PROGRESS SOFTWARE CORP /MA
EX-10.12 2004 INDUCEMENT STOCK PLAN
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<TYPE>EX-10.12
<SEQUENCE>4
<FILENAME>b53540psexv10w12.txt
<DESCRIPTION>EX-10.12 2004 INDUCEMENT STOCK PLAN
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                                                                   EXHIBIT 10.12

                          PROGRESS SOFTWARE CORPORATION

                           2004 INDUCEMENT STOCK PLAN

      SECTION 1. General Purpose of the Plan; Definitions. The name of the plan
is the Progress Software Corporation 2004 Inducement Stock Plan (the "Plan").
The purpose of the Plan is to encourage and enable employees of Progress
Software Corporation, a Massachusetts corporation (the "Company"), and its
Subsidiaries to acquire a proprietary interest in the Company. It is anticipated
that providing employees with a direct stake in the Company's welfare will
assure a closer identification of their interests with those of the Company and
its stockholders, thereby stimulating their efforts on the Company's behalf and
strengthening their desire to remain with the Company. The Company intends that
the Plan be reserved for persons to whom the Company may issue securities
without stockholder approval as an inducement pursuant to Rule 4350(i)(1)(A)(iv)
of the Marketplace Rules of the Nasdaq Stock Market, Inc. The Company intends
that this purpose will be effected by the granting of Awards (as defined below)
under the Plan.

      The following terms shall be defined as set forth below:

      "Affiliate" means any company in an "affiliated group," as such term is
defined in Section 1504(a) of the Code, which includes the Company.

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

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

      "Cause" means (i) any material breach by the participant of any agreement
to which the participant and the Company are both parties, (ii) any act or
omission to act by the participant which may have a material and adverse effect
on the Company's business or on the participant's ability to perform services
for the Company, including, without limitation, the commission of any crime
(other than ordinary traffic violations), or (iii) any material misconduct or
material neglect of duties by the participant in connection with the business or
affairs of the Company or any affiliate of the Company.

      "Change of Control" shall have the meaning set forth in Section 15.

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

      "Committee" shall mean the Board or, if appointed by the Board, a
committee of not less than two (2) directors. It is the intention of the Company
that the Plan shall be administered by "non-employee directors" within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, but
the authority and validity of any act taken or not taken by the

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Committee shall not be affected if any director administering the Plan is not a
non-employee director.

      "Disability" means disability as set forth in Section 22(e)(3) of the
Code.

      "Effective Date" means the date on which the Plan is adopted by the Board
as set forth in Section 17.

      "Eligible Persons" shall have the meaning set forth in Section 4.

      "Fair Market Value" on any given date means the closing price per share of
the Stock on such date as reported by a nationally recognized stock exchange,
or, if the Stock is not listed on such an exchange, as reported by the Nasdaq
Stock Market, or, if the Stock is not quoted by the Nasdaq Stock Market, the
fair market value of the Stock as determined by the Committee.

      "Non-Statutory Stock Option" means any stock option that is not an
incentive stock option as defined in Section 422 of the Code.

      "Normal Retirement" means retirement from active employment with the
Company and its Subsidiaries in accordance with the retirement policies of the
Company and its Subsidiaries then in effect.

      "Officer" means an officer as defined in Rule 16a-1(f) of the Securities
Exchange Act of 1934, as amended.

      "Performance Share Award" means an Award granted pursuant to Section 8.

      "Restricted Stock" shall have the meaning set forth in Section 6.

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

      "Stock" means the common stock, $0.01 par value per share, of the Company,
subject to adjustments pursuant to Section 3.

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

      "Subsidiary" means a subsidiary as defined in Section 424 of the Code.

      "Unrestricted Stock Award" means an award granted pursuant to Section 7.

      SECTION 2. Administration of Plan; Committee Authority to Select
Participants and Determine Awards.

      (a) Committee. The Plan shall be administered by the Committee. The
Committee shall select one of its members as its chairman and shall hold its
meetings at such times and places as it shall deem advisable. A majority of its
members shall constitute a quorum, and all actions of the Committee shall
require the affirmative vote of a majority of its members. Any action may be
taken by a written instrument signed by all of the members, and any action so

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taken shall be as fully effective as if it had been taken by a vote of a
majority of the members at a meeting duly called and held. Except as
specifically reserved to the Board under the terms of the Plan, the Committee
shall have full and final authority to operate, manage and administer the Plan
on behalf of the Company. Action by the Committee shall require the affirmative
vote of a majority of all members thereof.

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

            (i) to select the persons to whom Awards may from time to time be
      granted;

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

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

            (iv) to determine and modify the terms and conditions, including
      restrictions, not inconsistent with the terms of the Plan, of any Award,
      which terms and conditions may differ among individual Awards and
      participants, and to approve the form of written instruments evidencing
      the Awards; provided, however, that no such action shall adversely affect
      rights under any outstanding Award without the participant's consent;

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

            (vi) subject to the provisions of Section 5(b), to extend the period
      in which any outstanding Stock Option may be exercised;

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

            (viii) to delegate to other persons the responsibility for
      performing ministerial actions in furtherance of the Plan's purpose; and

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

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

      SECTION 3. Shares Issuable under the Plan; Mergers; Substitution.

      (a) Shares Issuable. The maximum number of shares of Stock with respect to
which Awards may be granted under the Plan, subject to adjustment upon changes
in capitalization of the Company as provided in this Section 3, shall be 200,000
shares of Stock. For purposes of this limitation, if any shares of Stock covered
by an Award granted under the Plan, or to which such an Award relates, are
repurchased or forfeited, or if an Award has expired, terminated or been
canceled for any reason whatsoever (other than by reason of exercise or
vesting), then such shares of Stock or the shares of Stock covered by such
Award, as the case may be, shall be added back to the shares of Stock with
respect to which Awards may be granted under the Plan. Subject to such overall
limitation, any type or types of Award may be granted with respect to shares of
Stock. Shares of Stock issued under the Plan may be authorized but unissued
shares or shares reacquired by the Company.

      (b) Stock Dividends, Mergers, etc. In the event that the Company effects a
stock dividend, stock split or similar change in capitalization affecting the
Stock, the Committee shall make appropriate adjustments in (i) the number and
kind of shares of stock or securities with respect to which Awards may
thereafter be granted (including without limitation the limitations set forth in
Section 3(a) above), (ii) the number and kind of shares remaining subject to
outstanding Awards, and (iii) the option or purchase price in respect of such
shares. In the event of the merger, consolidation, dissolution or liquidation of
the Company, the Committee in its sole discretion may, as to any outstanding
Awards, make such substitution or adjustment in the aggregate number of shares
reserved for issuance under the Plan and in the number and purchase price (if
any) of shares subject to such Awards as it may determine and as may be
permitted by the terms of such transaction, or accelerate, amend or terminate
such Awards upon such terms and conditions as it shall provide (which, in the
case of the termination of the vested portion of any Award, shall require
payment or other consideration which the Committee deems equitable in the
circumstances).

      (c) Substitute Awards. The Committee may grant Awards under the Plan by
assumption of or in substitution for stock and stock-based awards granted or
issued by another company to its directors, officers, employees, consultants and
other service providers if such persons become Eligible Persons in connection
with an acquisition of that company or any division thereof by the Company,
whether by merger, consolidation, purchase of stock, purchase of assets or
otherwise. The Committee may direct that the substitute awards be granted on
such terms and conditions as the Committee considers appropriate in the
circumstances. Shares which may be delivered under such substitute awards may be
in addition to the maximum number of shares provided for in Section 3(a).

      SECTION 4. Eligibility. Awards may be granted only to persons to whom the
Company may issue securities without stockholder approval in accordance with
Rule 4350(i)(1)(A)(iv) of the Marketplace Rules of the Nasdaq Stock Market, Inc.
("Eligible Persons"), provided, however, that members of the Board and Officers
are not eligible to receive Awards under the Plan.

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      SECTION 5. Stock Options. The Committee may grant Stock Options to
Eligible Persons pursuant to the Plan. Any Stock Option granted under the Plan
shall be in writing and in such form as the Committee may from time to time
approve. Stock Options granted under the Plan shall be Non-Statutory Stock
Options.

      The Committee in its discretion may determine the effective date of Stock
Options. Stock Options granted pursuant to this Section 5 shall be subject to
the following terms and conditions and the terms and conditions of Section 9 and
shall contain such additional terms and conditions, not inconsistent with the
terms of the Plan, as the Committee shall deem desirable:

      (a) Exercise Price. The exercise price per share for the Stock covered by
a Stock Option granted pursuant to this Section 5 shall be determined by the
Committee at the time of grant; provided, however, that the exercise price shall
not be less than Fair Market Value on the date of 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 (10) years
after the date the Stock Option is granted.

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

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

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

            (ii) with the consent of the Committee, in the form of shares of
      Stock owned by the optionee for a period of at least six (6) months and
      not then subject to restrictions. Such surrendered shares shall be valued
      at Fair Market Value on the exercise date;

            (iii) with the consent of the Committee, by the optionee delivering
      to the Company a properly executed exercise notice together with
      irrevocable instructions to a broker to promptly deliver to the Company
      cash or a check payable and acceptable to the Company to pay the purchase
      price; provided that in the event the optionee chooses to pay the purchase
      price as so provided, the optionee and the broker shall comply with such
      procedures and enter into such agreements of indemnity and other
      agreements as the Committee shall prescribe as a condition of such payment
      procedure. The Company need not act upon such exercise notice until the
      Company receives full payment of the exercise price; or

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            (iv) by any other means (including, without limitation, by delivery
      of a promissory note of the optionee payable on such terms as are
      specified by the Committee; provided, however, that the interest rate
      borne by such note shall not be less than the lowest applicable federal
      rate, as defined in Section 1247(d) of the Code) which the Committee
      determines are consistent with the purpose of the Plan and with applicable
      laws and regulations.

      The delivery of certificates representing shares of Stock to be purchased
pursuant to the exercise of a Stock Option will be contingent upon receipt from
the optionee (or a purchaser acting in his stead in accordance with the
provisions of the Stock Option) by the Company of the full purchase price for
such shares and the fulfillment of any other requirements contained in the Stock
Option or imposed by applicable laws and regulations, as determined by the
Committee in its sole discretion.

      (e) Transferability of Options. No Stock Option shall be transferable by
the optionee otherwise than by will or by the laws of descent and distribution,
and all Stock Options shall be exercisable, during the optionee's lifetime, only
by the optionee or his or her legal representative; provided, however, that the
Committee may, in the manner established by the Committee, permit the transfer,
without payment of consideration, of a Non-Statutory Stock Option by an optionee
to a member of the optionee's immediate family or to a trust or partnership
whose beneficiaries are members of the optionee's immediate family; and such
transferee shall remain subject to all the terms and conditions applicable to
the option prior to the transfer. For purposes of this provision, an optionee's
"immediate family" shall mean the holder's spouse, children and grandchildren.

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

      SECTION 6. Restricted Stock Awards.

      (a) Nature of Restricted Stock Award. The Committee in its discretion may
grant Restricted Stock Awards to any Eligible Person, entitling the recipient to
acquire, for a purchase price determined by the Committee (but not less than
Fair Market Value on the date of grant), shares of Stock subject to such
restrictions and conditions as the Committee may determine at the time of grant
("Restricted Stock"), including continued employment and/or achievement of
pre-established performance goals and objectives.

      (b) Acceptance of Award. A participant who is granted a Restricted Stock
Award shall have no rights with respect to such Award unless the participant
shall have accepted the Award within ten (10) days (or such shorter date as the
Committee may specify) following the delivery of written notice to the
participant of the Award by making payment to the Company of the specified
purchase price of the shares covered by the Award and by executing and
delivering to the Company a written instrument that sets forth the terms and
conditions applicable to the Restricted Stock in such form as the Committee
shall determine.

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      (c) Rights as a Stockholder. Upon complying with Section 6(b) above, a
participant shall have all the rights of a stockholder with respect to the
Restricted Stock, including voting and dividend rights, subject to
non-transferability restrictions and Company repurchase rights described in this
Section 6 and subject to such other conditions contained in the written
instrument evidencing the Restricted Stock Award. Unless the Committee shall
otherwise determine, certificates evidencing shares of Restricted Stock shall
remain in the possession of the Company until such shares are vested as provided
in Section 6(e) below.

      (d) Restrictions. Shares of Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein. In the event of termination of employment with or
services to the Company and its Subsidiaries for any reason (including death,
Disability, Normal Retirement, and voluntary termination by the participant),
the Company shall have the right, at the discretion of the Committee, to
repurchase shares of Restricted Stock with respect to which conditions have not
lapsed at their purchase price from the participant or the participant's legal
representative. The Company must exercise such right of repurchase within sixty
(60) days following such termination of employment (unless otherwise specified
in the written instrument evidencing the Restricted Stock Award).

      (e) Vesting of Restricted Stock. The Committee at the time of grant shall
specify the date or dates and/or the attainment of pre-established performance
goals, objectives and other conditions on which the non-transferability of the
Restricted Stock and the Company's right of repurchase shall lapse. Subsequent
to such date or dates and/or the attainment of such pre-established performance
goals, objectives and other conditions, the shares on which all restrictions
have lapsed shall no longer be Restricted Stock and shall be deemed "vested."
Subject to Section 12, the Committee at any time may accelerate such date or
dates and otherwise waive or amend any conditions of the Award.

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

      SECTION 7. Unrestricted Stock Awards.

      (a) Grant or Sale of Unrestricted Stock. The Committee in its discretion
may grant or sell to any Eligible Person shares of Stock free of any
restrictions under the Plan ("Unrestricted Stock") at a purchase price
determined by the Committee. Shares of Unrestricted Stock may be granted or sold
as described in the preceding sentence in respect of past services or other
valid consideration.

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

      SECTION 8. Performance Share Awards. A Performance Share Award is an award
entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals. The Committee may make Performance Share Awards
independent of or in connection with the granting of any other Award under the
Plan. Performance Share Awards may be

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granted under the Plan to any Eligible Person. The Committee in its discretion
shall determine whether and to whom Performance Share Awards shall be made, the
performance goals applicable under each such Award, the periods during which
performance is to be measured, the conditions under which such Award shall
terminate, and all other limitations and conditions applicable to the awarded
Performance Shares.

      SECTION 9. Termination of Stock Options.

      (a) Standard Termination Provisions.

            (i) Termination by Death. If any participant's employment by or
      services to the Company and its Subsidiaries terminates by reason of
      death, any Stock Option owned by such participant may thereafter be
      exercised to the extent exercisable at the date of death, by the legal
      representative or legatee of the participant, for a period of one (1) year
      (or such longer period as the Committee shall specify at any time) from
      the date of death, or until the expiration of the stated term of the Stock
      Option, if earlier.

            (ii) Termination by Reason of Disability or Normal Retirement.

                  (A)   Any Stock Option held by a participant whose employment
                        by or service to the Company and its Subsidiaries has
                        terminated by reason of Disability may thereafter be
                        exercised, to the extent it was exercisable at the time
                        of such termination, for a period of one (1) year (or
                        such longer period as the Committee shall specify at any
                        time) from the date of such termination, or until the
                        expiration of the stated term of the Stock Option, if
                        earlier.

                  (B)   Any Stock Option held by a participant whose employment
                        by or service to the Company and its Subsidiaries has
                        terminated by reason of Normal Retirement may thereafter
                        be exercised, to the extent it was exercisable at the
                        time of such termination, for a period of ninety (90)
                        days from the date of such termination, or until the
                        expiration of the stated term of the Stock Option, if
                        earlier.

                  (C)   The Committee shall have sole authority and discretion
                        to determine whether a participant's employment or
                        services have been terminated by reason of Disability or
                        Normal Retirement.

            (iii) Termination for Cause. If any participant's employment by or
      services to the Company and its Subsidiaries has been terminated for
      Cause, any Stock Option held by such participant shall immediately
      terminate and be of no further force and effect; provided, however, that
      the Committee may, in its sole discretion, provide that such Stock Option
      can be exercised for a period of up to thirty (30) days from the date of
      termination of employment or services or until the expiration of the
      stated term of the Stock Option, if earlier.

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            (iv) Voluntary Termination. If any participant's employment by or
      services to the Company and its Subsidiaries is voluntarily terminated,
      any Stock Option held by such participant shall immediately terminate and
      be of no further force and effect; provided, however, that the Committee
      may, in its sole discretion, provide that such Stock Option can be
      exercised for a period of up to ninety (90) days from the date of
      termination of employment or services or until the expiration of the
      stated term of the Stock Option, if earlier.

            (v) Other Termination. Unless otherwise determined by the Committee,
      if a participant's employment by or services to the Company and its
      Subsidiaries terminates for any reason other than death, Disability,
      Normal Retirement, for Cause or voluntary termination, any Stock Option
      held by such participant may thereafter be exercised, to the extent it was
      exercisable on the date of such termination, for ninety (90) days (or such
      longer period as the Committee shall specify at any time) from the date of
      termination or until the expiration of the stated term of the Stock
      Option, if earlier.

      (b) Committee Discretion. Notwithstanding the foregoing, the Committee may
grant Stock Options under the Plan which contain such terms and conditions with
respect to termination as the Committee, in its discretion, may from time to
time determine.

      SECTION 10. Tax Withholding.

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

      (b) Payment in Shares. A participant may elect, with the consent of the
Committee, to have such tax withholding obligation satisfied, in whole or in
part, by (i) authorizing the Company to withhold from shares of Stock to be
issued pursuant to an Award a number of shares with an aggregate Fair Market
Value (as of the date the withholding is effected) that would satisfy the
minimum withholding amount due with respect to such Award, or (ii) transferring
to the Company shares of Stock owned by the participant for a period of at least
six (6) months and with an aggregate Fair Market Value (as of the date the
withholding is effected) that would satisfy the minimum withholding amount due
with respect to such Award.

      SECTION 11. Transfer, Leave of Absence, Etc. For purposes of the Plan, a
transfer to the employment of the Company from a Subsidiary or from the Company
to a Subsidiary, or from one Subsidiary to another, shall not be deemed a
termination of employment. Whether authorized leave of absence, or absence on
military or government service, shall constitute termination of the employment
relationship between the Company and the participant shall be determined by the
Committee at the time thereof.

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      SECTION 12. Amendments and Termination. The Board may at any time amend or
discontinue the Plan in any manner allowed by law and the Committee may at any
time, subject to Section 2, amend or cancel any outstanding Award (or provide
substitute Awards) for the purpose of satisfying changes in law or for any other
lawful purpose, but no such action shall adversely affect rights under any
outstanding Award without the holder's consent.

      SECTION 13. Status of Plan. With respect to the portion of any Award that
has not been exercised, a participant shall have no rights greater than those of
a general creditor of the Company unless the Committee shall otherwise expressly
determine in connection with any Award or Awards. In its sole discretion, the
Committee may authorize the creation of trusts or other arrangements to meet the
Company's obligations to deliver Stock or make payments with respect to Awards
hereunder, provided that the existence of such trusts or other arrangements is
consistent with the provision of the foregoing sentence.

      SECTION 14. Lockup Agreement. The acceptance of any Award under this Plan
by the participant or any subsequent holder shall constitute the agreement of
such person that, upon the request of the Company or the underwriters managing
any underwritten offering of the Company's securities, such person will not, for
a period of time (not to exceed one hundred eighty (180) days) following the
effective date of any registration statement filed by the Company under the
Securities Act of 1933, as amended, sell, make any short sale of, loan, grant
any option for the purchase of, or otherwise dispose of any shares of Stock
received pursuant to such Award, without the prior written consent of the
Company or such underwriters, as the case may be, and that such person will
execute and deliver to the Company or such underwriters a written agreement to
that effect, in such form as the Company or such underwriters shall designate.

      SECTION 15. Change in Control.

      (a) Upon the occurrence of a Change of Control as defined in this Section
15:

            (i) subject to the provisions of clause (iii) below, after the
      effective date of such Change of Control, each holder of an outstanding
      Stock Option or Performance Share Award shall be entitled, upon exercise
      of such Award, to receive, in lieu of shares of Stock (or consideration
      based upon the Fair Market Value of Stock), shares of such stock or other
      securities, cash or property (or consideration based upon shares of such
      stock or other securities, cash or property) as the holders of shares of
      Stock received in connection with the Change of Control;

            (ii) the Committee may accelerate the time for exercise of, and
      waive all conditions and restrictions on, each unexercised and unexpired
      Stock Option and Performance Share Award, effective upon a date prior or
      subsequent to the effective date of such Change of Control, specified by
      the Committee;

            (iii) the Committee may waive all conditions and restrictions on,
      each Restricted Stock Award and Unrestricted Stock Award, effective upon a
      date prior or subsequent to the effective date of such Change of Control,
      specified by the Committee; or

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            (iv) each outstanding Stock Option and Performance Share Award may
      be cancelled by the Committee as of the effective date of any such Change
      of Control provided that (x) notice of such cancellation shall be given to
      each holder of such an Award and (y) each holder of such an Award shall
      have the right to exercise such Award to the extent that the same is then
      exercisable or, if the Committee shall have accelerated the time for
      exercise of all such unexercised and unexpired Awards, in full during the
      30-day period preceding the effective date of such Change of Control.

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

            (i) any "person" (as such term is used in Sections 13(d) and
      14(d)(2) of the Act) becomes a "beneficial owner" (as such term is defined
      in Rule 13d-3 promulgated under the Act) (other than the Company, any
      trustee or other fiduciary holding securities under an employee benefit
      plan of the Company, or any corporation owned, directly or indirectly, by
      the shareholders of the Company in substantially the same proportions as
      their ownership of stock of the Company), directly or indirectly, of
      securities of the Company representing thirty-five percent (35%) or more
      of the combined voting power of the Company's then outstanding securities;
      or

            (ii) persons who, as of January 1, 1997, constituted the Company's
      Board (the "Incumbent Board") cease for any reason, including without
      limitation as a result of a tender offer, proxy contest, merger or similar
      transaction, to constitute at least a majority of the Board, provided that
      any person becoming a director of the Company subsequent to January 1,
      1997 whose election was approved by, or who was nominated with the
      approval of, at least a majority of the directors then comprising the
      Incumbent Board shall, for purposes of this Plan, be considered a member
      of the Incumbent Board; or

            (iii) the shareholders of the Company approve a merger or
      consolidation of the Company with any other corporation or other entity,
      other than (a) a merger or consolidation which would result in the voting
      securities of the Company outstanding immediately prior thereto continuing
      to represent (either by remaining outstanding or by being converted into
      voting securities of the surviving entity) more than 65% of the combined
      voting power of the voting securities of the Company or such surviving
      entity outstanding immediately after such merger or consolidation or (b) a
      merger or consolidation effected to implement a recapitalization of the
      Company (or similar transaction) in which no "person" (as hereinabove
      defined) acquires more than 50% of the combined voting power of the
      Company's then outstanding securities; or

            (iv) the shareholders of the Company approve a plan of complete
      liquidation of the Company or an agreement for the sale or disposition by
      the Company of all or substantially all of the Company's assets.

      SECTION 16. General Provisions.

      (a) No Distribution; Compliance with Legal Requirements. The Committee may
require each person acquiring shares pursuant to an Award to represent to and
agree with the

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Company in writing that such person is acquiring the shares without a view to
distribution thereof, in such form as the Committee shall in its sole discretion
deem advisable.

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

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

      (c) Other Compensation Arrangements; No Employment Rights. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, subject to stockholder approval if
such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases. The adoption of the Plan or any
Award under the Plan does not confer upon any employee any right to continued
employment with the Company or any Subsidiary.

      SECTION 17. Effective Date of Plan. The Plan shall become effective upon
its adoption by the Board.

      SECTION 18. Governing Law. This Plan and each Award under the Plan shall
be governed by, and construed and enforced in accordance with, the substantive
laws of The Commonwealth of Massachusetts without regard to its principles of
conflicts of laws.

                                     - 12 -
</TEXT>
</DOCUMENT>
