Document:

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                                                                    EXHIBIT 4.10

                                WAVE OPTICS, INC.

                             2000 SHARE OPTION PLAN

                                   ARTICLE ONE

                               GENERAL PROVISIONS

        I. PURPOSE OF THE PLAN

            This 2000 Share Option Plan is intended to promote the interests of
Wave Optics, Inc., a California corporation, by providing eligible persons in
the Corporation's employ or service with the opportunity to acquire a
proprietary interest, or otherwise increase their proprietary interest, in the
Corporation as an incentive for them to continue in such employ or service.

            Capitalized terms herein shall have the meanings assigned to such
terms in the attached Appendix.

        II. STRUCTURE OF THE PLAN

            The Option Grant Program under which eligible persons may, at the
discretion of the Plan Administrator, be granted options to subscribe for
ordinary shares of S$0.01 each in the capital of the Corporation (the "Shares").

        III. ADMINISTRATION OF THE PLAN

            A. The Plan shall be administered by the Board. However, any or all
administrative functions otherwise exercisable by the Board may be delegated to
the Committee. Members of the Committee shall serve for such period of time as
the Board may determine and shall be subject to removal by the Board at any
time. The Board may also at any time terminate the functions of the Committee
and reassume all powers and authority previously delegated to the Committee.

            B. The Plan Administrator shall have full power and authority
(subject to the provisions of the Plan) to establish such rules and regulations
as it may deem appropriate for proper administration of the Plan and to make
such determinations under, and issue such interpretations of, the Plan and any
outstanding options thereunder as it may deem necessary or advisable. Decisions
of the Plan Administrator shall be final and binding on all parties who have an
interest in the Plan or any option grant thereunder.

        IV. ELIGIBILITY

            A. The persons eligible to participate in the Plan are as follows:

                (i) Employees,

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                (ii) non-employee members of the Board or the non-employee
members of the board of directors of any Parent or Subsidiary, and

                (iii) consultants and other independent advisors who provide
services to the Corporation (or any Parent or Subsidiary).

        In no event however, may any non-employee members of the Board,
non-employee members of the board of directors of any Parent or Subsidiary, or
consultants and other independent advisors who provide services to the
Corporation (or any Parent or Subsidiary) participate in the Plan if such
participation is (a) prohibited, or (b) restricted (either absolutely or subject
to various securities requirements, whether legal or administrative, being
complied with), in the jurisdiction in which such non-employee members of the
Board, non-employee members of the board of directors of any Parent or
Subsidiary, or consultants and other independent advisors who provide services
to the Corporation (or any Parent or Subsidiary) are resident under the relevant
securities laws of that jurisdiction. Provided always that in the case of (b)
above, the participation in the Plan by the relevant non-employee members of the
Board, non-employee members of the board of directors of any Parent or
Subsidiary, or consultants and other independent advisors who provide services
to the Corporation (or any Parent or Subsidiary) may be effected at the absolute
discretion of the Committee if compliance with the relevant Securities
requirements of the jurisdiction in which such non-employee members of the
Board, non-employee members of the board of directors of any Parent or
Subsidiary, or consultants and other independent advisors who provide services
to the Corporation (or any Parent or Subsidiary) are resident is not impractical
(having regard to the nature of those requirements) and would not involve undue
expense.

            B. The Plan Administrator shall have full authority to determine
with respect to the grants made under the Option Grant Program, which eligible
persons are to receive such grants, the time or times when those grants are to
be made, the number of shares to be covered by each such grant, the status of
the granted option as either an Incentive Option or a Non-Statutory Option, the
time or times when each option is to become exercisable, the vesting schedule
(if any) applicable to the option shares and the maximum term for which the
option is to remain outstanding.

            C. The Plan Administrator shall have the absolute discretion to
grant options in accordance with the Option Grant Program.

        V. SHARES SUBJECT TO THE PLAN

            A. The shares issuable under the Plan shall be shares of authorized
but unissued Shares. The maximum number of Shares which may be issued over the
term of the Plan shall not exceed Twenty-Five Thousand (25,000) shares.

            B. Shares subject to outstanding options shall be available for
subsequent issuance under the Plan to the extent (i) the options expire or
terminate for any reason prior to exercise in full or (ii) the options are
cancelled in accordance with the cancellation-regrant provisions of Article Two.

            C. Should any change be made to the Shares by reason of any shares
split, shares dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Shares as a class without the
Corporation's receipt of consideration, appropriate adjustments shall be made to
(i) the maximum number and/or class of securities issuable under the Plan and
(ii) the number and/or class of securities and the exercise price per

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share in effect under each outstanding option in order to prevent the dilution
or enlargement of benefits thereunder. The adjustments determined by the Plan
Administrator shall be final, binding and conclusive. In no event shall any such
adjustments be made in connection with the conversion of one or more outstanding
shares of the Corporation's preferred shares.

                                   ARTICLE TWO

                              OPTION GRANT PROGRAM

        I. OPTION TERMS

            Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
shall comply with the terms specified below. Each document evidencing an
Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.

            A. EXERCISE PRICE.

                1. The exercise price per share shall be fixed by the Plan
Administrator in accordance with the following provisions, provided always that
in no event may the exercise price be less than the par value of a Share:

                   (i) The exercise price per share shall not be less than
        eighty-five percent (85%) of the Fair Market Value per Share on the
        option grant date.

                   (ii) If the person to whom the option is granted is a 10%
        Shareholder, then the exercise price per share shall not be less than
        one hundred ten percent (110%) of the Fair Market Value per Share on the
        option grant date.

                2. The exercise price shall become immediately due upon exercise
of the option and shall be payable in cash or check made payable to the
Corporation. Should the Shares be registered under Section 12 of the 1934 Act at
the time the option is exercised, then the exercise price may also be paid, to
the extent the option is exercised for vested shares, through a special sale and
remittance procedure pursuant to which the Optionee shall concurrently provide
irrevocable instructions (A) to a Corporation-designated brokerage firm to
effect the immediate sale of the purchased shares and remit to the Corporation,
out of the sale proceeds available on the settlement date, sufficient funds to
cover the aggregate exercise price payable for the purchased shares plus all
applicable Federal, state and local income and employment taxes required to be
withheld by the Corporation by reason of such exercise and (B) to the
Corporation to deliver the certificates for the purchased shares directly to
such brokerage firm in order to complete the sale.

            Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.

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            B. EXERCISE AND TERM OF OPTIONS. Each option shall be exercisable at
such time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the option grant. However, no option granted to employees shall have a term in
excess of ten (10) years and no option granted to non-employees shall have a
term in excess of five (5) years, in either case, measured from the option grant
date.

            C. EFFECT OF TERMINATION OF SERVICE.

                1. The following provisions shall govern the exercise of any
options held by the Optionee at the time of cessation of Service or death:

                   (i) Should the Optionee cease to remain in Service for any
        reason other than death, Disability or Misconduct, then the Optionee
        shall have a period of three (3) months following the date of such
        cessation of Service during which to exercise each outstanding option
        held by such Optionee.

                   (ii) Should Optionee's Service terminate by reason of
        Disability, then the Optionee shall have a period of twelve (12) months
        following the date of such cessation of Service during which to exercise
        each outstanding option held by such Optionee.

                   (iii) If the Optionee dies while holding an outstanding
        option, then the personal representative of his or her estate or the
        person or persons to whom the option is transferred pursuant to the
        Optionee's will or the laws of inheritance or the Optionee's designated
        beneficiary or beneficiaries of that option shall have a twelve
        (12)-month period following the date of the Optionee's death to exercise
        such option.

                   (iv) Under no circumstances, however, shall any such option
        be exercisable after the specified expiration of the option term.

                   (v) During the applicable post-Service exercise period, the
        option may not be exercised in the aggregate for more than the number of
        vested shares for which the option is exercisable on the date of the
        Optionee's cessation of Service. Upon the expiration of the applicable
        exercise period or (if earlier) upon the expiration of the option term,
        the option shall terminate and cease to be outstanding for any vested
        shares for which the option has not been exercised. However, the option
        shall, immediately upon the Optionee's cessation of Service, terminate
        and cease to be outstanding with respect to any and all option shares
        for which the option is not otherwise at the time exercisable or in
        which the Optionee is not otherwise at that time vested.

                   (vi) Should Optionee's Service be terminated for Misconduct
        or should Optionee otherwise engage in Misconduct while holding one or
        more outstanding options under the Plan, then all those options shall
        terminate immediately and cease to remain outstanding.

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                2. The Plan Administrator shall have the discretion, exercisable
either at the time an option is granted or at any time while the option remains
outstanding, to:

                   (i) extend the period of time for which the option is to
        remain exercisable following Optionee's cessation of Service or death
        from the limited period otherwise in effect for that option to such
        greater period of time as the Plan Administrator shall deem appropriate,
        but in no event beyond the expiration of the option term, and/or

                   (ii) permit the option to be exercised, during the applicable
        post-Service exercise period, not only with respect to the number of
        vested Shares for which such option is exercisable at the time of the
        Optionee's cessation of Service but also with respect to one or more
        additional installments in which the Optionee would have vested under
        the option had the Optionee continued in Service.

            D. SHAREHOLDER RIGHTS. The holder of an option shall have no
shareholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become the
registered holder of the purchased shares.

            E. UNVESTED SHARES. The Plan Administrator shall have the discretion
to grant options which are exercisable for unvested Shares. The Plan
Administrator may not impose a vesting schedule upon any option grant which is
more restrictive than twenty percent (20%) per year vesting, with the initial
vesting to occur not later than one (1) year after the option grant date.
However, such limitation shall not be applicable to any option grants made to
individuals who are officers of the Corporation, non-employee Board members or
independent consultants.

            F. LIMITED TRANSFERABILITY OF OPTIONS. An Incentive Share Option
shall be exercisable only by the Optionee during his or her lifetime and shall
not be assignable or transferable other than by will or by the laws of
inheritance following the Optionee's death. A Non-Statutory Option may be
assigned in whole or in part during the Optionee's lifetime to one or more
members of the Optionee's family or to a trust established exclusively for one
or more such family members or to Optionee's former spouse, to the extent such
assignment is in connection with the Optionee's estate plan or pursuant to a
domestic relations order. The assigned portion may only be exercised by the
person or persons who acquire a proprietary interest in the Non-Statutory Option
pursuant to the assignment. The terms applicable to the assigned portion shall
be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as
the Plan Administrator may deem appropriate. Notwithstanding the foregoing, the
Optionee may also designate one or more persons as the beneficiary or
beneficiaries of his or her outstanding options under the Plan, and those
options shall, in accordance with such designation, automatically be transferred
to such beneficiary or beneficiaries upon the Optionee's death while holding
those options. Such beneficiary or beneficiaries shall take the transferred
options subject to all the terms and conditions of the applicable agreement
evidencing each such transferred option, including (without limitation) the
limited time period during which the option may be exercised following the
Optionee's death.

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        II. INCENTIVE OPTIONS

            The terms specified below shall be applicable to all Incentive
Options. Except as modified by the provisions of this Section II, all the
provisions of Articles One, Two and Four shall be applicable to Incentive
Options. Options which are specifically designated as Non--Statutory Options
shall not be subject to the terms of this Section II.

            A. ELIGIBILITY. Incentive Options may only be granted to Employees.

            B. EXERCISE PRICE. The exercise price per share shall not be less
than one hundred percent (100%) of the Fair Market Value per Share on the option
grant date, provided always that in no event may the exercise price be less than
the par value of a Share.

            C. DOLLAR LIMITATION. The aggregate Fair Market Value of the Shares
(determined as of the respective date or dates of grant) for which one or more
options granted to any Employee under the Plan (or any other option plan of the
Corporation or any Parent or Subsidiary) may for the first time become
exercisable as Incentive Options during any one (1) calendar year shall not
exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the
Employee holds two (2) or more such options which become exercisable for the
first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.

            D. 10% SHAREHOLDER. If any Employee to whom an Incentive Option is
granted is a 10% Shareholder, then the option term shall not exceed five (5)
years measured from the option grant date.

        III. CORPORATE TRANSACTION

            A. The shares subject to each option outstanding under the Plan at
the time of a Corporate Transaction shall automatically vest in full so that
each such option shall, immediately prior to the effective date of the Corporate
Transaction, become exercisable for all of the Shares at the time subject to
that option and may be exercised for any or all of those shares as fully-vested
Shares. However, the shares subject to an outstanding option shall NOT vest on
such an accelerated basis if and to the extent: (i) such option is assumed by
the successor corporation (or parent thereof) in the Corporate Transaction or
(ii) such option is to be replaced with a cash incentive program of the
successor corporation which preserves the spread existing on the unvested option
shares at the time of the Corporate Transaction and provides for subsequent
payout in accordance with the same vesting schedule applicable to those unvested
option shares or (iii) the acceleration of such option is subject to other
limitations imposed by the Plan Administrator at the time of the option grant.

            B. Immediately following the consummation of the Corporate
Transaction, all outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof).

            C. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation

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of such Corporate Transaction, had the option been exercised immediately prior
to such Corporate Transaction. Appropriate adjustments shall also be made to (i)
the number and class of securities available for issuance under the Plan
following the consummation of such Corporate Transaction and (ii) the exercise
price payable per share under each outstanding option, provided the aggregate
exercise price payable for such securities shall remain the same. To the extent
the actual holders of the Corporation's outstanding Shares receive cash
consideration for their Shares in consummation of the Corporate Transaction, the
successor corporation may, in connection with the assumption of the outstanding
options under this Plan, substitute one or more shares of its own Shares with a
fair market value equivalent to the cash consideration paid per share in such
Corporate Transaction.

            D. The Plan Administrator shall have the discretion, exercisable
either at the time the option is granted or at any time while the option remains
outstanding, to structure one or more options so that those options shall
automatically accelerate and vest in full upon the occurrence of a Corporate
Transaction, whether or not those options are to be assumed in the Corporate
Transaction.

            E. The Plan Administrator shall also have full power and authority,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to structure such option so that the shares subject
to that option will automatically vest on an accelerated basis should the
Optionee's Service terminate by reason of an Involuntary Termination within a
designated period (not to exceed eighteen (18) months) following the effective
date of any Corporate Transaction in which the option is assumed. Any option so
accelerated shall remain exercisable for the fully-vested option shares until
the expiration or sooner termination of the option term.

            F. The portion of any Incentive Option accelerated in connection
with a Corporate Transaction shall remain exercisable as an Incentive Option
only to the extent the applicable One Hundred Thousand Dollar limitation is not
exceeded. To the extent such dollar limitation is exceeded, the accelerated
portion of such option shall be exercisable as a Non-Statutory Option under the
Federal tax laws.

            G. The grant of options under the Plan shall in no way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.

        IV. CANCELLATION AND REGRANT OF OPTIONS

            The Plan Administrator shall have the authority to effect, at any
time and from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Plan and to grant in
substitution therefor new options covering the same or different number of
Shares but with an exercise price per share based on the Fair Market Value per
Share on the new option grant date, provided always that, in no event may the
exercise price be less than the par value of a Share.

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                                  ARTICLE THREE

                                  MISCELLANEOUS

        I. EFFECTIVE DATE AND TERM OF PLAN

            A. The Plan shall become effective when adopted by the Board, but no
option granted under the Plan may be exercised, and no shares shall be issued
under the Plan, until the Plan is approved by the Corporation's shareholders. If
such shareholder approval is not obtained within twelve (12) months after the
date of the Board's adoption of the Plan, then all options previously granted
under the Plan shall terminate and cease to be outstanding, and no further
options shall be granted and no shares shall be issued under the Plan. Subject
to such limitation, the Plan Administrator may grant options and issue shares
under the Plan at any time after the effective date of the Plan and before the
date fixed herein for termination of the Plan.

            B. The Plan shall terminate upon the earliest of (i) the expiration
of the ten (10)-year period measured from the date the Plan is adopted by the
Board, (ii) the date on which all shares available for issuance under the Plan
shall have been issued as vested shares or (iii) the termination of all
outstanding options in connection with a Corporate Transaction. All options
outstanding at the time of a clause (i) termination event shall continue to have
full force and effect in accordance with the provisions of the documents
evidencing those options.

        II. AMENDMENT OF THE PLAN

            A. The Board shall have complete and exclusive power and authority
to amend or modify the Plan in any or all respects. However, no such amendment
or modification shall adversely affect the rights and obligations with respect
to options at the time outstanding under the Plan unless the Optionee consents
to such amendment or modification. In addition, certain amendments may require
shareholder approval pursuant to applicable laws and regulations.

            B. Options may be granted under the Option Grant Program which are
in each instance in excess of the number of shares then available for issuance
under the Plan, provided any excess shares actually issued under those programs
shall be held in escrow until there is obtained shareholder approval of an
amendment sufficiently increasing the number of Shares available for issuance
under the Plan. If such shareholder approval is not obtained within twelve (12)
months after the date the first such excess grants are made, then any
unexercised options granted on the basis of such excess shares shall terminate
and cease to be outstanding.

        III. USE OF PROCEEDS

            Any cash proceeds received by the Corporation from the allotment and
issuance of Shares under the Plan shall be used for general corporate purposes.

        IV. WITHHOLDING

            The Corporation's obligation to deliver Shares upon the exercise of
any options granted under the Plan or vesting of any shares issued under the
Plan shall be subject to the

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satisfaction of all applicable Federal, state and local income and employment
tax withholding requirements.

        V. REGULATORY APPROVALS

            The implementation of the Plan, the granting of any options under
the Plan and upon the exercise of any option shall be subject to the
Corporation's procurement of all approvals and permits required by regulatory
authorities having jurisdiction over the Plan, the options granted under it and
the Shares issued pursuant to it.

        VI. NO EMPLOYMENT OR SERVICE RIGHTS

            Nothing in the Plan shall confer upon the Optionee any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining such person) or of the Optionee, which rights
are hereby expressly reserved by each, to terminate such person's Service at any
time for any reason, with or without cause.

        VII. FINANCIAL REPORTS

            The Corporation shall deliver a balance sheet and an income
statement at least annually to each individual holding an outstanding option
under the Plan, unless such individual is a key Employee whose duties in
connection with the Corporation (or any Parent or Subsidiary) assure such
individual access to equivalent information.

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                                    APPENDIX

            The following definitions shall be in effect under the Plan:

            A. BOARD shall mean the Corporation's Board of Directors.

            B. CODE shall mean the Internal Revenue Code of 1986, as amended.

            C. COMMITTEE shall mean a committee of two (2) or more Board members
appointed by the Board to exercise one or more administrative functions under
the Plan.

            D. SHARES shall mean ordinary shares of S$0.01 each in the capital
of the Corporation.

            E. CORPORATE TRANSACTION shall mean either of the following
shareholder-approved transactions to which the Corporation is a party:

                   (i) a merger or consolidation in which securities possessing
        more than fifty percent (50%) of the total combined voting power of the
        Corporation's outstanding securities are transferred to a person or
        persons different from the persons holding those securities immediately
        prior to such transaction, or

                   (ii) the sale, transfer or other disposition of all or
        substantially all of the Corporation's assets in complete liquidation or
        dissolution of the Corporation.

            F. CORPORATION shall mean Wave Optics, Inc., a California
corporation, and any successor corporation to all or substantially all of the
assets or voting shares of Wave Optics, Inc. which shall by appropriate action
adopt the Plan.

            G. DISABILITY shall mean the inability of the Optionee to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment and shall be determined by the Plan Administrator
on the basis of such medical evidence as the Plan Administrator deems warranted
under the circumstances.

            H. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.

            I. EXERCISE DATE shall mean the date on which the Corporation shall
have received written notice of the option exercise.

            J. FAIR MARKET VALUE per Share on any relevant date shall be
determined in accordance with the following provisions:

                   (i) If the Shares is at the time traded on the Nasdaq
        National Market, then the Fair Market Value shall be the closing selling
        price per

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        Share on the date in question, as such price is reported by the National
        Association of Securities Dealers on the Nasdaq National Market and
        published in The Wall Street Journal. If there is no closing selling
        price for the Shares on the date in question, then the Fair Market Value
        shall be the closing selling price on the last preceding date for which
        such quotation exists.

                   (ii) If the Shares is at the time listed on any Share
        Exchange, then the Fair Market Value shall be the closing selling price
        per Share on the date in question on the Share Exchange determined by
        the Plan Administrator to be the primary market for the Shares, as such
        price is officially quoted in the composite tape of transactions on such
        exchange and published in The Wall Street Journal. If there is no
        closing selling price for the Shares on the date in question, then the
        Fair Market Value shall be the closing selling price on the last
        preceding date for which such quotation exists.

                   (iii) If the Shares is at the time neither listed on any
        Share Exchange nor traded on the Nasdaq National Market, then the Fair
        Market Value shall be determined by the Plan Administrator after taking
        into account such factors as the Plan Administrator shall deem
        appropriate.

            K. INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.

            L. INVOLUNTARY TERMINATION shall mean the termination of the Service
of any individual which occurs by reason of:

                   (i) such individual's involuntary dismissal or discharge by
        the Corporation for reasons other than Misconduct, or

                   (ii) such individual's voluntary resignation following (A) a
        change in his or her position with the Corporation which materially
        reduces his or her duties and responsibilities or the level of
        management to which he or she reports, (B) a reduction in his or her
        level of compensation (including base salary, fringe benefits and target
        bonus under any corporate-performance based bonus or incentive programs)
        by more than fifteen percent (15%) or (C) a relocation of such
        individual's place of employment by more than fifty (50) miles, provided
        and only if such change, reduction or relocation is effected without the
        individual's consent.

            M. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee, any unauthorized use or disclosure
by such person of confidential information or trade secrets of the Corporation
(or any Parent or Subsidiary), or any other intentional misconduct by such
person adversely affecting the business or affairs of the Corporation (or any
Parent or Subsidiary) in a material manner. The foregoing definition shall not
in any way preclude or restrict the right of the Corporation (or any Parent or
Subsidiary) to discharge or dismiss any Optionee, or other person in the Service
of the Corporation (or any

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Parent or Subsidiary) for any other acts or omissions, but such other acts or
omissions shall not be deemed, for purposes of the Plan, to constitute grounds
for termination for Misconduct.

            N. 1934 ACT shall mean the Securities Exchange Act of 1934, as
amended.

            O. NON-STATUTORY OPTION shall mean an option not intended to satisfy
the requirements of Code Section 422.

            P. OPTION GRANT PROGRAM shall mean the option grant program in
effect under the Plan.

            Q. OPTIONEE shall mean any person to whom an option is granted under
the Plan.

            R. PARENT shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, shares possessing more than fifty percent (50%) of the
total combined voting power of all classes of shares in one of the other
corporations in such chain.

            S. PLAN shall mean the Corporation's 2000 Share Option Plan, as set
forth in this document.

            T. PLAN ADMINISTRATOR shall mean either the Board or the Committee
acting in its capacity as administrator of the Plan.

            U. SERVICE shall mean the provision of services to the Corporation
(or any Parent or Subsidiary) by a person in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant.

            V. SHARE EXCHANGE shall mean either the American Stock Exchange or
the New York Stock Exchange.

            W. SUBSIDIARY shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, shares possessing more
than fifty percent (50%) of the total combined voting power of all classes of
shares in one of the other corporations in such chain.

            X. 10% SHAREHOLDER shall mean the owner of shares (as determined
under Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of shares of the Corporation (or any Parent
or Subsidiary).

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                                WAVE OPTICS, INC.

                         NOTICE OF GRANT OF SHARE OPTION

        Notice is hereby given of the following option grant (the "Option") to
purchase shares of Wave Optics, Inc. (the "Corporation"):

        Optionee:
                  --------------------------------------------------------------

        Grant Date:
                    ------------------------------------------------------------

        Vesting Commencement Date:
                                  ----------------------------------------------

        Exercise Price: $                            per Share
                         ---------------------------

        Number of Option Shares:                     Shares
                                ---------------------

        Expiration Date:
                        --------------------------------------------------------

        Type of Option:               Incentive Share Option
                        -------------
                                      Non-Statutory Share Option
                        -------------

        Date Exercisable:
                          ------------------------------------------------------

        Vesting Schedule:
                         -------------------------------------------------------

        Optionee understands and agrees that the Option is granted subject to
and in accordance with the terms of the Wave Optics, Inc. 2000 Share Option Plan
(the "Plan"). Optionee further agrees to be bound by the terms of the Plan and
the terms of the Option as set forth in the Share Option Agreement attached
hereto as Exhibit A.

        Optionee understands that any Option Shares purchased under the Option
will be subject to the terms set forth in the Share Purchase Agreement attached
hereto as Exhibit B. Optionee hereby acknowledges receipt of a copy of the Plan
in the form attached hereto as Exhibit C.

        At Will Employment. Nothing in this Notice or in the attached Share
Option Agreement or Plan shall confer upon Optionee any right to continue in
Service for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Corporation (or any Parent or Subsidiary
employing or retaining Optionee) or of Optionee, which rights are hereby
expressly reserved by each, to terminate Optionee's Service at any time for any
reason, with or without cause.

        Definitions. All capitalized terms in this Notice shall have the meaning
assigned to them in this Notice or in the attached Share Option Agreement.

DATED:                       ,
      ----------------------  ----------

                                WAVE OPTICS, INC.

                                By:
                                       -----------------------------------------
                                Title:
                                       -----------------------------------------

                                               OPTIONEE

                                Address:
                                       -----------------------------------------

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

ATTACHMENTS:
EXHIBIT A - SHARE OPTION AGREEMENT
EXHIBIT B - SHARE PURCHASE AGREEMENT
EXHIBIT C - 2000 SHARE OPTION PLAN

<PAGE>   14

                                    EXHIBIT A

                             SHARE OPTION AGREEMENT

<PAGE>   15

                                WAVE OPTICS, INC.

                             SHARE OPTION AGREEMENT

RECITALS

        A. The Board has adopted the Plan for the purpose of retaining the
services of selected Employees, non-employee members of the Board or the board
of directors of any Parent or Subsidiary and consultants and other independent
advisors in the service of the Corporation (or any Parent or Subsidiary).

        B. Optionee is to render valuable services to the Corporation (or a
Parent or Subsidiary), and this Agreement is executed pursuant to, and is
intended to carry out the purposes of, the Plan in connection with the
Corporation's grant of an option to Optionee.

        C. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.

            NOW, THEREFORE, in consideration of the sum of $1 paid by the option
holder to the Corporation (the receipt, adequacy and sufficiency of which the
Corporation hereby acknowledges), it is hereby agreed as follows:

            1. GRANT OF OPTION. The Corporation hereby grants to Optionee, as of
the Grant Date, an option to subscribe for up to the number of Option Shares
specified in the Grant Notice. The Option Shares shall be exercisable from time
to time during the option term specified in Paragraph 2 at the Exercise Price.

            2. OPTION TERM. This option shall have a term of (i) in respect of
employees of the Corporation, ten (10) years measured from the Grant Date, or
(ii) in respect of non-employees of the Corporation, five (5) years measured
from the Grant Date, and in both cases, shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5 or 6 or the Plan.

            3. LIMITED TRANSFERABILITY.

        (a) This option shall be neither transferable nor assignable by Optionee
other than by will or the laws of inheritance following Optionee's death and may
be exercised, during Optionee's lifetime, only by Optionee. However, Optionee
may designate one or more persons as the beneficiary or beneficiaries of this
option, and this option shall, in accordance with such designation,
automatically be transferred to such beneficiary or beneficiaries upon the
Optionee's death while holding this option. Such beneficiary or beneficiaries
shall take the transferred option subject to all the terms and conditions of
this Agreement, including (without limitation) the limited time period during
which this option may, pursuant to Paragraph 5, be exercised following
Optionee's death.

        (b) If this option is designated a Non-Statutory Option in the Grant
Notice, then this option may be assigned in whole or in part during Optionee's
lifetime to one or more members of Optionee's family or to a trust established
for the exclusive benefit of one or more such family members or to Optionee's
former spouse, to the extent such assignment is in connection with the
Optionee's estate plan or pursuant to a domestic relations order. The

<PAGE>   16

assigned portion shall be exercisable only by the person or persons who acquire
a proprietary interest in the option pursuant to such assignment. The terms
applicable to the assigned portion shall be the same as those in effect for this
option immediately prior to such assignment.

            4. DATES OF EXERCISE. This option shall become exercisable for the
Option Shares in one or more installments as specified in the Grant Notice. As
the option becomes exercisable for such installments, those installments shall
accumulate, and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.

            5. CESSATION OF SERVICE. The option term specified in Paragraph 2
shall terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:

        (a) Should Optionee cease to remain in Service for any reason (other
than death, Disability or Misconduct) while holding this option, then Optionee
shall have a period of three (3) months (commencing with the date of such
cessation of Service) during which to exercise this option, but in no event
shall this option be exercisable at any time after the Expiration Date.

        (b) Should Optionee die while holding this option, then the personal
representative of Optionee's estate or the person or persons to whom the option
is transferred pursuant to Optionee's will or the laws of inheritance shall have
the right to exercise this option. However, if Optionee has designated one or
more beneficiaries of this option, then those persons shall have the exclusive
right to exercise this option following Optionee's death. Any such right to
exercise this option shall lapse, and this option shall cease to be outstanding,
upon the earlier of (i) the expiration of the twelve (12)-month period measured
from the date of Optionee's death or (ii) the Expiration Date.

        (c) Should Optionee cease Service by reason of Disability while holding
this option, then Optionee shall have a period of twelve (12) months (commencing
with the date of such cessation of Service) during which to exercise this
option. In no event shall this option be exercisable at any time after the
Expiration Date.

        Note: Exercise of this option on a date later than three (3) months
        following cessation of Service due to Disability will result in loss of
        favorable Incentive Option treatment, unless such Disability constitutes
        Permanent Disability. In the event that Incentive Option treatment is
        not available, this option will be taxed as a Non-Statutory Option upon
        exercise.

        (d) During the limited period of post-Service exercisability, this
option may not be exercised in the aggregate for more than the number of Option
Shares in which Optionee is, at the time of Optionee's cessation of Service,
vested pursuant to the Vesting Schedule specified in the Grant Notice or the
special vesting acceleration provisions of Paragraph 6. Upon the expiration of
such limited exercise period or (if earlier) upon the Expiration Date, this
option shall terminate and cease to be outstanding for any vested Option

<PAGE>   17

Shares for which the option has not been exercised. To the extent Optionee is
not vested in one or more Option Shares at the time of Optionee's cessation of
Service, this option shall immediately terminate and cease to be outstanding
with respect to those shares.

        (e) Should Optionee's Service be terminated for Misconduct or should
Optionee otherwise engage in Misconduct while this option is outstanding, then
this option shall terminate immediately and cease to remain outstanding.

            6. ACCELERATED VESTING.

        (a) In the event of any Corporate Transaction, the Option Shares at the
time subject to this option but not otherwise vested shall automatically vest in
full so that this option shall, immediately prior to the effective date of the
Corporate Transaction, become exercisable for all of the Option Shares as
fully-vested shares and may be exercised for any or all of those Option Shares
as vested shares. However, the Option Shares shall NOT vest on such an
accelerated basis if and to the extent: (i) this option is assumed by the
successor corporation (or parent thereof) in the Corporate Transaction or (ii)
this option is to be replaced with a cash incentive program of the successor
corporation which preserves the spread existing on the unvested Option Shares at
the time of the Corporate Transaction (the excess of the Fair Market Value of
those Option Shares over the Exercise Price payable for such shares) and
provides for subsequent payout in accordance with the same Vesting Schedule
applicable to those unvested Option Shares as set forth in the Grant Notice.

        (b) Immediately following the Corporate Transaction, this option shall
terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof) in connection with the Corporate
Transaction.

        (c) If this option is assumed in connection with a Corporate
Transaction, then this option shall be appropriately adjusted, immediately after
such Corporate Transaction, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Exercise
Price, provided the aggregate Exercise Price shall remain the same. To the
extent the actual holders of the Corporation's outstanding Shares receive cash
consideration for their Shares in consummation of the Corporate Transaction, the
successor corporation may, in connection with the assumption of this option,
substitute one or more shares of its own Shares with a fair market value
equivalent to the cash consideration paid per Share in such Corporate
Transaction.

        (d) This Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.

            7. ADJUSTMENT IN OPTION SHARES. Should any change be made to the
Shares by reason of any share split, share dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Shares as a class without the Corporation's

<PAGE>   18

receipt of consideration, appropriate adjustments shall be made to (i) the total
number and/or class of securities subject to this option and (ii) the Exercise
Price in order to reflect such change and thereby preclude a dilution or
enlargement of benefits hereunder.

            8. SHAREHOLDER RIGHTS. The holder of this option shall not have any
shareholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become the registered
holder of the purchased shares in the Branch Register of Members of the
Corporation.

            9. MANNER OF EXERCISING OPTION.

        (a) In order to exercise this option with respect to all or any part of
the Option Shares for which this option is at the time exercisable, Optionee (or
any other person or persons exercising the option) must take the following
actions:

            (i) Execute and deliver to the Corporation a Purchase Agreement for
the Option Shares for which the option is exercised.

            (ii) Pay the aggregate Exercise Price for the purchased shares in
cash or check made payable to the Corporation. Should the Shares be registered
under Section 12 of the 1934 Act at the time the option is exercised, then the
Exercise Price may also be paid as follows: to the extent the option is
exercised for vested Option Shares, through a special sale and remittance
procedure pursuant to which Optionee (or any other person or persons exercising
the option) shall concurrently provide irrevocable instructions (a) to a
Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
Exercise Price payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be withheld by the
Corporation by reason of such exercise and (b) to the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm in order
to complete the sale. Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise, payment of the Exercise Price
must accompany the Purchase Agreement delivered to the Corporation in connection
with the option exercise.

            (iii) Furnish to the Corporation appropriate documentation that the
person or persons exercising the option (if other than Optionee) have the right
to exercise this option.

            (iv) Execute and deliver to the Corporation such written
representations as may be requested by the Corporation in order for it to comply
with the applicable requirements of Federal and state securities laws.

            (v) Make appropriate arrangements with the Corporation (or Parent or
Subsidiary employing or retaining Optionee) for the satisfaction of all Federal,
state and local income and employment tax withholding requirements applicable to
the option exercise.

<PAGE>   19

        (b) As soon as practical after the Exercise Date and in any event, not
more than 2 months from the Exercise Date, the Corporation shall issue to or on
behalf of Optionee (or any other person or persons exercising this option) a
certificate for the purchased Option Shares, with the appropriate legends
affixed thereto.

        (c) In no event may this option be exercised for any fractional shares.

            10. COMPLIANCE WITH LAWS AND REGULATIONS.

        (a) The exercise of this option and the issuance of the Option Shares
upon such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any share exchange (or the Nasdaq National Market, if
applicable) on which the Shares may be listed for trading at the time of such
exercise and issuance.

        (b) The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to
the lawful issuance and sale of any Shares pursuant to this option shall relieve
the Corporation of any liability with respect to the non-issuance or sale of the
Shares as to which such approval shall not have been obtained. The Corporation,
however, shall use its best efforts to obtain all such approvals.

            11. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided
in Paragraphs 3 and 6, the provisions of this Agreement shall inure to the
benefit of, and be binding upon, the Corporation and its successors and assigns
and Optionee, Optionee's assigns and the legal representatives, heirs and
legatees of Optionee's estate.

            12. NOTICES. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated below Optionee's signature line on the Grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.

            13. CONSTRUCTION. This Agreement and the option evidenced hereby are
made and granted pursuant to the Plan and are in all respects limited by and
subject to the terms of the Plan. All decisions of the Plan Administrator with
respect to any question or issue arising under the Plan or this Agreement shall
be conclusive and binding on all persons having an interest in this option.

            14. GOVERNING LAW. The interpretation, performance and enforcement
of this Agreement shall be governed by the laws of the State of California
without resort to that State's conflict-of-laws rules.

            15. SHAREHOLDER APPROVAL. If the Option Shares covered by this
Agreement exceed, as of the Grant Date, the number of Shares which may be issued
under the Plan as last approved by the shareholders, then this option shall be
void with respect to such excess shares,

<PAGE>   20

unless shareholder approval of an amendment sufficiently increasing the number
of Shares issuable under the Plan is obtained in accordance with the provisions
of the Plan.

            16. ADDITIONAL TERMS APPLICABLE TO AN INCENTIVE OPTION. In the event
this option is designated an Incentive Option in the Grant Notice, the following
terms and conditions shall also apply to the grant:

        (a) This option shall cease to qualify for favorable tax treatment as an
Incentive Option if (and to the extent) this option is exercised for one or more
Option Shares: (i) more than three (3) months after the date Optionee ceases to
be an Employee for any reason other than death or Permanent Disability or (ii)
more than twelve (12) months after the date Optionee ceases to be an Employee by
reason of Permanent Disability.

        (b) This option shall not become exercisable in the calendar year in
which granted if (and to the extent) the aggregate Fair Market Value (determined
at the Grant Date) of the Shares for which this option would otherwise first
become exercisable in such calendar year would, when added to the aggregate
value (determined as of the respective date or dates of grant) of the Shares and
any other securities for which one or more other Incentive Options granted to
Optionee prior to the Grant Date (whether under the Plan or any other option
plan of the Corporation or any Parent or Subsidiary) first become exercisable
during the same calendar year, exceed One Hundred Thousand Dollars ($100,000) in
the aggregate. To the extent the exercisability of this option is deferred by
reason of the foregoing limitation, the deferred portion shall become
exercisable in the first calendar year or years thereafter in which the One
Hundred Thousand Dollar ($100,000) limitation of this Paragraph 18(b) would not
be contravened, but such deferral shall in all events end immediately prior to
the effective date of a Corporate Transaction in which this option is not to be
assumed, whereupon the option shall become immediately exercisable as a
Non-Statutory Option for the deferred portion of the Option Shares.

        (c) Should Optionee hold, in addition to this option, one or more other
options to subscribe for Shares which become exercisable for the first time in
the same calendar year as this option, then the foregoing limitations on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.

<PAGE>   21

                                    APPENDIX

            The following definitions shall be in effect under the Agreement:

        A. AGREEMENT shall mean this Share Option Agreement.

        B. BOARD shall mean the Corporation's Board of Directors.

        C. CODE shall mean the Internal Revenue Code of 1986, as amended.

        D. SHARES shall mean ordinary shares of S$0.01 each in the capital of
the Corporation.

        E. CORPORATE TRANSACTION shall mean either of the following
shareholder-approved transactions to which the Corporation is a party:

            (i) a merger or consolidation in which securities possessing more
than fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons different from the
persons holding those securities immediately prior to such transaction, or

            (ii) the sale, transfer or other disposition of all or substantially
all of the Corporation's assets in complete liquidation or dissolution of the
Corporation.

        F. CORPORATION shall mean Wave Optics, Inc., a California corporation,
and any successor corporation to all or substantially all of the assets or
voting shares of Wave Optics, Inc. which shall be appropriate action assume this
option.

        G. DISABILITY shall mean the inability of Optionee to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment and shall be determined by the Plan Administrator on the basis
of such medical evidence as the Plan Administrator deems warranted under the
circumstances. Disability shall be deemed to constitute PERMANENT DISABILITY in
the event that such Disability is expected to result in death or has lasted or
can be expected to last for a continuous period of twelve (12) months or more.

        H. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.

        I. EXERCISE DATE shall mean the date on which the option shall have been
exercised in accordance with Paragraph 9 of the Agreement.

        J. EXERCISE PRICE shall mean the exercise price payable per Option Share
as specified in the Grant Notice.

        K. EXPIRATION DATE shall mean the date on which the option expires as
specified in the Grant Notice.

<PAGE>   22

        L. FAIR MARKET VALUE per Share on any relevant date shall be determined
in accordance with the following provisions:

                   (i) If the Share is at the time traded on the Nasdaq National
        Market, then the Fair Market Value shall be the closing selling price
        per share on the date in question, as the price is reported by the
        National Association of Securities Dealers on the Nasdaq National Market
        and published in The Wall Street Journal. If there is no closing selling
        price for the share on the date in question, then the Fair Market Value
        shall be the closing selling price on the last preceding date for which
        such quotation exists.

            (ii) If the Share is at the time listed on any Stock Exchange, then
the Fair Market Value shall be the closing selling price per shares on the date
in question on the Stock Exchange determined by the Plan Administrator to be the
primary market for the Shares, as such price is officially quoted in the
composite tape of transactions on such exchange and published in The Wall Street
Journal. If there is no closing selling price for the Shares on the date in
question, then the Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.

            (iii) If the Share is at the time neither listed on any Stock
Exchange nor traded on the Nasdaq National Market, then the Fair Market Value
shall be determined by the Plan Administrator after taking into account such
factors as the Plan Administrator shall deem appropriate.

        M. GRANT DATE shall mean the date of grant of the option as specified in
the Grant Notice.

        N. GRANT NOTICE shall mean the Notice of Grant of Share Option
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.

        O. INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.

        P. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by
Optionee of confidential information or trade secrets of the Corporation (or any
Parent or Subsidiary), or any other intentional misconduct by Optionee adversely
affecting the business or affairs of the Corporation (or any Parent or
Subsidiary) in a material manner. The foregoing definition shall not in any way
preclude or restrict the right of the Corporation (or any Parent or Subsidiary)
to discharge or dismiss any Optionee, Participant or other person in the Service
of the Corporation (or any Parent or Subsidiary) for any other acts or
omissions, but such other acts or omissions shall not be deemed, for purposes of
the Plan or this Agreement, to constitute grounds for termination for
Misconduct.

        Q. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.

<PAGE>   23

        R. NON-STATUTORY OPTION shall mean an option not intended to satisfy the
requirements of Code Section 422.

        S. OPTION SHARES shall mean the number of Shares subject to the option.

        T. OPTIONEE shall mean the person to whom the option is granted as
specified in the Grant Notice.

        U. PARENT shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, share possessing more than fifty percent (50%) of the
total combined voting power of all classes of shares in one of the other
corporations in such chain.

        V. PLAN shall mean the Corporation's 2000 Share Option Plan.

        W. PLAN ADMINISTRATOR shall mean either the Board or a committee of the
Board acting in its capacity as administrator of the Plan.

        X. PURCHASE AGREEMENT shall mean the share purchase agreement in
substantially the form of Exhibit B to the Grant Notice.

        Y. SERVICE shall mean the Optionee's performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a
non-employee member of the board of directors or an independent consultant.

        Z. STOCK EXCHANGE shall mean the American Stock Exchange or the New York
Stock Exchange.

        AA. SUBSIDIARY shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain owns,
at the time of the determination, share possessing more than fifty percent (50%)
of the total combined voting power of all classes of share in one of the other
corporations in such chain.

        BB. VESTING SCHEDULE shall mean the vesting schedule specified in the
Grant Notice pursuant to which the Optionee is to vest in the Option Shares in a
series of installments over his or her period of Service.

<PAGE>   24

                                    ADDENDUM
                                       TO
                             SHARE OPTION AGREEMENT

            The following provisions are hereby incorporated into, and are
hereby made a part of, that certain Share Option Agreement (the "Option
Agreement") by and between Wave Optics, Inc. (the "Corporation") and
________________________ ("Optionee") evidencing the share option (the "Option")
granted on this date to Optionee under the terms of the Corporation's 2000 Share
Option Plan, and such provisions shall be effective immediately. All capitalized
terms in this Addendum, to the extent not otherwise defined herein, shall have
the meanings assigned to them in the Option Agreement.

                        INVOLUNTARY TERMINATION FOLLOWING
                              CORPORATE TRANSACTION

            17. If the Option is to be assumed by the successor corporation (or
the parent thereof) in connection with a Corporate Transaction, then none of the
Option Shares shall, in accordance with Paragraph 6 of the Option Agreement,
vest on an accelerated basis upon the occurrence of that Corporate Transaction,
and Optionee shall accordingly continue, over his or her period of Service
following the Corporate Transaction, to vest in the Option Shares in one or more
installments in accordance with the provisions of the Option Agreement. However,
upon an Involuntary Termination of Optionee's Service within eighteen (18)
months following such Corporate Transaction, all the Option Shares at the time
subject to the Option shall automatically vest in full on an accelerated basis
so that the Option shall immediately become exercisable for all the Option
Shares as fully-vested shares and may be exercised for any or all of those
Option Shares as vested shares. The Option shall remain so exercisable until the
earlier of (i) the Expiration Date or (ii) the expiration of the one (1)-year
period measured from the date of the Involuntary Termination.

            18. For purposes of this Addendum, an INVOLUNTARY TERMINATION shall
mean the termination of Optionee's Service by reason of:

            (i) Optionee's involuntary dismissal or discharge by the Corporation
for reasons other than for Misconduct, or

            (ii) Optionee's voluntary resignation following (A) a change in
Optionee's position with the Corporation (or Parent or Subsidiary employing
Optionee) which materially reduces Optionee's duties and responsibilities or the
level of management to which he or she reports, (B) a reduction in Optionee's
level of compensation (including base salary, fringe benefits and target bonus
under any corporate-performance based incentive programs) by more than fifteen
percent (15%) or (C) a relocation of Optionee's place of employment by more than
fifty (50) miles, provided and only if such change, reduction or relocation is
effected by the Corporation without Optionee's consent.

            19. The provisions of Paragraph 1 of this Addendum shall govern the
period for which the Option is to remain exercisable following the Involuntary
Termination of

<PAGE>   25

Optionee's Service within eighteen (18) months after the Corporate Transaction
and shall supersede any provisions to the contrary in Paragraph 5 of the Option
Agreement. The provisions of this Addendum shall also supersede any provisions
to the contrary in Paragraph 18 of the Option Agreement concerning the deferred
exercisability of the Option.

            IN WITNESS WHEREOF, Wave Optics, Inc. has caused this Addendum to be
executed by its duly-authorized officer as of the Effective Date specified
below.

                                        WAVE OPTICS, INC.

                                        By:    _________________________________

                                        Title: _________________________________

EFFECTIVE DATE: ________________, _____EXHIBIT 4.2

           AMENDMENT, dated as of February 9, 2001 (the "Amendment"), to the
Stockholders Rights Agreement, dated as of April 23, 1998 (the "Rights
Agreement"), between Conectiv, a Delaware corporation (the "Company"), and
Conectiv Resource Partners, Inc., a Delaware corporation, as Rights Agent
(the "Rights Agent").

                                   RECITALS

           The Company and the Rights Agent have heretofore executed and
entered into the Rights Agreement;

           The Company, Potomac Electric Power Company, a corporation
organized under the laws of the District of Columbia and the Commonwealth of
Virginia ("Parent"), and New RC, Inc., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Holdco"), are entering into an Agreement
and Plan of Merger, dated as of February 9, 2001 (as amended or supplemented
from time to time, the "Merger Agreement"), pursuant to which a newly
incorporated subsidiary of Holdco shall be merged with and into the Company
and another newly incorporated subsidiary of Holdco shall be merged with and
into Parent;

           Pursuant to Section 27 of the Rights Agreement, the Company may in
its sole and absolute discretion, and the Rights Agent shall, if the Company
so directs, supplement and amend the Rights Agreement;

           The Board of Directors of the Company has determined that an
amendment to the Rights Agreement as set forth herein is necessary and
desirable in connection with the foregoing and the Company and the Rights
Agent desire to evidence such amendment in writing; and

           All acts and things necessary to make this Amendment a valid
agreement, enforceable according to its terms have been done and performed,
and the execution and delivery of this Amendment by the Company and the
Rights Agent have been in all respects duly authorized by the Company and the
Rights Agent.

           NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, the parties hereto agree as
follows:

           1.   Amendment of Section 1.   (a) The definition of "Acquiring
Person" in Section 1(a) of the Rights Agreement is amended by adding the
following sentence at the end thereof:

<PAGE>

           "Notwithstanding anything in this Agreement to the
           contrary, neither Potomac Electric Power Company
           ("Parent"), New RC, Inc. ("Holdco"), nor any of their
           Affiliates or Associates shall be deemed to be an
           Acquiring Person solely by virtue of (i) the approval,
           execution or delivery of the Merger Agreement, (ii) the
           consummation of the Merger in accordance with the
           provisions of the Merger Agreement or (iii) the
           consummation of any other transaction to be effected
           pursuant to the Merger Agreement in accordance with the
           provisions thereof."

           (b)  Section 1 of the Rights Agreement is supplemented by adding
the following definitions in the appropriate locations therein:

                "Agreement" shall mean this Stockholders Rights
           Agreement between Conectiv, a Delaware corporation, and
           Conectiv Resource Partners, Inc., a Delaware
           corporation, as Rights Agent, amended as of February 9,
           2001, and as may be amended thereafter from time to
           time.

                "Merger" shall mean Conectiv Merger as such term
           is defined in the Merger Agreement.

                "Merger Agreement" shall mean the Agreement and
           Plan of Merger, dated as of February 9, 2001, between
           the Company, Parent and Holdco, as it may be amended,
           supplemented or replaced from time to time.

           (c)  The definition of "Stock Acquisition Date" in Section 1(ff)
of the Rights Agreement is amended by adding the following sentence at the
end thereof:

           "Notwithstanding anything in this Agreement to the
           contrary, a Stock Acquisition Date shall not be deemed
           to have occurred solely as the result of (i) the
           approval, execution or delivery or public announcement
           of the approval, execution or delivery of the Merger
           Agreement, (ii) the consummation of the Merger in
           accordance with the provisions of the Merger Agreement
           or any public announcement relating thereto or (iii)
           the consummation of any other transaction to be
           effected pursuant to the Merger Agreement in accordance
           with the provisions thereof or any public announcement
           relating thereto."

                                     -2-

<PAGE>

           2.   Amendment of Section 3(a).  Section 3(a) of the Rights
Agreement is amended by adding the following proviso at the end of the first
sentence:

           "; provided that, notwithstanding anything in this
           Agreement to the contrary, a Distribution Date shall
           not be deemed to have occurred solely as the result of
           (i) the approval, execution or delivery of or public
           announcement of the approval, execution or delivery of
           the Merger Agreement, (ii) the consummation of the
           Merger in accordance with the provisions of the Merger
           Agreement or any public announcement relating thereto
           or (iii) the consummation of any other transaction to
           be effected pursuant to the Merger Agreement in
           accordance with the provisions thereof or any public
           announcement relating thereto."

           3.   Amendment of Section 7(a).  Clauses numbered (i), (ii) and
(iii) in Section 7(a) of the Rights Agreement are hereby deleted and replaced
in their entirety as follows:

           "(i) the Close of Business on April 20, 2008 (the "Final
Expiration Date"), (ii) immediately prior to the time at which the
consummation of the Merger occurs, (iii) the time at which the Rights are
redeemed as provided in Section 23 hereof (the "Redemption Date") or (iv) the
time at which the Rights are exchanged as provided in Section 24 hereof (the
earlier of (i), (ii), (iii) and (iv) being the "Expiration Date"),"

           4.   Amendment of Section 11(a)(ii).  Section 11(a)(ii) of the
Rights Agreement is amended by adding the following sentence at the end
thereof:

           "Notwithstanding anything in this Agreement to the
           contrary, none of (i) the execution, delivery or
           approval of the Merger Agreement, (ii) the consummation
           of the Merger in accordance with the provisions of the
           Merger Agreement or (iii) the consummation of any other
           transaction to be effected pursuant to the Merger
           Agreement in accordance with the provisions of the
           Merger Agreement shall cause the Rights to be adjusted
           or become exercisable in accordance with this Section
           11(a)(ii)."

           5.   Amendment of Section 13(a).  Section 13(a) of the Rights
Agreement is amended by adding the following sentence at the end thereof:

                                     -3-

<PAGE>

           "Notwithstanding anything in this Agreement to the
           contrary, none of (i) the execution, delivery or
           approval of the Merger Agreement, (ii) the consummation
           of the Merger in accordance with the provisions of the
           Merger Agreement or (iii) the consummation of any other
           transaction to be effected pursuant to the Merger
           Agreement in accordance with the provisions of the
           Merger Agreement shall be deemed an event of the type
           described in clauses (x), (y) or (z) of this Section
           13(a) and shall not cause the Rights to be adjusted or
           exercisable in accordance with the terms of this
           Agreement."

           6.   Amendment of Section 30.  Section 30 of the Rights Agreement
is amended by adding the following sentence at the end thereof:

           "Nothing in this Agreement shall be construed to give
           any holder of Rights or any other Person any legal or
           equitable rights, remedies or claims under this
           Agreement by virtue of the execution, delivery or
           approval of the Merger Agreement or by virtue of  the
           commencement or consummation of any of the transactions
           to be effected pursuant to the Merger Agreement in
           accordance with the provisions of the Merger
           Agreement."

           7.   Effectiveness.  This Amendment shall be deemed effective as
of the date first written above, as if executed on such date.  Except as
amended hereby, the Rights Agreement shall remain in full force and effect
and shall be otherwise unaffected hereby.

           8.   Miscellaneous.  This Amendment shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes
shall be governed by and construed in accordance with the laws of such state
applicable to contracts to be made and performed entirely within such state.
This Amendment may be executed in any number of counterparts, each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.  If
any provision, covenant or restriction of this Amendment is held by a court
of competent jurisdiction or other authority to be invalid, illegal or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Amendment shall remain in full force and effect and
shall in no way be effected, impaired or invalidated

                                     -4-

<PAGE>

           IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and attested, all as of the date and year first above
written.

Attest:                                         CONECTIV

By:   /s/ Peter F. Clark                        By:  /s/ Howard E. Cosgrove
      Name: Peter F. Clark                           Name: Howard E. Cosgrove
      Title: Secretary                               Title: Chairman and CEO

Attest:                                         CONECTIV RESOURCE
                                                PARTNERS, INC., As Rights Agent

By:   /s/ Peter F. Clark                        By:  /s/ John van Roden
      Name: Peter F. Clark                           Name: John van Roden
      Title: Secretary                               Title: Senior Vice
                                                     President and CFO

                                     -5-

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