Document:

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                                                                     EXHIBIT 4.1

                     TWEETER HOME ENTERTAINMENT GROUP, INC.

                1998 STOCK OPTION AND INCENTIVE PLAN, AS AMENDED

                                   SECTION 1.

                    GENERAL PURPOSE OF THE PLAN; DEFINITIONS

     The name of the plan is the Tweeter Home Entertainment Group, Inc. 1998
Stock Option and Incentive Plan (the "Plan"). The purpose of the Plan is to
encourage and enable the officers, employees, Independent Directors and other
key persons of Tweeter Home Entertainment Group, Inc. (the "Company") and the
Company's Subsidiaries, upon whose judgment, initiative and efforts the Company
largely depends for the successful conduct of its business, to acquire a
proprietary interest in the Company. It is anticipated that providing such
persons with a direct stake in the Company's welfare will assure a closer
identification of their interests with those of the Company, thereby stimulating
their efforts on the Company's behalf and strengthening their desire to remain
with the Company. The following terms shall be defined as set forth below:

     "Act" means the Securities Exchange Act of 1934, as amended from time to
time.

     "Administrator" is defined in Section 2(a).

     "Award" or "Awards," except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Restricted Stock Awards, Performance Share Awards, Performance Unit
Awards, Stock Appreciation Rights Awards, Dividend Equivalent Rights Awards and
Common Stock in Lieu of Cash Compensation Awards.

     "Board" means the Board of Directors of the Company as constituted from
time to time.

     "Change of Control" is defined in Section 17.

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

     "Committee" means the Committee of the Board referred to in Section 2.

     "Common Stock in Lieu of Cash Compensation Award" means Awards granted
pursuant to Section 11.

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     "Company" means Tweeter Home Entertainment Group, Inc., a Delaware
corporation, and any successor thereto.

     "Dividend Equivalent Rights Award" means Awards granted pursuant to
Section 8.

     "Effective Date" means the later to occur of (i) the date on which the Plan
is initially approved by stockholders as set forth in Section 19 or (ii) the IPO
Date.

     "Fair Market Value" on any given date means the last sale price at which
Stock is traded on such date or, if no Stock is traded on such date, the next
preceding date on which Stock was traded, as reported by Nasdaq or, if
applicable, the principal stock exchange or, if applicable, any other national
stock exchange on which the Stock is traded or admitted to trading.
Notwithstanding the foregoing, the Fair Market Value on the first day of the
Company's initial public offering of Stock shall be the initial public offering
price as set forth in the final prospectus for the Company's initial public
offering.

     "Incentive Stock Option" means any Stock Option that is intended to qualify
as and is designated in writing in the related Option Award agreement as
intending to constitute an "incentive stock option" as defined in Section 422 of
the Code.

     "Independent Director" means a member of the Board who is not also an
employee of the Company or any Subsidiary.

     "IPO" means an initial public offering of the common stock of the Company
pursuant to an effective registration statement.

     "IPO Date" means the date on which the Company closes its IPO.

     "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.

     "Performance Share Award" means Awards granted pursuant to Section 9.

     "Performance Unit Award" means Awards granted pursuant to Section 10.

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

     "Stock" means the Common Stock, no par value, of the Company, subject to
adjustments pursuant to Section 3.

     "Stock Appreciation Rights Award" means Awards granted pursuant to
Section 7.

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

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     "Subsidiary" means any corporation or other entity (other than the Company)
in any unbroken chain of corporations or other entities beginning with the
Company if each of the corporations or entities (other than the last corporation
or entity in the unbroken chain) owns stock or other interests possessing 50% or
more of the economic interest or the total combined voting power of all classes
of stock or other interests in one of the other corporations or entities in the
chain, and specifically includes without limitation NEA Delaware, Inc.

                                   SECTION 2.

            ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT
                       PARTICIPANTS AND DETERMINE AWARDS

     (a) COMMITTEE. The Plan shall be administered by either the Board or a
committee of not fewer than two (2) Independent Directors (in either case, the
"Administrator"). Each member of the Committee shall be a "non-employee
director" within the meaning of Rule 16b-3(b)(3)(i) promulgated under the Act,
or any successor definition under said rule. From and after the date the Company
becomes subject to Section 162(m) of the Code with respect to compensation
earned under this Plan, each member of the Committee shall also be an "outside
director" within the meaning of Section 162(m) of the Code and the regulations
promulgated thereunder.

     (b) POWERS OF ADMINISTRATOR. The Administrator shall have the power and
authority to grant Awards consistent with the terms of the Plan, including the
power and authority:

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

          (ii) to determine the time or times of grant, and the extent, if any,
of Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock
Awards, Performance Share Awards, Performance Unit Awards, Stock Appreciation
Rights Awards, Dividend Equivalent Rights Awards and Common Stock in Lieu of
Cash Compensation Awards or any combination of the foregoing, granted to any one
or more participants;

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

          (iv) to determine and modify from time to time the terms and
conditions, including restrictions, not inconsistent with the terms of the Plan,
of any Award, which terms and conditions may differ among individual Awards and
participants, and to approve the form of written instruments evidencing the
Awards;

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

          (vi) subject to the provisions of Section 5(a)(iii), to extend at any
time the post-termination period in which Stock Options may be exercised;

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

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

     All decisions and interpretations of the Administrator shall be made in the
Administrator's sole and absolute discretion and shall be final and binding on
all persons, including the Company and Plan participants.

     (c) DELEGATION OF AUTHORITY TO GRANT AWARDS. The Administrator may delegate
to the Chief Executive Officer and/or the President of the Company (provided
that such officer is a member of the Board of Directors) all or part of the
Administrator's authority and duties with respect to Awards, including the
granting thereof, to individuals who are not subject to the reporting and other
provisions of Section 16 of the Act or "covered employees" within the meaning of
Section 162(m) of the Code, PROVIDED, however, that the number of shares of
Stock underlying Awards made by the Chief Executive Officer shall not exceed, in
the aggregate, ten percent (10%) of the number of shares of Stock available for
issuance under the Plan.

                                   SECTION 3.

                  STOCK ISSUABLE UNDER THE PLAN; TERM OF PLAN;
                  RECAPITALIZATIONS; MERGERS; SUBSTITUTE AWARDS

     (a) STOCK ISSUABLE. The maximum number of shares of Stock reserved and
available for issuance under the Plan initially shall be 1,458,217 and as of May
31, 2001 shall be 3,681,084 shares of Stock. In addition, (a) the number of
shares of Stock reserved and available for issuance under the Plan will be
increased each year after 2001 by a number of shares of Stock not to exceed
300,000 shares, (b) as Awards consisting of Stock Options are exercised, the
shares of Stock underlying such previously outstanding portion of the Award
shall be added back to the Shares available for issuance under the

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Plan; however, this amount shall not exceed 100,000 shares of Stock in any given
year, and (c) if any portion of an Award is forfeited, cancelled, or reacquired
by the Company, satisfied without the issuance of Stock or otherwise terminated,
the shares of Stock underlying such portion of the Award shall be added back to
the shares of Stock available for issuance under the Plan. Subject to such
overall limitation, shares of Stock may be issued up to such maximum number
pursuant to any type or types of Award; PROVIDED, however, that an individual
recipient can receive Stock Options with respect to no more than 625,000 shares
of Stock during any one calendar year. The shares available for issuance under
the Plan may be authorized but unissued shares of Stock or shares of Stock
reacquired by the Company.(1)

     (b) TERM OF PLAN. No Awards shall be made after June 1, 2003.
Notwithstanding the foregoing, Stock Options granted hereunder may, except as
otherwise expressly provided herein, be exercisable for up to ten years after
the date of grant.

     (c) RECAPITALIZATIONS. Subject to the provisions of Section 17, if, through
or as a result of any merger, consolidation, sale of all or substantially all of
the assets of the Company, reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split or other similar transaction,
the outstanding shares of Stock are increased or decreased or are exchanged for
a different number or kind of shares or other securities of the Company, or
additional shares or new or different shares or other securities of the Company
or other non-cash assets are distributed with respect to such shares of Stock or
other securities, the Administrator may make an appropriate or proportionate
adjustment in (i) the maximum number of shares reserved for issuance under the
Plan, (ii) the number of Stock Options that can be granted to any one individual
participant, (iii) the number and kind of shares or other securities subject to
any then outstanding Awards under the Plan, and (iv) the price for each share
subject to any then outstanding Stock Options under the Plan, without changing
the aggregate exercise price (i.e., the exercise price multiplied by the total
number of Stock Options) as to which such Stock Options remain exercisable. The
adjustment by the Administrator shall be final, binding and conclusive. No
fractional shares of Stock shall be issued under the Plan resulting from any
such adjustment, but the Administrator in its discretion may make a cash payment
in lieu of fractional shares.

     (d) SUBSTITUTE AWARDS. The Administrator may grant Awards under the Plan in
substitution for stock and stock based awards held by employees of another
corporation who become employees of the Company or a Subsidiary as the result of
a merger or consolidation of the employing corporation with the Company or a
Subsidiary or the acquisition by the Company or a Subsidiary of property or
stock of the employing corporation. The Administrator may direct that the
substitute awards be granted on such terms and conditions as the Administrator
considers appropriate in the circumstances.

---------
(1) Section 3(a) was amended on July 30, 2001 to increase the number of shares
issuable under the plan.
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                                   SECTION 4.

                                   ELIGIBILITY

     Participants in the Plan will be such full or part-time officers and other
employees, Independent Directors and key persons of the Company and the
Company's Subsidiaries who are responsible for or contribute to the management,
growth or profitability of the Company and the Company's Subsidiaries as are
selected from time to time by the Administrator in its sole discretion.

                                   SECTION 5.

                                  STOCK OPTIONS

     Any Stock Option granted under the Plan shall be in such form as the
Administrator may from time to time approve. Stock Options granted under the
Plan may be either Incentive Stock Options or Non-Qualified Stock Options.
Incentive Stock Options may be granted only to employees of the Company or any
Subsidiary that is a "subsidiary corporation" within the meaning of Section
424(f) of the Code. To the extent that any Option does not qualify as an
Incentive Stock Option, it shall be deemed a Non-Qualified Stock Option.

     (a) STOCK OPTIONS GRANTED TO EMPLOYEES AND KEY PERSONS. The Administrator
in its discretion may grant Stock Options to eligible employees and key persons
of the Company or any Subsidiary. Stock Options granted pursuant to this Section
5(a) shall be subject to the following terms and conditions and shall contain
such additional terms and conditions, not inconsistent with the terms of the
Plan, as the Administrator shall deem desirable. If the Administrator so
determines, Stock Options may be granted in lieu of cash compensation at the
participant's election, subject to such terms and conditions as the
Administrator may establish, as well as in addition to other compensation.

          (i) EXERCISE PRICE. The exercise price per share for the Stock covered
by a Stock Option granted pursuant to this Section 5(a) shall be determined by
the Administrator at the time of grant but shall not be less than 100% of the
Fair Market Value on the date of grant. If an employee owns or is deemed to own
(by reason of the attribution rules of Section 424(d) of the Code) more than 10%
of the combined voting power of all classes of stock of the Company or any
parent or subsidiary corporation and an Incentive Stock Option is granted to
such employee, the option price of such Incentive Stock Option shall be not less
than 110% of the Fair Market Value on the grant date.

          (ii) OPTION TERM. The term of each Stock Option shall be fixed by the
Administrator, but no Incentive Stock Option shall be exercisable more than ten
years after the date the option is granted. If an employee owns or is deemed to
own (by reason of the attribution rules of Section 424(d) of the Code) more than
10% of the combined voting power of all classes of stock of the Company or any
parent or subsidiary corporation and an Incentive Stock Option is granted to
such employee, the term of such option shall be no more than five years from the
date of grant.

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          (iii) EXERCISABILITY; RIGHTS OF A STOCKHOLDER. Stock Options shall
become exercisable at such time or times, whether or not in installments, as
shall be determined by the Administrator at or after the grant date; PROVIDED,
however, that (A) Stock Options granted in lieu of compensation shall be
exercisable in full as of the grant date unless the Administrator otherwise
provides in the Award agreement, and (B) all Stock Options must be exercised
within three (3) years of the date they become exercisable or they shall
automatically expire, and PROVIDED FURTHER that (1) no holder of a Stock Option
may exercise any Stock Options during any period in which such person is in
breach of any noncompetition agreement or covenant such person has with the
Company, and (2) if any such holder fails to cure any such breach within thirty
(30) days of written notice thereof, all Stock Options held by such person shall
thereupon be forfeited. The Administrator may at any time accelerate the
exercisability of all or any portion of any Stock Option. An optionee shall have
the rights of a stockholder only as to shares acquired upon the exercise of a
Stock Option and not as to unexercised Stock Options.

          (iv) METHOD OF EXERCISE. Stock Options may be exercised in whole or in
part, by giving written notice of exercise to the Company, specifying the number
of shares to be purchased. Payment of the purchase price may be made by one or
more of the following methods to the extent provided in the Option Award
agreement:

               (A) In cash, by certified or bank check or other instrument
acceptable to the Administrator;

               (B) In the form of shares of Stock that are not then subject to
restrictions under any Company plan and that have been beneficially owned by the
optionee for at least six months, if permitted by the Administrator in its
discretion. Such surrendered shares shall be valued at Fair Market Value on the
exercise date;

               (C) By the optionee delivering to the Company a properly executed
exercise notice together with irrevocable instructions to a broker to promptly
deliver to the Company cash or a check payable and acceptable to the Company to
pay the purchase price; provided that in the event the optionee chooses to pay
the purchase price as so provided, the optionee and the broker shall comply with
such procedures and enter into such agreements of indemnity and other agreements
as the Administrator shall prescribe as a condition of such payment procedure;
or

               (D) By the optionee delivering to the Company a promissory note
if the Administrator has expressly authorized the loan of funds to the optionee
for the purpose of enabling or assisting the optionee to effect the exercise of
his Stock Option; PROVIDED that at least so much of the exercise price as
represents the par value of the Stock shall be paid other than with a promissory
note, and provided further that any such promissory note shall bear interest at
market rates. Payment instruments will be received subject to collection.

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

               (v) ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. To the extent
required for "incentive stock option" treatment under Section 422 of the Code,
the aggregate Fair Market Value (determined as of the time of grant) of the
shares of Stock with respect to which Incentive Stock Options granted under this
Plan and any other plan of the Company or its parent and subsidiary corporations
become exercisable for the first time by an optionee during any calendar year
shall not exceed $100,000. To the extent that any Stock Option exceeds this
limit, it shall constitute a Non-Qualified Stock Option.

     (c) NON-TRANSFERABILITY OF OPTIONS. Except as otherwise set forth in the
following sentence, no Stock Option shall be transferable by the optionee other
than by will or by the laws of descent and distribution and all Stock Options
shall be exercisable, during the optionee's lifetime, only by the optionee.
Notwithstanding the foregoing, an optionee may transfer, without consideration
for the transfer, his Non-Qualified Stock Options to members of his family, to
trusts for the benefit of such family members, or to partnerships in which such
family members are the only partners, PROVIDED that the transferee agrees in
writing with the Company to be bound by all of the terms and conditions of this
Plan and the applicable option agreement.

     (d) TERMINATION. Except as may otherwise be provided by the Administrator
either in the Award agreement, or subject to Section 15 below, in writing after
the Award agreement is issued, an optionee's rights in all Stock Options shall
automatically terminate sixty (60) days following optionee's termination of
employment (or cessation of business relationship) with the Company and its
Subsidiaries for any reason.

                                   SECTION 6.

                             RESTRICTED STOCK AWARDS

     (a) NATURE OF RESTRICTED STOCK AWARDS. A Restricted Stock Award is an Award
entitling the recipient to acquire, at par value or such other higher purchase
price determined by the Administrator, shares of Stock subject to such
restrictions and conditions as the Administrator may determine at the time of
grant ("Restricted Stock"). Conditions may be based on continuing employment (or
other business relationship) and/or achievement of pre-established performance
goals and objectives. The grant of a Restricted Stock Award is contingent on the
participant executing the Restricted Stock Award agreement. The terms and
conditions of each such agreement shall be determined by the Administrator, and
such terms and conditions may differ among individual Awards and participants.

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     (b) RIGHTS AS A STOCKHOLDER. Upon execution of the Restricted Stock Award
agreement and paying any applicable purchase price, a participant shall have the
rights of a stockholder with respect to the voting of the Restricted Stock,
subject to such terms and conditions as may be contained in the Restricted Stock
Award agreement. Unless the Administrator shall otherwise determine,
certificates evidencing the Restricted Stock shall remain in the possession of
the Company until such Restricted Stock is vested as provided in Section 6(d)
below, and the participant shall be required, as a condition of the grant, to
deliver to the Company a stock power endorsed in blank.

     (c) RESTRICTIONS. Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered or disposed of except as specifically provided
herein or in the Restricted Stock Award agreement. If a participant's employment
(or other business relationship) with the Company and its Subsidiaries
terminates for any reason, the Company shall have the right to repurchase
Restricted Stock that has not vested at the time of termination at its original
purchase price, from the participant or the participant's legal representative.

     (d) VESTING OF RESTRICTED STOCK. The Administrator at the time of grant
shall specify the date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which the non-
transferability of the Restricted Stock and the Company's right of repurchase or
forfeiture shall lapse, PROVIDED, however, that any Awards of Restricted Stock
that vest solely on the basis of continuing employment (or other business
relationship) shall be subject to a seven (7) year period of vesting, in equal
installments, SUBJECT, however, at the Administrator's discretion, to
accelerated vesting upon the achievement of specified performance goals.
Subsequent to such date or dates and/or the attainment of such pre-established
performance goals, objectives and other conditions, the shares on which all
restrictions have lapsed shall no longer be Restricted Stock and shall be deemed
"vested." Except as may otherwise be provided by the Administrator either in the
Award agreement or, subject to Section 15 below, in writing after the Award
agreement is issued, a participant's rights in any shares of Restricted Stock
that have not vested shall automatically terminate upon the participant's
termination of employment (or other business relationship) with the Company and
its Subsidiaries and such shares shall be subject to the Company's right of
repurchase as provided in Section 6(c) above.

     (e) WAIVER, DEFERRAL AND REINVESTMENT OF DIVIDENDS. The Restricted Stock
Award agreement may require or permit the immediate payment, waiver, deferral or
reinvestment (in the form of additional Restricted Stock) of dividends paid on
the Restricted Stock.

     (f) LIMIT ON RESTRICTED STOCK AWARDS. No more than 25% of the shares of
Stock reserved for issuance under the Plan may, in any Plan year, be used for
Restricted Stock Awards.

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                                   SECTION 7.

                         STOCK APPRECIATION RIGHT AWARDS

     (a) GRANTS OF STOCK APPRECIATION RIGHTS. A Stock Appreciation Right Award
is an Award entitling the recipient to receive, upon surrender to the Company
unexercised the Stock Option to which it relates, or any portion thereof, that
number of shares of Stock having an aggregate Fair Market Value equal to (A) the
excess of (i) the Fair Market Value of one (1) share of Common Stock as of the
date the Stock Appreciation Right Award is exercised over (ii) the option price
per share specified in such Stock Option, multiplied by (B) the number of shares
of Stock subject to the Stock Option, or portion thereof, which is surrendered.
Stock Appreciation Rights may be awarded by the Administrator in connection with
any Stock Option granted under the Plan, either at the time the Stock Option is
granted or thereafter at any time prior to the exercise, termination or
expiration of the Stock Option. The base price of a Stock Appreciation Right
shall be not less than the Fair Market Value of a share of Stock on the date of
grant. Stock Appreciation Rights shall be subject to such terms and conditions
not inconsistent with the other provisions of this Plan as the Administrator
shall determine.

     (b) LIMITATIONS ON EXERCISE. A Stock Appreciation Right shall be
exercisable only to the extent that the related Stock Option is exercisable and
shall be exercisable only for such period as the Administrator may determine
(which period may expire prior to the expiration date of the related Stock
Option). Upon the exercise of all or a portion of Stock Appreciation Right, the
related Stock Option shall be canceled with respect to an equal number of shares
of Stock. Shares of Stock subject to Stock Options or portions thereof,
surrendered upon exercise of a Stock Appreciation Right, shall be available for
subsequent awards under the Plan. A Stock Appreciation Right shall be
exercisable during such period as the Administrator shall determine. Cash shall
be delivered in lieu of any fractional shares.

     (c) SETTLEMENT OF STOCK APPRECIATION RIGHTS. As soon as is reasonably
practicable after the exercise of a Stock Appreciation Right, the Company shall
(i) issue, in the name of the participant, stock certificates representing the
total number of full shares of Stock to which the participant is entitled
pursuant to paragraph (c) hereof and cash in an amount equal to the Fair Market
Value, as of the date of exercise, of any resulting fractional shares, and (ii)
if the Administrator causes the Company to elect to settle all or part of its
obligations arising out of the exercise of the Stock Appreciation Right in cash
pursuant to paragraph (e) below, deliver to the participant an amount in cash
equal to the Fair Market Value, as of the date of exercise, of the shares of
Stock it would otherwise be obligated to deliver.

     (d) CASH SETTLEMENT. The Administrator, in its discretion, may cause the
Company to settle all or any part of its obligation arising out of the exercise
of a Stock Appreciation Right by the payment of cash in lieu of all or part of
the shares of Common Stock it would otherwise be obligated to deliver in an
amount equal to the Fair Market Value of such shares on the date of exercise.

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                                   SECTION 8.

                        DIVIDEND EQUIVALENT RIGHTS AWARDS

     (a) DIVIDEND EQUIVALENT RIGHTS. A Dividend Equivalent Right is an Award
entitling the recipient to receive credits based on cash dividends that would
have been paid on the shares of Stock specified in the Dividend Equivalent Right
(or other Award to which it relates) if such shares had been issued to and held
by the recipient. A Dividend Equivalent Right may be granted hereunder to any
participant as a component of another Award or as a freestanding Award. The
terms and conditions of Dividend Equivalent Rights shall be specified in the
grant. Dividend equivalents credited to the holder of a Dividend Equivalent
Right may be paid currently or may be deemed to be reinvested in additional
shares of Stock, which may thereafter accrue additional equivalents. Any such
reinvestment shall be at Fair Market Value on the date of reinvestment. Dividend
Equivalent Rights may be settled in cash or shares of Stock. A Dividend
Equivalent Right granted as a component of another Award may also contain terms
and condition different from such other Award.

     (b) TERMINATION. Except as may otherwise be provided by the Administrator
either in the Award agreement, or, subject to Section 15 below, in writing after
the Award agreement is issued, a participant's rights in all Dividend Equivalent
Rights shall automatically terminate upon the participant's termination of
employment (or cessation of business relationship) with the Company and its
Subsidiaries for any reason.

                                   SECTION 9.

                            PERFORMANCE SHARE AWARDS

     (a) NATURE OF PERFORMANCE SHARE AWARDS. A Performance Share Award is an
Award entitling the recipient to acquire shares of Stock upon the attainment of
specified long-term performance goals over a specified period of three to five
years. The Administrator may make Performance Share Awards independent of or in
connection with the granting of any other Award under the Plan. The
Administrator in its sole discretion shall determine whether and to whom
Performance Share Awards shall be made, the performance goals applicable under
each such Award, the periods during which performance is to be measured, and all
other limitations and conditions applicable to the awarded Performance Shares;
PROVIDED, however, that the Administrator may rely on the performance goals and
other standards applicable to other performance unit plans of the Company in
setting the standards for Performance Share Awards under the Plan.

     (b) RIGHTS AS A STOCKHOLDER. A participant receiving a Performance Share
Award shall have the rights of a stockholder only as to shares actually received
by the participant under the Plan and not with respect to shares subject to the
Award but not actually received by the participant. A participant shall be
entitled to receive a stock certificate evidencing the acquisition of shares of
Stock under a Performance Share

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Award only upon satisfaction of all conditions specified in the written
instrument evidencing the Performance Share Award (or in a performance plan
adopted by the Administrator).

     (c) TERMINATION. Except as may otherwise be provided by the Administrator
either in the Award agreement or, subject to Section 15 below, in writing after
the Award agreement is issued, a participant's rights in all Performance Share
Awards shall automatically terminate upon the participant's termination of
employment (or cessation of business relationship) with the Company and its
Subsidiaries for any reason.

     (d) ACCELERATION, WAIVER, ETC. At any time prior to the participant's
termination of employment (or other business relationship) by the Company and
its Subsidiaries, the Administrator may in its sole discretion accelerate, waive
or, subject to Section 15, amend any or all of the goals, restrictions or
conditions imposed under any Performance Share Award.

                                   SECTION 10.

                             PERFORMANCE UNIT AWARDS

     (a) NATURE OF PERFORMANCE UNIT AWARDS. A Performance Unit Award is an Award
of units with a specified dollar value, the payment of which shall be contingent
upon the recipient's attainment of specified long-term performance goals over a
specified period of three to five years. Payment of the Awards may be in the
form of cash compensation of shares of Stock. The Administrator may make
Performance Unit Awards independent of or in connection with the granting of any
other Award under the Plan. The Administrator in its sole discretion shall
determine whether and to whom Performance Unit Awards shall be made, the
performance goals applicable under each such Award, the periods during which
performance is to be measured, and all other limitations and conditions
applicable to the awarded Performance Units; PROVIDED, however, that the
Administrator may rely on the performance goals and other standards applicable
to other performance unit plans of the Company in setting the standards for
Performance Unit Awards under the Plan.

     (b) RIGHTS AS A STOCKHOLDER. A participant receiving a Performance Unit
Award payable in shares of Stock shall have the rights of a stockholder only as
to shares actually received by the participant under the Plan and not with
respect to shares subject to the Award but not actually received by the
participant. A participant shall be entitled to receive a stock certificate
evidencing the acquisition of shares of Stock under a Performance Unit Award
only upon satisfaction of all conditions specified in the written instrument
evidencing the Performance Unit Award (or in a performance plan adopted by the
Administrator).

     (c) TERMINATION. Except as may otherwise be provided by the Administrator
either in the Award agreement or, subject to Section 15 below, in writing after
the Award agreement is issued, a participant's rights in all Performance Unit
Awards shall

                                      -12-

<PAGE>   13

automatically terminate upon the participant's termination of employment (or
cessation of business relationship) with the Company and its Subsidiaries for
any reason.

     (d) ACCELERATION, WAIVER, ETC. At any time prior to the participant's
termination of employment (or other business relationship) by the Company and
its Subsidiaries, the Administrator may in its sole discretion accelerate, waive
or, subject to Section 15, amend any or all of the goals, restrictions or
conditions imposed under any Performance Unit Award.

                                   SECTION 11.

                COMMON STOCK IN LIEU OF CASH COMPENSATION AWARDS

     (a) GRANTS OF COMMON STOCK PAYABLE IN LIEU OF CASH. The Administrator may
grant shares of Stock available for issuance under the Plan to an eligible
participant in lieu of cash compensation earned by the participant under a
short- or long-term incentive plan of the Company (an "Other Incentive Plan),
PROVIDED, however, that the award made under the Other Incentive Plan allows for
satisfaction of such award by payment of Stock in lieu of cash compensation.
Additionally, shares of Stock may be granted if specified performance goals
established by the Administrator are met, provided that the performance goals so
established meet the requirements of Section 162(m) of the Code and that the
Administrator certifies that the performance goals have been met. In the event
of a grant of shares of Stock in lieu of cash compensation, such grant shall be
conditioned upon the participant's irrevocable election to waive receipt of all
or a portion of the cash compensation otherwise payable, which waiver shall
constitute payment in full by such participant for the shares of Stock granted
in lieu of such cash compensation. All shares of Stock granted under this
Section 11 shall be without restriction.

     (b) DATE OF GRANT. Stock granted in lieu of cash compensation shall be
granted to each participant on the date the waived cash compensation would
otherwise by paid, provided, however, that with respect to a participant who is
subject to Section 16 of the Act, if such grant date is not at least six months
and one day from the date of the election, the grant shall be delayed until the
date which is six months and one day from the date of the election (or the next
following business day, if such date is not a business day) to the extent
necessary to conform to the requirements for exempt purchases under Rule 16b-3
of the Act.

     (c) NUMBER OF SHARES. The number of shares of Stock granted in lieu of cash
compensation shall be determined by dividing the amount of the waived cash
compensation by the Fair Market Value of the Stock on the date the Stock is
granted. Such Stock shall be granted for the whole number of shares so
determined; the value of any fractional share shall be paid in cash.

                                      -13-

<PAGE>   14

                                   SECTION 12.

                     INDEPENDENT DIRECTOR STOCK OPTION PLAN

     Each person who is elected as an Independent Director after the IPO shall
be granted, on the date of his or her election, a Non-Qualified Stock Option to
acquire such number of shares of Stock as may be determined by the Administrator
with an exercise price per share for the Stock covered by such Stock Option
equal to the Fair Market Value on the date as of which the Stock Option is
granted. Such Stock Options shall become exercisable as may be determined by the
Administrator, provided that all Stock Options granted under this Section 12
shall expire if not exercised within three (3) years after they become
exercisable. Stock Options granted under this Section 12 may be exercised only
by written notice to the Company specifying the number of shares to be
purchased. Payment of the full purchase price of the shares to be purchased may
be made by one or more of the methods specified in Section 5(a)(iv). An optionee
shall have the rights of a stockholder only as to shares acquired upon the
exercise of a Stock Option and not as to unexercised Stock Options.

                                   SECTION 13.

                                 TAX WITHHOLDING

     (a) PAYMENT BY PARTICIPANT. Each participant shall, no later than the date
as of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income of the participant for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Administrator regarding payment of, any Federal, state, or
local taxes of any kind required by law to be withheld with respect to such
income. The Company and its Subsidiaries shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise
due to the participant. The Company's obligation to deliver stock certificates
to any participant is subject to and conditioned on tax obligations being
satisfied by the participant.

     (b) PAYMENT IN STOCK. Subject to approval by the Administrator, a
participant may elect to have such tax withholding obligation satisfied, in
whole or in part, by (i) authorizing the Company to withhold from shares of
Stock to be issued pursuant to any Award a number of shares with an aggregate
Fair Market Value (as of the date the withholding is effected) that would
satisfy the withholding amount due, or (ii) transferring to the Company shares
of Stock owned by the participant with an aggregate Fair Market Value (as of the
date the withholding is effected) that would satisfy the withholding amount due.

                                   SECTION 14.

                        TRANSFER, LEAVE OF ABSENCE, ETC.

     For purposes of the Plan, the following events shall not be deemed a
termination of employment:

                                      -14-

<PAGE>   15

     (a) a transfer to the employment of the Company from a Subsidiary or from
the Company to a Subsidiary, or from one Subsidiary to another; or

     (b) an approved leave of absence for military service or sickness, or for
any other purpose approved by the Company, if the employee's right to re-
employment is guaranteed either by a statute or by contract or under the written
policy pursuant to which the leave of absence was granted or if the
Administrator otherwise so provides in writing.

                                   SECTION 15.

                           AMENDMENTS AND TERMINATION

     The Board may, at any time, amend or discontinue the Plan, and the
Administrator may, at any time, amend or cancel any outstanding Award for the
purpose of satisfying changes in law or for any other lawful purpose, but no
such action shall adversely affect rights under any outstanding Award without
the holder's written consent. The Administrator may provide substitute Awards at
the same or reduced exercise or purchase price or with no exercise or purchase
price in a manner not inconsistent with the terms of the Plan, but such price,
if any, must satisfy the requirements which would apply to the substitute or
amended Award if it were then initially granted under this Plan, but no such
action shall adversely affect rights under any outstanding Award without the
holder's written consent. If and to the extent determined by the Administrator
to be required by (a) the Code to ensure that Incentive Stock Options granted
under the Plan are qualified under Section 422 of the Code or ensure that
compensation earned under Stock Options granted under the Plan qualifies as
performance-based compensation under Section 162(m) of the Code, if and to the
extent intended to so qualify, or (b) the rules of the Nasdaq Stock Market, Plan
amendments shall be subject to approval by the Company's stockholders entitled
to vote at a meeting of stockholders. Nothing in this Section 15 shall limit the
Board's authority to take any action permitted pursuant to Section 3(c) or 3(d).

                                   SECTION 16.

                                 STATUS OF PLAN

     Unless the Administrator shall otherwise expressly determine in writing,
with respect to the portion of any Award which has not been exercised and any
payments in cash, Stock or other consideration not received by a participant, a
participant shall have no rights greater than those of a general creditor of the
Company. In its sole discretion, the Administrator may authorize the creation of
trusts or other arrangements to meet the Company's obligations to deliver Stock
or make payments with respect to Awards hereunder, provided that the existence
of such trusts or other arrangements is consistent with the foregoing sentence.

                                      -15-

<PAGE>   16

                                   SECTION 17.

                     CHANGE OF CONTROL AND MERGER PROVISIONS

     (a) In contemplation of and subject to the consummation of a consolidation
or merger or sale of all or substantially all of the assets of the Company in
which outstanding shares of Stock are exchanged for securities, cash or other
property of an unrelated corporation or business entity or in the event of a
liquidation or dissolution of the Company or in the event of a corporate
reorganization of the Company (in each case, a "Transaction"), the Board, or the
board of directors of any corporation or other entity assuming the obligations
of the Company, may, in its discretion, take any one or more of the following
actions, as to outstanding Awards: (i) provide that such Awards shall be assumed
or equivalent awards shall be substituted, by the acquiring or succeeding
corporation or other entity (or an affiliate thereof), and/or (ii) upon written
notice to the participants, provide that all Awards will terminate immediately
prior to the consummation of the Transaction. In the event that, pursuant to
clause (ii) above, Awards will terminate immediately prior to the consummation
of the Transaction, all vested Awards, other than Options, shall be fully
settled in cash or in kind at such appropriate consideration as determined by
the Administrator in its sole discretion after taking into account any and all
consideration payable per share of Stock pursuant to the Transaction (the
"Transaction Price") and all Stock Options shall be fully settled, in cash or in
kind, in an amount equal to the difference between (A) the Transaction Price
times the number of shares of Stock subject to such outstanding Stock Options
(to the extent then exercisable at prices not in excess of the Transaction
Price) and (B) the aggregate exercise price of all such outstanding Stock
Options. In addition, the Board, or the board of directors of any corporation or
other entity assuming the obligations of the Company, may, in its discretion,
permit each participant, within a specified period determined by the Board prior
to the consummation of the Transaction, to exercise all outstanding Stock
Options, including those that are not then exercisable, subject to the
consummation of the Transaction.

     (b) Upon the occurrence of a Change of Control as defined in Section 17(c)
below, unless otherwise specified in the Award instrument, unless otherwise
determined by the Board in office immediately prior to such Change of Control or
specified in the Plan Award instrument, each Award outstanding shall be
accelerated, such that all Stock Options shall become fully exercisable and the
restricted period on all shares of Restricted Stock shall terminate immediately.

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

          (i) any "person," as such term is used in Sections 13(d) and 14(d) of
     the Act (other than the Company, any of its Subsidiaries, any "affiliate"
     or "associate" (as such terms are defined in Rule 12b-2 under the Act) of
     the foregoing persons, or any trustee, fiduciary or other person or entity
     holding securities under any employee benefit plan or trust of the Company
     or any of its

                                      -16-

<PAGE>   17

     Subsidiaries), together with all "affiliates" and "associates" (as such
     terms are defined in Rule 12b-2 under the Act) of such person, shall become
     the "beneficial owner" (as such term is defined in Rule 13d-3 under the
     Act), directly or indirectly, of securities of the Company representing 25%
     or more of the combined voting power of the Company's then outstanding
     securities having the right to vote in an election of the Company's Board
     of Directors ("Voting Securities") (other than as a result of an
     acquisition of securities directly from the Company); or

          (ii) persons who, as of the effective date of the Company's IPO,
     constitute the Board (the "Incumbent Directors") cease for any reason,
     including, without limitation, as a result of a tender offer, proxy
     contest, merger or similar transaction, to constitute at least a majority
     of the Board, PROVIDED that any person becoming a director of the Company
     subsequent to such date shall be considered an Incumbent Director if such
     person's election was approved by or such person was nominated for election
     by either (A) a vote of at least two-thirds of the Incumbent Directors or
     (B) a vote of at least a majority of the Incumbent Directors who are
     members of a nominating committee comprised, in the majority, of Incumbent
     Directors.

Notwithstanding the foregoing, a "Change of Control" shall not be deemed to have
occurred for purposes of the foregoing clause (i) solely as the result of an
acquisition of securities by the Company which, by reducing the number of shares
of Voting Securities outstanding, increases the proportionate number of shares
of Voting Securities beneficially owned by any person (as defined in the
foregoing clause (i)) to 25% or more of the combined voting power of all then
outstanding Voting Securities; PROVIDED, however, that if such person shall
thereafter become the beneficial owner of any additional shares of Voting
Securities (other than pursuant to a stock split, stock dividend, or similar
transaction or as a result of an acquisition of securities directly from the
Company), then a "Change of Control" shall be deemed to have occurred for
purposes of the foregoing clause (i).

                                   SECTION 18.

                               GENERAL PROVISIONS

          (a) NO DISTRIBUTION; COMPLIANCE WITH LEGAL REQUIREMENTS. The
Administrator may require each person acquiring Stock pursuant to an Award to
represent to and agree with the Company in writing that such person is acquiring
the shares without a view to distribution thereof. No shares of Stock shall be
issued pursuant to an Award until all applicable securities law and other legal
and stock exchange or similar requirements have been satisfied. The
Administrator may require the placing of such stop-orders and restrictive
legends on certificates for Stock and Awards as it deems appropriate.

                                      -17-

<PAGE>   18

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

     (c) OTHER COMPENSATION ARRANGEMENTS; NO EMPLOYMENT RIGHTS. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of this
Plan and the grant of Awards shall not confer upon any employee any right to
continued employment with the Company or any Subsidiary and shall not interfere
in any way with the right of the Company or any Subsidiary to terminate the
employment of any of its employees at any time.

     (d) TRADING POLICY RESTRICTIONS. Option exercises and other Awards under
the Plan shall be subject to such Company insider-trading-policy-related
restrictions, terms and conditions as may be established by the Administrator,
or in accordance with policies set by the Administrator, from time to time.

                                   SECTION 19.

                             EFFECTIVE DATE OF PLAN

     This Plan shall become effective upon the later to occur of (i) approval by
the holders of a majority of the votes cast at a meeting of stockholders at
which a quorum is present or by a unanimous written consent of stockholders, or
(ii) the IPO Date. Subject to such approval by the stockholders and to the
requirement that no Stock may be issued hereunder prior to such approval, Stock
Options and other Awards may be granted hereunder on and after adoption of this
Plan by the Board.

                                   SECTION 20.

                                  GOVERNING LAW

     This Plan and all Awards and actions taken thereunder shall be governed by,
and construed in accordance with, the laws of the State of Delaware, applied
without regard to conflict of law principles.

DATE APPROVED BY BOARD OF DIRECTORS:  June 1, 1998

DATE APPROVED BY STOCKHOLDERS:  June 1, 1998

DATE AMENDMENT APPROVED BY BOARD OF DIRECTORS:  May 31, 2001

DATE AMENDMENT APPROVED BY STOCKHOLDERS:  July 30, 2001*

* The effective date of the amendment is July 30, 2001.

                                      -18-<PAGE>   1
                                                                     EXHIBIT 4.1

                           NATIONAL DENTEX CORPORATION

                                 2001 STOCK PLAN

     1.   PURPOSE. The purpose of the National Dentex Corporation 2001 Stock
Plan (the "Plan") is to provide an incentive for employees of National Dentex
Corporation, (the "Company"), and of any present or future parent or subsidiary
of the Company (collectively, "Related Corporations") and other persons who may
render services to the Company or a Related Corporation, by offering
opportunities to participate in the ownership of the Company and its future
growth through (a) the grant of options which qualify as "incentive stock
options" ("ISOs") under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"); and (b) the grant of options which do not qualify as ISOs
("Non-Qualified Options"). Both ISOs and Non-Qualified Options are referred to
hereafter individually as an "Option" and collectively as "Options." As used
herein, (i) the terms "parent" and "subsidiary" mean "parent corporation" and
"subsidiary corporation," respectively, as those terms are defined in Section
424 of the Code, and (ii) the term "grantee" refers to the recipient of Options.

     2.   ADMINISTRATION OF THE PLAN.

          A.   BOARD OR COMMITTEE ADMINISTRATION. The Plan shall be administered
by the Board of Directors of the Company (the "Board") or by a committee of two
or more non-employee directors appointed by the Board (the "Committee").
Hereinafter, all references in this Plan to the "Committee" shall mean the Board
if no Committee has been appointed. Subject to the terms of the Plan, the
Committee shall have the authority to (i) determine to whom (from among the
class of employees eligible under paragraph 3 to receive ISOs) ISOs shall be
granted, and to whom (from among the class of individuals and entities eligible
under paragraph 3 to receive Non-Qualified Options) Non-Qualified Options, shall
be granted; (ii) determine the time or times at which Options shall be granted;
(iii) determine the purchase price of shares subject to each Option, which
prices shall not be less than the minimum price specified in paragraph 6; (iv)
determine whether each Option granted shall be an ISO or a Non-Qualified Option;
(v) determine (subject to paragraph 7) the time or times when each Option shall
become exercisable and the duration of the exercise period; (vi) extend the
period during which outstanding Options may be exercised; (vii) determine
whether restrictions such as repurchase options are to be imposed on shares
subject to Options and the nature of such restrictions, if any; (viii) determine
whether performance targets or goals are to be imposed on Options, and set and
interpret such targets or goals; and (ix) interpret the Plan and prescribe and
rescind rules and regulations relating to it. The interpretation and
construction by the Committee of any provisions of the Plan or any Options
granted under it shall be final unless otherwise determined by the Board. The
Committee may from time to time adopt such rules and regulations for carrying
out the Plan as it may deem advisable. Consistent with the terms of the Plan,
the Committee may waive, modify or suspend any restriction or performance target
or goal imposed by the Committee. No member of the Board or the Committee shall
be liable for any action or determination made in good faith with respect to the
Plan or any Options granted under it.

<PAGE>   2

          B.   GRANT OF OPTIONS TO BOARD MEMBERS. Subject to the restrictions on
ISOs imposed by the Code, Options may be granted to members of the Board,
including members of the Committee. All grants of Options to members of the
Board shall in all other respects be made in accordance with the provisions of
this Plan applicable to other eligible persons. Members of the Board who either
(i) are eligible to receive grants of Options pursuant to the Plan or (ii) have
been granted Options may vote or act by written consent on any matters affecting
the administration of the Plan.

     3.   ELIGIBLE EMPLOYEES AND OTHERS. ISOs may be granted only to employees
of the Company or any Related Corporation. Non-Qualified Options may be granted
to any employee, prospective employee, officer, director (whether or not also an
employee), advisor, consultant or other key person of or to the Company or any
Related Corporation. The Committee may take into consideration a recipient's
individual circumstances in determining whether to grant Options. The granting
of any Options to any individual or entity shall neither entitle that individual
or entity to, nor disqualify such individual or entity from, participation in
any other grant of Options or any other incentive plan or arrangement of the
Company.

     4.   STOCK. The stock subject to Options shall be authorized but unissued
common shares of the Company, par value $.01 per share (the "Common Stock"), or
shares of such Common Stock reacquired by the Company in any manner. The
aggregate number of shares of Common Stock which may be issued pursuant to the
Plan is 300,000, subject to adjustment as provided in paragraph 13. If any
Option granted under the Plan shall expire or terminate for any reason without
having been exercised in full or shall cease for any reason to be exercisable in
whole or in part or shall be repurchased by the Company, the unpurchased shares
of Common Stock subject to such Option shall again be available for grants of
Options under the Plan. The Maximum number of shares of Common Stock that may be
subject to Options granted under the Plan to any one individual during any
fiscal year of the Company shall be 100,000 shares.

     5.   GRANTING OF OPTIONS. Options may be granted under the Plan at any time
on or after the date of adoption hereof and prior to the tenth anniversary of
such date of adoption. The date of grant of Options under the Plan will be the
date specified by the Committee at the time it grants the Options.

     6.   MINIMUM OPTION PRICE; ISO LIMITATIONS.

          A.   PRICE FOR NON-QUALIFIED OPTIONS. The exercise price per share
specified in the agreement relating to each Non-Qualified Option granted under
the Plan shall in no event be less than the fair market value per share of
Common Stock on the date of grant, [except that Non-Qualified Options to
purchase up to 30,000 shares may be granted under the Plan at a lesser price,
but in no event less than the minimum legal consideration required therefor
under the laws of any jurisdiction in which the Company or its successors in
interest may be organized].

          B.   PRICE FOR ISOS. The exercise price per share specified in the
agreement relating to each ISO granted under the Plan shall not be less than the
fair market value per share of Common Stock on the date of such grant. In the
case of an ISO to be granted to an employee

                                       2
<PAGE>   3

owning stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or any Related Corporation, the
price per share specified in the agreement relating to such ISO shall not be
less than one hundred ten percent (110%) of the fair market value per share of
Common Stock on the date of grant. For purposes of determining stock ownership
under this paragraph, the rules of Section 424(d) of the Code shall apply.

          C.   $100,000 ANNUAL LIMITATION ON ISO VESTING. Each eligible employee
may be granted Options treated as ISOs only to the extent that, in the aggregate
under this Plan and all incentive stock option plans of the Company and any
Related Corporation, ISOs do not become exercisable from the first time by such
employee during any calendar year with respect to stock having a fair market
value (determined at the time the ISOs were granted) in excess of $100,000. The
Company intends to designate any Options granted in excess of such limitation as
Non-Qualified Options.

          D.   DETERMINATION OF FAIR MARKET VALUE. If, at the time an Option is
granted under the Plan, the Company's Common Stock is publicly traded, "fair
market value" shall be determined as of the date of grant or, if the prices or
quotes discussed in this sentence are unavailable for such date, the last
business day for which such prices or quotes are available prior to the date of
grant and shall mean (i) the average (on that date) of the high and low prices
of the Common Stock on the principal national securities exchange on which the
Common Stock is traded, if the Common Stock is then traded on a national
securities exchange; or (ii) the last reported sale price (on that date) of the
Common Stock on the NASDAQ National Market, if the Common Stock is not then
traded on a national securities exchange; or (iii) the closing bid (or average
of bid prices) last quoted (on that date) by an established quotation service
for over-the-counter securities, if the Common Stock is not reported on the
NASDAQ National Market, in each case determined as of the end of the "regular"
trading day. If the Common Stock is not publicly traded at the time an Option is
granted under the Plan, "fair market value" shall mean the fair value of the
Common Stock as determined by the Committee after taking into consideration all
factors which it deems appropriate, including, without limitation, recent sale
and offer prices of the Common Stock in private transactions negotiated at arm's
length.

     7.   OPTION DURATION. Subject to earlier termination as provided herein or
in the agreement relating to such Option, each Option shall expire on the date
specified by the Committee, but not more than (i) ten (10) years from the date
of grant in the case of Options generally and (ii) five (5) years from the date
of grant in the case of ISOs granted to an employee owning stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any Related Corporation, as determined under paragraph
6(B). Subject to earlier termination as provided herein, the term of each ISO
shall be the term set forth in the original instrument granting such ISO, except
with respect to any part of such ISO that is converted into a Non-Qualified
Option pursuant to paragraph 16.

     8.   EXERCISE OF OPTION. Subject to the provisions of paragraphs 9 through
13, each Option granted under the Plan shall be exercisable as follows:

                                       3
<PAGE>   4

          A.   VESTING. The Option shall either be fully exercisable on the date
of grant or shall become exercisable thereafter in such installments (which need
not be equal) as the Committee may specify.

          B.   FULL VESTING OF INSTALLMENTS. Once an installment becomes
exercisable it shall remain exercisable until expiration or termination of the
Option, unless otherwise specified by the Committee.

          C.   PARTIAL EXERCISE. Each Option or installment may be exercised at
any time or from time to time, in whole or in part, for up to the total number
of shares with respect to which it is then exercisable.

          D.   ACCELERATION OF VESTING. The Committee may in its discretion
provide in any agreement relating to any Options, or at any time thereafter, for
the acceleration of the date that any installment of any Options become
exercisable, including prior to or in connection with any Change of Control (as
defined herein); provided that, except as set forth in any agreement relating to
any Options, the Committee shall not, without the consent of an optionee,
accelerate the permitted exercise date of any installment of any Option granted
to any employee as an ISO (and not previously converted into a Non-Qualified
Option pursuant to paragraph 16) if such acceleration would violate the annual
vesting limitation contained in Section 422(d) of the Code, as described in
paragraph 6(C).

     As used in this Plan, "Change of Control" shall mean the occurrence of any
one of the following events:

          (i) there occurs a change of control of the Company of a nature that
     would be required to be reported in response to Item 1(a) of the Current
     Report on Form 8-K pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934 (the "Exchange Act") or in any other filing under the
     Exchange Act; or

          (ii) any Person (as defined in Section 13(d) of the Exchange Act)
     other than an employee benefit plan of the Company or of any Related
     Corporations becomes the owner of 33% or more of the Company's Common Stock
     and thereafter individuals who were not directors of the Company prior to
     the date such Person became a 33% owner are elected as directors pursuant
     to an arrangement or understanding with, or upon the request of or
     nomination by, such Person and constitute at least 1/3 of the Board; or

          (iii) there occurs any solicitation or series of solicitations of
     proxies by or on behalf of any Person other than the Board and thereafter
     individuals who were not directors of the Company prior to the commencement
     of such solicitation or series of solicitations are elected as directors
     pursuant to an arrangement or understanding with, or upon the request of or
     nomination by, such Person and constitute at lest 1/3 of the Board; or

          (iv) the Company executes an agreement of acquisition, merger or
     consolidation which contemplates that (i) after the effective date provided
     for in such agreement, all or

                                       4
<PAGE>   5

     substantially all of the business and/or assets of the Company shall be
     owned, leased or otherwise controlled by another Person and (ii)
     individuals who are directors of the Company when such agreement is
     executed shall not constitute at least two-thirds of the board of directors
     of the survivor or successor entity immediately after the effective date
     provided for in such agreement; PROVIDED, HOWEVER, that for purposes of
     this paragraph (iii), if such agreement requires as a condition precedent
     approval by the Company's shareholders of the agreement or transaction, a
     Change of Control shall not be deemed to have taken place unless and until
     such approval is secured.

     9.   TERMINATION OF EMPLOYMENT. Unless otherwise specified in the agreement
relating to such Option, if an optionee ceases to be employed by the Company and
all Related Corporations other than by reason of death or disability as defined
in paragraph 10, no further installments of his or her Options shall become
exercisable, and his or her Options shall terminate on the earlier of ninety
(90) days after the date of termination of his or her employment, or (b) their
specified expiration dates. For purposes of this paragraph 9, employment shall
be considered as continuing uninterrupted during any bona fide leave of absence
(such as those attributable to illness, maternity leave, military obligations or
governmental service) provided that the period of such leave does not exceed
ninety (90) days or, if longer, any period during which such optionee's right to
reemployment is guaranteed by statute. A bona fide leave of absence with the
written approval of the Committee shall not be considered an interruption of
employment under this paragraph 9, provided that such written approval
contractually obligates the Company or any Related Corporation to continue the
employment of the optionee after the approved period of absence. Options granted
under the Plan shall not be affected by any change of employment within or among
the Company and Related Corporations, so long as the optionee continues to be an
employee of the Company or any Related Corporation. Nothing in the Plan shall be
deemed to give any grantee of any Options the right to be retained in employment
or other service by the Company or any Related Corporation for any period of
time.

     10.  DEATH; DISABILITY.

          A.   DEATH. If an optionee ceases to be employed by the Company and
all Related Corporations by reason of his or her death, any Option held by such
optionee upon death may be exercised, to the extent otherwise exercisable on the
date of death, by the estate, personal representative or beneficiary who has
acquired the Option by will or by the laws of descent and distribution, until
the earlier of (i) the specified expiration date of the Option or (ii) one year
from the date of the optionee's death.

          B.   DISABILITY. If an optionee ceases to be employed by the Company
and all Related Corporations by reason of his or her disability, such optionee
shall have the right to exercise any Option held by him or her on the date of
termination of employment, for the number of shares for which he or she could
have exercised it on that date, until the earlier of (i) the specified
expiration date of the Option or (ii) ninety (90) days from the date of
termination of the optionee's employment; provided, however, that, if the
optionee dies within such ninety (90) day period (or such other period as the
Board shall specify at grant, any unexercised Option held by such optionee shall
thereafter be exercisable to the extent to which it was exercisable at the time
of death for a

                                       5
<PAGE>   6

period of twelve (12) months, from the date of such death or until the
expiration of the stated term of such Option, whichever period is the shorter.
In the event of termination of employment by reason of Disability, if an ISO is
exercisable after the expiration of the exercise periods that apply for purposes
of Section 422 of the Code, such Option will thereafter be treated as a
Non-Qualified Option. For the purposes of the Plan, the term "disability" shall
mean "permanent and total disability" as defined in Section 22(e)(3) of the Code
or any successor statute.

     11.  ASSIGNABILITY. Unless otherwise determined by the Committee or
specified in the agreement, Options shall not be assignable or transferable by
the grantee except by will or by the laws of descent and distribution. Except as
set forth in the previous sentence, during the lifetime of a grantee each Option
shall be exercisable only by such grantee.

     12.  TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced by
agreements or other instruments (which need not be identical) in such forms as
the Committee may from time to time approve. Such instruments shall conform to
the terms and conditions set forth in paragraphs 6 through 11 hereof, to the
extent applicable, and may contain such other provisions as the Committee deems
advisable which are not inconsistent with the Plan, including restrictions
applicable to shares of Common Stock issuable upon exercise of Options,
including but not limited to rights of first refusal and options to purchase.
The Committee may specify that any Options shall be subject to the restrictions
set forth herein with respect to ISOs, or to such other termination and
cancellation provisions as the Committee may determine. The Committee may from
time to time confer authority and responsibility on one or more of its own
members and/or one or more officers of the Company to execute and deliver such
instruments. The officers of the Company are authorized and empowered to take
any and all action necessary or advisable from time to time to carry out the
terms of such instruments.

     13.  ADJUSTMENTS. Upon the occurrence of any of the following events, the
shares of Common Stock subject to outstanding Options granted hereunder shall be
adjusted as hereinafter provided, unless otherwise specifically provided in the
written agreement between the grantee and the Company relating to such Options:

          A.   STOCK DIVIDENDS AND STOCK SPLITS. If the shares of the Company
shall be subdivided or combined into a greater or smaller number of shares or if
the Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock subject to
outstanding Options shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend.

          B.   RECAPITALIZATION, REORGANIZATION, CONSOLIDATION OR MERGERS. In
the event of a recapitalization or reorganization of the Company or a
consolidation or a merger involving the Company (other than a transaction
described in subparagraph C below) pursuant to which securities of the Company
or of another corporation are issued with respect to the outstanding shares of
Common Stock, a grantee upon exercising Options shall be entitled to receive for
the purchase price paid upon such exercise the securities he or she would have
received if he or she had exercised such Stock Right prior to such
recapitalization or reorganization.

                                       6
<PAGE>   7

          C.   CERTAIN CONSOLIDATIONS AND MERGERS. If the Company is to be
consolidated with or acquired by another entity in a merger or other
reorganization or in the event of a sale or other disposition of assets which
constitutes a Change of Control (each, a "Sale"), the Committee or the board of
directors of any entity assuming the obligations of the Company hereunder (the
"Successor Board"), shall, as to outstanding Options, either (i) make
appropriate provision for the continuation of such Options by substituting on an
equitable basis for the shares then subject to such Options either (a) the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Sale, (b) shares of stock of the surviving or successor
corporation or other entity or (c) such other securities as the Successor Board
deems appropriate, the fair market value of which shall not materially exceed
the fair market value of the shares of Common Stock subject to such Options
immediately preceding the Sale; or (ii) upon written notice to the grantees,
provide that all Options must be exercised, to the extent then exercisable or to
be exercisable as a result of the Sale, within a specified number of days of the
date of such notice, at the end of which period the Options shall terminate; or
(iii) terminate all Options in exchange for a cash payment equal to the excess
of the fair market value of the shares subject to such Options (to the extent
then exercisable or to be exercisable as a result of the Sale) over the exercise
price thereof.

          D.   MODIFICATION OF ISOs. Notwithstanding the foregoing, any
adjustments made pursuant to subparagraphs A, B or C with respect to ISOs shall
be made only after the Committee, after consulting with counsel for the Company,
determines whether such adjustments would constitute a "modification" of such
ISOs (as that term is defined in Section 424 of the Code) or would cause any
adverse tax consequences for the holders of such ISOs. If the Committee
determines that such adjustments made with respect to ISOs would constitute a
modification of such ISOs or would cause adverse tax consequences to the
holders, it may in its discretion refrain from making such adjustments.

          E.   DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, each outstanding Options will
terminate immediately prior to the consummation of such proposed action or at
such other time and subject to such other conditions as shall be determined by
the Committee.

          F.   OTHER ISSUANCES OF SECURITIES. Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares subject to outstanding Options. No adjustments shall be made for
dividends paid in cash or in property other than securities of the Company.

          G.   FRACTIONAL SHARES. No fractional shares shall be issued under the
Plan, and the grantee of Options shall receive from the Company cash in lieu of
any such fractional share.

          H.   ADJUSTMENTS. Upon the happening of any of the events described in
subparagraphs A, B or C above, the class and aggregate number of shares set
forth in paragraph 4 hereof that are subject to Options which previously have
been or subsequently may be granted

                                       7
<PAGE>   8

under the Plan shall also be appropriately adjusted to reflect the events
described in such subparagraphs. The Committee or the Successor Board shall
determine the specific adjustments to be made under this paragraph 13 and,
subject to paragraph 2, its determination shall be conclusive.

     14.  EXERCISE OF OPTIONS. An Option (or any part or installments thereof)
shall be exercised by giving written notice to the Company at its principal
office address. Such notice shall identify the Option being exercised and
specify the number of shares as to which such Option is being exercised. The
optionee shall make full payment of the exercise price of the Option shares
being purchased either (a) in United States dollars in cash or by check, (b) at
the discretion of the Committee, through delivery or withholding of shares of
Common Stock having a fair market value equal as of the date of the exercise to
the cash exercise price of the Option, (c) at the discretion of the Committee
and consistent with applicable law, through the delivery to the Company of a
portion of the proceeds from the sale of the Common Stock acquired upon exercise
of the Option equal to the cash exercise price of the Option, along with an
authorization to the broker or selling agent to pay that amount to the Company,
which sale shall be at the participant's discretion at the time of exercise, or
(d) at the discretion of the Committee, by any combination of (a), (b) and (c)
above. The holder of an Option shall not have the rights of a shareholder with
respect to the shares covered by such Option until the date of issuance of a
stock certificate to such holder for such shares. Except as expressly provided
above in paragraph 13 with respect to changes in capitalization and stock
dividends, no adjustment shall be made for dividends or similar rights for which
the record date is before the date such stock certificate is issued.

     15.  TERM AND AMENDMENT OF PLAN. The Plan was adopted by the Board as of
January 23, 2001. The Plan shall expire at the close of business on January 22,
2011 (except as to Options outstanding on that date). The Board may terminate or
amend the Plan in any respect at any time, except that no amendment of the Plan
by the Board shall be effective, without the approval of the stockholders
obtained within 12 months before or after the Board's action, (i) if such
amendment would cause ISOs already granted under the Plan to fail to qualify as
"incentive stock options" under the Code, or (ii) if such stockholder approval
is then required by applicable law, by Rule 16b-3 (or any successor rule) under
the Exchange Act, or by applicable regulations of any stock exchange or NASDAQ.
In no event may action of the Board or stockholders alter or impair the rights
of a grantee, without such grantee's consent, under any Options previously
granted to such grantee, except as provided herein. Notwithstanding the
foregoing, (a) no Option outstanding under the Plan shall be amended to reduce
the exercise price per share of such Option (other than adjustments for stock
splits and other matters as provided in Section 13 hereof), and (b) no Option (a
so-called "Replacement Option") may be granted under the Plan in exchange for
the cancellation of an outstanding Option having a higher exercise price per
share than the Replacement Option, if such cancellation occurs within a period
of six (6) months before or after the grant of the Replacement Option.

     16.  CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS. The Committee, at the
written request or with the written consent of any optionee, may in its
discretion take such actions as may be necessary to convert such optionee's ISOs
(or any installments or portions of installments thereof) that have not been
exercised on the date of conversion into Non-Qualified Options at any time prior
to the expiration of such ISOs, regardless of whether the optionee is an
employee of the

                                       8
<PAGE>   9

Company or a Related Corporation at the time of such conversion. Such actions
may include, but shall not be limited to, extending the exercise period or
reducing the exercise price of the appropriate installments of such ISOs. At the
time of such conversion, the Committee (with the consent of the optionee) may
impose such conditions on the exercise of the resulting Non-Qualified Options as
the Committee in its discretion may determine, provided that such conditions
shall not be inconsistent with this Plan. Nothing in this Plan shall be deemed
to give any optionee the right to have such optionee's ISOs converted into
Non-Qualified Options, and no such conversion shall occur until and unless the
Committee takes appropriate action.

     17.  APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of shares pursuant to Options granted under the Plan shall be used for
general corporate purposes.

     18.  NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. By accepting an ISO
granted under the Plan, each optionee agrees to notify the Company in writing
immediately after such optionee makes a "Disqualifying Disposition" (as
described in Sections 421, 422 and 424 of the Code and regulations thereunder)
of any stock acquired pursuant to the exercise of ISOs granted under the Plan. A
Disqualifying Disposition is generally any disposition occurring on or before
the latter of (a) the date two (2) years following the date the ISO was granted
or (b) the date one (1) year following the date the ISO was exercised.

     19.  WITHHOLDING OF INCOME TAXES. Upon the exercise of a Non-Qualified
Option or the making of a Disqualifying Disposition (as defined in paragraph
18), the vesting or transfer of restricted stock or securities acquired on the
exercise of an option hereunder, or the making of a distribution or other
payment with respect to such stock or securities, the Company may withhold taxes
in respect of amounts that constitute compensation includible in gross income.
The Committee in its discretion may condition the exercise of an Option on the
grantee's making satisfactory arrangement for such withholding. Such arrangement
may include payment by the grantee in cash or by check of the amount of the
withholding taxes or, at the discretion of the Committee, by the grantee's
delivery of previously held shares of Common Stock or the withholding, from the
shares of Common Stock otherwise deliverable upon exercise of a Options, of that
number of shares having an aggregate fair market value equal to the amount of
such withholding taxes.

     20.  GOVERNMENTAL REGULATION. The Company's obligation to sell and deliver
shares of Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such shares.

          Government regulations may impose reporting or other obligations on
the Company with respect to the Plan. For example, the Company may be required
to send tax information statements to employees and former employees that
exercise ISOs under the Plan, and the Company may be required to file tax
information returns reporting the income received by grantees of Options in
connection with the Plan.

                                       9
<PAGE>   10

     21.  GOVERNING LAW. The validity and construction of the Plan and the
instruments evidencing Options shall be governed by the laws of the Commonwealth
of Massachusetts or the laws of any jurisdiction in which the Company or its
successors in interest may be organized.

     Approved by the Board on January 23, 2001.

     Approved by the Stockholders on April 10, 2001.

     Amendments to Sections 6.A and 15 approved by the Board on April 10, 2001.

                                       10

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