OSICOM TECHNOLOGIES INC
PRE 14A, 1997-11-07
TELEPHONE & TELEGRAPH APPARATUS
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                                PRELIMINARY COPY

                       [OSICOM TECHNOLOGIES, INC. LETTERHEAD]



                                 October     , 1997



Dear Shareholders:

         We cordially invite you to attend the Meeting of the Shareholders of
Osicom Technologies, Inc. (the "Company") to be held at 10:00 a.m. on Tuesday,
December 2, 1997, at the Miramar Sheraton, 101 Wilshire Boulevard, Santa Monica,
California.

         The  purposes  of this  meeting  are to (i)  elect a Board  of four (4)
directors,  (ii) ratify the appointment of auditors,  (iii) approve an amendment
to the  Certificate  of  Incorporation  of the Company to increase the number of
shares of common stock authorized for issuance, (iv) approve an amendment to the
Company's  1988  Incentive and  Non-Qualified  Stock Option Plan to increase the
amount of shares reserved thereunder, and (v) ratify and approve the adoption of
the Company's  1997  Incentive  and  Non-Qualified  Stock Option Plan,  and (vi)
ratify and approve the  adoption of the  Company's  1997  Director  Stock Option
Plan.  These  matters are  described in the  accompanying  Notice of Meeting and
Proxy Statement.

         The Board of Directors  recommends that  Shareholders  vote in favor of
each  proposal.  We encourage all  Shareholders  to  participate by voting their
shares by Proxy  whether or not they plan to attend the  meeting.  Please  sign,
date and mail the  enclosed  Proxy as soon as  possible.  If you do  attend  the
Annual Meeting, you may still vote in person.


                                   Sincerely,



                                 John H. Gorman
                                    Secretary



<PAGE>



                            NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

                                  To be held on December 2, 1997

         Notice is hereby  given that the Annual  Meeting of  Shareholders  (the
"Meeting")  of Osicom  Technologies,  Inc. (the  "Company")  will be held at the
Miramar Sheraton, 101 Wilshire Boulevard,  Santa Monica,  California on December
2, 1997 at 10:00 a.m. Pacific Time, for the following purposes:

         1.       To elect a Board of  Directors  of four (4)  persons  to serve
                  until  the 1998  Annual  Meeting  of  Shareholders  or until a
                  successor is duly elected and qualified.

         2.       To  approve  the  appointment  of  BDO  Seidman,  LLP  as  the
                  Company's independent auditors.

         3.       To approve an amendment to the Certificate of Incorporation of
                  the Company to increase  the number of shares of common  stock
                  authorized for issuance.

         4.       To approve an amendment to the  Company's  1988  Incentive and
                  NonQualified  Stock  Option  Plan to  increase  the  amount of
                  shares reserved thereunder.

         5.       To ratify and  approve  the  adoption  of the  Company's  1997
                  Incentive and Non-Qualified Stock Option Plan.

         6.       To ratify and  approve  the  adoption  of the  Company's  1997
                  Director Stock Option Plan.

         7.       To transact  such other  business as may properly  come before
                  the Meeting or any adjournment thereof.

         Only  shareholders  of record at the close of  business  on October 15,
1997 will be entitled to notice of and to vote at the Meeting.

         Whether or not you intend to attend the Meeting,  please complete, date
and sign the enclosed Proxy. Your Proxy will be revokable,  either in writing or
by voting in person at the Meeting, at any time prior to its exercise.

                                            By Order of the Board of Directors



                                            ------------------------------------
                                            JOHN H. GORMAN, Secretary


Santa Monica, California
October   , 1997


<PAGE>




                             OSICOM TECHNOLOGIES, INC.
                                2800 28th Avenue
                         Santa Monica, California  90405



                                   PROXY STATEMENT


         Accompanying  this  Proxy  Statement  is a Notice of Annual  Meeting of
Shareholders  and a form of Proxy  for such  meeting  solicited  by the Board of
Directors. The Board of Directors has fixed the close of business on October 15,
1997, as the record date for the  determination of shareholders who are entitled
to notice of and to vote at the meeting or any adjournment  thereof. The holders
of a majority of the  outstanding  shares of Common Stock present in person,  or
represented by Proxy, shall constitute a quorum at the meeting.

         As of the record date, the Company had 17,393,461 outstanding shares of
common  stock,  $.10 par value (the  "Common  Stock"),  the holders of which are
entitled to one vote per share.

         A Proxy that is properly submitted to the Company may be revoked at any
time before it is exercised by written  notice to the  Secretary of the Company,
and any  Shareholder  attending  the  meeting may vote in person and by doing so
revokes any Proxy previously submitted by him. Where a Shareholder has specified
a choice on his Proxy with respect to Proposals 1, 2, 3, 4, 5, and 6, it will be
complied with. If no direction is given, all the shares represented by the Proxy
will be voted in favor of such Proposals.

         The cost of soliciting Proxies will be paid by the Company,  which will
reimburse  brokerage  firms,  custodians,  nominees  and  fiduciaries  for their
expenses in forwarding proxy material to the beneficial  owners of the Company's
stock.  Officers  and regular  employees  of the  Company  may  solicit  Proxies
personally  and by  telephone.  The Annual  Report of the Company for the fiscal
year ended January 31, 1997,  containing  audited financial  statements for such
year,  is  enclosed  with this Proxy  Statement.  This Proxy  Statement  and the
enclosed  Proxy are being sent to the  shareholders  of the  Company on or about
October ____, 1997.


IN ORDER THAT YOUR SHARES MAY BE REPRESENTED AT THIS MEETING,  YOU ARE REQUESTED
TO PLEASE SIGN, DATE AND MAIL THE PROXY PROMPTLY.




<PAGE>



                                  PROPOSAL 1

                             ELECTION OF DIRECTORS


         According to the Company's By-Laws,  the Board of Directors is composed
of five (5) members.  At each Annual  Meeting,  all directors will be elected to
serve for one year  expiring on the date of the Annual  Meeting of  Shareholders
the  following  year.  Each  director  elected  will  continue in office until a
successor  has been  elected  or until  resignation  or  removal  in the  manner
provided by the  Company's  By-Laws.  The names of the nominees for the Board of
Directors are listed below.  Shares  represented by a properly executed proxy in
the accompanying  form will be voted for such nominees.  However,  discretionary
authority  is reserved  to vote such shares in the best  judgment of the persons
named in the event  that any person or persons  other than the  nominees  listed
below are to be voted on at the meeting due to the unavailability of any nominee
so listed.

         All  persons  named below are  directors  of the Company at the present
time.  There  are no family  relationships  between  any  nominee,  director  or
executive officer of the Company.


                          NOMINEES FOR ONE YEAR TERMS

Par Chadha has been Chief Executive  Officer of the Company since November 1996.
Mr.  Chadha  founded the Company in 1981 and has been a director for the Company
since that  time.  He served as  President  and Chief  Executive  Officer of the
Company from July 1981, through May 1993, and as Chairman from July 1981 through
June 1996.  Mr.  Chadha was a  director  and  Chairman  of  Builders'  Warehouse
Association,  Inc.  from March 1995 through  September  1996.  Mr.  Chadha was a
director of Saratoga  Brands,  Inc.  from January 1995 through July 1995. He has
been  Chairman,  President and Chief  Executive  Officer of Oxford  Acquisitions
Group,  Inc. since February 1994. Mr. Chadha is also a director of Rand Research
Corporation,  RII Partners, Inc., and RT Investments,  Inc., which are privately
held companies.

Leonard N. Hecht has been a director of the Company since June 1996. Since 1994,
he has been President of Chrysalis Capital Group, an investment  banking company
specializing in mergers, acquisitions and financings which he founded. From 1987
to 1993,  Mr. Hecht was Managing  Director of the  Investment  Banking Group and
head of the  Technology  Assessment  Group of Houlihan  Lokey Howard & Zukin,  a
financial  advisory firm.  From 1984 to 1987, Mr. Hecht was the Vice Chairman of
the  Board  and  Chief  Executive  Officer  of  Quantech  Electronics  Corp.,  a
diversified  publicly-held  electronics company.  Prior to joining Quantech, Mr.
Hecht was a founding principal of Xerox Development Corporation,  a wholly-owned
subsidiary of the Xerox Corporation. Xerox Development Corporation was active in
strategic  planning,  mergers and acquisition,  divestitures,  licensing,  joint
ventures and venture investing for the Xerox Corporation.

     Humbert B.  Powell III, is a Managing  Director  of Sanders  Morris  Mundy,
reuniting him with his previous senior  colleagues from E.F. Hutton.  Mr. Powell
III was Vice  Chairman  and  Director of Marleau,  Lemire,  Securities  Inc. and
Chairman of Marleau, Lemire USA. Mr. Powell served as a Senior Managing Director
in the  Corporate  Finance  Department  of Bear  Stearns & Co. from 1988 through
February 1995,  with  responsibilities  for the  investment  banking effort both
domestic and  international.  Prior to his employment with Bear Stearns in 1994,
Mr. Powell served as a Senior Vice President and Director of E.F.  Hutton & Co.,
where he was employed in various  capacities for 18 years. He is also a Director
of Bikers Dream Inc., Tatham Offshore Corp. and Salem-Teikyo University. Humbert
B.  Powell III has been a director  of the  Company  since May 1996.  Xin Cheng,
Ph.D. has been President and director of the Company since  September  1995, and
was  Secretary  from June 1993 to February  1997.  Dr.  Cheng  holds a Ph.D.  in
electrical  engineering from the University of California,  Irvine.  Since 1988,
Dr.  Cheng has been  leading the  Company's  efforts in fiber  transmission  and
switching systems development.

                        INFORMATION CONCERNING BOARD

         The  Board of  Directors  met two  times in fiscal  1997.  No  director
attended fewer than 75% of the meetings of the Board of Directors.  In addition,
the Board acted by unanimous consent four times during fiscal 1997.

         The  Board of  Directors  has an  Audit  Committee  and a  Compensation
Committee.  The Audit  Committee is  responsible  for  reviewing  the  Company's
audited financial statements, meeting with the Company's independent accountants
to review the Company's internal controls and financial management practices and
examining  all  agreements  or other  transactions  between  the Company and its
directors and officers (other than those compensation  functions assigned to the
Compensation Committee) to determine whether such agreements or transactions are
fair to the Company's shareholders.  Messrs. Hecht and Powell currently serve on
the Audit Committee.

         The   Compensation   Committee  is   responsible   for   reviewing  the
compensation  and  benefits  of  the  Company's   executive   officers,   making
recommendations to the Board of Directors  concerning  compensation and benefits
for such executive officers,  reviewing overall company-wide  compensation plans
and  administering  the Company's stock option plans.  Messrs.  Hecht and Chadha
currently serve on the Compensation Committee.

<PAGE>

                              SECURITY OWNERSHIP OF CERTAIN
                             BENEFICIAL OWNERS AND MANAGEMENT


         The following table sets forth certain information, as of September 30,
1997,  regarding the ownership of the Common Stock and voting Series E Preferred
Stock by (i) each director and nominee for director of the Company; (ii) each of
the  executive  named  officers  and  nominees,  (iii) each person  known to the
Company to  beneficially  own five percent (5%) or more of the Company's  Common
Stock or voting Series E Preferred  Stock,  and (iv) all directors and executive
officers of the Company as a group.

<TABLE>
<CAPTION>


================================================================================================================================
       Name of Beneficial Owner (A)                        Common Stock                       Series E Preferred Stock
                                            ------------------------------------------------------------------------------------
                                                Number of Shares       Percentage        Number of Shares      Percentage of
                                                                           of                                   Outstanding
                                                                       Outstanding                                   (I)
                                       (I)
<S>                                                  <C>                    <C>                  <C>                <C>
- --------------------------------------------------------------------------------------------------------------------------------
Par Chadha                                           2,426,551 (B)          13.5%                --                 --
2800 28th Street, Suite 100
Santa Monica, CA 90405
- --------------------------------------------------------------------------------------------------------------------------------
R II Partners, Inc.                                  1,107,501               6.4%                 --                --
2250 East Tropicana Ave., Suite 19-246
Las Vegas, NV 89119
- --------------------------------------------------------------------------------------------------------------------------------
R-T Investments, Inc.                                   93,600                *                   --                --
2250 East Tropicana Ave., Suite 19-246
Las Vegas, NV 89119
- --------------------------------------------------------------------------------------------------------------------------------
Rand Research Corporation                              585,858               3.4%                 --                --
2250 East Tropicana Ave., Suite 19-246
Las Vegas, NV 89119
- --------------------------------------------------------------------------------------------------------------------------------
Sharon G. Chadha                                       908,364 (C)           5.2%                 --                --
2800 28th Street, Suite 100
Santa Monica, CA 90405
- --------------------------------------------------------------------------------------------------------------------------------
Barry Witz                                           1,858,475 (D)          10.6%                 --                --
505 S. Beverly Drive, Suite 1066
Beverly Hills, CA 90212
- --------------------------------------------------------------------------------------------------------------------------------
Brite Lite Industries, Inc.                          1,121,275               6.5%                 --                --
505 S. Beverly Drive, Suite 1066
Beverly Hills, CA 90212
- --------------------------------------------------------------------------------------------------------------------------------
Leonard Hecht                                          167,392 (E)           1.0%                 --                --
18241 Lake Encino Drive
Encino, CA 91316
- --------------------------------------------------------------------------------------------------------------------------------
Christopher E. Sue                                      25,000 (F)            *                   --                --
2800 28th Street, Suite 100
Santa Monica, CA 90405
- --------------------------------------------------------------------------------------------------------------------------------
Xin Cheng                                              196,945 (G)           1.1%                 --                --
2800 28th Street, Suite 100
Santa Monica, CA 90405
- --------------------------------------------------------------------------------------------------------------------------------
Vantage Point Venture Partners 1996                  1,675,750               9.8%                 --                --
1001 Bayhill Drive, Suite 140
San Bruno, CA 94066
- --------------------------------------------------------------------------------------------------------------------------------
LM LDC                                                    --                  --                  600              100%
Fort Street, Grand Cayman
 Cayman Islands, BWI
- --------------------------------------------------------------------------------------------------------------------------------
Humbert B. Powell III                                  145,097                 *
2800 28th St., Suite 100
Santa Monica, CA 90405
- --------------------------------------------------------------------------------------------------------------------------------
HMS Advisors, LLC                                       82,200(H)              *
100 Davidson Ave., Ste. 311
Somerset, NJ 08873
- --------------------------------------------------------------------------------------------------------------------------------
All Directors and executive officers as a            3,205,475              17.5%                  --                --
group
================================================================================================================================

</TABLE>

*        Less than 1%

(A)      All information  with respect to beneficial  ownership of the shares is
         based upon filings made by the  respective  beneficial  owners with the
         Securities  and Exchange  Commission  or  information  provided by such
         beneficial  owners to the Company.  Shares  include  stock  options and
         warrants exercisable within 60 days.

(B)      Includes  shares,  options  and  warrants  held  in  the  name  of R II
         Partners,  Inc., R-T Investments,  Inc., and Rand Research Corporation.
         Mr.  Chadha owns,  directly  and  indirectly,  100% of the  outstanding
         capital  stock of R II  Partners,  Inc. and R-T  Investments,  Inc. Mr.
         Chadha holds  exercisable  options to acquire  552,500 shares of common
         stock at prices  ranging from $1.50 to $7.92 per share (market price on
         the date granted).


         Mr. Chadha disclaims beneficial ownership of 28,906 shares held by Ms.
         Chadha.

 C)      Includes  shares,  options  and  warrants  held  in the  name  of Rand
         Research  Corporation  and  RT  Investments,  Inc.  Ms.  Chadha  owns,
         directly and indirectly,  100% of the  outstanding  capital stock Rand
         Research  Corporation  and  RT  Investments,  Inc.  Ms.  Chadha  holds
         exercisable  options  to  acquire  200,000  shares of common  stock at
         prices ranging from $1.50 to $7.92 per share (market price on the date
         granted).  Ms. Chadha disclaims  beneficial ownership of 87,092 shares
         held by Mr. Chadha.

(D)      Includes  shares,  options and warrants  held in the name of Brite Lite
         Industries,  Inc. Mr. Witz owns,  directly and indirectly,  100% of the
         outstanding capital stock of Brite Lite Industries, Inc. Mr. Witz holds
         exercisable options to acquire 377,700 shares of common stock at prices
         ranging  from  $1.00  to  $3.72  per  share  (market  price on the date
         granted).

(E)      Includes exercisable options held by Mr. Hecht to acquire 90,000 shares
         of common stock at prices ranging from $1.00 to $9.49 per share (market
         price on the date granted).

(F)      Includes  exercisable  options held by Mr. Sue to acquire 25,000 shares
         of common stock at $6.98 market price on the date granted).

(G)      Includes  exercisable  options  held by Mr.  Cheng to  acquire  161,448
         shares of common stock at prices  ranging from $1.00 to $7.92 per share
         (market price on the date granted).

(H)      Includes shares,  options and warrants held in the name of HMS Advisors
         LLC. Mr. Powell owns,  directly and indirectly,  50% of the outstanding
         capital stock of HMS Advisors LLC. Mr. Powell holds exercisable options
         to acquire  50,000  shares of common  stock at $4.50 per share  (market
         price on the date granted). HMS Advisors LLC holds warrants to purchase
         75,000 shares of common stock at the exercise price of $8.00 per share.

(I)      For each beneficial owner, the "Percentage of Outstanding"  equals each
         owner's   actual   holdings  of  shares  plus  shares   represented  by
         unexercised   options  and  warrants  held,  divided  by  total  shares
         outstanding of the Company at September 30, 1997, of  17,174,613,  plus
         the above-referenced unexercised options and warrants of the referenced
         holder  only.  In other  words,  individual  percentages  of the listed
         holders will not add to the group total  because the  calculations  are
         made separately for each holder.


                                 CERTAIN TRANSACTIONS

     During  May 1997,  279,207  warrants  exercisable  at  $5.638  held by R II
Partners,  Inc. and 279,207  warrants  exercisable  at $5.638 held by Brite Lite
Industries,  Inc. were  exercised in cashless  transactions.  Of the  $1,877,000
liability representing the difference between the closing price of the Company's
common  shares at exercise and the exercise  price  $1,567,000  was paid in cash
with the  remaining  $310,000  balance  applied to amounts due the Company under
indemnification  agreements.  Par Chadha,  director and Chief Executive Officer,
owns  directly and  indirectly  100% of the  outstanding  capital  stock of R II
Partners, Inc. Barry Witz, former director, owns directly and indirectly 100% of
the outstanding capital stock of Brite Lite Industries, Inc.

         During  the  year  ended  January  31,  1997,   the  Company   received
non-interest   bearing   advances  from  Rand  Research   Corporation   and  R-T
Investments,  Inc. totaling  $1,316,000 which were fully repaid through payments
and the offset for an 8% demand loan from the Company to R-T  Investments,  Inc.
in the amount of $100,000  (including  accrued interest of $5,000).  Par Chadha,
director and Chief Executive Officer, and Sharon Chadha,  Chairman and director,
own  directly  and  indirectly  100% of the  outstanding  capital  stock  of R-T
Investments, Inc. and Rand Research Corporation.

         During September  through November 1996, the Company made  non-interest
bearing advances  totaling  $502,000 to Brite Lite  Industries,  Inc. which were
fully  repaid  in  December  1996.  Barry  Witz,  director,  owns  directly  and
indirectly 100% of the outstanding capital stock of Brite Lite Industries, Inc.


                               EXECUTIVE COMPENSATION

          The  following  table sets forth,  for each of the last fiscal  years,
cash and certain other compensation paid or accrued by the Company for the Chief
Executive  Officer  and for  each of the  four  other  most  highly  compensated
executive  officers (the "Named  Officers") of the Company in all  capacities in
which they served:


                                    SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>

====================================================================================================================================
                           SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------------------------------
  Name and Principal        Year             Annual Compensation                      Long-Term Compensation              All Other
       Position                                                                                                         Compensation
                                                                                                                            ($)
                                   --------------------------------------------------------------------------------------
                                      Salary       Bonus      Other     Restricted  Securities       Long-Term
                                      ($)          ($)        Annual    Stock       Underlying       Incentive
                                                              Compen-   Award(s)    Options          Plan
                                                              sation    ($)         (#)              Payouts
                                                              ($)
<S>                         <C>           <C>       <C>         <C>         <C>      <C>                 <C>                <C>

- ------------------------------------------------------------------------------------------------------------------------------------
Sharon Chadha,             1997           0         0           0           0         50,000             0                  0
Chairwoman                 1996           0         0           0           0         50,000             0                  0
                           1995           0         0           0           0        100,000             0                  0
- ------------------------------------------------------------------------------------------------------------------------------------
Par Chadha, Director,      1997           0         0           0           0         50,000             0                  0
Chief Executive Officer    1996           0         0           0           0        402,500             0                  0
                           1995           0         0           0           0        100,000             0                  0
====================================================================================================================================

</TABLE>
<PAGE>

<TABLE>
<CAPTION>



====================================================================================================================================
                        OPTION GRANTS IN LAST FISCAL YEAR
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
                                   Individual Grants                                 Potential Realizable Value at
                                                                                     Assumed Rates of Stock Price
                                                                                     Appreciation for Option Term (B)
- --------------------------------------------------------------------------------
        Name            Number of     % of Total    Exercise     Expiration
                        Securities    Options       of Base      Date
                        Underlying    Granted to    Price
                        Options       Employees     ($/Sh)
                        Granted (#)   in Fiscal     (A)
                                      Year
                                                                                     -----------------------------------------------
<S>                      <C>          <C>            <C>         <C>                  <C>       <C>       <C>

                                                                                      0%($)     5%($)     10%($)
- ------------------------------------------------------------------------------------------------------------------------------------
Sharon Chadha            50,000       2.65%         $7.92        1-Feb-2006           0         249,042   631,122
- ------------------------------------------------------------------------------------------------------------------------------------
Par Chadha               50,000       2.65%         $7.92        1-Feb-2006           0         249,042   631,122
====================================================================================================================================

</TABLE>


(A)      The value indicated is a net amount, since the aggregate exercise price
         has  been  deducted  from  the  final  appreciated  value.  5% and  10%
         appreciation  would result in per share prices of approximately  $12.91
         and $20.54, respectively, as of February 1, 2006.


<TABLE>
<CAPTION>

====================================================================================================================================
                     AGGREGATED OPTION EXERCISES IN 1997 AND
                         JANUARY 31, 1997 OPTION VALUES
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
    Name                Shares        Value             Number of Securities                 Value of Unexercised In-the-
                        Acquired      Realized          Underlying Unexercised                  Money Options at FY-End
                        on            ($)             Options at Fiscal Year-End                          ($)
                        Exercise                               (#)*
                        (#)
                                                   --------------------------------------------------------------------------------
                                                   Exercisable           Unexercisable        Exercisable           Unexercisable
- ------------------------------------------------------------------------------------------------------------------------------------
<S>                      <C>          <C>          <C>                   <C>                  <C>                   <C>

Sharon Chadha            -            -            100,000               50,000                 825,000               166,500
- ------------------------------------------------------------------------------------------------------------------------------------
Par Chadha               -            -            335,000              167,500               2,594,550             1,051,275
====================================================================================================================================
</TABLE>


*        Options are  "in-the-money" if, on September 30, 1997, the market price
         of the  Common  Stock  ($4.09)  exceeded  the  exercise  price  of such
         options.  The value of such options is  calculated by  determining  the
         difference  between  the  aggregate  market  price of the Common  Stock
         covered by such options on September 30, 1997, and the aggregate  price
         of such options.

<PAGE>


Employment Agreements

         The  Company has no  employment  agreements  with any of its  executive
officers.


                               COMPENSATION COMMITTEE REPORT

         The  Compensation  Committee is comprised of Messrs.  Hecht and Chadha.
The  Compensation  Committee  reviews,  recommends  and approves  changes to the
Company's  compensation  policies and programs and is responsible  for reviewing
and approving the  compensation of the Chief Executive  Officer and other senior
officers of the Company.

         The following  report shall not be deemed  incorporated by reference by
any general  statement  incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or under the Securities  Exchange Act of
1934,  except  to  the  extent  the  Company   specifically   incorporates  this
information  by  reference,  and shall not  otherwise be deemed filed under such
Acts.

         The   Compensation   Committee  is   responsible   for   reviewing  the
compensation  and  benefits  of  the  Company's   executive   officers,   making
recommendations to the Board of Directors  concerning  compensation and benefits
for such executive officers and administering the Company's stock option plans.

         The Company believes that executive  compensation  should be based upon
value  returned to  shareholders.  The Company has  developed  and is developing
compensation  programs  designed  to  reflect  Company  performance  and  to  be
competitive in the marketplace.  In designing compensation programs, the Company
attempts to reflect both value created for  shareholders  while  supporting  the
company's  strategic  goals.  The Company's  compensation  programs  reflect the
following themes:

         .  Compensation should be meaningfully related to the value created for
            shareholders.

         .  Compensation programs should support the Company's short-term and
            long-term strategic goal and objectives.

         .  Compensation programs should promote the Company's value and
            reward individuals for outstanding contributions to the Company's
            success.

         .  Short-term and long-term compensation should be designed to attract
            and retain superior executives.


            The Company's executive compensation is based upon three components,
base  salary,  annual  incentive  bonuses and  long-term  incentives,  which are
intended to serve the overall compensation philosophy.

Base Salary

            The  base  salary  of each  executive  officer  is  determined  as a
function  of  three  principal  factors:  the  individual's   performance,   the
relationship  of the  individual's  salary to similar  executives  in comparable
companies, and increases in the individual's  responsibilities,  whether through
promotions or otherwise.

Annual Incentive Bonus

            The Company's annual  incentive  bonuses are designed to reflect the
individual  officer's  contribution to the  profitability of the Company and any
special achievements by the respective  officers.  Each officer's bonus is based
upon the Company's  performance in various areas, such as sales, profit margins,
operating expenses and net income, as compared to a pre-determined plan for each
officer for each year.




                                                 PERFORMANCE GRAPH
<TABLE>
<CAPTION>


=============================================================================================================================
                                                       INDEX VALUES
- -----------------------------------------------------------------------------------------------------------------------------
                                                                     Osicom Technologies,                    NASDAQ Market
                                CSRP Non-Financial                            Inc.                               Index
- -----------------------------------------------------------------------------------------------------------------------------
     <S>                                <C>                                   <C>                              <C>

     1/31/92                            219.162                               3.438                            198.232
- -----------------------------------------------------------------------------------------------------------------------------
     1/29/93                            231.933                               3.100                            224.165
- -----------------------------------------------------------------------------------------------------------------------------
     1/31/94                            269.515                               5.500                            257.800
- -----------------------------------------------------------------------------------------------------------------------------
     1/31/95                            249.869                               1.656                            245.950
- -----------------------------------------------------------------------------------------------------------------------------
     1/31/96                            351.971                               6.313                            347.590
- -----------------------------------------------------------------------------------------------------------------------------
     1/31/97                            457.513                              11.250                            455.659
- -----------------------------------------------------------------------------------------------------------------------------
     8/29/97                            520.365                               3.688                            525.592
- -----------------------------------------------------------------------------------------------------------------------------
    Pct. Ch.                            237.434%                            107.272%                           265.140%
=============================================================================================================================
</TABLE>


<TABLE>
<CAPTION>

=============================================================================================================================
                                                      GROWTH OF $100
- -----------------------------------------------------------------------------------------------------------------------------
                                                                   Osicom Technologies,                    NASDAQ Market
                                 CRSP Non-Financial                         Inc.                                Index
- -----------------------------------------------------------------------------------------------------------------------------
     <S>                                <C>                                 <C>                                <C>

     1/31/92                            100.000                             100.000                            100.000
- -----------------------------------------------------------------------------------------------------------------------------
     1/29/93                            105.827                              90.169                            113.082
- -----------------------------------------------------------------------------------------------------------------------------
     1/31/94                            122.975                             159.977                            130.050
- -----------------------------------------------------------------------------------------------------------------------------
     1/31/95                            114.011                              48.168                            124.072
- -----------------------------------------------------------------------------------------------------------------------------
     1/31/96                            160.599                             183.624                            175.345
- -----------------------------------------------------------------------------------------------------------------------------
     1/31/97                            208.758                             327.225                            229.861
- -----------------------------------------------------------------------------------------------------------------------------
     8/29/97                            237.434                             107.272                            265.140
=============================================================================================================================
</TABLE>


         This graph shall not be deemed incorporated by reference by any general
statement  incorporating by reference this proxy statement into any filing under
the Securities Act of 1933 or under the Securities  Exchange Act of 1934, except
to the extent that the Company specifically incorporate this graph by reference,
and shall not otherwise be deemed filed under such Acts.


                          COMPARISON OF CUMULATIVE TOTAL RETURN OF COMPANY



                                                Fiscal Year Ending            ,
     Company                                1992    1993    1994    1995    1996
     -------                                ------------------------------------

Osicom Technologies, Inc.





     THE BOARD OF DIRECTORS  RECOMMENDS THAT THE SHAREHOLDERS  VOTE TO ELECT THE
AFOREMENTIONED NOMINEES TO SERVE ON THE BOARD OF DIRECTORS.

<PAGE>



                                       PROPOSAL 2

                                   RATIFICATION OF THE
                            SELECTION OF INDEPENDENT AUDITORS


         The  selection  of  independent   auditors  to  examine  the  financial
statements  of the Company  for the fiscal  year  ending  January 31, 1998 to be
transmitted or made available to shareholders  and filed with the Securities and
Exchange  Commission  is to be  submitted to the meeting for  ratification.  BDO
Seidman,  LLP has been selected by the  Company's  Board of Directors to examine
such financial  statements.  A member of BDO Seidman, LLP will be present at the
Annual  Meeting and will be available to respond to  appropriate  questions  and
will have the opportunity to make a statement.


         THE BOARD OF DIRECTORS  RECOMMENDS THAT THE  SHAREHOLDERS  VOTE FOR THE
RATIFICATION OF BDO SEIDMAN, LLP AS THE COMPANY'S INDEPENDENT AUDITORS.



<PAGE>



                                 PROPOSAL 3


                  On  September  26, 1997,  the Board of  Directors  unanimously
adopted a resolution  proposing that Article IV of the Company's  Certificate of
Incorporation be amended to increase from 20,000,000 shares to 50,000,000 shares
the  Common  Stock of the  Company,  with $.10 par value,  which the  Company is
authorized to issue. The Board directed that the proposed amendment be submitted
to a vote of the  holders  of all of the  Company's  outstanding  stock.  If the
amendment  is  approved by the  holders of a majority  of the  Company's  shares
represented in person or by proxy at the Meeting,  the Company's  Certificate of
Incorporation will be amended to provide that the Company is authorized to issue
50,000,000 shares of Common Stock, with $.10 par value.

                  As of the  date of  this  Proxy  Statement,  the  Company  has
[17,393,461]  shares of Common Stock  outstanding.  The Company has  outstanding
securities  convertible  into shares of Common Stock,  options  exercisable  for
shares of Common Stock and options reserved for issuance. Other than to meet the
requirements of various  employee benefit and incentive plans of the Company and
its  outstanding  convertible  securities,  the  Company  has no  present  plan,
understanding  or  agreement  to issue  additional  shares  of  Common  Stock or
Preferred  Stock.  However,  the Board of Directors  believes  that the proposed
increase in the number of  authorized  shares of Common  Stock is  desirable  to
enhance the Company's  flexibility in connection  with possible  future actions,
such as stock  dividends,  stock  splits,  corporate  mergers,  acquisitions  of
property and the possible funding of its business,  or other corporate purposes.
The Board will determine whether, where and on what terms the issuance of shares
of  Common  Stock  may be  warranted  in  connection  with any of the  foregoing
purposes.

                  As with the  issuance  of any shares of the  Company's  Common
Stock other than on a pro-rata basis to all current  shareholders,  the issuance
of additional shares to be authorized  pursuant to the proposed  amendment would
reduce the proportionate interests in the Company held by current shareholder.

                  A vote in favor of the  proposed  amendment  to the  Company's
Certificate  of  Incorporation  by the holders of a majority of the  outstanding
shares of Common Stock  represented  at the Meeting,  in person or by proxy,  is
necessary  for the  adoption of this  proposal.  If the  proposed  amendment  is
adopted by the shareholders,  it will become effective upon filing a Certificate
of  Amendment  as  required  by the New Jersey  Business  Corporation  Act.  The
Company's financial statements,  included in its 1997 Annual Report furnished to
shareholders in connection with the  distribution of this Proxy  Statement,  are
incorporated in this Proxy Statement by reference.

                  THE BOARD OF  DIRECTORS  RECOMMENDS A VOTE FOR THE PROPOSAL TO
AMEND ARTICLE IV OF THE CERTIFICATE OF  INCORPORATION.  PROXIES SOLICITED BY THE
BOARD OF  DIRECTORS  WILL BE SO VOTED  UNLESS  SHAREHOLDERS  SPECIFY A DIFFERENT
CHOICE.

<PAGE>



                                       PROPOSAL 4


                  On  October  24,  1997,  the  Board of  Directors  unanimously
adopted a  resolution  proposing  the  number  of shares of common  stock of the
Company  reserved  pursuant to the Company's  1988  Incentive and  Non-Qualified
Stock Option Plan ("1988 Plan") be increased from 2,400,000  shares to 4,400,000
shares. The Board directed that the proposed amendment be submitted to a vote of
the holders of all of the  Company's  outstanding  stock.  If the  amendment  is
approved by the holders of a majority of the  Company's  shares  represented  in
person or by proxy at the Meeting,  the  Company's  1988 Plan will be amended to
provide that  4,400,000  shares of the  Company's  common stock are reserved for
issuance under the 1988 Plan.

                  The  proposed  amendment  to the 1988  Plan  will  permit  the
Company  to meet the  outstanding  commitments  made to various  employees  with
respect to the granting of incentive  options  under the 1988 Plan.  The Company
will not  grant  any  additional  options  under  the 1988  Plan in the  future;
however,  the Board of  Directors  believes  that the  proposed  increase in the
number of reserved  shares of Common Stock is  necessary  to meet the  Company's
outstanding  obligations  under the  Plan.  The  number  of shares  vested as of
October 24, 1997 is less than the number of shares currently reserved.

                  A vote in favor of the  proposed  amendment  to the  Company's
1988 Plan by the holders of a majority of the outstanding shares of Common Stock
represented at the Meeting, in person or by proxy, is necessary for the adoption
of this proposal.  If the proposed amendment is adopted by the shareholders,  it
will become effective on the date of the  Shareholders'  Meeting.  The Company's
financial   statements,   included  in  its  1997  Annual  Report  furnished  to
shareholders in connection with the  distribution of this Proxy  Statement,  are
incorporated in this Proxy Statement by reference.

                  THE BOARD OF  DIRECTORS  RECOMMENDS A VOTE FOR THE PROPOSAL TO
AMEND THE  COMPANY'S  1988  INCENTIVE  AND  NONQUALIFIED  STOCK  OPTION  PLAN TO
INCREASE  THE  NUMBER  OF SHARES OF COMMON  STOCK OF THE  COMPANY  RESERVED  FOR
ISSUANCE  THEREUNDER.  PROXIES  SOLICITED BY THE BOARD OF  DIRECTORS  WILL BE SO
VOTED UNLESS SHAREHOLDERS SPECIFY A DIFFERENT CHOICE.





<PAGE>



                                         PROPOSAL 5

                                      1997 INCENTIVE AND
                               NON-QUALIFIED STOCK OPTION PLAN


Summary Description of Options and Tax Status

         The full text of the 1997 Incentive and Non-Qualified Stock Option Plan
(the  "1997  Plan")  is set  forth as  Exhibit  A to this  Proxy  Statement  and
reference  is  made  thereto  for a  complete  statement  of the  terms  of that
document.

         Shares  Reserved for Issuance.  Pursuant to the terms of the 1997 Plan,
three million  (3,000,000) shares of the company's Common Stock are reserved for
issuance  thereunder.  In the event  there is any change in the number of issued
shares of the Common  Stock of the  company  without  new  consideration  to the
company  (such as by stock  dividends  or stock  splits),  the  number of shares
reserved for issuance  under the 1997 Plan,  the number of shares subject to any
outstanding  option and the  option  price per share of each  outstanding  stock
option shall be appropriately adjusted. Similarly, if the Company shall be party
to  a  merger,  consolidation,   reorganization,  sale  or  similar  occurrence,
equitable adjustment in the options may be made.

         Administration of Plan; Award of Options. The 1997 Plan is administered
by the  Board of  Directors.  Pursuant  to its  authority,  the  Board may grant
options  to  purchase  shares of  Common  Stock  reserved  under the Plan to all
employees of the Company.

         Amendments.  The  Board of  Directors  may  amend  the Plan as it deems
advisable. No amendment may, without further approval of the shareholders of the
Company  within twelve  months before or after the date on which such  amendment
was  adopted,  (a)  increase  the total  number of shares  which may be made the
subject  of  options  granted  under the 1997  Plan,  (b)  change  the manner of
determining  the option  price,  (c) change the  criteria of  determining  which
employees  are eligible to receive  options,  (d) extend the period during which
options may be granted or exercised,  or (e) withdraw the  administration of the
1997 Plan from the Board of Directors.

     Vesting.  Options  granted to employees under the 1997 Plan are to vest and
become  exercisable as specified in each grant provided that certain  conditions
are satisfied.  For a description of these conditions,  see the subsection below
entitled "Termination of Employment."
         Exercise  Period.  The options granted to employees under the 1997 Plan
may not be  exercised  more than ten (10) years  after the date of grant or five
(5) years after the date of grant in the case of an incentive  option granted to
a 10% shareholder.

        Termination of Employment.  Outstanding  incentive stock options must be
exercised  during  employment  with the  Company or within  three  months  after
termination  of  employment  with the company  (other than by reason of death or
permanent  disability,  in which case they must be exercised  within three years
after termination). In addition, options are exercisable only to the extent that
they are vested as of the date of termination of employment.

         Nontransferability.  Each incentive stock option granted under the 1997
Plan is not transferable by the holder except by will or the laws of descent and
distribution  of the State  wherein the holder is  domiciled  at the time of his
death.  If the  administrator  makes an option  transferable,  such option shall
contain additional terms and conditions as the administrator deems appropriate.

         Merger or Asset Sale of the Company. In the case of (i) a merger of the
company with or into another corporation;  or (ii) the sale of substantially all
of the  assets  of the  company;  all  outstanding  options  may be  assumed  or
equivalent  options may be substituted by the successor  corporation or a parent
or subsidiary thereof. In the event an option is assumed or substituted for, the
option or  substituted  option shall continue to be exercisable as it would have
been in the absence of the  transaction  for so long as the optionee serves as a
employee of the  successor  corporation.  If,  following  such an  assumption or
substitution,  the optionee's status as a employee is terminated other than as a
result of his or her  voluntary  resignation,  his or her options  shall  become
fully  exercisable and shall be exercisable for such period during which options
may generally be exercised  under the plan by an individual  who is no longer an
employee.

         Federal  Income Tax  Treatment  of  Options.  The options to be granted
under the 1997 Plan may be deemed to be  qualified or  non-qualified  within the
meaning of the Code, in the discretion of the board of directors.  Generally, an
optionee will  recognize  ordinary  income upon the exercise of a  non-qualified
stock option (or, if the stock  subject to the option is  restricted  within the
meaning  of Code  Section  83 and the  optionee  does  not  otherwise  elect  to
recognize  income  upon the  exercise of the stock  option,  at such time as the
shares become  transferable  or are no longer  subject to a substantial  risk of
forfeiture)  in an amount  equal to the excess (if any) of the fair market value
of the shares  purchased at the time of exercise  over the exercise  price.  The
Company  will be entitled to an income tax  deduction  in the same amount and at
the same time as the optionee  recognizes  such income.  Upon the sale of shares
which were purchased upon the exercise of an option, the optionee will recognize
capital gain or loss measured by the difference  between the amount  realized on
the  sale and the  fair  market  value of the  shares  at the  time  income  was
previously recognized in connection with the exercise (or possibly the grant) of
the stock  option.  Such capital gain or loss will be  short-term  or long-term,
depending upon the length of time the shares were held by the optionee.

         THE BOARD OF DIRECTORS  RECOMMENDS THAT THE  SHAREHOLDERS  VOTE FOR THE
APPROVAL AND  RATIFICATION  OF THE COMPANY'S  1997  INCENTIVE AND  NON-QUALIFIED
STOCK OPTION PLAN.

<PAGE>


                                        PROPOSAL 6

                                       1997 DIRECTOR
                                      STOCK OPTION PLAN


Summary Description of Options and Tax Status

         The  full  text of the 1997  Director  Stock  Option  Plan  (the  "1997
Director  Plan") is set forth as Exhibit B to this Proxy Statement and reference
is made thereto for a complete statement of the terms of that document.

         Shares  Reserved  for  Issuance.  Pursuant  to the  terms  of the  1997
Director Plan, four hundred  thousand  (400,000)  shares of the company's Common
Stock are reserved for issuance thereunder.  In the event there is any change in
the  number of issued  shares of the Common  Stock of the  company  without  new
consideration  to the company (such as by stock dividends or stock splits),  the
number of shares  reserved for issuance under the 1997 Director Plan, the number
of shares  subject to any  outstanding  option and the option price per share of
each outstanding stock option shall be appropriately adjusted. Similarly, if the
company  shall be  party to a  merger,  consolidation,  reorganization,  sale or
similar occurrence, equitable adjustment in the options may be made.

         Administration  of Plan; Award of Options.  Options may only be granted
to outside  (non-employee)  directors  under the 1997  Director  Plan.  The plan
provides  that no person  shall  have any  discretion  to select  which  outside
directors  shall be granted  options or to determine  the number of shares to be
covered by options granted to outside directors.  Each outside director shall be
automatically granted an option to purchase thirty-five thousand (35,000) shares
on the date on which such person first  becomes an outside  director,  provided,
however,  that a  director  who is an  employee  and who  then  ceases  to be an
employee  but who remains a director,  shall not  receive  such an option.  Each
outside  director  shall also  automatically  be  granted an option to  purchase
twenty-five  thousand  (25,000)  shares  on the date  following  the date of the
company's annual stockholder's  meeting each year, provided he or she is then an
outside director.

         Amendments.  The Board of Directors may amend the 1997 Director Plan as
it deems advisable.  However,  no amendment shall be made which would impair the
rights of an  optionee  under any grant  theretofore  made,  without  his or her
consent.

         Vesting.  The options  granted shall be  immediately  exercisable as to
1/12th of the shares  subject  thereto  and shall  become  exercisable  as to an
additional 1/12th of the shares subject thereto each month thereafter,  provided
that the optionee continues to serve as an outside director on such date.

         Term of Plan.  The 1997 Director Plan shall continue in effect for a
term of ten (10) years.

         Exercise  Period.  An option  granted to an outside  director under the
1997 Director Plan may not be exercised  more than ten (10) years after the date
on which the option is granted.

     Exercise Price. The exercise price per share shall be the fair market value
of the shares on the date of grant of the option.

         Termination  of  Status  as a  Director.  Outstanding  options  must be
exercised  while the optionee is a director of the company or within three years
after the termination of optionee's status as a director.  In addition,  options
are exercisable  only to the extent that they are vested as of the date on which
optionee's status as a director terminates and are in no event exercisable after
the expiration of the ten (10) year term of the option.

         Nontransferability. Each option granted under the 1997 Director Plan is
not  transferable  by the  holder  except  by will or the  laws of  descent  and
distribution and may be exercised,  during the lifetime of the optionee, only by
the optionee.  If the administrator  makes an option  transferable,  such option
shall  contain  additional  terms  and  conditions  as the  administrator  deems
appropriate.

         Merger or Asset Sale of the Company. In the case of (i) a merger of the
company with or into another corporation;  or (ii) the sale of substantially all
of the  assets  of the  company;  all  outstanding  options  may be  assumed  or
equivalent  options may be substituted by the successor  corporation or a parent
or subsidiary thereof. In the event an option is assumed or substituted for, the
option or  substituted  option shall continue to be exercisable as it would have
been in the absence of the  transaction  for so long as the optionee serves as a
director of the  successor  corporation.  If,  following  such an  assumption or
substitution,  the optionee's status as a director is terminated other than as a
result of his or her  voluntary  resignation,  his or her options  shall  become
fully  exercisable and shall be exercisable for such period during which options
may generally be exercised  under the plan by an  individual  who is no longer a
director.

         Federal  Income Tax  Treatment  of  Options.  The options to be granted
under the 1997 Director Plan are  non-qualified  within the meaning of the Code.
Generally,  an optionee will  recognize  ordinary  income upon the exercise of a
non-qualified stock option (or, if the stock subject to the option is restricted
within the meaning of Code Section 83 and the optionee does not otherwise  elect
to recognize  income upon the exercise of the stock option,  at such time as the
shares become  transferable  or are no longer  subject to a substantial  risk of
forfeiture)  in an amount  equal to the excess (if any) of the fair market value
of the shares  purchased at the time of exercise  over the exercise  price.  The
company  will be entitled to an income tax  deduction  in the same amount and at
the same time as the optionee  recognizes  such income.  Upon the sale of shares
which were purchased upon the exercise of an option, the optionee will recognize
capital gain or loss measured by the difference  between the amount  realized on
the  sale and the  fair  market  value of the  shares  at the  time  income  was
previously  recognized in connection with the exercise of the stock option. Such
capital gain or loss will be short-term or long-term,  depending upon the length
of time the shares were held by the optionee.

         THE BOARD OF DIRECTORS  RECOMMENDS THAT THE  SHAREHOLDERS  VOTE FOR THE
APPROVAL AND RATIFICATION OF THE COMPANY'S 1997 DIRECTOR PLAN.



<PAGE>




                             COMPLIANCE WITH SECTION 16(a) OF THE
                                SECURITIES EXCHANGE ACT OF 1934

         The  Securities  Exchange Act of 1934 requires the Company's  directors
and executive  officers and person who own more than ten percent of a registered
class of the Company's equity securities to file reports of beneficial ownership
and changes in beneficial ownership with the Securities and Exchange Commission.
To the knowledge of the Company,  all filing requirements under Section 16(a) in
respect of the Company were complied within the year ended January 31, 1997.



                                          GENERAL

         The expense of this  solicitation  is to be borne by the  Company.  The
Company may also reimburse persons holding shares in their names or in the names
of their  nominees for their  expenses in sending  proxies and proxy material to
their principals.

         Unless otherwise  directed,  the persons named in the accompanying form
of proxy intend to vote all proxies received by them in favor of the election of
nominees to the Board  herein,  and the  ratification  of  selected  independent
auditors. All proxies will be voted as specified.

         Management does not intend to present any business at the meeting other
than that set forth in the accompanying Notice of Annual Meeting,  and it has no
information  that others will do so. If other matters  requiring the vote of the
shareholders  properly come before the meeting and any adjournments  thereof, it
is the intention of the persons named in the accompanying  form of proxy to vote
the proxies held by them in accordance with their judgment on such matters.


                 SHAREHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING

         Shareholder  proposals for inclusion in the proxy materials  related to
the 1998 Annual Meeting of Shareholders must be received by the Company no later
than January 1, 1998. A Shareholder  must have been a record or beneficial owner
of the  Company's  common  stock for at least one year prior to January 1, 1998,
and the  shareholder  must  continue to own such shares,  worth at least $1,000,
through the date on which the Meeting is held.

        The Company's by-laws outline   procedures,   including  minimum  notice
provisions,  for  shareholder  nominations  of directors  and other  shareholder
business to be brought before  shareholders at the Annual Meeting. A copy of the
pertinent  by-law  provisions  is  available  upon  request  to John H.  Gorman,
Secretary, Osicom Technologies, Inc., 2800 28th Street, Santa Monica, California
90405.


                            FORM 10-KSB ANNUAL REPORT

         Upon written  request by any  shareholder  entitled to vote at the 1997
Annual  Meeting,  the Company will furnish that person  without charge a copy of
the Form 10-KSB  Annual Report which it filed with the  Securities  and Exchange
Commission for 1997, including financial statements and schedules. If the person
requesting  the report was not a  shareholder  of record on April 18, 1997,  the
request  must  contain a good faith  representation  that the person  making the
request was a  beneficial  owner of the  Company's  common stock at the close of
business on that date.  Requests  should be addressed  to John H. Gorman,  Chief
Financial Officer,  Osicom  Technologies,  Inc., 2800 28th Street, Santa Monica,
California 90405.

                                        By Order of the Board of Directors


                                        OSICOM TECHNOLOGIES, INC.



                                         --------------------------
                                         JOHN H. GORMAN
                                         Secretary



Santa Monica, California
October   , 1997


<PAGE>


In the case of (i) a sale of all or  substantially  all of the company's  assets
outside the ordinary  course of  business;  (ii) an offer to purchase at least a
majority of the Company's issued and outstanding common stock or an offer to the
Company's  shareholders  to tender for sale at least a majority of the Company's
issued and outstanding common stock, which offer is accepted or tender made with
respect to at least a majority of the Company's issued and outstanding shares of
Common  Stock;  (iii) the merger or  consolidation  of the company  with another
corporation or entity; (iv) a public or private offering of the company's Common
Stock,  whether of newly or previously  issued  shares;  or (v) a dissolution or
liquidation  of the  Company,  options  granted but  unexercised  shall,  in the
discretion of the Board of Directors,  become fully vested and exercisable for a
period of twenty  days from the date  notice of such sale or public  offering is
given to the optionees.  Upon the expiration of the twenty day period, the Board
of Directors in its  discretion  may suspend or cancel the right of any optionee
to exercise such options.



<PAGE>








                                 OSICOM TECHNOLOGIES, INC.
                                     1997 INCENTIVE AND
                              NON-QUALIFIED STOCK OPTION PLAN

         1. Purposes of Plan. The purposes of the Osicom Technologies, Inc. 1997
Incentive and Non-Qualified  Stock Option Plan  (hereinafter  referred to as the
"Plan") are to provide to employees of Osicom  Technologies.  Inc.  (hereinafter
referred to as the  "Corporation"),  as well as employees  subsidiary  or parent
corporations  which may currently  exist or be formed or acquired in the future,
an opportunity  for investment in the  Corporation's  common stock  (hereinafter
referred to as the "Shares"),  as an inducement  for such  individuals to remain
with the  Corporation,  and to encourage  them to increase their efforts to make
the Corporation's business more successful.

                  Effective Date and  Termination of Plan. The effective date of
the Plan is September  24,  1997,  the date on which the Plan was adopted by the
Board of  Directors  of the  Corporation.  The Plan shall  terminate  on, and no
option shall be granted hereunder, after September 23, 2007; provided,  however,
that the Board of  Directors  may at any time prior to that date  terminate  the
Plan;  and  provided  further  that any option  granted  hereunder  prior to the
termination of the Plan shall remain exercisable in accordance with its terms as
then in effect.

                  Administration  of Plan. The Plan shall be administered by the
Board of Directors of the Corporation.  The Board of Directors may, however,  to
the extent permissible under the Corporation's Articles of Organization, By-laws
and applicable law, delegate any of its functions under this Plan to a committee
of the Board of Directors or any other committee. Wherever in this Plan the term
"Board of Directors" is used it shall be construed to mean such committee to the
extent that the Board of Directors  may have  delegated  any of its functions to
said  committee  and only to the  extent of any such  delegation.  The acts of a
majority of the  members  present at any  meeting of the Board of  Directors  at
which a quorum is  present,  or acts  approved  in writing by a majority  of the
entire  Board,  shall be the acts of the Board of Directors  for purposes of the
Plan.

         4.  Eligibility and Grant of Options.  Subject to the provisions of the
Plan, the Board of Directors shall (i) authorize the granting of incentive stock
options, non-qualified stock options or a combination of incentive stock options
and  non-qualified  stock  options  (hereinafter  collectively  referred  to  as
"options"  unless otherwise  stated);  (ii) determine and designate from time to
time  those  employees  (from  the group  consisting  of all  employees)  of the
Company)  to whom  options  are to be  granted  and the  number  of Shares to be
optioned to each employee;  (iii) determine the number of Shares subject to each
option;  and (iv)  determine the time or times when and the manner in which each
option  shall  be  exercisable  and the  duration  of the  exercise  period.  In
determining the eligibility of an individual to receive an option, as well as in
determining the number of Shares to be optioned to any individual,  the Board of
Directors shall consider the position and responsibilities of the employee,  the
nature and value to the  Corporation,  parent or  subsidiary of his services and
accomplishments,  his present and potential  contribution  to the success of the
Corporation, parent or subsidiary, and such other factors as the Board may deem
relevant.  To be eligible to receive an incentive stock option or  non-qualified
stock option an  individual  must be an employee of the  Corporation,  parent or
subsidiary.  A Director shall abstain from voting on the grant of any options to
himself, his spouse, his children,  grandchildren and parents. The grant of each
option shall be confirmed by a Stock Option Agreement (in the form prescribed by
the Board of  Directors)  which  shall be executed  by the  Corporation  and the
optionee as promptly as practicable  after such grant.  More than one option may
be granted to an individual.

         Incentive  stock  options  shall be those  options  which  satisfy  the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended and
which the Board of Directors  has  specifically  identified  as incentive  stock
options  in the Stock  Option  Agreement  executed  by the  Corporation  and the
optionee.  In the case of incentive  stock  options,  the aggregate  fair market
value,  determined at the time incentive stock options are granted, of the stock
with respect to which the incentive  stock options are exercisable for the first
time by such  individual  during  any  calendar  year  (under all such plans the
Corporation   may  adopt)  shall  not  exceed  one  hundred   thousand   dollars
($100,000.00).  In the event that an incentive stock option granted  pursuant to
the terms of this Plan is granted to an employee who, prior to the grant,  holds
more than ten percent (10%) of the total combined voting power of all classes of
stock of the  Corporation,  its parent or a subsidiary ("10%  shareholder")  the
option  price under such grant shall be at least one hundred ten percent  (110%)
of the  fair  market  value,  and  such  option,  by  its  terms,  shall  not be
exercisable more than five (5) years from the date of grant.

         Nothing in the Plan or in any option granted pursuant to the Plan shall
confer on any individual any right to continue in the employ of the  Corporation
or any  parent  or  subsidiary  or  interfere  in any way with the  right of the
Corporation to terminate his employment at any time.

         5. Number of Shares Subject to Options.  The Board of Directors,  prior
to the time options  under the Plan become  exercisable,  shall  reserve for the
purposes of the Plan a total of three million (3,000,000)  Shares,  which Shares
may be either  authorized and unissued Shares,  or previously issued Shares held
in the  treasury  of the  Corporation,  or both.  Shares  as to which an  option
granted under the Plan shall remain unexercised at the expiration or termination
thereof,  and Shares subject to options which are cancelled,  may be the subject
of the grant of further options.  Shares reserved pursuant to this paragraph may
be  adjusted  to  reflect  changes in the  Corporation's  capital  structure  as
discussed in paragraph 19 hereof.

         6. Option Price. The option price per Share shall be determined in each
case by the Board of  Directors  and shall not be less than one hundred  percent
(100%) (one hundred ten percent (110%) in the case of an incentive  stock option
granted to a ten percent (10%)  Shareholder) of the fair market value thereof as
determined by the Board by any reasonable  method using market quotations on the
date the option is granted.

         7.  Period of Option  and When  Exercisable.  No option  may be granted
under this Plan whose  exercise date is later than ten (10) years after the date
of grant or five (5) years  after the date of grant in the case of an  incentive
stock option granted to a ten percent (10%)  Shareholder.  Generally,  an option
may be  exercised  only by the optionee and subject to the rules set forth below
only if, at all times during the period beginning on the date of the granting of
such option and ending with the date of exercise of such option, the optionee is
an employee of the Corporation, its parent or a subsidiary.

         Except as  otherwise  provided  herein,  in the case of an employee who
terminates employment,  incentive stock options which are vested but unexercised
as of the date of termination of employment  must be exercised  within three (3)
months of  termination.  In the case of an employee who is discharged for cause,
as determined in the sole  discretion of the Board of Directors,  all previously
vested but unexercised options shall be forfeited immediately.

         In the case of an employee  who dies during the three (3) month  period
discussed in (i) above,  options which are vested but unexercised as of the date
of  termination  of  employment  must be exercised  within twelve (12) months of
death.

         Options which are vested but  unexercised as of the date of termination
of employment  due to death,  must be exercised  within twelve (12) months after
the death of an optionee.

         In the event that the employee  becomes  disabled as defined in Section
22(e) (3) of the Internal  Revenue code of 1986,  as amended,  options which are
vested  but  unexercised  as of the date of  termination  of  employment  due to
disability  must be exercised  within  twelve (12) months  following the date of
termination of the optionee's said employment.

                  (v) In the event an optionee's  employment  is terminated  for
any reason  (including but not limited to, voluntary or involuntary  termination
or  termination  resulting  from the death or disability of the  optionee),  all
unvested options shall be immediately forfeited.

         Notwithstanding  the foregoing,  options may not be exercised after the
original  five (5) or ten (10) year term,  Options may be exercised on behalf of
the estate of a former employee by the person or persons entitled to do so under
the optionee's  will or, if the optionee shall have failed to make  testamentary
disposition of such option or shall have died intestate, by the optionee's legal
representative or  representatives.  Such person,  persons,  representative,  or
representatives are hereinafter referred to as the "Successors of an Optionee."

         8. Vesting.  Options  granted to a participant  shall be exercisable in
accordance with the following schedule:

                                          Cumulative Percentage of
                                          Aggregate Number of Shares
                                          of Stock Covered by an
Exercise Period                           Option which may be Exercised
- ---------------                           -----------------------------

Beginning on the one year anniversary
date from date of grant                             50%

Beginning on the second anniversary
date from date of grant                            100%*

*less the number of  Shares,  if any,  previously  purchased  under the  option.
Non-vested  options  shall be  immediately  forfeited  upon the  termination  of
employment  for  any  reason.   Vested  options  shall  be  forfeited  upon  the
termination of employment as provided in paragraph 7 hereof.

Notwithstanding  the  foregoing,  the Board of Directors or its designees  shall
have the right to grant  options  with  shorter  vesting  schedules or which are
immediately exercisable under the Plan.

                  Exercise of Options. Subject to Plan restrictions and vesting,
an option may be exercised,  and payment in full of the option price made, by an
optionee  only by  written  notice  (in the  form  prescribed  by the  Board  of
Directors)  to  the  Corporation  specifying  the  number  of  Shares  to  be so
purchased. Such notice shall state that the option price will be paid in full in
cash (which in the discretion of the Board of Directors may be obtained  through
a loan  from  the  Corporation  or  from a third  party  and  guaranteed  by the
Corporation) or other  property,  in the discretion of the  Corporation.  If the
Corporation accepts a request to pay in stock of the Corporation in satisfaction
of the exercise price,  the fair market value of said stock shall at least equal
the option price,  and, in the case of incentive  stock  options,  prior to such
acceptance the Corporation  must be furnished with evidence that the acquisition
of said stock and its  transfer  in payment of the option  price  satisfies  the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended and
other applicable law. As soon as practicable after receipt by the Corporation of
such  notice and of payment in full of the option  price of all the Shares  with
respect to which an option has been  exercised,  a certificate  or  certificates
representing  such Shares  shall be  registered  (subject to the  provisions  of
paragraph  16  hereof)  in the  name of the  optionee  or the  Successors  of an
Optionee  as defined  under this Plan and  delivered  to the  optionee or to the
Successors of an Optionee.

                   10.  Merger  or Asset  Sale.  In the event of a merger of the
Company with or into another corporation or the sale of substantially all of the
assets of the Company,  outstanding Options may be assumed or equivalent options
may be  substituted  by the  successor  corporation  or a Parent  or  Subsidiary
thereof (the  "Successor  Corporation").  If an Option is assumed or substituted
for,  the Option or  equivalent  option  shall  continue  to be  exercisable  as
provided in Section 7 hereof for so long as the  Optionee  serves as an employee
of the Successor Corporation.  Following such assumption or substitution, if the
Optionee's  status as an  employee  is  terminated  other than upon a  voluntary
resignation  by  the  Optionee,   the  Option  shall  become  fully  vested  and
exercisable in accordance with Section 7 above.

                If the  Successor  Corporation  does not  assume an  outstanding
Option or substitute for it an equivalent  option, the Option shall become fully
vested and exercisable,  including as to Shares for which it would not otherwise
be  exercisable.  In such event the Board  shall  notify the  Optionee  that the
Option shall be fully exercisable for a period of thirty (30) days from the date
of such  notice,  and  upon the  expiration  of such  period  the  Option  shall
terminate.

     For the purposes of this Section 10, an Option shall be considered  assumed
if,  following  the merger or sale of assets,  the Option  confers  the right to
purchase or  receive,  for each Share of  Optioned  Stock  subject to the Option
immediately prior to the merger or sale of assets,  the  consideration  (whether
stock,  cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the  effective  date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares).
If such  consideration  received  in the  merger or sale of assets is not solely
common stock of the successor corporation or its Parent, the Board may, with the
consent  of the  successor  corporation,  provide  for the  consideration  to be
received  upon the  exercise  of the Option,  for each Share of  Optioned  Stock
subject to the Option, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.

         11. Employer  Withholding.  In the case of non-qualified stock options,
the  Corporation   shall  be  required  to  withhold   additional  income  taxes
attributable to that amount which is considered  compensation  includible in the
optionee's  gross  income  by  reason  of the  exercise  of  such  options.  The
Corporation  in  its  discretion  shall  determine  the  method  and  amount  of
withholding.

         12.  Exercise  bv  Successors  and  Payment  in Full.  An option may be
exercised, and payment in full of the option price made, by the Successors of an
Optionee  only by  written  notice  (in the  form  prescribed  by the  Board  of
Directors) to the  Corporation  specifying the number of Shares to be purchased.
Such  notice  shall  state  that the  option  price will be paid in full in cash
(which in the  discretion  of the Board of Directors  may be obtained  through a
loan  from  the  Corporation  or  from  a  third  party  and  guaranteed  by the
Corporation), property or stock of the Corporation in conformance with paragraph
9 hereof. As soon as practicable after receipt by the Corporation of such notice
and of  payment in full of the option  price of all the Shares  with  respect to
which an option has been exercised,  a certificate or certificates  representing
such Shares  shall be  registered  (subject to the  provisions  of  paragraph 16
hereof)  in the name or names of such  Successors  of an  Optionee  and shall be
delivered to him.

     Non-Transferability  of Option. Each option granted under the Plan shall by
its  terms be  nontransferable  by the  optionee  except  by will or the laws of
descent and  distribution  of the state wherein the optionee is domiciled at the
time of his  death.  If the  Administrator  makes an Option  transferable,  such
Option shall contain such additional terms and conditions,  as the Administrator
deems appropriate.

     Other Terms of Option.  Options granted  pursuant to the Plan shall contain
such terms,  provisions,  and conditions not  inconsistent  herewith as shall be
determined by the Board of Directors.

              Registration of Certificates. Certificates representing Shares may
be registered  either in the name of the Optionee or in the name or names of the
Successors of an Optionee.  Designation of the appropriate  form of registration
of  certificates  shall be made in the written  notice given to the  Corporation
upon exercise of an option.

              Listing and  Registration  of Shares.  If at any time the Board of
Directors  of the  Corporation  shall  determine,  in its  discretion,  that the
listing,  registration, or qualification of any of the Shares subject to options
under the Plan 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 granting of options or the
purchase or issue of Shares  thereunder,  no further  options may be granted and
outstanding  options may not be  exercised  in whole or in part unless and until
such listing, registration,  qualification, consent, or approval shall have been
effected or  obtained  free of any  conditions  not  acceptable  to the Board of
Directors.

The Board of Directors  shall have the authority to cause the Corporation at its
expense  to take  any  action  related  to the Plan  which  may be  required  in
connection with such listing, registration, qualification, consent, or approval.
The  Board of  Directors  may  require  that any  person  exercising  an  option
hereunder  shall make such  representations  and  agreements  and  furnish  such
information as it deems  appropriate to assure  compliance with the foregoing or
any other applicable legal requirement.

         17. Interpretation and Amendments. The Board of Directors may make such
rules and regulations and establish such procedure.  for the  administration  of
the Plan as it deems  appropriate.  In the event of any dispute or disagreements
as to the interpretation of this Plan or of any rule, regulation,  or procedure,
or as to any question,  right or obligation arising from or related to the Plan,
the  decision  of the Board of  Directors  shall be final and  binding  upon all
persons.  The Board of Directors may amend this Plan as it shall deem advisable.
However,  in no event shall any such amendment adversely affect the rights of an
optionee under any existing stock option  agreement  without the consent of such
optionee.  In  addition,  no  amendment  may,  without  further  approval of the
shareholders  of the Company  within  twelve  months before or after the date on
which such amendment was adopted,  (a) increase the total number of shares which
may be made  subject of  options  granted  under the 1997  Plan,  (b) change the
manner of determining  the option price,  (c) change the criteria of determining
which  employees are eligible to receive  options,  (d) extend the period during
which options may be granted or exercised, or (e) withdraw the administration of
the 1997 Plan from the Board of Directors.

         18. Indemnification and Exculpation.

         (a) Each  person  who is or shall  have  been a member  of the Board of
Directors shall be indemnified and held harmless by the Corporation  against and
from any and all loss, cost,  liability,  or expense that may be imposed upon or
reasonably  incurred  by him in  connection  with or  resulting  from any claim,
action,  suit, or proceeding to which he may be or become a party or in which he
may be or become  involved by reason of any action taken or failure to act under
the Plan and  against  and from any and all  amounts  paid by him in  settlement
thereof (with the Corporation's written approval) or paid by him in satisfaction
of a judgment in any such  action,  suit,  or  proceeding,  except a judgment in
favor  of the  Corporation  based  upon a  finding  of his  lack of good  faith;
subject,  however,  to the  condition  that upon the  institution  of any claim,
action,  suit,  or  proceeding  against  him,  he  shall  in  writing  give  the
Corporation an  opportunity,  at its own expense,  to handle and defend the same
before he  undertakes  to handle and defend it on his own 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
Corporation may have to indemnify him or hold him harmless.

           (b) Each  member  of the Board of  Directors,  and each  officer  and
employee of the  Corporation  shall be fully  justified  in relying or acting in
good faith upon any information  furnished in connection with the administration
of the Plan by any appropriate person or persons other than himself. In no event
shall any person  who is or shall have been a member of the Board of  Directors,
or  an  officer  or  employee  of  the   Corporation  be  held  liable  for  any
determination made or other action taken or any omission to act in reliance upon
any  such   information,   or  for  any  action  (including  the  furnishing  of
information) taken or any failure to act, if in good faith.

                  Changes  in  Capital  Structure.  In the event that a dividend
shall be declared upon the Shares  payable in Shares,  the number of shares then
subject  to any  option  outstanding  under  the Plan and the  number  of Shares
reserved  for the grant of options  pursuant  to the Plan but not yet subject to
option shall be adjusted by adding to each such Share the number of Shares which
would be distributable in respect thereof if such Shares had been outstanding on
the date fixed for determining the  shareholders of the Corporation  entitled to
receive such Share dividend.  In the event that the outstanding  Shares shall be
changed into or exchanged for a different  number of Shares or other  securities
of the Corporation or of another  corporation,  whether through  reorganization,
recapitalization,  split-up,  combination of shares,  merger,  or consolidation,
then there shall be  substituted  for each Share  subject to any such option and
for each Share  reserved  for the grant of options  pursuant to the Plan but not
yet  subject to option the  number and kind of Shares or other  securities  into
which each  outstanding  Share shall have been so changed or for which each such
share shall have been exchanged.  In the event there shall be any change,  other
than as specified above in this paragraph,  in the number or kind of outstanding
Shares or of any shares or other  securities  into which such Shares  shall have
been changed or for which they shall have been  exchanged,  then if the Board of
Directors  shall in its sole  discretion  determine  that such change  equitably
requires an adjustment in the number or kind of Shares theretofore  reserved for
the grant of options  pursuant  to the Plan but not yet subject to option and of
the Shares then subject to an option or options.  such adjustments shall be made
by the Board of Directors and shall be effective and binding for all purposes of
the  Plan and of each  option  outstanding  thereunder.  In the case of any such
substitution  or  adjustment  as provided for in this  paragraph,  the aggregate
option  exercise  price set forth for all  outstanding  options  for all  Shares
covered  thereby prior to such  substitution  or  adjustment  will be the option
exercise price for all shares or other securities which shall have been adjusted
pursuant to this paragraph.  No adjustment or substitution  provided for in this
paragraph  shall require the  Corporation  to sell a fractional  Share,  and the
total  substitution or adjustment with respect to each outstanding  option shall
be limited accordingly. Upon any adjustment made pursuant to this paragraph, the
Corporation  will, upon request,  deliver to the optionee or to his successors a
certificate  setting forth the option price  thereafter in effect and the number
and kind of shares or other securities thereafter purchasable on the exercise of
the option.

20.  Notices.  All  notices  under the Plan shall be in  writing,  and if to the
Corporation,  shall be delivered.  to the Treasurer of the corporation or mailed
to its principal office,  addressed to the attention of the Treasurer; and if to
the  optionee,  shall be delivered  personally  or mailed to the optionee at the
address appearing in the payroll records of the Corporation.  Such addresses may
be changed at any time by written notice to the other party.




<PAGE>



                                   OSICOM TECHNOLOGIES, INC.

                                1997 DIRECTOR STOCK OPTION PLAN


     1. Purposes of the Plan.  The purposes of this 1997  Director  Stock Option
Plan are to attract  and  retain the best  available  personnel  for  service as
Outside  Directors  (as defined  herein) of the Company,  to provide  additional
incentive to the Outside Directors of the Company to serve as Directors,  and to
encourage their continued service on the Board.

          All options granted hereunder shall be nonstatutory stock options.

     2. Definitions. As used herein, the following definitions shall apply:

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

          (b)  "Code" means the Internal Revenue Code of 1986, as amended.

          (c)  "Common Stock" means the Common Stock of the Company.

          (d)  "Company" means Osicom Technologies, Inc., a New Jersey 
               corporation.

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

          (f)  "Employee"  means any person,  including  officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company.  The payment
of a Director's  fee by the Company  shall not be sufficient in and of itself to
constitute "employment" by the Company.

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

          (h) "Fair Market  Value"  means,  as of any date,  the value of Common
Stock determined as follows:

               (i) If the  Common  Stock  is  listed  on any  established  stock
exchange or a national market system,  including  without  limitation the Nasdaq
National Market or The Nasdaq  SmalICap  Market of The Nasdaq Stock Market,  its
Fair  Market  Value  shall be the  closing  sales  price for such  stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of  determination,  as reported in
The  Wall  Street  Journal  or such  other  source  as the  Administrator  deems
reliable;


               (ii) If the  Common  Stock is  regularly  quoted by a  recognized
securities dealer but selling prices are not reported,  the Fair Market Value of
a Share of Common  Stock  shall be the mean  between  the high bid and low asked
prices for the Common  Stock on the date of  determination,  as  reported in The
Wall Street Journal or such other source as the Board deems reliable, or;

               (iii) In the  absence  of an  established  market  for the Common
Stock,  the Fair Market Value  thereof  shall be determined in good faith by the
Board.

          (i)      "Inside Director" means a Director who is an Employee.

          (j)      "Option" means a stock option granted pursuant to the Plan.

          (k) "Optioned Stock" means the Common Stock subject to an Option.

          (1)      "Optionee" means a Director who holds an Option.

          (m)      "Outside Director" means a Director who is not an Employee.

          (n) "Parent"  means a "parent  corporation,"  whether now or hereafter
existing, as defined in Section 424(e) of the Code.

          (o)      "Plan" means this 1997 Director Stock Option Plan.

          (p)  "Share"  means  a share  of the  Common  Stock,  as  adjusted  in
accordance with Section 10 of the Plan.

          (q)  "Subsidiary"  means a  "subsidiary  corporation,"  whether now or
hereafter existing, as defined in Section 424(f) of the Internal Revenue Code of
1986.

     3. Stock  Subject to the Plan.  Subject to the  provisions of Section 10 of
the Plan, the maximum  aggregate number of Shares which may be optioned and sold
under the Plan is 400,000 Shares of Common Stock (the "Pool"). The Shares may be
authorized, but unissued, or reacquired Common Stock.

          If an Option  expires or becomes  unexercisable  without  having  been
exercised in full,  the  unpurchased  Shares which were  subject  thereto  shall
become  available  for future  grant or sale under the Plan (unless the Plan has
terminated).  Shares that have  actually been issued under the Plan shall not be
returned  to the Plan and shall not become  available  for  future  distribution
under the Plan.

     4. Administration and Grants of Options under the Plan.

                   (a)  Procedure  for Grants.  All grants of Options to Outside
Directors under this Plan shall be automatic and  nondiscretionary  and shall be
made strictly in accordance with the following provisions:

               (i) No person shall have any  discretion  to select which Outside
Directors  shall be granted  Options or to determine  the number of Shares to be
covered by Options granted to Outside Directors.

     (ii) Each  Outside  Director  shall be  automatically  granted an Option to
purchase 35,000 Shares on the date on which such person first becomes an Outside
Director,  whether  through  election  by the  shareholders  of the  Company  or
appointment by the Board to fill a vacancy;  provided,  however,  that an Inside
Director who ceases to be an Inside  Director  but who remains a Director  shall
not receive a First Option.

               (iii) Each Outside  Director  shall be  automatically  granted an
Option to purchase  25,000 Shares on the day following the date of the Company's
annual  stockholder's  meeting each year,  provided he or she is then an Outside
Director.

               (iv) Notwithstanding the provisions of subsections (ii) and (iii)
hereof,  any  exercise of an Option  granted  before the  Company  has  obtained
stockholder  approval of the Plan in accordance  with Section 16 hereof shall be
conditioned upon obtaining such  stockholder  approval of the Plan in accordance
with Section 16 hereof.

               (v) The  terms  of each  Option  granted  hereunder  shall  be as
follows:

                    (A) the term of the Option shall be ten (10) years.

                    (B) the Option shall be  exercisable  only while the Outside
Director  remains a Director of the  Company,  except as set forth in Sections 8
and 10 hereof.

                    (C) the  exercise  price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the Option. In the event that the
date of grant of the Option is not a trading day,  the exercise  price per Share
shall be the Fair Market Value on the next trading day immediately following the
date of grant of the Option.

                    (D)  subject  to Section  10  hereof,  the  Option  shall be
immediately  exercisable  as to 1/12 of the  Shares  subject  thereto  and shall
become  exercisable as to an additional  1/12 of the Shares subject thereto each
month thereafter, provided that the Optionee continues to serve as a Director on
such dates.

               (vi) In the event  that any Option  granted  under the Plan would
cause the number of Shares  subject to  outstanding  Options  plus the number of
Shares previously purchased under Options to exceed the Pool, then the remaining
Shares  available for Option grant shall be granted under Options to the Outside
Directors on a pro rata basis.  No further grants shall be made until such time,
if any, as additional  Shares become  available for grant under the Plan through
action of the Board or the  stockholders  to increase the number of Shares which
may be issued under the Plan or through  cancellation  or  expiration of Options
previously granted hereunder.

     5.  Eligibility.  Options  may be granted  only to Outside  Directors.  All
Options shall be automatically granted in accordance with the terms set forth in
Section 4 hereof.

          The Plan shall not confer upon any  Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director,  nor
shall it  interfere in any way with any rights which the Director or the Company
may have to terminate the Director's relationship with the Company at any time.

     6. Term of Plan. The Plan shall become  effective upon the earlier to occur
of its adoption by the Board or its approval by the  stockholders of the Company
as described in Section 16 of the Plan.  It shall  continue in effect for a term
of ten (10) years unless sooner terminated under Section 11 of the Plan.

     7. Form of Consideration. The consideration to be paid for the Shares to be
issued  upon  exercise  of an Option,  including  the method of  payment,  shall
consist of (i) cash,  (ii) check,  (iii) other  shares  which (x) in the case of
Shares acquired upon exercise of an Option,  have been owned by the Optionee for
more than six (6) months on the date of  surrender,  and (y) have a Fair  Market
Value on the date of  surrender  equal to the  aggregate  exercise  price of the
Shares as to which said Option shall be exercised,  (iv) consideration  received
by the Company under a cashless  exercise program  implemented by the Company in
connection  with the Plan, or (v) any  combination  of the foregoing  methods of
payment.

     8.   Exercise of Option.

          (a)  Procedure  for  Exercise:  Rights as a  Stockholder.  Any  Option
granted hereunder shall be exercisable at such times as are set forth in Section
4  hereof;  provided,  however,  that no  Options  shall  be  exercisable  until
stockholder  approval of the Plan in accordance  with Section 16 hereof has been
obtained.

          An Option may not be exercised for a fraction of a Share.

     An Option  shall be  deemed to be  exercised  when  written  notice of such
exercise  has been  given to the  Company  in  accordance  with the terms of the
Option by the person  entitled to exercise  the Option and full  payment for the
Shares with  respect to which the Option is exercised  has been  received by the
Company.  Full  payment may consist of any  consideration  and method of payment
allowable  under Section 7 of the Plan.  Until the issuance (as evidenced by the
appropriate  entry on the books of the Company or of a duly authorized  transfer
agent of the Company) of the stock certificate  evidencing such Shares, no right
to vote or receive  dividends or any other rights as a  stockholder  shall exist
with respect to the Optioned Stock,  notwithstanding the exercise of the Option.
A share  certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as  practicable  after  exercise of the Option.  No  adjustment
shall be made for a dividend  or other  right for which the record date is prior
to the date the stock certificate is issued, except as provided in Section 10 of
the Plan.
          Exercise of an Option in any manner  shall result in a decrease in the
number of Shares which  thereafter  may be  available,  both for purposes of the
Plan and for sale  under  the  Option,  by the  number of Shares as to which the
Option is exercised.

          (b) Termination of Continuous Status as a Director. Subject to Section
10 hereof,  in the event an Optionee' 5 status as a Director  terminates  (other
than upon the Optionee's death or total and permanent  disability (as defined in
Section 22(e)(3) of the Code)), the Optionee may exercise his or her Option, but
only within three (3) years following the date of such termination,  and only to
the extent  that the  Optionee  was  entitled to exercise it on the date of such
termination  (but in no event  later  than the  expiration  of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise an Option on
the date of such  termination,  and to the  extent  that the  Optionee  does not
exercise  such  Option (to the extent  otherwise  so  entitled)  within the time
specified herein, the Option shall terminate.

          (c)  Disability  of  Optionee.  In the event  Optionee'  5 status as a
Director terminates as a result of total and permanent disability (as defined in
Section 22(e)(3) of the Code), the Optionee may exercise his or her Option,  but
only within three (3) years following the date of such termination,  and only to
the extent  that the  Optionee  was  entitled to exercise it on the date of such
termination  (but in no event  later  than the  expiration  of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise an Option on
the date of  termination,  or if he or she does not exercise such Option (to the
extent otherwise so entitled) within the time specified herein, the Option shall
terminate.

          (d)  Death of  Optionee.  In the  event of an  Optionee's  death,  the
Optionee's  estate or a person who  acquired the right to exercise the Option by
bequest or inheritance may exercise the Option,  but only within three (3) years
following  the date of  death,  and only to the  extent  that the  Optionee  was
entitled  to  exercise  it on the date of death (but in no event  later than the
expiration  of its ten (10) year term).  To the extent that the Optionee was not
entitled to exercise an Option on the date of death, and to the extent that the
Optionee's  estate or a person who  acquired  the right to exercise  such Option
does not exercise such Option (to the extent  otherwise so entitled)  within the
time specified herein, the Option shall terminate.

     9.  Non-Transferability  of Options.  The Option may not be sold,  pledged,
assigned, hypothecated,  transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised,  during the
lifetime of the Optionee,  only by the Optionee.  If the Administrator  makes an
Option  transferable,  such  Option  shall  contain  such  additional  terms and
conditions as the Administrator deems appropriate.

     10. Adjustments Upon Changes in Capitalization  Dissolution Merger or Asset
Sale.

          (a) Changes in  Capitalization.  Subject to any required action by the
stockholders  of the Company,  the number of Shares covered by each  outstanding
Option,  the number of Shares which have been  authorized for issuance under the
Plan but as to which  no  Options  have yet  been  granted  or which  have  been
returned to the Plan upon  cancellation  or expiration of an Option,  as well as
the price per Share covered by each such outstanding  Option,  and the number of
Shares issuable  pursuant to the automatic grant  provisions of Section 4 hereof
shall be proportionately  adjusted for any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock dividend,
combination or  reclassification  of the Common Stock,  or any other increase or
decrease  in  the  number  of  issued  Shares   effected   without   receipt  of
consideration  by  the  Company;  provided,  however,  that  conversion  of  any
convertible securities of the Company shall not be deemed to have been "effected
without  receipt of  consideration."  Except as expressly  provided  herein,  no
issuance  by the  Company  of  shares  of  stock  of any  class,  or  securities
convertible into shares of stock of any class,  shall affect,  and no adjustment
by reason  thereof  shall be made with respect to, the number or price of Shares
subject to an Option.

          (b)  Dissolution  or  Liquidation.   In  the  event  of  the  proposed
dissolution or liquidation of the Company,  to the extent that an Option has not
been  previously  exercised,   it  shall  terminate  immediately  prior  to  the
consummation of such proposed action.

          (c) Merger or Asset Sale. In the event of a merger of the Company with
or into another  corporation or the sale of  substantially  all of the assets of
the Company,  outstanding  Options may be assumed or  equivalent  options may be
substituted by the successor  corporation or a Parent or Subsidiary thereof (the
"Successor Corporation"). If an Option is assumed or substituted for, the Option
or equivalent  option shall  continue to be exercisable as provided in Section 4
hereof for so long as the  Optionee  serves as a Director  or a director  of the
Successor  Corporation.  Following  such  assumption  or  substitution,  if  the
Optionee's  status as a Director or director of the  Successor  Corporation,  as
applicable,  is  terminated  other  than  upon a  voluntary  resignation  by the
Optionee,  the Option or option shall become fully exercisable,  including as to
Shares for which it would not otherwise be exercisable.  Thereafter,  the Option
shall  remain  exercisable  in  accordance  with the  provisions  of  Section  8
governing the exercise of options by individuals who are no longer a Directors.

     If the  Successor  Corporation  does not  assume an  outstanding  Option or
substitute for it an equivalent option, the Option shall become fully vested and
exercisable,  including  as to  Shares  for  which it  would  not  otherwise  be
exercisable.  In such event the Board shall notify the Optionee  that the Option
shall be fully  exercisable  for a period of  thirty  (30) days from the date of
such notice, and upon the expiration of such period the Option shall terminate.

     For the  purposes of this  Section  10(c),  an Option  shall be  considered
assumed if, following the merger or sale of assets, the Option confers the right
to purchase or receive,  for each Share of Optioned  Stock subject to the Option
immediately prior to the merger or sale of assets,  the  consideration  (whether
stock,  cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the  effective  date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares).
If such  consideration  received  in the  merger or sale of assets is not solely
common stock of the successor corporation or its Parent, the Board may, with the
consent  of the  successor  corporation,  provide  for the  consideration  to be
received  upon the  exercise  of the Option,  for each Share of  Optioned  Stock
subject to the Option, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.

     11.  Amendment and Termination of the Plan

          (a) Amendment and Termination. The Board may at any time amend, alter,
suspend, or discontinue the Plan, but no amendment,  alteration,  suspension, or
discontinuation  shall be made which  would  impair  the rights of any  Optionee
under any grant theretofore made,  without his or her consent.  In addition,  to
the extent necessary and desirable to comply with any applicable law, regulation
or stock  exchange rule,  the Company shall obtain  stockholder  approval of any
Plan amendment in such a manner and to such a degree as required.

          (b)  Effect  of  Amendment  or  Termination.  Any  such  amendment  or
termination  of the Plan  shall not  affect  Options  already  granted  and such
Options  shall  remain  in full  force  and  effect as if this Plan had not been
amended or terminated.

     12. Time of Granting Options. The date of grant of an Option shall, for all
purposes, be the date determined in accordance with Section 4 hereof.

     13. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant
to the exercise of an Option unless the exercise of such Option and the issuance
and  delivery of such Shares  pursuant  thereto  shall  comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended,  the Exchange Act, the rules and  regulations  promulgated  thereunder,
state securities laws, and the requirements of any stock exchange upon which the
Shares may then be  listed,  and shall be further  subject  to the  approval  of
counsel for the Company with respect to such compliance.

          As a condition to the  exercise of an Option,  the Company may require
the person  exercising  such Option to represent  and warrant at the time of any
such  exercise  that the  Shares are being  purchased  only for  investment  and
without any present  intention to sell or  distribute  such  Shares,  if, in the
opinion of counsel for the Company,  such a representation is required by any of
the aforementioned relevant provisions of law.

          Inability of the Company to obtain  authority from any regulatory body
having  jurisdiction,  which authority is deemed by the Company's  counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the  Company of any  liability  in respect of the  failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.

     14.  Reservation of Shares The Company,  during the term of this Plan, will
at all  times  reserve  and keep  available  such  number  of Shares as shall be
sufficient to satisfy the requirements of the Plan.

     15.  Option  Agreement.  Options  shall  be  evidenced  by  written  option
agreements in such form as the Board shall approve.

     16.  Stockholder  Approval.  Continuance  of the Plan  shall be  subject to
approval  by the  stockholders  of the  Company at or prior to the first  annual
meeting of stockholders  held subsequent to the granting of an Option hereunder.
Such  stockholder  approval shall be obtained in the degree and manner  required
under applicable state and federal law and any stock exchange rules.



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