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                                                                     Exhibit 4.2


                           THIRD AMENDED AND RESTATED
                      1990 NON-QUALIFIED STOCK OPTION PLAN
                           FOR NON-EMPLOYEE DIRECTORS

                      (AS AMENDED EFFECTIVE APRIL 17, 2000)

1.       NAME.

         The name of this plan is the Third Amended and Restated 1990
Non-Qualified Stock Option Plan for Non-Employee Directors.

2.       DEFINITIONS.

         For the purposes of the Plan, the following terms shall be defined as
set forth below:

         (a)      "Board" means the board of directors of the Company.

         (b)      "Code" means the Internal Revenue Code of 1986, as amended
                  from time to time, and the Treasury regulations promulgated
                  thereunder.

         (c)      "Committee" means the committee  appointed by the Board to
                  administer the Plan as provided in Section 4(a).

         (d)      "Common Stock" means the $.01 par value common stock of the
                  Company or any security of the Company identified by the
                  Committee as having been issued in substitution or exchange
                  therefor or in lieu thereof.

         (e)      "Company" means ALARIS Medical, Inc., a Delaware corporation.

         (f)      "Effective Date" means September 7, 1990.

         (g)      "Employee" means an individual whose wages are subject to the
                  withholding of federal income tax under Section 3401 of the
                  Code.

         (h)      "Exchange Act" means the Securities Exchange Act of 1934, as
                  amended from time to time, or any successor statute.

         (i)      "Fair Market Value" of a Share as of a specified date means,
                  except as otherwise reasonably determined by the Committee
                  based on reported prices of a Share, (i) the average of the
                  highest and lowest market prices of a Share on such date as
                  reported in the American Stock Exchange (or the principal
                  exchange on which the Shares are then traded) composite
                  transactions published in the Eastern Edition of The Wall
                  Street Journal or, if no trading of Common Stock is reported
                  for that day, the next preceding day on which trading was
                  reported, or (ii) if the Shares are traded in the
                  over-the-counter market, the average of the highest bid and
                  lowest asked prices per Share on the specified date (or the
                  next preceding date on which trading was reported) as reported
                  through the NASDAQ system or any successor thereto.

         (j)      "Non-Employee Director" means an individual who: (i) is now,
                  or hereafter becomes, a member of the Board; (ii) is neither
                  an Employee nor an Officer (other than an officer who does not
                  receive a salary as an officer) of the Company or of any
                  Subsidiary on the date of the grant of the NQSO; and (iii) has
                  not elected to decline to participate in the Plan pursuant to
                  the next succeeding sentence. A director otherwise eligible to
                  participate in the Plan may make an irrevocable, one-time
                  election, by written notice to the Corporate Secretary of the
                  Company and the Chairman of the Committee within thirty days
                  after his initial election or appointment to the Board to
                  decline to participate in the Plan.

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         (k)      "NQSO" means an option granted under this Plan, which option
                  is not qualified under Section 422 of the Code.

         (l)      "Officer" means an individual elected or appointed by the
                  Board or by the board of directors of a Subsidiary, or chosen
                  in such other manner as may be prescribed by the by-laws of
                  the Company or a Subsidiary, as the case may be, to serve as
                  such.

         (m)      "Participant" means a Non-Employee Director who is granted a
                   NQSO under the Plan.

         (n)      "Plan" means this Third Amended and Restated 1990
                  Non-Qualified Stock Option Plan for Non-Employee Directors.

         (o)      "Rule 16b-3" means Rule 16b-3 promulgated by the Securities
                  and Exchange Commission under the Exchange Act, or any
                  successor or replacement rule adopted by the Securities and
                  Exchange Commission.

         (p)      "Share" means one share of Common Stock, adjusted in
                  accordance with Section 9(b), if applicable.

         (q)      "Stock Option Agreement" means the written agreement between
                  the Company and the Participant that contains the terms and
                  conditions pertaining to the NQSO.

         (r)      "Subsidiary" means any corporation or entity of which the
                  Company, directly or indirectly, is the beneficial owner of
                  fifty percent (50%) or more of the total combined voting power
                  of all classes of its stock having voting power, unless the
                  Committee shall determine that any such corporation or entity
                  shall be excluded hereunder from the definition of the term
                  Subsidiary.

3.       PURPOSE.

         The purpose of the Plan is to enable the Company to provide incentives,
which are linked directly to increases in shareholder value, to Non-Employee
Directors in order that they will be encouraged to serve on the Board and exert
their best efforts on behalf of the Company.

4.       ADMINISTRATION.

         (a)      COMPOSITION OF THE COMMITTEE.

         The Plan shall be administered by a Committee appointed by the Board
consisting of no less than two individuals. Members of the Committee need not be
members of the Board, Officers or Employees of the Company. Members of the
Committee shall not be entitled to participate in the Plan. The Board may from
time to time remove members from, or add members to, the Committee. Vacancies on
the Committee, however caused, shall be filled by the Board.

         (b)      ACTIONS BY THE COMMITTEE.

         The Committee shall hold meetings at such times and places as it may
determine. Acts approved by a majority of the members of the Committee present
at a meeting at which a quorum is present, or acts reduced to or approved in
writing by a majority of the members of the Committee, shall be the valid acts
of the Committee.

         (c)      POWERS OF THE COMMITTEE.

         The Committee shall have the authority to administer the Plan in its
sole and absolute discretion; PROVIDED, HOWEVER, that the Committee shall have
no authority to grant NQSOs, to determine the number of Shares subject to NQSOs
or the price at which each Share covered by a NQSO may be purchased pursuant to
the Plan, all of which shall be automatic as described in Section 8. To this
end, the Committee is authorized to construe and interpret the

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Plan and to make all other determinations necessary or advisable for the
administration of the Plan. Subject to the foregoing, any determination,
decision or action of the Committee in connection with the construction,
interpretation, administration or application of the Plan shall be final,
conclusive and binding upon all Participants and any person validly claiming
under or through a Participant.

         (d)      LIABILITY OF COMMITTEE MEMBERS.

         No member of the Board or the Committee will be liable for any action
or determination made in good faith by the Board or the Committee with respect
to the Plan or any grant or exercise of a NQSO thereunder.

         (e)      NQSO ACCOUNTS.

         The Committee shall maintain a journal in which a separate account for
each Participant shall be established. Whenever NQSOs are granted to or
exercised by a Participant, the Participant's account shall be appropriately
credited or debited. Appropriate adjustment shall also be made in the journal
with respect to each account in the event of an adjustment pursuant to Section
9(b).

5.       EFFECTIVE DATE AND TERM OF THE PLAN.

         (a)      EFFECTIVE DATE OF THE PLAN.

         The Plan in its original form was adopted by the Board on July 12, 1990
and became effective on September 7, 1990. The Plan in its third amended and
restated form was amended by the Board effective May 28, 1998, subject to
approval by the shareholders of the Company at a meeting duly called and held
within twelve months following the date of Board approval. The Plan, as amended,
was again amended by the Board effective April 17, 2000, subject to approval by
the shareholders of the Company at a meeting duly called and held within twelve
months following the date of Board approval.

         (b)      TERM OF PLAN.

         No NQSO shall be granted pursuant to the Plan on or after September 7,
2005, but NQSOs theretofore granted may extend beyond that date.

6.       SHARES SUBJECT TO THE PLAN.

         The maximum aggregate number of Shares which may be subject to NQSOs
granted to Non-Employee Directors under the Plan shall be 500,000. The
limitation on the number of Shares which may be subject to NQSOs under the Plan
shall be subject to adjustment as provided in Section 9(b).

         If any NQSO granted under the Plan expires or is terminated for any
reason without having been exercised in full, the Shares allocable to the
unexercised portion of such NQSO shall again become available for grant pursuant
to the Plan. At all times during the term of the Plan, the Company shall reserve
and keep available for issuance such number of Shares as the Company is
obligated to issue upon the exercise of all then outstanding NQSOs.

7.       SOURCE OF SHARES ISSUED UNDER THE PLAN.

         Common Stock issued under the Plan may consist, in whole or in part, of
authorized and unissued Shares or treasury Shares, as determined in the sole and
absolute discretion of the Committee. No fractional Shares shall be issued under
the Plan.

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8.       NON-QUALIFIED STOCK OPTIONS.

         (a)      GRANT OF NQSOS.

         An individual who first becomes a Non-Employee Director on or after May
28, 1998, shall be granted automatically NQSOs to purchase 10,000 Shares on the
next succeeding business day after becoming a Non-Employee Director. In
addition, (i) NQSOs to purchase 10,000 Shares shall be granted automatically to
each Non-Employee Director on each anniversary date of his preceding automatic
NQSO grant under the Plan and every year thereafter during the term of the Plan,
provided that said Non-Employee Director continues to be a member of the Board
on the date of each such additional grant; and (ii) the Chairman of the Board
shall be granted a NQSO to purchase 16,000 Shares on May 28, 1998, which NQSO
shall be immediately vested and exercisable. NQSOs shall be granted in the
aforesaid manner until the date on which the Shares available for grant shall no
longer be sufficient to permit grants of NQSOs covering 10,000 Shares to be made
to each Non-Employee Director entitled to a grant as of such date, in which
event the Shares then available for grant shall be allocated on a PRO RATA basis
among the Non-Employee Directors entitled to a grant of NQSOs as of such date.

         (b)      EXERCISE PRICE.

         The price at which each Share covered by a NQSO may be purchased
pursuant to this Plan shall be equal to the Fair Market Value of a Share on the
date of the NQSO grant.

         (c)      TERMS AND CONDITIONS.

         All NQSOs granted pursuant to the Plan shall be evidenced by a Stock
Option Agreement (which need not be the same for each Participant or NQSO),
approved by the Committee which shall be subject to the following express terms
and conditions and to the other terms and conditions specified in this Section
8, and to such other terms and conditions as shall be determined by the
Committee in its sole and absolute discretion which are not inconsistent with
the terms of the Plan:

                  (i)      except as set forth in Sections 8(a) and 10, all
                           NQSOs granted to a Participant shall vest and become
                           first exercisable at the rate of one-third of the
                           Shares subject to the NQSOs for each twelve month
                           period of continuous service on the Board (from the
                           date of grant of the NQSO) by such Participant,
                           rounded down to the nearest whole number for each of
                           the first two twelve month periods and rounded up to
                           the nearest whole number for the third twelve month
                           period of service;

                  (ii)     the failure of a NQSO to vest for any reason
                           whatsoever shall cause the NQSO to expire and be of
                           no further force or effect;

                  (iii)    unless terminated earlier pursuant to Sections 8(f)
                           or 10, the term of each NQSO shall be five years from
                           the date of grant;

                  (iv)     no NQSO or interest therein may be pledged,
                           hypothecated, encumbered or otherwise made subject to
                           execution, attachment or similar process, and no NQSO
                           or interest therein shall be assignable or
                           transferable by the holder otherwise than by will or
                           by the laws of descent and distribution or to a
                           beneficiary upon the death of a Participant, and an
                           NQSO shall be exercisable during the lifetime of the
                           holder only by him or by his guardian or legal
                           representative, except that a NQSO may be transferred
                           to one or more transferees during the lifetime of the
                           Participant, and may be exercised by such transferee
                           in accordance with the terms of such NQSO, subject to
                           any terms and conditions which the Committee may
                           impose thereon. A transferee or other person claiming
                           any rights under the Plan from or through any
                           Participant shall be subject to all terms and
                           conditions of the Plan and any Stock Option Agreement
                           applicable to such Participant, except as otherwise
                           determined by the Committee, and to any additional
                           terms and conditions deemed necessary or appropriate
                           by the Committee; and

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                  (v)      payment for the Shares to be received upon exercise
                           of a NQSO may be made in cash or in Shares
                           (determined with reference to their Fair Market Value
                           on the date of exercise), or any combination thereof.

         (d)      ADDITIONAL MEANS OF PAYMENT.

         Any Stock Option Agreement may, in the sole and absolute discretion of
the Committee, permit payment by any other form of legal consideration
consistent with applicable law and any rules and regulations relating thereto,
including, but not limited to, the execution and delivery of a full recourse
promissory note by the Participant to the Company.

         (e)      EXERCISE.

         The holder of a NQSO may exercise the same by filing with the Corporate
Secretary of the Company a written election, in such form as the Committee may
determine, specifying the number of Shares with respect to which such NQSO is
being exercised. Such notice shall be accompanied by payment in full of the
exercise price for such Shares. Notwithstanding the foregoing, the Committee may
specify a reasonable minimum number of Shares that may be purchased on any
exercise of an Option, provided that such minimum number will not prevent the
Participant from exercising the Option with respect to the full number of Shares
as to which the Option is then exercisable.

         (f)      TERMINATION OF NQSOS.

         NQSOs granted under the Plan shall be subject to the following events
of termination:

                  (i)      in the event a Participant is removed from the Board
                           for cause (as contemplated by the Company's by-laws),
                           all unexercised NQSOs held by such Participant on the
                           date of such removal (whether or not vested) will
                           expire immediately;

                  (ii)     in the event a Participant is no longer a member of
                           the Board, other than by reason of removal for Cause,
                           all NQSOs which remain unvested at the time the
                           Participant is no longer a member of the Board shall
                           expire immediately, and all NQSOs which have vested
                           prior to such time shall expire twelve months
                           thereafter unless by their terms they expire sooner;
                           and

                  (iii)    in the event a Participant becomes an Officer or
                           Employee of the Company or a Subsidiary (whether or
                           not such Participant remains a member of the Board)
                           all NQSOs which remain unvested on the date such
                           Participant becomes an Officer or Employee of the
                           Company shall expire immediately, and all NQSOs which
                           have vested prior to such date shall expire twelve
                           months thereafter unless by their terms they expire
                           sooner.

9.       RECAPITALIZATION.

         (a)      CORPORATE FLEXIBILITY.

         The existence of the Plan and the NQSOs granted hereunder shall not
affect or restrict in any way the right or power of the Board or the
shareholders of the Company, in their sole and absolute discretion, to make,
authorize or consummate any adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of bonds, debentures, common stock,
preferred or prior preference stocks ahead of or affecting the Company's capital
stock or the rights thereof, the dissolution or liquidation of the Company or
any sale or transfer of all or any part of its assets or business, or any other
grant of rights, issuance of securities, transaction, corporate act or
proceeding and notwithstanding the fact that any such activity, proceeding,
action, transaction or other event may have, or be expected to have, an impact
(whether positive or negative) on the value of any NQSO or underlying Shares.

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         (b)      ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.

         Except as otherwise provided in Section 10 below, in the event of any
change in capitalization affecting the Common Stock of the Company, such as a
stock dividend, stock split or recapitalization, the Committee shall make
proportionate adjustments with respect to: (i) the aggregate number of Shares
available for issuance under the Plan; (ii) the number of shares subject to each
grant under the Plan; (iii) the number and exercise price of Shares subject to
outstanding NQSOs; and (iv) such other matters as shall be appropriate in light
of the circumstances; PROVIDED, HOWEVER, that the number of Shares subject to
any NQSO shall always be a whole number.

10.      CHANGE OF CONTROL

         In the event of a Change of Control (as defined below), all NQSOs not
vested on or prior to the effective time of any such Change of Control shall
vest immediately prior to such effective time. Unless otherwise determined by
the Committee at the time of a Change of Control, in the event of a Change of
Control all outstanding NQSOs shall terminate and cease to be outstanding
immediately following the Change of Control; PROVIDED, HOWEVER, that no such
NQSO termination shall occur unless a Participant shall have been given five
business days, following prior written notice, to exercise such Participant's
outstanding vested NQSOs at the effective time of the Change of Control, or to
receive cash in an amount per Share subject to such NQSOs equal to the amount by
which the price paid for a Share (determined on a fully diluted basis and taking
into account the exercise price, as determined by the Committee) in the Change
of Control exceeds the per share exercise price of such NQSOs. The Committee in
its discretion may make provisions for the assumption of outstanding NQSOs, or
the substitution for outstanding NQSOs of new incentive awards covering the
stock of a successor corporation or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and prices so as to
prevent dilution or enlargement of rights.

         A "Change of Control" will be deemed to occur on the date any of the
following events occur:

         (a) any person or persons acting together which would constitute a
"group" for purposes of Section 13(d) of the Exchange Act (other than the
Company, any Subsidiary and Jeffry M. Picower (including, any of his Affiliates
and any lineal descendant of Mr. Picower, any widow or then current spouse of
Mr. Picower or of any such lineal descendant, a trust established principally
for the benefit of any of the foregoing, any entity which is at least 90%
beneficially owned by any of the foregoing, and the executor, administrator or
personal representative of the estate of any of the foregoing (the "Picower
Group")) beneficially own (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, securities of the Company or any Significant Subsidiary
(as defined below) representing greater than 10% of the total combined voting
power of the Company or the Significant Subsidiary entitled to vote in the
election of the board of directors of the Company or the Significant Subsidiary;
PROVIDED, HOWEVER, that such event shall not constitute a Change of Control
unless and until the combined voting power of such securities owned
beneficially, directly or indirectly, by such person or persons is greater than
the combined voting power of all such securities owned beneficially, directly or
indirectly, by Mr. Picower and the Picower Group;

         (b) persons other than the Current Directors (as herein defined)
constitute a majority of the members of the Board (for these purposes, a
"Current Director" means any member of the Board as of May 1, 1997, and any
successor of any such member whose election, or nomination for election by the
Company's shareholders, was approved by at least a majority of the Current
Directors then on the Board or by Mr. Picower or the Picower Group);

         (c) the consummation of (i) a plan of liquidation of all or
substantially all of the assets of the Company or any Subsidiary owning directly
or indirectly all or substantially all of the consolidated assets of the Company
(a "Significant Subsidiary"), or (ii) an agreement providing for the merger or
consolidation of the Company or a Significant Subsidiary (A) in which the
Company or a Significant Subsidiary is not the continuing or surviving
corporation (other than a consolidation or merger with a wholly-owned subsidiary
of the Company in which all Shares of the Company or common stock in the
Significant Subsidiary outstanding immediately prior to the effectiveness
thereof are changed into or exchanged for all or substantially all of the common
stock of the surviving corporation and (if the Company ceases to exist) the
surviving corporation assumes all the NQSO, or (B) pursuant to which, even
though the Company is the continuing or surviving corporation, the Shares of the
Company or common stock in the Significant Subsidiary are converted into cash,
securities or other property; PROVIDED,

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HOWEVER, that no "Change of Control" shall be deemed to occur as the result of a
consolidation or merger of the Company or a Significant Subsidiary in which the
holders of the Shares of the Company immediately prior to the consolidation or
merger have, as a result thereof, directly or indirectly, at least a majority of
the combined voting power of all classes of voting stock of the continuing or
surviving corporation or its parent immediately after such consolidation or
merger or in which the Board immediately prior to the merger or consolidation
would, immediately after the merger or consolidation, constitute a majority of
the board of directors of the continuing or surviving corporation or its parent;
or

         (d) the consummation of an agreement (or agreements) providing for the
sale or other disposition (in one transaction or a series of transactions) of
all or substantially all of the assets of the Company or a Significant
Subsidiary other than such a sale or disposition immediately after which such
assets will be owned directly or indirectly by the stockholders of the Company
in substantially the same proportions as their ownership of the Shares
immediately prior to such sale or disposition.

11.      SECURITIES LAW REQUIREMENTS.

         No Shares shall be issued under the Plan unless and until: (i) the
Company and the Participant have taken all actions required to register the
Shares under the Securities Act of 1933, as amended, or perfect an exemption
from the registration requirements thereof; (ii) any applicable listing
requirement of any stock exchange or national market system on which the Common
Stock is listed has been satisfied; and (iii) any other applicable provision of
state or federal law has been satisfied. The Company shall be under no
obligation to register the Shares with the Securities and Exchange Commission or
to effect compliance with the registration or qualification requirements of any
state securities laws or stock exchange.

12.      AMENDMENT AND TERMINATION.

         (a)      MODIFICATIONS TO THE PLAN.

         The Board may, insofar as permitted by law, from time to time, with
respect to any Shares at the time not subject to NQSOs, suspend or terminate the
Plan or, subject to Sections 8(a) and 8(b), revise or amend the Plan in any
respect whatsoever. However, any revision or amendment that would cause the Plan
to fail to comply with any requirement of applicable law or regulation if such
amendment were not approved by the shareholders of the Company shall not be
effective unless and until such approval is obtained.

         (b)      RIGHTS OF PARTICIPANT.

         No amendment, suspension or termination of the Plan or of any NQSO that
would adversely affect the right of any Participant with respect to a NQSO
previously granted under the Plan will be effective without the written consent
of the affected Participant.

13.      MISCELLANEOUS

         (a)      SHAREHOLDERS' RIGHTS.

         No Participant and no beneficiary or other person claiming under or
through such Participant shall acquire any rights as a shareholder of the
Company by virtue of such Participant having been granted a NQSO under the Plan.
No Participant and no beneficiary or other person claiming under or through such
Participant will have any right, title or interest in or to any Shares allocated
or reserved under the Plan or subject to any NQSO, except as to Shares, if any,
that have been issued or transferred to such Participant. No adjustment shall be
made for dividends or distributions or other rights for which the record date is
prior to the date of exercise.

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         (b)      OTHER COMPENSATION ARRANGEMENTS.

         Nothing contained in the Plan shall prevent the Board from adopting
other compensation arrangements, subject to shareholder approval if such
approval is required. Such other arrangements may be either generally applicable
or applicable only in specific cases.

         (c)      TREATMENT OF PROCEEDS.

         Proceeds realized from the exercise of NQSOs under the Plan shall
constitute general funds of the Company.

         (d)      COSTS OF THE PLAN.

         The costs and expenses of administering the Plan shall be borne by the
Company.

         (e)      NO RIGHT TO CONTINUE AS DIRECTOR.

         Nothing contained in the Plan or in any instrument executed pursuant to
the Plan will confer upon any Participant any right to continue as a member of
the Board or affect the right of the Company, the Board or the shareholders of
the Company to terminate the directorship of any Participant at any time with or
without cause.

         (f)      SEVERABILITY.

         The provisions of the Plan shall be deemed severable and the validity
or unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.

         (g)      GOVERNING LAW.

         The Plan and all actions taken thereunder shall be enforced, governed
and construed by and interpreted under the laws of the State of Delaware
applicable to contracts made and to be performed wholly within such State
without giving effect to the principles of conflict of laws thereof.

         (h)      HEADINGS.

         The headings contained in this Plan are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Plan.

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