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                                                                  EXHIBIT 10.21

                            PEOPLE'S BANCSHARES, INC.

                      1996 STOCK OPTION AND INCENTIVE PLAN

SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS

     The name of the plan is the People's Bancshares, Inc. 1996 Stock Option and
Incentive Plan (the "Plan").  The purpose of the Plan is to encourage and enable
the officers, employees, directors and other key persons of People's Bancshares,
Inc. (the "Company") and its  Subsidiaries  upon whose judgment,  initiative and
efforts the Company largely  depends for the successful  conduct of its business
to  acquire a  proprietary  interest  in the  Company.  It is  anticipated  that
providing such persons with a direct stake in the Company's  welfare will assure
a closer  identification  of their interests with those of the Company,  thereby
stimulating their efforts on the Company's behalf and strengthening their desire
to remain with the Company.

     The following terms shall be defined as set forth below:

     "Act" means the Securities Exchange Act of 1934, as amended.

     "Award" or  "Awards,"  except where  referring to a particular  category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Restricted Stock Awards, and Unrestricted Stock Awards.

     "Board" means the Board of Directors of the Company.

     "Cause" as such term  relates to the  termination  of any person  means the
occurrence  of one or more of the  following:  (i) such person is convicted  of,
pleads   guilty  to,  or   confesses   to  any  felony  or  any  act  of  fraud,
misappropriation  or embezzlement  which has an immediate and materially adverse
effect on the  Company or any  Subsidiary,  as  determined  by the Board in good
faith in its sole  discretion;  (ii) such person  engages in a fraudulent act to
the material  damage or prejudice of the Company or any Subsidiary or in conduct
or activities materially damaging to the property, business or reputation of the
Company or any  Subsidiary,  all as determined by the Board in good faith in its
sole  discretion;  (iii) any material  act or omission by such person  involving
malfeasance  or negligence  in the  performance  of such person's  duties to the
Company  or any  Subsidiary  to the  material  detriment  of the  Company or any
Subsidiary,  as  determined  by the Board in good faith in its sole  discretion,
which has not been  corrected by such person within 30 days after written notice
from the  Company of any such act or  omission;  (iv)  failure by such person to
comply in any material  respect with the terms of his employment  agreement,  if
any, or any written  policies or  directives  of the Board as  determined by the
Board in good faith in its sole discretion, which has not been corrected by such
person within 30 days after written notice from the Company of such failure;  or
(v)  material  breach by such person of his  noncompetition  agreement  with the
Company,  if  any,  as  determined  by the  Board  in  good  faith  in its  sole
discretion.

     "Change of Control" is defined in Section 12.


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     "Code"  means  the  Internal  Revenue  Code of 1986,  as  amended,  and any
successor Code, and related rules, regulations and interpretations.

     "Committee" means the Committee of the Board referred to in Section 2.

     "Disability"  means an individual's  inability to engage in any substantial
gainful  activity  by reason of any  medically  determinable  physical or mental
impairment  which can be  expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than 12 months.

     "Disinterested  Person" means an Independent Director who qualifies as such
under Rule 16b-3(c)(2)(i) promulgated under the Act, or any successor definition
under said Rule.

     "Effective  Date"  means  the  date  on  which  the  Plan  is  approved  by
stockholders as set forth in Section 14.

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
amended, and the related rules, regulations and interpretations.

     "Fair Market  Value" on any given date means the closing price per share of
Stock or, if no Stock is traded on such date,  the next  preceding date on which
Stock was traded, as reflected on the Nasdaq National Market.

     "Incentive Stock Option" means any Stock Option designated and qualified as
an "incentive stock option" as defined in Section 422 of the Code.

     "Independent  Director"  means a  member  of the  Board  who is not also an
employee of the Company or any Subsidiary.

     "Non-Qualified  Stock  Option"  means  any  Stock  Option  that  is  not an
Incentive Stock Option.

     "Option" or "Stock  Option"  means any option to  purchase  shares of Stock
granted pursuant to Section 5.

     "Restricted Stock Award" means Awards granted pursuant to Section 6.

     "Stock" means the Common Stock,  par value $.10 per share,  of the Company,
subject to adjustments pursuant to Section 3.

     "Subsidiary" means any corporation or other entity (other than the Company)
including,  without limitation,  People's Savings Bank of Brockton (the "Bank"),
in any unbroken  chain of  corporations  or other  entities,  beginning with the
Company if each of the corporations or entities

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(other than the last  corporation or entity in the unbroken chain) owns stock or
other  interests  possessing  50% or more of the economic  interest or the total
combined  voting power of all classes of stock or other  interests in one of the
other corporations or entities in the chain.

     "Unrestricted Stock Award" means any Award granted pursuant to Section 7.

SECTION 2.  ADMINISTRATION OF PLAN;  COMMITTEE  AUTHORITY TO SELECT PARTICIPANTS
            AND DETERMINE AWARDS

     (a) Committee. The Plan shall be administered by the Option Committee which
shall  consist of not less than two  Independent  Directors  as appointed by the
Board from time to time.  Each member of the Committee  shall be a Disinterested
Person and an "outside  director"  within the  meaning of Section  162(m) of the
Code and the regulations promulgated thereunder.

     (b) Powers of Committee.  The Committee  shall have the power and authority
to grant Awards  consistent with the terms of the Plan,  including the power and
authority:

          (i) to select the  officers,  employees and key persons of the Company
     and its Subsidiaries to whom Awards may from time to time be granted;

          (ii) to determine the time or times of grant, and the extent,  if any,
     of Incentive Stock Options,  Non-Qualified Stock Options,  Restricted Stock
     Awards,  Unrestricted  Stock Awards,  or any  combination of the foregoing,
     granted to any one or more participants;

          (iii) to determine  the number of shares of Stock to be covered by any
     Award;

          (iv)  to  determine  and  modify  from  time  to time  the  terms  and
     conditions,  including restrictions, not inconsistent with the terms of the
     Plan, of any Award,  which terms and conditions may differ among individual
     Awards and  participants,  and to approve  the form of written  instruments
     evidencing the Awards;

          (v) to accelerate at any time the  exercisability or vesting of all or
     any portion of any Award;

          (vi) subject to the provisions of Section  5(a)(ii),  to extend at any
     time the period in which Stock Options may be exercised;

          (vii) to determine at any time whether, to what extent, and under what
     circumstances  Stock and other  amounts  payable  with  respect to an Award
     shall  be  deferred  either   automatically  or  at  the  election  of  the
     participant  and whether and to what extent the Company shall pay or credit
     amounts  constituting  interest (at rates  determined by the  Committee) or
     dividends or deemed dividends on such deferrals; and


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          (viii) at any time to adopt,  alter and repeal such rules,  guidelines
     and  practices  for  administration  of the  Plan  and for its own acts and
     proceedings  as it  shall  deem  advisable;  to  interpret  the  terms  and
     provisions  of  the  Plan  and  any  Award   (including   related   written
     instruments);  to  make  all  determinations  it  deems  advisable  for the
     administration  of the Plan;  to decide all disputes  arising in connection
     with the Plan; and to otherwise supervise the administration of the Plan.

     All decisions and  interpretations of the Committee shall be binding on all
persons, including the Company and Plan participants.

SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION

     (a) Stock  Issuable.  The maximum  number of shares of Stock  reserved  and
available for issuance under the Plan shall be 334,000  shares.  For purposes of
this limitation,  the shares of Stock underlying any Awards which are forfeited,
canceled,  reacquired by the Company, satisfied without the issuance of Stock or
otherwise  terminated (other than by exercise) shall be added back to the shares
of Stock  available  for  issuance  under  the  Plan.  Subject  to such  overall
limitation,  shares of Stock may be issued up to such maximum number pursuant to
any type or types of Award. The shares available for issuance under the Plan may
be authorized but unissued shares of Stock or shares of Stock  reacquired by the
Company.

     Notwithstanding the foregoing, the sum of the aggregate number of shares of
Stock   underlying  (i)  outstanding   Options  granted  under  the  Plan,  (ii)
outstanding  options  granted under the People's  Bancshares,  Inc.  Amended and
Restated  Directors' Stock Option Plan, (iii) outstanding  options granted under
the People's  Bancshares,  Inc. Amended and Restated  Incentive and Nonqualified
Stock Option Plan,  and (iv)  outstanding  warrants to purchase Stock granted by
the Bank in 1992 shall at no time exceed 20% of the  aggregate  number of shares
of Stock then issued and outstanding.

     (b)  Recapitalizations.   If,  through  or  as  a  result  of  any  merger,
consolidation,  sale of all or  substantially  all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse  stock split or other similar  transaction,  the  outstanding  shares of
Stock are increased or decreased or are exchanged for a different number or kind
of shares or other  securities of the Company,  or  additional  shares or new or
different shares or other securities of the Company or other non-cash assets are
distributed  with  respect  to such  shares  of Stock or other  securities,  the
Committee  shall make an  appropriate  or  proportionate  adjustment  in (i) the
maximum number of shares  reserved for issuance under the Plan,  (ii) the number
of Stock Options that can be granted to any one  individual  participant,  (iii)
the  number  and  kind  of  shares  or  other  securities  subject  to any  then
outstanding  Awards under the Plan, and (iv) the price for each share subject to
any then  outstanding  Stock  Options  under  the  Plan,  without  changing  the
aggregate  exercise price (i.e.,  the exercise price multiplied by the number of
Stock Options) as to which such Stock Options remain exercisable. The adjustment
by the Committee shall be final, binding and conclusive. No fractional shares of
Stock shall be issued under the

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Plan resulting from any such adjustment, but the Committee in its discretion may
make a cash payment in lieu of fractional shares.

     (c) Mergers.  Upon consummation of a consolidation or merger or sale of all
or substantially all of the assets of the Company in which outstanding shares of
Stock are  exchanged  for  securities,  cash or other  property of an  unrelated
corporation or business  entity or in the event of a liquidation of the Company,
the Plan and all outstanding  Options issued hereunder shall  terminate,  unless
provision is made in  connection  with such  transaction  for the  assumption of
Options theretofore granted, or the substitution for such Options of new options
of the  acquiring or  succeeding  corporation  (or an affiliate  thereof),  with
appropriate  adjustment  as to the  number  and kind of shares and the per share
exercise prices,  as provided in Section 3(b). In the event of such termination,
all outstanding  Options shall be exercisable in full for at least 15 days prior
to the date of such termination whether or not otherwise exercisable during such
period.

     (d)  Substitute  Awards.  The  Committee may grant Awards under the Plan in
substitution  for stock and stock  based  awards  held by  employees  of another
corporation who become employees of the Company or a Subsidiary as the result of
a merger or  consolidation  of the employing  corporation  with the Company or a
Subsidiary  or the  acquisition  by the Company or a  Subsidiary  of property or
stock of the employing corporation. The Committee may direct that the substitute
awards be  granted  on such  terms and  conditions  as the  Committee  considers
appropriate in the circumstances.

SECTION 4. ELIGIBILITY

     Participants in the Plan will be such full or part-time  officers and other
employees  and  key  persons  of  the  Company  and  its  Subsidiaries  who  are
responsible for or contribute to the management,  growth or profitability of the
Company and its Subsidiaries as are selected from time to time by the Committee,
in its sole discretion.  Independent  Directors are also eligible to participate
in the Plan but only to the extent provided in Section 5(b) below.

SECTION 5.  STOCK OPTIONS

     Any  Stock  Option  granted  under  the Plan  shall be in such  form as the
Committee may from time to time approve.

     Stock Options granted under the Plan may be either  Incentive Stock Options
or Non- Qualified Stock Options.  Incentive Stock Options may be granted only to
employees of the Company or any  Subsidiary  that is a "subsidiary  corporation"
within the meaning of Section  424(f) of the Code. To the extent that any Option
does  not  qualify  as  an  Incentive  Stock  Option,   it  shall  be  deemed  a
Non-Qualified Stock Option.

     No Incentive  Stock Option shall be granted  under the Plan after March 26,
2006.

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     (a) Stock Options  Granted to Employees  and Key Persons.  The Committee in
its discretion may grant Stock Options to eligible  employees and key persons of
the Company or any Subsidiary. No person shall be eligible to receive any Option
under this Section 5(a) if at the date of grant such person beneficially owns in
excess of 10% of the  outstanding  Stock of the Company.  Stock Options  granted
pursuant  to this  Section  5(a)  shall be subject  to the  following  terms and
conditions  and  shall  contain  such  additional  terms  and  conditions,   not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:

          (i) Exercise Price. The exercise price per share for the Stock covered
     by a Stock Option granted pursuant to this Section 5(a) shall be determined
     by the  Committee  at the time of grant  but shall not be less than 100% of
     the Fair  Market  Value on the date of  grant.  If an  employee  owns or is
     deemed to own (by reason of the attribution  rules applicable under Section
     424(d)  of the  Code)  more than 10% of the  combined  voting  power of all
     classes of stock of the Company or any Subsidiary or parent corporation and
     an Incentive Stock Option is granted to such employee,  the option price of
     such Incentive  Stock Option shall be not less than 110% of the Fair Market
     Value on the grant date.

          (ii) Option Term.  The term of each Stock Option shall be fixed by the
     Committee, but no Incentive Stock Option shall be exercisable more than ten
     years  after the date the  option is  granted.  If an  employee  owns or is
     deemed to own (by reason of the attribution  rules of Section 424(d) of the
     Code) more than 10% of the combined voting power of all classes of stock of
     the Company or any Subsidiary or parent  corporation and an Incentive Stock
     Option is granted to such employee, the term of such Incentive Stock Option
     shall be no more than five years from the date of grant.

          (iii)  Exercisability;  Rights of a  Stockholder.  Stock Options shall
     become  vested  and  exercisable  at such time or times,  whether or not in
     installments, as shall be determined by the Committee at or after the grant
     date. The Committee may at any time accelerate the exercisability of all or
     any portion of any Stock  Option.  An  optionee  shall have the rights of a
     stockholder  only as to shares acquired upon the exercise of a Stock Option
     and not as to unexercised Stock Options.

          (iv) Method of Exercise. Stock Options may be exercised in whole or in
     part, by giving written  notice of exercise to the Company,  specifying the
     number of shares to be purchased. Payment of the purchase price may be made
     by one or more of the following methods:

               (A) In cash,  by  certified  or bank  check  or other  instrument
          acceptable to the Committee;

               (B) In the form of shares of Stock  that are not then  subject to
          restrictions  under  any  Company  plan and that have been held by the
          optionee for at least six months, if permitted by the Committee in its
          discretion.  Such  surrendered  shares  shall be valued at Fair Market
          Value on the exercise date; or

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               (C) By the optionee delivering to the Company a properly executed
          exercise notice together with irrevocable  instructions to a broker to
          promptly deliver to the Company cash or a check payable and acceptable
          to the Company to pay the purchase  price;  provided that in the event
          the  optionee  chooses to pay the purchase  price as so provided,  the
          optionee and the broker shall  comply with such  procedures  and enter
          into  such  agreements  of  indemnity  and  other  agreements  as  the
          Committee shall prescribe as a condition of such payment procedure.

     Payment instruments will be received subject to collection. The delivery of
     certificates  representing the shares of Stock to be purchased  pursuant to
     the  exercise of a Stock  Option will be  contingent  upon receipt from the
     optionee  (or a  purchaser  acting  in his  stead  in  accordance  with the
     provisions of the Stock  Option) by the Company of the full purchase  price
     for such shares and the fulfillment of any other requirements  contained in
     the Stock Option or applicable provisions of laws.

          (v) Termination by Reason of Death. If an optionee's employment by (or
     other  business  relationship  with) the  Company and its  Subsidiaries  is
     terminated  by reason of death,  any Stock Option held by such optionee may
     thereafter be exercised,  to the extent it was  exercisable  on the date of
     death, by the legal representative or legatee of the optionee, for a period
     of 12 months (or such longer period as the  Committee  shall specify at any
     time) from the date of death, or until the expiration of the stated term of
     the Option, if earlier.  To the extent that any portion of any Stock Option
     is not  exercisable  on the date of such death,  such  portion of the Stock
     Option shall terminate immediately and be of no force or effect.

          (vi) Termination by Reason of Disability.

               (A)  If  an   optionee's   employment   by  (or  other   business
          relationship  with) the Company and its  Subsidiaries is terminated by
          reason of  Disability,  any Stock  Option  held by such  optionee  may
          thereafter be exercised,  to the extent it was exercisable on the date
          of termination of employment (or business relationship),  for a period
          of 12 months (or such longer period as the Committee  shall specify at
          any time) from the date of such termination of employment (or business
          relationship),  or until  the  expiration  of the  stated  term of the
          Option, if earlier. To the extent that any portion of any Stock Option
          is not  exercisable on the date of such  termination of employment (or
          business  relationship),  such  portion  of  the  Stock  Option  shall
          terminate immediately and be of no force or effect.

               (B) The Committee  shall have sole  authority  and  discretion to
          determine   whether   a   participant's    employment   (or   business
          relationship) has been terminated by reason of Disability.

               (C) Except as  otherwise  provided by the  Committee at any time,
          the death of an optionee  during the period  provided in this  Section
          5(a)(vi) for the

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          exercise of a Stock Option shall extend such period for 12 months from
          the date of death,  subject to  termination  on the  expiration of the
          stated term of the Option, if earlier.

               (vii) Termination for Cause. If any optionee's  employment by (or
          business  relationship  with)  the  Company  and its  Subsidiaries  is
          terminated  by  resignation  or other  voluntary  reason  (other  than
          retirement)  or for Cause,  any Stock  Option  held by such  optionee,
          including any Stock Option that is immediately exercisable at the time
          of such termination,  shall terminate immediately and be of no further
          force and effect.

               (viii) Other  Termination.  Unless  otherwise  determined  by the
          Committee,  if an optionee's  employment by (or business  relationship
          with) the Company and its Subsidiaries terminates for any reason other
          than death, Disability,  voluntary action (other than retirement),  or
          for Cause,  any Stock Option held by such  optionee may  thereafter be
          exercised, to the extent it was exercisable on the date of termination
          of employment  (or business  relationship),  for three months (or such
          longer  period as the  Committee  shall  specify at any time) from the
          date of termination of employment (or business  relationship) or until
          the  expiration of the stated term of the Option,  if earlier.  To the
          extent that any portion of any Stock Option is not  exercisable on the
          date of such  termination  of employment  (or business  relationship),
          such portion of the Stock Option shall terminate immediately and be of
          no force or effect.

               (ix)  Annual  Limit on  Incentive  Stock  Options.  To the extent
          required for "incentive  stock option"  treatment under Section 422 of
          the Code, the aggregate  Fair Market Value  (determined as of the time
          of grant) of the shares of Stock with respect to which Incentive Stock
          Options  granted  under this Plan and any other plan of the Company or
          its parent and  subsidiary  corporations  become  exercisable  for the
          first time by an optionee  during any  calendar  year shall not exceed
          $100,000.  To the extent that any Stock Option exceeds this limit,  it
          shall constitute a Non-Qualified Stock Option.

     (b) Stock Options Granted to Independent Directors.

               (i) Automatic Grant of Options.

                    (A) Upon initial election or appointment to the Board of the
               Company or the board of  directors  of the Bank,  as the case may
               be, an  Independent  Director  shall  automatically  be granted a
               Stock Option to acquire 1,000 shares of Stock.  Each  Independent
               Director who is serving as an Independent Director of the Company
               on  the  Friday  after  each  annual  meeting  of   stockholders,
               beginning with the 1997 annual meeting,  shall  automatically  be
               granted  on such day a Stock  Option to acquire  1,000  shares of
               Stock,  provided,  however,  that in no event shall the aggregate
               number of  shares  of Stock  underlying  options  granted  to any
               Independent  Director  pursuant  to the  Plan  or  the  Company's
               Amended and Restated  Directors'  Stock Option Plan exceed 10,000
               shares. A grant of a Stock

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               Option  under  this  subsection  shall be  reduced  to the extent
               necessary to comply with the proviso in the foregoing sentence.

                    (B) The exercise  price per share for the Stock covered by a
               Stock  Option  granted  under this Section 5(b) shall be equal to
               the Fair Market  Value of the Stock on the date the Stock  Option
               is granted.

          (ii) Exercise; Termination.

                    (A)  Subject to Section  12, any Option  granted  under this
               Section  5(b) shall be  exercisable  upon the  completion  by the
               Independent  Director  of one year of service  as an  Independent
               Director of the Company or  Subsidiary;  provided that any Option
               so  granted  shall  become   immediately   exercisable  upon  the
               termination  of service of the  Independent  Director  because of
               Disability  or death.  An Option  issued  under this Section 5(b)
               shall not be  exercisable  after the expiration of ten years from
               the date of grant.

                    (B)  Any  Option  granted  to an  Independent  Director  and
               outstanding  on the date of his  death  may be  exercised  by the
               legal  representative  or legatee of the optionee for a period of
               12 months from the date of death or until the  expiration  of the
               stated term of the Option, if earlier.

                    (C)  Any  Option  granted  to an  Independent  Director  and
               outstanding on the date of his Disability may be exercised by the
               optionee for a period of 12 months from the date of Disability or
               until  the  expiration  of the  stated  term  of the  Option,  if
               earlier.

                    (D)  Any  Option  granted  to an  Independent  Director  and
               outstanding on the date of his resignation  from the Board may be
               exercised by the optionee for a period of 12 months from the date
               of such resignation or until the expiration of the stated term of
               the Option, if earlier.

                    (E) If a Director  ceases to be an Independent  Director for
               any   reason   other   than   those   set   forth   in   Sections
               5(b)(ii)(B)-(D),  any Option held by such  Independent  Director,
               including any Option that is immediately  exercisable at the time
               of such  termination,  shall  terminate  immediately and be of no
               further force and effect.

                    (F) Options granted under this Section 5(b) may be exercised
               only by written  notice to the Company  specifying  the number of
               shares to be purchased. The minimum number of shares with respect
               to which an Option may be  exercised at any one time shall be 100
               shares, or such lesser number as is subject to exercise under the
               Option at such time.  Payment of the full  purchase  price of the
               shares to be purchased  may be made by one or more of the methods
               specified in Section

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               5(a)(iv). An optionee shall have the rights of a stockholder only
               as to shares acquired upon the exercise of a Stock Option and not
               as to unexercised Stock Options.

          (iii) Limited to Independent Directors. The provisions of this Section
     5(b) shall  apply only to Options  granted or to be granted to  Independent
     Directors,  and shall not be deemed to modify,  limit or otherwise apply to
     any other provision of this Plan or to any Option issued under this Plan to
     a participant  who is not an  Independent  Director of the Company.  To the
     extent  inconsistent with the provisions of any other Section of this Plan,
     the provisions of this Section 5(b) shall govern the rights and obligations
     of the Company and Independent  Directors  respecting Options granted or to
     be granted to  Independent  Directors.  The provisions of this Section 5(b)
     which affect the price, date of exercisability,  option period or amount of
     shares of Stock under an Option  shall not be amended more than once in any
     six-month period, other than to comport with changes in the Code or ERISA.

     (c)  Non-transferability  of Options. No Stock Option shall be transferable
by  the  optionee  otherwise  than  by  will  or by  the  laws  of  descent  and
distribution  and all Stock Options shall be exercisable,  during the optionee's
lifetime, only by the optionee. Notwithstanding the foregoing, the Committee may
provide  in  an  option  agreement  that  the  optionee  may  transfer,  without
consideration  for the  transfer,  his Stock Options to members of his immediate
family,  to trusts for the benefit of such family members and to partnerships in
which such family members are the only partners.

     (d) Form of  Settlement.  Shares of Stock  issued upon  exercise of a Stock
Option  shall be free of all  restrictions  under the Plan,  except as otherwise
provided in the Plan.

SECTION 6. RESTRICTED STOCK AWARDS

     (a) Nature of Restricted  Stock Awards.  The Committee may grant Restricted
Stock Awards to any employee or key person of the Company or any  Subsidiary.  A
Restricted  Stock Award is an Award  entitling the recipient to acquire,  at par
value or such other purchase price determined by the Committee,  shares of Stock
subject to such  restrictions  and  conditions as the Committee may determine at
the time of grant  ("Restricted  Stock").  Conditions may be based on continuing
employment   (or   other   business    relationship)   and/or   achievement   of
pre-established performance goals and objectives.

     (b) Rights as a Stockholder. Upon execution of a written instrument setting
forth the  Restricted  Stock Award and paying any applicable  purchase  price, a
participant shall have the rights of a stockholder with respect to the voting of
the  Restricted  Stock,  subject to such  conditions  contained  in the  written
instrument  evidencing the Restricted  Stock Award.  Unless the Committee  shall
otherwise determine,  certificates  evidencing the Restricted Stock shall remain
in the  possession  of the  Company  until  such  Restricted  Stock is vested as
provided in Section 6(d) below.

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<PAGE>   11

     (c) Restrictions.  Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise  encumbered or disposed of except as specifically  provided
herein or in the written instrument  evidencing the Restricted Stock Award. If a
participant's  employment (or other business  relationship) with the Company and
its Subsidiaries  terminates for any reason, the Company shall have the right to
repurchase  Restricted Stock with respect to which conditions have not lapsed at
their  purchase  price,  from  the  participant  or  the   participant's   legal
representative.

     (d) Vesting of Restricted  Stock.  The Committee at the time of grant shall
specify the date or dates and/or the attainment of  pre-established  performance
goals,  objectives and other conditions on which the  non-transferability of the
Restricted  Stock and the Company's  right of  repurchase  or  forfeiture  shall
lapse.  Subsequent  to  such  date  or  dates  and/or  the  attainment  of  such
pre-established  performance goals, objectives and other conditions,  the shares
on which all  restrictions  have lapsed shall no longer be Restricted  Stock and
shall be deemed  "vested."  Except as may otherwise be provided by the Committee
at any time, a participant's  rights in any shares of Restricted Stock that have
not vested shall automatically  terminate upon the participant's  termination of
employment   (or  other  business   relationship)   with  the  Company  and  its
Subsidiaries  and such  shares  shall  either be  forfeited  or  subject  to the
Company's right of repurchase as provided in Section 6(c) above.

     (e) Waiver, Deferral and Reinvestment of Dividends.  The written instrument
evidencing  the  Restricted  Stock  Award may  require or permit  the  immediate
payment,  waiver,  deferral or  investment of dividends  paid on the  Restricted
Stock.

SECTION 7. UNRESTRICTED STOCK AWARDS

     (a) Grant or Sale of  Unrestricted  Stock.  The Committee  may, in its sole
discretion,  grant (or sell at a purchase price  determined by the Committee) an
Unrestricted  Stock  Award to any  employee  or key person of the Company or any
Subsidiary,  pursuant to which such employee or key person may receive shares of
Stock  free  of  any  restrictions   ("Unrestricted   Stock")  under  the  Plan.
Unrestricted  Stock Awards may be granted or sold as described in the  preceding
sentence in respect of past services or other valid consideration, or in lieu of
any cash compensation due to such employee or key person.

     (b) Elections to Receive  Unrestricted Stock In Lieu of Compensation.  Upon
the request of an employee or a key person of the Company or any  Subsidiary and
with the consent of the Committee,  each employee or key person may, pursuant to
an irrevocable  written election delivered to the Company no later than the date
or dates specified by the Committee,  receive a portion of the cash compensation
otherwise  due to  such  employee  or  key  person  in the  form  of  shares  of
Unrestricted  Stock  (valued at Fair Market  Value on the date or dates the cash
compensation  would  otherwise  be paid).  With  respect to any  employee who is
subject  to  Section  16 of the Act,  such  irrevocable  election  shall  become
effective  no earlier  than six months  and one day  following  the date of such
election and the  revocation of such election  shall be effective six months and
one day following the date of the revocation.


                                       11

<PAGE>   12

     (c) Restrictions on Transfers. The right to receive Unrestricted Stock on a
deferred  basis may not be sold,  assigned,  transferred,  pledged or  otherwise
encumbered, other than by will or the laws of descent and distribution.

SECTION 8. TAX WITHHOLDING

     (a) Payment by Participant.  Each participant shall, no later than the date
as of which  the  value of an Award or of any  Stock or other  amounts  received
thereunder  first becomes  includable in the gross income of the participant for
Federal  income  tax  purposes,   pay  to  the  Company,  or  make  arrangements
satisfactory to the Committee regarding payment of, any Federal, state, or local
taxes of any kind  required by law to be withheld  with  respect to such income.
The Company and its Subsidiaries shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to the
participant.

     (b) Payment in Stock. A participant  may elect to have such tax withholding
obligation  satisfied,  in whole or in part, by (i)  authorizing  the Company to
withhold  from  shares of Stock to be issued  pursuant  to any Award a number of
shares with an aggregate  Fair Market Value (as of the date the  withholding  is
effected) that would satisfy the withholding amount due, or (ii) transferring to
the Company  shares of Stock owned by the  participant  with an  aggregate  Fair
Market Value (as of the date the withholding is effected) that would satisfy the
withholding  amount  due.  With  respect  to any  participant  who is subject to
Section 16 of the Act, the following additional restrictions shall apply:

          (A) the election to satisfy tax withholding obligations relating to an
     Award in the manner permitted by this Section 8(b) shall be made either (1)
     during the period beginning on the third business day following the date of
     release of quarterly or annual summary  statements of sales and earnings of
     the Company and ending on the twelfth  business day following such date, or
     (2) at least six months  prior to the date as of which the  receipt of such
     an Award first becomes a taxable event for Federal income tax purposes;

          (B) such election shall be irrevocable;

          (C) such election  shall be subject to the consent or  disapproval  of
     the Committee; and

          (D) the Stock withheld to satisfy tax  withholding  must pertain to an
     Award which has been held by the  participant  for at least six months from
     the date of grant of the Award.

Notwithstanding the foregoing,  the provision of Section 8(b)(A)(1) shall not be
applicable  until the Company has been subject to the reporting  requirements of
Section 13(a) of the Act for at least a year prior to the election and has filed
all reports and  statements  required to be filed  pursuant to that  Section for
that year.

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<PAGE>   13

SECTION 9. TRANSFER, LEAVE OF ABSENCE, ETC.

     For  purposes  of the  Plan,  the  following  events  shall not be deemed a
termination of employment:

     (a) a transfer to the  employment  of the Company from a Subsidiary or from
the Company to a Subsidiary, or from one Subsidiary to another; or

     (b) an approved leave of absence for military  service or sickness,  or for
any  other  purpose  approved  by  the  Company,  if  the  employee's  right  to
re-employment  is  guaranteed  either by a statute or by  contract  or under the
policy  pursuant to which the leave of absence  was granted or if the  Committee
otherwise so provides in writing.

SECTION 10. AMENDMENTS AND TERMINATION

     The Board may, at any time, amend or discontinue the Plan and the Committee
may, at any time, amend or cancel any outstanding  Award (or provide  substitute
Awards at the same or reduced  exercise or purchase price or with no exercise or
purchase price in a manner not inconsistent with the terms of the Plan, but such
price, if any, must satisfy the requirements which would apply to the substitute
or  amended  Award if it were then  initially  granted  under this Plan) for the
purpose of  satisfying  changes in law or for any other lawful  purpose,  but no
such action shall adversely  affect rights under any  outstanding  Award without
the holder's  consent.  If and to the extent  determined  by the Committee to be
required  by the Act to ensure  that  Awards  granted  under the Plan are exempt
under Rule 16b-3  promulgated  under the Act, or that  Incentive  Stock  Options
granted  under  the Plan are  qualified  under  Section  422 of the  Code,  Plan
amendments shall be subject to approval by the Company stockholders  entitled to
vote at a meeting of stockholders.

SECTION 11. STATUS OF PLAN

     With respect to the portion of any Award which has not been  exercised  and
any  payments  in  cash,  Stock  or  other   consideration  not  received  by  a
participant,  a participant shall have no rights greater than those of a general
creditor of the Company unless the Committee shall otherwise expressly determine
in connection with any Award or Awards.  In its sole  discretion,  the Committee
may authorize the creation of trusts or other arrangements to meet the Company's
obligations to deliver Stock or make payments with respect to Awards  hereunder,
provided that the existence of such trusts or other  arrangements  is consistent
with the foregoing sentence.

SECTION 12. CHANGE OF CONTROL PROVISIONS

     Upon the occurrence of a Change of Control as defined in this Section 12:

          (a) Each  outstanding  Stock Option shall  automatically  become fully
     exercisable.

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<PAGE>   14

          (b) Each  Restricted  Stock Award  shall be subject to such terms,  if
     any,  with  respect  to a Change of Control  as have been  provided  by the
     Committee in connection with such Award.

          (c) "Change of Control"  shall mean the  occurrence  of any one of the
     following events:

               (i) any  "person,"  as such  term is used in  Sections  13(d) and
          14(d) of the Act (other than the Company, any of its Subsidiaries,  or
          any trustee,  fiduciary or other person or entity  holding  securities
          under any employee  benefit plan or trust of the Company or any of its
          Subsidiaries),  together with all  "affiliates"  and  "associates" (as
          such terms are  defined in Rule 12b-2  under the Act) of such  person,
          shall become the  "beneficial  owner" (as such term is defined in Rule
          13d-3 under the Act),  directly or  indirectly,  of  securities of the
          Company  representing  25% or more of either (A) the  combined  voting
          power of the Company's then outstanding securities having the right to
          vote in an  election  of the  Company's  Board of  Directors  ("Voting
          Securities")  or (B) the  then  outstanding  shares  of  Stock  of the
          Company (in either such case other than as a result of an  acquisition
          of securities directly from the Company); or

               (ii)  persons  who,  as of the  Effective  Date,  constitute  the
          Company's Board of Directors (the "Incumbent Directors") cease for any
          reason, including,  without limitation, as a result of a tender offer,
          proxy contest, merger or similar transaction, to constitute at least a
          majority of the Board, provided that any person becoming a director of
          the  Company  subsequent  to the  Effective  Date  whose  election  or
          nomination  for election was approved by a vote of at least a majority
          of the  Incumbent  Directors  shall,  for  purposes  of this Plan,  be
          considered an Incumbent Director; or

               (iii) the  stockholders  of the  Company  shall  approve  (A) any
          consolidation  or merger of the  Company or any  Subsidiary  where the
          stockholders of the Company, immediately prior to the consolidation or
          merger,  would not,  immediately  after the  consolidation  or merger,
          beneficially  own (as such term is  defined  in Rule  13d-3  under the
          Act), directly or indirectly, shares representing in the aggregate 80%
          or  more of the  voting  shares  of the  corporation  issuing  cash or
          securities in the  consolidation  or merger (or of its ultimate parent
          corporation,  if any), (B) any sale, lease, exchange or other transfer
          (in one  transaction  or a  series  of  transactions  contemplated  or
          arranged by any party as a single plan) of all or substantially all of
          the  assets  of the  Company  or (C)  any  plan  or  proposal  for the
          liquidation or dissolution of the Company.

     Notwithstanding  the foregoing,  a Change of Control shall not be deemed to
have occurred for purposes of the  foregoing  clause (i) solely as the result of
an  acquisition  of securities by the Company  which,  by reducing the number of
shares  of Stock or  other  Voting  Securities  outstanding,  increases  (x) the
proportionate  number of shares of Stock beneficially owned by any person to 25%
or more of the shares of Stock then outstanding or (y) the proportionate  voting
power represented by the Voting Securities  beneficially  owned by any person to
25% or  more  of the  combined  voting  power  of all  then  outstanding  Voting
Securities;  provided,  however, that if any person referred to in clause (x) or
(y) of this sentence shall thereafter become the beneficial

                                       14
<PAGE>   15

owner of any additional  shares of Stock or other Voting  Securities (other than
pursuant to a stock  split,  stock  dividend,  or similar  transaction),  then a
"Change  of  Control"  shall be  deemed to have  occurred  for  purposes  of the
foregoing clause (i).

SECTION 13. GENERAL PROVISIONS

     (a) No Distribution;  Compliance with Legal Requirements. The Committee may
require  each person  acquiring  Stock  pursuant to an Award to represent to and
agree with the  Company  in writing  that such  person is  acquiring  the shares
without a view to distribution thereof.

     No  shares  of Stock  shall  be  issued  pursuant  to an  Award  until  all
applicable  securities  law and  other  legal  and  stock  exchange  or  similar
requirements have been satisfied.  The Committee may require the placing of such
stop-orders and restrictive  legends on certificates  for Stock and Awards as it
deems appropriate.

     (b)  Delivery  of Stock  Certificates.  Delivery of stock  certificates  to
participants  under this Plan shall be deemed effected for all purposes when the
Company  or a stock  transfer  agent  of the  Company  shall  have  mailed  such
certificates  in the United States mail,  addressed to the  participant,  at the
participant's last known address on file with the Company.

     (c) Release of Financial Information. A copy of the Company's annual report
to  stockholders  shall be delivered to each optionee at the time such report is
distributed  to the  Company's  stockholders.  Upon  request the  Company  shall
furnish  to each  optionee  a copy of its most  recent  annual  report  and each
quarterly  report and  current  report  filed under the Act since the end of the
Company's prior fiscal year.

     (d)  Other  Compensation   Arrangements;   No  Employment  Rights.  Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, and such arrangements may be either
generally  applicable or applicable only in specific cases. The adoption of this
Plan and the  grant of  Awards  do not  confer  upon any  employee  any right to
continued employment with the Company or any Subsidiary.

SECTION 14. EFFECTIVE DATE OF PLAN

     This Plan shall become effective upon approval by the holders of a majority
of the shares of Stock of the Company  present or  represented  and  entitled to
vote at a meeting of stockholders.  Subject to such approval by the stockholders
and to the  requirement  that no Stock  may be  issued  hereunder  prior to such
approval,  Stock Options and other Awards may be granted  hereunder on and after
adoption of this Plan by the Board.


                                       15
<PAGE>   16

SECTION 15. GOVERNING LAW

     This Plan shall be governed by Massachusetts  law except to the extent such
law is preempted by federal law.



Date approved by Board of Directors: March 26, 1996

Date approved by Stockholders: May 14, 1996


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