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                                                                   Exhibit 10.18




                           THE LEARNING COMPANY, INC.
                         LONG TERM EQUITY INCENTIVE PLAN


                         RESTATED AS OF DECEMBER 4, 1997


1.       PURPOSE; DEFINITIONS.

         A.       PURPOSE. The purpose of the Plan is to provide selected
eligible employees of, and consultants to, The Learning Company, Inc., a
Delaware corporation, its Subsidiaries (as defined herein) and Affiliates (as
defined herein) an opportunity to participate in The Learning Company, Inc.'s
future by offering them long-term, performance-based and other incentives and
equity interests in The Learning Company, Inc. so as to retain, attract and
motivate management personnel.

         B.       DEFINITIONS. For purposes of the Plan, the following terms
have the following meanings:

                  1. "AFFILIATE" means a parent or subsidiary corporation, as
defined in the applicable provisions (currently Section 425) of the Code.

                  2. "ANNUAL BASE SALARY" with respect to a participant who is a
Covered Employee as of the end of the year shall mean the annual rate of base 
salary of such participant as in effect as of the first day of any year, without
regard to any optional or mandatory deferral of base salary pursuant to a salary
deferral arrangement.

                  3. "AWARD" means any award under the Plan, including any
Option, Stock Appreciation Right, Restricted Stock, Stock Purchase Right, or
Performance Share Award.

                  4. "AWARD AGREEMENT" means, with respect to each Award, the
signed written agreement between the Company and the Plan participant setting
forth the terms and conditions of the Award.

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

                  6. "CHANGE IN CONTROL" has the meaning set forth in Section
10A.

                  7. "CHANGE IN CONTROL PRICE" has the meaning set forth in
Section 10C.

                  8. "CODE" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor.

                  9. "COMMISSION" means the Securities and Exchange Commission
and

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any successor agency.

                  10. "COMMITTEE" means the Committee referred to in Section 2,
or the Board in its capacity as administrator of the Plan in accordance with
Section 2.

                  11. "COMPANY" means The Learning Company, Inc., a Delaware
corporation.

                  12. "COVERED EMPLOYEE" has the meaning set forth in Section
162(m)(3) of the Code.

                  13. [Intentionally Omitted]

                  14. "DISABILITY" means permanent and total disability as
determined by the Committee for purposes of the Plan.

                  15. "DISINTERESTED PERSON" has the meaning set forth in Rule
16b-3(d)(3) under the Exchange Act and any successor definition adopted by the
Commission.

                  16. "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended from time to time, and any successor.

                  17. "FAIR MARKET VALUE" means as of any given date:

                      (a) If the Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market, the closing sale price for the Stock or the closing bid, if no
sales are reported, as quoted on such system or exchange (or the largest such
exchange) for the date the value is to be determined (or if there are no sales
for such date, then for the last preceding business day on which there were
sales), as reported in the WALL STREET JOURNAL or similar publication.

                      (b) If the Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the mean between the high
bid and low asked prices for the Stock on the date the value is to be determined
(or if there are no quoted prices for the date of grant, then for the last
preceding business day on which there were quoted prices).

                      (c) In the absence of an established market for the Stock,
as determined in good faith by the Committee, with reference to the Company's
net worth, prospective earning power, dividend-paying capacity, and other
relevant factors, including the goodwill of the Company, the economic outlook in
the Company's industry, the Company's position in the industry and its
management and the values of stock of other corporations in the same or a
similar line of business.

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                  18. "INCENTIVE STOCK OPTION" means any Option intended to be
and designated as an "Incentive Stock Option" within the meaning of Section 422
of the Code.

                  18A. "NON-EMPLOYEE DIRECTOR" has the meaning set forth in Rule
16b-3 under the Exchange Act and any successor definition adopted by the
Commission.

                  19. "NON-QUALIFIED STOCK OPTION" means any Option that is not
an Incentive Stock Option.

                  20. "OUTSIDE DIRECTOR" has the meaning set forth in Section
162(m).

                  21. "OPTION" means an Option granted under Section 5.

                  22. "PERFORMANCE SHARE" means the equivalent, as of any time
such assessment is made, of the Fair Market Value of one share of Stock.

                  23. "PERFORMANCE SHARE AWARD" means an Award under Section 9.

                  24. "PLAN" means this Learning Company, Inc. Long Term Equity
Incentive Plan, as amended from time to time.

                  25. "PRE-TAX PROFIT" shall mean the net profit before income
taxes of the Company for each year determined in accordance with generally
accepted accounting principles and reported upon by the Company's independent
accountants.

                  26. "RESTRICTED STOCK" means an Award of Stock subject to
restrictions, as more fully described in Section 7.

                  27. "RULE 16B-3" means Rule 16b-3 under Section 16(b) of the
Exchange Act, as amended from time to time, and any successor rule.

                  28. "SECTION 162(m)" means Section 162(m) of the Code, as
amended from time to time, and any successor provision.

                  29. "STOCK" means the Common Stock, $0.01 par value, of the
Company, and any successor security.

                  30. "STOCK APPRECIATION RIGHT" means an Award granted under
Section 6.

                  31. "STOCK PURCHASE RIGHT" means an Award granted under
Section 8.

                  32. "SUBSIDIARY" has the meaning set forth in Section 425 of
the Code.

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                  33. "TERMINATION" means, for purposes of the Plan, with
respect to a participant, that the participant has ceased to be, for any reason,
with or without cause, an employee of, or a consultant to, the Company, or a
Subsidiary or Affiliate of the Company, such that such participant is neither an
employee of, or a consultant to, the Company, a Subsidiary, or any Affiliate.

2.       ADMINISTRATION.

         A.       COMMITTEE. The Plan shall be administered by the Board or, 
upon delegation by the Board, by a committee of the Board comprised of not less
than two members (i) each member of which shall be, to the extent required to
comply with Rule 16b-3 and unless the Committee determines that Rule 16b-3 is
not applicable to the Plan, a Non-Employee Director, and (ii) each member of
which shall be, to the extent required to comply with Section 162(m) and unless
the Committee determines that Rule 162(m) is not applicable to the Plan, an
Outside Director. In connection with the administration of the Plan, the
Committee shall have the powers possessed by the Board. The Committee may act
only by a majority of its members, except that the Committee (i) may authorize
any one or more of its members or any officer of the Company to execute and
deliver documents on behalf of the Committee and (ii) so long as not otherwise
required for the Plan to comply with Rule 16b-3 (unless the Committee determines
that Rule 16b-3 is not applicable to the Plan) and so long as not otherwise
required for the Plan to comply with Section 162(m) (unless the Committee
determines that Section 162(m) is not applicable to the Plan), may delegate to
one or more officers or directors of the Company authority to grant Awards to
persons who are not subject to Section 16 of the Exchange Act with respect to
Stock and who are not Covered Employees. The Board at any time may abolish the
Committee and revest in the Board the administration of the Plan.

         B.       AUTHORITY. The Committee shall grant Awards to eligible 
employees and consultants. In particular and without limitation, the Committee,
subject to the terms of the Plan, shall:

                  1.  Select the officers, other employees and consultants to 
whom Awards may be granted;

                  2.  Determine whether and to what extent Awards are to be
granted under the Plan;

                  3.  Determine the number of shares to be covered by each Award
granted under the Plan;

                      (a) determine the terms and conditions of any Award
granted under the Plan and any related loans to be made by the Company, based
upon factors determined by the Committee;

                      (b) determine to what extent and under what circumstances
any 

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Award payments may be deferred by a Plan participant; and

                  4.  Make adjustments in the Performance Goals (as hereinafter
defined) in recognition of unusual or non-recurring events affecting the Company
or the financial statements of the Company, or in response to changes in
applicable laws, regulations, or accounting principles.

         C.       COMMITTEE DETERMINATIONS BINDING. The Committee may adopt,
alter and repeal administrative rules, guidelines and practices governing the
Plan as it from time to time shall deem advisable, interpret the terms and
provisions of the Plan, any Award, any Award Agreement and otherwise supervise
the administration of the Plan. Any determination made by the Committee pursuant
to the provisions of the Plan with respect to any Award shall be made in its
sole discretion at the time of the grant of the Award or, unless in
contravention of any express term of the Plan or Award, at any later time. All
decisions made by the Committee under the Plan shall be binding on all persons,
including the Company and Plan participants.

3.       STOCK SUBJECT TO PLAN.

         A.       NUMBER OF SHARES. The total number of shares of Stock reserved
and available for issuance pursuant to Awards under the Plan shall be 9,000,000
shares. Such shares may consist, in whole or in part, of authorized and unissued
shares or shares reacquired in private transactions or open market purchases,
but all shares issued under the Plan regardless of source shall be counted
against the 9,000,000 share limitation. If any Option terminates or expires
without being exercised in full or if any shares of Stock subject to an Award
are forfeited or if an Award otherwise terminates without a payment being made
to the participant in the form of Stock, the shares issuable under such Option
or Award shall again be available for issuance in connection with Awards;
provided that, to the extent required for the Plan to comply with Rule 16b-3, in
the case of forfeiture, cancellation, exchange or surrender of shares of
Restricted Stock, the number of shares with respect to such Awards shall not be
available for Awards hereunder unless dividends paid on such shares are also
forfeited, canceled, exchanged or surrendered. If any shares of Stock subject to
an Award are repurchased by the Company, the shares issuable under such Award
shall again be available for issuance in connection with Awards other than
Options and Stock Appreciation Rights. To the extent an Award is paid in cash,
the number of shares of Stock representing, at Fair Market Value on the date of
the payment, the value of the cash payment shall not be available for later
grant under the Plan.

         B.       INDIVIDUAL LIMITS. In any year during the term of this Plan
(commencing January 1, 1995), no Plan participant can receive stock-based Awards
including Options, Stock Appreciation Rights which are granted without reference
to an Option, Restricted Stock, Stock Purchase Rights and Performance Shares,
relating to shares of Stock which in the aggregate exceed 20% of the total
number of shares of Stock authorized pursuant to the Plan, as adjusted pursuant
to the terms hereof.

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         C.       ADJUSTMENTS. In the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, stock split, spin-off, sale of
substantial assets or other change in corporate structure affecting the Stock,
such substitution or adjustments shall be made in the aggregate number and kind
of shares of Stock reserved for issuance under the Plan, in the number, kind and
exercise price of shares subject to outstanding Options, in the number, kind and
purchase price of shares subject to outstanding Stock Purchase Rights and in the
number and kind of shares subject to other outstanding Awards, as may be
determined to be appropriate by the Committee in its sole discretion; provided
that the number and kind of shares subject to any Award shall always be rounded
down to the nearest whole number; and provided further that with respect to
Incentive Stock Options, such adjustment shall be made in accordance with
Section 424 of the Code. Such adjusted exercise price shall also be used to
determine the amount payable by the Company upon the exercise of any Stock
Appreciation Right associated with any Option.

4.       ELIGIBILITY.

         Awards may be granted to officers and other employees of, and
consultants to, the Company, its Subsidiaries and its Affiliates (excluding any
person who serves only as a director).

5.       STOCK OPTIONS.

         A.       TYPES. Any 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 to any Plan participant Incentive Stock Options,
Non-Qualified Stock Options, or any type of Option (in each case with or without
Stock Appreciation Rights). Incentive Stock Options may be granted only to
employees of the Company, its parent (within the meaning of Section 425 of the
Code) or its Subsidiaries. Any portion of an Option that does not qualify as an
Incentive Stock Option shall constitute a Non-Qualified Stock Option.

         B.       TERMS AND CONDITIONS. Options granted under the Plan shall be
subject to the following terms and conditions:

                  1.  OPTION TERM. The term of each 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, and no Non-Qualified Stock
Option shall be exercisable more than 11 years after the date the Option is
granted. If, at the time the Company grants an Incentive Stock Option, the
optionee owns directly or by attribution stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or any
Affiliate of the Company, the Incentive Stock Option shall not be exercisable
more than five years after the date of grant.


                  2.  GRANT DATE. The Company may grant Options under the Plan
at any time and from time to time before the Plan terminates. The Committee
shall specify the date of grant 

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or, if it fails to do so, the date of grant shall be the date of action taken by
the Committee to grant the Option; provided that no Option may be exercised
prior to execution of the applicable Award Agreement. However, if an Option is
approved in anticipation of employment, the date of grant shall be the date the
intended optionee is first treated as an employee for payroll purposes.

                  3.  EXERCISE PRICE. The exercise price per share of Stock
purchasable under a Non-Qualified Stock Option shall be equal to at least 50%,
and not more than 100%, of the Fair Market Value on the date of grant, provided
that no Option granted to an employee whom the Committee determines is likely to
be a Covered Employee at the end of the year shall have an exercise price below
100% of Fair Market Value on the date of grant. The exercise price per share of
Stock purchasable under an Incentive Stock Option shall be equal to at least the
Fair Market Value on the date of grant; provided that if at the time the Company
grants an Incentive Stock Option, the optionee owns directly or by attribution
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company or any Affiliate of the Company the exercise price shall
be not less than 110% of the Fair Market Value on the date the Incentive Stock
Option is granted.

                  4.  EXERCISABILITY. Subject to the other provisions of the
Plan, an Option shall be exercisable in its entirety at the time of grant or at
such times and in such amounts as are specified in the Award Agreement
evidencing the Option. The Committee, in its absolute discretion, at any time
may waive any limitations respecting the time at which an Option first becomes
exercisable in whole or in part.

                  5.  METHOD OF EXERCISE; PAYMENT. To the extent the right to
purchase shares has accrued, Options may be exercised, in whole or in part, from
time to time, by written notice from the optionee to the Company stating the
number of Shares being purchased, accompanied by payment of the exercise price
for the shares. The Committee, in its discretion, may elect at the time of
Option exercise that any Non-Qualified Stock Option be settled in cash rather
than Stock.

                  6.  NO DISQUALIFICATION. Notwithstanding any other provision
in the Plan, no term of the Plan relating to Incentive Stock Options shall be
interpreted, amended or altered nor shall any discretion or authority granted
under the Plan be exercised so as to disqualify the Plan under Section 422 of
the Code or, without the consent of the optionee affected, to disqualify any
Incentive Stock Option under such Section 422.


6.       STOCK APPRECIATION RIGHTS.

         A.       RELATIONSHIP TO OPTIONS; NO PAYMENT BY PARTICIPANT. A Stock
Appreciation Right may be awarded either (i) with respect to Stock subject to an
Option held by a participant or (ii) without reference to an Option. If an
Option is an Incentive Stock Option, a Stock Appreciation Right granted with
respect to such Option may be granted only at the time of grant of the related
Incentive Stock Option, but if the Option is a Non-Qualified 

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Stock Option, the Stock Appreciation Right may be granted either simultaneously
with the grant of the related Non-Qualified Stock Option or at any time during
the term of such related Non-Qualified Stock Option. No consideration shall be
paid by a participant with respect to a Stock Appreciation Right.

         B.       WHEN EXERCISABLE. A Stock Appreciation Right shall be
exercisable at such times and in whole or in part, each as determined by the
Committee, subject, with respect to Plan participants subject to Section 16(b)
of the Exchange Act, to Rule 16b-3. Any exercise by the participant of a Stock
Appreciation Right for cash shall be made only during the window period
specified in Rule 16b-3(e)(3)(iii) and any successor rule (the "Window Period"),
unless the Committee determines that Rule 16b-3 is not applicable to the Plan.
If a Stock Appreciation Right is granted with respect to an Option, unless the
Award Agreement otherwise provides, the Stock Appreciation Right may be
exercised only to the extent to which shares covered by the Option are not at
the time of exercise subject to repurchase by the Company.

         C.       EFFECT ON RELATED RIGHT; TERMINATION OF STOCK APPRECIATION 
                  RIGHT. If a Stock Appreciation Right granted with respect to 
an Option is exercised, the Option shall cease to be exercisable and shall be
canceled to the extent of the number of shares with respect to which the Stock
Appreciation Right was exercised. Upon the exercise or termination of an Option,
related Stock Appreciation Rights shall terminate to the extent of the number of
shares as to which the Option was exercised or terminated, except that, unless
otherwise determined by the Committee at the time of grant, a Stock Appreciation
Right granted with respect to less than the full number of shares covered by a
related Option shall not be reduced until the number of shares covered by
exercise or termination of the related Option exceeds the number of shares not
covered by the Stock Appreciation Right. A Stock Appreciation Right granted
independently from an Option shall terminate and shall be no longer exercisable
at the time determined by the Committee at the time of grant, but not later than
10 years from the date of grant. Upon the Termination of the participant, a
Stock Appreciation Right granted with respect to an Option shall be exercisable
only to the extent to which the Option is then exercisable.

         D.       FORM OF PAYMENT UPON EXERCISE. Despite any attempt by a Plan
participant to elect payment in a particular form upon exercise of a Stock
Appreciation Right, the Committee, in its discretion, may elect to cause the
Company to pay cash, Stock, or a combination of cash and Stock upon exercise of
the Stock Appreciation Right.


         E.       AMOUNT OF PAYMENT UPON EXERCISE. Upon the exercise of a Stock
Appreciation Right, the Plan participant shall be entitled to receive one of the
following payments, as determined by the Committee under Section 6D. hereof:

                  1.  STOCK. That number of whole shares of Stock equal to the
number computed by dividing (A) an amount (the "Stock Appreciation Right 
Spread"), rounded to the nearest whole dollar, equal to the product computed by
multiplying (x) the excess of (1) if

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the Stock Appreciation Right may only be exercised during the Window Period, the
highest Fair Market Value on any day during the Window Period, and otherwise,
the Fair Market Value on the date the Stock Appreciation Right is exercised,
over (2) the exercise price per share of Stock of the related Option, or in the
case of a Stock Appreciation Right granted without reference to an Option, such
other price as the Committee establishes at the time the Stock Appreciation
Right is granted, by (y) the number of shares of Stock with respect to which a
Stock Appreciation Right is being exercised by (B) (1) if the Stock Appreciation
Right may only be exercised during the Window Period, the highest Fair Market
Value during the Window Period in which the Stock Appreciation Right was
exercised, and (2) otherwise, the Fair Market Value on the date the Stock
Appreciation Right is exercised; plus, if the foregoing calculation yields a
fractional share, an amount of cash equal to the applicable Fair Market Value
multiplied by such fraction (such payment to be the difference of the fractional
share); or

                  2.  CASH. An amount in cash equal to the Stock Appreciation
Right Spread; or

                  3.  CASH AND STOCK. A combination of cash and Stock, the
combined value of which shall equal the Stock Appreciation Right
Spread.

7.       RESTRICTED STOCK.

         Shares of Restricted Stock shall be subject to the following terms
and conditions:

         A.       PRICE. Plan participants awarded Restricted Stock, within 45
days of receipt of the applicable Award Agreement, which in no event shall be
later than ten (10) days after the Award grant date, shall pay to the Company,
if required by applicable law, an amount equal to the par value of the Stock
subject to the Award. If such payment is not made and received by the Company by
such date, the Award of Restricted Stock shall lapse.

         B.       RESTRICTIONS. Subject to the provisions of the Plan and the 
Award Agreement, during a period set by the Committee, commencing with, and not
exceeding 10 years from, the date of such award (the "Restriction Period"), the
Plan participant shall not be permitted to sell, assign, transfer, pledge or
otherwise encumber shares of Restricted Stock. Within these limits, the
Committee may in its discretion provide for the lapse of such restrictions in
installments and may accelerate or waive such restrictions, in whole or in part,
based on service, performance or such other factors or criteria as the Committee
may determine.

         C.       DIVIDENDS. Unless otherwise determined by the Committee, cash
dividends with respect to shares of Restricted Stock shall be automatically
reinvested in additional Restricted Stock, and dividends payable in Stock shall
be paid in the form of Restricted Stock.

         D.       TERMINATION. Except to the extent otherwise provided in the
Award Agreement and pursuant to Section 7B., upon termination of a Plan
participant's employment 

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for any reason during the Restriction Period, all shares still subject to 
restriction shall be forfeited by the participant.

         E.       SPECIAL PROVISIONS REGARDING AWARDS. Notwithstanding anything
to the contrary contained in this Section 7, (i) all awards of Restricted Stock
granted pursuant to this Section 7 to participants who are employees whom the
Committee determines are likely to be Covered Employees at the end of the year
shall have restrictions which will lapse contingent on the attainment of
performance goals based on the attainment of an amount of Pre-tax Profit of the
Company during a tax year and (ii) in no event shall the grant of Restricted
Stock in any fiscal year be made to an employee whom the Committee determines is
likely to be a Covered Employee at the end of the year with a Fair Market Value
as of the date of grant which exceeds the lesser of (i) 100% of such
Participant's Annual Base Salary and (ii) $500,000.

         F.       TIME AND FORM OF PAYMENT. In the case of Plan participants who
are Covered Employees as of the end of the year, unless otherwise determined by
the Committee, shares of Restricted Stock shall be released from restrictions
only after achievement of the applicable performance goals has been certified by
the Committee.

8.       STOCK PURCHASE RIGHTS.

         A.       PRICE. The Committee may grant Stock Purchase Rights which 
shall enable the recipients to purchase Stock at a price equal to not less than
50%, and not more than 100%, of Fair Market Value on the date of grant.

         B.       EXERCISABILITY. Stock Purchase Rights shall be exercisable for
a period determined by the Committee not exceeding 30 days from the date of
grant. The Committee, however, may provide that, if required under Rule 16b-3,
Stock Purchase Rights granted to persons subject to Section 16(b) of the
Exchange Act shall not become exercisable until six months and one day after the
grant date and shall then be exercisable for 10 trading days at the purchase
price specified by the Committee in accordance with Section 8A.

         C.       SPECIAL PROVISIONS REGARDING AWARDS. In no event shall any 
awards be granted under this Section 8 to an employee who the Committee
determines is likely to be a Covered Employee at the end of the year.


9.       PERFORMANCE SHARES.

         A.       AWARDS. The Committee shall determine the nature, length 
(which shall in no event be greater than 10 years) and starting date of the
performance (the "Performance Period") for each Performance Share Award. The
consideration payable to a participant with respect to a Performance Share Award
shall be an amount determined by the Committee in the exercise of the
Committee's discretion at the time of the Award; provided that the amount of
consideration may be zero and may in no event exceed 50% of a Plan participant's
Annual

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Base Salary at the time of grant. The Committee shall determine the
performance objectives to be used in awarding Performance Shares (the
"Performance Goals") and the extent to which such Performance Shares have been
earned. Performance Periods may overlap and participants may participate
simultaneously with respect to Performance Share Awards that are subject to
different Performance Periods and different performance factors and criteria. At
the beginning of each Performance Period, the Committee shall determine for each
Performance Share Award subject to such Performance Period the number of shares
of Stock (which may constitute Restricted Stock) to be awarded to the
participant at the end of the Performance Period if and to the extent that the
relevant measures of performance for such Performance Share Award are met. Such
number of shares of Stock may be fixed or may vary in accordance with such
performance or other criteria as may be determined by the Committee. The
Committee may provide that amounts equivalent to interest at such rates as the
Committee may determine or amounts equivalent to dividends paid shall be payable
with respect to Performance Share Awards. In addition to the provisions set
forth in Section 11J., the Committee, in its discretion, may modify the terms of
any Performance Share Award (except for those Participants who are Covered
Employees), including the specification and measurement of performance goals.

         B.       TERMINATION OF EMPLOYMENT. Except as otherwise provided in the
Award Agreement or determined by the Committee, in the event of Termination
during a Performance Period for any reason, then the Plan participant shall not
be entitled to any payment with respect to the Performance Shares subject to the
Performance Period.

         C.       FORM OF PAYMENT. Payment shall be made in the form of cash or
whole shares of Stock as the Committee, in its discretion,

shall determine.

         D.       SPECIAL PROVISIONS REGARDING AWARDS. In no event shall any
awards be granted under this Section 9 to an employee whom the Committee
determines is likely to be a Covered Employee at the end of the year.

10.      CHANGE IN CONTROL.

         A.       DEFINITION OF "CHANGE IN CONTROL". For purposes of Section 
1B., a "Change in Control" means the occurrence of either of the following:

                  1.  Any "person", as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, a Company Subsidiary, a
Company Affiliate, or a Company employee benefit plan, including any trustee of
such plan acting as trustee) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company (or a successor to the Company) representing 35% or more of the combined
voting power of the then outstanding securities of the Company or such
successor; or

                  2.  At any time that the Company has registered shares under
the Exchange Act, at least 40% of the directors of the Company constitute
persons who were not at 

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the time of their first election to the Board, candidates proposed by a majority
of the Board in office prior to the time of such first election; or

                  3.  The dissolution of the Company or liquidation of more than
50% in value of the Company or a sale of assets involving 50% or more in value
of the assets of the Company, (x) any merger or reorganization of the Company
whether or not another entity is the survivor, (y) a transaction pursuant to
which the holders, as a group, of all of the shares of the Company outstanding
prior to the transaction hold, as a group, less than 50% of the combined voting
power of the Company or any successor company outstanding after the transaction,
or (z) any other event which the Board determines, in its discretion, would
materially alter the structure of the Company or its ownership.

         B.       IMPACT OF EVENT. Except as expressly provided in any Award
agreement, in the event of a "Change in Control" as defined in Section 10A, the
following provisions shall apply:

                  1.  Any Stock Appreciation Rights and Options outstanding as 
of the date such Change in Control is determined to have occurred and not then
exercisable and vested shall become fully exercisable and vested; provided, that
in the case of the holder of Stock Appreciation Rights who is actually subject
to Section 16(b) of the Exchange Act, such Stock Appreciation Rights shall have
been outstanding for at least six months at the date such Change in Control is
determined to have occurred;

                  2.  The restrictions and limitations applicable to any
Restricted Stock and Stock Purchase Rights shall lapse and such Restricted Stock
shall become fully vested;

                  3.  The value (net of any exercise price and required tax
withholdings) of all outstanding Options, Stock Appreciation Rights, Restricted
Stock, and Stock Purchase Rights, unless otherwise determined by the Committee
at or after grant and subject to Rule 16b-3, shall be cashed out on the basis of
the "Change in Control Price," as defined in Section 11C., as of the date such
Change in Control is determined to have occurred or such other date as the Board
may determine prior to the Change in Control;

                  4.  Any outstanding Performance Share Awards shall be vested
and paid in full as if all performance criteria had been met; provided, however,
that the foregoing provision shall only apply, with respect to the events
described in Section 10A.1, 10A.3(x), 10A.3(z), and 10A.4, if and to the extent
so specifically determined by the Committee in the exercise of the Committee's
discretion, which determination may be amended or reversed only by the
affirmative vote of a majority of the persons who were directors at the time
such determination was made.

         C.       CHANGE IN CONTROL PRICE. For purposes of this Section 10, 
"Change in Control Price" means the highest price per share paid in any
transaction reported on any established stock exchange, national market system
or other established market for the Stock, or paid or offered in any bona fide
transaction related to a potential or actual Change in Control of the 

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<PAGE>   13
Company at any time during the preceding 60-day period as determined by the
Committee, except that in the case of Incentive Stock Options and Stock
Appreciation Rights relating to Incentive Stock Options, such price shall be
based only on transactions reported for the date on which the Board decides to
cash out such Options.

11.      GENERAL PROVISIONS.

         A.       AWARD GRANTS. Any Award may be granted either alone or in 
addition to other Awards granted under the Plan. Subject to the terms and
restrictions set forth elsewhere in the Plan, the Committee shall determine the
consideration, if any, payable by the participant for any Award and, in addition
to those set forth in the Plan, any other terms and conditions of the Awards.
The Committee may condition the grant or payment of any Award upon the
attainment of Performance Goals or such other factors or criteria, including
vesting based on continued employment or consulting, as the Committee shall
determine. Performance Goals may vary from Plan participant to Plan participant
and among groups of Plan participants and shall be based upon such Company,
subsidiary, group or division factors or criteria as the Committee may deem
appropriate, including, but not limited to, earnings per share or return on
equity (except as otherwise required for Plan participants who are Covered
Employees as of the end of the year in order to comply with Section 162(m)). The
other provisions of Awards also need not be the same with respect to each
recipient. Unless otherwise specified in the Plan or by the Committee, the date
of grant of an Award shall be the date of action by the Committee to grant the
Award. The Committee may also substitute new Options for previously granted
Options, including previously granted Options having higher exercise prices.

         B.       TYPES OF SHARES. The Committee, in its discretion, may 
determine at the time of an Award that in lieu of Stock there shall be issuable
under, or applicable to the measurement of, any Award any of the following: (i)
Restricted Stock; (ii) shares of any series of common stock of the Company other
than Stock and shares of any series of common stock of any Subsidiary or
Affiliate of the Company ("Common Shares"); or (iii) shares of any series of
preferred stock of the Company ("Preferred Shares"); provided that (A) with
respect to shares issuable upon exercise of Incentive Stock Options, Common
Shares and Preferred Shares shall be limited to shares of any Subsidiary
authorized as of the date the Plan is approved by the Board and (B) with respect
to shares issuable upon exercise of Non-Qualified Stock Options and Stock
Appreciation Rights, Common Shares and Preferred Shares shall be limited to
shares of any Subsidiary or Affiliate of the Company. In such event, the
Committee shall determine the number of shares of Stock equivalent to such
Restricted Stock, Common Shares or Preferred Shares for the purpose of
calculating the shares of Stock issued under the Plan; provided that a Common
Share or a Preferred Share in no event shall be deemed equal to less than one
share of Stock.

         C.       AWARD AGREEMENT. As soon as practicable after the date of an
Award grant, the Company and the participant shall enter into a written Award
Agreement specifying the date of grant and the terms and conditions of the
Award.

                                       13
<PAGE>   14

         D.       CERTIFICATES. All certificates for shares of Stock or other
securities delivered under the Plan shall be subject to such stock transfer
orders, legends and other restrictions as the Committee may deem advisable under
the rules, regulations and other requirements of the Commission, any stock
exchange upon which the Stock is then listed, any national market system over
which the Stock is then quoted and any applicable federal, state or foreign
securities law.

         E.       TERMINATION. With respect to Awards (other than Options), in
the event of Termination for any reason other than death or Disability, Awards
held at the date of Termination (and only to the extent then exercisable or
payable, as the case may be) may be exercised in whole or in part at any time
within 90 days after the date of Termination, or such lesser period specified in
the Award Agreement (but in no event after the expiration date of the Award),
but not thereafter. With respect to Options, in the event of Termination for any
reason other than death or Disability, Options held at the date of Termination
(to the extent then exercisable) may be exercised in whole or in part within 90
days after the date of Termination, or such other period (which may be longer or
shorter than 90 days) which shall be specified in the Award Agreement (but in no
event shall any Option remain exercisable after the expiration date of such
Option). If Termination is due to death or Disability, or a participant dies or
becomes disabled within the period that the Award remains exercisable or
payable, as the case may be, after Termination, only Awards (including Options)
held at the date of death or Disability (and only to the extent then exercisable
or payable, as the case may be) may be exercised in whole or in part by the
participant in the case of Disability, by the participant's personal
representative or by the person to whom the Award is transferred by will or the
laws of descent and distribution, at any time within 18 months after the death
or one year after the Disability, as the case may be, of the participant (or
such other period which shall be specified in the Award Agreement, but in no
event shall any Award remain exercisable after the expiration of such Award). In
the event of Termination by reason of the participant's retirement (as
determined in the exercise of the Committee's sole discretion), Awards
(including Options) may be exercised in whole or in part at any time within two
years after the date of Termination (or such other period which shall be
specified in the Award Agreement, but in no event shall any Award remain
exercisable after the expiration date of such Award).

         F.       DELIVERY OF PURCHASE PRICE. Plan participants shall make all
or any portion of any payment due to the Company with respect to the
consideration payable for, upon exercise of, or for federal, state, local or
foreign tax payable in connection with, an Award by delivery of cash; and if and
only to the extent authorized by the Committee, all or any portion of such
payment may be made by delivery of any property (including without limitation a
promissory note of the participant or shares of Stock or other securities and,
in the case of an Option, surrender of shares issuable upon exercise of that
Option) other than cash, so long as, if applicable, such property constitutes
valid consideration for the Stock under applicable law. To the extent
participants may make payments due to the Company upon grant or exercise of
Awards by the delivery of shares of Stock or other securities, the Committee, in
its discretion, may permit participants constructively to deliver for any such
payment securities of the Company held by the participant for at least three
months. Constructive delivery shall 

                                       14
<PAGE>   15

be effected by (i) identification by the participant of shares intended to be
delivered constructively, (ii) confirmation by the Company of participant's
ownership of such shares (for example, by reference to the Company's stock
records, or by some other means of verification) and (iii) if applicable, upon
exercise, delivery to the participant of a certificate for that number of shares
equal to the number of shares for which the Award is exercised less the number
of shares constructively delivered.

         G.       TAX WITHHOLDING. If and to the extent authorized by the 
Committee in its discretion, a person who has received an Award or payment under
an Award may make an election to deliver to the Company a promissory note of the
Plan participant on the terms set forth in Section 11F or to have shares of
Stock or other securities of the Company withheld by the Company or to tender
any such securities to the Company to pay the amount of tax that the Committee
in its discretion determines to be required to be withheld by the Company.

                  1.  Such election shall be irrevocable;

                  2.  Such election shall be subject to the disapproval of the
Committee;

                  3.  In the case of participants subject to Section 16(b) of
the Exchange Act, the election and the exercise of the Award may not be made
within six months after the grant of the Award (and in the case of a Stock
Appreciation Right, any related Award) to be exercised (except that this
limitation shall not apply in the event of death or Disability of such person
before the six-month period expires); and

                  4.  In the case of participants subject to Section 16(b) of
the Exchange Act, such election may be made either (A) at least six months
before the date that the amount of tax to be withheld in connection with such
exercise is determined or (B) in any ten-day period beginning on the third
business day following the date of release for publication of quarterly or
annual summary statements of sales and earnings.

Any shares or other securities so withheld or tendered will be valued by the
Committee as of the date they are withheld or tendered; provided, that Stock
shall be valued at the Fair Market Value on such date. The value of the shares
withheld or tendered may not exceed the required federal, state, local and
foreign withholding tax obligations as computed by the Company. Unless the
Committee permits otherwise, the Plan participant shall pay to the Company in
cash, promptly when the amount of such obligations becomes determinable, all
applicable federal, state, local and foreign withholding taxes that the
Committee in its discretion determines to result from the lapse of restrictions
imposed upon an Award or upon exercise of an Award or from a transfer or other
disposition of shares acquired upon exercise or payment of an Award or otherwise
related to the Award or the shares acquired in connection with an Award.

         H.       TRANSFERABILITY. Unless otherwise provided in an Award 
Agreement, no Award shall be assignable or otherwise transferable by the
participant other than by will or by 


                                       15
<PAGE>   16

the laws of descent and distribution, and, during the life of the participant,
an Award shall be exercisable, and any elections with respect to an Award shall
be made, only by the Plan participant or such participant's guardian or legal
representative.

         I.       RIGHTS OF FIRST REFUSAL. At the time of grant, the Committee
may provide in connection with any Award that the shares of Stock received as a
result of such Award shall be subject to a right of first refusal pursuant to
which the participant shall be required to offer to the Company any shares that
the participant wishes to sell at the then Fair Market Value subject to such
other terms and conditions as the Committee may specify at the time of grant

         J.       ADJUSTMENT OF AWARDS; WAIVERS. The Committee may adjust the
Performance Goals and measurements applicable to Awards (i) to take into account
changes in law and accounting and tax rules, (ii) to make such adjustments as
the Committee deems necessary or appropriate to reflect the inclusion or
exclusion of the impact of extraordinary or unusual items, events, or
circumstances in order to avoid windfalls or hardships, (iii) to make such
adjustments as the Committee deems necessary or appropriate to reflect any
material changes in business conditions and (iv) in any other manner determined
in its discretion. In the event of hardship or other special circumstances of a
participant and otherwise in its discretion, the Committee may waive in whole or
in part any or all restrictions, conditions, vesting, or forfeiture with respect
to any Award granted to such Plan participant.

         K.       ELECTION TO DEFER PAYMENT. To the extent, if any, permitted by
the Committee, a Plan participant may elect, at such time as the Committee may
in its discretion specify, to defer payment of all or a portion of an Award.

         L.       NON-COMPETITION. The Committee may condition the Committee's
discretionary waiver of a forfeiture or vesting acceleration at the time of
Termination of a Plan participant holding any unexercised or unearned Award or
the waiver of restrictions upon any Award upon a requirement that such
participant agree to and actually (i) not engage in any business or activity
competitive with any business or activity conducted by the Company and (ii) be
available, unless such participant shall have died, for consultations at the
request of the Company's management, all on such terms and conditions (including
conditions in addition to (i) and (ii)) as the Committee may determine.

         M.       DIVIDENDS. The reinvestment of dividends in additional Stock 
or Restricted Stock at the time of any dividend payment shall only be
permissible if sufficient shares of Stock are available under Section 3 for such
reinvestment (taking into account then outstanding Awards).

         N.       REGULATORY COMPLIANCE. Each Award under the Plan shall be 
subject to the condition that, if at any time the Committee shall determine that
(i) the listing, registration or qualification of the shares of Stock upon any
securities exchange or under any state or federal law, (ii) the consent or
approval of any government or regulatory body, or (iii) an agreement or
representations by the participant with respect thereto, is necessary or
desirable, then such Award shall not be consummated in whole or in part unless
such listing, registration, 

                                       16
<PAGE>   17

qualification, consent, approval, agreement or representations shall have been
effected or obtained free of any conditions not acceptable to the Committee.

         O.       RIGHTS AS STOCKHOLDER. Unless the Plan or the Committee 
expressly specifies otherwise, a Plan participant shall have no rights as a
stockholder with respect to any shares covered by an Award until the participant
is entitled, under the terms of the Award, to receive such shares. Subject to
Sections 3B. and 7C., no adjustment shall be made for dividends or other rights
for which the record date is prior to the date the certificates are delivered.

         P.       BENEFICIARY DESIGNATION. The Committee, in its discretion, may
establish procedures for a participant to designate a beneficiary to whom any
amounts payable in the event of the participant's death are to be paid.

         Q.       ADDITIONAL PLANS. Nothing contained in the Plan shall prevent 
the Company or a Subsidiary or Affiliate of the Company from adopting other or
additional compensation arrangements for its employees.

         R.       NO EMPLOYMENT RIGHTS. The adoption of the Plan shall not 
confer upon any employee any right to continued employment nor shall it
interfere in any way with the right of the Company or a Subsidiary or Affiliate
of the Company to terminate the employment of any employee at any time.

         S.       INTERPRETATION. Notwithstanding any provision of the Plan, the
Plan shall always be administered, and Awards shall always be granted and
exercised, in such a manner as to conform to the provisions of Rule 16b-3 and
Section 162(m), unless the Committee determines that Rule 16b-3 or Section
162(m) are not applicable to the Plan. The Plan is designed and intended to
comply with Rule 16b-3 and, to the extent applicable, with Section 162(m), and
all provisions hereof shall be construed in a manner to so comply.

         T.       GOVERNING LAW. The Plan and all Awards shall be governed by 
and construed in accordance with the laws of the Commonwealth of Massachusetts.

         U.       USE OF PROCEEDS. All cash proceeds to the Company under the 
Plan shall constitute general funds of the Company.


         V.       UNFUNDED STATUS OF PLAN. The Plan shall constitute an 
"unfunded" plan for incentive and deferred compensation. The Committee may
authorize the creation of trusts or arrangements to meet the obligations created
under the Plan to deliver Stock or make payments; provided, that unless the
Committee otherwise determines, the existence of such trusts or other
arrangements shall be consistent with the "unfunded" status of the Plan.

         W.       ASSUMPTION BY SUCCESSOR. The obligations of the Company under
the Plan and under any outstanding Award may be assumed by any successor
corporation, which for purposes of the Plan shall be included within the meaning
of "Company".

                                       17
<PAGE>   18

         X.       PLAN DESIGNATION AND STATUS. Notwithstanding the designation 
of this document as a plan for convenience of reference and to standardize
certain provisions applicable to all types of Awards, each type of Award shall
be deemed to be a separate "plan" for purposes of Section 16 of the Exchange Act
and any applicable state securities laws.

12.      AMENDMENTS AND TERMINATION.

         The Board may amend, alter or discontinue the Plan, but no amendment,
alteration or discontinuance shall be made which would impair the rights of a
participant under an outstanding Award without the Plan participant's consent.
In addition, to the extent required for the Plan to comply with Rule 16b-3 or
Section 162(m) or, with respect to provisions solely as they relate to Incentive
Stock Options, to the extent required for the Plan to comply with Section 422A
of the Code, the Board may not amend or alter the Plan without the approval of a
majority of the votes cast at a duly held stockholders' meeting at which a
quorum of the voting power of the Company is represented in person or by proxy,
where such amendment or alteration would:

         A.       Except as expressly provided in the Plan, increase the total 
number of shares reserved for issuance pursuant to Awards under the Plan;

         B.       Except as expressly provided in the Plan, change the minimum 
price terms of Section 5B.3 or Section 8A;

         C.       Change the class of employees and consultants eligible to
participate in the Plan;

         D.       Extend the maximum Option term under Section 5B. or the 
maximum exercise period under Section 8B.; or

         E.       Materially increase the benefits accruing to participants 
under the Plan.

         The Board of Directors may, at any time without stockholder approval,
amend the Plan and the terms of any Award outstanding under the Plan, provided
that such amendment is designed to maximize federal income tax benefits accorded
to Awards or, if the Committee determines that Rule 16b-3 is applicable to the
Plan, to comply with Rule 16b-3 and provided further that with respect to
outstanding Awards, the Plan participant consents to such amendment.

13.      EFFECTIVE DATE OF PLAN.

         The Plan, and any amendments thereto, shall be effective on the date
the same is adopted by the Board, but all Awards shall be conditioned upon
approval of the Plan, and any amendment thereto requiring such approval, at a
duly held stockholders' meeting by the affirmative vote of the holders of shares
representing a majority of the voting power of the 

                                       18
<PAGE>   19

Company represented in person or by proxy and entitled to vote at the meeting.

14.      TERM OF PLAN.

         No Award shall be granted on or after July 1, 2000, but Awards granted
prior to July 1, 2000 (including, without limitation, Performance Share Awards
for Performance Periods commencing prior to July 1, 2000) may extend beyond that
date.


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