Document:

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                                                                     EXHIBIT 4.2

                                iPHOTONICS, INC.
                           2000 NON-EMPLOYEE DIRECTOR
                              STOCK INCENTIVE PLAN

SECTION 1.     PURPOSE

        The purpose of the iPhotonics, Inc. 2000 Non-Employee Director Stock
Incentive Plan (the "Plan") is to attract and retain the services of qualified
persons who are not employees of iPhotonics, Inc. 2000 (the "Corporation") to
serve as members of the Board of Directors and to secure for the Corporation the
benefits of the incentives inherent in increased equity ownership by
Non-Employee Directors, by granting to such persons incentives in the form of
equity ownership or monetary payments based on the value of the equity of the
Corporation on the terms and conditions set forth herein.

SECTION 2.     DEFINITIONS

        As used in the Plan and unless the context clearly indicates otherwise,
the following terms shall have the respective meanings set forth below:

               (a) "Affiliate" shall mean any entity that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the Corporation.

               (b) "Award" shall mean any Option, Stock Appreciation Right,
Restricted Stock, or Restricted Stock Unit granted under the Plan.

               (c) "Award Agreement" shall mean any written agreement, contract
or other instrument or document evidencing any Award granted under the Plan.

               (d) "Board of Directors" shall mean the Board of Directors of the
Corporation.

               (e) "Commission" shall mean the United States Securities and
Exchange Commission or any successor agency.

               (f) "Committee" shall mean the Compensation Committee of the
Board of Directors. The Committee initially shall be composed of the Board of
Directors and, at such time as the Board of Directors shall have been expanded
the Committee shall be composed of two or more directors none of whose members
shall be Non-Employee Directors.

               (g) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.

               (h) "Fair Market Value" shall mean the average of the highest and
lowest selling prices of the Shares as reported on the NASDAQ National Market or
such national securities exchange as may be designated by the Committee or, in
the event that the Shares are not listed for trading on a national securities
exchange or the NASDAQ National Market, the average of the highest and lowest
quoted bid prices of the

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Shares as reported by the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") or, if not listed on NASDAQ, the fair market value
of the Shares as determined in good faith by the Board of Directors or the
Committee, in any such case as of the valuation date.

               (i) "Non-Employee Director" shall mean a member of the Board of
Directors who is not an employee of the Corporation or any of its subsidiaries
and who otherwise satisfies the requirements of Rule 16B-3 promulgated under the
Exchange Act.

               (j) "Option" shall mean an option to purchase Shares awarded to a
Non-Employee Director pursuant to the Plan.

               (k) "Person" shall mean any individual, corporation, partnership,
limited liability company, association, joint-stock company, trust,
unincorporated organization or government or political subdivision thereof.

               (l) "Released Securities" shall mean Restricted Stock with
respect to which all applicable restrictions have expired, lapsed or been
waived.

               (m) "Restricted Stock" shall mean any Shares granted and issued
under SECTION 7(b) of the Plan.

               (n) "Restricted Stock Unit" shall mean any Award granted under
SECTION 7(b) of the Plan that is denominated in Shares.

               (o) "Restriction Period" shall mean, with respect to Restricted
Stock or Restricted Stock Units, that period of time determined by the Committee
pursuant to SECTION 7(b) of the Plan.

               (p) "Retirement" shall mean a Non-Employee Director ceasing to be
a member of the Board of Directors as a result of retirement from the Board of
Directors in accordance with the retirement policy then applicable to members of
the Board of Directors.

               (q) "Shares" or "Common Stock" shall mean shares of the Class B
Common Stock of the Corporation and such other securities or property as may
become subject to Awards pursuant to an adjustment made under Section 8 of the
Plan.

SECTION 3.     EFFECTIVE DATE

               (a) EFFECTIVE DATE. The Plan shall be effective as of APRIL 14,
2000.

               (b) TERMINATION. No Award shall be granted under the Plan after
APRIL 1, 2010; provided, however, that any Award granted on or before APRIL 1,
2010 may extend beyond such date unless expressly provided otherwise herein or
in the applicable Award Agreement; provided further, to the extent set forth in
SECTION 8 hereof, the authority of the Committee to amend, alter, adjust,
suspend, discontinue or terminate any Award or to waive any conditions or
restrictions with respect to any Award, and the authority of the Board of
Directors to amend the Plan, shall extend beyond such date.

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SECTION 4.     ADMINISTRATION

               (a) The Plan shall be administered by the Committee. Subject to
the terms of the Plan and applicable law, the Committee shall have full power
and authority with respect to the Plan, including, without limitation, the power
to:

                   (i) select Non-Employee Directors;

                   (ii) determine the types of Awards to be granted to each
Non-Employee Director under the Plan;

                   (iii) determine the number of Shares to be covered by (or
with respect to which payments, rights or other matters are to be calculated in
connection with) Awards;

                   (iv) determine the terms and conditions of any Award;

                   (v) determine whether, to what extent, under what
circumstances and the method by which Awards may be settled or exercised in
cash, Shares, other securities, other Awards or other property, or canceled,
forfeited or suspended;

                   (vi) determine whether, to what extent and under what
circumstances cash, Shares, other securities, other Awards, other property and
other amounts payable with respect to an Award shall be deferred either
automatically or at the election of the holder thereof or of the Committee;

                   (vii) interpret and administer the Plan and any instrument or
agreement relating to, and any Award made under, the Plan (including, without
limitation, any Award Agreement);

                   (viii) establish, amend, suspend and waive such rules and
regulations and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and

                   (ix) make any other determination and take any other action
that the Committee deems necessary or desirable for the administration of the
Plan.

               Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations and other decisions under or with
respect to the Plan, or any Award, shall be within the sole discretion of the
Committee, may be made at any time and shall be final, conclusive and binding
upon all Persons, including the Corporation, any Affiliate, any Non-Employee
Director, any holder of any Award, any equity owner of the Corporation or any
Affiliate.

               (b) No member of the Committee shall be liable for any action or
determination made in good faith, and the members of the Committee shall be
entitled to indemnification and reimbursement in the manner provided in the
Corporation's Charter and Bylaws, as amended from time to time.

SECTION 5.     GRANTS OF AWARDS; SHARES AVAILABLE FOR AWARD

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               (a) The Committee may, from time to time, grant Awards to one or
more Non-Employee Directors, provided, however, that:

                   (i) subject to any adjustment pursuant to SECTION 8, the
aggregate number of Shares available with respect to which Awards may be granted
under the Plan shall be 750,000; provided, however, such number shall be reduced
by the number of Shares granted from time to time under the iPhotonics, Inc.
2000 Employee Stock Incentive Plan;

                   (ii) to the extent that any Shares covered by an Award
granted under the Plan, or to which any Award relates, are forfeited, or if an
Award otherwise terminates, expires or is canceled prior to the delivery of all
of the Shares or of other consideration issuable or payable pursuant to such
Award, then the number of Shares counted against the number of Shares available
under the Plan in connection with the grant of such Award, to the extent of any
such forfeiture, termination, expiration or cancellation, shall be available for
granting of Awards under the Plan;

                   (iii) Shares which have been issued, or any other shares of
the capital stock of the Corporation which a Non-Employee Director tenders to
the Corporation in satisfaction of the exercise price of any Award shall be
available for granting of Awards under the Plan;

                   (iv) notwithstanding anything herein to the contrary, the
Committee may limit the application of SECTIONS 5(ii) AND 5(iii) in any manner
that it considers necessary or appropriate to ensure that the Plan complies with
the requirements of Rule 16b-3 under the Exchange Act or any successor
provision; and

                   (v) notwithstanding anything herein to the contrary, any
Shares ceasing to be subject to an Award due to the exercise of an Award or
expiration of a Restriction Period shall no longer be available for granting of
Awards under the Plan.

               (b) For purpose of this SECTION 5:

                   (i) if an Award is denominated in Shares, the number of
Shares covered by such Award, or to which such Award relates, shall be counted
on the date of grant of such Award against the number of Shares available for
granting of Awards under the Plan; and

                   (ii) if an Award is not denominated in Shares, the number of
Shares shall be counted on the date of grant of such Award against the number of
Shares available for granting Awards under the Plan equal to the quotient of the
Fair Market Value (calculated as of the date of grant) of the maximum amount of
cash or other consideration payable pursuant to such Award, divided by the Fair
Market Value of one Share on the date of grant.

               (c) Any Shares delivered by the Corporation pursuant to an Award
may consist, in whole or in part, of authorized and unissued Shares or of
treasury Shares.

SECTION 6.     ELIGIBILITY. Awards pursuant to the Plan shall be granted only to
Non-Employee Directors.

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SECTION 7.     AWARDS

               (a) OPTIONS. The Committee is hereby authorized to grant Options
to Non-Employee Directors with such additional terms and conditions, in any case
not inconsistent with the provisions of the Plan, as the Committee shall
determine.

                   (i) EXERCISE PRICE. The exercise price per Share purchasable
under an Option shall be determined by the Committee.

                   (ii) OPTION TERM. The term of each Option shall be fixed by
the Committee.

                   (iii) EXERCISABILITY AND METHOD OF EXERCISE. Except for such
limitations as may be set forth herein, an Option shall become exercisable in
such manner and within such period or periods and in such installments as shall
be determined by the Committee and set forth in the Award Agreement evidencing
the Option. The Committee also shall determine the method or methods by which,
and the form or forms in which, payment of the exercise price with respect to
any Option may be made or deemed to have been made.

                   (iv) NON-QUALIFIED STATUS OF OPTIONS. Options awarded under
the Plan are not intended to qualify, and shall not be treated, as an "incentive
stock option" within the meaning of the Internal Revenue Code of 1986, as
amended.

               (b) RESTRICTED STOCK AND RESTRICTED STOCK UNITS.

                   (i) ISSUANCE. The Committee is hereby authorized to grant
Awards of Restricted Stock and Restricted Stock Units to Non-Employee Directors,
such Awards, including the total number of Shares to which they pertain, to be
evidenced by an Award Agreement.

                   (ii) RESTRICTIONS. Shares of Restricted Stock and Restricted
Stock Units shall be issued in the name of the Non-Employee Director without
payment of consideration, and shall be subject to such restrictions as the
Committee may impose (including, without limitation, a Restriction Period, any
limitation on the right to vote a Share of Restricted Stock or the right to
receive any dividend or other right or property), which restrictions may lapse
separately or in combination at such time or times, in such installments or
otherwise, as the Committee may deem appropriate. Different Restricted Stock or
Restricted Stock Unit Awards may, among other things, have different Restriction
Periods.

                   (iii) REGISTRATION. Any Restricted Stock granted under the
Plan may be evidenced in such manner as the Committee may deem appropriate,
including, without limitation, book-entry registration or issuance of a stock
certificate or certificates. In the event any stock certificate is issued to
evidence Shares of Restricted Stock granted under the Plan, such certificate
shall be registered in the name of the Participant and shall bear an appropriate
legend (as determined by the Committee) referring to the terms, conditions and
restrictions applicable to such Restricted Stock. Upon completion of the
applicable Restriction Period, the related restriction or restrictions upon the
Award shall expire and new certificates representing the Award shall be issued
without the applicable restrictive legend described herein. Such

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Shares shall be delivered in accordance with the terms and conditions of such
Participant's Award Agreement.

               (c) OTHER STOCK OR STOCK-BASED AWARDS. An Award other than as
described in (a) through (c) above may be granted pursuant to which Shares are,
or in the future may be acquired, or which is valued or determined in whole or
in part by reference to, or otherwise based upon, Shares.

               (d) TERMINATION OF SERVICE. The Agreement relating to an Award
will set forth provisions governing the disposition of an Award in the event of
the retirement, disability, death or other termination of a Non-Employee
Director's service as a Director of the Corporation.

               (e) ELECTION TO RECOGNIZE INCOME. If a Participant makes an
election in a timely manner pursuant to Section 83(b) of the Code to recognize
income for tax purposes when an Award is first made, the Participant shall
notify the Corporation within 10 days of the making of such election.

               (f) GENERAL.

                   (i) AWARD AGREEMENTS. Each Award granted under the Plan shall
be evidenced by an Award Agreement in such form as shall have been approved by
the Committee.

                   (ii) AWARDS MAY BE GRANTED SEPARATELY OR TOGETHER. Awards may
be granted either alone or in addition to, in tandem with, or in substitution
for any other Award or any award granted under any other plan of the Corporation
or any Affiliate. Awards granted in addition to or in tandem with other Awards,
or in addition to or in tandem with awards granted under any other plan of the
Corporation or any Affiliate, may be granted either at the same time as or at a
different time from the grant of such other Awards or awards.

                   (iii) FORMS OF PAYMENT UNDER AWARDS. Subject to the terms of
the Plan and of any applicable Award Agreement, payments or transfers to be made
by the Corporation or any Affiliate upon the grant, exercise or payment of an
Award may be made in such form or forms as the Committee shall determine,
including, without limitation, cash, Shares, other securities, other Awards or
other property, or any combination thereof, and may be made in a single payment
or transfer, in installments or on a deferred basis, in each case in accordance
with the rules and procedures established by the Committee. Such rules and
procedures may include, without limitation, provisions for the payment or
crediting of interest in installments or deferred payments.

                   (iv) LIMITS ON TRANSFER OF AWARDS. No Award (other than
Released Securities), except as otherwise provided by the Committee in its
discretion, and no right under any such Award, shall be assignable, alienable,
saleable or transferable by a Participant otherwise than by will or by the laws
of descent and distribution or pursuant to a qualified domestic relations order
as defined in the Code or Title I of ERISA (or, in the case of an Award of
Restricted Stock, to the Corporation); provided, however, that, if so determined
by the Committee, a Non-Employee Director may, in the manner established by the
Committee, designate a beneficiary to exercise the rights of the Non-Employee
Director, and to receive any property distributable with respect to any Award
upon the death of the Non-Employee Director. Each Award, and each right under
any Award, shall be exercisable, during the Non Employee Director's lifetime,
only by the

                                      -6-
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Non-Employee Director or, if permissible under applicable law, by the
Non-Employee Director's guardian or legal representative. No Award (other than
Released Securities), and no right under any such Award, may be pledged,
alienated, attached or otherwise encumbered, and any purported pledge,
alienation, attachment or encumbrance thereof shall be void and unenforceable
against the Corporation or any Affiliate.

                   (v) TERM OF AWARDS. Except as otherwise provided herein, the
term of each Award shall be for such period as may be determined by the
Committee.

                   (vi) SHARE CERTIFICATES AND REPRESENTATION BY NON-EMPLOYEE
Directors. All certificates for Shares or other securities delivered under the
Plan pursuant to any Award or the exercise thereof shall be subject to such stop
transfer orders and other restrictions as the Committee may deem advisable under
the Plan or the rules, regulations and other requirements of the Commission, any
stock exchange or other market upon which such Shares or other securities are
then listed or traded, and any applicable federal or state securities laws, and
the Committee may cause a legend or legends to be inscribed upon any such
certificate(s) to make appropriate reference to such restrictions. The Committee
may require each Non-Employee Director or other Person who acquires Shares or
other securities under the Plan to represent to the Corporation in writing that
such Non-Employee Director or other Person is acquiring the Shares or other
securities without a view to the distribution thereof.

SECTION 8.     AMENDMENT AND TERMINATION; ADJUSTMENTS; CORRECTIONS

               (a) AMENDMENTS TO THE PLAN. The Committee may, at any time or
from time to time, amend, alter, suspend, discontinue or terminate the Plan in
whole or in part; provided, however, that no amendment, alteration, suspension,
discontinuation or termination of the Plan shall in any manner (except as
otherwise provided in this SECTION 8) adversely affect the rights of any
Non-Employee Director under any Award granted and then outstanding under the
Plan, without the consent of the respective Non-Employee Director; provided
further, however, that any amendment which under the requirements of applicable
law or stock exchange or NASDAQ rule or policy must be approved by the
stockholders of the Corporation shall not be effective unless and until such
stockholder approval has been obtained in compliance with such law. No
termination or amendment of the Plan may, without the consent of the
Non-Employee Director to whom an Award has been granted, adversely affect the
rights of such Non-Employee Director under such Award.

               (b) CERTAIN ADJUSTMENTS OF AWARDS.

                   (i) In the event the Corporation or any Affiliate shall
assume outstanding employee awards or the right or obligation to make future
such awards in connection with the acquisition of another business or business
entity, the Committee may make such adjustments in the terms of Awards, not
inconsistent with the terms of the Plan, as it shall deem appropriate in order
to achieve reasonable comparability or other equitable relationship between the
assumed awards and the Awards granted under the Plan, as so adjusted.

                   (ii) In the event that the Committee shall determine that any
dividend or other distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of Shares or other securities of the Corporation,
issuance of warrants or other rights to purchase

                                      -7-
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Shares or other securities of the Corporation, or other similar corporate
transaction, change in applicable laws, regulations or financial accounting
principles or other event affects the Shares, such that an adjustment is
determined by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan, then the Committee may, in such manner as it may deem equitable,
adjust any or all of: (A) the number and type of Shares (or other securities or
property) which thereafter may be made the subject of Awards under the Plan; (B)
the number and type of Shares (or other securities or property) subject to
outstanding Awards; and (C) the grant, purchase or exercise price with respect
to any Award, or, if deemed appropriate, make provision for a cash payment to
the holder of an outstanding Award provided however, that the number of Shares
subject to any Award denominated in Shares shall always be a whole number. The
foregoing adjustments shall be determined by the Committee in its sole
discretion.

               (c) CORRECTION OF DEFECTS, OMISSIONS AND INCONSISTENCIES. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in any Award or Award Agreement in the manner and to the extent it
shall deem desirable to carry the Plan into effect.

SECTION 9.     GENERAL PROVISIONS

               (a) NO RIGHTS TO AWARDS. No Non-Employee Director or other Person
shall have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Non-Employee Directors or holders or
beneficiaries of Awards under the Plan. The terms and conditions of Awards need
not be the same with respect to each Non Employee Director.

               (b) TAX WITHHOLDING. The Corporation shall have the right, prior
to the delivery of any certificates evidencing shares of Common Stock as Awards
or to be issued upon full or partial exercise of an Option, to require a
Non-Employee Director to remit to the Corporation any amount sufficient to
satisfy any Federal, state or local tax withholding requirements. The
Corporation may permit the Non-Employee Director to satisfy, in whole or in
part, such obligation to remit taxes, by directing the Corporation to withhold
shares of Common Stock that would otherwise be received by the Non-Employee
Director, pursuant to such rules as the Committee may establish from time to
time. The Corporation shall also have the right to deduct from all cash payments
made pursuant to or in connection with the Option, any Federal, state or local
taxes required to be withheld with respect to such payments.

               (c) ACCELERATION. Except as otherwise provided hereunder, the
Committee may, in its discretion, accelerate the time at which an outstanding
Award granted hereunder may be exercised. With respect to Restricted Stock, in
the event of a public tender offer for all or any portion of the Shares of the
Corporation, or in the event that any proposal to merge or consolidate the
Corporation with another entity is submitted to the stockholders of the
Corporation for a vote, the Committee, in its sole discretion, may shorten or
eliminate the Restriction Period consistent with the best interests of the
Corporation.

               (d) NO RIGHT TO REELECTION. Nothing in the Plan shall be deemed
to create any obligation on the part of the Board of Directors to nominate any
of its members for reelection by the Corporation's stockholders, nor confer upon
any Non-Employee Director the right to remain a member of the Board of Directors
for any period of time, or at any particular rate of compensation.

                                      -8-
<PAGE>

               (e) UNFUNDED STATUS OF THE PLAN. Unless otherwise determined by
the Committee, the Plan shall be unfunded and shall not create (or be construed
to create) a trust or a separate fund or funds. The Plan shall not establish any
fiduciary relationship between the Corporation and any Non-Employee Director or
other Person. To the extent any Person holds any right by virtue of the grant of
an Award under the Plan, such right (unless otherwise determined by the
Committee) shall be no greater than the right of an unsecured general creditor
of the Corporation.

               (f) GOVERNMENT AND OTHER REGULATIONS. The obligation of the
Corporation to make payment of Awards in Shares or otherwise shall be subject to
all applicable laws, rules and regulations, and to such approvals by any
government agencies as may be required. If Shares awarded hereunder may in
certain circumstances be exempt from registration under the Securities Act of
1933, as amended, the Corporation may restrict its transfer in such manner as it
deems advisable to ensure such exempt status.

               (g) NO RESTRICTION ON RIGHT OF CORPORATION TO EFFECT CORPORATE
CHANGES. The Plan shall not affect in any way the right or power of the
Corporation or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Corporation's capital
structure or its business, or any merger or consolidation of the Corporation, or
any issue of stock or options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Shares or the rights thereof or which are convertible into or
exchangeable for the Shares, or dissolution or liquidation of the Corporation,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.

               (h) GOVERNING LAW. The validity, construction and effect of the
Plan, and any rules and regulations relating to the Plan, shall be determined in
accordance with the laws of the State of Maryland, exclusive of its conflicts of
law provisions, and applicable Federal law.

               (i) SEVERABILITY. If any provision of the Plan, any Award
Agreement or any Award is or becomes or is deemed to be invalid, illegal or
unenforceable in any jurisdiction, or as to any Person or Award, or would
disqualify the Plan, any Award Agreement or any Award under any law deemed
applicable by the Committee, such provision shall be construed or deemed amended
to conform to applicable laws, or, if it cannot be so construed or deemed
amended without, in the determination of the Committee, materially altering the
intent of the Plan, the Award Agreement or the Award, such provision shall be
stricken as to such jurisdiction, Person or Award, and the remainder of the
Plan, such Award Agreement and such Award shall remain in full force and effect.

               (j) NO FRACTIONAL SHARES. No fractional Shares shall be issued or
delivered pursuant to the Plan, any Award Agreement or any Award, and the
Committee shall determine whether cash, other securities or other property shall
be paid or transferred in lieu of any fractional Shares, or whether such
fractional Shares or any rights thereto shall be canceled, terminated or
otherwise eliminated.

               (k) HEADINGS. Headings are given to the sections and subsections
of the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.

                                      -9-

<PAGE>

                                    AMENDMENT
                                       TO
        iPHOTONICS, INC. 2000 NON-EMPLOYEE DIRECTOR STOCK INCENTIVE PLAN

        THIS AMENDMENT TO IPHOTONICS, INC. 2000 NON-EMPLOYEE DIRECTOR STOCK
INCENTIVE PLAN (this "Amendment") is made as of the 17th day of November, 2000,
by the Board of Directors (the "Board") of iPHOTONICS, INC. (the "Corporation").

        WHEREAS, the Corporation adopted the iPhotonics 2000 Non-Employee
Director Stock Incentive Plan on April 14, 2000 (collectively, the "Plan;" all
capitalized terms not otherwise defined in this Amendment shall have the
meanings assigned to them in the Plan); and

        WHEREAS, on November 17, 2000, the Board approved a 3 for 1 stock
dividend with respect to the Corporation's Common Stock (the "Stock Dividend");
and

        WHEREAS, the Plan gives the Board (which is serving as the "Committee"
under the Plan) the authority to amend the Plan in the event of a dividend in
accordance with Section 8(b)(ii) thereof; and

        WHEREAS, in accordance with its authority under the Plan, the Board has
adjusted the stock options already outstanding to Participants to reflect the
effect of the Stock Dividend, and similarly desires to increase the number of
shares of the Corporation's Common Stock subject to Awards under the Plan;

        NOW, THEREFORE, in consideration of the foregoing, the Plan is amended
as follows:

        1. AMENDMENT TO THE PLAN. The Plan is amended as follows:

        By deleting Section 5(a)(i) and substituting the following in lieu
thereof:

                   "(i) subject to any adjustment pursuant to SECTION 8, the
        aggregate number of Shares available with respect to which Awards may be
        granted under the Plan shall be 3,000,000; provided, however, such
        number shall be reduced by the number of Shares subject to Awards
        granted from time to time under the iPhotonics, Inc. 2000 Employee Stock
        Incentive Plan;"

        2. EFFECT OF AMENDMENT. This Amendment is intended to modify the
provisions of the Plan. In the event that there is a conflict between the terms
of the Amendment and the Plan, the parties intend that the provisions of this
Amendment should govern their respective rights and obligations. Except as
hereby amended, all other terms and conditions of the Plan remain unchanged and
in full force and effect.

                         [SIGNATURES ON FOLLOWING PAGE]

<PAGE>

        THE MEMBERS OF THE BOARD OF DIRECTORS have approved this Amendment as of
the day and year first above written.

                                        ---------------------------------
                                        Anthony Hitschler

                                        ---------------------------------
                                        Susan L.Trumbule

                                        ---------------------------------
                                        Peter Nagy

                                        ---------------------------------
                                        Alec Cutler

                                        ---------------------------------
                                        Spencer Punter

                                       2<PAGE>
                                                                   Exhibit 10.18

                              EMPLOYMENT AGREEMENT

            THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
as of this 16th day of July, 2001 (the "Effective Date"), by and between Gary J.
Sbona ("Employee") and Calico Commerce, Inc. ("Employer"). In consideration of
the covenants, representations and agreements set forth below, Employer and
Employee hereby agree as follows:

        1. Employment of Employee. Employer hereby hires Employee pursuant to
the Agreement between Regent Pacific Management Corporation dated July 13, 2001
(the "Regent Agreement"), and Employee hereby accepts such employment on the
terms and conditions contained in this Agreement and the Regent Agreement.

        2. Term of the Agreement. The initial term of this Agreement (the
"Term") shall commence upon the Effective Date and shall terminate 12 months
thereafter (the "Termination Date"), unless sooner terminated as provided
herein. Employer and Employee may, upon mutual agreement, elect to continue
Employee's employment on an at-will basis (meaning that either Employee or
Employer may terminate the employment relationship at any time with or without
cause or notice), after the initial term of this Agreement. If the term of the
Regent Agreement is extended in the future, the Termination Date of the
Agreement will automatically extend to coincide with the amended term of the
Regent Agreement, unless otherwise mutually agreed between Employer and
Employee.

        3. Services to be Provided by Employee.

            3.1 Scope, Responsibilities and Duties. Employee agrees to provide
services to Employer, generally in the field of corporate strategy, , so that
Employer may have the benefit of the experience and knowledge possessed by
Employee (the "Services"). It shall be the duty of Employee in rendering the
Services to make such periodic reports to Employer as the directors of Employer
may, from time to time, reasonably request.

            3.2. Non-exclusivity. Employee shall not be required to devote full
time to the affairs of Employer. Subject to the provisions of Section 7 below,
Employee may accept other employment and perform services for others.

        4. Compensation. Employee shall receive $500.00 per week in addition to
any compensation received from Regent Pacific Management Corporation, for the
Services to be provided hereunder..

        5. Expenses. Employer shall reimburse Employee for all reasonable and
necessary business expenses pursuant to the Regent Agreement.

<PAGE>

        6. Termination. Termination pursuant to this Section shall become
effective immediately upon receipt by Employee of written notice from Employer
of such termination.

            6.1 Termination by Incapacity or Disability of Employee. If Employee
shall become unable to fully perform the Services in accordance with the terms
of this Agreement due to incapacity, ill health or disability for a consecutive
period of two months, the Employer may, at its option, terminate this Agreement.

            6.2 Death of Employee. Upon the death of Employee, this Agreement
shall terminate without further obligation or liability on the part of Employer
to Employee's estate.

            6.3 Termination of Regent Agreement. Employee's employment shall
terminate upon termination of the Regent Agreement unless otherwise mutually
agreed between Employer and Employee.

            6.4 Termination for Cause. Company may terminate Employee's
employment for "cause", which shall mean a reasonable belief that Employee has
engaged in any one of the following: (i) financial dishonesty, including,
without limitation, misappropriation of funds or property, or any attempt by
Employee to secure any personal profit related to the business or business
opportunities of the Company without the informed, written approval of the
Company's Board of Directors; (ii) refusal to comply with reasonable directives
of the Company's Board of Directors; (iii) negligence or reckless or willful
misconduct in the performance of Employee's duties; (iv) failure to perform, or
continuing neglect in the performance of, duties assigned to Employee; (v)
misconduct which has a materially adverse effect upon the Company's business or
reputation; (vi) the conviction of, or plea of nolo contendere to, any felony or
a misdemeanor involving dishonesty or fraud; (vii) the material breach of any
provision of this agreement; or (viii) violation of Company policies including,
without limitation, the Company's policies on equal employment opportunity and
prohibition of unlawful harassment.

        7. Confidentiality and Trade Secrets. Employee acknowledges and agrees
that during the Term of this Agreement, and during any continuing term of
employment on at at-will basis he will become privy to important proprietary,
confidential business information and trade secrets that are the exclusive
property of Employer. This information includes, without limitation, business
plans, marketing concepts, designs, proposals, product information, financial
information, technology and costs, pricing information, customer lists, and key
accounts, including their credit information and product wants and needs (the
"Confidential Information"). This Confidential Information derives independent
economic value, both actual and potential, from not being generally known to the
public or to other persons who can obtain economic value from its disclosure and
use. As Employer has always held the Confidential Information as proprietary,
confidential trade secret information and has taken steps to insure that the
Confidential Information is not disclosed outside of Calico Commerce, Inc., the
Confidential Information constitutes "trade secrets" under the Uniform Trade
Secrets Act, California Civil Code Section 3426(d)(1). In light of the
foregoing, Employee therefore agrees that: (1) he will not at any time, now or
in the future, share, disseminate, disclose, discuss or use the Confidential
Information in any way; and (2) upon termination of this Agreement, Employee
will return to

                                  Page 2 of 4
<PAGE>

Employer all property, writings and/or documents in his possession or custody
belonging to or relating to the affairs of Employer or any of its subsidiaries
or affiliates, or comprising or relating to the Confidential Information.

        8. Ownership of Intellectual Property. Employee hereby acknowledges and
agrees that any and all copyrightable works authored by Employee in connection
with the performance of the Services, alone or with others, during the Term of
this Agreement, and during any continuing term of employment on at at-will
basis, shall be deemed to have been specially ordered or commissioned for use as
either a contribution to a collective work, as a translation, as a supplementary
work, as a compilation, or as an instructional text and, as such, shall be
deemed to be "works for hire" under the United States copyright laws from the
inception of creation of such works. In the event that any such works shall be
deemed by a court of competent jurisdiction not to be a "work made for hire,"
this Agreement shall operate as an irrevocable assignment by Employee to
Employer of all right, title and interest in and to such works, including
without limitation, all worldwide copyright interests therein, in perpetuity.
The fact that such copyrightable works are created by Employee outside of
Employer's facilities or other than during Employee's working hours with
Employer, shall not diminish Employer's rights with respect to such works which
otherwise fall within this subsection. Employee agrees to execute and deliver to
Employer such further instruments or documents as may be requested by Employer
in order to effectuate the purposes of this subsection.

        9. Relationship of the Parties. Employee shall not be entitled to any
vacation, retirement or health benefits or participation in any other employee
benefit plan.

        10. Appointment as a Director. The Board of Directors of Employer (the
"Board") has resolved to appoint Employee as a Class I Director. In this
capacity, Employee will serve at the pleasure of the Board and pursuant to
Employer's bylaws.

        11. Stock Options. Concurrently with the execution of this Agreement as
an inducement to Employee to accept employment with Employer, Employee and
Employer are executing and delivering an Option Certificate attached hereto as
Exhibit A and a Stock Option Agreement (the ("Option Agreement") attached hereto
as Exhibit B and incorporated herein by this reference, which grants to Employee
the option to purchase three million five hundred forty-eight thousand seven
hundred and seventy-seven (3,548,777) shares of the Common Stock of Employer at
an exercise price of $0.18. The remaining shares subject to this Option shall be
earned and vested in twelve equal monthly installments upon each month of
continued service by Employee to the Company after the Date of Grant and shall
become exercisable pursuant to the exercise schedule contained in Exhibit B.
Should Employee's employment be terminated for cause, the Options will terminate
immediately as to all unvested shares.

        12. Arbitration.

                                  Page 3 of 4
<PAGE>

            12.1 Any dispute regarding any aspect of this Agreement or any act
which would violate any provision in this Agreement (hereafter referred to as
"arbitrable disputes" shall be resolved by an experienced arbitrator licensed to
practice law in the State of California and selected in accordance with the
rules of the American Arbitration Association, as the exclusive remedy for such
dispute. Judgment on any award rendered by such arbitrator may be entered in any
court having proper jurisdiction.

            12.2 Should Employee or Employer institute any legal action or
administrative proceeding regarding any dispute or matter covered by this
Section by any method other than said arbitration, the responding party shall be
entitled to recover from the other party all damages, costs, expenses and
attorney's fees incurred as a result of such action.

        13. Severability and Governing Law.

            13.1 Should any of the provisions in this Agreement be declared or
be determined to be illegal or invalid, all remaining parts, terms or provisions
shall be valid, and the illegal or invalid part, term or provision shall be
deemed not to be a part of this Agreement.

            13.2 This Agreement is made and entered into in the State of
California and shall in all respects be interpreted, enforced and governed under
the laws of California.

        14. Proper Construction.

            14.1 The language of all parts of this Agreement shall in all cases
be construed as a whole according to its fair meaning, and not strictly for or
against any of the parties.

            14.2 As used in this Agreement, the term "or" shall be deemed to
include the term "and/or" and the singular or plural number shall be deemed to
include the other whenever the context so indicates or requires.

            14.3 The paragraph headings used in this Agreement are intended
solely for convenience of reference and shall not in any manner amplify, limit,
modify or otherwise be used in the interpretation of any of the provisions
hereof.

        15. Entire Agreement. This Agreement is the entire agreement between
Employee and Employer and fully supersedes any and all prior agreements or
understandings between the parties pertaining to its subject matter.

        16. Notices. All notices, requests, demands and other communications
called for or contemplated under this Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered, on the date of
transmission if sent by facsimile, on the third day after mailing if mailed to
the party to whom notice is to be given, by first class mail, postage prepaid,
and properly addressed as follows:

               If to Employer:         Calico Commerce, Inc.

                                  Page 4 of 4
<PAGE>

                                       333 San Carlos Street -- Suite 300
                                       San Jose, CA  95110
                                       Attn:  Chief Financial Officer

               If to Employee:         Gary J. Sbona
                                       c/o Regent Pacific Management Corporation
                                       425 California Street, Suite 1310
                                       San Francisco, CA  94104

        17. Amendments. This Agreement may not be amended, supplemented,
canceled, or discharged except by written instrument executed by the parties
hereto.

        18. Waivers. All waivers hereunder shall be in writing. No waiver by any
party hereto of any breach or anticipated breach of any provision of this
Agreement by any other party shall be deemed a waiver of any other
contemporaneous, preceding, or succeeding breach or anticipated breach, whether
or not similar, on the part of the same or any other party.

        IN WITNESS WHEREOF, the parties hereto have hereby executed this
Agreement as of the day and year first written above.

                                                CALICO COMMERCE, INC.

                                                By: ____________________________
Gary J. Sbona                                   Its:____________________________

                                  Page 5 of 4

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