IONICS, INCORPORATED

                            1997 STOCK INCENTIVE PLAN
                        (as amended through May 8, 2002)


1.  Purpose.  The  purpose  of this  Plan is to  enable  officers  and other key
employees of, and consultants to, Ionics,  Incorporated  (the "Company") and any
present or future parent or subsidiary  of the Company  (collectively,  "Related
Corporations")  to (i) own shares of Stock in the Company,  (ii)  participate in
the shareholder value which has been created, (iii) have a mutuality of interest
with other  shareholders  and (iv)  enable the  Company to  attract,  retain and
motivate key employees and consultants of particular merit. As used herein,  the
terms  "parent" and  "subsidiary"  mean  "parent  corporation"  and  "subsidiary
corporation,"  respectively,  as those  terms are  defined in Section 424 of the
Code.

2. Definitions. For the purposes of the Plan, the following terms shall have the
meanings set forth below:

     (a) Award means the grant or sale pursuant to the Plan of any Stock Options
     and Long-Term Performance Awards.

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

     (c) Code means the Internal  Revenue Code of 1986,  as amended from time to
     time, or any statute  successor  thereto,  and any regulations  issued from
     time to time thereunder.

     (d) Company means Ionics, Incorporated, a corporation organized under the
     laws of the Commonwealth of Massachusetts (or any successor corporation).

     (e)  Disability  means  "permanent  and total  disability" as defined under
     Section 22(e)(3) of the Code or any successor statute.

     (f)  Effective  Date means the date that the Plan is  approved  by both the
     Board of Directors of the Company and the stockholders of the Company,  and
     if not approved on the same day, the date of the last approval.

     (g) Fair Market Value means,  as of any given date, the last reported sales
     price of the Stock as reported in The Wall Street Journal for such date, or
     if no such sale is reported on the last  preceding  trade date to the sales
     date,  or if the Stock is not  publicly  traded on or as of such date,  the
     fair market value of the Stock as determined by the Committee in good faith
     based on the available facts and circumstances at the time.

     (i)  Incentive  Stock  Option  means any Stock  Option  intended  to be and
     designated as an "Incentive Stock Option" within the meaning of Section 422
     of the Code.

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     (j) Long-Term  Performance  Award means an Award made pursuant to Section 7
     below that is payable in cash and/or Stock in accordance  with the terms of
     the grant,  based on Company,  business unit and/or individual  performance
     over a period of at least one year.

     (k)  Non-Qualified  Stock  Option  means  any Stock  Option  that is not an
     Incentive Stock Option.

     (l) Participant means an employee or consultant to whom an Award is granted
     pursuant to the Plan.

     (m) Plan means the Ionics,  Incorporated  1997 Stock Incentive Plan, as set
     forth herein and as it may be amended from time to time.

     (n) Retirement  means a termination  of employment,  for reasons other than
     death,  which  satisfies  the  requirements  for  normal,  early,  late  or
     disability   retirement  in  accordance   with  the  Ionics,   Incorporated
     Retirement Plan or any successor plan.

     (o) Stock means the common stock, $1.00 par value per share, of the
         Company.
     (p) Stock  Option or Option  means any option to  purchase  shares of Stock
     granted pursuant to Section 6 below.

     In  addition  the term  Change in Control  shall have  meaning set forth in
     Section 8.2.

3.   Administration

     (a) Board or Committee  Administration.  The Plan shall be  administered by
     the Board or,  subject to  paragraph  3(d)  (relating  to  compliance  with
     Section  162(m) of the Code),  by a committee  appointed  by the Board (the
     "Committee"),  which shall initially be the  Compensation  Committee of the
     Board.  Hereinafter,  all references in this Plan to the "Committee"  shall
     mean the Board if no Committee has been appointed.  Subject to ratification
     of the grant or authorization of each Award by the Board (if so required by
     applicable  state law), and subject to the terms of the Plan, the Committee
     shall have the  authority to (i) determine to whom (from among the class of
     employees  eligible  under Section 5 to receive  Incentive  Stock  Options)
     Incentive Stock Options shall be granted, and to whom (from among the class
     of   individuals   and  entities   eligible  under  Section  5  to  receive
     Non-Qualified Stock Options and Long-Term Performance Awards) Non-Qualified
     Stock  Options  and  Long-Term  Performance  Awards  may be  granted,  (ii)
     determine  the  time or  times at which  Awards  shall  be  granted;  (iii)
     determine the purchase price of shares subject to each Option, which prices
     shall not be less than the minimum price specified in Section 6.2(a);  (iv)
     determine whether each Option granted shall be an Incentive Stock Option or
     a Non-Qualified Stock Option; (v) determine (subject to Sections 6.2(b) and
     6.2(c)) the time or times when each Option shall become exercisable and the
     duration  of the  exercise  period;  (vi)  extend the period  during  which
     outstanding Options may be exercised;  (vii) determine whether restrictions
     such as  repurchase  options are to be imposed on shares  subject to Awards


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     and the nature of such restrictions,  if any; and (viii) interpret the Plan
     and  prescribe  and rescind  rules and  regulations  relating to it. If the
     Committee  determines to issue a Non-Qualified  Stock Option, it shall take
     whatever actions it deems necessary,  under Section 422 of the Code and the
     regulations promulgated thereunder, to ensure that such Non-Qualified Stock
     Option is not treated as an Incentive Stock Option.  The interpretation and
     construction by the Committee of any provisions of the Plan or of any Award
     granted under it shall be final unless  otherwise  determined by the Board.
     The  Committee may from time to time adopt such rules and  regulations  for
     carrying out the Plan as it may deem  advisable.  No member of the Board or
     the Committee shall be liable for any action or determination  made in good
     faith with respect to the Plan or any Award granted under it.

     (b) Committee  Actions.  The Committee may select one of its members as its
     chairman,  and  shall  hold  meetings  at such  time and  places  as it may
     determine.  A majority of the Committee shall  constitute a quorum and acts
     of a  majority  of the  members  of the  Committee  at a meeting at which a
     quorum is  present,  or acts  reduced to or  approved in writing by all the
     members of the Committee (if consistent with applicable  state law),  shall
     be the  valid  acts of the  Committee.  From  time to time  the  Board  may
     increase the size of the Committee and appoint  additional members thereof,
     remove  members  (with  or  without  cause)  and  appoint  new  members  in
     substitution therefor, fill vacancies however caused, or remove all members
     of the Committee and thereafter directly administer the Plan.

     (c) Grant of Awards to Board  Members.  Awards may be granted to members of
     the Board who are otherwise  eligible to receive Awards under the Plan. All
     grants of Awards to members of the Board  shall in all  respects be made in
     accordance  with the  provisions of this Plan  applicable to other eligible
     persons. Members of the Board who either (i) are eligible to receive grants
     of Awards pursuant to the Plan or (ii) have been granted Awards may vote on
     any matters  affecting the  administration  of the Plan or the grant of any
     Awards pursuant to the Plan,  except that no such member shall act upon the
     granting  to  himself or  herself  of  Awards,  but any such  member may be
     counted in  determining  the  existence  of a quorum at any  meeting of the
     Board  during  which  action is taken with  respect to the granting to such
     member of Awards.

     (d) Performance-Based  Compensation. The Board, in its discretion, may take
     such action as may be necessary to ensure that Stock Options  granted under
     the Plan qualify as "qualified  performance-based  compensation" within the
     meaning  of  Section  162(m)  of  the  Code  and   applicable   regulations
     promulgated thereunder ("Performance-Based  Compensation"). Such action may
     include,  in the Board's discretion,  some or all of the following:  (i) if
     the Board  determines  that Stock Options  granted under the Plan generally
     shall  constitute  Performance-Based   Compensation,   the  Plan  shall  be
     administered,  to the extent  required for such Stock Options to constitute
     Performance-Based  Compensation, by a Committee consisting solely of two or
     more "outside directors" (as defined in applicable regulations  promulgated
     under Section 162(m) of the Code);  and (ii) Stock Options and Stock Grants
     granted under the Plan may be subject to such other terms and conditions as
     are necessary for  compensation  recognized in connection with the exercise
     or  disposition  of such Stock Option or the  disposition of Stock acquired
     pursuant to such Stock Option to constitute Performance-Based Compensation.

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4.   Shares of Stock Subject to the Plan.

     (a) Stock.  The Stock  subject to Awards shall be  authorized  but unissued
     shares of Stock or shares of Stock reacquired by the Company in any manner.
     Subject to adjustment as provided in subsection  (c) of this Section 4, the
     aggregate number of shares of Stock that may be issued pursuant to the Plan
     shall be (i)  1,550,000*  (which number  includes the  aggregate  number of
     shares with respect to which no options  have been  granted  under the 1979
     Stock Option Plan on the Effective  Date),  plus (ii) such number of shares
     as to which options  granted under the 1979 Stock Option Plan  terminate or
     expire without being fully exercised, plus (iii) effective as of January 1,
     1998 and each of the three successive years thereafter,  a number of shares
     of Stock equal to two percent  (2%) of the total  number of shares of Stock
     issued and  outstanding  as of the close of  business on December 31 of the
     preceding year. Subject to adjustment as provided in subsection (c) of this
     Section  4, no more than an  aggregate  of  750,000  shares of Stock may be
     issued  pursuant to the exercise of Incentive  Stock Options  granted under
     the Plan  (including  shares  issued  pursuant to the exercise of Incentive
     Stock Options granted under the Plan that are the subject of  disqualifying
     dispositions  within the meaning of Sections  421,  422 and 424 of the Code
     and the regulations  thereunder);  and no more than an aggregate of 150,000
     shares  of Stock may be issued in  connection  with  Long-Term  Performance
     Awards  granted  under this Plan. If any Award granted under the Plan shall
     expire or terminate for any reason without having been exercised in full or
     shall  cease for any  reason  to be  exercisable  in whole or in part,  the
     unpurchased  shares  subject to such Award  shall  again be  available  for
     grants of Awards under the Plan.

     No  employee  of the  Company  or any  Related  Corporation  may be granted
     Options  (or any  other  Award) to  acquire,  in the  aggregate,  more than
     200,000  shares of Stock during any 12-month  period under the Plan. If any
     Option  granted  under the Plan shall  expire or  terminate  for any reason
     without  having been  exercised in full or shall cease for any reason to be
     exercisable  in whole or in part,  the  unpurchased  shares subject to such
     Option shall be included in the  determination  of the aggregate  number of
     shares of Stock  deemed to have been  granted  to such  employee  under the
     Plan.

     (b) Computation of Available Shares. For the purpose of computing the total
     number of shares of Stock  available  for Plan  purposes at any time during
     which the Plan is in  effect,  there  shall be  debited  against  the total
     number of shares determined to be available  pursuant to paragraphs (a) and
     (c) of this  Section 4 the  maximum  number of shares of Stock  subject  to
     issuance  upon  exercise  of Options  or upon  settlement  of other  Awards
     theretofore  made under the Plan. In addition,  however,  shares related to
     the  unexercised or  undistributed  portion of any  terminated,  expired or
     forfeited Award for which no material benefit was received by a Participant
     (e.g. dividends, but not including voting rights), or to the portion of any
     Award settled in cash,  shall be recredited  to the number  remaining  upon
     such  termination,   expiration  or  forfeiture  and  thereafter  again  be
     available for distribution in connection with future Awards under the Plan.

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     *Amended  effective May 8, 2002
     (c)  Other  Adjustment.  In  the  event  of  any  merger,   reorganization,
     consolidation,   recapitalization,  Stock  dividend,  or  other  change  in
     corporate  structure  affecting the Stock,  such substitution or adjustment
     shall be made in the aggregate number of shares reserved for issuance under
     the  Plan,  and in the  number  and  option  price  of  shares  subject  to
     outstanding Options and other Stock-based Awards granted under the Plan, as
     may be determined to be appropriate by the Committee in its sole discretion
     provided  that the number of shares  subject to any Award shall always be a
     whole number.

5.   Eligibility. Incentive Stock Options may be granted only to employees of
     the Company and any Related Corporation. Officers and other key employees
     of or consultants to the Company, who are responsible for or contribute to,
     as determined by the Committee in its sole discretion, the management,
     growth and/or profitability of the business of the Company and/or any
     Related Corporation are eligible for Awards under the Plan.

6.   Stock Options.

          6.1  Provision  for Grant.  Stock  Options  may be granted  alone,  in
     addition to or in tandem with other Awards under the Plan. Any Stock Option
     granted under the Plan shall be in such form as the Committee may from time
     to time  approve.  The  Committee  shall  have the  authority  to grant any
     optionee who is an employee of the Company, or of any Related  Corporation,
     Incentive  Stock Options,  Non-Qualified  Stock  Options,  or both types of
     Stock  Options.  To the extent that any Stock Option does not qualify as an
     Incentive Stock Option, it shall constitute a separate  Non-Qualified Stock
     Option.  In the case of any other  person  eligible  for an Award under the
     Plan,  any Stock  Option  granted  under the Plan shall be a  Non-Qualified
     Stock Option.

     Anything in the Plan to the contrary notwithstanding, no term of this Plan
     relating to Incentive Stock Options shall be interpreted, amended or
     altered, nor shall any discretion or authority granted under the Plan be so
     exercised, so as to disqualify the Plan under Section 422 of the Code, or,
     without the consent of the optionee(s) affected, to disqualify any
     Incentive Stock Option under such Section 422.

          6.2 Terms and  Conditions.  Options  granted  under the Plan  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 appropriate:

               (a) Option Price. The option price per share of Stock purchasable
          under a Stock Option shall be  determined by the Committee at the time
          of grant but shall be not less than 100% of the Fair  Market  Value of
          the Stock at the time of grant.  However,  any Incentive  Stock Option
          granted to any optionee  who, at the time the option is granted,  owns
          more  than  10% of the  voting  power of all  classes  of stock of the
          Company  or of a parent  or  subsidiary  corporation  (in each case as
          defined in Section 424 of the Code)  shall have an  exercise  price no
          less than 110% of Fair Market Value per share on date of the grant.

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               (b) Option Term.  The term of each Stock Option shall be fixed by
          the Committee,  but no Stock Option shall be exercisable more than ten
          years  after the date on which the  Option is  granted.  However,  any
          Incentive  Stock Option  granted to any optionee  who, at the time the
          Option  is  granted,  owns more  than 10% of the  voting  power of all
          classes  of  stock  of  the  Company  or  of a  parent  or  subsidiary
          corporation  (in each case as defined in Section  424 of the Code) may
          not  have a term of more  than  five  years.  No Stock  Option  may be
          exercised by any person after expiration of the term of the Option.

               (c)  Exercisability.  Stock Options shall be  exercisable at such
          time or times and  subject  to such terms and  conditions  as shall be
          determined  by the  Committee  at or after grant,  provided,  however,
          that,  except as  provided in  Sections  6.2(f),  6.2(g) and 8, unless
          otherwise  determined  by the  Committee at or after  grant,  no Stock
          Option shall be exercisable  during the six months  following the date
          of the  granting  of the Option.  If the  Committee  provides,  in its
          discretion, that any Stock Option is exercisable only in installments,
          the Committee may waive such  installment  exercise  provisions at any
          time at or after grant in whole or in part,  based on such  factors as
          the Committee shall determine, in its sole discretion.

               (d) Method of Exercise.  Subject to whatever installment exercise
          provisions  apply  pursuant to Section  6.2(c),  Stock  Options may be
          exercised in whole or in part at any time and from time to time during
          the option period, by giving written notice of exercise to the Company
          specifying the number of shares to be purchased.  Such notice shall be
          accompanied  by  payment  in full of the  purchase  price,  either  by
          certified or bank check, or such other instrument as the Committee may
          accept.  As  determined  by the  Committee,  in its  sole  discretion,
          payment  in  full  or in  part  may  also  be  made  in  the  form  of
          unrestricted Stock already owned by the optionee (based, in each case,
          on the Fair  Market  Value of the  Stock  on the  date the  option  is
          exercised, as determined by the Committee);  provided,  however, that,
          in the case of an Incentive Stock Option,  the right to make a payment
          in the form of already owned shares may be authorized only at the time
          the Option is granted.

               If payment of the Option exercise price of a Stock Option is made
          in whole or in part in the form of unrestricted Stock already owned by
          the Participant, the Company may require that the Stock has been owned
          by the  Participant  for a specified  minimum  period of time, for the
          purpose of avoiding any charge to the Company's earnings, limiting the
          pyramiding of Stock Option  exercises,  or such other  purposes as the
          Company deems appropriate.

               No shares of Stock shall be issued  until full  payment  therefor
          has  been  made.  An  optionee  shall  generally  have the  rights  to
          dividends  or other  rights of a  shareholder  with  respect to shares
          subject to the Option when the  optionee has given  written  notice of
          exercise,  has paid in full for such shares,  and, if  requested,  has
          given the representation described in Section 11.1.

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               (e) Transferability. 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,  provided,  however,  the
          Committee may grant Non-Qualified Stock Options that are transferable,
          without payment of  consideration,  to immediate family members of the
          optionee or to trusts for such family  members,  or to partnerships in
          which such immediate  family members are the only parties,  subject to
          such limits as the Committee may establish,  and the transferee  shall
          remain subject to all of the terms and  conditions  applicable to such
          Non-Qualified Stock Options prior to such transfer.

               (f) Termination by Reason of Death.  If an optionee's  employment
          by  or  association  with  the  Company  or  any  Related  Corporation
          terminates by reason of death,  any Stock Option held by such optionee
          may  thereafter be exercised,  to the extent then  exercisable  at the
          time of  death,  or on such  accelerated  basis as the  Committee  may
          determine at or after grant, by the legal representative of the estate
          or by the legatee of the optionee under the will of the optionee,  for
          a period  of 90 days (or such  shorter  period  as the  Committee  may
          specify at grant) from the date of such death or until the  expiration
          of the  stated  term of such  Stock  Option,  whichever  period is the
          shorter.

               (g)  Termination  by Reason of  Disability or  Retirement.  If an
          optionee's  employment  by or  association  with  the  Company  or any
          Related Corporation  terminates by reason of Disability or Retirement,
          any Stock Option held by such optionee may  thereafter be exercised by
          the  optionee,  to the  extent  it was  exercisable  at  the  time  of
          termination,  or on  such  accelerated  basis  as  the  Committee  may
          determine at or after grant,  for a period of 90 days (or such shorter
          period as the  Committee  may  specify at grant) from the date of such
          termination  of employment or until the  expiration of the stated term
          of such  Stock  Option,  whichever  period is the  shorter;  provided,
          however, that, if the optionee dies within such 90-day period (or such
          shorter  period  as  the  Committee  shall  specify  at  grant),   any
          unexercised  Stock Option held by such  optionee  shall  thereafter be
          exercisable  to the extent to which it was  exercisable at the time of
          death for a period of 90 days from the date of such death or until the
          expiration of the stated term of such Stock Option,  whichever  period
          is the shorter.

               (h)  Other  Termination.   Unless  otherwise  determined  by  the
          Committee at grant, if an optionee's employment by or association with
          the Company or any Related Corporation terminates for any reason other
          than death, Disability or Retirement, the Stock Option shall thereupon
          terminate, except that in the Committee's sole discretion,  based upon
          such factors as the Committee may deem appropriate,  the Committee may
          specify  that  such  Stock  Option  may be  exercised,  to the  extent
          exercisable  at  termination,  or on  such  accelerated  basis  as the
          Committee may determine at or after grant, for a period of 90 days (or
          such shorter period as the Committee  shall specify at grant) from the
          date of such termination or until the expiration of the stated term of
          such Stock Option, whichever period is shorter.

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               (i) Incentive  Stock Option  Limitations.  To the extent required
          for "incentive stock option" status under Section 422 of the Code, the
          aggregate  Fair Market Value  (determined  as of the time of grant) of
          the Stock with respect to which  Incentive  Stock Options  granted are
          exercisable  for the first time by the  optionee  during any  calendar
          year under the Plan and/or any other stock  option plan of the Company
          and any  parent or  subsidiary  corporation  (within  the  meaning  of
          Section  424 of the  Code)  shall not  exceed  $100,000.  The  Company
          intends to  designate  any Options  granted in excess of the  $100,000
          limitation as Non-Qualified Stock Options, and the Company shall issue
          certificates  to the  optionee  with  respect to the Options  that are
          Non-Qualified Options and Options that are Incentive Stock Options.

               (j) Cashless Exercise;  Satisfaction of Tax Withholdings.  To the
          extent permitted under applicable laws and regulations, at the request
          of a  Participant,  the  Company  agrees to  cooperate  in a "cashless
          exercise" of an Option. The cashless exercise shall be effected by the
          Participant delivering to a registered securities broker acceptable to
          the  Company  instructions  to sell a  sufficient  number of shares of
          Stock for which such Option is then exercisable to cover the costs and
          expenses associated with such exercise and sale. Under any Option, the
          Committee may permit a Participant to pay any  applicable  withholding
          taxes by delivering a sufficient  number of previously owned shares of
          Common Stock to the Company to satisfy such taxes.

7.   Long-Term Performance Awards

          7.1 Provision for Grant.  Long-Term  Performance Awards may be awarded
     either alone or in addition to other  Awards  granted  under the Plan.  The
     Committee  shall  determine  the nature,  length and  starting  date of the
     performance   period  (the   "Performance   Period")  for  each   Long-Term
     Performance Award, which subject to Section 8 below shall be a period of at
     least one year, and shall determine the  performance  objectives to be used
     in valuing Long-Term Performance Awards and determining the extent to which
     such Long-Term Performance Awards have been earned.  Performance objectives
     may vary from Participant to Participant and between groups of Participants
     and shall be based  upon such  Company,  business  unit  and/or  individual
     performance  factors and criteria as the  Committee  may deem  appropriate,
     including,  but not  limited  to,  earnings  per share or return on equity.
     Performance   Periods  may  overlap  and   Participants   may   participate
     simultaneously  with  respect  to  Long-Term  Performance  Awards  that are
     subject to  different  Performance  Periods  and/or  different  performance
     factors and criteria.

          7.2 Periodical Determination of Performance.  At the beginning of each
     Performance  Period,  the  Committee  shall  determine  for each  Long-Term
     Performance  Award subject to such  Performance  Period the range of dollar
     values or number of shares of Stock to be awarded to the Participant at the
     end of the  Performance  Period  if and to the  extent  that  the  relevant
     measure(s) of  performance  for such Long-Term  Performance  Award is (are)
     met.  Such  dollar  values or number of shares of Stock may be fixed or may
     vary in accordance  with such  performance  and/or other criteria as may be
     specified by the Committee, in its sole discretion.

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          7.3 Adjustment of Awards. In the event of special or unusual events or
     circumstances   affecting  the  application  of  one  or  more  performance
     objectives to a Long-Term  Performance  Award, the Committee may revise the
     performance objectives and/or underlying factors and criteria applicable to
     the Long-Term Performance Awards affected, to the extent deemed appropriate
     by the Committee, in its sole discretion,  to avoid unintended windfalls or
     hardship.

          7.4  Termination of Employment.  Subject to Section 8 below and unless
     otherwise provided in the applicable Award  agreement(s),  if a Participant
     terminates  employment or other association with the Company or any Related
     Corporation  during a Performance  Period  because of death,  Disability or
     Retirement, such Participant shall be entitled to a payment with respect to
     each outstanding  Long-Term  Performance Award at the end of the applicable
     Performance Period (i) based, to the extent relevant under the terms of the
     award,  upon  the  Participant's   performance  for  the  portion  of  such
     Performance Period ending on the date of termination and the performance of
     the applicable business unit(s) for the entire Performance Period, and (ii)
     prorated, where deemed appropriate by the Committee, for the portion of the
     Performance  Period  during  which  the  Participant  was  employed  by  or
     associated with the Company and any Related Corporation,  all as determined
     by the  Committee,  in its sole  discretion.  However,  the  Committee  may
     provide for an earlier  payment in  settlement of such award in such amount
     and under such terms and conditions as the Committee deems appropriate.

          Subject to Section 8 below, if a Participant  terminates employment by
     or  association  with the  Company  and any  Related  Corporation  during a
     Performance Period for any other reason, then such Participant shall not be
     entitled  to any  payment  with  respect to  Long-Term  Performance  Awards
     subject to such  Performance  Period,  unless the Committee shall otherwise
     determine, in its sole discretion.

          7.5 Form of Payment.  The earned  portion of a  Long-Term  Performance
     Award may be paid  currently or on a deferred  basis with such  interest or
     earnings  equivalent  as may be determined  by the  Committee,  in its sole
     discretion.  Payment  shall be made in the form of cash or whole  shares of
     Stock, either in a lump sum payment or in annual installments commencing as
     soon as practicable after the end of the relevant  Performance  Period, all
     as the Committee shall determine at or after grant.

8.  Change in Control Provisions.

          8.1  Consequences  of Event.  In the event of a Change in Control,  in
     addition to the adjustment  provided for in Section 4(c), the Committee may
     in its  discretion  determine  whether,  with respect to all Stock  Options
     granted  and  Awards  made  before  the Change in  Control,  the  following
     acceleration and valuation provisions shall apply:

                                      -9-
<PAGE>

               (a) Any  Stock  Options  awarded  under  the Plan not  previously
          exercisable shall thereupon become fully exercisable.

               (b) Any outstanding  Long-Term  Performance  Awards shall be paid
          out in cash within  thirty days  following the Change in Control based
          on prorated target results for the Performance Periods in question.

               In case of any  reorganization,  merger or  consolidation  of the
          Company  into or with  another  company  or in the case of any sale or
          conveyance to another company or entity of the property of the Company
          as a whole or  substantially  as a whole,  each Stock  Option shall be
          automatically  converted  into a stock  option  or other  award  which
          covers  shares  of stock or other  securities  equivalent  in kind and
          value to the shares or other  securities  the optionee or holder would
          have held if the Stock  Option or other  Award had been  exercised  or
          received in full prior to such reorganization,  merger, consolidation,
          sale or conveyance and no disposition  thereof had  subsequently  been
          made,   and  the  option  price  under  each  Stock  Option  shall  be
          proportionately adjusted.

          8.2  Change in  Control.  For  purposes  of this  Plan,  a "Change  in
     Control" means the happening of any of the following:

               (a)  The  acquisition,  other  than  from  the  Company,  by  any
          individual, entity or group (within the meaning of Section 12(d)(3) or
          14(d)(2)  of the  Securities  Exchange  Act of 1934,  as amended  (the
          "Exchange Act")) of beneficial  ownership  (within the meaning of Rule
          13d-3 promulgated under the Exchange Act) of 20% or more of either (i)
          the then  outstanding  shares  of  common  stock of the  Company  (the
          "Outstanding  Company Common Stock") or (ii) the combined voting power
          of the then outstanding  voting  securities of the Company entitled to
          vote  generally  in the  election of directors  (the  "Company  Voting
          Securities");  provided,  however,  that  any  acquisition  by (x) any
          noncorporate  shareholder  of the Company as of the effective  date of
          the initial  registration of an offering of Stock under the Securities
          Act of  1933,  (y)  the  Company  or any of its  subsidiaries,  or any
          employee  benefit plan (or related  trust)  sponsored or maintained by
          the Company or any of its  subsidiaries,  or (z) any corporation  with
          respect  to  which,  following  such  acquisition,  more  than 60% of,
          respectively,  the then  outstanding  shares of  common  stock of such
          corporation and combined voting power of the then  outstanding  voting
          securities  of such  corporation  entitled  to vote  generally  in the
          election  of  directors  is  then  beneficially  owned,   directly  or
          indirectly,  by  all or  substantially  all  of  the  individuals  and
          entities  who  were  the  beneficial  owners,  respectively,   of  the
          Outstanding   Company  Common  Stock  and  Company  Voting  Securities
          immediately  prior  to such  acquisition  in  substantially  the  same
          proportion as their ownership,  immediately prior to such acquisition,
          of the Outstanding Company Common Stock and Company Voting Securities,
          as the case may be,  shall not  constitute  a Change in Control of the
          Company; or

                                      -10-
<PAGE>

               (b) Continuing  Directors  constitute less than a majority of the
          Board,  where a  Continuing  Director  is (i)  each  person  who was a
          director of the  Company on January 2, 1997,  and (ii) each person who
          subsequently  becomes a director of the Company and whose  election or
          nomination  was  approved  by a vote  of at  least a  majority  of the
          Continuing  Directors  in  office  at  the  time  of the  election  or
          nomination  unless that person became a director in connection with an
          actual or threatened election contest; or

               (c)   Approval   by  the   shareholders   of  the  Company  of  a
          reorganization, merger or consolidation (a "Business Combination"), in
          each  case,  with  respect  to which all or  substantially  all of the
          individuals and entities who were the respective  beneficial owners of
          the  Outstanding  Company Common Stock and Company  Voting  Securities
          immediately   prior   to  such   Business   Combination   do  not  own
          beneficially,  directly or indirectly, more than 60% of, respectively,
          the then  outstanding  shares of common stock and the combined  voting
          power of the  then  outstanding  voting  securities  entitled  to vote
          generally  in the  election of  directors,  as the case may be, of the
          corporation  resulting from such Business Combination in substantially
          the same  proportion  as  their  ownership  immediately  prior to such
          Business  Combination  of the  Outstanding  Company  Common  Stock and
          Company Voting Securities, as the case may be; or

               (d) a complete  liquidation  or  dissolution  of the Company or a
          sale or other disposition of all or substantially all of the assets of
          the  Company  other  than to a  corporation  with  respect  to  which,
          following such sale or  disposition,  more than 60% of,  respectively,
          the then  outstanding  shares of common stock and the combined  voting
          power of the  then  outstanding  voting  securities  entitled  to vote
          generally in the  election of  directors  is then owned  beneficially,
          directly or indirectly, by all or substantially all of the individuals
          and  entities who were the  beneficial  owners,  respectively,  of the
          Outstanding   Company  Common  Stock  and  Company  Voting  Securities
          immediately  prior to such sale or  disposition in  substantially  the
          same proportion as their  ownership of the Outstanding  Company Common
          Stock and Company Voting  Securities,  as the case may be, immediately
          prior to such sale or disposition.

9. Amendment and  Termination.  The Board may terminate or amend the Plan at any
time and from time to time; provided,  however,  that the Board may not, without
approval of the  shareholders  of the Company,  increase  the maximum  number of
shares  of Stock  issuable  under  the Plan or  change  the  description  of the
individuals  eligible to receive  Awards.  No termination of or amendment to the
Plan may adversely  affect the rights of a Participant with respect to any Award
theretofore granted under the Plan without such Participant's consent.

     The  Committee  may  amend  the  terms of any  Award  theretofore  granted,
prospectively  or  retroactively,  but,  subject  to  Section  4 above,  no such
amendment shall (i) decrease the exercise price of an outstanding  Stock Option,
or (ii) effect the simultaneous  cancellation of an outstanding Stock Option and
new grant of a  replacement  Stock Option,  or (iii)  without the  Participant's
consent, impair the rights of any Participant.

                                      -11-
<PAGE>

10.  Unfunded  Status of Plan.  The Plan is intended to constitute an "unfunded"
plan for incentive and deferred  compensation.  With respect to any payments not
yet made to a Participant by the Company,  nothing  contained  herein shall give
any such Participant any rights that are greater than those of any other general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other  arrangements to meet the obligations  created under
the Plan to  deliver  Stock or  payments  in lieu of or with  respect  to Awards
hereunder; provided, however, unless the Committee otherwise determines with the
consent of the  affected  Participant,  the  existence  of such  trusts or other
arrangements shall be consistent with the "unfunded" status of the Plan.

11.  General Provisions.

          11.1 Investment Representation.  The Committee may require each person
     acquiring  shares  pursuant to an Award under the Plan to  represent to and
     agree with the Company in writing that the  Participant  is  acquiring  the
     shares  for  investment  without  a  view  to  distribution   thereof.  The
     certificates  for such shares may include  any legend  which the  Committee
     deems appropriate to reflect any restrictions on transfer. All certificates
     for shares of Stock or other  securities  delivered under the Plan shall be
     subject  to  such  stock-transfer  orders  and  other  restrictions  as the
     Committee  may deem  advisable  under  the  rules,  regulations,  and other
     requirements of any stock exchange upon which the Stock is then listed, and
     any applicable Federal or state securities law, and the Committee may cause
     a legend or legends to be put on any such  certificates to make appropriate
     reference to such restrictions.

          11.2  Adoption of Other  Plans.  Nothing  contained in this Plan shall
     prevent  the  Board  of  Directors   from  adopting   other  or  additional
     compensation arrangements, subject to stockholder approval if such approval
     is required;  and such  arrangements may be either generally  applicable or
     applicable only in specific cases.

          11.3 No Employment  Rights.  Neither the establishment or continuation
     of the Plan,  nor the grant of any Award  hereunder,  shall confer upon any
     employee or consultant of the Company or any Related  Corporation any right
     to continued  employment  or  association  with the Company and any Related
     Corporation,  nor  shall it  interfere  in any way  with  the  right of the
     Company  and  any  Related  Corporation  to  terminate  the  employment  or
     association of any of its employees or consultants at any time.

          11.4  Participant Not to Compete.  In  consideration  of the Company's
     grant of an Award, a Participant shall agree in the agreement setting forth
     the terms of such Award that  during  the  period of his  employment  by or
     other service with the Company or any Related Corporation, and for a period
     of at least  two (2)  years  after  the date  such  employment  or  service
     terminates,  he will not without the consent of the Board accept or perform
     work for any entity whose business is competitive with the business carried
     on by the  Company  and any Related  Corporation,  or engage in  activities
     which are  significantly  competitive  with the business of the Company and
     any  Related  Corporation.   In  the  event  a  Participant  breaches  such
     agreement,  the  Participant  shall  forfeit all rights to any  unexercised
     Options or unearned Awards held as of the date of such breach.

                                      -12-
<PAGE>

          11.5 Tax  Withholding.  No later  than the date as of which an  amount
     first becomes includible in the gross income of the Participant for Federal
     income tax purposes with respect to any Award, the Participant shall pay to
     the Company,  or make arrangements  satisfactory to the Committee regarding
     the payment of, any Federal,  state, or local taxes of any kind required by
     law to be withheld with respect to such amount. Unless otherwise determined
     by the  Committee,  the minimum  required  withholding  obligations  may be
     settled with Stock.  The obligations of the Company under the Plan shall be
     conditional on such payment or  arrangements  and the Company 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.

          11.6 Payments on Death.  The Committee shall establish such procedures
     as it deems  appropriate  for a Participant  to designate a beneficiary  to
     whom any amounts payable in the event of the Participant's  death are to be
     paid.

          11.7  Governing  Law.  The  Plan  and all  Awards  and  actions  taken
     thereunder  shall be governed by and construed in accordance  with the laws
     of the  Commonwealth  of  Massachusetts,  without regard to the conflict of
     laws principles thereof.

12. Term of Plan. The Plan shall become effective upon the approval of the Plan
by the shareholders of the Company. No Award shall be granted pursuant to the
Plan on or after the tenth anniversary of the Plan's approval by shareholders,
but Awards theretofore granted may extend beyond that date.


                                      -13-