2000 STOCK OPTION PLAN

EXHIBIT 4.2


EMCORE CORPORATION

2000 STOCK OPTION PLAN

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




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which such Person has Beneficial Ownership of fifty percent (50%) or
more of the combined voting power of the Company's then outstanding
Voting 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





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Beneficial Ownership of fifty percent (50%) or more
of the then outstanding Voting Securities, owns,
together 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.




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

(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.





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(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 Company's
Secretary or sent by facsimile to the Company at (732) 302-9783, 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,



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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 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




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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 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.




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(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 (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 725,000,
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
total number of shares of Stock that may be delivered pursuant to Incentive
Stock Options under the Plan is 725,000, 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



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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.

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.




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(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 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





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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 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.





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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 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






-12-


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 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:




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(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.

(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,




-14-



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.

(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




-15-



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 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




-16-



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.

(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



-17-


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.

(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:




-18-



(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 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.



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