EXHIBIT 10.12 - EXECUTIVE SEVERANCE AGREEMENT


                       EXECUTIVE SEVERANCE AGREEMENT


     This EXECUTIVE SEVERANCE AGREEMENT (the "Agreement") is made as of
November 17, 1997, by and between SCAN-OPTICS, INC. (the "Company") and
Clarence W. Rife (the "Executive").

                                 RECITALS:

          A.   The Executive is an executive of the Company and has made
and is expected to continue to make major contributions to the short- and
long-term profitability, growth, and financial strength of the Company;

          B.   The Company recognizes that the possibility of a Change of
Control (as hereafter defined) exists;

          C.   The Company desires to assure itself of both present and
future continuity of its management and desires to establish certain
severance benefits for key executive officers of the Company, including the
Executive, applicable in the event of a Change of Control; and

          D.   The Company wishes to aid in assuring that such executives
are not practically disabled from discharging their duties in respect of a
proposed or actual transaction involving a Change of Control.

          NOW, THEREFORE, the Company and the Executive agree as follows:

          1.   CERTAIN DEFINED TERMS:  In addition to terms defined
elsewhere herein, the following terms have the following meanings when used
in this Agreement with initial capital letters:

          (a) "Base Pay" means the Executive's annual aggregate fixed base
     salary from the Company at the time in question.

          (b) "Board" means the Board of Directors of the Company.

          (c) "Change of Control" means a change of control of a nature
     that would be required to be reported in response to Item 5(f) of
     Schedule 14A of Regulation 14A promulgated under the Securities
     Exchange Act of 1934, as amended (the "Exchange Act"), whether or not
     the Company is then subject to such reporting requirement; provided
     that, without limitation, such a Change of Control shall be deemed to
     have occurred if (i) any "person" (as such term is used in Sections
     13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
     owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
     indirectly, of securities of the Company representing 22% or more of
     the combined voting power of the Company's then outstanding
     securities; or (ii) during any period of two consecutive years (not
     including any period prior to the execution of this Agreement),
     individuals who at the beginning of such period constitute the Board
     and any new directors, whose election by the Board or nomination for
     election by the Company's stockholders was approved by a vote of at
     least two-thirds (2/3) of the directors then still in office who
     either were directors at the beginning of the period or whose election
     or nomination for election was previously so approved, cease for any
     reason to constitute a majority thereof.

          (d) "Cause" means that, prior to any Termination by the Executive
     for Good Reason, the Executive shall have:

               (i) committed an intentional act of fraud, embezzlement, or
          theft in connection with the Executive's duties or in the course
          of his employment with the Company;

               (ii) committed intentional wrongful damage to property of
          the Company; or

               (iii) intentionally and wrongfully disclosed confidential
          information of the Company;

     and any such act shall have been materially harmful to the Company.
     For purposes of this Agreement, no act on the part of the Executive
     shall be deemed "intentional" if it was due primarily to an error in
     judgment or negligence, but shall be deemed "intentional" only if done
     by the Executive not in good faith and without reasonable belief that
     the Executive's action or omission was in the best interests of the
     Company.  The determination of whether a Termination of the
     Executive's employment is for "Cause" shall be made by the Board.

          (e) "Commission Pay" means the average annual commissions paid to
     the Executive by the Company during the three year period ending at
     the time in question.

          (f) "Date of Termination" means the date of receipt of a Notice
     of Termination or any later date specified therein, as the case may
     be; provided, however, that if the Executive is Terminated by the
     Company other than for Cause or for disability pursuant to Section
     2(a)(ii), the Date of Termination will be the date on which the
     Executive receives a Notice of Termination from the Company; and
     provided further, if the Executive is Terminated by reason of death or
     disability pursuant to Section 2(a)(i) or 2(a)(ii), the Date of
     Termination will be the last day of the month in which occurs the date
     of death or the disability effective date, as the case may be.

          (g) "Employee Benefits" means the perquisites, benefits and
     service credit for benefits as provided under the plans and programs
     maintained by the Company, including, but not limited to, plans and
     programs which are "employee benefit plans" under Section 3(3) of the
     Employee Retirement Income Security Act of 1974, as amended, and any
     amendment or successor to such plans or programs (whether insured,
     funded or unfunded).

          (h) "Good Reason" means the occurrence of any of the events
     listed in Sections 2(b)(i) through 2(b)(vii), inclusive.

          (i) "Incentive Pay" means an annual amount equal to the aggregate
     annual bonus, incentive compensation or performance pay, in addition
     to Base Pay, made or to be made in regard to services rendered in any
     calendar year or performance period pursuant to any bonus, incentive
     compensation or performance pay plan of the Company.

          (j) "Notice of Termination" means a written notice which (i)
     indicates the specific provision in this Agreement relied upon, (ii)
     sets forth in reasonable detail the facts and circumstances claimed to
     provide a basis for the Termination under the provision so indicated,
     and (iii) if the effective date of the Termination is other than the
     date of receipt of such notice, specifies the effective date of
     Termination (which date will be not more than sixty (60) days after
     the giving of such notice).  The failure by the Executive to set forth
     in the Notice of Termination any fact or circumstance which
     contributes to a showing that the Executive is entitled to the
     benefits intended to be provided by this Agreement will not constitute
     a waiver of any right of the Executive hereunder or otherwise preclude
     the Executive from later asserting such fact or circumstance in
     enforcing the Executive's rights hereunder.

          (k) "Severance Period" means the period of time commencing on the
     date of an occurrence of a Change of Control and continuing until the
     earlier of (i) the date which is two years following the occurrence of
     the Change of Control, and (ii) the Executive's death.

          (1) "Term" means (i) the period commencing on the date hereof and
     ending on the second anniversary of the date hereof; provided,
     however, that commencing on the date one year after the date hereof,
     and on each annual anniversary of such date (such date and each annual
     anniversary thereof shall be hereinafter referred to as the "Renewal
     Date"), unless previously terminated, the Term shall be automatically
     extended so as to terminate two years from such Renewal Date, unless
     at least sixty (60) days prior to the Renewal Date the Company shall
     give notice to the Executive that the Term shall not be so extended,
     (ii) if, prior to a Change of Control, for any reason the Executive is
     Terminated or Terminates, thereupon without further action the Term
     shall be deemed to have expired and this Agreement will immediately
     terminate and be of no further effect, and (iii) in the event of a
     Change of Control, the Term will, without further action, be
     considered to terminate at the expiration of the Severance Period.

          (m) "Terminate", "Termination" and correlative terms mean the
     termination of the Executive's employment with the Company and any
     Affiliate or Subsidiary.

          2.   TERMINATION FOLLOWING A CHANGE OF CONTROL:  (a) If, during
the Severance Period, the Executive is Terminated, the Executive will be
entitled to the benefits provided by Section 3 unless such Termination is
by reason of one or more of the following events:

               (i) The Executive's death;

               (ii) The permanent and total disability of the Executive, as
          defined in any long term disability plan of the Company,
          applicable to the Executive, as in effect immediately prior to
          the Change of Control;

               (iii) Cause; or

               (iv) The Executive's voluntary Termination in circumstances
          in which Good Reason does not exist.

          (b) In the event of the occurrence of a Change of Control, the
     Executive may Terminate during the Severance Period with the right to
     severance compensation as provided in Section 3 upon the occurrence of
     one or more of the following events (regardless of whether any other
     reason, other than Cause as hereinabove provided, for Termination
     exists or has occurred, including, without limitation, other
     employment):

               (i) An adverse change in the nature or scope of the
          authorities, powers, functions, responsibilities, or duties
          attached to the position with the Company, which the Executive
          held immediately prior to the Change of Control;

               (ii) A reduction in the Executive's Base Pay as in effect
          immediately prior to any Change of Control, or as it may have
          been increased from time to time thereafter;

               (iii) Any failure by the Company to continue in effect any
          plan or arrangement providing Incentive Pay in which the
          Executive is participating at the tine of a Change of Control (or
          any other plans or arrangements providing substantially similar
          benefits) or the taking of any action by the Company which would
          adversely affect the Executive's participation in any such plan
          or arrangement or reduce the Executive's benefits under any such
          plan or arrangement in a manner inconsistent with the practices
          of the Company prior to the Change of Control;

               (iv) Any failure by the Company to continue in effect any
          Employee Benefits in which the Executive is participating at the
          time of a Change of Control (or any other plans or arrangements
          providing the Executive with substantially similar benefits) or
          the taking of any action by the Company which would adversely
          affect the Executive's participation in or materially reduce the
          Executive's benefits under any Employee Benefits or deprive the
          Executive of any material fringe benefit enjoyed by the Executive
          at the time of a Change of Control;

               (v) The liquidation, dissolution, merger, consolidation, or
          reorganization of the Company or transfer of all or substantially
          all of its business and/or assets, unless the successor or
          successors (by liquidation, merger, consolidation,
          reorganization, transfer, or otherwise) to which all or a
          significant portion of its business and/or assets have been
          transferred (directly or by operation of law) assumed all duties
          and obligations of the Company under this Agreement pursuant to
          Section 9;

               (vi) Without limiting the generality or effect of the
          foregoing, any material breach of this Agreement by the Company
          or any successor thereto; or

               (vii) Any action by the Company which causes the Executive's
          services to be performed regularly at any office or location
          greater than thirty five (35) miles from the office or location
          where the Executive was employed immediately preceding the date
          of the Change of Control.

          (c) Any Termination will be communicated by Notice of Termination
     hereto given in accordance with Section 10 of this Agreement.

          3.   SEVERANCE COMPENSATION:  (a) If, following the occurrence of
a Change of Control, the Executive is Terminated by the Company during the
Severance Period other than in the circumstances set forth in Section
2(a)(i), 2(a)(ii), or 2(a)(iii), or if the Executive Terminates for Good
Reason:

               (i) The Company will pay to the Executive in a lump sum in
          cash within five business days after the later of the date on
          which the Company receives the determination of the Accounting
          Firm required in Section 4 hereof or the Date of Termination an
          amount (the "Severance Payment") equal to the sum of (A) 2.5
          times the sum of Base Pay and Commission Pay at the highest rates
          in effect at any time within the 90-day period preceding the date
          the Notice of Termination was given or, if higher, at the highest
          rates in effect at any time within the 90-day period preceding
          the date of the first occurrence of a Change of Control, plus (B)
          an amount equal to 2.5 times the greatest amount of Incentive Pay
          received by the Executive during any year from and including the
          third year prior to the first occurrence of a Change of Control,
          plus (C) an amount equal to 2.5 times the matching contribution
          that would be made by the Company to the Scan-Optics, Inc.
          Retirement Savings Plan on Executive's behalf if the Executive
          deferred under such Plan four percent (adjusted for any
          applicable limitation under the Internal Revenue Code of 1986, as
          amended) of the sum of Base Pay, Commission Pay and Incentive Pay
          (at the rates used in (A) and (B) above) or such higher
          percentage as may then be eligible for Company matching
          contributions, plus (D) an amount equal to the value (determined
          as of the Date of Termination and assuming exercisability as of
          such date) of all options granted to the Executive to acquire
          Company common stock that will not become exercisable as a result
          of Executive's Termination; and

               (ii) For two years following the Date of Termination, the
          Executive shall be eligible for participation in and shall
          receive all benefits under such benefit plans, practices,
          policies and programs of the Company that provide medical,
          prescription, dental, disability, accident or life insurance
          coverage, with the costs of such participation to be paid by the
          Company to the same extent as prior to the Executive's
          Termination.  In the event that such continued participation is
          not allowed under the terms and provisions of such plans or
          programs, then in lieu thereof, the Company shall acquire
          individual insurance policies providing comparable coverage for
          the Executive; provided that if any such individual coverage is
          unavailable, the Company shall pay to the Executive an amount
          equal to the contributions that would have been made by the
          Company for such coverage on the Executive's behalf if the
          Executive had remained in the employ of the Company for two years
          following the Date of Termination.

          (b) There will be no right of set-off or counterclaim in respect
     of any claim, debt, or obligation against any payment to or benefit
     for the Executive provided for in this Agreement.

          (c) Without limiting the rights of the Executive at law or in
     equity, if the Company fails to make any payment or provide any
     benefit required to be made or provided under this Agreement
     (including under this Section 3 or Section 6) on a timely basis, the
     Company will pay interest on the amount or value thereof at an
     annualized rate of interest equal to the so-called composite "prime
     rate" as quoted from time to time during the relevant period in the
     Northeast Edition of THE WALL STREET JOURNAL.  Such interest will be
     payable as it accrues on demand.  Any change in such prime rate will
     be effective on and as of the date of such change.

          (d) Notwithstanding any other provision hereof, the parties'
     respective rights and obligations under this Section 3 and under
     Sections 4 and 6 will survive any termination or expiration of this
     Agreement following a Change of Control or any Termination following a
     Change of Control for any reason whatsoever.

          4.   EXCISE AND OTHER TAXES.  The Executive shall bear all
expense of, and be solely responsible for, all federal, state, local or
foreign taxes due with respect to any payment received hereunder,
including, without limitation, any excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code"); provided,
however, that the Severance Payment shall be reduced to the extent
necessary so that no portion thereof shall be subject to the excise tax
imposed by Section 4999 of the Code.  The foregoing determination will be
made by a nationally recognized accounting firm (the "Accounting Firm")
selected by the Executive and reasonably acceptable to the Company (which
may, but will not be required to be, the Company's independent auditors).
The Executive will direct the Accounting Firm to submit its determination
and detailed supporting calculations to both the Company and the Executive
within fifteen (15) days after the Date of Termination.  If the Accounting
Firm determines that such reduction is required by this Section 4, the
Company shall pay such reduced amount to the Executive in accordance with
Section 3(a)(i).  If the Accounting Firm determines that no reduction is
necessary under this Section 4, it will, at the same time as it makes such
determination, furnish the Company and the Executive an opinion that the
Executive will
not be liable for any excise tax under Section 4999 of the Code. The
Company and the Executive will each provide the Accounting Firm access to
and copies of any books, records, and documents in the possession of the
Company or the Executive, as the case may be, reasonably requested by the
Accounting Firm, and otherwise cooperate with the Accounting Firm in
connection with the preparation and issuance of the determinations and
calculations contemplated by this Section 4.  The fees and expenses of the
Accounting Firm for its services in connection with the determinations and
calculations contemplated by this Section 4 will be borne by the Company.

          5.   NO MITIGATION OBLIGATION:  The Company hereby acknowledges
that it will be difficult, and may be impossible, for the Executive to find
reasonably comparable employment following the Date of Termination.  The
payment of the severance compensation by the Company to the Executive in
accordance with the terms of this Agreement will be liquidated damages, and
the Executive will not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise,
nor will any profits, income, earnings, or other benefits from any source
whatsoever create any mitigation, offset, reduction, or any other
obligation on the part of the Executive hereunder or otherwise.

          6.   LEGAL FEES AND EXPENSES:  If the Company has failed to
comply with any of its obligations under this Agreement or in the event
that the Company or any other person takes or threatens to take any action
to declare this Agreement void or unenforceable, or institutes any
litigation or other action or proceeding designed to deny, or to recover
from, the Executive the benefits provided or intended to be provided to the
Executive hereunder, the Company irrevocably authorizes the Executive from
time to time to retain counsel of the Executive's choice, at the expense of
the Company to the extent hereafter provided, to advise and represent the
Executive in connection with any such interpretation, enforcement, or
defense, including, without limitation, the initiation or defense of any
litigation or other legal action, whether by or against the Company or any
member of the Board, officer, stockholder, or other person or entity
affiliated with the Company, in any jurisdiction.  If the Executive
prevails, in whole or in part, in connection with any such litigation, the
Company will pay and be solely financially responsible for any and all
attorneys' and related fees' and expenses incurred by the Executive in
connection with such litigation.

          7.   EMPLOYMENT RIGHTS:  Nothing expressed or implied in this
Agreement will create any right or duty on the part of the Company or the
Executive to have the Executive remain in the employment of the Company
prior to or following any Change of Control.

          8.   WITHHOLDING OF TAXES:  Except as otherwise provided in this
Agreement, the Company may withhold from any amounts payable under this
Agreement all federal, state, city, or other taxes as the Company is
required to withhold pursuant to any law or government regulation or
ruling.

          9.   SUCCESSORS AND BINDING AGREEMENT:  (a) The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization, or otherwise) to all or substantially all of
the business and/or assets of the Company, by agreement in form and
substance satisfactory to the Executive, expressly to assume and agree to
perform this agreement in the same manner and to the same extent the
Company would be required to perform if no such succession had taken place.
This Agreement will be binding upon and inure to the benefit of the Company
and any successor to the Company, including, without limitation, any
persons acquiring directly or indirectly all or substantially all of the
business and/or assets of the Company whether by purchase, merger,
consolidation, reorganization, or otherwise (and such successor will
thereafter be deemed the "Company" for the purposes of this Agreement), but
will not otherwise be assignable, transferable, or delegable by the
Company.

          (b) This Agreement will inure to the benefit of and be
     enforceable by the Executive's personal or legal representatives,
     executors, administrators, successors, heirs, distributees, and/or
     legatees.

          (c) This Agreement is personal in nature and neither of the
     parties hereto will, without the consent of the other, assign,
     transfer, or delegate this Agreement or any rights or obligations
     hereunder except as expressly provided in Sections 9(a) and 9(b).
     Without limiting the generality or effect of the foregoing, the
     Executive's right to receive payments hereunder will not be
     assignable, transferable, or delegable, whether by pledge, creation of
     a security interest, or otherwise, other than by a transfer by will or
     by the laws of descent and distribution and, in the event of any
     attempted assignment or transfer contrary to this Section 9(c), the
     Company will have no liability to pay any amount so attempted to be
     assigned, transferred, or delegated.

          10.  NOTICES:  For all purposes of this Agreement, all
communications, including, without limitation, notices, consents, requests,
or approvals, required or permitted to be given hereunder will be in
writing and will be deemed to have been duly given when hand delivered or
dispatched by electronic facsimile transmission (with receipt thereof
orally confirmed), or two business days after having been mailed by United
States registered or certified mail, return receipt requested, postage
prepaid, or one business day after having been sent by a nationally
recognized overnight courier service, addressed to the Company (to the
attention of the Chairman of the Board) at its principal executive office
and to the Executive at the Executive's principal residence, or to such
other address as any party may have furnished to the other in writing and
in accordance herewith, except that notices of changes of address will be
effective only upon receipt.

          11.  GOVERNING LAW:  The validity, interpretation, construction,
and performance of this Agreement will be governed by and construed in
accordance with the substantive laws of the State of Connecticut, without
giving effect to the principles of conflict of laws of such State, to the
extent not preempted by applicable federal law.

          12.  VALIDITY:  If any provision of this Agreement or the
application of any provision hereof to any person or circumstances is held
invalid, unenforceable, or otherwise illegal, the remainder of this
Agreement and the application of such provision to any other person or
circumstances will not be affected, and the provision so held to be
invalid, unenforceable, or otherwise illegal will be reformed to the extent
(and only to the extent) necessary to make it enforceable, valid, or legal.

          13.  NON-EXCLUSIVITY OF RIGHTS:  Nothing in this Agreement will
prevent or limit the Executive's present or future participation in any
benefit, bonus, incentive, or other plan or program provided by the Company
for which the Executive may qualify, nor will this Agreement in any manner
limit or otherwise affect such rights as the Executive may have under any
stock option or other agreements with the Company.  Amounts or benefits
which are vested or which the Executive is otherwise entitled to receive
under any plan or program of the Company at or subsequent to the Date of
Termination will be payable in accordance with such plan or program, except
as otherwise expressly provided in this Agreement; provided, however, that
any amounts received by the Executive pursuant to this Agreement shall be
in lieu of (but, if necessary to give effect to this provision, shall be
reduced by) any benefits which the Executive is entitled to receive or may
become entitled to receive under any reduction-in-force or severance pay
plan or practice which the Company now has in effect or may hereafter put
into effect, any other benefits to which the Executive may be entitled
under any previous individual agreement of employment or severance
agreement with the Company which would provide a benefit to the Executive
upon the occurrence of, or the termination of employment following, a
Change of Control (whether or not so defined in said individual agreement),
and any severance benefits required under federal or state law to be paid
to the Executive.

          14.  MISCELLANEOUS:  No provision of this Agreement may be
modified, waived, or discharged unless such waiver, modification, or
discharge is agreed to in writing signed by the Executive and the Company.
No waiver by either party hereto at any time of any breach by the other
party hereto or compliance with any condition or provision of this
Agreement to be performed by such other party will be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior
or subsequent time.  No agreements or representations, oral or otherwise,
expressed or implied with respect to the subject matter hereof have been
made by either party which are not set forth expressly in this Agreement.
References to Sections are to references to Sections of this Agreement.

          IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered as of the date first above written.


                                           SCAN-OPTICS, INC.




                                              By /s/ James C. Mavel
                                              Name:  James C. Mavel
                                              Title: Chairman, President and
                                                     Chief Executive Officer






                                           /s/ Clarence W. Rife
                                           Clarence W. Rife