DYNAMICWEB ENTERPRISES INC, S-8, 2000-02-07

DYNAMICWEB ENTERPRISES INC
S-8, 2000-02-07
PREPACKAGED SOFTWARE

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

____________________

FORM S-8

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

DYNAMICWEB ENTERPRISES, INC.
(Exact Name of Registrant as Specified in Its Charter)

New Jersey
(State or Other Jurisdiction of Incorporation or Organization)

22-2267658
(I.R.S. Employer Identification No.)

271 Route 46 West
Building F, Suite 209
Fairfield, New Jersey 07004
(Address of Principal Executive Offices) (Zip Code)

DYNAMICWEB ENTERPRISES, INC. 1997 STOCK OPTION PLAN
(Full Title of the Plan)

Sarah Hewitt, Esq.
Brown Raysman Millstein Felder & Steiner LLP
120 West 45th Street
New York, New York 10036
(Name and Address of Agent For Service)

212-944-1515
(Telephone Number, Including Area Code, of Agent For Service)

CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Proposed Proposed
Title Of Maximum Maximum Amount Of
Securities Amount Offering Aggregate Registration
To Be To Be Price Per Offering Fee
Registered Registered Share (1) Price (1)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par 500,000 shares $12.50 $6,250,000 $1,650.00
value $.0001 per
share
- ------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Calculated in accordance with Rule 457(h)(1) and Rule 457(c), based on the
average of the bid and asked price as reported on the Nasdaq Stock Market
on February 4, 2000.

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PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.

The following documents filed with the Securities and Exchange
Commission are incorporated by reference in this Registration Statement and made
a part hereof:

(a) The Registrant's Annual Report on Form 10-KSB for the fiscal year
ended September 30, 1999; and

(b) All other documents filed by the Registrant after the date of this
Registration Statement under Section 13(a), 13(c), 14 and 15(d) of
the Securities Exchange Act of 1934, prior to the filing of a
post-effective amendment to the Registration Statement which
indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in this Registration Statement and
part of this Registration Statement from the date of filing of such
documents.

ITEM 4. DESCRIPTION OF SECURITIES.

Common Stock - Holders of Common Stock have the right to cast one vote,
in person or by proxy, for each share owned of record on the record date (as
defined in the Registrant's by-laws) on all matters submitted to a vote of the
holders of Common Stock, including the election of directors. Holders of Common
Stock do not have cumulative voting rights, which means that holders of more
than 50% of the outstanding shares voting for the election of the class of
directors to be elected by the Common Stock can elect all of such directors,
and, in such event, the holders of the remaining shares of Common Stock will be
unable to elect any of the Registrant's directors.

Holders of the Common Stock are entitled to share ratably in such
dividends as may be declared by the Board of Directors out of funds legally
available therefor, when, as and if declared by the Board of Directors and are
also entitled to share ratably in all of the assets of the Registrant available
for distribution to holders of shares of Common Stock upon the liquidation,
dissolution or winding up of the affairs of the Registrant. Holders of Common
Stock do not have preemptive, subscription or conversion rights. All outstanding
shares of Common Stock are, and those shares of Common Stock offered hereby will
be, validly issued, fully paid and non-assessable.

ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL.

<PAGE>

Not Applicable.

ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Registrant's Certificate of Incorporation provides that the
Registrant shall indemnify any person who is or was a director, officer,
employee or agent of the Registrant to the fullest extent permitted by the New
Jersey Business Corporation Act (the "NJBCA"), and to the fullest extent
otherwise permitted by law. The NJBCA permits a New Jersey corporation to
indemnify its directors, officers, employees and agents against liabilities and
expenses they may incur in such capacities in connection with any proceeding in
which they may be involved, unless a judgment or other final adjudication
adverse to the director, officer, employee or agent in question establishes that
his or her acts or omissions (a) were in breach of his or her duty of loyalty
(as defined in the NJBCA) to the Registrant or its shareholders, (b) were not in
good faith or involved a knowing violation of law or (c) resulted in the receipt
by the director, officer, employee or agent of an improper personal benefit.

Pursuant to the Registrant's Certificate of Incorporation and the
NJBCA, no director or officer of the Registrant shall be personally liable to
the Registrant or to any of its shareholders for damages for breach of any duty
owed to the Registrant or its shareholders, except for liabilities arising from
any breach of duty based upon an act or omission (i) in breach of such
director's or officer's duty of loyalty (as defined in the NJBCA) to the
Registrant or its shareholders, (ii) not in good faith or involving a knowing
violation of law or (iii) resulting in receipt by such director or officer of an
improper personal benefit.

In addition, the Registrant's Bylaws include provisions to indemnify
its officers and directors and other persons against expenses, judgments, fines
and amounts incurred or paid in settlement in connection with civil or criminal
claims, actions, suits or proceedings against such persons by reason of serving
or having served as officers, directors, or in other capacities, if such person
acted in good faith, and in a manner such person reasonably believed to be in or
not opposed to the best interests of the Registrant and, in a criminal action or
proceeding, if he had no reasonable cause to believe that his/her conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent shall
not, of itself, create a presumption that the person did not act in good faith
and in a manner which he or she reasonably believed to be in or not opposed to
the best interests of the corporation or that he or she had reasonable cause to
believe his or her conduct was unlawful. Indemnification as provided in the
Bylaws shall be made only as authorized in a specific case and upon a
determination that the person met the applicable standards of conduct.

ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.

Not Applicable.

<PAGE>

ITEM 8. EXHIBITS.

Exhibits:

Number Title

4.1.1 Certificate of Incorporation of Registrant, as filed with the Secretary
of State of New Jersey on August 7, 1979 (incorporated by reference to
Exhibit 3.1.1 filed with Registrant's Annual Report on Form 10-K for
the Year ended December 31, 1991).

4.1.2 Certificate of Amendment to Registrant's Certificate of Incorporation,
as filed with the Secretary of State of New Jersey on May 19, 1980
(incorporated by reference to Exhibit 3.1.2 filed with Registrant's
Annual Report on Form 10-K for the Year ended December 31, 1991).

4.1.3 Certificate of Amendment to Registrant's Certificate of Incorporation,
as filed with the Secretary of State of New Jersey on April 1981
(incorporated by reference to Exhibit 3.1.3 filed with Registrant's
Annual Report on Form 10-K for the Year ended December 31, 1991).

4.1.4 Certificate of Amendment of Registrant's Certificate of Incorporation,
as filed with the Secretary of State of New Jersey on April 24, 1986
(incorporated by reference to Exhibit 3.1.4 filed with Registrant's
Annual Report on Form 10-K for the Year ended December 31, 1991).

4.1.5 Certificate of Amendment to Registrant's Certificate of Incorporation,
as filed with the Secretary of State of New Jersey on July 15, 1988
(incorporated by reference to Exhibit 3.1.5 filed with Registrant's
Annual Report on Form 10-K for the Year ended December 31, 1991).

4.1.6 Certificate of Amendment to Registrant's Certificate of Incorporation,
as filed with the Secretary of State of New Jersey on November 28, 1989
(incorporated by reference to Exhibit 3.1.6 filed with Registrant's
Annual Report on Form 10-K for the Year ended December 31, 1991).

4.1.7 Certificate of Amendment to Registrant's Certificate of Incorporation,
as filed with the Secretary of State of New Jersey on August 15, 1994
(incorporated by reference to Exhibit 3.1.7 filed with Registrant's
Annual Report on Form 10-K for the Year ended December 31, 1994).

4.1.8 Certificate of Amendment to Registrant's Certificate of Incorporation,
as filed with the Secretary of State of New Jersey on May 14, 1996,
changing the name of the Company to

<PAGE>

DynamicWeb Enterprises, Inc. (incorporated by reference to Exhibit
3.2.3 filed with Registrant's Annual Report on Form 10-KSB for the Year
ended December 31, 1995).

4.1.9 Certificate of Amendment and Restatement of Registrant's Certificate of
Incorporation of DynamicWeb Enterprises, Inc., as filed with the
Secretary of State of New Jersey on January 6, 1998 (incorporated by
reference to Exhibit 3.1.9 filed with Registrant's Registration
Statement on Form SB-2/A No. 4 filed on January 30, 1998).

4.1.10 Amendment to the Certificate of Incorporation of DynamicWeb
Enterprises, Inc. dated August 6, 1998, as filed with the Secretary of
State of New Jersey on August 7, 1998 (incorporated by reference to
Exhibit 3.1.10 of Registrant's Registration Statement on Form S-2 filed
on November 7, 1998).

4.2.1 Bylaws of Registrant adopted August 7, 1979 (incorporated by reference
to Exhibit 3.2.1 filed with Registrant's Annual Report on Form 10-K for
the Year ended December 31, 1991).

4.2.2 Amendments adopted March 8, 1982 to Bylaws of Registrant (incorporated
by reference to Exhibit 3.2.2 filed with Registrant's Annual Report on
Form 10-K for the Year ended December 31, 1991).

4.2.3 Amended and Restated Bylaws of Registrant adopted March 7, 1997
(incorporated by reference to Exhibit 3.2.3 filed with Registrant's
Annual Report on Form 10-KSB for the Year ended September 30, 1996).

4.2.4 Amendments adopted January 21, 1998 to the Bylaws of Registrant
(incorporated by reference to Exhibit 3.2.4 of Registrant's
Registration Statement on Form SB-2 filed on September 15, 1997 as
amended by Registrant's Registration Statement on Form SB-2/A No. 5
filed on January 30, 1998).

5.1 Opinion of Brown Raysman Millstein Felder & Steiner LLP regarding
legality.

23.1 Consent of Brown Raysman Millstein Felder & Steiner LLP (included in
Exhibit 5.1).

23.2 Consent of Richard A. Eisner & Company, LLP.

24.1 Power of Attorney (included on signature page).

99.1 DynamicWeb Enterprises, Inc. 1997 Stock Option Plan.

ITEM 9. UNDERTAKINGS

(a) The undersigned Registrant hereby undertakes:

<PAGE>

(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:

(i) to include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;

(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement; and

(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.

(2) That for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.

The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such

<PAGE>

indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the Town of Fairfield, State of New Jersey, on February 4,
2000.

DYNAMICWEB ENTERPRISES, INC.

By: /s/ STEVEN L. VANECHANOS, JR.
------------------------------
Steven L. Vanechanos, Jr.
Chief Executive Officer

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Steven L. Vanechanos, Jr., James D.
Conners, Steve Vanechanos, Sr., and Sarah Hewitt, Esquire, and each of them, his
true and lawful attorney-in-fact, as agent with full power of substitution and
resubstitution for him and in his name, place and stead, in any and all
capacity, to sign any or all amendments to this Registration Statement and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting to each such
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully and to all intents and purposes as each of them might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

/s/ STEVEN L. VANECHANOS, JR. February 4, 2000
- -------------------------------------
Steven L. Vanechanos, Jr.
Chief Executive Officer and Director
(Principal Executive Officer)

<PAGE>

/s/ STEVE VANECHANOS, SR. February 4, 2000
Steve Vanechanos, Sr.
Vice President, Treasurer,
Secretary and Director

/s/ NINA PESCATORE February 4, 2000
Nina Pescatore
Controller

/s/ DENIS CLARK February 4, 2000
Denis Clark
Director

/s/ FRANK T. DIPALMA February 4, 2000
Frank T. DiPalma
Director

/s/ ROBERT DROSTE February 4, 2000
Robert Droste
Director

/s/ KENNETH R. KONIKOWSKI February 4, 2000
Kenneth R. Konikowski
Director

/s/ ROBERT J. GAILUS February 4, 2000
Robert J. Gailus
Director

<PAGE>

EXHIBIT INDEX

Number Title

4.1.8 Certificate of Amendment to Registrant's Certificate of Incorporation,
as filed with the Secretary of State of New Jersey on May 14, 1996,
changing the name of the Company to DynamicWeb Enterprises, Inc.
(incorporated by reference to Exhibit 3.2.3 filed with Registrant's
Annual Report on Form 10-KSB for the Year ended December 31, 1995).

<PAGE>

4.1.9 Amendment to the Certificate of Incorporation of DynamicWeb
Enterprises, Inc. dated August 6, 1998, as filed with the Secretary of
State of New Jersey on August 7, 1998 (incorporated by reference to
Exhibit 3.1.10 of Registrant's Registration Statement on Form S-2 filed
on November 7, 1998).

4.2.1 Bylaws of Registrant adopted August 7, 1979 (incorporated by reference
to Exhibit 3.2.1 filed with Registrant's Annual Report on Form 10-K for
the Year ended December 31, 1991).

4.2.2 Amendments adopted March 8, 1982 to Bylaws of Registrant (incorporated
by reference to Exhibit 3.2.2 filed with Registrant's Annual Report on
Form 10-K for the Year ended December 31, 1991).

4.2.4 Amended and Restated Bylaws of Registrant adopted January 21, 1998
(incorporated by reference to Exhibit 3.2.4 of Registrant's
Registration Statement on Form SB-2 filed on September 15, 1997 as
amended by Registrant's Registration Statement on Form SB-2/A No. 5
filed on January 30, 1998).

5.1 Opinion of Brown Raysman Millstein Felder & Steiner LLP regarding
legality.

23.1 Consent of Brown Raysman Millstein Felder & Steiner LLP (included in
Exhibit 5.1).

23.2 Consent of Richard A. Eisner & Company, LLP.

24.1 Power of Attorney (included on signature page).

99.1 DynamicWeb Enterprises, Inc. 1997 Stock Option Plan.

<PAGE>

EXHIBIT 5.1

February 4, 2000

Board of Directors
DynamicWeb Enterprises, Inc.
271 Route 46 West
Building F, Suite 209
Fairfield, New Jersey 07004

Re: DynamicWeb Enterprises, Inc. Registration of an additional 500,000
shares of Common Stock under the 1997 Stock Option Plan.

Gentlemen:

You have asked us to provide you with our opinion whether the 500,000
shares of common stock, par value $0.0001 per share (the "Common Stock"), of
DynamicWeb Enterprises, Inc. (the "Company") that may be issued from time to
time pursuant to the exercise of options issued under the DynamicWeb
Enterprises, Inc. 1997 Stock Option Plan (the "Plan"), when and if such shares
are issued pursuant to and in accordance with the Plan, will be duly and validly
issued, fully paid and nonassessable. We, as counsel to the Company, have
reviewed:

1. The New Jersey Business Corporation Act, as amended;

2. The Certificate of Incorporation of the Company, as amended;

3. The By-laws of the Company, as amended; and

4. The Resolutions of the Board of Directors of the Company.

Based on our review of such documents, it is our opinion that the
Common Stock issuable upon the exercise of options granted under the Plan, when
and as issued and paid for in accordance with the provisions of the Plan, will
be duly and validly issued, fully paid and nonassessable. In giving the
foregoing opinion, we have assumed that the Company will have, at the time of
the issuance of such Common Stock, a sufficient number of authorized shares
available for issue.

We consent to the filing of this opinion as an exhibit to the
registration statement the Company is filing today in connection with the
registration of 500,000 shares of the Company's Common Stock. In giving this
consent, we do not thereby admit that we come within the

<PAGE>

category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the Rules and Regulations of the Securities and
Exchange Commission thereunder.

Very truly yours,

BROWN RAYSMAN MILLSTEIN FELDER & STEINER LLP

<PAGE>

EXHIBIT 23.2

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in the Registration Statement on
Form S-8 of DynamicWeb Enterprises, Inc. pertaining to the 1997 Stock Option
Plan of our report dated November 19, 1999; November 23, 1999 with respect to
Note M[3], and December 17, 1999 with respect to Note M[4], with respect to our
audit of the consolidated financial statements of DynamicWeb Enterprises, Inc.
and subsidiaries included in its annual report on Form 10-KSB for the year ended
September 30, 1999.

Richard A. Eisner & Company, LLP

New York, New York
February 4, 2000

<PAGE>

EXHIBIT 99.1

DYNAMICWEB ENTERPRISES, INC.
1997 STOCK OPTION PLAN

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Page
<S> <C>

Article 1. PURPOSE OF THE PLAN. . . . . . . . . . . . . . . . . . 1

Article 2. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . 1

Article 3. ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . 2

Article 4. COMMON STOCK SUBJECT TO THE PLAN . . . . . . . . . . . 4

Article 5. STOCK OPTIONS. . . . . . . . . . . . . . . . . . . . . 4

Article 6. ELIGIBILITY. . . . . . . . . . . . . . . . . . . . . . 6

Article 7. TERM AND EXERCISE OF OPTIONS . . . . . . . . . . . . . 7

Article 8. TERMINATION OF EMPLOYMENT . . . . . . . . . . . . . . 12

Article 9. ADJUSTMENT PROVISIONS. . . . . . . . . . . . . . . . .14

Article 10. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . .15
</TABLE>

Article 1. PURPOSE OF THE PLAN

1.1 Purpose - The DynamicWeb Enterprises, Inc. 1997 Stock Option Plan (the
"Plan") is intended to provide key employees of DynamicWeb Enterprises
Inc. (the "Corporation") and any of its Subsidiaries an opportunity to
acquire Common Stock of the Corporation. The Plan is designed to help
the corporation attract, retain and motivate key employees to make
substantial contributions to the success of the business. Stock options
are granted under the Plan based on the Participant's level of
responsibility and performance within the Corporation.

<PAGE>

1.2 Stock Options to be Granted - Incentive Stock Options within the
meaning of Code Section 422(b) Nonqualified Stock Options may be
granted within the limitations of the Plan herein described.

Article 2. DEFINITIONS

2.1 "Agreement" - The written instrument evidencing the grant of an Option.
A Participant may be issued one or more Agreements from time to time
reflecting one or more options.

2.2 "Board" - The Board of Directors of the Corporation.

2.3 "Code" - The Internal Revenue Code of 1986, as amended.

2.4 "Committee" - The Committee which the Board appoints to administer the
Plan.

2.5 "Common Stock" - The class A common stock of the Corporation ($0.0001
par value) as described in the Corporation's Articles of Incorporation,
or such other stock as shall be substituted therefor.

2.6 "Corporation" - Dynamicweb Enterprises, Inc., a New Jersey corporation.

2.7 "Employee" - Any key employee (including officer of the Corporation or
a Subsidiary).

2.8 "Exchange Act" - The Securities Exchange Act of 1934, as amended.

2.9 "Incentive Stock Option" - A stock option intended to satisfy the
Requirements of Code Section 422(b).

2.10 "Nonqualified Stock Option" - A stock option other than an incentive
stock option.

2.11 "Optionee" - A Participant who is awarded a Stock Option pursuant to
the provisions of the Plan.

2.12 "Participant" - An Employee selected by the Committee to receive a
grant of an Option under the Plan.

2.13 "Plan" - The DynamicWeb Enterprises, Inc. 1997 Stock Option Plan.

2.14 "Retirement" - The voluntary termination of employment upon or
following the attainment of age sixty-five.

2.15 "Securities Act" - The Securities Act of 1933, as amended.

<PAGE>

2.16 "Stock Option" or "Option" - An award of a right to purchase Common
Stock pursuant to the provisions of the Plan.

2.17 "Subsidiary" - A subsidiary corporation as defined in Code Section
424(f) that is a subsidiary of the Corporation.

Article 3. ADMINISTRATION OF THE PLAN

3.1 The Committee - The Plan shall be administered by a committee of the
Board (the "Committee") composed of two or more members of the Board,
all of whom are "outside directors" within the meaning of Code Section
162(m). The Board may from time to time remove members from, or add
members to, the Committee. Vacancies on the Committee, howsoever
caused, shall be filled by the Board.

3.2 Powers of the Committee -

(a) The Committee shall be vested with full authority to make such
rules and regulations as it deems necessary or desirable to
administer the Plan and to interpret the provisions of the Plan,
unless otherwise determined by a majority of the disinterested
members of the Board. Any determination, decision or action of the
Committee in connection with the construction, interpretation,
administration or application of the Plan shall be final,
conclusive and binding upon all optionees and any person claiming
under or through an Optionee, unless otherwise determined by a
majority of the disinterested members of the Board.

(b) Subject to the terms, provisions and conditions of the Plan and
subject to review and approval by a majority of the disinterested
members of the Board, the Committee shall have exclusive
jurisdiction to:

(i) determine and select, based upon the recommendation of the
Corporation's Chief Executive Officer (except as to himself),
the key Employees to be granted Options (it being understood
that more than one Option may be granted to the same person);

(ii) determine the number of shares subject to each option;

(iii) determine the date or dates when the Options will be granted;

(iv) determine the purchase price of the shares subject to each
Option in accordance with Article 5 of the Plan;

(v) determine the date or dates when each Option may be exercised
within the term of the Option specified pursuant to Article 7
of the Plan;

<PAGE>

(vi) determine whether or not an option constitutes an Incentive
Stock Option; and

(vii) prescribe the form, which shall be consistent with the Plan,
of the Agreement evidencing any options, granted under the
Plan.

3.3 Terms - The grant of an Option under the Plan shall be evidenced by an
Agreement and may include any terms and conditions consistent with this
Plan, as the Committee may determine.

3.4 Liability - No member of the Board or the Committee shall be liable for
any action or determination made in good faith by the Board or the
Committee with respect to this Plan or any Options granted under this
Plan.

Article 4. COMMON STOCK SUBJECT TO THE PLAN

4.1 Common Stock Authorized - The aggregate number of shares of Common
Stock for which Options may be granted under the Plan shall not exceed
834,764 shares. The limitation established by the preceding sentence
shall be subject to adjustment as provided in Article 9 of the Plan.

4.2 Shares Available - The Common Stock to be issued upon exercise of
options granted under the Plan shall be the Corporation's Common Stock
which shall be made available at the discretion of the Board, either
from authorized but unissued Common Stock or from Common stock acquired
by the corporation, including shares purchased in the open market. In
the event that any outstanding Option under the Plan for any reason
expires or is terminated, the shares of Common Stock allocable to the
unexercised portion of such Option may thereafter be regranted subject
to option under the Plan.

Article 5. STOCK OPTIONS

5.1 Exercise Price - The exercise price of Common Stock shall be, in the
case of an Incentive Stock Option, 100 percent of the fair market value
of one share of Common Stock on the date the Option is granted, except
that the purchase price per share shall be 110 percent of such fair
market value in the case of an Incentive Stock Option granted to any
individual described in Section 6.2 of the Plan. The exercise price of
Common Stock shall be, in the case of a Nonqualified Stock option, such
dollar amount as may be specified by the Committee. The exercise price
shall be subject to adjustment as provided in Article 9 of the Plan.

5.2 Limitation on Incentive Stock Options - The aggregate fair market value
(determined as of the date an option is granted) of the stock with
respect to which incentive Stock Options are exercisable for the first
time by any individual in any calendar year (under the

<PAGE>

Plan and all other plans maintained by the Corporation and
Subsidiaries) shall not exceed $100,000.

5.3 Determination of Fair Market Value -

(a) During such time as Common Stock is not listed on an
established stock exchange or, exchanges but is listed in the
NASDAQ National Market System, the fair market value per share
shall be the closing sale price for the Common Stock on the
day the Option is granted. If no sale of Common Stock has
occurred on that day, the fair market value shall be
determined by reference to such price for the next preceding
day on which a sale occurred.

(b) During such time as the Common Stock is not listed on an
established stock exchange or in the NASDAQ National Market
System, fair market value per share shall be the mean between
the closing dealer "bid" and "asked" prices for the Common
Stock for the day of the grant, and if no "bid" and "asked"
prices are quoted for the day of the grant, the fair market
value shall be determined by reference to such prices on the
next preceding day on which such prices were quoted.

(c) If the Common Stock is listed on an established stock
exchange, the fair market value shall be deemed to be the
closing price of Common Stock on such stock exchange on the
day the Option is granted or, if no sale of Common Stock has
been made on such stock exchange on that day, the fair market
value shall be determined by reference to such price for the
next preceding day on which a sale occurred.

(d) In the event that the Common Stock is not traded on an
established stock exchange or in the NASDAQ National Market
System, and no closing dealer "bid" and "asked" prices are
available on the date of a grant, then fair market value will
be the price established by the Committee in good faith.

5.4 Limitation on Grants - Grants to any Employee under this Plan shall not
exceed in the aggregate 250,000 Options during any period of 12
consecutive months. Such limitation shall be subject to adjustment in
the manner described in Article 9 and by giving effect to any
adjustment in other Options granted during the relevant 12-month
period.

5.5 Transferability of Options - Unless otherwise designated by the
Committee to the contrary, each Option granted under the Plan shall by
its terms be non-transferable by the Optionee (except by will or the
laws of descent and distribution) and each Option shall be exercisable
during the optionee's lifetime only by the Optionee, his guardian or
legal representative or by such other means as the Committee may
approve from time to time that is not inconsistent with or contrary to
the provisions of either Section 16(b) of the Exchange Act or Rule
16b-3, as either may be amended from time to time, or any law, rule,
regulation or other provision that may hereafter replace such Rule. An
Optionee

<PAGE>

may also designate a beneficiary to exercise his or her options after
the Optionee's death. The Committee may amend outstanding Options to
provide for transfer, without payment of consideration, to immediate
family members of the Optionee or to trusts or partnerships for such
family members.

Article 6. ELIGIBILITY

6.1 Participation - Options shall be granted only to persons who are
considered key Employees, as determined by the Committee, based upon
the recommendation of the Chief Executive Officer (except as to
himself) and ratified by a majority of the disinterested members of the
Board.

6.2 Incentive Stock Option Eligibility - Notwithstanding any other
provision of the Plan, an individual who owns more than 10 percent of
the total combined voting power of all classes of outstanding stock of
the Corporation or of a Subsidiary shall not be eligible for the grant
of an Incentive Stock Option, unless the special requirements set forth
in Sections 5.1 and 7.1 of the Plan are satisfied. For purposes of this
Section 6.2, in determining stock ownership, an individual shall be
considered as owning the stock owned, directly or indirectly, by or for
his brothers and sisters (whether by the whole or half blood), spouse,
ancestors and lineal descendants. Stock owned, directly or indirectly,
by or for a corporation, partnership, estate or trust shall be
considered as being owned proportionately by or for its shareholders,
partners or beneficiaries. "Outstanding stock" shall include all stock
actually issued and outstanding immediately before the grant of the
Option. "Outstanding stock" shall not include shares authorized for
issue under outstanding Options held by the Optionee or by any other
person.

Article 7. TERM AND EXERCISE OF OPTIONS

7.1 Termination -

(a) Each option granted under the Plan shall terminate on the date
determined by the Committee and approved by a majority of the
disinterested members of the Board, and specified in the Agreement;
provided, however, that (i) each intended Incentive Stock Option
granted to an individual described in Section 6.2 of the Plan shall
terminate not later than five years after the date of the grant,
(ii) each other intended Incentive Stock Option shall terminate not
later than ten years after the date of grant, and (iii) each Option
granted under the Plan which is intended to be a Nonqualified Stock
Option shall terminate not later than ten years and one month after
the date of grant. Except as otherwise provided in Section 8.4,
each Option granted under the Plan shall become exercisable only
after the earlier of the date on which (i) the Optionee has
completed one year of continuous employment with the Corporation or
a Subsidiary immediately following the date of the grant of the
Option or (ii) a Change in Control occurs. The Committee at

<PAGE>

its discretion may provide further limitations on the
exercisability of Options granted under the Plan. An Option may be
exercised only during the continuance of the Optionee's employment,
except as provided in Article 8.

(b) For purposes of Section 7.1(a), a "Change in Control" shall be
deemed to have occurred upon the happening of any of the following:

(i) any "Person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act (except for (1) the Corporation or
any Subsidiary, or (2) any of the Corporation's employee
benefit plans (or any trust forming a part thereof) (the
"Benefit Plan(s)")) is or becomes the beneficial owner,
directly or indirectly, of the Corporation's securities
representing 19.9% or more of the combined voting power of
the Corporation's then outstanding securities, other than
pursuant to an excepted transaction described in Clause (iii)
below;

(ii) a binding written agreement is executed (and, if legally
required, approved by the Corporation's shareholders)
providing for a sale, exchange, transfer or other disposition
of substantially all of the assets of the Corporation to
another entity, except to an entity controlled directly or
indirectly by the Corporation;

(iii) the shareholders of the Corporation approve a merger,
consolidation, share exchange, division or other
reorganization of or relating to the Corporation, unless:

(A) the shareholders of the Corporation immediately before
such merger, consolidation, share exchange, division or
reorganization, own, directly or indirectly immediately
following such merger, consolidation, share exchange,
division or reorganization at least 66-2/3% of the
combined voting power of the outstanding voting
securities of the Corporation resulting from such merger,
consolidation, share exchange, division or reorganization
(the "Surviving Corporation,") in substantially the same
proportion as their ownership of the voting securities
immediately before such merger, consolidation, share
exchange, division or reorganization; and

(B) the individuals who, immediately before such merger,
consolidation, share exchange, division or
reorganization, are members of the Board (the "Incumbent
Board"), continue to constitute at least 66-2/3% of the
Board of Directors of the Surviving Corporation;
provided, however, that if the election, or nomination
for election by the Corporation's shareholders of any new
director was approved by a vote of at least 66-2/3% of
the

<PAGE>

Incumbent Board, such new director shall, for the
purposes hereof, be considered a member of the Incumbent
Board; provided further, however, that no individual
shall be considered a member of the Incumbent Board if
such individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the Exchange
Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other
than the Board (a "Proxy Contest") including by reason of
any agreement intended to avoid or settle any Election
Contest or Proxy Contest; and

(C) no Person (except (1) the Corporation or any Subsidiary,
(2) any Benefit Plan, (3) the Surviving Corporation or
any subsidiary of the surviving Corporation, or (4) any
Person who immediately prior to such merger,
consolidation, share exchange, division or reorganization
had beneficial ownership of 19.9% or more of the then
outstanding voting securities of the Corporation) has
beneficial ownership of 19.9% or more of the combined
voting power of the Surviving Corporation's then
outstanding voting securities immediately following such
merger, consolidation, share exchange, division or
reorganization;

(iv) a plan of liquidation or dissolution of the Corporation,
other than pursuant to bankruptcy or insolvency laws, is
adopted; or

(v) during any period of two consecutive years, individuals, who
at the beginning of such period, constituted the Board cease
for any reason to constitute at least a majority of the
Board, unless the election, or the nomination for election by
the Corporation's shareholders, of each new director was
approved by a vote of at least 66-2/3% of the directors then
still in office who were directors at the beginning of the
period; provided, however, that no individual shall be
considered a member of the Board at the beginning of such
period if such individual initially assumed office as a
result of either an actual or threatened Election Contest or
Proxy Contest, including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy Contest.

Notwithstanding the foregoing, a Change in Control shall not be deemed
to have occurred if a Person becomes the beneficial owner, directly or
indirectly, of securities representing 19.9% or more of the combined voting
power of the Corporation's then outstanding securities solely as a result of an
acquisition by the Corporation of its voting securities which, by reducing the
number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person; provided, however, that if a Person becomes a
beneficial owner of 19.9% or more of the combined voting power of the
Corporation's then outstanding securities by reason of share repurchases by the
Corporation and thereafter becomes the beneficial owner, directly or

<PAGE>

indirectly, of any additional voting securities of the Corporation (other than
pursuant to a stock split, stock dividend or similar transaction), then a Change
in Control shall be deemed to have occurred with respect to such Person under
Clause (i).

7.2 Exercise

(a) A person electing to exercise an Option shall give written notice
to the Corporation of such election and of the number of shares he
has elected to purchase, in such form as the committee shall have
prescribed or approved, and shall at the time of exercise tender
the full purchase price of the shares he has elected to purchase.
The purchase price shall be paid in full, in cash, upon the
exercise of the option; provided, however, that in lieu of cash,
with the approval of the Committee at or prior to exercise, an
optionee may exercise his Option by tendering to the Corporation
shares of Common Stock owned by him and having a fair market value
equal to the cash exercise price applicable to his option (with the
fair market value of such stock to be determined in the manner
provided in Section 5.3 hereof) or by delivering such combination
of cash and such shares as the Committee in its sole discretion may
approve. Notwithstanding the foregoing, Common Stock acquired
pursuant to, the exercise of an incentive Stock Option may not be
tendered as payment unless the holding period requirements of Code
Section 422(a)(1) have been satisfied.

(b) A person holding more than one Option at any relevant time may, in
accordance with the provisions of the Plan, elect to exercise such
Options in any order.

(c) In addition, at the request of the Participant and to the extent
permitted by applicable law, the Corporation may, in its sole
discretion, selectively approve arrangements with a brokerage firm
under which such brokerage firm, on behalf of the Participant,
shall pay to the Corporation the exercise price of the Options
being exercised, and the Corporation, pursuant to an irrevocable
notice from the Participant, shall promptly deliver the shares
being purchased to such firm.

Article 8. TERMINATION OF EMPLOYMENT

8.1 Retirement - In the event of Retirement, an Option shall lapse at the
earlier of the expiration of the term of the Option or:

(a) In the case of an Incentive Stock Option, three months from the
date of Retirement; and

(b) in the case of Options other than Incentive Stock Options, up to 24
months, at the discretion of the Committee, from the date of
Retirement.

<PAGE>

8.2 Death or Disability - In the event of termination of employment due to
death or disability (as defined in Code Section 72(m)), the Option
shall lapse at the earlier of the expiration of the term of the Option
or one year after termination due to any such cause.

8.3 Other Termination - Except as otherwise provided in Sections 8.4(a) and
(c), in the event termination of employment for any reason other than
is described in Section 8.1 or 8.2, all options shall lapse as of the
date of termination.

8.4 Special Termination Provision -

(a) Notwithstanding anything herein to the contrary, the Committee may,
in its discretion and subject to the approval of a majority of the
disinterested members of the Board, waive the one-year continuous
employment requirement set forth in Section 7.1(a) and permit the
exercise of an Option held by an Employee whose employment has
terminated prior to the satisfaction of such requirement. Any such
waiver may be made with retroactive effect provided it is made
within 60 days following the Optionee's termination of employment.

(b) In the event the Committee waives the continuous service
requirement with respect to an Option and the circumstance of the
Employee's termination is described in Section 8.1 or 8.2, the
Option will lapse as otherwise provided in the relevant section.

(c) Notwithstanding anything herein to the contrary, the Committee may,
in its discretion, waive the lapse provisions of Section 8.3 and
permit the exercise of an Option until a date which is the earlier
of the expiration of the term of such Option or:

(i) in the case of an Incentive Stock Option, three months from
the date of termination of employment; and

(ii) in the case of options other than Incentive Stock options, up
to 24 months from the date of termination.

Article 9. ADJUSTMENT PROVISIONS

9.1 Share Adjustments -

(a) In the event that the shares of Common Stock of the Corporation, as
presently constituted, shall be changed into or exchanged for a
different number or kind of shares of stock or other securities of
the Corporation or of another corporation (whether by reason of
merger, consolidation, recapitalization, reclassification,
split-up, combination of shares or otherwise) or if the number of
such shares of stock shall be increased through the payment of a
stock dividend, then, subject to

<PAGE>

the provisions of Subsection (c) below, there shall be substituted
for or added to each share of Common Stock of the Corporation which
was theretofore appropriated, or which thereafter may become
subject to an Option under the Plan, the number and kind of shares
of stock or other securities into which each outstanding share of
the Common Stock of the Corporation shall be so changed or for
which each such share shall be exchanged or to which each such
share shall be entitled as the case may be outstanding, Options
shall also be appropriately amended as to price and other terms, as
may be necessary to reflect the foregoing events.

(b) If there shall be any other change in the number or kind of the
outstanding Shares of the Common Stock of the Corporation, or of
any stock or other securities in which such Common Stock shall have
been changed, or for which it shall have been exchanged, and if a
majority of the disinterested members of the Board shall, in its
sole discretion, determine that such change equitably requires an
adjustment in any option which was theretofore granted or which may
thereafter be granted under the Plan, then such adjustment shall be
made in accordance with such determination.

(c) The grant of an Option pursuant to the Plan shall not affect in any
way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or
business structure, to merge, to consolidate, to dissolve, to
liquidate or to sell or transfer all or any part of its business or
assets.

9.2 Corporate Changes - A dissolution or liquidation of the Corporation, or
a merger or consolidation in which the Corporation is not the surviving
Corporation, shall cause each outstanding Option to terminate, except
to the extent that another corporation may and does in the transaction
assume and continue the option or substitute its own options.

9.3 Fractional Shares - Fractional shares resulting from any adjustment in
Options pursuant to this Article 9 may be settled as a majority of the
disinterested members of the Board or the Committee (as the case may
be) shall determine.

9.4 Binding Determination - To the extent that the foregoing adjustments
relate to stock or securities of the Corporation, such adjustments
shall be made by a majority of the disinterested members of the Board,
whose determination in that respect shall be final, binding and
conclusive. Notice of any adjustment shall be given by the corporation
to each holder of an Option which shall have been adjusted.

Article 10. GENERAL PROVISIONS

10.1 Effective Date - The Plan shall become effective upon its adoption by
the Board, provided that any grant of an Option is subject to the
approval of the Plan by the shareholders of the Corporation within 12
months of adoption by the Board.

<PAGE>

10.2 Termination of the Plan - Unless previously terminated by the Board of
Directors, the Plan, shall terminate on, and no Options shall be
granted after, the tenth anniversary of its adoption by the Board.

10.3 Limitation on Termination, Amendment or Modification

(a) The Board may at any time terminate, amend, modify or suspend the
Plan, provided that without the approval of the stockholders of the
Corporation no amendment or modification shall be made by the Board
which:

(i) increases the maximum number of shares of Common Stock as to
which options may be granted under the Plan;

(ii) changes the class of eligible Employees; or

(iii) otherwise requires the approval of shareholders under
applicable tax, securities or other law.

(b) No amendment, modification, suspension or termination of the Plan
shall in any manner affect any Option theretofore granted under the
Plan without the consent of the Optionee or any person validly
claiming under or through the Optionee.

10.4 No Right to Employment - Neither anything contained in the Plan or in
any instrument under the Plan nor the grant of any option hereunder
shall confer upon any Optionee any right to continue in the employ of
the Corporation or of any Subsidiary or limit in any respect the right
of the Corporation or of any subsidiary to terminate the Optionee's
employment at any time and for any reason.

10.5 Withholding Taxes - The Corporation will require that an Optionee, as a
condition of the exercise of an Option, or any other person or entity
receiving Common Stock upon exercise of an Option, pay or reimburse any
taxes which the Corporation is required to withhold in connection with
the exercise of the Option.

10.6 Listing and Registration of Shares -

(a) No Option granted pursuant to the Plan shall be exercisable in
whole or in part if at any time a majority of the disinterested
members of the Board shall determine in its discretion that the
listing, registration or qualification of the shares of Common
Stock subject to such Option on any securities exchange or under
any applicable law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in
connection with, the granting of such Option or the issue of shares
thereunder, unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of
any conditions not acceptable to a majority of the disinterested
members of the Board.

<PAGE>

(b) If a registration statement under the Securities Act with respect
to the shares issuable upon exercise of any Option granted under
the Plan is not in effect at the time of exercise, as a condition
of the issuance of the shares, the person exercising such Option
shall give the Committee a written statement, satisfactory in form
and substance to the Committee, that he is acquiring the shares for
his own account for investment and not with a view to their
distribution. The Corporation may place upon any stock Certificate
for shares issuable upon exercise of such Option the following
legend or such other legend as the Committee may prescribe to
prevent disposition of the shares in violation of the Securities
Act or other applicable law;

"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 ("ACT"). AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED OR OFFERED FOP, SALE IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT WITH RESPECT TO THEM UNDER THE ACT OR A WRITTEN OPINION
OF COUNSEL FOR THE CORPORATION THAT REGISTRATION IS NOT REQUIRED."