THERMO ELECTRON CORP
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>11
<FILENAME>tmok01ex10-7.txt
<TEXT>
                                                                    Exhibit 10.7

                           THERMO ELECTRON CORPORATION

                           DIRECTORS STOCK OPTION PLAN

            As amended and restated effective as of February 7, 2002

1. Purpose

     The purpose of this  Directors  Stock  Option  Plan (the  "Plan") of Thermo
Electron Corporation (the "Company") is to encourage ownership in the Company by
outside directors of the Company whose services are considered  essential to the
Company's  growth and progress  and to provide them with a further  incentive to
become  directors  and to  continue as  directors  of the  Company.  The Plan is
intended to be a nonstatutory stock option plan.

2. Administration

     The Board of Directors,  or a Committee (the "Committee") consisting of one
or more  directors  of the Company  appointed by the Board of  Directors,  shall
supervise and  administer  the Plan.  Grants of stock options under the Plan and
the amount  and  nature of the  options  to be  granted  shall be  automatic  in
accordance with Section 5. However,  all questions of interpretation of the Plan
or of any stock  options  granted  under it shall be  determined by the Board of
Directors or the  Committee  and such  determination  shall be final and binding
upon all persons having an interest in the Plan.

3. Participation in the Plan

     Directors  of the  Company  who are not  employees  of the  Company  or any
subsidiary  or parent of the Company  shall be eligible  to  participate  in the
Plan. Directors who receive grants of stock options in accordance with this Plan
are sometimes referred to herein as "Optionees."

4. Stock Subject to the Plan

     The  maximum  number of shares  that may be issued  under the Plan shall be
675,000 shares of the Company's  Common Stock (the "Common  Stock"),  subject to
adjustment  as provided  in Section 9. Shares to be issued upon the  exercise of
options  granted under the Plan may be either  authorized but unissued shares or
shares held by the Company in its treasury.  If any option expires or terminates
for any reason without having been  exercised in full,  the  unpurchased  shares
subject thereto shall again be available for options thereafter to be granted.

5. Terms and Conditions

     A. Annual Stock Option Grants

     Each  Director of the Company who meets the  requirements  of Section 3 and
who is holding office  immediately  following the Annual Meeting of Stockholders
commencing with the Annual Meeting of  Stockholders  held in calendar year 1993,
shall be granted an option to purchase 1,000 shares of Common Stock at the close


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of business on the date of such Annual Meeting.

     B. General Terms and Conditions Applicable to All Grants.

          1.   Options  shall be  immediately  exercisable  at any time from and
               after the grant date and prior to the date which is the  earliest
               of:

               (a) seven years  after the grant date,  (b) three years after the
               Optionee  ceases to serve as a director  of the  Company,  or any
               subsidiary  of the  Company  (one year in the event the  Optionee
               ceases to meet the  requirements  of this Subsection by reason of
               his or her death),  or (c) the date of dissolution or liquidation
               of the Company.

          2.   The exercise price at which Options are granted  hereunder  shall
               be the average of the  closing  prices  reported by the  national
               securities  exchange  on which the  Common  Stock is  principally
               traded  for the  five  trading  days  immediately  preceding  and
               including  the date the option is granted or, if such security is
               not traded on an exchange,  the average last  reported sale price
               for the five-day  period on the NASDAQ  National  Market List, or
               the  average of the closing  bid prices for the  five-day  period
               last   quoted   by   an   established   quotation   service   for
               over-the-counter securities, or if none of the above shall apply,
               the last price paid for shares of the Common Stock by independent
               investors in a private placement.

          3.   All  options   shall  be   evidenced   by  a  written   agreement
               substantially  in such form as shall be  approved by the Board of
               Directors  or   Committee,   containing   terms  and   conditions
               consistent with the provisions of this Plan.

6. Exercise of Options

     A. Exercise/Consideration

     An option may be exercised in accordance with the instructions described in
"The  Guide for  Employees  of  Thermo  Electron  Stock  Option  Plans"  and any
supplement thereto as they may be amended from time to time (the "Guide").  Upon
exercise of the option in accordance with the aforementioned  instructions,  the
Company  shall  deliver or cause to be  delivered  to the Optionee the number of
shares then being  purchased,  registered  in the name of the  Optionee or other
person  exercising  the  option.  If any  law or  applicable  regulation  of the
Securities  and Exchange  Commission  or other body having  jurisdiction  in the
premises  shall  require  the  Company  or the  Director  to take any  action in
connection with shares being purchased upon exercise of the option,  exercise of
the option and delivery of the certificate or certificates for such shares shall
be postponed until completion of the necessary  action,  which shall be taken at
the Company's expense.



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     B. Tax Withholding

     No later  than the date on  which  part or all of the  value of any  shares
received upon the exercise of an option first  becomes  includible in your gross
income for income tax purposes,  you shall satisfy your  obligations  to pay any
federal,  state or local  taxes  required to be  withheld  with  respect to such
income in  accordance  with the  provisions  of the Guide.  Notwithstanding  the
foregoing,  no election to use shares for the payment of withholding taxes shall
be effective unless made in compliance with any applicable  requirements of Rule
16b-3.

7. Transferability

     Except as may be authorized by the Board, in its sole discretion, no Option
may be transferred  other than by will or the laws of descent and  distribution,
and during an Optionee's  lifetime an Option may be exercised only by him or her
(or in the event of incapacity,  the person or persons properly appointed to act
on his or her behalf). The Board may, in its discretion, determine the extent to
which Options granted to an Optionee shall be transferable,  and such provisions
permitting or acknowledging transfer shall be set forth in the written agreement
evidencing the Option  executed and delivered by or on behalf of the Company and
the Optionee.

8. Limitation of Rights to Continue as a Director

     Neither the Plan,  nor the  quantity of shares  subject to options  granted
under  the  Plan,  nor any  other  action  taken  pursuant  to the  Plan,  shall
constitute or be evidence of any agreement or understanding, express or implied,
that the  Company  will  retain a  Director  for any  period of time,  or at any
particular rate of compensation.

9. Adjustments in the Event of Certain Transactions

     (a) In the event of a stock dividend, stock split or combination of shares,
or other  distribution with respect to holders of Common Stock other than normal
cash dividends,  the Board will make (i) appropriate  adjustments to the maximum
number of shares that may be delivered under the Plan under Section 4 above, and
(ii)  appropriate  adjustments  to the  number  and kind of  shares  of stock or
securities  subject to Options then  outstanding or  subsequently  granted,  any
exercise prices relating to Options and any other provisions of Options affected
by such change.

     (b) In the event of any recapitalization, merger or consolidation involving
the  Company,  any  transaction  in which the Company  becomes a  subsidiary  of
another entity, any sale or other disposition of all or a substantial portion of
the assets of the  Company or any  similar  transaction,  as  determined  by the
Board,  the  Board  in  its  discretion  may  make  appropriate  adjustments  to
outstanding  Awards,   including,   without   limitation:   (i)  accelerate  the
exercisability of the Option, or (ii) adjust the terms of the Option (whether or
not in a manner that complies  with the  requirements  of Section  424(a) of the
Internal Revenue Code of 1986, as amended (the "Code")),  or (iii) if there is a
survivor or acquiror  entity,  provide for the  assumption of the Option by such
survivor  or acquiror  or an  affiliate  thereof or for the grant of one or more
replacement  options by such  survivor or acquiror or an affiliate  thereof,  in
each case on such terms (which may, but need not,  comply with the  requirements


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of Section 424(a) of the Code) as the Board may determine, or (iv) terminate the
Option  (provided,  that if the  Board  terminates  the  Option,  it  shall,  in
connection  therewith,  either (A) accelerate the  exercisability  of the Option
prior to such  termination,  or (B)  provide  for a payment to the holder of the
Option of cash or other  property or a combination  of cash or other property in
an amount  reasonably  determined by the Board to  approximate  the value of the
Option  assuming an exercise  immediately  prior to the  transaction,  or (C) if
there is a survivor  or  acquiror  entity,  provide for the grant of one or more
replacement options pursuant to clause (iii) above), or (v) provide for none of,
or any combination of, the foregoing.

     (c) No fraction of a share or  fractional  shares shall be  purchasable  or
deliverable pursuant to this Section 9.

10. Limitation of Rights in Option Stock

     The Optionee  shall have no rights as a stockholder in respect of shares as
to which his or her options shall not have been exercised,  certificates  issued
and  delivered and payment as herein  provided  made in full,  and shall have no
rights with respect to such shares not  expressly  conferred by this Plan or the
written agreement evidencing options granted hereunder.

11. Stock Reserved

     The Company  shall at all times during the term of the options  reserve and
keep  available  such number of shares of the Common Stock as will be sufficient
to permit the exercise in full of all options  granted under this Plan and shall
pay  all  other  fees  and  expenses  necessarily  incurred  by the  Company  in
connection therewith.

12. Securities Laws Restrictions

     A. Investment Representations.

     The  Company  may  require  any person to whom an option is  granted,  as a
condition of exercising such option, to give written assurances in substance and
form satisfactory to the Company to the effect that such person is acquiring the
Common Stock subject to the option for his or her own account for investment and
not with any present  intention of selling or otherwise  distributing  the same,
and to such other effects as the Company deems necessary or appropriate in order
to comply with federal and applicable state securities laws.

     B. Compliance with Securities Laws.

     Each  option  shall be  subject  to the  requirement  that if, at any time,
counsel  to the  Company  shall  determine  that the  listing,  registration  or
qualification of the shares subject to such option upon any securities  exchange
or  under  any  state  or  federal  law,  or  the  consent  or  approval  of any
governmental   or  regulatory   body,  or  that  the  disclosure  of  non-public
information  or the  satisfaction  of any  other  condition  is  necessary  as a
condition  of,  or in  connection  with,  the  issuance  or  purchase  of shares
thereunder,  such option may not be exercised,  in whole or in part, unless such


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listing,  registration,  qualification,  consent or approval, or satisfaction of
such condition shall have been effected or obtained on conditions  acceptable to
the Board of Directors. Nothing herein shall be deemed to require the Company to
apply  for or to obtain  such  listing,  registration  or  qualification,  or to
satisfy such condition.

13. Change in Control

     A. Impact of Event

     In the event of a "Change in  Control"  as defined  in Section  13(A),  the
following  provisions  shall apply,  unless the agreement  evidencing  the Award
otherwise provides (by specific explicit reference to Section 13(B) below). If a
Change in Control occurs while any Options are outstanding, then, effective upon
the  Change in  Control,  each  outstanding  Option  under the Plan that was not
previously  exercisable and vested shall become immediately  exercisable in full
and will no longer be subject to a right of repurchase by the Company.

     B. Definition of "Change in Control"

     "Change in Control"  means an event or  occurrence  set forth in any one or
more of subsections (a) through (d) below (including an event or occurrence that
constitutes  a  Change  in  Control  under  one  of  such   subsections  but  is
specifically exempted from another such subsection):

     (a) the  acquisition by an individual,  entity or group (within the meaning
of Section  13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of beneficial
ownership  of  any  capital  stock  of  Thermo  Electron   Corporation  ("Thermo
Electron") if, after such acquisition, such Person beneficially owns (within the
meaning of Rule 13d-3  promulgated under the Exchange Act) 40% or more of either
(i) the  then-outstanding  shares  of  common  stock  of  Thermo  Electron  (the
"Outstanding  TMO  Common  Stock")  or (ii)  the  combined  voting  power of the
then-outstanding securities of Thermo Electron entitled to vote generally in the
election of  directors  (the  "Outstanding  TMO Voting  Securities");  provided,
however,  that for purposes of this subsection  (a), the following  acquisitions
shall  not  constitute  a Change  in  Control:  (i) any  acquisition  by  Thermo
Electron,  (ii) any acquisition by any employee  benefit plan (or related trust)
sponsored or  maintained  by Thermo  Electron or any  corporation  controlled by
Thermo  Electron,  or (iii) any  acquisition  by any  corporation  pursuant to a
transaction  which  complies with clauses (i) and (ii) of subsection (c) of this
definition; or

     (b)  such  time as the  Continuing  Directors  (as  defined  below)  do not
constitute a majority of the Board of Directors of Thermo  Electron (the "Thermo
Board") (or, if applicable, the Board of Directors of a successor corporation to
Thermo  Electron),  where  the term  "Continuing  Director"  means at any date a
member of the Thermo  Board (i) who was a member of the Thermo  Board as of July
1, 1999 or (ii) who was nominated or elected subsequent to such date by at least
a majority of the  directors who were  Continuing  Directors at the time of such
nomination or election or whose election to the Thermo Board was  recommended or
endorsed by at least a majority of the directors who were  Continuing  Directors
at the time of such nomination or election;  provided, however, that there shall


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be excluded from this clause (ii) any  individual  whose  initial  assumption of
office  occurred as a result of an actual or  threatened  election  contest with
respect to the election or removal of  directors  or other actual or  threatened
solicitation of proxies or consents,  by or on behalf of a person other than the
Thermo Board; or

     (c)  the   consummation   of  a  merger,   consolidation,   reorganization,
recapitalization or statutory share exchange involving Thermo Electron or a sale
or  other  disposition  of all or  substantially  all of the  assets  of  Thermo
Electron in one or a series of transactions (a "Business Combination"),  unless,
immediately  following  such  Business  Combination,  each of the  following two
conditions is satisfied:  (i) all or  substantially  all of the  individuals and
entities who were the beneficial  owners of the Outstanding TMO Common Stock and
Outstanding TMO Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly,  more than 60% of the then-outstanding
shares of common  stock and the combined  voting  power of the  then-outstanding
securities   entitled  to  vote   generally  in  the   election  of   directors,
respectively,  of the  resulting  or  acquiring  corporation  in  such  Business
Combination (which shall include,  without limitation,  a corporation which as a
result of such transaction  owns Thermo Electron or substantially  all of Thermo
Electron's  assets either  directly or through one or more  subsidiaries)  (such
resulting  or  acquiring  corporation  is referred  to herein as the  "Acquiring
Corporation")  in  substantially   the  same  proportions  as  their  ownership,
immediately  prior to such Business  Combination,  of the Outstanding TMO Common
Stock and Outstanding TMO Voting  Securities,  respectively;  and (ii) no Person
(excluding the Acquiring  Corporation  or any employee  benefit plan (or related
trust)   maintained  or  sponsored  by  Thermo  Electron  or  by  the  Acquiring
Corporation) beneficially owns, directly or indirectly,  40% or more of the then
outstanding  shares  of common  stock of the  Acquiring  Corporation,  or of the
combined  voting power of the  then-outstanding  securities of such  corporation
entitled to vote generally in the election of directors; or

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

14. Amendment of the Plan

     The  provisions  of Sections 3 and 5 of the Plan shall not be amended  more
than once every six months,  other than to comport with changes in the Code, the
Employee  Retirement  Income  Security  Act of 1974,  or the  rules  thereunder.
Subject to the foregoing,  the Board of Directors may at any time, and from time
to time, modify or amend the Plan in any respect, except that if at any time the
approval of the Stockholders of the Company is required as to such  modification
or  amendment  under Rule  16b-3,  the Board of  Directors  may not effect  such
modification or amendment without such approval.

     The  termination  or any  modification  or amendment of the Plan shall not,
without the  consent of an  Optionee,  affect his or her rights  under an option
previously  granted to him or her. With the consent of the  Optionees  affected,
the Board of Directors may amend  outstanding  option agreements in a manner not
inconsistent with the Plan. The Board of Directors shall have the right to amend
or modify the terms and provisions of the Plan and of any outstanding  option to
the extent necessary to ensure the qualification of the Plan under Rule 16b-3.

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15. Effective Date of the Plan

     The Plan shall become effective when adopted by the Board of Directors, but
no option granted under the Plan shall become exercisable until six months after
the Plan is approved by the Stockholders of the Company.

16. Notice

     Any written notice to the Company  required by any of the provisions of the
Plan  shall be  addressed  to the  Secretary  of the  Company  and shall  become
effective when it is received.

17. Governing Law

     The Plan and all  determinations  made and actions  taken  pursuant  hereto
shall be governed by the laws of the State of Delaware.


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