THERMO TERRATECH INC, 10-K/A, 2000-07-31

THERMO TERRATECH INC
10-K/A, 2000-07-31
TESTING LABORATORIES

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------------------------------------------

AMENDMENT NO. 1 ON FORM 10-K/A
TO FORM 10-K

(mark one)

X Annual Report Pursuant to Section 13 or 15(d) of the
--------- Securities Exchange Act of 1934

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

Commission file number 1-9549

THERMO TERRATECH INC.
(Exact name of Registrant as specified in its charter)

Delaware 04-2925807
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

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

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

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

Name of each exchange
Title of each class on which registered
------------------- -------------------
Common Stock, $.10 par value American Stock Exchange

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

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to filing requirements for the
past 90 days. 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 April 28, 2000, was approximately $16,872,000.

As of April 28, 2000, the Registrant had 18,956,855 shares of Common Stock
outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's Annual Report to Shareholders for the fiscal year
ended April 1, 2000, are incorporated by reference into Parts I and II.

<PAGE>

Items 10, 11, 12 & 13 of Part III of the Registrant's Annual Report on Form 10-K
for the fiscal year ended April 1, 2000 are hereby amended and restated in their
entirety as follows:

Part III

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS

Set forth below are the names of the directors, their ages, their
offices in Thermo TerraTech Inc. ("Thermo TerraTech" or the "Company"), if any,
their principal occupation or employment for the past five years, the length of
their tenure as directors and the names of other public companies in which such
persons hold directorships. Information regarding their beneficial ownership of
the Company's Common Stock and of the common stock of its parent company, Thermo
Electron Corporation ("Thermo Electron"), a provider of products and services in
measurement instrumentation, medical devices, power generation and resource
recovery is reported in Item 12 - "Security Ownership of Certain Beneficial
Owners and Management."

--------------------------------------------------------------------------------
John P. Appleton Dr. Appleton, 65, has been a director of the Company since
September 1993 and its non-executive chairman of the board
since May 2000. He was the president and chief executive
officer of the Company from September 1993 until his
retirement in April 2000. Dr. Appleton also served as a
vice president of Thermo Electron from 1975 until April
2000. He was the chief executive officer of ThermoRetec
Corporation from September 1993 until May 1997.
ThermoRetec Corporation, a subsidiary of the Company that
provides advanced management, regulatory, and technology
skills to a variety of environmental services, was taken
private by Thermo Electron in a merger effective June 5,
2000.

--------------------------------------------------------------------------------
Brian D. Holt Mr. Holt, 51, has been a director of the Company since
1997 and its president and chief executive officer since
May 2000. Mr. Holt has been the president and chief
executive officer of Thermo Ecotek Corporation, a
majority-owned subsidiary of Thermo Electron that is
involved in clean-power resources, clean fuels, and
naturally derived products for protecting crops, since
February 1994. He has been the chief operating officer,
energy and environment, of Thermo Electron since September
1998. From March 1996 to September 1998, he was a vice
president of Thermo Electron. For more than five years
prior to his appointment as an officer of Thermo Ecotek
Corporation, he was president and chief executive officer
of Pacific Generation Company, a financier, builder, owner
and operator of independent power facilities. Mr. Holt is
also a director of Thermo Ecotek Corporation.

--------------------------------------------------------------------------------
Donald E. Noble Mr. Noble, 85, has been a director of the Company since
1986 and served as chairman of the board from 1992 to
November 1994. For more than 20 years, from 1959 to 1980,
Mr. Noble served as the chief executive officer of
Rubbermaid Incorporated, first with the title of president
and then as the chairman of the board. Mr. Noble is also a
director of Thermo Fibertek Inc.

--------------------------------------------------------------------------------
William A. Rainville Mr. Rainville, 58, has been a director of the Company
since February 1993 and was chairman of the board from
November 1994 through February 1997. Mr. Rainville has
been president and chief executive officer of Thermo
Fibertek Inc., a majority-owned subsidiary of Thermo
Electron that develops and manufactures equipment and
products for the papermaking and paper-recycling
industries, since its inception in 1991 and has been the
chief operating officer, recycling and resource recovery,
of Thermo Electron since September 1998. Prior to that
time, Mr. Rainville was a senior vice president of Thermo
Electron from March 1993 to September 1998; and a vice
president of Thermo Electron from 1986 to 1993. Mr.
Rainville is also a director of Thermo Ecotek Corporation,
Thermo Fibergen Inc., and Thermo Fibertek Inc.

--------------------------------------------------------------------------------

2
<PAGE>

--------------------------------------------------------------------------------
Polyvios C. Vintiadis Mr. Vintiadis, 64, has been a director of the Company
since September 1992 and was non-employee chairman of
the board from February 1997 until April 2000. Mr.
Vintiadis has been the chairman and chief executive
officer of Towermarc Corporation, a real estate
development company, since 1984. Prior to joining
Towermarc, Mr. Vintiadis was a principal of Morgens,
Waterfall & Vintiadis, Inc., a financial services firm,
with whom he remains associated. For more than 20 years
prior to that time, Mr. Vintiadis was employed by Arthur
D. Little & Company, Inc. Mr. Vintiadis is also a
director of Spectra-Physics Lasers, Inc.

--------------------------------------------------------------------------------

COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS

The board of directors has established an audit committee and a human
resources committee, each consisting solely of directors who are not employees
of the Company, of Thermo Electron or of any other companies affiliated with
Thermo Electron (also referred to as "outside directors"). The present members
of the audit committee are Mr. Vintiadis (Chairman) and Mr. Noble. The audit
committee reviews the scope of the audit with the Company's independent public
accountants and meets with them for the purpose of reviewing the results of the
audit subsequent to its completion. The present members of the human resources
committee are Mr. Noble (Chairman) and Mr. Vintiadis. The human resources
committee reviews the performance of senior members of management, recommends
executive compensation and administers the Company's stock option and other
stock-based compensation plans. The Company does not have a nominating committee
of the board of directors. The board of directors met six times, the audit
committee met once and the human resources committee met three times during
fiscal 2000. Each director attended at least 75% of all meetings of the board of
directors and committees on which he served held during fiscal 2000.

The board of directors has also established a special committee (the
"Special Committee") consisting solely of one outside director for the purpose
of evaluating the merits and negotiating the terms of the proposed transaction
with Thermo Electron pursuant to which the Company would be taken private,
considering such alternatives as the Special Committee deems appropriate and
making a recommendation to the full board of directors on whether or not to
approve any such proposed transaction. See Item 13 - Certain Relationships and
Related Transactions. The sole member of the Special Committee is Mr. Vintiadis.

COMPENSATION OF DIRECTORS

CASH COMPENSATION

Outside directors receive an annual retainer of $4,000 and a fee of
$1,000 per day for attending regular meetings of the board of directors and $500
per day for participating in meetings of the board of directors held by means of
conference telephone and for participating in certain meetings of committees of
the board of directors. The former non-employee chairman of the board, Mr.
Vintiadis, received an additional meeting fee for his services equal to $1,000
per day for attending regular meetings of the board of directors and $500 per
day for participating in meetings of the board of directors held by means of
conference telephone. Payment of directors' fees is made quarterly. Dr.
Appleton, Mr. Holt and Mr. Rainville are all employees of Thermo Electron or its
subsidiaries and do not receive any cash compensation from the Company for their
services as directors. Directors are also reimbursed for out-of-pocket expenses
incurred in attending such meetings.

In addition, the member of the Special Committee receives a one-time
retainer of $20,000 and a fee of $1,000 per day for attending regular meetings
of the Special Committee and $500 per day for participating in meetings of the
Special Committee held by means of conference telephone.

DEFERRED COMPENSATION PLAN FOR DIRECTORS

Under the Company's deferred compensation plan for directors (the
"Deferred Compensation Plan"), a director has the right to defer receipt of his
cash fees until he ceases to serve as a director, dies or retires from his
principal occupation. In the event of a change of control or proposed change of
control of the Company that is not approved by the board of directors, deferred
amounts become payable immediately. Any of the following are deemed to be a
change of control: (i) the acquisition by any person of 40% or more of the
outstanding common

3
<PAGE>

stock or voting securities of Thermo Electron; (ii) the failure of the Thermo
Electron board of directors to include a majority of directors who are
"continuing directors", which term is defined to include directors who were
members of Thermo Electron's board on July 1, 1999 or who subsequent to that
date were nominated or elected by a majority of directors who were "continuing
directors" at the time of such nomination or election; (iii) the consummation of
a merger, consolidation, reorganization, recapitalization or statutory share
exchange involving Thermo Electron or the sale or other disposition of all or
substantially all of the assets of Thermo Electron unless immediately after such
transaction (a) all holders of Thermo Electron common stock immediately prior to
such transaction own more than 60% of the outstanding voting securities of the
resulting or acquiring corporation in substantially the same proportions as
their ownership immediately prior to such transaction and (b) no person after
the transaction owns 40% or more of the outstanding voting securities of the
resulting or acquiring corporation; or (iv) approval by stockholders of a
complete liquidation or dissolution of Thermo Electron. Amounts deferred
pursuant to the Deferred Compensation Plan are valued at the end of each quarter
as units of Common Stock. When payable, amounts deferred may be disbursed solely
in shares of Common Stock accumulated under the Deferred Compensation Plan. As
of April 1, 2000, a total of 41,416 shares of Common Stock were currently
reserved for issuance under the Deferred Compensation Plan and deferred units
equal to approximately 36,192 full shares of Common Stock were accumulated for
current directors under the Deferred Compensation Plan.

DIRECTORS STOCK OPTION PLAN

The Company's directors stock option plan (the "Directors Plan")
provides for the grant of stock options to purchase shares of Common Stock to
outside directors as additional compensation for their service as directors. The
exercise price for options granted under the Directors Plan is the average of
the closing prices of the Common Stock as reported on the American Stock
Exchange (or other principal market on which the Common Stock is then traded)
for the five trading days immediately preceding and including the date of grant,
or, if the shares are not then traded, at the last price per share paid by third
parties in an arms-length transaction prior to the option grant As of May 31,
2000, options to purchase 27,700 shares of Common Stock had been granted under
the Directors Plan, of which 13,300 shares were outstanding, 8,600 shares had
lapsed, 5,800 shares had been exercised; and options to purchase 55,900 shares
of Common Stock were reserved and available for future grant.

DISCRETIONARY GRANTS OF STOCK OPTIONS TO DIRECTORS

In addition to stock options granted pursuant to the Directors Plan,
the Company may also make discretionary grants of stock options to directors.
Beginning in fiscal 1997, the non-employee chairman of the board has received
annually a discretionary grant of options to purchase an additional 1,000 shares
of Common Stock of the Company. The exercise price for discretionary option
grants is calculated in the same manner as for options granted pursuant to the
Director's Plan, and the grant is awarded at the first regular meeting of the
board of directors following the Annual Meeting of the Stockholders in
conjunction with the chairman's annual appointment as chairman of the board. Dr.
Appleton, who was appointed non-executive chairman of the board in May 2000, is
not eligible for this discretionary grant.

STOCK OWNERSHIP POLICIES FOR DIRECTORS

The human resources committee of the board of directors (the
"Committee") has established a stock holding policy for directors. The stock
holding policy requires each director to hold a minimum of 1,000 shares of
Common Stock. Directors are requested to achieve this ownership level within a
three-year period. The chief executive officer of the Company is required to
comply with a separate stock holding policy established by the Committee, which
is described below.

EXECUTIVE OFFICERS

Reference is made to Item 1(e) of this Report for information regarding
the Executive Officers of the Registrant.

4
<PAGE>

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, (the
"Exchange Act") requires the Company's directors and executive officers, and
beneficial owners of more than 10% of the Common Stock, such as Thermo Electron,
to file with the Securities and Exchange Commission initial reports of ownership
and periodic reports of changes in ownership of the Company's securities. Based
upon a review of such filings, all Section 16(a) filing requirements applicable
to such persons were complied with during fiscal 2000, except in the following
instances. Mr. Jeffrey L. Powell, an officer of the Company, filed one late
transaction on Form 4, reporting the acquisition of a restricted stock award.
Mr. Emil C. Herkert, an officer of the Company, filed three late transactions on
Form 4, reporting the acquisition of a restricted stock award and two sales of
shares of common stock.

ITEM 11 - EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table summarizes compensation during the last three
fiscal years for services to the Company in all capacities awarded to, earned by
or paid to the Company's former chief executive officer and its two other
executive officers whose total annual salary and bonus, as determined in
accordance with the rules of the Securities and Exchange Commission, was greater
than $100,000, and who were employed by the Company as of the end of fiscal
2000. These officers are together referred to as the "named executive officers."

The Company is required to appoint certain executive officers and
full-time employees of Thermo Electron as executive officers of the Company, in
accordance with the Thermo Electron Corporate Charter. The compensation for
these executive officers is determined and paid entirely by Thermo Electron. The
time and effort devoted by these individuals to the Company's affairs is
provided to the Company under the Corporate Services Agreement between the
Company and Thermo Electron. See Item 13 - "Certain Relationships and Related
Transactions." Accordingly, the compensation for these individuals is not
reported in the following table.

Summary Compensation Table
-------------------------------------------------------------------------------------------------------------------------
Long Term Compensation
Annual Compensation ---------------------
----------------- Restricted Securities
Name and Fiscal Other Annual Stock Underlying All Other
Principal Position Year Salary Bonus Compensation Award(1) Options (2) Compensation (3)
------------------ ------ -------- -------- ------------ ------------- ----------------- ----------------
John P. Appleton (4) 2000 $208,125 $150,000 $44,500 (TTT) -- $18,220 (6)
President and Chief 1999 $189,000 $115,000 -- -- -- $17,455 (6)
Executive Officer 1998 $175,500 $0 (5) -- -- 60,000 (TTT) $ 5,762(6)
120,000 (RGI) (7)
-------------------------------------------------------------------------------------------------------------------------
Emil C. Herkert 2000 $214,000 $100,000 $37,929 (8) 500 (TMO) $25,719
Vice President 1999 $214,000 $65,000 $37,391 (8) $97,000 (TTT) 8,000 (TTT) $26,202
6,100 (TMO)
10,000 (RGI) (7)
1998 $207,000 $0 (5) $48,188 (8) -- 998 (TMO) $18,325
2,000 (MKA) (9)
2,000 (ONX)(10)
240,000 (RGI) (7)
2,000 (TDX) (11)
999 (THI) (12)
1,023 (TKN)
2,000 (TRIL)
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

5
<PAGE>

Jeffrey L. Powell 2000 $150,000 $45,000 -- -- 1,000 (TMO) $10,481 (13)
Vice President 1999 $145,000 $44,000 -- $44,000 (TTT) 5,000 (TTT) $ 8,237 (13)
1,000 (TMO)
1998 $145,000 $0 (5) -- -- 1,398 (TMO) $60,304 (13)
2,000 (MKA) (9)
2,000 (ONX)(10)
24,000 (RGI) (7)
2,000 (TDX) (11)
999 (THI) (12)
1,023 (TKN)
2,000 (TRIL)
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) In fiscal 2000, Dr. Appleton was awarded 8,900 shares of restricted
Common Stock of the Company with a value of $44,500 on the grant date.
In fiscal 1999, Mr. Herkert and Mr. Powell were awarded 19,400 and
8,800 shares, respectively, of restricted Common Stock of the Company
with a value of $97,000 and $44,000, respectively, on the grant date.
The restricted stock awards vest 100% on the third anniversary of the
grant date. Any cash dividends paid on restricted shares are entitled
to be retained by the recipient without regard to vesting. Any non-cash
dividends paid on restricted shares are entitled to be retained by the
recipient subject to the same vesting restrictions as the underlying
stock. At the end of fiscal 2000, Dr. Appleton, Mr. Herkert and Mr.
Powell held 8,900, 19,400 and 8,800 shares, respectively, of restricted
Common Stock with an aggregate value of $68,975, $150,350 and $68,200,
respectively.

(2) Options to purchase Common Stock granted by the Company are designated
in the table as "TTT". In addition, the named executive officers have
also been granted options to purchase the common stock of the following
Thermo Electron companies during the last three fiscal years as part of
Thermo Electron's stock option program: Thermo Electron (designated in
the table as TMO), Metrika Systems Corporation (designated in the table
as MKA), ONIX Systems Inc. (designated in the table as ONX), The
Randers Killam Group Inc. (designated in the table as RGI), Thermedics
Detection Inc. (designated in the table as TDX), Thermo Instrument
Systems Inc. (designated in the table as THI), ThermoTrex Corporation
(designated in the table as TKN) and Thermo Trilogy Corporation
(designated in the table as TRIL).

(3) Represents the amount of matching contributions made by the
individual's employer on behalf of the named executive officers
participating in Thermo Electron's 401(k) plan or, in the case of Mr.
Herkert, the Elson T. Killam Savings and Investment Plan.

(4) Dr. Appleton retired as President and Chief Executive Officer of the
Company effective April 1, 2000. Prior to his retirement, Dr. Appleton
served in various management capacities for the Company and its
subsidiaries and served as an officer of Thermo Electron during the
past three fiscal years. A portion of Dr. Appleton's annual cash
compensation (salary and bonus) has been allocated to and paid by
Thermo Electron over each of the past three fiscal years as
compensation for the services provided to Thermo Electron. The annual
cash compensation reported in the table for Dr. Appleton represents the
amounts paid by the Company and its subsidiaries solely for Dr.
Appleton's services as an officer of the Company or its subsidiaries.
Approximately 90% of Dr. Appleton's annual cash compensation (salary

6
<PAGE>

and bonus) earned in all capacities throughout the Thermo Electron
organization was paid by the Company and its subsidiaries for his
services to the Company and its subsidiaries in each of fiscal 2000,
1999 and 1998. These percentages include the allocation to ThermoRetec
Corporation, a subsidiary of the Company that provides advanced
management, regulatory, and technology skills to a variety of
environmental services ("ThermoRetec") of 20% of Dr. Appleton's annual
cash compensation (salary and bonus) in fiscal 1998 for Dr. Appleton's
services as ThermoRetec's chief executive officer. The salary and
bonuses paid to Dr. Appleton reflect compensation decisions based on
fiscal year performance. From time to time in the past, Dr. Appleton
has been, and in the future may be, granted options to purchase common
stock of Thermo Electron and certain of its subsidiaries other than the
Company. These options are not reported in this table as they were
granted as compensation for services to other Thermo Electron companies
in capacities other than in his capacity as the president and chief
executive officer of the Company.

(5) Dr. Appleton, Mr. Herkert and Mr. Powell elected to forego their
bonuses for fiscal 1998 in light of the Company's operating and stock
price performance in fiscal 1998.

(6) In addition to the matching contribution referred to in footnote (3),
such amount includes $10,889, $10,086 and $2,262, which represents the
amount of compensation in fiscal 2000, 1999 and 1998, respectively,
attributable to interest-free loans provided to Dr. Appleton pursuant
to the stock holding assistance plans of the Company and ThermoRetec.
See Item 13 - Certain Relationships and Related Transactions - Stock
Holding Assistance Plans.

(7) Subsequent to April 1, 2000, The Randers Killam Group Inc. ("RGI") was
taken private by Thermo Electron in a merger transaction whereby each
outstanding share of RGI common stock was exchanged for $4.50 in cash
and each outstanding option of RGI was converted into an option to
acquire approximately .24 shares of the common stock of Thermo
Electron.

(8) This amount includes payments of $20,000 plus an additional gross-up
amount of $17,929, $17,391 and $17,186 in each of fiscal 2000, 1999 and
1998, respectively, to compensate for the federal and state income tax
liability attributable to such payments in fiscal 2000, 1999 and 1998
made to Mr. Herkert pursuant to the terms of a certain Deferred
Compensation Agreement with Elson T. Killam Associates.

(9) Subsequent to April 1, 2000, Metrika Systems Corporation ("MKA") was
taken private by Thermo Electron in a merger transaction whereby each
outstanding share of MKA common stock was exchanged for $9.00 in cash
and each outstanding option of MKA was converted into an option to
acquire approximately .46 shares of the common stock of Thermo
Electron.

(10) Subsequent to April 1, 2000, ONIX Systems Inc. ("ONX") was taken
private by Thermo Electron in a merger transaction whereby each
outstanding share of ONX common stock was exchanged for $9.00 in cash
and each outstanding option of ONX was converted into an option to
acquire approximately .44 shares of the common stock of Thermo
Electron.

(11) Subsequent to April 1, 2000, Thermedics Detection Inc. ("TDX") was
taken private by Thermo Electron in a merger transaction whereby each
outstanding share of TDX common stock was exchanged for $8.00 in cash
and each outstanding option of TDX was converted into an option to
acquire approximately .39 shares of the common stock of Thermo
Electron.

(12) Subsequent to April 1, 2000, Thermo Instrument Systems Inc ("THI") was
taken private by Thermo Electron in a merger transaction whereby each
outstanding share of THI common stock was exchanged for .85 shares of
Thermo Electron Common Stock and each outstanding option of THI was
converted into an option to acquire .85 shares of the common stock of
Thermo Electron.

(13) In addition to the matching contribution referred to in footnote (3),
such amount includes the reimbursement by the Company of $50,000 in
expenses associated with Mr. Powell's relocation to Concord,
Massachusetts in fiscal 1998 and $3,272, $3,218 and $932, which
represents the amount of compensation in fiscal 2000, 1999 and 1998,
respectively, attributable to interest-free loans provided to Mr.
Powell pursuant to the stock holding assistance plan of ThermoRetec.
See Item 13 - "Certain Relationships and Related Transactions - Stock
Holding Assistance Plans."

7
<PAGE>

STOCK OPTIONS GRANTED DURING FISCAL 2000

The following table sets forth information concerning individual grants
of stock options made during fiscal 2000 to the Company's named executive
officers. It has not been the Company's policy in the past to grant stock
appreciation rights, and no such rights were granted during fiscal 2000.

Dr. Appleton served as a vice president of Thermo Electron since 1975
and from time to time has been granted options to purchase common stock of
Thermo Electron and certain of its subsidiaries other than the Company and its
majority-owned subsidiaries. These options are not reported in this table as
they were granted as compensation for services to other Thermo Electron
companies in capacities other than in his capacity as the chief executive
officer of the Company.

Option Grants in Fiscal 2000
--------------------------------------------------------------------------------------------------------------
Potential Realizable
Number of Percent of Value at Assumed
Securities Total Options Annual Rates of Stock
Underlying Options Granted to Exercise Price Appreciation for
Granted and Employees in Price Per Expiration Option Term (2)
Name Company (1) Fiscal Year Share Date 5% 10%
---- -------------- ------------ ----- ---- -- ---

John P. Appleton -- -- -- -- -- -- --
--------------------------------------------------------------------------------------------------------------
Emil C. Herkert 500 (TMO) 0.02% (3) $14.81 9/22/04 $2,050 $4,521
--------------------------------------------------------------------------------------------------------------
Jeffrey L. Powell 1,000 (TMO) 0.03% (3) $14.81 9/22/04 $4,090 $9,042
--------------------------------------------------------------------------------------------------------------
</TABLE>

(1) All of the options granted during the fiscal year are immediately
exercisable at the date of grant. In all cases, the shares acquired
upon exercise are subject to repurchase by the granting company at the
exercise price if the optionee ceases to be employed by such company or
any other Thermo Electron company. The granting company may exercise
its repurchase rights within six months after the termination of the
optionee's employment. The repurchase rights lapse after one-year, and
the option has a five year term, provided the optionee continues to be
employed by the granting company or any other Thermo Electron company.
The granting company may permit the holder of options to exercise
options and to satisfy tax withholding obligations by surrendering
shares equal in fair market value to the exercise price or withholding
obligation. Please see footnote (2) under Summary Compensation Table
above for the company abbreviations used in this table.

(2) The amounts shown on this table represent hypothetical gains that could
be achieved for the respective options if exercised at the end of the
option term. These gains are based on assumed rates of stock
appreciation of 5% and 10% compounded annually from the date the
respective options were granted to their expiration date. The gains
shown are net of the option exercise price, but do not include
deductions for taxes or other expenses associated with the exercise.
Actual gains, if any, on stock option exercises will depend on the
future performance of the common stock of the applicable corporation,
the optionee's continued employment through the option period and the
date on which the options are exercised.

(3) These options were granted under stock option plans maintained by
Thermo Electron or its subsidiaries other than the Company as part of
Thermo Electron's compensation program and accordingly are reported as
a percentage of total options granted to employees of Thermo Electron
and its subsidiaries.

STOCK OPTIONS EXERCISED DURING FISCAL 2000 AND FISCAL YEAR-END OPTION VALUES

The following table reports certain information regarding stock option
exercises during fiscal 2000 and outstanding stock options held at the end of
fiscal 2000 by the Company's named executive officers. No stock appreciation
rights were exercised or were outstanding during fiscal 2000.

8
<PAGE>

Aggregated Option Exercises In Fiscal 2000 And Fiscal 2000 Year-End Option Values
-----------------------------------------------------------------------------------------------------------------------
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Fiscal Options at Fiscal
Shares Year-End Year-End
Acquired on Value (Exercisable/ (Exercisable/
Name Company (1) Exercise Realized (2) Unexercisable)(1) Unexercisable)
---- ----------- ------------ ------------ ----------------- -----------------

John P. Appleton (3) TTT -- -- 275,000 /0 $0 /--
RGI (4) -- -- 120,000 /0 $135,000 /--
THN (5) -- -- 63,000 /0 $0 /--
-----------------------------------------------------------------------------------------------------------------------
Emil C. Herkert TTT -- -- 8,000 /0 $21,760 /--
TMO -- -- 45,098 /0 (6) $31,224 /--
MKA (7) -- -- 2,000 /0 $0 /--
ONX (8) -- -- 2,000 /0 $0 /--
RGI (4) -- -- 250,000 /0 $288,750 /--
TDX (9) -- -- 2,000 /0 $0 /--
TRIL -- -- 0 /2,000 -- /$0 (10)
THI (11) -- -- 999 /0 $10,173 /--
TKN -- -- 1,023 /0 $2,486 /--
-----------------------------------------------------------------------------------------------------------------------
Jeffrey L. Powell TTT -- -- 28,000 /0 $13,600 /--
TMO 5,062 $31,121 31,748 /0 (12) $28,829 /--
MKA (7) -- -- 2,000 /0 $0 /--
ONX (8) -- -- 2,000 /0 $0 /--
RGI (4) -- -- 24,000 /0 $27,000 /--
TDX (9) -- -- 2,000 /0 $0 /--
TBA (13) -- -- 2,000 /0 $35,380 /--
TFG -- -- 2,000 /0 $3,876 /--
THI (11) -- -- 999 /0 $10,173 /--
TLZ -- -- 5,000 /0 $0 /--
TLT -- -- 0 /2,000 -- /$0 (10)
TOC (14) -- -- 6,000 /0 $26,430 /--
TMQ (15) -- -- 6,000 /0 $22,500 /--
THN (5) -- -- 111,000 /0 $0 /--
TSR (16) -- -- 2,000 /0 $2,750 /--
TRIL -- -- 0 /2,000 -- /$0 (10)
TKN -- -- 1,023 /0 $2,486 /--
TXM -- -- 4,000 /0 $0 /--
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) All of the options reported outstanding at the end of the fiscal year
are immediately exercisable as of fiscal year-end, except options to
purchase the common stock of ThermoLyte Corporation and Thermo Trilogy
Corporation, which are not exercisable until the earlier of (i) 90 days
after the effective date of the registration of that company's common
stock under Section 12 of the Exchange Act or (ii) nine years from the
grant date. Generally, the shares acquired upon exercise of the options
reported in the table are subject to repurchase by the granting company
at the exercise price if the optionee ceases to be employed by such
company or any other Thermo Electron company. The granting company may
exercise its repurchase rights within six months after the termination
of the optionee's employment. For publicly-traded companies, the
repurchase rights generally lapse ratably over a one- to ten-year
period, depending on the option term, which may vary from five to
twelve years, provided that the optionee continues to be employed by
the granting company or another Thermo Electron company. For companies
that are not publicly-traded, the repurchase rights lapse in their
entirety on the ninth

9
<PAGE>

anniversary of the grant date. The granting company may permit the
holder of options to exercise options and to satisfy tax withholding
obligations by surrendering shares equal in fair market value to the
exercise price or withholding obligation. Please see footnote (2) under
Summary Compensation Table above for the company abbreviations used in
this table. In addition, company abbreviations used in this table and
not defined in footnote (2) are as follows: Thermo BioAnalysis
Corporation (designated in the table as TBA), Thermo Fibergen Inc.
(designated in the table as TFG), ThermoLase Corporation (designated in
the table as TLZ), ThermoLyte Corporation (designated in the table as
TLT), Thermo Optek Corporation (designated in the table as TOC),
ThermoRetec Corporation (Designated in the table as THN), ThermoQuest
Corporation (designated in the table as TMQ), Thermo Sentron Inc.
(designated in the table as TSR) and Trex Medical Corporation
(designated in the table as TXM).

(2) Amounts shown in this column do not necessarily represent actual value
realized from the sale of the shares acquired upon exercise of the
option because in many cases the shares are not sold on exercise but
continue to be held by the executive officer exercising the option. The
amounts shown represent the difference between the option exercise
price and the market price on the date of exercise, which is the amount
that would have been realized if the shares had been sold immediately
upon exercise.

(3) Dr. Appleton served as a vice president of Thermo Electron from 1975
until April 2000 and has been granted options to purchase shares of the
common stock of Thermo Electron and certain of its subsidiaries other
than the Company from time to time by Thermo Electron or such other
subsidiaries. These options are not reported here as they were granted
as compensation for service to other Thermo Electron companies in
capacities other than in his capacity as the chief executive officer of
the Company.

(4) Subsequent to April 1, 2000, The Randers Killam Group Inc. ("RGI") was
taken private by Thermo Electron in a merger transaction whereby each
outstanding share of RGI common stock was exchanged for $4.50 in cash
and each outstanding option of RGI was converted into an option to
acquire approximately .24 shares of the common stock of Thermo
Electron.

(5) Subsequent to April 1, 2000, ThermoRetec Corporation ("THN) was taken
private by Thermo Electron in a merger transaction whereby each
outstanding share of THN common stock was exchanged for $7.00 in cash
and each outstanding option of THN was converted into an option to
acquire approximately .36 shares of the common stock of Thermo
Electron.

(6) Options to purchase 22,500 shares of the common stock of Thermo
Electron granted to Mr. Herkert are subject to the same terms as
described in footnote (1), except that the repurchase rights of the
granting corporation generally do not lapse until the tenth anniversary
of the grant date. In fiscal 1998, the human resources committee of the
board of directors of Thermo Electron accelerated the vesting of 1,350
shares.

(7) Subsequent to April 1, 2000, Metrika Systems Corporation ("MKA") was
taken private by Thermo Electron in a merger transaction whereby each
outstanding share of MKA common stock was exchanged for $9.00 in cash
and each outstanding option of MKA was converted into an option to
acquire approximately .46 shares of the common stock of Thermo
Electron.

(8) Subsequent to April 1, 2000, ONIX Systems Inc. ("ONX") was taken
private by Thermo Electron in a merger transaction whereby each
outstanding share of ONX common stock was exchanged for $9.00 in cash
and each outstanding option of ONX was converted into an option to
acquire approximately .44 shares of the common stock of Thermo
Electron.

(9) Subsequent to April 1, 2000, Thermedics Detection Inc. ("TDX") was
taken private by Thermo Electron in a merger transaction whereby each
outstanding share of TDX common stock was exchanged for $8.00 in cash
and each outstanding option of TDX was converted into an option to
acquire approximately .39 shares of the common stock of Thermo
Electron.

(10) No public market existed for the shares underlying these options as of
April 1, 2000. Accordingly, no value in excess of exercise price has
been attributed to these options.

10
<PAGE>

(11) Subsequent to April 1, 2000, Thermo Instrument Systems Inc ("THI") was
taken private by Thermo Electron in a merger transaction whereby each
outstanding share of THI common stock was exchanged for .85 shares of
Thermo Electron Common Stock and each outstanding option of THI was
converted into .85 options to purchase shares of the common stock of
Thermo Electron.

(12) Options to purchase 22,500 shares of the common stock of Thermo
Electron granted to Mr. Powell are subject to the same terms as
described in footnote (1), except that the repurchase rights of the
granting corporation lapse ratably over a three-year period commencing
with the sixth anniversary of the grant date.

(13) Subsequent to April 1, 2000, Thermo BioAnalysis Corporation ("TBA") was
taken private by Thermo Electron in a merger transaction whereby each
outstanding share of TBA common stock was exchanged for $28.00 in cash
and each outstanding option of TBA was converted into approximately
1.47 options to purchase shares of the common stock of Thermo Electron.

(14) Subsequent to April 1, 2000, Thermo Optek Corporation ("TOC") was taken
private by Thermo Electron in a merger transaction whereby each
outstanding share of TOC common stock was exchanged for $15.00 in cash
and each outstanding option of TOC was converted into approximately .83
options to purchase shares of the common stock of Thermo Electron.

(15) Subsequent to April 1, 2000, ThermoQuest Corporation ("TMQ") was taken
private by Thermo Electron in a merger transaction whereby each
outstanding share of TMQ common stock was exchanged for $17.00 in cash
and each outstanding option of TMQ was converted into approximately .94
options to purchase shares of the common stock of Thermo Electron.

(16) Subsequent to April 1, 2000, Thermo Sentron Inc. ("TSR") was taken
private by Thermo Electron in a merger transaction whereby each
outstanding share of TSR common stock was exchanged for $15.50 in cash
and each outstanding option of TSR was converted into approximately .77
options to purchase shares of the common stock of Thermo Electron.

DEFINED BENEFIT RETIREMENT PLAN

Killam Associates, a subsidiary of The Randers Killam Group Inc., a
subsidiary of the Corporation ("Randers"), maintains a Defined Benefit
Retirement Plan (the "Plan") for eligible U.S. employees. Accrued benefits under
the Plan were frozen as of March 31, 1995. Mr. Herkert is a participant in the
Plan. The following table sets forth the estimated annual benefits payable under
the Plan upon retirement in specified compensation and years-of-service
classifications. The estimated benefits reflect the statutory limits on
compensation that can be recognized for Plan purposes. The limit at March 31,
1995 was $150,000 per year.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years of Service
Annual ----------------
Compensation 15 20 25 30 35
-- -- -- -- --
$100,000 $20,064 $26,752 $33,440 $40,128 $46,817
125,000 25,427 33,902 42,378 50,853 59,329
150,000 30,789 41,052 51,315 61,578 71,842

</TABLE>

Each eligible employee receives a monthly retirement benefit, beginning
at normal retirement age (65, although benefits are not reduced if the employee
retires after reaching 62). Before the benefit was frozen, it provided 1.05% of
an employee's Average Final Compensation (as defined below) plus .38% of an
employees Average Final Compensation (as defined below) in excess of the average
of the Social Security wage bases, multiplied by his years of service (up to a
maximum of 35 years). Benefits are reduced for retirement before age 62. Average
Final Compensation is the average total compensation for the 60 consecutive
months out of the last 180 months prior to 1995 which produce the highest
average. The frozen annual accrued benefit for Mr. Herkert is $93,332 (based on
the compensation limit of $235,840 that was in effect in 1993). The Plan
benefits shown are payable during the employee's lifetime unless the employee
elects another form of benefit that provides death protection. On May 15, 2000
Thermo Electron completed a merger of its wholly owned subsidiary, RK

11
<PAGE>

Acquisition Corporation with and into Randers. Upon completion of the merger,
Randers became a wholly owned subsidiary of Thermo Electron.

EXECUTIVE RETENTION AGREEMENTS

Thermo Electron has entered into agreements with certain executive
officers and key employees of Thermo Electron and its subsidiaries that provide
severance benefits if there is a change in control of Thermo Electron and their
employment is terminated by Thermo Electron "without cause" or by the individual
for "good reason", as those terms are defined in the agreements, within 18
months thereafter. For purposes of these agreements, a change in control exists
upon (i) the acquisition by any person of 40% or more of the outstanding common
stock or voting securities of Thermo Electron; (ii) the failure of the Thermo
Electron board of directors to include a majority of directors who are
"continuing directors", which term is defined to include directors who were
members of Thermo Electron's board on the date of the agreement or who
subsequent to the date of the agreement were nominated or elected by a majority
of directors who were "continuing directors" at the time of such nomination or
election; (iii) the consummation of a merger, consolidation, reorganization,
recapitalization or statutory share exchange involving Thermo Electron or the
sale or other disposition of all or substantially all of the assets of Thermo
Electron unless immediately after such transaction (a) all holders of Thermo
Electron common stock immediately prior to such transaction own more than 60% of
the outstanding voting securities of the resulting or acquiring corporation in
substantially the same proportions as their ownership immediately prior to such
transaction and (b) no person after the transaction owns 40% or more of the
outstanding voting securities of the resulting or acquiring corporation; or (iv)
approval by stockholders of a complete liquidation or dissolution of Thermo
Electron.

In 1998, Thermo Electron authorized an executive retention agreement
with Dr. Appleton and Mr. Herkert. This agreement provides that in the event the
individual's employment is terminated under the circumstances described above,
the individual would be entitled to a lump sum payment equal to the sum of (a)
in the case of Dr. Appleton, two times, and in the case of Mr. Herkert, one
times his highest annual base salary in any 12 month period during the prior
five-year period, plus (b) in the case of Dr. Appleton, two times, and in the
case of Mr. Herkert, one times his highest annual bonus in any 12 month period
during the prior five-year period. In addition, the individual would be provided
benefits for a period of, in the case of Dr. Appleton, two years, and in the
case of Mr. Herkert, one year after such termination substantially equivalent to
the benefits package the individual would have been otherwise entitled to
receive if the individual was not terminated. Further, all repurchase rights of
Thermo Electron and its subsidiaries shall lapse in their entirety with respect
to all options that the individual holds in Thermo Electron and its
subsidiaries, including the Company, as of the date of the change in control.
Finally, the individual would be entitled to a cash payment equal to, in the
case of Dr. Appleton, $20,000, and in the case of Mr. Herkert, $15,000, to be
used toward outplacement services. These executive retention agreements
supersede and replace any and all prior severance arrangements which these
individuals had with Thermo Electron.

Assuming that the severance benefits would have been payable as of
April 1, 2000, the lump sum salary and bonus payment under such agreement to Dr.
Appleton and Mr. Herkert would have been approximately $750,000 and $347,863,
respectively. In the event that payments under these agreements are deemed to be
so called "excess parachute payments" under the applicable provisions of the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), the
individual would be entitled to receive a gross-up payment equal to the amount
of any excise tax payable by him with respect to such payment, plus the amount
of all other additional taxes imposed on him attributable to the receipt of such
gross-up payment.

RETENTION AGREEMENT WITH DR. JOHN P. APPLETON

On November 17, 1999, Thermo Electron entered into a retention
agreement with Dr. John P. Appleton, Thermo TerraTech's president and chief
executive officer until April 1, 2000 and currently non-executive chairman of
its board of directors. The retention agreement provides that Dr. Appleton will
remain employed with Thermo Electron until March 31, 2002, and will work
part-time (on average, 20 hours per week) from April 1, 2000 until that date.
During the term of the agreement, Dr. Appleton is required to perform his normal
managerial work duties and use his best efforts to achieve the closings of sales
of certain Thermo TerraTech businesses as part of the Thermo Electron corporate
reorganization. The agreement provides for an annualized

12
<PAGE>

base salary of $112,500 from April 1, 2000 through March 31, 2002. Dr. Appleton
is entitled to receive, for the period from April 1, 2000 through the end of the
agreement's term, a minimum bonus of $100,000 and a maximum bonus of $300,000
for the completion of specific tasks assigned to him, including efforts to sell
certain Thermo TerraTech businesses. Also, Thermo Electron agreed that,
effective April 1, 2000, it would use its best efforts to cause Dr. Appleton to
be non-executive chairman of the board of directors of Thermo TerraTech, as long
as the Company remains a public company. The agreement may be terminated by
Thermo Electron at any time, with or without cause, or by Dr. Appleton upon
thirty days' prior written notice. The agreement will also be terminated upon
Dr. Appleton's death or disability. If the agreement is terminated by Thermo
Electron or at Dr. Appleton's election, Thermo Electron will pay Dr. Appleton
the compensation and benefits which would otherwise have been payable through
the termination date of the agreement. If the agreement is terminated by Thermo
Electron without cause, Thermo Electron will also pay Dr. Appleton a severance
payment equal to the balance of the base salary payable through March 31, 2002,
plus any unpaid minimum guaranteed bonus.

STOCK OWNERSHIP POLICIES

The Committee has established a stock holding policy for the chief
executive officer of the Company that requires him to own a multiple of his
compensation in shares of the Company's Common Stock. The multiple is one times
his base salary and reference bonus for the fiscal year in which compliance is
achieved. The chief executive officer has three years from the adoption of the
policy to achieve this ownership level.

In order to assist the chief executive officer in complying with the
policy, the Committee also adopted a stock holding assistance plan under which
the Company is authorized to make interest-free loans to the chief executive
officer to enable him to purchase shares of Common Stock in the open market. The
loans are required to be repaid upon the earlier of demand or the tenth
anniversary of the date of the loan, unless otherwise determined by the
Committee. See Item 13 "Certain Relationships and Related Transactions - Stock
Holding Assistance Plan."

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the beneficial ownership of Common
Stock, as well as the common stock of Thermo Electron, as of May 31, 2000, with
respect to (i) each director, (ii) each executive officer named in the summary
compensation table set forth in Item 11 - "Executive Compensation" (the "named
executive officers") and (iii) all directors and current executive officers as a
group. In addition, the following table sets forth the beneficial ownership of
Common Stock, as of May 31, 2000, with respect to each person who was known by
the Company to own beneficially more than 5% of the outstanding shares of Common
Stock. The beneficial ownership of the Company's ThermoRetec Corporation
subsidiary ("ThermoRetec") is not included in this table. On June 5, 2000,
Thermo Electron completed a merger of its subsidiary, Retec Acquisition
Corporation with and into ThermoRetec. Upon completion of the merger,
ThermoRetec became a jointly owned subsidiary of the Company and Thermo
Electron. The table indicating the beneficial ownership of the common stock of
Thermo Electron includes shares that such persons or members of the group have
the right to acquire through the exercise of stock options of ThermoRetec which
were assumed by Thermo Electron in the merger.

While certain directors or executive officers of the Company are also
directors and executive officers of Thermo Electron, all such persons disclaim
beneficial ownership of the shares of Common Stock owned by Thermo Electron.

13
<PAGE>

Thermo Thermo Electron
Name (1) TerraTech Inc. (2) Corporation (3)
-------- ------------------ --------------
Thermo Electron Corporation (4) 16,709,626 N/A
Loomis, Sayles & Company, L.P. (5) 2,749,999 N/A
John P. Appleton 305,939 183,401
Emil C. Herkert 27,400 86,912
Brian D. Holt 250,000 341,495
Donald E. Noble 52,927 85,694
Jeffrey L. Powell 56,635 103,399
William A. Rainville 25,000 395,172
Polyvios C. Vintiadis 17,583 14,670
All directors and current executive
officers as a group (9 persons) 749,409 1,772,871
</TABLE>

(1) Except as reflected in the footnotes to this table, shares beneficially
owned consist of shares owned by the indicated person or by that person
for the benefit of minor children and all share ownership includes sole
voting and investment power.

(2) Shares of Common Stock beneficially owned by Dr. Appleton, Mr. Herkert,
Mr. Holt, Mr. Noble, Mr. Powell, Mr. Rainville, Mr. Vintiadis and all
directors and current executive officers as a group include 275,000,
8,000, 250,000, 6,300, 28,000, 25,000, 6,000 and 611,550 shares,
respectively, that such person or group has the right to acquire within
60 days of May 31, 2000, through the exercise of stock options. Shares
beneficially owned by Mr. Noble, Mr. Vintiadis and all directors and
current executive officers as a group include 23,587, 11,583 and 35,170
full shares, respectively, allocated through April 1, 2000, to their
respective accounts maintained under the Deferred Compensation Plan.
Except for Dr. Appleton, who beneficially owned 1.59% and Mr. Holt who
beneficially owned 1.3% of the Common Stock outstanding as of May 31,
2000, no director or named executive officer beneficially owned more
than 1% of the Common Stock outstanding as of such date; all directors
and current executive officers as a group beneficially owned 3.84% of
the Common Stock outstanding as of May 31, 2000.

(3) Shares of the common stock of Thermo Electron beneficially owned by Dr.
Appleton, Mr. Herkert, Mr. Holt, Mr. Noble, Mr. Powell, Mr. Rainville,
Mr. Vintiadis and all directors and current executive officers as a
group include 174,257, 83,253, 303,502, 25,838, 94,490, 324,454, 12,170
and 1,503,869 shares, respectively, that such person or members of the
group have the right to acquire within 60 days of May 31, 2000, through
the exercise of stock options. Shares beneficially owned by Mr. Noble
and all directors and current executive officers as a group each
include 46,813 shares allocated through April 1, 2000, to Mr. Noble's
account maintained pursuant to Thermo Electron's deferred compensation
plan for directors. No director or named executive officer beneficially
owned more than 1% of the common stock of Thermo Electron outstanding
as of May 31, 2000; all directors and current executive officers as a
group beneficially owned 1.13% of the common stock of Thermo Electron
outstanding as of such date.

(4) Shares beneficially owned by Thermo Electron include 104,440 shares of
Common Stock issuable upon the conversion of a 4 5/8% convertible
debenture due in 2003. As of May 31, 2000, Thermo Electron beneficially
owned approximately 87.57% of the outstanding Common Stock. Thermo
Electron's address is 81 Wyman Street, Waltham, Massachusetts
02454-9046. As of May 31, 2000, Thermo Electron had the power to elect
all of the members of the Company's board of directors.

(5) Information regarding the number of shares of Common Stock beneficially
owned by Loomis, Sayles & Company L.P. is based upon the most recent
Schedule 13G of Loomis, Sayles & Company, L.P. received by the Company,
which reported such ownership as of December 31, 1999. The address of
Loomis, Sayles & Company, L.P. is One Financial Center, Boston,
Massachusetts 02111. As of December 31, 1999, Loomis, Sayles & Company,
L.P. beneficially owned approximately 12.6% of the outstanding Common
Stock.

14
<PAGE>

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company and Thermo Electron have entered into a Corporate Services
Agreement (the "Services Agreement") under which Thermo Electron's corporate
staff provides certain administrative services, including certain legal advice
and services, risk management, employee benefit administration, tax advice and
preparation of tax returns, centralized cash management and financial and other
services to the Company. The Company was assessed an annual fee equal to 0.8% of
the Company's revenues for these services in fiscal 2000. The annual fee will
remain at 0.8% of the Company's revenues for fiscal 2001. The fee is reviewed
annually and may be changed by mutual agreement of the Company and Thermo
Electron. During fiscal 2000, Thermo Electron assessed the Company $2,459,000 in
fees under the Services Agreement. Management believes that the charges under
the Services Agreement are reasonable and that the terms of the Services
Agreement are fair to the Company. In fiscal 2000, the Company was billed an
additional $7,000 by Thermo Electron for certain administrative services
required by the Company that were not covered by the Services Agreement. The
Services Agreement automatically renews for successive one-year terms, unless
canceled by the Company upon 30 days' prior notice. In addition, the Services
Agreement terminates automatically in the event the Company ceases to be a
member of the Thermo Group or ceases to be a participant in Thermo electron
Corporate Charter. In the event of a termination of the Services Agreement, the
Company will be required to pay a termination fee equal to the fee that was paid
by the Company for services under the Services Agreement for the nine-month
period prior to termination. Following termination, Thermo Electron may provide
certain administrative services on an as-requested basis by the Company or as
required in order to meet the Company's obligations under Thermo Electron's
policies and procedures. Thermo Electron will charge the Company a fee equal to
the market rate for comparable services if such services are provided to the
Company following termination.

The Company has entered into a Tax Allocation Agreement with Thermo
Electron that outlines the terms under which the Company will be included in
Thermo Electron's consolidated Federal and state income tax returns. Under
current law, the Company will be included in such tax returns so long as Thermo
Electron owns at least 80% of the Company's outstanding Common Stock. In years
in which the Company has taxable income, it will pay to Thermo Electron amounts
comparable to the taxes the Company would have paid if it had filed its own
separate company tax returns. If Thermo Electron's equity ownership of the
Company were to drop below 80%, the Company would file its own tax returns.

The Company leases an office and operating facility from Thermo
Electron. The total rental payments made to Thermo Electron during fiscal year
2000 under this agreement were $166,000.

The Company and Thermo Electron entered into a development agreement
under which Thermo Electron agreed to fund up to $4,000,000 of the direct and
indirect costs of the Company's development of soil-remediation centers. In
exchange for this funding, the Company granted Thermo Electron a royalty equal
to approximately 3% of net revenues from soil-remediation services performed at
the centers developed under this agreement. The royalty payments may cease if
the amounts paid by the Company yield a certain internal rate of return to
Thermo Electron on the funds advanced to the Company under this agreement. The
Company paid Thermo Electron royalties of $196,000 in fiscal 2000.

The Company purchases and sells products and services in the ordinary
course of business to Thermo Electron and Thermo Electron's other subsidiaries.
In fiscal 2000, the Company sold a total of $288,000 of products to Thermo
Electron and its other subsidiaries and purchased a total of $641,000 of
products and/or services from such companies.

The Company, along with certain other Thermo subsidiaries, has entered
into a cash management arrangement with ABN AMRO. The new arrangement with ABN
AMRO consists of a zero balance arrangement, which includes a $24,744,720 credit
facility. The Company has access to $9,020,000 under this credit facility. Funds
borrowed by the Company under this arrangement pay interest at a rate set by
Thermo Finance B.V., a wholly-owned subsidiary of Thermo Electron, at the
beginning of each month, based on euro market rates. Funds invested by the
Company under the arrangement earn a rate set by Thermo Finance B.V. at the
beginning of each month, based on euro market rates. Thermo Electron guarantees
all of the obligations of each participant in this arrangement. As of April 1,
2000, the Company had a positive cash balance of approximately $2,228,000 and a
negative cash balance of approximately $8,965,000, based on an exchange rate

15
<PAGE>

of $0.4326/NLG 1.00. As of April 1, 2000, the average annual interest rate
earned on NLG deposits by participants in this credit arrangement was
approximately 3.079% and the average annual interest rate paid on overdrafts was
approximately 3.679%.

At April 1, 2000, the Company owed Thermo Electron and its other
subsidiaries an aggregate of $2,403,000 for amounts due under the Services
Agreement and related administrative charges, for other products and services,
and for miscellaneous items, net of amounts owed to the Company by Thermo
Electron and its other subsidiaries for products, services and other
miscellaneous items. The largest amount of such net indebtedness owed by the
Company to Thermo Electron and its other subsidiaries since April 4, 1999 was
$2,586,000. These amounts do not bear interest and are expected to be paid in
the normal course of business.

As of April 3, 1999, approximately $40,625,000 of the Company's cash
equivalents were invested in a repurchase agreement with Thermo Electron. Under
this agreement, the Company in effect lends excess cash to Thermo Electron,
which Thermo Electron collateralized with investments principally consisting of
corporate notes, U.S. government agency securities, money market funds,
commercial paper and other marketable securities, in the amount of at least 103%
of such obligation. The Company's funds subject to the repurchase agreement were
readily convertible into cash by the Company. The repurchase agreement earned a
rate based on the 90-day Commercial Paper Composite Rate plus 25 basis points,
set at the beginning of each quarter.

Effective June 1999, the Company and Thermo Electron commenced use of a
new domestic cash management arrangement in lieu of the repurchase agreement.
Under the new arrangement, amounts advanced to Thermo Electron by the Company
for domestic cash management purposes bear interest at the 30-day Dealer
Commercial Paper Rate plus 50 basis points, set at the beginning of each month.
Thermo Electron is contractually required to maintain cash, cash equivalents,
and/or immediately available bank lines of credit equal to at least 50% of all
funds invested under this cash management arrangement by all Thermo Electron
subsidiaries other than wholly owned subsidiaries. The Company has the
contractual right to withdraw its funds invested in the cash management
arrangement upon 30 days' prior notice. In addition, under the new domestic cash
management arrangement, amounts borrowed from Thermo Electron for domestic cash
management purposes bear interest at the 30-day Dealer Commercial Paper Rate
plus 150 basis points, set at the beginning of each month. The Company had
$1,158,000 of borrowings under this arrangement at fiscal year-end 2000.

THERMO ELECTRON CORPORATE REORGANIZATION

Thermo Electron has adopted a major reorganization plan under which,
among other things, it is acquiring the minority interest in most of its
subsidiaries that have minority investors. As part of this plan, Thermo Electron
has acquired or intends to acquire the minority interest in the Company and in
its subsidiaries ThermoRetec Corporation and The Randers Killam Group Inc., as
described below.

TRANSACTION WITH THE COMPANY

Thermo Electron has entered into an Agreement and Plan of Merger with
the Company, dated as of October 19, 1999, as amended, under which the
stockholders of the Company (other than Thermo Electron) would receive common
stock in Thermo Electron in exchange for their shares. The number of Thermo
Electron shares to be issued to the Company's minority shareholders will be
determined at the time of the merger transaction, according to the following
conditions: If during the 20 trading days immediately prior to the effective
date of the merger the average closing price of Thermo Electron common stock is
less than $18.75, the Company's shareholders would receive common stock worth
the equivalent of $7.50 per share of the Company's common stock. However, Thermo
Electron may elect to terminate the agreement if it would be required to issue
1.8 million or more shares of Thermo Electron common stock. If the average
closing price of Thermo Electron common stock is between $18.75 and $23.125,
each share of the Common Stock would be exchanged for .4 shares of Thermo
Electron common stock. If the average closing price of Thermo Electron common
stock is greater than $23.125, shareholders of the Company would receive Thermo
Electron common stock worth the equivalent of $9.25 per share of Common Stock.
The completion of this transaction is subject to numerous conditions, as
outlined in Note 15 to Consolidated Financial Statements in the Company's Fiscal
2000 Annual Report to Shareholders, which statements are incorporated herein by
reference.

16
<PAGE>

Executive officers and directors of the Company who hold shares of
Common Stock will also receive shares of Thermo Electron common stock on the
same terms as all the other stockholders. See Item 12 - "Security Ownership of
Certain Beneficial Owners and Management." In addition, certain executive
officers and directors of the Company hold options to acquire shares of Common
Stock (See Item 12 - "Security Ownership of Certain Beneficial Owners and
Management"), which options will be treated in the same manner as options held
by other employees. In general, all options held by such persons will be assumed
by Thermo Electron and converted into options to acquire shares of Thermo
Electron's common stock. Options that are assumed by Thermo Electron will be
converted as follows: The number of shares of Thermo Electron common stock
underlying each assumed option will equal the number of shares of Common Stock
underlying the option before the transaction, multiplied by the same exchange
ratio that is applied to the Common Stock in the merger, rounded down to the
nearest whole number of shares of Thermo Electron common stock. The exercise
price for each assumed option will be calculated by dividing the exercise price
of the option before the transaction by the exchange ratio, rounded up to the
nearest whole cent.

In addition to the ownership information that appears in the Item 12 -
"Security Ownership of Certain Beneficial Owners and Management" table, Mr.
Melas-Kyriazi (who is not a named executive officer of the Company for purposes
of Securities and Exchange Commission regulations, and whose ownership
information therefore does not appear in such table) holds 618 shares of Common
Stock. Additionally, certain directors participate in the Deferred Compensation
Plan. See Item 12 - "Security Ownership of Certain Beneficial Owners and
Management." On the effective date of the proposed transaction, the Deferred
Compensation Plan will terminate and the participants will receive either Thermo
Electron common stock in an amount equal to the balance of stock units credited
as of the effective time multiplied by the exchange ratio or the equivalent
value of the Thermo Electron common stock in cash.

TRANSACTIONS WITH THERMORETEC CORPORATION AND THE RANDERS KILLAM GROUP INC.

On May 15, 2000 and June 5, 2000, Thermo Electron Corporation took the
Company's ThermoRetec Corporation and The Randers Killam Group Inc. subsidiaries
private in mergers for $7.00 and $4.50 per share in cash, respectively.
Executive officers and directors of the Company who held shares of common stock
in ThermoRetec and Randers Killam received the same cash consideration per share
of subsidiary stock as all other stockholders of such subsidiaries.

In addition, the executive officers' and directors' options to acquire
shares of such subsidiaries' common stock, for which the granting corporation's
repurchase rights had not lapsed ("unvested options"), were automatically
assumed by Thermo Electron and converted into options to purchase shares of
Thermo Electron's common stock on the same terms as were applicable to all the
other holders of such subsidiary's options, as described below. In the case of
options to acquire shares of such subsidiaries' common stock, for which the
granting corporation's repurchase rights had lapsed ("vested options"), the
holders were given the opportunity to elect either to convert the options into
vested options to acquire shares of Thermo Electron's common stock or to receive
cash at the applicable cash transaction price less the applicable exercise
price, on the same terms as were applicable to all the other holders of such
subsidiary's options. Vested and unvested options that were assumed by Thermo
Electron in these completed transactions generally were converted as follows:
The number of shares of Thermo Electron's common stock underlying each assumed
option equaled the number of shares of subsidiary common stock underlying the
option before the transaction, multiplied by the applicable "cash exchange
ratio" described below, rounded down to the nearest whole number of shares of
Thermo Electron's common stock. The exercise price for each assumed option was
calculated by dividing the exercise price of the subsidiary stock option before
the transaction by the applicable "cash exchange ratio" described below, rounded
up to the nearest whole cent. The applicable "cash exchange ratio" for each
transaction was a fraction, the numerator of which was $7.00 (in the case of the
ThermoRetec transaction) or $4.50 (in the case of the Randers Killam
transaction) and the denominator of which was the closing price of Thermo
Electron's common stock on the day preceding the effective date of the
transaction.

Additionally, certain directors participated in the deferred
compensation plans of the various subsidiaries. On the effective date of the
ThermoRetec and Randers Killam mergers, each of their respective deferred
compensation plans terminated and the participants received cash in an amount
equal to the balance of such participant's stock units credited to his account
under the respective deferred compensation plan, multiplied

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by $7.00 or $4.50, as applicable. Any such stock units held by directors are
included in their stock ownership information described below.

In the ThermoRetec transaction, Dr. Appleton, Mr. Noble, Mr. Powell and
Mr. Rainville received a cash payment of $7.00 per share for 10,000, 4,500,
10,000 and 1,500 shares of common stock of ThermoRetec held by such individuals,
respectively. Additionally, Dr. Appleton, Mr. Noble, Mr. Powell and Mr.
Vintiadis held options to acquire 63,000, 6,000, 111,000 and 1,500 shares of
ThermoRetec common stock, respectively, that were converted into options to
acquire shares of common stock of Thermo Electron, as described above.
Additionally, Mr. Rainville elected to receive a cash payment, as described
above, for options to purchase an additional 22,500 shares of ThermoRetec common
stock, and received a payment of $1,575 for such options.

In the Randers Killam transaction, Mr. Herkert and Mr. Vintiadis
received a cash payment of $4.50 per share for 2,000 and 5,388 shares of common
stock of Randers Killam held by such individuals, respectively. Additionally,
Dr. Appleton, Mr. Herkert, Mr. Holt, Mr. Noble, Mr. Powell, Mr. Rainville and
Mr. Vintiadis held options to acquire 120,000, 149,000, 4,000, 225, 24,000,
14,400 and 48,300 shares of Randers Killam common stock, respectively, that were
converted into options to acquire shares of common stock of Thermo Electron, as
described above. Additionally, Mr. Herkert, Mr. Noble and Mr. Rainville elected
to receive cash payments, as described above, for options to purchase an
additional 101,000, 75 and 9,600 shares of Randers Killam common stock,
respectively, and received payments of $130,000, $195 and $4,800, respectively,
for such options.

STOCK HOLDING ASSISTANCE PLAN

The human resources committee of the board of directors (the
"Committee"), established a stock holding policy that requires the chief
executive officer to acquire and hold a minimum number of shares of Common
Stock. In order to assist the chief executive officer in complying with the
policy, the Committee also adopted a stock holding assistance plan under which
the Company may make interest-free loans to the chief executive officer, to
enable him to purchase the Common Stock in the open market. The stock holding
policy and the stock holding assistance plan were both subsequently amended to
apply only to the chief executive officer. In fiscal 1998 and 1999, Dr. Appleton
received loans in the principal amount of $137,607 under this plan to purchase
20,000 shares, the entire amount of which was outstanding as of June 30, 2000.
The loan is repayable by March 31, 2002 through Dr. Appleton's sale of all or
part, as necessary, of the 20,000 shares of the Company that were purchased with
the loan (or, if applicable, shares of Thermo Electron common stock received by
Dr. Appleton in the proposed merger with the Company); if, after such shares are
sold, there remains an outstanding balance under the loan, the balance will be
forgiven.

The Company's formerly publicly-traded, majority owned subsidiary,
ThermoRetec Corporation ("ThermoRetec") adopted a similar stock holding policy
and stock holding assistance plan, which was applicable to its executive
officers prior to their amendment to make them applicable only to its chief
executive officer. Certain executive officers of the Company were also the chief
executive officer of this subsidiary and were required to comply with the
subsidiary's stock holding policies. Dr. Appleton, the Company's president and
chief executive officer until April 2000, was also the chief executive officer
of ThermoRetec until May 14, 1997. Mr. Powell, a vice president of the Company,
was also the chief executive officer of ThermoRetec until April 30, 1998. In
fiscal 1998, Dr. Appleton received loans in the principal amount of $61,867.50
under the plan to purchase 10,000 shares of the common stock of ThermoRetec, of
which the entire amount was repaid as of June 30, 2000. In fiscal 1998, Mr.
Powell received loans in the principal amount of $59,940.50 under the plan to
purchase 10,000 shares of the common stock of ThermoRetec, of which the entire
amount was still outstanding as of June 30, 2000. Each of these loans is
repayable upon the earlier of demand or the fifth anniversary of the date of the
loan, unless otherwise determined by the human resources committee of the board
of directors of ThermoRetec. On June 5, 2000, Thermo Electron completed a merger
of its subsidiary Retec Acquisition Corporation with and into ThermoRetec. Upon
completion of the merger, ThermoRetec Corporation became a jointly owned
subsidiary of the Company and Thermo Electron. All outstanding loans under the
ThermoRetec stock holding assistance plan became immediately due and payable
upon completion of the merger transaction.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Amendment No. 1 on form 10-K/A
to be signed by the undersigned, duly authorized.

THERMO TERRATECH INC.

By: /s/ Sandra L. Lambert
-----------------------
Sandra L. Lambert
Secretary

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