Document:

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                                                                   EXHIBIT 10.17

                          BOSTON SCIENTIFIC CORPORATION
                          2003 LONG-TERM INCENTIVE PLAN

1.       ADMINISTRATION

         Subject to the express provisions of the Plan, the Administrator has
the authority to interpret the Plan; determine eligibility for and grant Awards;
determine, modify or waive the terms and conditions of any Award; prescribe
forms, rules and procedures (which it may modify or waive); and otherwise do all
things necessary to implement the Plan. Once a written agreement evidencing an
Award hereunder has been provided to a Participant, the Administrator may not,
without the Participant's consent, alter the terms of the Award so as to affect
adversely the Participant's rights under the Award, unless the Administrator
expressly reserved the right to do so in writing at the time of such delivery.
In the case of any Award intended to be eligible for the performance-based
compensation exception under Section 162(m), the Administrator shall exercise
its discretion consistent with qualifying the Award for such exception.

          Notwithstanding any provision herein to the contrary, the
Administrator may modify the terms of the Plan or may create one or more
subplans, in each case on such terms as it deems necessary or appropriate, to
provide for awards to non-U.S. participants; provided, that no such action by
the Administrator shall increase the total number of shares issuable hereunder.

2.       LIMITS ON AWARD UNDER THE PLAN

         a.       NUMBER OF SHARES. A maximum of 25,000,000 shares of Stock may
be delivered in satisfaction of Awards under the Plan. For purposes of the
preceding sentence, shares that have been forfeited in accordance with the terms
of the applicable Award and shares held back in satisfaction of the exercise
price or tax withholding requirements from shares that would otherwise have been
delivered pursuant to an Award shall not be considered to have been delivered
under the Plan. Also, the number of shares of Stock delivered under an Award
shall be determined net of any previously acquired Shares tendered by the
Participant in payment of the exercise price or of withholding taxes.

         b.       TYPE OF SHARES. Stock delivered by the Company under the Plan
may be authorized but unissued Stock or previously issued Stock acquired by the
Company and held in treasury. No fractional shares of Stock will be delivered
under the Plan.

         c.       STOCK-BASED AWARD LIMITS. The maximum number of shares of
Stock for which Stock Options may be granted to any person in any calendar year,
the maximum number of shares of Stock subject to SARs granted to any person in
any calendar year and the aggregate maximum number of shares of Stock subject to
other Awards that may be delivered (or the value of which may be paid) to any
person in any calendar year shall each be 2,000,000. Subject to these
limitations, each person eligible to participate in the Plan shall be eligible
in any year to receive Awards covering up to the full number of shares of Stock
then available for Awards under the Plan.

         d.       OTHER AWARD LIMITS. No more than $2,500,000 may be paid to any
individual with respect to any Cash or Other Performance Award (other than an
Award expressed in terms of shares of Stock or units representing Stock, which
shall instead be subject to the limit set forth in Section 2.c. above). In
applying the dollar limitation of the preceding sentence: (A) multiple Cash or
Other Performance Awards to the same individual that are determined by reference
to performance periods of one year or less ending with or within the same fiscal
year of the Company shall be subject in the aggregate to one $2,500,000 limit,
and (B) multiple Cash or Other Performance Awards to the same individual that
are determined by reference to one or more multi-year performance periods ending
in the same fiscal year of the Company shall be subject in the aggregate to
separate $2,500,000 limits.

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3.       ELIGIBILITY AND PARTICIPATION

         The Administrator will select Participants from among those key
Employees, directors and other individuals or entities providing services to the
Company or its Affiliates who, in the opinion of the Administrator, are in a
position to make a significant contribution to the success of the Company and
its Affiliates. Eligibility for ISOs is further limited to those individuals
whose employment status would qualify them for the tax treatment described in
Sections 421 and 422 of the Code.

4.       RULES APPLICABLE TO AWARDS

         a.       ALL AWARDS

                  (1) TERMS OF AWARDS. The Administrator shall determine the
terms of all Awards subject to the limitations provided herein.

                  (2) Performance Criteria. Where rights under an Award depend
in whole or in part on satisfaction of Performance Criteria, actions by the
Company that have an effect, however material, on such Performance Criteria or
on the likelihood that they will be satisfied will not be deemed an amendment or
alteration of the Award.

                  (3) ALTERNATIVE SETTLEMENT. The Company may at any time
extinguish rights under an Award in exchange for payment (subject in each case
to the limitations of Section 2) in cash, Stock or other property on such terms
as the Administrator determines. In those jurisdictions where forfeiture is not
permitted under applicable law, the Company shall have right to repurchase, and
the Participant shall have the obligation to sell and deliver, any and all
Stock-based Awards held by the Participant at a price per share equal to the par
value of the Company's Common Stock; in this event, the Participant hereby
authorizes the Company to perform on his or her behalf all legal actions
necessary to transfer ownership of the Stock-based Award back to the Company.

                  (3) TRANSFERABILITY OF AWARDS. Awards may be transferred only
as follows: (i) ISOs may not be transferred other than by will or by the laws of
descent and distribution and during a Participant's lifetime may be exercised
only by the Participant (or in the event of the Participant's incapacity, by the
person or persons legally appointed to act on the Participant's behalf); (ii)
Stock Options other than ISOs may be transferred by will or by the laws of
descent and distribution and, except as otherwise determined by the
Administrator, may also be transferred during the Participant's lifetime,
without payment of consideration, to one or more Family Members of the
Participant; (iii) Awards of Unrestricted Stock shall be subject only to such
transfer restrictions under the Plan as are specified by the Administrator; and
(iv) Awards other than Stock Options and other than Unrestricted Stock may not
be transferred except as the Administrator otherwise determines. If an Award is
claimed or exercised by a person or persons other than the Participant, the
Company shall have no obligation to deliver Stock, cash or other property
pursuant to such Award or otherwise to recognize the transfer of the Award until
the Administrator is satisfied as to the authority of the person or persons
claiming or exercising such Award.

                  (5) VESTING, ETC. Without limiting the generality of Section
1, the Administrator may determine the time or times at which an Award will vest
(i.e., become free of forfeiture restrictions) or become exercisable and the
terms on which an Award requiring exercise will remain exercisable. Unless the
Administrator expressly provides otherwise, upon the cessation of the
Participant's employment or other service relationship with the Company and its
Affiliates (i) all Awards (other than Stock Options, SARs and Restricted Stock)
held by the Participant or by a permitted transferee under Section 4.a.(4)
immediately prior to such cessation of employment or other service relationship
will be immediately forfeited if not then vested and, where exercisability is
relevant, will immediately cease to be exercisable, and (ii) Stock Options, SARs
and Restricted Stock shall be treated as follows:

                           (A) immediately upon the cessation of a Participant's
         employment or other service relationship with the Company and its
         Affiliates by reason of the Participant's Disability,

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         or with respect to a Participant who is an employee or director of the
         Company or its Affiliates, by reason of such Participant's Retirement,
         all Stock Options, SARs and Restricted Stock Awards held by the
         Participant (or by a permitted transferee under Section 4.a.(4))
         immediately prior to such Disability or, as applicable, Retirement,
         will become vested and, where exercisability is relevant, will be
         exercisable until the expiration of the stated term of the Stock Option
         or SAR, unless otherwise determined by the Administrator at or after
         grant;

                            (B) all Stock Options, SARs and Restricted Stock
         Awards held by a Participant (or by a permitted transferee under
         Section 4.a.(4)) immediately prior to the Participant's death will
         become vested and, where exercisability is relevant, will be
         exercisable until the expiration of the stated term of the Stock Option
         or SAR, unless otherwise determined by the Administrator on or after
         grant;

                            (C) except as provided in (D) below, all Stock
         Options, SARs and Restricted Stock Awards held by a Participant (or by
         a permitted transferee under Section 4.a.(4)) immediately prior to the
         cessation (other than by reason of death or Disability, or with respect
         to a Participant who is an employee or director of the Company or its
         Affiliates, Retirement) of the Participant's employment or other
         service relationship with the Company and its Affiliates, to the extent
         then not vested shall terminate, and to the extent then exercisable,
         will remain exercisable for the lesser of twelve months or until the
         expiration of the stated term of the Stock Option or SAR unless
         otherwise determined by the Administrator at or after grant;"

                           (D) all Stock Options, SARs and Restricted Stock
         Awards held by the Participant (or by a permitted transferee under
         Section 4.a.(4)) whose cessation of employment or other service
         relationship is determined by the Administrator in its sole discretion
         to be for cause or to result from reasons which cast such discredit on
         the Participant as to justify immediate termination of the Award shall
         immediately terminate upon such cessation. For this purpose, "cause"
         means a felony conviction of a Participant or the failure of a
         Participant to contest prosecution for a felony, or a Participant's
         misconduct or dishonesty which is harmful to the business or reputation
         of the Company.

Unless the Administrator expressly provides otherwise, a Participant's
"employment or other service relationship with the Company and its Affiliates"
will be deemed to have ceased when the individual is no longer employed by or in
a service relationship with the Company or its Affiliates. Except as the
Administrator otherwise determines, with respect to a Participant who is an
employee or director of the Company or its Affiliates, such Participant's
"employment or other service relationship with the Company and its Affiliates"
will not be deemed to have ceased during a military, sick or other bona fide
leave of absence if such absence does not exceed 180 days or, if longer, so long
as the Participant retains a right by statute or by contract to return to
employment or other service relationship with the Company and its Affiliates.

                  (6) TAXES. The Administrator will make such provision for the
withholding of taxes as it deems necessary. The Administrator may, but need not,
hold back shares of Stock from an Award or permit a Participant to tender
previously-owned shares of Stock in satisfaction of tax withholding
requirements. In no event shall shares of Stock be tendered or held back by the
Company in excess of the minimum amount required to be withheld for Federal,
state, and other taxes.

                  (7) DIVIDEND EQUIVALENTS, ETC. The Administrator may provide
for the payment of amounts in lieu of cash dividends or other cash distributions
with respect to Stock subject to an Award if and in such manner as it deems
appropriate.

                  (8) RIGHTS LIMITED. Nothing in the Plan shall be construed as
giving any person the right to continued employment or service with the Company
or its Affiliates, or any rights as a shareholder except as to shares of Stock
actually issued under the Plan. The loss of existing or potential profit in

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Awards will not constitute an element of damages in the event of termination of
employment or service for any reason, even if the termination is in violation of
an obligation of the Company or Affiliate to the Participant.

                  (9) SECTION 162(m). The Administrator in its discretion may
grant Performance Awards that are intended to qualify for the performance-based
compensation exception under Section 162(m) and Performance Awards that are not
intended so to qualify. In the case of an Award intended to be eligible for the
performance-based compensation exception under Section 162(m), the Plan and such
Award shall be construed to the maximum extent permitted by law in a manner
consistent with qualifying the Award for such exception. In the case of a
Performance Award intended to qualify as performance-based for the purposes of
Section 162(m), the Administrator shall preestablish in writing one or more
specific Performance Criteria no later than 90 days after the commencement of
the period of service to which the performance relates (or at such earlier time
as is required to qualify the Award as performance-based under Section 162(m)).
Prior to payment of any Performance Award intended to qualify as
performance-based under Section 162(m), the Administrator shall certify whether
the Performance Criteria have been attained, and such determination shall be
final and conclusive. In the case of a Performance Award intended to qualify as
performance-based for the purposes of Section 162(m), the provisions of this
Section 4.a.(9) shall be construed in a manner that is consistent with the
regulations under Section 162(m).

         b.       AWARDS REQUIRING EXERCISE

                  (1) TIME AND MANNER OF EXERCISE. Unless the Administrator
expressly provides otherwise, (a) an Award requiring exercise by the holder will
not be deemed to have been exercised until the Administrator receives a written
notice of exercise (in form acceptable to the Administrator) signed by the
appropriate person and accompanied by any payment required under the Award; and
(b) if the Award is exercised by any person other than the Participant, the
Administrator may require satisfactory evidence that the person exercising the
Award has the right to do so.

                  (2) EXERCISE PRICE. The Administrator shall determine the
exercise price of each Stock Option; provided, that each Stock Option must have
an exercise price that is not less than the fair market value of the Stock
subject to the Stock Option, determined as of the date of grant, except as
necessary to maintain the intrinsic value of substitute Stock Options in
connection with a merger or acquisition consummated by the Company. An ISO
granted to an Employee described in Section 422(b)(6) of the Code must have an
exercise price that is not less than 110% of such fair market value. Where
shares of Stock issued under an Award are part of an original issue of shares,
the Award shall require an exercise price equal to at least the par value of
such shares. Except for certain provisions contained in Section 5 below, the
exercise price for any Stock Option grant under the Plan may not be decreased
after the grant of the Option without the approval of the stockholders of the
Company.

                  (3) PAYMENT OF EXERCISE PRICE, IF ANY. Where the exercise of
an Award is to be accompanied by payment, the Administrator may determine the
required or permitted forms of payment, subject to the following: all payments
will be by cash or check acceptable to the Administrator, unless one of the
following forms of payment is permitted by the Administrator in its discretion
in any specific instance (with the consent of the optionee of an ISO, unless
such permitted form of payment is expressly provided for in the grant), (i)
through the delivery of shares of Stock which have been outstanding for at least
six months (unless the Administrator approves a shorter period) and which have a
fair market value equal to the exercise price, (ii) by delivery to the Company
of a promissory note of the person exercising the Award, payable on such terms
as are specified by the Administrator, (iii) by delivery of an unconditional and
irrevocable undertaking by a broker to deliver promptly to the Company
sufficient funds to pay the exercise price, or (iv) by any combination of the
foregoing permissible forms of payment.

                  (4) GRANT OF STOCK OPTIONS. Each Stock Option awarded under
the Plan shall be deemed to have been awarded as a non-ISO (and to have been so
designated by its terms) unless the Administrator expressly provides that the
Stock Option is to be treated as an ISO. No ISO may be granted under the Plan
after February 25, 2013, but ISOs previously granted may extend beyond that
date.

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         c.       AWARDS NOT REQUIRING EXERCISE

         Awards of Restricted Stock and Unrestricted Stock may be made in return
for either (i) services determined by the Administrator to have a value not less
than the par value of the Awarded shares of Stock, or (ii) cash or other
property having a value not less than the par value of the Awarded shares of
Stock plus such additional amounts (if any) as the Administrator may determine
payable in such combination and type of cash, other property (of any kind) or
services as the Administrator may determine.

5.       EFFECT OF CERTAIN TRANSACTIONS

         a.       CHANGE IN CONTROL

         Except as the Administrator may otherwise determine in connection with
the grant of an Award, immediately prior to a Change in Control each Award shall
vest (and if relevant shall become exercisable), all Performance Criteria and
other conditions to an Award shall be deemed satisfied, and all Award deferrals
shall be accelerated. In addition, all Stock-based Awards (all Stock Options,
SARs, Restricted Stock, Deferred Stock, including any Performance Awards
consisting of any of the foregoing), except to the extent consisting of
outstanding shares of Stock that are then free of any restrictions under the
Plan, shall terminate immediately prior to the Change in Control unless assumed
in accordance with the immediately following sentence. If there is a surviving
or acquiring entity, the Administrator may provide for a substitution or
assumption of Awards by the acquiring or surviving entity or an affiliate
thereof, on such terms as the Administrator determines. If there is no surviving
or acquiring entity, or if the Administrator does not provide for a substitution
or assumption of an Award, the Award shall vest (and to the extent relevant
become exercisable) on a basis that gives the holder of the Award a reasonable
opportunity to participate as a stockholder in the Change in Control.

         b.       CHANGES IN AND DISTRIBUTIONS WITH RESPECT TO THE STOCK

                  (1) BASIC ADJUSTMENT PROVISIONS. In the event of a stock
dividend, stock split or combination of shares, recapitalization or other change
in the Company's capital structure, the Administrator will make appropriate
adjustments to the maximum number of shares that may be delivered under the Plan
under Section 2.a. and to the maximum share limits described in Section 2.b.,
and will also make appropriate adjustments to the number and kind of shares of
stock or securities subject to Awards then outstanding or subsequently granted,
any exercise prices relating to Awards and any other provision of Awards
affected by such change.

                  (2) CERTAIN OTHER ADJUSTMENTS. The Administrator may also make
adjustments of the type described in paragraph (1) above to take into account
distributions to common stockholders other than those provided for in Section
5.a. and 5.b.(1), or any other event, if the Administrator determines that
adjustments are appropriate to avoid distortion in the operation of the Plan and
to preserve the value of Awards made hereunder; provided, that no such
adjustment shall be made to the maximum share limits described in Section 2.c.
or 2.d., or otherwise to an Award intended to be eligible for the
performance-based exception under Section 162(m), except to the extent
consistent with that exception, nor shall any change be made to ISOs except to
the extent consistent with their continued qualification under Section 422 of
the Code.

                  (3) CONTINUING APPLICATION OF PLAN TERMS. References in the
Plan to shares of Stock shall be construed to include any stock or securities
resulting from an adjustment pursuant to Section 5.b.(1) or 5.b.(2) above.

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6.       LEGAL CONDITIONS ON DELIVERY OF STOCK

         The Company will not be obligated to deliver any shares of Stock
pursuant to the Plan or to remove any restriction from shares of Stock
previously delivered under the Plan until the Company's counsel has approved all
legal matters in connection with the issuance and delivery of such shares; if
the outstanding Stock is at the time of delivery listed on any stock exchange or
national market system, the shares to be delivered have been listed or
authorized to be listed on such exchange or system upon official notice of
issuance; and all conditions of the Award have been satisfied or waived. If the
sale of Stock has not been registered under the Securities Act of 1933, as
amended, the Company may require, as a condition to exercise of the Award, such
representations or agreements as counsel for the Company may consider
appropriate to avoid violation of such Act. The Company may require that any
certificates evidencing Stock issued under the Plan bear an appropriate legend
reflecting any restriction on transfer applicable to such Stock.

7.       AMENDMENT AND TERMINATION

         Subject to the provisions of Section 1, the Administrator may at any
time or times amend the Plan or any outstanding Award for any purpose which may
at the time be permitted by law, or may at any time terminate the Plan as to any
further grants of Awards.

8.       NON-LIMITATION OF THE COMPANY'S RIGHTS

         The existence of the Plan or the grant of any Award shall not in any
way affect the Company's right to award a person bonuses or other compensation
in addition to Awards under the Plan.

9.       GOVERNING LAW

         The Plan shall be construed in accordance with the laws of the
Commonwealth of Massachusetts.

10.      DEFINED TERMS

The following terms, when used in the Plan, shall have the meanings and be
subject to the provisions set forth below:

         "ADMINISTRATOR": The Board or, if one or more has been appointed, the
Committee, including their delegates (subject to such limitations on the
authority of such delegates as the Board or the Committee, as the case may be,
may prescribe). The senior Legal and Human Resources representatives of the
Company shall also be the Administrator, but solely with respect to ministerial
tasks related hereto.

         "AFFILIATE": Any corporation or other entity owning, directly or
indirectly, 50% or more of the outstanding Stock of the Company, or in which the
Company or any such corporation or other entity owns, directly or indirectly,
50% of the outstanding capital stock (determined by aggregate voting rights) or
other voting interests.

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         "AWARD": Any or a combination of the following:

                  (i) Stock Options.

                  (ii) SARs.

                  (iii) Restricted Stock.

                  (iv) Unrestricted Stock.

                  (v) Deferred Stock.

                  (vi) Other Stock-Based Awards.

                  (vii) Cash Performance Awards.

                  (viii) Other Performance Awards.

                  (ix) Grants of cash, or loans, made in connection with other
         Awards in order to help defray in whole or in part the economic cost
         (including tax cost) of the Award to the Participant.

         "BOARD":  The Board of Directors of the Company.

         "CASH PERFORMANCE AWARD": A Performance Award payable in cash. The
right of the Company under Section 4.a.(3) to extinguish an Award in exchange
for cash or the exercise by the Company of such right shall not make an Award
otherwise not payable in cash a Cash Performance Award.

         "CHANGE IN CONTROL":  Any of:

         (i) an acquisition, consolidation or merger in which the Company is not
the surviving corporation or with respect to which all or substantially all of
the beneficial owners of the outstanding stock of the Company and the combined
voting power of the outstanding voting securities of the Company entitled to
vote generally in the election of directors immediately prior to such
transaction do not own beneficially, directly or indirectly, and in
substantially the same proportion, 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
transaction;

         (ii) a sale or transfer of all or substantially all the Company's
assets;

         (iii) a dissolution or liquidation of the Company; or

         (iv) continuing directors constitute less than a majority of the Board,
where a "continuing director" includes (A) each person who was a director of the
Company as of the close of business on May 6, 2003, and (B) each person who
subsequently becomes a director of the Company with approval by a vote of at
least a majority of the "continuing directors" in office at the time of such
person's election or nomination as a director unless that person became a
director in connection with an actual or threatened election contest.

Notwithstanding clauses (i) through (iv) above, none of the following shall
constitute a "Change in Control" for purposes of this definition:

         (x) the shares of common stock of the Company or the voting securities
of the Company entitled to vote generally in the election of directors are
acquired directly from the Company in a capital raising transaction;

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         (y) the shares of common stock of the Company or the voting securities
of the Company entitled to vote generally in the election of directors are
acquired by any employee benefit plan (or related trust) sponsored or maintained
by the Company or any corporation controlled by the Company; or

         (z) (A) the beneficial owners of the outstanding shares of common stock
of the Company, and of the securities of the Company entitled to vote generally
in the election of directors, immediately prior to such transaction beneficially
own, directly or indirectly, in substantially the same proportions immediately
following such transaction more than 60% of the outstanding shares of common
stock and of the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the corporation
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries) resulting from such
transaction and (B) at least a majority of the members of the board of directors
of the corporation resulting from such transaction were members of the board of
directors at the time of the execution of the initial agreement, or of the
action of the Board, authorizing such transaction.

         "CODE": The U.S. Internal Revenue Code of 1986 as from time to time
amended and in effect, or any successor statute as from time to time in effect.

         "COMMITTEE": One or more committees of the Board (including any
subcommittee thereof) appointed or authorized to make Awards and otherwise to
administer the Plan. In the case of Awards granted to executive officers of the
Company, the Committee shall be comprised solely of two or more outside
directors within the meaning of Section 162(m).

         "COMPANY": Boston Scientific Corporation.

         "DEFERRED STOCK": A promise to deliver Stock or other securities in the
future on specified terms.

         "DISABILITY": Permanent and total disability as determined under the
Company's long-term disability program for employees then in effect.

         "EMPLOYEE": Any person who is employed by the Company or an Affiliate.

         "FAMILY MEMBER": An individual or entity included as a "family member"
within the meaning of the Security and Exchange Commission's Form S-8,
Registration Statement Under The Securities Act of 1933.

         "ISO": A Stock Option intended to be an "incentive stock option" within
the meaning of Section 422 of the Code.

         "PARTICIPANT": An Employee, director or other person providing services
to the Company or its Affiliates who is granted an Award under the Plan.

         "PERFORMANCE AWARD":  An Award subject to Performance Criteria.

         "PERFORMANCE CRITERIA": Specified criteria the satisfaction of which is
a condition for the exercisability, vesting or full enjoyment of an Award. For
purposes of Performance Awards that are intended to qualify for the
performance-based compensation exception under Section 162(m), a Performance
Criterion shall mean an objectively determinable measure of performance relating
to any of the following (determined either on a consolidated basis or, as the
context permits, on a divisional, subsidiary, line of business, project or
geographical basis or in combinations thereof): (i) sales; revenues; assets;
liabilities; costs; expenses; earnings before or after deduction for all or any
portion of interest, taxes, depreciation, amortization or other items, whether
or not on a continuing operations or an aggregate or per share basis; return on
equity, investment, capital or assets; one or more operating ratios; borrowing
levels, leverage ratios or credit rating; market share; capital expenditures;
cash flow; working capital requirements; stock price; stockholder return; sales,
contribution or gross margin, of particular products or services; particular
operating or financial ratios; customer acquisition, expansion and retention; or
any combination

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of the foregoing; or (ii) acquisitions and divestitures (in whole or in part);
joint ventures and strategic alliances; spin-offs, split-ups and the like;
reorganizations; recapitalizations, restructurings, financings (issuance of debt
or equity) and refinancings; transactions that would constitute a change of
control; or any combination of the foregoing. A Performance Criterion measure
and targets with respect thereto determined by the Administrator need not be
based upon an increase, a positive or improved result or avoidance of loss.

         "PLAN": The Boston Scientific Corporation 2000 Incentive Plan as set
forth herein, as from time to time amended and in effect.

         "RESTRICTED STOCK": An Award of Stock subject to forfeiture to the
Company if specified conditions are not satisfied.

         "RETIREMENT": Unless the Administrator expressly provides otherwise,
cessation of employment or other service relationship with the Company and its
Affiliates if, as of the date of such cessation, (i) the Participant has
attained age 50, (ii) the Participant has accrued at least five years of service
with the Company and its Affiliates, and (iii) the sum of the Participant's age
and years of service as of such date equals or exceeds 62.

         "SECTION 162(m)": Section 162(m) of the Code.

         "SARs": Rights entitling the holder upon exercise to receive cash or
Stock, as the Administrator determines, equal to a function (determined by the
Administrator using such factors as it deems appropriate) of the amount by which
the Stock has appreciated in value since the date of the Award.

         "STOCK": Common Stock of the Company, par value $.01 per share.

         "STOCK OPTIONS": Options entitling the recipient to acquire shares of
Stock upon payment of the exercise price.

         "UNRESTRICTED STOCK": An Award of Stock not subject to any restrictions
under the Plan.<PAGE>

                                                                    EXHIBIT 10.3

                              IONICS, INCORPORATED

                 AMENDED AND RESTATED 1997 STOCK INCENTIVE PLAN

    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 stockholder value which has been created, (iii) have a mutuality of interest
with other stockholders 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
    Restricted Stock Awards, Stock Options or 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.

         (h) 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.

         (i) 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.

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

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

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

         (m) Restricted Stock Award means an award made pursuant to Section 8
    below that is payable in Stock in accordance with and subject to the terms
    of the grant.

<PAGE>

         (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 9.2.

    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, Restricted Stock Awards and Long-Term
    Performance Awards) Non-Qualified Stock Options, Restricted Stock Awards 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 or Restricted Stock Award, which prices
    shall not be less than the minimum price specified in Section 6.2(a) or
    Section 8, as the case may be; (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 and the nature of such
    restrictions, if any; (viii) determine the Restriction Period (as set forth
    in Section 8.1(a)); 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

                                       2
<PAGE>

    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 and
    Restricted Stock Awards 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 and
    certain Restricted Stock Awards granted under the Plan generally shall
    constitute Performance-Based Compensation, the Plan shall be administered,
    to the extent required for such Stock Options and certain Restricted Stock
    Awards 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 certain Restricted Stock Awards 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.

    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) 2,750,000 (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); 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; and no more than an aggregate of 1,000,000 shares of Stock
    may be issued in connection with Restricted Stock Awards. If any Award
    granted under the Plan expires, ceases to be exercisable or is terminated,
    surrendered (other than pursuant to Sections 6.2(k) or 12.5) or forfeited,
    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 Award
    granted under the Plan expires, or is terminated, surrendered or forfeited,
    in whole or in part, the unpurchased shares subject to such Award 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, undistributed or restricted portion of any expired, terminated,
    surrendered (other than

                                       3
<PAGE>

    pursuant to Sections 6.2(k) or 12.5) 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 expiration,
    termination, surrender or forfeiture and thereafter again be available for
    distribution in connection with future Awards under the Plan.

         (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
(other than acceleration of the exercisability of Stock Options hereunder) 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.

         (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.

                                       4
<PAGE>

         (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 9, 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
    12.1.

         (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

                                       5
<PAGE>

    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.

         (i) Extension of Exercisability Period. The Committee or Board of
    Directors pursuant to the authority granted in Section 3(a) may in its
    discretion grant Stock Options which provide for longer periods of
    exercisability following the termination of an optionee's employment by or
    association with the Company or any Related Company than is provided in
    Subsections 6.2(f), 6.2(g), and 6.2(h), provided that any extended
    exercisability period shall not extend beyond the expiration of the stated
    term of the Stock Option. Notwithstanding Sections 6.2(f), 6.2(g) and
    6.2(h), the Committee or the Board of Directors may also in its discretion
    amend outstanding Stock Options to extend the period during which they
    remain exercisable, provided that any extended exercisability period shall
    not extend beyond the expiration of the stated term of the Stock Option.

         (j) 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.

         (k) 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 9 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.

                                       6
<PAGE>

    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.

    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 9 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 9 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. Restricted Stock Awards

    8.1 Terms and Conditions. The Committee may grant Restricted Stock Awards in
furtherance of the purpose of the Plan without, unless otherwise provided, other
payment and subject to the restrictions referred to in this Section 8. All
Restricted Stock Awards granted under the Plan shall be so granted for, and in
consideration of, past services rendered to the Company or a Related Corporation
or other lawful consideration and shall be subject to the following terms and
conditions and to such other terms and conditions, not inconsistent with the
Plan, as shall be prescribed by the Committee in its sole discretion and as
shall be contained in the Restricted Stock Agreement referred to in Section
8.1(d) hereof:

         (a) Restriction Period. At the time of a grant of shares of Restricted
    Stock, the Committee shall establish for all such shares received by a
    grantee (a "Restricted Stock Grantee") (or, if it is the intent that the
    total of such shares shall be divided into separate parts, for each part of
    such total) a period of time (the "Restriction Period") commencing with the
    date of the grant of such shares during which time the shares may not be
    sold, assigned, transferred, pledged, or otherwise encumbered, except as
    herein provided. Different Restriction Periods may be fixed for different
    parts of the shares that are being granted to a recipient, and the
    Restriction Period for one grant may differ from the Restriction Period for
    other grants; provided, however, that in no event will the total Restriction
    Period with respect to any

                                       7
<PAGE>

    Restricted Stock Award be less than three (3) years, and restrictions shall
    lapse as to equal pro rata portions of a Restricted Stock Award over the
    total Restriction Period. Except for such restrictions, unless otherwise
    determined by the Committee, the Restricted Stock Grantee as owner of the
    shares of Stock subject to the Restricted Stock Awards shall have all the
    rights of a stockholder, including but not limited to the right to receive
    any dividends paid on such shares of Stock and the right to vote such shares
    of Stock. The restrictions shall terminate upon the expiration of the
    Restriction Period, or, if determined by the Committee, earlier upon the
    Restricted Stock Grantee's death, Disability, Retirement, or other voluntary
    or involuntary termination of employment without cause.

         (b) Termination of Employment. If a Restricted Stock Grantee ceases to
    be an employee of the Company or a Related Corporation, all Restricted Stock
    Awards theretofore granted to him as to which the restrictions imposed under
    this Section 8 have not terminated or do not thereby terminate shall, except
    as otherwise provided in this Plan, upon such cessation of employment be
    forfeited and returned to the Company. Notwithstanding the foregoing, the
    Committee in its discretion may waive such forfeiture, but only where the
    termination of employment of a Restricted Stock Grantee is due to
    Retirement, Disability, death or voluntary or involuntary termination of
    employment without cause. In any of such events the Committee may provide
    that any remaining restriction period shall terminate for all Restricted
    Stock Awards of the Restricted Stock Grantee and the Company shall deliver,
    upon remittance by the Restricted Stock Grantee of the amount of any taxes
    or other amounts which have been withheld by the Company, the shares of
    Stock subject to the Restricted Stock Award to or for the benefit of the
    Restricted Stock Grantee free of restrictions. In the event that the
    Restricted Stock Grantee forfeits any shares of Stock subject to the
    Restricted Stock Award, the Company shall reacquire such shares without
    making any payment to the Restricted Stock Grantee therefor.

         (c) Legend. Each certificate issued in respect of Restricted Stock
    Awards granted under the Plan shall be registered in the name of the
    Restricted Stock Grantee and deposited by him, together with a stock power
    endorsed in blank, with the Company and shall bear the following (or a
    similar) legend:

         "The transferability of this certificate and the shares of stock
    represented hereby are subject to the terms, conditions and restrictions
    (including forfeiture) contained in a Plan and an Agreement between the
    registered owner and Ionics, Incorporated. A copy of such Plan and Agreement
    will be furnished to the holder of this certificate upon written request and
    without charge."

         (d) Restricted Stock Agreement. The Restricted Stock Grantee shall
    enter into an Agreement (a "Restricted Stock Agreement") with the Company,
    in a form not inconsistent with the Plan, agreeing to the terms and
    conditions of the grant and such other matters as the Committee shall in its
    sole discretion determine. The Restricted Stock Agreement may be amended by
    the Committee at any time to modify the Restriction Period with respect to
    any Restricted Stock Awards the restrictions on which have not then lapsed
    or in any other respect; provided that, except as provided in Section 10, no
    amendment shall adversely affect the terms and conditions of an outstanding
    grant without the written consent of the Restricted Stock Grantee.

         (e) Termination of Restrictions. Upon the termination of the
    restrictions imposed under this Section 8, the Company shall return to the
    Restricted Stock Grantee (or his legal representative, beneficiary, or heir)
    certificates, without a legend, for the shares of Common Stock deposited
    with it pursuant to subsection (c) hereof.

    8.2 Taxes. The Company or a Related Corporation, as the case may be, shall
have the right to deduct from amounts payable to the Restricted Stock Grantee,
or to require such grantee to pay, any taxes required by law to be withheld with
respect to Restricted Stock Awards. In the Committee's discretion such tax
obligations may be paid in whole or in part in shares of Common Stock, including
shares retained from the grant creating the tax obligation, valued at their fair
market value on the date of delivery.

    8.3 Notice of Election Under Section 83(b). Each Restricted Stock Grantee
making an election under Section 83(b) of the Code and the regulations and
rulings promulgated thereunder, will provide a copy thereof to the Company
within thirty days of the filing of such election with the Internal Revenue
Service
                                       8
<PAGE>

and the Restricted Stock Agreement referred to in Section 8 shall so provide. In
the event a Restricted Stock Grantee does not provide to the Company a copy of a
valid election under Section 83(b) of the Code filed with the Internal Revenue
Service with respect to a Restricted Stock Award, the Company may presume that
no such election was filed and, accordingly, withhold from any payments
(including salary and bonuses) otherwise payable to the Restricted Stock Grantee
in order to comply with any withholding obligation arising upon the termination
of any restriction.

    9. Change in Control Provisions.

    9.1 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:

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

         (b) Any remaining restrictions on Restricted Stock Awards shall lapse;

         (c) 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 and other Award 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.

    9.2 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

                                       9
<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.

    10. 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 stockholders 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. 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.

    12. General Provisions.

    12.1 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-

                                       10
<PAGE>

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.

    12.2 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.

    12.3 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.

    12.4 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.

    12.5 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.

    12.6 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.

    12.7 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.

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

                                       11

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