
                               Pegasystems Inc.

                                 Common Stock

                                ---------------


                            Underwriting Agreement

                                                             December __, 1996

Goldman, Sachs & Co.
Cowen & Company
Montgomery Securities
    As representatives of the several Underwriters
    named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004

Ladies and Gentlemen:

    Pegasystems Inc., a Massachusetts corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
1,500,000 shares and, at the election of the Underwriters, up to 336,750
additional shares of Common Stock, $.01 par value ("Stock") of the Company and
the stockholders of the Company named in Schedule II hereto (the "Selling
Stockholders") propose, subject to the terms and conditions stated herein, to
sell to the Underwriters an aggregate of 745,000 shares of Stock. The aggregate
of 2,245,000 shares to be sold by the Company and the Selling Stockholders is
herein called the "Firm Shares" and the aggregate of 336,750 additional shares
to be sold by the Company is herein called the "Optional Shares." The Firm
Shares and the Optional Shares that the Underwriters elect to purchase pursuant
to Section 2 hereof are herein collectively called the "Shares."

      1.    (a)   The Company represents and warrants to, and agrees with, each 
of the Underwriters that:

            (i)   A registration statement on Form S-1 (File No. 333-____) (the


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      "Initial Registration Statement") in respect of the Shares has been filed
      with the Securities and Exchange Commission (the "Commission"); the
      Initial Registration Statement and any post-effective amendment thereto,
      each in the form heretofore delivered to you, and, excluding exhibits
      thereto, to you for each of the other Underwriters, have been declared
      effective by the Commission in such form; other than a registration
      statement, if any, increasing the size of the offering (the "Rule 462(b)
      Registration Statement"), filed pursuant to Rule 462(b) under the
      Securities Act of 1933, as amended (the "Act"), which became effective
      upon filing, no other document with respect to such registration statement
      has heretofore been filed with the Commission; and no stop order
      suspending the effectiveness of the Initial Registration Statement, any
      post-effective amendment thereto or the Rule 462(b) Registration
      Statement, if any, has been issued and no proceeding for that purpose has
      been initiated or threatened by the Commission (any preliminary prospectus
      included in the Initial Registration Statement and the Rule 462(b)
      Registration Statement, if any, or filed with the Commission pursuant to
      Rule 424(a) of the rules and regulations of the Commission under the Act
      is hereinafter called a "Preliminary Prospectus"; the various parts of the
      Initial Registration Statement and the Rule 462(b) Registration Statement,
      if any, including all exhibits thereto and including the information
      contained in the form of final prospectus filed with the Commission
      pursuant to Rule 424(b) under the Act in accordance with Section 5(a)
      hereof and deemed by virtue of Rule 430A under the Act to be part of the
      Initial Registration Statement at the time it was declared effective, each
      as amended at the time such part of the Initial Registration Statement
      became effective or such part of the Rule 462(b) Registration Statement,
      if any, became or hereafter becomes effective, are hereinafter
      collectively called the "Registration Statement"; and such final
      prospectus, in the form first filed pursuant to Rule 424(b) under the Act,
      is hereinafter called the "Prospectus");

            (ii) No order preventing or suspending the use of any Preliminary
      Prospectus has been issued by the Commission, and each Preliminary
      Prospectus, at the time of filing thereof, conformed in all material
      respects to the requirements of the Act and the rules and regulations of
      the Commission thereunder, and did not contain an untrue statement of a
      material fact or omit to state a material fact required to be stated
      therein or necessary to make the statements therein, in the light of the
      circumstances under which they were made, not misleading; provided,
      however, that this representation and warranty shall not apply to any
      statements or omissions made in reliance upon and in conformity with
      information furnished in writing to the Company by an Underwriter through
      Goldman, Sachs & Co. expressly for

                                             
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<PAGE>



      use therein or by a Selling Stockholder expressly for use in the 
      preparation of the answers therein to Items 7 and 11(l) of Form S-1;

            (iii) The Registration Statement conforms, and the Prospectus and
      any further amendments or supplements to the Registration Statement or the
      Prospectus will conform, in all material respects to the requirements of
      the Act and the rules and regulations of the Commission thereunder and do
      not and will not, as of the applicable effective date as to the
      Registration Statement and any amendment thereto and as of the applicable
      filing date as to the Prospectus and any amendment or supplement thereto,
      contain an untrue statement of a material fact or omit to state a material
      fact required to be stated therein or necessary to make the statements
      therein not misleading; provided, however, that this representation and
      warranty shall not apply to any statements or omissions made in reliance
      upon and in conformity with information furnished in writing to the
      Company by an Underwriter through Goldman, Sachs & Co. expressly for use
      therein or by a Selling Stockholder expressly for use in the preparation
      of the answers therein to Items 7 and 11(l) of Form S-1;

      (iv) Neither the Company nor any of its subsidiaries has sustained since
      the date of the latest audited financial statements included in the
      Prospectus any material loss or interference with its business from fire,
      explosion, flood or other calamity, whether or not covered by insurance,
      or from any labor dispute or court or governmental action, order or
      decree, otherwise than as set forth or contemplated in the Prospectus;
      and, since the respective dates as of which information is given in the
      Registration Statement and the Prospectus, there has not been any change
      in the capital stock or long-term debt of the Company or any of its
      subsidiaries or any material adverse change, or any development involving
      a prospective material adverse change, in or affecting the general
      affairs, management, financial position, stockholders' equity or results
      of operations of the Company and its subsidiaries, otherwise than as set
      forth or contemplated in the Prospectus;

            (v) The Company and its subsidiaries do not own any real property;
      the Company and its subsidiaries have good and marketable title to all
      personal property owned by them, in each case free and clear of all liens,
      encumbrances and defects except such as are described in the Prospectus or
      such as do not materially affect the value of such property and do not
      interfere with the use made and proposed to be made of such property by
      the Company and its subsidiaries; and any real property and buildings held
      under lease by the Company and its subsidiaries are held by them under
      valid, subsisting and enforceable leases with such exceptions as are not
      material and do not interfere with the use made and proposed to be made of
      such property and buildings by the Company and its subsidiaries;


                                             
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            (vi) The Company has been duly incorporated and is validly existing
      as a corporation in good standing under the laws of the Commonwealth of
      Massachusetts, with power and authority (corporate and other) to own its
      properties and conduct its business as described in the Prospectus, and
      has been duly qualified as a foreign corporation for the transaction of
      business and is in good standing under the laws of each other jurisdiction
      in which it owns or leases properties or conducts any business so as to
      require such qualification, or is subject to no material liability or
      disability by reason of the failure to be so qualified in any such
      jurisdiction; and each subsidiary of the Company has been duly
      incorporated and is validly existing as a corporation in good standing
      under the laws of its jurisdiction of incorporation;

            (vii) The Company has an authorized capitalization as set forth in
      the Prospectus, and all of the issued shares of capital stock of the
      Company have been duly and validly authorized and issued, are fully paid
      and non-assessable and conform to the description of the Stock contained
      in the Prospectus; and all of the issued shares of capital stock of each
      subsidiary of the Company have been duly and validly authorized and
      issued, are fully paid and non-assessable and (except for directors'
      qualifying shares) are owned directly or indirectly by the Company, free
      and clear of all liens, encumbrances, equities or claims;

      (viii)The unissued Shares to be issued and sold by the Company to the
      Underwriters hereunder have been duly and validly authorized and, when
      issued and delivered against payment therefor as provided herein, will be
      duly and validly issued and fully paid and non-assessable and will conform
      to the description of the Stock contained in the Prospectus;

      (ix) The issue and sale of the Shares to be sold by the Company and the
      compliance by the Company with all of the provisions of this Agreement and
      the consummation of the transactions herein contemplated will not conflict
      with or result in a breach or violation of any of the terms or provisions
      of, or constitute a default under, any indenture, mortgage, deed of trust,
      loan agreement or other agreement or instrument to which the Company or
      any of its subsidiaries is a party or by which the Company or any of its
      subsidiaries is bound or to which any of the property or assets of the
      Company or any of its subsidiaries is subject, nor will such action result
      in any violation of the provisions of the Articles of Organization or
      By-laws of the Company or any statute or any order, rule or regulation of
      any court or governmental agency or body having jurisdiction over the
      Company or any of its subsidiaries or any of their properties; and no
      consent, approval, authorization, order, registration or qualification of
      or with any such court or governmental agency or body is required for the
      issue and sale of the Shares or the consummation by the Company of the
      transactions contemplated by this Agreement, except the registration under
      the Act of the Shares and such consents, approvals, authorizations,
      registrations or qualifications may be required

                                             
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<PAGE>

      under state securities or Blue Sky laws in connection with the purchase
      and distribution of the Shares by the Underwriters or under the rules of
      the National Association of Securities Dealers, Inc.;

            (x) Neither the Company nor any of its subsidiaries is in violation
      of its Articles of Organization or By-laws (or other charter documents) or
      in default in the performance or observance of any material obligation,
      agreement, covenant or condition contained in any indenture, mortgage,
      deed of trust, loan agreement, lease or other agreement or instrument to
      which it is a party or by which it or any of its properties may be bound;

            (xi) The statements set forth in the Prospectus under the caption
      "Description of Capital Stock", insofar as they purport to constitute a
      summary of the terms of the Stock and under the caption "Underwriting",
      insofar as they purport to describe the provisions of the laws and
      documents referred to therein, are accurate, complete and fair;

            (xii) There are no legal or governmental proceedings pending to
      which the Company or any of its subsidiaries is a party or of which any
      property of the Company or any of its subsidiaries is the subject which,
      if determined adversely to the Company or any of its subsidiaries, would
      individually or in the aggregate have a material adverse effect on the
      current or future consolidated financial position, stockholders' equity or
      results of operations of the Company and its subsidiaries taken as a
      whole; and, to the best of the Company's knowledge, no such proceedings
      are threatened or contemplated by governmental authorities or threatened
      by others;

            (xiii)The Company is not and, after giving effect to the offering
      and sale of the Shares, will not be an "investment company" or an entity
      "controlled" by an "investment company", as such terms are defined in the
      Investment Company Act of 1940, as amended (the "Investment Company Act");

            (xiv) Neither the Company nor any of its affiliates does business
      with the government of Cuba or with any person or affiliate located in
      Cuba within the meaning of Section 517.075, Florida Statutes;

            (xv) Ernst & Young LLP, who have certified certain financial
      statements of the Company and its subsidiaries, are independent public
      accountants as required by the Act and the rules and regulations of the
      Commission thereunder;

            (xvi) To the best of the Company's knowledge, each of the Company
      and its subsidiaries owns, is licensed to use or otherwise possesses
      adequate rights to use all material patents, patent rights, inventions,
      trade secrets, know-how, trademarks, service marks, trade names and
      copyrights described or referred to

                                             
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<PAGE>

      in the Prospectus as owned or used by it or which are necessary for the
      conduct of its businesses as described in the Prospectus; and the Company
      has not received any notice of, and has no knowledge of, any infringement
      of or conflict with asserted rights of others with respect to any patent,
      patent rights, inventions, trade secrets, know-how, trademarks, service
      marks, trade names or copyrights;

            (xvii)The Company has filed all reports it has been required to file
      under the Securities Exchange Act of 1934, as amended, and the rules and
      regulations of the Commission thereunder (the "Exchange Act"); such
      reports when filed conformed in all material respects to the requirements
      of the Exchange Act; and none of such reports contained an untrue
      statement of a material fact or omitted to state a material fact required
      to be stated therein to make the statements therein, in light of the
      circumstances under which they were made, not misleading; and

            (xviiiThe Common Stock is registered pursuant to Section 12(g) of
      the Exchange Act, and is listed on NASDAQ (as defined below), and the
      Company has taken no action designed to, or likely to have the effect of,
      terminating the registration of the Common Stock under the Exchange Act or
      delisting the Common Stock from NASDAQ, nor has the Company received any
      notification that the Commission or NASDAQ is contemplating terminating
      such registration or listing.

      (b) Each of the Selling Stockholders severally represents and warrants to,
  and agrees with, each of the Underwriters and the Company that:

            (i) All consents, approvals, authorizations and orders necessary for
        the execution and delivery by such Selling Stockholder of this Agreement
        and the Power of Attorney and the Custody Agreement hereinafter referred
        to, and for the sale and delivery of the Shares to be sold by such
        Selling Stockholder hereunder, have been obtained; and such Selling
        Stockholder has full right, power and authority to enter into this
        Agreement, the Power of Attorney and the Custody Agreement and to sell,
        assign, transfer and deliver the Shares to be sold by such Selling
        Stockholder hereunder;

            (ii) The sale of the Shares to be sold by such Selling Stockholder
        hereunder and the compliance by such Selling Stockholder with all of the
        provisions of this Agreement, the Power of Attorney and the Custody
        Agreement and the consummation of the transactions herein and therein
        contemplated will not conflict with or result in a breach or violation
        of any of the terms or provisions of, or constitute a default under, any
        statute, indenture, mortgage, deed of trust, loan agreement or other
        agreement or instrument to which such Selling Stockholder is a party or
        by which such Selling Stockholder is bound or to which any of the
        property or assets of such Selling Stockholder is subject, nor will such

                                             
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<PAGE>

        action result in any violation of any statute or any order, rule or
        regulation of any court or governmental agency or body having
        jurisdiction over such Selling Stockholder or the property of such
        Selling Stockholder;

            (iii) Such Selling Stockholder has, and immediately prior to each
        Time of Delivery (as defined in Section 4 hereof) such Selling
        Stockholder will have, good and valid title to the Shares to be sold by
        such Selling Stockholder hereunder, free and clear of all liens,
        encumbrances, equities or claims; and, upon delivery of such Shares and
        payment therefor pursuant hereto, good and valid title to such Shares,
        free and clear of all liens, encumbrances, equities or claims, will pass
        to the several Underwriters;

            (iv) During the period beginning from the date hereof and continuing
        to and including the date 120 days after the date of the Prospectus,
        such Selling Stockholder shall not offer, sell, contract to sell or
        otherwise dispose of, except as provided hereunder, any Stock, or any
        securities of the Company that are substantially similar to the Shares,
        including but not limited to any securities that are convertible into or
        exchangeable for, or that represent the right to receive, Stock or any
        such substantially similar securities (other than pursuant to employee
        stock option plans existing on the date of this Agreement), without your
        prior written consent;

            (v) Such Selling Stockholder has not taken and will not take,
        directly or indirectly, any action which is designed to or which has
        constituted or which might reasonably be expected to cause or result in
        stabilization or manipulation of the price of any security of the
        Company to facilitate the sale or resale of the Shares;

            (vi) To the extent that any statements or omissions made in the
        Registration Statement, any Preliminary Prospectus, the Prospectus or
        any amendment or supplement thereto are made in reliance upon and in
        conformity with written information furnished to the Company by such
        Selling Stockholder expressly for use therein, such Preliminary
        Prospectus and the Registration Statement did, and the Prospectus and
        any further amendments or supplements to the Registration Statement and
        the Prospectus, when they become effective or are filed with the
        Commission, as the case may be, will conform in all material respects to
        the requirements of the Act and the rules and regulations of the
        Commission thereunder and will not contain any untrue statement of a
        material fact or omit to state any material fact required to be stated
        therein or necessary to make the statements therein not misleading;

            (vii) In order to document the Underwriters' compliance with the
        reporting and withholding provisions of the Tax Equity and Fiscal
        Responsibility Act of 1982 with respect to the transactions herein
        contemplated, such Selling Stockholder will deliver to you prior to or
        at the First Time of Delivery (as

                                             
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<PAGE>



        hereinafter defined) a properly completed and executed United States
        Treasury Department Form W-9 (or other applicable form or statement
        specified by Treasury Department regulations in lieu thereof);

            (viii)Certificates in negotiable form representing all of the Shares
        to be sold by such Selling Stockholder hereunder, or stock option
        agreements, accompanied by duly completed notices of exercise for all of
        the Shares to be sold by such Selling Stockholder hereunder, and the
        exercise price therefor, have been placed in custody under a Custody
        Agreement, in the form heretofore furnished to you (the "Custody
        Agreement"), duly executed and delivered by such Selling Stockholder and
        such Selling Stockholder has duly executed and delivered a Power of
        Attorney, in the form heretofore furnished to you (the "Power of
        Attorney"), appointing the persons indicated in Schedule II hereto, and
        each of them, as such Selling Stockholder's attorneys-in-fact (the
        "Attorneys-in-Fact") with authority to execute and deliver this
        Agreement on behalf of such Selling Stockholder, to determine the
        purchase price to be paid by the Underwriters to the Selling
        Stockholders as provided in Section 2 hereof, to authorize the delivery
        of the Shares to be sold by such Selling Stockholder hereunder and
        otherwise to act on behalf of such Selling Stockholder in connection
        with the transactions contemplated by this Agreement and the Custody
        Agreement; and

            (ix) The Shares represented by the certificates and the notices of
        exercise of options, accompanied by the exercise price therefor, each as
        held in custody for such Selling Stockholder under the Custody
        Agreement, are subject to the interests of the Underwriters hereunder;
        the arrangements made by such Selling Stockholder for such custody, and
        the appointment by such Selling Stockholder of the Attorneys-in-Fact by
        the Power of Attorney, are to that extent irrevocable; the obligations
        of the Selling Stockholders hereunder shall not be terminated by
        operation of law, whether by the death or incapacity of any individual
        Selling Stockholder or, in the case of an estate or trust, by the death
        or incapacity of any executor or trustee or the termination of such
        estate or trust, or in the case of a partnership or corporation, by the
        dissolution of such partnership or corporation, or by the occurrence of
        any other event; if any individual Selling Stockholder or any such
        executor or trustee should die or become incapacitated, or if any such
        estate or trust should be terminated, or if any such partnership or
        corporation should be dissolved, or if any other such event should
        occur, before the delivery of the Shares hereunder, certificates
        representing the Shares shall be delivered by or on behalf of the
        Selling Stockholders in accordance with the terms and conditions of this
        Agreement and of the Custody Agreements; and actions taken by the
        Attorneys-in-Fact pursuant to the Powers of Attorney shall be as valid
        as if such death, incapacity, termination, dissolution or other event
        had not occurred, regardless of whether or not the Custodian, the
        Attorneys-in-Fact, or any of them, shall have received notice of such
        death, incapacity, termination, dissolution or other event.

                                             
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<PAGE>


         2. Subject to the terms and conditions herein set forth, (a) the
   Company and each of the Selling Stockholders agree, severally and not
   jointly, to sell to each of the Underwriters, and each of the Underwriters
   agrees, severally and not jointly, to purchase from the Company and each of
   the Selling Stockholders, at a purchase price per share of $____, the number
   of Firm Shares (to be adjusted by you so as to eliminate fractional shares)
   determined by multiplying the aggregate number of Shares to be sold by the
   Company and each of the Selling Stockholders as set forth opposite their
   respective names in Schedule II hereto by a fraction, the numerator of which
   is the aggregate number of Firm Shares to be purchased by such Underwriter as
   set forth opposite the name of such Underwriter in Schedule I hereto and the
   denominator of which is the aggregate number of Firm Shares to be purchased
   by all of the Underwriters from the Company and all of the Selling
   Stockholders hereunder and (b) in the event and to the extent that the
   Underwriters shall exercise the election to purchase Optional Shares as
   provided below, the Company agrees to sell to each of the Underwriters, and
   each of the Underwriters agrees, severally and not jointly, to purchase from
   the Company, at the purchase price per share set forth in clause (a) of this
   Section 2, that portion of the number of Optional Shares as to which such
   election shall have been exercised (to be adjusted by you so as to eliminate
   fractional shares) determined by multiplying such number of Optional Shares
   by a fraction the numerator of which is the maximum number of Optional Shares
   which such Underwriter is entitled to purchase as set forth opposite the name
   of such Underwriter in Schedule I hereto and the denominator of which is the
   maximum number of Optional Shares that all of the Underwriters are entitled
   to purchase hereunder.

         The Company hereby grants to the Underwriters the right to purchase at
   their election up to 336,750 Optional Shares, at the purchase price per share
   set forth in the paragraph above, for the sole purpose of covering
   overallotments in the sale of the Firm Shares. Any such election to purchase
   Optional Shares may be exercised only by written notice from you to the
   Company, given within a period of 30 calendar days after the date of this
   Agreement and setting forth the aggregate number of Optional Shares to be
   purchased and the date on which such Optional Shares are to be delivered, as
   determined by you but in no event earlier than the First Time of Delivery (as
   defined in Section 4 hereof) or, unless you and the Company otherwise agree
   in writing, earlier than two or later than ten business days after the date
   of such notice.

         3. Upon the authorization by you of the release of the Firm Shares, the
   several Underwriters propose to offer the Firm Shares for sale upon the terms
   and conditions set forth in the Prospectus.

         4. (a) The Shares to be purchased by each Underwriter hereunder, in
   definitive form, and in such authorized denominations and registered in such
   names as Goldman, Sachs & Co. may request upon at least forty-eight hours'
   prior notice to the Company and the Selling Stockholders shall be delivered
   by or on behalf of the

                                             
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   Company and the Selling Stockholders to Goldman, Sachs & Co., for the account
   of such Underwriter, against payment by or on behalf of such Underwriter of
   the purchase price therefor by wire transfer or certified or official bank
   check or checks, payable to the order of the Company and the Custodian, as
   their interests may appear, in federal (same day) funds. The Company will
   cause the certificates representing the Shares to be made available for
   checking and packaging at least twenty-four hours prior to the Time of
   Delivery (as defined below) with respect thereto at the office of Goldman,
   Sachs & Co., 85 Broad Street, New York, New York 10004 (the "Designated
   Office"). The time and date of such delivery and payment shall be, with
   respect to the Firm Shares, 9:30 a.m., New York time, on July 24, 1996 or
   such other time and date as Goldman, Sachs & Co., the Company and the Selling
   Stockholders may agree upon in writing, and, with respect to the Optional
   Shares, 9:30 a.m., New York time, on the date specified by Goldman, Sachs &
   Co. in the written notice given by Goldman, Sachs & Co. of the Underwriters'
   election to purchase such Optional Shares, or such other time and date as
   Goldman, Sachs & Co. and the Company may agree upon in writing. Such time and
   date for delivery of the Firm Shares is herein called the "First Time of
   Delivery", such time and date for delivery of the Optional Shares, if not the
   First Time of Delivery, is herein called the "Second Time of Delivery", and
   each such time and date for delivery is herein called a "Time of Delivery".

         (b) The documents to be delivered at each Time of Delivery by or on
   behalf of the parties hereto pursuant to Section 7 hereof, including the
   cross receipt for the Shares and any additional documents requested by the
   Underwriters pursuant to Section 7(j) hereof, and the check or checks
   specified in subsection (a) above, if any, will be delivered at the offices
   of Hale and Dorr, 60 State Street, Boston, Massachusetts 02109 (the "Closing
   Location"), and the Shares will be delivered at the Designated Office, all at
   such Time of Delivery. A meeting will be held at the Closing Location at 2:00
   p.m., New York City time, on the New York Business Day next preceding such
   Time of Delivery, at which meeting the final drafts of the documents to be
   delivered pursuant to the preceding sentence will be available for review by
   the parties hereto. For the purposes of this Section 4, "New York Business
   Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is
   not a day on which banking institutions in New York are generally authorized
   or obligated by law or executive order to close.

         5.    The Company agrees with each of the Underwriters:

         (a) To prepare the Prospectus in a form approved by you and to file
   such Prospectus pursuant to Rule 424(b) under the Act not later than the
   Commission's close of business on the second business day following the
   execution and delivery of this Agreement, or, if applicable, such earlier
   time as may be required by Rule 430A(a)(3) under the Act; to make no further
   amendment or any supplement to the Registration Statement or Prospectus prior
   to the last Time of Delivery which shall be disapproved by you promptly after
   reasonable notice thereof; to advise you, promptly after it receives

                                             
                                      -10-

<PAGE>



   notice thereof, of the time when any amendment to the Registration Statement
   has been filed or becomes effective or any supplement to the Prospectus or
   any amended Prospectus has been filed and to furnish you with copies thereof;
   to advise you, promptly after it receives notice thereof, of the issuance by
   the Commission of any stop order or of any order preventing or suspending the
   use of any Preliminary Prospectus or prospectus, of the suspension of the
   qualification of the Shares for offering or sale in any jurisdiction, of the
   initiation or threatening of any proceeding for any such purpose, or of any
   request by the Commission for the amending or supplementing of the
   Registration Statement or Prospectus or for additional information; and, in
   the event of the issuance of any stop order or of any order preventing or
   suspending the use of any Preliminary Prospectus or prospectus or suspending
   any such qualification, promptly to use its best efforts to obtain the
   withdrawal of such order;

         (b) Promptly from time to time to take such action as you may
   reasonably request to qualify the Shares for offering and sale under the
   securities laws of such jurisdictions as you may request and to comply with
   such laws so as to permit the continuance of sales and dealings therein in
   such jurisdictions for as long as may be necessary to complete the
   distribution of the Shares, provided that in connection therewith the Company
   shall not be required to qualify as a foreign corporation or to file a
   general consent to service of process in any jurisdiction;

         (c) Prior to 12:00 p.m., New York City time, on the New York Business
   Day next succeeding the date of this Agreement and from time to time, to
   furnish the Underwriters with copies of the Prospectus in New York City in
   such quantities as you may reasonably request, and, if the delivery of a
   prospectus is required at any time prior to the expiration of nine months
   after the time of issue of the Prospectus in connection with the offering or
   sale of the Shares and if at such time any events shall have occurred as a
   result of which the Prospectus as then amended or supplemented would include
   an untrue statement of a material fact or omit to state any material fact
   necessary in order to make the statements therein, in the light of the
   circumstances under which they were made when such Prospectus is delivered,
   not misleading, or, if for any other reason it shall be necessary during such
   period to amend or supplement the Prospectus in order to comply with the Act,
   to notify you and upon your request to prepare and furnish without charge to
   each Underwriter and to any dealer in securities as many copies as you may
   from time to time reasonably request of an amended Prospectus or a supplement
   to the Prospectus which will correct such statement or omission or effect
   such compliance, and in case any Underwriter is required to deliver a
   prospectus in connection with sales of any of the Shares at any time nine
   months or more after the time of issue of the Prospectus, upon your request
   but at the expense of such Underwriter, to prepare and deliver to such
   Underwriter as many copies as you may request of an amended or supplemented
   Prospectus complying with Section 10(a)(3) of the Act;

         (d) To make generally available to its securityholders as soon as
   practicable,

                                             
                                      -11-

<PAGE>



   but in any event not later than eighteen months after the effective date of
   the Registration Statement (as defined in Rule 158(c) under the Act), an
   earnings statement of the Company and its subsidiaries (which need not be
   audited) complying with Section 11(a) of the Act and the rules and
   regulations of the Commission thereunder (including, at the option of the
   Company, Rule 158);

         (e) During the period beginning from the date hereof and continuing to
   and including the date 120 days after the date of the Prospectus, not to
   offer, sell, contract to sell or otherwise dispose of, except as provided
   hereunder, any securities of the Company that are substantially similar to
   the Shares, including but not limited to any securities that are convertible
   into or exchangeable for, or that represent the right to receive, Stock or
   any such substantially similar securities (other than option issuances and
   the issuance of Stock upon the exercise of options pursuant to employee stock
   plans existing on the date of this Agreement), without your prior written
   consent, except that the Company may issue such securities in exchange for
   all of the equity or substantially all of the assets of a company in
   connection with a merger or acquisition, provided that prior to any such
   issuance the recipients of such securities shall have agreed with Goldman,
   Sachs & Co. in writing to be bound by this provision for the remainder of the
   120-day period;

         (f) To furnish to its stockholders as soon as practicable after the end
   of each fiscal year an annual report (including a balance sheet and
   statements of income, stockholders' equity and cash flows of the Company and
   its consolidated subsidiaries certified by independent public accountants)
   and, as soon as practicable after the end of each of the first three quarters
   of each fiscal year (beginning with the fiscal quarter ending after the
   effective date of the Registration Statement), consolidated summary financial
   information of the Company and its subsidiaries for such quarter in
   reasonable detail;

         (g) During a period of five years from the effective date of the
   Registration Statement, to furnish to you copies of all reports or other
   communications (financial or other) furnished to stockholders, and to deliver
   to you (i) as soon as they are available, copies of any reports and financial
   statements furnished to or filed with the Commission or any national
   securities exchange on which any class of securities of the Company is
   listed; and (ii) such additional information concerning the business and
   financial condition of the Company as you may from time to time reasonably
   request (such financial statements to be on a consolidated basis to the
   extent the accounts of the Company and its subsidiaries are consolidated in
   reports furnished to its stockholders generally or to the Commission);

         (h) To use the net proceeds received by it from the sale of the Shares
   pursuant to this Agreement in the manner specified in the Prospectus under
   the caption "Use of Proceeds";


                                             
                                      -12-

<PAGE>



         (i) To use its best efforts to list for quotation the Shares on the
   National Association of Securities Dealers Automated Quotations National
   Market System ("NASDAQ"); and

         (j) If the Company elects to rely on Rule 462(b), to file a Rule 462(b)
   Registration Statement with the Commission in compliance with Rule 462(b) by
   10:00 p.m., Washington, D.C. time, on the date of this Agreement, and at the
   time of filing either to pay to the Commission the filing fee for the Rule
   462(b) Registration Statement or to give irrevocable instructions for the
   payment of such fee pursuant to Rule 111(b) under the Act.

         6. (a) The Company covenants and agrees with each Selling Stockholder
   and the several Underwriters that the Company will pay or cause to be paid
   the following: (i) the fees, disbursements and expenses of the Company's
   counsel and accountants in connection with the registration of the Shares
   under the Act and all other expenses in connection with the preparation,
   printing and filing of the Registration Statement, any Preliminary Prospectus
   and the Prospectus and amendments and supplements thereto and the mailing and
   delivering of copies thereof to the Underwriters and dealers; (ii) the cost
   of printing or producing any Agreement among Underwriters, this Agreement,
   the Blue Sky Memorandum, closing documents (including any compilations
   thereof) and any other documents in connection with the offering, purchase,
   sale and delivery of the Shares; (iii) all expenses in connection with the
   qualification of the Shares for offering and sale under state securities laws
   as provided in Section 5(b) hereof, including the fees and disbursements of
   counsel for the Underwriters in connection with such qualification and in
   connection with the Blue Sky survey; (iv) all fees and expenses in connection
   with listing the Shares on NASDAQ; and (v) the filing fees incident to any
   required review by the National Association of Securities Dealers, Inc. of
   the terms of the sale of the Shares; (vi) the cost of preparing stock
   certificates; (vii) the cost and charges of any transfer agent or registrar
   and (viii) all other costs and expenses incident to the performance of its
   obligations hereunder which are not otherwise specifically provided for in
   this Section.


         (b) The Company further covenants and agrees with each of the Selling
   Stockholders and the several Underwriters that the Company will pay or cause
   to be paid all costs and expenses incident to the performance of such Selling
   Stockholder's obligations hereunder which are not otherwise specifically
   provided for in this Section, including (i) any fees and expenses of counsel
   for such Selling Stockholder, (ii) the fees and expenses of the
   Attorneys-in-Fact and the Custodian, and (iii) all expenses and taxes
   incident to the sale and delivery of the Shares to be sold by such Selling
   Stockholder to the Underwriters hereunder. In connection with clause (iii) of
   the preceding sentence, Goldman, Sachs & Co. agrees to pay New York State
   stock transfer tax, and the Selling Stockholder agrees to reimburse Goldman,
   Sachs & Co. for associated carrying costs if such tax payment is not rebated
   on the day of payment and

                                             
                                      -13-

<PAGE>



   for any portion of such tax payment not rebated. It is understood, however,
   that the Company shall bear, and the Selling Stockholders shall not be
   required to pay or to reimburse the Company for, the cost of any other
   matters not directly relating to the sale and purchase of the Shares pursuant
   to this Agreement, and that, except as provided in this Section, and Sections
   8 and 11 hereof, the Underwriters will pay all of their own costs and
   expenses, including the fees of their counsel, stock transfer taxes on resale
   of any of the Shares by them, and any advertising expenses connected with any
   offers they may make.

         7. The obligations of the Underwriters hereunder, as to the Shares to
   be delivered at each Time of Delivery, shall be subject, in their discretion,
   to the condition that all representations and warranties and other statements
   of the Company and of the Selling Stockholders herein are, at and as of such
   Time of Delivery, true and correct, the condition that the Company and the
   Selling Stockholders shall have performed all of its and their obligations
   hereunder theretofore to be performed, and the following additional
   conditions:

         (a) The Prospectus shall have been filed with the Commission pursuant
   to Rule 424(b) within the applicable time period prescribed for such filing
   by the rules and regulations under the Act and in accordance with Section
   5(a) hereof; if the Company has elected to rely upon Rule 462(b), the Rule
   462(b) Registration Statement shall have become effective by 10:00 p.m.,
   Washington, D.C. time, on the date of this Agreement, no stop order
   suspending the effectiveness of the Registration Statement or any part
   thereof shall have been issued and no proceeding for that purpose shall have
   been initiated or threatened by the Commission; and all requests for
   additional information on the part of the Commission shall have been complied
   with to your reasonable satisfaction;

         (b) Hale and Dorr, counsel for the Underwriters, shall have furnished
   to you such opinion or opinions (a draft of each such written opinion is
   attached as Annex II(a) hereto), dated such Time of Delivery, with respect to
   the matters covered in paragraphs (i), (ii), (vii), (x) and (xii) of
   subsection (c) below as well as such other related matters as you may
   reasonably request, and such counsel shall have received such papers and
   information as they may reasonably request to enable them to pass upon such
   matters;

         (c) Choate, Hall & Stewart, counsel for the Company, shall have
   furnished to you their written opinion (a draft of such opinion is attached
   as Annex II(b) hereto), dated such Time of Delivery, in form and substance
   satisfactory to you, to the effect that:

               (i) The Company has been duly incorporated and is validly
        existing as a corporation in good corporate standing under the laws of
        The Commonwealth of Massachusetts, with corporate power and authority to
        own its properties and conduct its business as described in the
        Prospectus;


                                             
                                      -14-

<PAGE>



               (ii) The Company has an authorized capitalization as set forth in
        the Prospectus, and all of the issued shares of capital stock of the
        Company (including the Shares being delivered at such Time of Delivery)
        have been duly and validly authorized and issued and are fully paid and
        non-assessable; and the Shares conform to the description of the Stock
        contained in the Prospectus;

               (iii) The Company has been duly qualified as a foreign
        corporation for the transaction of business and is in good standing
        under the laws of each of the States of California, Texas, New York and
        Illinois, which to such counsel's knowledge are the only jurisdictions
        within the United States in which the Company owns or leases real
        property or maintains an office.

               (iv) Each subsidiary of the Company has been duly incorporated
        and is validly existing as a corporation in good corporate standing
        under the laws of its jurisdiction of incorporation; and all of the
        issued shares of capital stock of each such subsidiary have been duly
        and validly authorized and issued, are fully paid and non-assessable,
        and (except for directors' qualifying shares) are owned directly or
        indirectly by the Company, free and clear of all liens, encumbrances,
        equities or claims (such counsel being entitled to rely in respect of
        the opinion in this clause upon opinions of local counsel and in respect
        of matters of fact upon certificates of officers of the Company or its
        subsidiaries, provided that such counsel shall state that they believe
        that both you and they are justified in relying upon such opinions and
        certificates);

               (v) Any real property and buildings held under lease by the
        Company and its subsidiaries are held by them under valid, subsisting
        and enforceable (except to the extent that the rights and remedies
        created thereby may be limited by applicable bankruptcy, insolvency,
        reorganization and similar laws affecting rights and remedies of
        creditors and that the remedy of specific performance is subject to the
        discretion of a court) leases with such exceptions as are not material
        and do not interfere with the use made and proposed to be made of such
        property and buildings by the Company and its subsidiaries (in giving
        the opinion in this clause, such counsel may rely in respect of matters
        of fact, upon certificates of officers of the Company or its
        subsidiaries, provided that such counsel shall state that they believe
        that both you and they are justified in relying upon such certificates);

               (vi) To such counsel's knowledge and other than as set forth in
        the Prospectus, there are no legal or governmental proceedings pending
        to which the Company or any of its subsidiaries is a party or of which
        any property of the Company or any of its subsidiaries is the subject
        which would individually or in the aggregate reasonably be expected to
        have a material adverse effect on the current or future consolidated
        financial position, stockholders' equity or results of operations of the
        Company and its subsidiaries; and, to such counsel's

                                             
                                      -15-

<PAGE>



        knowledge, no such proceedings are threatened or contemplated by
        governmental authorities or threatened by others;

               (vii) This Agreement has been duly authorized, executed and
        delivered by the Company;

               (viii)The issue and sale of the Shares being delivered at such
        Time of Delivery to be sold by the Company and the compliance by the
        Company with all of the provisions of this Agreement and the
        consummation of the transactions herein contemplated will not conflict
        with or result in a breach or violation of any of the terms or
        provisions of, or constitute a default under, any indenture, mortgage,
        deed of trust, loan agreement or other material agreement or instrument
        known to such counsel to which the Company or any of its subsidiaries is
        a party or by which the Company or any of its subsidiaries is bound or
        to which any of the property or assets of the Company or any of its
        subsidiaries is subject, nor will such action result in any violation of
        the provisions of the Articles of Organization or By-laws of the Company
        or any statute or any order, rule or regulation known to such counsel of
        any court or governmental agency or body having jurisdiction over the
        Company or any of its subsidiaries or any of their properties;

               (ix) No consent, approval, authorization, order, registration or
        qualification of or with any such court or governmental agency or body
        is required for the issue and sale of the Shares or the consummation by
        the Company of the transactions contemplated by this Agreement, except
        the registration under the Act of the Shares, and such consents,
        approvals, authorizations, registrations or qualifications as may be
        required under state securities or Blue Sky laws in connection with the
        purchase and distribution of the Shares by the Underwriters or under the
        rules of the National Association of Securities Dealers, Inc.;

               (x) The statements set forth in the Prospectus under the caption
        "Description of Capital Stock", insofar as they purport to constitute a
        summary of the terms of the Stock and under the caption "Underwriting",
        insofar as they purport to describe the provisions of the laws and
        documents referred to therein, are accurate and complete summaries of
        such terms and provisions in all material respects;

               (xi) The Company is not an "investment company" or an entity
        controlled by an "investment company", as such terms are defined in the
        Investment Company Act; and

               (xii) The Registration Statement and the Prospectus and any
        further amendments and supplements thereto made by the Company prior to
        such Time of Delivery (other than the financial statements and related
        schedules therein, as to which such counsel need express no belief)
        comply as to form in all material

                                             
                                      -16-

<PAGE>



        respects with the requirements of the Act and the rules and regulations
        thereunder; although they do not assume any responsibility for the
        accuracy, completeness or fairness of the statements contained in the
        Registration Statement or the Prospectus, except for those referred to
        in the opinion in subsection (x) of this Section 7(c), no facts have
        come to their attention that have caused them to believe that, as of its
        effective date, the Registration Statement or any further amendment
        thereto made by the Company prior to such Time of Delivery (other than
        the financial statements and related schedules therein, as to which such
        counsel need express no belief) contained an untrue statement of a
        material fact or omitted to state a material fact required to be stated
        therein or necessary to make the statements therein not misleading or
        that, as of its date, the Prospectus or any further amendment or
        supplement thereto made by the Company prior to such Time of Delivery
        (other than the financial statements and related schedules therein, as
        to which such counsel need express no belief) contained an untrue
        statement of a material fact or omitted to state a material fact
        necessary to make the statements therein, in the light of the
        circumstances under which they were made, not misleading or that, as of
        such Time of Delivery, either the Registration Statement or the
        Prospectus or any further amendment or supplement thereto made by the
        Company prior to such Time of Delivery (other than the financial
        statements and related schedules therein, as to which such counsel need
        express no belief) contains an untrue statement of a material fact or
        omits to state a material fact necessary to make the statements therein,
        in the light of the circumstances under which they were made, not
        misleading; and they do not know of any amendment to the Registration
        Statement required to be filed or of any contracts or other documents of
        a character required to be filed as an exhibit to the Registration
        Statement or required to be described in the Registration Statement or
        the Prospectus which are not filed or described as required.

         (d) Choate, Hall & Stewart, counsel for each of the Selling
     Stockholders, shall have furnished to you their written opinion with
     respect to each of the Selling Stockholders (such opinion to be
     incorporated in the opinion attached as Annex II(b) hereto), dated such
     Time of Delivery, in form and substance satisfactory to you, to the effect
     that:

                                             
                                       -17-

<PAGE>



               (i) A Power of Attorney and a Custody Agreement have been duly
          executed and delivered by such Selling Stockholder and constitute
          valid and binding agreements of such Selling Stockholder in accordance
          with their terms (except to the extent that the rights and remedies
          created thereby may be limited by applicable bankruptcy, insolvency,
          reorganization and similar laws affecting rights and remedies of
          creditors and that the remedy of specific performance is subject to
          the discretion of a court);

               (ii) This Agreement has been duly executed and delivered by or on
           behalf of such Selling Stockholder; and the sale of the Shares to be
           sold by such Selling Stockholder hereunder and the compliance by such
           Selling Stockholder with all of the provisions of this Agreement, the
           Power of Attorney and the Custody Agreement and the consummation of
           the transactions herein and therein contemplated will not conflict
           with or result in a breach or violation of any terms or provisions
           of, or constitute a default under, any statute, indenture, mortgage,
           deed of trust, loan agreement or other agreement or instrument known
           to such counsel to which such Selling Stockholder is a party or by
           which such Selling Stockholder is bound or to which any of the
           property or assets of such Selling Stockholder is subject, nor will
           such action result in any violation of any order, rule or regulation
           known to such counsel of any court or governmental agency or body
           having jurisdiction over such Selling Stockholder or the property of
           such Selling Stockholder;

               (iii) No consent, approval, authorization or order of any court
           or governmental agency or body is required for the consummation of
           the transactions contemplated by this Agreement in connection with
           the Shares to be sold by such Selling Stockholder hereunder, except
           such as have been obtained under the Act and such as may be required
           under state securities or Blue Sky laws in connection with the
           purchase and distribution of such Shares by the Underwriters or under
           the rules of the National Association of Securities Dealers, Inc.;

               (iv) Immediately prior to such Time of Delivery, such Selling
          Stockholder was the sole registered and, to such counsel's knowledge,
          beneficial, owner of the Shares to be sold at such Time of Delivery by
          such Selling Stockholder under this Agreement, and, to such counsel's
          knowledge, had full right, power and authority to sell, assign,
          transfer and deliver the Shares to be sold by such Selling Stockholder
          hereunder; and

               (v) Immediately prior to the Time of Delivery, each Selling
           Stockholder was the sole registered owner of the Shares to be sold by
           such Selling Stockholder. Upon registration of the Shares in the
           names of the Underwriters in the stock records of the Company, the
           Underwriters will have acquired the Shares, free and clear of any
           liens, encumbrances, equities or claims (assuming

                                             
                                       -18-

<PAGE>



           that the Underwriters are without notice of any adverse claim, as
           defined in the Uniform Commercial Code, and are otherwise bona fide
           purchasers for the purposes of the Code and that such Underwriters'
           rights are not limited by subsection (4) of Section 8-302 of the
           Uniform Commercial Code).

         (e) On the date of the Prospectus at a time prior to the execution of
    this Agreement, at 9:30 a.m., New York City time, on the effective date of
    any post-effective amendment to the Registration Statement filed subsequent
    to the date of this Agreement and also at each Time of Delivery, Ernst &
    Young LLP shall have furnished to you a letter or letters, dated the
    respective dates of delivery thereof, in form and substance satisfactory to
    you, to the effect set forth in Annex I hereto (the executed copy of the
    letter delivered prior to the execution of this Agreement is attached as
    Annex I(d) hereto and a draft of the form of letter to be delivered on the
    effective date of any post-effective amendment to the Registration Statement
    and as of each Time of Delivery is attached as Annex I(e) hereto);

         (f)(i)Neither the Company nor any of its subsidiaries shall have
    sustained since the date of the latest audited financial statements included
    in the Prospectus any loss or interference with its business from fire,
    explosion, flood or other calamity, whether or not covered by insurance, or
    from any labor dispute or court or governmental action, order or decree,
    otherwise than as set forth or contemplated in the Prospectus, and (ii)
    since the respective dates as of which information is given in the
    Prospectus there shall not have been any change in the capital stock (other
    than as a result of the exercise of stock options) or long-term debt of the
    Company or any of its subsidiaries or any change, or any development
    involving a prospective change, in or affecting the general affairs,
    management, financial position, stockholders' equity or results of
    operations of the Company and its subsidiaries, otherwise than as set forth
    or contemplated in the Prospectus, the effect of which, in any such case
    described in clause (i) or (ii), is in the judgment of the Representatives
    so material and adverse as to make it impracticable or inadvisable to
    proceed with the public offering or the delivery of the Shares being
    delivered at such Time of Delivery on the terms and in the manner
    contemplated in the Prospectus;

         (g) On or after the date hereof there shall not have occurred any of
    the following: (i) a suspension or material limitation in trading in
    securities generally on the New York Stock Exchange or on NASDAQ; (ii) a
    suspension or material limitation in trading in the Company's securities on
    NASDAQ; (iii) a general moratorium on commercial banking activities declared
    by either Federal or New York or Massachusetts State authorities; or (iv)
    the outbreak or escalation of hostilities involving the United States or the
    declaration by the United States of a national emergency or war, if the
    effect of any such event specified in this clause (iv) in the judgment of
    the Representatives makes it impracticable or inadvisable to proceed with
    the public offering or the delivery of the Shares being delivered at such
    Time of Delivery on the terms and in the manner contemplated in the
    Prospectus;

                                             
                                       -19-

<PAGE>



         (h)   The Shares at the such Time of Delivery shall have been duly 
    listed for quotation on NASDAQ;

         (i) The Company has obtained and delivered to the Underwriters executed
    copies of an agreement from each stockholder of the Company substantially to
    the effect set forth in Subsection 1(b)(iv) hereof in form and substance
    satisfactory to you; and

         (j) The Company and the Selling Stockholders shall have furnished or
    caused to be furnished to you at such Time of Delivery certificates of
    officers of the Company and of the Selling Stockholders, respectively,
    satisfactory to you as to the accuracy of the representations and warranties
    of the Company and the Selling Stockholders, respectively, herein at and as
    of such Time of Delivery, as to the performance by the Company and the
    Selling Stockholders of all of their respective obligations hereunder to be
    performed at or prior to such Time of Delivery, and as to such other matters
    as you may reasonably request, and the Company shall have furnished or
    caused to be furnished certificates as to the matters set forth in
    subsections (a) and (f) of this Section; and

         (k) The Company shall have complied with the provisions of Section 5(c)
    hereof with respect to the furnishing of prospectuses on the New York
    Business Day next succeeding the date of this Agreement.

         8. (a) The Company and each of the Selling Stockholders, jointly and
    severally, will indemnify and hold harmless each Underwriter against any
    losses, claims, damages or liabilities, joint or several, to which such
    Underwriter may become subject, under the Act or otherwise, insofar as such
    losses, claims, damages or liabilities (or actions in respect thereof) arise
    out of or are based upon an untrue statement or alleged untrue statement of
    a material fact contained in any Preliminary Prospectus, the Registration
    Statement or the Prospectus, or any amendment or supplement thereto, or
    arise out of or are based upon the omission or alleged omission to state
    therein a material fact required to be stated therein or necessary to make
    the statements therein not misleading, and will reimburse each Underwriter
    for any legal or other expenses reasonably incurred by such Underwriter in
    connection with investigating or defending any such action or claim as such
    expenses are incurred; provided, however, that the Company and the Selling
    Stockholders shall not be liable in any such case to the extent that any
    such loss, claim, damage or liability arises out of or is based upon an
    untrue statement or alleged untrue statement or omission or alleged omission
    made in any Preliminary Prospectus, the Registration Statement or the
    Prospectus or any such amendment or supplement in reliance upon and in
    conformity with written information furnished to the Company by any
    Underwriter through Goldman, Sachs & Co. expressly for use therein; provided
    further, that the liability of a Selling Stockholder pursuant to this
    subsection (a) shall not exceed the

                                             
                                       -20-

<PAGE>



    product of the number of Shares sold by such Selling Stockholder and the
    initial public offering price of the Shares as set forth in the Prospectus.

         (b) Each Underwriter will indemnify and hold harmless the Company and
    each Selling Stockholder against any losses, claims, damages or liabilities
    to which the Company or such Selling Stockholder may become subject, under
    the Act or otherwise, insofar as such losses, claims, damages or liabilities
    (or actions in respect thereof) arise out of or are based upon an untrue
    statement or alleged untrue statement of a material fact contained in any
    Preliminary Prospectus, the Registration Statement or the Prospectus, or any
    amendment or supplement thereto, or arise out of or are based upon the
    omission or alleged omission to state therein a material fact required to be
    stated therein or necessary to make the statements therein not misleading,
    in each case to the extent, but only to the extent, that such untrue
    statement or alleged untrue statement or omission or alleged omission was
    made in any Preliminary Prospectus, the Registration Statement or the
    Prospectus or any such amendment or supplement in reliance upon and in
    conformity with written information furnished to the Company by such
    Underwriter through Goldman, Sachs & Co. expressly for use therein; and will
    reimburse the Company and each Selling Stockholder for any legal or other
    expenses reasonably incurred by the Company or such Selling Stockholder in
    connection with investigating or defending any such action or claim as such
    expenses are incurred.

         (c) Promptly (but in any event within 30 days) after receipt by an
    indemnified party under subsection (a) or (b) above of notice of the
    commencement of any action, such indemnified party shall, if a claim in
    respect thereof is to be made against the indemnifying party under such
    subsection, notify the indemnifying party in writing of the commencement
    thereof. No indemnification under subsection (a) or (b) above shall be
    available to any party who shall so fail to give such notice if the party to
    whom such notice was not given was unaware of the action to which the notice
    would have related and was prejudiced by the failure to give the notice, but
    the omission so to notify the indemnifying party shall not relieve it from
    any liability which it may have to any indemnified party otherwise than
    under such subsection. In case any such action shall be brought against any
    indemnified party and it shall notify the indemnifying party of the
    commencement thereof, the indemnifying party shall be entitled to
    participate therein and, to the extent that it shall wish, jointly with any
    other indemnifying party similarly notified, to assume the defense thereof,
    with counsel satisfactory to such indemnified party (who shall not, except
    with the consent of the indemnified party, be counsel to the indemnifying
    party), and, after notice from the indemnifying party to such indemnified
    party of its election so to assume the defense thereof, the indemnifying
    party shall not be liable to such indemnified party under such subsection
    for any legal expenses of other counsel or any other expenses, in each case
    subsequently incurred by such indemnified party, in connection with the
    defense thereof other than reasonable costs of investigation. No
    indemnifying party shall, without the written consent of the indemnified
    party, effect the settlement or compromise of, or consent to the entry of
    any judgment with respect to, any pending or threatened action or claim in
    respect of which

                                             
                                       -21-

<PAGE>



    indemnification or contribution may be sought hereunder (whether or not the
    indemnified party is an actual or potential party to such action or claim)
    unless such settlement, compromise or judgment (i) includes an unconditional
    release of the indemnified party from all liability arising out of such
    action or claim and (ii) does not include a statement as to or an admission
    of fault, culpability or a failure to act, by or on behalf of any
    indemnified party.

         (d) If the indemnification provided for in this Section 8 is
    unavailable to or insufficient to hold harmless an indemnified party under
    subsection (a) or (b) above in respect of any losses, claims, damages or
    liabilities (or actions in respect thereof) referred to therein, then each
    indemnifying party shall contribute to the amount paid or payable by such
    indemnified party as a result of such losses, claims, damages or liabilities
    (or actions in respect thereof) in such proportion as is appropriate to
    reflect the relative benefits received by the Company and the Selling
    Stockholders on the one hand and the Underwriters on the other from the
    offering of the Shares. If, however, the allocation provided by the
    immediately preceding sentence is not permitted by applicable law or if the
    indemnified party failed to give the notice required under subsection (c)
    above, then each indemnifying party shall contribute to such amount paid or
    payable by such indemnified party in such proportion as is appropriate to
    reflect not only such relative benefits but also the relative fault of the
    Company and the Selling Stockholders on the one hand and the Underwriters on
    the other in connection with the statements or omissions which resulted in
    such losses, claims, damages or liabilities (or actions in respect thereof),
    as well as any other relevant equitable considerations. The relative
    benefits received by the Company and the Selling Stockholders on the one
    hand and the Underwriters on the other shall be deemed to be in the same
    proportion as the total net proceeds from the offering (before deducting
    expenses) received by the Company and the Selling Stockholders bear to the
    total underwriting discounts and commissions received by the Underwriters,
    in each case as set forth in the table on the cover page of the Prospectus.
    The relative fault shall be determined by reference to, among other things,
    whether the untrue or alleged untrue statement of a material fact or the
    omission or alleged omission to state a material fact relates to information
    supplied by the Company or the Selling Stockholders on the one hand or the
    Underwriters on the other and the parties' relative intent, knowledge,
    access to information and opportunity to correct or prevent such statement
    or omission. The Company, each of the Selling Stockholders and the
    Underwriters agree that it would not be just and equitable if contributions
    pursuant to this subsection (d) were determined by pro rata allocation (even
    if the Underwriters were treated as one entity for such purpose) or by any
    other method of allocation which does not take account of the equitable
    considerations referred to above in this subsection (d). The amount paid or
    payable by an indemnified party as a result of the losses, claims, damages
    or liabilities (or actions in respect thereof) referred to above in this
    subsection (d) shall be deemed to include any legal or other expenses
    reasonably incurred by such indemnified party in connection with
    investigating or defending any such action or claim. Notwithstanding the
    provisions of this subsection (d), no Underwriter shall be required to
    contribute any amount in excess

                                             
                                       -22-

<PAGE>



    of the amount by which the total price at which the Shares underwritten by
    it and distributed to the public were offered to the public exceeds the
    amount of any damages which such Underwriter has otherwise been required to
    pay by reason of such untrue or alleged untrue statement or omission or
    alleged omission. No person guilty of fraudulent misrepresentation (within
    the meaning of Section 11(f) of the Act) shall be entitled to contribution
    from any person who was not guilty of such fraudulent misrepresentation. The
    Underwriters' obligations in this subsection (d) to contribute are several
    in proportion to their respective underwriting obligations and not joint.
    Notwithstanding the foregoing, the liability of a Selling Stockholder
    pursuant to this subsection (d) shall not exceed the product of the number
    of Shares sold by such Selling Stockholder and the initial public offering
    price of the Shares as set forth in the Prospectus.

         (e) The obligations of the Company and the Selling Stockholders under
    this Section 8 shall be in addition to any liability which the Company and
    the respective Selling Stockholders may otherwise have and shall extend,
    upon the same terms and conditions,to each person, if any, who controls any
    Underwriter within the meaning of the Act; and the obligations of the
    Underwriters under this Section 8 shall be in addition to any liability
    which the respective Underwriters may otherwise have and shall extend, upon
    the same terms and conditions, to each officer and director of the Company
    (including any person who, with his or her consent, is named in the
    Registration Statement as about to become a director of the Company) and to
    each person, if any, who controls the Company or any Selling Stockholder
    within the meaning of the Act.

         9. (a) If any Underwriter shall default in its obligation to purchase
    the Shares which it has agreed to purchase hereunder at a Time of Delivery,
    you may in your discretion arrange for you or another party or other parties
    to purchase such Shares on the terms contained herein. If within thirty-six
    hours after such default by any Underwriter you do not arrange for the
    purchase of such Shares, then the Company and the Selling Stockholders shall
    be entitled to a further period of thirty-six hours within which to procure
    another party or other parties satisfactory to you to purchase such Shares
    on such terms. In the event that, within the respective prescribed periods,
    you notify the Company and the Selling Stockholders that you have so
    arranged for the purchase of such Shares, or the Company and the Selling
    Stockholders notify you that they have so arranged for the purchase of such
    Shares, you or the Company and the Selling Stockholders shall have the right
    to postpone such Time of Delivery for a period of not more than seven days,
    in order to effect whatever changes may thereby be made necessary in the
    Registration Statement or the Prospectus, or in any other documents or
    arrangements, and the Company agrees to file promptly any amendments to the
    Registration Statement or the Prospectus which in your opinion may thereby
    be made necessary. The term "Underwriter" as used in this Agreement shall
    include any person substituted under this Section with like effect as if
    such person had originally been a party to this Agreement with respect to
    such Shares.

         (b)   If, after giving effect to any arrangements for the purchase of 
    the Shares of

                                             
                                       -23-

<PAGE>



    a defaulting Underwriter or Underwriters by you and the Company and the
    Selling Stockholders as provided in subsection (a) above, the aggregate
    number of such Shares which remains unpurchased does not exceed one-eleventh
    of the aggregate number of all the Shares to be purchased at such Time of
    Delivery, then the Company and the Selling Stockholders shall have the right
    to require each non-defaulting Underwriter to purchase the number of Shares
    which such Underwriter agreed to purchase hereunder at such Time of Delivery
    and, in addition, to require each non-defaulting Underwriter to purchase its
    pro rata share (based on the number of Shares which such Underwriter agreed
    to purchase hereunder) of the Shares of such defaulting Underwriter or
    Underwriters for which such arrangements have not been made; but nothing
    herein shall relieve a defaulting Underwriter from liability for its
    default.

         (c) If, after giving effect to any arrangements for the purchase of the
    Shares of a defaulting Underwriter or Underwriters by you and the Company
    and the Selling Stockholders as provided in subsection (a) above, the
    aggregate number of such Shares which remains unpurchased exceeds
    one-eleventh of the aggregate number of all of the Shares to be purchased at
    such Time of Delivery, or if the Company and the Selling Stockholders shall
    not exercise the right described in subsection (b) above to require
    non-defaulting Underwriters to purchase Shares of a defaulting Underwriter
    or Underwriters, then this Agreement (or, with respect to the Second Time of
    Delivery, the obligations of the Underwriters to purchase and of the Company
    and the Selling Stockholders to sell the Optional Shares) shall thereupon
    terminate, without liability on the part of any non-defaulting Underwriter
    or the Company or the Selling Stockholders, except for the expenses to be
    borne by the Company and the Selling Stockholders and the Underwriters as
    provided in Section 6 hereof and the indemnity and contribution agreements
    in Section 8 hereof; but nothing herein shall relieve a defaulting
    Underwriter from liability for its default.

         10. The respective indemnities, agreements, representations, warranties
    and other statements of the Company, the Selling Stockholders and the
    several Underwriters, as set forth in this Agreement or made by or on behalf
    of them, respectively, pursuant to this Agreement, shall remain in full
    force and effect, regardless of any investigation (or any statement as to
    the results thereof) made by or on behalf of any Underwriter or any
    controlling person of any Underwriter, or the Company, or any of the Selling
    Stockholders, or any officer or director or controlling person of the
    Company, or any controlling person of any Selling Stockholder, and shall
    survive delivery of and payment for the Shares.

         11. If this Agreement shall be terminated pursuant to Section 9 hereof,
    neither the Company nor the Selling Stockholders shall then be under any
    liability to any Underwriter except as provided in Sections 6 and 8 hereof;
    but, if for any other reason any Shares are not delivered by or on behalf of
    the Company and the Selling Stockholders as provided herein, the Company and
    each of the defaulting Selling Stockholders, if any, pro rata (with the
    Company's portion based on the number of

                                             
                                       -24-

<PAGE>



    Shares to be sold by the Company and all non-defaulting Selling Stockholders
    hereunder and the defaulting Selling Stockholder's portion based on the
    number of Shares to be sold by such defaulting Selling Stockholder, if any,
    hereunder) will reimburse the Underwriters through you for all out-of-pocket
    expenses approved in writing by you, including fees and disbursements of
    counsel, reasonably incurred by the Underwriters in making preparations for
    the purchase, sale and delivery of the Shares not so delivered, but the
    Company and the Selling Stockholders shall then be under no further
    liability to any Underwriter in respect of the Shares not so delivered
    except as provided in Sections 6 and 8 hereof. Notwithstanding the
    provisions of this Section 11, in the event any Shares are not delivered by
    or on behalf of the Company and the Selling Stockholders as provided herein
    as a result of the failure to meet the conditions set forth in Section 7(g),
    then the Company and the Selling Stockholders shall not be obligated to
    reimburse the Underwriters for the above-referenced out-of-pocket expenses.

         12. In all dealings hereunder, you shall act on behalf of each of the
    Underwriters, and the parties hereto shall be entitled to act and rely upon
    any statement, request, notice or agreement on behalf of any Underwriter
    made or given by you jointly or by Goldman, Sachs & Co. on behalf of you as
    the representatives; and in all dealings with any Selling Stockholder
    hereunder, you and the Company shall be entitled to act and rely upon any
    statement, request, notice or agreement on behalf of such Selling
    Stockholder made or given by any or all of the Attorneys-in-Fact for such
    Selling Stockholder.

         All statements, requests, notices and agreements hereunder shall be in
    writing, and if to the Underwriters shall be delivered or sent by mail,
    telex or facsimile transmission to you as the representatives in care of
    Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004, Attention:
    Registration Department; if to any Selling Stockholder shall be delivered or
    sent by mail, telex or facsimile transmission to counsel for such Selling
    Stockholder at its address set forth in Schedule II hereto; and if to the
    Company shall be delivered or sent by mail, telex or facsimile transmission
    to the address of the Company set forth in the Registration Statement,
    Attention: President; provided, however, that any notice to an Underwriter
    pursuant to Section 8(c) hereof shall be delivered or sent by mail, telex or
    facsimile transmission to such Underwriter at its address set forth in its
    Underwriters' Questionnaire or telex constituting such Questionnaire, which
    address will be supplied to the Company or the Selling Stockholders by you
    on request. Any such statements, requests, notices or agreements shall take
    effect upon receipt thereof.

         13. This Agreement shall be binding upon, and inure solely to the
    benefit of, the Underwriters, the Company and the Selling Stockholders and,
    to the extent provided in Sections 8 and 10 hereof, the officers and
    directors of the Company and each person who controls the Company, any
    Selling Stockholder or any Underwriter, and their respective heirs,
    executors, administrators, successors and assigns, and no other

                                             
                                       -25-

<PAGE>



    person shall acquire or have any right under or by virtue of this Agreement.
    No purchaser of any of the Shares from any Underwriter shall be deemed a
    successor or assign by reason merely of such purchase.

         14. Time shall be of the essence of this Agreement. As used herein, the
    term "business day" shall mean any day when the Commission's office in
    Washington, D.C.
    is open for business.

         15.   This Agreement shall be governed by and construed in accordance
    with the laws of the State of New York.

         16. This Agreement may be executed by any one or more of the parties
    hereto in any number of counterparts, each of which shall be deemed to be an
    original, but all such counterparts shall together constitute one and the
    same instrument.


                   [remainder of page intentionally left blank]



                                             
                                       -26-

<PAGE>



         If the foregoing is in accordance with your understanding, please sign
    and return to us seven counterparts hereof, and upon the acceptance hereof
    by you, on behalf of each of the Underwriters, this letter and such
    acceptance hereof shall constitute a binding agreement among each of the
    Underwriters, the Company and each of the Selling Stockholders. It is
    understood that your acceptance of this letter on behalf of each of the
    Underwriters is pursuant to the authority set forth in a form of Agreement
    among Underwriters, the form of which shall be submitted to the Company and
    the Selling Stockholders for examination, upon request, but without warranty
    on your part as to the authority of the signers thereof.

         Any person executing and delivering this Agreement as Attorney-in-Fact
    for a Selling Stockholder represents by so doing that he has been duly
    appointed as Attorney- in-Fact by such Selling Stockholder pursuant to a
    validly existing and binding Power-of- Attorney which authorizes such
    Attorney-in-Fact to take such action.


                                Very truly yours,


                                PEGASYSTEMS INC.


                                By:
                                   --------------------
                                   Name: Alan Trefler
                                   Title: President


                                THE PERSONS LISTED AS SELLING
                                STOCKHOLDERS ON SCHEDULE II
                                HERETO



                                By:
                                   --------------------
                                   Name: Alan Trefler
                                   Title: President


                                As Attorney-in-Fact acting on behalf
                                of each of the Selling Stockholders
                                named in Schedule II to this
                                Agreement.



                                             
                                       -27-

<PAGE>



Accepted as of the date hereof at New, York, New York:

Goldman, Sachs & Co.
Cowen & Company
Montgomery Securities

By:                                               
    ----------------------------------------------
               (Goldman, Sachs & Co.)

On behalf of each of the Underwriters



                                             
                                       -28-

<PAGE>



                                    SCHEDULE I

<TABLE>
<CAPTION>

                                                               Number of Optional
                                       Total Number of       Shares to be Purchased
                                         Firm Shares               if Maximum
Underwriter                            to be Purchased          Option Exercised

<S>                                      <C>                     <C>

Goldman, Sachs & Co.
Cowen & Company
Montgomery Securities





                                         ------------             ------------
  TOTAL                                   2,245,000                  336,750
</TABLE>















                                             
                                       -1-

<PAGE>



                                    SCHEDULE II



<TABLE>
<CAPTION>


                                                               Number of Optional
                                                                  Shares to be
                                            Total Number of          Purchased
                                               Firm Shares          if Maximum
                                             to be Purchased     Option Exercised
<S>                                             <C>                <C>    

The Company..................................   1,500,000            336,750

The Selling Stockholders(a)..................

    --

    --

    --

    --

    --
                                                ---------          ---------
Total                                           2,245,000            336,750
</TABLE>

(a) All Selling Stockholders are represented by Choate, Hall & Stewart and have
appointed Alan Trefler and Ira Vishner, and each of them, as the
Attorneys-in-Fact for such Selling Stockholder.

                                             
                                        -2-

<PAGE>




                                                                         ANNEX I


          Pursuant to Section 7(d) of the Underwriting Agreement, the
    accountants shall furnish letters to the Underwriters to the effect that:

                (i) They are independent certified public accountants with
           respect to the Company and its subsidiaries within the meaning of the
           Act and the applicable published rules and regulations thereunder;

                (ii) In their opinion, the financial statements and any
          supplementary financial information and schedules (and, if applicable,
          financial forecasts and/or pro forma financial information) examined
          by them and included in the Prospectus or the Registration Statement
          comply as to form in all material respects with the applicable
          accounting requirements of the Act and the related published rules and
          regulations thereunder; and they have made a review in accordance with
          standards established by the American Institute of Certified Public
          Accountants of the unaudited consolidated interim financial
          statements, selected financial data, pro forma financial information,
          financial forecasts and/or condensed financial statements derived from
          audited financial statements of the Company for the periods specified
          in such letter, as indicated in their reports thereon, copies of which
          have been separately furnished to the representatives of the
          Underwriters (the "Representatives");

                (iii) They have made a review in accordance with standards
          established by the American Institute of Certified Public Accountants
          of the unaudited condensed consolidated statements of income,
          consolidated balance sheets and consolidated statements of cash flows
          included in the Prospectus as indicated in their reports thereon
          copies of which have been separately furnished to the Representatives
          and on the basis of specified procedures including inquiries of
          officials of the Company who have responsibility for financial and
          accounting matters regarding whether the unaudited condensed
          consolidated financial statements referred to in paragraph (vi)(A)(i)
          below comply as to form in all material respects with the applicable
          accounting requirements of the Act and the related published rules and
          regulations, nothing came to their attention that caused them to
          believe that the unaudited condensed consolidated financial statements
          do not comply as to form in all material respects with the applicable
          accounting requirements of the Act and the related published rules and
          regulations;

                (iv) They have compared the information in the Prospectus under
          selected captions with the disclosure requirements of Regulation S-K
          and on the basis of limited procedures specified in such letter
          nothing came to their attention as a result of the foregoing
          procedures that caused them to believe that this

                                             
                                        -1-

<PAGE>



          information does not conform in all material respects with the
          disclosure requirements of Items 301, 302, 402 and 503(d),
          respectively, of Regulation S-K;

                (v) On the basis of limited procedures, not constituting an
           examination in accordance with generally accepted auditing standards,
           consisting of a reading of the unaudited financial statements and
           other information referred to below, a reading of the latest
           available interim financial statements of the Company and its
           subsidiaries, inspection of the minute books of the Company and its
           subsidiaries since the date of the latest audited financial
           statements included in the Prospectus, inquiries of officials of the
           Company and its subsidiaries responsible for financial and accounting
           matters and such other inquiries and procedures as may be specified
           in such letter, nothing came to their attention that caused them to
           believe that:


                      (A) (i) the unaudited consolidated statements of income,
                consolidated balance sheets and consolidated statements of cash
                flows included in the Prospectus do not comply as to form in all
                material respects with the applicable accounting requirements of
                the Act and the related published rules and regulations, or (ii)
                any material modifications should be made to the unaudited
                condensed consolidated statements of income, consolidated
                balance sheets and consolidated statements of cash flows
                included in the Prospectus for them to be in conformity with
                generally accepted accounting principles;

                      (B) any other unaudited income statement data and balance
                sheet items included in the Prospectus do not agree with the
                corresponding items in the unaudited consolidated financial
                statements from which such data and items were derived, and any
                such unaudited data and items were not determined on a basis
                substantially consistent with the basis for the corresponding
                amounts in the audited consolidated financial statements
                included in the Prospectus;

                      (C) the unaudited financial statements which were not
                included in the Prospectus but from which were derived any
                unaudited condensed financial statements referred to in Clause
                (A) and any unaudited income statement data and balance sheet
                items included in the Prospectus and referred to in Clause (B)
                were not determined on a basis substantially consistent with the
                basis for the audited consolidated financial statements included
                in the Prospectus;

                      (D) any unaudited pro forma consolidated condensed
                financial statements included in the Prospectus do not comply as
                to form in all material respects with the applicable accounting
                requirements of the Act

                                             
                                        -2-

<PAGE>


                and the published rules and regulations thereunder or the pro
                forma adjustments have not been properly applied to the
                historical amounts in the compilation of those statements;

                      (E) as of a specified date not more than five days prior
                to the date of such letter, there have been any changes in the
                consolidated capital stock (other than issuances of capital
                stock upon exercise of options which were outstanding on the
                date of the latest financial statements included in the
                Prospectus) or any increase in the consolidated long-term debt
                of the Company and its subsidiaries, or any decreases in
                consolidated net current assets or stockholders' equity or other
                items specified by the Representatives, or any increases in any
                items specified by the Representatives, in each case as compared
                with amounts shown in the latest balance sheet included in the
                Prospectus, except in each case for changes, increases or
                decreases which the Prospectus discloses have occurred or may
                occur or which are described in such letter; and

                      (F) for the period from the date of the latest financial
                 statements included in the Prospectus to the specified date
                 referred to in Clause (E) there were any decreases in
                 consolidated net revenues or operating profit or the total or
                 per share amounts of consolidated net income or other items
                 specified by the Representatives, or any increases in any items
                 specified by the Representatives, in each case as compared with
                 the comparable period of the preceding year and with any other
                 period of corresponding length specified by the
                 Representatives, except in each case for decreases or increases
                 which the Prospectus discloses have occurred or may occur or
                 which are described in such letter; and

                (vi) In addition to the examination referred to in their
           report(s) included in the Prospectus and the limited procedures,
           inspection of minute books, inquiries and other procedures referred
           to in paragraphs (iii) and (vi) above, they have carried out certain
           specified procedures, not constituting an examination in accordance
           with generally accepted auditing standards, with respect to certain
           amounts, percentages and financial information specified by the
           Representatives, which are derived from the general accounting
           records of the Company and its subsidiaries, which appear in the
           Prospectus, or in Part II of, or in exhibits and schedules to, the
           Registration Statement specified by the Representatives, and have
           compared certain of such amounts, percentages and financial
           information with the accounting records of the Company and its
           subsidiaries and have found them to be in agreement.

                                             
                                        -3-



