COMNET CORP, DEF 14A, 1995-09-13

COMNET CORP
DEF 14A, 1995-09-13
PREPACKAGED SOFTWARE

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COMNET CORPORATION

4200 Parliament Place
Suite 600
Lanham, Maryland 20706-1860

__________________

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To be Held September 12, 1995

To the Stockholders of COMNET Corporation:

You are cordially invited to attend the Annual Meeting of stockholders
of COMNET Corporation (the "Company") to be held on September 12, 1995 at
9:30 a.m. at Prudential Securities, One Liberty Plaza, New York, New York
10292 (the "Annual Meeting"), for the following purposes:

(1) To elect three (3) directors to hold office until the third
annual meeting of stockholders of the Company following their election and
until the election and qualification of their successors;

(2) To approve the adoption of the Company's 1995 Incentive Stock
Option, Non-Qualified Stock Option and Stock Appreciation Unit Plan;

(3) To approve the adoption of the Company's 1995 Non-Employee
Directors' Stock Option Plan; and

(4) To transact such other business as may properly come before the
Annual Meeting and any adjournment or postponement thereof.

Only stockholders of record at the close of business on July 11, 1995
(the "Record Date"), are entitled to receive notice of, and to vote at, the
Annual Meeting.

We hope that you will be able to attend the Annual Meeting in person.

___________________________________________________________________________

IN ORDER TO ASSURE A QUORUM AND TO AVOID THE EXPENSE AND DELAY OF
SENDING FOLLOW-UP LETTERS, PLEASE FILL IN, SIGN, DATE AND RETURN
YOUR PROXY IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF
MAILED WITHIN THE UNITED STATES. IF YOU ARE PRESENT AT THE
ANNUAL MEETING, YOU MAY, IF YOU WISH, WITHDRAW YOUR PROXY AND
VOTE YOUR SHARES PERSONALLY.
___________________________________________________________________________

By Order of the Board of Directors

Edward Weiss
Secretary

Lanham, Maryland
July 25, 1995
COMNET CORPORATION

4200 Parliament Place
Suite 600
Lanham, Maryland 20706-1860
301/918-0400
__________________

PROXY STATEMENT
__________________

ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 12, 1995

__________________

This Proxy Statement and the enclosed form of proxy are furnished to
stockholders of COMNET Corporation, a Delaware corporation (the "Company"),
in connection with the solicitation of proxies by the Board of Directors of
the Company from holders of outstanding shares of its common stock, $.50
par value (the "Common Stock") and 6% Convertible Preferred Stock (the "6%
Preferred Stock"), (the Common Stock and 6% Preferred Stock, collectively
constitute the "Voting Securities"), for use at the annual meeting of stock
holders to be held on September 12, 1995 (the "Annual Meeting"), and at any
adjournment thereof. The approximate date on which this Proxy Statement
and the related form of proxy are first being sent to stockholders is July
25, 1995.

If the enclosed proxy is properly signed and returned, and if the
stockholder specifies a choice on the proxy, the shares of the Voting
Securities represented by the proxy will be voted (or withheld from voting)
in accordance with the stockholder's choice. If the proxy is signed and
returned but no specification is made, the proxy will be voted FOR the
election of the Board's nominees for directors listed below and, in turn
FOR each other proposals contained in the Proxy Statement.

The Board of Directors of the Company knows of no business that will
be presented for consideration at the Annual Meeting other than the matters
described in this Proxy Statement. If any other matters are presented at
the Annual Meeting, the proxy holders will vote the proxies in accordance
with their judgment.

Any proxy may be revoked by the stockholder giving such proxy, at any
time prior to its being voted, by filing with the Secretary of the Company,
at its address set forth above, a notice of revocation or a duly executed
proxy bearing a later date. Any proxy may also be revoked by the stock
holder's attendance at the Annual Meeting and voting in person. A notice
of revocation need not be on any specific form.

The Company has fixed the close of business on July 11, 1995, as the
record date (the "Record Date") for the determination of the stockholders
of the Voting Securities of the Company entitled to notice of, and to vote
at, the Annual Meeting. On that date, there were outstanding 2,989,067
shares of Common Stock and 147,500 shares of 6% Preferred Stock. The
holders of the Common Stock and the 6% Preferred Stock will be entitled to
one vote per share on each matter submitted to the Annual Meeting. No
other voting securities of the Company are outstanding.

The presence at the Annual Meeting, in person or by proxy, of the
holders of a majority of the shares of Voting Securities entitled to vote
constitutes a quorum for the transaction of business at the Annual Meeting.
If a quorum should not be present, the Annual Meeting may be adjourned from
time to time until a quorum is obtained.

There are no rights of appraisal or similar rights of dissenters
applicable to the matters to be voted upon at the Annual Meeting.

FINANCIAL INFORMATION

A copy of the Company's Annual Report to Stockholders for the fiscal
year ended March 31, 1995 accompanies this Proxy Statement. The Annual
Report is not a part of the proxy solicitation materials.

BENEFICIAL OWNERSHIP

The following table sets forth certain information as of July 11,
1995, as to all persons who, to the knowledge of the Company, were
beneficial owners of five percent or more of the Common Stock or 6%
Convertible Preferred Stock of the Company, and all directors and officers
of the Company as a group.
<TABLE>
<CAPTION>
Number of Number of Shares
Shares of of 6% Preferred
Common Stock Stock and
Name and Address of Beneficial and Percent of Percent of
Owner Number of Persons in Group Class Class

<S> <C> <C>
Medco Containment Services, Inc. 543,345 100,000
100 Summit Avenue 18.2% 67.8%
Montvale, NJ 07645 <F1>

Robert S. Bowen 328,533 <F2> 11,875
4200 Parliament Place 10.3% 8.1%
Suite 600
Lanham, MD 20706

John Spohler 235,525 <F3> 11,875
One Liberty Plaza 7.8% 8.1%
New York, NY 10292

Milton Kaplan * 11,875
1920 Ocean Avenue 8.1%
Brooklyn, New York 11230

Leonard J. Smith * 11,875
451 Ives Dairy Road, #A202 8.1%
North Miami Beach, FL 33179

All directors and officers as a 559,793 <F4> 11,875
group 16.3% 8.1%
(10 persons)

_______________

* Less than 5%.
<FN>
<F1> Pursuant to an Agreement and Plan of Merger, dated as of July 27,
1993, as amended, by and among Merck & Co., Inc., a New Jersey corporation
("Merck"), M Acquisition Corp. ("Merger Sub") and Medco Containment
Services, Inc., a Delaware corporation ("Medco"), Medco was merged with and
into Merger Sub and Medco became a wholly owned subsidiary of Merck. Merck
is a worldwide organization engaged primarily in the business of dis-
covering, developing, producing and marketing products and services for the
treatment of disease, and the maintenance or restoration of health. The
principal executive offices of Merck are located at One Merck Drive,
Whitehouse Station, New Jersey. As of July 11, 1995, Merck may be deemed
to be the indirect beneficial owner, through its ownership of Medco, of
543,345 shares of Common Stock, representing approximately 18.2% of the out-
standing shares of Common Stock and Merck may also be deemed to be the
indirect beneficial owner, through its ownership of Medco, of 100,000
shares of 6% Preferred Stock, which is convertible into 100,000 shares of
Common Stock. Merck effectively has the sole power to vote and direct the
vote of such shares of Common Stock and 6% effectively Preferred Stock, and
to dispose and direct the disposal of such shares.

<F2> Includes Common Stock purchase options for 209,869 shares exercisable
within 60 days of the Record Date.

<F3> Includes Common Stock purchase options for 48,750 shares exercisable
within 60 days of the Record Date, but does not include 10,000 shares of
Common Stock held by Mr. Spohler on behalf of his wife and as to which he
disclaims beneficial ownership.

<F4> Does not include the 543,345 shares of Common Stock or the 100,000
shares of 6% Preferred Stock currently owned by Medco, beneficial ownership
of which is disclaimed by Messrs. Manning, Marden, Mele, Kanter and
Eisenberg, who are also officers or designees of Medco.
</TABLE>
Based solely on a review of Forms 3, 4 and 5 and amendments thereto
furnished to the Company, all directors, officers and beneficial owners of
more than ten percent of any class of stock have filed on a timely basis
Forms 3, Forms 4 and Forms 5 as required in the fiscal year ended March 31,
1995.

PROPOSAL ONE

Election of Directors

Stockholders are being asked to elect three members to the Company's
Board of Directors. The three members who are so elected and the remaining
six directors whose terms continue after the Annual Meeting will constitute
the Board of Directors of the Company.

Pursuant to the terms of the Company's Certificate of Incorporation,
the directors of the Company are divided into three classes, and one class
is elected at each annual meeting of stockholders and serves for a term
ending on the third annual meeting of stockholders following their election
and after their respective successors have been elected and qualified.
Under the Company's Bylaws, the election of directors is determined by a
vote of a majority of the shares present in person or represented by proxy
and voting on the matter. And, under applicable Delaware law and the
Company's Certificate of Incorpor-ation and Bylaws, abstentions and broker
non-votes on proposals to elect directors will effectively be treated as
shares that are not present and voting for that matter.

The Board has nominated Messrs. James V. Manning, Richard H. Eisenberg
and Karl I. Kanter for election at the Annual Meeting, to serve until the
third annual meeting of stockholders of the Company following their
election and their successors have been elected and qualified. Unless
otherwise directed, the persons named as proxies in the proxy enclosed
herewith will vote the shares represented by such proxy for the election of
such nominees as directors.

If for any reason any nominee for director should become unavailable
for election, the proxies may be voted for the election of a substitute
designated by management, unless a contrary instruction is given on the
proxy. Management has no reason to believe that any of the nominees will
be unable or unwilling to serve if elected, and all nominees have expressed
an intention to serve the entire term for which election is sought.

The following table sets forth certain information at the Record Date
concerning the directors and their ownership of (i) the Voting Securities;
and (ii) shares of common stock, $.01 par value, of Group 1 Software, Inc.

<PAGE>
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
<TABLE>
<CAPTION>
Number of Shares of Voting
Name of Director of Director Principal Occupation,Business Securities and Percent of
the Company (Age) Since Experience and Directorships class (at Record Date)
COMNET Group 1
Common stock

Class I Directors (whose terms will expire at the third annual
meeting of stockholders after the Meeting,
and the election and qualification of their
successors)

<S> <C> <C> <C> <C>
Richard H. Eisenberg 1994 Senior Vice President of Kaye 1,000 <F1><F2> 0
57 Insurance Association,L.P., since * *
September, 1992. He has also been
President of APCO Corporation, an
insurance brokerage firm, Vice
President of Amalgamated Programs
Corporation and President of Great
Northern Brokerage Corporation for
more than five years.

Carl I. Kanter 1993 Senior Vice President and Co- 6,000 <F2><F3> 3,000<F4>
63 General Counsel Medco Containment * *
Containment Services,Inc.("Medco")
since May,1992. For more than five
years prior to joining Medco, he
was a senior partner in the law
firm of Stroock, Stroock & Lavan.
He is also a director of Group 1
and SunResorts Ltd., N.V. (owner
and operator of a Caribbean resort
complex).

James V. Manning 1992 Chief Executive Officer of Synetic, 7,000 <F2><F5> 0
48 Inc. ("Synetic") Since September, * *
1994. Prior to that, he was Senior
Executive Vice President - Finance
and Administration and a director
of Medco for more than five years.
He has also been a director of
Synetic since June, 1989.
</TABLE>
<PAGE>

MEMBERS OF THE BOARD CONTINUING IN OFFICE
<TABLE>
<CAPTION>
Number of Shares of Voting
Name of Director of Director Principal Occupation,Business Securities and Percent of
the Company (Age) Since Experience and Directorships class (at Record Date)
COMNET Group 1
Common stock

Class II Directors (whose terms will expire at the next annual
meeting of stockholders following the Annual
Meeting, and the election and qualification
of their successors)

<S> <C> <C> <C> <C>
Robert S. Bowen 1983 President and Chief Executive 328,533<F6> 30,750<F7>
57 Officer of the Company for more 10.3% *
than five years and a director,
Chairman of the Board and Chief
Executive Officer of Group 1
Software, Inc. ("Group 1"), for
more than five years.

Ronald F. Friedman 1987 Director, and Chief Operating 145,000<F8> 16,287<F9>
51 Officer of Group 1 for more than 4.6% *
five years. He is also a director
of Group 1.

Charles A. Crew 1990 Executive Vice President and Chief 42,660<F10> 0
52 Financial Officer of the Company 1.4% *
since September, 1990, and was Vice
President, Finance and Assistant
Secretary of Group 1 from July,
1989 to October, 1990. He is also
a director of Group 1.

</TABLE>
<PAGE>
MEMBERS OF THE BOARD CONTINUING IN OFFICE
<TABLE>
<CAPTION>
Number of Shares of Voting
Name of Director of Director Principal Occupation,Business Securities and Percent of
the Company (Age) Since Experience and Directorships class (at Record Date)
COMNET Group 1
Common stock

Class III Directors (whose terms will expire at the second
annual meeting of stockholders following the
Annual Meeting, and the election and qualification
of their successors)
<S> <C> <C> <C> <C>
Charles J. Sindelar 1992 President of the Display Division 7,000<F11> 0
58 of Zenith Electronics Corporation * *
since December, 1990. Mr. Sindelar
was Executive Director of Color
Display Operations of Zenith from
April, 1990 through November, 1990.
For more than five years prior to
that, he was Senior Vice President
of Zenith Sales Company Division of
Zenith Electronics Corp.

James P. Marden 1992 Chairman of The Entertainment 7,000<F2><F12> 0
42 Connection, Inc., since January, * *
1995, and was Vice President -
Acquisitions of Medco and Vice
President - Acquisitions of Synetic
from 1992 to 1994. He has been a
private investor for more than five
years.

Charles A. Mele 1992 Executive Vice President - General 7,000<F2><F13> 3,000<F14>
39 Counsel and a director of Synetic * *
since May, 1989. For more than five
years, up through July, 1994, he
was Executive Vice President and
General Counsel or Co-General
Counsel of Medco. He is also a
director of Group 1.
_______________

* Less than 1%

<PAGE>

<FN>

<F1> Includes options to purchase 1,000 shares of Common Stock exercisable
within 60 days of the Record Date.

<F2> Does not include 643,345 shares of Voting Securities (20.8% of total
issued and outstanding) owned by Medco.

<F3> Includes options to purchase 6,000 shares of Common Stock exercisable
within 60 days of the Record Date.

<F4> Includes options to purchase 3,000 shares of Group 1 common stock
exercisable within 60 days of the Record Date.

<F5> Includes options to purchase 7,000 shares of Common Stock exercisable
within 60 days of the Record Date.

<F6> Includes options to purchase 209,869 shares of Common Stock
exercisable within 60 days of the Record Date.

<F7> Includes options to purchase 18,750 shares of Group 1 common stock
exercisable within 60 days of the Record Date.

<F8> Includes options to purchase 145,000 shares of Common Stock
exercisable within 60 days of the Record Date.

<F9> Includes options to purchase 15,000 shares of Group 1 common stock
exercisable within 60 days of the Record Date.

<F10> Includes options to purchase 42,660 shares of Common Stock exercisable
within 60 days of the Record Date.

<F11> Includes options to purchase 7,000 shares of Common Stock exercisable
within 60 days of the Record Date.

<F12> Includes options to purchase 7,000 shares of Common Stock exercisable
within 60 days of the Record Date.

<F13> Includes options to purchase 7,000 shares of Common Stock exercisable
within 60 days of the Record Date.

<F14> Includes options to purchase 3,000 shares of Group 1 common stock
exercisable within 60 days of the Record Date.
</TABLE>
The business address of each of Messrs. Manning, Marden, and Mele is
River Drive Center 2, 669 River Drive, Elmwood, New Jersey 07407-1361. The
business of Mr. Kanter is 100 Summit Avenue, Montvale, New Jersey 07645.
Mr. Eisenberg's business address is 122 East 42nd Street, New York, New York
10168. Mr. Sindelar's business address is 1000 Milwaukee Avenue, Glenview,
Illinois 60025. The business address of each of Messrs. Bowen, Friedman
and Crew is 4200 Parliament Place, Suite 600, Lanham, Maryland 20706.

The Company has been advised by Medco and the members of the Board
designated by Medco that there are no oral or written agreements or
understandings between the Medco designees and Medco with respect to how
such designees will vote as members of the Board or which may affect the
Company. Stockholders should nevertheless be aware that all of the Medco
designees are officers or designees of Medco.

Family Relationships

There are no family relationships between any director or executive
officer of the Company.

Compensation of Directors

No cash payments have been made to directors for attendance at
meetings of the Board or any committee thereof since April, 1985. In
January, 1993, stockholders approved both the 1992 Non-Employee Directors'
Stock Option Plan (the "1992 Directors' Plan"), which provides for the
annual, automatic grant of options to non-employee directors, and Fee
Agreements with certain directors. During the year ended March 31, 1995,
Messrs. Manning, Marden, Mele, Kanter, Sindelar and Eisenberg were each
granted options under the 1992 Directors' Plan to purchase 5,000 shares of
the Common Stock. For further details concerning the options granted under
the 1992 Directors' Plan and the Fee Agreements, see "Executive Officers
and Compensation -- Summary Compensation" and " -- Fee Agreements with
Messrs. Manning, Bowen and Friedman".

In Proposal 3 of this Proxy Statement, the stockholders are asked to
approve the 1995 Non-Employee Directors' Stock Option Plan (the "1995
Directors' Plan"), which will also provide for the annual, automatic grant
of options to non-employee directors. The authority to grant options under
the 1992 Directors' Plan, will expire on March 31, 1996. With the adoption
of the 1995 Directors' Plan, non-employee directors of the Company will
continue to receive compensation for their service on the Company's Board
of Directors on the substantially equivalent terms and conditions after
March 31, 1995, as previously granted to them under the 1992 Directors'
Plan.

Committees and Meetings

The Bylaws of the Company provide for the Board to appoint the Audit
and Compensation Committees. The Compensation Committee's functions
include establishing principles for setting executive compensation, and
reviewing management proposals pertaining to executive compensation, profit
sharing and stock options. The Compensation Committee recommends
management bonuses to the Board for the Company's officers and employees.
The Committee has granted options to employees under and in accordance with
the Company's 1986 Incentive Stock Option, Non-Qualified Stock Option and
Stock Appreciation Unit Plan (the "1986 Incentive Plan") and, upon
shareholder approval of Proposal 2 of this Proxy Statement at the Annual
Meeting, shall have the authority to grant options to employees under and
in accordance with the Company's 1995 Incentive Stock Option, Non-Qualified
Stock Option and Stock Appreciation Unit Plan (the "1995 Incentive Plan").
The Compensation Committee is comprised of Messrs. Manning, Marden and
Kanter. None of the members of the Compensation Committee has ever been an
employee of the Company.

The Audit Committee's functions include recommending to the Board the
selection of the Company's independent public accountants and reviewing
with such accountants the plan, scope and results of their audit of the
financial statements and the adequacy of the Company's system of internal
accounting controls. The Audit Committee is comprised of Messrs. Manning,
Marden and Sindelar.

During the fiscal year ended March 31, 1995, the Board of Directors of
the Company held 4 meetings, the Compensation Committee held 3 meetings and
the Audit Committee held 1 meeting. No director attended less than 75% of
all meetings of the Board and the committees on which such director served
during that fiscal year.

EXECUTIVE OFFICERS AND COMPENSATION

The Executive Officers of the Company are Robert S. Bowen, Ronald F.
Friedman, Charles A. Crew and Edward Weiss. The business experience during
at least the past five years for Messrs. Bowen, Friedman and Crew is set
forth under " -- Members of the Board of Directors Continuing in Office."
Mr. Weiss, 44, has been General Counsel to the Company since January, 1990,
and has been Secretary since November, 1990. Prior to January, 1990, Mr.
Weiss was engaged in private law practice with the law firm of Foley, Hoag
& Eliot, of Washington, D.C. and Boston, Massachusetts.

<PAGE>
<TABLE>
Summary Compensation Table
<CAPTION>
Annual Compensation Long-Term Compensation Awards
Name and Principal Stock All other
Position Year Salary Bonus Options<F1> Compensation<F2>

<S> <C> <C> <C> <C> <C>
Robert S. Bowen, 1995 $296,892 $489,192<F1> --- $28,991<F3>
CEO; Director 1994 $284,241 $ 67,112 --- $31,291
1993 $273,144 $400,721 --- $20,530

Ronald F.Friedman 1995 $173,088 $307,237 --- $ 3,993
President - Group 1 1994 $166,892 --- --- $ 4,448
Software; Director 1993 $158,572 $ 65,781 --- $ 4,312

Charles A. Crew 1995 $111,404 $104,265 --- $ 1,028
Chief Financial 1994 $ 98,871 --- --- $ 1,973
Officer; Director 1993 $ 95,955 --- --- $ 1,151

<FN>
<F1> Mr. Bowen elected to defer $161,421 of bonus compensation, in
accordance with the Company's deferred compensation plan.

<F2> Includes Company contributions to Defined Contribution Savings Plan
(401(k)).

<F3> Includes Company contributions to Defined Contribution Savings Plan
(401(k)) and calculated debt forgiveness of Company loan to Mr. Bowen. See
" -- Bowen Loan Agreement".
</TABLE>
Report of the Compensation Committee on Executive Compensation

The Company has established an executive compensation program based on
the following on-going principles and objectives: (i) provide compensation
opportunities that will help attract, motivate and retain highly qualified
managers and executives, (ii) link executive's total compensation to
Company performance and the individual performance of the executive and
(iii) provide an appropriate balance between incentives focused on
achievement of annual business plans and longer term incentives linked to
increases in shareholder value. To effectuate these principles and
objectives, compensation for each of the executives of the Company consists
of base salary compensation, annual incentive compensation (based in most
cases on profit performance measured against internal profit targets) and
stock option grants.

For Fiscal Year 1995, the Compensation Committee did not review the
base salary nor incentive compensation program for Mr. Bowen since these
matters are fixed by the employment agreement between the Company and Mr.
Bowen. Grants of options to executive officers and the compensation
programs for executive officers other than Mr. Bowen are reviewed annually
by the Compensation Committee, including the review conducted for the most
recent fiscal year.

Compensation Committee

James V. Manning
James Marden
Carl I. Kanter

Stock Option Grants in Fiscal Year 1995

COMNET

No stock options were granted during fiscal year 1995.

Group 1

No stock options were granted during fiscal year 1995.
<PAGE>
<TABLE>
OPTION/SAR EXERCISES AND YEAR-END
OPTION/SAR VALUES
04/01/94 TO 03/31/95
<CAPTION>
Number of Unexercised Value of Unexercised
Options/SARs at FY-End Options/SARS at FY-End<F1>
Shares
Acquired
on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable

COMNET

<S> <C> <C> <C> <C> <C> <C>
Robert S. Bowen 118,664 $296,660 189,868 47,001 $321,014 $24,496
Charles A. Crew --- --- 37,658 15,642 59,250 10,125
Ronald F. Friedman --- --- 131,998 40,002 223,003 20,996

GROUP 1

Robert S. Bowen None None 18,750 --- 70,313 ---
Ronald F. Friedman None None 15,000 --- 56,250 ---
Charles A. Crew None None --- --- --- 10,125

<FN>

<F1> These values are based upon the difference between the exercise prices
of all options awarded and the average price of $10.125 per share for
COMNET common stock and $9.75 per share for Group 1 common stock at
March 31, 1995.

</TABLE>

THE GRAPH PRESENTED IN THE DEFINATIVE PROXY IS A COMPARISON OF THE 5 YEAR
CUMULATIVE TOTAL RETURN OF THE COMPANY VERSUS A PEER GROUP AND THE BROAD
MARKET.

The chart displayed directly above is presented in accordance with
requirements of the Securities and Exchange Commission. The industry peer
group consisted of Hogan Systems, Inc., Hathaway CP, Altai, Inc., and
Timberline Software, Inc.Stockholders are cautioned against drawing any
conclusions from the data contained therein, as past results are not
necessarily indicative of future performance. This graph in no way reflects
the Company's forecast of future financial performance.

The graph and the related disclosure contained in this section of the
Proxy Statement should not be incorporated by reference into any prior
filings by the Company under the Securities and Exchange Act of 1934 that
incorporated future filings or portions thereof (including this Proxy
Statement or the Executive Compensation section of this Proxy Statement).

Employment Agreements

Robert S. Bowen.

COMNET Agreement. The Company has entered into an amended and
restated employment agreement with Mr. Bowen, as President and Chief
Executive Officer of the Company, dated as of January 28, 1992 (the "COMNET
Agreement"). The COMNET Agreement was ratified by the stockholders at the
January 22, 1993 meeting. The COMNET Agreement expires on June 30, 1998,
and provides for a current total base salary of $312,026 per annum adjusted
annually (effective each July 1) by the greater of changes in the area cost
of living or the average salary percentage increase for Company employees
as part of the annual budget presented to the Board as part of the annual
budget. The COMNET Agreement provides for a bonus payable to Mr. Bowen
equal to 7-1/2% of the first $1,000,000 of consolidated net income before
taxes, with certain adjustments as defined, and 10% of all such
consolidated net income in excess of $1,000,000. Consolidated net income
includes all earnings attributable to Group 1 and COM-MED Systems, Inc. (a
former subsidiary of COMNET) and any of the Company's business operations
or subsidiaries directly related to the particular lines of business
engaged in by Group 1 or COM-MED as of July 1, 1991, from any source,
including gain or loss on the sale of stock or assets of the Company and
its subsidiaries, but subject to certain specified deletions, including the
Cap Amount provisions, described below. Specified deletions from earnings
include, among other items, any provisions for taxes, any bonus payable
under the COMNET Agreement, any excess of interest income over interest
expense from the Company's or its affiliates' investments, any charge to
income associated with the exercise of stock options and any interest or
dividend income from, or gain from the sale of, securities held for
investment at the time Mr. Bowen joined the Company. The 7-1/2% and 10%
calculations apply to gain realized upon a sale of Group 1 and included in
consolidated net income only to the extent that such gain does not exceed
an amount (the "Cap Amount") equal to the gain that the Company would
realize on a disposition, if any, of its interest in Group 1 at a price per
share of $21.125. The COMNET Agreement provides that with respect to any
pretax gain (net of expenses) realized upon a disposition of Group 1 in
excess of the Cap Amount described above, Mr. Bowen will be entitled to the
following percentages of such gain: $0 to $3.3 million - 1%; above $3.3 to
$6.6 million - 2%; above $6.6 to $9.9 million - 3%; above $9.9 to $13.2
million - 4%; and above $13.2 million - 5%. Further, any bonus under the
COMNET Agreement will be offset by 40% of all fees theretofore received by
Mr. Bowen under the Bowen Fee Agreement (described below).

If Mr. Bowen terminates his employment with the Company during the
term of the COMNET Agreement because of his disability, he will be entitled
to receive his base salary and his bonuses, prorated through the date of
termination, and any options previously granted to him will, to the extent
exercisable on Mr. Bowen's date of employment termination, continue to be
exercisable for 12 months following such termination date. If Mr. Bowen's
employment with the Company is terminated during the term of the COMNET
Agreement because of his death, his estate will be entitled to receive his
base salary and his bonuses, prorated through the date of termination, and
any options previously granted to Mr. Bowen will, to the extent exercisable
on Mr. Bowen's date of termination of employment, continue to be
exercisable for six months following Mr. Bowen's death.

If Mr. Bowen terminates his employment with the Company for any reason
other than death or disability or is discharged by the Company for cause,
Mr. Bowen will be entitled to receive his base salary, prorated through his
date of termination, and his bonus earned and all of his options will be
treated as provided in the instruments or agreements governing such options.
If the Company terminates Mr. Bowen's employment without cause, Mr. Bowen
will be entitled to receive his salary, as adjusted, fringe benefits and
bonuses throughout the remaining term of the COMNET Agreement, as if it had
not been terminated, and all of his options, including those that had not
yet vested, will continue to vest or be exercisable as if Mr. Bowen's
employment had not been terminated but had continued for the outstanding
balance of the term of the COMNET Agreement, and Mr. Bowen will be afforded
the maximum length of time permissible to exercise such options; provided,
however, that if such vesting of options after termination is prohibited,
the Company shall, at such time as the options would have vested (the
"Vesting Date"), pay Mr. Bowen in cash the difference between the average
reported price for the Common Stock over the 20 days immediately preceding
the Vesting Date and the exercise price of the stock options on the Vesting
Date.

Group 1 Agreement. Group 1 entered into an amended and restated
employment agreement with Mr. Bowen, a director, as Chief Executive Officer
of Group 1 dated as of January 28, 1992 (the "Group 1 Agreement"). Salary
and incentive compensation paid under the Group 1 Agreement are not to be
duplicated by payments under the COMNET Agreement, so long as the COMNET
Agreement is effective. The Group 1 Agreement also expires on July 1, 1998
and provides for a salary of not less than $187,216 per annum subject to
adjustments (effective each July 1) depending upon the amount of
professional time dedicated to Group 1 vis-a-vis the Company and adjusted
annually by the greater of any changes in the area cost of living index or
the average salary percentage increase for employees approved by the Group
1 Board as part of its annual budget.

The Group 1 Agreement also includes an annual incentive bonus equal to
7-1/2% of the first $1,000,000 of consolidated net income of Group 1 before
taxes with certain adjustments as defined, and 10% of such income in excess
of $1,000,000, such bonus to be no greater than that determined under a
similar bonus program related to the consolidated earnings of the Company
as long as the program relating to the Company is effective. Consolidated
net income as defined in the Group 1 Agreement includes all earnings of
Group 1 and its subsidiaries from any source, subject to certain specified
deletions but including gain or loss on the sale of stock or assets of
Group 1 and/or a subsidiary. Specified deletions from net income include,
among other items, any provision for taxes, any bonus payable under the
Group 1 Agreement, any excess of interest income from bank and other cash
deposits over interest expense from loans or other financing, and any
charge to income associated with the exercise of stock options.

If Mr. Bowen's employment with Group 1 during the term of the Group 1
Agreement is terminated because of his disability or death, his base salary
and bonus will be prorated through the date of termination. If Mr. Bowen
terminates his employment with Group 1 for any reason other than death or
disability or he is discharged by Group 1 for cause, Mr. Bowen is entitled
to his base salary, equitably prorated, and any bonuses earned for any
fiscal year prior to the fiscal year in which his termination of employment
occurred. If Group 1 terminates Mr. Bowen's employment without cause,
Mr. Bowen is entitled to receive his salary, fringe benefits and bonuses
throughout the remaining term of the Group 1 Agreement. Upon any
termination of Bowen's employment under the Group 1 Agreement, all options
held by Bowen to purchase Group 1's common stock will be treated as provided
in the instruments or agreements governing such options.

The Group 1 Agreement also provides that as long as the Company owns
25% or more of Group 1's common stock, Mr. Bowen will receive no additional
compensation under the Group 1 Agreement, but Mr. Bowen's aggregate
compensation payable under his employment agreement with the Company will
be allocated between the Company and Group 1 based on the proportion of his
time spent working for each of such companies. If the Company ceases to
own 25% or more of Group 1's common stock, (i) Mr. Bowen's annual salary
under the Group 1 Agreement is increased to the greater of $240,000 or
160% of the then current base salary of Group 1's Chief Operating Officer,
adjusted upward or downward to the extent that the proportion of Mr.
Bowen's time spent working for Group 1 is greater or lesser than 50% and
adjusted for changes in the cost of living, (ii) Mr. Bowen's annual salary
under his employment agreement with the Company is reduced to reflect only
the proportion of his time spent working for the Company's businesses other
than Group 1 and (iii) Mr. Bowen becomes entitled to receive incentive
bonus compensation from Group 1 as follows: (A) if the Company disposes
of its interest in Group 1 in a registered public offering, then for each
fiscal year, if Group 1's earnings equal budget targets established by
Group 1's board of directors in its reasonable business judgment, then Mr.
Bowen's bonus shall be the greater of $200,000 or 160% of the bonus payable
to Group 1's Chief Operating Officer, and if Group 1's earnings are greater
or lesser than such targets, then Mr. Bowen's bonus will vary from the
amount payable to him at the target earnings level to the same proportional
extent as the variation in the bonus payable to Group 1's Chief Operating
Officer; and (B) if the Company disposes of its interest in Group 1 other
than in a registered public offering, then Mr. Bowen's bonus shall be as
determined by Group 1's board of directors, without the participation of
any directors affiliated with the Company.

Ronald F. Friedman.

Group 1 has entered into an employment agreement dated October 31,
1990, with Ronald F. Friedman, a director, as President and Chief Operating
Officer of Group 1. The agreement, as amended, expires on March 31, 1998
and provides for annual base compensation of $183,400 per annum (adjusted
as of April 1, 1995), which may be further adjusted annually for merit
increases upon approval of Group 1's compensation committee. Under his
employment agreement, Mr. Friedman is entitled to receive an annual bonus
for the fiscal year ending March 31, 1996 based on a percentage of Group 1's
net income before income taxes, interest expense, management fees and bonus
amounts paid to or for the benefit of Mr. Friedman and Group 1's Chief
Executive Officer and Chief Financial Officer ("Adjusted Net Income"),
which bonus varies from 7.4% of Adjusted Net Income over $5.6 million, up
to a maximum of 9% of Adjusted Net Income over $9.0 million. The bonus is
based upon both achievement of a certain level of Adjusted Net Income and
satisfactory growth over actual prior year results in the opinion of Group
1's compensation committee and board of directors. If Mr. Friedman retires
or becomes totally and permanently disabled, Mr. Friedman shall be entitled
to receive all earned but unpaid bonuses and any subsequent bonus
installments. In the case of death, all earned but unpaid bonuses and
subsequent bonus installments shall be paid promptly in one sum. If Mr.
Friedman is terminated for cause or resigns under circumstances which would
justify termination for cause, all unpaid bonuses will be forfeited and no
longer be payable. If a change in control of Group 1 occurs, Mr. Friedman,
at his option, has the right to resign his position with Group 1 and Group 1
will continue to pay his compensation and provide him with employee benefits
for one year or until the expiration date of the employment agreement,
whichever is the shorter period, and will pay Mr. Friedman, as a lump sum,
all earned but unpaid bonuses. In addition, bonuses will be paid on a pro-rata
basis for the period through the nearest full fiscal quarter prior to
resignation.

Fee Agreements with Messrs. Manning, Bowen and Friedman.

The Company has agreed, pursuant to separate fee agreement dated as of
January 28, 1992, to pay Mr. Manning fees of 1/2% of the total
consideration paid on acquisitions, and 1/2% of the pre-tax gain (net of
expenses) on dispositions of the Company's or its subsidiaries' businesses.
Fees payable with respect to a disposition, if any, by the Company of its
holdings in Group 1 would be payable only if, and to the extent that, the
consideration the Company receives exceeds $50,000,000. The term of this
agreement extends until January 27, 2002, unless earlier terminated because
Mr. Manning is no longer a director, officer or employee of the Company.
This agreement was approved by the stockholders at the January 22, 1993
meeting. Mr. Manning has earned $4,930 according to this fee agreement
during fiscal year 1995.

The Company has entered into a fee agreement dated as of January 28,
1992 (the "Bowen Fee Agreement") with Mr. Bowen. The Bowen Fee Agreement
was approved by the stockholders at the January 22, 1993 meeting. Under
the Bowen Fee Agreement, Mr. Bowen will be entitled to a fee of 1/2% of the
total consideration payable on acquisitions and 1/2% of the pre-tax gain
(net of expenses) on dispositions of the Company's or its subsidiaries'
businesses. However, this fee will not be paid with respect to a
disposition, if any, of Group 1 or COM-MED or any of the Company's business
operations or subsidiaries directly related to the particular lines of
business engaged in by such companies as of July 1, 1991, which shall
remain subject to the incentive compensation arrangements in Mr. Bowen's
amended and restated employment agreement with the Company.

The term of the Bowen Fee Agreement extends until January 27, 2002,
unless Mr. Bowen is no longer a director, officer or employee of the
Company, provided that if Mr. Bowen's employment is terminated without
cause (as defined in his amended and restated employment agreement), the
Company must either continue this agreement until January 27, 2002 or pay
Mr. Bowen the incentive bonus upon a disposition, if any, of the Company's
interests in Group 1 to which Mr. Bowen would have been entitled under his
employment agreement with the Company as in effect prior to its January 28,
1992 amendment and restatement. Mr. Bowen has earned $4,930 according to
this fee agreement during fiscal year 1995.

The Company has entered into a fee agreement with Mr. Friedman dated as
of January 28, 1992, which was approved by the stockholders at the January
22, 1993 meeting. Pursuant to this fee agreement, Mr. Friedman will be
entitled to receive on disposition, if any, of the Company's interest in
Group 1 or on the sale by Group 1 or any of its subsidiaries of any
business unit or line of business of Group 1 or any of its subsidiaries, a
fee in an amount equal to the following percentages of the Company's
pre-tax gain (net of expenses) to the extent such gain exceeds $21.125 per
share of Group 1: $0 to $3.3 million - 0.5%; above $3.3 to $6.6 million -
1%; above $6.6 to $9.9 million 1.5%; above $9.9 to $13.2 million - 2%; and
above $13.2 million - 2.5%. Such fee shall only be payable, however, if
Group 1's net operating income increases at an average annualized rate of
20% or more from 1991 until such disposition. If Group 1's net operating
income increases at an average annualized rate of 15% or more, but less
than 20%, Mr. Friedman will be entitled to one-half the fee set forth
above. The term of this agreement extends until January 27, 2002, unless
Mr. Friedman is no longer a director, officer or employee of the Company.
Because no such disposition has been made, no payments have been made to
Mr. Friedman under his fee agreement.

Bonus Programs to Other Executives

Mr. Crew is entitled to an annual incentive bonus for the fiscal year
ended March 31, 1996 to be calculated on the basis of the Company' profit
performance as compared to internal profit targets. Mr. Weiss is entitled
to an annual bonus for fiscal year ended March 31, 1996 calculated on the
basis the Company's profit performance as compared to internal profit
targets and the achievement of certain other objectives.

Deferred Compensation Arrangements

The Company has adopted a Deferred Compensation Plan by which certain
members of senior management have the option of deferring the receipt of
amounts of their annual bonus compensation, if any, and/or their base
compensation (the "Deferred Compensation Plan"). The Deferred Compensation
Plan is intended by the Company to qualify as an unfunded plan for federal
income tax purposes and the Employee Retirement Income Security Act
(ERISA). The Deferred Compensation Plan is administered by the Company.
The expenses associated with the establishment and administration of the
Deferred Compensation Plan are borne by the Company. Any expenses,
however, of implementing any investment option selected by a participant
are charged against that participant's account.

The compensation, that is deferred, is paid into a trust designated
solely to administer the Deferred Compensation Program. Currently, Mr.
Bowen is the only parti-cipant in the Deferred Compensation Plan.

Executive Supplementary Benefits

The Company provides certain of its executive officers with group
health insurance and disability insurance policies that are not available
to all salaried employees. These supplementary benefits to such executive
officers are limited to the cost of the premiums for the coverage. The
aggregate cost is less than $25,000 per year for all covered executive
officers.

Bowen Loan Agreement

On January 23, 1992, the Company entered into a Loan Agreement with
Mr. Bowen under which the Company agreed to loan him $235,000 on the
following terms: (i) the loan was made in three installments ($78,334 on
the date of the Loan Agreement and $78,333 on the first and second
anniversary dates thereafter); (ii) in consideration of each advance of
funds, Mr. Bowen delivered a promissory note to the Company; (iii) each
promissory note will be deemed satisfied in full and cancelled if, as of
its due date, Mr. Bowen has complied with certain conditions set forth in
the Loan Agreement including, without limitation, Mr. Bowen tendering his
services to the Company or an affiliate of the Company and complying with
certain provisions of his employment agreement with the Company; and (iv)
upon Mr. Bowen's death or disability, such promissory notes will be deemed
satisfied and cancelled provided the conditions in clause (iii) above have
been satisfied up to the date of such death or disability.

Crew Loan Agreement

On March 20, 1992, the Company made a loan to Mr. Crew of $100,000 to
facilitate his relocation into the geographical area of the Company's
offices. The loan was evidenced by a promissory note with a term of three
years, with interest at 2% above the prime interest rate. Interest was
payable quarterly during the first two years, with principal and interest
payable quarterly over the remaining year of the note. The note was
secured by a second mortgage on a residential property held by Mr. Crew and
by any proceeds from the exercise of the Company's stock options held by
him. The principal balance on the loan has been paid off during the year
by Mr. Crew with no balance outstanding as of March 31, 1995.

Friedman Loan Agreement

On March 1, 1993, the Company entered into a loan agreement by which
it has loaned Mr. Friedman $375,000. Mr. Friedman has delivered promissory
notes to the Company for the loan amount, plus interest. Under this loan,
all installments, plus accrued interest and other charges (if any) under
all of these notes shall be satisfied in full by June 1, 1997, interest
under all such notes shall accrue at prime plus 2 percent, and interest
commenced on June 30, 1993 and principal and interest are payable beginning
July 30, 1995. All such notes are secured by a second mortgage on Mr.
Friedman's residence and by any proceeds from the exercise of stock options
Mr. Friedman holds in the Company or Group 1. The principal balance on the
loan outstanding as of March 31, 1995 was $375,000.

Indemnification Agreements; Directors and Officers Liability Insurance

Indemnification Agreements. Each current member of the Board of
Directors is signatory to an indemnification agreement (the
"Indemnification Agreement") with the Company. Each Indemnification
Agreement provides that the Company shall indemnify the director or officer
who is a party to the agreement (an "Indemnitee") if he was or is a party
to or threatened to be made a party to any threatened, pending or completed
action, suit or proceeding (except a derivative proceeding) by reason of
the fact that he is or was a director or officer of the Company, or is or
was serving at its request in certain capacities for another entity,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement (if such settlement is approved in advance by the
Company) incurred in connection with such actions, suits or proceedings.
The indemnification is limited to instances where the Indemnitee acted in
good faith and in a manner he reasonably believed to be in, or not opposed
to, the best interests of the Company, and with respect to any criminal
action, had no reasonable cause to believe his conduct was unlawful. With
respect to derivative proceedings, the Indemnification Agreement provides
indemnification similar to that provided in the Indemnification Agreement
for non-derivative proceedings discussed above, except that indemnification
is allowed only to the extent determined to be fair and reasonable by the
court.

The Indemnification Agreement provides that if a director or officer
is entitled to indemnification for some or a portion of the expenses,
judgments, fines or penalties actually or reasonably incurred by him in the
investigation, defense, appeal or settlement of any civil or criminal
action, suit or proceeding, the Company shall nevertheless indemnify him to
the extent to which he is entitled. By the terms of the Indemnification
Agreement, its benefits are not available for expenses or liabilities paid
directly to the Indemnitee under a policy of officers' and directors'
insurance maintained by the Company or in several other instances such as
if a court determines that each material assertion made by the Indemnitee
in that proceeding was not made in good faith or was frivolous, or if the
claim arises from the purchase and sale by the Indemnitee of securities in
violation of Section 16(b) of the Exchange Act, or similar successor
statute.

Directors and Officers Liability Insurance. The Company currently
maintains a Directors and Officers liability policy with an aggregate limit
of liability of $5,000,000. Deductibles under this policy range from
$5,000 per officer or director for each claim to $50,000 in the aggregate
for certain covered claims. This policy does not cover, among other
matters, dishonest, fraudulent, or criminal behavior.

401(k) Plan

In January, 1994, the Company adopted the COMNET Corporation and
Subsidiaries 401(k) Retirement Savings Plan and Trust (the "401(k) Plan").
The 401(k) Plan provides for a contribution to be made by the Company and
its subsidiaries out of current operating earnings based upon the
contributions made by participating employees.

All employees of the Company or its subsidiaries who have been
employed for at least three months are eligible to participate in the
401(k) Plan. Participants in the 401(k) Plan may contribute from 1% to 15%
of their compensation from the Company or its subsidiary (up to a limit of
$9,240) in a calendar year. The Company or the relevant subsidiary will
make contributions to an employee's 401(k) Plan account equal to the sum of
the following: (i) $.75 for each $1.00 a participant contributes up to 2%
of the participant's compensation and (ii) $.50 for each $1.00 the
participant contributes for the next 1% of the participant's compensation.
Participants are 100% vested in the contributions, and earnings thereon,
they make to the 401(k) Plan out of their compen-sation. Participants vest
in Company contributions, and earnings thereon, at a rate of 20% per year
of employment with the Company or its subsidiary, up to 100%. However, if
a participant's employment with the Company or its subsidiary terminates
because of retirement, death or disability (as defined in the 401(k) Plan),
100% of the Company contributions, and their earnings thereon, become 100%
vested.

CERTAIN TRANSACTION

The Company has used the services of Kaye Insurance Associate, L.P.
("Kaye Insurance") of New York, New York to obtain directors and officers
liability insurance coverage for the current fiscal year. A description of
this coverage is set out above in "Executive Officers and Compensation --
Indemnification Agreements; Directors and Officers Liability Insurance."
Richard H. Eisenberg, a director of the Company, is also a Senior Vice
President of Kaye Insurance. The Company's payment for this coverage is
$76,000 - which includes compensation to Kaye Insurance for its services
that does not exceed $4,000.

PROPOSAL TWO

Approval of the Adoption of the Company's 1995 Incentive
Stock Option, Non-Qualified Stock Option and Stock Appreciation Rights Plan

The Board is recommending to the stockholders that they approve the
1995 Incentive Stock Option, Non-Qualified Stock Option and Stock
Appreciation Rights Plan, a copy of which is attached hereto as Exhibit A
(the "1995 Incentive Plan"). The 1995 Incentive Plan is comparable to the
Company's Incentive Stock Option 1986 Plan, except for the effective and
termination dates. Upon the effectiveness of the 1995 Incentive Plan no
further grants will be made under the 1986 Incentive Plan.

The 1995 Incentive Stock Option Plan

The purpose of the 1995 Incentive Plan is to advance the growth and
development of the Company by affording an opportunity to the officers and
other employees (whether full-time or otherwise) of the Company or a
subsidiary to invest in shares of the Company's stock and/or to receive
cash or stock distribution representing increases in the value of the
Company's stock. The acquisition of such stock by such employees and/or
the payment of cash distributions to such employees, who contribute to the
Company's success, provide the continuing incentive for them to promote the
best interest of the Company and induces them to continue their employment
with the Company or a subsidiary. Finally, the 1995 Incentive Plan will
enhance the ability of the Company or a subsidiary to attract compe-tent
personnel to enter its employ.

The following is a brief description of the principal provisions of
the 1995 Incentive Plan and is qualified in its entirety by the 1995
Incentive Plan included herewith as Exhibit A.

The 1995 Incentive Plan authorizes the grant of incentive stock
options ("ISOs") under Section 422(b) of the Internal Revenue Code of 1986,
as amended (the "Code"), non-qualified stock options ("Non-Qualified Stock
Options"), and stock appreciation rights units ("Stock Units") redeemable
at the discretion of the Company for cash or stock or a combination
thereof. Only employees of the Company or employees of the Company's
subsidiaries are eligible for options under the Plan. The Plan reserves
600,000 shares for issuance upon the exercise of options granted and for
issuance upon redemption of Stock Units granted under it.

Administration and Eligibility. The 1995 Incentive Plan is
administered by the Company's Compensation Committee appointed by the
Company's Board of Directors. The 1995 Incentive Plan authorizes the grant
of options with an exercise price equal to 100% of the fair market value of
the shares of Common Stock on the date the options are granted. Only those
officers and employees of the Company designated by the Compensation
Committee are eligible to participate in the 1995 Incentive Plan.

The 1995 Incentive Plan precludes the issuance of ISOs to individuals
owning stock possessing more than ten percent of the total combined voting
power of all classes of stock in the Company, its subsidiaries, and any
parent it may subsequently have. Options to purchase Common Stock are not
included in determining whether a person is a ten percent or more
stockholder. To the knowledge of the Company, no person otherwise eligible
to receive ISOs holds or owns ten percent or more of the total combined
voting power of all classes of stock.

Terms and Conditions of Grants. The Options are to contain such terms
as the Compensation Committee shall determine including the term and
installments, if any, during which the options may be exercised. The 1995
Incentive Plan provides that options may be exercised not later than six
months after the date of termination of employment except in the event of
the termination of employment by the Company for cause, in which event the
options will be revoked upon termination of employment. In the event of the
termination of employment as a result of the disability of the optionee,
the options will be exercisable for a period of twelve months following
such termination. The options may not be trans-ferred other than by will
or the laws of descent and distribution.

The 1995 Incentive Plan permits optionees to pyramid and to surrender
to the Company already-owned shares of the Common Stock, valued at the fair
market value on the date of exercise, in full or partial payment of the
exercise price.

The 1995 Incentive Plan provides for the acceleration of the vesting
and redemption of stock units and stock options upon the occurrence of any
of the following events and approval of the acceleration by the
Compensation Committee: (i) the commencement of a bona fide "tender
offer", other than by the Company, acceptable to the Board for the shares
of the Company as provided under Rule 14d-2 promulgated under the
Securities Exchange Act of 1934, as amended, or any subsequent comparable
federal rule or regulation governing tender offers; (ii) a successful
tender offer not previously approved by the Board resulting in a change of
control of the Board; (iii) the Company's execution of an agreement
concerning the sale of substantially all of its assets (other than to a
subsidiary in a mere corporate restructuring); (iv) the Company's adoption
of a plan of dissolution or liquidation; or (v) the Company's execution of
an agreement concerning a merger or consolidation involving the Company in
which the Company is not the surviving corporation or if, immediately
following such merger or consolidation, less than fifty percent (50%) of
the surviving corporation's outstanding voting stock is held by persons who
were stockholders of the Company immediately prior to such merger or
consolidation. The options shall be fully exercisable regardless of
whether the tender offer is success-ful, regardless of whether the
dissolution or liquidation is consummated, and regardless of whether the
other corporation which is the surviving corporation in a merger or
consolidation shall adopt and maintain any plan under which options are
granted to holders of outstanding options. If the agreement concerning the
sale of substantially all of the Company's assets or the agreement
concerning a merger or consolidation is not consummated by the parties,
then the options not exercised prior to a formal determination by the
Company's Board of Directors that the contemplated transaction will not be
consummated shall, on and after the date of such determination, be subject
to the exercise restrictions set forth in the respective option agreements.
Under the accelerated vesting provisions of the 1995 Incentive Plan, the
Board of Directors cannot prevent accelerated vesting of options upon a
triggering event.

Certain Tax Matters. The following is a summary, and does not purport
to be a complete description, of certain federal income tax aspects of the
1995 Incentive Plan and transactions thereunder. Furthermore, no
information is given with respect to any state, local, or foreign taxes
which may be applicable.

Under the 1995 Incentive Plan, an optionee will not recognize any
taxable income at the time of the grant of an ISO. Furthermore, in
general, the optionee will not recognize income on the exercise of an ISO.
However, if the option is exercised by an individual who has terminated his
or her employment more than three months prior to the exercise of the ISO,
the individual will be taxed on the difference between the fair market
value of the stock and the amount paid for the stock. While the exercise
of an ISO will not generally result in current taxable income, the same
does not hold true for purposes of the Alternative Minimum Tax ("AMT").
Upon the exercise of an ISO, the optionee must recognize for AMT purposes
the difference between the exercise price of the option and the fair market
value of the stock received.

An employee who disposes of stock, acquired through the exercise of an
ISO, will recognize long-term capital gain equal to the excess of the sale
price over the price paid for the stock if such sale does not occur within
(A) two years after the option is granted, and (B) one year after the stock
is acquired. In this case, the Company will not receive a deduction for
compensation expense. If, however, the employee disposes the stock prior
to the aforementioned holding periods, then the employee will have ordinary
income equal to the lesser of (i) the difference between the option
exercise price and the fair market value of the stock on the date the
option was exercised or (ii) the difference between the option exercise
price and the fair market value of the stock on the date of sale or
exchange. Any additional gain attributed to the sale will be considered
capital gain. The amount so recognized as ordinary income to the employee
will be deductible to the Company as compensation expense.

If the exercise of an ISO is made by delivery of shares of Common
Stock (acquired pursuant to the 1995 Incentive Plan) in payment of the
option price, the shares delivered are deemed to be exchanged in a tax-free
transaction provided that such shares were not delivered prior to (A) two
years after the option had been granted, and (B) one year after the stock
had been acquired. If stock is used to exercise an option, but is
delivered prior to the expiration of the aforementioned holding periods,
the employee will have ordinary income equal to the difference between the
fair market value of the stock on the date acquired, and the price paid to
exercise the option. In addition, the employee will recognize capital gain
income equal to the difference between the fair market value of the stock
when acquired, and the fair market value of the newly issued stock
received. The Company will be able to take a compensation expense
deduction for the amount recognized by the employee as ordinary income.

With respect to Non-Qualified Stock Options, the optionees will not
recognize taxable income, and the Company will not be entitled to a
deduction, upon the grant of such options. Upon exercise of such options,
the optionees will recognize ordinary income in an amount equal to the
amount by which the fair market value of each share of Common Stock on the
date of exercise exceeds the option price. The amount so recognized as
income will be deductible by the Company. Upon any subsequent sale of
shares by an optionee, the optionee's basis on the shares purchased for
determining gain or loss will be the fair market value on the date of
exercise, if such shares were acquired for cash. If the exercise of the
option is made by delivery of shares of Common Stock in payment of the
option price, the shares delivered are deemed to be exchanged in a tax-free
transaction for the equivalent number of new shares of Common Stock. Such
equivalent number of new shares has the same basis and holding period as
the shares exchanged.

The number of shares received in excess of the number of shares
delivered is included in the optionee's income at the fair market value
thereof at the time of exercise. Any gain or loss recognized upon the sale
or other disposition of these shares will be capital gain or loss, either
long-term or short-term depending upon the holding period of the shares
(which begins on the date the optionee recognizes income with respect to
such shares, except for the shares deemed to be received in a tax-free
transaction as described above).

Any payment received for the redemption of Stock Units is compensation
income to the employee and a compensation deduction to the employer.

The foregoing is not to be considered as tax advice to any persons who
may be optionees, and any such persons are advised to consult their own tax
counsel.

Recommendation of the Board of Directors Concerning the Adoption
of the 1995 Incentive Plan.

An affirmative vote of a majority of the outstanding shares of Voting
Securities present and voting at the Meeting is required for approval. The
Board of Directors of the Company recommends that the stockholders vote FOR
the adoption of the 1995 Incentive Plan.

PROPOSAL THREE

Approval of the Adoption of the Company's
1995 Non-Employee Directors' Stock Option Plan

The Board is recommending to the stockholders that they approve the
1995 Directors' Plan, a copy of which is attached hereto as Exhibit B. The
1995 Directors' Plan is comparable to the 1992 Non-Employee Directors'
Stock Option Plan, except for the effective and termination dates. Because
adoption of the 1995 Directors' Plan may benefit the current non-employee
directors of the Company, they may be deemed to have an interest in this
proposal.

The 1995 Non-Employee Directors' Stock Option Plan.

The purpose of the 1995 Directors' Plan is to provide incentives that
will attract and retain highly competent persons as non-employee directors
by providing them with opportunities to acquire a propriety interest in the
Company. Additionally, by providing non-employee directors with stock
option grants determined on a non-discretionary basis according to a fixed
formula, the 1995 Directors' Plan will permit non-employee directors to be
"disinterested" as defined in the regulations of the Securities and
Exchange Commission under Section 16 of the Exchange Act, thus allowing
these directors to administer the Company's stock option plans in
compliance with exemptions from the short-swing liability provisions
contained in Section 16.

The following is a brief description of the principal provisions of
the 1995 Directors' Plan and is qualified in its entirety by the 1995
Directors' Plan included herewith as Exhibit B.

Under the 1995 Non-Employee Director Plan, the aggregate number of
shares of Common Stock of the Company which may be issued pursuant to
options is 150,000 shares, subject to adjustment in certain circumstances,
including merger, consolidation, reorganization, recapitalization, stock
dividends, stock splits, combination of shares, exchange of shares, change
of corporate structure or other similar transactions.

The terms and conditions under which options shall be granted under
the 1995 Directors' Plan are set forth in the 1995 Non-Employee Directors'
Plan and described below. The Board of Directors or any executive officer
of the Company designated by the Board of Directors shall have authority to
interpret the provisions of the 1995 Directors' Plan, to establish such
rules and procedures as may be necessary or advisable to administer the
1995 Directors' Plan and to make all determinations necessary or advisable
for the administration of the 1995 Directors' Plan, provided that no such
interpretation or determination shall change or affect the selection of
participants eligible to receive grants under the 1995 Directors' Plan, the
number of shares of Common Stock covered by or the timing of any grant of
options under the 1995 Directors' Plan or the terms and conditions thereof.

Eligibility. All non-employee directors of the Company are eligible
to receive options under the 1995 Directors' Plan. The Company currently
has six non-employee directors eligible to participate in the 1995
Directors' Plan, of which three such directors are standing for re-election
to the Board of Directors. See Proposal One, "Election of Directors".

Term of Plan; Grant of Options to Non-Employee Directors. The 1995
Directors' Plan shall be effective as of September 12, 1995, upon approval
of the stockholders at the Annual Meeting. On the first day of each fiscal
year during the term of the 1995 Directors' Plan, each non-employee
director then in office will be automatically granted an option to purchase
5,000 shares of Common Stock. In addition, each non-employee director
whose initial term commences after the effective date of the 1995
Directors' Plan shall receive an option to purchase 5,000 shares of Common
Stock at the time such director is first elected to the Company's Board of
Directors. No options will be granted under the 1995 Directors' Plan after
September 10, 2005. Options shall be evidenced by a stock option agreement
in such form as the Board of Directors or any executive officer of the
Company designated by the board of directors shall from time to time
determine consistent with the 1995 Directors' Plan.

Terms and Conditions of Options. Options granted to non-employee
directors become exercisable at a rate of 20% each successive year from the
date of grant. The purchase price of the Common Stock under each option
will be the fair market value of the Common Stock on the date of grant.
For purposes of the 1995 Directors' Plan, fair market value shall mean (i)
the last sales price of a share of Common Stock traded on the over-the-
counter market, as reported on the NASDAQ National Market System, but if no
shares of Common Stock were traded on such date, then on the last previous
date on which a share of Common Stock was so traded, (ii) the closing price
for a share of Common Stock on the stock exchange, if any, on which the
shares of Common Stock are primarily traded, but if no shares of Common
Stock were traded on such date, then on the last previous date on which a
share of Common Stock was so traded or (iii) if none of the above is
applicable, the value of a share of Common Stock for such date as
established by a nationally recognized appraisal firm or investment bank,
using any reasonable method of valuation.

All options expire on the earlier of the fifteenth anniversary of the
date of grant or the date of termination of the optionee's status as a
director of the Company. Subject to such fifteen year maximum duration, if
an optionee ceases to be a director of the Company due to retirement upon
or after attaining age 65 (or such earlier date as such optionee shall be
permitted to retire under the Company's retirement policy then in effect)
or disability, he or she shall have thirty days following his or her
termination to exercise his or her options to the extent exercisable as of
such termination, and if an optionee dies while a director of the Company
or within thirty days following the date of termination of such optionee's
status as a director, such optionee's personal representa-tives or heirs
shall have one (1) year following such optionee's death to exercise his or
her options, to the extent such options were exercisable as of the date of
the optionee's death.

Under the 1995 Directors' Plan, an option becomes exercisable in full,
whether or not it is then exercisable, upon a Change in Control (as defined
in the 1995 Directors' Plan). If the Company is merged or consolidated
with another corporation or in the event of a reorganization, separation or
liquidation of the Company, the options will be replaced by options to
purchase stock in the successor corporation.

The 1995 Directors' Plan may be terminated and may be modified or
amended by the Company's Board of Directors at any time, provided, however,
that (i) no modification or amendment increasing the aggregate number of
shares which may be issued under options, materially increasing benefits
accruing to participants under the 1995 Directors' Plan, or materially
modifying the requirements as to eligibility to receive options shall be
effective without stockholder approval within one (1) year of the adoption
of such amendments, (ii) no such termination, modification or amendment of
the 1995 Directors' Plan shall alter or affect the terms of any then-
outstanding options previously granted, without the consent of the holder
thereof and (iii) the provisions of the 1995 Directors' Plan with respect
to the number of shares of Common Stock for which options shall be granted,
the timing of such grants and the exercise price for such options shall not
be amended more than once every six months, other than to comport with
changes in the Internal Revenue Code of 1986, as amended, or the Employee
Retirement Income Security Act of 1974, as amended, or the respective rules
thereunder.

Certain Tax Matters. The following is a summary, and does not purport
to be a complete description, of certain federal income tax aspects of the
Plan and transactions thereunder. Furthermore, no information is given
with respect to any state, local, or foreign taxes which may be applicable.

Under the 1995 Directors' Plan, an optionee will not recognize taxable
income, and the Company will not be entitled to a deduction, upon the grant
of an option. Upon exercise of such option, the optionee will recognize
ordinary income in an amount equal to the amount by which the fair market
value of each share of Common Stock on the date of exercise exceeds the
option price. The amount so recognized as income will be deductible by the
Company. Upon any subsequent sale of shares by an optionee, the optionee's
basis in the shares purchased for determining gain or loss will be their
fair market value on the date of exercise, if such shares were acquired for
cash. If the exercise of the option is made by delivery of shares of
Common Stock in payment of the option price, the shares delivered are
deemed to be exchanged in a tax-free transaction for the equivalent number
of new shares of Common Stock. Such equivalent number of new shares has
the same basis and holding period as the shares exchanged.

The foregoing is not to be considered as tax advice to the optionee,
and any such person should consult their tax counsel.

Recommendation of the Board of Directors Concerning the Adoption
of the 1995 Directors' Plan.

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Coopers & Lybrand, L.L.P. has audited the Company's financial
statements for the fiscal years ending March 31, 1995, 1994 and 1993.

A representative of Coopers & Lybrand is expected to be present at the
Annual Meeting. The representative will be afforded an opportunity to make
a statement and will be available to respond to appropriate questions by
stockholders.

STOCKHOLDERS' PROPOSALS

Stockholders are entitled to submit proposals on matters appropriate
for stockholder action consistent with regulations of the Securities and
Exchange Commission. Should a stockholder intend to present a proposal at
the Company's next annual meeting, it must be received by the Secretary of
the Company, 4200 Parliament Place, Suite 600, Lanham, Maryland 20706-1860,
no later than February 10, 1996, in order to be included in the Company's
proxy statement and form of proxy relating to that meeting.

SOLICITATION PROCEDURES

Officers and regular employees of the Company, without extra
compensation, may solicit the return of proxies by mail, telephone,
telegram and personal interview. Certain holders of record such as
brokers, custodians and nominees, are being requested to distribute proxy
materials to beneficial owners and to obtain such beneficial owner's
instructions concerning the voting of proxies. The cost of solicitation of
proxies (including the cost of reimbursing banks, brokerage houses, and
other custodians, nominees and fiduciaries for their reasonable expenses in
regard to the proxy soliciting materials) will be paid by the Company.

MISCELLANEOUS

Management does not intend to present any other matters at the Annual
Meeting. If other matters are properly presented at the Annual Meeting,
the persons named as proxies will vote them in accordance with their best
judgment.

Where information contained in this Proxy Statement rests particularly
within the knowledge of a person other than the Company, the Company has
relied upon information furnished by such person or contained in filings
made by such person with the Securities Exchange Commission.

By Order of the Board of Directors

Edward Weiss
Secretary
Dated: July 25, 1995
<PAGE>
COMNET CORPORATION
4200 Parliament Place, Suite 600
Lanham, Maryland 20706-1844

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF COMNET CORPORATION
FOR THE ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 12, 1995

The undersigned hereby appoints Edward Weiss and Charles A. Crew and
each of them, as true and lawful attorneys and proxies of the undersigned,
with full power of substitution, for and in the name of the undersigned, to
vote and otherwise act at the Annual Meeting of Stockholders of COMNET
Corporation (the "Company") to be held on Tuesday, September 12, 1995, at
9:30 a.m. at Prudential Securities, One Liberty Plaza, New York, New York
10292, and at any adjournment or postponement thereof (the "Annual
Meeting"), with respect to all shares of Common Stock and 6% Preferred
Stock of the Company which the undersigned would possess if personally
present, on the following matters.

1. Election of Directors

____FOR all nominees listed below
(Except as marked to the contrary below)

____WITHHOLD AUTHORITY to vote for all nominees listed below

(Instruction: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name in the list below.)

Mr. James V. Manning
Mr. Richard H. Eisenberg
Mr. Carl I. Kanter

There is no assurance that any of the Company's nominees will serve as
directors if any other nominees are elected to the Board.

2. To approve the adoption of the Company's 1995 Incentive Stock
Option, Non-Qualified Stock Option and Stock Appreciation Rights Plan

_____ FOR _____ AGAINST _____ ABSTAIN

3. To approve the adoption of the Company's 1995 Non-Employee
Directors' Stock Option Plan

_____ FOR _____ AGAINST _____ ABSTAIN
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED TO ELECT THE INDIVIDUALS NAMED IN PROPOSAL
ONE.

In their discretion, the appointed proxies may also vote upon any
other matters which the persons making the solicitation do not know, a
reasonable time before the solicitation and that properly come before the
Annual Meeting or any adjournment or postponement thereof, including the
election of any person to any office for which a nominee is named in the
proxy statement and such nominee is unable to serve for good cause.

The undersigned hereby ratifies and confirms that the aforesaid
attorneys and proxies may do hereunder.

_______________________________ Dated:_____________, 1995
(Signature of Stockholder)

(Please sign exactly as your name appears hereon. When signing as
attorney, executor, administrator, trustee, guardian or corporate official,
please give your full official title. If shares are held jointly, each
holder should sign.)

TO INSURE A QUORUM AND TO AVOID THE EXPENSE AND DELAY OF SENDING FOLLOW-UP
LETTERS, PLEASE FILL IN, SIGN, DATE AND MAIL THIS PROXY IN THE ENCLOSED
POSTAGE PAID ENVELOPE.
<PAGE>
Exhibit A

COMNET CORPORATION
INCENTIVE STOCK OPTION,
NON-QUALIFIED STOCK OPTION AND
STOCK APPRECIATION UNIT PLAN

COMNET CORPORATION, a Delaware corporation (hereinafter referred to as
the "Company"), adopted and established a non-qualified stock option and
stock appreciation incentive unit plan (the "Plan") for its officers and
other key employees (whether full-time or otherwise) effective as of
September 12, 1995, the date it was approved by the Company's shareholders
at their annual meeting.

The provisions of the Plan are set forth below:

SECTION ONE

DESIGNATION AND PURPOSE OF THE PLAN

A. Designation. This document is designated the "COMNET CORPORATION
INCENTIVE STOCK OPTION, NON-QUALIFIED STOCK OPTION AND STOCK APPRECIATION
UNIT PLAN" (hereinafter referred to as the "Plan").

B. Purpose. The purpose of the Plan is to advance the growth and
development of the Company by affording an opportunity to the officers and
other employees (whether full-time or otherwise) of the Company or a
Subsidiary to invest in shares of the Company's Stock and/or to receive a
cash or Stock distribution representing increases in the value of the
Company's Stock. The acquisition of such Stock by such employees and/or
the payment of cash distributions to such employees, who contribute to
responsible for the Company's success, provides a continuing incentive for
them to promote the best interests of the Company and induces them to
continue their employment with the Company or a Subsidiary. Finally, the
Plan will enable the Company or a Subsidiary to attract competent personnel
to enter its employ.

SECTION TWO

DEFINITIONS

The following definitions shall be applicable to the terms used in the
Plan:

A. "Code" means the Internal Revenue Code of 1986, as presently in
effect or as hereafter amended.

B. "Committee" means the Compensation Committee appointed to
administer the Plan pursuant to Section Four.

C. "Company" means COMNET Corporation, a Delaware corporation.

D. "Eligible Individual" means any officer or other key employee
(whether full-time or otherwise) of the Company or a Subsidiary. Options
and Stock Units may be granted under the Plan only to such officers and
other key employees (whether full-time or otherwise) of the Company or a
Subsidiary.

E. "Incentive Stock Option" shall mean an option granted under this
Plan that meets the requirements of Code Section 422.

F. "Incentive Stock Option Plan" shall mean that part of the Plan the
provisions of which are specifically designated as relating solely to
Incentive Stock Options as well as those provisions of the Plan which
relate to Options generally or to both Options and Stock Units.

G. "Non-Qualified Stock Option" means any options granted under the
Plan that are not Incentive Stock Options.

H. "Non-Qualified Stock Option Plan" shall mean that part of the Plan
the provisions of which are specifically designated as relating solely to
Non-Qualified Stock Options as well as those provisions of the Plan which
relate to Options generally or to both Options and Stock Units.

I. "Option" shall mean an Incentive Stock Option and a Non-Qualified
Stock Option granted under this Plan to purchase authorized but unissued or
treasury shares of the Company's Stock.

J. "Participant" means any Eligible Individual who is granted an
Option or Stock Unit as provided in this Plan, and shall also mean the
successor in interest, if any, of a deceased Eligible Individual.

K. "Plan" shall mean the COMNET Corporation Incentive Stock Option,
Non-Qualified Stock Option and Stock Appreciation Unit Plan as set forth in
this document, and as hereafter amended, the provisions of which, unless
otherwise designated, form a part of each of the incentive Stock Options
Plan, the Non-Qualified Stock Option Plan, and the Stock Appreciation Unit
Plan.

L. "Redemption Date" for a Stock Unit shall be the earlier of (i) the
date so designated in the written instrument granting the Stock Unit, which
shall in no event be earlier than the first anniversary of the date of
grant of the Stock Unit (except as otherwise expressly provided herein) nor
later than the tenth anniversary of the date of grant of the Stock Unit;
(ii) the date of the death of the Participant to whom the Stock Unit was
granted; or (iii) the date which is the first day of the sixth month
following the termination of employment of the Participant to whom the
Stock Unit was granted if such termination of employment is due to "total
disability" of the Participant. If the termination of employment is due to
any other cause which the Committee, in its sole discretion, determines
should permit a redemption rather than a forfeiture of outstanding vested
Stock Units, the redemption rules of Section Twelve A shall apply.

M. "Stock" means the Common Stock of the Company.

N. "Stock Appreciation Unit Plan" shall mean that part of the Plan
the provisions of which are specifically designated as relating solely to
Stock Units as well as those provisions of the Plan which relate to both
Stock Units and Options.

O. "Stock Unit" means a stock appreciation incentive unit granted to
a Participant by the Committee under this Plan.

P. "Subsidiary" shall mean an affiliate controlled by the Company,
directly or indirectly, through one or more intermediaries, subject to
Section Twelve(A)(vi), below.

Q. "Vesting Date" for a Stock Unit shall mean the date or dates upon
which all or any portion of the Stock Units shall become nonforfeitable in
the event of the subsequent
total disability or death of the participant or in the event of the
termination of employment of the Participant for other causes approved by
the Committee.

R. Wherever appropriate, words used in this Plan in the singular may
mean the plural, the plural may mean the singular, and the masculine may
mean the feminine or neuter.

SECTION THREE

STOCK SUBJECT TO STOCK OPTIONS AND STOCK UNITS

Subject to the adjustment provided in Section Ten, the total number of
shares of Stock which may be delivered to all participants upon the
exercise of all Options granted under this Plan, shall not exceed 600,000
and the total number of shares of Stock which may be so issued may be
increased only by a resolution adopted by the Board of Directors of the
Company and approved by the stockholders of the Company. Shares delivered
under this Plan upon the exercise of an Option shall be fully paid and non-
assessable. Subject to the adjustment provided in Section Ten, the total
number of Stock Units which may be issued by the Committee to all
Participants under this Plan shall not exceed 100,000 and the total of such
Stock Units may be increased only by a resolution adopted by the Board of
Directors of the Company and approved by the stockholders of the Company.
Such Stock may either be authorized and unissued or treasury stock.
Subject to the adjustment provided in Section Ten, the total number of
Shares of Stock which may be issued by the Committee in redemption of Stock
Units to all Participants under the Plan shall not exceed 75,000 shares and
the total number of shares of Stock which may be so issued may be increased
only by a resolution adopted by the Board of Directors of the Company and
approved by the stockholders of the Company.

SECTION FOUR

ADMINISTRATION OF THE PLAN

A. Appointment of Committee. The Board of Directors shall appoint a
Compensation Committee (the "Committee") which shall consist of not less
than three (3) members of such Board of Directors, none of whom is, or has
been during the one (1) year period prior to his appointment, an Eligible
Individual, who shall not be eligible during the period of service on the
Committee. In addition, the Board of Directors may designate a member of
the Committee to act as Chairman of the Committee. The Board of Directors,
in its sole discretion, may at any time, remove any member of the Committee
and appoint a director to fill any vacancy on the Committee. No individual
may participate as a member of the Committee in the administration of this
Plan if he shall have been eligible to receive a grant of an award of any
options or stock appreciation rights of the Company or any of its
affiliates (as that term is used in SEC Rule 16b-3) under this Plan or any
other discre- tionary plan of the Company or its affiliates (as that term
is used in SEC Rule 16b-3) at any time within one year prior to serving on
the Committee.

B. Committee Meetings. The Committee shall hold its meetings at such
times and places as are specified by the Committee. A majority of the
Committee shall constitute a quorum. All actions of the Committee shall be
taken by a majority of a quorum present at the meeting duly called by any
member of the Committee; provided, however, that any action taken by a
written document signed by a majority of the Committee members shall be as
effective as actions taken by the Committee at a meeting duly called and
held.

C. Committee Powers. Subject to the terms and provisions of this
Plan, the Committee shall have full power and authority to (i) designate
the Eligible Individuals to whom Options or Stock Units shall be granted,
(ii) determine the number of Options and/or Stock Units to be granted to
each Participant, (iii) determine the Redemption Date of any Stock Units
and the Vesting Date for any Stock Units, (iv) determine whether a vested
Stock Unit shall be redeemed for cash or for Stock or for a combination of
cash and Stock, (v) determine the purchase price to be paid for each share
of Stock deliverable upon the exercise of any Options, which shall be at
least equal to the fair market value of a share of Stock at the time the
Option is granted, (vi) determine the period during which an Option may be
exercised, which period may not (except as otherwise expressly provided
herein commence prior to the first anniversary of the date of grant of the
Options nor extend beyond the tenth anniversary of the date of grant of the
Options, (vii) establish the provisions of Non-Qualified Options to avoid
such Options being deemed to constitute incentive stock options under
Section 422 of the Code and regulations thereunder, including but not
limited to extending the terms of Non-Qualified Options to a term not to
exceed ten years and seven days and (viii) determine any other conditions
to which the exercise of an Option shall be subject, including, subject to
the provisions of Section Twelve, the effect upon an Option of the
termination of employment or death of a Participant. The Committee shall
have all rights, powers and authority necessary or appropriate to
administer this Plan in accordance with its terms, including, without
limitation, the power to make binding interpretations of this Plan and to
resolve all questions (whether express or implied) arising thereunder. The
Committee may prescribe such rules and regulations for administering this
Plan as the Committee, in its sole discretion, deems necessary or
appropriate.

SECTION FIVE

SELECTION OF PARTICIPANTS

In determining which Eligible Individuals shall be granted Options
and/or Stock Units, the Committee shall evaluate, inter alia, (i) the
duties and responsibilities of the Eligible Individuals, (ii) their past
and prospective contributions to the success of the Company, (iii) the
extent to which they are performing and will continue to perform valuable
services for the benefit of the Company, and (iv) such other factors as the
Committee deems relevant.

SECTION SIX

ISSUANCE OF OPTIONS AND STOCK UNITS

A. Form of Options and Stock Units. Subject to the provisions of
this Plan, each group of Options and/or Stock Units granted to a
Participant shall be set forth in a written instrument upon such terms and
conditions as the Committee determines. The Redemption Date of any Stock
Unit and the Vesting Date of any Stock Unit shall be set forth in such
written instrument. Each such instrument shall incorporate the provisions
of this Plan by reference.

B. Date of Grant of Stock Units and Options. The date of grant for a
Stock Unit shall be the date on which the Stock Unit instrument was issued
to the Participant and for an Option shall be the date such options were
granted by the Committee.

C. Delivery of Shares on Exercise of Option. Except as otherwise
expressly provided herein, no Option may be exercised prior to the first
anniversary of the date of grant of the Option. Upon exercise of any
Option, or any portion thereof, the Committee shall deliver to the
Participant such number of shares of Stock as the Participant elects to
purchase, as soon as practicable after the Committee receives (i) written
notice of such exercise under and pursuant to the terms and conditions of
the applicable Option document and (ii) the full purchase price for such
shares which shall be paid in cash or shares of stock, or a combination
thereof. The Participant shall be entitled to pyramid the shares received
upon exercise of Options by simultaneously delivering such shares of stock
in payment of the purchase price of shares subject to additional Options;
any share delivered in payment of the exercise price must have been held of
record by the Optionee for a least six months or such other period as may
be required to avoid any adverse effect on the financial position of the
Company or a Subsidiary as a result of incurring compensation expense or
otherwise. Such shares, which shall be fully paid and non-assessable upon
the issuance thereof, shall be represented by a certificate or certificates
registered in the name of the Participant and stamped with any appropriate
legend.

SECTION SEVEN

VESTING AND REDEMPTION OF STOCK UNITS

A. Vesting. The amount to be paid in redemption of any Stock Unit as
of the Redemption Date of such Stock Unit shall be equal to the percentage
of the "Stock Unit Value" of the Stock Unit in which the Participant has a
vested interest as of the Redemption Date. The Committee may, in its
discretion, issue Stock Units to a participant in which the Participant has
an immediate fully vested interest or may impose such vesting requirements,
expressed in terms of years of continuous employment with the Company
and/or a Subsidiary, as the Committee, in its sole discretion, may
determine is appropriate in any given situation.

B. Stock Unit Value. The "Stock Unit Value" of a Stock Unit shall be
determined as of the Redemption Date of the Stock Unit and shall consist of
the appreciation, if any, in the value of one share of Stock of the
Company, between (i) the value of one share of the Company's Stock as of
the date of grant of the Stock Unit, and (ii) the value of one share of
Stock of the Company as of the Redemption Date of such Stock Unit.

C. Payment of Stock Unit Value. Each Stock Unit granted to a
Participant which has become vested shall be redeemed by the Committee on
the Redemption Date of such Stock Unit. The "Stock Unit Value" of the
Stock Unit shall be paid to the Participant in cash, in Stock or in a
combination of cash and Stock as soon as is practicable after the
Redemption Date, at the discretion of the Committee. To the extent that
payment of the Stock Unit Value is made in shares of Stock, the value of
the Company's Stock as of the Redemption Date shall be used in determining
the number of shares of Stock to be received by the Participant. Any
shares of stock received by a Participant upon exercise of a Stock Unit
shall be non-transferable until a period of at least six months has elapsed
since the date of the grant of such Stock Unit.

SECTION EIGHT

NON-TRANSFERABILITY OF OPTIONS AND STOCK UNITS

Any Option or Stock Unit granted to an Eligible Individual may not be
sold, exchanged, assigned, pledged, discounted, hypothecated or otherwise
transferred except by will or by the laws of descent and distribution.
During the lifetime of the Eligible Individual to whom an Option or Stock
Unit is issued, such Option or Stock Unit may be exercised only by the
Eligible Individual to whom it was issued or his representative. Upon any
attempt to so sell, transfer, assign, pledge, discount, hypothecate or
otherwise transfer any Option or Stock Unit, or any right thereunder,
contrary to the provisions hereof, such Option of Stock Unit and all rights
thereunder shall immediately become null and void.

SECTION NINE

COMPLIANCE WITH SECURITIES LAWS

Unless a registration statement under the Securities Act of 1933 is
then in effect with respect to the Stock a Participant receives upon the
exercise of an Option or the redemption of a Stock Unit the Committee, in
its discretion, may require, at the time that a Participant so receives
such Stock, that the Participant agrees in writing to acquire any such
Stock he may so receive for investment and not for distribution, or to
consent to such other agreement as the Committee, in its discretion, may
deem to be necessary to comply with the requirements of the Securities Act
of 1933 or any applicable state securities laws. A reference to any such
agreement shall be inscribed on the Stock certificate(s). Each Option
shall be subject to the requirement that, if at any time the Committee
determines, in its discretion, that the listing, registration or
qualification of the shares of Stock subject to the Option upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as
a condition of, or in connection with, the issuance or purchase of shares
thereunder, the Option may not be exercised in whole or in part unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained and the same shall have been free of any conditions
not acceptable to the Committee.

SECTION TEN

CHANGES IN CAPITAL STRUCTURE OF COMPANY

In the event of the splitting or consolidation of shares of Stock of
the Company, the payment of a stock dividend by the Company or a similar
transaction, the number of shares of Stock specified in Section Three of
this Plan, the number of shares of Stock upon which the value of each
outstanding Stock Unit shall be based and the value per share and the
number and price per share of shares subject to then outstanding Options
shall be proportionately adjusted.

SECTION ELEVEN

REORGANIZATION, DISSOLUTION, LIQUIDATION
CHANGE OF CONTROL OR SIMILAR EVENT

A. Treatment of Options. In the event of an occurrence of any of the
following events and upon approval of the Committee:

(i) the commencement of a bona fide "tender offer" acceptable to
the Company's Board for the shares of the Company as provided under Rule
14d-2 promulgated under the Federal Securities Exchange Act of 1934, as
amended, or any subsequent comparable Federal rule or regulation governing
tender offers;

(ii) a successful tender offer not previously approved by the
Company's Board of Directors resulting in a change of control of the Board;

(iii) the Company's execution of an agreement concerning the
sale of substantially all of its assets (other than to a subsidiary in a
mere corporate restructuring);

(iv) the Company's adoption of a plan of dissolution or
liquidation; or

(v) the Company's execution of an agreement concerning a merger
or consolidation involving the Company in which the Company is not the
surviving corporation or if, immediately following such merger or
consolidation, less than fifty percent (50%) of the surviving corporation's
outstanding voting stock is held by persons who were shareholders of the
Company immediately prior to such merger or consolidation; each Participant
shall have the right, immediately following such occurrence, to exercise
his or her Option in full to the extent not theretofore exercised
regardless of any provision herein or any provision in the Option contract
providing for the deferment of the vesting or exercise thereof.

The Participant shall be entitled to exercise the options regardless of
whether the tender offer (described in subsection A(i), directly above), is
successful, regardless of whether the dissolution or liquidation is
consummated, and regardless of whether the other corporation which is the
surviving corporation in a merger or consolidation shall adopt and maintain
any plan under which options are granted to the Participant. In the event
the agreement concerning the sale of substantially all of its assets or the
agreement concerning a merger or consolidation is not consummated by the
parties, then the Options not exercised prior to the formal determination
by the Board that the contemplated transaction will not be consummated
shall on and after the date of such determination again be subject to the
exercise restrictions set forth in the Option agreement. In the case of a
merger, consolidation, reorganization, reclassification, sale of assets or
similar event, all outstanding Options shall pertain to the securities or
other property to which a holder of the number of shares of Stock covered
by the Option would have been entitled to receive in connection with such
event, and in the case of any other event specified herein, each
outstanding Option shall remain outstanding and exercisable in accordance
with its terms.

B. Treatment of Stock Units. In the event of an occurrence of any of
the following events and upon approval of the Committee:

(ii) a successful tender offer not previously approved by the
Company's Board of Directors resulting in a change of control of the Board;

(iii) the Company's execution of an agreement concerning the
sale of substantially all of its assets (other than to a subsidiary in a
mere corporate restructuring);

(iv) the Company's adoption of a plan of dissolution or
liquidation; or

(v) the Company's execution of an agreement concerning a merger
or consolidation involving the Company in which the Company is not the
surviving corporation or if, immediately following such merger or
consolidation, less than fifty percent (50%) of the surviving corporation's
outstanding voting stock is held by persons who were shareholders of the
Company immediately prior to such merger or consolidation; the Redemption
Date with respect to all Stock Units theretofore granted hereunder and
outstanding at that time shall be the date of such event, regardless of any
provision herein or any provision in the Stock Unit contract providing for
the deferment of the vesting or redemption of any provision herein or any
provision in the Stock Unit contract providing for the deferment of the
vesting or redemption thereof.

The Participant shall be entitled to require redemption (the "Redemption
Date") of the Stock Units regardless of whether the tender offer is
successful, regardless of whether the dissolution or liquidation is
consummated, and regardless of whether the other corporation which is the
surviving corporation in a merger or consolidation shall adopt and maintain
any plan under which Stock Units are granted to the Participant. In the
event the agreement concerning the sale of substantially all of its assets
or the agreement concerning a merger or consolidation is not consummated by
the parties, then the Stock Units not exercised prior to the formal
determination by the Board that the contemplated transaction will not be
consummated shall on and after the date of such determination again be
subject to the vesting restrictions set forth in the Option agreement.

In the case of a merger, consolidation, reorganization,
reclassification, sale of assets or similar event, the Stock Unit Value of
any Stock Unit upon the redemption of such Stock Unit shall be determined
on the basis of the difference, if any, between (i) the value of a single
share of the Company's Stock as of the date of grant of such Stock Unit,
and (ii) the current value, as of the Redemption Date of such Stock Unit,
of the shares of stock or other securities into which a single share of the
Company's Stock would have been converted on the date of such
reclassification, consolidation, merger, reorganization, sale of assets or
other similar event.

SECTION TWELVE

TERMINATION OF EMPLOYMENT

A. Severance.

(i) Stock Units - Termination of Employment. In the event that
a Participant's employment with the Company or a Subsidiary terminates for
any reason, other than due to his death or "total disability," any Stock
Unit granted to him will be forfeited, whether or not such Stock Unit had
been vested, unless the Committee, in its sole discretion, decides to
authorize the redemption of the Stock Unit, to the extent then vested. If
the Committee so decides to redeem the Stock Unit, it shall be redeemed as
of the third business day following the next date on which quarterly and/or
annual summary statements of sales and sales earnings of the Company are
released for publication on a wire service, in a financial news service, in
a newspaper of general publication or are otherwise made publicly
available.

(ii) Stock Units - Total Disability. In the event that a
Participant's employment with the Company or a Subsidiary is terminated due
to his incurring a "total disability", any Stock Units granted to him will
be redeemed, to the extent then vested, upon the expiration of six months
following the date of termination of employment due to a "total
disability".

(iii) Options - Termination of Employment. In the event that a
Participant's employment with the Company or a Subsidiary terminates for
any reason, other than due to his death or "total disability", any Option
granted to such Participant will expire in accordance with the provisions
of the Options document dealing with the effect of a termination of
employment. Such provisions must provide for an expiration of the Option
not later than six months after the date of such termination.
Notwithstanding the foregoing, in the event that the Participant's
employment is terminated for cause any Option granted to him shall be
revoked as of the date his employment terminates. Notwithstanding any
other provisions of this Plan, no payment under any Stock Unit or issuance
of any Stock pursuant to any Option or Stock Unit shall be made and all
rights of the Participant who received such Option or Stock Unit (or his
designated beneficiary or legal representatives) under this Plan shall be
forfeited if, prior to the time of such payment or issuance, the
Participant (1) shall be employed without the Company's or affiliate's
consent by a competitor of, or shall be engaged in any activity in
competition with, the Company or an affiliate; (2) divulges without the
consent of the Company any secret or confidential information belonging to
the Company or an affiliate; (3) has been dishonest or fraudulent in any
matter affecting the Company or (4) has committed any act which, in the
sole judgment of the Committee, has been substantially detrimental to the
interests of the Company. The Company shall give a Participant written
notice of the occurrence of any such event (described in the foregoing
clauses (1) - (4)) prior to making any such forfeiture. The determination
of the Committee as to the occurrence of any of the events specified in the
foregoing clauses (1)-(4) of this Section 11 shall be conclusive and
binding upon all persons for all purposes. Any Award shall be subject to
forfeiture for the reasons provided in this Section in such manner as shall
be provided by the Committee.

(iv) Options - Total Disability. In the event that a
Participant's employment with the Company or a Subsidiary is terminated due
to his incurring a "total disability," any Option granted to such
Participant will expire twelve months after the date of such termination.

(v) Definition of "Total Disability". For purposes of this
Section Twelve, a Participant is totally disabled if he is unable to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or
which has lasted or can be expected to last for a continuous period of not
less than 12 months.

(vi) Definition of "Subsidiary". For purposes of this Section
Twelve, a Participant's employer shall continue to be deemed a Subsidiary
notwithstanding that such entity is no longer directly or indirectly
controlled by the Company and therefore no longer a Subsidiary, provided
that the Participant's employer was a Subsidiary at the time the Options or
Stock Units were granted to such Participant.

B. Death. If a Participant dies while in the employ of the Company
or a Subsidiary, his vested Stock Units will be redeemed as soon as is
practicable after his death and the proceeds of such redemption shall be
paid over to the executor or administrator of the estate of the Participant
or to the person to whom the Stock Units shall pass by will or by the laws
of descent and distribution. If a Participant dies while in the employ of
the Company or a Subsidiary, any Option may provide that it can be
exercisable not later than six months after his death by the executor or
administrator of the estate of the Participant or by the person to whom the
Option shall pass by will or by the laws of descent and distribution, but
only to the extent the Participant was entitled to exercise the Options as
of the date of his death.

SECTION THIRTEEN

PARTICIPANT'S RIGHTS AS A HOLDER OF SHARES

A Participant has no rights as a stockholder with respect to any
shares of Stock paid in redemption of any Stock Units or acquired pursuant
to the exercise of an Option until the date a certificate is issued to him
for such shares. Except as otherwise provided in Section Ten of this Plan,
no adjustment shall be made for dividends or other rights for which the
record date occurs prior to the date such stock certificate is issued.

SECTION FOURTEEN

AMENDMENTS TO THE PLAN

The Board of Directors of the Company may amend or terminate this Plan
at any time; provided, however, that (i) any such amendment or termination
shall not adversely affect the rights of Participants under Options or
Stock Units granted prior thereto; and (ii) any amendment which increases
the total number of Options, Stock Units or shares of Stock covered by this
Plan, changes the definition of Eligible Individual, changes the criteria
for becoming a member of the Compensation Committee or any other material
change to this Plan shall be subject to obtaining the approval thereof by
the Company's stockholders. Notwithstanding the foregoing, this Plan shall
not be amended more than once every six months, other than to comport with
changes in the, the Code, the Employee Retirement Income Security Act of
1974, as amended or the rules thereunder.

SECTION FIFTEEN

EFFECTIVE AND EXPIRATION DATES OF THE PLAN

This Plan shall be effective on September 12, 1995, after approval of
it by the Company's shareholders. No Option shall be granted after
September 10, 2005.

SECTION SIXTEEN

INCENTIVE STOCK OPTIONS PROVISIONS

The provisions of this Section Sixteen shall apply only to Incentive
Stock Options.

A. Over Ten-Percent Shareholders. Incentive Stock Options shall not
be issued to individuals then owning more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or any
parent or subsidiary of the Company.

B. Limit. Incentive Stock Options shall not be granted which will
cause the aggregate fair market value (determined at the time each Option
is granted) of the Stock for which options are granted to any Eligible
Individual under all incentive stock option plans of the Company during the
calendar year to exceed $100,000 plus the "unused limit carry-over"
referred to in Section 422(b)(8) of the Internal Revenue Code of 1954.

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<PAGE>

EXHIBIT B
COMNET CORPORATION
1995 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

1. Definitions. The terms below shall be defined
as indicated.

1.1 Administrator means the Board or any executive officer or officers
of the Company designated by the Board.

1.2 Board means the Board of Directors of the Company, including any
directors who may be Optionees.

1.3 Change in Control means the occurrence of and of the following:

(i) Any "person," as defined in Section 3(a)(9) of the Exchange Act
and as used in Sections 13(d) and 14(d) thereof, including a "group" as
defined in Section 13(d) of the Exchange Act (but excluding the Company and
any successor to the Company which became a successor of the Company in a
transaction that did not involve a Change in Control, any Subsidiary and
any employee benefit plan sponsored or maintained by the Company or any
Subsidiary and any employee benefit plan sponsored or maintained by the
Company or any Subsidiary, including any trustee of any such plan acting as
trustee), becomes directly or indirectly the "beneficial owner"(as defined
in Rule 13d-3 under the Exchange Act) of, or makes an offer to purchase,
securities of the Company representing 50% or more of the combined voting
power of the Company's then outstanding securities with respect to the
election of directors.

(ii) During any period of 12 consecutive months during the existence
of the Plan, the individuals who, at the beginning of such period,
constitute the Board (the "Incumbent Directors") cease for any reason other
than death to constitute at least a majority thereof; provided, however,
that a director who was not a director at the beginning of such 12-month
period shall be deemed to have satisfied such requirement and be an
Incumbent Director if such director was elected by, or on the
recommendation of or with the approval of, at least two-thirds of the
directors of the Company who then qualified as Incumbent Directors either
because they were directors at the beginning of such 12-month period or by
operation of this clause (ii).

(iii) The stockholders of the Company approve a merger or
consolidation of the Company or a reclassification of its voting stock
without the consent or approval of a majority of the Incumbent Directors.

(iv) The stockholders of the Company approve a sale or other
disposition of all or substantially all of the Company's assets.

(v) The stockholders of the Company approve or adopt a plan of
liquidation, dissolution or winding up.

1.4 Code means the Internal Revenue Code of 1986, as amended from time
to time, or
any successor statute thereof.

1.5 Common Stock means the Company's common stock, par value $.50,
subject to the provisions of Section 9.

1.6 Company means COMNET Corporation, a Delaware corporation, and any
successor corporation which adopts the Plan.

1.7 Exchange Act means the Securities Exchange Act of 1934, as amended
from time to time, or any successor statute thereof.

1.8 Fair Market Value means, on a specified date, the last sales price
of a Share traded on the over-the counter market, as reported on the NASDAQ
National Market System, or the last closing price for a Share on the stock
exchange, if any, on which Shares are primarily traded (or if no Shares were
traded on such date, then on the last previous date on which any Shares were
so traded), or if none of the above is applicable, the value of a Share for
such date as established by a nationally recognized appraisal firm or
investment bank, using any reasonable method of valuation.

1.9 Non-Employee Director means a director of the Company who is not an
officer or employee of the Company or any subsidiary.

1.10 Option means an option to purchase Shares granted by the Company
pursuant to the Plan.

1.11 Option Agreement means a written agreement as described in Section 7
between the Company and the Optionee evidencing an option.

1.12 Option Period means the period from the date of the granting of an
Option to the date on which that Option terminates pursuant to Section 5.2
hereof.

1.13 Option Price means the price to be paid for the Shares purchased
pursuant to an Option.

1.14 Optionee means any person who is granted an Option under the Plan.

1.15 Plan means the Company's 1995 Non-Employee Directors' Stock Option
Plan, as adopted by the Board in substantially the form set forth herein and
as the same may be amended or otherwise modified from time to time.

1.16 Shares means shares of Common Stock.

1.17 Subsidiary means a subsidiary of the Company as defined under
section 424 of the Code.

2. Purpose; Construction.

2.1 The Plan is intended to encourage ownership of Common Stock by
directors of the Company, upon whose judgment and interest the Company is
dependent for its successful operationand growth, in order to increase their
proprietary interest in the Company's success and to encourage them to serve
as directors of the Company.

2.2 The Plan is intended to comply with the terms and provisions of Rule
16b-3 promulgated under the Exchange Act. Any provision of the Plan or any
option Agreement inconsistent with the terms of such Rule in effect on such
date shall be inoperative and shall not affect the validity of the Plan, such
Option Agreement or any other provision thereof.

3. Administration and Interpretation. The terms and conditions under which
options shall be granted under the Plan are set forth in Section 5. Subject
to the provisions of Section 12, the Administrator shall have authority to
interpret the provisions of the Plan, to establish such rules and procedures
as may be necessary or advisable to administer the Plan and to make all
determinations necessary or advisable for the administration of the Plan;
provided, however, that no such interpretation or determination shall change
or affect the selection of participants eligible to receive grants under the
Plan, the number of shares covered by or the timing of any grant of Options
under the Plan or the terms and conditions thereof. The interpretation and
construction by the Administrator of any provision of the Plan or of any
Option Agreement shall be final and conclusive.

4. Eligible Persons. Options shall be granted pursuant to the provisions
hereof to persons who are Non-Employee Directors at the time of grant.

5. Grant of Options.

5.1 Procedure. Subject to the provisions of Section 8.1 limiting the
maximum number of Shares subject to purchase under Options, (a) each Non-
Employee Director whose initial term commences after the date of adoption of
the Plan by the Board shall be granted an option as of the date such director
is first elected to the Board of Directors to purchase 5,000 Shares, and (b)
on the first day of each fiscal year of the Company, each Non-Employee
Director (including Non-Employee Directors whose initial terms commenced on
or before the date of adoption of the Plan by the Board) shall be granted an
option to purchase 5,000 Shares. Each such Option shall become exercisable as
to 20% of the Shares covered thereby on each of the first five successive
anniversaries of the date of grant; provided, however, that upon the
occurrence of a Change in Control any portion of each such Option not then
exercisable shall immediately and automatically (without notice) become fully
exercisable. The Option Price for each option shall be the Fair Market Value
of a Share on the date of grant. No Option shall be granted under the Plan
except as provided in this Section 5.1.

5.2 Termination. The unexercised portion of each Option (both vested and
non-vested) shall automatically and without notice terminate and become null
and void upon the earlier of the
following:

(i) The fifteenth anniversary of the date of grant; or

(ii) Subject to the provisions of this Section 5.2, 30 days following
the date of termination of the Optionee's status as a director of the Company.

Notwithstanding the foregoing, if an Optionee ceases to be a director of the
Company due to retirement on or after attaining the age of 65 (or such earlier
date as such Optionee shall be permitted to retire under the Company's
retirement policy then in effect) or due to disability (the existence of which
disability shall be determined by the Administrator in its sole discretion,
which determination shall be conclusive), any unexercised portion of
the Option that was otherwise exercisable on the date such Optionee ceases to
be a director of the Company shall be exercisable by the Optionee at any time
within the 30 day period following the date of termination of such Optionee's
status as a director, and if an Optionee dies while a director of the Company
or within 30 days following the date of termination of such Optionee's status
as a director, any unexercised portion of the Option that was otherwise
exercisable on the date of such Optionee's death shall be exercisable by the
Optionee's personal representatives or heirs at law if no personal
representative is required by the governing state law, at any time within the
one year period from the date of such Optionee's death; provided, however,
that notwithstanding anything to the contrary contained herein, in no event
shall any option be exercisable following the fifteenth anniversary of the
date of grant.

5.3 Additional Grants. Nothing contained in the Plan shall be construed
to preclude the granting of an Option or Options pursuant to Section 5.1 to an
Optionee in addition to an Option or options for the purchase of Shares
already held by that Optionee or the granting of more than one option pursuant
to Section 5.1 to an Optionee at the same time.

5.4 Subject to Exchange Rules. Any and all grants of Options shall be
subject to all applicable rules and regulations of any exchange on which the
Company's Common Stock may then be listed.

6. Effective and Expiration Dates of Plan. The Plan shall be effective on
September 12, 1995, after approval by the Company's stockholders at the 1995
annual meeting of stockholders. No Option shall be granted after September
10, 2005.

7. Option Agreements. Option Agreements shall be in such form as the
Administrator shall approve or determine; provided, however, that all Option
Agreements shall comply with and be subject to the following terms and
conditions.

7.1 Manner, Time, and Medium of Payment. An Option shall be exercised in
the manner set forth in the Option Agreement relating thereto and payment in
full of the Option Price for all Shares shall be made at the time of exercise.
Payment shall be in United States dollars in the form of cash, certified check
or bank draft, or by delivery of fully paid Shares valued at their Fair Market
Value on the date of exercise, or, if the Option Agreement so provides (subject
to compliance with any applicable rules promulgated under Section 16 of the
Exchange Act requiring elections to be made six months in advance or during a
window period or as may otherwise hereafter be required), by withholding
Shares with respect to which the Optionee has exercised such Option having a
Fair Market Value on the date of exercise equal to the sum of the Option Price
for the withheld Shares and the remaining shares with respect to which the
Optionee has exercised such option, or any combination of such methods of
payment.

7.2 Number of Shares. Subject to Section 9, the Option Agreement shall
state the number of Shares to which it pertains.

7.3 Date of Exercise. An Option may be exercised, to the extent vested,
in whole or in part from time to time during the Option Period.
Notwithstanding anything in this Plan or any Option Agreement to the contrary,
no Option shall be exercisable prior to the approval of this Plan by the
stockholders of the Company.

7.4 Reorganization. In case the Company is merged or consolidated with
another corporation, or in case of a reorganization, separation or liquidation
of the Company, the Board or the board of directors of any corporation
assuming the obligations of the Company hereunder shall either (i) make
appropriate provisions for the protection of any outstanding options by the
substitution on an equitable basis of appropriate securities of the Company,
or appropriate shares or other securities of the merged, consolidated, or
otherwise reorganized corporation, or the appropriate adjustment in the
Option Price, or both, or (ii) give written notice to Optionees that their
Options must be exercised, to the extent then exercisable after giving due
effect to Section 7.3, within 60 days of the date of such notice or they will
terminate, and to the extent that such Options are not exercised within such
60-day period they shall terminate and be of no further effect.

7.5 Assignability. No option shall be assignable or transferable except
by will, by the laws of descent and distribution or pursuant to a qualified
domestic relations order (as defined in the Code), and no option may be
exercised other than by an Optionee or, after the death of an Optionee, by
that Optionee's personal representatives, heirs, or legatees.

7.6 No Right to Continue as Director. Nothing in the Plan nor in any
option granted under the Plan shall confer (or be deemed to confer) any right
on any Optionee to continue as a director of the Company or any Subsidiary or
shall interfere in any way with the right of the Board or the stockholders of
the Company, or the board of directors or stockholders (including the
Company) of any subsidiary, to terminate such status at any time, with or
without cause and with or without notice except as otherwise provided by the
certificate of incorporation or by laws of the Company or such Subsidiary or
applicable law.

7.7 Rights as a Stockholder. An Optionee shall have no rights as a
stockholder with respect to Shares covered by any Option until the date the
Company has issued or delivered such Shares to the Optionee, and then only as
to such Shares as are actually issued and delivered to the Optionee.

7.8 Other Provisions. Option Agreements shall contain such other terms
and conditions not inconsistent with the Plan as the Administrator shall deem
advisable.

7.9 Compliance with Law. Notwithstanding any provision of the Plan or
any Option Agreement to the contrary, no option may be granted or exercised at
any time when such Option or the granting or exercise thereof or payment
therefor may result in the violation of any law or governmental order or
regulation.

7.10 Securities Laws. The Company intends to register the Shares
issuable pursuant to exercise of Options under the Securities Act of 1933, as
amended, and to effect similar compliance under applicable state laws, but
shall be under no obligation to do so. The Administrator may require, as a
condition of the issuance and delivery of certificates evidencing Shares
issuable pursuant to exercise of Options, that the Optionee make such
covenants, agreements and representations, including, without limitation, as
to compliance with applicable securities laws, and that such certificates
bear such legends, as the Administrator in its sole discretion deems necessary
or desirable.

8. Shares Available for Option.

8.1 Maximum. Subject to Sections 7.4 and 9, no more than 150,000 Shares
shall be subject to purchase pursuant to options granted under the Plan, which
Shares may be either Shares held in treasury or authorized but unissued
Shares. At all times during the term of the Plan, the Company shall have
reserved that number of Shares less an amount equal to the number of Shares
held in treasury and the number of Shares which have been issued pursuant to
the exercise of Options. At all times after termination of the Plan the
Company shall have reserved for issuance a number of Share; equal to the
aggregate number of Shares subject to outstanding options less the number of
Shares held in treasury.

8.2 Expiration or Termination. If any outstanding option under the
Plan expires for any reason or is terminated prior to the expiration date of
the Plan as set forth in Section 6, the Shares allocable to any unexercised
portion of such Option may again be subject to an option.

9. Recapitalization or Change in Par Value of Common Stock. The aggregate
number of Shares purchasable under options granted and which may be granted
pursuant to the Plan and the option Price for Shares covered by each
outstanding option shall all be proportionately adjusted, as deemed
appropriate by the Administrator, if the Shares are split up, converted,
exchanged, reclassified or in any way substituted for. The Administrator
shall provide for appropriate adjustments of the numbers of shares purchasable
under the Plan and of outstanding options in the event of stock dividends or
distributions of assets or securities of other companies owned by the Company
to stockholders relating to Common Stock for which the record date is prior to
the date the Shares purchased by exercise of an Option are issued or
transferred, except that no such adjustment shall be made for cumulative
stock dividends of 10% or less (in the aggregate) or cash dividends. Any such
adjustment may include an adjustment of the Option Price or the number of
Shares for which an Option may be exercised, or may provide for an escrow of
assets or securities so distributed to be available upon future exercise. In
the event of a change in the Company's presently authorized Common Stock which
is limited to a change of all of its presently authorized Shares of Common
Stock with par value into the same number of shares without par value, or any
change of the then authorized Shares of Common Stock with par value into the
same number of shares of Common Stock with a different par value, the shares
resulting from any such change shall be deemed to be Shares as defined in
Section 1, and no change in the number of Shares covered by each option or in
the Option Price shall take place.

10. Indemnification; Reliance; Exculpation.

10.1 Indemnification. Each person who is or shall have been a member of
the Board of the Company shall be indemnified and held harmless by the Company
against and from any and all loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by such person in connection with or
resulting from any claim, action, suit, or proceeding to which such person
may be a party or in which such person may be involved by reason of any action
taken or failure to act under the Plan and against and from any and all
amounts paid by such person in settlement thereof (with the Company's written
approval) or paid by such person in satisfaction of a judgment in any such
action, suit, or proceeding to the fullest extent permitted by the Delaware
General Corporation Law, subject, however, to the condition that upon the
institution of any such claim, action, suit, or proceeding such person shall
in writing give the Company an opportunity to intervene at the Company's
expense on his or her behalf. The foregoing right of indemnification shall
not be exclusive of any other right to which such person may be entitled as
a matter of law or otherwise, or any power that the Company may have to
indemnify such person or hold his or her harmless.

10.2 Reliance. Each member of the Board and each officer and employee
of the Company in performing duties under the Plan shall be entitled to rely
upon information and reports furnished in connection with the administration
of this Plan by any duly authorized officer or agent of the Company.

10.3 Exculpation. No a member of the Board and no officer or employee
of the Company shall be liable for any action or determination made in good
faith with respect to the Plan or any Option granted under the Plan.

11. Income Tax Withholding. Any Option Agreement may include provisions that
if the Company or a Subsidiary shall be required to withhold any amounts by
reason of any federal, state or local tax rules or regulations in respect of
the issuance of Shares pursuant to the exercise of an Option, the Company or
the Subsidiary shall be entitled to deduct and to withhold such amount from
any cash payments to be made to the Optionee. The Administrator may
establish such rules and procedures, including, without limitation, any rules
or procedures necessary to comply with Rule 16b-3, as it may deem necessary or
advisable in connection with the withholding taxes relating to the exercise
of any option.

12. Amendment or Termination of Plan. The Plan may be terminated and may be
modified or amended by the Board at any time and from time to time; provided,
however, that (i) no modification or amendment increasing the aggregate
number of Shares which may be issued under Options, materially increasing
benefits accruing to Optionees, or materially modifying the requirements as
to eligibility to receive options hereunder shall be effective without
stockholder approval, (ii) no such termination, modification, or amendment
of the Plan shall alter or affect the terms of any then outstanding Options
previously granted hereunder without the consent of the holder thereof and
(iii) the provisions of Section 5 with respect to the number of Shares for
which Options shall be granted, the timing of such grants and the Option
Price for such Options shall not be amended more than once every six months,
other than to comport with changes in the Code, the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder.

13. Set-Off. If at any time an Optionee is indebted to or otherwise obligated
to make any payment to the Company or any Subsidiary, the Company may (a)
withhold from the Optionee (i) following the exercise by the Optionee of an
Option, Shares issuable to the Optionee having a Fair Market Value on the
date of exercise up to the amount of indebtedness to the Company or (ii)
following the sale by an Optionee of Shares received pursuant to the
exercise of an Option amounts due to an Optionee in connection with the sale
of such Shares up to the amount of the indebtedness to the Company, or (b)
take any substantially similar action. The Company may establish such rules
and procedures as it may deem necessary or advisable in connection with the
taking of any action contemplated by this Section 13.

14. Headings. The section headings contained herein have no substantive
meaning or content and are not part of this Plan.

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