Document:

<PAGE>

                                                                     EXHIBIT 4.1
                                                                     -----------

                               EMCORE CORPORATION
                             2000 STOCK OPTION PLAN
                             ----------------------

             (AS AMENDED AND RESTATED, EFFECTIVE FEBRUARY 20, 2004)

     1. Purposes. The purposes of the EMCORE Corporation 2000 Stock Option Plan
are to give officers and other employees, consultants and non-employee directors
of the Company and its Affiliates an opportunity to acquire shares of Stock, to
provide an incentive for such employees, consultants and directors to continue
to promote the best interests of the Company and its Affiliates and enhance its
long-term performance and to provide an incentive for such employees,
consultants and directors to join or remain with the Company and its Affiliates.
Toward these objectives, the Committee may grant Options to such employees,
directors and consultants, all pursuant to the terms and conditions of the Plan.

     2. Definitions. As used in the Plan, the following capitalized terms shall
have the meanings set forth below:

     (a) "AFFILIATE" - other than the Company, (i) any corporation or limited
liability company in an unbroken chain of corporations or limited liability
companies ending with the Company if each corporation or limited liability
company owns stock or membership interests (as applicable) possessing more than
fifty percent (50%) of the total combined voting power of all classes of stock
in one of the other corporations or limited liability companies in such chain;
(ii) any corporation, trade or business (including, without limitation, a
partnership or limited liability company) which is more than fifty percent (50%)
controlled (whether by ownership of stock, assets or an equivalent ownership
interest or voting interest) by the Company or one of its Affiliates; or (iii)
any other entity, approved by the Committee as an Affiliate under the Plan, in
which the Company or any of its Affiliates has a material equity interest.

     (b) "AGREEMENT" - a written stock option award agreement evidencing an
Option, as described in Section 3(e).

     (c) "AWARD LIMIT" - 300,000 shares of Stock (as adjusted in accordance with
Section 10).

     (d) "BENEFICIAL OWNERSHIP" - (including correlative terms) shall have the
same meaning given such term in Rule 13d-3 promulgated under the Exchange Act.

     (e) "BOARD" - the Board of Directors of the Company.

     (f) "CHANGE IN CONTROL" - the occurrence of any of the following:

          (i) an acquisition in one transaction or a series of related
     transactions (other than directly from the Company or pursuant to Options
     granted under the Plan or other similar awards granted by the Company) of
     any Voting Securities by any Person, immediately after which such Person
     has Beneficial Ownership of fifty percent (50%) or more of the combined
     voting power of the Company's then outstanding Voting

<PAGE>

                                                                     EXHIBIT 4.1
                                                                     -----------
                                                                          Page 2

     Securities; provided, however, in determining whether a Change in Control
     has occurred pursuant to this Section 2(f), Voting Securities which are
     acquired in a Non-Control Acquisition shall not constitute an acquisition
     that would cause a Change in Control;

          (ii) the individuals who, immediately prior to the Effective Date, are
     members of the Board (the "INCUMBENT BOARD"), cease for any reason to
     constitute at least a majority of the members of the Board; provided,
     however, that if the election, or nomination for election, by the Company's
     common stockholders, of any new director was approved by a vote of at least
     a majority of the Incumbent Board, such new director shall, for purposes of
     the Plan, be considered as a member of the Incumbent Board; provided
     further, however, that no individual shall be considered a member of the
     Incumbent Board if such individual initially assumed office as a result of
     either an actual or threatened "Election Contest" (as described in Rule
     14a-11 promulgated under the Exchange Act) or other actual or threatened
     solicitation of proxies or consents by or on behalf of a Person other than
     the Board (a "PROXY CONTEST") including by reason of any agreement intended
     to avoid or settle any Election Contest or Proxy Contest; or

          (iii) the consummation of:

               (A) a merger, consolidation or reorganization involving the
          Company unless:

                    (1) the stockholders of the Company, immediately before such
               merger, consolidation or reorganization, own, directly or
               indirectly, immediately following such merger, consolidation or
               reorganization, more than fifty percent (50%) of the combined
               voting power of the outstanding voting securities of the
               corporation resulting from such merger or consolidation or
               reorganization (the "SURVIVING CORPORATION") in substantially the
               same proportion as their ownership of the Voting Securities
               immediately before such merger, consolidation or reorganization,

                    (2) the individuals who were members of the Incumbent Board
               immediately prior to the execution of the agreement providing for
               such merger, consolidation or reorganization constitute at least
               a majority of the members of the board of directors of the
               Surviving Corporation, or a corporation Beneficially Owning,
               directly or indirectly, a majority of the voting securities of
               the Surviving Corporation, and

                    (3) no Person, other than (i) the Company, (ii) any Related
               Entity (as defined in Section 2(p)), (iii) any employee benefit
               plan (or any trust forming a part thereof) that, immediately
               prior to such merger, consolidation or reorganization, was
               maintained by the Company, the Surviving Corporation, or any
               Related Entity or (iv) any Person who, together with its
               Affiliates, immediately prior to such merger, consolidation or
               reorganization had Beneficial Ownership of fifty percent (50%) or
               more of the then outstanding Voting Securities, owns, together

<PAGE>
                                                                     EXHIBIT 4.1
                                                                     -----------
                                                                          Page 3

               with its Affiliates, Beneficial Ownership of fifty percent (50%)
               or more of the combined voting power of the Surviving
               Corporation's then outstanding voting securities

               (a transaction described in clauses (1) through (3) above is
               referred to herein as a "NON-CONTROL TRANSACTION");

               (B) a complete liquidation or dissolution of the Company; or

               (C) an agreement for the sale or other disposition of all or
          substantially all of the assets or business of the Company to any
          Person (other than a transfer to a Related Entity or the distribution
          to the Company's stockholders of the stock of a Related Entity or any
          other assets).

          Notwithstanding the foregoing, a Change in Control shall not be deemed
          to occur solely because any Person (the "SUBJECT PERSON") acquired
          Beneficial Ownership of fifty percent (50%) or more of the combined
          voting power of the then outstanding Voting Securities as a result of
          the acquisition of Voting Securities by the Company which, by reducing
          the number of Voting Securities then outstanding, increases the
          proportional number of shares Beneficially Owned by the Subject
          Persons, provided that if a Change in Control would occur (but for the
          operation of this sentence) as a result of the acquisition of Voting
          Securities by the Company, and (1) before such share acquisition by
          the Company the Subject Person becomes the Beneficial Owner of any new
          or additional Voting Securities in a related transaction or (2) after
          such share acquisition by the Company the Subject Person becomes the
          Beneficial Owner of any new or additional Voting Securities which in
          either case increases the percentage of the then outstanding Voting
          Securities Beneficially Owned by the Subject Person, then a Change in
          Control shall be deemed to occur. Solely for purposes of this Section
          2(f), (x) "Affiliate" shall mean, with respect to any Person, any
          other Person that, directly or indirectly, controls, is controlled by,
          or is under common control with, such Person; (y) any "Relative" (for
          this purpose, "Relative" means a spouse, child, parent, parent of
          spouse, sibling or grandchild) of an individual shall be deemed to be
          an Affiliate of such individual for this purpose; and (z) neither the
          Company nor any Person controlled by the Company shall be deemed to be
          an Affiliate of any holder of Common Stock.

     (g) "CODE" - the Internal Revenue Code of 1986, as it may be amended from
time to time, including regulations and rules thereunder and successor
provisions and regulations and rules thereto.

     (h) "COMMITTEE" - the Compensation Committee of the Board, or such other
Board committee as may be designated by the Board to administer the Plan.

     (i) "COMPANY" - EMCORE Corporation, a New Jersey corporation, or any
successor entity.

<PAGE>
                                                                     EXHIBIT 4.1
                                                                     -----------
                                                                          Page 4

     (j) "DISQUALIFIED OPTION" - the meaning given such term in Section 10(d).

     (k) "DISQUALIFYING DISPOSITION" - the meaning given such term in Section
10(d).

     (l) "EFFECTIVE DATE" - the date on which the Plan is effective, as
determined pursuant to Section 15.

     (m) "EXCHANGE ACT" - the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

     (n) "FAIR MARKET VALUE" - of a share of Stock as of a given date shall be:
(i) if the Stock is listed or admitted to trading on an established stock
exchange (including, for this purpose, the Nasdaq National Market), the mean of
the highest and lowest sale prices for a share of Stock on the composite tape or
in Nasdaq National Market trading as reported in The Wall Street Journal (or, if
not so reported, such other nationally recognized reporting source as the
Committee shall select) for such date, or, if no such prices are reported for
such date, the most recent day for which such prices are available shall be
used; (ii) if the Stock is not then listed or admitted to trading on such a
stock exchange, the mean of the closing representative bid and asked prices for
the Stock on such date as reported by the Nasdaq Small Cap Market or, if not so
reported, by the OTC Bulletin Board (or any successor or similar quotation
system regularly reporting the market value of the Stock in the over-the-counter
market), or, if no such prices are reported for such date, the most recent day
for which such prices are available shall be used; or (iii) in the event neither
of the valuation methods provided for in clauses (i) and (ii) above are
practicable, the fair market value of a share of Stock determined by such other
reasonable valuation method as the Committee shall, in its discretion, select
and apply in good faith as of the given date; provided, however, that for
purposes of paragraphs (a) and (h) of Section 6, such fair market value shall be
determined subject to Section 422(c)(7) of the Code.

     (o) "ISO" or "INCENTIVE STOCK OPTION" - a right to purchase Stock granted
to an Optionee under the Plan in accordance with the terms and conditions set
forth in Section 6 and which conforms to the applicable provisions of Section
422 of the Code.

     (p) "NON-CONTROL ACQUISITION" - an acquisition by (i) an employee benefit
plan (or a trust forming a part thereof) maintained by (A) the Company or (B)
any corporation or other Person of which a majority of its voting power or its
voting equity securities or equity interest is owned, directly or indirectly, by
the Company (a "RELATED ENTITY"), (ii) the Company or any Related Entity, (iii)
any of Thomas Russell, The AER Trust 1997, Robert Louis-Dreyfus, Gallium
Enterprises, Inc. and Reuben Richards or (iv) any Person in connection with a
Non-Control Transaction.

     (q) "NOTICE" - written notice actually received by the Company at its
executive offices on the day of such receipt, if received on or before 1:30
p.m., on a day when the Company's executive offices are open for business, or,
if received after such time, such notice shall be deemed received on the next
such day, which notice may be delivered in person to the

<PAGE>
                                                                     EXHIBIT 4.1
                                                                     -----------
                                                                          Page 5

Company's Secretary or sent by facsimile to the Company at (732) 271-9686, or
sent by certified or registered mail or overnight courier, prepaid, addressed to
the Company at 394 Elizabeth Avenue, Somerset, New Jersey 08873, Attention:
Secretary.

     (r) "OPTION" - a right to purchase Stock granted to an Optionee under the
Plan in accordance with the terms and conditions set forth in Section 6. Options
may be either ISOs or stock options other than ISOs.

     (s) "OPTIONEE" - an individual who is eligible, pursuant to Section 5, and
who has been selected, pursuant to Section 3(c), to participate in the Plan, and
who holds an outstanding Option granted to such individual under the Plan in
accordance with the terms and conditions set forth in Section 6.

     (t) "PERSON" - "person" as such term is used for purposes of Section 13(d)
or 14(d) of the Exchange Act, including, without limitation, any individual,
corporation, limited liability company, partnership, trust, unincorporated
organization, government or any agency or political subdivision thereof, or any
other entity or any group of Persons.

     (u) "PLAN" - this EMCORE Corporation 2000 Stock Option Plan.

     (v) "PREDECESSOR PLAN" - the Company's 1995 Incentive and Non-Statutory
Stock Option Plan.

     (w) "SECURITIES ACT" - the Securities Act of 1933, as it may be amended
from time to time, including the regulations and rules promulgated thereunder
and successor provisions and regulations and rules thereto.

     (x) "STOCK" - the common stock of the Company, without par value.

     (y) "SUBSIDIARY" - any present or future corporation which is or would be a
"subsidiary corporation" of the Company as the term is defined in Section 424(f)
of the Code.

     (z) "VOTING SECURITIES" - all the outstanding voting securities of the
Company entitled to vote generally in the election of the Board.

     3. Administration of the Plan. (a) The Committee shall have exclusive
authority to operate, manage and administer the Plan in accordance with its
terms and conditions. Notwithstanding the foregoing, in its absolute discretion,
the Board may at any time and from time to time exercise any and all rights,
duties and responsibilities of the Committee under the Plan, including, but not
limited to, establishing procedures to be followed by the Committee, but
excluding matters which under any applicable law, regulation or rule, including,
without limitation, any exemptive rule under Section 16 of the Exchange Act
(including Rule 16b-3, or any successor rule, as the same may be amended from
time to time) or Section 162(m) of the Code, are required to be determined in
the sole discretion of the Committee. If and to the extent

<PAGE>
                                                                     EXHIBIT 4.1
                                                                     -----------
                                                                          Page 6

that no Committee exists which has the authority to administer the Plan, the
functions of the Committee shall be exercised by the Board.

     (b) The Committee shall be appointed from time to time by the Board, and
the Committee shall consist of not less than three members of the Board.
Appointment of Committee members shall be effective upon their acceptance of
such appointment. Committee members may be removed by the Board at any time
either with or without cause, and such members may resign at any time by
delivering notice thereof to the Board. Any vacancy on the Committee, whether
due to action of the Board or any other reason, shall be filled by the Board.

     (c) The Committee shall have full authority to grant, pursuant to the terms
of the Plan, Options to those individuals who are eligible to receive Options
under the Plan. In particular, the Committee shall have discretionary authority,
in accordance with the terms of the Plan, to: determine eligibility for
participation in the Plan; select, from time to time, from among those eligible,
the employees, directors and consultants to whom Options shall be granted under
the Plan, which selection may be based upon information furnished to the
Committee by the Company's or an Affiliate's management; determine whether an
Option shall take the form of an ISO or an Option other than an ISO; determine
the number of shares of Stock to be included in any Option and the periods for
which Options will be outstanding; establish and administer any terms,
conditions, performance criteria, restrictions, limitations, forfeiture, vesting
or exercise schedule, and other provisions of or relating to any Option; grant
waivers of terms, conditions, restrictions and limitations under the Plan or
applicable to any Option, or accelerate the vesting or exercisability of any
Option; amend or adjust the terms and conditions of any outstanding Option
and/or adjust the number and/or class of shares of Stock subject to any
outstanding Option; at any time and from time to time after the granting of an
Option, specify such additional terms, conditions and restrictions with respect
to any such Option as may be deemed necessary or appropriate to ensure
compliance with any and all applicable laws or rules, including, but not limited
to, terms, restrictions and conditions for compliance with applicable securities
laws, regarding an Optionee's exercise of Options by tendering shares of Stock
or under any "cashless exercise" program established by the Committee, and
methods of withholding or providing for the payment of required taxes; offer to
buy out an Option previously granted, based on such terms and conditions as the
Committee shall establish with and communicate to the Optionee at the time such
offer is made; and, to the extent permitted under the applicable Agreement,
permit the transfer of an Option or the exercise of an Option by one other than
the Optionee who received the grant of such Option (other than any such a
transfer or exercise which would cause any ISO to fail to qualify as an
"incentive stock option" under Section 422 of the Code).

     (d) The Committee shall have all authority that may be necessary or helpful
to enable it to discharge its responsibilities with respect to the Plan. Without
limiting the generality of the foregoing sentence or Section 3(a), and in
addition to the powers otherwise expressly designated to the Committee in the
Plan, the Committee shall have the exclusive right and discretionary authority
to interpret the Plan and the Agreements; construe any ambiguous provision of
the Plan and/or the Agreements and decide all questions concerning eligibility
for and the amount of Options granted under the Plan. The Committee may
establish, amend, waive and/or rescind rules and regulations and administrative
guidelines for carrying out the Plan and

<PAGE>
                                                                     EXHIBIT 4.1
                                                                     -----------
                                                                          Page 7

may correct any errors, supply any omissions or reconcile any inconsistencies in
the Plan and/or any Agreement or any other instrument relating to any Options.
The Committee shall have the authority to adopt such procedures and subplans and
grant Options on such terms and conditions as the Committee determines necessary
or appropriate to permit participation in the Plan by individuals otherwise
eligible to so participate who are foreign nationals or employed outside of the
United States, or otherwise to conform to applicable requirements or practices
of jurisdictions outside of the United States; and take any and all such other
actions it deems necessary or advisable for the proper operation and/or
administration of the Plan. The Committee shall have full discretionary
authority in all matters related to the discharge of its responsibilities and
the exercise of its authority under the Plan. Decisions and actions by the
Committee with respect to the Plan and any Agreement shall be final, conclusive
and binding on all persons having or claiming to have any right or interest in
or under the Plan and/or any Agreement.

     (e) Each Option shall be evidenced by an Agreement, which shall be executed
by the Company and the Optionee to whom such Option has been granted, unless the
Agreement provides otherwise; two or more Options granted to a single Optionee
may, however, be combined in a single Agreement. An Agreement shall not be a
precondition to the granting of an Option; no person shall have any rights under
any Option, however, unless and until the Optionee to whom the Option shall have
been granted (i) shall have executed and delivered to the Company an Agreement
or other instrument evidencing the Option, unless such Agreement provides
otherwise, and (ii) has otherwise complied with the applicable terms and
conditions of the Option. The Committee shall prescribe the form of all
Agreements, and, subject to the terms and conditions of the Plan, shall
determine the content of all Agreements. Any Agreement may be supplemented or
amended in writing from time to time as approved by the Committee; provided that
the terms and conditions of any such Agreement as supplemented or amended are
not inconsistent with the provisions of the Plan.

     (f) A majority of the members of the entire Committee shall constitute a
quorum and the actions of a majority of the members of the Committee in
attendance at a meeting at which a quorum is present, or actions by a written
instrument signed by all members of the Committee, shall be the actions of the
Committee.

     (g) The Committee may consult with counsel who may be counsel to the
Company. The Committee may, with the approval of the Board, employ such other
attorneys and/or consultants, accountants, appraisers, brokers and other persons
as it deems necessary or appropriate. In accordance with Section 12, the
Committee shall not incur any liability for any action taken in good faith in
reliance upon the advice of such counsel or other persons.

     (h) In serving on the Committee, the members thereof shall be entitled to
indemnification as directors of the Company, and to any limitation of liability
and reimbursement as directors with respect to their services as members of the
Committee.

     (i) Except to the extent prohibited by applicable law, including, without
limitation, the requirements applicable under Section 162(m) of the Code to any
Option intended to be "qualified performance-based compensation," or the
requirements for any Option granted to an officer or director to be covered by
any exemptive rule under Section 16 of the Exchange Act

<PAGE>
                                                                     EXHIBIT 4.1
                                                                     -----------
                                                                          Page 8

(including Rule 16b-3, or any successor rule, as the same may be amended from
time to time), or the applicable rules of a stock exchange, the Committee may,
in its discretion, allocate all or any portion of its responsibilities and
powers under this Section 3 to any one or more of its members and/or delegate
all or any part of its responsibilities and powers under this Section 3 to any
person or persons selected by it; provided, however, that the Committee may not
delegate its authority to correct errors, omissions or inconsistencies in the
Plan. Any such authority delegated or allocated by the Committee under this
paragraph (i) of Section 3 shall be exercised in accordance with the terms and
conditions of the Plan and any rules, regulations or administrative guidelines
that may from time to time be established by the Committee, and any such
allocation or delegation may be revoked by the Committee at any time.

     4. Shares of Stock Subject to the Plan. (a) The shares of stock subject to
Options granted under the Plan shall be shares of Stock. Such shares of Stock
subject to the Plan may be either authorized and unissued shares (which will not
be subject to preemptive rights) or previously issued shares acquired by the
Company or any Subsidiary. The total number of shares of Stock that may be
delivered pursuant to Options granted under the Plan is 6,850,000, plus any
shares of Stock subject to a stock option granted under the Predecessor Plan
which for any reason expires or is terminated or canceled without having been
fully exercised by delivery of shares of Stock; provided, however, that the
number of shares of Stock that may be delivered pursuant to Incentive Stock
Options under the Plan is 6,850,000, without application of paragraph (d) of
this Section 4.

     (b) Notwithstanding any of the foregoing limitations set forth in this
Section 4, the numbers of shares of Stock specified in this Section 4 shall be
adjusted as provided in Section 10.

     (c) Any shares of Stock subject to an Option which for any reason expires
or is terminated or canceled without having been fully exercised by delivery of
shares of Stock may again be granted pursuant to an Option under the Plan,
subject to the limitations of this Section 4.

     (d) If the option exercise price of an Option granted under the Plan or a
stock option granted under the Predecessor Plan is paid by tendering to the
Company shares of Stock already owned by the holder of such option (or such
holder and his or her spouse jointly), only the number of shares of Stock issued
net of the shares of Stock so tendered shall be deemed delivered for purposes of
determining the total number of shares of Stock that may be delivered under the
Plan.

     (e) Any shares of Stock delivered under the Plan in assumption or
substitution of outstanding stock options, or obligations to grant future stock
options, under plans or arrangements of an entity other than the Company or an
Affiliate in connection with the Company or an Affiliate acquiring such another
entity, or an interest in such an entity, or a transaction otherwise described
in Section 6(j), shall not reduce the maximum number of shares of Stock
available for delivery under the Plan.

<PAGE>
                                                                     EXHIBIT 4.1
                                                                     -----------
                                                                          Page 9

     5. Eligibility. Executive employees and other employees, including
officers, of the Company and the Affiliates, directors (whether or not also
employees), and consultants of the Company and the Affiliates, shall be eligible
to become Optionees and receive Options in accordance with the terms and
conditions of the Plan, subject to the limitations on the granting of ISOs set
forth in Section 6(h).

     6. Terms and Conditions of Stock Options. All Options to purchase Stock
granted under the Plan shall be either ISOs or Options other than ISOs. To the
extent that any Option does not qualify as an Incentive Stock Option (whether
because of its provisions or the time or manner of its exercise or otherwise),
such Option, or the portion thereof which does not so qualify, shall constitute
a separate Option other than an Incentive Stock Option. Each Option shall be
subject to all the applicable provisions of the Plan, including the following
terms and conditions, and to such other terms and conditions not inconsistent
therewith as the Committee shall determine and which are set forth in the
applicable Agreement. Options need not be uniform as to all grants and
recipients thereof.

          (a) The option exercise price per share of shares of Stock subject to
     each Option shall be determined by the Committee and stated in the
     Agreement; provided, however, that, subject to paragraph (h)(iii) and/or
     (j) of this Section 6, if applicable, such price applicable to any ISO
     shall not be less than one hundred percent (100%) of the Fair Market Value
     of a share of Stock at the time that the Option is granted.

          (b) Each Option shall be exercisable in whole or in such installments,
     at such times and under such conditions as may be determined by the
     Committee, in its discretion in accordance with the Plan, and stated in the
     Agreement, and, in any event, over a period of time ending not later than
     ten (10) years from the date such Option was granted, subject to paragraph
     (h)(iii) of this Section 6.

          (c) An Option shall not be exercisable with respect to a fractional
     share of Stock or the lesser of one hundred (100) shares and the full
     number of shares of Stock then subject to the Option. No fractional shares
     of Stock shall be issued upon the exercise of an Option.

          (d) Each Option may be exercised by giving Notice to the Company
     specifying the number of shares of Stock to be purchased, which shall be
     accompanied by payment in full including applicable taxes, if any, in
     accordance with Section 9. Payment shall be in any manner permitted by
     applicable law and prescribed by the Committee, in its discretion, and set
     forth in the Agreement, including, in the Committee's discretion, and
     subject to such terms, conditions and limitations as the Committee may
     prescribe, payment in accordance with a "cashless exercise" arrangement
     established by the Committee and/or in Stock owned by the Optionee or by
     the Optionee and his or her spouse jointly and acquired more than six (6)
     months prior to such tender.

          (e) No Optionee or other person shall become the beneficial owner of
     any shares of Stock subject to an Option, nor have any rights to dividends
     or other rights of a

<PAGE>

                                                                     EXHIBIT 4.1
                                                                     -----------
                                                                         Page 10

     shareholder with respect to any such shares until he or she has exercised
     his or her Option in accordance with the provisions of the Plan and the
     applicable Agreement.

          (f) An Option may be exercised only if at all times during the period
     beginning with the date of the granting of the Option and ending on the
     date of such exercise, the Optionee was an employee, director or consultant
     of the Company or an Affiliate, as applicable. Notwithstanding the
     preceding sentence, the Committee may determine in its discretion that an
     Option may be exercised prior to expiration of such Option following
     termination of such continuous employment, directorship or consultancy,
     whether or not exercisable at the time of such termination, to the extent
     provided in the applicable Agreement.

          (g) Subject to the terms and conditions and within the limitations of
     the Plan, the Committee may modify, extend or renew outstanding Options
     granted under the Plan, or accept the surrender of outstanding Options (up
     to the extent not theretofore exercised) and authorize the granting of new
     Options in substitution therefor (to the extent not theretofore exercised).

          (h) (i) Each Agreement relating to an Option shall state whether such
     Option will or will not be treated as an ISO. No ISO shall be granted
     unless such Option, when granted, qualifies as an "incentive stock option"
     under Section 422 of the Code. No ISO shall be granted to any individual
     otherwise eligible to participate in the Plan who is not an employee of the
     Company or a Subsidiary on the date of granting of such Option. Any ISO
     granted under the Plan shall contain such terms and conditions, consistent
     with the Plan, as the Committee may determine to be necessary to qualify
     such Option as an "incentive stock option" under Section 422 of the Code.
     Any ISO granted under the Plan may be modified by the Committee to
     disqualify such Option from treatment as an "incentive stock option" under
     Section 422 of the Code.

               (ii) Notwithstanding any intent to grant ISOs, an Option granted
          under the Plan will not be considered an ISO to the extent that it,
          together with any other "incentive stock options" (within the meaning
          of Section 422 of the Code, but without regard to subsection (d) of
          such Section) under the Plan and any other "incentive stock option"
          plans of the Company, any Subsidiary and any "parent corporation" of
          the Company within the meaning of Section 424(e) of the Code, are
          exercisable for the first time by any Optionee during any calendar
          year with respect to Stock having an aggregate Fair Market Value in
          excess of $100,000 (or such other limit as may be required by the
          Code) as of the time the Option with respect to such Stock is granted.
          The rule set forth in the preceding sentence shall be applied by
          taking Options into account in the order in which they were granted.

               (iii) No ISO shall be granted to an individual otherwise eligible
          to participate in the Plan who owns (within the meaning of Section
          424(d) of the Code), at the time the Option is granted, more than ten
          percent (10%) of the total combined voting power of all classes of
          stock of the Company or a Subsidiary or any "parent corporation" of
          the Company within the meaning of Section 424(e) of

<PAGE>

                                                                     EXHIBIT 4.1
                                                                     -----------
                                                                         Page 11

          the Code. This restriction does not apply if at the time such ISO is
          granted the Option exercise price per share of Stock subject to the
          Option is at least 110% of the Fair Market Value of a share of Stock
          on the date such ISO is granted, and the ISO by its terms is not
          exercisable after the expiration of five years from such date of
          grant.

          (i) An Option and any shares of Stock received upon the exercise of an
     Option shall be subject to such other transfer and/or ownership
     restrictions and/or legending requirements as the Committee may establish
     in its discretion and which are specified in the Agreement and may be
     referred to on the certificates evidencing such shares of Stock. The
     Committee may require an Optionee to give prompt Notice to the Company
     concerning any disposition of shares of Stock received upon the exercise of
     an ISO within: (i) two (2) years from the date of granting such ISO to such
     Optionee or (ii) one (1) year from the transfer of such shares of Stock to
     such Optionee or (iii) such other period as the Committee may from time to
     time determine. The Committee may direct that an Optionee with respect to
     an ISO undertake in the applicable Agreement to give such Notice described
     in the preceding sentence, at such time and containing such information as
     the Committee may prescribe, and/or that the certificates evidencing shares
     of Stock acquired by exercise of an ISO refer to such requirement to give
     such Notice.

          (j) In the event that a transaction described in Section 424(a) of the
     Code involving the Company or a Subsidiary is consummated, such as the
     acquisition of property or stock from an unrelated corporation, individuals
     who become eligible to participate in the Plan in connection with such
     transaction, as determined by the Committee, may be granted Options in
     substitution for stock options granted by another corporation that is a
     party to such transaction. If such substitute Options are granted, the
     Committee, in its discretion and consistent with Section 424(a) of the
     Code, if applicable, and the terms of the Plan, though notwithstanding
     paragraph (a) of this Section 6, shall determine the option exercise price
     and other terms and conditions of such substitute Options.

          (k) Notwithstanding any other provision contained in the Plan to the
     contrary, the maximum number of shares of Stock which may be subject to
     Options granted under the Plan to any Optionee in any twelve (12) month
     period shall not exceed the Award Limit. To the extent required by Section
     162(m) of the Code, shares of Stock subject to Options which are canceled
     shall continue to be counted against the Award Limit and if, after the
     grant of an Option, the price of shares subject to such Option is reduced
     and the transaction is treated as a cancellation of the Option and a grant
     of a new Option, both the Option deemed to be canceled and the Option
     deemed to be granted shall be counted against the Award Limit.

     7. Transfer, Leave of Absence. A transfer of an employee from the Company
to an Affiliate (or, for purposes of any ISO granted under the Plan, a
Subsidiary), or vice versa, or from one Affiliate to another (or in the case of
an ISO, from one Subsidiary to another), and a

<PAGE>

                                                                     EXHIBIT 4.1
                                                                     -----------
                                                                         Page 12

leave of absence, duly authorized in writing by the Company or a Subsidiary or
Affiliate, shall not be deemed a termination of employment of the employee for
purposes of the Plan or with respect to any Option (in the case of ISOs, to the
extent permitted by the Code).

     8. Rights of Employees and Other Persons. (a) No person shall have any
rights or claims under the Plan except in accordance with the provisions of the
Plan and the applicable Agreement.

     (b) Nothing contained in the Plan or in any Agreement shall be deemed to
(i) give any employee or director the right to be retained in the service of the
Company or any Affiliate nor restrict in any way the right of the Company or any
Affiliate to terminate any employee's employment or any director's directorship
at any time with or without cause or (ii) confer on any consultant any right of
continued relationship with the Company or any Affiliate, or alter any
relationship between them, including any right of the Company or an Affiliate to
terminate its relationship with such consultant.

     (c) The adoption of the Plan shall not be deemed to give any employee of
the Company or any Affiliate or any other person any right to be selected to
participate in the Plan or to be granted an Option.

     (d) Nothing contained in the Plan or in any Agreement shall be deemed to
give any employee the right to receive any bonus, whether payable in cash or in
Stock, or in any combination thereof, from the Company or any Affiliate, nor be
construed as limiting in any way the right of the Company or any Affiliate to
determine, in its sole discretion, whether or not it shall pay any employee
bonuses, and, if so paid, the amount thereof and the manner of such payment.

     9. Tax Withholding Obligations. (a) The Company and/or any Affiliate are
authorized to take whatever actions are necessary and proper to satisfy all
obligations of Optionees (including, for purposes of this Section 9, any other
person entitled to exercise an Option pursuant to the Plan or an Agreement) for
the payment of all Federal, state, local and foreign taxes in connection with
any Options (including, but not limited to, actions pursuant to the following
paragraph (b) of this Section 9).

     (b) Each Optionee shall (and in no event shall Stock be delivered to such
Optionee with respect to an Option until), no later than the date as of which
the value of the Option first becomes includible in the gross income of the
Optionee for income tax purposes, pay to the Company in cash, or make
arrangements satisfactory to the Company, as determined in the Committee's
discretion, regarding payment to the Company of, any taxes of any kind required
by law to be withheld with respect to the Stock or other property subject to
such Option, and the Company and any Affiliate shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment of any kind
otherwise due to such Optionee. Notwithstanding the above, the Committee may, in
its discretion and pursuant to procedures approved by the Committee, permit the
Optionee to (i) elect withholding by the Company of Stock otherwise deliverable
to such Optionee pursuant to his or her Option (provided, however, that the
amount

<PAGE>

                                                                     EXHIBIT 4.1
                                                                     -----------
                                                                         Page 13

of any Stock so withheld shall not exceed the amount necessary to satisfy
required Federal, state, local and foreign withholding obligations using the
minimum statutory rate) and/or (ii) tender to the Company Stock owned by such
Optionee (or by such Optionee and his or her spouse jointly) and acquired more
than six (6) months prior to such tender in full or partial satisfaction of such
tax obligations, based, in each case, on the Fair Market Value of the Stock on
the payment date as determined by the Committee.

     10. Changes in Capital. (a) The existence of the Plan and any Options
granted hereunder shall not affect in any way the right or power of the Board or
the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company or an
Affiliate, any issue of debt, preferred or prior preference stock ahead of or
affecting Stock, the authorization or issuance of additional shares of Stock,
the dissolution or liquidation of the Company or its Affiliates, any sale or
transfer of all or part of its assets or business or any other corporate act or
proceeding.

     (b)(i) Upon changes in the outstanding Stock by reason of a stock dividend,
stock split, reverse stock split, subdivision, recapitalization,
reclassification, merger, consolidation (whether or not the Company is a
surviving corporation), combination or exchange of shares of Stock, separation,
or reorganization, or in the event of an extraordinary dividend, "spin-off,"
liquidation, other substantial distribution of assets of the Company or
acquisition of property or stock or other change in capital of the Company, or
the issuance by the Company of shares of its capital stock without receipt of
full consideration therefor, or rights or securities exercisable, convertible or
exchangeable for shares of such capital stock, or any similar change affecting
the Company's capital structure, the aggregate number, class and kind of shares
of stock available under the Plan as to which Options may be granted, the Award
Limit, and the number, class and kind of shares under each outstanding Option
and the exercise price per share applicable to any such Options shall be
appropriately adjusted by the Committee in its discretion to preserve the
benefits or potential benefits intended to be made available under the Plan or
with respect to any outstanding Options or otherwise necessary to reflect any
such change.

          (ii) Fractional shares of Stock resulting from any adjustment in
     Options pursuant to Section 10(b)(i) shall be aggregated until, and
     eliminated at, the time of exercise of the affected Options. Notice of any
     adjustment shall be given by the Committee to each Optionee whose Option
     has been adjusted and such adjustment (whether or not such Notice is given)
     shall be effective and binding for all purposes of the Plan.

     (c) In the event of a Change in Control:

          (i) Immediately prior thereto, all outstanding Options shall be
     accelerated and become immediately exercisable as to all of the shares of
     Stock covered thereby, notwithstanding anything to the contrary in the Plan
     or the Agreement.

<PAGE>
                                                                     EXHIBIT 4.1
                                                                     -----------
                                                                         Page 14

          (ii) In its discretion, and on such terms and conditions as it deems
     appropriate, the Committee may provide, either by the terms of the
     Agreement applicable to any Option or by resolution adopted prior to the
     occurrence of the Change in Control, that any outstanding Option shall be
     adjusted by substituting for Stock subject to such Option stock or other
     securities of the surviving corporation or any successor corporation to the
     Company, or a parent or subsidiary thereof, or that may be issuable by
     another corporation that is a party to the transaction resulting in the
     Change in Control, whether or not such stock or other securities are
     publicly traded, in which event the aggregate exercise price shall remain
     the same and the amount of shares or other securities subject to the Option
     shall be the amount of shares or other securities which could have been
     purchased on the closing date or expiration date of such transaction with
     the proceeds which would have been received by the Optionee if the Option
     had been exercised in full (or with respect to a portion of such Option, as
     determined by the Committee, in its discretion) prior to such transaction
     or expiration date and the Optionee exchanged all of such shares in the
     transaction.

          (iii) In its discretion, and on such terms and conditions as it deems
     appropriate, the Committee may provide, either by the terms of the
     Agreement applicable to any Option or by resolution adopted prior to the
     occurrence of the Change in Control, that any outstanding Option shall be
     converted into a right to receive cash on or following the closing date or
     expiration date of the transaction resulting in the Change in Control in an
     amount equal to the highest value of the consideration to be received in
     connection with such transaction for one share of Stock, or, if higher, the
     highest Fair Market Value of the Stock during the thirty (30) consecutive
     business days immediately prior to the closing date or expiration date of
     such transaction, less the per share exercise price of such Option,
     multiplied by the number of shares of Stock subject to such Option, or a
     portion thereof.

          (iv) The Committee may, in its discretion, provide that an Option
     cannot be exercised after such a Change in Control, to the extent that such
     Option is or becomes fully exercisable on or before such Change in Control
     or is subject to any acceleration, adjustment or conversion in accordance
     with the foregoing paragraphs (i), (ii) or (iii) of this Section 10.

     No Optionee shall have any right to prevent the consummation of any of the
foregoing acts affecting the number of shares of Stock available to such
Optionee. Any actions or determinations of the Committee under this subsection
10(c) need not be uniform as to all outstanding Options, nor treat all Optionees
identically. Notwithstanding the foregoing adjustments, in no event may any
Option be exercised after ten (10) years from the date it was originally
granted, and any changes to ISOs pursuant to this Section 10 shall, unless the
Committee determines otherwise, only be effective to the extent such adjustments
or changes do not cause a "modification" (within the meaning of Section
424(h)(3) of the Code) of such ISOs or adversely affect the tax status of such
ISOs.

<PAGE>
                                                                     EXHIBIT 4.1
                                                                     -----------
                                                                         Page 15

     (d) If, as a result of a Change in Control transaction, an ISO fails to
qualify as an "incentive stock option," within the meaning of Section 422 of the
Code, either because of the failure of the Optionee to meet the holding period
requirements of Code Section 422(a)(1) (a "Disqualifying Disposition") or the
exercisability of such Option is accelerated pursuant to Section 10(c)(i), or
any similar provision of the applicable Agreement, in connection with such
Change in Control and such acceleration causes the aggregate Fair Market Value
(determined at the time the Option is granted) of the shares of Stock with
respect to which such Option, together with any other "incentive stock options,"
as provided in Section 6(h)(ii), are exercisable for the first time by such
Optionee during the calendar year in which such accelerated exercisability
occurs to exceed the limitations set forth in Section 6(h)(ii) (a "Disqualified
Option"); or any other exercise, payment, acceleration, adjustment or conversion
of an Option in connection with a Change in Control transaction results in any
additional taxes imposed on an Optionee, then the Company may, in the discretion
of the Committee, make a cash payment to or on behalf of the Optionee who holds
any such Option equal to the amount that will, after taking into account all
taxes imposed on the Disqualifying Disposition or other exercise, payment,
acceleration, adjustment or conversion of the Option, as the case may be, and
the receipt of such payment, leave such Optionee in the same after-tax position
the Optionee would have been in had the Code Section 422(a)(1) holding period
requirements been met at the time of the Disqualifying Disposition or had the
Disqualified Option continued to qualify as an "incentive stock option," within
the meaning of Code Section 422 on the date of such exercise or otherwise
equalize the Optionee for any such taxes; provided, however, that the amount,
timing and recipients of any such payment or payments shall be subject to such
terms, conditions and limitations as the Committee shall, in its discretion,
determine. Without limiting the generality of the proviso contained in the
immediately preceding sentence, in determining the amount of any such payment or
payments referred to therein, the Committee may adopt such methods and
assumptions as it considers appropriate, and the Committee shall not be required
to examine or take into account the individual tax liability of any Optionee.

     11. Miscellaneous Provisions. (a) The Plan shall be unfunded. The Company
shall not be required to establish any special or separate fund or to make any
other segregation of assets to assure the issuance of shares of Stock or the
payment of cash upon exercise or payment of any Option. Proceeds from the sale
of shares of Stock pursuant to Options granted under the Plan shall constitute
general funds of the Company.

     (b) Except as otherwise provided in this paragraph (b) of Section 11 or by
the Committee, an Option by its terms shall be personal and may not be sold,
transferred, pledged, assigned, encumbered or otherwise alienated or
hypothecated otherwise than by will or by the laws of descent and distribution
and shall be exercisable during the lifetime of an Optionee only by him or her.
An Agreement may permit the exercise or payment of an Optionee's Option (or any
portion thereof) after his or her death by or to the beneficiary most recently
named by such Optionee in a written designation thereof filed with the Company,
or, in lieu of any such surviving beneficiary, as designated by the Optionee by
will or by the laws of descent and distribution. In the event any Option is
exercised by the executors, administrators, heirs or distributees of the estate
of a deceased Optionee, or such an Optionee's beneficiary, or the transferee of
an Option, in any such case pursuant to the terms and conditions of the Plan and
the

<PAGE>
                                                                     EXHIBIT 4.1
                                                                     -----------
                                                                         Page 16

applicable Agreement and in accordance with such terms and conditions as may be
specified from time to time by the Committee, the Company shall be under no
obligation to issue Stock thereunder unless and until the Committee is satisfied
that the person or persons exercising such Option is the duly appointed legal
representative of the deceased Optionee's estate or the proper legatee or
distributee thereof or the named beneficiary of such Optionee, or the valid
transferee of such Option, as applicable.

     (c) (i) If at any time the Committee shall determine, in its discretion,
that the listing, registration and/or qualification of shares of Stock upon any
securities exchange or under any state, Federal or foreign law, or the consent
or approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the sale or purchase of shares of Stock
hereunder, no Option may be granted, exercised or paid in whole or in part
unless and until such listing, registration, qualification, consent and/or
approval shall have been effected or obtained, or otherwise provided for, free
of any conditions not acceptable to the Committee.

          (ii) If at any time counsel to the Company shall be of the opinion
     that any sale or delivery of shares of Stock pursuant to an Option is or
     may be in the circumstances unlawful or result in the imposition of excise
     taxes on the Company or any Affiliate under the statutes, rules or
     regulations of any applicable jurisdiction, the Company shall have no
     obligation to make such sale or delivery, or to make any application or to
     effect or to maintain any qualification or registration under the
     Securities Act, or otherwise with respect to shares of Stock or Options and
     the right to exercise any Option shall be suspended until, in the opinion
     of such counsel, such sale or delivery shall be lawful or will not result
     in the imposition of excise taxes on the Company or any Affiliate.

          (iii) Upon termination of any period of suspension under this Section
     11(c), any Option affected by such suspension which shall not then have
     expired or terminated shall be reinstated as to all shares available before
     such suspension and as to the shares which would otherwise have become
     available during the period of such suspension, but no suspension shall
     extend the term of any Option.

     (d) The Committee may require each person receiving Stock in connection
with any Option under the Plan to represent and agree with the Company in
writing that such person is acquiring the shares of Stock for investment without
a view to the distribution thereof. The Committee, in its absolute discretion,
may impose such restrictions on the ownership and transferability of the shares
of Stock purchasable or otherwise receivable by any person under any Option as
it deems appropriate. Any such restrictions shall be set forth in the applicable
Agreement, and the certificates evidencing such shares may include any legend
that the Committee deems appropriate to reflect any such restrictions.

     (e) By accepting any benefit under the Plan, each Optionee and each person
claiming under or through such Optionee shall be conclusively deemed to have
indicated their acceptance and ratification of, and consent to, all of the terms
and conditions of the Plan and any action taken under the Plan by the Committee,
the Company or the Board, in any case in accordance with the terms and
conditions of the Plan.

<PAGE>
                                                                     EXHIBIT 4.1
                                                                     -----------
                                                                         Page 17

     (f) In the discretion of the Committee, an Optionee may elect irrevocably
(at a time and in a manner determined by the Committee) prior to exercising an
Option that delivery of shares of Stock upon such exercise shall be deferred
until a future date and/or the occurrence of a future event or events, specified
in such election. Upon the exercise of any such Option and until the delivery of
any deferred shares, the number of shares otherwise issuable to the Optionee
shall be credited to a memorandum account in the records of the Company or its
designee and any dividends or other distributions payable on such shares shall
be deemed reinvested in additional shares of Stock, in a manner determined by
the Committee, until all shares of Stock credited to such Optionee's memorandum
account shall become issuable pursuant to the Optionee's election.

     (g) The Committee may, in its discretion, extend one or more loans to
Optionees who are directors, key employees or consultants of the Company or an
Affiliate in connection with the exercise or receipt of an Option granted to any
such individual. The terms and conditions of any such loan shall be established
by the Committee.

     (h) Except with respect to Incentive Stock Options granted under the
Predecessor Plan (within the meaning of the Predecessor Plan) and outstanding on
the Effective Date, subject to approval of the Plan by the Company's
shareholders, in accordance with Section 15, the provisions of the Plan shall
apply to and govern all stock options granted under the Predecessor Plan and,
unless otherwise determined by the Committee, such stock options granted under
the Predecessor Plan shall be deemed to be amended to provide any additional
rights applicable to Options hereunder, subject to the right of any affected
participant in the Predecessor Plan to refuse to consent to such amendment
pursuant to the terms and conditions of the Predecessor Plan and the applicable
option or award agreement between the Company and such participant.

     (i) Neither the adoption of the Plan nor anything contained herein shall
affect any other compensation or incentive plans or arrangements of the Company
or any Affiliate (other than the Predecessor Plan, as provided in paragraph (h)
of this Section 11), or prevent or limit the right of the Company or any
Affiliate to establish any other forms of incentives or compensation for their
directors, employees or consultants or grant or assume options or other rights
otherwise than under the Plan.

     (j) The Plan shall be governed by and construed in accordance with the laws
of the State of New Jersey, without regard to such state's conflict of law
provisions, and, in any event, except as superseded by applicable Federal law.

     (k) The words "Section," "subsection" and "paragraph" herein shall refer to
provisions of the Plan, unless expressly indicated otherwise. Wherever any words
are used in the Plan or any Agreement in the masculine gender they shall be
construed as though they were also used in the feminine gender in all cases
where they would so apply, and wherever any words are used herein in the
singular form they shall be construed as though they were also used in the
plural form in all cases where they would so apply.

<PAGE>
                                                                     EXHIBIT 4.1
                                                                     -----------
                                                                         Page 18

     (l) The Company shall bear all costs and expenses incurred in administering
the Plan, including expenses of issuing Stock pursuant to any Options granted
hereunder.

     12. Limits of Liability. (a) Any liability of the Company or an Affiliate
to any Optionee with respect to any Option shall be based solely upon
contractual obligations created by the Plan and the Agreement.

     (b) None of the Company, any Affiliate, any member of the Committee or the
Board or any other person participating in any determination of any question
under the Plan, or in the interpretation, administration or application of the
Plan, shall have any liability, in the absence of bad faith, to any party for
any action taken or not taken in connection with the Plan, except as may
expressly be provided by statute.

     13. Limitations Applicable to Certain Options Subject to Exchange Act
Section 16 and Code Section 162(m). Unless stated otherwise in the Agreement,
notwithstanding any other provision of the Plan, any Option granted to an
officer or director of the Company who is then subject to Section 16 of the
Exchange Act, shall be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including Rule
16b-3, or any successor rule, as the same may be amended from time to time) that
are requirements for the application of such exemptive rule, and the Plan and
applicable Agreement shall be deemed amended to the extent necessary to conform
to such limitations. Furthermore, unless stated otherwise in the Agreement,
notwithstanding any other provision of the Plan, any Option granted to an
employee of the Company or an Affiliate intended to qualify as "other
performance-based compensation" as described in Section 162(m)(4)(C) of the Code
shall be subject to any additional limitations set forth in Section 162(m) of
the Code or any regulations or rulings issued thereunder (including any
amendment to any of the foregoing) that are requirements for qualification as
"other performance-based compensation" as described in Section 162(m)(4)(C) of
the Code, and the Plan and applicable Agreement shall be deemed amended to the
extent necessary to conform to such requirements.

     14. Amendments and Termination. The Board may, at any time and with or
without prior notice, amend, alter, suspend or terminate the Plan, retroactively
or otherwise; provided, however, unless otherwise required by law or
specifically provided herein, no such amendment, alteration, suspension or
termination shall be made which would impair the previously accrued rights of
any holder of an Option theretofore granted without his or her written consent,
or which, without first obtaining approval of the stockholders of the Company
(where such approval is necessary to satisfy (i) any applicable requirements
under the Code relating to ISOs or for exemption from Section 162(m) of the
Code; (ii) the then-applicable requirements of Rule 16b-3 promulgated under the
Exchange Act, or any successor rule, as the same may be amended from time to
time; or (iii) any other applicable law, regulation or rule), would:

          (a) except as is provided in Section 10, increase the maximum number
              of shares of Stock which may be sold or awarded under the Plan or
              increase

<PAGE>
                                                                     EXHIBIT 4.1
                                                                     -----------
                                                                         Page 19

              the limitations set forth in Section 6(k) on the maximum of
              shares of Stock that may be subject to Options granted to an
              Optionee;

          (b) except as is provided in Section 10, decrease the minimum option
              exercise price requirements of Section 6(a);

          (c) change the class of persons eligible to receive Options under the
              Plan; or

          (d) extend the duration of the Plan or the period during which Options
              may be exercised under Section 6(b).

     The Committee may amend the terms of any Option theretofore granted,
including any Agreement, retroactively or prospectively, but no such amendment
shall materially impair the previously accrued rights of any Optionee without
his or her written consent.

     15. Duration. Following the adoption of the Plan by the Board, the Plan
shall become effective as of the date on which it is approved by the holders of
a majority of the Company's outstanding Stock which is present and voted at a
meeting, or by written consent in lieu of a meeting (the "Effective Date"),
which approval must occur within the period ending twelve (12) months after the
date the Plan is adopted by the Board. The Plan shall terminate upon the
earliest to occur of:

          (a) the effective date of a resolution adopted by the Board
              terminating the Plan;

          (b) the date all shares of Stock subject to the Plan are delivered
              pursuant to the Plan's provisions; or

          (c) ten (10) years from the Effective Date.

No Option may be granted under the Plan after the earliest to occur of the
events or dates described in the foregoing paragraphs (a) through (c) of this
Section 15; however, Options theretofore granted may extend beyond such date.

     No such termination of the Plan shall affect the previously accrued rights
of any Optionee hereunder and all Options previously granted hereunder shall
continue in force and in operation after the termination of the Plan, except as
they may be otherwise terminated in accordance with the terms of the Plan or the
Agreement.<PAGE>

                            LMS MEDICAL SYSTEMS INC.

                             2004 STOCK OPTION PLAN

                         ARTICLE I - PURPOSE OF THE PLAN

1.1 The purpose of the Plan is to provide officers, directors and employees of
the Company or its Subsidiaries and any other persons providing ongoing
management or consulting services to the Company or its Subsidiaries with the
opportunity to acquire a proprietary interest in the Company and thereby
participate in the growth and development of the Company and its Subsidiaries.

                            ARTICLE II - DEFINITIONS

2.1 Where used herein, the following terms shall have the following meanings,
respectively:

     (a) "ACT" means the Securities Act (Ontario) as the same may be amended,
         re-enacted or replaced from time to time;

     (b) "ASSOCIATES" shall have the meaning given to it under the Act;

     (c) "BOARD OF DIRECTORS" means the Board of Directors of the Company;

     (d) "COMPANY" means LMS Medical Systems Inc. and includes any successor
         corporation thereto;

     (f) "HOLDER" means a person to whom an Option has been granted under the
         Plan;

     (g) "INSIDER" means:

         (i)   an insider as defined in the Act, other than a person who falls
               within that definition solely by virtue of being a director or
               senior officer (as such term is defined in the Act) of a
               Subsidiary; and

         (ii)  an Associate of any person who is an insider by virtue of (i)
               above;

     (h) "OPTION" means an option to purchase Shares granted pursuant to the
         Plan;

     (i) "OUTSTANDING ISSUE" means at any time the number of Shares of the
         Company then issued and outstanding less the number of Shares issued
         pursuant to Share Compensation Arrangements within the previous 12
         months;

     (j) "PLAN" shall mean the LMS Medical Systems Inc. - 2004 Stock Option Plan
         adopted by the Board of Directors on March 31, 2004 and to be submitted
         to the shareholders

<PAGE>

                                      -2-
         of the Company for approval at a meeting to be held on or about
         September 2004;

     (k) "SHARES" means common shares in the capital of the Company;

     (l) "SHARE COMPENSATION ARRANGEMENTS" shall have the meaning set out in
         section 3.3 hereof; and

     (m) "SUBSIDIARY" means, in respect of the Company, any corporation that is
         a "subsidiary", as that term is defined in the Canada Business
         Corporations Act, of the Company.

                              ARTICLE III - OPTIONS

3.1 SHARES AVAILABLE. The Board of Directors may at any time, and from time to
time, in accordance with this Plan, reserve and grant Options to purchase such
number of treasury Shares which is not in excess of 2,149,942 Shares, or such
greater number of Shares as shall have been duly approved by the Board of
Directors and, if required by the rules and policies of The Toronto Stock
Exchange or any other Stock Exchange on which the Shares may then be listed, by
the shareholders of the Company.

3.2 TIME OF ISSUANCE OF OPTIONS. The Board of Directors may from time to time
grant Options pursuant to this Plan. Subject to the provisions of section 3.4,
nothing herein shall be construed to prohibit the granting of Options at
different times to the same person.

3.3 PERSONS ELIGIBLE. Persons eligible to receive Options shall be such bona
fide officers, directors and employees of the Company and/or its Subsidiaries or
other persons or companies engaged to provide on-going management or consulting
services to the Company or its Subsidiaries, which in the view of the Board of
Directors, demonstrate the potential of becoming key personnel of, or performing
valuable services for, the Company and its Subsidiaries, or as an inducement of
employment, as the Board of Directors, in its sole discretion may determine.
Notwithstanding anything to the contrary contained in the Plan, no Options may
be granted to Insiders if such Options, together with any other options
previously granted by the Company (collectively the "Share Compensation
Arrangements") could result in:

     (a) the number of Shares reserved for issuance pursuant to Share
         Compensation Arrangements to Insiders collectively exceeding 10% of the
         Outstanding Issue; or

     (b) the issuance to Insiders, collectively within the 12 months immediately
         preceding or 12 months immediately following the date of grant of such
         Options, of a number of Shares exceeding 10% of the Outstanding Issue;
         or

     (c) the issuance to any one Insider within the 12 months immediately
         preceding or 12 months immediately following the date of grant of such
         Options, of a number of Shares exceeding 5% of the Outstanding Issue.

<PAGE>
                                      -3-

3.4 NUMBER OF SHARES TO BE OPTIONED. The number of Shares to be optioned to any
person shall be determined, in its sole discretion, by the Board of Directors
provided that the number of Shares reserved for issuance at any time to any one
person pursuant to Share Compensation Arrangements shall not exceed 5% of the
number of Shares of the Company then issued and outstanding.

3.5 OPTION CERTIFICATES. An Option certificate, in the form approved by the
Board of Directors and signed by such officer(s) of the Company as the Board of
Directors may from time to time determine, shall be issued to each Holder.

3.6 ASSIGNABILITY OF OPTIONS. Options and all rights thereunder shall be
non-assignable and non-transferable by the Holder, provided however that the
personal representatives of a deceased Holder may exercise the rights enjoyed
under any such Option at the time of his death subject, however, to the terms,
conditions and limitations herein provided.

3.7 OPTION PRICE. The price at which Shares may be purchased under any Option
shall be fixed by the Board of Directors, subject only to the rules and policies
of any applicable securities regulatory authority and any trading network,
market or stock exchange upon which the Shares may then be listed or quoted for
trading.

     If the Shares are listed on the Toronto Stock Exchange, the exercise price
of the Option shall be not less than the closing sale price of the Shares on the
Toronto Stock Exchange on the last trading day prior to the grant of such Option
and, if there is no such closing price, then the exercise price per Share at
which the Shares may be purchased under any Option shall not be less than the
simple average of the closing bid and ask prices on the Toronto Stock Exchange
on the last trading day prior to grant of such Option.

     If the Shares are not listed on the Toronto Stock Exchange, the exercise
price of the Option shall be not less than the closing price of a board lot of
the Shares on such stock exchange or over-the-counter market as the Company's
Shares are then listed or quoted from time to time on the last trading day prior
to the grant of such Option and, if there is no such closing price, then the
exercise price per Share at which the Shares may be purchased under any Option
shall be not less than the simple average of the closing bid and ask prices on
such stock exchange or over-the-counter market on the last trading day prior to
grant of such Option.

     Notwithstanding the foregoing, the Board of Directors may grant options at
such prices as the Board of Directors may determine and applicable regulatory
authorities, stock exchanges or over-the-counter markets may approve.

3.8 TERM AND VESTING. The Board of Directors shall determine the term during
which Shares may be purchased under any Option granted pursuant to the Plan (but
such term shall not exceed 10 years) and shall determine the extent to which the
Option may be exercised at any time during the term of the Option.

<PAGE>
                                      -4-

                        ARTICLE IV - EXERCISE OF OPTIONS

4.1 HOW EXERCISABLE. Options shall be exercised by delivery of a duly signed
notice in writing to such effect, together with the Option certificate and the
full purchase price of the Shares purchased pursuant to the exercise of the
Option, addressed to the Chief Financial Officer of the Company or any other
officer of the Company as the Board of Directors may from time to time appoint
for the purposes of receiving the same.

4.2 ISSUANCE OF SHARE CERTIFICATES. Within a reasonable time after exercise of
an Option and payment for the Shares purchased pursuant to such exercise, the
Company shall cause to be delivered to the person exercising the Option, a
certificate for the Shares purchased pursuant to the exercise of the Option and
an Option certificate for a number of Shares equivalent to the difference
between the number of Shares of the Option certificate surrendered at the time
of the exercise of the Option and the number of Shares with respect to which the
Option was so exercised, or the Company may, at its election and in lieu of
issuing a new Option certificate, endorse on the original Option certificate, a
memorandum of the number of Shares in respect of which the Option has been
exercised.

4.3. TERMINATION OF OPTIONS. Any Option not exercised within the period fixed
for its exercise shall terminate and become void and of no effect.

4.4 CESSATION OF EMPLOYMENT. If a Holder ceases to be an officer, director or
employee of the Company or a Subsidiary for any reason, other than that noted
below, then all Options held by such Holder shall terminate and cease to be
exercisable on the day which is 180 days following the effective date on which
the Holder ceased to be an officer, director or employee of the Company. If a
Holder ceases to be an officer, director or employee of the Company or a
Subsidiary as a result of the retirement of the Holder and provided such
retirement is accepted by the Board of Directors, then all Options held by such
Holder shall terminate and cease to be exercisable on the day which is the third
anniversary of the effective date of the Holder's retirement. If a Holder's
employment with the Company is terminated for just cause, all Options held by
such Holder shall automatically terminate. The Holder, or the legal personal
representative of a deceased Holder, as the case may be, shall be entitled to
exercise any Options held by such Holder but only to the extent that the Holder
was entitled to exercise such Options at the effective date of the Holder
ceasing to be a director, officer or employee of the Company or a Subsidiary,
and for greater certainty, no Option may be exercised after the stated expiry
date thereof.

                             ARTICLE V - ADJUSTMENTS

5.1 ADJUSTMENT OF OPTIONED SHARES. If prior to the complete exercise of any
Option there shall be declared and paid a stock dividend upon the Shares of the
Company or if such Shares shall be consolidated or subdivided or converted,
exchanged or reclassified, or in any way substituted for, including without
limitation, pursuant to an amalgamation, arrangement or merger, then the Option,
to the extent that it has not been exercised, shall entitle the Holder upon the
future exercise of the Option to such number and kind of securities or other
property, subject to the terms of the Option, to

<PAGE>
                                      -5-

which the Holder would have been entitled had the Holder actually owned the
Shares subject to the unexercised portion of the Option at the time of the
occurrence of such stock dividend, consolidation, conversion, subdivision,
exchange, reclassification or substitution; and the aggregate purchase price
upon the future exercise of the Option shall be the same as if originally
optioned Shares of the Company were being purchased hereunder. If any such event
should occur, the number of Shares reserved for issuance pursuant to the Plan
shall be similarly adjusted.

                         ARTICLE VI - CHANGE OF CONTROL

6.1 If a bona fide offer (the "Offer") for voting or equity shares is made to
shareholders of the Company generally, or to a class of shareholders of the
Company which, if Options were exercised, would include Holders, and which
Offer, if accepted in whole or in part, would result in the offeror exercising
control over the Company within the meaning of subsection 1(3) of the Act then,
notwithstanding section 3.8 but subject to the other provisions hereof:

     (a) The Board of Directors may give its express consent to the exercise of
         any Options which are outstanding although not yet exercisable at the
         time of the Offer in the manner hereinafter provided.

     (b) If the Board of Directors has so consented to the exercise of any
         Options outstanding at the time of the Offer, the Company shall,
         immediately after such consent has been given, notify each Holder
         currently holding an Option of the Offer, with full particulars
         thereof, together with a notice stating that, in order to permit the
         Holder to participate in the Offer, the Holder may, during the period
         that the Offer is open for acceptance (or, if no such period is
         specified, the period of 30 days following the date of such notice),
         exercise all or any portion of any such Option held by the Holder.

     (c) In the event that the Holder so exercises any such Option, such
         exercise shall be in accordance with Article 4 hereof; provided that,
         if necessary in order to permit the Holder to participate in the Offer,
         such Option shall be deemed to have been exercised, and the issuance of
         Shares received upon such exercise (the "Optioned Shares") shall be
         deemed to have occurred, effective as of the first day prior to the
         date on which the Offer was made.

     (d) If, upon the expiry of the applicable period referred to in subsection
         (b) above, the Offer is completed, and:

         (i)   the Holder has not exercised the entire or any portion of such
               Option then, as of and from the expiry of such period, the
               Holder's right to purchase the Shares covered by such Option
               shall not be exercisable, and shall expire and be null and void;
               and

         (ii)  the Holder has exercised the entire or any portion of such
               Option, but has not tendered the Shares received in connection
               with such exercise to the Offer,

<PAGE>
                                      -6-

               then, as and from the expiry of such period, the Company may
               require the Holder to sell to the Company such Optioned Shares
               for a purchase price of $.001 per Optioned Share.

     (e) If:

         (i)   the Offer is not completed (within the time specified therein, if
               applicable);

               or

         (ii)  all of the Optioned Shares tendered by the Holder pursuant to the
               Offer are not taken up and paid for by the offeror in respect
               thereof;

         then the Optioned Shares or, in the case of paragraph (ii) above, the
         portion thereof that are not taken up and paid for by such offeror,
         shall be returned by the Holder to the Company for cancellation and the
         terms of the Option as set forth herein shall again apply to such
         Option, or the remaining portion thereof, as the case may be.

     (f) If any Optioned Shares are returned to the Company pursuant to
         subsection (e) above, the Company shall refund the option price to the
         Holder in respect of such Optioned Shares.

     (g) In no event shall the Holder be entitled to sell the Optioned Shares
         otherwise than pursuant to the Offer, except as provided in paragraph
         (d)(ii) above.

                         ARTICLE VII - FRACTIONAL SHARES

7.1 No fractional shares may be purchased or issued under the Plan. If as a
result of any adjustment pursuant to Article 5 hereof, a Holder would become
entitled to a fractional Share, he or she shall have the right to purchase only
the next lower whole number of Shares and no payment or other adjustment will be
made with respect to the fractional interest so disregarded.

                           ARTICLE VIII - LIMITATIONS

8.1 The Company's obligations to issue Shares in accordance with the terms of
this Plan is subject to compliance with the laws, rules, and regulations of all
public agencies and authorities applicable to the issuance and distribution of
such Shares and to the listing of such Shares on any Stock Exchange on which the
Shares of the Company may be listed. Each Holder agrees to comply with all such
laws, rules and regulations and agrees to furnish to the Company all information
and such undertakings as may be required to permit compliance with such laws,
rules and regulations.

<PAGE>
                                      -7-

              ARTICLE IX - AMENDMENT OR DISCONTINUANCE OF THE PLAN

9.1 The Board of Directors may discontinue the Plan at any time; provided
however that such discontinuance may not alter or impair any Option previously
granted to a Holder under the Plan. Subject to any necessary approval of The
Toronto Stock Exchange or any other Stock Exchange on which the Shares may be
listed, the Board of Directors may from time to time amend the Plan and the
terms and the conditions of any Options thereafter to be granted and the Board
of Directors, with the consent of the affected Holder of an Option, may from
time to time amend the Plan and the terms and conditions of any Options which
have been theretofore granted.

                      ARTICLE X - MISCELLANEOUS PROVISIONS

10.1 RIGHTS OF HOLDERS. The Holder of an Option shall not have any rights as a
shareholder of the Company with respect to any Shares covered by such Option
until such Holder shall have exercised such Option in accordance with the terms
of the Plan (including tendering payment in full of the aggregate exercise price
in respect of which the Option is being exercised).

10.2 NO ADDITIONAL RIGHTS CONFERRED. Nothing in the Plan nor any Option shall
confer upon any Holder any right to continue as an employee, officer or director
of the Company or any Subsidiary or affect in any manner the right of the
Company or any Subsidiary to terminate a Holder's employment at any time.

     ADOPTED BY THE BOARD OF DIRECTORS OF LMS MEDICAL SYSTEMS INC. THE 31ST DAY
OF MARCH, 2004.

                                        By:   "Yves Grou"
                                           -------------------------------------
                                           Name: Yves Grou
                                           Title: Chief Financial Officer

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00070-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00070-of-00352.parquet"}]]