10-K

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                ------------------
                                    FORM 10-K
   (mark one)
   [ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the fiscal year ended December 30, 1995

   [   ] 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
   incorporation or organization)                          Identification No.)

   81 Wyman Street, P.O. Box 9046
   Waltham, Massachusetts                                           02254-9046
   (Address of principal executive offices)                         (Zip Code)
       Registrant's telephone number, including area code: (617) 622-1000

           Securities registered pursuant to Section 12(b) of the Act:
                                                         Name of each exchange
   Title of each class                                     on which registered
   -------------------                                     -------------------
   Common Stock, $1.00 par value                       New York Stock Exchange
   Preferred Stock Purchase Rights
           Securities registered pursuant to Section 12(g) of the Act:
                                      None

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

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

   The aggregate market value of the voting stock held by nonaffiliates of the
   Registrant as of January 26, 1996, was approximately $4,625,253,000.

   As of January 26, 1996, the Registrant had 87,927,556 shares of Common
   Stock outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE
   Portions of the Registrant's Annual Report to Shareholders for the year
   ended December 30, 1995, are incorporated by reference into Parts I and II.

   Portions of the Registrant's definitive Proxy Statement for the Annual
   Meeting of Shareholders to be held on May 21, 1996, are incorporated by
   reference into Part III.
PAGE

                                     PART I


   Item 1.  Business

   (a)  General Development of Business

   Thermo Electron Corporation and its subsidiaries (the Company or the
   Registrant) develop, manufacture, and market environmental monitoring and
   analysis instruments; biomedical products including heart-assist devices,
   respiratory care equipment, and mammography systems; paper-recycling and
   papermaking equipment; alternative-energy systems; industrial process
   equipment; and other specialized products. The Company also provides
   environmental, laboratory, and metallurgical services and conducts
   advanced-technology research and development. The Company performs its
   business through divisions and wholly owned subsidiaries, as well as
   majority-owned subsidiaries that are partially owned by the public or by
   private investors.

   A key element in the Company's growth has been its ability to commercialize
   innovative products and services emanating from research and development
   activities conducted at the Company's various subsidiaries and divisions.
   The Company's strategy has been to identify business opportunities arising
   from social, economic, and regulatory issues and to seek a leading market
   share through the application of proprietary technology. As part of this
   strategy, the Company continues to focus on the acquisition of
   complementary businesses that can be integrated into its existing core
   businesses to leverage the Company's access to new markets.

   The Company believes that maintaining an entrepreneurial atmosphere is
   essential to its continued growth and development. In order to preserve
   this atmosphere, the Company has adopted a strategy of spinning out certain
   of its businesses into separate subsidiaries and having these subsidiaries
   sell a minority interest to outside investors. The Company believes that
   this strategy provides additional motivation and incentives for the
   management of the subsidiaries through the establishment of subsidiary-
   level stock option incentive programs, as well as capital to support the
   subsidiaries' growth. The Company's wholly and majority-owned subsidiaries
   are provided with centralized corporate development, administrative,
   financial, and other services that would not be available to many
   independent companies of similar size. As of March 11, 1996, the Company
   had 16 subsidiaries that have sold minority equity interests, 12 of which
   are publicly traded and 4 of which are privately held. In addition, two
   subsidiaries have privately sold debentures that will be convertible into
   shares of common stock of these subsidiaries upon completion of their
   initial public offerings.

   The Company 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. The principal executive office of the
   Company is 81 Wyman Street, Waltham, Massachusetts 02254-9046 (telephone:
   617-622-1000).
                                        2PAGE

   (b)  Financial Information About Industry Segments

   The Company's products and services are divided into six segments:
   Instruments, Alternative-energy Systems, Process Equipment, Biomedical
   Products, Environmental Services, and Advanced Technologies. Products or
   services within a particular segment are provided by more than one
   subsidiary, and certain subsidiaries' products or services are included in
   more than one segment. The principal products and services offered by the
   Company in the six industry segments are described in detail below (see
   "Principal Products and Services"). Financial information concerning the
   Company's industry segments is summarized in Note 15 to Consolidated
   Financial Statements in the Registrant's 1995* Annual Report to
   Shareholders and is incorporated herein by reference.

   (c)  Description of Business

        (i) Principal Products and Services

   Instruments

   The Company, through its Thermo Instrument Systems Inc. subsidiary, is a
   worldwide leader in the development, manufacture, and marketing of
   analytical, monitoring, process control, and imaging, inspection, and
   measurement instruments used to identify and analyze air pollution,
   radioactivity, complex chemical compounds, toxic metals, and other elements
   in a broad range of liquids and solids, as well as to control, monitor,
   image, inspect, and measure various industrial processes and life sciences
   phenomena.

   Thermo Instrument historically has expanded both through the acquisition of
   companies, product lines, and technologies and through internal development
   of new products and technologies. During the past several years Thermo
   Instrument has completed a number of complementary acquisitions that have
   provided additional technologies, specialized manufacturing or product
   development expertise, and broader capabilities in marketing and
   distribution. In 1995, Thermo Instrument's acquisitions included Gould
   Instrument Systems, Inc. and the Analytical Instrument Division of
   Analytical Technology, Inc.

   On March 1, 1995, Thermo Instrument entered into an agreement with Fisons
   plc (Fisons) to acquire the Scientific Instruments Division of Fisons for
   approximately 202 million British pounds sterling. On April 13, 1995,
   Thermo Instrument announced that it had received a "second request" for
   information regarding the transaction from the U.S. Federal Trade
   Commission (FTC). After extensive discussions with Fisons and the FTC, in
   January 1996, Thermo Instrument withdrew its original pre-merger
   notification filing under the Hart-Scott-Rodino Antitrust Improvements Act
   (the HSR Act), and submitted a new filing with respect to a modified form
   of the acquisition. On February 15, 1996, Thermo Instrument announced that
   the FTC had granted early termination of the waiting period under the HSR
   Act with respect to the modified acquisition and, on March 1, 1996, Thermo
   Instrument announced that it had received clearance from U.K. antitrust
   regulatory authorities. The form of the acquisition cleared by the FTC and
   the U.K. authorities excludes from the businesses to be acquired by Thermo
   Instrument substantially all of the mass spectrometer businesses of Fisons
   and a high-resolution mass spectrometer/inductively-coupled plasma product.
   These businesses accounted for slightly less than 20% of the 1995

   * References to 1995, 1994, and 1993 herein are for the fiscal years ended
     December 30, 1995, December 31, 1994, and January 1, 1994, respectively.
                                        3PAGE

   revenues of Fisons' Scientific Instruments Division. The new purchase price
   is expected to be slightly less than 150 million British pounds sterling
   and will be subject to a post-closing adjustment based on the net asset
   value of the acquired businesses as of the closing date. The modified
   acquisition is still subject to the consent of certain third parties and
   the satisfaction of other closing conditions.

   Thermo Instrument has adopted Thermo Electron's spinout strategy in an
   effort to more clearly focus its many analytical technologies on their more
   specific niche markets. To date, Thermo Instrument has completed an initial
   public offering of ThermoSpectra Corporation, has privately offered equity
   in Thermo BioAnalysis Corporation, and has privately sold convertible
   debentures in Thermo Optek Corporation and ThermoQuest Corporation.

   ThermoSpectra develops, manufactures, and markets precision imaging,
   inspection, and measurement instruments based on high-speed data
   acquisition and digital processing technologies to provide industrial and
   research customers with integrated systems that address their specific
   needs. ThermoSpectra's products include digital oscillographic recorders
   and data acquisition systems that continuously measure and monitor signals
   from various sensors; digital storage oscilloscopes (DSOs) capable of
   taking hundreds of millions of measurements per second of transient signals
   or short bursts of data; X-ray microanalyzers used as accessories to
   electron microscopes to provide elemental materials analysis as a
   supplement to the microscope's imaging capabilities; nondestructive X-ray
   inspection systems for process monitoring and quality control applications;
   and confocal laser scanning microscopes that use laser light to generate
   precise optical images primarily for life science applications.

   Thermo BioAnalysis develops, manufactures, and sells capillary
   electrophoresis, matrix-assisted laser desorption/ionization time-of-flight
   (MALDI-TOF) mass spectrometry, and health physics instrumentation.
   Capillary electrophoresis is a powerful separation technique based on a
   combination of chromatographic and electroanalytical technologies.
   MALDI-TOF mass spectrometers measure the weight of the components of a
   sample and identify inorganic chemical components and/or inorganic elements
   contained within the sample. Thermo BioAnalysis' health physics division
   manufactures and sells radiation detection and counting instrumentation and
   sophisticated radiation monitoring systems to the nuclear industry
   throughout the world. In February 1996, Thermo BioAnalysis acquired
   Dynatech Laboratories Worldwide from Dynatech Corporation, which designs,
   manufactures, and markets products used in the immunoassay segment of the
   bioinstrumentation market. Immunoassay is an analytical method widely used
   in pharmaceutical and biopharmaceutical research, as well as for clinical
   testing of patient samples.

   Thermo Optek is a leader in the development, manufacture, and marketing of
   products used for both elemental and molecular analysis. These products are
   based on several optical spectroscopy techniques, including Atomic Emission
   (AE), Atomic Absorption (AA), and Fourier transform infrared (FT-IR) and
   FT-Raman technologies.

                                        4PAGE

   Thermo Optek's AE and AA spectrometers identify and measure trace
   quantities of metals and other elements in a wide variety of materials,
   including environmental samples (such as soil, water, and wastes), foods,
   drugs, cosmetics, and alloys. Thermo Optek sells its products to a range of
   customers from manufacturing industries to service industries to government
   and university laboratories. Thermo Optek is a leading manufacturer of
   FT-IR and FT-Raman spectrometers, which nondestructively determine the
   chemical composition and physical properties of materials. These
   instruments are used in chemical research, industrial quality control, and
   process monitoring, and for solving a wide variety of materials-analysis
   problems.

   ThermoQuest is a leading manufacturer of commercial mass spectrometers and
   has pioneered many of the significant developments and applications of mass
   spectrometry. ThermoQuest's mass spectrometry products identify and measure
   the components of a sample for organic chemical compounds or for inorganic
   compounds. These instruments are used by customers in research and the
   production of pharmaceuticals; in environmental analysis and pollution
   control; in biochemistry; in analysis of foods, chemicals, and
   petrochemicals; and in health and forensic sciences. ThermoQuest also
   manufactures high performance liquid chromatographs, gas chromatographs,
   and related instruments and equipment used principally in the research and
   development and production monitoring of pharmaceuticals and chemicals, and
   for environmental monitoring. These instruments separate the chemical
   components of substances for purposes of identification and measurement.

   Thermo Instrument's wholly owned businesses manufacture monitoring
   instruments for two principal markets: the detection and measurement of
   nuclear radiation, and the monitoring of air pollutants including toxic and
   combustible gases.

   The Company's nuclear radiation monitoring instruments detect and measure
   alpha, beta, gamma, neutron, and X-ray radiation emitted by natural sources
   and by radioactive materials used in nuclear power plants and certain
   governmental, industrial, and medical facilities. The Company is a major
   supplier of instruments and systems that are manufactured to European
   standards for personnel protection and environmental monitoring. The
   Company also manufactures industrial gauging and process control
   instruments used principally by manufacturers of flat-sheet materials,
   including metals, plastics, rubber, paper, and fibers.

   The Company's air-monitoring instruments measure pollutants in ambient air
   and from stationary sources such as industrial smoke stacks. The principal
   pollutants measured are oxides of nitrogen, sulfur dioxide, carbon
   monoxide, ozone, and volatile organic compounds (VOCs). These instruments
   are used by utility and industrial customers to ensure compliance with
   environmental regulations, by government agencies to monitor air quality,
   and by research facilities. The Occupational Safety and Health
   Administration's safety requirements for protecting workers from toxic or
   explosive atmospheres in confined spaces are addressed with the Company's
   detectors, instruments, and systems for sensing, monitoring, and warning of
   such dangers.
                                        5PAGE

   In addition, the Company manufactures equipment that provides on-line,
   real-time analysis of elements in bulk raw materials, such as coal and
   cement.

   The Company manufactures and markets a number of process monitoring,
   analysis, and control systems including: analog and digital recorders for
   continuous process industries; process and laboratory analytical
   instruments and monitors to detect lethal gases for the oil, gas, and
   petrochemical industries; supervisory control and data acquisition software
   for process monitoring and operator interface in a variety of industrial
   processes; and turnkey, integrated systems to control networks of distant
   oil and gas wells.

   The Company also manufactures and markets process gauges and noncontacting
   and nonintrusive process control instrumentation to measure liquid levels,
   density, weight, and flows for a variety of industries. The Company's X-ray
   fluorescence instruments allow for the nondestructive analysis of inorganic
   elements. Applications include alloy identification, on-line process
   monitoring and quality control, characterization of toxic metals in soil,
   and thickness and/or composition of semiconductor thin films.

   The 1995 acquisition of ATI's Analytical Instrument Division added to the
   Company's product offerings in several analytical areas, notably in
   ultraviolet visual spectrometry and thermogravimetric analysis.

   Alternative-energy Systems

   The Company's Alternative-energy Systems segment includes the operation
   and, prior to 1994, the construction and sale of independent (nonutility)
   power plants. This segment also includes the manufacture, sale, and
   servicing of industrial refrigeration systems; natural gas and marine
   engines; packaged cooling and cogeneration systems; and steam turbines and
   compressors.

   Alternative-energy Power Plants

   Through its Thermo Ecotek Corporation subsidiary, the Company designs,
   develops, owns, and operates independent (nonutility) electric power
   generation facilities that use a range of environmentally responsible
   combustion technologies. Since 1987, the Company has owned and operated
   facilities fueled by agricultural and wood waste, including urban wood
   waste (referred to as "biomass"). The Company currently operates seven
   facilities representing total electric generating capacity of approximately
   140 megawatts. The Company develops and operates its facilities through
   joint ventures or limited partnerships in which the Company has a majority
   interest or through wholly owned subsidiaries.

   Thermo Ecotek intends to pursue project development and acquisition
   opportunities both in the U.S. and internationally. Projects are expected
   to include power generation and "clean-fuels" production and processing
   facilities, and may include natural gas infrastructure facilities and
   investments in other environmental businesses in the future.
                                        6PAGE

   The facilities that are leased by the Company are owned by institutional
   investors and leased on a long-term basis to the Company or to joint
   ventures or partnerships in which the Company has ownership interests. The
   Company uses internal funds for preconstruction development expenses and
   generally obtains external financing for construction. The Company has
   equity ownership interests in three operating plants. The Company may make
   additional significant equity investments in future projects. The process
   of locating, developing, financing, and constructing power plants is highly
   complex, lengthy, and expensive and only a small percentage of the power
   projects that the Company evaluates or pursues results in operating
   projects.

   In August 1995, Thermo Ecotek, through two wholly owned subsidiaries,
   entered into a Limited Partnership Agreement with KFX Wyoming, Inc., a
   subsidiary of KFX Inc. (KFX), to develop, construct, and operate a
   subbituminous coal-beneficiation plant to be located near Gillette,
   Wyoming. The plant, which is expected to begin commercial operation in late
   1996, will employ certain patented clean coal technology.

   Thermo Ecotek also entered into an agreement with KFX under which Thermo
   Ecotek acquired 3,000,000 shares of KFX common stock, or approximately 14%
   of the outstanding stock of KFX, for $2.00 per share, and obtained the
   rights to purchase up to 51% of KFX common stock at certain times through
   2000.

   In July 1995, Thermo Ecotek entered into an agreement to invest $15 million
   in a 185 megawatt combined cycle, steam-turbine electric generation
   facility located in Puerto Plata, Dominican Republic, owned by Smith/Enron
   Cogeneration Limited Partnership (SECLP), contingent upon the satisfaction
   by the facility of certain performance tests. In other international
   projects, Thermo Ecotek has two plants under development in India, and has
   begun development efforts in the Czech Republic, to provide environmentally
   friendly power generation.

   Waste-recycling Facility

   In early 1994, the Company completed construction and commenced operation
   of a 2,100-ton-per-day municipal solid waste-recycling facility (the
   Recycling Facility) in San Diego County, California (the County). The
   construction of the Recycling Facility was financed by the issuance of
   $133.7 million principal amount of bonds by the California Pollution
   Control Financing Authority (the CPCFA Bonds). The County is a party to
   these financing arrangements and is responsible for payment of the facility
   debt in the event of County defaults. The obligations are nonrecourse to
   the Company for events of County default.

   The Company entered into a 24-year agreement with the County under which
   the Company, for a service fee, was committed to recycle materials
   recovered from the County's waste stream to reduce the volume of remaining
   waste. During 1995, the County ceased delivering waste to the facility and
   defaulted on certain payment obligations to the Company. The County was
   also not in compliance with certain covenants of its agreements with the
   bank group that provided the facility financing. As a result of the
   preceding events, the Company wrote off its net investment in the facility
   during 1995. (See also "Management's Discussion and Analysis of Financial
   Condition and Results of Operations" incorporated by reference into Item 7
   hereof.)
                                        7PAGE

   Other

   The Company, through its Thermo Power Corporation subsidiary, develops,
   manufactures, markets, and services environmentally sound and economically
   efficient industrial refrigeration equipment, natural gas-fueled and
   low-emission natural gas engines for vehicular and stationary applications,
   lift-truck engines, marine engines, and commercial cooling and cogeneration
   units.

   Through its industrial refrigeration business, the Company provides
   environmentally sound solutions to the refrigeration needs of the
   food-processing, petrochemical, and pharmaceutical industries. More than
   80% of the Company's refrigeration products operate on ammonia, a
   nonozone-depleting alternative to the chlorofluorocarbon refrigerants
   gradually being phased out by government regulations. The 1994 acquisition
   of NuTemp, Inc., which rents and sells new and remanufactured commercial
   cooling and industrial refrigeration equipment, broadens the product lines
   and services the Company offers.

   Many of Thermo Power's products are powered by its low-emission dedicated
   natural gas-fueled TecoDrive(R) engines. Thermo Power has supplied major
   fleet operators such as United Parcel Service and the U.S. Postal Service
   with TecoDrive engines to power some of their alternative-fuel vehicles.
   Thermo Power also manufactures natural gas engines for stationary
   applications, including compressor drives. Other products that operate with
   TecoDrive engines include cooling and cogeneration systems and gas
   engine-driven refrigeration systems. The Company also manufactures gasoline
   and LPG (liquefied petroleum gas) engines for lift trucks and gasoline
   engines for marine applications, primarily "cruiser" class boats ranging in
   size from 25 to 45 feet.

   In addition, the Company conducts sponsored research and development on
   advanced systems for clean combustion, including a low-cost system for
   converting a diesel-fueled engine to operate solely on natural gas without
   major modifications to the engine.

   Through its ThermoLyte Corporation subsidiary, formed in March 1995, Thermo
   Power is developing a line of propane-powered lighting products, including
   flashlights, area lights or lanterns, and hazard lights. These products
   will be based on proprietary technology for a rigid mantle, the "bulb" in
   gas lighting products.

   The Company's Alternative-energy Systems segment also includes its Peter
   Brotherhood Ltd. subsidiary, a U.K.-based manufacturer of steam turbines
   and compressors.

   Process Equipment

   The Company designs, manufactures, and sells advanced, custom-engineered
   processing machinery, including paper-recycling and papermaking equipment,
   metallurgical thermal-processing systems, and electroplating systems.
                                        8PAGE

   Paper-recycling and Papermaking Equipment

   Through its Thermo Fibertek Inc. subsidiary, the Company designs and
   manufactures processing machinery and accessories for the paper-recycling
   and papermaking industries. The Company's principal products include
   custom-engineered systems and equipment for the preparation of wastepaper
   for conversion into recycled paper, and accessory equipment and related
   consumables important to the efficient operation of papermaking machines.
   The Company has developed technologically advanced equipment for the
   preparation of white recycled fiber (e.g. printing and office paper,
   newsprint, and tissue). The Company sells in countries outside the Pacific
   Rim technologically advanced equipment for the preparation of brown
   recycled fiber (e.g. corrugated boxes and paper bags) pursuant to a license
   from Aikawa Iron Works Co., Ltd., a leading Japanese manufacturer of this
   equipment.

   Thermo Fibertek also designs and manufactures accessories used in the
   papermaking industry, including doctor blades and showers that perform
   on-line continuous cleaning of the fabrics and rolls used in the
   papermaking process. This cleaning process is important to papermakers
   because it reduces machine breakdowns, extends the life of consumable paper
   machine fabrics, and improves paper quality. Thermo Fibertek also
   manufactures forming tables, vacuum systems, and water-management systems.

   In December 1994, a wholly owned subsidiary of the Company entered into a
   $145 million contract for engineering, procurement, and construction
   services for an office wastepaper de-inking facility located in Menominee,
   Michigan. Completion of construction is expected in 1996. Thermo Fibertek
   is supplying approximately $16 million of equipment and services under the
   contract over a two-year period.

   Metallurgical Thermal-processing Systems

   The Company, through a division of its Thermo TerraTech Inc. subsidiary
   (formerly Thermo Process Systems Inc.), designs, manufactures, and sells
   computer-controlled, custom-engineered thermal-processing systems used to
   treat primary metals and metal parts.

   The Company also manufactures electroplating systems, heavy metal and
   waste-treatment systems, and aqueous cleaning systems that offer an
   alternative to the use of ozone-damaging solvents in a variety of
   production processes.

   Biomedical Products

   The Company's Biomedical Products segment comprises a number of different
   businesses. The Company made several acquisitions in 1995, including Bird
   Medical Technologies, Inc. and Bennett X-Ray Corporation.

   Thermo Cardiosystems Inc., a majority-owned subsidiary of Thermedics Inc.,
   has developed two versions of an implantable left ventricular-assist system
   (LVAS): a pneumatic system that can be controlled by either a bedside
   console or portable unit, and an electric system that features an internal
   electric motor powered by an external battery-pack worn by the patient.
                                        9PAGE

   These devices are designed to perform substantially all or part of the
   pumping function of the left ventricle of the natural heart for patients
   suffering from cardiovascular disease. Unlike a total artificial heart
   system, an LVAS allows the natural heart to remain in place to assist the
   heart when it is unable to provide sufficient cardiac function to maintain
   life. In October 1994, the U.S. Food and Drug Administration (FDA) granted
   approval for commercial sale of the pneumatic LVAS. With this approval, the
   pneumatic system is available for sale to cardiac centers throughout the
   United States. In April 1994, the Company received the European Conformity
   Mark (CE Mark) for the commercial sale of the pneumatic LVAS in all
   European Community countries. The electric version of the LVAS, which
   received the CE Mark in August 1995, is currently being used in clinical
   trials in the U.S. for patients awaiting heart transplants and may not be
   sold commercially in this country until it has received approval from the
   FDA. In December 1995, the FDA approved the protocol for conducting
   clinical trials using Thermo Cardiosystems' electric LVAS as an alternative
   to transplant. It is implanted both as a bridge to transplant and as an
   alternative to heart transplants in Europe.

   The Company's wholly owned International Technidyne Corporation subsidiary
   is a leading manufacturer of hemostasis management products, including
   blood coagulation-monitoring instruments. International Technidyne also
   manufactures and markets skin-incision devices that can draw minute but
   medically significant blood samples through precisely controlled incisions.

   Nicolet Biomedical Inc., another wholly owned subsidiary of the Company, is
   a leading manufacturer of biomedical instruments for assessing muscle,
   nerve, sleep, hearing, and brain blood-flow disorders and for related work
   in clinical neurophysiology. These instruments are used in hospitals,
   clinics, universities, private practice medical offices, and medical
   research facilities by physicians and technologists for routine clinical
   testing and intra-operative monitoring. Nicolet Biomedical also
   manufactures systems that record and display spontaneous brain waves in the
   form of a topographic colored "map." Such maps of brain activity are used
   in conjunction with other measurements to assist in the diagnosis of
   various neurologic disorders.

   Trex Medical Corporation, a majority owned subsidiary of ThermoTrex
   Corporation, is a leading manufacturer of low-dose X-ray mammography
   equipment and minimally invasive needle-biopsy systems. In 1992, the
   Company introduced a digital imaging mammography system designed to target
   only a specific area of the breast where a suspicious lesion has been
   detected, creating a digital image of the lesion on a video monitor within
   seconds of taking an X-ray. The advantage of digital imaging is that the
   radiologist can manipulate and enhance the image quality to scrutinize
   subtle differences that may go undetected on a film-based X-ray. The
   Company is developing a digital imaging system capable of imaging the whole
   breast rather than just a specific area. The FDA is currently evaluating
   whether this type of screening system will require a premarket approval
   application or a 510(k) application. The Company does not expect to submit
   data to the FDA seeking market clearance for its full-breast digital
   imaging system before the end of 1996.
                                       10PAGE

   Trex Medical's needle-biopsy systems provide a less-invasive alternative to
   conventional surgical biopsies. Compared with open surgery, these needle
   techniques are less traumatic to the patient, result in less scarring,
   which can affect the accuracy of future mammograms, and are performed on an
   outpatient basis at significantly lower cost.

   Acquired in September 1995, Bennett X-Ray Corporation, a subsidiary of Trex
   Medical, is a leading manufacturer of general-purpose and specialty
   radiographic systems, including mammography systems. Bennett manufactures
   office-based radiographic systems, which are cost-effective units generally
   used in doctors' offices and surgi-care centers. In 1993, Bennett broadened
   its focus by offering the more sophisticated, more expensive systems
   typically used in hospitals. Bennett entered the hospital market with
   systems based on its patented high-frequency generator, which permits
   shorter exposure times that result in lower radiation doses and greater
   image contrast and resolution.

   ThermoLase Corporation, a majority-owned subsidiary of ThermoTrex,
   manufactures skin-care, bath, and body products sold through salons, spas,
   and stores, including the lotion that is an integral part of the
   laser-based SoftLight(SM) system that has been developed for the removal of
   unwanted hair.

   Bird Medical Technologies, Inc. was acquired by Thermo Electron in August
   1995. Bird Medical Technologies develops, manufactures, and sells
   respiratory care equipment and accessories and infection-control products
   to hospitals, subacute care facilities, outpatient surgical centers,
   doctors, dentists, the military, as well as other manufacturers.

   Environmental Services

   Through its Thermo TerraTech subsidiary, the Company provides comprehensive
   laboratory-based environmental testing and analysis, as well as design and
   construction inspection of water supply and wastewater treatment
   facilities, natural resource management consultation, surveying and site
   planning, transportation engineering services, solid waste management
   services, and building services.

   In February 1995, Thermo TerraTech acquired Elson T. Killam Associates
   Inc., which provides environmental consulting and engineering services and
   specializes in wastewater treatment and water resources management.

   In May 1995, Thermo TerraTech acquired substantially all of the assets of
   Lancaster Laboratories, Inc. and its affiliate Clewmark Holdings
   (collectively Lancaster Laboratories). Lancaster Laboratories, based in
   Lancaster, Pennsylvania, is a provider of high-quality analytical services
   to the environmental, food, and pharmaceutical industries.

   Thermo Remediation Inc., a majority-owned subsidiary of Thermo TerraTech,
   provides soil-remediation services from a network of regional centers.
   These soil-remediation centers thermally treat soils to remove and destroy
   hydrocarbon contamination caused by leaking storage tanks, spills
   accumulated at manufactured-gas plants and refineries, and from other
   sources. Thermo Remediation also operates a waste fluids-recycling facility
                                       11PAGE

   through a fluids-recovery company based in Arizona, and offers services in
   nuclear remediation and health safety at radioactivity contaminated sites.
   Through Thermo Remediation's December 1995 acquisition of Remediation
   Technologies, Inc., the Company also offers a broad array of remedial
   solutions, including bioremediation and the application of risk-based
   corrective actions such as brownfield development. A majority-owned
   subsidiary of Thermo TerraTech, Thermo EuroTech N.V. (formerly J. Amerika
   N.V.), provides waste-oil recycling, underground tank removal, and other
   environmental services from its Netherlands-based operation.

   In addition, metallurgical heat-treating services are provided for
   customers in the automotive, aerospace, defense, and other industries. The
   Company also provides metallurgical fabrication services, principally on
   high-temperature materials, for customers in the aerospace, medical,
   electronics, and nuclear industries.

   Advanced Technologies

   The Company's ThermoTrex subsidiary conducts sponsored research and
   development and is also attempting to commercialize new products based on
   advanced technologies it has developed in its laboratories. Sponsored
   research and development conducted by ThermoTrex, principally for the U.S.
   government, includes basic and applied research in electro-optic and
   electro-acoustic systems, signal processing, materials technology, and
   lasers.

   ThermoTrex is currently developing a passive microwave camera intended to
   "see" through clouds and fog to enhance safety in aerial navigation, the
   Sonic CT(TM) (computed tomography) system for the early detection of breast
   cancer, and a blood-flow measurement system, called the Doppler CT, for the
   diagnosis and monitoring of peripheral vascular disease. Because
   ThermoTrex's products are at different stages of development and subject to
   different levels of regulatory approval, no assurance can be given that the
   necessary approvals for any of the projects will be obtained on a timely
   basis, or at all, or that any of them will eventually result in
   commercially viable products.

   In April 1995, ThermoLase received clearance from the FDA to commercially
   market its laser-based hair-removal system, SoftLight. The SoftLight system
   uses a low-energy dermatology laser, in combination with a laser-absorbing
   lotion, to remove hair. On October 30, 1995, ThermoLase opened its first
   pilot retail center, Spa Thira, in La Jolla, California. Currently, this is
   the only location where the SoftLight process is available. ThermoLase has
   signed leases for Spa Thira locations in Dallas and Beverly Hills, and
   plans to begin opening additional centers in the second half of calendar
   1996. In January 1996, ThermoLase formed a joint venture to market the
   SoftLight process in Japan.

   Through Thermedics' Thermo Sentron Inc. (formerly Ramsey Technology, Inc.)
   subsidiary, the Company manufactures high-speed precision weighing and
   inspection equipment for industrial production and packaging lines serving
   two principal markets: packaged goods and bulk materials. The packaged
   goods market includes a wide range of checkweighing equipment and metal
   detectors that can be integrated at various stages in production lines for
                                       12PAGE

   process control and quality assurance and are sold primarily to customers
   in the food processing and pharmaceutical industries. The bulk materials
   product line includes conveyor belt scales, solids level measurement and
   conveyor monitoring devices, and sampling systems, all sold primarily to
   customers in the mining and material processing industries, as well as
   electric utilities, chemical, and other manufacturing companies.

   Through the Orion laboratory products division of Analytical Technology,
   Inc., acquired by Thermedics in December 1995, the Company manufactures
   electrochemistry, microweighing, process, and other instruments used to
   analyze the chemical composition of foods, beverages, and pharmaceuticals
   and detect contaminants in environmental and high-purity water samples.

   Based on technology that has been used to develop instruments sold by the
   Company for the detection of nitrogen-based compounds, the Company
   developed the EGIS(R) system for screening people, baggage, and electronic
   equipment, such as personal computers, for the presence of a wide range of
   explosives, including the plastic explosives that have proven difficult to
   detect using conventional methods. In 1992, the Company introduced a
   high-speed product quality assurance system based on its vapor-detection
   technology for use in bottling lines in the carbonated beverage industry
   (the Alexus(R) system). The Alexus system is currently being used to ensure
   product quality in more than 200 bottling lines worldwide. In 1994, the
   Company introduced a new system to the bottled water industry, and it
   continues to develop new technologies for product quality applications in
   response to consumer demand for product quality and regulatory influences.

   Thermo Voltek Corp., a majority-owned subsidiary of Thermedics, designs,
   develops, and manufactures electronic test instruments that test electronic
   and electrical systems and components for electromagnetic compatibility
   (EMC), offers EMC-consulting and systems-integration services, acts as a
   distributor of a broad range of EMC-testing products, and manufactures
   power-conversion systems for use in telecommunications equipment. Thermo
   Voltek also designs, manufactures, and markets high-voltage power
   conversion systems, modulators, fast-response protection systems, and
   related high-voltage equipment for industrial, medical, and environmental
   processes, and defense and scientific research applications.

   The Company's wholly owned Coleman Research Corporation subsidiary,
   acquired in March 1995, provides systems integration, systems engineering,
   and analytical services to government and commercial customers in fields of
   information technology, energy and the environment, software engineering,
   launch systems, advanced radar imaging, and health systems.

   Publicly and Privately Held Subsidiaries

   In 1983, the Company adopted a strategy of having certain subsidiaries sell
   a minority interest in a public or private offering to outside investors.
   An important goal of this strategy is to provide the entrepreneurial
   atmosphere and focused performance incentives of a separate business. As of
   March 11, 1996, the Company had 16 subsidiaries that have sold minority
   equity interests, 12 of which are publicly traded and 4 of which are
   privately held. In addition, two subsidiaries have privately sold
   debentures that will be convertible into shares of common stock of these
   subsidiaries upon the completion of their initial public offerings.
                                       13PAGE

   Thermedics Inc. develops, manufactures, and markets product quality
   assurance systems, precision weighing and inspection equipment, explosives-
   detection devices, microweighing and electrochemistry instruments, as well
   as biomaterials and other biomedical products. Thermedics' products are
   included in the Company's Biomedical Products and Advanced Technologies
   segments.

        Thermo Cardiosystems Inc., a majority-owned subsidiary of Thermedics,
        develops, manufactures, markets, and sells implantable left
        ventricular-assist systems designed to perform substantially all or
        part of the pumping function of the left ventricle of the natural
        heart for patients suffering from cardiovascular disease. Thermo
        Cardiosystems' products are included in the Company's Biomedical
        Products segment.

        Thermo Voltek Corp., a majority-owned subsidiary of Thermedics,
        designs, manufactures, and markets instruments that test electronic
        systems and components for electromagnetic compatibility, and provides
        related distribution and consulting services. Thermo Voltek also
        designs and manufactures high-voltage power conversion systems for
        research and commercial applications, and specialized power supplies
        for telecommunications equipment. Thermo Voltek's products are
        included in the Company's Advanced Technologies segment.

   Thermo Instrument Systems Inc. develops, manufactures, and markets
   analytical, monitoring, and process control instruments used to detect and
   measure air pollution, nuclear radioactivity, complex chemical compounds,
   toxic metals, and other elements in a wide range of materials as well as to
   control and monitor various industrial processes. Thermo Instrument's
   products represent the Company's Instruments segment.

        ThermoSpectra Corporation, a majority-owned subsidiary of Thermo
        Instrument, develops, manufactures, and markets precision imaging,
        inspection, and measurement instruments based on high-speed data
        acquisition and digital processing technologies.

        Thermo BioAnalysis Corporation, a majority-owned, privately held
        subsidiary of Thermo Instrument, develops, manufactures, and sells
        instrumentation for the analytical biochemistry, biopharmaceutical,
        and health physics instrumentation markets. It comprises four
        operations that specialize in capillary electrophoresis;
        matrix-assisted laser desorption/ionization time-of-flight mass
        spectrometry; health physics instrumentation; and immunoassays, which
        are analytical methods widely used in pharmaceutical and
        biopharmaceutical research, as well as for clinical testing of patient
        samples.

        Thermo Optek Corporation, a wholly owned, privately held subsidiary of
        Thermo Instrument, is a worldwide leader in the development,
        manufacture, and marketing of optical and energy-based analytical
        instruments. These instruments are used in the quantitative and
        qualitative chemical analysis of elements and molecular compounds in a
        wide variety of solids, liquids, and gases.
                                       14PAGE

        ThermoQuest Corporation, a wholly owned, privately held subsidiary of
        Thermo Instrument, develops, manufactures, and sells mass
        spectrometers, liquid chromatographs, and gas chromatographs for the
        environmental, pharmaceutical, and industrial marketplaces. These
        analytical instruments are used in the quantitative and qualitative
        chemical analysis of organic and inorganic compounds at ultra-trace
        levels of detection.

   Thermo TerraTech Inc. provides environmental services and infrastructure
   planning and design encompassing a range of specializations within
   consulting and design, soil and water remediation, and laboratory testing.
   Thermo TerraTech also provides metal-treating services. Thermo TerraTech's
   products and services are included in the Company's Environmental Services
   and Process Equipment segments.

        Thermo Remediation Inc., a majority-owned subsidiary of Thermo
        TerraTech, is a leading provider, to clients nationwide, of services
        for the recycling of petroleum-contaminated soils and fluids as well
        as manufactured-gas plant and refinery wastes. Thermo Remediation is
        also a major supplier of nuclear remediation and safety services at
        radioactively contaminated sites, and is a leader in the application
        of bioremediation technology. Thermo Remediation's services are
        included in the Company's Environmental Services segment.

        Thermo EuroTech N.V., a majority-owned, privately held subsidiary of
        Thermo TerraTech, provides environmental services in the Netherlands,
        including recycling waste oils, testing, removal, and installation of
        underground storage tanks, and groundwater cleanup. Thermo EuroTech's
        services are included in the Company's Environmental Services segment.

   Thermo Power Corporation manufactures, markets, and services industrial
   refrigeration equipment; natural gas engines for vehicular and stationary
   applications; natural gas-fueled cooling and cogeneration systems;
   lift-truck engines; and marine engines. Thermo Power also conducts
   sponsored research and development on advanced systems for clean combustion
   and other high-efficiency gas-fueled devices. Thermo Power's products are
   included in the Company's Alternative-energy Systems segment.

        ThermoLyte Corporation, a majority-owned, privately held subsidiary of
        Thermo Power, was formed in March 1995 to develop and commercialize a
        line of propane-powered lighting products, including flashlights, area
        lights or lanterns, and hazard lights.

   ThermoTrex Corporation manufactures and markets mammography and needle-
   biopsy systems for the early detection of breast cancer, and develops
   advanced technologies that it is incorporating into commercial products for
   the medical imaging, personal-care, and avionics industries. ThermoTrex's
   products are included in the Company's Advanced Technologies and Biomedical
   Products segments.

                                       15PAGE

        ThermoLase Corporation, a majority-owned subsidiary of ThermoTrex, has
        developed a laser-based system for the removal of unwanted hair, and
        manufactures skin-care and other personal-care products sold through
        salons, spas, and stores. ThermoLase's hair-removal system, called
        SoftLight, is included in the Company's Advanced Technologies segment,
        and its skin-care products are included in the Company's Biomedical
        Products segment.

        Trex Medical Corporation, a majority-owned privately held subsidiary
        of ThermoTrex, designs, manufactures, and markets mammography
        equipment and minimally invasive stereotactic needle biopsy systems
        used for the detection of breast cancer, as well as office-based
        general radiography equipment. Trex Medical's products are included in
        the Company's Biomedical Products segment.

   Thermo Fibertek Inc. develops, manufactures, and markets a range of
   equipment and accessory products for the domestic and international paper
   industry, including de-inking and stock-preparation equipment, and
   water-management systems for paper recycling. Thermo Fibertek's products
   are included in the Company's Process Equipment segment.

   Thermo Ecotek Corporation develops and operates independent (nonutility)
   power plants that use clean combustion technology and alternative-energy
   sources, such as agricultural waste. The Company is also now involved in
   engineered clean fuels, as well as a range of other environmentally sound
   technologies. Thermo Ecotek's operations are included in the Company's
   Alternative-energy Systems segment.

        (ii) New Products

   The Company's business includes the development and introduction of new
   products and may include entry into new business segments. The Company has
   made no commitments to new products that require the investment of a
   material amount of the Company's assets, nor does it have any definitive
   plans to enter new business segments that would require such an investment
   (see Section (xi) "Research and Development").

        (iii) Raw Materials

   Thermo Cardiosystems relies upon several custom-designed components and
   materials supplied by other companies to manufacture its LVAS. In 1992,
   several suppliers of such components and materials notified Thermo
   Cardiosystems that they intended to exit the biomedical market. While the
   Company believes that it will be able to develop new sources of, or
   alternatives to, these materials and components, no assurance can be given
   that the Company will develop such sources or alternatives in a timely
   manner, or that the FDA will approve the use of any such alternative
   materials or components.

   Except as described above, in the opinion of management, the Company has a
   readily available supply of raw materials for all of its significant
   products from various sources and does not anticipate any difficulties in
   obtaining the raw materials essential to its business.
                                       16PAGE

        (iv) Patents, Licenses, and Trademarks

   The Company considers patents to be important in the present operation of
   its business. Except for ThermoLase's patents for its laser-based
   hair-removal system, the Company does not consider any patent, or related
   group of patents, to be of such importance that its expiration or
   termination would materially affect the Company's business taken as a
   whole. The Company seeks patent protection for inventions and developments
   made by its personnel and incorporated into its products or otherwise
   falling within its 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.

   The Company protects some of its technology as trade secrets and, where
   appropriate, uses trademarks or registers its products. It also enters into
   license agreements with others to grant and/or receive rights to patents
   and know-how.

        (v) Seasonal Influences

   There are no significant seasonal influences on the Company's sales of
   products and services.

        (vi) Working Capital Requirements

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

        (vii) Dependency on a Single Customer

   No single customer accounted for more than 10% of the Company's total
   revenues in any of the past three years. The Advanced Technologies segment
   derived approximately 27%, 13%, and 23% of its revenues in 1995, 1994, and
   1993, respectively, from contracts with various agencies of the U.S.
   government and approximately 23% of its revenues in 1994 from one customer
   for a process-detection instrument. In connection with the development of
   power plants, the Company typically enters into long-term power supply
   contracts with a single customer for the sale of power generated by each
   plant. The Alternative-energy Systems segment derived 16% of its revenues
   in 1995 and 1994 and 9% of its revenues in 1993, from Pacific Gas &
   Electric and 15%, 19%, and 18% of its revenues in 1995, 1994, and 1993,
   respectively, from Southern California Edison.



                                       17PAGE

        (viii) Backlog

   The Company's backlog of firm orders at year-end 1995 and 1994 was as
   follows:

   (In thousands)                                           1995        1994
   -------------------------------------------------------------------------

   Instruments                                          $188,700    $139,600
   Alternative-energy Systems                            112,900     109,100
   Process Equipment                                     114,800     199,000
   Biomedical Products                                    77,100      37,300
   Environmental Services                                 76,500      46,700
   Advanced Technologies                                 117,200     206,500
                                                        --------    --------
                                                        $687,200    $738,200
                                                        ========    ========

   The Alternative-energy Systems segment backlog for 1994 has been restated
   to exclude the backlog of the Recycling Facility (see "Alternative-energy
   Systems" under section (c), "Description of Business").

   Backlog includes the uncompleted portion of research and development
   contracts and the uncompleted portion of certain equipment contracts that
   are accounted for using the percentage-of-completion method. The Company
   believes approximately 95% of the 1995 backlog will be filled during fiscal
   1996.

        (ix) Government Contracts

   Approximately 9% of the Company's total revenues in 1995 were derived from
   contracts or subcontracts with the federal government, which are subject to
   renegotiation of profits or termination. The Company does not have any
   knowledge of threatened or pending renegotiation or termination of any
   material contract or subcontract.

        (x) Competition

   The Company is engaged in many highly competitive industries. The nature of
   the competition in each of the Company's markets is described below:

   Instruments

   The Company is among the principal manufacturers of analytical instrumenta-
   tion. Within the markets for the Company's analytical instrument products,
   the Company competes with several large corporations with broad product
   offerings, as well as numerous smaller companies that address only
   particular segments of the industry or specific geographic areas. The
   Company's instruments business generally competes on the basis of technical
   advances that result in new products and improved price-performance ratios,
   reputation among customers as a quality leader for products and services,
   and active research and application-development programs. To a lesser
   extent, the Company competes on the basis of price.
                                      18PAGE

   Alternative-energy Systems

   The worldwide independent power market consists of numerous companies,
   ranging from small startups to multinational industrial companies. In
   addition, a number of regulated utilities have created subsidiaries that
   compete as nonutility generators. Nonutility generators often specialize in
   market "niches," such as a specific technology or fuel (for example,
   gas-fired cogeneration, refuse-to-energy, hydropower, geothermal, wind,
   solar, wood or coal) or a specific region of the country where they believe
   they have a market advantage. However, many nonutility generators,
   including the Company, seek to develop projects on a best-available-fuel
   basis. The Company competes primarily on the basis of project experience,
   technical expertise, capital resources, and power pricing.

   The Company's sale of industrial refrigeration systems is subject to
   intense competition. The industrial refrigeration market is mature, highly
   fragmented, and extremely dependent on close customer contacts. Major
   industrial refrigeration companies, of which the Company is one, account
   for approximately one-half of worldwide sales, with the balance generated
   by many smaller companies. The Company competes principally on the basis of
   its advanced control systems and overall quality, reliability, service, and
   price. The Company believes it is a leader in remanufactured refrigeration
   equipment. Its rental services business has one large competitor that
   supplies rental equipment. The Company competes in this market based on
   price, delivery time, and customized equipment.

   The Company's sale of packaged cogeneration systems is subject to intense
   competition, both direct and indirect. Direct competitors consist of
   companies that sell cogeneration products resembling those sold by the
   Company as well as electric utilities' pricing programs. Indirect
   competitors include manufacturers of conventional heating and cooling
   systems.

   As the alternative-fuel engine market becomes fully developed, the Company
   anticipates that competition, specifically in the market for natural gas
   engines for vehicles, will be intense, and potential competitors may
   include major automotive and natural gas companies and other companies that
   have substantially greater financial resources than those of the Company.

   The Company has experienced intense competition in the marine engine
   business in recent years as some of its former customers have been acquired
   by competitors following the vertical integration of the boating industry.
   Competition is primarily on the basis of quality, reliability, and service.

   Process Equipment

   The Company faces significant competition in the markets for paper-
   recycling and water handling equipment and papermachine accessories, and
   competes in these markets primarily on the basis of quality, service,
   technical expertise, and product innovation. The Company is a leading
   supplier of accessory equipment for papermaking machines, and competes in
   this market primarily on the basis of service, technical expertise, and
   performance.
                                       19PAGE

   The market for thermal-processing systems is subject to intense competition
   worldwide. The Company is aware of at least eight companies that market a
   number of products comparable to the Company's, but competition for
   particular projects is typically limited to fewer companies. The Company
   competes on the basis of several factors, including technical performance,
   product quality and reliability, timely delivery, and often price.

   Biomedical Products

   Competition in the markets for most of the Company's biomedical products,
   including those manufactured by Thermo Cardiosystems, ThermoTrex, Nicolet
   Biomedical, ITC, and Bird Medical Technologies, is based to a large extent
   upon technical performance.

   The Company is aware of one other company that has submitted a PMA
   application with the FDA for an implantable LVAS. The Company is unaware
   whether this PMA application has been accepted for filing by the FDA. Also,
   the Company is aware of one other company that has received approval by the
   FDA Advisory Panel on Circulatory System Devices and subsequent commercial
   approval for its cardiac-assist device. This is an external device that is
   positioned on the outside of the patient's chest and is intended for
   short-term use in the hospital environment. The Company is also aware that
   a total artificial heart is currently undergoing clinical trials. The
   requirement of obtaining FDA approval for commercial sale of an LVAS is a
   significant barrier to entry into the U.S. market for these devices. There
   can be no assurance, however, that FDA regulations will not change in the
   future, reducing the time and testing required for others to obtain FDA
   approval. In addition, other research groups and companies are developing
   cardiac-assist systems using alternative technologies or concepts, one or
   more of which might prove functionally equivalent to or more suitable than
   the Company's systems. Among products that have been approved for
   commercial sale, the Company competes primarily on the basis of
   performance, service capability, reimbursement status, and price.

   The Company is one of a number of competitors in the markets for
   mammography and general radiographic systems and is one of two competitors
   in the market for prone stereotactic needle biopsy systems. The Company
   competes in these markets primarily on the basis of product features,
   product performance, and reputation, as well as price and service. Many of
   the Company's radiographic products are technologically innovative, and the
   markets in which the Company competes with these products are characterized
   by rapid technological change. The Company believes that in order for it to
   be competitive in these markets it will be important for it to continue to
   be technologically innovative.

   Environmental Services

   The Company competes in the market for soil-remediation services based on
   its ability to offer customers superior protection from environmental
   liabilities using a national network of cleanup facilities. The Company
   believes that there are two other companies that operate fixed-site
   thermal-treatment facilities for soil-remediation in multiple states.
   However, the Company faces competition in local markets from landfills,
                                       20PAGE

   other treatment technologies, and from companies competing with similar
   technologies, which limits the prices that can be charged by the Company.
   Pricing is therefore a major competitive factor for the Company.

   The Company's metallurgical services business competes in specialty
   machining services. Competition is based principally on services provided,
   turnaround time, and price.

   Hundreds of independent analytical testing laboratories and consulting
   firms compete for environmental services business nationwide. Many of these
   firms use equipment and processes similar to those of the Company.
   Competition is based not only on price, but also on reputation for
   accuracy, quality, and the ability to respond rapidly to customer
   requirements. In addition, many industrial companies have their own
   in-house analytical testing capabilities. The Company believes that its
   competitive strength lies in certain niche markets within which the Company
   is recognized for its expertise.

   Advanced Technologies

   In its contract research and development business, the Company not only
   competes with other companies and institutions that perform similar
   services, but must also rely on the ability of government agencies and
   other clients to obtain allocations of research and development monies to
   fund contracts with the Company. The Company competes for its research and
   development programs principally on the basis of technical innovations. As
   government funding becomes more scarce, particularly for defense projects,
   the competition for such funding will become more intense. In addition, as
   the Company's programs move from the development stage to commercializa-
   tion, competition is expected to intensify.

   The Company's Orion division competes with several international companies.
   In the markets for the products made by its Orion division, the Company
   competes on the basis of performance, service, technology, and price.

   The Company's Thermo Sentron subsidiary competes with several international
   and regional companies in the market for its products. Thermo Sentron's
   competitors in the packaged goods market differ from those in the bulk
   materials market. The principal competitive factors in both markets are
   customer service and support, quality, reliability, and price.

   The Company's product quality assurance systems compete with chemical-
   detection systems manufactured by several companies and with other
   technologies and processes for product quality assurance. Competition in
   the markets for all of the Company's detection products is based primarily
   on performance, service, and price.

   There are a number of competing technologies for instruments that detect
   explosives and narcotics, including makers of other chemical-detection
   instruments as well as enhanced X-ray detectors. To date, the Federal
   Aviation Administration (FAA) has not required that U.S. airports and
   airlines buy advanced explosives-detection equipment. The Company believes
   that companies, if any, whose devices are required by the FAA will have a
   substantial competitive advantage in the United States.
                                       21PAGE

   The Company is a leading supplier of pulsed electromagnetic interference
   testing equipment in the U.S., and believes that it is also among the
   leading suppliers in Europe and the Pacific Rim, other than Japan. The
   Company competes in this market primarily on the basis of performance,
   technical expertise, and reputation.

   The Company estimates that there are approximately 20 companies that
   independently manufacture and market high-voltage power supply systems of
   the general type manufactured and marketed by Thermo Voltek. Thermo Voltek
   competes for both contracts and commercial sales primarily on the basis of
   technical expertise, product performance, and reputation.

   The Company's Coleman Research subsidiary has numerous public and private
   competitors in its various market segments. Coleman Research competes
   primarily on the basis of price, technological performance, technical
   expertise, and reputation.

        (xi) Research and Development

   During 1995, 1994, and 1993, the Company expended $266,104,000,
   $229,200,000, and $176,316,000, respectively, on research and development.
   Of these amounts, $167,120,000, $149,645,000, and $116,733,000,
   respectively, were sponsored by customers and $98,984,000, $79,555,000, and
   $59,583,000, respectively, were Company-sponsored. Approximately 930
   professional employees were engaged full-time in research and development
   activities at December 30, 1995.

        (xii) Environmental Protection Regulations

   The Company believes that compliance with federal, state, and local
   environmental protection regulations will not have a material adverse
   effect on its capital expenditures, earnings, or competitive position.

        (xiii) Number of Employees

   At December 30, 1995, the Company employed approximately 14,400 persons.

   (d)  Financial Information about Exports by Domestic Operations and about
        Foreign Operations

   Financial information about exports by domestic operations and about
   foreign operations is summarized in Note 15 to Consolidated Financial
   Statements in the Registrant's 1995 Annual Report to Shareholders and is
   incorporated herein by reference.




                                       22PAGE

   (e)  Executive Officers of the Registrant

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

   George N. Hatsopoulos(1)      69   Chairman of the Board, President, Chief
                                       Executive Officer, and Director (1956)
   John N. Hatsopoulos(1)        61   Executive Vice President and Chief
                                       Financial Officer (1968)
   Robert C. Howard              65   Executive Vice President (1968)
   Peter G. Pantazelos           65   Executive Vice President (1968)
   Arvin H. Smith                66   Executive Vice President (1983)
   William A. Rainville          54   Senior Vice President (1993)
   John W. Wood Jr.              52   Senior Vice President (1995)
   Paul F. Kelleher              53   Vice President, Finance and
                                       Administration (1982)

   (1) George N. Hatsopoulos and John N. Hatsopoulos are brothers.

   Each executive officer serves until his successor is chosen or appointed
   and qualified or until earlier resignation, death, or removal. All
   executive officers, except Messrs. Rainville and Wood, have held comparable
   positions with the Company for at least the last five years. Mr. Rainville
   has been a Senior Vice President of the Company since 1993 and was a Vice
   President of the Company from 1986 to 1993. Mr. Wood has been President and
   Chief Executive Officer of Thermedics Inc. since 1984 and was a Vice
   President of the Company from 1994 to 1995, prior to becoming a Senior Vice
   President of the Company in 1995.


   Item 2.  Properties

   The location and general character of the Company's principal properties by
   industry segment as of December 30, 1995, are as follows:

   Instruments

   The Company owns approximately 1,446,000 square feet of office,
   engineering, laboratory, and production space, principally in California,
   Colorado, Wisconsin, Germany, and England, and leases approximately
   1,596,000 square feet of office, engineering, laboratory, and production
   space principally in California, Connecticut, Massachusetts, Ohio, Texas,
   Wisconsin, and England, under leases expiring from 1996 to 2017.

   Alternative-energy Systems

   The Company owns approximately 358,000 square feet of office, engineering,
   and production space, principally in Pennsylvania and England, and leases
   approximately 320,000 square feet of office, engineering, laboratory, and
   production space principally in Illinois and Michigan, under leases
   expiring from 1996 to 2017.

                                       23PAGE

   The Company operates four independent power plants in California, Maine,
   and New Hampshire, under leases expiring from 2000 to 2010. The Company
   owns three independent power plants in New Hampshire and California and a
   waste-recycling facility in California.

   Process Equipment

   The Company owns approximately 1,160,000 square feet of office, laboratory,
   and production space, principally in Connecticut, Massachusetts, New York,
   France, and England, and leases approximately 308,000 square feet of
   office, engineering, and production space principally in Michigan and
   Wisconsin, under leases expiring from 1996 to 2004.

   Biomedical Products

   The Company owns approximately 248,000 square feet of office and production
   space in California, Connecticut, and New Jersey, and leases approximately
   587,000 square feet of office, engineering, laboratory, and production
   space in California, Illinois, New York, and Texas, under leases expiring
   from 1996 to 2009.

   Environmental Services

   The Company owns approximately 835,000 square feet of office, laboratory,
   and production space, principally in California, Pennsylvania, Minnesota,
   and the Netherlands, and leases approximately 540,000 square feet of
   office, engineering, laboratory, and production space principally in
   California, Massachusetts, New Hampshire, New Mexico, and Pennsylvania,
   under leases expiring from 1996 to 2008.

   The Company owns approximately 16 acres of land from which it provides
   soil-remediation and fluid-recycling services in Arizona and Washington and
   leases approximately 96 acres of land from which it provides soil-recycling
   services in Maryland and South Carolina.

   Advanced Technologies and Corporate Headquarters

   The Company owns approximately 190,000 square feet of office space in
   Massachusetts and New York, and leases approximately 1,119,000 square feet
   of office, engineering, and laboratory space principally in Alabama,
   California, Florida, Massachusetts, and Minnesota, under leases expiring
   from 1996 to 2008.

   The Company believes that its facilities are in good condition and are
   suitable and adequate to meet its current needs, and that suitable
   replacements are available on commercially reasonable terms for any leases
   that expire in 1996 in the event that the Company is unable to renew such
   leases on reasonable terms.


                                       24PAGE

   Item 3.  Legal Proceedings

   The Company has participated in the operation of the Dade County Downtown
   Government Center cogeneration facility in Miami, Florida, through a 50/50
   joint venture of subsidiaries of the Company and Rolls-Royce, Inc. This
   facility and the joint venture are involved in regulatory and other legal
   proceedings at the Federal Energy Regulatory Commission, the Florida Public
   Service Commission and in court. See the information pertaining to this
   matter in Note 7 to Consolidated Financial Statements, and under the
   caption "Management's Discussion and Analysis of Financial Condition and
   Results of Operations," in the Registrant's 1995 Annual Report to
   Shareholders (filed as Exhibit 13 to this Annual Report on Form 10-K),
   which information is incorporated herein by reference.

   Certain subsidiaries of the Company have been notified that the U.S.
   Environmental Protection Agency (EPA) has determined that a release or a
   substantial threat of a release of a hazardous substance, as defined in the
   Comprehensive Environmental Response Compensation and Liability Act of 1980
   (CERCLA or the Superfund law), occurred at sites to which chemical or other
   wastes generated by the manufacturing operations of these companies may
   have been sent. These notifications generally also allege that these
   companies may be potentially responsible parties with respect to the
   remedial actions needed to control or clean up any such releases. Under
   CERCLA, responsible parties can include current and previous owners of the
   site, generators of hazardous substances disposed of at the site, and
   transporters of hazardous substances to the site. Each responsible party
   can be jointly and severally liable, without regard to fault or negligence,
   for all costs associated with site remediation. In each instance the
   Company believes that it is one of several companies that received such
   notification and who may likewise be held liable for any such remedial
   costs.

   The Company is also involved in situations under state environmental laws
   with respect to certain other sites where remediation may be required. The
   Company is conducting investigative or remediation activities at these
   sites pursuant to arrangements with state environmental agencies.

   The Company evaluates its potential liability as a responsible party for
   these environmental matters on an ongoing basis subject to factors such as
   the estimated remediation costs, the nature and duration of the Company's
   involvement with the site, the financial strength of other potentially
   responsible parties, and the availability of indemnification from previous
   owners of acquired businesses. Estimated liabilities are accrued in
   accordance with Statement of Financial Accounting Standards No. 5,
   "Accounting for Contingencies." To date, the Company has not incurred any
   significant liability with respect to any of these sites and anticipates
   that future liabilities related to sites where the Company is currently a
   potentially responsible party or is otherwise conducting investigative or
   remediation activities, will not have a material adverse effect on its
   business, results of operations, or financial position.


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

   Not applicable.
                                       25PAGE

                                     PART II


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

   Information concerning the market and market price for the Registrant's
   common stock, $1.00 par value, and related matters, is included under the
   sections labeled "Common Stock Market Information" and "Dividend Policy" in
   the Registrant's 1995 Annual Report to Shareholders and is incorporated
   herein by reference.


   Item 6.  Selected Financial Data

   The information required under this item is included under the sections
   "Ten Year Financial Summary" and "Dividend Policy" in the Registrant's 1995
   Annual Report to Shareholders and is incorporated herein by reference.


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

   The information required under this item is included under the heading
   "Management's Discussion and Analysis of Financial Condition and Results of
   Operations" in the Registrant's 1995 Annual Report to Shareholders and is
   incorporated herein by reference.


   Item 8.  Financial Statements and Supplementary Data

   The Registrant's Consolidated Financial Statements as of December 30, 1995,
   are included in the Registrant's 1995 Annual Report to Shareholders and are
   incorporated herein by reference.


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

   Not Applicable.








                                       26PAGE

                                    PART III


   Item 10.  Directors and Executive Officers of the Registrant

   The information concerning directors required under this item is
   incorporated herein by reference from the material contained under the
   caption "Election of Directors" in the Registrant's definitive proxy
   statement to be filed with the Securities and Exchange Commission pursuant
   to Regulation 14A, not later than 120 days after the close of the fiscal
   year. The information concerning delinquent filers pursuant to Item 405 of
   Regulation S-K is incorporated herein by reference from the material
   contained under the heading "Disclosure of Certain Late Filings" under the
   caption "Stock Ownership" in the Registrant's definitive proxy statement to
   be filed with the Securities and Exchange Commission pursuant to Regulation
   14A, not later than 120 days after the close of the fiscal year.


   Item 11.  Executive Compensation

   The information required under this item is incorporated herein by
   reference from the material contained under the caption "Executive
   Compensation" in the Registrant's definitive proxy statement to be filed
   with the Securities and Exchange Commission pursuant to Regulation 14A, not
   later than 120 days after the close of the fiscal year.


   Item 12.  Security Ownership of Certain Beneficial Owners and Management

   The information required under this item is incorporated herein by
   reference from the material contained under the caption "Stock Ownership"
   in the Registrant's definitive proxy statement to be filed with the
   Securities and Exchange Commission pursuant to Regulation 14A, not later
   than 120 days after the close of the fiscal year.


   Item 13.  Certain Relationships and Related Transactions

   The information required under this item is incorporated herein by
   reference from the material contained under the caption "Relationship with
   Affiliates" in the Registrant's definitive proxy statement to be filed with
   the Securities and Exchange Commission pursuant to Regulation 14A, not
   later than 120 days after the close of the fiscal year.







                                       27PAGE

                                     PART IV


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

   (a), (d)  Financial Statements and Schedules

             (1)  The financial statements set forth in the list below are
                  filed as part of this Report.
             (2)  The financial statement schedule set forth in the list below
                  is filed as part of this Report.
             (3)  Exhibits filed herewith or incorporated herein by reference
                  are set forth in Item 14(c) below.

             List of Financial Statements and Schedules Referenced in this
             Item 14

             Information incorporated by reference from Exhibit 13 filed
             herewith:

                  Consolidated Statement of Income
                  Consolidated Balance Sheet
                  Consolidated Statement of Cash Flows
                  Consolidated Statement of Shareholders' Investment
                  Notes to Consolidated Financial Statements
                  Report of Independent Public Accountants

             Financial Schedule included herewith:

             Schedule II: Valuation and Qualifying Accounts

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

   (b)  Reports on Form 8-K

        The Company filed a Current Report on Form 8-K dated November 28, 1995
   announcing that it had entered into an agreement to sell its 4 1/4%
   convertible subordinated debentures due 2003.

   (c)  Exhibits

        See Exhibit Index on the page immediately preceding exhibits.







                                       28PAGE

                                   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 11, 1996

                                         THERMO ELECTRON CORPORATION

                                         By: George N. Hatsopoulos
                                             ---------------------
                                             George N. Hatsopoulos
                                             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 11, 1996.

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

 By: George N. Hatsopoulos               President, Chief Executive Officer,
     -----------------------------        Chairman of the Board and Director
     George N. Hatsopoulos                

 By: John N. Hatsopoulos                 Executive Vice President and Chief
     -----------------------------        Financial Officer
     John N. Hatsopoulos                  

 By: Paul F. Kelleher                    Vice President, Finance and Adminis-
     -----------------------------        tration (Chief Accounting officer)
     Paul F. Kelleher                     

 By: John M. Albertine                   Director
     -----------------------------
     John M. Albertine

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

 By: Elias P. Gyftopoulos                Director
     -----------------------------
     Elias P. Gyftopoulos

 By: Frank Jungers                       Director
     -----------------------------
     Frank Jungers

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

 By: Frank E. Morris                     Director
     -----------------------------
     Frank E. Morris

 By: Donald E. Noble                     Director
     -----------------------------
     Donald E. Noble

 By: Hutham S. Olayan                    Director
     -----------------------------
     Hutham S. Olayan

 By: Roger D. Wellington                 Director
     -----------------------------
     Roger D. Wellington
                                       29PAGE

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


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

        We have audited in accordance with generally accepted auditing
   standards, 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 15, 1996 (except with respect to the matters discussed in Note 16
   as to which the date is March 1, 1996). 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 28 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 15, 1996











                                       30PAGE

   SCHEDULE II


                           Thermo Electron Corporation

                        Valuation and Qualifying Accounts
                                 (In thousands)


                          Year Ended December 30, 1995

                 Balance,   Charged
                   Begin-  to Costs            Accounts  Accounts   Balance,
                  ning of       and              Recov-   Written    End of
                     Year  Expenses  Other(a)      ered       Off      Year
   ------------------------------------------------------------------------

   Allowance for
     Doubtful
     Accounts     $21,664   $ 5,473   $ 6,886   $   420   $(6,422)  $28,021
   ========================================================================


                          Year Ended December 31, 1994

                 Balance,   Charged
                   Begin-  to Costs            Accounts  Accounts   Balance,
                  ning of       and              Recov-   Written    End of
                     Year  Expenses  Other(a)      ered       Off      Year
   ------------------------------------------------------------------------

   Allowance for
     Doubtful
     Accounts     $14,174   $ 4,225   $ 7,646   $   268   $(4,649)  $21,664
   ========================================================================


                           Year Ended January 1, 1994

                 Balance,   Charged
                   Begin-  to Costs            Accounts  Accounts   Balance,
                  ning of       and              Recov-   Written    End of
                     Year  Expenses  Other(a)      ered       Off      Year
   ------------------------------------------------------------------------

   Allowance for
    Doubtful
    Accounts      $11,341   $ 2,720   $ 1,532   $ 1,961   $(3,380)  $14,174
   ========================================================================

   (a)  Allowances of businesses acquired during the year as described in Note
        3 to Consolidated Financial Statements in the Registrant's 1995 Annual
        Report to Shareholders.
                                       31PAGE

                                  EXHIBIT INDEX

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

      2.1       Asset and Stock Purchase Agreement among the
                 Registrant, Thermo Instrument Corporation and Fisons
                 plc dated November 1, 1995 (filed as Exhibit 2.3 to
                 Thermo Instrument's Annual Report on Form 10-K for the
                 fiscal year ended December 31, 1994 and Exhibit 2 to
                 Thermo Instrument's Quarterly Report on Form 10-Q for
                 the quarter ended September 30, 1995 [File No. 1-9786]
                 and incorporated herein by reference). Pursuant to Item
                 601(b)(2) of Regulation S-K, schedules to this
                 Agreement have been omitted. The Company hereby
                 undertakes to furnish supplementally a copy of such
                 schedules to the Commission upon request.

      3.1       Restated Certificate of Incorporation of the
                 Registrant, as amended (filed as Exhibit 3(i) to the
                 Registrant's Quarterly Report on Form 10-Q for the
                 quarter ended July 2, 1994 [File No. 1-8002] and
                 incorporated herein by reference).

      3.2       By-laws of the Registrant, as amended (filed as Exhibit
                 3.2 to the Registrant's Annual Report on Form 10-K for
                 the fiscal year ended January 1, 1994 [File No. 1-8002]
                 and incorporated herein by reference).

      4.1       Fiscal Agency Agreement dated July 29, 1992 between the
                 Registrant and Chemical Bank, pertaining to the
                 Registrant's 4 5/8% Senior Convertible Debentures due
                 1997 (filed as Exhibit 19 to the Registrant's Quarterly
                 Report on Form 10-Q for the quarter ended June 27, 1992
                 [File No. 1-8002] and incorporated herein by
                 reference).

                Fiscal Agency Agreement dated as of April 15, 1994
                 between the Registrant and Chemical Bank, pertaining to
                 the Registrant's 5% Senior Convertible Debentures due
                 2001 (filed as Exhibit 4.1 to the Registrant's
                 Quarterly Report on Form 10-Q for the quarter ended
                 April 2, 1994 [File No. 1-8002] and incorporated herein
                 by reference).

                Fiscal Agency Agreement dated as of January 3, 1996
                 between the Registrant and Chemical Bank pertaining to
                 the Registrant's 4 1/4% Subordinated Convertible
                 Debentures due 2003.

                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.

                                       32PAGE

                                  EXHIBIT INDEX

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

      4.2       Rights Agreement dated as of January 19, 1996 between
                 the Registrant and The First National Bank of Boston,
                 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 1 to the
                 Registrant's Registration Statement on Form 8-A,
                 declared effective by the Commission on January 31,
                 1996 [File No. 1-8002] and incorporated herein by
                 reference).

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

     10.2       Form of Severance Benefit Agreement with officers
                 (filed as Exhibit 10.15 to the Registrant's Annual
                 Report on Form 10-K for the fiscal year ended December
                 29, 1990 [File No. 1-8002] and incorporated herein by
                 reference).

     10.3       Form of Indemnification Agreement with directors and
                 officers (filed as Exhibit 10.16 to the Registrant's
                 Annual Report on Form 10-K for the fiscal year ended
                 December 29, 1990 [File No. 1-8002] and incorporated
                 herein by reference).

     10.4       Loan and Reimbursement Agreement dated as of December
                 1, 1991 among North County Resource Recovery
                 Associates; Union Bank of Switzerland; National
                 Westminster Bank PLC and Banque Paribas, New York
                 Branch, as lead managers; Credit Local de France as
                 co-lead manager; and Union Bank of Switzerland as
                 issuing bank and as agent (filed as Exhibit 10.39 to
                 the Registrant's Annual Report on Form 10-K for the
                 fiscal year ended January 2, 1993 [File No. 1-8002] and
                 incorporated herein by reference).

     10.5       Amended and Restated Reimbursement Agreement dated as
                 of December 31, 1993 among Chemical Trust Company of
                 California as Owner Trustee; Delano Energy Company
                 Inc.; ABN AMRO Bank N.V., Boston Branch, for itself and
                 as Agent; The First National Bank of Boston, as
                 Co-agent; Barclays Bank PLC, as Co-agent; Societe
                 Generale, as Co-agent; and BayBank, as Lead Manager
                 (filed as Exhibit 10.5 to the Registrant's Annual
                 Report on Form 10-K for the fiscal year ended January
                 1, 1994 [File No. 1-8002] and incorporated herein by
                 reference).
                                       33PAGE

                                  EXHIBIT INDEX

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

     10.6       Amended and Restated Participation Agreement dated as
                 of December 31, 1991 among Delano Energy Company Inc.;
                 Thermo Ecotek Corporation (formerly Thermo Energy
                 Systems Corporation); Chemical Trust Company of
                 California, as Owner Trustee; ABN AMRO Bank N.V.,
                 Boston Branch, as Co-agent; Bank of Montreal, as
                 Co-agent; Barclays Bank PLC, as Co-agent; Society
                 Generale, as Co-agent; BayBank, as Lead Manager; and
                 ABN AMRO Bank N.V., Cayman Island Branch, and joined in
                 by the Registrant (filed as Exhibit 10.6 to the
                 Registrant's Annual Report on Form 10-K for the fiscal
                 year ended January 1, 1994 [File No. 1-8002] and
                 incorporated herein by reference).

     10.7       Turnkey Engineering, Procurement, Construction and
                 Initial Operation Agreement for a deinking pulp
                 facility dated as of November 1, 1994 between the
                 Registrant, as contractor, and Great Lakes Pulp
                 Partners I, L.P., as owner (filed as Exhibit 10.7 to
                 the Registrant's Annual Report on Form 10-K for the
                 fiscal year ended December 31, 1994 [File No. 1-8002]
                 and incorporated herein by reference). Pursuant to Item
                 601(b)(2) of Regulation S-K, schedules to this
                 Agreement have been omitted. The Company hereby
                 undertakes to furnish supplementally a copy of such
                 schedules to the Commission upon request.

   10.8 - 10.20 Reserved.

     10.21      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 herein
                 by reference). (Maximum number of shares issuable in
                 the aggregate under this plan and the Registrant's
                 Nonqualified Stock Option Plan is 9,035,156 shares,
                 after adjustment to reflect share increases approved in
                 1984 and 1986, share decrease approved in 1989, and
                 3-for-2 stock splits effected in October 1986, October
                 1993 and May 1995).

     10.22      Nonqualified Stock Option Plan of the Registrant (filed
                 as Exhibit 4(e) to the Registrant's Registration
                 Statement on Form S-8 [Reg. No. 33-8993] and
                 incorporated herein by reference). (Plan amended in
                 1984 to extend expiration date to December 14, 1994;
                 maximum number of shares issuable in the aggregate
                 under this plan and the Registrant's Incentive Stock
                 Option Plan is 9,035,156 shares, after adjustment to
                 reflect share increases approved in 1984 and 1986,
                 share decrease approved in 1989, and 3-for-2 stock
                 splits effected in October 1986, October 1993 and May
                 1995).
                                       34PAGE

                                  EXHIBIT INDEX

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

     10.23      Deferred Compensation for Directors of the Registrant
                 (filed as Exhibit 10.5 to the Registrant's Annual
                 Report on Form 10-K for the fiscal year ended January
                 3, 1987 [File No. 1-8002] and incorporated herein by
                 reference). (Maximum number of shares issuable is
                 452,812 shares, after adjustment to reflect share
                 increases approved in 1986 and 1992 and 3-for-2 stock
                 splits effected in October 1986, October 1993 and May
                 1995).

     10.24      Equity Incentive Plan of the Registrant (filed as
                 Exhibit 10.1 to the Registrant's Quarterly Report on
                 Form 10-Q for the quarter ended July 2, 1994 [File No.
                 1-8002] and incorporated herein by reference). (Plan
                 amended in 1989 to restrict exercise price for SEC
                 reporting persons to not less than 50% of fair market
                 value or par value; maximum number of shares issuable
                 is 7,050,000 shares, after adjustment to reflect
                 3-for-2 stock splits effected in October 1993 and May
                 1995 and share increase approved in 1994).

     10.25      Amended and Restated Directors' Stock Option Plan of
                 the Registrant (filed as Exhibit 10.25 to the
                 Registrant's Annual Report on Form 10-K for the fiscal
                 year ended December 31, 1994 [File No. 1-8002] and
                 incorporated herein by reference).

     10.26      Thermo Electron Corporation - Thermedics Inc.
                 Nonqualified Stock Option Plan (filed as Exhibit 4 to a
                 Registration Statement on Form S-8 of Thermedics [Reg.
                 No. 2-93747] and incorporated herein by reference).
                 (Maximum number of shares issuable is 450,000 shares,
                 after adjustment to reflect share increase approved in
                 1988, 5-for-4 stock split effected in January 1985,
                 4-for-3 stock split effected in September 1985, and
                 3-for-2 stock splits effected in October 1986 and
                 November 1993).

     10.27      Thermo Electron Corporation - Thermo Instrument Systems
                 Inc. (formerly Thermo Environmental Corporation)
                 Nonqualified Stock Option Plan (filed as Exhibit 4(c)
                 to a Registration Statement on Form S-8 of Thermo
                 Instrument [Reg. No. 33-8034] and incorporated herein
                 by reference). (Maximum number of shares issuable is
                 421,875 shares, after adjustment to reflect 3-for-2
                 stock splits effected in July 1993 and April 1995 and
                 5-for-4 stock split effected in December 1995).

                                       35PAGE

                                  EXHIBIT INDEX

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

     10.28      Thermo Electron Corporation - Thermo Instrument Systems
                 Inc. Nonqualified Stock Option Plan (filed as Exhibit
                 10.12 to the Registrant's Annual Report on Form 10-K
                 for the fiscal year ended January 3, 1987 [File No.
                 1-8002] and incorporated herein by reference). (Maximum
                 number of shares issuable is 600,285 shares, after
                 adjustment to reflect share increase approved in 1988,
                 3-for-2 stock splits effected in January 1988, July
                 1993 and April 1995 and 5-for-4 stock split effected in
                 December 1995).

     10.29      Thermo Electron Corporation - Thermo TerraTech Inc.
                 (formerly Thermo Process Systems Inc.) Nonqualified
                 Stock Option Plan (filed as Exhibit 10.13 to the
                 Registrant's Annual Report on Form 10-K for the fiscal
                 year ended January 3, 1987 [File No. 1-8002] and
                 incorporated herein by reference). (Maximum number of
                 shares issuable is 108,000 shares, after adjustment to
                 reflect 6-for-5 stock splits effected in July 1988 and
                 March 1989 and 3-for-2 stock split effected in
                 September 1989).

     10.30      Thermo Electron Corporation - Thermo Power Corporation
                 (formerly Tecogen Inc.) Nonqualified Stock Option Plan
                 (filed as Exhibit 10.14 to the Registrant's Annual
                 Report on Form 10-K for the fiscal year ended January
                 3, 1987 [File No. 1-8002] and incorporated herein by
                 reference). (Amended in September 1995 to extend the
                 plan expiration date to December 31, 2005).

     10.31      Thermo Electron Corporation - Thermo Cardiosystems Inc.
                 Nonqualified Stock Option Plan (filed as Exhibit 10.11
                 to the Registrant's Annual Report on Form 10-K for the
                 fiscal year ended December 29, 1990 [File No. 1-8002]
                 and incorporated herein by reference). (Maximum number
                 of shares issuable is 130,500 shares, after adjustment
                 to reflect share increases approved in 1990 and 1992,
                 3-for-2 stock split effected in January 1990, 5-for-4
                 stock split effected in May 1990, and 2-for-1 stock
                 split effected in November 1993).

     10.32      Thermo Electron Corporation - Thermo Ecotek Corporation
                 (formerly Thermo Energy Systems Corporation)
                 Nonqualified Stock Option Plan (filed as Exhibit 10.12
                 to the Registrant's Annual Report on Form 10-K for the
                 fiscal year ended December 29, 1990 [File No. 1-8002]
                 and incorporated herein by reference).

                                       36PAGE

                                  EXHIBIT INDEX

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

     10.33      Thermo Electron Corporation - ThermoTrex Corporation
                (formerly Thermo Electron Technologies Corporation)
                Nonqualified Stock Option Plan (filed as Exhibit 10.13
                to the Registrant's Annual Report on Form 10-K for the
                fiscal year ended December 29, 1990 [File No. 1-8002]
                and incorporated herein by reference). (Maximum number
                of shares issuable is 180,000 shares, after adjustment
                to reflect 3-for-2 stock split effected in
                October 1993).

     10.34      Thermo Electron Corporation - Thermo Fibertek Inc.
                Nonqualified Stock Option Plan (filed as Exhibit 10.14
                to the Registrant's Annual Report on Form 10-K for the
                fiscal year ended December 28, 1991 [File No. 1-8002]
                and incorporated herein by reference). (Maximum number
                of shares issuable is 600,000 shares, after adjustment
                to reflect 2-for-1 stock split effected in September
                1992 and 3-for-2 stock split effected in September
                1995).

     10.35      Thermo Electron Corporation - Thermo Voltek Corp.
                 (formerly Universal Voltronics Corp.) Nonqualified
                 Stock Option Plan (filed as Exhibit 10.17 to the
                 Registrant's Annual Report on Form 10-K for the fiscal
                 year ended January 2, 1993 [File No. 1-8002] and
                 incorporated herein by reference). (Maximum number of
                 shares issuable is 57,500 shares, after adjustment to
                 reflect 3-for-2 stock split effected in November 1993
                 and share increase approved in September 1995).

     10.36      Thermo Electron Corporation - Thermo BioAnalysis
                 Corporation Nonqualified Stock Option Plan (filed as
                 Exhibit 10.31 to Thermo Power's Annual Report on Form
                 10-K for the fiscal year ended September 30, 1995 [File
                 No. 1-10573] and incorporated herein by reference).

     10.37      Thermo Electron Corporation - ThermoLyte Corporation
                 Nonqualified Stock Option Plan (filed as Exhibit 10.32
                 to Thermo Power's Annual Report on Form 10-K for the
                 fiscal year ended September 30, 1995 [File No. 1-10573]
                 and incorporated herein by reference).

     10.38      Thermo Electron Corporation - Thermo Remediation Inc.
                 Nonqualified Stock Option Plan (filed as Exhibit 10.33
                 to Thermo Power's Annual Report on Form 10-K for the
                 fiscal year ended September 30, 1995 [File No. 1-10573]
                 and incorporated herein by reference).

                                       37PAGE

                                  EXHIBIT INDEX

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

     10.39      Thermo Electron Corporation - ThermoSpectra Corporation
                 Nonqualified Stock Option Plan (filed as Exhibit 10.34
                 to Thermo Power's Annual Report on Form 10-K for the
                 fiscal year ended September 30, 1995 [File No. 1-10573]
                 and incorporated herein by reference).

     10.40      Thermo Electron Corporation - ThermoLase Corporation
                 Nonqualified Stock Option Plan (filed as Exhibit 10.35
                 to Thermo Power's Annual Report on Form 10-K for the
                 fiscal year ended September 30, 1995 [File No. 1-10573]
                 and incorporated herein by reference).

     10.41      Thermo Electron Corporation - ThermoQuest Corporation
                 Nonqualified Stock Option Plan (filed as Exhibit 10.41
                 to Thermo Cardiosystems' Annual Report on Form 10-K for
                 the fiscal year ended December 30, 1995 [File No.
                 1-10114] and incorporated herein by reference).

     10.42      Thermo Electron Corporation - Thermo Optek Corporation
                 Nonqualified Stock Option Plan (filed as Exhibit 10.42
                 to Thermo Cardiosystems' Annual Report on Form 10-K for
                 the fiscal year ended December 30, 1995 [File No.
                 1-10114] and incorporated herein by reference).

     10.43      Thermo Electron Corporation - Thermo Sentron Inc.
                 Nonqualified Stock Option Plan (filed as Exhibit 10.43
                 to Thermo Cardiosystems' Annual Report on Form 10-K for
                 the fiscal year ended December 30, 1995 [File No.
                 1-10114] and incorporated herein by reference).

     10.44      Thermo Electron Corporation - Trex Medical Corporation
                 Nonqualified Stock Option Plan (filed as Exhibit 10.44
                 to Thermo Cardiosystems' Annual Report on Form 10-K for
                 the fiscal year ended December 30, 1995 [File No.
                 1-10114] and incorporated herein by reference).

     10.45      Thermo Ecotek Corporation (formerly Thermo Energy
                 Systems Corporation) Incentive Stock Option Plan (filed
                 as Exhibit 10.18 to the Registrant's Annual Report on
                 Form 10-K for the fiscal year ended January 2, 1993
                 [File No. 1-8002] and incorporated herein by
                 reference). (Maximum number of shares issuable in the
                 aggregate under this plan and the Thermo Ecotek
                 Nonqualified Stock Option Plan is 900,000 shares, after
                 adjustment to reflect share increase approved in
                 December 1993).


                                       38PAGE

                                  EXHIBIT INDEX

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

     10.46      Thermo Ecotek Corporation (formerly Energy Systems
                 Corporation) Nonqualified Stock Option Plan (filed as
                 Exhibit 10.19 to the Registrant's Annual Report on
                 Form 10-K for the fiscal year ended January 2, 1993
                 [File No. 1-8002] and incorporated herein by
                 reference). (Maximum number of shares issuable in the
                 aggregate under this plan and the Thermo Ecotek
                 Incentive Stock Option Plan is 900,000 shares, after
                 adjustment to reflect share increase approved in
                 December 1993).

     10.47      Thermo Ecotek Corporation (formerly Thermo Energy
                 Systems Corporation) Equity Incentive Plan (filed as
                 Exhibit 10.39 to Thermo Instrument's Annual Report on
                 Form 10-K for the fiscal year ended December 31, 1994
                 [File No. 1-9786] and incorporated herein by
                 reference).

     10.48      Thermedics Inc. Incentive Stock Option Plan (filed as
                 Exhibit 10(d) to Thermedics' Registration Statement on
                 Form S-1 [Reg. No. 33-84380] and incorporated herein by
                 reference). (Maximum number of shares issuable in the
                 aggregate under this plan and the Thermedics
                 Nonqualified Stock Option Plan is 1,931,923 shares,
                 after adjustment to reflect share increases approved in
                 1986 and 1992, 5-for-4 stock split effected in January
                 1985, 4-for-3 stock split effected in September 1985
                 and 3-for-2 stock splits effected in October 1986 and
                 November 1993).

     10.49      Thermedics Inc. Nonqualified Stock Option Plan (filed
                 as Exhibit 10(e) to Thermedics' Registration Statement
                 on Form S-1 [Reg. No. 33-84380] and incorporated herein
                 by reference). (Maximum number of shares issuable in
                 the aggregate under this plan and the Thermedics
                 Incentive Stock Option Plan is 1,931,923 shares, after
                 adjustment to reflect share increases approved in 1986
                 and 1992, 5-for-4 stock split effected in January 1985,
                 4-for-3 stock split effected in September 1985 and
                 3-for-2 stock splits effected in October 1986 and
                 November 1993).

     10.50      Thermedics Inc. Equity Incentive Plan (filed as
                 Appendix A to the Proxy Statement dated May 10, 1993 of
                 Thermedics [File No. 1-9567] and incorporated herein by
                 reference). (Maximum number of shares issuable is
                 1,500,000 shares, after adjustment to reflect 3-for-2
                 stock split effected in November 1993).

     10.51      Thermedics Inc. - Thermo Sentron Inc. Nonqualified
                 Stock Option Plan (filed as Exhibit 10.51 to Thermo
                 Cardiosystems' Annual Report on Form 10-K for the
                 fiscal year ended December 30, 1995 [File No. 1-10114]
                 and incorporated herein by reference).
                                       39PAGE

                                  EXHIBIT INDEX

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

     10.52      Thermedics Inc. - Thermedics Detection Inc.
                 Nonqualified Stock Option Plan (filed as Exhibit 10.20
                 to the Registrant's Annual Report on Form 10-K for the
                 fiscal year ended January 2, 1993 [File No. 1-8002] and
                 incorporated herein by reference).

     10.53       Thermedics Detection Inc. Equity Incentive Plan (filed as
                 Exhibit 10.69 to Thermo Instrument's Annual Report on Form
                 10-K for the fiscal year ended December 31, 1994 [File No.
                 1-9786] and incorporated herein by reference).

     10.54      Thermo Cardiosystems Inc. Incentive Stock Option Plan
                 (filed as Exhibit 10(f) to Thermo Cardiosystems'
                 Registration Statement on Form S-1 [Reg. No. 33-25144]
                 and incorporated herein by reference). (Maximum number
                 of shares issuable in the aggregate under this plan and
                 the Thermo Cardiosystems Nonqualified Stock Option Plan
                 is 1,143,750 shares, after adjustment to reflect share
                 increase approved in 1992, 3-for-2 stock split effected
                 in January 1990, 5-for-4 stock split effected in May
                 1990, and 2-for-1 stock split effected in November
                 1993).

     10.55      Thermo Cardiosystems Inc. Nonqualified Stock Option
                 Plan (filed as Exhibit 10(g) to Thermo Cardiosystems'
                 Registration Statement on Form S-1 [Reg. No. 33-25144]
                 and incorporated herein by reference). (Maximum number
                 of shares issuable in the aggregate under this plan and
                 the Thermo Cardiosystems Incentive Stock Option Plan is
                 1,143,750 shares, after adjustment to reflect share
                 increase approved in 1992, 3-for-2 stock split effected
                 in January 1990, 5-for-4 stock split effected in May
                 1990, and 2-for-1 stock split effected in November
                 1993).

     10.56      Thermo Cardiosystems Inc. Equity Incentive Plan (filed
                 as Exhibit 10.46 to Thermo Instrument's Annual Report
                 on Form 10-K for the fiscal year ended December 31,
                 1994 [File No. 1-9786] and incorporated herein by
                 reference).

     10.57      Thermo Voltek Corp. (formerly Universal Voltronics
                 Corp.) 1985 Stock Option Plan (filed as Exhibit 10.14
                 to Thermo Voltek's Annual Report on Form 10-K for the
                 fiscal year ended June 30, 1985 [File No. 0-8245] and
                 incorporated herein by reference). (Maximum number of
                 shares issuable is 200,000 shares, after adjustment to
                 reflect 1-for-3 reverse stock split effected in
                 November 1992 and 3-for-2 stock split effected in
                 November 1993).
                                       40PAGE

                                  EXHIBIT INDEX

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

     10.58      Thermo Voltek Corp. (formerly Universal Voltronics
                 Corp.) 1990 Stock Option Plan (filed as Exhibit 10.2 to
                 Thermo Voltek's Annual Report on Form 10-K for the
                 fiscal year ended June 30, 1990 [File No. 1-10574] and
                 incorporated herein by reference). (Maximum number of
                 shares issuable is 400,000 shares, after adjustment to
                 reflect share increases in 1993 and 1994, 1-for-3
                 reverse stock split effected in November 1992 and
                 3-for-2 stock split effected in November 1993).

     10.59      Thermo Voltek Corp. Equity Incentive Plan (filed as
                 Exhibit 10.49 to Thermo Instrument's Annual Report on
                 Form 10-K for the fiscal year ended December 31, 1994
                 [File No. 1-9786] and incorporated herein by
                 reference).

     10.60      Thermo Sentron Inc. Equity Incentive Plan (filed as
                 Exhibit 10.57 to Thermo Cardiosystems' Annual Report on
                 Form 10-K for the fiscal year ended December 30, 1995
                 [File No. 1-10114] and incorporated herein by
                 reference).

     10.61      Thermo Instrument Systems Inc. Incentive Stock Option
                 Plan (filed as Exhibit 10(c) to Thermo Instrument's
                 Registration Statement on Form S-1 [Reg. No. 33-6762]
                 and incorporated herein by reference). (Maximum number
                 of shares issuable in the aggregate under this plan and
                 the Thermo Instrument Nonqualified Stock Option Plan is
                 2,812,500 shares, after adjustment to reflect share
                 increase approved in 1990, 3-for-2 stock splits
                 effected in January 1988, July 1993 and April 1995 and
                 5-for-4 stock split effected in December 1995).

     10.62      Thermo Instrument Systems Inc. Nonqualified Stock
                 Option Plan (filed as Exhibit 10(d) to Thermo
                 Instrument's Registration Statement on Form S-1 [Reg.
                 No. 33-6762] and incorporated herein by reference).
                 (Maximum number of shares issuable in the aggregate
                 under this plan and the Thermo Instrument Incentive
                 Stock Option Plan is 2,812,500 shares, after adjustment
                 to reflect share increase approved in 1990, 3-for-2
                 stock splits effected in January 1988, July 1993 and
                 April 1995 and 5-for-4 stock split effected in December
                 1995).

     10.63      Thermo Instrument Systems Inc. Equity Incentive Plan
                 (filed as Appendix A to the Proxy Statement dated April
                 27, 1993 of Thermo Instrument [File No. 1-9786] and
                 incorporated herein by reference). (Maximum number of
                 shares issuable is 4,031,250 shares, after adjustment
                 to reflect share increase approved in December 1993,
                 3-for-2 stock splits effected in July 1993 and April
                 1995 and 5-for-4 stock split effected in December
                 1995).
                                       41PAGE

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

     10.64      Thermo Instrument Systems Inc. (formerly Thermo
                 Environmental Corporation) Incentive Stock Option Plan
                 (filed as Exhibit 10(d) to Thermo Environmental's
                 Registration Statement on Form S-1 [Reg. No. 33-329]
                 and incorporated herein by reference). (Maximum number
                 of shares issuable in the aggregate under this plan and
                 the Thermo Instrument (formerly Thermo Environmental)
                 Nonqualified Stock Option Plan is 1,160,156 shares,
                 after adjustment to reflect share increase approved in
                 1987, 3-for-2 stock splits effected in July 1993 and
                 April 1995 and 5-for-4 stock split effected in December
                 1995).

     10.65      Thermo Instrument Systems Inc. (formerly Thermo
                 Environmental Corporation) Nonqualified Stock Option
                 Plan (filed as Exhibit 10(e) to Thermo Environmental's
                 Registration Statement on Form S-1 [Reg. No. 33-329]
                 and incorporated herein by reference). (Maximum number
                 of shares issuable in the aggregate under this plan and
                 the Thermo Instrument (formerly Thermo Environmental)
                 Incentive Stock Option Plan is 1,160,156 shares, after
                 adjustment to reflect share increase approved in 1987,
                 3-for-2 stock splits effected in July 1993 and April
                 1995 and 5-for-4 stock split effected in December
                 1995).

     10.66      Thermo Instrument Systems Inc. - ThermoSpectra Corporation
                Nonqualified Stock Option Plan (filed as Exhibit 10.51 to
                Thermo Instrument's Annual Report on Form 10-K for the fiscal
                year ended December 31, 1994 [File No. 1-9786] and
                incorporated herein by reference).

     10.67      Thermo Instrument Systems Inc. - Thermo BioAnalysis
                Corporation Nonqualified Stock Option Plan (filed as Exhibit
                10.64 to Thermo Cardiosystems' Annual Report on Form 10-K for
                the fiscal year ended December 30, 1995 [File No. 1-10114]
                and incorporated herein by reference).

     10.68      Thermo Instrument Systems Inc. - ThermoQuest Corporation
                Nonqualified Stock Option Plan (filed as Exhibit 10.65 to
                Thermo Cardiosystems' Annual Report on Form 10-K for the
                fiscal year ended December 30, 1995 [File No. 1-10114] and
                incorporated herein by reference).

     10.69      ThermoSpectra Corporation Equity Incentive Plan (filed as
                Exhibit 10.52 to Thermo Instrument's Annual Report on Form
                10-K for the fiscal year ended December 31, 1994 [File No.
                1-9786] and incorporated herein by reference).

     10.70      Thermo BioAnalysis Corporation Equity Incentive Plan
                 (filed as Exhibit 10.67 to Thermo Cardiosystems' Annual
                 Report on Form 10-K for the fiscal year ended December
                 30, 1995 [File No. 1-10114] and incorporated herein by
                 reference).
                                       42PAGE

                                  EXHIBIT INDEX

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

     10.71      Thermo Optek Corporation Equity Incentive Plan (filed
                 as Exhibit 10.68 to Thermo Cardiosystems' Annual Report
                 on Form 10-K for the fiscal year ended December 30,
                 1995 [File No. 1-10114] and incorporated herein by
                 reference).

     10.72      ThermoQuest Corporation Equity Incentive Plan (filed as
                 Exhibit 10.69 to Thermo Cardiosystems' Annual Report on
                 Form 10-K for the fiscal year ended December 30, 1995
                 [File No. 1-10114] and incorporated herein by
                 reference).

     10.73      ThermoTrex Corporation (formerly Thermo Electron
                 Technologies Corporation) Incentive Stock Option Plan
                 (filed as Exhibit 10(h) to ThermoTrex's Registration
                 Statement on Form S-1 [Reg. No. 33-40972] and
                 incorporated herein by reference). (Maximum number of
                 shares issuable in the aggregate under this plan and
                 the ThermoTrex Nonqualified Stock Option Plan is
                 1,945,000 shares, after adjustment to reflect share
                 increases approved in 1992 and 1993 and 3-for-2 stock
                 split effected in October 1993).

     10.74      ThermoTrex Corporation (formerly Thermo Electron
                 Technologies Corporation) Nonqualified Stock Option
                 Plan (filed as Exhibit 10(i) to ThermoTrex's
                 Registration Statement on Form S-1 [Reg. No. 33-40972]
                 and incorporated herein by reference). (Maximum number
                 of shares issuable in the aggregate under this plan and
                 the ThermoTrex Incentive Stock Option Plan is 1,945,000
                 shares, after adjustment to reflect share increases
                 approved in 1992 and 1993 and 3-for-2 stock split
                 effected in October 1993).

     10.75      ThermoTrex Corporation - ThermoLase Corporation
                 (formerly ThermoLase Inc.) Nonqualified Stock Option
                 Plan (filed as Exhibit 10.53 to ThermoTrex's Annual
                 Report on Form 10-K for the fiscal year ended
                 January 1, 1994 [File No. 1-10791] and incorporated
                 herein by reference).

     10.76      ThermoTrex Corporation - Trex Medical Corporation
                 Nonqualified Stock Option Plan (filed as Exhibit 10.73
                 to Thermo Cardiosystems' Annual Report on Form 10-K for
                 the fiscal year ended December 30, 1995 [File No.
                 1-10114] and incorporated herein by reference).



                                       43PAGE

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

     10.77      ThermoLase Corporation (formerly ThermoLase Inc.)
                 Incentive Stock Option Plan (filed as Exhibit 10.55 to
                 ThermoTrex's Annual Report on Form 10-K for the fiscal
                 year ended January 1, 1994 [File No. 1-10791] and
                 incorporated herein by reference). (Maximum number of
                 shares issuable in the aggregate under this plan and
                 the ThermoLase Nonqualified stock option plan is
                 2,800,000 shares, after adjustment to reflect share
                 increase approved in 1993 and 2-for-1 stock splits
                 effected in March 1994 and June 1995).

     10.78      ThermoLase Corporation (formerly ThermoLase Inc.)
                 Nonqualified Stock Option Plan (filed as Exhibit 10.54
                 to ThermoTrex Corporation's Annual Report on Form 10-K
                 for the fiscal year ended January 1, 1994 [File No.
                 1-10791] and incorporated herein by reference) (Maximum
                 number of shares issuable in the aggregate under this
                 plan and the ThermoLase Incentive Stock Option Plan is
                 2,800,000 shares, after adjustment to reflect share
                 increases approved in 1993 and 2-for-1 stock splits
                 effected in March 1994 and June 1995).

     10.79      ThermoLase Corporation Equity Incentive Plan (filed as
                 Exhibit 10.81 to Thermo TerraTech's Annual Report on
                 Form 10-K for the fiscal year ended April 1, 1995 [File
                 No. 1-9549] and incorporated herein by reference).

     10.80      Trex Medical Corporation Equity Incentive Plan (filed
                 as Exhibit 10.77 to Thermo Cardiosystems' Annual Report
                 on Form 10-K for the fiscal year ended December 30,
                 1995 [File No. 1-10114] and incorporated herein by
                 reference).

     10.81      Thermo Fibertek Inc. Incentive Stock Option Plan (filed
                 as Exhibit 10(k) to Thermo Fibertek's Registration
                 Statement on Form S-1 [Reg. No. 33-51172] and
                 incorporated herein by reference).

     10.82      Thermo Fibertek Inc. Nonqualified Stock Option Plan
                 (filed as Exhibit 10(l) to Thermo Fibertek's
                 Registration Statement on Form S-1 [Reg. No. 33-51172]
                 and incorporated herein by reference).

     10.83      Thermo Fibertek Inc. Equity Incentive Plan (filed as
                 Exhibit 10.60 to Thermo Instrument's Annual Report on
                 Form 10-K for the fiscal year ended December 31, 1994
                 [File No. 1-9786] and incorporated herein by
                 reference).

                                    44PAGE

                                  EXHIBIT INDEX

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

     10.84      Thermo Power Corporation (formerly Tecogen Inc.)
                 Incentive Stock Option Plan, as amended (filed as
                 Exhibit 10(h) to Thermo Power's Quarterly Report on
                 Form 10-Q for the quarter ended April 3, 1993 [File No.
                 1-10573] and incorporated herein by reference).
                 (Maximum number of shares issuable in the aggregate
                 under this plan and the Thermo Power Nonqualified Stock
                 Option Plan is 950,000 shares, after adjustment to
                 reflect share increases approved in 1990, 1992 and
                 1993).

     10.85      Thermo Power Corporation (formerly Tecogen Inc.)
                 Nonqualified Stock Option Plan, as amended (filed as
                 Exhibit 10(i) to Thermo Power's Quarterly Report on
                 Form 10-Q for the quarter ended April 3, 1993 [File No.
                 1-10573] and incorporated herein by reference).
                 (Maximum number of shares issuable in the aggregate
                 under this plan and the Thermo Power Incentive Stock
                 Option Plan is 950,000 shares, after adjustment to
                 reflect share increases approved in 1990, 1992 and
                 1993).

     10.86      Thermo Power Corporation Equity Incentive Plan (filed
                 as Exhibit 10.63 to Thermo Instrument's Annual Report
                 on Form 10-K for the fiscal year ended December 31,
                 1994 [File No. 1-9786] and incorporated herein by
                 reference).

     10.87      Thermo Power Corporation - ThermoLyte Corporation
                 Nonqualified Stock Option Plan (filed as Exhibit 10.84
                 to Thermo Cardiosystems' Annual Report on Form 10-K for
                 the fiscal year ended December 30, 1995 [File No.
                 1-10114] and incorporated herein by reference).

     10.88       ThermoLyte Corporation Equity Incentive Plan (filed as
                 Exhibit 10.71 to Thermo Power's Annual Report on Form 10-K
                 for the fiscal year ended September 30, 1995 [File No.
                 1-10573] and incorporated herein by reference).

     10.89      Thermo TerraTech Inc. (formerly Thermo Process Systems
                 Inc.) Incentive Stock Option Plan (filed as Exhibit
                 10(h) to Thermo TerraTech's Registration Statement on
                 Form S-1 [Reg. No. 33-6763] and incorporated herein by
                 reference). (Maximum number of shares issuable in the
                 aggregate under this plan and the Thermo TerraTech
                 Nonqualified Stock Option Plan is 1,850,000 shares,
                 after adjustment to reflect share increases approved in
                 1987, 1989, and 1992, 6-for-5 stock splits effected in
                 July 1988 and March 1989 and 3-for-2 stock split
                 effected in September 1989).


                                       45PAGE

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

     10.90      Thermo TerraTech Inc. (formerly Thermo Process Systems
                 Inc.) Nonqualified Stock Option Plan (filed as Exhibit
                 10(i) to Thermo TerraTech's Registration Statement on
                 Form S-1 [Reg. No. 33-6763] and incorporated herein by
                 reference). (Maximum number of shares issuable in the
                 aggregate under this plan and the Thermo TerraTech
                 Incentive Stock Option Plan is 1,850,000 shares, after
                 adjustment to reflect share increases approved in 1987,
                 1989, and 1992, 6-for-5 stock splits effected in July
                 1988 and March 1989 and 3-for-2 stock split effected in
                 September 1989).

     10.91      Thermo TerraTech Inc. (formerly Thermo Process Systems
                 Inc.) Equity Incentive Plan (filed as Exhibit 10.63 to
                 Thermedics' Annual Report on Form 10-K for the year
                 ended January 1, 1994 [File No. 1-9567] and
                 incorporated herein by reference). (Maximum number of
                 shares issuable is 1,750,000 shares, after adjustment
                 to reflect share increased approved in 1994).

     10.92      Thermo TerraTech Inc. (formerly Thermo Process Systems
                 Inc.) - Thermo Remediation Inc. Nonqualified Stock
                 Option Plan (filed as Exhibit 10(l) to Thermo
                 TerraTech's Quarterly Report on Form 10-Q for the
                 fiscal quarter ended January 1, 1994 [File No. 1-9549]
                 and incorporated herein by reference).

     10.93      Thermo Remediation Inc. Equity Incentive Plan (filed as
                 Exhibit 10.7 to Thermo Remediation's Registration
                 Statement on Form S-1 [Reg. No. 33-70544] and
                 incorporated herein by reference).

     11         Computation of earnings per share.

     13         Annual Report to Shareholders for the year ended
                 December 30, 1995 (only those portions incorporated
                 herein by reference).

     21         Subsidiaries of the Registrant.

     23         Consent of Arthur Andersen LLP.

     27         Financial Data Schedule.

EX-4.1

                            FISCAL AGENCY AGREEMENT


                                    between


                          THERMO ELECTRON CORPORATION,
                                   as Issuer

                                      and

                                 CHEMICAL BANK,
                                as Fiscal Agent



                             ______________________

                          Dated as of January 3, 1996
                             ______________________



                       U.S. $500,000,000 Principal Amount

                4 1/4% Convertible Subordinated Debentures Due 2003
PAGE




       CONTENTS 

             Heading                                          Page

       1.   The Securities                                         1
       2.   Appointment of Agents and Security Registrar           3
       3.   Registration of Transfer and Exchange; 
            Restrictions on Transfer                               5
       4.   Closing Date; Exchange of Regulation S
             Global Security                                       11
       5.   Payment                                                13
       6.   Redemption                                             15
       7.   Conversion of Securities                               18
       8.   Surrendered Securities                                 24
       9.   Mutilated, Destroyed, Stolen or Lost Securities        25
       10.  Signatures                                             25
       11.  Agreements Concerning Agents                           25
       12.  Offices, Resignation, Successors,
            Etc. of Agents; Paying, Conversion and
            Transfer Agencies                                      27
       13.  Taxes                                                  30
       14.  Meetings and Votes of Holders                          30
       15.  Merger, Consolidation or Sale of Assets                33
       16.  Governing Law                                          34
       17.  Amendments                                             35
       18.  Agent for Service of Process                           35
       19.  Notices                                                35
       20.  Counterparts                                           37
PAGE





       Exhibit A-     Form of Registered Security
                      Form of Bearer Security

       Exhibit B-     Form of Regulation S Global Security

       Exhibit C-     Form of Certificate to be given by the Euroclear
                      Operator or Cedel with respect to the exchange of
                      all or a portion of the Regulation S Global
                      Security for Bearer Securities

       Exhibit D-     Form of Certificate of Beneficial Ownership for
                      Bearer Securities to be provided to the Euroclear
                      Operator or Cedel

       Exhibit E-     Form of Certificate of Beneficial Ownership for
                      Registered Securities to be provided to the
                      Euroclear Operator or Cedel

       Exhibit F-     Form of Certificate to be given by the Euroclear
                      Operator or Cedel with respect to the exchange of
                      all or a portion of the Regulation S Global
                      Security for Registered Regulation S Securities

       Exhibit G-     Form of Transferee Letter
PAGE




            FISCAL AGENCY AGREEMENT, dated as of January 3, 1996 (this
       _Agreement_), between THERMO ELECTRON CORPORATION, a corporation
       duly organized and validly existing under the laws of the State
       of Delaware (the "Company"), and CHEMICAL BANK, a banking
       corporation duly organized and validly existing under the laws of
       the State of New York (the "Fiscal Agent").

            1.   The Securities.

                 (a)  The Company has, by a Subscription Agreement,
       dated November 28, 1995 (the "Subscription Agreement"), among the
       Company and the managers named therein (the "Managers"), agreed
       to issue and sell to the Managers U.S. $500,000,000 aggregate
       principal amount of its 4q% Convertible Subordinated Debentures
       Due 2003 (hereinafter referred to as the "Initial Securities" and
       together with the Over-Allotment Securities (as defined below),
       if any, the "Securities").  In addition, the Company has granted
       an option to the Managers to subscribe for up to an additional
       U.S. $85,000,000 principal amount of Securities (the
       "Over-Allotment Securities") solely to cover over-allotments, if
       any.  The amount of Securities that may be issued hereunder may
       be increased by agreement between the Company and the Fiscal
       Agent, and such additional securities shall be "Securities"
       hereunder.  Interest on the Securities shall be calculated on the
       basis of a 360 day year comprised of twelve 30-day months.

                 (b)  Pursuant to the Subscription Agreement, the
       Managers (or their affiliates) may sell the Securities to (i)
       persons who are not "U.S. Persons" (as such term is defined in
       Regulation S promulgated by the United States Securities and
       Exchange Commission (the "SEC") pursuant to the Securities Act of
       1933, as amended (the "Securities Act")) in transactions that
       meet the requirements of Regulation S, (ii) _qualified
       institutional buyers" (as such term is defined in Rule 144A
       promulgated by the SEC pursuant to the Securities Act and
       hereinafter referred to as "QIBs") in reliance on Rule 144A (the
       Securities that are resold by the Managers pursuant to Rule 144A
       being hereinafter referred to as the "Rule 144A Securities") and
       (iii) a limited number of _institutional accredited investors"
       (within the meaning of Rule 501(a)(1), (2), (3) or (7)
       promulgated by the SEC pursuant to the Securities Act)
       ("Institutional Accredited Investors") that, prior to their
       purchase of any Securities, deliver to the Managers a letter
       containing certain representations and agreements.

                 (c)  A portion of the Securities will initially be
       issued in the form of a temporary global debenture in bearer form
       without coupons or conversion rights, which will be deposited
       with a depository in London for Cedel and Euroclear for the
       accounts of the subscribers of such Securities on the Closing
       Date (as defined herein).  Upon deposit of the temporary global
       debenture, Cedel or Euroclear, as the case may be, will credit
       each subscriber with a principal amount of Securities equal to
PAGE

       the principal amount thereof for which it has subscribed and paid
       in the aggregate principal amount of the entire issue of
       Securities less the aggregate principal amount of the Rule 144A
       Securities and Accredited Investor Securities concurrently
       issued, substantially in the form of Exhibit B hereto (the
       "Regulation S Global Security").  As hereinafter provided, the
       Regulation S Global Security may subsequently be exchanged for
       Securities in printed definitive form either as (i) bearer
       Securities ("Bearer Securities") in denominations of U.S. $1,000
       and U.S. $10,000 and with interest coupons attached thereto,
       representing the semi-annual interest payable thereon, or (ii)
       fully registered Securities ("Registered Regulation S
       Securities") in denominations of U.S. $1,000 and integral
       multiples thereof, without coupons, or (iii) a beneficial
       interest in the Rule 144A Global Security (as defined below), in
       accordance with the provisions of Section 5(c).  Bearer
       Securities shall be substantially in the form of Exhibit A
       hereto, including the coupons set forth therein.  Registered
       Regulation S Securities also shall be substantially in the form
       of Exhibit A hereto.  The Securities which are not Bearer
       Securities or the Regulation S Global Security are hereinafter
       collectively referred to as the "Registered Securities."

                 (d)  The Rule 144A Securities will initially be issued
       in the form of a global Security in the aggregate principal
       amount of the Rule 144A Securities, which Security shall be in
       substantially the form of Exhibit A hereto, and is hereinafter
       referred to as the "Rule 144A Global Security." Such Rule 144A
       Global Security shall be duly executed by the Company and
       authenticated by the Fiscal Agent (as defined below) as
       hereinafter provided and will be deposited on the Closing Date
       with, or on behalf of, The Depositary Trust Company ("DTC") and
       registered in the name of Cede & Co., as nominee of DTC.  The
       aggregate principal amount of the Rule 144A Global Security may
       from time to time be increased or reduced by adjustments made in
       the Security Register.  Transfers of interests in the Rule 144A
       Global Security will be subject to certain restrictions set forth
       therein and described in Section 3 hereof.

                 (e)  The Accredited Investor Securities will initially
       be issued in fully registered form in minimum denominations of
       U.S. $250,000 and integral multiples of U.S. $1,000 in excess
       thereof, which Securities shall be in substantially the form of
       Exhibit A hereto, and are hereinafter collectively referred to as
       "Registered Accredited Investor Securities." Such Registered
       Accredited Investor Securities shall be in definitive, fully
       registered certificated form only and registered in the names of
       such Institutional Accredited Investors or their nominees.  Such
       Institutional Accredited Investors may not elect to hold
       Registered Accredited Investor Securities through DTC, Euroclear
       or Cedel.  The aggregate principal amount of the Registered
       Accredited Investor Securities may be increased or reduced by
       adjustments made in the Security Register.  Transfers of
       Registered Accredited Investor Securities will be subject to
PAGE


       certain restrictions set forth therein and described in Section 3
       hereof.

                 (f)  During the period beginning on the Closing Date
       and ending on the date which is three years (or the then
       applicable holding period under Rule 144(k) under the Securities
       Act (or successor provision)) after the later of the date of
       original issuance thereof and the last date on which the Company
       or any affiliate of the Company was the owner thereof (or any
       predecessor), all Rule 144A Securities, all Accredited Investor
       Securities, all other Registered Securities and all Securities
       issued upon registration of transfer of or in exchange for such
       Securities, shall be "Restricted Securities" and shall be subject
       to the restrictions on transfer in Section 3 hereof; provided,
       however, that the term "Restricted Securities" shall not include
        Registered Securities as to which such restrictions on transfer
       have been terminated in accordance with Section 3(g) hereof.  All
       Restricted Securities shall bear the legend required by Section
       3(f) hereof.

                 (g)  The Securities will be convertible as provided in
       Section 4 of the Registered Securities and the Bearer Securities
       and Section 7 hereof.  The Securities may be redeemed by the
       Company as provided in Section 3 of the Registered Securities and
       the Bearer Securities and Section 6 hereof.  The Securities will
       be subordinated as provided in Section 7 of the Registered
       Securities and the Bearer Securities.  The Registered Securities,
       the Bearer Securities and the Regulation S Global Security shall
       contain such appropriate insertions, omissions, substitutions and
       other variations as are required or permitted by this Agreement
       and may have such letters, numbers or other marks of
       identification and such legends or endorsements placed thereon as
       may, consistent herewith, be determined by the officer of the
       Company executing such Securities, as evidenced by his execution
       of such Securities.

                 (h)  The Company in issuing the Securities shall use
       CUSIP numbers, and the Fiscal Agent may use such CUSIP numbers in
       any notice of redemption with respect to the Securities.  The
       Company shall obtain one CUSIP number for the Rule 144A
       Securities and one for the Registered Regulation S Securities.
       In addition, the Company shall obtain an ISIN number and a Common
       Code for the Regulation S Global Security, the Bearer Securities
       and the Registered Regulation S Securities.

                 (i)  Pursuant to the Subscription Agreement, the
       Managers (or their affiliates) may sell the Securities to persons
       who are not persons within the United States or its possessions
       or "United States persons" as defined in the Internal Revenue
       Code except as provided in U.S. Treasury Regulation Section
       1.163-5 (c) (2) (i) (D).  In compliance with United States tax
       laws and regulations, Bearer Securities may not be offered or
       sold during the 40-day period beginning on the Closing Date, or
       at any time if part of a Manager's unsold allotment, to a person
PAGE


       who is within the United States or to a United States person
       other than (a) foreign branches of United States financial
       institutions if such institutions agree in writing to comply with
       the requirements of Section 165(j)(3)(A), (B), or (C) of the
       Internal Revenue Code of 1986, as amended, and the regulations
       thereunder, (b) United States offices of exempt distributors, or
       (c) United States offices of international organizations or
       foreign central banks.  United States tax laws and regulations
       also require that Bearer Securities not be delivered within the
       United States.

                 (j)  The Company will use its reasonable best efforts
       to have the Securities approved for listing on the Luxembourg
       Stock Exchange or such other exchange as shall be agreed upon by
       the Managers and the Company, as soon as practicable after the
       date hereof.
PAGE


            2.   Appointment of Agents and Security Registrar.

                 (a)  The Company hereby appoints Chemical Bank, at
       present having its principal corporate trust office at 450 West
       33rd Street, New York, New York 10001, and having its main office
       in London at Chemical Bank House, 125 London Wall, London EC2
       Y54J, England, as its fiscal agent in respect of the Securities
       upon the terms and subject to the conditions herein set forth.
       (Chemical Bank and its successor or successors as such fiscal
       agent qualified and appointed in accordance with Section 12
       hereof are herein called the "Fiscal Agent.") The Fiscal Agent
       shall have the powers and authority granted to and conferred upon
       it herein and in the Securities, and such further powers and
       authority, acceptable to it, to act on behalf of the Company as
       the Company may hereafter grant to or confer upon it.

                 (b)  The Company hereby appoints Chemical Bank, at
       present located at 450 West 33rd Street, New York, New York
       10001, and having its main office in London at Chemical Bank
       House, 125 London Wall, London EC2 Y54J, England, as its paying
       agent in respect of the Securities upon the terms and subject to
       the conditions herein set forth. (Chemical Bank and its successor
       or successors as such paying agent qualified and appointed in
       accordance with Section 12 hereof are herein called the _Paying
       Agent.") The Paying Agent shall have the powers and authority
       granted to and conferred upon it herein and in the Securities,
       and such further powers and authority, acceptable to it, to act
       on behalf of the Company as the Company may hereafter grant to or
       confer upon it.  As used herein, "paying agencies" shall mean
       paying agencies maintained by the Company as provided in Section
       12(f) hereof.

                 (c)  The Company hereby appoints Chemical Bank, at
       present located at 450 West 33rd Street, New York, New York
       10001, and having its main office in London at Chemical Bank
       House, 125 London Wall, London EC2 Y54J, England, as its
       conversion agent in respect of the Securities upon the terms and
       subject to the conditions herein set forth. (Chemical Bank and
       its successor or successors as such conversion agent qualified
       and appointed in accordance with Section 12 hereof are herein
       called the "Conversion Agent," and the Paying Agent, the
       Conversion Agent, the Transfer Agents (as herein defined) and the
       Fiscal Agent are sometimes herein referred to severally as an
       "Agent" and, collectively, as the "Agents.").  The Conversion
       Agent shall have the powers and authority granted to and
       conferred upon it herein and in the Securities, and such further
       powers and authority, acceptable to it, to act on behalf of the
       Company as the Company may hereafter grant to or confer upon it.
       As used herein, "conversion agencies" shall mean conversion
       agencies maintained by the Company as provided in Section 12(f)
       hereof.

                 (d)  The Company shall cause to be kept at the
       principal corporate trust office of the Fiscal Agent a register
PAGE


       (the registers maintained in such office and in any other office
       or agency designated for such purpose (which office shall be
       located outside of the United Kingdom) being herein sometimes
       collectively referred to as the "Security Register") in which,
       subject to such reasonable regulations as the Fiscal Agent may
       prescribe, the Company shall provide for the registration of
       Registered Securities and of transfers of Registered Securities.
       The Fiscal Agent is hereby appointed "Security Registrar" for the
       purpose of registering Registered Securities and transfers of
       Registered Securities as herein provided.

                 (e)  With respect to the Securities issuable or issued
       in whole or in part in the form of the Rule 144A Global Security,
       the Company hereby appoints DTC, at present located at 55 Water
       Street, New York, New York, 10041, as the depository for the Rule
       144A Global Security upon the terms and conditions herein set
       forth.  DTC and its successor or successors as such depository
       are herein called the "Depository."

            3.   Registration of Transfer and Exchange; Restrictions on
       Transfer.

                 (a)  Upon surrender for registration of transfer of any
       Registered Security at any office or agency designated for such
       purpose by the Company pursuant to Section 12(g) hereof, the
       Company shall execute, and the Fiscal Agent shall authenticate,
       register and deliver, in the name of the designated transferee or
       transferees, one or more new Registered Securities of any
       authorized denominations and of a like aggregate principal amount
       and bearing such restrictive legends as may be required by this
       Agreement; provided, however, that, with respect to any
       Registered Security that is a Restricted Security, the Fiscal
       Agent shall not register the transfer of such Security unless the
       conditions in Sections 3(b) hereof shall have been satisfied.
       The holder of each Restricted Security, by such holder's
       acceptance thereof, agrees to be bound by the transfer
       restrictions set forth herein and in the legend on such
       Restricted Security.

                 (b)  Whenever any Restricted Security is presented or
       surrendered for registration of transfer or exchange for a
       Registered Security registered in a name other than that of the
       holder, no registration of transfer or exchange shall be made
       unless:

                 (i)  The registered holder presenting such Restricted
       Security for transfer shall have certified to the Fiscal Agent in
       writing that such registered holder is transferring such
       Restricted Security to a QIB in compliance with the exemption
       from registration under the Securities Act provided by Rule 144A
       thereunder (or a successor provision);

                 (ii) The registered holder presenting such Restricted
       Security for transfer shall have certified to the Fiscal Agent in
PAGE


       writing that the registered holder is transferring such
       Restricted Security outside the United States in a transaction
       meeting the requirements of Rule 904 of Regulation S under the
       Securities Act;

                 (iii)     (A) The registered holder presenting such
       Restricted Security for transfer shall have certified to the
       Fiscal Agent in writing that such registered holder is
       transferring such Restricted Security to an _institutional
       accredited investor" (within the meaning of Rule 501(a)(1), (2),
       (3) or (7) under the Securities Act) in a transaction that is
       exempt from the registration requirements of the Securities Act;
       and (B) a broker or dealer registered under Section 15 of the
       Securities Exchange Act of 1934, as amended, shall have certified
       to the Fiscal Agent in writing that: (x) each person who will
       become a beneficial owner of the Restricted Security upon
       transfer is an institutional "accredited investor" (as such term
       is defined in Rule 501(a)(1), (2), (3) or (7) under the
       Securities Act); (y) no general solicitation or general
       advertising was made or used by such broker or dealer in
       connection with the offer and sale of such Restricted Security to
       such person(s); and (z) such institutional accredited investor
       has been informed that the Securities have not been registered
       under the Securities Act and are subject to the restrictions on
       transfer set forth in the Securities and this Agreement;

                 (iv) The registered holder presenting such Restricted
       Security for transfer shall have certified to the Fiscal Agent in
       writing that the registered holder is transferring the Registered
       Security to the Company; or

                 (v)  The Fiscal Agent has received transfer
       documentation indicating, and a written opinion of U.S. counsel
       acceptable in form and substance to the Company and the Fiscal
       Agent, that the transfer is being made pursuant to an exemption
       from, or a transaction not otherwise subject to, the registration
       requirements of the Securities Act.

                 For purposes of this Section 3(b), any such
       certification to the Fiscal Agent in writing shall be in the form
       of the Transfer Notice set forth on the reverse of such Security.
       In the case of transfer pursuant to the foregoing clauses (ii),
       (iii) or (v) above, the Company and the Fiscal Agent may require
       that the registered holder deliver an opinion of counsel,
       certifications or other information acceptable to them in form
       and substance.  The Fiscal Agent shall notify the Company upon
       receipt of such Transfer Notice and the Company shall immediately
       advise the Fiscal Agent as to whether an opinion of counsel,
       certifications or other information as described herein shall be
       required for such transfer.  In addition, in the case of a
       transfer pursuant to the foregoing clause (iii) above, the
       transferor shall be required to deliver a letter from the
       transferee substantially in the form of Exhibit G hereto.
PAGE


                 (c)  Bearer Securities may, at the option of the holder
       thereof, (with all unmatured coupons appertaining thereto and
       matured defaulted coupons appertaining thereto), be exchanged at,
       subject to applicable laws and regulations, the offices of the
       paying agencies in London and, if the Securities are listed on
       the Luxembourg Stock Exchange and so long as listed thereon,
       Luxembourg or as designated by the Company for such purposes
       pursuant to Section 12(g), for an equal aggregate principal
       amount of Registered Securities in denominations of $1,000 and
       integral multiples thereof without coupons and/or Bearer
       Securities of authorized denominations.  If such holder is unable
       to produce any such unmatured coupon or coupons or matured coupon
       or coupons in default, such exchange may be effected if the
       Bearer Securities are accompanied by payment in funds acceptable
       to the Company in an amount equal to the face amount of such
       missing coupon or coupons or the surrender of such missing coupon
       or coupons may be waived by the Company if there be furnished to
       it and the Fiscal Agent such security or indemnity as it may
       require to save it, the Fiscal Agent, the Paying Agent and any
       paying agency harmless.  If thereafter the holder of such
       Security shall surrender to any paying agency any such missing
       coupon in respect of which such a payment shall have been made,
       such holder shall be entitled to receive the amount of such
       payment from the Company; provided, however, that, except as
       otherwise provided in the form of Bearer Security set forth in
       Exhibit A hereto, interest represented by coupons shall be
       payable only upon presentation and surrender of those coupons
       outside of the United States, its territories and its
       possessions.  Bearer Securities and coupons are transferable upon
       delivery.

                 Registered Securities may, at the option of the holder
       thereof, be exchanged at the Corporate Trust Office of the Fiscal
       Agent in New York City, or subject to applicable laws and
       regulations, the offices of the paying agencies in London and, if
       the Securities are listed on the Luxembourg Stock Exchange and so
       long as listed thereon, Luxembourg or as designated by the
       Company for such purposes pursuant to Section 12(g), for an equal
       aggregate principal amount of Registered Securities of different
       denominations.  Registered Securities shall not be exchangeable
       for Bearer Securities.  Whenever any Registered Securities are so
       surrendered for exchange, the Company shall execute, and the
       Fiscal Agent shall authenticate and deliver, the Registered
       Securities which the holder making the exchange is entitled to
       receive.  If the Registered Security so surrendered for exchange
       is a Registered Accredited Investor Security and the holder
       thereof requests in writing that such Registered Accredited
       Investor Security be exchanged for an interest in the Rule 144A
       Global Security, such Registered Accredited Investor Security
       will be exchangeable into an equal aggregate principal amount of
       beneficial interest in the Rule 144A Global Security; provided,
       however, that, if such Registered Accredited Investor Security is
       a Restricted Security, such exchange may only be made if such
       holder certifies to the Fiscal Agent in writing that such holder
PAGE


       is a QIB by completing the Transfer Notice on the reverse of such
       Security.  Upon any exchange as provided in the immediately
       preceding sentence, the Fiscal Agent shall cancel such Registered
       Accredited Investor Security and cause, or direct any custodian
       for the Rule 144A Global Security to cause, in accordance with
       the standing instructions and procedures existing between the
       Depository and any such custodian, the aggregate principal amount
       of Securities represented by the Rule 144A Global Security to be
       increased accordingly.  If no Rule 144A Global Securities are
       then outstanding, the Company shall issue and the Fiscal Agent
       shall authenticate a new Rule 144A Global Security in the
       appropriate principal amount.

                 Any person having a beneficial interest in a Rule 144A
       Global Security may upon request exchange such beneficial
       interest for a Registered Security only as provided in this
       paragraph.  Upon receipt by the Company and the Fiscal Agent of
       (i) written or electronic instructions from the Depository or its
       nominee (or such other form of instructions as is customary) on
       behalf of any person having a beneficial interest in a Rule 144A
       Global Security and upon receipt by the Fiscal Agent of a written
       order of such person containing registration instructions and
       (ii) in the case of a Restricted Security, the following
       additional information and documents (all of which may be
       submitted by facsimile):

                      (A)  if such beneficial interest is being
       transferred to the person designated as being the beneficial
       owner, a certification to that effect from such person; or

                      (B)  if such beneficial interest is being
       transferred to a person other than the person designated as being
       the beneficial owner, the provisions of Section 3(b) hereof have
       been satisfied;

       in which case the Fiscal Agent or any custodian for the Rule 144A
       Global Security, at the direction of the Fiscal Agent, shall, in
       accordance with the standing instructions and procedures existing
       between the Depository and such custodian, cause the aggregate
       principal amount of the Rule 144A Global Security to be reduced
       accordingly and, following such reduction, the Company shall
       execute and the Fiscal Agent shall authenticate and deliver to
       such person or the transferee, as the case may be, a Registered
       Security in the appropriate principal amount and, if such
       Registered Security is a Restricted Security, including the
       appropriate legend.  Registered Securities issued in exchange for
       a beneficial interest in the Rule 144A Global Security pursuant
       to this paragraph shall be registered in such names and such
       authorized denominations as shall be instructed to the Fiscal
       Agent.  The Fiscal Agent shall deliver such Registered Securities
       to the persons in whose names such Securities are so registered.

                 (d)  Notwithstanding any other provision of this
       Agreement (other than the provisions set forth in Section 3(e)
PAGE


       hereof), the Rule 144A Global Security may not be transferred as
       a whole except by the Depository to a nominee of the Depository
       or by a nominee of the Depository to the Depository or another
       nominee of the Depository or by the Depository or any such
       nominee to a successor Depository or a nominee of such successor
       Depository.

                 (e)  If at any time either (i) the Depository for the
       Rule 144A Global Security notifies the Company that the
       Depository is unwilling or unable to continue as Depository for
       the Rule 144A Global Security and a successor Depository for the
       Rule 144A Global Security is not appointed by the Company within
       90 days after delivery of such notice, or (ii) the Company, at
       its sole discretion, notifies the Fiscal Agent in writing that it
       elects to cause the issuance of Registered Securities under this
       Agreement, then the Company shall execute, and the Fiscal Agent
       shall authenticate and deliver, Registered Securities in an
       aggregate principal amount equal to the principal amount of the
       Rule 144A Global Security in exchange for such Rule 144A Global
       Security.

                 (f)  Each certificate evidencing Restricted Securities
       shall bear a legend in substantially the following form:

            THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED
       UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
       "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER THIS
       SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED,
       SOLD OR OTHERWISE TRANSFERRED WITHIN THE "UNITED STATES" OR TO
       "U.S. PERSONS" (AS DEFINED IN REGULATION S UNDER THE SECURITIES
       ACT) IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
       EXEMPTION THEREFROM.  EACH PURCHASER OF THIS SECURITY IS HEREBY
       NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
       PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
       144A THEREUNDER.  THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE
       HEREOF, REPRESENTS, ACKNOWLEDGES AND AGREES FOR THE BENEFIT OF
       THE COMPANY THAT: (I) IT HAS ACQUIRED A "RESTRICTED" SECURITY
       WHICH HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT; (II) IT
       WILL NOT OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY PRIOR TO
       THE DATE WHICH IS THREE YEARS (OR THE THEN APPLICABLE HOLDING
       PERIOD UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR SUCCESSOR
       PROVISION))AFTER THE DATE OF ORIGINAL ISSUANCE HEREOF AND THE
       LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY
       WAS THE OWNER OF SUCH RESTRICTED SECURITIES (OR ANY PREDECESSOR),
       EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
       STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
       ACT, (C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE
       PURSUANT TO RULE 144A, TO A PERSON WHO THE SELLER REASONABLY
       BELIEVES IS A _QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
       144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
       REQUIREMENTS OF RULE 144A, (D) OUTSIDE THE UNITED STATES IN A
       TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
       SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
       FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND, IN
PAGE


       EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF
       ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
       JURISDICTION; AND (III) IT WILL, AND EACH SUBSEQUENT HOLDER IS
       REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS SECURITY OF THE
       RESALE RESTRICTIONS SET FORTH IN (II) ABOVE.  ANY OFFER, SALE OR
       OTHER DISPOSITION PURSUANT TO THE FOREGOING CLAUSE (II)(D) AND
       (E) IS SUBJECT TO THE RIGHT OF THE ISSUER OF THIS SECURITY AND
       THE FISCAL AGENT FOR SUCH ISSUER TO REQUIRE THE DELIVERY OF AN
       OPINION OF COUNSEL, CERTIFICATIONS OR OTHER INFORMATION
       ACCEPTABLE TO THEM IN FORM AND SUBSTANCE.

                 (g)  The restrictions imposed by Section 3(b) upon the
       transferability of any particular Restricted Security shall cease
       and terminate when such Restricted Security has been sold
       pursuant to an effective registration statement under the
       Securities Act or transferred pursuant to Rule 144 under the
       Securities Act (or any successor provision thereto), unless the
       holder is an affiliate of the Company within the meaning of said
       Rule 144 (or such successor provision).  Any Restricted Security
       as to which such restrictions on transfer shall have expired in
       accordance with their terms or shall have terminated may, upon
       surrender of such Restricted Security for exchange to the Fiscal
       Agent in accordance with the provisions of this Section 3(g)
       (accompanied, in the event that such restrictions on transfer
       have terminated by reason of a transfer pursuant to Rule 144 (or
       any successor provision), by an opinion of counsel reasonably
       acceptable to the Company, addressed to the Company and the
       Fiscal Agent and in form and scope satisfactory to the Company,
       to the effect that the transfer of such Restricted Security has
       been made in compliance with Rule 144 (or such successor
       provision)), be exchanged for a new Registered Security, of like
       tenor and aggregate principal amount, which shall not bear the
       restrictive legend required by Section 3(f) hereof.  The Company
       shall promptly inform the Fiscal Agent in writing of the
       effective date of any registration statement registering the
       Securities under the Securities Act.

                 (h)  The transfer and exchange of the Rule 144A Global
       Security or beneficial interests therein shall be effected
       through the Depository, in accordance with this Agreement and the
       procedures of the Depository therefor, which shall include
       restrictions on transfer comparable to those set forth herein to
       the extent required by the Securities Act.

                 (i)  At such time as all beneficial interests in the
       Rule 144A Global Security have either been exchanged for
       Registered Securities, redeemed, repurchased or cancelled, the
       Rule 144A Global Security shall be returned to or retained and
       cancelled by the Fiscal Agent.  At any time prior to such
       cancellation, if any beneficial interest in the Rule 144A Global
       Security is exchanged for Registered Securities, redeemed,
       repurchased or cancelled, the principal amount of Securities
       represented by the Rule 144A Global Security shall be reduced
       accordingly and an endorsement shall be made on the Rule 144A
PAGE


       Global Security, by the Fiscal Agent or any custodian therefor,
       at the direction of the Fiscal Agent, to reflect such reduction.

                 (j)  All Securities issued upon any registration of
       transfer or exchange of Securities shall be the valid obligations
       of the Company, evidencing the same obligations, and entitled to
       the same benefits under this Agreement, as the Securities
       surrendered upon such registration of transfer or exchange.

                 (k)  Every Registered Security presented for
       registration of transfer or surrendered for exchange shall be
       duly endorsed, or be accompanied by a written instrument of
       transfer in form satisfactory to the Company, the Fiscal Agent
       and the Transfer Agent to which such Security is presented or
       surrendered and the Security Registrar, duly executed by the
       holder thereof or his attorney duly authorized in writing.  All
       such instruments shall comply with the applicable provisions of
       this Section 3. The registration of the transfer of a Registered
       Security by the Security Registrar shall be deemed to be the
       written acknowledgment of such transfer on behalf of the Company.

                 (1)  No service charge shall be made for any
       registration of transfer or exchange (other than the cost of
       delivery), but the Company or the Transfer Agent may require
       payment of a sum sufficient to cover any tax or other
       governmental charge that may be imposed in connection with any
       registration of transfer or exchange of Securities, other than
       exchanges pursuant to Section 4 hereof or not involving any
       registration of transfer.

                 (m)  Neither the Company nor the Fiscal Agent nor any
       of the offices or agencies designated for the purposes specified
       in Section 12(f) nor any Transfer Agent shall be required (i) to
       exchange Bearer Securities for Registered Securities during the
       period between the close of business on any Record Date (as
       defined in Section 5(c) hereof) and the opening of business on
       the next succeeding interest payment date, (ii) to exchange any
       Bearer Security (or portion thereof) for a Registered Security if
       the Company shall determine and inform the Fiscal Agent in
       writing that, as a result thereof, the Company would incur
       adverse consequences under the United States Federal income tax
       laws at the time of such exchange, or (iii) in the event of a
       redemption in part, (A) to register the transfer of Registered
       Securities or to exchange any Bearer Securities for Registered
       Securities for a period of 15 days immediately preceding the date
       notice is given pursuant to Section 3(f) of the Registered
       Securities and the Bearer Securities identifying the serial
       numbers of any Securities to be redeemed, or (B) to register the
       transfer of or exchange of any Registered Security so selected
       for redemption in whole or in part, except portions not being
       redeemed of Securities being redeemed in part, or (C) to exchange
       any Bearer Security called for redemption; provided, however,
       that a Bearer Security called for redemption may be exchanged, on
       the terms and conditions set forth above, for a Registered
PAGE


       Security that is simultaneously surrendered, with written
       instruction for payment on the date fixed for redemption, unless
       the redemption date is after a Record Date and on or before the
       next succeeding interest payment date, in which case such
       exchange may be made only prior to the Record Date immediately
       preceding the redemption date.

            4.   Closing Date; Exchange of Regulation S Global Security.

                 (a)  At any time and from time to time after the
       execution and delivery of this Agreement, the Company may deliver
       Securities executed by the Company in accordance with this
       Agreement to the Fiscal Agent for authentication together with an
       officer's certificate of the Company directing such
       authentication, and the Fiscal Agent shall thereupon authenticate
       and make such Securities available for delivery upon and in
       accordance with the written order of the Company.  No Security
       shall be valid or enforceable for any purpose unless and until
       the certificate of authentication thereon shall have been
       manually signed by a duly authorized signatory of the Fiscal
       Agent and such duly executed certificate of authentication on any
       Security shall be conclusive evidence that the Security has been
       duly authenticated and delivered hereunder.  The Regulation S
       Global Security, the Rule 144A Global Security and the Registered
       Accredited Investor Securities will be issued upon payment to the
       Company or its order in United States dollars in same-day funds
       by check or wire transfer to a United States dollar account
       designated by the Company, at 4:00 p.m., London time, on January
       3, 1996, or at such other time on the same or such other date,
       not later than 5:00 p.m., London time, on the fourth Business Day
       (as such term is defined in Section 5(h) hereof) in London
       thereafter, as the Managers and the Company may agree (the
       "Closing Date").  Such payment will be made (1) upon
       authorization from the Managers, (2) against delivery as provided
       in Section 4(b) hereof of the amount, if any, of Rule 144A
       Securities and Registered Accredited Investor Securities as the
       Managers may request and as they shall direct, and (3) against
       delivery of the Regulation S Global Security for the balance of
       the Securities to The Chase Manhattan Bank, N.A., London office,
       as depositary (the "Common Depositary") for Morgan Guaranty Trust
       Company of New York, Brussels office, as operator of the
       Euroclear System (the "Euroclear Operator"), and Cedel Bank
       societe anonyme ("Cedel").  The Regulation S Global Security
       shall be held on deposit with the Common Depositary for the
       accounts of the Euroclear Operator and Cedel, for credit to the
       Managers' respective Securities Clearance Accounts (or to such
       other accounts as the Lead Manager may have specified) with the
       Euroclear Operator or Cedel.

                 (b)  On the Closing Date, the Company shall execute and
       deliver to (i) the Managers, at the office of an affiliate of the
       Lead Manager (as defined in the Subscription Agreement) in New
       York, Registered Accredited Investor Securities (which shall have
       been duly authenticated by the Fiscal Agent and which may be in
PAGE


       typewritten form) in respect of the Accredited Investor
       Securities and (ii) the Depositary, at its office in New York,
       the Rule 144A Global Security (which shall have been duly
       authenticated by the Fiscal Agent and which may be in typewritten
       form) in respect of the Rule 144A Securities.

                 (c)  On or before the Exchange Date, the Company will
       execute and deliver to the Fiscal Agent, at its office in London,
       definitive Registered Regulation S Securities and Bearer
       Securities in the aggregate principal amount outstanding in the
       Regulation S Global Security and in such proportion of Registered
       Regulation S Securities to Bearer Securities as the Fiscal Agent
       may specify.  "Exchange Date" means the date following the
       expiration of the 40-day period commencing on the Closing Date.
       On or after the Exchange Date, the Regulation S Global Security
       may be surrendered to the Fiscal Agent to be exchanged, as a
       whole or in part, for definitive Bearer Securities without
       charge, and the Fiscal Agent shall authenticate and deliver, in
       exchange for such Regulation S Global Security or the portions
       thereof to be exchanged, an equal aggregate principal amount of
       definitive Bearer Securities, but only upon presentation to the
       Fiscal Agent at its office in London of a certificate of the
       Euroclear Operator or Cedel with respect to the Regulation S
       Global Security or portions thereof being exchanged,
       substantially in the form of Exhibit C hereto, to the effect that
       it has received a certificate or certificates in substantially
       the form set forth in Exhibit D hereto dated no earlier than 15
       days prior to the Exchange Date and signed by the person
       appearing in its records as the owner of the Regulation S Global
       Security or portions thereof being exchanged. Similarly, on or
       after the Exchange Date, portions of the Regulation S Global
       Security may be exchanged for an equal aggregate principal amount
       of definitive Registered Regulation S Securities upon
       presentation to the Fiscal Agent of a certificate substantially
       in the form of Exhibit F hereto, to the effect that it has
       received a certificate or certificates in substantially the form
       set forth in Exhibit E hereto dated no earlier than 15 days prior
       to the Exchange Date and signed by the person appearing in its
       records as the owner of the Regulation S Global Security or
       portions thereof being exchanged. In addition, on or after the
       Exchange Date, (or if permitted by the Company and the Fiscal
       Agent, before the Exchange Date), portions of the Regulation S
       Global Security may be exchanged for a beneficial interest in an
       equal aggregate principal amount of the Rule 144A Global Security
       (which portion shall be a Restricted Security) upon
       certifications acceptable to the Company and to the Fiscal Agent
       to the effect that the person(s) beneficially owning such portion
       of the Rule 144A Global Security are QIBs that acquired such
       interest in transaction(s) that complied with the exemption from
       registration under the Securities Act provided by Rule 144A
       thereunder (or a successor provision).

                 (d)  The definitive Securities and coupons shall be
       printed, lithographed or engraved or produced by any combination
PAGE


       of these methods or may be produced in any other manner permitted
       by the rules of any securities exchange on which the Securities
       may be listed, all as determined by the officers executing such
       Securities and coupons, as evidenced by such execution.

                 (e)  Only Bearer Securities may be issued upon receipt
       by the Euroclear Operator or Cedel of a certificate or
       certificates in the form of Exhibit D hereto.  Bearer Securities
       will be delivered only outside the United States, its territories
       or its possessions.  Only Registered Securities may be issued
       upon receipt by the Euroclear Operator or Cedel of a certificate
       or certificates in the form of Exhibit E hereto.

                 (f)  The delivery to the Fiscal Agent by the Euroclear
       Operator or Cedel of any certificate referred to above may be
       relied upon by the Company and the Fiscal Agent as conclusive
       evidence that a corresponding certificate or certificates has or
       have been delivered to the Euroclear Operator or Cedel pursuant
       to the terms of this Agreement.  The Fiscal Agent shall receive
       such certificate on behalf of the Company and shall promptly
       deliver the original certificate to the Company, retaining a copy
       of such certificate for its records.

                 (g)  Upon any such exchange of a portion of the
       Regulation S Global Security for a definitive Bearer Security or
       Securities or a definitive Registered Regulation S Security or
       Securities or a beneficial interest in the Rule 144A Global
       Security, the Regulation S Global Security shall be endorsed by
       the Fiscal Agent to reflect the reduction of its principal amount
       by an amount equal to the aggregate principal amount of such
       definitive Security or Securities.  Until so exchanged in full,
       the Regulation S Global Security shall in all respects be
       entitled to the same benefits under this Agreement as definitive
       Securities authenticated and delivered hereunder.

            5.   Payment.

                 (a)  The Company will pay or cause to be paid to the
       Paying Agent the amounts, at the times and for the purposes, set
       forth herein and in the text of the Securities, and the Company
       hereby authorizes and directs the Paying Agent to make payment of
       the principal of, premium, if any, and interest on and Additional
       Amounts (as defined in Section 2 of the Registered Securities and
       the Bearer Securities), if any, on the Securities from such
       payments.

                 (b)  At least 15 days prior to the date on which any
       payment of Additional Amounts shall be required to be made
       pursuant to Section 2 of the Registered Securities and the Bearer
       Securities, the Company will furnish the Paying Agent, each other
       paying agency of the Company and the Fiscal Agent with a
       certificate of one of its duly authorized officers instructing
       the Paying Agent and each other paying agency of the Company as
       to the amounts required (i) to be deducted or withheld for or on
PAGE

       account of any taxes described in Section 2 of the Registered
       Securities and the Bearer Securities from a payment to be made on
       that date and (ii) to be paid to each holder of Securities or
       coupons as Additional Amounts pursuant to that Section.  If the
       foregoing amounts are not uniform for all holders, then the
       Company's certificate shall specify by country of residence or
       other factor the amounts required to be deducted or withheld and
       to be paid as Additional Amounts for each holder or class of
       holders of the Securities or coupons.  In the absence of its
       receipt of any such  certificate from the Company, the Paying
       Agent may make payment without deduction or withholding.  The
       Company hereby agrees to indemnify the Paying Agent, each other
       paying agency of the Company and the Fiscal Agent for, and to
       hold them harmless against, any loss, liability or expense
       reasonably incurred without gross negligence or bad faith on
       their part, arising out of or in connection with actions taken or
       omitted by any of them in reliance on any certificate furnished
       pursuant to this Section.

                 (c)  Interest on any Registered Security that is
       payable, and is punctually paid or duly provided for, on any
       interest payment date shall be paid to the person in whose name
       that Security is registered at the close of business on the June
       15 or December 15 immediately preceding such interest payment
       date (each a "Record Date"), even if such Registered Security is
       cancelled, upon redemption, conversion or otherwise, after such
       Record Date.  In case a Bearer Security is surrendered for
       exchange for a Registered Security after the close of business on
       any Record Date and before the opening of business on the next
       succeeding interest payment date, the Fiscal Agent shall not be
       required to perform such transfer or exchange of such Security.

                 (d)  Interest on any Registered Security that is
       payable upon conversion in accordance with Section 7(a) hereof
       shall be paid to the person in whose name that Security is
       registered immediately prior to the conversion, provided that if
       a Registered Security is converted after the close of business on
       a Record Date and before the opening of business on the next
       succeeding interest payment date, accrued interest shall be paid
       on the next succeeding interest payment date to the person in
       whose name that Security is registered at the close of business
       on that Record Date.

                 (e)  Any interest on any Registered Security that is
       payable, but is not punctually paid or duly provided for, on any
       interest payment date shall forthwith cease to be payable to the
       registered holder thereof on the relevant regular record date by
       virtue of having been such holder, and such defaulted interest
       may be paid by the Company to the registered holder of such
       registered Security on a subsequent record date established by
       the Company in any lawful manner if, after notice given by the
       Company to the Fiscal Agent of the proposed payment pursuant to
       this clause, such manner of payment shall be deemed practicable
       by the Fiscal Agent.
PAGE


                 (f)  Subject to the foregoing provisions of this
       Section 5, each Security delivered under this Agreement upon
       registration of transfer of or in exchange for or in lieu of any
       other Security shall carry all the rights to interest accrued and
       unpaid, and to accrue, which were carried by such other Security.

                 (g)  In order to provide for the payment of the
       principal of, premium, if any, and interest on the Securities as
       the same shall become due and payable, the Company shall pay to
       the Paying Agent at its office in London, in such coin or
       currency of the United States of America as at the time of
       payment is legal tender for the payment of public and private
       debts therein, and in same day funds, the following amounts (and
       the Company shall give notice to the Fiscal Agent at least one
       full Business Day prior to the date payment is due to the Paying
       Agent as to the means of such payment), to be held and applied by
       the Paying Agent as hereinafter set forth:

                 (i)  The Company shall pay to the Paying Agent on the
       Business Day immediately prior to each interest payment date in
       same day funds an amount sufficient to pay the interest due (and
       Additional Amounts, if any) on all the Securities outstanding on
       such interest payment date and the Paying Agent shall apply the
       amounts paid to it to the payment of such interest (and
       Additional Amounts, if any) on such interest payment date.

                 (ii) Upon presentment for conversion of any Securities
       pursuant to Section 7(a) hereof (except as described in the
       proviso to Section 5(d)), the Paying Agent shall promptly notify
       the Company of the amount of any accrued interest due and owing
       thereon.  Within four business days of such notification, the
       Company shall pay to the Paying Agent an amount sufficient to pay
       the accrued interest due on such Securities (and Additional
       Amounts, if any, thereon), and the Paying Agent shall apply the
       amounts so paid to it to the payment of such accrued interest
       (and Additional Amounts, if any, thereon) in accordance with the
       terms of the Securities.

                 (iii)     If the Company shall elect, or shall be
       required, to redeem the Securities in accordance with Section 6
       hereof, the Company will pay to the Paying Agent on the Business
       Day immediately prior to the date fixed for redemption thereof in
       same day funds an amount sufficient (with any amount then held by
       the Paying Agent and available for the purpose) to pay the
       redemption price of the Securities called for redemption on the
       redemption date or entitled to be redeemed, together with accrued
       interest thereon (and Additional Amounts, if any, thereon) to the
       date fixed for redemption and not paid pursuant to clause (g)(i)
       of this Section 5, and the Paying Agent shall apply such amount
       to the payment of the redemption price and accrued interest
       thereon (and Additional Amounts, if any, thereon) in accordance
       with the terms of the Securities.
PAGE


                 (iv) On the Business Day immediately prior to the
       maturity date of the Securities, the Company shall pay to the
       Paying Agent in same day funds an amount which, together with any
       amounts then held by the Paying Agent, and available for payment
       thereof, shall be equal to the entire amount of principal and
       interest (and Additional Amounts, if any) to be due on such
       maturity date on all the Securities then outstanding, and the
       Paying Agent shall apply such amount to each payment of the
       principal of and interest on (and Additional Amounts, if any, on)
       the Securities in accordance with the terms of the Securities.

                 (h)  Notwithstanding anything in this Section to the
       contrary, if any payment of interest or premium or principal (or
       Additional Amounts, if any) is due on a day that is not a
       Business Day, payment shall be made on the next succeeding
       Business Day, with the same effect as if made on the day such
       payment was due, and no interest shall accrue for the period
       after such date.  A "Business Day" is defined, with respect to
       any act to be performed pursuant hereto or to the Securities, as
       any day which is not a Saturday, Sunday or a day on which banking
       institutions in the place where such act is to occur are
       authorized or obligated by applicable law, regulation or
       executive order to close.

            6.   Redemption.

                 (a)  If, under the circumstances described in Section 3
       of the Registered Securities and Bearer Securities, the Company
       shall elect or be required to redeem outstanding Securities, the
       following provisions shall be applicable:

                 (i)  The Company shall, at least 35 days in the case of
       a redemption in whole or 75 days in the case of a redemption in
       part (or such shorter period as shall be reasonably acceptable to
       the Fiscal Agent) before the date designated for such redemption,
       give written notice to the Agents of its election to redeem the
       Securities on the redemption date specified in such notice and
       state in such notice that the conditions precedent to such
       redemption have occurred and describe them, and in case of
       redemptions pursuant to Section 3(b) of the Registered Securities
       and the Bearer Securities, shall provide to the Fiscal Agent an
       opinion of counsel satisfactory to the Fiscal Agent stating that
       the legal conditions precedent to the right of the Company to
       effect such redemption have occurred, and shall request the
       Fiscal Agent to arrange for publication and mailing of the notice
       specified in clause (a) (ii) below.

                 (ii) In case the Company shall give notice to the
       Agents of its election to redeem the Securities, the Fiscal Agent
       shall cause to be published on behalf of and at the expense of
       the Company a notice of redemption in accordance with the
       provisions of Section 3 of the Registered Securities and Bearer
       Securities and shall mail by first-class mail a copy of the
       notice to each holder of a Registered Security at the address of
PAGE


       such holder as it shall appear in the Security Register.  The
       Fiscal Agent shall send a copy of such notice of redemption to
       the Company, the Paying Agent (if different from the Fiscal
       Agent) and each other paying agency of the Company.

                 (iii)     Such notice shall be published on behalf and
       at the expense of the Company in an Authorized Newspaper (as
       defined in Section 19 hereof) on a Business Day in New York City
       and in London and, if the Securities are listed on the Luxembourg
       Stock Exchange and so long as listed thereon, in an Authorized
       Newspaper in Luxembourg, or, if publication in either London or
       Luxembourg is not practical, in an Authorized Newspaper in any
       country in Western Europe, as set forth in Section 19 of this
       Agreement and Section 3 of the Registered Securities and Bearer
       Securities.  In the case of a redemption in whole, notice will be
       given once not more than 60 nor less than 30 days prior to the
       date fixed for redemption.  In the case of partial redemption,
       notice will be given twice, the first such notice to be given not
       more than 75 nor less than 60 days prior to the date fixed for
       redemption and the second such notice to be given not more than
       60 and not less than 30 days prior to the date fixed for
       redemption.  The Fiscal Agent shall notify the Company promptly
       of the portions of outstanding Securities to be called for
       redemption as determined pursuant to Section 3(a) of the
       Registered Securities and Bearer Securities.

                 (b)  Under the circumstances described in Section 3(d)
       of the Registered Securities and Bearer Securities concerning the
       redemption of outstanding Securities at the option of the holders
       thereof, the following provisions shall be applicable:

                 (i)  The Company shall give notice to the Fiscal Agent
       of the occurrence of a Redemption Event (as defined in Section
       3(d) of the Registered Securities and Bearer Securities)
       immediately upon the occurrence of such Redemption Event.  Such
       notice shall state:

                      (A)  The nature of the Redemption Event;

                      (B)  The Holder Redemption Date (as defined in
       Section 3(d) of the Registered Securities and Bearer Securities)
       in respect of such Redemption Event; and

                      (C)  The redemption price as set forth in Section
       3(d) of the Registered Securities and Bearer Securities.

                 (ii) The Fiscal Agent shall cause to be published on
       behalf of the Company a notice of entitlement to redeem in
       accordance with the provisions of Section 3 of the Registered
       Securities and Bearer Securities and shall mail by first-class
       mail a copy of such notice to each holder of a Registered
       Security at the address of such holder as it shall appear in the
       Security Register.  The Fiscal Agent shall send a copy of such
       notice of entitlement to redeem to the Company, the Paying Agent
PAGE


       (if different from the Fiscal Agent) and each other paying agency
       of the Company hereunder.  Such notice shall be published on
       behalf and at the expense of the Company in Authorized Newspapers
       on a Business Day in New York City and in London and, if the
       Securities are listed on the Luxembourg Stock Exchange and so
       long as listed thereon, in an Authorized Newspaper in Luxembourg,
       or, if either publication in London or Luxembourg is not
       practical, in an Authorized Newspaper in any country in Western
       Europe, as set forth in Section 19 of this Agreement.  Notice
       shall be given not later than 10 days after the later of the
       Exchange Date or the date of the occurrence of a Redemption
       Event.

                 (iii)     Upon the deposit of any of the Registered
       Securities or Bearer Securities with the agency designated by the
       Company as the place for payment of the Registered Securities and
       Bearer Securities together with a duly signed and completed
       redemption notice in the form set forth on the reverse of the
       Bearer Securities and Registered Securities, all in accordance
       with the provisions of Section 3 of the Registered Securities and
       Bearer Securities, the holder of such Registered Security and
       Bearer Security shall be entitled to receive a non-transferable
       receipt evidencing such deposit.

                 (iv) The Fiscal Agent shall notify the Company on each
       Business Day in the five Business Days prior to the Holder
       Redemption Date for outstanding Securities to be redeemed under
       this Section 6(b) of the amount required to redeem such
       Securities.

                 (c)  Under the circumstances described in Section 3(e)
       of the Registered Securities and Bearer Securities concerning the
       redemption of outstanding Securities at the option of the holders
       thereof upon a Change in Control of the Company that is not
       approved by a majority of the Continuing Directors prior to the
       expiration of the Approval Period (all as defined and set forth
       in Section 3(e) of the Registered Securities and Bearer
       Securities), the following provisions shall be applicable:

                      (i)  The Company shall give notice to the Fiscal
       Agent of the occurrence of a Change in Control immediately upon
       the expiration of the Approval Period if such Change in Control
       has not been approved by a majority of the Continuing Directors
       prior to the expiration of the Approval Period.  Such notice
       shall state:

                      (A)  The nature of the Change in Control;

                           (B)  The Repurchase Date (as that term is
       defined in Section 3(e) of the               Registered
       Securities and Bearer Securities) in respect of such Change in
       Control; and
PAGE


                           (C)  The redemption price as set forth in
       Section 3(e) of the Registered               Securities and
       Bearer Securities.

                      (ii) The Fiscal Agent shall cause to be published
       on behalf of the Company a notice of entitlement to redeem in
       accordance with the provisions of Section 3 of the Registered
       Securities and Bearer Securities and shall mail by first-class
       mail a copy of such notice to each holder of a Registered
       Security at the address of such holder as it shall appear in the
       Security Register.  The Fiscal Agent shall send a copy of such
       notice of entitlement to redeem to the Company, the Paying Agent
       (if different from the Fiscal Agent) and each other paying agency
       of the Company hereunder.  Such notice shall be published on
       behalf and at the expense of the Company in Authorized Newspapers
       on a Business Day in New York City and in London and, if the
       Securities are listed on the Luxembourg Stock Exchange and so
       long as listed thereon, in an Authorized Newspaper in Luxembourg,
       or, if either publication in London or Luxembourg is not
       practical, in an Authorized Newspaper in any country in Western
       Europe, as set forth in Section 19 of this Agreement.  Notice
       shall be given not later than 10 days after the later of the
       Exchange Date or the date of the expiration of the Approval
       Period.

                      (iii)     Upon the deposit of any of the
       Registered Securities or Bearer   Securities with the agency
       designated by the Company as the place for payment of the
       Registered Securities and Bearer Securities, together with a duly
       signed and completed redemption notice in the form set forth on
       the reverse of the Bearer Securities and     Registered
       Securities, all in accordance with the provisions of Section 3 of
       the Registered Securities and Bearer Securities,  the holder of
       such Registered Security and Bearer Security shall be entitled to
       receive a non-transferable receipt evidencing such deposit.

                      (iv) The Fiscal Agent shall notify the Company on
       the second Business Day prior to the Repurchase Date for
       outstanding Securities to be redeemed under this Section 6(c) of
       the amount required to redeem such Securities.

            7.   Conversion of Securities.

                 (a)  Subject to and upon compliance with the provisions
       of this Section 7, at the option of the holder thereof, any
       outstanding Registered Security or Bearer Security or, in the
       case of any outstanding Registered Security or Bearer Security of
       a denomination other than $1,000, any portion of the principal
       amount thereof which is $1,000 or an integral multiple of $1,000,
       may be converted into shares of the Company's common stock, par
       value $1.00 per share ("Common Stock"), issuable upon conversion
       of the Securities, at the principal amount thereof, or of such
       portion thereof, into fully paid and nonassessable shares of
       Common Stock ("Conversion Shares") as set forth in the Registered
PAGE


       Securities and Bearer Securities.  Such Registered Securities or
       Bearer Securities may be converted on or after the date which is
       the latest of: (i) the Exchange Date, (ii) March 15, 1996 and
       (iii) the date of the effectiveness of the Registration Statement
       to be filed by the Company under the Securities Act relating to
       the Common Stock issuable upon conversion of the Restricted
       Securities (the _Registration Date_), and in any event prior to
       redemption or maturity.  The right to convert Securities called
       for redemption will terminate at the close of business on the
       fifteenth day next preceding the date fixed for redemption (or if
       such date is not a Business Day, then the next succeeding
       Business Day), and will be lost if not exercised prior to that
       time.  No payment or adjustment shall be made upon any conversion
       on account of any dividends on the Common Stock issued upon
       conversion.  Accrued interest from the immediately preceding
       interest payment date until the conversion date (and Additional
       Amounts, if any, thereon) will be paid to the holder, through the
       Paying Agent, in the same manner as payments of interest, within
       five Business Days after the conversion date, provided that if a
       Registered Security is converted after the close of business on a
       Record Date and before the opening of business on the next
       succeeding interest payment date, accrued interest shall be paid
       on the next succeeding interest payment date to the person in
       whose name that Security is registered at the close of business
       on that Record Date.  The price at which Conversion Shares shall
       be delivered upon conversion (herein called the "Conversion
       Price") shall be initially $56.70 per share of Common Stock.  The
       Conversion Price shall be adjusted in certain instances as
       provided in paragraphs (c)(i), (ii), (iii), (iv), (vi) and (vii)
       of Section 4 of the Registered Securities and Bearer Securities.

                 (b)  In order to exercise the conversion privilege, the
       holder of any Security to be converted shall surrender such
       Security, or, if less than the entire principal amount of a
       Registered Security or Bearer Security of a denomination other
       than $1,000 is to be converted, the portion thereof to be
       converted, together with all unmatured coupons and any matured
       coupons in default appertaining thereto, at the office of the
       Conversion Agent or any office or agency of the Company
       maintained for that purpose pursuant to Section 12(f) hereof,
       accompanied by a duly signed and completed Conversion Notice, in
       substantially the form set forth in the Registered Securities and
       Bearer Securities, to the Company, at such office or agency that
       the holder elects to convert such Security (or specified portion
       thereof).

                 (c)  Securities shall be deemed to have been converted
       immediately prior to the close of business on the day of
       surrender of such Securities for conversion in accordance with
       the foregoing provisions, and at such time the rights of the
       holders of such Securities as holders shall cease, and the person
       or persons entitled to receive the Common Stock issuable upon
       conversion shall be treated for all purposes as the record holder
       or holders of such Common Stock at such time.  As promptly as
PAGE


       practicable on or after the conversion date, the Company shall
       cause to be issued or delivered at such office or agency a
       certificate or certificates for the number of full shares of
       Common Stock issuable or deliverable upon conversion, together
       with payment, in lieu of any fraction of a share, as provided
       below.  The Paying Agent shall, within five business days after
       the conversion date, make a payment for the accrued interest
       thereon (and Additional Amounts, if any, thereon), except as
       otherwise provided in this Section 7.

                 (d)  In the case of any Registered Security or Bearer
       Security of a denomination other than $1,000 which is converted
       in part only, upon such conversion the Company shall execute and
       the Fiscal Agent shall authenticate and deliver to the holder
       thereof, at the expense of the Company, a new Security or
       Securities of any authorized kind or denomination as requested by
       such holder, in aggregate principal amount equal to the
       unconverted portion of the principal amount of such Security.

                 (e)  No fractional shares of Common Stock shall be
       issued or delivered upon conversion of Securities.  If more than
       one Security shall be surrendered for conversion at one time by
       the same holder, the number of full shares of Common Stock which
       shall be issuable or deliverable upon conversion thereof shall be
       computed on the basis of the aggregate principal amount of the
       Securities (or, in the case of Registered Securities or Bearer
       Securities of a denomination other than $1,000, specified
       portions thereof) so surrendered.  Instead of any fractional
       share of Common Stock which would otherwise be issuable or
       deliverable upon conversion of any Security or Securities (or, in
       the case of Registered Securities or Bearer Securities of a
       denomination other than $1,000, specified portions thereof), the
       Company shall pay a cash adjustment in respect of such fraction
       in an amount equal to the same fraction of the Closing Price (as
       defined in Section 4(c)(v) of the Registered Securities and
       Bearer Securities) for a share of Common Stock at the close of
       business on the day preceding the day of conversion.

                 (f)  Whenever the Conversion Price is adjusted as
       provided in the Registered Securities and Bearer Securities:

                      (i)  the Company shall compute the adjusted
       Conversion Price in accordance with the terms of the Registered
       Securities and Bearer Securities and shall prepare a certificate
       signed by the President, any Vice President or the Treasurer of
       the Company setting forth the adjusted Conversion Price and
       showing in reasonable detail the facts upon which such adjustment
       is based, and such certificate shall forthwith be filed with the
       Conversion Agent and at each office or agency maintained for the
       purpose of conversion of Securities pursuant to Section 12(f)
       hereof; and

                      (ii) a notice stating that the Conversion Price
       has been adjusted and setting forth the adjusted Conversion Price
PAGE


       shall forthwith be prepared, and, as soon as practicable after it
       is prepared, the Company shall promptly cause a notice setting
       forth the adjusted Conversion Price to be given to the holders of
       the Securities.  Such notice shall be published on behalf and at
       the expense of the Company in Authorized Newspapers on a Business
       Day in New York City and in London and, if the Securities are
       listed on the Luxembourg Stock Exchange and so long as listed
       thereon, in an Authorized Newspaper in Luxembourg, or, if
       publication in either London or Luxembourg is not practical, in
       an Authorized Newspaper in any country in Western Europe, as set
       forth in Section 19 of this Agreement and Section 4 of the
       Registered Securities and Bearer Securities.

                 (g)  In case:

                 (i)  the Company shall declare a dividend (or any other
       distribution) on its Common Stock payable otherwise than in cash
       out of its retained earnings (excluding dividends payable in
       stock for which adjustment is made pursuant to the terms of the
       Registered Securities and Bearer Securities); or

                 (ii) the Company shall authorize the granting to the
       holders of its Common Stock of rights or warrants to subscribe
       for or purchase any shares of capital stock of any class or of
       any other rights; or

                 (iii)     of any reclassification of the Common Stock
       of the Company (other than a subdivision or combination of its
       outstanding shares of Common Stock), or of any consolidation
       with, or merger of the Company into, any other corporation, or of
       any merger of another corporation into the Company (other than a
       merger which does not result in any reclassification, conversion,
       exchange or cancellation of outstanding shares of Common Stock of
       the Company), or of any sale or transfer of all or substantially
       all of the assets of the Company (which shall not include the
       sale or transfer of any portion of the assets of the Company to
       any corporation which, immediately following such transfer is at
       least 51% owned by the Company, provided that such sale or
       transfer does not result in the reclassification, conversion,
       exchange or cancellation of outstanding shares of Common Stock of
       the Company); or

                 (iv) of the involuntary dissolution, liquidation or
       winding up of the Company; or

                 (v)  the Company proposes to take any other action
       which would require an adjustment of the Conversion Price
       pursuant to the Registered Securities and Bearer Securities; 

            then the Company shall cause to be filed with the Conversion
       Agent and at each office or agency maintained for the purpose of
       conversion of Securities a notice setting forth the adjusted
       Conversion Price and shall cause notice to be given as provided
       in Section 19 except that notice need be given once at least 20
PAGE


       days (or 10 days in any case specified in clause (i) or (iii)
       above) prior to the applicable record date hereinafter specified,
       stating (x) the date on which a record is to be taken for the
       purpose of such dividend, distribution, rights or warrants or, if
       a record is not to be taken, the date as of which the holders of
       Common Stock of record to be entitled to such dividend,
       distribution, rights or warrants is to be determined, or (y) the
       date on which a reclassification, consolidation, merger, sale,
       transfer, dissolution, liquidation or winding up is expected to
       become effective, and the date as of which it is expected that
       holders of Common Stock of record shall be entitled to exchange
       their shares of Common Stock for the securities, cash or other
       property deliverable upon such reclassification, consolidation,
       merger, sale, transfer, dissolution, liquidation or winding up.
       The failure to give notice required by this Section or any defect
       therein shall not affect the legality or validity of any
       dividend, distribution, rights, warrants, reclassification,
       consolidation, merger, sale, transfer, dissolution, liquidation
       or winding up, or the vote on any such action.

                 (h)  The Company shall, at all times, have reserved and
       available, free from preemptive rights, out of its authorized but
       unissued shares of Common Stock, for the purpose of effecting the
       conversion of Securities, the full number of Conversion Shares
       then issuable upon the conversion of all Securities (based on the
       aggregate principal amount of Securities outstanding).

                 (i)  The Company shall file, as soon as practicable
       following the Closing Date, a shelf registration statement with
       the United States Securities and Exchange Commission covering the
       resale of shares of Common Stock issuable upon conversion of the
       Restricted Securities (_Registrable Securities_); provided that
       any holder of any Restricted Securities shall not sell any shares
       pursuant to such registration statement unless and until it
       provides to the Company such information as the Company may
       reasonably request for use in connection with the identification
       of such holder as a selling stockholder in such registration
       statement, or any prospectus included therein, and no such sale
       shall be made by such holder pursuant to such registration
       statement unless and until such information is included by the
       Company in such registration statement or prospectus.  The
       Company shall in good faith use its best efforts and at its cost
       to cause such registration statement to be declared effective as
       promptly as practicable thereafter and to include in such
       registration statement the information provided by a holder as a
       selling stockholder and shall notify the Fiscal Agent of the
       effectiveness thereof and agrees to use its best efforts to (i)
       cause all registrations with, and to obtain any approvals by, any
       governmental authority under any Federal or state law of the
       United States that may be required in connection with the
       conversion of the Securities into Common Stock and the resale
       thereof, (ii) maintain the effectiveness of such registrations
       until the earlier of (a) three years from the latest date of
       original issuance of the Securities hereunder, or (b) the date
PAGE


       that Rule 144(k) under the Securities Act (or successor
       provision) is available for the resale of the shares of Common
       Stock issuable upon conversion of the Restricted Securities (or
       other securities issuable upon conversion of the Securities) and
       (iii) to list the shares of Common Stock required to be issued or
       delivered upon conversion of Securities (or other securities
       issuable upon conversion of the Securities) prior to such issue
       or delivery on such national securities exchange or automated
       over-the-counter trading market where such Common Stock is listed
       or traded at the time of such delivery. The Company shall,
       without limitation as to time, indemnify and hold harmless, to
       the fullest extent permitted by law, each holder of Registrable
       Securities, the officers, directors and agents and employees of
       each of them, each person who controls such holder (within the
       meaning of Section 15 of the Securities Act or Section 20 of the
       Securities Exchange Act of 1934, as amended) and the officers,
       directors, agents and employees of any such controlling person,
       from and against all losses, claims, damages, liabilities, costs
       (including, without limitation, the costs of preparation and
       attorneys' fees) and expenses (collectively, _Losses_), as
       incurred, arising out of or based upon any untrue or alleged
       untrue statement of a material fact contained in any such
       registration statement, or related prospectus or in any amendment
       or supplement thereto, or arising out of or based upon any
       omission or alleged omission to state therein a material fact
       required to be stated therein or necessary to make the statements
       therein not misleading, except insofar as the same are based
       solely upon information, if any, furnished in writing to the
       Company by such holder expressly for use therein; provided, that
       the Company shall not be liable to any holder of Registrable
       Securities to the extent that any such Losses arise out of or are
       based upon an untrue statement or alleged untrue statement or
       omission or alleged omission made in any preliminary prospectus
       if either (A)(i) such holder failed to send or deliver a copy of
       the final prospectus with or prior to the delivery of written
       confirmation of the sale by such holder of a Registrable Security
       to the person asserting the claim from which such Losses arise
       and (ii) the prospectus would have completely corrected such
       untrue statement or alleged untrue statement or such omission or
       alleged omission; or (B)(i) such untrue statement or alleged
       untrue statement, omission or alleged omission is completely
       corrected in an amendment or supplement to the prospectus and
       (ii) having previously been furnished by or on behalf of the
       Company with copies of the prospectus as so amended or
       supplemented, such holder thereafter fails to deliver such
       prospectus as so amended or supplemented, prior to or
       concurrently with the sale of a Registrable Security to the
       person asserting the claim from which such Losses arise.
       Promptly after receipt by an indemnified party under this
       Paragraph (i) of notice of any claim or the commencement of any
       action, the indemnified party shall, if a claim in respect
       thereof is to be made against the Company under this Paragraph
       (i) notify the Company in writing of the claim or the
       commencement of that action; provided, however, that the failure
PAGE


       to notify the Company shall not relieve it from any liability
       which it may have to an indemnified party otherwise than under
       this Paragraph (i).  If any such claim or action shall be brought
       against an indemnified party, and it shall notify the Company
       thereof, the Company shall be entitled to participate therein
       and, to the extent that it wishes, to assume the defense thereof
       with counsel reasonably satisfactory to the indemnified party.
       After notice from the Company to the indemnified party of its
       election to assume the defense of such claim or action, the
       Company shall not be liable to the indemnified party under this
       Paragraph (i) for any legal or other expenses subsequently
       incurred by the indemnified party in connection with the defense
       thereof; provided, however, if the defendants in any such action
       include both an indemnified party and the Company and the
       indemnified party shall have reasonably concluded that there may
       be legal defenses available to it and for other indemnified
       parties that are different from or additional to those available
       to the Company, the indemnified party or parties under this
       Paragraph (i) shall have the right to employ not more than one
       counsel to represent them and, in that event, the reasonable fees
       and expenses of not more than one such separate counsel shall be
       paid by the Company.  The Company shall not be liable for any
       settlement effected without its written consent of any claim or
       action.

                 (j)  The Company covenants that all shares of Common
       Stock which may be issued or delivered upon conversion of
       Securities (or other securities issuable upon conversion of the
       Securities) will upon issuance be fully paid and nonassessable
       and, except as provided in Section 13 hereof, the Company will
       pay all stamp, excise or similar taxes or duties, liens and
       charges with respect to the issue thereof.

                 (k)  All converted Securities shall be held by the
       Company, and may, at any time, be delivered to the Fiscal Agent
       for cancellation, which shall hold or dispose of the same in
       accordance with its policy for disposal of cancelled securities
       or as otherwise directed by the Company.  Converted Securities
       shall not be transferred.  The Conversion Agent shall give the
       Company prompt notice of all Securities which have been
       converted, and if the Fiscal Agent is not also the Conversion
       Agent, the Company will promptly give, or cause to be given,
       written notice to the Fiscal Agent of the serial numbers of all
       Securities which have been converted.

                 (1)  In case of any consolidation with, or merger of
       the Company into, any other corporation, or in case of any merger
       of another corporation into the Company (other than a merger
       which does not result in any reclassification, conversion,
       exchange or cancellation of outstanding shares of Common Stock of
       the Company), or in case of any sale or transfer of all or
       substantially all of the assets of the Company, the corporation
       formed by such consolidation or resulting from such merger (which
       shall not include the sale or transfer of any portion of the
PAGE


       assets of the Company to any corporation which, immediately
       following such transfer is at least 51% owned by the Company,
       provided that such sale or transfer does not result in the
       reclassification, conversion, exchange or cancellation of
       outstanding shares of Common Stock of the Company), or which
       acquires such assets, as the case may be, shall execute and
       deliver to the Fiscal Agent an amendment to the Fiscal Agency
       Agreement providing that the holder of each Registered Security
       and Bearer Security shall have the right during the period such
       Security shall be convertible as specified in the Registered
       Securities and Bearer Securities to convert such Security only
       into the kind and amount of securities, cash and other property
       receivable upon such consolidation, merger, sale or transfer by a
       holder of the number of shares of Common Stock of the Company
       into which such Security might have been converted immediately
       prior to such consolidation, merger, sale or transfer, assuming,
       if such consolidation, merger, sale or transfer is prior to the
       period such Security shall be convertible as specified in the
       Registered Securities and Bearer Securities, that the Securities
       were convertible at such time at the initial Conversion Price as
       adjusted pursuant to the terms of the Registered Securities and
       Bearer Securities.  Such amendment shall provide for adjustments
       which, for events subsequent to the effective date of such
       amendment, shall be as nearly equivalent as may be practicable to
       the adjustments provided for in the Registered Securities and the
       Bearer Securities.  The above provisions of this Section shall
       similarly apply to successive consolidations, mergers, sales or
       transfers.

                 (m)  Subject to Section 11(j) hereof, neither the
       Fiscal Agent nor the Conversion Agent or conversion agency
       appointed by the Company shall at any time be under any duty or
       responsibility to any holder of Securities to determine whether
       any facts exist which may require any adjustment of the
       Conversion Price, or with respect to the nature or extent of any
       such adjustment when made, or with respect to the method
       employed, or herein or in the Registered Securities and Bearer
       Securities provided to be employed, in making the same.  Neither
       the Fiscal Agent nor the Conversion Agent or conversion agency
       appointed by the Company shall be accountable with respect to the
       validity or value (or the kind or amount) of any shares of Common
       Stock or of any securities or property which may at any time be
       issued or delivered upon the conversion of any Security; and
       neither the Fiscal Agent nor the Conversion Agent or conversion
       agency appointed by the Company makes any representation with
       respect thereto.  Neither the Fiscal Agent nor the Conversion
       Agent or conversion agency appointed by the Company shall be
       responsible for any acts or omissions of the Company including
       without limitation any failure of the Company to issue, transfer
       or deliver any certificates representing shares of Common Stock
       or other securities or property or to make any cash payment upon
       the delivery of any Security for the purpose of conversion or to
       comply with any of the covenants contained in this Section 7.
PAGE


                 (n)  Any Common Stock issued upon conversion of a
       Restricted Security ("Restricted Common Stock") at any time prior
       to the date which is three years (or the then applicable holding
       period under Rule 144(k) under the Securities Act (or successor
       provision)) after the date of original issuance of such
       Restricted Security and the last date on which the Company or any
       affiliate of the Company was the owner thereof (or any
       predecessor),  and when a registration statement in respect of
       such Common Stock is not effective under the Securities Act,
       shall be subject to the restrictions on transfer set forth in
       Section 3 hereof to the same extent as such Restricted Securities
       which were so converted.  All shares of Restricted Common Stock
       shall bear the legend and transfer requirements set forth in
       Section 3(f) hereof, with such modifications thereto as the
       Company shall deem appropriate.

            8.   Surrendered Securities.

                 All Securities, together with any coupons appertaining
       thereto, surrendered for payment, redemption, retirement,
       transfer or exchange and all coupons paid through the application
       of interest installments and all Securities purchased by the
       Company or any subsidiary shall be delivered to the Fiscal Agent.
       In any such case the Fiscal Agent shall cancel all Securities and
       coupons not previously cancelled and destroy all such Securities
       and coupons so delivered and shall furnish to the Company a
       certificate with respect to such destruction.  Such certificate
       shall state, in the case of destruction of the Regulation S
       Global Security, that all certificates of the Euroclear Operator
       or Cedel S.A. as to beneficial ownership required by Section 4
       hereof have been duly presented by the Euroclear Operator or
       Cedel S. A.

            9.   Mutilated, Destroyed, Stolen or Lost Securities.

                 The Fiscal Agent is hereby authorized, in accordance
       with the provisions of the Securities and this Section, from time
       to time to authenticate and deliver Securities in exchange for or
       in lieu of Securities that become mutilated, destroyed, stolen or
       lost, upon receipt of indemnity and such other documents or proof
       as may be required in form and substance satisfactory to the
       Fiscal Agent and the Company.  Every Security authenticated and
       delivered in exchange for or in lieu of any such Security shall
       be considered obligations of the Company and shall carry all
       rights to interest accrued and unpaid and to accrue which were
       carried by such Security, and notwithstanding anything to the
       contrary herein contained, any new Bearer Security shall have
       attached thereto such coupons that neither gain nor loss in
       interest shall result from such exchange or substitution.

            10.  Signatures.

                 Securities shall be executed on behalf of the Company
       by its President, its Secretary, any Vice President or its
PAGE


       Treasurer, any of whose signatures may be manual or in facsimile,
       and any coupons appertaining thereto shall be executed on behalf
       of the Company by the facsimile signature of its President, its
       Secretary, any Vice President or its Treasurer.  Any signature in
       facsimile may be imprinted or otherwise reproduced on the
       Securities.  The Company may adopt and use the signature or
       facsimile signature of any person who shall be a President,
       Secretary, Vice President or Treasurer at the time of the
       execution of the Securities, notwithstanding the fact that at the
       time the Securities shall be authenticated and delivered, or
       disposed of, such person shall have ceased to have held such
       office by virtue of which such person so executed such security.

            11.  Agreements Concerning Agents.

                 Each of the Agents accepts its obligations herein and
       in the Securities, upon the terms and conditions hereof and
       thereof, including the following, to all of which the Company
       agrees and to all of which the rights hereunder of the holders
       from time to time of the Securities and coupons shall be subject:

                 (a)  Each of the Agents shall be entitled to reasonable
       compensation for all services rendered by such Agent, as
       separately agreed by the Company and the Agent, and the Company
       agrees promptly to pay such compensation and to reimburse each of
       the Agents for the reasonable out-of-pocket expenses (including,
       but not limited to, counsel fees) incurred by such Agent in
       connection with the services rendered by it hereunder.  The
       Company also agrees to indemnify each of the Agents and each
       other paying agency and conversion agency of the Company for, and
       to hold it harmless against, any loss, liability or expense
       (including the costs and expenses of defending against any claim
       of liability) incurred without negligence or bad faith on the
       part of such Agent or other paying agency and conversion agency
       of the Company hereunder.  The obligations of the Company under
       this clause (a) shall survive payment of the Securities or the
       resignation or removal of any Agent or paying agency or
       conversion agency.

                 (b)  In acting under this Agreement and in connection
       with the Securities, each of the Agents and each other paying
       agency and conversion agency of the Company is acting solely as
       agent of the Company, and does not assume any obligation, or
       relationship of agency or trust, for or with any of the owners or
       holders of the Securities or coupons, except that all funds held
       by the Paying Agent or any other paying agency of the Company for
       payment of principal, premium, if any, or interest on (or
       Additional Amounts, if any, on) the Securities shall be held in
       trust but need not be segregated from other funds except as
       required by law and as set forth herein and in the Securities,
       and shall be applied as set forth herein and in the Securities;
       provided, however, that monies paid by the Company to the Paying
       Agent or any other paying agency of the Company for the payment
       of principal of or interest on (or Additional Amounts, if any,
PAGE


       on) Securities remaining unclaimed at the end of two years after
       such principal or interest (or Additional Amounts, if any) shall
       have become due and payable shall be repaid to the Company, as
       provided and in the manner set forth in the Securities, whereupon
       the aforesaid trust shall terminate and all liability of the
       Paying Agent or such other paying agency or the Company with
       respect thereto shall cease.

                 (c)  Each of the Agents and each other paying agency
       and conversion agency of the Company may consult with one or more
       counsel satisfactory to it (including counsel to the Company),
       and the written opinion of such counsel shall be full and
       complete authorization and protection in respect of any action
       taken, omitted or suffered by it hereunder in good faith and in
       accordance with the opinion of such counsel.

                 (d)  Each of the Agents and each other paying agency
       and conversion agency of the Company shall be protected and shall
       incur no liability for or in respect of any action taken, omitted
       or suffered by it in reliance upon any Security or coupon,
       notice, direction, consent, certificate, affidavit, statement or
       other paper or document believed in good faith by such Agent or
       such other paying agency and conversion agency of the Company to
       be genuine and to have been signed by the property parties.

                 (e)  Each of the Agents and each other paying agency
       and conversion agency of the Company, its officers, directors and
       employees may become the owner of, or acquire any interest in,
       any Securities or coupons, with the same rights that it or they
       would have if it were not an Agent or such other paying agency of
       the Company hereunder, and may engage or be interested in any
       financial or other transaction with the Company and its
       affiliates and may act on, or as depositary, trustee or agent
       for, any committee or body of holders of Securities or other
       obligations of the Company, as freely as if it were not an Agent
       or a paying agency or conversion agency of the Company hereunder.

                 (f)  Neither the Paying Agent nor any other paying
       agency of the Company shall be under any liability for interest
       on any monies at any time received by it pursuant to any of the
       provisions of this Agreement or of the Securities.

                 (g)  The recitals contained herein and in the
       Securities (except in the Fiscal Agent's certificates of
       authentication), shall be taken as the statements of the Company,
       and the Agents assume no responsibility for the correctness of
       the same.  None of the Agents makes any representation as to the
       validity or sufficiency of this Agreement or the Securities or
       the coupons, except for such Agent's due authorization to execute
       this Agreement.  Neither the Agents nor any other paying agency
       or conversion agency of the Company shall be accountable for the
       use or application by the Company of the proceeds of any
       Securities authenticated and delivered by the Fiscal Agent in
       conformity with the provisions of this Agreement.
PAGE


                 (h)  The Agents and each other paying agency and
       conversion agency of the Company shall be obligated to perform
       such duties and only such duties as are herein and in the
       Securities specifically set forth and no implied duties or
       obligations shall be read into this Agreement or the Securities
       against the Agents or any other paying agency of the Company.
       The Agents shall not be under any obligation to take any action
       hereunder which may tend to involve them in any expense or
       liability, the payment of which, within a reasonable time, is
       not, in their reasonable opinion, assured to them.

                 (i)  Unless herein or in the Securities otherwise
       specifically provided, any order, certificate, notice, request,
       direction, or other communication, from the Company made by or
       given by it under any provision of this Agreement shall be
       sufficient if signed by the President, the Secretary, any Vice
       President or the Treasurer of the Company.

                 (j)  Anything in this Agreement to the contrary
       notwithstanding, none of the Agents shall incur any liability
       hereunder, except as a result of negligence or bad faith
       attributable to it or its officers or employees, and shall incur
       no liability for the negligence or bad faith of its agents
       appointed by it with due care; provided that the Agent shall
       notify the Company of the appointment of any such agents.

                 (k)  The Agents shall not be liable for any loss caused
       by events beyond the reasonable control of the Agents, including
       any malfunction, interruption of or error in the transmission of
       information caused by any machines or systems or interruption of
       communication facilities, abnormal operating conditions or acts
       of God.  The Agents shall have no liability whatsoever for any
       consequential, special, indirect or speculative losses or
       damages.

            12.  Offices, Resignation, Successors, Etc. of Agents,
       Paying, Conversion and Transfer Agencies.

                 (a)  The Company agrees that, until none of the
       Securities and coupons are outstanding or until monies for the
       payment of all principal, premium, if any, and interest on (and
       Additional Amounts, if any, on) all outstanding Securities shall
       have been made available at the office of the Paying Agent and
       shall have been returned to the Company as provided in the
       Securities, there shall at all times be a Fiscal Agent in the
       Borough of Manhattan, New York City, which shall be a bank or
       trust company organized and doing business under the laws of the
       United States of America or of any State of the United States of
       America, in good standing and authorized under such laws to
       exercise corporate trust powers, a Paying Agent, a Conversion
       Agent and a Transfer Agent having offices in a city in Western
       Europe and in New York City, which shall be a bank or trust
       company organized, in good standing and doing business under the
PAGE


       laws of the United States of America or of any State of the
       United States of America, and a paying agency, a conversion
       agency and a transfer agency in at least one city in Western
       Europe, which shall be Luxembourg if the Securities are listed on
       the Luxembourg Stock Exchange and so long as listed thereon.

                 (b)  Each of the Agents may at any time resign as such
       Agent by giving written notice to the Company of such intention
       on its part, specifying the date on which its desired resignation
       shall become effective; provided, however, that such date shall
       not be less than 90 days after receipt of such notice by the
       Company unless the Company agrees to accept less notice.  Each of
       the Agents hereunder may be removed at any time by the filing
       with it of any instrument in writing signed on behalf of the
       Company and specifying such removal and the date when it is
       intended to become effective.  Such resignation or removal shall
       take effect upon the date of the appointment by the Company, as
       hereinafter provided, of a successor Fiscal Agent, Conversion
       Agent or Paying Agent, as the case may be, and the acceptance of
       such appointment by such successor Agent.  Upon its resignation
       or removal, each of the Agents shall be entitled to the payment
       by the Company of its compensation for the services rendered
       hereunder and to the reimbursement of all reasonable
       out-of-pocket expenses incurred in connection with the services
       rendered hereunder by such Agent and shall promptly notify the
       Company of such action.

                 (c)  In case at any time any of the Agents shall
       resign, or shall be removed, or shall be incapable of acting, or
       shall file a voluntary petition as a debtor under Chapter 7 or 11
       of Title 11 of the United States Code or have an order for relief
       entered against it as a debtor under Chapter 7 or 11 of Title 11
       of the United States Code or make an assignment for the benefit
       of its creditors or consent to the appointment of a receiver of
       all or any substantial part of its property, or shall admit in
       writing its inability to pay or meet its debts as they mature, or
       if an order of any court shall be entered approving any petition
       filed by or against the Fiscal Agent under any legislation
       similar to the provisions of Title 11 of the United States Code
       or against any of the Agents under the provisions of any
       legislation similar to the provisions of Title 11 of the United
       States Code, or if a receiver of it or of all or any substantial
       part of its property shall be appointed, or if any public officer
       shall take charge or control of it or of its property or affairs,
       for the purpose of rehabilitation, conservation or liquidation, a
       successor Agent, qualified as aforesaid, shall be appointed by
       the Company by an instrument in writing.  Upon the appointment as
       aforesaid of a successor Agent and acceptance by it of such
       appointment, the Agent so superseded shall cease to be such Agent
       hereunder.  If no successor Agent shall have been so appointed by
       the Company and shall have accepted appointment as hereinafter
       provided, any holder of a Security, on behalf of itself and all
       others similarly situated, or any Agent may petition any court of
PAGE


       competent jurisdiction for the appointment of a successor Agent
       and shall promptly notify the Company of such action.

                 (d)  Any successor Fiscal Agent, Conversion Agent,
       Transfer Agent or Paying Agent appointed hereunder shall execute,
       acknowledge and deliver to its predecessor and to the Company an
       instrument accepting such appointment hereunder, and thereupon
       such successor Agent, without any further act, deed or
       conveyance, shall become vested with all the authority, rights,
       powers, trusts, immunities, duties and obligations of such
       predecessor with like effect as if originally named as such Agent
       hereunder, and such predecessor, upon payment of its charges and
       disbursements then unpaid, shall thereupon become obligated to
       transfer, deliver and pay over, and such successor Agent shall be
       entitled to receive, all monies, securities or other property on
       deposit with or held by such predecessor, as such Agent
       hereunder.

                 (e)  Any corporation or bank into which any of the
       Agents hereunder may be merged or converted, or any corporation
       or bank with which such Agent may be consolidated, or any
       corporation or bank resulting from any merger, conversion or
       consolidation to which such Agent shall be a party, or any
       corporation or bank to which such Agent shall sell or otherwise
       transfer all or substantially all the assets and business of such
       Agent, or any corporation to which the Fiscal Agent shall sell or
       otherwise transfer all or substantially all of its corporate
       trust business, provided that it shall be qualified as aforesaid,
       shall be the successor to such Agent under this Agreement without
       the execution or filing of any document or any further act on the
       part of any of the parties hereto.

                 (f)  So long as there shall be a Fiscal Agent and
       Paying Agent hereunder, the Company shall maintain agencies (i)
       where Registered Securities (but not Bearer Securities or
       coupons) may be presented for surrender for payment (and for the
       payment of Additional Amounts on the Registered Securities, if
       any) and where Securities may be surrendered for conversion in
       the Borough of Manhattan, New York City, and (ii) where Bearer
       Securities and coupons may be surrendered for payment (and for
       the payment of Additional Amounts (pursuant to Section 2 of the
       Bearer Securities) on Bearer Securities, if any) and where Bearer
       Securities may be surrendered for conversion in at least one city
       in Western Europe, which shall be Luxembourg if the Securities
       are listed on the Luxembourg Stock Exchange and so long as listed
       thereon.  The Company now intends to maintain additional agencies
       (subject to applicable laws and regulations) where Bearer
       Securities may be surrendered for payment (and for the payment of
       Additional Amounts (pursuant to Section 2 of the Bearer
       Securities) on Bearer Securities, if any), where Registered
       Securities may be surrendered for payment and where Securities
       may be surrendered for conversion in London, England and, if the
       Securities are listed on the Luxembourg Stock Exchange and so
       long as listed thereon, Luxembourg, and during such period to
PAGE


       keep the Agents advised of the names and locations of such
       agencies.  Unless the Company shall otherwise notify each of the
       Agents in writing, the sole such paying agencies and conversion
       agencies shall be the agencies specified in the Securities.  The
       Company authorizes the Paying Agent to pay to or to the order of
       the aforesaid agencies, upon demand by such agencies, funds for
       the payment of the principal, premium, if any, and interest on
       (and Additional Amounts pursuant to Section 2 of the Registered
       Securities and Bearer Securities, if any, on) the Securities.
       Except as otherwise arranged by the Company, the Fiscal Agent
       shall arrange for the payment of the compensation of such paying
       agencies for their services as such, and the Company shall pay to
       the Fiscal Agent from time to time sufficient funds to make such
       payments.

                 (g)  So long as there shall be a Fiscal Agent, Paying
       Agent and Conversion Agent hereunder, the Company shall maintain
       a Security Registrar and additional transfer agencies (the
       "Transfer Agents") (i) where Registered Securities may be
       surrendered for exchange for other Registered Securities in New
       York City and (ii) in at least one city in Western Europe, which
       shall be Luxembourg if the Securities are listed on the
       Luxembourg Stock Exchange and so long as listed thereon, where
       Bearer Securities may be delivered in exchange for Bearer
       Securities or for Registered Securities.  Consistent with
       applicable laws and regulations, including the provisions of the
       federal income tax laws of the United States, such agencies may
       be the same agencies as or different agencies from those
       maintained by the Company pursuant to Section 12(f).

                 The Company hereby appoints, subject to the listing of
       the Securities on the Luxembourg Stock Exchange, Banque
       Internationale a Luxembourg, 69, route d'Esch, L-1470 Luxembourg
       Ville, Luxembourg, as Transfer Agent for such exchanges.  The
       transfer, exchange and registration of transfer or exchange of
       Registered Securities shall be made by the Fiscal Agent in New
       York City.

            13.  Taxes.

                 The Company will pay all stamp taxes and other similar
       duties, if any, that may be imposed by the United States of
       America or the United Kingdom, or any state or political
       subdivision thereof or taxing authority therein, with respect to
       the execution or delivery of this Agreement, or the issuance of
       the Regulation S Global Security, or the exchange from time to
       time of the Regulation S Global Security for Registered
       Securities and Bearer Securities, or with respect to the issue or
       delivery of shares of Common Stock on conversion of Securities;
       provided, however, that the Company shall not be required to pay
       any tax or duty which may be payable in respect of any transfer
       involved in the issue or delivery of shares of Common Stock in a
       name other than that of the holder of the Security or Securities
       to be converted, and no such issue or delivery shall be made
PAGE


       unless and until the person requesting such issue has paid to the
       Company the amount of any such tax or duty or has established to
       the satisfaction of the Company that such tax or duty has been
       paid; and further provided that the Company shall not be required
       to pay any tax or duty that may be payable in respect of any
       accrued interest paid in connection with the conversion of the
       Securities.

            14.  Meetings and Votes of Holders.

                 (a)  A meeting of holders of Securities may be called
       at any time and from time to time pursuant to this Section for
       any of the following purposes: (i) to give any notice to the
       Company or to the Fiscal Agent, or to give any directions to the
       Fiscal Agent, or to consent to the waiving of any default
       hereunder or under the Registered Securities and Bearer
       Securities and its consequences, or to take any other action
       authorized to be taken by holders of Securities pursuant to
       Section 9 of the Registered Securities and Bearer Securities; or
       (ii) to take any other action authorized to be taken by or on
       behalf of the holders of any specified aggregate principal amount
       of the Securities under any other provision of this Agreement,
       the Registered Securities and Bearer Securities or under
       applicable law.

                 (b)  Meetings of holders of Securities may be held at
       such place or places in New York City or London as the Fiscal
       Agent or, in case of its failure to act, the Company or the
       holders calling the meeting shall from time to time determine.

                 (c)  The Fiscal Agent may at any time call a meeting of
       holders of Securities to be held at such time and at such place
       in any of the locations designated in Section 14(b) hereof as the
       Fiscal Agent shall determine.  Notice of every meeting of holders
       shall be made as specified in Section 19 hereof, except that such
       notice shall set forth the time and the place of such meeting, in
       general terms the action proposed to be taken at such meeting and
       a general description of regulations applicable to such meeting,
       and shall be published at least three times in the publications
       specified in such Section 19, the first publication to be not
       less than 21 nor more than 180 days prior to the date fixed for
       the meeting.

                 (d)  In case at any time the Company or the holders of
       at least 25% in aggregate principal amount of the Securities
       shall have requested the Fiscal Agent to call a meeting of the
       holders, by written request setting forth in reasonable detail
       the action proposed to be taken at the meeting, and the Fiscal
       Agent shall not have given the first notice of such meeting
       within 21 days after receipt of such request or shall not
       thereafter proceed to cause the meeting to be held as provided
       herein, then the Company or the holders of Securities in the
       amount above specified may determine the time and the place in
       either of the locations designated in Section 14(b) hereof for
PAGE


       such meeting and may call such meeting to take any action
       authorized in Section 14(a) hereof by giving notice thereof as
       provided in Section 14(c) hereof.

                 (e)  To be entitled to vote at any meeting of holders
       of Securities, a person shall be (i) a holder of one or more
       Securities, or (ii) a person appointed by an instrument in
       writing as proxy for a holder or holders of Securities by such
       holder or holders, which proxy need not be a holder of
       Securities.  The only persons who shall be entitled to be present
       or to speak at any meeting of holders shall be the persons
       entitled to vote at such meeting and their counsel and any
       representatives of the Fiscal Agent and its counsel and any
       representatives of the Company and its counsel.

                 (f)  The persons entitled to vote a majority in
       principal amount of the outstanding Securities shall constitute a
       quorum for the transaction of all business specified in Section
       14(a) hereof. No business shall be transacted in the absence of a
       quorum unless a quorum is represented when the meeting is called
       to order.  In the absence of a quorum within 30 minutes of the
       time appointed for any such meeting, the meeting shall, if
       convened at the request of the holders of Securities (as provided
       in Section 14(d) hereof), be dissolved.  In any other case the
       meeting shall be adjourned for a period of not less than 10 days
       as determined by the chairman of the meeting prior to the
       adjournment of such adjourned meeting.  Notice of the reconvening
       of any adjourned meeting shall be given as provided in Section
       14(c) hereof except that such notice need be published only once
       but must be given not less than five days prior to the date on
       which the meeting is scheduled to be reconvened.  Subject to the
       foregoing, at the reconvening of any meeting adjourned for a lack
       of a quorum the persons entitled to vote 25% in principal amount
       of the Securities outstanding shall constitute a quorum for the
       taking of any action set forth in the notice of the original
       meeting.  Notice of the reconvening of an adjourned meeting shall
       state expressly the percentage of the aggregate principal amount
       of the Securities that shall constitute a quorum.  At a meeting
       or an adjourned meeting duly reconvened and at which a quorum is
       present as aforesaid, any resolution and all matters (except as
       limited by Section 9 of the Registered Securities and Bearer
       Securities) shall be effectively passed and decided if passed or
       decided by the persons entitled to vote a majority in principal
       amount of the Securities represented and voting at such meeting,
       provided that such amount shall be not less than 25% in principal
       amount of the Securities outstanding.  Any holder of a Security
       who has executed an instrument in writing appointing a person as
       his proxy shall be deemed to be present for the purposes of
       determining a quorum and be deemed to have voted; provided,
       however, that such holder shall be considered as present or
       voting only with respect to the matters covered by such
       instrument in writing.  Any resolution passed or decision taken
       at any meeting of the holders of Securities duly held in
       accordance with this Section 14 shall be binding on all the
PAGE


       holders of Securities whether or not present or represented at
       the meeting.

                 (g)  Notwithstanding any other provision of this
       Agreement, the Fiscal Agent may make such reasonable regulations
       as it may deem advisable for any meeting of holders of Securities
       in regard to proof of the holding of Securities and of the
       appointment of proxies and in regard to the appointment and
       duties of inspectors of votes, the submission and examination of
       proxies, certificates and other evidence of the right to vote,
       and such other matters concerning the conduct of the meeting as
       it shall deem appropriate.  Except as otherwise permitted or
       required by any such regulations, the holding of Bearer
       Securities shall be proved by the production of the Bearer
       Securities or by a certificate executed, as depositary, by, and
       the appointment of any proxy shall be proved by having the
       signature of the person executing the proxy witnessed or
       guaranteed by, in each case, any trust company, bank or banker
       satisfactory to the Fiscal Agent.  Such regulations may provide
       that written instruments appointing proxies, regular on their
       face, may be presumed valid and genuine without the proof
       specified herein or other proof.  The holding of Registered
       Securities shall be proved by the registry books maintained in
       accordance with Section 2(d) hereof or by a certificate or
       certificates of the Fiscal Agent in its capacity as Company's
       agent for the maintenance of such books.

                 (h)  The Fiscal Agent shall, by an instrument in
       writing, appoint a temporary chairperson and a temporary
       secretary of the meeting, unless the meeting shall have been
       called by the Company or by the holders of Securities or the
       Fiscal Agent at the request of the Company or the holders of
       Securities as provided in Section 14(d) hereof and in the
       Securities, in which case the Company or the holders calling the
       meeting, as the case may be, shall in like manner appoint a
       temporary chairperson and a temporary secretary.  A permanent
       chairperson and a permanent secretary of the meeting shall be
       elected by vote of the holders of a majority in principal amount
       of the Securities represented at the meeting and entitled to
       vote.

                 (i)  At any meeting each holder or proxy shall be
       entitled to one vote for each U.S.$1,000 principal amount of
       Securities held or represented by him; provided, however, that no
       vote shall be cast or counted at any meeting in respect of any
       Securities challenged as not outstanding and ruled by the
       chairperson of the meeting to be not outstanding.  The
       chairperson of the meeting shall have no right to vote, except as
       a holder or proxy.

                 (j)  Any meeting of holders of Securities duly called
       pursuant to Section 14(c) or 14(d) hereof at which a quorum is
       present may be adjourned from time to time by vote of the holders
       (or proxies for the holders) of a majority in principal amount of
PAGE

       the Securities represented at the meeting and entitled to vote;
       and the meeting may be held as so adjourned without further
       notice.

                 (k)  The vote upon any resolution submitted to any
       meeting of holders of Securities shall be by written ballots on
       which shall be subscribed the signatures of the holders of
       Securities or of their representatives by proxy and the serial
       number or numbers of the Securities held or represented by them.
       The permanent chairperson of the meeting shall appoint two
       inspectors of votes who shall count all votes cast at the meeting
       for or against any resolution and who shall make and file with
       the secretary of the meeting their verified written reports in
       triplicate of all votes cast at the meeting.  A record, at least
       in triplicate, of the proceedings of each meeting of holders of
       Securities shall be prepared by the secretary of the meeting and
       there shall be attached to said record the original reports of
       the inspectors of votes on any vote by ballot taken thereat and
       affidavits by one or more persons having knowledge of the facts
       setting forth a copy of the notice of the meeting and showing
       that said notice was published as provided in Section 14(c) or
       14(d) hereof and, if applicable, Section 14(f) hereof.  Each copy
       shall be signed and verified by the affidavits of the permanent
       chairperson and secretary of the meeting, and one such copy shall
       be delivered to the Company and another to the Fiscal Agent to be
       preserved by the Fiscal Agent, the copy delivered to the Fiscal
       Agent to have attached thereto the ballots voted at the meeting.
       Any record so signed and verified shall be conclusive evidence of
       the matters therein stated.

            15.  Merger, Consolidation or Sale of Assets.

                 (a)  If at any time there shall be a merger,
       consolidation, sale or conveyance of assets or assumption of
       obligations to which any of the covenants contained in Section 6
       of the Registered Securities and Bearer Securities is applicable,
       then in any such event the successor or assuming corporation
       referred to therein will promptly deliver to the Fiscal Agent:

                 (i)  a certificate signed by an executive officer of
       such successor or assuming corporation stating that as of the
       time immediately after the effective date of any such
       transaction, the covenants of the Company contained in the
       Registered Securities and Bearer Securities have been complied
       with and the successor or assuming corporation is not in default
       under the provisions of this Agreement or the Securities, as
       applicable; and

                 (ii) a written opinion of legal counsel (who may be an
       employee of or counsel to the successor or assuming corporation)
       stating that, in such counsel's opinion, such covenants have been
       complied with and that any instrument or instruments executed in
       the performance of such covenants comply with the requirements
       thereof.
PAGE


                 In case of any such merger, consolidation, sale,
       conveyance or assumption, such successor or assuming corporation
       shall succeed to and be substituted for the Company with the same
       effect, subject to (in the case of a merger to which the Company
       is a party) Section 6(b) of the Registered Securities and Bearer
       Securities, as if such successor or assuming corporation had been
       named herein and in the Registered Securities and Bearer
       Securities as the Company; the Company shall thereupon be
       relieved of any further obligation or liability hereunder or upon
       the Securities, provided that any successor or assuming
       corporation shall have the right to redeem the Securities,
       pursuant to Section 3(b) of the Registered Securities and Bearer
       Securities, only as a result of circumstances which occur
       subsequent to such merger, consolidation, sale, conveyance or
       assumption and as a result of which the Company would have had
       such right if the Company had remained the obligor on the
       Securities.  The Company, as the predecessor corporation may
       thereupon or at any time thereafter be dissolved, wound up or
       liquidated.  If applicable, such successor or assuming
       corporation thereupon may cause to be signed, and may issue
       either in its own name or in the name of the Company any or all
       of the Securities issuable hereunder which theretofore shall not
       have been executed on behalf of the Company and delivered to the
       Fiscal Agent; and, upon the order of such successor or assuming
       corporation, instead of the Company, and subject to all the
       terms, conditions and limitations in this Agreement prescribed,
       the Fiscal Agent shall authenticate and shall deliver any
       Securities which previously shall have been signed and delivered
       by the officers of the Company to the Fiscal Agent for
       authentication, and any Securities which such successor or
       assuming corporation thereafter shall cause to be signed and
       delivered to the Fiscal Agent for that purpose.  All the
       Securities so issued shall in all respects have the same legal
       rank and benefit under this Agreement as the Securities
       theretofore or thereafter issued in accordance with the terms of
       this Agreement as though all of such Securities had been issued
       at the date of the execution hereof.

                 In case of any merger, consolidation, sale, conveyance
       or assumption, such changes in phraseology and form (but not in
       substance) may be made in the Securities thereafter to be issued
       as may be appropriate.

                 (b)  The Fiscal Agent may rely on the documents
       delivered pursuant to this Agreement by any successor or assuming
       corporation pursuant to this Section 15 as conclusive evidence
       that any such merger, consolidation, sale, conveyance or
       assumption complies with the provisions of this Section and the
       Securities.

            16.  Governing Law.
PAGE


                 THIS AGREEMENT, THE SECURITIES AND ANY COUPONS
       APPERTAINING THERETO SHALL BE GOVERNED BY AND CONSTRUED IN
       ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS,
       UNITED STATES OF AMERICA, WITHOUT GIVING EFFECT TO ITS CONFLICTS
       OF LAW RULES.

            17.  Amendments.

                 This Agreement may be amended by the parties hereto,
       and certain provisions hereof may be waived, in the manner
       provided in Section 9 of the Registered Securities and Bearer
       Securities.  This Agreement may also be amended by the parties
       hereto, without the consent of the holder of any Security, for
       the purposes set forth in Section 9 of the Registered Securities
       and Bearer Securities and for the purpose of curing any
       ambiguity, or of curing, correcting or supplementing any
       defective provision contained herein or in any manner that the
       parties may mutually deem necessary or desirable, and that shall
       not materially adversely affect the interests of the holders of
       the Securities.

            18.  Agent for Service of Process.

                 As long as any of the Securities or coupons
       appertaining thereto remain outstanding, the Company will at all
       times have an authorized agent in the City of New York, upon whom
       process may be served in any legal action or proceeding arising
       out of or relating to this Agreement or any Security or any
       coupons appertaining thereto.  Service of process upon such agent
       and written notice of such service mailed or delivered to the
       Company shall to the extent permitted by law be deemed in every
       respect effective service of process upon the Company in any such
       legal action or proceeding.  The Company hereby appoints the
       Fiscal Agent as its agent for such purpose, and covenants and
       agrees that service of process in any legal action or proceeding
       may be made upon it at the office of such agent located at 450
       West 33rd Street, 15th Floor, New York, New York 10001  (or such
       other address in the City of New York, as may be the principal
       corporate trust office of such agent), unless and until the
       Company shall designate another agent for such purpose by written
       notice to the Fiscal Agent.  If the Fiscal Agent receives any
       such service of process, it shall promptly notify the Company of
       such service.

            19.  Notices.

            All notices hereunder shall be deemed to have been given
       when deposited in the mail as first-class mail, registered or
       certified, return receipt requested, postage prepaid, addressed
       to any party hereto as follows:

            The Company:        81 Wyman Street
                                P.O. Box 9046
                                Waltham, MA 02254-9046
PAGE


                                Attn: Secretary,
                                with a copy to the General Counsel 

            The Fiscal Agent:   450 West 33rd Street
                                15th Floor
                                New York, New York 10001
                                Attn: Corporate Trust Department

                                                                        
            Chemical Bank House
                                125 London Wall
                                London EC2 Y54J
                                England
                                Attn:     Corporate Agency

            The Paying Agent:   450 W. 33rd Street
                                15th Floor
                                New York, New York 10001
                                Attn: Corporate Trust Department

                                Chemical Bank House
                                125 London Wall
                                London EC2 Y54J
                                England 
                                Attn: Corporate Agency

            The Transfer Agent: Banque Internationale a Luxembourg, S.A.
                                69, Route d'Esch
                                L-1470 Luxembourg Ville, Luxembourg

       or at any other address of which any of the foregoing shall have
       notified the others in writing.

                 Notices to holders of the Securities shall be given by
       publication on a Business Day in an Authorized Newspaper. For
       purposes of this Agreement, the term "Authorized Newspaper" means
       an English language newspaper, customarily published on each
       business day in morning editions, whether or not it shall be
       published in Saturday, Sunday or holiday editions, such as The
       Wall Street Journal (Eastern edition) in New York City, the
       Financial Times in London and the Luxemburger Wort in Luxembourg.
       If by reason of the temporary or permanent suspension of
       publication of any newspaper or by reason of any other cause it
       shall be impossible to make publication of such notice in an
       Authorized Newspaper as herein provided, then such publication or
       other notice in lieu thereof as shall be made by the Fiscal Agent
       shall constitute sufficient publication of such notice, if such
       publication or other notice shall, so far as may be possible,
       approximate the terms and conditions of the publication in lieu
       of which it is given.  Notices will be mailed by the Fiscal
       Agent, on behalf of and at the expense of the Company, by

       1  Subject to the listing of the Securities on the Luxembourg
       Stock Exchange.
PAGE


       first-class mail to registered holders of Registered Securities
       at their registered address as the same shall appear on the books
       of the Fiscal Agent on the day 15 days prior to such mailing.
       The Fiscal Agent shall promptly furnish to the Company and to
       each other paying agency of the Company a copy of each notice so
       published or mailed.

            20.  Counterparts.

                 This Agreement may be executed in separate
       counterparts, and by each party separately in a separate
       counterpart, each such counterpart, when so executed and
       delivered, to be an original.  Such counterparts shall together
       constitute but one and the same instrument.

       [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
PAGE


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

                                THERMO ELECTRON CORPORATION


                                By:  _________________________________
                                Name:
                                Title:


                                CHEMICAL BANK,
                                as Fiscal Agent


                                By:  _________________________________
                                Name:
                                Title:
PAGE


                                                               EXHIBIT A


       (FORM OF FACE OF REGISTERED SECURITY)

                 Unless and until it is exchanged in whole or in part
       for Securities in definitive form, this Security may not be
       transferred except as a whole by the Depository to a nominee of
       the Depository or by a nominee of the Depository to the
       Depository or another nominee of the Depository or by the
       Depository or any such nominee to a successor depository or a
       nominee of such successor Depository.  Unless this certificate is
       presented by an authorized representative of The Depository Trust
       Company, a New York corporation (55 Water Street, New York, New
       York) ("DTC"), to the issuer or its agent for registration of
       transfer, exchange or payment, and any certificate issued is
       registered in the name of Cede & Co. or such other name as may be
       requested by an authorized representative of DTC (and any payment
       is made to Cede & Co. or such other entity as may be requested by
       an authorized representative of DTC), ANY TRANSFER, PLEDGE OR
       OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
       WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has
       an interest herein. 

                 THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN
       REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
       AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND
       NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
       MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED WITHIN THE "UNITED
       STATES" OR TO "U.S. PERSONS" (AS DEFINED IN REGULATION S UNDER
       THE SECURITIES ACT) IN THE ABSENCE OF SUCH REGISTRATION OR AN
       APPLICABLE EXEMPTION THEREFROM.  EACH PURCHASER OF THIS SECURITY
        IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
       EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
       PROVIDED BY RULE 144A THEREUNDER.  THE HOLDER OF THIS SECURITY,
       BY ITS ACCEPTANCE HEREOF, REPRESENTS, ACKNOWLEDGES AND AGREES FOR
       THE BENEFIT OF THE COMPANY THAT: (I) IT HAS ACQUIRED A
       "RESTRICTED" SECURITY WHICH HAS NOT BEEN REGISTERED UNDER THE
       SECURITIES ACT; (II) IT WILL NOT OFFER, SELL OR OTHERWISE
       TRANSFER THIS SECURITY PRIOR TO THE DATE WHICH IS THREE YEARS (OR
       THE THEN APPLICABLE HOLDING PERIOD UNDER RULE 144(K) UNDER THE
       SECURITIES ACT (OR SUCCESSOR PROVISION)) AFTER THE DATE OF
       ORIGINAL ISSUANCE HEREOF AND THE LAST DATE ON WHICH THE COMPANY
       OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF SUCH RESTRICTED
       SECURITIES (OR ANY PREDECESSOR), EXCEPT (A) TO THE COMPANY, (B)
       PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
       EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THIS
       SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
       PERSON WHO THE SELLER REASONABLY BELIEVES IS A "QUALIFIED
       INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
       SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE

       2 This paragraph should be included only if the Security is
       issued in global form.
PAGE


       144A, (D) OUTSIDE THE UNITED STATES IN A TRANSACTION MEETING THE
       REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, OR (E)
       PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
       REQUIREMENTS OF THE SECURITIES ACT AND, IN EACH CASE, IN
       ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF
       THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION; AND (III)
       IT WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
       PURCHASER FROM IT OF THIS SECURITY OF THE RESALE RESTRICTIONS SET
       FORTH IN (II) ABOVE.  ANY OFFER, SALE OR OTHER DISPOSITION
       PURSUANT TO THE FOREGOING CLAUSES II(D) AND (E) IS SUBJECT TO THE
       RIGHT OF THE ISSUER OF THIS SECURITY AND THE FISCAL AGENT FOR
       SUCH ISSUER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
       CERTIFICATIONS OR OTHER INFORMATION ACCEPTABLE TO THEM IN FORM
       AND SUBSTANCE. 





























       3  This paragraph to be included if the Security is a Restricted
       Security.
PAGE


                          THERMO ELECTRON CORPORATION
                    (Incorporated in the State of Delaware)

               4 1/4% CONVERTIBLE SUBORDINATED DEBENTURE DUE 2003

       No. R-________________                            U.S.$_______

                 Thermo Electron Corporation, a corporation duly
       incorporated and existing under the laws of the State of Delaware
       (the "Company"), for value received, hereby promises to pay to
       ________________, or registered assigns, the principal sum of
       __________________ United States Dollars on January 1, 2003 upon
       presentation and surrender hereof and to pay interest thereon,
       from January 3, 1996 or from the most recent Interest Payment
       Date (as defined below) to which interest has been paid or duly
       provided for, semiannually in arrears on January 1 and July 1 in
       each year (each an "Interest Payment Date"), commencing July 1,
       1996, at the rate of 4q% per annum, until the principal hereof is
       paid or made available for payment.  Interest hereon shall be
       calculated on the basis of a 360-day year comprised of twelve
       30-day months.  The interest so payable, and punctually paid or
       duly provided for, on any Interest Payment Date will, as provided
       in the Fiscal Agency Agreement (as defined on the reverse
       hereof), be paid to the person in whose name this Security is
       registered at the close of business on the Record Date for such
       interest payment, which shall be the December 15 or June 15
       (whether or not a Business Day (as defined on the reverse
       hereof)) next preceding such Interest Payment Date.  Except as
       otherwise provided in the Fiscal Agency Agreement (as defined on
       the reverse hereof), any such interest not so punctually paid or
       duly provided for will forthwith cease to be payable to the
       holder on such Record Date and may be paid at any time in any
       lawful manner, all as more fully provided in the Fiscal Agency
       Agreement.  Payment of interest on this Security shall be made by
       United States dollar check drawn on a bank in the City of New
       York and mailed to the person entitled thereto at his address as
       it shall appear in the Security Register, or (if arrangements
       satisfactory to the Company and the Fiscal Agent are made) by
       wire transfer to a United States dollar account maintained by the
       payee with a bank in the City of New York; provided, however,
       that if such mailing is not possible and no such application
       shall have been made, payment of interest shall be made at the
       principal corporate trust office of the Fiscal Agent, or such
       other office or agency of the Company as may be designated for
       such purpose in the City of New York, in United States currency.

                 Reference is hereby made to the further provisions of
       this Security set forth under Terms and Conditions of the
       Securities on the reverse hereof, which further provisions shall
       for all purposes have the same effect as if set forth at this
       place.
PAGE


                 This Security shall not become valid or enforceable for
       any purpose unless and until the certificate of authentication
       hereon shall have been manually signed by a duly authorized
       signatory of the Fiscal Agent.

                 IN WITNESS WHEREOF, the Company has caused this
       Security to be duly executed in its corporate name by the manual
       or facsimile signature of a duly authorized officer and coupons
       bearing the facsimile signature of a duly authorized signatory to
       be annexed hereto.

       Dated: 


                                     THERMO ELECTRON CORPORATION


                                     By:  ____________________________
                                     Name:
                                     Title:

       Attest:

       _______________________________



                         CERTIFICATE OF AUTHENTICATION

            This is one of the Securities described in the
       within-mentioned Fiscal Agency Agreement.


                                     CHEMICAL BANK,
                                     as Fiscal Agent

                                     By__________________________
                                          Authorized Signatory
PAGE



                       (FORM OF FACE OF BEARER SECURITY)

       THIS SECURITY HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
       UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
       ACT"), AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR
       TO U.S. PERSONS EXCEPT TO QUALIFIED INSTITUTIONAL BUYERS (AS
       DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN ACCORDANCE WITH
       RULE 144A (IF AVAILABLE) OR OTHERWISE PURSUANT TO AN EXEMPTION
       FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
       REQUIREMENTS OF THE SECURITIES ACT.

       ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE
       SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS,
       INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a)
       OF THE UNITED STATES INTERNAL REVENUE CODE.

                          THERMO ELECTRON CORPORATION
                     (Incorporated in the State of Delaware)

               4 1/4% CONVERTIBLE SUBORDINATED DEBENTURE DUE 2003

       No. B-______________                              U.S.$______

                 Thermo Electron Corporation, a corporation duly
       incorporated and existing under the laws of the State of Delaware
       (the "Company"), for value received, hereby promises to pay to
       bearer upon presentation and surrender of this Security the
       principal sum of __________United States Dollars on January 1,
       2003, and to pay interest thereon from January 3, 1996,
       semiannually in arrears on January 1 and July 1 in each year
       (each an "Interest Payment Date"), commencing July 1, 1996, at
       the rate of 4q% per annum, until the principal hereof is paid or
       made available for payment.  Interest hereon shall be calculated
       on the basis of a 360-day year comprised of twelve 30-day months.
       Such payments (including premium, if any) shall be made in such
       coin or currency of the United States of America as at the time
       of payment shall be legal tender for the payment of public and
       private debts, subject to any laws or regulations applicable
       thereto and to the right of the Company (limited as provided in
       the Fiscal Agency Agreement (as defined on the reverse hereof))
       to terminate the appointment of any paying agency, at the London
       office of Chemical Bank located at Chemical Bank House, 125
       London Wall, London EC2Y 5A4J, England, or, if the Securities are
       listed on the Luxembourg Stock Exchange and so long as listed
       thereon, Banque Internationale a Luxembourg S.A., 69, Route
       d'Esch, L-1470 Luxembourg or at such other offices or agencies
       outside the United States of America, its territories or its
       possessions as the Company may designate, by United States dollar
       check drawn on a bank in the City of New York, or (if
       arrangements satisfactory to the Company and the Fiscal Agent (as
       defined on the reverse hereof) are made) by wire transfer to a
       United States dollar account maintained by the holder at a bank
       outside the United States, its territories and its possessions.
       Interest on this Security shall be paid only at an office or
PAGE


       agency located outside the United States, its territories or its
       possessions and, in the case of interest due on or before
       maturity, only upon presentation and surrender at such an office
       or agency of the interest coupons hereto attached as they
       severally mature.  No payment on this Security or any coupon will
       be made at the corporate trust office of the Fiscal Agent or any
       other paying agency maintained by the Company in the United
       States its territories and possessions, nor will any payment be
       made by transfer to an account in, or by mail to an address in,
       the United States, its territories or possessions, except as may
       be permitted by United States tax laws and regulations in effect
       at the time of such payment without detriment to the Company.
       Notwithstanding the foregoing, payment of this Security and
       coupons may be made at the office of the Fiscal Agent in the City
       of New York if full payment at all paying agencies outside the
       United States is illegal or effectively precluded by exchange
       controls or other similar restrictions.

                 References is hereby made to the further provisions of
       this Security set forth under Terms and Conditions of the
       Securities on the reverse hereof, which further provisions shall
       for all purposes have the same effect as if set forth at this
       place.

                 Neither this Security nor any of the coupons attached
       hereto shall become valid or enforceable for any purpose unless
       and until the certificate of authentication hereon shall have
       been manually signed by a duly authorized signatory of the Fiscal
       Agent.

                 IN WITNESS WHEREOF, the Company has caused this
       Security to be duly executed in its corporate name by the manual
       or facsimile signature of a duly authorized signatory.

       Dated:                        THERMO ELECTRON CORPORATION


                                By:  ____________________________
                                Name:
                                Title:
       Attest:

       _______________________________

                         CERTIFICATE OF AUTHENTICATION

            This is one of the Securities described in the
       within-mentioned Fiscal Agency Agreement.

                                     CHEMICAL BANK,
                                     as Fiscal Agent

                                     By:  ____________________________
                                     Authorized Signatory
PAGE


                  (FORM OF FACE OF COUPON ON BEARER SECURITIES)

       ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE
       SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS,
       INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a)
       OF THE UNITED STATES INTERNAL REVENUE CODE.

                           THERMO ELECTRON CORPORATION
                    (Incorporated in the State of Delaware)

              4 1/4% CONVERTIBLE SUBORDINATED DEBENTURE.  DUE 2003

                                          No:  _____________

                                          U.S.$____________

                                          Due: 


                 Unless the Security to which this coupon appertains
       shall have been called for redemption prior to the due date
       hereof and payment thereof duly provided for or shall have been
       converted, THERMO ELECTRON CORPORATION (herein called the
       "Company") shall, subject to and in accordance with the terms and
       conditions of the Bearer Security and the Fiscal Agency Agreement
       dated as of January 3, 1996 between the Company and Chemical
       Bank, as Fiscal Agent, pay to the bearer, on the date set forth
       herein upon surrender hereof, the amount shown hereon (together
       with any Additional Amount in respect thereof which the Company
       may be required to pay according to the terms of said Bearer
       Security) at the paying agencies set out on the reverse hereof or
       at such other places outside the United States of America, its
       territories and its possessions as the Company may determine from
       time to time, by United States dollar check drawn on a bank in
       the City of New York, or (if arrangements satisfactory to the
       Company and the Fiscal Agent are made) wire transfer to a United
       States dollar account maintained by the bearer at a bank outside
       the United States of America, its territories and its
       possessions, being one-half year's interest then payable on said
       Security.


                                     THERMO ELECTRON CORPORATION


                                     By:  ____________________________
                                     Name:
                                     Title:

       Attest:


       --------------------------
PAGE

       [Reverse of Coupon]

       Chemical Bank            Banque Internatioanle a Luxembourg S.A.
       Chemical Bank House      69, Route d'Esch
       125 London Wall          L-1470 Luxembourg
       London EC2 Y54J
       England
PAGE


             (FORM OF REVERSE OF REGISTERED AND BEARER SECURITIES)

                     Terms and Conditions of the Securities
       1.   General.

            (a)  This Security is one of a duly authorized issue of
       Securities of the Company designated as its 4q% Convertible
       Subordinated Debentures Due 2003 (herein called the
       "Securities").  The Company, for the benefit of the holders from
       time to time of the Securities, has entered into a Fiscal Agency
       Agreement dated as of January 3, 1996 (the "Fiscal Agency
       Agreement") between the Company and Chemical Bank, as Fiscal
       Agent, Paying Agent, Security Registrar and Conversion Agent (the
       "Fiscal Agent"), to which Fiscal Agency Agreement reference is
       hereby made for a statement of the respective rights, limitations
       of rights, duties and immunities thereunder of the Company, the
       Fiscal Agent, and the holders of Securities and any coupons
       appertaining thereto and of the terms upon which the Securities
       are, and are to be, authenticated and delivered.  The holders of
       the Securities will be entitled to the benefits of, be bound by,
       and be deemed to have notice of, all of the provisions of the
       Fiscal Agency Agreement.  A copy of the Fiscal Agency Agreement
       is on file and may be inspected at the office of paying agencies
       appointed by the Company.

            (b)  The Securities are issuable as bearer securities (the
       "Bearer Securities"), with interest coupons attached, in the
       denominations of U.S. $1,000 and U.S. $10,000, and as registered
       securities (the "Registered Securities"), without coupons, in
       denominations of U.S. $1,000 and integral multiples thereof.  The
       Registered Securities, and transfers thereof, shall be registered
       as provided in Section 8 hereof and in the Fiscal Agency
       Agreement.  The holder of any Bearer Security or any coupon and
       the registered holder of a Registered Security shall (to the
       fullest extent permitted by applicable law) be treated at all
       times, by all persons and for all purposes as the absolute owner
       of such Security or coupon, as the case may be, regardless of any
       notice of ownership, theft or loss or of any writing thereon.

            (c)  The Securities are direct and unsecured obligations of
       the Company, subordinated as set forth in Section 7 hereof.
       There are no restrictions herein on other indebtedness or
       securities which may be incurred or issued by the Company.

            2.   Additional Amounts.  The Company will pay to the holder
       of this Security or of any coupon appertaining hereto who is a
       United States Alien (as defined below) such additional amounts
       (_Additional Amounts") as may be necessary in order that every
       net payment of the principal of, premium, if any, and interest on
       this Security,  after withholding for or on account of any
       present or future tax, assessment or governmental charge imposed
       upon or as a result of such payment by the United States or any
PAGE


       political subdivision or taxing authority thereof or therein,
       will not be less than the amount provided herein or in any coupon
       appertaining hereto to be then due and payable; provided,
       however, that the foregoing obligation to pay Additional Amounts
       shall not apply to any one or more of the following:

                 (a)  any tax, assessment or other governmental charge
       which would not have been so imposed but for (i) the existence of
       any present or former connection between such holder (or between
       a fiduciary, settlor, beneficiary, member or stockholder of, or a
       person holding a power over, such holder, if such holder is an
       estate, trust, partnership or corporation) and the United States,
       including, without limitation, such holder (or such fiduciary,
       settlor, beneficiary, member, stockholder or person holding a
       power) being or having been a citizen or resident or treated as a
       resident thereof or being or having been engaged in a trade or
       business therein or being or having been present therein or
       having or having had a permanent establishment therein, or (ii)
       such holder's present or former status as a personal holding
       company, foreign personal holding company, passive foreign
       investment company, foreign private foundation or other foreign
       tax-exempt entity or controlled foreign corporation for United
       States tax purposes or a corporation which accumulates earnings
       to avoid United States Federal income tax, or (iii) such holder's
       status as a bank extending credit pursuant to a loan agreement
       entered into in the ordinary course of business;

                 (b)  any tax, assessment or other governmental charge
       which would not have been so imposed but for the presentation by
       the holder of this Security or any coupon appertaining hereto for
       payment on a date more than 10 days after the date on which such
       payment became due and payable or on the date on which payment
       thereof is duly provided, whichever occurs later;

                 (c)  any estate, inheritance, gift, sales, transfer or
       personal property tax or any similar tax, assessment or other
       governmental charge;

                 (d)  any tax, assessment or other governmental charge
       which would not have been imposed but for the failure to comply
       with certification, information, documentation or other reporting
       requirements concerning the nationality, residence, identity or
       present or former connection with the United States of the holder
       or beneficial owner of such Security or any related coupon if
       such compliance is required by statute, regulation or ruling of
       the United States or any political subdivision or taxing
       authority thereof as a precondition to relief or exemption from
       such tax, assessment or other governmental charge;

                 (e)  any tax, assessment or other governmental charge
       which is payable otherwise than by deduction or withholding from
       payments of principal of and premium, if any, or interest on this
       Security;
PAGE


                 (f)  any tax, assessment or other governmental charge
       imposed on interest received by a person holding, actually or
       constructively, 10% or more of the total combined voting power of
       all classes of stock of the Company entitled to vote; or

                 (g)  any tax, assessment or other governmental charge
       required to be withheld by any paying agent from any payment of
       principal, or premium, if any, or interest on any Security or
       interest on any coupon appertaining thereto if such payment can
       be made without such withholding by any other paying agent; nor
       will Additional Amounts be paid with respect to any payment of
       the principal of, premium, if any, or interest on this Security
       (or cash in lieu of issuance of shares of Common Stock upon
       conversion) to a person other than the sole beneficial owner of
       such payment, or that is a partnership or fiduciary to the extent
       such beneficial owner, member of such partnership or beneficiary
       or settlor with respect to such fiduciary would not have been
       entitled to the payment of Additional Amounts had such beneficial
       owner, member, beneficiary or settlor been the holder of this
       Security or any coupon appertaining hereto.

                 The term "United States Alien" means any person who,
       for United States Federal income tax purposes, is a foreign
       corporation, a non-resident alien individual, a foreign
       partnership, or an estate or trust subject to United States
       Federal income tax on net income basis, and the term "United
       States" means the United States of America (including the several
       States and the District of Columbia), its territories, its
       possessions and other areas subject to its jurisdiction.

                 Except as specifically provided herein and in the
       Fiscal Agency Agreement, the Company shall not be required to
       make any payment with respect to any tax, assessment or other
       governmental charge imposed by any government or any political
       subdivision or taxing authority thereof or therein.

                 Whenever any Additional Amounts are to be paid on the
       Securities, the Company will give notice to the Fiscal Agent, the
       Paying Agent and any paying agency of the Company, all as
       provided in the Fiscal Agency Agreement.

            3.   Redemption.

                 (a)  The Company, at its option, may redeem the
       Securities, in whole or in part, at any time on or after January
       1, 1999, upon notice as hereinafter prescribed, at a redemption
       price equal to 100% of the principal amount thereof, together
       with accrued interest to the redemption date; provided, however,
       that in the event that the Company shall have elected to redeem
       all or any part of the Securities pursuant to this clause after
       the date on which a Change in Control (as defined in Section 3(e)
       hereof) shall have been determined to occur by the Continuing
       Directors (as defined in Section 3(e) hereof), which Change in
       Control shall not have been approved by the Continuing Directors,
PAGE


       the date on which such redemption may occur shall be not sooner
       than the first business day immediately following the Repurchase
       Date (as defined in Section 3(e) hereof).  In the event of a
       partial redemption, the Securities to be redeemed will be
       selected by the Fiscal Agent not more than 75 days before the
       date fixed for redemption by such method as the Fiscal Agent
       shall deem fair and appropriate. Provisions of this Security that
       apply to Securities called for redemption also apply to portions
       of Securities called for redemption.  The Fiscal Agent shall
       notify the Company promptly of the Securities or portions of
       Securities to be called for redemption.

                 (b)  If, at any time, the Company shall determine that
       as a result of any change in or amendment to the laws or any
       regulations or rulings of the United States or any political
       subdivision or taxing authority thereof or therein affecting
       taxation, or any amendment to, or change in, an official
       application or interpretation of such laws, regulations or
       rulings, which amendment or change is announced or becomes
       effective on or after November 28, 1995, the Company has or will
       become obligated to pay to the holder of any Security (other than
       the Restricted Securities) or coupon Additional Amounts and such
       obligation cannot be avoided by the Company taking reasonable
       measures available to it, then the Company may, at its election
       exercised at any time when such conditions continue to exist,
       redeem such Securities as a whole but not in part, upon notice as
       hereinafter prescribed, at a redemption price equal to 100% of
       the principal amount, together with accrued interest, if any, to
       the date fixed for redemption; provided that no such notice of
       redemption shall be given earlier than 90 days prior to the
       earliest date on which the Company would be obligated to pay such
       Additional Amounts were a payment in respect of such Securities
       then due; and provided  further that, at the time such notice is
       given, such obligations to pay such Additional Amounts remains in
       effect.

                 Prior to any redemption of the Securities pursuant to
       the preceding paragraph, the Company shall provide the Fiscal
       Agent with one or more certificates (signed by the President or
       any Vice President and the Treasurer or the Secretary) of the
       Company on which the Fiscal Agent may conclusively rely to the
       effect that the Company is entitled to redeem such Securities
       pursuant to such paragraph and that the conditions precedent to
       the right of the Company to redeem such Securities pursuant to
       such paragraph have occurred and a written opinion of counsel
       (who may be an employee of the Company) stating that all legal
       conditions precedent to the right of the Company to redeem such
       Securities pursuant to such paragraph have occurred.

                 (c)  Except as set forth in the next succeeding
       paragraph, the Company shall redeem the Bearer Securities as a
       whole but not in part, upon notice as hereinafter prescribed, at
       100% of their principal amount, together with interest accrued to
       the date fixed for redemption, less applicable withholding taxes,
PAGE


       if any, plus any applicable Additional Amounts payable, in the
       event that the Company determines that payment of principal of,
       premium, if any, or interest on a Bearer Security or a coupon
       appertaining thereto made outside the United States by the
       Company or a paying agent, based on a written opinion of counsel,
       would under any present or future laws or regulations of the
       United States be subject to any certification, identification or
       information reporting requirement with regard to the nationality,
       residence or identity of a beneficial owner of a Bearer Security
       or a coupon appertaining thereto who is a United States Alien
       (other than a requirement (a) that would not be applicable to a
       payment made by the Company or any one of its paying agents (i)
       directly to the beneficial owner or (ii) to a custodian, nominee
       or other agent of the beneficial owner, or (b) that can be
       satisfied by the custodian, nominee or other agent certifying
       that the beneficial owner is a United States Alien, provided,
       however, in each case referred to in clauses (a)(ii) and (b),
       payment by such custodian, nominee or other agent of the
       beneficial owner is not otherwise subject to any such
       requirement).  The Company shall make such determination on the
       basis of a written opinion of counsel and will notify the Fiscal
       Agent thereof in writing as soon as practicable, stating in the
       notice the effective date of such certification, identification,
       or information reporting requirement and the dates within which
       the redemption shall occur, and the Fiscal Agent shall give
       prompt notice thereof to the holders of the Securities in
       accordance with the Fiscal Agency Agreement.  The Company shall
       determine the redemption date by notice to the Fiscal Agent at
       least 75 days before the redemption date, unless shorter notice
       is acceptable to the Fiscal Agent.  Such redemption of the Bearer
       Securities must take place on such date, not later than one year
       after the publication of the initial notice of the Company's
       determination of the existence of such certification,
       identification or information reporting requirement.  The Company
       shall not so redeem the Bearer Securities, however, if the
       Company, based on a written opinion of counsel, determines not
       less than 30 days prior to the date fixed for redemption, that no
       such payment would be subject to any requirement described above,
       in which case the Company shall notify the Fiscal Agent, which
       shall give prompt notice of that determination in accordance with
       the Fiscal Agency Agreement and any earlier redemption notice
       shall thereupon be revoked and of no further effect.

                 Notwithstanding the next preceding paragraph, if and so
       long as the certification, identification or information
       reporting requirement referred to in the next preceding paragraph
       would be fully satisfied by payment of United States withholding,
       backup withholding or similar taxes, the Company may elect, prior
       to publication of the notice of redemption and in lieu of
       redemption of the Bearer Securities, to have the provisions of
       this paragraph apply in lieu of the provisions of the next
       preceding paragraph.  In that event, the Company will pay such
       Additional Amounts (without regard to Section 2 hereof) as are
       necessary in order that, following the effective date of such
PAGE


       requirements, every net payment made outside the United States by
       the Company or a paying agent of the principal of, premium, if
       any, and interest on a Bearer Security or a coupon appertaining
       thereto to a holder who is a United States Alien (without regard
       to a certification, identification or information reporting
       requirement as to the nationality, residence or identity of such
       holder), after deduction for United States withholding, backup
       withholding or similar taxes (other than a tax (i) that would not
       be applicable in the circumstances referred to in the
       parenthetical clause of the first sentence of the next preceding
       paragraph or (ii) are imposed as a result of presentation of such
       Bearer Security or coupon for payment more than 10 days after the
       date on which such payment becomes due and payable or on which
       payment thereof is duly provided for, whichever occurs later),
       will not be less than the amount provided in the Bearer Security
       or the related coupon to be then due and payable.  If the Company
       elects to pay such Additional Amounts and as long as it is
       obligated to pay such Additional Amounts, the Company may
       subsequently redeem the Bearer Securities, at any time, in whole
       but not in part, upon not more than 60 days nor less than 30 days
       notice, given as hereinafter prescribed, at 100% of their
       principal amount, plus accrued interest to date fixed for
       redemption and Additional Amounts, if any.

                 (d)  Each Security is subject to redemption in whole or
       in part (which shall be in a principal amount hereof which is
       U.S. $1,000 or an integral multiple thereof) at the option of the
       holder thereof on any Holder Redemption Date (as defined below)
       at a redemption price equal to 100% of the principal amount
       thereof, together with accrued interest, if a Redemption Event
       shall occur or have occurred.  For purposes hereof a "Redemption
       Event" shall have occurred if the Company's Common Stock (or
       other equity securities into which the Securities are then
       convertible) is neither listed for trading on a United States
       national securities exchange nor approved for trading on an
       established automated over-the-counter trading market in the
       United States.  The "Holder Redemption Date" with respect to any
       Redemption Event shall be the ninetieth day after the later of
       the Exchange Date or the date a Redemption Event has occurred.

                 Notwithstanding the fact that a Security or a portion
       thereof is called for redemption by the Company, each holder of a
       Security desiring to exercise the option for redemption set forth
       in this Section 3(d) shall, as a condition to such redemption, on
       or before the close of business on the fifth day prior to the
       Holder Redemption Date, surrender the Security to be redeemed in
       whole or in part together with the redemption notice hereon duly
       executed at the place or places specified in the notice required
       by Section 3(f) and otherwise comply with the provisions of
       Section 3(g).  A holder of a Security who has tendered a
       redemption notice (i) will be entitled to revoke its election by
       delivering a written notice of such revocation together with the
       holder's non-transferable receipt for such Security to the office
       or agency of the Company designated as the place for the payment
PAGE


       of the Securities to be so redeemed on or before the Holder
       Redemption Date and (ii) will retain the right to convert its
       Securities into shares of Common Stock of the Company to the
       extent set forth in Section 4.

                 (e)  Each Security is subject to redemption in whole or
       in part (which shall be in a principal amount hereof which is
       U.S. $1,000 or an integral multiple thereof) at the option of the
       holder thereof on the Repurchase Date (as defined below) at a
       redemption price equal to 100% of the principal amount thereof,
       together with accrued interest to the Repurchase Date, if a
       Change in Control (as defined below) shall have been determined
       to occur by the Continuing Directors (as defined below), which
       Change in Control shall not have been approved by a majority of
       the Continuing Directors prior to the expiration of the Approval
       Period (as defined below).

                 A Change in Control shall be deemed to have occurred at
       such time or times when (1) any person that acquired any Common
       Stock pursuant to a tender offer becomes the beneficial owner,
       directly or indirectly, of more than 50% of the outstanding
       Common Stock, (2) any person that is the beneficial owner,
       directly or indirectly, of more than 50% of the outstanding
       Common Stock becomes the beneficial owner, directly or
       indirectly, of any additional shares of Common Stock pursuant to
       a tender offer, (3) individuals who constitute the Continuing
       Directors cease for any reason to constitute at least a majority
       of the Board of Directors of the Company, or (4) the Continuing
       Directors shall determine that any other event constitutes an
       effective change in control of the Company.  The Continuing
       Directors shall mean any member of the Board of Directors of the
       Company who was a member of the Board of Directors of the Company
       on January 3, 1996 and any future director of the Company who has
       been nominated or elected by a majority of Continuing Directors
       who are then members of the Board of Directors of the Company.
       The Approval Period shall mean an initial period of 60 days after
       the date on which a Change of Control shall have occurred, plus
       one or more 60 day extensions of such initial or successive
       period which extension shall take effect by vote of a majority of
       the Continuing Directors taken prior to the expiration of the
       applicable 60 day initial or successive period.  The Repurchase
       Date shall be the date that is 50 days after the expiration of
       the Approval Period.

                 The Company will make the determination whether or not
       a Change in Control has occurred, and if one has occurred and it
       shall not have been approved by a majority of the Continuing
       Directors prior to the expiration of the Approval Period, the
       Company shall immediately upon expiration of the Approval Period
       give notice to the Fiscal Agent, stating in the notice the nature
       of the Change in Control, the Repurchase Date and the redemption
       price.
PAGE


                 Notwithstanding the fact that a Security or a portion
       thereof is called for redemption by the Company, each holder of a
       Security desiring to exercise the option for redemption set forth
       in this Section 3(e) shall, as a condition to such redemption, on
       or before the close of business on the fifth day prior to the
       Repurchase Date, surrender the Security to be redeemed in whole
       or in part together with the redemption notice thereon duly
       executed at the place or places specified in the notice required
       by Section 3(f) and otherwise comply with the provisions of
       Section 3(g).  A holder of a Security who has tendered a
       redemption notice will not be entitled to revoke its election and
       will lose the right to convert its Securities into shares of
       Common Stock of the Company on or before the Repurchase Date.

                 (f)  Notice of redemption will be given by publication
       in Authorized Newspapers (as defined in the Fiscal Agency
       Agreement) on a Business Day (as defined in the Fiscal Agency
       Agreement) in New York City and in London and, if the Securities
       are listed on the Luxembourg Stock Exchange and so long as listed
       thereon, in an Authorized Newspaper in Luxembourg, or, if either
       publication in London or Luxembourg is not practical, in an
       Authorized Newspaper in any country in Western Europe, and by
       mail to holders of Registered Securities, all as provided in the
       Fiscal Agency Agreement.  In the case of a redemption in whole at
       the option of the Company, notice will be given once not more
       than 60 nor less than 30 days prior to the date fixed for
       redemption.  In the case of a partial redemption at the option of
       the Company, notice will be given twice, the first such notice to
       be given not more than 75 nor less than 60 days prior to the date
       fixed for redemption and the second such notice to be given not
       more than 60 nor less than 30 days prior to the date fixed for
       redemption.  In the case of a redemption by the Company at the
       option of a holder of a Security pursuant to Section 3(d) hereof,
       notice will be given by the Fiscal Agent setting forth the
       information described below not later than 10 days after the
       later of the Exchange Date or the occurrence of a Redemption
       Event. In the case of a redemption by the Company at the option
       of a holder of a Security pursuant to Section 3(e) resulting from
       a Change in Control that shall not have been approved by a
       majority of the Continuing Directors prior to the expiration of
       the Approval Period, notice will be given by the Fiscal Agent
       setting forth the information described below not later than 10
       days after the later of the Exchange Date or the expiration of
       the Approval Period.  Neither the failure to give notice nor any
       defect in any notice given to any particular holder of a Security
       shall affect the sufficiency of any notice with respect to other
       Securities.

                 Notices relating to the redemption of Securities
       whether at the option of the Company or the holder hereof shall
       specify: the date fixed for redemption or the Holder Redemption
       Date or the Repurchase Date, as the case may be; the redemption
       price; the date the conversion privilege expires; the place or
       places of payment; and that payment will be made upon
PAGE


       presentation and surrender of the Securities to be redeemed,
       together, in the case of a Bearer Security, with all appurtenant
       coupons, if any, maturing subsequent to the date fixed for
       redemption; and that interest accrued to the date fixed for
       redemption (unless the redemption date is an interest payment
       date) will be paid as specified in such notice; and that, on and
       after said date, interest thereon will cease to accrue.  In the
       case of a redemption by the Company at the option of the holder
       of a Security pursuant to Section 3(d), the notices given by the
       Fiscal Agent informing a holder of such holder's entitlement to
       redeem shall also specify that a holder electing redemption will
       be entitled to revoke its election by delivering a written notice
       of such revocation, together with the holder's non-transferable
       receipt for such Security, to the agency designated by the
       Company as the place for the payment of the Securities to be so
       redeemed not later than the fifth day prior to the Holder
       Redemption Date.  In the case of a redemption in part at the
       option of the Company, notices shall specify the aggregate
       principal amount of Securities to be redeemed and the aggregate
       principal amount of Securities outstanding after such partial
       redemption.  The first notice shall specify the last date on
       which exchanges or transfers of Securities may be made, and the
       second notice shall specify the serial numbers of the Securities
       and the portions thereof called for redemption.  In the case of a
       redemption in whole or in part by the Company, notices shall
       specify the date the conversion privilege expires in accordance
       with Section 4(a) hereof.  Such notices shall also state that the
       conditions precedent, if any, to such redemption have occurred.

                 (g)  If (i) notice of redemption has been given in the
       manner set forth in Section 3(f) hereof with respect to
       Securities to be redeemed at the option of the Company, or (ii)
       notice of redemption has been given by the holder of a Security
       to be redeemed pursuant to Section 3(d) or Section 3(e) hereof,
       the Securities so to be redeemed shall become due and payable on
       the applicable redemption date specified in such notice and upon
       presentation and surrender of the Securities at the place or
       places specified in the notices given by the Company with respect
       to such redemption, together in the case of Bearer Securities
       with all appurtenant coupons, if any, maturing subsequent to the
       redemption date and any related mature defaulted coupons, the
       Securities shall be paid and redeemed by the Company, at the
       places and in the manner and currency herein specified and at the
       redemption price together with accrued interest, if any, to the
       redemption date; provided, however, that interest due in respect
       of coupons maturing on or prior to the redemption date shall be
       payable only upon the presentation and surrender of such coupons
       (at an office or agency located outside of the United States of
       America).  If any Bearer Security surrendered for redemption
       shall not be accompanied by all appurtenant coupons maturing
       after the redemption date and any related mature defaulted
       coupons, such Security may be paid after deducting from the
       amount otherwise payable an amount equal to the face amount of
       all such missing coupons, or the surrender of such missing coupon
PAGE


       or coupons may be waived by the Company and the Fiscal Agent if
       they are furnished with such security or indemnity as they may
       require to save each of them and each other paying agency of the
       Company harmless.  From and after the redemption date, if monies
       for the redemption of Securities shall have been available at the
       principal corporate trust office of the Fiscal Agent for
       redemption on the redemption date, the Securities shall cease to
       bear interest, the coupons for interest appertaining to Bearer
       Securities maturing subsequent to the redemption date shall be
       void, the only right of the holders of such Securities shall be
       to receive payment of the redemption price together with accrued
       interest to the redemption date.  If monies for the redemption of
       the Securities are not made available by the Company for payment
       until after the redemption date, the Securities shall not cease
       to bear interest until such monies have been so made available.

                 (h)  Accrued interest payable on any Registered
       Security that is redeemed will be payable against surrender of
       such Registered Security in the manner described in this Section
       with respect to payments of principal on Registered Securities,
       except that interest on any Registered Security that is redeemed
       on a date after the close of business on any interest Record Date
       and on or before the next succeeding Interest Payment Date, shall
       be paid to the holder of record of such Registered Security on
       the interest Record Date.

            4.   Conversion.

                 (a)  Subject to and upon compliance with the provisions
       of the Fiscal Agency Agreement, a holder of Securities is
       entitled, at its option, at any time on or after the date that is
       the latest of (i) the Exchange Date, (ii) March 15, 1996 and
       (iii) the date of the effectiveness of the Registration Statement
       to be filed by the Company under the Securities Act relating to
       the Common Stock issuable upon conversion of the Restricted
       Securities (the _Registration Date_) and on or before the close
       of business on January 1, 2003, or in the case of a Security or
       portion thereof that is called for redemption by the Company, or
       the holder thereof elects to have such Security or portion
       thereof redeemed by the Company pursuant to Section 3(d) hereof,
       then in respect of such Security or such portion thereof until
       and including, but (unless the Company defaults in making the
       payment due upon redemption) not after, the close of business on
       the 15th day next preceding the date fixed for redemption (or if
       such date is not a business day, as described in Section 11
       hereof in New York City, then the next succeeding business day),
       or in the case of a Security or portion thereof that the holder
       elects to have redeemed by the Company pursuant to Section 3(e)
       hereof, then in respect of such Security or portion thereof until
       and including, but (unless the Company defaults in making the
       payment due upon redemption) not after, the close of business on
       the date the holder makes such election,  to convert such
       Security (or any portion of the principal amount thereof which is
       U.S. $1,000 or an integral multiple thereof), at the principal
PAGE


       amount thereof, or of such portion, into fully paid and
       nonassessable shares ("Conversion Shares")  (calculated as to
       each conversion to the nearest 1/1000 of a share) of common
       stock, par value $1.00 per share of the Company ("Common Stock_),
       at a Conversion Price equal to U.S. $56.70 aggregate principal
       amount of Securities for each Conversion Share (the "Conversion
       Price") (or at the current adjusted Conversion Price if an
       adjustment has been made as provided herein) by surrender of the
       Security, or in the case of a Security submitted for redemption
       pursuant to Section 3(d) or Section 3(e) hereof, satisfactory
       evidence of such submission, together with (i) if a Bearer
       Security, all unmatured coupons and any matured coupons in
       default appertaining thereto, and if a Registered Security (if so
       required by the Company or the Fiscal Agent), instruments of
       transfer in form satisfactory to the Company and the Fiscal
       Agent, duly executed by the registered holder or by his duly
       authorized attorney, and (ii) the conversion notice hereon duly
       executed (x) at the principal corporate trust office of the
       Fiscal Agent, or at such other office or agency of the Company as
       may be designated by it for such purpose in New York City, or (y)
       subject to any laws or regulations applicable thereto and subject
       to the right of the Company to terminate the appointment of any
       such conversion agency, at Chemical Bank, Chemical Bank House,
       125 London Wall, London EC2Y 5AJ, England, and if the Securities
       are listed on the Luxembourg Stock Exchange and so long as listed
       thereon, Banque Internationale a Luxembourg, S.A., 69, Route
       d'Esch, L-1470 Luxembourg, or at such other offices or agencies
       as the Company may designate.

                 (b)  In the case of a conversion after the close of
       business on a Record Date next preceding any interest payment
       date and before the opening of business on such interest payment
       date, the holder of record of a Registered Security at such
       Record Date is to receive an installment of interest on the
       interest payment date.  No payment or adjustment shall be made
       upon any conversion for dividends on the Common Stock delivered
       on conversion.  Except as set forth in the first sentence of this
       subsection (b), accrued interest from the immediately preceding
       interest payment date until the date of conversion (together with
       any Additional Amounts, if any, thereon) will be paid to the
       holder within five business days after presentment for conversion
       on account of any interest accrued on the Securities surrendered
       for conversion, except that interest on Registered Securities
       surrendered for conversion after the close of business on a
       Record Date and before the opening of business on the next
       succeeding interest payment date shall be paid in an amount equal
       to the interest payable on such interest payment date on the
       principal amount being surrendered for conversion.  No fractions
       of shares or scrip representing fractions of shares will be
       issued or delivered on conversion, but instead of any fractional
       interest the Company shall pay a cash adjustment as provided in
       the Fiscal Agency Agreement.  Such conversion shall be so
       affected by the Company, except payment of accrued interest
PAGE


       (together with Additional Amounts, if any, thereon) which will be
       paid by the Paying Agent.

            (c)  (i) In case at any time the Company shall pay or make a
       dividend or other distribution on any class of capital stock of
       the Company in shares of Common Stock, the Conversion Price in
       effect at the opening of business on the day following the date
       fixed for the determination of stockholders entitled to receive
       such dividend or other distribution shall be reduced so that the
       same shall equal the price determined by multiplying such
       Conversion Price by a fraction of which the numerator shall be
       the number of shares of Common Stock outstanding at the close of
       business on the date fixed for such determination and the
       denominator shall be the sum of such number of shares and the
       total number of shares of Common Stock constituting such dividend
       or other distribution, such adjustment to become effective
       immediately after the opening of business on the day following
       the date fixed for such determination.

            (ii) In the case at any time the Company shall (A) subdivide
       its outstanding shares of Common Stock, (B) combine its
       outstanding shares of Common Stock into a smaller number of
       shares, or (C) issue by reclassification of its shares of Common
       Stock (including any such reclassification in connection with a
       consolidation or merger in which the Company is the continuing
       corporation) any shares of capital stock, the Conversion Price in
       effect at the effective date of such subdivision, combination or
       reclassification shall be proportionately adjusted so that the
       holder of any Security surrendered for conversion after such time
       shall be entitled to receive the aggregate number and kind of
       shares which, if such Security had been converted immediately
       prior to such time, the holder would have owned upon such
       conversion and been entitled to receive upon such subdivision,
       combination or reclassification.  Such adjustment shall become
       effective immediately after the effectiveness of such
       subdivision, combination or reclassification.  Such adjustment
       shall be made successively whenever any event listed above shall
       occur.

            (iii)     In case at any time the Company shall fix a record
       date for the issuance of rights or warrants to all holders of its
       Common Stock entitling them to subscribe for or purchase Common
       Stock at a price per share less than the current market price per
       share of Common Stock (determined as provided in paragraph (v) of
       this subsection (c)) on such record date, the Conversion Price in
       effect at the opening of business on the day following such
       record date shall be reduced so that the same shall equal the
       price determined by multiplying such Conversion Price by a
       fraction of which the numerator shall be the number of shares of
       Common Stock outstanding at the close of business on such record
       date plus the number of shares of Common Stock which the
       aggregate of the offering price of the total number of shares so
       offered for subscription or purchase would purchase at such
       current market price per share of Common Stock and the
PAGE


       denominator shall be the number of shares of Common Stock
       outstanding at the close of business on such record date plus the
       number of shares so offered for subscription or purchase, such
       reduction to become effective immediately after the opening of
       business on the day following such record date.  Such reduction
       shall be made successively whenever such a record date is fixed;
       and in the event that such rights or warrants are not so issued,
       the Conversion Price shall again be adjusted to be the Conversion
       Price which would then be in effect if such record date had not
       been fixed.

                 (iv) In case at any time the Company shall fix a record
       date for the making of a distribution, by dividend or otherwise,
       to all holders of its shares if Common Stock, of evidences of its
       indebtedness or assets (including securities, but excluding any
       dividend or distribution referred to in paragraph (i) of this
       subsection (c), any rights or warrants referred to in paragraph
       (iii) of this subsection (c), and any dividend or distribution
       paid in cash out of the retained earnings of the Company), then
       in each such case the Conversion Price in effect after such
       record date shall be determined by multiplying the Conversion
       Price in effect immediately prior to such record date by a
       fraction, of which numerator shall be the total number of
       outstanding shares of Common Stock multiplied by the current
       market price per share of Common Stock (determined as provided in
       paragraph (v) of this subsection (c)) on such record date, less
       the fair market value (as determined by the Board of Directors of
       the Company, whose determination shall be conclusive and
       described in a statement filed with the Fiscal Agent) of the
       portion of the assets or evidences of indebtedness so to be
       distributed, and of which denominator shall be the total number
       of outstanding shares of Common Stock multiplied by such current
       market price per share of Common Stock.  Such adjustment shall be
       made successively whenever such a record date is fixed; and in
       the event that such distribution is not so made, the Conversion
       Price shall again be adjusted to be the Conversion Price which
       would then be in effect if such record date has not been fixed.

                 (v)  For the purpose of any computation under
       paragraphs (iii) and (iv) of this subsection (c), the current
       market price per share of Common Stock on any date shall be
       deemed to be the average of the Closing Prices (as defined below)
       for the 15 consecutive trading days upon which the principal
       trading market for the Common Stock is open and selected by the
       Company commencing not less than 20 nor more than 30 days before
       the day in question.  The "Closing Price" for any day shall be
       the last reported sales prices regular way or, in case no such
       reported sale takes place on such day, the average of the
       reported closing bid and asked prices regular way, in either case
       on the New York Stock Exchange or, if the Common Stock is not or
       admitted to trading on such exchange, on the principal national
       securities exchange on which the Common Stock is listed or
       admitted to trading or, if not listed or admitted to trading on
       any national securities exchange, the closing sale price quoted
PAGE


       on the Nasdaq National Market, or if not so quoted, as determined
       by the Company.

                 (vi) The Company may make such adjustments in the
       Conversion Price, in addition to those required by paragraphs
       (i), (ii) and, (iii) selected by the Company of this section, as
       it considers to be advisable in order that any event treated for
       United States Federal income tax purposes as a dividend of stock
       or stock rights shall not be taxable to the recipients.

                 (vii)     No adjustment in the Conversion Price shall
       be required unless such adjustment would require an increase or
       decrease of at least U.S. $.25 in such Conversion Price;
       provided, however, that any adjustment which by reason of this
       paragraph (vii) is not required to be made shall be carried
       forward and taken into account in any subsequent adjustment.  All
       calculations under this subsection (c) shall be made to the
       nearest cent or to the nearest 1/1000 of a share, as the case may
       be.

                 (viii)    In the event that the Company shall
       distribute rights pro rata to holders of Common Stock pursuant to
       the Rights Agreement, dated as of May 4, 1988, between the
       Company and the First National Bank of Boston, as Rights Agent,
       or any similar plan (_Rights_) the Company shall make proper
       provision so that each holder of a Security who converts such
       Security (or any portion thereof) after the record date for such
       distribution and prior to the expiration or redemption of the
       Rights shall be entitled to receive upon such conversion, in
       addition to the Conversion Shares, a number of Rights to be
       determined as follows:  (i) if such conversion occurs on or prior
       to the date for the distribution to the holders of Rights of
       separate certificates evidencing such Rights (the _Distribution
       Date_), the same number of Rights to which a holder of a number
       of shares of Common Stock equal to the number of Conversion
       Shares is entitled at the time of such conversion in accordance
       with the terms and provisions of and applicable to the Rights;
       and (ii) if such conversion occurs after the Distribution Date,
       the same number of Rights to which a holder of the number of
       shares of Common Stock into which the principal amount of the
       Security so converted was convertible immediately prior to the
       Distribution Date would have been entitled on the Distribution
       Date in accordance with the terms and provisions of and
       applicable to the Rights; provided, however, that if after the
       Distribution Date with respect to such Rights converting Holders
       of Securities are not entitled to receive the Rights that would
       otherwise be attributable (but for the date of conversion) to
       their respective Conversion Shares or such Rights are not issued
       to them upon conversion for any reason, then adjustment of the
       Conversion Price shall be made under paragraph (iii) and this
       subsection (c), except the Distribution Date with respect to such
       Rights shall be substituted as _the record date for the issuance
       of rights_; provided, further, that if such an adjustment is made
       and such Rights are later redeemed, invalidated or terminated,
PAGE


       then a corresponding reversing adjustment of the Conversion Price
       shall be made to the Conversion Price, on an equitable basis, to
       take account of such event.

                 (d)  Whenever the Conversion Price is adjusted and in
       the event of certain other corporate actions, as herein provided,
       the Company shall give notice, all as provided in the Fiscal
       Agency Agreement.

                 (e)  The Company shall file, as soon as practicable
       following the Closing Date, a shelf registration statement with
       the United States Securities and Exchange Commission covering the
       resale of the shares of Common Stock issuable upon conversion of
       the Restricted Securities (_Registrable Securities_); provided
       that any holder of any Restricted Securities or Registrable
       Securities shall not sell any shares pursuant to such
       registration statement unless and until it provides to the
       Company such information as the Company may reasonably request
       for use in connection with the identification of such holder as a
       selling stockholder in such registration statement, or any
       prospectus included therein, and no such sale shall be made by
       such holder pursuant to such registration statement unless and
       until such information is included by the Company in such
       registration statement or prospectus.  The Company shall in good
       faith use its best efforts and at its cost to cause such
       registration statement to be declared effective as promptly as
       practicable thereafter and to include in such registration
       statement the information provided by a holder as a selling
       stockholder and shall notify the Fiscal Agent of the
       effectiveness thereof and agrees to use its best efforts to (i)
       cause all registrations with, and to obtain any approvals by, any
       governmental authority under any Federal or state law of the
       United States that may be required in connection with the
       conversion of the Securities into Common Stock and the resale
       thereof, (ii) maintain the effectiveness of such registrations
       until the earlier of (a) three years from the date of the Fiscal
       Agency Agreement, or (b) the date that Rule 144(k) under the
       Securities Act is available for the resale of the shares of
       Common Stock issuable upon conversion of the Restricted
       Securities (or other securities issuable upon conversion of the
       Securities) and (iii) to list the shares of Common Stock required
       to be issued or delivered upon conversion of Securities (or other
       securities issuable upon conversion of the Securities) prior to
       such issue or delivery on such national securities exchange or
       automated over-the-counter trading market where such Common Stock
       is listed or traded at the time of such delivery. The Company
       shall, without limitation as to time, indemnify and hold
       harmless, to the fullest extent permitted by law, each holder of
       Registrable Securities, the officers, directors and agents and
       employees of each of them, each person who controls such holder
       (within the meaning of Section 15 of the Securities Act or
       Section 20 of the Securities Exchange Act of 1934, as amended)
       and the officers, directors, agents and employees of any such
       controlling person, from and against all losses, claims, damages,
PAGE


       liabilities, costs (including, without limitation, the costs of
       preparation and attorneys' fees) and expenses (collectively,
       _Losses_), as incurred, arising out of or based upon any untrue
       or alleged untrue statement of a material fact contained in any
       such registration statement, or related prospectus or in any
       amendment or supplement thereto, or arising out of or based upon
       any omission or alleged omission to state therein a material fact
       required to be stated therein or necessary to make the statements
       therein not misleading, except insofar as the same are based
       solely upon information, if any, furnished in writing to the
       Company by such holder expressly for use therein; provided, that
       the Company shall not be liable to any holder of Registrable
       Securities to the extent that any such Losses arise out of or are
       based upon an untrue statement or alleged untrue statement or
       omission or alleged omission made in any preliminary prospectus
       if either (a)(i) such holder failed to send or deliver as
       required a copy of the final prospectus with or prior to the
       delivery of written confirmation of the sale by such holder of a
       Registrable Security to the person asserting the claim from which
       such Losses arise and (ii) the prospectus would have completely
       corrected such untrue statement or alleged untrue statement or
       such omission or alleged omission; or (b)(i) such untrue
       statement or alleged untrue statement, omission or alleged
       omission is completely corrected in an amendment or supplement to
       the prospectus and (ii) having previously been furnished by or on
       behalf of the Company with copies of the prospectus as so amended
       or supplemented, such holder thereafter fails to deliver as
       required such prospectus as so amended or supplemented, prior to
       or concurrently with the sale of a Registrable Security to the
       person asserting the claim from which such Losses arise. Promptly
       after receipt by an indemnified party under this Paragraph (e) of
       notice of any claim or the commencement of any action, the
       indemnified party shall, if a claim in respect thereof is to be
       made against the Company under this Paragraph (e) notify the
       Company in writing of the claim or the commencement of that
       action; provided, however, that the failure to notify the Company
       shall not relieve it from any liability which it may have to an
       indemnified party otherwise than under this Paragraph (e).  If
       any such claim or action shall be brought against an indemnified
       party, and it shall notify the Company thereof, the Company shall
       be entitled to participate therein and, to the extent that it
       wishes, to assume the defense thereof with counsel reasonably
       satisfactory to the indemnified party.  After notice from the
       Company to the indemnified party of its election to assume the
       defense of such claim or action, the Company shall not be liable
       to the indemnified party under this Paragraph (e) for any legal
       or other expenses subsequently incurred by the indemnified party
       in connection with the defense thereof; provided, however, if the
       defendants in any such action include both an indemnified party
       and the Company and the indemnified party shall have reasonably
       concluded that there may be legal defenses available to it and
       for other indemnified parties that are different from or
       additional to those available to the Company, the indemnified
       party or parties under this Paragraph (e) shall have the right to
PAGE


       employ not more than one counsel to represent them and, in that
       event, the reasonable fees and expenses of not more than one such
       separate counsel shall be paid by the Company.  The Company shall
       not be liable for any settlement effected without its written
       consent of any claim or action.

                 (f)  The Company shall, at all times, have reserved and
       available, free from preemptive rights, out of its authorized but
       unissued shares of Common Stock, for the purpose of effecting the
       conversion of Securities, the full number of shares of Common
       Stock then issuable upon the conversion of all Securities (based
       on the aggregate principal amount of Securities outstanding).
       The Company covenants that all shares of Common Stock which may
       be issued or delivered upon conversion of Securities will upon
       issuance be fully paid and nonassessable.

                 (g)  Subject to the rights of the holders pursuant to
       Section 3(e) hereof, in case of any consolidation with, or merger
       of the Company into, any other corporation, or in case of any
       merger of another corporation into the Company (other than a
       merger which does not result in any reclassification, conversion,
       exchange or cancellation of outstanding shares of Common Stock of
       the Company), or in case of any sale or transfer of all or
       substantially all of the assets of the Company (which shall not
       include the sale or transfer of any portion of the assets of the
       Company to any corporation which, immediately following such
       transfer is at least 51% owned by the Company, provided that such
       sale or transfer does not result in the reclassification,
       conversion, exchange or cancellation of outstanding shares of
       Common Stock of the Company), the corporation formed by such
       consolidation or resulting from such merger or which acquires
       such assets, as the case may be, shall execute and deliver to the
       Fiscal Agent an amendment to the Fiscal Agency Agreement
       providing that the holder of each Security shall have the right
       during the period such Security shall be convertible as specified
       in section (a) hereof to convert such Security only into the kind
       and amount of securities, cash and other property receivable upon
       such consolidation, merger, sale or transfer by a holder of the
       number of shares of Common Stock of the Company into which such
       Security might have been converted immediately prior to such
       consolidation, merger, sale or transfer assuming, if such
       consolidation, merger, sale or transfer is prior to the period
       such Security shall be convertible as specified in subsection (a)
       hereof, that the Securities were convertible at such time at the
       initial Conversion Price as adjusted from November 28, 1995 to
       such time pursuant to paragraphs (i), (ii), (iii), (iv) and (vi)
       of subsection (c) hereof.  Such amendment shall provide for
       adjustments which, for events subsequent to the effective date of
       such amendment, shall be as nearly equivalent as may be
       practicable to the adjustments provided for herein.  The above
       provisions of this subsection shall similarly apply to successive
       consolidations, mergers, sales or transfers.
PAGE


            5.   Events of Default.  In the event that any of the
       following ("Events of Default_) shall occur and be continuing:

                 (a)  the Company shall fail to pay when due the
       principal of, or premium, if any, on any of the Securities
       whether at maturity or upon redemption or otherwise; or

                 (b)  the Company shall fail to pay any installment of
       interest or any required payment of any Additional Amounts (as
       described in Section 2 hereof) on any of the Securities for a
       period of 10 days after the date when due; or

                 (c)  the Company shall fail duly to perform or observe
       any other term, covenant or agreement contained in any of the
       Securities or in the Fiscal Agency Agreement for a period of 60
       days after the date on which written notice of such failure,
       requiring the Company to remedy the same, shall first have been
       given to the Company and the Fiscal Agent by the holders of at
       least 25% in aggregate principal amount of the Securities at the
       time outstanding; provided, however, that in the event the
       Company shall within the aforesaid period of 60 days commence
       legal action in a court of competent jurisdiction seeking a
       determination that the Company had not failed duly to perform or
       observe the term or terms, covenant or covenants or agreement or
       agreements specified in the aforesaid notice, such failure shall
       not be an Event of Default unless the same continues for a period
       of 10 days after the date of any final determination to the
       effect that the Company had failed to duly perform or observe one
       or more of such terms, covenants or agreements; or

                 (d)  a court having jurisdiction in the premises shall
       enter a decree or order for relief in respect of the Company in
       an involuntary case or proceeding under any applicable
       bankruptcy, insolvency, reorganization or other similar law now
       or hereafter in effect, or appointing a receiver, liquidator,
       assignee, custodian, trustee, sequestrator (or similar official)
       of the Company or for any substantial part of the property of it
       or ordering the winding-up or liquidation of the affairs of it
       and such decree or order shall remain unstayed and in effect for
       a period of 20 consecutive days; or

                 (e)  the Company shall commence a voluntary case or
       proceeding under any applicable bankruptcy, insolvency,
       reorganization or other similar law now or hereafter in effect,
       or shall consent to the entry of an order for relief in an
       involuntary case under any such law, or shall consent to the
       appointment of or taking possession by a receiver, liquidator,
       assignee, trustee, custodian, sequestrator (or similar official)
       of the Company or for any substantial part of its property, or
       shall make any general assignment for the benefit of creditors,
       or shall admit in writing its inability to pay its debts as they
       become due or shall take any corporate action in furtherance of
       any of the foregoing; or
PAGE


                 (f)  an event of default, as defined in any indenture
       or instrument evidencing or under which the Company shall have at
       least $25,000,000 outstanding (or its equivalent in another
       currency), in aggregate principal amount of indebtedness for
       borrowed money, shall happen and be continuing and such default
       shall involve the failure to pay the principal of such
       indebtedness (or any part thereof), when due and payable after
       the expiration of any applicable grace period with respect
       thereto, or such indebtedness shall have been accelerated so the
       same shall be or become due and payable prior to the date on
       which the same would otherwise have become due and payable, and
       failure to pay shall not have been cured by the Company within 20
       days after such failure or such acceleration shall not be
       rescinded or annulled within 20 days after notice thereof shall
       have first been given to the Company; provided that if such event
       of default under such indenture or instrument shall be remedied
       or cured by the Company or waived by the holders of such
       indebtedness, then the Event of Default hereunder by reason
       thereof shall be deemed likewise to have been thereupon remedied,
       cured or waived without further action upon the part of any of
       the holders of Securities; then the holder of this Security may,
       at such holder's option, declare the principal of this Security
       and the interest accrued hereon (and Additional Amounts under
       Section 2 hereof, if any, thereon) to be due and payable
       immediately by written notice to the Company and the Fiscal
       Agent, and if any such Event of Default shall continue at the
       time of receipt of such written notice, the principal of this
       Security and the interest accrued hereon (and Additional Amounts,
       if any, hereon) shall become immediately due and payable, subject
       to the proviso of subsection (c) of this Section 5. Upon payment
       of such amount of principal, premium, if any, and interest (and
       Additional Amounts pursuant to Section 2 hereof, if any), all of
       the Company's obligations in respect of payment of principal of,
       premium, if any, and interest on (and Additional Amounts, if any,
       on) this Security shall terminate.  Interest on overdue
       principal, premium, if any, and interest (and Additional Amounts,
       if any) shall accrue from the date on which such principal,
       premium, if any, and interest (and Additional Amounts, if any)
       were due and payable to the date such principal, premium, if any,
       and interest (and Additional Amounts, if any) are paid or duly
       provided for, at the rate borne by the Securities (to the extent
       payment of such interest shall be legally enforceable).  Any
       acceleration of this Security pursuant to this Section 5 shall
       not affect the subordination provisions of Section 7 hereof.

                 If an Event of Default, as defined in this Section 5,
       with respect to the Securities, or an event which would, with the
       passing of time or the giving of notice, or both, be an Event of
       Default, shall occur and be continuing, the Company shall within
       five Business Days of becoming aware thereof notify the Fiscal
       Agent in writing of such Event of Default, and the Fiscal Agent
       shall thereupon promptly notify all of the holders of the
       Securities of such Event of Default.
PAGE


            6.   Merger, Consolidation, Sale, Conveyance or Assumption.

                 (a)  Subject to the rights of the holder pursuant to
       Section 3(e) hereof, the Company will not merge or consolidate
       with, or sell or convey all or substantially all of its assets
       to, any other corporation, unless (i) either (A) the Company
       shall be the surviving corporation in the case of a merger, (B)
       the assets sold or conveyed shall be owned by a corporation
       which, immediately following such sale or conveyance, is at least
       51% owned by the Company, provided that such sale or conveyance
       does not result in the reclassification, conversion, exchange or
       cancellation of outstanding shares of Common Stock of the
       Company, or (C) (I) the surviving, resulting or transferee
       corporation shall expressly assume the due and punctual payment
       (including Additional Amounts pursuant to Section 2 hereof, if
       any) of all the Securities, according to their tenor, and the due
       and punctual performance of all of the covenants and obligations
       of the Company under the Securities, the coupons and the Fiscal
       Agency Agreement, by supplemental agreement reasonably
       satisfactory to the Fiscal Agent and (II) the Fiscal Agent shall
       have received the documentation required in the context by the
       Fiscal Agency Agreement, (ii) the surviving, resulting or
       transferee corporation, if not organized and validly existing
       under the laws of the United States, shall expressly agree to
       make payments under the Securities free of any deduction or
       withholding for any and all then existing or future withholding
       taxes, levies, imposts and charges whatsoever imposed by or for
       the account of the jurisdiction where such successor corporation
       is generally subject to taxation (or any political subdivision or
       taxing authority thereof or therein) in a manner equivalent to
       that set forth herein, subject to the exceptions contained in
       such forms of the Securities, and (iii) the Company or such
       successor corporation, as the case may be, shall not, immediately
       after such merger, consolidation, sale or conveyance, be in
       default in the performance of any covenants or obligations of the
       Company under the Securities or the Fiscal Agency Agreement.

                 (b)  Upon any merger, consolidation, sale, conveyance
       or assumption as provided in Section 6(a), the successor or
       assuming corporation shall succeed to and be substituted for, and
       may exercise every right and power of and be subject to all the
       obligations of, the Company under the Securities and Fiscal
       Agency Agreement, with the same effect as if such successor or
       assuming corporation had been named as the Company therein and
       herein and the Company shall be released from its liability as
       obligor under the Securities and Fiscal Agency Agreement;
       provided that any successor or assuming corporation shall have
       the right to redeem the Securities pursuant to Section 3(b)
       hereof only as a result of circumstances which occur subsequent
       to such merger, consolidation, sale, conveyance or assumption and
       as a result of which the Company would have had such right if the
       Company had remained the obligor on the Securities.

            7.   Agreement of Subordination of Securities.
PAGE


                 (a)  The Company, for itself, its successors and
       assigns, covenants and agrees, and each holder of Securities and
       coupons by his acceptance thereof, likewise covenants and agrees,
       that the payment of the principal of, premium, if any, and
       interest and Additional Amounts (pursuant to Section 2 hereof) on
       each and all of the Securities and coupons is hereby expressly
       subordinated, to the extent and in the manner hereinafter set
       forth, in right of payment to the prior payment in full of all
       Senior Indebtedness of the Company (as defined below).

                 "Senior Indebtedness of the Company_ or _Senior
       Indebtedness_ shall mean the principal of, premium, if any, and
       interest on and all other amounts due on or with respect to the
       following whether outstanding at the date of execution of the
       Fiscal Agency Agreement or thereafter incurred or created:

                 (i)  indebtedness of the Company for money borrowed by
       the Company (excluding the Securities, but including, without
       limitation, purchase money obligations), whether or not evidenced
       by debentures, bonds, notes or other corporate debt securities or
       similar instruments issued by the Company (including the
       Company's obligations with respect to its 5% Senior Convertible
       Debentures due 2001 and its 4-5/8% Senior Convertible Debentures
       due 1997); provided, however, that Senior Indebtedness shall not
       include (a) the Company's 4-7/8% Convertible Subordinated
       Debentures due 1997, the obligations represented by which shall
       rank pari passu with the obligations represented hereby in right
       of payment, (b) the Company's subordinated guarantee of the
       principal, premium, if any, and interest on the 6-5/8%
       Convertible Subordinated Debentures due 2001 of Thermo Instrument
       Systems Inc., on the 6-1/2% Convertible Subordinated Debentures
       due 1997 of Thermo Process Systems Inc., on the Non-Interest
       Bearing Convertible Subordinated Debentures due 1997 and the
       5-1/2% Convertible Subordinated Note due 2002 of Thermo
       Cardiosystems Inc., on the 6-1/2% Convertible Subordinated
       Debentures due 1998 of Thermedics Inc., on the 3-3/4% Convertible
       Subordinated Debentures due 2000 of Thermo Voltek Corp., on the
       4-7/8% Convertible Subordinated Debentures due 2000 of Thermo
       Remediation Inc., on the 5% Convertible Subordinated Debentures
       due 2000 of ThermoQuest Corporation, and on the 5% Convertible
       Subordinated Debentures due 2000 of Thermo Optek Corporation, the
       obligations represented by which shall rank pari passu with the
       obligations represented hereby in right of payment and (c) the
       Company's subordinated guarantee of the obligations to redeem the
       common stock of ThermoLyte Corporation, the obligations
       represented by which shall rank pari passu with the obligations
       represented hereby in right of payment;

                 (ii) obligations to reimburse any bank or other person
       in respect of amounts paid under letters of credit;

                 (iii)     leases of real property, equipment or other
       assets, which leases are capitalized in the Company's financial
PAGE


       statements in accordance with generally accepted accounting
       principles;

                 (iv) commitment, standby and other fees due and payable
       to financial institutions with respect to credit facilities
       available to the Company;

                 (v)  obligations of the Company under interest rate and
       currency swaps, floors, caps or other similar arrangements
       intended to hedge interest rates or currency exposure;

                 (vi) indebtedness secured by any mortgage, pledge, lien
       or other encumbrance on property which is owned or held by the
       Company subject to such mortgage, pledge, lien or other
       encumbrance, whether or not the indebtedness secured thereby
       shall have been assumed by the Company;

                 (vii)     obligations of the Company constituting
       guarantees of indebtedness of or joint obligation with another or
       others which would be included in the preceding clauses (i),
       (ii), (iii), (iv), (v) or (vi) (including the Company's guarantee
       of the principal, premium, if any, and interest on the 3-3/4%
       Senior Convertible Debentures due 2000 of Thermo Instrument
       Systems Inc.); and

                 (viii)    modifications, renewals, extensions or
       refundings of any of the indebtedness, leases, fees or
       obligations referred to in the preceding clauses (i), (ii),
       (iii), (iv), (v), (vi) or (vii), or debentures, notes or other
       evidences of indebtedness issued in exchange therefor;

       provided that Senior Indebtedness shall not include any
       particular indebtedness, lease, fee, obligation, modification,
       renewal, extension, refunding or exchanged securities if, under
       the express provisions of the instrument creating or evidencing
       the same, or pursuant to which the same is outstanding, such
       indebtedness, lease, fee or obligation or such renewal, extension
       or refunding thereof is stated to be not superior in right to
       payment to the Securities.

                 (b)  (i) In the event of any insolvency or bankruptcy
       proceedings, or any receivership, liquidation, reorganization or
       other similar proceedings in connection therewith, relative to
       the Company or to its creditors, in their capacity as such
       creditors, or to its property, or in the event of any proceedings
       for voluntary liquidation, dissolution or other winding up of the
       Company, whether or not involving insolvency or bankruptcy, or in
       the event of any assignment for the benefit of creditors of the
       Company or any marshalling of assets of the Company, then the
       holders of Senior Indebtedness of the Company shall first be
       entitled to receive payment in full of the principal of (and
       premium, if any, on) and interest, including interest thereon
       accruing after the commencement of any such proceeding, and other
       amounts due on or with respect to, all Senior Indebtedness of the
PAGE

       Company before the holders of any of the Securities shall be
       entitled to receive any payment on account of the principal of,
       premium, if any, or interest and Additional Amounts (pursuant to
       Section 2 hereof) on the Securities, and to that end the holders
       of Senior Indebtedness of the Company shall be entitled to
       receive for application in payment thereof any payment or
       distribution of any kind or character, whether in cash, property
       or securities, which may be payable or deliverable in any such
       proceedings in respect of the Securities, other than securities
       of the Company as reorganized or readjusted or securities of the
       Company or any other corporation provided for by a plan of
       reorganization or readjustment, the payment of which is
       subordinate, at least to the extent provided in this Section 7
       with respect to the Securities, to the payment of all Senior
       Indebtedness of the Company, provided that the rights of the
       holders of Senior Indebtedness of the Company are not altered by
       such reorganization or readjustment.  For the purposes of this
       Section 7, no consolidation, merger, conveyance or transfer made
       pursuant to the provisions of Section 6 shall be deemed to be a
       liquidation, reorganization, dissolution or other winding up of
       the Company.

                 (ii) If under the circumstances set forth in paragraph
       (i) of this subsection, and notwithstanding the provisions
       thereof, any payment or distribution of assets of the Company of
       any kind, whether in cash, property or securities (other than
       securities of the Company as reorganized or readjusted or
       securities of the Company or any other corporation provided for
       by a plan of reorganization or readjustment the payment of which
       is subordinated, at least to the extent provided in this Section
       7 with respect to the Securities, to the payment of all Senior
       Indebtedness of the Company, provided that the rights of the
       holders of Senior Indebtedness of the Company are not altered by
       such reorganization or readjustment), shall be received by the
       holders of the Securities before all Senior Indebtedness of the
       Company is paid in full, such payment or distribution shall be
       paid over to the holders of Senior Indebtedness of the Company,
       ratably, for application to the payment of all Senior
       Indebtedness of the Company remaining unpaid until all Senior
       Indebtedness of the Company shall have been paid in full, after
       giving effect to any concurrent payment or distribution to the
       holders of such Senior Indebtedness of the Company.

                 (iii)     Upon any distribution of assets of the
       Company referred to in this Section, the holders of Securities
       shall be entitled to rely upon any final order or decree of a
       court of competent jurisdiction in which such dissolution,
       winding up, liquidation or reorganization proceedings are
       pending, and the holders of Securities shall be entitled to rely
       upon a certificate of the liquidating trustee or agent or other
       person making any distribution to the holders of Securities for
       the purpose of ascertaining the persons entitled to participate
       in such distribution, the holders of the Senior Indebtedness of
       the Company and other indebtedness of the Company, the amount
PAGE


       thereof or payable thereon, the amount or amounts paid or
       distributed thereon and all other facts pertinent thereto or to
       this Section.

                 (c)  (i) Upon the maturity of any Senior Indebtedness
       of the Company by lapse of time, acceleration or otherwise, all
       principal thereof (and premium, if any) and interest due thereon,
       including interest thereon accruing after the commencement of any
       proceeding of the type referred to in paragraph (i) of Section
       7(b) above, and all other amounts due on or with respect thereto,
       shall first be paid in full, or such payment duly provided for in
       cash, before any payment, directly or indirectly, is made on
       account of the principal of, premium, if any, or interest and
       Additional Amounts (pursuant to Section 2 hereof) on the
       Securities or coupons.

                 (ii) Upon the happening of an event of default with
       respect to any Senior Indebtedness of the Company, as defined
       therein or in the instrument under which it is outstanding
       permitting the holders to accelerate the maturity thereof, then,
       unless and until such event of default shall have been cured or
       waived or shall have ceased to exist, no payment shall be made by
       the Company, directly or indirectly, on account of the principal
       of, premium, if any, or interest and Additional Amounts (pursuant
       to Section 2 hereof) on the Securities or coupons.

                 (d)  In case cash, securities or other property
       otherwise payable or deliverable to the holders of the Securities
       shall have been applied, pursuant to Section 7(b) or 7(c), to the
       payment of Senior Indebtedness of the Company, then, upon the
       payment in full of all Senior Indebtedness of the Company, the
       holders of the Securities shall be subrogated to any rights of
       any holders of Senior Indebtedness of the Company to receive any
       further payment or distributions applicable to Senior
       Indebtedness of the Company until the principal of, premium, if
       any, and interest and Additional Amounts (pursuant to Section 2
       hereof) on the Securities shall have been paid in full, and such
       payments or distributions received by the holders of the
       Securities and coupons, by reason of such subrogation, of cash,
       securities or other property which otherwise would be paid or
       distributed to the holders of Senior Indebtedness of the Company
       shall, as between the Company and its creditors other than the
       holders of Senior Indebtedness of the Company, on the one hand,
       and the holders of the Securities, on the other hand, be deemed
       to be a payment by the Company on account of Senior Indebtedness
       of the Company and not on account of the Securities.

                 (e)  No present or future holder of any Senior
       Indebtedness of the Company shall be prejudiced in any way in the
       right to enforce the subordination of the Securities by any act
       or failure to act on the part of the Company.  The provisions of
       this Section are solely for the purpose of defining the relative
       rights of the holders of Senior Indebtedness of the Company, on
       the one hand, and the holders of the Securities, on the other
PAGE


       hand, against the Company and its assets, and nothing contained
       in this Section shall impair, as between the Company and the
       holder of any Security, the obligation of the Company, which is
       unconditional and absolute, to pay to the holder thereof, the
       principal thereof, premium, if any, and interest and Additional
       Amounts (pursuant to Section 2 hereof) thereon as and when the
       same shall become due and payable in accordance with the terms
       thereof, or prevent the holder of any Security, upon default
       hereunder or under such Security, from exercising all rights,
       powers and remedies otherwise provided herein or therein or by
       applicable law, all subject to the rights of the holders of
       Senior Indebtedness of the Company under this Section to receive
       cash, property or securities otherwise payable or deliverable to
       the holders of the Securities and coupons.

                 (f)  Nothing contained in this Section or in any of the
       Securities shall prevent at any time, except under the conditions
       described in Sections 7(b) and (c) hereof or during the pendency
       of any dissolution, winding up, liquidation or reorganization
       proceedings therein referred to, the Company from making payments
       at any time of principal of, premium of, if any, or interest or
       Additional Amounts (pursuant to Section 2 hereof) on the
       Securities.  Nothing contained in this Section shall prevent
       conversions of Securities.


                 8.   Replacement, Transfer and Exchange of Securities.

                 (a)  In case any Security (including any coupons
       appertaining thereto) shall at any time become mutilated,
       destroyed, stolen or lost and such Security or evidence of the
       loss, theft or destruction thereof (together with the indemnity
       hereinafter referred to and such other documents or proof as may
       be required) shall be delivered to the Fiscal Agent, a new
       Security of like tenor and date with appropriate interest
       coupons, if any, will be issued by the Company in exchange for
       the Security so mutilated, or in lieu of the Security so
       destroyed, stolen or lost, but, in the case of a destroyed,
       stolen or lost Security only upon receipt of evidence
       satisfactory to the Fiscal Agent and the Company that such
       Security was destroyed, stolen or lost, and if required by the
       Fiscal Agent or the Company, upon receipt also of indemnity
       satisfactory to the Fiscal Agent and the Company.  All expenses
       and reasonable charges associated with procuring such indemnity
       and with the preparation, authentication and delivery of a new
       Security shall be borne by the owner of the Security so
       mutilated, destroyed, stolen or lost.

                 (b)  As provided in the Fiscal Agency Agreement and
       subject to certain limitations therein set forth, Bearer
       Securities (with all unmatured and matured defaulted coupons
       appertaining thereto) are exchangeable at, subject to applicable
       laws and regulations, the offices of the paying agencies in
       London and, if the Securities are listed on the Luxembourg Stock
PAGE


       Exchange and so long as listed thereon, Luxembourg or as
       designated by the Company for such purpose pursuant to the Fiscal
       Agency Agreement, for an equal aggregate principal amount of
       Registered Securities in the denominations of $1,000 and integral
       multiples thereof without coupons and/or Bearer Securities of
       authorized denominations, and Registered Securities are
       exchangeable at the Corporate Trust Office of the Fiscal Agent in
       New York City or, subject to applicable laws and regulations, the
       offices of the paying agencies in London and, if the Securities
       are listed on the Luxembourg Stock Exchange and so long as listed
       thereon, Luxembourg or as designated by the Company for such
       purpose pursuant to the Fiscal Agency Agreement, for an equal
       aggregate principal amount of Registered Securities of authorized
       denominations as requested by the holder surrendering the same.
       Registered Securities will not be exchangeable for Bearer
       Securities.  The Company shall not be required (a) to exchange
       Bearer Securities for Registered Securities during the period
       between the close of business on each June 15 and December 15 and
       the opening of business on the next succeeding interest payment
       date or (b) to exchange Bearer Securities for Registered
       Securities, if as a result, the Company would incur adverse
       consequences under United States Federal income tax laws in
       effect of the time of exchange, or (c) in the event of a
       redemption in part, (i) to register the transfer of Registered
       Securities or to exchange Bearer Securities for Registered
       Securities for a period of 15 days immediately preceding the date
       notice is given identifying the serial numbers of the Securities
       called for such redemption; (ii) to register the transfer or
       exchange of any such Registered Securities, or portion thereof,
       called for redemption; or (iii) to exchange any such Bearer
       Securities called for redemption; provided, however, that a
       Bearer Security called for redemption may be exchanged for a
       Registered Security that is simultaneously surrendered, with
       written instruction for payment on the date fixed for redemption,
       unless the date fixed for redemption is during the period between
       the close of business on each June 15 and December 15 and the
       close of business on the next succeeding interest payment date,
       in which case such exchange may only be made prior to the close
       of business on each June 15 and December 15 immediately preceding
       the date fixed for redemption.  In the event of redemption or
       conversion of a Security in part only, a new Security or
       Securities for the unredeemed or unconverted portion hereof will
       be issued in the name of the holder thereof.

                 (c)  The costs and expenses of effecting any exchange
       or registration of transfer pursuant to the foregoing provisions,
       except for the expenses of delivery by other than regular mail
       (if any) and except, if the Company shall so require, the payment
       of a sum sufficient to cover any tax or other governmental charge
       or insurance charges that may be imposed in relation thereto,
       will be borne by the Company.

                 (d)  The Company has initially appointed as registrar
       and transfer agent the Fiscal Agent acting through the Corporate
PAGE


       Trust Office in New York.  The Company has also initially
       appointed Banque Internationale a Luxembourg as a transfer agent,
       subject to the listing of the Securities on the Luxembourg Stock
       Exchange.  The Company may at any time terminate the appointment
       of the registrar and transfer agent and appoint additional or
       other registrars and transfer agents or approve any change in an
       office through which the registrar and transfer agent acts;
       provided that, until all of the Securities have been delivered to
       the Fiscal Agent for cancellation, or monies sufficient to pay
       the Securities have been made available for payment and either
       paid or returned to the Company as provided in the Securities,
       the Company will maintain a registrar and transfer agent in the
       City of New York in the United States.

                 (e)  For purposes of the provisions of this Security
       and the Fiscal Agency Agreement, any Security authenticated and
       delivered pursuant to the Fiscal Agency Agreement shall, as of
       any date of determination, be deemed to be "outstanding", except
       for:

                      (i)  Securities previously canceled by the Fiscal
       Agent or delivered to the Fiscal Agent for cancellation;

                      (ii) Securities which have been called for
       redemption by the Company in accordance with Section 3 hereof or
       which have become due and payable at maturity or otherwise and
       with respect to which monies sufficient to pay the principal
       thereof and interest thereon (including Additional Amounts, if
       any) shall have been made available to the Fiscal Agent; or

                      (iii)     Securities in lieu of or in substitution
       for which other Securities have been authenticated and delivered
       pursuant to the Fiscal Agency Agreement;

       provided, however, that in determining whether the holders of the
       requisite principal amount of outstanding Securities are present
       at a meeting of holders of Securities for quorum purposes or have
       given any request, demand, authorization, direction, notice,
       consent or waiver hereunder, Securities owned by the Company or
       any subsidiary thereof shall be disregarded and deemed not to be
       outstanding.

            9.   Modifications and Amendments.

                 (a)  Without the consent of any holders of Securities
       or coupons, modifications of or amendments to the Fiscal Agency
       Agreement or the Terms and Conditions of the Securities may be
       made for any of the following purposes:

                      (i)  to evidence the succession of another
       corporation to the Company and the assumption by any such
       successor of the covenants of the Company in the Fiscal Agency
       Agreement or the Securities;
PAGE


                      (ii) to add to the covenants of the Company for
       the benefit of the holders of Securities or related coupons, or
       to surrender any right or power herein conferred upon the
       Company;

                      (iii)     to permit payment of principal of,
       premium, if any, and interest
       on Bearer Securities in the United States, provided that such
       payment is permitted by
       United States tax laws and regulations then in effect;

                      (iv) to make provision with respect to the
       conversion rights and redemption rights of holders of Securities
       or coupons in the event of a consolidation, merger or sale of
       substantially all of the assets of the Company;

                      (v)  to cure any ambiguity, to correct or
       supplement any defective provision in the Fiscal Agency Agreement
       which may be inconsistent with any other provision therein, or to
       make any other provisions with respect to matters or questions
       arising under this Security or the Fiscal Agency Agreement,
       provided such action pursuant to this clause (v) will not
       materially adversely affect the interests of the holders of
       Securities or related coupons; or

                      (vi) to increase the principal amount of
       Securities that may be issued pursuant to the Fiscal Agency
       Agreement; or 

                      (vii)     to delete the agreement of subordination
       contained in Section 7 hereof and any other references thereto.

                 (b)  Modifications and amendments to the Fiscal Agency
       Agreement or to the Terms and Conditions of the Securities may be
       made, and future compliance with or past default by the Company
       under any of the provisions thereof may be waived, with the
       written consent of the holders of not less than a majority in
       aggregate principal amount of the Securities at the time
       outstanding (excluding for purposes of this calculation the
       aggregate principal amount of Securities held by the Company or
       any of its subsidiaries), or of such lesser percentage as may act
       at a meeting of holders of Securities held in accordance with the
       provisions set forth herein; provided that no such modification,
       amendment or waiver may, without the consent of the holder of
       each such Security affected thereby:

                      (i)  waive a default in the payment of the
       principal of, premium, if any, or any installment of interest on
       any Security;

                      (ii) change the stated maturity of the principal
       of, premium, if any, or any installment of interest on, any
       Security, or reduce the principal amount thereof or any premium,
       if any, or any installment of interest, or change the obligation
PAGE


       of the Company to pay Additional Amounts pursuant to Section 2
       hereof (except as permitted by subsection (a) of Section 9 or by
       the Fiscal Agency Agreement), or change the coin or currency in
       which any Security or any premium or interest thereon is payable,
       or, except as otherwise permitted or contemplated by the
       provisions concerning corporate reorganizations, adversely affect
       the right to redeem (pursuant to Section 3(d) or Section 3(e)
       hereof) or convert any Securities as provided in Sections 3 and
       4, respectively;

                      (iii)     reduce the requirements of Section 10
       hereof for the adoption of a resolution of the quorum required at
       any meeting of holders of Securities at which a resolution is
       adopted, or reduce the percentage in principal amount of the
       outstanding Securities the consent of whose holders is required
       for any amendment or modification of the Fiscal Agency Agreement
       or the Terms and Conditions of the Securities or the consent of
       whose holders is required for any waiver (of compliance with
       certain provisions of the Fiscal Agency Agreement or the
       Securities or certain defaults hereunder and thereunder and their
       consequences) provided for in the Terms and Conditions of the
       Securities;

                      (iv) modify the obligation of the Company to
       maintain an office or agency in the City of New York and outside
       the United States; or

                      (v)  modify any of the provisions of this section
       except to increase any such percentage or to provide that certain
       other provisions of the Fiscal Agency Agreement or the Securities
       cannot be modified or waived without the consent of the holder of
       each outstanding Security affected thereby.

       It shall not be necessary for any act of holders of Securities
       under this Section to approve the particular form of any proposed
       amendment, modification or waiver, but it shall be sufficient if
       such act shall approve the substance thereof.  Any modifications,
       amendments or waivers to the Fiscal Agency Agreement or to these
       Terms and Conditions will be conclusive and binding on all
       holders of the Securities and any coupons appertaining thereto,
       whether or not they have given such consent or were present at
       such meeting and whether or not notation of such modifications,
       amendments or waivers is made upon the Securities or coupons, and
       on all future holders of Securities and coupons.  Any instrument
       given by or on behalf of any holder of a Security in connection
       with any consent to any such modification, amendment or waiver
       will be irrevocable once given and will be conclusive and binding
       on all subsequent holders of such Security and coupons
       appertaining thereto.
PAGE


            10.  Meetings and Votes of Holders.

                 (a)  A meeting of holders of Securities may be called
       at any time and from time to time pursuant to this Section for
       any of the following purposes: (i) to give any notice to the
       Company or to the Fiscal Agent, or to give any directions to the
       Fiscal Agent, or to consent to the waiving of any default
       hereunder and its consequences, or to take any other action
       authorized to be taken by holders of Securities pursuant to these
       Terms and Conditions; or (ii) to take any other action authorized
       to be taken by or on behalf of the holders of any specified
       aggregate principal amount of the Securities under any other
       provision of the Fiscal Agency Agreement, under applicable law or
       under these Terms and Conditions.

                 (b)  Meetings of holders of Securities may be held at
       such place or places in New York City or London as the Fiscal
       Agent or, in case of its failure to act, the Company or the
       holders calling the meeting shall from time to time determine.

                 The Fiscal Agent may at any time call a meeting of
       holders of the Securities to be held at such time and at such
       place in any of such designated locations as the Fiscal Agent
       shall determine.  Notice of every meeting of holders shall be
       made as specified in the Fiscal Agency Agreement.

                 In case at any time the Company or the holders of at
       least 25% in aggregate principal amount of the Securities shall
       have requested the Fiscal Agent to call a meeting of the holders,
       by written request setting forth in reasonable detail the action
       proposed to be taken at the meeting, and the Fiscal Agent shall
       not have given the first notice of such meeting within 21 days
       after receipt of such request or shall not thereafter proceed to
       cause the meeting to be held as provided herein, then the Company
       or the holders of Securities in the amount above specified may
       determine the time and the place in such designated locations for
       such meeting and may call such meeting to take any action
       authorized herein by giving notice thereof as provided in the
       Fiscal Agency Agreement.

                 (c)  To be entitled to vote at any meeting of holders
       of Securities, a person shall be (i) a holder of one or more
       Securities, or (ii) a person appointed by an instrument in
       writing as proxy for a holder or holders of Securities by such
       holder or holders, which proxy need not be a holder of
       Securities. The only persons who shall be entitled to be present
       or to speak at any meeting of holders shall be the persons
       entitled to vote at such meeting and their counsel and any
       representatives of the Fiscal Agent and its counsel and any
       representatives of the Company and its counsel.  The persons
       entitled to vote a majority in principal amount of outstanding
       Securities shall constitute a quorum for the transaction of all
       business specified in subsection (a) hereof.  No business shall
       be transacted in the absence of a quorum unless a quorum is
PAGE


       represented when the meeting is called to order.  In the absence
       of a quorum within 30 minutes of the time appointed for any such
       meeting, the meeting shall, if convened at the request of the
       holders of Securities, be dissolved.  In any other case the
       meeting shall be adjourned for a period of not less than 10 days
       as determined by the chairman of the meeting prior to the
       adjournment of such adjourned meeting.  Notice of the reconvening
       of any adjourned meeting shall be given as provided in the Fiscal
       Agency Agreement.  Subject to the foregoing, at the reconvening
       of any meeting adjourned for a lack of a quorum the persons
       entitled to vote 25% in principal amount of the Securities
       outstanding shall constitute a quorum for the taking of any
       action set forth in the notice of the original meeting.  Notice
       of the reconvening of an adjourned meeting shall state expressly
       the percentage of the aggregate principal amount of the
       Securities that shall constitute a quorum.  At a meeting or an
       adjourned meeting duly reconvened and at which a quorum is
       present as aforesaid, any resolution and all matters (except as
       limited by Section 9 of these Terms and Conditions) shall be
       effectively passed and decided if passed or decided by the
       persons entitled to vote a majority in principal amount of the
       Securities represented and voting at such meeting, provided that
       such amount shall not be less than 25 % in principal amount of
       the Securities outstanding.  Any holder of a Security who has
       executed an instrument in writing appointing a person as his
       proxy shall be deemed to be present for the purposes of
       determining a quorum and be deemed to have voted; provided,
       however, that such holder shall be considered as present or
       voting only with respect to the matters covered by such
       instrument in writing.  Any resolution effectively passed or
       decision taken at any meeting of the holders of Securities duly
       held in accordance with this Section 10 shall be binding on all
       the holders of Securities whether or not present or represented
       at the meeting.

                 (d)  The Fiscal Agent may make such reasonable
       regulations as it may deem advisable for any meeting of holders
       of Securities in regard to proof of the holding of Securities and
       of the appointment of proxies and in regard to the appointment
       and duties of inspectors of votes, the submission and examination
       of proxies, certificates and other evidence of the right to vote,
       and such other matters concerning the conduct of the meeting as
       it shall deem appropriate.  Except as otherwise permitted or
       required by any such regulations, the holding of Bearer
       Securities shall be proved by the production of the Bearer
       Securities or by a certificate executed, as depositary, by, and
       the appointment of any proxy shall be proved by having the
       signature of the person executing the proxy witnessed or
       guaranteed by, in each case, any trust company, bank or banker
       satisfactory to the Fiscal Agent.  Such regulations may provide
       that written instruments appointing proxies, regular on their
       face, may be presumed valid and genuine without the proof
       specified herein or other proof.  The holding of Registered
       Securities shall be proved by the registry books maintained in
PAGE


       accordance with the Fiscal Agency Agreement or by a certificate
       or certificates of the Fiscal Agent in its capacity as the
       Company's agent for the maintenance of such books.

                 (e)  The Fiscal Agent shall, by an instrument in
       writing, appoint a temporary chairperson and a temporary
       secretary of the meeting, unless the meeting shall have been
       called by the Company or by the holders of Securities as provided
       herein and in the Fiscal Agency Agreement, in which case the
       Company or the holders calling the meeting, as the case may be,
       shall in like manner appoint a temporary chairperson and a
       temporary secretary.  A permanent chairperson and a permanent
       secretary of the meeting shall be elected by vote of the holders
       of a majority in principal amount of the Securities represented
       at the meeting and entitled to vote.  At any meeting each holder
       or proxy shall be entitled to one vote for each U.S. $1,000
       principal amount of Securities held or represented by him;
       provided, however, that no vote shall be cast or counted at any
       meeting in respect of the Securities challenged as not
       outstanding and ruled by the chairperson of the meeting to be not
       outstanding.  The chairperson of the meeting shall have no right
       to vote, except as a holder or proxy.  Any meeting of holders of
       Securities duly called at which a quorum is present may be
       adjourned from time to time by vote of the holders (or proxies
       for the holders) of a majority in principal amount of the
       Securities represented at the meeting and entitled to vote; and
       the meeting may be held as so adjourned without further notice.

                 (f)  The vote upon any resolution submitted to any
       meeting of holders of Securities shall be written ballots on
       which shall be subscribed the signatures of the holders of
       Securities or of their representatives by proxy and the serial
       number or numbers of the Securities held or represented by them.
       The permanent chairperson of the meeting shall appoint two
       inspectors of votes who shall count all votes cast at the meeting
       for or against any resolution and who shall make and file with
       the secretary of the meeting their verified written reports in
       triplicate of all votes cast at the meeting.  A record, at least
       in triplicate, of the proceedings of each meeting of holders of
       Securities shall be prepared by the secretary of the meeting and
       there shall be attached to said record the original reports of
       the inspectors of votes on any vote by ballot taken thereat and
       affidavits by one or more persons having knowledge of the facts
       setting forth a copy of the notice of the meeting and showing
       that said notice was published as provided in the Fiscal Agency
       Agreement.  Each copy shall be signed and verified by the
       affidavits of the permanent chairperson and secretary of the
       meeting, and one of such copy of the notice of the meeting and
       showing that said notice was published as provided in the Fiscal
       Agency Agreement.  Each copy shall be signed and verified by the
       affidavits of the permanent chairperson and secretary of the
       meeting, and one of such copy shall be delivered to the Company
       and another to the Fiscal Agent to be preserved by the Fiscal
       Agent, the copy delivered to the Fiscal Agent to have attached
PAGE


       thereto by ballots voted at the meeting.  Any record so signed
       and verified shall be conclusive evidence of the matters therein
       stated.

            11.  Business Days.  Notwithstanding anything herein or in
       the Fiscal Agency Agreement to the contrary, if any payment of
       interest or premium or principal (or Additional Amounts, if any)
       is due on a day that is not a Business Day, payment shall be made
       on the next succeeding Business Day, with the same effect as if
       made on the day such payment was due, and no interest shall
       accrue for the period after such date.  A "Business Day" is
       defined, with respect to any act to be performed pursuant hereto
       or to the Fiscal Agency Agreement, as any day which is not a
       Saturday, Sunday or a day on which banking institutions in the
       place where such act is to occur are authorized or obligated by
       applicable law, regulation or executive order to close.


            12.  Fiscal and Paying Agent.

                 (a)  In acting under the Fiscal Agency Agreement and in
       connection with the Securities, the Fiscal Agent is acting solely
       as agent of the Company and does not assume any obligation, or
       relationship of agency or trust, for or with the owner or holder
       of this Security or any interest coupon appertaining hereto,
       except that funds held by the Fiscal Agent for payment on this
       Security shall be held in trust by it and applied as set forth
       herein, but need not be segregated from other funds held by it,
       except as required by law.  For a description of the duties and
       the immunities and rights of the Fiscal Agent under the Fiscal
       Agency Agreement, reference is made to the Fiscal Agency
       Agreement, and the obligations of the Fiscal Agent to the holder
       hereof are subject to such immunities and rights.

                 (b)  Any monies paid by the Company to any paying
       agency for payment of principal of, premium, if any, or interest
       on any Security (including Additional Amounts, if any, in respect
       thereof) and remaining unclaimed for two years after such payment
       has been made shall be repaid to the Company and to the extent
       permitted by law the holder of any Security shall thereafter look
       only to the Company for any payment thereof as a general
       unsecured obligation thereof and all liability of the Fiscal
       Agent with respect thereto shall cease.

                 (c)  No reference herein to the Fiscal Agency Agreement
       and no provision of this Security or of the Fiscal Agency
       Agreement shall alter or impair the obligation of the Company,
       which is absolute and unconditional, to pay the principal of,
       premium, if any, and interest (and Additional Amounts, as
       described above) on this Security at the times, places and rate,
       and in the coin or currency, herein prescribed or to convert or
       redeem (at the request of a holder) this Security as provided
       herein or in the Fiscal Agency Agreement.
PAGE


                 Title to Bearer Securities and coupons shall pass by
       delivery.  As provided in the Fiscal Agency Agreement and subject
       to certain limitations therein set forth, the transfer of
       Registered Securities is registrable on the Security Register
       upon surrender of a Registered Security for registration of
       transfer at the office or agency of the Company in the City of
       New York,  duly endorsed by, or accompanied by a written
       instrument of transfer in form satisfactory to the Company and
       the Security Registrar duly executed by, the holder thereof or
       his attorney duly authorized in writing, and thereupon one or
       more new Registered Securities, of authorized denominations and
       for the same aggregate principal amount, will be issued to the
       designated transferee or transferees.

            13.  Notices.  All notices to the holders of Securities will
       be published on a Business Day in an Authorized Newspaper (as
       defined in the Fiscal Agency Agreement) in New York City and in
       London, and, as long as the Securities are listed on the
       Luxembourg Stock Exchange, in Luxembourg or, if either
       publication in London or Luxembourg is not practical, in an
       Authorized Newspaper in any country in Western Europe.  It is
       expected that publication in New York City will be made in The
       Wall Street Journal (Eastern edition), in London in the Financial
       Times and in Luxembourg in the Luxemburger Wort.  Notices shall
       be deemed to have been given on the date of publication as
       aforesaid or, if published on different dates, on the date of the
       first such publication.  A copy of each such notice will be
       mailed by the Fiscal Agent, on behalf of and at the expense of
       the Company, by first-class mail to each holder of a Registered
       Security at the registered address of such holder as the same
       shall appear in the Security Register (as defined in the Fiscal
       Agency Agreement) on the day fifteen days prior to such mailing.

            14.  Governing Law.

                 (a)  THE FISCAL AGENCY AGREEMENT, THE SECURITIES AND
       ANY COUPONS APPERTAINING THERETO SHALL BE GOVERNED BY AND
       CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF
       MASSACHUSETTS,  UNITED STATES OF AMERICA WITHOUT GIVING EFFECT TO
       ITS CONFLICTS OF LAWS RULES.

                 (b)  The Company has appointed the Fiscal Agent as its
       agent upon whom process may be served in any suit, action or
       proceeding initially at its office located at 450 West 33rd
       Street, 15th Floor, New York, New York 10001, with a copy to the
       Company at 81 Wyman Street, Waltham, Massachusetts 02254-9046,
       Attention: General Counsel.

            15.  Authentication.  This Security and any coupons
       appertaining thereto shall not become valid or obligatory for any
       purpose until the certificate or authentication hereon shall have
       been duly signed by the Fiscal Agent acting under the Fiscal
       Agency Agreement.
PAGE


            16.  Warranty of the Issuer.  Subject to Section 15 hereof,
       the Company hereby certifies and warrants that all acts,
       conditions and things required to be done and performed and to
       have happened precedent to the creation and issuance of this
       Security and any coupons appertaining thereto, and to constitute
       the same legal, valid and binding obligations of the Company
       enforceable in accordance with their terms, have been done and
       performed and have happened in due and strict compliance with all
       applicable laws.

            17.  Delivery of Certain Information.  At any time when the
       Company is not subject to Section 13 or 15(d) of the Securities
       Exchange Act of 1934, as amended,  upon the request of a holder
       or beneficial owner of a Restricted Security, the Company will
       promptly furnish or cause to be furnished such information as is
       specified in Rule 144A(d)(4) under the Securities Act (or any
       successor thereto) to such holder, to a prospective purchaser of
       such Restricted Security designated by such holder, to such
       beneficial owner or to a prospective purchaser of such Restricted
       Security designated by such beneficial owner, as the case may be,
       in order to permit compliance by such holder or beneficial owner
       with Rule 144A under the Securities Act in connection with the
       resale of such Security by such holder or beneficial owner,
       provided, however, that the Company shall not be required to
       furnish such information in connection with any request made on
       or after the date which is three years (or the then applicable
       holding period under Rule 144(k) under the Securities Act (or
       successor provision)) from the later of (i) the date such
       Security (or any predecessor security) was originally acquired
       from the Company and (ii) the date such Security (or any
       predecessor security) was last acquired from the Company or an
       "affiliate" of the Company within the meaning of Rule 144 under
       the Securities Act.

            18.  Accounting Terms.  All accounting terms not otherwise
       defined herein shall have the meanings assigned to them in
       accordance with generally accepted accounting principles as
       applied in the United States.

            19.  Descriptive Headings.  The descriptive headings
       appearing in these Terms and Conditions are for convenience of
       reference only and shall not alter, limit or define the
       provisions hereof.

                                TRANSFER NOTICE

       Only if a Registered Security is transferred:

       FOR VALUE RECEIVED, the undersigned Holder hereby sell(s),
       assign(s) and transfer(s)
       unto ___________________________________________________________
       ________________________________________________________________
       ______________________________________________ whose taxpayer
       identification number is                    and whose address
                                ------------------
PAGE


       including postal/zip code is
       ____________________________________the within Security and all
       rights thereunder, hereby irrevocably constituting and appointing
       _________________________ attorney-in-fact to transfer said
       Security on the books of the Fiscal Agent with full power of
       substitution in the premises.

       In connection with the transfer of this Security, the undersigned
       Holder certifies that:

            (Check one)

                 (a)  This Security is being transferred to a "qualified
       institutional buyer" (as defined in Rule 144A under the
       Securities Act of 1933) in compliance with the exemption from
       registration under the Securities Act of 1933 provided by Rule
       144A.

                 (b)  This Security is being transferred in an Offshore
       Transaction (as defined in Regulation S under the Securities Act
       of 1933) in compliance with the exemption from registration under
       the Securities Act of 1933 provided by Regulation S and in
       connection with which transfer the Company has received, if so
       requested, an opinion of counsel (satisfactory to it in form and
       substance) to the effect that the transfer is being made pursuant
       to an exemption from the registration requirements of Securities
       Act of 1933.

                 (c)  This Security is being transferred to an
       institutional investor which is an "accredited investor" (within
       the meaning of Rule 501(a)(1), (2), (3) or (7) under the
       Securities Act of 1933) in a transaction that is exempt from the
       registration requirements of the Securities Act of 1933 and in
       connection with which transfer the Company has received, if so
       requested, an opinion of counsel (satisfactory to it in form and
       substance) to the effect that the transfer is being made pursuant
       to an exemption from the registration requirements of Securities
       Act of 1933.

                 (d)  This Security is being transferred to Thermo
       Electron Corporation.

                 (e)  Transfer other than those above in connection with
       which the Company has received an opinion of counsel
       (satisfactory to it in form and substance) to the effect that the
       transfer is being made pursuant to an exemption from, or in a
       transaction not subject to, the registration requirements of the
       Securities Act of 1933.

                 (f)  This Security is being exchanged for a beneficial
       interest in the Rule 144A Global Security and the undersigned is
       a "qualified institutional buyer" (as defined in Rule 144A under
       the Securities Act of 1933).
PAGE


       Dated:                   Name:

                                By:

                                Title:

                                     NOTICE: The signature of the Holder
       to this assignment must correspond with the name as written upon
       the face of the within instrument in every particular, without
       enlargement or any change whatsoever.

                      SIGNATURE GUARANTEED




       TO BE COMPLETED BY A BROKER OR DEALER IF (c) ABOVE IS CHECKED:

       The undersigned represents and warrants that (i) it is a broker
       or dealer registered under Section 15 of the Securities Exchange
       Act of 1934, (ii) each person which will become a beneficial
       owner of this Security upon transfer is an institutional investor
       which is an "accredited investor" (within the meaning of Rule
       501(a)(1), (2), (3) or (7) under the Securities Act of 1933);
       (iii) no general solicitation or advertising was made or used by
       it in connection with the offer and sale of this Security to such
       person(s); and (iv) each such person has been notified that this
       Security has not been registered under the Securities Act of 1933
       and is subject to the restrictions on transfer of the Security
       set forth herein and in the Fiscal Agency Agreement.

       Dated:

                                By:

       IF NONE OF THE FOREGOING BOXES IS CHECKED, THE FISCAL AGENT SHALL
       NOT BE OBLIGATED TO REGISTER THE TRANSFER OF THIS SECURITY UNLESS
       AND UNTIL THE CONDITIONS TO ANY SUCH TRANSFER OF REGISTRATION SET
       FORTH HEREIN, ON THE FACE HEREOF AND IN THE FISCAL AGENCY
       AGREEMENT SHALL HAVE BEEN SATISFIED.
PAGE


                               CONVERSION NOTICE

       If (i) Registered Security of denomination U.S. $1,000 or (ii)
       Bearer Security of denomination U.S. $1,000:

            The undersigned holder of this Security hereby (i)
       irrevocably exercises the option to convert this Security into
       shares of Common Stock of Thermo Electron Corporation (the
       "Company") in accordance with the terms of this Security, and
       (ii) directs that such shares be registered in the name of and
       delivered, together with a check in payment for any fractional
       share, to the undersigned unless a different name has been
       indicated below.  If shares are to be registered in the name of a
       person other than the undersigned, the undersigned will pay all
       transfer taxes payable with respect thereto.

       Dated:


       Signature


       [MUST BE GUARANTEED IF STOCK IS TO BE ISSUED
        IN A NAME OTHER THAN THE REGISTERED
        HOLDER OF THE SECURITY]

       If shares are to be registered in the name of and delivered to a
       person other than the holder, please print such person's name and
       address and, if this is a Restricted Security, complete the
       Transfer Notice:






       HOLDER

       Please print name and address of holder:
PAGE


                               CONVERSION NOTICE

       If (i) Registered Security of denomination greater than U.S.
       $1,000 or (ii) Bearer Security of denomination U.S. $10,000:
        
            The undersigned holder of this Security hereby irrevocably
       exercises the option to convert this Security, or portion hereof
       (which is U.S. $1,000 or an integral multiple thereof) below
       designated, into shares of Common Stock of Thermo Electron
       Corporation (the "Company") in accordance with the terms of this
       Security, and (ii) directs that such shares, together with a
       check in payment for any fractional share and any Securities
       representing any unconverted principal amount hereof, be
       delivered to and be registered (if a Registered Security) in the
       name of the undersigned unless a different name has been
       indicated below.  If shares or Securities are to be registered in
       the name of a person other than the undersigned, the undersigned
       will pay all transfer taxes payable with respect thereto.


       Signature
       [MUST BE GUARANTEED IF STOCK IS TO 
       BE ISSUED IN A NAME OTHER THAN
       THE REGISTERED HOLDER OF THE SECURITY]


       Dated:



       If shares or Securities are to be registered in the name of a
       Person other than the registered holder, please print such
       person's name and address and, if this is a Restricted Security,
       complete Transfer Notice:

       ________________________
       ________________________
       ________________________

       HOLDER 
       Please print name and address of holder:
       _________________________________

       _________________________________

       _________________________________



       If only a portion of the Securities is to be converted, please
       indicate:

            1 .  Principal Amount to be converted: U.S.$
                                                        --------
PAGE


            2.   Kind, amount and denomination of Securities
       representing unconverted principal amount to be issued:

       Bearer U.S. $_____________
       (U.S. $1,000 or $10,000)

       Registered U.S.$___________
       Denominations:  U.S.$__________
       (U.S. $1,000 or an integral multiple thereof)

       Registered Securities are not exchangeable for Bearer Securities.
PAGE


                      REDEMPTION NOTICE UNDER SECTION 3(d)

        If (i) Registered Security of denomination U.S. $1,000 or (ii)
        Bearer Security of denomination
        U.S. $ 1,000:

             The undersigned holder of this Security hereby requests and
        instructs the Company to redeem this Security in accordance with
        the terms of Section 3(d) of this Security and directs that a
        check in payment of the redemption amount be delivered to the
        undersigned unless a different name has been indicated below.
        The undersigned understands that this request can be revoked by
        delivering written notice to the Paying Agent on or before the
        Holder Redemption Date, together with the undersigned's
        non-transferable receipt for such Security.

        Dated:

        _____________________________________
        Signature
        [MUST BE GUARANTEED IF CHECK IS TO
         BE MADE PAYABLE TO A NAME OTHER
         THAN THE REGISTERED HOLDER OF THE SECURITY]

        If a check in payment of the redemption amount is to be delivered
        to a person other than the holder, please print such person's
        name and address:

        _________________________________

        _________________________________

        _________________________________




        HOLDER
        Please print name and address of holder:

        _________________________________

        _________________________________


        ---------------------------------
PAGE


                      REDEMPTION NOTICE UNDER SECTION 3(d)

        If (i) Registered Security of denomination greater than U.S.
        $1,000 or (ii) Bearer Security of denomination U.S. $10,000:
         
             The undersigned holder of this Security hereby requests and
        instructs the Company to redeem this Security or portion hereof
        (which is U.S. $1,000 or an integral multiple thereof) in
        accordance with the terms of Section 3(d) of this Security, and
        directs that a check in payment of the redemption amount be
        delivered to, and any Securities representing any unredeemed
        principal amount hereof be delivered to and be registered in the
        name of, the undersigned unless a different name has been
        indicated below.  If Securities are to be registered in the name
        of a person other than the undersigned, the undersigned will pay
        all transfer taxes payable with respect thereto.  The undersigned
        understands that this request can be revoked by delivering
        written notice to the Paying Agent on or before the Holder
        Redemption Date, together with the undersigned's non-transferable
        receipt for such Security.

        Dated:

                                      _________________________________
                                      Signature
                                      [MUST BE GUARANTEED IF CHECK IS TO
                                      BE MADE PAYABLE TO A NAME OTHER
                                      THAN THE REGISTERED HOLDER OF THE
                                      SECURITY]

        If Securities are to be registered        HOLDER
        in the name of, or a check in             Please print name
        payment of the redemption                 and address of holder:
        amount is to be delivered to, 
        a person other than the holder,
        please print such person's name
        and address, and if this is a
        Restricted Security and any                               
        Securities representing any
        unredeemed principal amount
        hereof are to be registered in the
        name of a person other than the
        undersigned, complete Transfer
        Notice.

        _____________________________

        _____________________________


        -----------------------------
PAGE


                       1.   Principal Amount to redeemed: U.S. $

                       2.   Kind, amount and denomination of Securities 
                            representing unredeemed principal amount to 
                            be issued:

                            Bearer U.S. $_____________
                            Denominations:  U.S. $__________
                            (U.S. $1,000 or $10,000)

                            Registered U.S.$___________
                            Denominations:  U.S.$__________
                            (U.S. $1,000 or an integral multiple thereof)

                            Registered Securities are not
                            exchangeable for Bearer Securities.

PAGE

                      REDEMPTION NOTICE UNDER SECTION 3(e)

        If (i) Registered Security of denomination U.S. $1,000 or (ii)
        Bearer Security of denomination
        U.S. $ 1,000:

             The undersigned holder of this Security hereby requests and
        instructs the Company to redeem this Security in accordance with
        the terms of Section 3(e) of this Security and directs that a
        check in payment of the redemption amount be delivered to the
        undersigned unless a different name has been indicated below.
        The undersigned understands that this request can not be revoked
        unless the Company fails to provide for payment of the redemption
        amount on the Repurchase Date.

        Dated:

                            _____________________________________
                            Signature
                            [MUST BE GUARANTEED IF CHECK IS TO
                            BE MADE PAYABLE TO A NAME OTHER THAN
                            THE REGISTERED HOLDER OF THE SECURITY]

        If a check in payment of the redemption amount is to be delivered
        to a person other than the holder, please print such person's
        name and address:

        _________________________________

        _________________________________

        _________________________________


                                           HOLDER
                                 Please print name and address of holder:

                                      _________________________________

                                      _________________________________


                                      ---------------------------------
PAGE


                      REDEMPTION NOTICE UNDER SECTION 3(e)

        If (i) Registered Security of denomination greater than U.S.
        $1,000 or (ii) Bearer Security of denomination U.S. $10,000:

             The undersigned holder of this Security hereby requests and
        instructs the Company to redeem this Security or portion hereof
        (which is U.S. $1,000 or an integral multiple thereof) in
        accordance with the terms of Section 3(e) of this Security, and
        directs that a check in payment of the redemption amount be
        delivered to, and any Securities representing any unredeemed
        principal amount hereof be delivered to and be registered in the
        name of, the undersigned unless a different name has been
        indicated below.  If Securities are to be registered in the name
        of a person other than the undersigned, the undersigned will pay
        all transfer taxes payable with respect thereto. The undersigned
        understands that this request can not be revoked unless the
        Company fails to provide for payment of the redemption amount on
        the Repurchase Date.

        Dated:

                                      ___________________________________
                                      Signature
                                      [MUST BE GUARANTEED IF CHECK IS TO
                                      BE MADE PAYABLE TO A NAME OTHER
                                      THAN THE REGISTERED HOLDER OF THE
                                      SECURITY]

        If Securities are to be registered
        in the name of, or a check in
        payment of the redemption
        amount is to be delivered to,
        a person other than the holder,
        please print such person's name
        and address, and if this is a
        Restricted Security and any
        Securities representing any
        unredeemed principal amount
        hereof are to be registered in the
        name of a person other than the
        undersigned, complete Transfer
        Notice.

        _____________________________

        _____________________________

        _____________________________


                       1.   Principal Amount to redeemed: U.S. $

                            2.   Kind, amount and denomination of
        Securities representing unredeemed principal amount to be issued:
                  Bearer U.S. $__________
                  Denominations:  U.S. $__________
                  (U.S. $1,000 or $10,000)

                  Registered U.S.$___________
                  Denominations:  U.S.$__________
             (U.S. $1,000 or an integral multiple thereof)

        Registered Securities are not exchangeable for Bearer Securities.
PAGE


                                                                EXHIBIT B

                     (FORM OF REGULATION S GLOBAL SECURITY)

             THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED
        STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT_),
        OR ANY STATE SECURITIES LAWS.  NEITHER THIS SECURITY NOR ANY
        INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD OR
        OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, IN THE UNITED
        STATES OF AMERICA, ITS TERRITORIES, ITS POSSESSION AND OTHER
        AREAS SUBJECT TO ITS JURISDICTION (THE _UNITED STATES_ ) OR TO
        ANY CITIZEN, NATIONAL RESIDENT OF THE UNITED STATES OR TO ANY
        CORPORATION, PARTNERSHIP OR OTHER ENTITY CREATED OR ORGANIZED IN
        OR UNDER THE LAWS OF THE UNITED STATES OR ANY POLITICAL
        SUBDIVISION THEREOF, OR TO ANY ESTATE OR TRUST THE INCOME OF
        WHICH IS SUBJECT TO UNITED STATES FEDERAL INCOME TAXATION
        REGARDLESS OF ITS SOURCE OR TO ANY OTHER PERSON OR ENTITY DEEMED
        A U.S. PERSON UNDER REGULATIONS UNDER THE SECURITIES ACT (_UNITED
        STATES PERSON_), EXCEPT TO CERTAIN INSTITUTIONAL INVESTORS IN THE
        UNITED STATES IN TRANSACTIONS NOT REQUIRED TO BE REGISTERED UNDER
        THE SECURITIES ACT.

             ANY UNITED STATES PERSON WHO HOLDS THIS SECURITY WILL BE
        SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS,
        INCLUDING THE LIMITATIONS PROVIDED IN SECTION 165(j) AND 1287(a)
        OF THE UNITED STATES INTERNAL REVENUE CODE.

             THIS SECURITY IS A TEMPORARY GLOBAL SECURITY, WITHOUT
        COUPONS OR CONVERSION RIGHTS, EXCHANGEABLE FOR DEFINITIVE BEARER
        SECURITIES WITH INTEREST COUPONS OR REGISTERED SECURITIES WITHOUT
        INTEREST COUPONS.  THE RIGHTS ATTACHING TO THIS GLOBAL SECURITY,
        AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR
        DEFINITIVE SECURITIES, ARE AS SPECIFIED IN THE FISCAL AGENCY
        AGREEMENT (AS DEFINED HEREIN).

             NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS GLOBAL
        SECURITY SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON
        EXCEPT PURSUANT TO THE PROVISIONS HEREOF.
PAGE


                           THERMO ELECTRON CORPORATION

                     (Incorporated in the State of Delaware)

               4 1/4% Convertible Subordinated Debenture Due 2003

                           TEMPORARY GLOBAL DEBENTURE

             THERMO ELECTRON CORPORATION, a corporation duly incorporated
        and existing under the laws of the State of Delaware (the
        "Company"), for value received, hereby promises to pay to bearer
        upon presentation and surrender of this Global Security the
        principal sum of $_______ United States Dollars on January 1,
        2003 and to pay interest thereon, from the date hereof,
        semiannually in arrears on January 1 and July 1 in each year,
        commencing July 1, 1996, at the rate of 4q% per annum, until the
        principal hereof is paid or made available for payment; provided,
        however, that interest on this Global Security shall be payable
        only after the issuance of the definitive Securities for which
        this Global Security is exchangeable and, in the case of
        definitive Securities in bearer form, only upon presentation and
        surrender (at an office or agency outside the United States, its
        territories and its possessions, except as otherwise provided in
        the Fiscal Agency Agreement referred to below) of the interest
        coupons thereto attached as they severally mature.

             This Global Security is one of a duly authorized issue of
        Securities of the Company designated as specified in the title
        hereof, issued and to be issued under the Fiscal Agency Agreement
        dated as of January 3, 1996 (the "Fiscal Agency Agreement")
        between the Company and Chemical Bank, as fiscal agent (the
        "Fiscal Agent", which term includes any successor fiscal agent
        under the Fiscal Agency Agreement).  This Global Security is a
        temporary security and is exchangeable in whole or from time to
        time in part without charge upon request of the holder hereof for
        definitive Securities in bearer form, with interest coupons
        attached, or in registered form, without coupons, of authorized
        denominations, (a) not earlier than the day following expiration
        of the 40-day period that begins on the date hereof and (b) as
        promptly as practicable following presentation of certification,
        in the forms set forth as Exhibits C and F of the Fiscal Agency
        Agreement for such purpose, that the beneficial owner or owners
        of this Global Security (or, if such exchange is only for a part
        of this Global Security, of such part) are not United States
        Persons or other persons who have purchased such Debenture for
        resale to United States Persons.  Definitive Securities in bearer
        form to be delivered in exchange for any part of this Global
        Security shall be delivered only outside of the United States,
        its territories and its possessions.  Upon any exchange of a part
        of this Global Security for definitive Securities, the portion of
        the principal amount hereof so exchanged shall be endorsed by the
        Fiscal Agent or its agents on the Schedule of Exchanges hereto,
        and the principal amount hereof shall be reduced for all purposes
        by the amount so exchanged.
PAGE


             Until exchanged in full for definitive Securities, this
        Global Security shall in all respects be entitled to the same
        benefits under, and subject to the same terms and conditions of,
        the Fiscal Agency Agreement as definitive Securities
        authenticated and delivered thereunder, except that neither the
        holder hereof nor the beneficial owners of this Global Security
        shall be entitled to receive payment of interest hereon, except
        as provided above, or to convert this Global Security into shares
        of Common Stock of the Company or any other security, cash or
        other property.

             THIS GLOBAL SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
        ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS,
        UNITED STATES OF AMERICA, WITHOUT GIVING EFFECT TO ITS CONFLICTS
        OF LAW RULES.

             All terms used in this Global Security which are defined in
        the Fiscal Agency Agreement shall have the meanings assigned to
        them in the Fiscal Agency Agreement.

             Unless the certificate of authentication hereon has been
        manually executed by an authorized signatory of the Fiscal Agent,
        this Global Security shall not be entitled to any benefit under
        the Fiscal Agency Agreement or valid or obligatory for any
        purpose.

             IN WITNESS WHEREOF, the Company has caused this Global
        Security to be duly executed in its corporate name by its duly
        authorized signatory under its corporate seal.

        Dated: January 3, 1996

                                           THERMO ELECTRON CORPORATION

                                           By:
                                           Name:
                                           Title:



        Attest:


        _________________________


                          CERTIFICATE OF AUTHENTICATION

             This is one of the Securities described in the
        within-mentioned Fiscal Agency Agreement.

                                           CHEMICAL BANK
                                           as Fiscal Agent


                                           By:
                                           Authorized Officer
PAGE


                              SCHEDULE OF EXCHANGES

                   Principal             Remaining
                   amount                principal          Notation
                   exchanged             amount             made   on
        Date       for                   following          behalf of
        made       definitive            such               the
                   Securities            exchange           Fiscal
                                                            Agent
PAGE


                                                                EXHIBIT C

                       Form of Certificate to be Given by
             The Euroclear Operator and Cedel Bank, societe anonyme


                                  CERTIFICATION

                                     U.S. $

                           THERMO ELECTRON CORPORATION

                     4 1/4% Convertible Subordinated Debentures
                               due January 1, 2003

                               (the  "Securities")

             This is to certify that, based solely on certifications we
        have received in writing, by tested telex or electronic
        transmission from member organizations appearing in our records
        as persons being entitled to a portion of the principal amount
        set forth below or to interest payable on an interest payment
        date (our _Member Organizations"), substantially to the effect
        set forth in the Fiscal Agency Agreement relating to the
        above-captioned Securities, as of the date hereof, U.S.
        $_______________ aggregate principal amount of the
        above-captioned Securities is owned by persons that are not
        citizens or residents of the United States, domestic
        partnerships, domestic corporations or any estate or trust the
        income of which is subject to United States Federal income
        taxation regardless of its source or any other person deemed a
        _United States person_ or a "U.S. person" under the Internal
        Revenue Code of 1986, as amended, or Regulation S under the U.S.
        Securities Act of 1933, as amended ("United States persons").

             The following denominations of Bearer Securities are
        requested:

                           No.         of              Amount
                           Certificates

        $1,000             ______________  =    $________________
        Denomination
        $10,000            ______________  =    $________________
        Denomination
        Total Requested    ______________  =    $________________ 




             We further certify (i) that we are not making available
        herewith for exchange any portion of the Regulation S Global
        Security excepted in such certifications and (ii) that as of the
        date hereof we have not received any notification from any of our
        Member Organizations to the effect that the statements made by
        such Member Organization with respect to any portion of the part
        submitted herewith for exchange are no longer true and cannot be
        relied upon as of the date hereof.  We further certify that
        interest payable on the interest payment dates on January 1 and
PAGE


        July 1 will be paid with respect to U.S. $_____________ principal
        amount of the Securities with respect to which we have received
        from  Member Organizations certificates substantially in the form
        set out in Exhibit D to the Fiscal Agency Agreement relating to
        the Securities that the Securities (a) are owned by a person
        (other than a financial institution for purposes of resale during
        the restricted period) who is not a United States person; (b) are
        owned by a United States person (other than a financial
        institution for purposes of resale during the restricted period)
        who is (i) a foreign branch of a United States financial
        institution or (ii) a United States person who acquired such
        Securities through the foreign branch of a United States
        financial institution and who for purposes of this certification
        holds such Securities through such financial institution on the
        date hereof and, in either case, such United States financial
        institution has agreed, for the benefit of the Company, to comply
        with the requirements of Section 165(j)(3)(A), (B) or (C) of the
        United States Internal Revenue Code of 1986, as from time to time
        amended, and the regulations thereunder; or (c) are owned by a
        financial institution for purposes of resale during the
        restricted period and such financial institution has certified
        that it has not acquired such Securities for purposes of resale
        directly or indirectly to a United States person or to a person
        within the United States or its possessions.

             To the extent that we have knowledge that any of such
        certificates from a Member Organization is false and to the
        extent that we have not received with respect to any Securities
        such certificates from Member Organization, we are not requesting
        that payment be made for interest with respect thereto.

             We further certify that as of the date hereof we have not
        received any notification from any of our Member Organizations to
        the effect that the statements made by such Member Organization
        with respect to any interest payment on any portion of the
        principal amount of the Securities are no longer true and cannot
        be relied upon as of the date hereof.  We further certify that
        under the rules of the undersigned organization, each Member
        Organization has agreed that any electronic certification shall
        have the effect of a signed certification and that all
        certifications shall be retained for at least four years in
        compliance with the rules set forth under Treas.  Reg. _1. 163-5
        (c) (2) (i) (D) (3) (ii).

             We undertake that any interest received by us and not paid
        as provided above shall be returned to the Fiscal Agent for the
        above-captioned Securities immediately prior to the expiration of
        two years after such interest payment date in order to be repaid
        by such Fiscal Agent to the above issuer at the end of two years
        after such interest payment date.

             We understand that this certification is required in
        connection with certain tax laws and, if applicable, certain
        securities laws of the United States.  In connection therewith,
        if administrative or legal proceedings are commenced or
        threatened in connection with which this certification is or
        would be relevant, we irrevocably authorize you to produce this
        certification to any interested party in such proceedings.
PAGE


             As used herein, "United States" means the United States of
        America (including the States and the District of Columbia); and
        its territories and possessions, including Puerto Rico, the U.S.
        Virgin Islands, Guam, American Samoa, Wake Island and the
        Northern Mariana Islands.  As used herein, "restricted period"
        means the period described in Section 1. 163-5(c)(2)(i)(D)(7) of
        the Treasury Regulations and "financial institution" means the
        persons described in Section 1. 165-12(c)(1)(v) of the Treasury
        Regulations.

        Dated:         ____________________, 1996

                                 Yours faithfully,

                                 [MORGAN GUARANTY TRUST COMPANY OF NEW 
                                 YORK, BRUSSELS OFFICE, AS OPERATOR OF 
                                 THE EUROCLEAR SYSTEM]

                                 [CEDEL BANK, SOCIETE ANONYME 4**

                                 By:_____________________________
















        4    **   Delete as appropriate.
PAGE


                                                             EXHIBIT D

        Form of Certificate of Beneficial Ownership for
        Bearer Securities to be Provided to the
        Euroclear Operator or to Cedel Bank, societe anonyme

                                  CERTIFICATION

                               U.S. $____________

                           THERMO ELECTRON CORPORATION

                     4 1/4% Convertible Subordinated Debentures
                               due January 1, 2003

                               (the "Securities")

             This is to certify that as of the date hereof and except as
        set forth below, $___________ aggregate principal amount of the
        above-mentioned Securities held by you for our account are owned
        or, if this certificate is being delivered in connection with a
        payment of interest, were owned, by or on behalf of, (a) a person
        (other than a financial institution for purposes of resale during
        the restricted period) who is not a United States person; or (b)
        a United States person (other than a financial institution for
        purposes of resale during the restricted period) who is (i) a
        foreign branch of a United States financial institution or (ii) a
        United States person acquiring such Securities through the
        foreign branch of a United States financial institution and who
        for purposes of this certification holds such Securities through
        such financial institution on the date hereof, and, in the case
        of either (i) or (ii), such United States financial institution
        has agreed, for the benefit of the Company, to comply with the
        requirements of Section 165(j)(3)(A), (B) or (C) of the United
        States Internal Revenue Code of 1986, as from time to time
        amended, and the regulations thereunder; or (c) a financial
        institution for purposes of resale during the restricted period
        and such financial institution has not acquired such Securities
        for purposes of resale directly or indirectly to a United States
        person or to a person within the United States or its
        possessions; and the undersigned has obtained a similar
        certificate from its member organizations on which this
        certificate is based; provided, however, that if the undersigned
        has actual knowledge that the information contained in such a
        certificate is false (and, absent documentary evidence that the
        beneficial owner of such Security is not a United states person,
        it will be deemed to have actual knowledge that such certificate
        is false if it has a United States address for such beneficial
        owner, other than a financial institution described above), the
        undersigned will not deliver a Security in temporary or
        definitive bearer form to the person who signed such certificate
        notwithstanding the delivery of such certificate to the
        undersigned.
PAGE


                          No.         of              Amount
                          Certificates

        $1,000                            =    $
                          --------------        ----------------
        Denomination      __
        $10,000                           =    $
                          --------------        ----------------
        Denomination      __
        Total Requested                   =    $
                          --------------        ----------------
                          __




             As used herein, (i) "United States person" means a citizen
        or resident of the United States, a corporation, partnership or
        other entity created or organized in or under the laws of the
        United States and an estate or trust the income of which is
        subject to United States Federal income taxation regardless of
        its source or any other person deemed a _United States person_ or
        a "U.S. person" under the Internal Revenue Code of 1986, as
        amended, or Regulation S under the U.S. Securities Act of 1933,
        as amended, (ii) "United States" means the United States of
        America (including the States and the District of Columbia) and
        its territories and possessions, including Puerto Rico, the U.S.
        Virgin Islands, Guam, American Samoa, Wake Island and the
        Northern Mariana Islands, (iii) _restricted period" means the
        period described in Section 1.163-5(c)(2)(i)(D)(7) of the
        Treasury Regulations, and (iv) "financial institution" means the
        persons described in Section 1. 165-12(c)(1)(v) of the United
        States Treasury Regulations.

             We undertake to advise you promptly by tested telex on or
        prior to the date on which you intend to submit your
        certification relating to the Securities held by you for our
        account in accordance with your operating procedures if any
        applicable statement herein is not correct on such date, and in
        the absence of any such notification it may be assumed that this
        certification applies as of such date.

             This certification excepts and does not relate to
        U.S.$_______________ of such interest in the above Securities in
        respect of which we are not able to certify and as to which we
        understand exchange and delivery of definitive Securities cannot
        be made until we do so certify.

             We understand that this certification is required in
        connection with certain tax laws and, if applicable, certain
        securities laws of the United States.  In connection therewith,
        if administrative or legal proceedings are commenced or
        threatened in connection with which this certification is or
        would be relevant, we irrevocably authorize you to produce this
        certification or a copy hereof to any interested party in such
        proceedings.
PAGE


        Dated:         ___________________, 1996* 



                                                [Name]


                                           By:_________________________
                                                     Signature
                                                     As, or as agent for,
                                                     the beneficial
                                                     owner[s] of the
                                                     Securities to which
                                                     this certificate
                                                     relates.
PAGE


                                                                EXHIBIT E

                   Form of Certificate of Beneficial Ownership
                 for Registered Securities to be Provided to the
              Euroclear Operator or to Cedel Bank, societe anonyme

                                 CERTIFICATION 

                               U.S. $____________

                           THERMO ELECTRON CORPORATION

                     4 1/4% Convertible Subordinated Debentures
                               due January 1, 2003

                               (the "Securities")

             Please issue U. S. $_______ of the U.S. $________ aggregate
        principal amount of the Securities held by you for our account in
        registered form.  We hereby certify to you that we are not a
        "U.S. Person" as defined in Regulation S under the United States
        Securities Act of 1933, as amended.  The exact name of the
        beneficial holder that the Securities are to be registered in is
        as follows:

             The following denomination(s) of Registered Securities are
        requested (integral multiples of $1,000):


                              No. of                  Amount
                              ------                  ------
          Denominations    Certificates
          -------------    ------------

        $                                 =    $
         ---------------  --------------        ----------------
        __                __
                                          =    $
        ----------------  --------------        ----------------
        __                __
                                          =    $
        ----------------  --------------        ----------------
        __                __

                                          =    $
        ----------------  --------------        ----------------
        __                __
                                          =    $
                          --------------        ----------------
        Total Requested   __

             This certificate does not constitute such certification [or
        We hereby certify that we have provided such certification] on
        Form W-8 or its equivalent as may be necessary to avoid
        imposition of withholding and/or back-up withholding under U.S.
PAGE

        federal tax law with respect to any payments of interest on the
        Securities .

             We irrevocably authorize you to produce this certificate or
        a copy hereof to any interested party in any administrative or
        proceedings with respect to the matters covered by this
        certificate.

        Dated:         __________________, 1996 78* 

                                      Yours faithfully,

                                      [NAME]


                                      By:
                                           Signature

                                      To be completed by the account
                                      holder as, or as agent for, the
                                      beneficial owner(s) of the
                                      Securities to which this
                                      certificate relates.

        7
        8    * To be dated not earlier than the date which is 40 days
        after January 3, 1996.
PAGE

                                                                EXHIBIT F

                       Form of Certificate to be Given by
             The Euroclear Operator and Cedel Bank, societe anonyme

                                  CERTIFICATION

                               U.S. $_____________

                           THERMO ELECTRON CORPORATION

                     4 1/4% Convertible Subordinated Debentures
                              due December 1, 2003

                               (the "Securities")

             This is to certify that, based solely on certifications we
        have received in writing, by tested telex or electronic
        transmission from member organizations appearing in our records
        as persons being entitled to a portion of the principal amount
        set forth below (our "Member Organizations"), substantially to
        the effect set forth in the Fiscal Agency Agreement, as of the
        date hereof, U.S. $___________ aggregate principal amount of the
        above-captioned Securities is owned by persons that are not
        citizens or residents of the United States, domestic
        partnerships, domestic corporations or any estate or trust the
        income of which is subject to United States Federal income
        taxation regardless of its source or any other person deemed a
        _U.S. person_ under Regulation S under the U.S. Securities Act of
        1933, as amended.  

             The following denomination(s) of Registered Securities are
        requested (integral multiples of $1,000):


                              No. of                  Amount
                              ------                  ------
                           Certificates
                           ------------

        $1,000                            =    $
                          --------------        ----------------
        Denomination      __
        $10,000                           =    $
                          --------------        ----------------
        Denomination      __
        Total Requested   ______________  =    $________________ 
                          __


             We further certify (i) that we are not making available
        herewith for exchange (or, if relevant, exercise of any rights or
        collection of any interest) any portion of the Regulation S
        Global Security excepted in such certifications and (ii) that as
        of the date hereof we have not received any notification from any
        of our Member Organizations to the effect that the statements
        made by such Member Organization with respect to any portion of
PAGE

        the part submitted herewith for exchange (or, if relevant,
        exercise of any rights or collection of any interest) are no
        longer true and cannot be relied upon as of the date hereof.

             We understand that this certification is required in
        connection with certain tax laws and, if applicable, certain
        securities laws of the United States.  In connection therewith,
        if administrative or legal proceedings are commenced or
        threatened in connection with which this certification is or
        would be relevant, we irrevocably authorize you to produce this
        certification to any interested party in such proceedings.

             As used herein, "United States" means the United States of
        America (including the States and the District of Columbia); and
        its territories and possessions, including Puerto Rico, the U.S.
        Virgin Islands, Guam, American Samoa, Wake Island and the
        Northern Mariana Islands.



        Dated:         __________________, 19969 10* 

                                      Yours faithfully,

                                      [MORGAN GUARANTY TRUST COMPANY OF
        NEW YORK, BRUSSELS OFFICE, AS OPERATOR OF THE EUROCLEAR SYSTEM]

                                      [CEDEL BANK, SOCIETE ANONYME]

                                      By:____________________________

        9
        10   *    To be dated no earlier than the date which is 40 days
        after January 3, 1996.
PAGE

                                                                EXHIBIT G

                            FORM OF TRANSFEREE LETTER


        Thermo Electron Corporation
        81 Wyman St.
        P.O. Box 9046
        Waltham, MA 02254-9046

        and

        Chemical Bank
        Attention: Corporate Trust Department
        450 West 33rd Street, 15th floor
        New York, New York 10001

        and

        Chemical Bank House
        Attention: Corporate Agency
        125 London Wall
        London EC2Y 5AJ
        England

        Ladies and Gentlemen:

             We are delivering this letter in connection with the
        purchase of 4 1/4% Convertible Subordinated Debentures due 2003 (the
        _Debentures_) of Thermo Electron Corporation, a Delaware
        corporation (the _Company_), which are convertible into shares of
        Common Stock of the Company (the _Underlying Shares_ and together
        with the Debentures, the "Restricted Securities"), all as
        described in the Company's Offering Circular dated November 28,
        1995 (the "Offering Circular").

             We represent, warrant and agree as follows:

                  1.   We understand and hereby acknowledge that the
        Debentures and, prior to the effectiveness of a registration
        statement filed with the Securities and Exchange Commission
        relating to the resale of the Underlying Shares, the Underlying
        Shares have not been registered under the Securities Act of 1933,
        as amended (the "Securities Act"), and may not be sold except as
        permitted in the following sentence.  We agree on our own behalf
        and on behalf of any investor account (as hereinafter defined)
        for which we are purchasing the Debentures to offer, sell or
        otherwise transfer such Restricted Securities prior to the date
        which is three years (or the then applicable holding period under
        Rule 144(k) under the Securities Act (or successor provision))
        after the later of the date of original issue and the last date
        on which the Company or any affiliate of the Company was the
        owner of such Restricted Securities (or any predecessor thereto)
        (the "Resale Restriction Termination Date") only (a) to the
        Company, (b) pursuant to a registration statement which has been
        declared effective under the Securities Act, (c) for so long as
        the Debentures are eligible for resale pursuant to Rule 144A
        under the Securities Act, to a person we reasonably believe is a
        qualified institutional buyer under Rule 144A (a _QIB_) that
        purchases for its own account or for the account of a QIB to whom
PAGE


        notice is given that the transfer is being made in reliance on
        Rule 144A (d) outside the United States in a transaction meeting
        the requirements of Rule 904 of Regulation S under the Securities
        Act, (e) in a transaction arranged by a broker or dealer
        registered under the Securities Exchange Act of 1934, as amended,
        to an institutional "accredited investor" within the meaning of
        subparagraph (a)(1), (2), (3), or (7) of Rule 501 under the
        Securities Act (an "Institutional Accredited Investor") that is
        purchasing Restricted Securities for its own account or for the
        account of such Institutional Accredited Investor, for investment
        purposes and not with a view to, or for offer or sale in
        connection with, any distribution in violation of the Securities
        Act or (f) pursuant to any other available exemption from the
        registration requirements of the Securities Act as confirmed in
        an opinion of counsel, acceptable in from and substance to the
        Company, and, in each case, in accordance with the applicable
        securities laws of any state of the United States or any other
        applicable jurisdiction and subject to any requirement of law
        that the disposition of our property or the property of such
        investor account or accounts be at all times within our or their
        control and in compliance with any applicable state securities
        laws.  The foregoing restrictions on resale will not apply
        subsequent to the Resale Restriction Termination Date.  If any
        resale or other transfer of the Restricted Securities is proposed
        to be made pursuant to clause (e) above prior to the Resale
        Restriction Termination Date, the transferor shall deliver a
        letter from the transferee containing representations and
        agreements substantially the same as those contained herein.  We
        acknowledge that the Company and the Fiscal Agent reserve the
        right prior to any offer, sale or other transfer prior to the
        Resale Restriction Termination Date of the Debentures and Common
        Stock pursuant to clause (d), (e) or (f) above to require the
        delivery of an opinion of counsel, certifications or other
        information acceptable to the Company and the Fiscal Agent in
        form and substance.

                  2.   We are an Institutional Accredited Investor within
        the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501
        under the Securities Act.

                  3.   Any purchase of Restricted Securities by us will
        be for our own account or for the account of one or more other
        Institutional Accredited Investors (an "investor account") as to
        which we exercise sole investment discretion.

                  4.   We are not acquiring the Restricted Securities
        with a view to, or for offer or sale in connection with, any
        distribution in violation of the Securities Act.

                  5.   We have such knowledge and experience in financial
        and business matters as to be capable of evaluating the merits
        and risks of purchasing the Restricted Securities, and we and any
        investor account for which we are acting are each able to bear
        the economic risk of our or its investment.

                  6.   We have received a copy of the Offering Circular
        and acknowledge that we have had access to such financial and
        other information, and have been afforded the opportunity to ask
        such questions of representatives of the Company and receive
PAGE


        answers thereto, as we deem necessary in connection with our
        decision to purchase Restricted Securities.

             We understand that the registrar and transfer agent will not
        be required to accept for registration of transfer any Restricted
        Securities, except upon presentation of evidence satisfactory to
        the Company and the Fiscal Agent that the foregoing restrictions
        on transfer have been complied with.  We further understand that
        the Restricted Securities will be in the form of definitive
        physical certificates and that such certificates will bear a
        legend reflecting the substance of paragraph 1 above.

             We shall provide to any person purchasing any Restricted
        Securities from us a notice advising such purchaser that
        transfers of the Debentures and the Underlying Shares are
        restricted as set forth herein.

             We understand that prior to any proposed offer of Debentures
        occurring before the Resale Restriction Termination Date, we must
        check the appropriate box set forth on the reverse of the
        certificate evidencing such Debentures relating to the manner of
        such transfer and submit the certificates to the Fiscal Agent.
        In addition, we understand that prior to any proposed transfer of
        Debentures or any proposed offer of Underlying Shares acquired
        upon conversion of Debentures when there is not effective
        registration statement covering such Underlying Shares to an
        institutional accredited investor occurring before the Resale
        Restriction Termination Date, we may be required to furnish to
        the Company and the Fiscal Agent such certifications, legal
        opinion or other information as they may reasonably require to
        confirm that the proposed transfer is being made pursuant to an
        exemption from, or in a transaction not subject to, the
        registration requirements of the Securities Act, and that
        transfers occurring before the Resale Restriction Termination
        Date to any other person pursuant to another available exemption
        under the Securities act will require an opinion of counsel
        satisfactory to the Company.

             We acknowledge that you and others will rely upon our
        confirmations, acknowledgments and agreements set forth herein,
        and we agree to notify you promptly in writing of any of our
        representations or warranties herein ceases to be accurate and
        complete. You are irrevocably authorized to produce this letter
        or a copy hereof to any interested party in any administrative or
        legal proceeding or official inquiry with respect to the matters
        covered hereby.

             THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN
        ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.

                                      Very truly yours,

                                      _____________________________
                                           (Name of Purchaser)

                                      By:___________________________
                                           Name:
                                           Title:
                                           Address:

EX-11

                                                                    Exhibit 11



                           Thermo Electron Corporation
                        Computation of Earnings per Share


                                           1995           1994           1993
                                   ------------    -----------    -----------

   Computation of Fully Diluted
   Earnings per Share:

   Income:
     Income per primary
     computation                   $140,080,000   $104,711,000   $ 76,868,000

     Add: Convertible debt
          interest, net of tax       15,561,000     15,934,000     10,273,000
                                   ------------   ------------   ------------

     Income applicable to common
     stock assuming full
     dilution (a)                  $155,641,000   $120,645,000   $ 87,141,000
                                   ------------   ------------   ------------

   Shares:
     Weighted average shares
     outstanding                     83,655,644     77,666,970     69,468,495

     Add: Shares issuable from
          assumed conversion of
          convertible debentures     20,015,397     22,368,855     16,884,552

          Shares issuable from
          assumed exercise of
          options (as determined
          by the application of the
          treasury stock method)      1,730,838        783,546        725,577
                                   ------------   ------------   ------------

     Weighted average shares
     outstanding, as
     adjusted (b)                   105,401,879    100,819,371     87,078,624
                                   ------------   ------------   ------------

   Fully Diluted Earnings Per
   Share (a) / (b)                 $       1.48   $       1.20   $       1.00
                                   ============   ============   ============

EX-13

                                                                    Exhibit 13


















                           THERMO ELECTRON CORPORATION

                        Consolidated Financial Statements

                             as of December 30, 1995
PAGE

   Thermo Electron Corporation
   Consolidated Statement of Income

   (In thousands except per share amounts)      1995        1994         1993
   --------------------------------------------------------------------------

   Revenues:
    Product revenues                      $1,802,371  $1,418,306  $1,103,558
    Service revenues                         210,503     141,438     121,987
    Research and development contract
     revenues                                194,543     169,447     128,963
                                          ----------  ----------  ----------
                                           2,207,417   1,729,191   1,354,508
                                          ----------  ----------  ----------
   Costs and Expenses:
    Cost of products                       1,064,775     824,845     664,201
    Cost of services                         144,864     103,800      91,292
    Expenses for research and development
     and new lines of business (a)           269,584     233,099     183,965
    Selling, general and administrative
     expenses                                480,774     384,715     289,282
    Restructuring and other nonrecurring
     costs (Note 12)                          21,938         650       6,616
                                          ----------  ----------  ----------
                                           1,981,935   1,547,109   1,235,356
                                          ----------  ----------  ----------

   Operating Income                          225,482     182,082     119,152
   Gain on Issuance of Stock by
    Subsidiaries (Note 10)                    80,815      25,283      39,863
   Other Expense, Net (Note 11)               (6,802)       (989)    (27,548)
                                          ----------  ----------  ----------
   Income Before Income Taxes and
    Minority Interest                        299,495     206,376     131,467
   Provision for Income Taxes (Note 9)        98,900      70,703      33,513
   Minority Interest Expense                  60,515      30,962      21,086
                                          ----------  ----------  ----------
   Net Income                             $  140,080  $  104,711  $   76,868
                                          ==========  ==========  ==========
   Earnings per Share:
    Primary                               $     1.67  $     1.35  $     1.11
                                          ==========  ==========  ==========
    Fully diluted                         $     1.48  $     1.20  $     1.00
                                          ==========  ==========  ==========
   Weighted Average Shares:
    Primary                                   83,656      77,667      69,468
                                          ==========  ==========  ==========
    Fully diluted                            105,402     100,819      87,079
                                          ==========  ==========  ==========









                                        2PAGE

   Thermo Electron Corporation
   Consolidated Statement of Income (continued)


   (In thousands)                               1995         1994        1993
   --------------------------------------------------------------------------

   (a) Includes costs of:
        Research and development
         contracts                        $  167,120  $  149,645  $  116,733
        Internally funded research
         and development                      98,984      79,555      59,583
        Other expenses for new lines
         of business                           3,480       3,899       7,649
                                          ----------  ----------  ----------
                                          $  269,584  $  233,099  $  183,965
                                          ==========  ==========  ==========


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























                                        3PAGE

   Thermo Electron Corporation
   Consolidated Balance Sheet

   (In thousands)                                          1995        1994
   ------------------------------------------------------------------------

   Assets
   Current Assets:
    Cash and cash equivalents                        $  461,983  $  383,005
    Short-term available-for-sale investments,
     at quoted market value (amortized cost of
     $588,471 and $617,837) (Note 2)                    593,802     614,915
    Accounts receivable, less allowances
     of $28,021 and $21,664                             476,479     347,444
    Unbilled contract costs and fees                     74,941      59,906
    Inventories                                         318,182     233,382
    Prepaid income taxes (Note 9)                        72,993      57,824
    Prepaid expenses                                     22,846      15,148
                                                     ----------  ----------
                                                      2,021,226   1,711,624
                                                     ----------  ----------

   Property, Plant and Equipment, at Cost, Net          712,845     624,888
                                                     ----------  ----------

   Long-term Available-for-sale Investments, at 
    Quoted Market Value (amortized cost of $60,780
    and $65,218) (Note 2)                                61,845      62,451
                                                     ----------  ----------

   Long-term Held-to-Maturity Investments
    (quoted market value of $24,942) (Note 2)            23,819           -
                                                     ----------  ----------

   Other Assets                                          98,102      85,338
                                                     ----------  ----------

   Cost in Excess of Net Assets of Acquired
    Companies (Notes 3 and 9)                           827,071     577,634
                                                     ----------  ----------
                                                     $3,744,908  $3,061,935
                                                     ==========  ==========










                                        4PAGE

   Thermo Electron Corporation
   Consolidated Balance Sheet (continued)

   (In thousands except share amounts)                     1995        1994
   ------------------------------------------------------------------------

   Liabilities and Shareholders' Investment
   Current Liabilities:
    Notes payable and current maturities of
     long-term obligations (Note 6)                  $  106,248  $   94,003
    Accounts payable                                    164,605     116,768
    Accrued payroll and employee benefits                91,393      79,849
    Accrued income taxes                                 51,807      35,845
    Accrued installation and warranty costs              40,699      33,442
    Other accrued expenses (Note 3)                     260,084     200,985
                                                     ----------  ----------
                                                        714,836     560,892
                                                     ----------  ----------

   Deferred Income Taxes (Note 9)                        59,188      58,250
                                                     ----------  ----------

   Other Deferred Items                                  65,878      57,723
                                                     ----------  ----------

   Long-term Obligations (Note 6):
    Senior convertible obligations                      458,925     620,000
    Subordinated convertible obligations                343,076     186,661
    Tax-exempt obligations                              128,567     130,985
    Nonrecourse tax-exempt obligations                   94,700      95,300
    Other                                                90,743      16,904
                                                     ----------  ----------
                                                      1,116,011   1,049,850
                                                     ----------  ----------
   Minority Interest                                    471,648     327,734
                                                     ----------  ----------
   Commitments and Contingencies (Note 7)

   Common Stock of Subsidiary Subject to
    Redemption ($18,450 redemption value)                17,513           -
                                                     ----------  ----------

   Shareholders' Investment (Notes 4 and 5):
    Preferred stock, $100 par value, 50,000
     shares authorized; none issued
    Common stock, $1 par value, 175,000,000
     shares authorized; 87,863,315 and 53,558,248
     shares issued                                       87,863      53,558
    Capital in excess of par value                      597,678     493,058
    Retained earnings                                   612,476     472,396
    Treasury stock at cost, 11,574 and 38,318
     shares                                                (536)     (1,631)
    Cumulative translation adjustment                       561      (3,557)
    Deferred compensation (Note 8)                       (2,271)     (2,657)
    Net unrealized gain (loss) on available-for-sale
     investments (Note 2)                                 4,063      (3,681)
                                                     ----------  ----------
                                                      1,299,834   1,007,486
                                                     ----------  ----------
                                                     $3,744,908  $3,061,935
                                                     ==========  ==========

   The accompanying notes are an integral part of these consolidated financial
   statements.
                                        5PAGE

   Thermo Electron Corporation
   Consolidated Statement of Cash Flows

   (In thousands)                               1995         1994        1993
   --------------------------------------------------------------------------

   Operating Activities:
    Net income                             $ 140,080    $ 104,711   $  76,868
    Adjustments to reconcile net income
     to net cash provided by operating
     activities:
      Depreciation and amortization           84,979       65,028      44,192
      Restructuring and other nonrecurring
       costs (Note 12)                        21,938          650       6,616
      Equity in losses of unconsolidated
       subsidiaries                              203        4,019      22,721
      Provision for losses on accounts
       receivable                              5,473        4,225       2,720
      Increase in deferred income taxes        4,562        9,403      14,134
      Gain on sale of property, plant
       and equipment                            (547)     (15,025)       (198)
      Gain on sale of investments             (9,305)      (4,851)     (2,469)
      Gain on issuance of stock by
       subsidiaries (Note 10)                (80,815)     (25,283)    (39,863)
      Minority interest expense               60,515       30,962      21,086
      Other noncash expenses                  15,642        9,809       7,850
      Changes in current accounts,
       excluding the effects of
       acquisitions:
        Accounts receivable                  (49,442)      (8,526)    (45,034)
        Inventories                          (31,805)      10,017      (6,525)
        Other current assets                  (8,868)      (9,713)     (8,319)
        Accounts payable                      16,341          804      13,865
        Other current liabilities             25,613       16,295      (6,319)
                                           ---------    ---------   ---------
         Net cash provided by operating
          activities                         194,564      192,525     101,325
                                           ---------    ---------   ---------
  
   Investing Activities:
    Acquisitions, net of cash acquired
     (Note 3)                               (330,698)    (173,764)   (142,962)
    Purchases of available-for-sale
     investments                            (570,064)    (748,879)          -
    Purchases of long-term held-to-
     maturity investments                    (22,300)          -            -
    Proceeds from sale and maturities of
     available-for-sale investments          617,145      495,361           -
    Purchases of property, plant and
     equipment                               (62,907)     (65,525)    (62,704)
    Proceeds from sale of property,
     plant and equipment                       5,643       21,391       5,224
    Purchases of long-term investments             -            -     (20,573)
    Proceeds from sale of long-term
     investments                                   -            -      16,651
    Increase in short-term investments             -            -    (193,894)

                                             6PAGE

   Thermo Electron Corporation
   Consolidated Statement of Cash Flows (continued)

   (In thousands)                               1995         1994       1993
   -------------------------------------------------------------------------

    Decrease in net restricted funds       $       -   $  23,420   $       -
    Other                                    (18,858)     (7,662)     (7,297)
                                           ---------   ---------   ---------
                              
         Net cash used in investing
          activities                        (382,039)   (455,658)   (405,555)
                                           ---------   ---------   ---------

   Financing Activities:
    Proceeds from issuance of long-term
     obligations                             201,891     368,620     102,282
    Repayment and repurchase of long-term
     obligations                             (16,826)    (27,176)    (11,732)
    Proceeds from issuance of Company
     and subsidiary common stock             173,326      60,601     378,790
    Purchases of Company and subsidiary
     common stock                            (97,789)   (101,481)    (57,198)
    Increase in short-term notes
     payable, net                              1,588      16,683      27,343
    Other                                        962         987       3,096
                                           ---------   ---------   ---------
         Net cash provided by financing
          activities                         263,152     318,234     442,581
                                           ---------   ---------   ---------

   Exchange Rate Effect on Cash                3,301       1,915      (3,374)
                                           ---------   ---------   ---------

   Increase in Cash and Cash Equivalents      78,978      57,016     134,977
   Cash and Cash Equivalents at
    Beginning of Year                        383,005     325,989     191,012
                                           ---------   ---------   ---------
   Cash and Cash Equivalents at End
    of Year                                $ 461,983   $ 383,005   $ 325,989
                                           =========   =========   =========

   See Note 13 for supplemental cash flow information.


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



                                             7PAGE

   Thermo Electron Corporation
   Consolidated Statement of Shareholders' Investment

                                                Common    Capital
                                                Stock,  in Excess
                                                $1 Par     of Par   Retained
   (In thousands)                                Value      Value   Earnings
   -------------------------------------------------------------------------

   Balance January 2, 1993                   $ 29,633   $260,185    $290,817
   Net income                                       -          -      76,868
   Public offering of Company
    common stock                                4,500    241,505           -
   Issuance of stock under
    employees' and directors'
    stock plans                                   216        763           -
   Conversion of convertible
    obligations                                   285      6,619           -
   Effect of majority-owned
    subsidiaries' equity
    transactions                                    -    (19,029)          -
   Effect of three-for-two stock
    split                                      15,850    (15,850)          -
   Translation adjustment                           -          -           -
   Amortization of deferred
    compensation                                    -          -           -
                                             --------   --------    --------
   Balance January 1, 1994                     50,484    474,193     367,685
   Net income                                       -          -     104,711
   Issuance of stock under
    employees' and directors'
    stock plans                                   153      2,429           -
   Conversion of convertible
    obligations                                 2,921     63,013           -
   Effect of majority-owned
    subsidiaries' equity
    transactions                                    -    (46,577)          -
   Translation adjustment                           -          -           -
   Amortization of deferred
    compensation                                    -          -           -
   Effect of change in accounting
    principle (Note 2)                              -          -           -
   Change in net unrealized gain
    (loss) on available-for-sale
    investments (Note 2)                            -          -           -
                                             --------   --------    --------








                                        8PAGE

   Thermo Electron Corporation
   Consolidated Statement of Shareholders' Investment (continued)

                                                Common    Capital
                                                Stock,  in Excess
                                                $1 Par     of Par   Retained
   (In thousands)                                Value      Value   Earnings
   -------------------------------------------------------------------------

   Balance December 31, 1994                 $ 53,558   $493,058    $472,396
   Net income                                       -          -     140,080
   Issuance of stock under
    employees' and directors'
    stock plans                                   571      5,293           -
   Tax benefit related to directors'
    and employees' stock plans                      -      9,666           -
   Conversion of convertible
    obligations                                 6,047    150,787           -
   Effect of majority-owned
    subsidiaries' equity
    transactions                                    -    (33,439)          -
   Effect of three-for-two stock
    split                                      27,687    (27,687)          -
   Translation adjustment                           -          -           -
   Amortization of deferred
    compensation                                    -          -           -
   Change in net unrealized gain
    (loss) on available-for-sale
    investments (Note 2)                            -          -           -
                                             --------   --------    --------
   Balance December 30, 1995                 $ 87,863   $597,678    $612,476
                                             ========   ========    ========


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















                                        9PAGE

   Thermo Electron Corporation
   Consolidated Statement of Shareholders' Investment (continued)

                                                                          Net
                                                                   Unrealized
                                           Cumulative             Gain (Loss)
                                             Transla-               on Avail-
                                                 tion    Deferred   able-for-
                                    Treasury   Adjust-  Compensa-        sale
   (In thousands)                      Stock      ment       tion  Investments
   ---------------------------------------------------------------------------

   Balance January 2, 1993         $ (3,810)  $ (7,949)  $ (5,050)  $      -
   Net income                             -          -          -          -
   Public offering of Company
    common stock                          -          -          -          -
   Issuance of stock under
    employees' and directors'
    stock plans                       2,598          -          -          -
   Conversion of convertible
    obligations                           -          -          -          -
   Effect of majority-owned
    subsidiaries' equity
    transactions                          -          -          -          -
   Effect of three-for-two stock
    split                                 -          -          -          -
   Translation adjustment                 -     (5,642)         -          -
   Amortization of deferred
    compensation                          -          -      1,211          -
                                   --------   --------   --------   --------
   Balance January 1, 1994           (1,212)   (13,591)    (3,839)         -
   Net income                             -          -          -          -
   Issuance of stock under
    employees' and directors'
    stock plans                        (419)         -          -          -
   Conversion of convertible
    obligations                           -          -          -          -
   Effect of majority-owned
    subsidiaries' equity
    transactions                          -          -          -          -
   Translation adjustment                 -     10,034          -          -
   Amortization of deferred
    compensation                          -          -      1,182          -
   Effect of change in accounting
    principle (Note 2)                    -          -          -      2,868
   Change in net unrealized gain
    (loss) on available-for-sale
    investments (Note 2)                  -          -          -     (6,549)
                                   --------   --------   --------   --------





                                       10PAGE

   Thermo Electron Corporation
   Consolidated Statement of Shareholders' Investment (continued)

                                                                          Net
                                                                   Unrealized
                                           Cumulative             Gain (Loss)
                                             Transla-               on Avail-
                                                 tion    Deferred   able-for-
                                    Treasury   Adjust-  Compensa-        sale
   (In thousands)                      Stock      ment       tion  Investments
   ---------------------------------------------------------------------------

   Balance December 31, 1994       $ (1,631)  $ (3,557)  $ (2,657)  $ (3,681)
   Net income                             -          -          -          -
   Issuance of stock under
    employees' and directors'
    stock plans                       1,095          -          -          -
   Tax benefit related to directors'
    and employees' stock plans            -          -          -          -
   Conversion of convertible
    obligations                           -          -          -          -
   Effect of majority-owned
    subsidiaries' equity
    transactions                          -          -          -          -
   Effect of three-for-two stock
    split                                 -          -          -
   Translation adjustment                 -      4,118          -          -
   Amortization of deferred
    compensation                          -          -        386          -
   Change in net unrealized gain
    (loss) on available-for-sale
    investments (Note 2)                  -          -          -      7,744
                                   --------   --------   --------   --------
   Balance December 30, 1995       $   (536)  $    561   $ (2,271)  $  4,063
                                   ========   ========   ========   ========


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






                                       11PAGE

   Thermo Electron Corporation
   Notes to Consolidated Financial Statements

   1.  Nature of Operations and Significant Accounting Policies

   Nature of Operations
   Thermo Electron Corporation and its subsidiaries develop, manufacture, and
   market environmental monitoring and analysis instruments; biomedical
   products including heart-assist devices, respiratory care equipment, and
   mammography systems; paper-recycling and papermaking equipment;
   alternative-energy systems; industrial process equipment; and other
   specialized products. The Company also provides environmental, laboratory,
   and metallurgical services and conducts advanced-technology research and
   development.

   Principles of Consolidation
   The accompanying consolidated financial statements include the accounts of
   Thermo Electron Corporation and its majority- and wholly owned subsidiaries
   (the Company). All material intercompany accounts and transactions have
   been eliminated. Majority-owned public subsidiaries include Thermedics
   Inc., Thermo Instrument Systems Inc., Thermo TerraTech Inc. (formerly
   Thermo Process Systems Inc.), Thermo Power Corporation, ThermoTrex
   Corporation, Thermo Fibertek Inc., and Thermo Ecotek Corporation. Thermo
   Cardiosystems Inc. and Thermo Voltek Corp. are majority-owned, public
   subsidiaries of Thermedics. Thermo Remediation Inc. is a majority-owned
   public subsidiary of Thermo TerraTech. ThermoLase Corporation is a
   majority-owned, public subsidiary of ThermoTrex. ThermoSpectra Corporation
   is a majority-owned, public subsidiary of Thermo Instrument. Thermo
   BioAnalysis Corporation is a majority-owned, privately held subsidiary of
   Thermo Instrument. ThermoQuest Corporation and Thermo Optek Corporation are
   wholly owned subsidiaries of Thermo Instrument, which have privately sold
   debentures that will be convertible into shares of common stock of these
   subsidiaries upon completion of their initial public offerings. Thermo
   EuroTech N.V. is a majority-owned, privately held subsidiary of Thermo
   TerraTech. ThermoLyte Corporation is a majority-owned, privately held
   subsidiary of Thermo Power. Trex Medical Corporation is a majority-owned,
   privately held subsidiary of ThermoTrex. The Company accounts for
   investments in businesses in which it owns between 20% and 50% using the
   equity method.

   Fiscal Year
   The Company has adopted a fiscal year ending the Saturday nearest December
   31. References to 1995, 1994, and 1993 are for the fiscal years ended
   December 30, 1995, December 31, 1994, and January 1, 1994, respectively.

   Revenue Recognition
   For the majority of its operations, the Company recognizes revenues upon
   shipment of its products or upon completion of services it renders. The
   Company provides a reserve for its estimate of warranty and installation
   costs at the time of shipment. Revenues and profits on substantially all
   contracts are recognized using the percentage-of-completion method.
   Revenues recorded under the percentage-of-completion method were $472.0
   million in 1995, $319.8 million in 1994, and $281.4 million in 1993. The
   percentage of completion is determined by relating either the actual costs
   or actual labor incurred to date to management's estimate of total costs or
   total labor, respectively, to be incurred on each contract. If a loss is
   indicated on any contract in process, a provision is made currently for the
   entire loss. The Company's contracts generally provide for billing of
   customers upon the attainment of certain milestones specified in each
                                       12PAGE

   Thermo Electron Corporation
   Notes to Consolidated Financial Statements

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

   contract. Revenues earned on contracts in process in excess of billings are
   classified as unbilled contract costs and fees in the accompanying balance
   sheet. There are no significant amounts included in the accompanying
   balance sheet that are not expected to be recovered from existing contracts
   at current contract values, or that are not expected to be collected within
   one year, including amounts that are billed but not paid under retainage
   provisions.
        In August 1993, the Company agreed, in exchange for a cash settlement,
   to terminate a power sales agreement between a subsidiary of the Company
   and a utility. The power sales agreement required the utility to purchase
   output of a cogeneration facility that had been under development. Under
   the termination agreement, the Company received $15.3 million through 1995,
   with subsequent payments of $2.7 million to be made through 1997. The
   Company will be obligated to return $8.2 million of this settlement if the
   Company elects to proceed with the facility and it achieves commercial
   operation before January 1, 2000. Accordingly, the Company has deferred
   recognition of $8.2 million of revenues, pending final determination of the
   project's status. During 1993, the Company recorded revenues of $9.8
   million and operating income of $5.4 million from the termination of the
   power sales agreement.

   Gain on Issuance of Stock by Subsidiaries
   At the time a subsidiary sells its stock to unrelated parties at a price in
   excess of its book value, the Company's net investment in that subsidiary
   increases. If at that time the subsidiary is an operating entity and not
   engaged principally in research and development, the Company records the
   increase as a gain.
        If gains have been recognized on issuances of a subsidiary's stock and
   shares of the subsidiary are subsequently repurchased by the subsidiary or
   by the Company, gain recognition does not occur on issuances subsequent to
   the date of a repurchase until such time as shares have been issued in an
   amount equivalent to the number of repurchased shares. Such transactions
   are reflected as equity transactions, and the net effect of these
   transactions is reflected in the accompanying statement of shareholders'
   investment as the effect of majority-owned subsidiaries' equity
   transactions.

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

   Earnings per Share
   Primary earnings per share have been computed based on the weighted average
   number of common shares outstanding during the year. Because the effect of
   common stock equivalents was not material, they have been excluded from the
   primary earnings per share calculation. Fully diluted earnings per share
   assumes the exercise of stock options and the conversion of the Company's
   dilutive convertible obligations and elimination of the related interest
   expense.
                                       13PAGE

   Thermo Electron Corporation
   Notes to Consolidated Financial Statements

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

   Stock Split
   All share and per share information has been restated to reflect a
   three-for-two stock split, effected in the form of a 50% stock dividend,
   which was distributed in May 1995.

   Cash and Cash Equivalents
   Cash equivalents consist principally of U.S. government agency securities,
   corporate notes, commercial paper, money market funds, 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 and Held-to-maturity Investments
   Pursuant to SFAS No. 115, "Accounting for Certain Investments in Debt and
   Equity Securities," short- and long-term debt and marketable equity
   securities that the Company considers available-for-sale are accounted for
   at market value. Debt securities that the Company intends to hold to
   maturity are accounted for at amortized cost (Note 2). Prior to 1994,
   short- and long-term marketable equity securities were carried at the lower
   of cost or market value.

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

   (In thousands)                                        1995        1994
   ----------------------------------------------------------------------

   Raw materials and supplies                        $172,742   $128,876
   Work in process                                     72,087     44,711
   Finished goods                                      73,353     59,795
                                                     --------   --------
                                                     $318,182   $233,382
                                                     ========   ========

   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 -- 5 to 40 years, alternative-energy and waste-recycling





                                       14PAGE

   Thermo Electron Corporation
   Notes to Consolidated Financial Statements

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

   facilities -- 5 to 25 years, machinery and equipment -- 3 to 20 years, and
   leasehold improvements -- the shorter of the term of the lease or the life
   of the asset. Property, plant and equipment consist of the following:

   (In thousands)                                        1995         1994
   -----------------------------------------------------------------------

   Land                                              $ 47,848     $ 43,990
   Buildings                                          175,165      143,727
   Alternative-energy and waste-recycling
    facilities                                        382,257      335,064
   Machinery, equipment and leasehold
    improvements                                      361,799      288,544
                                                     --------     --------
                                                      967,069      811,325
   Less: Accumulated depreciation and
         amortization                                 254,224      186,437
                                                     --------     --------
                                                     $712,845     $624,888
                                                     ========     ========

   Other Assets
   Other assets in the accompanying balance sheet include the costs of
   acquired trademarks, patents, and other specifically identifiable
   intangible assets, as well as capitalized costs associated with the
   Company's operation of certain alternative-energy facilities. These assets
   are being amortized using the straight-line method over their estimated
   useful lives, which range from 5 to 20 years. These assets were $44.5
   million and $39.7 million, net of accumulated amortization of $27.4 million
   and $21.7 million, at year-end 1995 and 1994, respectively.

   Cost in Excess of Net Assets of Acquired Companies
   The excess of cost over the fair value of net assets of acquired companies
   is amortized using the straight-line method principally over 40 years.
   Accumulated amortization was $65.3 million and $47.3 million at year-end
   1995 and 1994, respectively. The Company assesses the future useful life of
   this asset whenever events or changes in circumstances indicate that the
   current useful life has diminished. The Company considers the future
   undiscounted cash flows of the acquired companies in assessing the
   recoverability of this asset.

   Common Stock of Subsidiary Subject to Redemption
   In March 1995, ThermoLyte sold 1,845,000 units, each unit consisting of one
   share of ThermoLyte common stock and one redemption right, at $10.00 per
   unit, for net proceeds of $17.3 million. Holders of the common stock
   purchased in the offering will have the option to require ThermoLyte to
   redeem in December 1998 or 1999 any or all of their shares at $10.00 per
   share. The difference between the redemption value and the original
   carrying amount of common stock of subsidiary subject to redemption is
   accreted over the period ending December 1998, which corresponds to the
   first redemption period. The accretion is charged to minority interest
   expense in the accompanying statement of income.

                                       15PAGE

   Thermo Electron Corporation
   Notes to Consolidated Financial Statements

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

   Foreign Currency
   All assets and liabilities of the Company's foreign 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 as a separate component of shareholders' investment titled
   "Cumulative translation adjustment." Foreign currency transaction gains and
   losses are included in the accompanying statement of income and are not
   material for the three years presented.

   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 and
   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. Actual results could differ from those
   estimates.

   Presentation
   The historical financial information presented has been restated to reflect
   the March 1995 acquisition of Coleman Research Corporation, which has been
   accounted for under the pooling-of-interests method (Note 3). 


   2.   Available-for-sale and Held-to-maturity Investments

   Effective January 2, 1994, the Company adopted SFAS No. 115, "Accounting
   for Certain Investments in Debt and Equity Securities." In accordance with
   SFAS No. 115, certain of the Company's debt and marketable 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 currently as a component of shareholders' investment titled "Net
   unrealized gain (loss) on available-for-sale investments." Effect of change
   in accounting principle in the accompanying 1994 statement of shareholders'
   investment represents the unrealized gain, net of related tax effects,
   pertaining to available-for-sale investments held by the Company on January
   2, 1994.


                                       16PAGE

   Thermo Electron Corporation
   Notes to Consolidated Financial Statements

   2.   Available-for-sale and Held-to-maturity Investments (continued)

        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, at year-end 1995 and 1994, are as follows:

   1995                                                      Gross       Gross
                                     Market       Cost  Unrealized  Unrealized
   (In thousands)                     Value      Basis       Gains      Losses
   ---------------------------------------------------------------------------

   Government agency securities   $367,208    $366,659   $    574   $    (25)
   Corporate bonds                 194,628     192,422      2,223        (17)
   Tax-exempt securities            16,275      16,247         28          -
   Other                            77,536      73,923      3,885       (272)
                                  --------    --------   --------   --------
                                  $655,647    $649,251   $  6,710   $   (314)
                                  ========    ========   ========   ========


   1994                                                      Gross       Gross
                                     Market       Cost  Unrealized  Unrealized
   (In thousands)                     Value      Basis       Gains      Losses
   ---------------------------------------------------------------------------

   Government agency securities   $287,418    $291,342   $      -   $ (3,924)
   Corporate bonds                 298,799     301,103         74     (2,378)
   Tax-exempt securities            33,588      33,882          -       (294)
   Other                            57,561      56,728      2,783     (1,950)
                                  --------    --------   --------   --------
                                  $677,366    $683,055   $  2,857   $ (8,546)
                                  ========    ========   ========   ========

        Short- and long-term available-for-sale investments in the
   accompanying 1995 balance sheet include equity securities of $22.9 million,
   debt securities of $280.9 million with contractual maturities of one year
   or less, debt securities of $321.0 million with contractual maturities of
   more than one year through five years, and debt securities of $30.8 million
   with contractual maturities of more than five years. Actual maturities may
   differ from contractual maturities as a result of the Company's intent to
   sell these securities prior to maturity and as a result of put and call
   options that enable either the Company and/or the issuer to redeem these
   securities at an earlier date.
        The cost of available-for-sale investments that were sold was based on
   specific identification in determining realized gains and losses recorded
   in the accompanying statement of income. Gain on sale of investments in
   1995 resulted from gross realized gains of $9.8 million and gross realized
   losses of $0.5 million relating to the sale of available-for-sale
   investments. Gain on sale of investments in 1994 resulted from gross
   realized gains of $6.7 million and gross realized losses of $1.8 million
   relating to the sale of available-for-sale investments.
        Held-to-maturity investments in the accompanying 1995 balance sheet
   represent investments in U.S. treasury bonds that mature in February and
   May 1998. It is the Company's intent to hold these securities to maturity.
                                       17PAGE

   Thermo Electron Corporation
   Notes to Consolidated Financial Statements

   3.   Acquisitions

   In March 1995, the Company acquired Coleman Research Corporation in
   exchange for 4,002,224 shares of the Company's common stock, including
   202,861 shares reserved for issuance upon exercise of stock options assumed
   upon the acquisition of Coleman Research. Coleman Research provides systems
   integration, systems engineering, and analytical services to government and
   commercial customers in fields of information technology, energy and the
   environment, software engineering, launch systems, advanced radar imaging,
   and health systems. The acquisition has been accounted for under the
   pooling-of-interests method.
        Accordingly, all historical financial information presented has been
   restated to include the acquisition of Coleman Research. Revenues and net
   income for 1994 and 1993, as previously reported by the separate entities
   prior to the acquisition and as restated for the combined Company, are as
   follows:

   (In thousands)                                  1994          1993
   ------------------------------------------------------------------

   Revenues:
    Previously reported                      $1,585,348   $1,249,718
    Coleman Research                            143,843      104,790
                                             ----------   ----------
                                             $1,729,191   $1,354,508
                                             ==========   ==========

   Net Income:
    Previously reported                      $  103,410   $   76,633
    Coleman Research                              1,301          235
                                             ----------   ----------
                                             $  104,711   $   76,868
                                             ==========   ==========

        In addition, in 1995, the Company and its majority-owned subsidiaries
   made several acquisitions for an aggregate of $339.1 million in cash, the
   issuance of common stock and stock options of the Company's majority-owned
   subsidiaries valued at $19.0 million, and the issuance of $22.3 million in
   debt. In 1994, the Company and its majority-owned subsidiaries made several
   acquisitions for an aggregate of $174.3 million in cash.
        These acquisitions have been accounted for using the purchase method
   of accounting, and the acquired companies' results of operations have been
   included in the accompanying financial statements from their respective
   dates of acquisition. The aggregate cost of the acquisitions in 1994 and
   1995 exceeded the estimated fair value of the acquired net assets by $385.6
   million, which is being amortized principally over 40 years. Allocation of
   the purchase price for these acquisitions was based on estimates of the
   fair value of the net assets acquired and, for acquisitions completed in
   1995, is subject to adjustment upon finalization of the purchase price
   allocation. Pro forma data is not presented since the acquisitions were not
   material to the Company's results of operations.
        Other accrued expenses in the accompanying balance sheet includes
   approximately $33 million and $26 million at year-end 1995 and 1994,
   respectively, for estimated severance, relocation, and other reserves
   associated with acquisitions.
                                       18PAGE

   Thermo Electron Corporation
   Notes to Consolidated Financial Statements

   4.   Common Stock

   At December 30, 1995, the Company had reserved 30,229,901 unissued shares
   of its common stock for possible issuance under stock-based compensation
   plans, for possible conversion of the Company's convertible debentures, and
   for possible exchange of subsidiaries' convertible obligations into common
   stock of the Company. Substantially all of the subsidiaries' obligations
   are exchangeable into common stock of the Company in the event of a change
   in control (as defined in the related fiscal agency agreement) that has not
   been approved by the continuing members of Company's Board of Directors
   (Note 6). The exchange price would be equal to 50% of the average price of
   the Company's common stock for the 30 trading days preceding the change in
   control.
        In January 1996, the Company redeemed the share purchase rights
   outstanding under its previously existing shareholder rights plan for $.02
   per right, or $.009 per share of the Company's common stock outstanding.
   Simultaneous with this redemption, the Company distributed rights under a
   new 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 of Series B
   Junior Participating Preferred Stock, $100 par value, at a purchase price
   of $250 per share, 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 the outside 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
   outside 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.
                                       19PAGE

   Thermo Electron Corporation
   Notes to Consolidated Financial Statements

   5.   Stock-based Compensation Plans

   The Company has several stock-based compensation plans for its key
   employees, directors, and others, which permit the award of stock-based
   incentives in the stock of the Company and its majority-owned subsidiaries.
   The Company has a nonqualified stock option plan, adopted in 1974, and an
   incentive stock option plan, adopted in 1981, which permit the award of
   stock options to key employees. The incentive stock option plan expired in
   1991, and no grants were made after that date. An equity incentive plan,
   adopted in 1989, permits 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), including restricted stock, stock
   options, stock bonus shares or performance-based shares. To date, only
   nonqualified stock options have been awarded under this plan. The option
   recipients and the terms of options granted under these plans are
   determined by the Board Committee. Generally, options presently outstanding
   under these plans are exercisable immediately, but are subject to certain
   transfer restrictions and the right of the Company to repurchase shares
   issued upon exercise of the options at the exercise price, upon certain
   events. The restrictions and repurchase rights generally lapse ratably over
   periods ranging from two to ten years after the first anniversary of the
   grant date, depending on the term of the option, which may range from three
   to twelve years. In addition, under certain options, shares acquired upon
   exercise are restricted from resale until retirement or other events.
   Nonqualified options may be granted at any price determined by the Board
   Committee, while 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, adopted in 1993, that
   provides for the annual grant of stock options of the Company and its
   majority-owned subsidiaries to outside directors pursuant to a formula
   approved by the Company's shareholders. Options awarded under this plan are
   exercisable six months after the date of grant and expire three to seven
   years after the date of grant. In addition to the Company's stock-based
   compensation plans, certain officers and key employees may also participate
   in stock-based compensation plans of the Company's majority-owned
   subsidiaries.
        In connection with the acquisition of Coleman Research in 1995, the
   Company assumed certain outstanding options granted under Coleman
   Research's nonqualified stock option plan. Such options were converted into
   options to purchase shares of the Company's common stock, in accordance
   with the original terms of the options. On the date of acquisition, 25% of
   the nonvested options being converted became exercisable immediately. The
   remaining options become exercisable commencing two or three years after
   the date of grant, and expire three or four years from the date of grant.
        No accounting recognition is given to options granted at fair market
   value until they are exercised. Upon exercise, net proceeds, including tax
   benefits realized, are credited to equity.

                                       20PAGE

   Thermo Electron Corporation
   Notes to Consolidated Financial Statements

   5.   Stock-based Compensation Plans (continued)

        A summary of the Company's stock option information is as follows:

                                1995              1994             1993
                          ----------------  ---------------- ----------------
                                     Range            Range            Range
                                        of               of               of
                                    Option           Option           Option
                          Number    Prices  Number   Prices  Number   Prices
   (In thousands except       of       per      of      per      of      per
   per share amounts)      Shares    Share  Shares     Share  Shares    Share
   --------------------------------------------------------------------------

   Options outstanding,            $ 4.85-          $ 4.85-          $ 4.85-
    beginning of year     5,252    $30.07   4,442   $28.21   3,111   $20.87 

     Assumed upon
      acquisition of                 5.21-
      Coleman               203     10.45     --       --      --       --

                                    32.17-           25.79-           26.15-
     Granted                887     48.90   1,094    30.07   1,838    28.21 

                                     4.85-            6.15-            4.85-
     Exercised             (733)    27.59    (210)   20.87    (476)   19.35

                                     8.33-            7.69-            7.15-
     Lapsed or canceled     (74)    37.27     (74)   27.59     (31)   24.71
                          -----             -----            -----

   Options outstanding,            $ 6.36-          $ 4.85-          $ 4.85-
   end of year            5,535    $48.90   5,252   $30.07   4,442   $28.21 
                          =====             =====            =====        
                                   $ 6.36-          $ 4.85-          $ 4.85-
   Options exercisable    5,508    $48.90   5,252   $30.07   4,442   $28.21
                          =====             =====            =====
   Options available
    for grant             1,598             2,418              438
                          =====             =====            =====





                                       21PAGE

Thermo Electron Corporation
Notes to Consolidated Financial Statements

6.   Long-term Obligations and Other Financing Arrangements

Long-term obligations of the Company are as follows:

(In thousands except per share amounts)                      1995          1994
- -------------------------------------------------------------------------------
5% Senior convertible debentures,
 due 2001, convertible at $31.50 per share             $  309,000    $  345,000
4 5/8% Senior convertible debentures,
 due 1997, convertible at $21.50 per share                 82,325       205,000
4 7/8% Subordinated convertible debentures,
 due 1997, convertible at $21.50 per share                 55,000        55,000
3 3/4% Senior convertible debentures,
 due 2000, convertible into shares of 
 Thermo Instrument at $16.93 per share                     67,600        70,000
6 5/8% Subordinated convertible debentures,
 due 2001, convertible into shares of
 Thermo Instrument at $9.38 per share                      22,275        36,862
5% Subordinated convertible debentures,
 due 2000, convertible into shares of ThermoQuest          86,250             -
5% Subordinated convertible debentures,
 due 2000, convertible into shares of Thermo Optek         86,250             -
4 7/8% Subordinated convertible debentures,
 due 2000, convertible into shares of
 Thermo Remediation at $17.92 per share                    34,950             -
6 1/2% Subordinated convertible debentures,
 due 1998, convertible into shares of
 Thermedics at $10.42 per share                             8,037        10,252
6 1/2% Subordinated convertible debentures,
 due 1997, convertible into shares of
 Thermo TerraTech at $10.33 per share                      13,432        16,597
Noninterest-bearing subordinated convertible
 debentures, due 1997, convertible into shares
 of Thermo Cardiosystems at $21.74 per share               11,642        33,000
5 1/2% Subordinated convertible notes,
 due 2002, convertible into shares of
 Thermo Cardiosystems at $9.88 per share                        -           450
3 3/4% Subordinated convertible debentures,
 due 2000, convertible into shares of Thermo
 Voltek at $11.75 per share                                25,240        34,500
8.1% Nonrecourse tax-exempt obligation, payable
 in semiannual installments, with final
 payment in 2000                                           59,100        62,500
6.0% Nonrecourse tax-exempt obligation, payable
 in semiannual installments, with final
 payment in 2000                                           49,700        49,700
Tax-exempt obligations, payable in semiannual
 installments, with final payment in 2017                 132,047       133,670
Other                                                     101,228        19,353
                                                       ----------    ----------
                                                        1,144,076     1,071,884
Less: Current maturities of long-term
      obligations                                          28,065        22,034
                                                       ----------    ----------
                                                       $1,116,011    $1,049,850
                                                       ==========    ==========
                                       22PAGE

   Thermo Electron Corporation
   Notes to Consolidated Financial Statements

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

        The debentures that are convertible into subsidiary common stock have
   been issued by the respective subsidiaries and are guaranteed by the
   Company.
         In the event of a change in control of the Company (as defined in the
   related fiscal agency agreement) that has not been approved by the
   continuing members of the Company's Board of Directors, each holder of the
   5%, 4 5/8%, and 4 7/8% convertible debentures issued by the Company will
   have the right to require the Company to buy all or part of the holder's
   debentures, at par value plus accrued interest, within 50 calendar days
   after the date of expiration of a specified approval period. In addition,
   substantially all of the obligations convertible into subsidiary common
   stock become exchangeable for common stock of the Company at an exchange
   price equal to 50% of the average price of the Company's common stock for
   the 30 trading days preceding the change in control.
        Nonrecourse tax-exempt obligations represent obligations issued by the
   California Pollution Control Financing Authority (CPCFA), the proceeds of
   which were used to finance two alternative-energy facilities (Delano I and
   Delano II) located in Delano, California. The obligations are payable only
   by a subsidiary of Thermo Ecotek and are not guaranteed by the Company,
   except under limited circumstances. As required by the financing bank
   group, Thermo Ecotek entered into interest rate swap agreements that
   effectively convert these obligations from floating rates to the fixed
   rates described above. These swaps have terms expiring in 2000,
   commensurate with the final maturity of the debt. During 1995 and 1994, the
   average variable rate received under the interest rate swap agreements was
   3.8% and 4.9%, respectively.
        Tax-exempt obligations represent obligations issued by the CPCFA in
   January 1992, the proceeds of which were used to finance the construction
   of a waste-recycling facility in San Diego County, California. Construction
   of this facility was completed in 1994. Of these tax-exempt obligations,
   $93 million carry fixed rates of interest ranging from 7.2% to 8.5%, and
   $39 million carry a floating rate of interest that varies weekly based on
   short-term, tax-exempt markets. The interest rate ranged from 4.3% to 7.5%
   in 1995 and 3.1% to 7.2% in 1994.
        During 1994, the Company capitalized $2.1 million of interest expense,
   net of interest income, incurred in connection with the construction of the
   waste-recycling facility discussed above.

        The annual requirements for long-term obligations are as follows:

   (In thousands)
   --------------------------------------------------------

   1996                                         $   28,065
   1997                                            214,181
   1998                                             67,650
   1999                                             37,084
   2000                                            333,316
   2001 and thereafter                             463,780
                                                ----------

                                                $1,144,076
                                                ==========
                                       23PAGE

   Thermo Electron Corporation
   Notes to Consolidated Financial Statements

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

        Certain of the Company's obligations include requirements to maintain
   predetermined financial ratios. At December 30, 1995, the Company was in
   compliance with these requirements.
        See Note 14 for fair value information pertaining to the Company's
   long-term obligations.
        Notes payable and current maturities of long-term obligations in the
   accompanying balance sheet include $78.1 million and $71.9 million in 1995
   and 1994, respectively, of short-term bank borrowings by several of the
   Company's subsidiaries. The weighted average interest rates for these
   borrowings were 5.1% and 6.2% at year-end 1995 and 1994, respectively.


   7.  Commitments and Contingencies

   Litigation

   Cogeneration Joint Venture

   The Company has participated in the operation of the Dade County Downtown
   Government Center cogeneration facility in Miami, Florida, through a 50/50
   joint venture of the Company and Rolls-Royce, Inc. Because the demand for
   power and chilled water at the Dade County Downtown Government Center
   complex has been substantially less than anticipated since the plant's
   startup in 1987, and because the plant has had difficulty disposing of the
   remainder of its output, the joint venture has experienced continuing
   losses. In September 1994, the plant's operations were suspended in
   connection with the resolution of litigation that the joint venture brought
   against Dade County related to the plant.
      The joint venture has a pending antitrust lawsuit against another
   purchaser of part of the plant's output, Florida Power and Light (FPL). FPL
   has continued to pursue petitions it has filed with the Florida Public
   Service Commission (FPSC) and the Federal Energy Regulatory Commission
   (FERC). The petition at FPSC seeks a determination that the joint venture
   has been engaging in illegal retail sales of electricity. FPL's actions at
   FERC seek to take advantage of a 1993 FERC order finding that, from 1987
   through 1991, the plant did not meet required operating efficiencies. If
   either FPSC or FERC were to take the action requested by FPL, the joint
   venture could be subject to potentially significant refund and other
   liabilities, including any deficiency between (a) in the event the lessor
   of the plant's generating equipment declared a default under the lease and
   sold the equipment, approximately $44 million and the amount realized from
   the sale, or (b) in the case of a re-lease by the lessor in lieu of a sale,
   the present value of future rentals and prepayment penalty under the lease
   (approximately $33 million) and the present value of a fair rental to be
   collected from a new tenant. The joint venture's revenues for the
   cumulative period from 1987 through 1991 were $26.3 million.
      In 1996, the joint venture and FPL entered into an agreement to settle
   their disputes. Before the settlement can become effective, it must be
   approved by FPSC. There can be no assurance as to whether or when FPSC will
   approve the settlement agreement. The settlement would include (i) the
   continued closure of the plant but the availability of its capacity for
                                       24PAGE

   Thermo Electron Corporation
   Notes to Consolidated Financial Statements

   7.   Commitments and Contingencies (continued)

   potential dispatch by FPL, (ii) payments by FPL of the plant's lease
   payments and operation and maintenance costs, and (iii) termination of the
   antitrust litigation and withdrawal of FPL's motions in the FPSC and FERC
   proceedings.

   Other Litigation and Related Contingencies

      The Company's wholly owned Napco, Inc. subsidiary is challenging a jury
   verdict rendered against it during the third quarter of 1994 for
   approximately $11.0 million in a contract dispute arising out of an
   allegedly defective waste-treatment system installed by Napco in 1984. The
   Company believes that the verdict is in error and has appealed the decision
   to the U.S. Court of Appeals for the First Circuit. Because this verdict
   exceeds Napco's financial ability to pay, Napco has filed a petition for
   bankruptcy.
      In a lawsuit relating to the Company's waste-recycling facility in
   southern California, a third party, from which the Company acquired certain
   development rights, alleges that fees totaling $7.9 million plus interest
   and legal costs are due and payable by the Company in connection with
   construction of the facility. The Company contends that no additional fees
   are payable because the facility actually built was substantially different
   from the one contemplated in the agreement with the third-party developer.
      The Company has been sued by third-party developers of an alternative-
   energy facility, constructed by the Company and its subcontractors in 1988
   and 1989 and leased and operated by a partnership including Thermo Ecotek.
   The third-party developers seek $25 million in damages for alleged
   misrepresentation, breach of contract, and other causes of action. The
   dispute arises out of the development, construction, and subsequent
   operating performance of the plant. The Company believes that the
   allegations are without merit and intends to vigorously defend this matter.
      The Company's ThermoTrex subsidiary is a defendant in a lawsuit brought
   by Fischer Imaging Corporation (Fischer), which alleges that the
   StereoGuide(R) prone breast-biopsy system of ThermoTrex's Lorad division
   infringes on a Fischer patent on a precision mammographic needle-biopsy
   system. The Company believes it has meritorious legal defenses and intends
   to vigorously defend the matter. Lorad's cumulative revenues from this
   product totaled approximately $39 million through December 30, 1995.
      In the opinion of management, the ultimate liability for all such
   matters, together with the liability for all other pending legal
   proceedings, asserted legal claims, and known potential legal claims that
   are probable of assertion, will not be material to the Company's financial
   position, but could materially affect the results of operations or cash
   flows for a particular quarter or annual period.



                                       25PAGE

   Thermo Electron Corporation
   Notes to Consolidated Financial Statements

   7.   Commitments and Contingencies (continued)

   Operating Leases
   The Company leases portions of its office and operating facilities under
   various noncancelable operating lease arrangements. The accompanying
   statement of income includes expenses from operating leases of $30.3
   million, $24.3 million, and $17.2 million in 1995, 1994, and 1993,
   respectively. Minimum rental commitments under noncancelable operating
   leases at December 30, 1995, are as follows:

   (In thousands)
   ------------------------------------------------------

   1996                                         $ 30,591
   1997                                           23,955
   1998                                           18,228
   1999                                           13,717
   2000                                           11,994
   2001 and thereafter                            49,346
                                                --------
                                                $147,831
                                                ========


   8.   Employee Benefit Plans                                                

   401(k) Savings Plan
   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. For this plan, the Company contributed and
   charged to expense $7.6 million, $6.5 million, and $4.5 million in 1995,
   1994, and 1993, respectively.

   Other Retirement Plans
   Certain of the Company's subsidiaries offer retirement plans, separate from
   the Company's 401(k) savings plan. These retirement plans cover
   approximately a third of the Company's U.S. employees. The majority of
   these subsidiaries offer 401(k) savings plans; however, one subsidiary
   offers a money purchase plan, and two subsidiaries offer profit-sharing
   plans. Company contributions to the 401(k) savings plans are based on the
   level of employee contributions. Company contributions to the money
   purchase plan and profit-sharing plans are based on formulas determined by
   the Company. For these plans, the Company contributed and charged to
   expense $7.7 million, $5.8 million, and $4.8 million in 1995, 1994, and
   1993, respectively.


                                       26PAGE

   Thermo Electron Corporation
   Notes to Consolidated Financial Statements

   8.   Employee Benefit Plans (continued)

   Employee Stock Ownership Plan
   The Company's Employee Stock Ownership Plan (ESOP) covers eligible
   full-time U.S. employees. The Company borrowed funds from a financial
   institution and then loaned these funds to the ESOP to purchase shares of
   common stock of the Company and its majority-owned subsidiaries. The loan
   balance between the Company and the financial institution was paid in 1992.
   The loan between the Company and the ESOP remains outstanding. The shares
   purchased are reported as deferred compensation in the accompanying balance
   sheet. The Company makes annual contributions to the ESOP, and shares are
   allocated to plan participants based on employee compensation. Effective
   December 31, 1994, the ESOP was split into two plans: ESOP I, covering
   employees of the Company's corporate office and its wholly owned
   subsidiaries and ESOP II, covering employees of certain of the Company's
   majority-owned subsidiaries. Also, effective December 31, 1994, ESOP II was
   terminated, and as a result, employees of certain of the Company's
   majority-owned subsidiaries are no longer eligible to participate in an
   ESOP. For this plan, the Company charged to expense $0.3 million, $1.1
   million, and $1.1 million in 1995, 1994, and 1993, respectively.

   Employee Stock Purchase Plan
   Substantially all of the Company's full-time U.S. employees are eligible to
   participate in employee stock purchase plans sponsored by the Company or by
   the Company's majority-owned public subsidiaries. Prior to the November
   1995 plan year, shares of the Company's common stock could be purchased at
   the end of a 12-month plan year at 85% of the fair market value at the
   beginning of the plan year, and the shares purchased were subject to a
   one-year resale restriction. Effective November 1, 1995, shares of the
   Company's common stock may be purchased at 95% of the fair market value at
   the beginning of the plan year, and the shares purchased are subject to a
   six-month resale restriction. Shares are purchased through payroll
   deductions of up to 10% of each participating employee's gross wages.
   Participants of employee stock purchase plans sponsored by the Company's
   majority-owned public subsidiaries may also elect to purchase shares of the
   common stock of the subsidiary by which they are employed under the same
   general terms described above. During 1995, 1994, and 1993, the Company
   issued 220,296 shares, 145,836 shares, and 187,902 shares of its common
   stock, respectively, under these plans.




                                       27PAGE

   Thermo Electron Corporation
   Notes to Consolidated Financial Statements

   9.   Income Taxes

   The components of income before income taxes and minority interest are as
   follows:

   (In thousands)                              1995        1994         1993
   -------------------------------------------------------------------------

   Domestic                                $257,214    $165,761     $113,500
   Foreign                                   42,281      40,615       17,967
                                           --------    --------     --------
                                           $299,495    $206,376     $131,467
                                           ========    ========     ========

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

   (In thousands)                              1995        1994         1993
   -------------------------------------------------------------------------

   Currently payable:
    Federal                                $ 72,496    $ 30,089     $ 10,270
    Foreign                                  17,751      16,343        8,643
    State                                    19,733       9,672        5,320
                                           --------    --------     --------
                                            109,980      56,104       24,233
                                           --------    --------     --------
   Deferred (prepaid), net:
    Federal                                  (9,050)     11,355        6,922
    Foreign                                     232        (243)         931
    State                                    (2,262)      3,487        1,427
                                           --------    --------     --------
                                            (11,080)     14,599        9,280
                                           --------    --------     --------
                                           $ 98,900    $ 70,703     $ 33,513
                                           ========    ========     ========

        The provision for income taxes that are currently payable does not
   reflect $20.5 million, $3.5 million, and $3.4 million of tax benefits of
   the Company and its majority-owned subsidiaries allocated to capital in
   excess of par value, directly or through the effect of majority-owned
   subsidiaries' equity transactions, or $3.0 million, $0.1 million, and $2.3
   million of tax benefits used to reduce cost in excess of net assets of
   acquired companies in 1995, 1994, and 1993, respectively. The deferred
   provision for income taxes does not reflect $5.8 million of tax benefits
   used to reduce cost in excess of net assets of acquired companies in 1995.






                                       28PAGE

  Thermo Electron Corporation
  Notes to Consolidated Financial Statements

  9.   Income Taxes (continued)

       The provision for income taxes in the accompanying statement of income
  differs from the provision calculated by applying the statutory federal
  income tax rate of 35% to income before income taxes and minority interest
  due to the following:

  (In thousands)                                   1995       1994      1993
  --------------------------------------------------------------------------

  Provision for income taxes at
   statutory rate                              $104,823  $ 72,232  $ 46,013
  Increases (decreases) resulting from:
   Gain on issuance of stock by
    subsidiaries                                (28,285)   (8,849)  (13,770)
   State income taxes, net of federal tax        11,356     8,317     4,307
   Investment and research and development
    tax credits                                       -    (2,786)   (6,625)
   Foreign tax rate and tax law differential      3,785     1,422     3,969
   Amortization and write-off of cost in
    excess of net assets of acquired companies    7,484     3,450     3,400
   Reduction in valuation allowance              (2,104)        -         -
   Other, net                                     1,841    (3,083)   (3,781)
                                               --------  --------  --------
                                               $ 98,900  $ 70,703  $ 33,513
                                               ========  ========  ========

       Prepaid income taxes and deferred income taxes in the accompanying
  balance sheet consist of the following:

  (In thousands)                                   1995       1994
  ----------------------------------------------------------------

  Prepaid income taxes:
   Reserves and accruals                       $ 31,659  $ 31,369
   Inventory basis difference                    19,782    16,756
   Capitalized costs and joint venture equity     4,821     3,727
   Accrued compensation                          12,551     8,599
   Allowance for doubtful accounts                5,592     5,470
   Net operating loss carryforwards              28,692    17,022
   Federal tax credit carryforwards               6,770     7,869
   Available-for-sale investments                (2,383)    1,025
   Other, net                                     4,723     6,185
                                               --------  --------
                                                112,207    98,022
   Less: Valuation allowance                     39,214    40,198
                                               --------  --------
                                               $ 72,993  $ 57,824
                                               ========  ========
  Deferred income taxes:
   Depreciation                                $ 55,418  $ 49,313
   Intangible assets                              2,806     7,373
   Other                                            964     1,564
                                               --------  --------
                                               $ 59,188  $ 58,250
                                               ========  ========
                                       29PAGE

   Thermo Electron Corporation
   Notes to Consolidated Financial Statements

   9.   Income Taxes (continued)

        The valuation allowance relates to the uncertainty surrounding the
   realization of tax loss and credit carryforwards and the realization of tax
   benefits attributable to purchase accounting reserves and certain other tax
   assets of the Company and certain subsidiaries. Of the year-end 1995
   valuation allowance, $24.6 million will be used to reduce cost in excess of
   net assets of acquired companies when any portion of the related deferred
   tax asset is recognized, and $2.1 million will increase capital in excess
   of par value when previously unrealized stock option benefits are
   recognized.
        During 1995, the valuation allowance was reduced as it became more
   likely than not that certain tax benefits will be realized, offset in part
   by the establishment of valuation allowances for tax loss and credit
   carryforwards of businesses acquired in 1995.
        The Company has not recognized a deferred tax liability for the
   difference between the book basis and tax basis of the common stock of its
   domestic subsidiaries (such difference relates primarily to unremitted
   earnings and gains on issuance of stock by subsidiaries) because the
   Company does not expect this basis difference to become subject to tax at
   the parent level. The Company believes it can implement certain tax
   strategies to recover its investment in its domestic subsidiaries tax-free.
        A provision has not been made for U.S. or additional foreign taxes on
   $101 million of undistributed earnings of foreign subsidiaries that could
   be subject to taxation if remitted to the U.S. because the Company
   currently plans to keep these amounts permanently reinvested overseas. The
   Company believes that any additional U.S. tax liability due upon remittance
   of such earnings would be immaterial due to available U.S. foreign tax
   credits.


   10.  Transactions in Stock of Subsidiaries

   Gain on issuance of stock by subsidiaries in the accompanying statement of
   income results primarily from the following transactions:

   1995

        Initial public offering of 2,333,556 shares of Thermo Ecotek common
   stock at $12.75 per share for net proceeds of $27.5 million resulted in a
   gain of $7.9 million.
        Private placement of 1,601,500 shares of Thermo BioAnalysis common
   stock at $10.00 per share for net proceeds of $14.9 million resulted in a
   gain of $9.5 million that was recorded by Thermo Instrument.
        Private placement of 500,000 shares of Thermo Remediation common stock
   at $13.25 per share for net proceeds of $6.6 million resulted in a gain of
   $1.6 million that was recorded by Thermo TerraTech.
        Private placements of 150,000 and 50,000 shares of ThermoLase common
   stock at $13.75 and $12.825 per share, respectively, and a public offering
   of 2,250,000 shares at $25.25 per share, for aggregate net proceeds of
   $55.3 million resulted in an aggregate gain of $34.7 million that was
   recorded by ThermoTrex.
        Initial public offering of 1,725,000 shares of ThermoSpectra common
   stock at $14.00 per share and a private placement of 202,000 shares at

                                       30PAGE

   Thermo Electron Corporation
   Notes to Consolidated Financial Statements

   10.  Transactions in Stock of Subsidiaries (continued)

   $15.72 per share, for aggregate net proceeds of $24.9 million resulted in
   an aggregate gain of $10.6 million that was recorded by Thermo Instrument.
        Conversion of $9.1 million of Thermo Voltek 3 3/4% subordinated
   convertible debentures convertible at $11.75 per share into 775,399 shares
   of Thermo Voltek common stock resulted in a gain of $3.5 million that was
   recorded by Thermedics.
        Private placement of 1,862,000 shares of Trex Medical common stock at
   $10.25 per share for net proceeds of $17.6 million resulted in a gain of
   $12.8 million that was recorded by ThermoTrex.

   1994

        Public offering of 1,610,000 shares of ThermoTrex common stock at
   $15.375 per share for net proceeds of $23.0 million resulted in a gain of
   $7.9 million.
        Initial public offering of 5,349,572 shares of ThermoLase common stock
   at $3.00 per share for net proceeds of $14.8 million resulted in a gain of
   $8.6 million that was recorded by ThermoTrex.
        Private placements of 1,505,000 shares of ThermoSpectra common stock
   at $10.00 per share for net proceeds of $14.0 million resulted in a gain of
   $6.5 million that was recorded by Thermo Instrument.
        Conversion of $3.7 million of Thermedics 6 1/2% subordinated
   convertible debentures convertible at $10.42 per share into 357,597 shares
   of Thermedics common stock resulted in a gain of $1.0 million.

   1993

        Public offering of 3,225,000 shares of Thermedics common stock at
   $10.00 per share for net proceeds of $30.0 million resulted in a gain of
   $10.7 million.
        Public offering of 4,312,500 shares of Thermo Power common stock at
   $9.00 per share for net proceeds of $36.0 million resulted in a gain of
   $10.6 million.
        Private placements of 2,062,500 shares of ThermoTrex common stock at
   $11.17 and $14.50 per share for net proceeds of $27.5 million resulted in a
   gain of $11.4 million.
        Private placement of 300,000 shares and initial public offering of
   1,650,000 shares of Thermo Remediation common stock at $6.59 and $8.33 per
   share, respectively, for aggregate net proceeds of $14.6 million resulted
   in an aggregate gain of $4.2 million that was recorded by Thermo TerraTech.
        Conversion of $7.3 million of Thermedics 6 1/2% subordinated
   convertible debentures convertible at $10.42 per share into 697,919 shares
   of Thermedics common stock resulted in a gain of $2.5 million.

        The Company's ownership percentage in these subsidiaries changed
   primarily as a result of the transactions listed above, as well as the
   Company's purchases of shares of its majority-owned subsidiaries' stock,
   the subsidiaries' purchases of their own stock, the issuance of
   subsidiaries' stock by the Company or by the subsidiaries under stock-based
   compensation plans or in other transactions, and the conversion of
   convertible obligations held by the Company, its subsidiaries, or by third
   parties.
                                       31PAGE

   Thermo Electron Corporation
   Notes to Consolidated Financial Statements

   10.  Transactions in Stock of Subsidiaries (continued)

        The Company's ownership percentages at year-end were as follows:

                                      1995        1994         1993
                                      ----        ----         ----

   Thermedics                          51%         51%          52%
   Thermo Instrument                   86%         83%          81%
   Thermo TerraTech                    81%         80%          72%
   Thermo Power                        63%         60%          52%
   ThermoTrex                          51%         50%          55%
   Thermo Fibertek                     81%         81%          80%
   Thermo Ecotek                       83%         97%          88%
   Thermo Cardiosystems (a)            55%         58%          57%
   Thermo Voltek (a)                   59%         71%          67%
   Thermo Remediation (b)              69%         65%          67%
   ThermoLase (c)                      65%         69%          81%
   ThermoSpectra (d)                   72%         86%         100%
   Thermo EuroTech (e)                 62%         64%          72%
   ThermoLyte (f)                      78%        100%         100%
   Thermo BioAnalysis (d)              80%        100%         100%
   ThermoQuest (d)                    100%        100%         100%
   Thermo Optek (d)                   100%        100%         100%
   Trex Medical (c)                    91%        100%         100%

   (a) Reflects combined ownership by Thermedics and Thermo Electron.
   (b) Reflects combined ownership by Thermo TerraTech and Thermo Electron.
   (c) Reflects ownership by ThermoTrex.
   (d) Reflects ownership by Thermo Instrument.
   (e) Reflects ownership by Thermo TerraTech.
   (f) Reflects ownership by Thermo Power.


   11.  Other Expense, Net

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

   (In thousands)                               1995        1994        1993
   -------------------------------------------------------------------------

   Interest income                          $ 62,146    $ 43,280    $ 23,905
   Interest expense                          (76,961)    (59,844)    (31,736)
   Equity in losses of unconsolidated
    subsidiaries                                (203)     (4,019)    (22,721)
   Gain on sale of investments                 9,305       4,851       2,469
   Gain on sale of land                            -      14,698           -
   Other income (expense), net                (1,089)         45         535
                                            --------    --------    --------
                                            $ (6,802)   $   (989)   $(27,548)
                                            ========    ========    ========
                                       32PAGE

 Thermo Electron Corporation
 Notes to Consolidated Financial Statements

 12.  Restructuring and Other Nonrecurring Costs

 Restructuring and other nonrecurring costs in the accompanying 1995 statement
 of income includes $11.5 million to write off the Company's net investment in a
 waste-recycling facility in southern California due to contractual defaults by
 the facility's sole customer, which have caused operations to be substantially
 curtailed; $5.0 million to write off the cost in excess of net assets of
 acquired companies at Thermo TerraTech's thermal-processing equipment business
 due to this asset no longer being recoverable based on discontinuing investment
 in this business; $2.5 million to write off the cost in excess of net assets of
 acquired companies at the Company's Napco subsidiary, which is a defendant in
 litigation described in Note 7; and $2.9 million of other nonrecurring costs.
      The 1994 amount represents severance costs and, to a lesser extent, the
 costs to write off leasehold improvements at ThermoTrex's East Coast division.
      The 1993 amount primarily represents a $1.9 million reserve for the
 write-off of machinery and equipment and costs to phase out a product line in
 the Company's metal-fabrication services business, a $1.2 million reserve for
 restructuring at the Company's steam turbines and compressors business, and
 $2.7 million for the write-off of mobile soil-remediation assets and other
 related expenses.


 13.  Supplemental Cash Flow Information

 Supplemental cash flow information is as follows:

 (In thousands)                                1995        1994        1993
 --------------------------------------------------------------------------

 Cash Paid For:
  Interest                                $  71,816   $  47,745   $  29,529
  Income taxes                            $  50,788   $  27,456   $   9,909

 Noncash Activities:
  Conversions of the Company's and
   subsidiaries' convertible obligations  $ 212,979   $  89,625   $  50,403
  Acquisition of asset under capital
   lease                                  $  47,020   $       -   $       -
  Purchase of alternative-energy
   facility through assumption of
   debt                                   $       -   $       -   $  66,900

  Fair value of assets of acquired
   companies                              $ 521,558   $ 250,404   $ 208,193
  Cash paid for acquired companies         (339,075)   (174,330)   (143,790)
  Issuance of subsidiaries' common stock
   and stock options for acquired
   companies                                (18,990)          -           -
  Issuance of long-term obligations for
   acquired company                         (22,300)          -           -
                                          ---------    --------    --------
    Liabilities assumed of acquired
     companies                            $ 141,193   $  76,074   $  64,403
                                          =========   =========   =========
                                       33PAGE

 Thermo Electron Corporation
 Notes to Consolidated Financial Statements

 14.  Fair Value of Financial Instruments

 The Company's financial instruments consist mainly of cash and cash
 equivalents, available-for-sale and held-to-maturity investments, accounts
 receivable, notes payable and current maturities of long-term obligations,
 accounts payable, long-term obligations, forward exchange contracts, and
 interest rate swaps. The carrying amount of these financial instruments, with
 the exception of available-for-sale investments, long-term obligations, forward
 exchange contracts, and interest rate swaps, approximates 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. See Note 2 for fair value information pertaining to these
 financial instruments. Held-to-maturity investments in the accompanying balance
 sheet are carried at amortized cost. The fair values are disclosed on the
 accompanying balance sheet and were determined based on quoted market prices.
      The Company enters into forward exchange contracts to hedge certain firm
 purchase and sale commitments denominated in currencies other than its
 subsidiaries' local currencies, principally U.S. dollars, British pounds
 sterling, French francs, and Japanese yen. The purpose of the Company's foreign
 currency hedging activities is to protect the Company's local currency cash
 flows related to these commitments from fluctuations in foreign exchange rates.
 The amounts of such forward exchange contracts at year-end 1995 and 1994 were
 $34.2 million and $19.9 million, respectively.
      The Company's Thermo Ecotek subsidiary has interest rate swap agreements
 relating to its nonrecourse tax-exempt obligations. The interest rate swap
 agreements are with a different counterparty than the holders of the underlying
 debt. The Company believes, however, that the credit risks associated with
 these swaps are minimal because the agreements are with a large, reputable
 bank. The notional amount of the swap agreement is $110.0 million at December
 30, 1995 and December 31, 1994.
      The carrying amount and fair value of the Company's long-term obligations
 and off-balance-sheet financial instruments are as follows:

                                   1995                       1994
                         -----------------------   ------------------------
                           Carrying         Fair      Carrying         Fair
 (In thousands)              Amount        Value        Amount        Value
 --------------------------------------------------------------------------

 Long-term obligations:
  Convertible obligations$  802,001   $1,354,682   $  806,661   $  973,659
  Other long-term
   obligations              314,010      334,004      243,189      245,045
                         ----------   ----------   ----------   ----------
                         $1,116,011   $1,688,686   $1,049,850   $1,218,704
                         ==========   ==========   ==========   ==========

 Off-balance-sheet
  financial instruments:
   Forward exchange
    contracts receivable              $   (1,015)               $     (579)
   Interest rate swaps
    (receivable) payable              $    3,467                $   (2,113)

                                       34PAGE

 Thermo Electron Corporation
 Notes to Consolidated Financial Statements

 14.  Fair Value of Financial Instruments (continued)

      The fair value of long-term obligations was determined based on quoted
 market prices and on borrowing rates available to the Company at the respective
 year-ends. The fair value of convertible obligations exceeds the carrying
 amount primarily due to the market price of the Company's or subsidiaries'
 common stock at the respective year-ends exceeding the conversion price of the
 convertible obligations.
      The fair value of forward exchange contracts and interest rate swap
 agreements (used for hedging purposes) is the estimated amount that the Company
 would pay or receive upon termination of the contract, taking into account the
 change in foreign exchange rates on forward exchange contracts, and market
 interest rates and the creditworthiness of the counterparties on interest rate
 swap agreements.


 15.  Business Segment and Geographical Information                        

 The Company's business segments include the following:
   Instruments: environmental-monitoring, analytical, test and measurement, and
   process-control instruments
   Alternative-energy Systems: biomass power plants, waste-recycling facility,
   industrial refrigeration systems, natural gas engines, cooling and
   cogeneration units, turbines and compressors
   Process Equipment: paper-recycling equipment, papermaking systems and
   accessories, metallurgical-processing systems, electroplating equipment
   Biomedical Products: biomedical materials, mammography and needle-biopsy
   systems, general-purpose X-ray systems, respiratory-care equipment,
   skin-incision devices, blood coagulation-monitoring equipment, left
   ventricular-assist systems, neurophysiology monitoring instruments,
   personal-care products
   Environmental Services: thermal soil-remediation, industrial-fluids
   recycling, nuclear monitoring and cleanup, on-site industrial remediation,
   laboratory analysis, environmental sciences, metallurgical heat treating and
   fabrication
   Advanced Technologies: process detection systems, explosives-detection
   instruments, precision weighing and inspection equipment, electronic test
   equipment, power-conversion instruments, laser-based hair-removal system,
   systems integration and engineering, development of avionics products and
   medical equipment




                                       35PAGE

 Thermo Electron Corporation
 Notes to Consolidated Financial Statements

 15.  Business Segment and Geographical Information (continued)


 (In thousands)                             1995          1994         1993
 --------------------------------------------------------------------------

 Business Segment Information

 Revenues:
  Instruments                         $  782,662   $  650,114   $  516,712
  Alternative-energy Systems             325,912      285,410      242,662
  Process Equipment                      317,951      190,217      167,524
  Biomedical Products                    255,752      180,318      127,533
  Environmental Services                 210,503      141,438      121,987
  Advanced Technologies                  321,563      286,523      181,094
  Intersegment Sales Elimination (a)      (6,926)      (4,829)      (3,004)
                                      ----------   ----------   ----------
                                      $2,207,417   $1,729,191   $1,354,508
                                      ==========   ==========   ==========
 Income Before Income Taxes and
  Minority Interest:
   Instruments                        $  113,651   $  105,440   $   91,412
   Alternative-energy Systems             32,952       34,451       12,859
   Process Equipment                      29,071       20,730       13,444
   Biomedical Products                    32,343       17,601        5,758
   Environmental Services                 21,215       14,853        4,702
   Advanced Technologies                  18,930       12,563        8,260
                                      ----------   ----------   ----------

     Total Segment Income (b)            248,162      205,638      136,435
   Equity in Losses of Unconsolidated
    Subsidiaries                            (203)      (4,019)     (22,721)
   Corporate (c)                          51,536        4,757       17,753
                                      ----------   ----------   ----------
                                      $  299,495   $  206,376   $  131,467
                                      ==========   ==========   ==========
 Identifiable Assets:
  Instruments                         $1,372,814   $1,011,916   $  850,688
  Alternative-energy Systems             695,849      577,781      593,247
  Process Equipment                      238,537      191,846      179,251
  Biomedical Products                    552,825      348,199      285,715
  Environmental Services                 335,726      192,523      146,658
  Advanced Technologies                  303,270      236,543      203,375
  Corporate (d)                          245,887      503,127      248,663
                                      ----------   ----------   ----------
                                      $3,744,908   $3,061,935   $2,507,597
                                      ==========   ==========   ==========

 Depreciation and Amortization:
  Instruments                         $   25,257   $   22,070   $   18,059
  Alternative-energy Systems              25,186       16,078        4,982
  Process Equipment                        5,228        4,780        4,277
  Biomedical Products                      8,597        6,292        5,328
  Environmental Services                  11,197        8,382        6,641
  Advanced Technologies                    8,243        6,193        3,679
  Corporate                                1,271        1,233        1,226
                                      ----------   ----------   ----------
                                      $   84,979   $   65,028   $   44,192
                                      ==========   ==========   ==========
                                      36PAGE

 Thermo Electron Corporation
 Notes to Consolidated Financial Statements

 15.  Business Segment and Geographical Information (continued)


 (In thousands)                             1995          1994         1993
 --------------------------------------------------------------------------

 Capital Expenditures:
  Instruments                         $   10,313   $    7,574   $    6,347
  Alternative-energy Systems (e)          14,024       31,717       92,862
  Process Equipment                        3,686        3,231        2,631
  Biomedical Products                      7,168        7,284        9,042
  Environmental Services                  19,499        7,559        7,583
  Advanced Technologies                    7,757        8,019        8,898
  Corporate                                  460          141        2,241
                                      ----------   ----------   ----------
                                      $   62,907   $   65,525   $  129,604
                                      ==========   ==========   ==========
 Geographical Information
  
 Revenues:
  United States                       $1,739,910   $1,386,455   $1,103,133
  Europe                                 504,439      374,192      298,562
  Other                                  117,425       91,161       65,165
  Transfers among geographical
   areas (a)                            (154,357)    (122,617)    (112,352)
                                      ----------   -----------  ----------
                                      $2,207,417   $1,729,191   $1,354,508
                                      ==========   ==========   ==========
 Income Before Income Taxes and
  Minority Interest:
   United States                      $  201,464   $  182,177   $  116,863
   Europe                                 33,059       13,315       12,175
   Other                                  13,639       10,146        7,397
                                      ----------   ----------   ----------

     Total Segment Income (b)            248,162      205,638      136,435
   Equity in Losses of Unconsolidated
    Subsidiaries                            (203)      (4,019)     (22,721)
   Corporate (c)                          51,536        4,757       17,753
                                      ----------   ----------   ----------
                                      $  299,495   $  206,376   $  131,467
                                      ==========   ==========   ==========

 Identifiable Assets:
  United States                       $2,907,585   $2,110,843   $1,905,825
  Europe                                 501,997      387,268      300,302
  Other                                   89,439       60,697       52,807
  Corporate (d)                          245,887      503,127      248,663
                                      ----------   ----------   ----------
                                      $3,744,908   $3,061,935   $2,507,597
                                      ==========   ==========   ==========
 Export Sales Included in United
  States Revenues Above (f)           $  336,702   $  265,298   $  219,914
                                      ==========   ==========   ==========
                                       37PAGE

 Thermo Electron Corporation
 Notes to Consolidated Financial Statements

 15.  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)  Segment income is income before corporate general and administrative
      expenses, other income and expense, minority interest expense, and income
      taxes.
 (c)  Includes corporate general and administrative expenses, other income and
      expense, and gain on issuance of stock by subsidiaries.
 (d)  Primarily cash and cash equivalents, short- and long-term investments, and
      property and equipment at the Company's Waltham, Massachusetts,
      headquarters.
 (e)  Includes $88.4 million in 1993 for the purchase of an alternative-energy
      facility in Delano, California.
 (f)  In general, export revenues are denominated in U.S. dollars.


 16.  Subsequent Events

 Issuance of Subordinated Convertible Debentures
 On January 3, 1996, the Company issued and sold $585 million principal amount
 of 4 1/4% subordinated convertible debentures due 2003. The debentures will be
 convertible into shares of the Company's common stock at a price of $56.70 per
 share.

 Pending Acquisition
 On March 1, 1995, Thermo Instrument entered into an agreement with Fisons plc
 (Fisons) to acquire the Scientific Instruments Division of Fisons for
 approximately 202 million British pounds sterling. On April 13, 1995, Thermo
 Instrument announced that it had received a "second request" for information
 regarding the transaction from the U.S. Federal Trade Commission (FTC). After
 extensive discussions with Fisons and the FTC, in January 1996 Thermo
 Instrument withdrew its original pre-merger notification filing under the
 Hart-Scott-Rodino Antitrust Improvements Act (the HSR Act), and submitted a new
 filing with respect to a modified form of the acquisition. On February 15,
 1996, Thermo Instrument announced that the FTC had granted early termination of
 the waiting period under the HSR Act with respect to the modified acquisition
 and on March 1, 1996, Thermo Instrument announced that it had received
 clearance from U.K. antitrust regulatory authorities. The form of the
 acquisition cleared by the FTC and the U.K. authorities excludes from the
 businesses to be acquired by Thermo Instrument substantially all of the mass
 spectrometer businesses of Fisons and a high-resolution mass
 spectrometer/inductively-coupled plasma product. These businesses accounted for
 slightly less than 20% of the 1995 revenues of Fisons' Scientific Instruments
 Division. The new purchase price is expected to be slightly less than 150
 million British pounds sterling and will be subject to a post-closing
 adjustment based on the net asset value of the acquired businesses as of the
 closing date. The modified acquisition is still subject to the consent of
 certain third parties and the satisfaction of other closing conditions.
                                       38PAGE


   Report of Independent Public Accountants                                   

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

        We have audited the accompanying consolidated balance sheet of Thermo
   Electron Corporation (a Delaware corporation) and subsidiaries as of
   December 30, 1995 and December 31, 1994, and the related consolidated
   statements of income, shareholders' investment, and cash flows for each of
   the three years in the period ended December 30, 1995. 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 generally accepted auditing
   standards. 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 30, 1995 and
   December 31, 1994, and the results of their operations and their cash flows
   for each of the three years in the period ended December 30, 1995, in
   conformity with generally accepted accounting principles.
        As discussed in Note 2 to the consolidated financial statements,
   effective January 2, 1994, the Company changed its method of accounting for
   investments in debt and marketable equity securities.



                                                Arthur Andersen LLP



   Boston, Massachusetts
   February 15, 1996 (except with
   respect to the matters discussed
   in Note 16 as to which the date
   is March 1, 1996)








                                       39PAGE

   Thermo Electron Corporation

   Management's Discussion and Analysis of Financial Condition and Results of
   Operations

   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. The majority of
   the Company's businesses fall into four broad markets: environmental,
   energy, process control, and selected health and safety instrumentation.
        An important component of the Company's strategy is to establish
   leading positions in its markets through the application of proprietary
   technology, whether developed internally or acquired. A key contribution to
   the growth of the Company's segment income (as defined in the results of
   operations below), particularly over the last three years, has been the
   ability to identify attractive acquisition opportunities, complete those
   acquisitions, and derive a growing income contribution from the newly
   acquired businesses as they are integrated into the Company's business
   segments.
        The Company seeks to minimize its dependence on any specific product
   or market by maintaining and diversifying its portfolio of businesses and
   technologies. Similarly, the Company's goal is to maintain a balance in its
   businesses between those affected by various regulatory cycles and those
   more dependent on the general level of economic activity. Although the
   Company is diversified in terms of technology, product offerings, and
   geographic markets served, the future financial performance of the Company
   as a whole is largely affected by the strength of worldwide economies and
   the continued adoption and diligent enforcement of environmental, health,
   and safety regulations, among other factors.
        The Company believes that maintaining an entrepreneurial atmosphere is
   essential to its continued growth and development. In order to preserve
   this atmosphere, the Company has adopted a strategy of spinning out certain
   of its businesses into separate subsidiaries and having these subsidiaries
   sell a minority interest to outside investors. The Company believes that
   this strategy provides additional motivation and incentives for the
   management of the subsidiaries through the establishment of subsidiary-
   level stock option incentive programs, as well as capital to support the
   subsidiaries' growth. As a result of the sale of stock by subsidiaries, the
   issuance of stock by subsidiaries upon conversion of convertible
   debentures, and similar transactions, the Company records gains that
   represent the increase in the Company's net investment in the subsidiaries
   and are classified as "Gain on issuance of stock by subsidiaries" in the
   accompanying statement of income. These gains have represented a
   substantial portion of the net income reported by the Company in recent
   years. The size and timing of these transactions are dependent on market
   and other conditions that are beyond the Company's control. Accordingly,
   there can be no assurance that the Company will be able to generate gains
   from such transactions in the future.

   Proposed Accounting Pronouncement

        In October 1995, the Financial Accounting Standards Board (FASB)
   issued an exposure draft of a Proposed Statement of Financial Accounting
   Standards, "Consolidated Financial Statements: Policy and Procedures"
   (Proposed Statement). The Proposed Statement would establish new rules for
   determining when entities should be consolidated and how consolidated
   financial statements should be prepared. Under the Proposed Statement, it
   is possible that companies would be required to consolidate entities in
                                       40PAGE

   Thermo Electron Corporation

   Management's Discussion and Analysis of Financial Condition and Results of
   Operations

   Proposed Accounting Pronouncement (continued)

   which their legal ownership is as low as 40%. Companies involved with
   special purpose entities could be required to include these entities in
   their consolidated financial statements in such instances as when a company
   is the only general partner, although the company may own only a very small
   percentage of the entity (e.g. 1%). This portion of the Proposed Statement
   is expected to have little effect on the Company's consolidated financial
   statements. The portion of the Proposed Statement referred to as the
   Procedures portion, which describes how consolidated financial statements
   should be prepared, could result in significant changes in the way the
   Company records certain transactions once control, as newly defined, has
   been reached. Under the Proposed Statement, the following accounting will
   result:
        Decreases in a parent's ownership interest in a subsidiary -- Under
   the Proposed Statement, any sale of the stock of a subsidiary that does not
   result in loss of control would be accounted for as a transaction in the
   equity of the consolidated entity with no gain or loss being recognized.
   This would occur even when the sale is made by the parent, and even though
   such a sale would result in a gain for corporate tax purposes. Under this
   provision, any sale of a non-controlling interest, e.g. 49% of a wholly
   owned entity, whether the sale results in an economic gain or loss, would
   be recorded only in the equity section of the balance sheet.
        Recording gains from the purchase of additional shares -- Under
   current practice, a company that owns marketable equity securities of other
   issuers may account for them as "available-for-sale" under Statement of
   Financial Accounting Standards (SFAS) No. 115, with the fair value
   adjustment being recorded in equity. Upon obtaining "significant influence"
   (current practice being twenty percent or greater ownership), under the
   Proposed Statement the unrealized holding gains and losses previously
   recorded in equity would be recorded in the income statement. The same
   accounting would result if an entity increased its ownership from an SFAS
   No. 115 investment directly to control and consolidation. Under this
   accounting, the more the acquirer pays for the additional shares, the
   greater the gain recorded.
        Changes in a parent's ownership interest in a subsidiary and step
   acquisitions -- Under the FASB's proposed economic unit model, once control
   is obtained, any transactions in a subsidiary's stock between the
   controlling and noncontrolling shareholders are considered equity
   transactions and, therefore, only the equity accounts of the reporting
   entity are impacted. Under the Proposed Statement, after control is
   obtained, the cost of any subsequent purchase is recorded as a reduction of
   equity. As a result, no additional goodwill is recorded on these subsequent
   purchases, but the charge to equity would reduce the book value of the
   acquirer. This charge to equity would not become part of the "cost" of
   acquiring the entity and, therefore, it would be possible to sell the
   entity at a later date and record a "gain" on the transaction, even though
   the seller actually sold it for less than what the seller paid to acquire
   it.


                                       41PAGE

   Thermo Electron Corporation

   Management's Discussion and Analysis of Financial Condition and Results of
   Operations

   Proposed Accounting Pronouncement (continued)

        The FASB conducted a hearing concerning the Proposed Statement in
   February 1996, at which the Company, along with other major companies and
   many of the major accounting firms and accounting associations, expressed
   their disagreement with various parts of the Proposed Statement. The FASB
   expects to issue a final Statement by June 30, 1996, which could become
   effective for fiscal years beginning after December 15, 1996.

   Results of Operations

   1995 Compared With 1994

        Sales in 1995 were $2,207.4 million, an increase of $478.2 million, or
   28%, over 1994. Segment income, excluding restructuring and other
   nonrecurring costs described below of $21.9 million in 1995 and $0.7
   million in 1994, was $270.1 million, compared with $206.3 million in 1994,
   an increase of 31%. (Segment income is income before corporate general and
   administrative expenses, other income and expense, minority interest
   expense, and income taxes.) Operating income, which includes restructuring
   and other nonrecurring costs, was $225.5 million, an increase of $43.4
   million, or 24%, over 1994. Financial results for 1994 have been restated
   to include Coleman Research, which was acquired in a pooling-of-interests
   transaction in March 1995 (Note 3).
        Sales from the Instruments segment were $782.7 million in 1995, an
   increase of $132.5 million, or 20% over 1994. Sales increased primarily due
   to acquisitions made by Thermo Instrument, which added $104 million to
   sales in 1995. The remaining sales increase was substantially due to the
   favorable effects of currency translation due to a weaker U.S. dollar in
   1995. Segment income margin (segment income margin is segment income as a
   percentage of sales) was 14.5% in 1995, compared with 16.2% in 1994.
   Segment income margin declined due to lower margins at acquired businesses
   and reduced shipments at Thermo Instrument's air-monitoring instruments
   subsidiary.
        Sales from the Alternative-energy Systems segment were $325.9 million
   in 1995, an increase of $40.5 million, or 14%, over 1994. Within this
   segment, revenues from Thermo Ecotek, which consist of revenues from
   biomass power plant operations, were $141.4 million in 1995, compared with
   $134.3 million in 1994. This increase results from a full year of revenues
   from the Whitefield, New Hampshire, plant which did not operate for most of
   the first half of 1994 due to major damage to the turbine-generator, as
   well as higher contractual energy rates in 1995 at all of Thermo Ecotek's
   facilities, excluding the facility in Hemphill, New Hampshire. These
   increases were offset largely by utility-imposed curtailment of power at
   the Woodland and Mendota plants in California. The utility that purchases
   the electrical output of these California plants has the right to curtail
   the plants' power output up to 1,000 hours per year during periods of low
   demand. The utility commonly experiences low demand following periods of
   heavy rain or snow, when hydroelectric power is available. During 1995,
   these plants were each curtailed for 1,000 hours. During January and
   February 1996, these plants each experienced approximately 200 hours of
   curtailment and are likely to receive the contractual maximum during 1996.
   Revenues from the Company's waste-recycling facility in southern California
   declined by $0.8 million due to a reduction in the amounts paid by the
   facility's customer. The facility ceased processing waste during 1995 and
   the Company wrote off its net investment in this facility in the third 
                                       42PAGE

   Thermo Electron Corporation

   Management's Discussion and Analysis of Financial Condition and Results of
   Operations

   1995 Compared With 1994 (continued)

   quarter of 1995, as described below. Sales at Peter Brotherhood Ltd.
   increased $18.1 million to $56.2 million as a result of increased demand
   for steam turbines and, to a lesser extent, increased demand for special
   purpose machinery over depressed 1994 levels. Sales from Thermo Power
   increased $16.5 million to $108.4 million, due primarily to increased
   demand for refrigeration packages and marine engine-related products and,
   to a lesser extent, the acquisition of NuTemp, Inc. in May 1994.
        Segment income from the Alternative-energy Systems segment, excluding
   restructuring and other nonrecurring costs of $11.5 million in 1995, was
   $44.5 million in 1995, compared with $34.5 million in 1994. Thermo Ecotek
   had segment income of $34.6 million in 1995, compared with $26.9 million in
   1994. This improvement results from lower fuel costs at two of the
   California plants and higher contractual energy rates in 1995, offset in
   part by utility-imposed curtailment of power at the Woodland and Mendota
   facilities. Segment income at Thermo Power declined to $5.1 million in 1995
   from $5.3 million in 1994, reflecting an increase in expenditures for
   research and development. Peter Brotherhood incurred a segment loss of $1.1
   million in 1995, compared with a loss of $0.8 million in 1994, as a result
   of increased costs to complete jobs in process and competitive pricing
   pressures.
        In 1995, the Company recorded restructuring and other nonrecurring
   costs of $11.5 million for this segment. This amount represents the
   Company's net investment in a waste-recycling facility in southern
   California that contracted to process waste for San Diego County (the
   County). The County had previously advised the Company that it was
   attempting to raise funds to purchase the facility and had entered into
   discussions with the Company regarding termination of the Company's
   long-term service agreement. Termination of the service agreement would
   have required the County to pay the Company a termination fee and reimburse
   the Company for certain other items connected with the facility. To date,
   the County has been unable to raise the necessary funds on terms acceptable
   to the County. During the third quarter of 1995, the County paid the
   Company less than the amount due under the service agreement. In October
   1995, the Company notified the County that the County was in default of the
   service agreement and that, pursuant to that agreement, the County had 45
   days to cure the default. To date, the County has not cured this default.
   The Company's financing on this facility consists of tax-exempt obligations
   (Note 6), which are nonrecourse to the Company for events of County
   default. The County is a party to these financing arrangements. The County
   is in default of certain terms of its agreements with the bank group that
   provided the financing and if the County does not cure these defaults, it
   could be declared in default under the financing agreements. Based upon
   County assertions, its financial obligation to the Company in a default
   situation would be limited to the funds it has available from the
   day-to-day operation of the County's solid waste-disposal system, which
   would be insufficient for the Company to recover any of its investment.
        In a lawsuit relating to the waste-recycling facility discussed above,
   a third party, from which the Company's subsidiary acquired certain
   development rights, alleges that fees totaling $7.9 million plus interest
   and legal costs are due and payable in connection with construction of the
   facility. The Company contends that no additional fees are payable because
   the facility actually built was substantially different from the one
   contemplated in the agreement with the third-party developer. There can be
                                       43PAGE

   Thermo Electron Corporation

   Management's Discussion and Analysis of Financial Condition and Results of
   Operations

   1995 Compared With 1994 (continued)

   no assurance as to the outcome of this matter.
        Certain of Thermo Ecotek's plants have power sales agreements with
   utilities under which the rates paid for power will convert from fixed
   rates to "avoided-cost" rates in the year 2000. Avoided-cost rates are
   currently substantially less than the fixed rates. One of these plants,
   located in Woodland, California, has conditions in its nonrecourse lease
   agreement that require funding of a "power reserve" in years prior to 2000,
   based on projections of operating cash flow shortfalls in the year 2000 and
   thereafter. The power reserve represents funds available to make lease
   payments in the event that revenues are not sufficient after the Woodland
   plant converts to avoided-cost rates. Without sufficient increases in
   avoided-cost rates or reductions in fuel costs and other operating expenses
   by the year 2000, Thermo Ecotek expects to either renegotiate its
   nonrecourse lease agreement or forfeit its interest in the Woodland plant.
   Beginning in the third quarter of 1996, Thermo Ecotek will expense the
   funding of reserves required under the nonrecourse lease agreement. As a
   result, the Company expects that the results of the plant will be reduced
   to approximately breakeven at that time. During 1995, the plant contributed
   $6.3 million of operating income.
        Sales in the Process Equipment segment were $318.0 million in 1995,
   compared with $190.2 million in 1994. Sales from Thermo Fibertek increased
   $44.1 million to $206.7 million, due to an increase of $23.3 million in
   sales of paper-recycling equipment, which included $14.7 million of sales
   under an approximately $16 million subcontract with Thermo Electron to
   supply equipment and services for an office wastepaper de-inking facility
   in Menominee, Michigan, and due to increased demand at Thermo Fibertek's
   paper-recycling business in France. Sales at Thermo Fibertek also increased
   $17.3 million due to greater demand at its North American accessories
   business, and increased by $2.7 million due to the favorable effects of
   currency translation. In addition to sales recorded by Thermo Fibertek
   under the Michigan project, a wholly owned subsidiary of the Company
   recorded revenues from the project of $77.0 million. This facility is
   expected to be completed by the end of 1996. Sales of Thermo TerraTech's
   (formerly Thermo Process Systems) thermal-processing equipment and Napco's
   automated electroplating equipment increased $2.6 million and $4.2 million,
   respectively, from depressed 1994 levels. Segment income margin, excluding
   restructuring and other nonrecurring costs of $7.5 million in 1995, was
   11.5% in 1995, compared with 10.9% in 1994. Thermo Fibertek's segment
   income margin improved to 16.2% from 12.9% in 1994, primarily due to
   increased sales and an improved sales mix. During 1995, the Process
   Equipment segment recorded restructuring and other nonrecurring costs of
   $7.5 million to write off cost in excess of net assets of acquired
   companies, of which $5.0 million was recorded by Thermo TerraTech, and $2.5
   million was recorded by the Company's Napco subsidiary. Thermo TerraTech
   has decided to focus its resources on growing the environmental
   infrastructure services part of its business and, therefore, no longer
   expects to reinvest in its thermal-processing equipment business to the
   extent necessary to recover this investment. Napco is appealing a jury
   verdict rendered against it for approximately $11.0 million in a contract
   dispute arising out of an allegedly defective waste-treatment system
   installed by Napco in 1984. Because this verdict exceeds Napco's financial
                                       44PAGE

   Thermo Electron Corporation

   Management's Discussion and Analysis of Financial Condition and Results of
   Operations

   1995 Compared With 1994 (continued)

   ability to pay, Napco has filed a petition for bankruptcy. The Company
   believes that it will be unable to recover its investment in Napco. Napco's
   sales and income are not significant to the Company's consolidated results
   of operations.
        Sales in the Biomedical Products segment were $255.8 million in 1995,
   an increase of $75.4 million, or 42%, over 1994 due primarily to increased
   demand for a number of the Company's biomedical products and the inclusion
   of $31.6 million in sales from Bird Medical Technologies, Inc. and Bennett
   X-Ray Corporation, which were acquired in the third quarter of 1995. Sales
   of ThermoTrex's mammography and needle-biopsy systems increased 38% to
   $74.9 million; Thermo Cardiosystems' implantable left ventricular-assist
   system (LVAS) increased 98% to $20.6 million; ThermoLase's skin-care
   products increased 33% to $24.9 million; neurodiagnostic monitoring
   equipment sold by the Company's wholly owned Nicolet Biomedical Inc.
   subsidiary increased 12% to $53.1 million; and sales of blood
   coagulation-monitoring products and skin-incision devices sold by the
   Company's wholly owned International Technidyne Corporation subsidiary
   increased 13% to $32.3 million. Segment income margin improved to 12.6%
   from 9.8% in 1994 as a result of increased sales and, to a lesser extent,
   price increases for Thermo Cardiosystems' air-driven LVAS.
        Sales in the Environmental Services segment were $210.5 million in
   1995, an increase of $69.1 million, or 49%, over 1994. Within this segment,
   sales from Thermo Remediation were $57.5 million in 1995, compared with
   $50.4 million in 1994. Sales from Thermo Remediation's soil-remediation and
   fluids-recycling services increased due to acquisitions, offset in part by
   lower sales at existing sites resulting from ongoing regulatory
   uncertainties, primarily at two sites, as well as severe weather conditions
   at one site, and competitive pricing pressures. Thermo Remediation's
   nuclear services sales from existing sites increased primarily due to a
   long-term environmental restoration contract for the U.S. Department of
   Energy's (DOE's) Hanford site, offset in part by a decrease in
   radiochemistry laboratory work, reflecting a reduction in spending at the
   DOE. Sales of analytical laboratory and environmental consulting services
   increased $60.2 million, to $100.6 million, due to the inclusion of sales
   from acquired businesses. Sales of metallurgical services declined $2.0
   million to $42.8 million, due to the effect of closing a small plant in
   1995. Segment income margin, excluding restructuring and other nonrecurring
   costs of $1.9 million in 1995, improved to 11.0% from 10.5% in 1994, due
   primarily to higher sales, offset in part by higher legal expenses incurred
   within the environmental consulting services operations. The restructuring
   and other nonrecurring costs included $1.5 million as a result of the
   decision to close a metallurgical services division located in Albuquerque,
   New Mexico. The costs primarily represent severance costs and the write-off
   of cost in excess of net assets of acquired companies and leasehold
   improvements. The facility was closed in the second quarter of 1995.
        Sales from the Advanced Technologies segment were $321.6 million in
   1995, compared with $286.5 million in 1994. Sales increased $22.3 million
   due to the inclusion of a full year of sales from Thermo Sentron Inc.
   (formerly Ramsey Technology Inc.), which was acquired in March 1994, and
   sales from the Orion laboratory products division of Analytical Technology,
   Inc., which was acquired in December 1995. Sales at Thermo Voltek increased
                                       45PAGE

   Thermo Electron Corporation

   Management's Discussion and Analysis of Financial Condition and Results of
   Operations

   1995 Compared With 1994 (continued)

   $12.7 million to $36.3 million, due to the inclusion of $7.2 million in
   sales from acquired businesses and, to a lesser extent, the introduction of
   a new product line and an increase in demand. Sales at Coleman Research
   increased $20.7 million to $164.6 million due to increased contract
   funding. Coleman Research has experienced a decline in backlog, which could
   result in lower revenues in 1996. Sales of Thermedics Detection's
   process-detection instruments declined $21.8 million to $16.2 million
   primarily due to lower demand from its principal customer, which has
   substantially completed its deployment of these systems, and sales of
   EGIS(R) explosives-detection systems declined $2.1 million to $8.0 million,
   due primarily to lower demand as a result of the shipment of several large
   orders in 1994. Segment income, excluding restructuring and other
   nonrecurring costs of $1.0 million in 1995 and $0.7 million in 1994,
   increased $6.7 million to $19.9 million as a result of improved margins at
   Coleman Research and Thermo Sentron, due primarily to efforts to control
   costs. These improvements were offset in part by a decline in segment
   income from Thermedics Detection, primarily as a result of lower sales and,
   to a lesser extent, increased expenses incurred by ThermoLase to develop
   and commercialize its laser-based hair-removal process. Restructuring and
   other nonrecurring costs of $1.0 million in 1995 were recorded by
   ThermoTrex as a result of the decision to close its East Coast division.
   The costs included $0.6 million for the write-off of intangible assets.
        As a result of the sale of stock by subsidiaries, the issuance of
   stock by subsidiaries upon conversion of indebtedness, and similar
   transactions, the Company recorded gains of $80.8 million in 1995 and $25.3
   million in 1994. Such gains represent the increase in the Company's
   proportionate share of the subsidiaries' equity and are classified as gain
   on issuance of stock by subsidiaries in the accompanying statement of
   income. See Notes 1 and 10 for a more complete description of these
   transactions. Minority interest expense increased to $60.5 million in 1995
   from $31.0 million in 1994. Minority interest expense includes $28.6
   million in 1995 and $5.7 million in 1994 related to gains recorded by the
   Company's majority-owned subsidiaries as a result of the sale of stock and
   the issuance of stock upon conversion of indebtedness, by their
   subsidiaries.
        Other expense, net, in the accompanying statement of income includes a
   gain of $14.7 million in 1994 resulting from the sale of the Peter
   Brotherhood facility in the United Kingdom. Also included is equity in
   losses of unconsolidated subsidiaries, which represents the Company's
   portion of results from entities in which the Company's ownership is 50% or
   less, including the operation of the Dade County cogeneration facility. The
   loss associated with the Dade County facility was $1.6 million in 1995 and
   $5.7 million in 1994. Because the demand for power and chilled water at the
   Dade County Downtown Government Center complex has been substantially less
   than anticipated since the plant's startup in 1987, and because the plant
   has had difficulty disposing of the remainder of its output, the joint
   venture has experienced continuing losses. In September 1994, the joint
   venture suspended operation of this plant for an indefinite period of time,
   although it will continue to be responsible for lease and fixed costs. In
   1993, the Company established a reserve representing management's estimate,
   discounted to present value, of the Company's share of estimated negative
   cash flows of the joint venture. The Company is involved in regulatory
                                       46PAGE

   Thermo Electron Corporation

   Management's Discussion and Analysis of Financial Condition and Results of
   Operations

   1995 Compared With 1994 (continued)

   proceedings that could require additional reserves if the outcome of one or
   more matters is adverse to the Company. See Note 7 for a description of
   these and other legal proceedings involving the Company.

   1994 Compared With 1993

        Sales in 1994 were $1,729.2 million, an increase of $374.7 million, or
   28%, over 1993. Segment income, excluding restructuring and other
   nonrecurring costs described below, of $0.7 million in 1994 and $6.6
   million in 1993, was $206.3 million, compared with $143.1 million in 1993,
   an increase of 44%. Operating income was $182.1 million, compared with
   $119.2 million in 1993, an increase of 53%.
        Sales from the Instruments segment were $650.1 million in 1994, an
   increase of $133.4 million, or 26%, over 1993. Sales increased due to
   acquisitions made by Thermo Instrument during 1993 and its acquisition of
   several businesses within the EnviroTech Measurements & Controls group of
   Baker Hughes Incorporated in March 1994. Segment income margin was 16.2%,
   compared with 17.7% in 1993. Segment income margin declined principally due
   to lower margins at the acquired businesses within the EnviroTech
   Measurements & Controls group.
        Sales from the Alternative-energy Systems segment were $285.4 million,
   an increase of $42.7 million, or 18%, over 1993. Within this segment,
   revenues from Thermo Ecotek, which consist of revenues from biomass power
   plant operations, were $134.3 million, compared with $117.7 million in
   1993. This increase results from an additional plant in operation in 1994
   and, to a lesser extent, the absence of utility-imposed curtailments of
   power output as well as improved performance at two California plants and
   annual contractual energy rate increases under certain power sales
   contracts. The 1993 period included $9.8 million of revenues recorded as a
   result of the termination of a power sales contract and $3.1 million from
   the one-time sale of gas pipeline rights. Sales from the Company's wholly
   owned Energy Systems division increased $10.7 million as a result of a
   waste-recycling facility in San Diego County that commenced operation in
   the first quarter of 1994. Sales from Thermo Power increased 19%, to $91.9
   million, as a result of the inclusion of $8.4 million in sales from NuTemp,
   which was acquired in May 1994, and due to increased demand for
   refrigeration packages at its FES division.
        Segment income from the Alternative-energy Systems segment, excluding
   restructuring and other nonrecurring costs of $1.5 million in 1993, was
   $34.5 million, compared with $14.4 million in 1993. Thermo Ecotek had
   segment income of $26.9 million, compared with $13.2 million in 1993. This
   improvement results from an additional power plant in operation during
   1994, the absence of utility-imposed curtailments of power output and
   improved performance at two California plants, and annual contractual
   energy rate increases under certain power sales contracts. Thermo Ecotek's
   segment income also improved as a result of lower lease expense, offset in
   part by depreciation expense, resulting from the December 1993 purchase of
   the Delano I facility in California. The 1993 period included $8.6 million
   of income from the termination of a power sales contract and the one-time
   sale of gas pipeline rights. Segment income from the Company's Energy
                                       47PAGE

   Thermo Electron Corporation

   Management's Discussion and Analysis of Financial Condition and Results of
   Operations

   1994 Compared With 1993 (continued)

   Systems division, excluding restructuring and other nonrecurring costs of
   $0.3 million in 1993, increased $3.4 million as a result of the
   waste-recycling facility that commenced operation in the first quarter of
   1994. Segment income increased at Thermo Power by $2.6 million as a result
   of increased sales, as well as lower expenses at its Crusader Engines
   division. During 1993, the Company recorded restructuring and other
   nonrecurring costs of $1.5 million for this segment, which primarily
   represents a $1.2 million reserve for restructuring at the Company's steam
   turbines and compressors business.
        Sales in the Process Equipment segment were $189.9 million, compared
   with $167.5 million in 1993. Within this segment, sales from Thermo
   Fibertek increased to $162.6 million from $137.1 million in 1993 due to an
   increase of $17.6 million in sales as a result of the acquisition of AES
   Engineered Systems in June 1993, an increase of $7.9 million in sales from
   the Company's paper-recycling equipment business as a result of three large
   contracts received earlier in the year, and an increase of $4.1 million in
   sales from the Company's U.S. accessories business due to greater demand.
   These increases were offset in part by a decline of $4.4 million in sales
   of environmental-process systems sold by the Company's U.K. subsidiary, to
   $1.3 million in 1994, as a result of changes in U.K. environmental
   regulations that required modifications to that subsidiary's equipment.
   Sales of Thermo TerraTech's thermal-processing equipment, which remain
   depressed, declined $1.5 million in 1994, and sales of automated
   electroplating equipment from Napco declined $1.5 million due to weak
   demand. Segment income margin in the Process Equipment segment, excluding
   restructuring and other nonrecurring costs of $0.5 million in 1993, was
   10.9%, compared with 8.3% in 1993. Thermo Fibertek's segment income margin,
   excluding restructuring and other nonrecurring costs of $0.5 million in
   1993, improved to 12.9% from 11.6% in 1993, primarily due to increased
   sales and an improved sales mix. Thermal-processing equipment operations
   were just above the breakeven level, while Napco operations resulted in a
   segment loss of $0.3 million due to lower sales levels.
        Sales in the Biomedical Products segment were $180.3 million, an
   increase of $52.8 million, or 41%, over 1993. Sales increased $18.1 million
   due to the inclusion for a full year of sales from CBI Laboratories, Inc.,
   which was acquired by ThermoLase in December 1993. Sales of a number of the
   Company's biomedical products also contributed to the increase, including
   ThermoTrex's mammography and needle-biopsy systems, which increased 45% to
   $54.4 million; Thermo Cardiosystems' implantable LVAS, which increased $6.9
   million; blood coagulation-monitoring products and skin-incision devices
   sold by the Company's wholly owned International Technidyne Corporation
   subsidiary, which increased 18% to $28.6 million; and Thermedics' Scent
   Seal fragrance samplers, which increased $3.0 million, due primarily to
   increased demand. Segment income margin improved to 9.8% from 4.5% in 1993
   as a result of increased sales and efforts to reduce costs.
                                       48PAGE

   Thermo Electron Corporation

   Management's Discussion and Analysis of Financial Condition and Results of
   Operations

   1994 Compared With 1993 (continued)

        Sales in the Environmental Services segment were $141.8 million,
   compared with $122.0 million in 1993. Within this segment, sales from
   Thermo Remediation increased $8.6 million, to $29.7 million, primarily due
   to an increase in the volume of soil processed at its soil-remediation
   centers and, to a lesser extent, the inclusion of revenues from businesses
   acquired during 1994 and late 1993. Sales of analytical laboratory and
   environmental consulting services increased 10.9% to $61.2 million, due to
   the inclusion of sales from businesses acquired during 1994 and, to a
   lesser extent, the addition of a long-term environmental restoration
   contract for the DOE's Hanford site. Sales of metallurgical services
   increased 9.1%, to $44.8 million, due to increased demand. Segment income
   margin, excluding restructuring and other nonrecurring costs of $4.6
   million in 1993, improved to 10.5% from 7.6% in 1993, due to increased
   sales and efforts to reduce costs. During 1993, the Company recorded
   restructuring and other nonrecurring costs of $4.6 million for this
   segment, which represents a $1.9 million reserve for the write-off of
   machinery and equipment and costs to phase out a product line in the
   Company's metal-fabrication services business and $2.7 million for the
   write-off of mobile soil-remediation assets and related expenses.
        Sales from the Advanced Technologies segment were $286.5 million,
   compared with $181.1 million in 1993. Sales increased $54.7 million due to
   the inclusion of sales from Thermo Sentron, which was acquired by
   Thermedics in March 1994, and Comtest, which was acquired by Thermo Voltek
   in August 1993. Revenues from Coleman Research's government-sponsored
   research and development contracts increased $39.1 million, while revenues
   from ThermoTrex's government-sponsored research and development contracts
   increased $1.8 million. Sales of Thermedics Detection's EGIS explosives-
   detection systems increased $4.1 million, and sales of Thermedics
   Detection's process-detection instruments, principally to one customer,
   increased $3.6 million. Segment income margin, excluding restructuring and
   other nonrecurring costs of $0.7 million in 1994, was 4.6% in both 1994 and
   1993. Improved segment income margin at Coleman Research resulting from
   increased revenues was offset by lower margins at ThermoTrex due to
   increased research and development expenses to develop and commercialize
   new products and, to a lesser extent, lower margins at newly acquired
   businesses. During 1994, the Company recorded restructuring and other
   nonrecurring costs of $0.7 million for severance costs and, to a lesser
   extent, the costs to write off leasehold improvements at ThermoTrex's East
   Coast division.
        The Company's Napco subsidiary is challenging a jury verdict rendered
   against it during the third quarter of 1994 (Note 7). In the third quarter
   of 1994, the Company increased its reserve for potential losses from
   pending litigation by approximately $4.0 million, which is reflected in
   corporate general and administrative expenses.
                                      49PAGE

   Thermo Electron Corporation

   Management's Discussion and Analysis of Financial Condition and Results of
   Operations

   1994 Compared With 1993 (continued)

        As a result of the sale of stock by subsidiaries, the issuance of
   stock by subsidiaries upon conversion of indebtedness, and similar
   transactions, the Company recorded gains of $25.3 million in 1994 and $39.9
   million in 1993. See Notes 1 and 10 for a more complete description of
   these transactions. Minority interest expense increased to $31.0 million in
   1994 from $21.1 million in 1993. Minority interest expense includes $5.7
   million in 1994 and $1.3 million in 1993 relating to gains recorded by the
   Company's majority-owned subsidiaries as a result of the sale of stock by
   their subsidiaries.
        Other expense, net, in the accompanying statement of income includes a
   gain of $14.7 million resulting from the sale of the Peter Brotherhood
   facility in the United Kingdom. Also included is equity in losses of
   unconsolidated subsidiaries, which represents the Company's portion of
   results from entities in which the Company's ownership is 50% or less,
   primarily the operation of the Dade County cogeneration facility, and
   beginning in 1994, the Company's share of the profit from a 50%-owned joint
   venture that is responsible for the operation and maintenance of the
   Company's waste-recycling facility in San Diego. The loss associated with
   the Dade County facility was $5.7 million in 1994 and 1993, excluding a
   $15.0 million provision recorded in 1993 as management's estimate,
   discounted to present value, of the Company's share of estimated future
   negative cash flows of the venture.

   Liquidity and Capital Resources

   Consolidated working capital was $1,306.4 million at December 30, 1995,
   compared with $1,150.7 million at December 31, 1994. Included in working
   capital were cash, cash equivalents, and short-term available-for-sale
   investments of $1,055.8 million at December 30, 1995, compared with $997.9
   million at December 31, 1994. In addition, at December 30, 1995, the
   Company had $61.8 million of long-term available-for-sale investments and
   $23.8 million of long-term held-to-maturity investments, compared with
   $62.5 million of long-term available-for-sale investments at December 31,
   1994. During 1995, certain of the Company's majority-owned subsidiaries
   issued long-term obligations of $201.9 million. During 1995, an aggregate
   principal amount of $213.0 million of the Company's and subsidiaries'
   convertible obligations were converted into shares of the Company's or
   subsidiaries' common stock. Net proceeds from the issuance of Company and
   subsidiary common stock totaled $173.3 million in 1995. In January 1996,
   the Company issued and sold $585 million principal amount of 4 1/4%
   subordinated convertible debentures due 2003.
        On February 15, 1996, the Company announced that the Federal Trade
   Commission had granted early termination of the waiting period under the
   Hart-Scott-Rodino Antitrust Improvements Act with respect to the previously
   announced modified acquisition of the Scientific Instruments Division of
   Fisons plc and on March 1, 1996, the Company announced that it had received
   clearance of the transaction from U.K. antitrust regulatory authorities
   (see Note 16 for information regarding this pending acquisition).
                                       50PAGE

   Thermo Electron Corporation

   Management's Discussion and Analysis of Financial Condition and Results of
   Operations

   Liquidity and Capital Resources (continued)

        In 1995, the Company expended $330.7 million for acquisitions and
   $62.9 million for purchases of property, plant and equipment. Including the
   Fisons transaction discussed above, as of March 11, 1996, the Company had
   agreements or letters of intent to expend approximately $245 million on the
   acquisition of new businesses. These transactions are subject to various
   conditions to closing, and there can be no assurance that these
   transactions will be consummated. The Company has no material commitments
   for purchases of property, plant and equipment and expects that, for 1996,
   such expenditures will approximate the 1995 level.
        A substantial percentage of the Company's consolidated cash and
   investments is held by subsidiaries that are not wholly owned by the
   Company. This percentage may vary significantly over time. Pursuant to the
   Thermo Electron Corporate Charter (the Charter), to which each of the
   majority-owned subsidiaries of the Company is a party, the combined
   financial resources of Thermo Electron and its subsidiaries allow the
   Company to provide banking, credit, and other financial services to its
   subsidiaries so that each member of the Thermo Electron group of companies
   may benefit from the financial strength of the entire organization. Toward
   that end, the Charter states that each member of the group may be required
   to provide certain credit support to the consolidated entity. Nonetheless,
   the Company's ability to access assets held by its majority-owned
   subsidiaries through dividends, loans, or other transactions is subject in
   each instance to a fiduciary duty owed to the minority shareholders of the
   relevant subsidiary. In addition, dividends received by Thermo Electron
   from a subsidiary that does not consolidate with Thermo Electron for tax
   purposes are subject to tax. Therefore, under certain circumstances, a
   portion of the Company's consolidated cash and short-term investments may
   not be readily available to Thermo Electron or certain of its subsidiaries.
        The Company intends for the foreseeable future to maintain at least
   80% ownership of its Thermo Instrument, Thermo Fibertek, and Thermo Ecotek
   subsidiaries, which is required in order to continue to file a consolidated
   federal income tax return with these subsidiaries. In addition, the Company
   intends to maintain greater than 50% ownership of its other majority-owned
   subsidiaries so that the Company may continue to consolidate these
   subsidiaries for financial reporting purposes. This may require the
   purchase by the Company of additional shares or convertible debentures of
   these companies from time to time as the number of outstanding shares
   issued by these companies increases, either in the open market or directly
   from the subsidiaries. See Note 6 for a description of outstanding
   convertible debentures issued by Thermo Instrument. In addition, at
   December 30, 1995, Thermo Instrument, Thermo Fibertek, and Thermo Ecotek
   had outstanding stock options for 3,221,000 shares, 2,522,000 shares, and
   1,113,000 shares, respectively, exercisable at various prices and subject
   to certain vesting schedules. The Company's other majority-owned
   subsidiaries also have outstanding stock options and/or convertible
   debentures.
                                       51PAGE

   Thermo Electron Corporation

   Management's Discussion and Analysis of Financial Condition and Results of
   Operations

   Liquidity and Capital Resources (continued)

        During 1995, the Company expended $97.8 million to purchase common
   stock of certain of the Company's subsidiaries. The Company expects that
   these purchases will continue although the amount of purchases in a given
   reporting period may vary significantly. In addition, the Company repaid
   and repurchased long-term obligations of $16.8 million in 1995.































                                       52PAGE

   Thermo Electron Corporation

   Information as to Publicly Owned Businesses (Unaudited)

   (In thousands)                             1995         1994         1993
   -------------------------------------------------------------------------

   Revenues:
    Thermedics Inc. (a)                 $  175,754   $  155,111  $   80,220
    Thermo Instrument Systems Inc. (b)     782,662      649,992     529,278
    Thermo TerraTech Inc. (c)              197,769      123,463     108,737
    Thermo Power Corporation               108,393       91,873      77,360
    ThermoTrex Corporation (d)             129,626       91,052      54,329
    Thermo Fibertek Inc.                   206,743      162,625     137,088
    Thermo Ecotek Corporation              141,435      134,261     117,691
    Wholly Owned Nonpublic Companies       487,576      323,816     251,892
    Intercompany Sales Elimination         (22,541)      (3,002)     (2,087)
                                        ----------   ----------  ----------
                                        $2,207,417   $1,729,191  $1,354,508
                                        ==========   ==========  ==========
   Income Before Income Taxes and
    Minority Interest:
     Thermedics Inc. (a)                $   21,662   $   16,909  $    8,292
     Thermo Instrument Systems Inc. (b)    113,652      106,241      96,786
     Thermo TerraTech Inc. (c)              11,918        9,219      (1,803)
     Thermo Power Corporation                5,078        5,263       2,707
     ThermoTrex Corporation (d)              3,024          817         485
     Thermo Fibertek Inc.                   33,408       20,948      15,902
     Thermo Ecotek Corporation              34,564       26,928      13,184
     Wholly Owned Nonpublic Companies       24,856       19,313         882
                                        ----------   ----------  ----------

       Total Segment Income (e)            248,162      205,638     136,435
     Equity in Losses of Unconsolidated
      Subsidiaries                            (203)      (4,019)    (22,721)
     Corporate                              51,536        4,757      17,753
                                        ----------   ----------  ----------
                                        $  299,495   $  206,376  $  131,467
                                        ==========   ==========  ==========

   (a) Includes Thermo Cardiosystems Inc. and Thermo Voltek Corp.
   (b) Includes ThermoSpectra Corporation.
   (c) Includes Thermo Remediation Inc.
   (d) Includes ThermoLase Corporation.
   (e) Segment income is income before corporate general and administrative
       expenses, other income and expense, minority interest expense, and
       income taxes.


                                       53PAGE

   Thermo Electron Corporation

   Quarterly Information (Unaudited)

   (In thousands except per share amounts)

   1995(a)                               First    Second     Third    Fourth
   -------------------------------------------------------------------------

   Revenues                           $478,545  $528,721  $570,373  $629,778
   Gross profit                        179,295   198,818   214,938   237,607
   Net income                           29,548    32,584    38,133    39,815
   Earnings per share:
    Primary                                .37       .39       .45       .46
    Fully diluted                          .32       .35       .40       .41


   1994(b)                               First    Second     Third    Fourth
   -------------------------------------------------------------------------

   Revenues                           $383,724  $428,547  $445,516  $471,404
   Gross profit                        140,020   159,736   171,114   180,031
   Net income                           22,925    24,418    27,827    29,541
   Earnings per share:
    Primary                                .30       .32       .35       .37
    Fully diluted                          .27       .28       .31       .33

   (a)  Results include nontaxable gains of $12.9 million, $9.7 million, $43.0
        million, and $15.2 million in the first, second, third, and fourth
        quarters, respectively, from the issuance of stock by subsidiaries.
   (b)  Results include nontaxable gains of $8.5 million, $0.2 million, $12.6
        million, and $4.0 million in the first, second, third, and fourth
        quarters, respectively, from the issuance of stock by subsidiaries.

   Common Stock Market Information
   --------------------------------------------------------------------------

   The following table shows the market range for the Company's common stock
   based on reported sales prices on the New York Stock Exchange (symbol TMO)
   for 1995 and 1994. Prices have been restated to reflect a three-for-two
   stock split, effected in the form of a 50% stock dividend, which was
   distributed in May 1995.

                                             1995                1994
                                      ----------------    ----------------
   Quarter                             High       Low      High      Low
   -----------------------------------------------------------------------

   First                              $34 1/4   $29 1/4   $29 3/5   $25 1/3
   Second                              41        32 2/3    27 3/5    24
   Third                               46 5/8    40        30 3/5    25 1/4
   Fourth                              52        42 3/8    31 11/12  27 1/6

        The closing market price on the New York Stock Exchange for the
   Company's common stock on January 26, 1996, was $53 7/8 per share.
        As of January 26, 1996, the Company had 7,787 holders of record of its
   common stock. This does not include holdings in street or nominee names.
                                       54PAGE

   Thermo Electron Corporation

        Common stock of the Company's majority-owned public subsidiaries is
   traded on the American Stock Exchange: Thermedics Inc. (TMD), Thermo
   Instrument Systems Inc. (THI), Thermo TerraTech Inc. (TTT), Thermo Power
   Corporation (THP), ThermoTrex Corporation (TKN), Thermo Fibertek Inc.
   (TFT), Thermo Ecotek Corporation (TCK), Thermo Cardiosystems Inc. (TCA),
   Thermo Voltek Corp. (TVL), Thermo Remediation Inc. (THN), ThermoLase
   Corporation (TLZ), and ThermoSpectra Corporation (THS).

   Stock Transfer Agent

   The Bank of Boston is the stock transfer agent and maintains shareholder
   activity records. The agent will respond to questions on issuances of stock
   certificates, changes of ownership, lost stock certificates, and changes of
   address. For these and similar matters, please direct inquiries to:

               The Bank of Boston
               Post Office Box 644
               Mail Stop: 45-02-09
               Boston, Massachusetts 02102-0644
               (617) 575-3120

   Shareholder Services

   Shareholders of Thermo Electron Corporation who desire information about
   the Company are invited to contact John N. Hatsopoulos, Chief Financial
   Officer, Thermo Electron Corporation, 81 Wyman Street, P.O. Box 9046,
   Waltham, Massachusetts 02254-9046, (617) 622-1111. A mailing list is
   maintained to enable shareholders whose stock is held in street name, and
   other interested individuals, to receive quarterly reports, annual reports,
   and press releases as quickly as possible. Quarterly reports and press
   releases are also available through the Internet at Thermo Electron's home
   page on the World Wide Web (http://www.thermo.com).

   Dividend Policy

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

   Annual Meeting

   The annual meeting of shareholders will be held on Tuesday, May 21, 1996,
   at 5:00 p.m. at the Turnberry Isle Resort & Club, Aventura, Florida.

   Form 10-K Report

   A copy of the Annual Report on Form 10-K for the fiscal year ended December
   30, 1995, as filed with the Securities and Exchange Commission, may be
   obtained at no charge by writing to John N. Hatsopoulos, Chief Financial
   Officer, Thermo Electron Corporation, 81 Wyman Street, P.O. Box 9046,
   Waltham, Massachusetts 02254-9046.
                                       55PAGE


Thermo Electron Corporation
Ten Year Financial Summary
(In millions except per share amounts)

                         1995    1994(a)   1993(b) 1992(c) 1991(d) 1990(e)   1989    1988    1987    1986
                     --------  --------  --------  ------  ------  ------  ------  ------  ------  ------
                                                                        
Revenues             $2,207.4  $1,729.2  $1,354.5  $999.2  $842.5  $744.5  $640.3  $553.7  $430.8  $368.0
                     --------  --------  --------  ------  ------  ------  ------  ------  ------  ------
Costs and Expenses:
 Cost of revenues     1,209.6     928.6     755.5   609.0   532.9   465.1   424.2   359.6   280.3   244.8
 Expenses for R&D
  and new lines of
  business              269.6     233.1     183.9   106.5    84.6    74.5    60.7    54.3    40.9    33.9
 Selling, general
  and administrative
  expenses              480.8     384.7     289.3   213.2   177.7   163.0   129.6   113.1    90.4    71.7
 Restructuring and
  other nonrecurring 
  costs                  21.9        .7       6.6       -     3.7     1.0     2.2     0.9     3.4     7.1
                     --------  --------  --------  ------  ------  ------  ------  ------  ------  ------
                      1,981.9   1,547.1   1,235.3   928.7   798.9   703.6   616.7   527.9   415.0   357.5
                     --------  --------  --------  ------  ------  ------  ------  ------  ------  ------

Operating Income        225.5     182.1     119.2    70.5    43.6    40.9    23.6    25.8    15.8    10.5 

Gain on Issuance 
 of Stock by
 Subsidiaries            80.8      25.3      39.8    30.2    27.4    20.3    16.8     6.0    16.1    15.9
Other Income
 (Expense), Net          (6.8)     (1.0)    (27.5)    1.8    10.6   (0.5)     1.1     2.8    (2.5)  (5.1)
                     --------  --------  --------  ------  ------  ------  ------   ------  ------  ------
Income Before
 Income Taxes,
 Minority Interest,
 and Cumulative
 Effect of Change
 in Accounting
 Principle              299.5     206.4     131.5   102.5    81.6    60.7    41.5    34.6    29.4    21.3
Provision for                                                                        
 Income Taxes            98.9      70.7      33.5    27.7    25.8    18.1    10.9     9.2     6.3     4.4
Minority Interest
 Expense                 60.5      31.0      21.1    13.9     7.3     7.1     3.3     2.1     1.9     0.5
                     --------  --------  --------  ------  ------  ------  ------   ------  ------  ------
                                                    56PAGE

Thermo Electron Corporation
Ten Year Financial Summary (continued)
(In millions except per share amounts)

                          1995  1994(a)  1993(b) 1992(c) 1991(d) 1990(e)    1989    1988    1987    1986
                         -----  ------   ------  ------  ------  ------   ------  ------  ------  ------                
Income Before 
 Cumulative Effect  
 of Change in
 Accounting
 Principle                140.1   104.7     76.9    60.9    48.5    35.5    27.3    23.3    21.2    16.4
Cumulative Effect 
 of Change in 
 Accounting Prin-
 ciple, Net of
 Tax (f)                      -       -        -     1.4       -       -       -       -       -       -
                         ------  ------   ------  ------  ------  ------  ------  ------  ------  ------              
Net Income               $140.1  $104.7   $ 76.9  $ 59.5  $ 48.5  $ 35.5  $ 27.3  $ 23.3  $ 21.2  $ 16.4
                         ======  ======   ======  ======  ======  ======  ======  ======  ======  ======
Earnings per
 Share Before
 Cumulative Effect
 of Change in
 Accounting
 Principle:
  Primary                $ 1.67  $ 1.35   $ 1.11  $  .95  $  .84  $  .68  $  .55  $  .48   $ .43   $ .34  
  Fully diluted          $ 1.48  $ 1.20   $ 1.00  $  .90  $  .79  $  .65  $  .53  $  .48   $ .43   $ .34

Earnings per Share:
  Primary                $ 1.67  $ 1.35   $ 1.11  $  .93  $  .84  $  .68  $  .55  $  .48   $ .43   $ .34
  Fully diluted          $ 1.48  $ 1.20   $ 1.00  $  .88  $  .79  $  .65  $  .53  $  .48   $ .43   $ .34
                                                    57PAGE

Thermo Electron Corporation
Ten Year Financial Summary (continued)
(In millions except per share amounts)

                  1995   1994(a)   1993(b)   1992(c)   1991(d)  1990(e)    1989    1988    1987    1986
              -------- --------   -------   -------   -------  -------   ------  ------  ------  ------            
Balance Sheet
 Data:
 Working
  capital    $1,306.4  $1,150.7  $  833.8  $  508.7  $  468.4  $ 244.1   $277.6  $220.1  $211.8  $124.5
 Total                                                                           
  assets      3,744.9   3,061.9   2,507.6   1,838.0   1,212.5    912.0    669.9   528.5   465.0   336.0
 Long-term                                                                        
  obliga-
  tions       1,116.0   1,049.9     647.6     494.2     255.1    210.5    177.0   152.9   136.1    61.4
 Minority                                                                         
  interest      471.6     327.7     277.7     164.3     122.5     83.9     51.8    22.6    25.8    20.1
 Common stock                                                                     
  of subsid-
  iaries
  subject to
  redemption     17.5        -       14.5       5.5       5.5      8.7     13.1       -       -       -
 Shareholders'
  investment  1,299.8  1,007.5      873.7     563.8     489.5    314.1    229.2   196.4   175.3   154.5

(a) Reflects the issuance of $345.0 million principal amount of convertible debentures
(b) Reflects the Company's 1993 public offering of common stock for net proceeds of $246.0 million.
(c) Reflects the August 1992 acquisition of Nicolet Instrument Corporation and the issuance of $260.0
    million principal amount of convertible debentures.
(d) Reflects the issuance of $164.0 million principal amount of convertible debentures.
(e) Reflects the May 1990 acquisition of Finnigan Corporation.
(f) Reflects the adoption in fiscal 1992 of Statement of Financial Accounting Standards No. 106,
    "Accounting for Post-retirement Benefits Other Than Pensions".
                                                    58PAGE

EX-21

                                                                EXHIBIT 21
Thermo Electron Corporation - Subsidiaries of the Registrant
At March 6, 1996, Thermo Electron Corporation owned the following companies:   

                                                         STATE OR
                                                       JURISDICTION
                         NAME                               OF       PERCENT OF
                                                       INCORPORATION  OWNERSHIP
- -------------------------------------------------------------------------------
 Coleman Research Corporation                         Florida            100
   Coleman Information Services Corporation           Delaware           100
 Nicolet Biomedical Inc.                              California         100
   Eden Medical Electronics, Inc.                     Delaware           100
   Eden Medizinische Elektronik GmbH                  Germany            100
   Neuroscience Limited                               United Kingdom     100
   Nicolet Biomedical Ltd.                            United Kingdom     100
   Nicolet Biomedical S.A.R.L.                        France             100
 Peter Brotherhood Holdings Ltd.                      United Kingdom     100
   Peter Brotherhood Limited                          United Kingdom     100
      D.S.T. Pattern & Engineering Co. Ltd.           United Kingdom     100
      FES International Limited                       United Kingdom     100
      Link Control Technology Ltd.                    United Kingdom     100
      Machtech Ltd.                                   United Kingdom     100
      Peter Brotherhood Pension Fund Trustees Ltd.    United Kingdom     100
      Sensonics Ltd.                                  United Kingdom     100
      Thermo Electron Realty Limited                  United Kingdom     100
      Turboflex Limited                               United Kingdom     100
        T & A Nash (Penn) Limited                     United Kingdom     100
        Torsiflex Limited                             United Kingdom     100
        (50% of which shares are owned directly
         by Peter Brotherhood Limited)
      Vikram Brotherhood Turbines Ltd.                United Kingdom     51*
   Thermo Holdings Limited                            United Kingdom     100
 Termo Electron, S.A. de C.V.                         Mexico             100
 The Thermo Electron Companies Inc.                   Wisconsin          100
   Bird Medical Technologies, Inc.                    California         100
      Bird International, Inc.                        U. S. Virgin       100
                                                      Islands
      Bird Products Corporation                       California         100
        Bird Life Design Corporation                  California         100
      Stackhouse, Inc.                                California         100
   Gulf Precision, Inc.                               Arizona            100
      Seeley Enterprises, Inc.                        New Mexico         100
   International Technidyne Corporation               Delaware           100
      International Technidyne Corporation Limited    United Kingdom     100
   Loftus Furnace Company                             Pennsylvania       100
   Metal Treating Inc.                                Wisconsin          100
   Met-Therm, Inc.                                    Ohio               100
   NAPCO, Inc.                                        Connecticut        100
   Nicolet Biomedical of California Inc.              California         100
   North Carbondale Minerals, Inc.                    California         100
   North County Recycling, Inc.                       California         100
   Overly, Inc.                                       Wisconsin          100
   Perfection Heat Treating Company                   Michigan           100
   San Marcos Resource Recovery, Inc.                 California         100
   Southern Ocean County Resource Recovery, Inc.      New Jersey         100

                                                                Page 1PAGE

Thermo Electron Corporation - Subsidiaries of the Registrant
At March 6, 1996, Thermo Electron Corporation owned the following companies:   
                                                         STATE OR
                                                       JURISDICTION
                         NAME                               OF       PERCENT OF
                                                       INCORPORATION  OWNERSHIP
- -------------------------------------------------------------------------------
   Staten Island Cogeneration Corporation             New York           100
   TE Great Lakes Inc.                                Michigan           100
   TEC Cogeneration Inc.                              Florida            100
      South Florida Cogeneration Associates           Florida            50*
   TEC Energy Corporation                             California         100
      North County Resource Recovery  Associates      California        100*
      (50% of which is owned directly by
       San Marcos Resource Recovery, Inc.)
   Tecomet Inc.                                       Massachusetts      100
   Thermedics Inc.                                    Massachusetts    50.95**
      Analytical Technology, Inc.                     Delaware           100
        Orion Foreign Sales Corp.                     U.S. Virgin        100
                                                      Islands
        Orion Research Limited                        United Kingdom     100
        Orion Research Puerto Rico, Inc.              Puerto Rico        100
      Corpak Inc.                                     Massachusetts      100
        Walpak Company                                Illinois           100
      Orion Research, Inc.                            Massachusetts      100
      Russell pH Limited                              Scotland           100
      Thermedics Detection Inc.                       Massachusetts      100
        Rutter & Co.                                  Netherlands        100
           Rutter Instrumentation S.A.R.L.            France             90
           Systech B.V.                               Netherlands        50
        ThermedeTec Corporation                       Delaware           100
           Thermedics Detection de Argentina S.A.     Argentina          100
            (1% of which shares are owned
            directly by Thermedics Detection Inc.)
           Thermedics Detection de Mexico, S.A. de    Mexico             100
            C.V.
           Thermedics Detection GmbH                  Germany            100
           Thermedics Detection Limited               United Kingdom     100
           Thermedics Detection Scandinavia AS        Norway             100
      Thermedics F. S. C. Inc.                        U. S. Virgin       100
                                                      Islands
      Thermo Sentron Inc.                             Delaware           100
        Ramsey France S.A.R.L.                        France             100
        Ramsey Ingenieros S.A.                        Spain              100
        Ramsey Italia S.R.L.                          Italy              100
           Tecno Europa Elettromeccanica S.R.L.       Italy              100
        Ramsey Technology Inc.                        Massachusetts      100
           Xuzhou Ramsey Technology Co., Limited      China              50*
        Thermedics Australia Pty. Ltd.                Australia          100
        Thermo Sentron B.V.                           Netherlands        100
        Thermo Sentron Canada Inc.                    Canada             100
        Thermo Sentron GmbH                           Germany            100
        Thermo Sentron Limited                        United Kingdom     100
           Hitech Electrocontrols Limited             United Kingdom     100

                                                                Page 2PAGE

Thermo Electron Corporation - Subsidiaries of the Registrant
At March 6, 1996, Thermo Electron Corporation owned the following companies:  
                                                         STATE OR
                                                       JURISDICTION
                         NAME                               OF       PERCENT OF
                                                       INCORPORATION  OWNERSHIP
- -------------------------------------------------------------------------------
             Hitech Licenses Ltd.                     United Kingdom     100
             Hitech Metal Detectors Ltd.              United Kingdom     100
        Thermo Sentron SEC Corporation                Massachusetts      l00
        Thermo Sentron (South Africa) Pty. Ltd.       South Africa       100
      TMD Securities Corporation                      Massachusetts      100
        Thermo Cardiosystems Inc.                     Massachusetts    51.95**
         (additionally, 2.74% of the shares are
         owned directly by The Thermo Electron
         Companies Inc.)
           TCA Securities Corporation                 Massachusetts      100
        Thermo Voltek Corp.                           Delaware         50.07**
         (additionally, 8.66% of the shares are
         owned directly by The Thermo Electron
         Companies Inc.)
           Comtest Europe B.V.                        Netherlands        100
             Comtest Instrumentation, B.V.            Netherlands        100
             Comtest Limited                          United Kingdom     100
           KeyTek FSC, Ltd.                           U.S. Virgin        100
                                                      Islands
           TVL Securities Corporation                 Delaware           100
           UVC Realty Corp.                           New York           100
   Thermo Administrative Services Corporation         Delaware           100
   Thermo Ecotek Corporation                          Delaware         82.73**
      Caribbean Cogeneration Company, Inc.            Massachusetts      100
      Delano Energy Company Inc.                      Delaware           100
      Delano Operations Company, Inc.                 California         100
      Eco Fuels Inc.                                  Wyoming            100
      Gatepeak Corporation                            Delaware           100
      Independent Power Services Corporation          Nevada             100
      SFS Corporation                                 New Hampshire      100
      TCK Fuels Inc.                                  Delaware           100
        KFx Fuel Partners, L.P.                       Delaware           95*
         (2% of which is owned
         directly by Eco Fuels Inc.)
      Tenpeak Corporation                             Nevada             100
      TES Securities Corporation                      Delaware           100
      Thermendota, Inc.                               California         100
        Mendota Biomass Power, Ltd.                   California         60*
           MBPL Agriwaste Corporation                 California         100
      Thermo Ecotek International Holdings Inc.       Cayman Islands     100
      Thermo Ecotek International Inc.                Cayman Islands     100
        TCK Cogeneration Dominicana Inc.              Cayman Islands     100
        (1% of which shares are owned directly by
         Thermo Ecotek International Holdings Inc.)
        TCK Dominicana Holdings Inc.                  Cayman Islands     100
        (1% of which shares are owned directly by
         Thermo Ecotek International Holdings Inc.)
      Thermo Electron of Maine, Inc.                  Maine              100

                                                                Page 3PAGE

Thermo Electron Corporation - Subsidiaries of the Registrant
At March 6, 1996, Thermo Electron Corporation owned the following companies:
                                                         STATE OR
                                                       JURISDICTION
                         NAME                               OF        PERCENT OF
                                                       INCORPORATION  OWNERSHIP
- -------------------------------------------------------------------------------
        Gorbell/Thermo Electron Power Company         Maine              80*
      Thermo Electron of New Hampshire, Inc.          New Hampshire      100
        Hemphill Power and Light Company              New Hampshire      66*
      Thermo Electron of Whitefield, Inc.             New Hampshire      100
        Whitefield Power and Light Company            New Hampshire     100*
         (39% of which is owned
         directly by SFS Corporation)
      Thermo Fuels Company, Inc.                      California         100
      Thermo Trilogy Corporation                      Delaware           100
      Woodland Biomass Power, Inc.                    California         100
        Woodland Biomass Power, Ltd.                  California        100*
         (.1% of which is owned directly
         by Thermo Ecotek Corporation)
   Thermo Electron Foundation, Inc.                   Massachusetts      100
   Thermo Electron Metallurgical Services, Inc.       Texas              100
   Thermo Fibertek Inc.                               Delaware         80.74**
      AES Equipos y Sistemas S.A. de C.V.             Mexico             100
      Thermo AES Canada Inc.                          Canada             100
      Thermo Electron Web Systems, Inc.               Massachusetts      100
        Fiberprep Inc.                                Delaware           95
         (31.05% of which shares are owned
         directly by E. & M. Lamort, S.A.)
           Fiberprep Securities Corporation           Delaware           100
        Thermo Electron Wisconsin, Inc.               Wisconsin          100
      Thermo Fibergen Inc.                            Delaware           100
      Thermo Fibertek U.K. Limited                    United Kingdom     100
        Vickerys Holdings Limited                     United Kingdom     100
           Vickerys Limited                           United Kingdom     100
             Paperliners Limited                      New Zealand        100
             Vickerys Projects Limited                United Kingdom     100
             Winterburn Limited                       United Kingdom     100
      TMO Lamort Holdings Inc.                        Delaware           100
        E. & M. Lamort, S.A.                          France             100
           Lamort GmbH                                Germany            100
           Lamort Italia S.R.L.                       Italy              100
           Lamort Paper Services Ltd.                 United Kingdom     100
           Nordiska Lamort Lodding A.B.               Sweden             100
   Thermo Instrument Systems Inc.                     Delaware         85.61**
      Analytical Instrument Development, Inc.         Pennsylvania       100
      ATI Acquisition Corp.                           Wisconsin          100
        Mattson Instruments Limited                   United Kingdom     100
        Unicam Analytical Inc.                        Canada             100
        Unicam Analytical Technology Netherlands      Netherlands        100
        B.V.
        Unicam Analytische System GmbH                Germany            100
        Unicam France S.A.                            France             100
        Unicam Italia SpA                             Italy              100

                                                                Page 4PAGE

Thermo Electron Corporation - Subsidiaries of the Registrant
At March 6, 1996, Thermo Electron Corporation owned the following companies: 
                                                         STATE OR
                                                       JURISDICTION
                         NAME                               OF       PERCENT OF
                                                       INCORPORATION  OWNERSHIP
- -------------------------------------------------------------------------------
        Unicam S.A.                                   Belgium            100
        Unicam Technology Limited                     United Kingdom     100
           Unicam Limited                             United Kingdom     100
             Unicam Export Limited                    United Kingdom     100
      Eberline Instrument Company Limited             United Kingdom     100
      Eberline Instrument Corporation                 New Mexico         100
      Epsilon Industrial Inc.                         Texas              100
      Gamma-Metrics                                   California         100
        Gamma-Metrics International F.S.C. Inc.       Guam               100
      Gas Tech Inc.                                   California         100
        Gas Tech Australia, Pty. Ltd.                 Australia          50
        Gas Tech Partnership                          California         50*
        Gastech Instruments Canada Ltd.               Canada             100
      Houston Atlas Inc.                              Texas              100
      National Nuclear Corporation                    California         100
      Optek-Nicolet Holdings Inc.                     Wisconsin          100
        Thermo Optek Corporation                      Delaware           100
           Nicolet Instrument Corporation             Wisconsin          100
             Nicolet Japan K.K.                       Japan              100
             Spectra-Tech, Europe Limited             United Kingdom     100
             Spectra-Tech, Inc.                       Wisconsin          100
           Nicolet Instrument GmbH                    Germany            100
           Nicolet Instrument S.A.R.L.                France             100
           Thermo Instrument Systems Japan Holdings,  Delaware           100
            Inc.
             Nippon Jarrell-Ash Company, Ltd.         Japan              100
           Thermo Jarrell Ash Corporation             Massachusetts      100
             Baird Do Brazil Representacoes Ltda.     Brazil             100
             Beijing Baird Analytical Instrument      China              100
             Technology Co. Limited
             Thermo Instrument Systems (F.E.)         China              100
             Limited
             Thermo Instruments (Canada) Inc.         Canada             100
                Eberline Instruments (Canada) Ltd.    Canada             100
           Thermo Optek Ltd.                          United Kingdom     100
             Nicolet Instrument Limited               United Kingdom     100
             Planweld Limited                         United Kingdom     100
                Hilger Analytical Limited             United Kingdom     100
             Thermo Electron Limited                  United Kingdom     100
           Thermo Vision Corporation                  Delaware           100
             CID Technologies Inc.                    New York           100
             Oriel Corporation                        Delaware           100
                Andor Technology Limited              United Kingdom    51.25
                Oriel Foreign Sales Corp.             U. S. Virgin       100
                                                      Islands
             Scientific Measurement Systems Inc.      Colorado           100
        ThermoSpectra Corporation                     Delaware         72.39**

                                                                Page 5PAGE

Thermo Electron Corporation - Subsidiaries of the Registrant
At March 6, 1996, Thermo Electron Corporation owned the following companies:
                                                         STATE OR
                                                       JURISDICTION  
                         NAME                               OF        PERCENT OF
                                                       INCORPORATION  OWNERSHIP
- -------------------------------------------------------------------------------
           Beleggingsmaatschappij Zeis B.V.           Netherlands        100
             Bakker Electronics Dongen B.V.           Netherlands        100
                Bakker Electronics Limited            United Kingdom     100
           Diametrix Detectors, Inc.                  Delaware           50
           Gould Instrument Systems, Inc.             Ohio               100
             Gould Instrument Systems GmbH            Germany            100
                NORAN Instruments GmbH                Germany            100
             Gould Instrument Systems Limited         United Kingdom     100
                Nicolet Technologies Ltd.             United Kingdom     100
             Gould Instruments S.A.                   France             100
           Nicolet Instrument Technologies Inc.       Wisconsin          100
           Nicolet Technologies S.A.R.L.              France             100
           NORAN Instruments Inc.                     Wisconsin          100
      Quest-Finnigan Holdings Inc.                    Virginia           100
      Quest-TSP Holdings Inc.                         Delaware           100
        ThermoQuest Corporation                       Delaware           100
         (50% of which shares are owned
         directly by Quest-Finnigan Holdings Inc.)
           Extrel FTMS, Inc.                          Delaware           100
           Finnigan Corporation                       Delaware           100
             Finnigan Instruments, Inc.               New York           100
             Finnigan International Sales, Inc.       California         100
             Finnigan MAT China, Inc.                 California         100
             Finnigan MAT (Delaware), Inc.            Delaware           100
             Finnigan MAT Instruments, Inc.           Nevada             100
             Finnigan MAT International Sales, Inc.   California         100
             Finnigan MAT (Nevada), Inc.              Nevada             100
                Finnigan MAT AG                       Switzerland        100
                Finnigan MAT Canada, Ltd.             Canada             100
                Finnigan MAT S.A.R.L.                 France             100
                Finnigan MAT S.R.L.                   Italy              100
                  Thermo Separation Products S.R.L.   Italy              100
                Thermo Instruments Australia Pty.     Australia          100
                 Limited
                ThermoQuest Ltd.                      United Kingdom     100
                  Finnigan MAT Ltd.                   United Kingdom     100
                     Finnigan MAT AB                  Sweden             100
                  Thermo Separation Products Ltd.     United Kingdom     100
             Finnigan Properties, Inc.                California         100
           Thermo Instrument Systems (France) S.A.    France             100
             Thermo Separation Products S.A.          France             100
           Thermo Separation Products AG              Switzerland        100
           Thermo Separation Products Inc.            Delaware           100
           ThermoQuest GmbH                           Germany            100
             Finnigan MAT GmbH                        Germany            100
             Thermo Separation Products GmbH          Germany            100
           ThermoQuest K.K.                           Japan              100

                                                                Page 6PAGE

Thermo Electron Corporation - Subsidiaries of the Registrant
At March 6, 1996, Thermo Electron Corporation owned the following companies:  
                                                         STATE OR
                                                       JURISDICTION  
                         NAME                               OF        PERCENT OF
                                                       INCORPORATION  OWNERSHIP
- -------------------------------------------------------------------------------
      SID Instruments Inc.                            Delaware           100
        ARL Inc.                                      Delaware           100
        FI Instruments Inc.                           Delaware           100
        FI Ltd.                                       United Kingdom     100
        HB Instruments Inc.                           Delaware           100
        Masslab Limited                               United Kingdom     100
        NK Instruments Inc.                           Delaware           100
        Thermo Elemental Limited                      United Kingdom     100
        Thermo FAST UK Limited                        United Kingdom     100
        Thermo Haake Ltd.                             United Kingdom     100
        Thermo Labsystems Limited                     United Kingdom     100
        Thermo SID (Australia) Pty. Ltd.              Australia          100
      Spectrace Instruments Inc.                      California         100
      Thermo BioAnalysis Corporation                  Delaware         80.23**
       (7% of which shares are owned directly by
       Quest-TSP Holdings Inc. and 3% of which
       shares are owned directly by Quest-Finnigan
       Holdings Inc.)
        BioAnalysis International Sales Inc.          Delaware           100
        DLW Inc.                                      Virginia           100
        Dynatech Deutschland GmbH                     Germany            100
        Dynatech Laboratories spol. s.r.o.            Czech Republic     100
        Thermo BioAnalysis (Guernsey) Limited         Channel            100
                                                      Islands
        Thermo BioAnalysis Ltd.                       United Kingdom     100
        Thermo BioAnalysis S.A.                       France             100
      Thermo Environmental Instruments Inc.           California         100
      Thermo Instrument Controls Inc.                 Delaware           100
        Thermo Instrument Controls de Mexico, S.A.    Mexico             100
         de C.V. (1% of which shares are owned
         directly by Thermo Instrument Systems Inc.)
      Thermo Instruments do Brasil Ltda.              Brazil             100
       (1% of which shares are owned directly
       by Thermo Jarrell Ash Corporation)
      Thermo Instruments F.S.C. Inc.                  U.S. Virgin        100
                                                      Islands
      TN Technologies Inc.                            Texas              100
        TN Technologies Canada Inc.                   Canada             100
      Van Hengel Holding B.V.                         Netherlands        100
        Baird Europe B.V.                             Netherlands        100
           Baird France S.A.R.L.                      France             100
        Thermo Instrument Systems B.V.                Netherlands        100
           Euroglas B.V.                              Netherlands        100
           Hilkomij B.V.                              Netherlands        100
           NORAN Instruments B.V.                     Netherlands        100
           Thermo Automation Services  (ThAS) B.V.    Netherlands        100
           Van Oortmerssen B.V.                       Netherlands        100

                                                                Page 7PAGE

Thermo Electron Corporation - Subsidiaries of the Registrant
At March 6, 1996, Thermo Electron Corporation owned the following companies:
                                                         STATE OR
                                                       JURISDICTION
                         NAME                               OF       PERCENT OF
                                                       INCORPORATION  OWNERSHIP
- -------------------------------------------------------------------------------
        Thermo Instrument Systems GmbH                Germany            100
        (24% of which shares are owned directly
         by Thermo Instrument Systems Inc.)
           Eberline Instruments GmbH                  Germany            100
           Thermo Instruments GmbH                    Germany            100
        Thermo Jarrell Ash (Europe) B.V.              Netherlands        100
        Thermo Jarrell Ash, S.A.                      Spain              100
        Thermo Separation Products B.V.               Netherlands        100
           Thermo Separation Products B.V. B.A.       Belgium            100
        TN Spectrace Europe B.V.                      Netherlands        100
      Westronics Inc.                                 Texas              100
   Thermo Power Corporation                           Massachusetts    63.07**
      NuTemp, Inc.                                    Illinois           100
      Takepine Limited                                United Kingdom     100
      Tecogen Securities Corporation                  Massachusetts      100
      ThermoLyte Corporation                          Delaware         77.89**
   Thermo TerraTech Inc.                              Delaware         80.90**
      Holcroft (Canada) Limited                       Canada             100
      Holcroft Corporation                            Delaware           100
        Holcroft GmbH                                 Germany            100
      Metallurgical, Inc.                             Minnesota          100
        Cal-Doran Metallurgical Services, Inc.        California         100
      Normandeau Associates, Inc.                     New Hampshire      100
      Thermo Analytical Inc.                          Delaware           100
        Skinner & Sherman, Inc.                       Massachusetts      100
      Thermo Consulting & Design Inc.                 Delaware           100
        Engineering Technology and Knowledge          Delaware           100
         Corporation
           Elson T. Killam Associates, Inc.           New Jersey         100
             Bettigole Andrews Clark & Killam         New York           100
              Associates Inc.
                N. H. Bettigole Co., Inc.             Delaware           100
                N. H. Bettigole, P.A.                 New Jersey         100
                N. H. Bettigole, P.C.                 New York           100
             Duncan, Lagnese and Associates,          Pennsylvania       100
              Incorporated
             E3-Killam, Inc.                          New York           100
             Killam Associates, Inc.                  Ohio               100
             Killam Management and Operational        New Jersey         100
              Services, Inc.
        Fellows, Read & Associates, Inc.              New Jersey         100
        Killam Associates, New England Inc.           Delaware           100
           George A. Schock & Associates, Inc.        New Jersey         100
           Jennison Engineering, Inc.                 Vermont            100
      Thermo EuroTech N.V.                            Netherlands      62.27**
        Amerika Tankinstallaties B.V.                 Netherlands        100

                                                                Page 8PAGE

Thermo Electron Corporation - Subsidiaries of the Registrant
At March 6, 1996, Thermo Electron Corporation owned the following companies:   
                                                         STATE OR
                                                       JURISDICTION
                         NAME                               OF        PERCENT OF
                                                       INCORPORATION  OWNERSHIP
- -------------------------------------------------------------------------------
        Grond- & Watersaneringstechniek Nederland     Netherlands        100
        B.V.
        High-Tech Trouble-Shooters B.V.               Netherlands        100
        Jac. Amerika en Zonen B.V.                    Netherlands        100
        Refining & Trading Holland B.V.               Netherlands        100
      Thermo Remediation Inc.                         Delaware         67.61**
       (additionally, 1.26% of the shares are owned
       directly by The Thermo Electron Companies
       Inc.)
        Eberline Holdings Inc.                        Delaware           100
           Eberline Analytical Corporation            New Mexico         100
             Thermo Hanford Inc.                      Delaware           100
             TMA/NORCAL Inc.                          California         100
        Remediation Technologies, Inc.                Delaware           100
           RETEC Thermal, Inc.                        Delaware           100
             ReTec/Tetra L.C.                         Texas              50*
        Thermo Fluids Inc.                            Delaware           100
        TPS Technologies Inc.                         Florida            100
           TPST Soil Recyclers of California Inc.     California         100
             California Hydrocarbon, Inc.             Nevada             100
           TPST Soil Recyclers of Maryland Inc.       Maryland           100
             Todds Lane Limited Partnership           Maryland          100*
              (1% of which is owned directly
              by TPS Technologies Inc.)
           TPST Soil Recyclers of New York Inc.       New York           100
           TPST Soil Recyclers of Oregon Inc.         Oregon             100
           TPST Soil Recyclers of South Carolina      Delaware           100
            Inc.
           TPST Soil Recyclers of Virginia Inc.       Delaware           100
           TPST Soil Recyclers of Washington Inc.     Washington         100
      TMA/Hanford, Inc.                               Washington         100
   Thermo Securities Corporation                      Delaware           100
   Thermo Soil Recyclers Inc.                         Massachusetts      100
   Thermo Technology Ventures Inc.                    Idaho              100
      Plasma Quench Investment Limited Partnership    Delaware           60*
   ThermoTrex Corporation                             Delaware         50.83**
      ThermoLase Corporation                          Delaware         64.74**
        CBI Laboratories, Inc.                        Texas              100
      ThermoTrex East Inc.                            Massachusetts      100
      Trex Medical Corporation                        Delaware         91.48**
        Bennett X-Ray Corporation                     New York           100
           Bennett International Corporation          U. S. Virgin       100
                                                      Islands
           Eagle X-Ray, Inc.                          New York           100
           Island X-Ray Incorporated                  New York           100
        Thermo Lorad F.S.C. Inc.                      U. S. Virgin       100
                                                      Islands

                                                                Page 9PAGE

Thermo Electron Corporation - Subsidiaries of the Registrant
At March 6, 1996, Thermo Electron Corporation owned the following companies:

                                                         STATE OR
                                                       JURISDICTION  
                         NAME                               OF        PERCENT OF
                                                       INCORPORATION  OWNERSHIP
- -------------------------------------------------------------------------------
   TMO, Inc.                                          Massachusetts      100
   TMO TVL Investments Inc.                           Delaware           100
   TMOI Inc.                                          Delaware           100
 Thermo Biomedical Inc.                               Delaware           100
 Thermo Electron Export Inc.                          Barbados           100
  (equally owned among TMO, TMD, TCA, TCK, TFT, THI,
  THP, TTT, TVL, TLZ, THS, Thermo BioAnalysis
  Corporation, Thermo Optek Corporation, ThermoQuest
  Corporation and Trex  Medical Corporation)
 Thermo Electron F. S. C. Inc.                        U. S. Virgin       100
                                                      Islands
 Thermo Electron (London) Ltd.                        United Kingdom     50
 Thermo Finance (UK) Limited                          United Kingdom     100
 
* Joint Venture/Partnership                         ** As of 12/30/95

EX-23

                                                                    Exhibit 23



                    Consent of Independent Public Accountants
                    -----------------------------------------


   As independent public accountants, we hereby consent to the incorporation
   by reference of our reports dated February 15, 1996 (except with respect to
   the matters discussed in Note 16 as to which the date is March 1, 1996)
   included in or incorporated by reference into Thermo Electron Corporation's
   Annual Report on Form 10-K for the year ended December 30, 1995 into the
   Company's previously filed Registration Statement No. 33-00182 on Form S-8,
   Registration Statement No. 33-8993 on Form S-8, Registration Statement No.
   33-8973 on Form S-8, Registration Statement No. 33-16460 on Form S-8,
   Registration Statement No. 33-16466 on Form S-8, Registration Statement No.
   33-25052 on Form S-8, Registration Statement No. 33-37865 on Form S-8,
   Registration Statement No. 33-37867 on Form S-8, Registration Statement No.
   33-36223 on Form S-8, Registration Statement No. 33-52826 on Form S-8,
   Registration Statement No. 33-52804 on Form S-8, Registration Statement No.
   33-52806 on Form S-8, Registration Statement No. 33-52800 on Form S-8,
   Registration Statement No. 33-37868 on Form S-3, Registration Statement No.
   33-35657 on Form S-3, Registration Statement No. 33-34752 on Form S-3,
   Registration Statement No. 33-39434 on Form S-3, Registration Statement No.
   33-12748 on Form S-3, Registration Statement No. 33-39773 on Form S-3,
   Registration Statement No. 33-40669 on Form S-3, Registration Statement No.
   33-41256 on Form S-3, Registration Statement No. 33-42694 on Form S-3,
   Registration Statement No. 33-43706 on Form S-3, Registration Statement No.
   33-45401 on Form S-3, Registration Statement No. 33-45603 on Form S-3,
   Registration Statement No. 33-50924 on Form S-3, Registration Statement No.
   33-51187 on Form S-8, Registration Statement No. 33-51189 on Form S-8,
   Registration Statement No. 33-54185 on Form S-3, Registration Statement No.
   33-54347 on Form S-8, Registration Statement No. 33-54453 on Form S-8,
   Registration Statement No. 33-59544 on Form S-3, Registration Statement No.
   33-58487 on Form S-8, Registration Statement No. 333-00197 on Form S-3,
   Registration Statement No. 033-65237 on Form S-8, Registration Statement
   No. 033-61561 on Form S-8, and Registration Statement No. 033-58487 on Form
   S-8.



                                               Arthur Andersen LLP



   Boston, Massachusetts
   March 11, 1996

EX-27

 

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
ELECTRON CORP.'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 30,1995
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.

<MULTIPLIER> 1,000
       
                             
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          DEC-30-1995
<PERIOD-END>                               DEC-30-1995
<CASH>                                         461,983
<SECURITIES>                                   593,802
<RECEIVABLES>                                  504,500
<ALLOWANCES>                                    28,021
<INVENTORY>                                    318,182
<CURRENT-ASSETS>                             2,021,226
<PP&E>                                         967,069
<DEPRECIATION>                                 254,224
<TOTAL-ASSETS>                               3,744,908
<CURRENT-LIABILITIES>                          714,836
<BONDS>                                      1,116,011
<COMMON>                                        87,863
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<OTHER-SE>                                   1,211,971
<TOTAL-LIABILITY-AND-EQUITY>                 3,744,908
<SALES>                                      1,802,371
<TOTAL-REVENUES>                             2,207,417
<CGS>                                        1,064,775
<TOTAL-COSTS>                                1,376,759
<OTHER-EXPENSES>                               124,402
<LOSS-PROVISION>                                 5,473
<INTEREST-EXPENSE>                              76,961
<INCOME-PRETAX>                                299,495
<INCOME-TAX>                                    98,900
<INCOME-CONTINUING>                            140,080
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                   140,080
<EPS-PRIMARY>                                     1.67
<EPS-DILUTED>                                     1.48

<F1>THIS LINE IS MADE UP OF THE FOLLOWING INCOME STATEMENT ACCOUNTS: "COST OF
PRODUCTS", "COST OF SERVICES", AND "RESEARCH AND DEVELOPMENT CONTRACTS".
<F2>THIS LINE IS MADE UP OF THE FOLLOWING INCOME STATEMENT ACCOUNTS: "COSTS
ASSOCIATED WITH DIVISIONAL AND PRODUCT RESTRUCTURING", "INTERNALLY FUNDED
RESEARCH AND DEVELOPMENT" AND "OTHER EXPENSES FOR NEW LINES OF BUSINESS".