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                                   EXHIBIT 4.1

                              AMENDED AND RESTATED
                      2002 NON-QUALIFIED STOCK OPTION PLAN

                                     PART I
                     DEFINITIONS AND ADMINISTRATIVE MATTERS

SECTION 1. Purpose; Definitions.

         The purpose of the Neoware Systems, Inc. 2002 Non-Qualified Stock
Option Plan (the "Plan") is to enable employees, officers, directors and
independent contractors of Neoware Systems, Inc. ("the Company") to (i) own
shares of stock in the Company, (ii) participate in the stockholder value which
has been created, (iii) have a mutuality of interest with other stockholders and
(iv) enable the Company to attract, retain and motivate employees, officers,
directors and independent contractors of particular merit.

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

         (a) "Board" means the Board of Directors of the Company.

         (b) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.

         (c) "Committee" means the Committee designated by the Board to
administer the Plan.

         (d) "Company" means Neoware Systems, Inc., its Subsidiaries or any
successor organization.

         (e) "Director" means any member of the Board.

         (f) "Disability" means permanent and total disability within the
meaning of Section 22(e)(3) of the Code.

         (g) "Eligible Independent Contractor" means an independent contractor
hired by the Company who is neither an Employee or Director of the Company.

         (h) "Employee" means any person who is employed by the Company and is
compensated for such employment by a regular salary.

         (i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

         (j) "Fair Market Value" means the per share value of the Stock as of
any given date, as determined by reference to the price of the last traded share
of Stock on the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation ("NASDAQ") System for such date
or the next preceding date that Stock was traded on such market, or, in the
event the Stock is listed on a stock exchange, the closing price per share of
Stock as reported on such exchange for such date.

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         (k) "Insider" means a Participant who is subject to Section 16 of the
Exchange Act.

         (l) "Participant" means an Employee, Director or Eligible Independent
Contractor to whom an Option is granted pursuant to the Plan.

         (m) "Plan" means the Neoware Systems, Inc. 2002 Non-Qualified Stock
Option Plan, as hereinafter amended from time to time.

         (n) "Rules" means Rule 16 b-3 and any successor provisions promulgated
by the Securities and Exchange Commission under Section 16 of the Exchange Act.

         (o) "Securities Act" shall mean the Securities Act of 1933, as amended.

         (p) "Securities Broker" means the registered securities broker
acceptable to the Company who agrees to effect the cashless exercise of an
Option pursuant to Section 5(d) hereof.

         (q) "Stock" means the Common Stock of the Company, par value $.001 per
share.

         (r) "Stock Option" or "Option" means any option to purchase shares of
Stock (including Restricted Stock, if the Committee so determines) granted
pursuant to Section 5 below.

         (s) "Subsidiary" means any corporation "controlled," as defined in Rule
405 promulgated under the Securities Act, by the Company.

SECTION 2. Administration.

         2.1 The Plan shall be administered by a Committee appointed by the
Board and who shall serve at the pleasure of the Board.

         The Committee shall have the authority to grant pursuant to the terms
of the Plan: Stock Options to Employees and Directors of the Company, and
Eligible Independent Contractors. In particular, the Committee shall, subject to
the limitations and terms of the Plan, have the authority:

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                  (i) to select the Directors and Employees of the Company, and
the Eligible Independent Contractors to whom Stock Options may from time to time
be granted hereunder;

                  (ii) to determine the number of shares to be covered by each
such award granted hereunder;

                  (iii) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder, including the option
or exercise price and any restrictions or limitations, based upon such factors
as the Committee shall determine, in its sole discretion;

                  (iv) to determine whether and under what circumstances a Stock
Option may be exercised and settled in cash or Stock or without a payment of
cash;

                  (v) to determine whether, to what extent and under what
circumstances Stock and other amounts payable with respect to an award under
this Plan shall be deferred either automatically or at the election of the
Participant; and

                  (vi) to amend the terms of any outstanding award (with the
consent of the Participant) to reflect terms not otherwise inconsistent with the
Plan, including amendments concerning exercise price changes, vesting
acceleration or forfeiture waiver regarding any award or the extension of a
Participant's right with respect to awards granted under the Plan, as a result
of termination of employment or service or otherwise, based on such factors as
the Committee shall determine, in its sole discretion.

         The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time deem advisable; to interpret the terms and provisions of the
Plan and any award issued under the Plan (and any agreements relating thereto);
and to otherwise supervise the administration of the Plan, provided that the
Committee may delegate to the Chief Executive Officer of the Company, or such
other officer as may be designated by the Committee, the authority, subject to
guidelines prescribed by the Committee, to grant Options to Employees and
Eligible Independent Contractors who are not then subject to the provisions of
Section 16 of the Exchange Act, and to determine the number of shares to be
covered by any such Option, and the Committee may authorize any one or more of
such persons to execute and deliver documents on behalf of the Committee,
provided that no such delegation may be made that would cause grants of Options
to persons subject to Section 16 of the Exchange Act to fail to comply with all
applicable conditions of Rule 16b-3 or its successors under the Exchange Act.
Determinations, interpretations or other actions made or taken by the Committee
pursuant to the provisions of the Plan shall be final and binding and conclusive
for all purposes and upon all persons.

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         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 Stock Option
granted under it. Nothing herein shall be deemed to expand the personal
liability of a member of the Board or Committee beyond that which may arise
under any applicable standards set forth in the Company's by-laws and Delaware
law, nor shall anything herein limit any rights to indemnification or
advancement of expenses to which any member of the Board or the Committee may be
entitled under any by-law, agreement, vote of the stockholders or directors, or
otherwise.

         2.2 With respect to grants to Directors who are not Employees of the
Company, the authority conferred by Section 2.1 shall rest with the Board.

SECTION 3. Stock Subject to the Plan. The aggregate number of shares of Stock
that may be issued or transferred under the Plan is 700,000, subject to
adjustment pursuant to Section 6.1 below. Such shares may be authorized but
unissued shares or reacquired shares. If the number of shares of Stock issued
under the Plan and the number of shares of Stock subject to outstanding awards
equals the maximum number of shares of Stock authorized under the Plan, no
further awards shall be made unless the Plan is amended or additional shares of
Stock become available for further awards under the Plan. If and to the extent
that Options granted under the Plan terminate, expire or are canceled without
having been exercised, such shares shall again be available for subsequent
awards under the Plan.

SECTION 4. Designation of Participants. Except as provided below, Participants
shall be selected, from time to time, by the Committee from among those
Employees, Directors and Eligible Independent Contractors who, in the opinion of
the Committee, occupy responsible positions and who have the capacity to
contribute materially to the continued growth, development and long-term success
of the Company.

                                     PART II
            GRANTS TO EMPLOYEES AND ELIGIBLE INDEPENDENT CONTRACTORS

SECTION 5. Stock Options.

         Any Stock Option granted under the Plan shall be in such form as the
Committee or the Board may from time to time approve. Stock Options granted
under the Plan shall be Non-Qualified Stock Options.

         Options granted hereunder 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 Committee or the Board shall
deem appropriate:

         5.1 Option Price. The option price per share of Stock purchasable under
a Stock Option shall be determined by the Committee or the Board at the time of
grant; provided, however, that the option price per share for any Stock Option
shall be not less than 100% of the Fair Market Value of the Stock on the date of
grant.

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         5.2 Option Term. The term of each Stock Option shall be fixed by the
Committee or the Board. No Option may be exercised by any person after
expiration of the term of the Option.

         5.3 Exercisability. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Committee or the Board at or after grant. If the Committee or the Board
provides, in its discretion, that any Stock Option is exercisable only in
installments, the Committee or the Board may waive such installment exercise
provisions at any time at or after grant in whole or in part, based on such
factors as the Committee or the Board shall determine, in its sole discretion.

         5.4 Method of Exercise. Subject to whatever installment exercise
provisions apply under Section 5.3, Stock Options may be exercised in whole or
in part at any time and from time to time during the Option period, by giving
written notice of exercise to the Company specifying the number of shares to be
purchased. Such notice shall be accompanied by payment in full of the purchase
price, either by cash, check, or such other instrument as the Committee or the
Board may accept. As determined by the Committee or the Board, in its sole
discretion, at or after grant, payment in full or in part may also be made in
the form of unrestricted Stock already owned by the Participant (based upon the
Fair Market Value of a share of Stock on the business date preceding tender if
received prior to the close of the stock market and at the Fair Market Value on
the date of tender if received after the stock market closes); provided,
however, that the Stock delivered be acceptable to the Committee or the Board.

             To the extent permitted under the applicable laws and regulations,
at the request of the Participant, and with the consent of the Committee or the
Board, the Company shall permit payment to be made by means of a "cashless
exercise" of an Option. Payment by means of a cashless exercise shall be
effected by the Participant delivering to the Securities Broker irrevocable
instructions to sell a sufficient number of shares of Stock to cover the cost
and expenses associated therewith and to deliver such amount to the Company.

             No shares of Stock shall be issued until full payment therefor has
been made. A Participant shall not have any right to dividends or other rights
of a stockholder with respect to shares subject to the Option until such time as
Stock is issued in the name of the Participant following exercise of the Option
in accordance with the Plan.

         5.5 Stock Option Agreement. Each Option granted under this Plan shall
be evidenced by an appropriate Stock Option agreement, which agreement shall be
executed by the Company and the Participant. The agreement shall contain such
terms and provisions, not inconsistent with the Plan, as shall be determined by
the Committee or the Board. Such terms and provisions may vary between
Participants or as to the same Participant to whom more than one Option may be
granted.

         5.6 Replacement Options. If an Option granted pursuant to the Plan may
be exercised by a Participant by means of a stock-for-stock swap method of
exercise as provided in 5.4 above, then the Committee or the Board may, in its
sole discretion and at the time of the original Option grant, authorize the
Participant to automatically receive a replacement Option pursuant to the Plan.
This replacement Option shall cover a number of shares determined by the
Committee or the Board, but in no event more than the number of shares equal to
the difference between the number of shares of the original Option exercised and
the net shares received by the Participant from such exercise. The per share
exercise price of the replacement Option shall equal the then current Fair
Market Value of a share of Stock, and shall have a term extending to the
expiration date of the original Option.

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             The Committee or the Board shall have the right, in its sole
discretion and at any time, to discontinue the automatic grant of replacement
Options if it determines the continuance of such grants to no longer be in the
best interest of the Company.

         5.7 Non-transferability of Options. No Stock Option shall be
transferable by the Participant other than by will, by the laws of descent and
distribution, pursuant to a qualified domestic relations order, or as permitted
under the Rules, and all Stock Options shall be exercisable, during the
Participant's lifetime, only by the Participant. Notwithstanding the foregoing,
the Committee or the Board may grant non-qualified Options that are
transferable, without payment of consideration, to immediate family members
(i.e., spouses, children and grandchildren) of the Participant or to trusts for,
or partnerships whose only partners are, such family members. The Committee or
the Board may also amend outstanding non-qualified Options to provide for such
transferability.

         5.8 Termination of Employment by Reason of Death. Unless otherwise
determined by the Committee at or after grant, if any Participant dies during
the Participant's period of employment by the Company, or during the periods
referred to in Sections 5.9, 5.10 or 5.11, any Stock Option held by such
Participant may thereafter be exercised, to the extent then exercisable or on
such accelerated basis as the Committee may determine at or after grant, by the
legal representative of the estate or by the legatee of the Participant under
the will of the Participant, for a period of one year (or such shorter period as
the Committee may specify at grant) from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is shorter.

         5.9 Termination of Employment by Reason of Disability. Unless otherwise
determined by the Committee at or after grant, if a Participant's employment by
the Company terminates by reason of Disability, any Stock Option held by such
Participant may thereafter be exercised by the Participant, to the extent it was
exercisable at the time of termination, or on such accelerated basis as the
Committee may determine at or after grant, for a period of one year (or such
shorter period as the Committee may specify at grant) from the date of such
termination of employment or until the expiration of the stated term of such
Stock Option, whichever period is shorter.

         5.10 Termination of Employment Upon Retirement. Unless otherwise
determined by the Committee at or after grant, if an Participant's employment
terminates due to retirement (as hereinafter defined), any Stock Option held by
such Participant may thereafter be exercised by the Participant, to the extent
it was exercisable at the date of retirement, or on such accelerated basis as
the Committee may specify at grant, for a period of one-year (or such shorter
period as the Committee may specify at grant) from the date of such retirement
or until the expiration of the stated term of such Stock Option, whichever
period is shorter. For purposes of this Section 5.10, "Retirement" shall mean
any Employee retirement under the Company's retirement policy.

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         5.11 Other Termination of Employment. Unless otherwise determined by
the Committee at or after grant, in the event of termination of employment
(voluntary or involuntary) for any reason other than death, Disability or
retirement, or if an Employee is terminated for cause, any Stock Option held by
such Participant may thereafter be exercised by the Participant, to the extent
it was exercisable at the time of such termination or on such accelerated basis
as the Committee may determine at or after grant, for a period of three months
(or such shorter period as the Committee may specify at grant) from the date of
such termination of employment or the expiration of the stated term of such
Stock Option, whichever period is shorter. If an Employee is terminated for
cause, any Stock Option held by such Participant shall terminate immediately.

         5.12 Termination of Eligible Independent Contractors Options. The
termination provisions of Options granted to Eligible Independent Contractors
shall be determined by the Committee in its sole discretion.

         5.13 Withholding and Use of Shares to Satisfy Tax Obligations. The
obligation of the Company to deliver Stock upon the exercise of any Option shall
be subject to applicable federal, state and local tax withholding requirements.

             If the exercise of any Option is subject to the withholding
requirements of applicable federal tax laws, the Committee, in its discretion
(and subject to such withholding rules ("Withholding Rules") as shall be adopted
by the Committee), may permit the Participant to satisfy the federal withholding
tax, in whole or in part, by electing to have the Company withhold (or by
delivering to the Company) shares of Stock, which Stock shall be valued, for
this purpose, at their Fair Market Value on the date the amount of tax required
to be withheld is determined (the "Determination Date"). Such election must be
made in compliance with and subject to the Withholding Rules, and the Committee
may not withhold shares of Stock in excess of the number necessary to satisfy
the minimum federal income tax withholding requirements.

         5.14 Issuance of Shares and Compliance with Securities Acts. Within a
reasonable time after exercise of an Option, the Company shall cause to be
delivered to the Participant a certificate for the Stock purchased pursuant to
the exercise of the Option. At the time of any exercise of any Option, the
Company may, if it shall deem it necessary and desirable for any reason
connected with any law or regulation of any governmental authority relative to
the regulation of securities, require the Participant to represent in writing to
the Company that it is his or her then intention to acquire the Stock for
investment and not with a view to distribution thereof and that such Participant
will not dispose of such Stock in any manner that would involve a violation of
applicable securities laws. In such event, no Stock shall be issued to such
holder unless and until the Company is satisfied with such representation.
Certificates for shares of Stock issued pursuant to the exercise may bear an
appropriate securities law legend.

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         5.15 Buyout Provision. The Company may at any time offer to buy out,
for a payment in cash or stock, an Option previously granted based on such terms
and conditions as the Company shall establish and communicate to the Participant
at the time that such offer is made. This provision shall not in any way be
deemed to create any rights on the part of the Participants to receive buyout
offers or payments.

                                    PART III
                                  MISCELLANEOUS

SECTION 6. Adjustments Upon Changes in Capitalization, Merger or Change
           in Control.

         6.1 Changes in Capitalization. If any change is made to the Stock
(whether by reason of merger, consolidation, reorganization, recapitalization,
stock dividend, stock split, combination of shares, or exchange of shares or any
other change in capital structure, where such changes are made without receipt
of consideration), then unless such event or change results in the termination
of all outstanding awards under the Plan, the Board or the Committee shall
preserve the value of the outstanding awards by adjusting the maximum number and
class of shares issuable under the Plan to reflect the effect of such event or
change in the Company's capital structure, and by making appropriate adjustments
to the number and class of shares subject to an outstanding award and/or the
option price of each outstanding Option, except that any fractional shares
resulting from such adjustments shall be eliminated by rounding any portion of a
share equal to .500 or greater up, and any portion of a share equal to less than
..500 down, in each case to the nearest whole number.

         6.2 Dissolution or Liquidation. In the event of a proposed dissolution
or liquidation of the Company, the Committee, or its designee, shall notify each
Participant as soon as practicable prior to the effective date of such proposed
transaction. The Committee or the Board in its discretion may provide for a
Participant to have the right to exercise his or her Option during such period
prior to such transaction as the Committee in its sole discretion shall
determine as to all of the Stock covered thereby, including shares of Stock as
to which the Option would not otherwise be exercisable. To the extent it has not
been previously exercised, an Option will terminate immediately prior to the
consummation of such proposed action.

          6.3 Merger or Asset Sale. In the event of a merger of the Company with
or into another corporation, or the sale of all or substantially all of the
assets of the Company, each outstanding Option shall either (a) be assumed or an
equivalent option substituted by the successor corporation or a parent or
subsidiary of the successor corporation or (b) the Committee or its designee
shall notify the Participant in writing or electronically that the Option may be
exercised, as to the extent then exercisable, during such period of time from
the date of such notice, as shall be determined by the Committee, and the Option
shall terminate upon the expiration of such period. The Committee may, in its
discretion, provide on a case by case basis that Options may be immediately
exercisable for the total remaining number of shares covered by the Option.

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         6.4 Change in Control.

         A "Change in Control" for purposes of this Plan shall mean any one of
the events described below:

                  (a) at any time during a period of two (2) consecutive years,
at least a majority of the Board shall not consist of Continuing Directors.
"Continuing Directors" shall mean directors of the Company at the beginning of
such two-year period and directors who subsequently became such and whose
selection or nomination for election by the Company's shareholders was approved
by a majority of the then Continuing Directors; or

                  (b) any person or "group" (as determined for purposes of
Regulation 13D-G promulgated by the Commission under the Exchange Act or under
any successor regulation), but excluding any majority-owned subsidiary or any
employee benefit plan sponsored by the Company or any subsidiary or any trust or
investment manager for the account of such a plan, shall have acquired
"beneficial ownership" (as determined for purposes of such regulation) of the
Company's securities representing fifty percent (50%) or more of the combined
voting power of the Company's then outstanding securities unless such
acquisition is approved in advance by a majority of the directors of the Company
who were in office immediately preceding such acquisition and any individual
selected to fill any vacancy created by reason of the death or disability of any
such director; or

                  (c) the Company becomes a party to a merger, consolidation or
share exchange in which either (i) the Company will not be the surviving
corporation or (ii) the Company will be the surviving corporation and any
outstanding shares of Common Stock will be converted into shares of any other
company (other than a reincorporation or the establishment of a holding company
involving no change in ownership of the Company or other securities or cash or
other property (excluding payments made solely for fractional shares); or

                  (d) the Company's stockholders (i) approve any plan or
proposal for the disposition or other transfer of all, or substantially all, of
the assets of the Company, whether by means of a merger, reorganization,
liquidation or dissolution or otherwise or (ii) dispose of, or become obligated
to dispose of, 50% or more of the outstanding capital stock of the Company by
tender offer or otherwise.

                  If a Change in Control has occurred, the Committee may, in its
discretion, provide on a case by case basis that Options may be immediately
exercisable for the total remaining number of Shares covered by the Option
and/or that the Options shall terminate, provided that the Participant shall
have the right to exercise such Option during such period prior to the Change in
Control as shall be determined by the Committee.

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SECTION 7. Amendments and Termination.

         The Board may amend, alter or discontinue the Plan at any time and from
time to time, but no amendment, alteration or discontinuation shall be made
which would impair the rights of a Participant under a Stock Option award
theretofore granted, without the Participant's consent, or which, without the
approval of the Company's stockholders, would require stockholder approval under
applicable laws, regulations and NASDAQ requirements.

         The Committee or the Board may amend the terms of any Stock Option
theretofore granted, prospectively or retroactively, but no such amendment shall
impair the rights of any holder without the holder's consent. The Committee may
also substitute new Stock Options for previously granted Stock Options,
including previously granted Stock Options having higher option prices. Subject
to the above provisions, the Board shall have broad authority to amend the Plan
to take into account changes in applicable tax laws, securities laws and
accounting rules, as well as other developments.

SECTION 8. Unfunded Status of Plan.

         The Plan is intended to constitute an "unfunded" plan of incentive and
deferred compensation. With respect to any payments not yet made to a
Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company. In its sole discretion, the Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Stock or payments in lieu of or with respect to awards hereunder;
provided, however, that, unless the Committee otherwise determines with the
consent of the affected Participant, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.

SECTION 9. General Provisions.

         9.1 All certificates for shares of Stock or other securities delivered
under the Plan shall be subject to such stock-transfer orders and other
restrictions as the Committee or the Board may deem advisable under the rules,
regulations and other requirements of the Securities Act, the Exchange Act, any
stock exchange or over-the-counter market upon which the Stock is then listed,
and any applicable federal or state securities law, and the Committee or the
Board may cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.

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

         9.3 The adoption of the Plan shall not confer upon any Participant any
right to continued employment with the Company nor shall it interfere in any way
with the right of the Company to terminate its relationship with any of its
Employees, Directors or Eligible Independent Contractors at any time.

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         9.4 No later than the date as of which an amount first becomes
includable in the gross income of the Participant for federal income tax
purposes with respect to any award under the Plan, the Participant who is an
Employee of the Company shall pay to the Company, or make arrangements
satisfactory to the Committee regarding the payment of, any federal, state, or
local taxes of any kind required by law to be withheld with respect to such
amount. To the extent permitted by the Committee, in its sole discretion, the
minimum required withholding obligations may be settled with Stock, including
Stock that is part of the award that gives rise to the withholding requirement.
The obligations of the Company under the Plan shall be conditional on such
payment or arrangements and the Company 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.

         9.5 The Committee shall establish such procedures as it deems
appropriate for a Participant to designate a beneficiary to whom any amounts
payable in the event of the Participant's death are to be paid.

         9.6 The Plan shall be governed by and subject to all applicable laws
and to the approvals by any governmental or regulatory agency as may be
required.

SECTION 10. Effective Date and Term of Plan.

         The Plan shall be effective as of January 4, 2002 (the "Effective
Date"). No Stock Option award shall be granted pursuant to the Plan on or after
ten years from the Effective Date, but Stock Options granted prior to such tenth
anniversary may be exercised after such date.

SECTION 11. Interpretation.

          A determination of the Committee or the Board as to any question which
may arise with respect to the interpretation of the provisions of this Plan or
any Options shall be final and conclusive, and nothing in this Plan, or in any
regulation hereunder, shall be deemed to give any Participant, his legal
representatives, assigns or any other person any right to participate herein
except to such extent, if any, as the Committee or the Board may have determined
or approved pursuant to this Plan. The Committee or the Board may consult with
legal counsel who may be counsel to the Company and shall not incur any
liability for any action taken in good faith in reliance upon the advice of such
counsel.

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SECTION 12. Governing Law.

         With respect to any Incentive Stock Options granted pursuant to the
Plan and the agreements thereunder, the Plan, such agreements and any Incentive
Stock Options granted pursuant thereto shall be governed by the applicable Code
provisions to the maximum extent possible. Otherwise, the laws of the State of
Delaware shall govern the operation of, and the rights of Participants under,
the Plan, the agreements and any Options granted thereunder.

SECTION 13. Compliance With The Rules.

         13.1 It is the intent of the Company that this Plan comply in all
respects with the Rules in connection with any grant of Options to, or other
transaction by, an Insider. Accordingly, if any provision of this Plan or any
agreement relating to an Option does not comply with the Rules as then
applicable to any such Insider, such provision will be construed or deemed
amended to the extent necessary to conform to such requirements with respect to
such person. In addition, neither the Committee nor the Board shall have
authority to make any amendment, alteration, suspension, discontinuation, or
termination of the Plan or any agreement hereunder, or take other action if such
authority would cause an Insider's transactions under the Plan not to be exempt
under the Rules.

         13.2 Certain restrictive provisions of the Plan have been implemented
to facilitate the Company's and Insiders' compliance with the Rules. The
Committee or the Board, in its discretion, may waive certain of these
restrictions, provided the waiver does not relate in any way to an Insider.

Amended and restated on June 30, 2003 by unanimous consent of the Board.

                                       17<PAGE>

                                                                     EXHIBIT 4.1

                       FIRST AMENDMENT TO CREDIT AGREEMENT

         THIS FIRST AMENDMENT TO CREDIT AGREEMENT (the "Amendment"), dated and
effective as of July 24, 2003, is made by and among NEW JERSEY NATURAL GAS
COMPANY, a New Jersey corporation (the "Borrower"), the BANKS (as hereinafter
defined), BANK OF TOKYO-MITSUBISHI TRUST COMPANY and JPMORGAN CHASE BANK, each
in its capacity as a syndication agent, FLEET NATIONAL BANK and SUNTRUST BANK,
each in its capacity as a documentation agent, BANK ONE, NA, CITIZENS BANK OF
MASSACHUSETTS and THE BANK OF NEW YORK, each in its capacity as a co-agent and
PNC BANK, NATIONAL ASSOCIATION, in its capacity as administrative agent for the
Banks (hereinafter referred to in such capacity as the "Agent").

                              W I T N E S S E T H:

         WHEREAS, reference is made to that certain Credit Agreement, dated as
of December 23, 2002, by and among the Borrower, the Banks party thereto, Bank
of Tokyo-Mitsubishi Trust Company and JPMorgan Chase Bank, each in its capacity
as a syndication agent, Fleet National Bank and SunTrust Bank, each in its
capacity as a documentation agent, Bank One, NA, Citizens Bank of Massachusetts
and The Bank of New York, each in its capacity as a co-agent, and the Agent (the
"Credit Agreement"); and

         WHEREAS, the parties hereto desire to amend certain terms of the Credit
Agreement as hereinafter provided.

         NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, covenant and agree as follows:

         1.       DEFINITIONS.

         Capitalized terms used herein unless otherwise defined herein shall
have the meanings ascribed to them in the Credit Agreement as amended by this
Amendment.

         2.       AMENDMENT OF CREDIT AGREEMENT.

         (a)      Section 1.1 [Certain Definitions.]

                  (i)      Existing Definitions. The following existing
         definitions contained in Section 1.1 the Credit Agreement are hereby
         amended and restated to read as follows:

                           "Facility Fees collectively and Facility Fee
                  separately shall have the meaning given to such terms in
                  Section 2.4.1."

                           "364-Day Facility Fees collectively and 364-Day
                  Facility Fee separately shall have the meaning given to such
                  terms in Section 2.4.2."

<PAGE>

                  (ii)     New Definitions. The following new definitions are
         hereby added to Section 1.1 of the Credit Agreement in alphabetical
         order:

                           "Facility Usage Fees collectively and Facility Usage
                  Fee separately shall have the meaning given to such terms in
                  Section 2.4.3."

                           "364-Day Revolving Credit Usage Fees collectively and
                  364-Day Revolving Credit Usage Fee separately shall have the
                  meaning given to such terms in Section 2.4.4."

         (b)      Section 2.4 [Facility Fees; 364-Day Facility Fees.] of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:

                  "2.4     Certain Fees.

                           2.4.1    Facility Fees.

                           Accruing from the date hereof until the Expiration
         Date, the Borrower agrees to pay to the Agent for the account of each
         Bank, as consideration for such Bank's Revolving Credit Commitment
         hereunder, a nonrefundable facility fee (the "Facility Fee") equal to
         the Applicable Facility Fee Rate (computed on the basis of a year of
         360 days and actual days elapsed) on the average daily amount of such
         Bank's Revolving Credit Commitment as the same may be constituted from
         time to time. All Facility Fees shall be payable quarterly in arrears
         on the first Business Day of each January, April, July and October
         after the date hereof and on the Expiration Date or upon acceleration
         of the Loans.

                           2.4.2    364-Day Facility Fees.

                           Accruing from the date hereof until the 364-Day Loan
         Expiration Date, the Borrower agrees to pay to the Agent for the
         account of each Bank, as consideration for such Bank's 364-Day
         Revolving Credit Commitment hereunder, a nonrefundable facility fee
         (the "364-Day Facility Fee") equal to the Applicable 364-Day Facility
         Fee Rate (computed on the basis of a year of 360 days and actual days
         elapsed) on the average daily amount of such Bank's 364-Day Revolving
         Credit Commitment as the same may be constituted from time to time. All
         364-Day Facility Fees shall be payable quarterly in arrears on the
         First Business Day of each January, April, July and October after the
         date hereof and on the 364-Day Loan Expiration Date or upon
         acceleration of the Loans.

                           2.4.3    Facility Usage Fees.

                           During the period commencing on the date hereof until
         the Expiration Date, the Borrower agrees to pay to the Agent for the
         account of each Bank, a nonrefundable fee (the "Facility Usage Fee")
         for each day when Revolving Facility Usage exceeds thirty-three and
         one-third percent (33-1/3%) of the Revolving Credit Commitments in an
         amount equal to the sum of (i) 0.125%

                                       2

<PAGE>

         per annum (computed on the basis of a year of 360 days and actual days
         elapsed) computed on the amount of the Revolving Credit Loans
         outstanding on such day plus (ii) 0.125% per annum (computed on the
         basis of a year of 360 days and actual days elapsed) computed on the
         amount of the Letters of Credit Outstanding on such day plus (iii)
         0.125% per annum (computed on the basis of a year of 360 days and
         actual days elapsed) computed on the amount of the Swing Loans
         outstanding on such day. The Facility Usage Fee shall be payable
         quarterly in arrears on the first Business Day of each January, April,
         July, and October after the date hereof and on the Expiration Date or
         upon acceleration of the Loans.

                           2.4.4    364-Day Revolving Credit Usage Fees.

                           During the period commencing on the date hereof until
         the Expiration Date, the Borrower agrees to pay to the Agent for the
         account of each Bank, a nonrefundable fee (the "364-Day Revolving
         Credit Usage Fee") for each day when 364-Day Revolving Credit Loans
         exceed thirty-three and one-third percent (33-1/3%) of the 364-Day
         Revolving Credit Commitments in an amount equal to 0.125% per annum
         (computed on the basis of a year of 360 days and actual days elapsed),
         which fees shall be computed on the amount of the 364-Day Revolving
         Credit Loans outstanding. The 364-Day Revolving Credit Usage Fee shall
         be payable quarterly in arrears on the First Business Day of each
         January, April, July, and October after the date hereof and on the
         364-Day Loan Expiration Date or upon acceleration of the Loans."

         (c)      Schedule 1.1(A)--Pricing Grid of the Credit Agreement is
hereby amended by deleting Subsections (c) and (d) in their entirety.

         3.       CONDITIONS OF EFFECTIVENESS OF THIS AMENDMENT.

         The effectiveness of this Amendment is expressly conditioned upon
satisfaction of the following conditions precedent:

         Legal Details; Counterparts.

         (a)      All legal details and proceedings in connection with the
transactions contemplated by this Amendment shall be in form and substance
satisfactory to the Agent, the Agent shall have received from the Borrower and
the Required Banks an executed original of this Amendment and the Agent shall
have received all such other counterpart originals or certified or other copies
of such documents and proceedings in connection with such transactions, in form
and substance satisfactory to the Agent.

         (b)      This Amendment shall become effective when it has been
executed by the Borrower, the Agent and the Required Banks and each of the other
conditions set forth in this Section 3 has been satisfied.

                                       3

<PAGE>

         4.       MISCELLANEOUS.

         (a)      Force and Effect. The Credit Agreement is hereby amended in
accordance with the terms hereof and any reference to the Credit Agreement in
any Loan Document or any other document, instrument, or agreement shall
hereafter mean and include the Credit Agreement as amended hereby. The Credit
Agreement (as amended by this Amendment) and each of the other Loan Documents
are hereby ratified and confirmed and are in full force and effect.

         (b)      Governing Law. This Amendment shall be deemed to be a contract
under the laws of the State of New Jersey and for all purposes shall be governed
by and construed and enforced in accordance with the internal laws of the State
of New Jersey without regard to its conflict of laws principles.

         (c)      Counterparts. This Amendment may be signed in any number of
counterparts each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         (d)      Fees and Expenses. The Borrower shall not be responsible for
payment of any attorneys' fees or other expenses specifically associated with
the preparation and execution of this Amendment.

                         [SIGNATURES BEGIN ON NEXT PAGE]

                                       4

<PAGE>

                      [SIGNATURE PAGE TO FIRST AMENDMENT TO
                NEW JERSEY NATURAL GAS COMPANY CREDIT AGREEMENT]

         IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties hereto have executed this Amendment as of the date first above written.

ATTEST:                           NEW JERSEY NATURAL GAS COMPANY

By: /s/Oleta Harden               By: /s/T. C. Hearne                   [Seal]
    -----------------------           ----------------------------------
Name:  Oleta Harden               Name:  T. C. Hearne
Title: Secretary                  Title: Senior Vice President and Treasurer

<PAGE>

                      [SIGNATURE PAGE TO FIRST AMENDMENT TO
                NEW JERSEY NATURAL GAS COMPANY CREDIT AGREEMENT]

                                  BANK OF TOKYO-MITSUBISHI TRUST
                                  COMPANY, individually and as Syndication Agent

                                  By:___________________________________________
                                  Name:_________________________________________
                                  Title:________________________________________

<PAGE>

                      [SIGNATURE PAGE TO FIRST AMENDMENT TO
                NEW JERSEY NATURAL GAS COMPANY CREDIT AGREEMENT]

                                  BANK ONE, NA, individually and as Co-Agent

                                  By:___________________________________________
                                  Name:_________________________________________
                                  Title:________________________________________

<PAGE>

                      [SIGNATURE PAGE TO FIRST AMENDMENT TO
                NEW JERSEY NATURAL GAS COMPANY CREDIT AGREEMENT]

                                  CITIZENS BANK OF MASSACHUSETTS,
                                  individually and as a Co-Agent

                                  By:___________________________________________
                                  Name:_________________________________________
                                  Title:________________________________________

<PAGE>

                      [SIGNATURE PAGE TO FIRST AMENDMENT TO
                NEW JERSEY NATURAL GAS COMPANY CREDIT AGREEMENT]

                                  FLEET NATIONAL BANK, individually and as
                                  Documentation Agent

                                  By:___________________________________________
                                  Name:_________________________________________
                                  Title:________________________________________

<PAGE>

                      [SIGNATURE PAGE TO FIRST AMENDMENT TO
                NEW JERSEY NATURAL GAS COMPANY CREDIT AGREEMENT]

                                  JPMORGAN CHASE BANK, individually and as
                                  Syndication Agent

                                  By:___________________________________________
                                  Name:_________________________________________
                                  Title:________________________________________

<PAGE>

                      [SIGNATURE PAGE TO FIRST AMENDMENT TO
                NEW JERSEY NATURAL GAS COMPANY CREDIT AGREEMENT]

                                  PNC BANK, NATIONAL ASSOCIATION,
                                  individually and as Agent

                                  By:___________________________________________
                                  Name:_________________________________________
                                  Title:________________________________________

<PAGE>

                      [SIGNATURE PAGE TO FIRST AMENDMENT TO
                NEW JERSEY NATURAL GAS COMPANY CREDIT AGREEMENT]

                                  SUNTRUST BANK, individually and as
                                  Documentation Agent

                                  By:___________________________________________
                                  Name:_________________________________________
                                  Title:________________________________________

<PAGE>

                      [SIGNATURE PAGE TO FIRST AMENDMENT TO
                NEW JERSEY NATURAL GAS COMPANY CREDIT AGREEMENT]

                                  THE BANK OF NEW YORK, individually and as
                                  a Co-Agent

                                  By:___________________________________________
                                  Name:_________________________________________
                                  Title:________________________________________

<PAGE>

                      [SIGNATURE PAGE TO FIRST AMENDMENT TO
                NEW JERSEY NATURAL GAS COMPANY CREDIT AGREEMENT]

                                  WACHOVIA BANK, NATIONAL
                                  ASSOCIATION

                                  By:___________________________________________
                                  Name:_________________________________________
                                  Title:________________________________________

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