Document:

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                                                                    Exhibit 10.2

                           STAND-BY PURCHASE AGREEMENT

            THIS STAND-BY PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of January 25, 2001, by and between INTERWORLD CORPORATION, a
Delaware corporation (the "Company"), and J NET ENTERPRISES, INC., a Nevada
corporation ("J Net"). Capitalized terms not otherwise defined herein shall have
the meanings assigned to them in the Stock Purchase Agreement referred to below.

            WHEREAS, the Company and J Net have entered into the Stock Purchase
Agreement, dated as of January 25, 2001 (the "Stock Purchase Agreement"),
providing for the conversion by J Net of the Securities into the Conversion
Shares;

            WHEREAS, among other things, the Stock Purchase Agreement
contemplates that the Company will commence a rights offering to be made to the
Company's shareholders (the "Rights Offering"); and

            WHEREAS, as provided for in the Stock Purchase Agreement, the
Company and J Net now desire to enter into this Agreement to provide for (i) a
stand-by commitment by J Net to purchase up to an aggregate number of shares of
Common Stock equal to the total number of shares offered but not purchased in
the Rights Offering as set forth herein (the "Stand-By Shares") and (ii) an
option on the part of J Net to purchase up to an aggregate number of shares of
Common Stock as set forth herein (the "Overallotment Shares" and, together with
the Stand-By Shares, the "J Net Rights Shares") in connection with the Rights
Offering.

            NOW, THEREFORE, in consideration of the foregoing, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:

1.    AGREEMENT TO PURCHASE AND SELL STOCK.

            1.1. THE STAND-BY SHARES. Subject to the terms and conditions set
forth in this Agreement, the Company agrees to issue and sell to J Net, and J
Net agrees to purchase from the Company, the aggregate number of shares of
Common Stock equal to such number of shares of Common Stock not validly
subscribed for by other shareholders of the Company in the Rights Offering,
including pursuant to any oversubscription privilege, for a total purchase price
not to exceed twenty million dollars ($20,000,000) (the "Stand-By Shares"), at a
purchase price per share equal to sixty-five cents ($0.65) (the "Offering
Price"). The issuance and resale of the Stand-By Shares shall be duly registered
under the Securities Act as provided in SECTION 4.13 of the Stock Purchase
Agreement.

            1.2. THE OVERALLOTMENT SHARES. Following the expiration of the
exercise period of the rights offered in the Rights Offering (the "Rights") and
the purchase of the Stand-By Shares, J Net shall have the option (i) for a
period up to five (5) business days after the expiration of the exercise period
of the Rights, to purchase up to an aggregate number of shares
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of Common Stock equal to the difference between thirty million seven hundred
sixty-nine two hundred thirty-one (30,769,231) shares and the Stand-By Shares at
a purchase price per share equal the Offering Price, and (ii) for a period up to
forty-five (45) days after the expiration of the exercise period of the Rights,
to purchase up to an aggregate number of shares of Common Stock equal to the
quotient obtained by dividing (1) the difference between (x) twenty million
dollars ($20,000,000) and (y) the aggregate amount paid by J Net for the
Overallotment Shares purchased pursuant to clause (i) above, by (2) the
Overallotment Average Price (the "Overallotment Option"). The issuance and
resale of the Overallotment Shares shall be duly registered under the Securities
Act. "Overallotment Average Price" means an amount equal to the greater of (xx)
the Offering Price or (yy) ninety percent (90%) of the volume weighted average
of the sale prices as reported by the NASDAQ National Market ("NASDAQ") for each
of the ten (10) consecutive Trading Days in the period ending on the day
immediately preceding the exercise of the Overallotment Option under clause (ii)
above. "Trading Day" means a day on which NASDAQ is open for trading.

2.   DETERMINATION OF STAND-BY SHARES; CLOSING.

            2.1. DETERMINATION OF STAND-BY SHARES. As soon as practicable
following the expiration of the exercise period of the Rights, the Company shall
notify J Net in writing of the number of Stand-By Shares, which shall be equal
to the total number of Rights issued by the Company, less the number of Rights
for which the Company has received proper notice of exercise and full payment of
the Offering Price, calculated in accordance with SECTION 1 of this Agreement.

            2.2. THE CLOSING.

            (a) THE STAND-BY SHARES. The sale and purchase of the Stand-By
Shares (the "Stand-By Closing") will take place at the offices of Greenberg
Traurig, LLP at 10:00 a.m. New York City time, New York, New York, on the fifth
business day following the Company's delivery to J Net of notice of the number
of Stand-By Shares to be purchased by it, or at such time and place as the
Company and J Net shall mutually agree upon (the "Stand-By Closing Date"). At
the Stand-By Closing, the Company will deliver to J Net a certificate
representing the Stand-By Shares to be purchased by J Net against delivery to
the Company by J Net of the aggregate purchase price for such shares in
immediately available funds.

            (b) THE OVERALLOTMENT SHARES. The sale and purchase of the
Overallotment Shares may take place at one or more closings (each an
"Overallotment Closing"), each to take place at the offices of Greenberg
Traurig, LLP at 10:00 a.m. New York City time, New York, New York, on the fifth
business day following J Net's delivery to the Company of notice of its intent
to exercise the Overallotment Option, or at such time and place as the Company
and J Net shall mutually agree upon (each an "Overallotment Closing Date"). At
each Overallotment Closing, the Company will deliver to J Net a certificate
representing such number of Overallotment Shares to be purchased by J Net
against delivery to the Company by J Net of the purchase price (as described in
SECTION 1.2) for such shares in immediately available funds.

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3.   REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

            Except as set forth in the corresponding sections or subsections of
the Company Disclosure Schedule, dated as of the date hereof, delivered by the
Company to J Net (the "Company Disclosure Schedule") or the Company SEC Reports,
the Company hereby represents and warrants to J Net that at each of the Stand-By
Closing and each Overallotment Closing, the following statements will be true
and correct:

            3.1. ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company and
each of its subsidiaries (as defined below) is a corporation or other legal
entity duly organized, validly existing and in good standing under the laws of
its jurisdiction of existence, has all requisite corporate power and authority,
and has been duly authorized by all necessary approvals and orders, to own,
lease and operate its assets and properties to the extent owned, leased and
operated and to carry on its business as it is now being conducted and is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of its business or the ownership or leasing of its assets and properties
makes such qualification necessary, other than in such jurisdictions where the
failure to be so qualified and in good standing would not, when taken together
with all other such failures, reasonably be expected to have a material adverse
effect on the business, properties, condition (financial or otherwise),
prospects (other than effects that are the result of general economic changes or
industry specific risks) or results of operations of the Company and its
subsidiaries taken as a whole or to prevent or materially delay the consummation
of the transactions contemplated by this Agreement (any such material adverse
effect being hereafter referred to as a "Company Material Adverse Effect"). As
used in this Agreement, the term "subsidiary" of a person shall mean any
corporation or other entity (including partnerships and other business
associations) of which a majority of the outstanding capital stock or other
voting securities having voting power under ordinary circumstances to elect
directors or similar members of the governing body of such corporation or entity
shall at the time be held, directly or indirectly, by such person. True,
accurate and complete copies of the articles of incorporation, as amended, and
by-laws of the Company as in effect on the date hereof, have been made available
to J Net.

            3.2. CAPITALIZATION. The authorized capital stock of the Company
consists of 100,000,000 shares of Common Stock and 15,000,000 shares of
preferred stock, par value $.01 per share. As of the date hereof, there were
issued and outstanding 29,335,993 shares of Common Stock and 3,200,000 shares of
Preferred Stock. In addition, 7,626,937 shares of Common Stock were reserved for
issuance pursuant to the Company's stock option plans, 968,850 shares of Common
Stock were reserved for issuance pursuant to the Company's employee stock
purchase plan, 150,158 shares of Common Stock were reserved for issuance
pursuant to securities (other than the Preferred Stock and the J Net Warrant)
exercisable for, or convertible into or exchangeable for shares of Common Stock
and 20,000,000 shares of Common Stock (subject to adjustment) were reserved for
issuance upon conversion of the Securities. Except as set forth in Section 3.2
of the Company Disclosure Schedule, this Agreement and the Stock Purchase
Agreement, and the transactions contemplated hereby and thereby, will not cause
a mandatory redemption, liquidation, acceleration or vesting of any other right
under any outstanding subscriptions, options, calls, contracts, voting trusts,
proxies, rights or warrants, including any right of conversion or exchange under
any outstanding security,

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instrument or other agreement. All of the issued and outstanding shares of
capital stock of the Company are validly issued, fully paid, non-assessable and,
except as it relates to the Preferred Stock, free of preemptive rights. Except
for the Securities or as set forth on Section 3.2 of the Company Disclosure
Schedule, there are no outstanding subscriptions, options, calls, contracts,
voting trusts, proxies, rights or warrants, including any right of conversion or
exchange under any outstanding security, instrument or other agreement,
obligating the Company or any of its subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock of the
Company, or obligating the Company to grant, extend or enter into any such
agreement or commitment.

            3.3. SUBSIDIARIES. Section 3.3 of the Company Disclosure Schedule
sets forth a description as of the date hereof, of all material subsidiaries and
joint ventures of the Company, including the name of each such entity, the state
or jurisdiction of its incorporation or organization, the Company's interest
therein and a brief description of the principal line or lines of business
conducted by each such entity. All of the issued and outstanding shares of
capital stock of, or other equity interests in, each subsidiary of the Company
are validly issued, fully paid, non-assessable and free of preemptive rights,
and are owned, directly or indirectly, by the Company free and clear of any
Liens. There are no outstanding subscriptions, options, calls, contracts, voting
trusts, proxies, rights or warrants, including any right of conversion or
exchange under any outstanding security, instrument or other agreement,
obligating any subsidiary of the Company to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of its capital stock or
obligating the Company or any of any of its subsidiaries to grant, extend or
enter into any such agreement or commitment, except for any of the foregoing
that could not reasonably be expected to have a Company Material Adverse Effect.
As used in this Agreement, the term "joint venture" of a person shall mean any
corporation or other entity (including partnerships and other business
associations) that is not a subsidiary of such person, in which such person or
one or more of its subsidiaries owns an equity interest, other than equity
interests held for passive investment purposes which are less than ten percent
(10%) of any class of the outstanding voting securities or equity of any such
entity.

            3.4. AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS; COMPLIANCE.

            (a) AUTHORITY. The Company has all requisite corporate power and
authority to enter into this Agreement and, subject to obtaining the Company
Shareholders' Approval and the Company Required Statutory Approvals, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company subject to obtaining the Company Shareholders'
Approval. This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery by the other
signatories hereto, constitutes a legal, valid and binding obligation of the
Company enforceable against it in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (whether such enforceability is
considered in a proceeding in equity or at law).

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            (b) NON-CONTRAVENTION. The execution and delivery of this Agreement
by the Company does not, and the consummation of the transactions contemplated
hereby will not, violate, conflict with, or result in a breach of any provision
of, or constitute a default (with or without notice or lapse of time or both)
under, or result in a right of termination, cancellation, or acceleration of any
obligation under, result in the creation of any Lien, charge, "put" or "call"
right or other encumbrance on, or the loss of, any of the properties or assets,
including Intellectual Property, of the Company or any of its subsidiaries (any
such violation, conflict, breach, default, right of termination, cancellation or
acceleration, loss or creation, a "Violation" with respect to the Company) or
any of its subsidiaries or, to the knowledge of the Company, any of its joint
ventures pursuant to any provisions of (i) subject to obtaining the Company
Shareholders' Approval, the articles of incorporation or by-laws of the Company
or any of its subsidiaries, (ii) subject to obtaining the Company Required
Statutory Approvals and the Company Shareholders' Approval, any statute, law,
ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit
or license of any Governmental Authority applicable to the Company or any of its
subsidiaries or, to the knowledge of the Company, any of its joint ventures, or
any of their respective properties or assets, or (iii) subject to obtaining the
Company Required Consents, any note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, concession, contract, lease or other instrument,
obligation or agreement of any kind to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
any of their respective properties or assets may be bound or affected, excluding
from the foregoing clauses (ii) and (iii) such Violations as would not
reasonably be expected to have, in the aggregate, a Company Material Adverse
Effect.

            (c) STATUTORY APPROVALS. No declaration, filing or registration
with, or notice to or authorization, consent or approval of, any Governmental
Authority is necessary for the execution and delivery of this Agreement by the
Company or the consummation by the Company of the transactions contemplated
hereby, except for the Company Required Statutory Approvals, it being understood
that references in this Agreement to "obtaining" such Company Required Statutory
Approvals shall mean making such declarations, filings or registrations; giving
such notice; obtaining such consents or approvals; and having such waiting
periods expire as are necessary to avoid a violation of law.

            (d) COMPLIANCE. Except as specifically disclosed in the Company SEC
Reports filed prior to the date hereof or as set forth in SECTION 3.4(D) of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries or,
to the knowledge of the Company, any of its joint ventures is in violation of,
or under investigation with respect thereto, or has been given notice of any
purported violation of, any law, statute, order, rule, regulation or judgment
(including, without limitation, any applicable Environmental Law) of any
Governmental Authority except for violations that, in the aggregate, are not
reasonably expected to have a Company Material Adverse Effect. Except as
disclosed in the Company SEC Reports filed prior to the date hereof, the Company
and its subsidiaries and, to the knowledge of the Company, its joint ventures
have all Permits, except those which the failure to obtain would, in the
aggregate, not reasonably be expected to have a Company Material Adverse Effect.
The Company and each of its subsidiaries and, to the knowledge of the Company,
each of its joint ventures are not in breach or violation of or in default in
the performance or observance of any term or provision of, and no event has
occurred which, with lapse of time or action by a third party, could result in a

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default under, (i) its articles of incorporation or by-laws or (ii) any material
contract, commitment, agreement, indenture, mortgage, loan agreement, note,
lease, bond, license, approval or other instrument to which it is a party or by
which it is bound or to which any of its property is subject, except for
breaches, violations or defaults that, in the aggregate, are not reasonably
expected to have a Company Material Adverse Effect.

            3.5. VALID ISSUANCE OF STOCK. The J Net Rights Shares, when issued,
sold and delivered in accordance with the terms of this Agreement for the
consideration provided for herein, will be duly and validly issued, fully paid
and non-assessable. In addition, the issuance and resale of the J Net Rights
Shares shall be duly registered under the Securities Act as provided in ARTICLE
1.

            3.6. LEGAL AND GOVERNMENTAL PROCEEDINGS. Except as disclosed in the
Company SEC Reports filed prior to the date hereof, (i) there are no claims,
suits, actions or proceedings, pending or, to the knowledge of the Company,
threatened, nor are there any investigations or reviews pending or threatened
against, relating to or affecting the Company or any of its subsidiaries or, to
the knowledge of the Company, any of its joint ventures, (ii) there have not
been any developments since September 30, 2000 with respect to any such
disclosed claims, suits, actions, proceedings, investigations or reviews, and
(iii) there are no judgments, decrees, injunctions, rules or orders of any
court, governmental department, commission, agency, instrumentality or authority
or any arbitrator applicable to the Company or any of its subsidiaries, except
for any of the foregoing under clauses (i), (ii) and (iii) that individually or
in the aggregate would not reasonably be expected to have a Company Material
Adverse Effect.

            3.7. REPORTS AND FINANCIAL STATEMENTS. The filings required to be
made by the Company or any of its subsidiaries since September 1, 1999 under the
Exchange Act and applicable state laws and regulations have been filed with the
SEC and the Secretary of State of the State of Delaware, as the case may be,
including all forms, statements, reports, agreements (oral or written) and all
documents, exhibits, amendments and supplements appertaining thereto, including,
but not limited to, all franchises, services agreements and related documents,
and all such filings complied, as of their respective dates, in all material
respects with all applicable requirements of the appropriate statutes and the
rules and regulations thereunder. The Company has made available to J Net a true
and complete copy of each form, report, schedule, registration statement,
registration exemption, if applicable, definitive proxy statement and other
document (together with all amendments thereof and supplements thereto) filed by
the Company or any of its subsidiaries with the SEC since September 1, 1999 (as
such documents have since the time of their filing been amended, the "Company
SEC Reports"), which are all the documents (other than preliminary materials)
that the Company and its subsidiaries were required to file with the SEC under
the Exchange Act since such date. As of their respective dates, the Company SEC
Reports, including, without limitation, any financial statements or schedules
included therein, at the time filed (i) complied as to form in all material
respects with the requirements of the Exchange Act, and (ii) did not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except to the extent such documents may have been
amended by a subsequent Company SEC Report. Each of the audited consolidated
financial statements and unaudited interim financial statements (including, in
each case, the notes, if any, thereto)

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included in the Company SEC Reports (collectively, the "Company Financial
Statements") complied as to form in all material respects with the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto and except with respect to unaudited statements
as permitted by Form 10-Q of the SEC) and fairly present (subject, in the case
of the unaudited interim financial statements, to normal, recurring year-end
audit adjustments (which are not expected to be, individually or in the
aggregate, materially adverse to the Company and its subsidiaries, taken as a
whole)) the consolidated financial position of the Company as of the dates
thereof and the consolidated results of operations and cash flows for the
periods then ended. Each subsidiary of the Company is treated as a consolidated
subsidiary of the Company in the Company Financial Statements for all periods
covered thereby.

      3.8. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
Company SEC Reports filed prior to the date hereof, since September 30, 2000,
there has not been:

                        (i) any material adverse change in the assets,
      liabilities, financial condition or operating results of the Company
      except changes in the ordinary course of business, that have not been and
      are not expected to be, individually or in the aggregate, materially
      adverse;

                        (ii) any damage, destruction or loss, whether or not
      covered by insurance, materially and adversely affecting the business,
      properties, or financial condition of the Company (as such business is
      presently conducted and as it is proposed to be conducted);

                        (iii) any  waiver or  compromise  by the  Company of a
      valuable right or of a material debt owed to it;

                        (iv) any satisfaction or discharge of any lien, claim,
      or encumbrance or payment of any obligation by the Company, except in the
      ordinary course of business and that is not material to the business,
      properties, or financial condition of the Company (as such business is
      presently conducted and as it is proposed to be conducted);

                        (v) any material change to a material contract or
      arrangement by which the Company or any of its assets is bound or subject;

                        (vi) any material change in any compensation arrangement
      or agreement with any employee, officer, director or holder of Common
      Stock, other than pursuant to the any employment agreements;

                        (vii) any sale, assignment or transfer of any material
      patents, trademarks, copyrights, trade secrets or other intangible assets;

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                        (viii) any resignation or termination of employment of
      any officer or key employee of the Company; and the Company does not know
      of any impending resignation or termination of employment of any such
      officer or key employee;

                        (ix) receipt of notice that there has been a loss of, or
      material order cancellation by, any major customer of the Company;

                        (x) any mortgage, pledge, transfer of a security
      interest in, or lien, created by the Company, with respect to any of its
      material properties or assets, except liens for taxes not yet due or
      payable;

                        (xi) any material loans or guarantees made by the
      Company to or for the benefit of its employees, holders of Common Stock,
      officers, or directors, or any members of their immediate families, other
      than travel advances and other advances made in the ordinary course of its
      business;

                        (xii) any declaration, setting aside, or payment of any
      dividend or other distribution of the Company's assets in respect of any
      of the preferred stock (including the Preferred Stock) or Common Stock, or
      any direct or indirect redemption, purchase, or other acquisition of any
      of such preferred stock (including the Preferred Stock) or Common Stock by
      the Company;

                        (xiii) to the best of the Company's knowledge, any other
      event or condition of any character that is reasonably likely to
      materially and adversely affect the business, properties, prospects, or
      financial condition of the Company (as such business is presently
      conducted and as it is proposed to be conducted), excluding events or
      conditions having general effect on businesses in the general economy or
      the Internet industry; or

                        (xiv) any  arrangement or commitment by the Company to
      do any of the things described in this SECTION 3.8.

4.   REPRESENTATIONS AND WARRANTIES OF J NET.

            Except as set forth in the corresponding sections or subsections of
the J Net Disclosure Schedule, dated as of the date hereof, delivered by J Net
to the Company to (the "J Net Disclosure Schedule") or the J Net SEC Reports, J
Net hereby represents and warrants to the Company that at each of the Stand-By
Closing and each Overallotment Closing, the following statements will be true
and correct:

            4.1. ORGANIZATION, GOOD STANDING AND QUALIFICATION. J Net and each
of its subsidiaries is a corporation or other legal entity duly organized,
validly existing and in good standing under the laws of its jurisdiction of
existence, has all requisite corporate power and authority, and has been duly
authorized by all necessary approvals and orders, to own, lease and operate its
assets and properties to the extent owned, leased and operated and to carry on
its

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business as it is now being conducted and is duly qualified and in good standing
to do business in each jurisdiction in which the nature of its business or the
ownership or leasing of its assets and properties makes such qualification
necessary, other than in such jurisdictions where the failure to be so qualified
and in good standing would not, when taken together with all other such
failures, reasonably be expected to have a material adverse effect on the
business, properties, condition (financial or otherwise), prospects (other than
effects that are the result of general economic changes or industry specific
risks) or results of operations of J Net and its subsidiaries taken as a whole
or to prevent or materially delay the consummation of the transactions
contemplated by this Agreement (any such material adverse effect being hereafter
referred to as a "J Net Material Adverse Effect"). True, accurate and complete
copies of the articles of incorporation, as amended, and by-laws of J Net as in
effect on the date hereof, have been made available to the Company.

            4.2. AUTHORITY; NON-CONTRAVENTION AND STATUTORY APPROVALS.

            (a) AUTHORITY. J Net has all requisite corporate power and authority
to enter into this Agreement and, subject to obtaining the J Net Required
Statutory Approvals, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by J Net and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of J Net. This Agreement has been duly and validly
executed and delivered by J Net and, assuming the due authorization, execution
and delivery by the other signatories hereto, constitutes a legal, valid and
binding obligation of J Net enforceable against J Net in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether such
enforceability is considered in a proceeding in equity or at law.

            (b) NON-CONTRAVENTION. The execution and delivery of this Agreement
by J Net does not, and the consummation of the transactions contemplated hereby
will not, result in a Violation by J Net or any of its subsidiaries or, to the
knowledge of J Net , any of its joint ventures pursuant to any provisions of (i)
the articles of incorporation or by-laws of J Net or any of its subsidiaries,
(ii) subject to obtaining the J Net Required Statutory Approvals, any statute,
law, ordinance, rule, regulation, judgment, decree, order, injunction, writ,
permit or license of any Governmental Authority) applicable to J Net or any of
its subsidiaries or, to the knowledge of J Net , any of its joint ventures, or
any of their respective properties or assets, or (iii) any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession, contract,
lease or other instrument, obligation or agreement of any kind to which J Net or
any of its subsidiaries is a party or by which J Net or any of its subsidiaries
or any of their respective properties or assets may be bound or affected,
excluding from the foregoing clauses (ii) and (iii) such Violations as would not
reasonably be expected to have, in the aggregate, a J Net Material Adverse
Effect.

            (c) STATUTORY APPROVALS. No declaration, filing or registration
with, or notice to or authorization, consent or approval of, any Governmental
Authority is necessary for the execution and delivery of this Agreement by J Net
or the consummation by J Net of the transactions contemplated hereby, except for
those required under or in relation to the J Net Required Statutory Approvals,
it being understood that references in this Agreement to "obtaining" such J Net
Required Statutory Approvals shall mean making such declarations,

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filings or registrations; giving such notice; obtaining such consents or
approvals; and having such waiting periods expire as are necessary to avoid a
violation of law.

            4.3. PURCHASE FOR OWN ACCOUNT. The J Net Rights Shares are being
acquired for investment for J Net's own account, not as a nominee or agent, and
not with a view to the public resale or distribution thereof within the meaning
of the Securities Act, and J Net has no present intention of selling, granting
any participation in, or otherwise distribution the same. J Net also represents
that it has not been formed for the specific purpose of acquiring the J Net
Rights Shares.

            4.4. INVESTMENT EXPERIENCE. J Net understands that the purchase of
the J Net Rights Shares involves substantial risk. J Net: (i) has experience as
an investor in securities and acknowledges that J Net is able to fend for
itself, can bear the economic risk of its investment in the J Net Rights Shares
and has such knowledge and experience in financial or business matters that J
Net is capable of evaluating the merits and risks of this investment in the J
Net Rights Shares and protecting its own interests in connection with this
investment and/or (ii) has a preexisting personal or business relationship with
the Company and certain of its officers, directors or controlling persons of a
nature and duration that enables J Net to be aware of the character, business
acumen and financial circumstances of such persons.

            4.5. ACCREDITED INVESTOR STATUS. J Net is an "accredited investor"
within the meaning of Regulation D promulgated under the Securities Act, and J
Net has received a copy of the Company's articles of incorporation, by-laws,
this Agreement and such other documents and agreements that it has requested and
has read and understands the respective contents thereof. J Net has had the
opportunity to ask questions of the Company and has received answers to such
questions from the Company. J Net has carefully reviewed and evaluated these
documents and understands the risks and other considerations relating to the
investment.

            4.6. FINANCIAL RESOURCES. J Net has the financial resources to
perform its obligations under this Agreement, including, without limitation, its
obligation to purchase the Stand-By Shares pursuant to SECTION 1.1.

5.    CONDITIONS TO CLOSING.

            Section 5.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of the Company and J Net to consummate each of the Stand-By Closing
and each Overallotment Closing shall be subject to the satisfaction of the
following conditions on or prior to each of the Stand-By Closing Date and each
Overallotment Closing Date (unless expressly waived in writing by the Company
and J Net on or prior to each of the Stand-By Closing Date and each
Overallotment Closing Date):

            (a) NO INJUNCTION. No temporary restraining order or preliminary or
permanent injunction or other order by any Federal or state court preventing
consummation of the transactions contemplated herein shall have been issued and
continuing in effect, and none of the transactions contemplated herein shall
have been prohibited under any applicable Federal or state law or other
regulation.

                                       10
<PAGE>

            (b) STATUTORY APPROVALS. The Company Statutory Approvals and the J
Net Statutory Approvals shall have been obtained at or prior to each of the
Stand-By Closing Date and each Overallotment Closing Date, such approvals shall
have become Final Orders, and no Final Order shall impose terms or conditions
that would have, or would be reasonably likely to have, a J Net Material Adverse
Effect or a Company Material Adverse Effect.

            (c) THE CONVERSION. The Conversion shall have been consummated or
shall be consummated concurrently with the Stand-By Closing.

            (d) HSR ACT. The waiting period (and any extension thereof), if any,
applicable to the Conversion and the J Net Rights Shares under the HSR Act shall
have been terminated or shall have otherwise expired.

            (e) COMPANY SHAREHOLDERS' APPROVAL. The Company Shareholders'
Approval with respect to (i) the issuance to J Net of Conversion Shares, (ii)
the amendment to the articles of incorporation of the Company to increase the
number of authorized shares of Common Stock to account for the shares of Common
Stock to be issued in connection with the Rights Offering, (iii) the Rights
Offering and the Overallotment Option and (iv) the amendment of the Company
Employee Benefit Plans shall have been obtained.

            Section 5.2. CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY. The
obligation of the Company to consummate each of the Stand-By Closing and each
Overallotment Closing is subject to the satisfaction of the following conditions
on or prior to each of the Closing Date and each Overallotment Closing Date
(unless expressly waived in writing by the Company on or prior to each of the
Stand-By Closing Date and each Overallotment Closing Date):

            (a) COMPLIANCE BY J NET. All of the terms, covenants and conditions
of this Agreement to be complied with and performed by J Net on or prior to each
of the Stand-By Closing Date and each Overallotment Closing Date shall have been
complied with and performed by it in all material respects, and the
representations and warranties made by J Net in this Agreement shall be true and
correct in all material respects on and as of each of the Stand-By Closing Date
and each Overallotment Closing Date with the same force and effect as though
such representations and warranties had been made on and as of each of the
Stand-By Closing Date and each Overallotment Closing Date, except that any such
representations and warranties that are given as of a particular date or period
and relate solely to a particular date or period shall be true and correct as of
such date or period.

            (b) COMPLIANCE CERTIFICATE. J Net shall deliver to the Company a
certificate dated each of the Stand-By Closing Date and each Overallotment
Closing Date of an executive officer of J Net certifying that the conditions
specified in SECTION 5.2(A) have been satisfied.

            Section 5.3. CONDITIONS TO THE OBLIGATION OF J NET. The obligation
of J Net to consummate each of the Stand-By Closing and each Overallotment
Closing is subject to the

                                       11
<PAGE>

satisfaction of the following conditions on or prior to each of the Stand-By
Closing Date and each Overallotment Closing Date (unless expressly waived in
writing by J Net on or prior to each of the Stand-By Closing Date and each
Overallotment Closing Date):

            (a) REGISTRATION STATEMENT. The Registration Statement relating to
the issuance and resale of shares of Common Stock issuable in connection with
the Conversion and the J Net Rights Shares shall have become effective in
accordance with the Securities Act, and no stop order suspending such
effectiveness shall have been issued and remain in effect.

            (b) LISTING OF SHARES. The shares of J Net Rights Shares issuable in
connection with this Agreement pursuant to ARTICLE I shall have been approved
for listing on the NASDAQ or NASDAQ Small Cap Market upon official notice of
issuance.

            (c) COMPLIANCE BY THE COMPANY. All of the terms, covenants and
conditions of this Agreement to be complied with and performed by the Company on
or prior to each of the Stand-By Closing Date and each Overallotment Closing
Date shall have been complied with and performed by it in all material respects,
and the representations and warranties made by the Company in this Agreement
shall be true and correct in all material respects on and as of each of the
Stand-By Closing Date and each Overallotment Closing Date with the same force
and effect as though such representations and warranties had been made on and as
of each of the Stand-By Closing Date and each Overallotment Closing Date, except
that any such representations and warranties that are given as of a particular
date or period and relate solely to a particular date or period shall be true
and correct as of such date or period.

            (d) COMPLIANCE CERTIFICATE. The Company shall deliver to J Net a
certificate dated each of the Stand-By Closing Date and each Overallotment
Closing Date of an executive officer of the Company certifying that the
conditions specified in SECTION 5.3(C) have been satisfied.

            (e) NO COMPANY MATERIAL ADVERSE EFFECT. No Company Material Adverse
Effect shall have occurred and there shall exist no fact or circumstance that
would have, or would be reasonably likely to have, a Company Material Adverse
Effect.

            (f) COMPANY REQUIRED CONSENTS. The Company Required Consents, the
failure of which to be obtained would have a Company Material Adverse Effect,
shall have been obtained.

            (h) OPINION OF COMPANY COUNSEL. An opinion of Covington & Burling,
counsel to the Company, dated as of each of the Stand-By Closing Date and each
Overallotment Closing Date, shall be delivered to J Net in form, scope and
substance reasonably satisfactory to J Net.

6.   MISCELLANEOUS.

            6.1. SUPPLEMENTAL SCHEDULES. With respect to facts and circumstances
that arise after the date of this Agreement, the parties shall supplement the
schedules to this

                                       12
<PAGE>

Agreement to the extent that such facts and circumstances would have been
required to be set forth on such schedules had they existed on the date of this
Agreement, and such supplements shall be deemed to be part of the schedules for
all purposes hereunder. Notwithstanding the foregoing sentence, the parties
shall be under no obligation to supplement the schedules after the final
Overallotment Closing Date.

            6.2. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations, warranties and covenants contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and each of
the Stand-By Closing and each Overallotment Closing and shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of J Net or its counsel.

            6.3. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and assigns.
Neither the Company nor J Net shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other.
Notwithstanding the foregoing, J Net may assign its rights hereunder to (i) any
of its "affiliates," as that term is defined under the Exchange Act and (ii) any
person that purchases the J Net Rights Shares in a private transaction from J
Net, without the consent of the Company.

            6.4. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in the State of New York (without regard to
principles of conflict of laws). Both parties irrevocably consent to the
jurisdiction of the United States Federal courts and the state courts located in
New York with respect to any suit or proceeding based on or arising under this
Agreement, the agreements entered into in connection herewith or the
transactions contemplated hereby or thereby and irrevocably agree that all
claims in respect of such suit or proceeding may be determined in such courts.
Both parties irrevocably waive the defense of an inconvenient forum to the
maintenance of such suit or proceeding. Both parties further agree that service
of process upon a party mailed by first class mail shall be deemed in every
respect effective service of process upon the party in any such suit or
proceeding. Nothing herein shall affect either party's right to serve process in
any other manner permitted by law. Both parties agree that a final
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.

            6.5. COUNTERPARTS; SIGNATURES BY FACSIMILE. This Agreement may be
executed in one or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when counterparts have been signed
by each party and delivered to the other party. This Agreement, once executed by
a party, may be delivered to the other party hereto by facsimile transmission of
a copy of this Agreement bearing the signature of the party so delivering this
Agreement.

            6.6. HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.

                                       13
<PAGE>

            6.7. SEVERABILITY. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction.

            6.8. ENTIRE AGREEMENT; AMENDMENTS. This Agreement, the schedules and
exhibits hereto and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor J Net makes any representation, warranty, covenant or undertaking
with respect to such matters. This Agreement supercedes Article 8 of the
Confidentiality Agreement dated October 6, 2000 between the Company and J Net.
No provision of this Agreement may be waived or amended other than by an
instrument in writing signed by the party to be charged with enforcement.

            6.9. NOTICES. Any notices required or permitted to be given under
the terms of this Agreement shall be sent by certified or registered mail
(return receipt requested) or delivered personally or by courier (including a
recognized overnight delivery service) or by facsimile and shall be effective
five days after being placed in the mail, if mailed by regular United States
mail, or upon receipt, if delivered personally or by courier (including a
recognized overnight delivery service) or by facsimile, in each case addressed
to a party. The addresses for such communications shall be:

                  If to the Company:

                  InterWorld Corporation
                  395 Hudson Street, 6th Floor
                  New York, New York 10014-3669
                  Attention:  Chairman of the Board
                  Facsimile: (212) 301-2424

                  With copy to:

                  Covington & Burling
                  1330 Avenue of the Americas
                  New York, New York 10019
                  Attention:  Stephen A. Infante, Esq.
                  Facsimile:  (212) 841-1010

            If to J Net: To the address set forth immediately below J Net's name
on the signature pages hereto.

                  J Net Enterprises Inc.
                  c/o J Net Venture Partners LLC
                  680 Fifth Avenue, 11th Floor
                  New York, New York 10019
                  Attention:  Keith Meister

                                       14
<PAGE>

                  Facsimile: (212) 502-6396

                  With copy to:

                  Greenberg Traurig, LLP
                  200 Park Avenue
                  New York, New York 10166
                  Attention: Alan I. Annex, Esq.
                  Facsimile: (212) 801-6400

            Each party shall provide notice to the other party of any change in
address.

            6.10. THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

            6.11. SURVIVAL; INDEMNIFICATION. The representations and warranties
and the agreements and covenants set forth in this Agreement shall survive the
closings hereunder notwithstanding any due diligence investigation conducted by
or on behalf of J Net. The Company agrees to indemnify and hold harmless J Net
and all its officers, directors, employees and agents for loss or damage arising
as a result of or related to any breach or alleged breach by the Company of any
of its representations, warranties and covenants set forth in this Agreement,
including any expenses incurred therewith. J Net agrees to indemnify and hold
harmless the Company and all its officers, directors, employees and agents for
loss or damage arising as a result of or related to any breach or alleged breach
by J Net of any of its representations, warranties and covenants set forth in
this Agreement, including any expenses incurred therewith.

            6.12. FURTHER ASSURANCES. Each party shall do and perform, or cause
to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents,
as the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

            6.13. NO STRICT CONSTRUCTION. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.

            6.14. REMEDIES. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to J Net by vitiating the
intent and purpose of the transactions contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Agreement will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Agreement, that J Net
shall be entitled, in addition to all other available remedies in law or in
equity, to an injunction or injunctions to prevent or cure any breaches of the
provisions of this Agreement and to enforce specifically the terms and
provisions of this Agreement, without the necessity of showing economic loss and
without any bond or other security being required.

                                       15
<PAGE>

            6.15. BEST EFFORTS. The parties shall use their reasonable best
efforts to satisfy timely each of the conditions described in Sections 5.1, 5.2
and 5.3.

            6.16. TERMINATION. This Agreement shall automatically terminate and
be of no further force or effect upon the termination, if any, of the Stock
Purchase Agreement in accordance with its terms.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       16
<PAGE>

            IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.

                                          INTERWORLD CORPORATION

                                          By: /s/ MICHAEL DONAHUE
                                             ---------------------------------
                                          Name:  Michael Donahue
                                          Title: Chairman, President & CEO

                                          J NET ENTERPRISES, INC

                                          By: /s/ MARK HOBBS
                                             ---------------------------
                                          Name:  Mark Hobbs
                                          Title: President & COO

                                       17<PAGE>

EXHIBIT 10.1

                                 NVE CORPORATION
                             2000 STOCK OPTION PLAN

1.       ESTABLISHMENT AND PURPOSE.

         1.1      ESTABLISHMENT. NVE Corporation, a Minnesota Corporation, is
                  establishing this 2000 Stock Option Plan (the "PLAN") for
                  employees and others providing services to the Company. The
                  Plan permits the granting of both Nonstatutory Options and
                  Incentive Stock Options.

         1.2      PURPOSE. The purposes of the Plan are to enhance shareholder
                  investment by attracting, retaining and motivating employees
                  and consultants of the Company and to encourage stock
                  ownership by such employees and consultants by providing them
                  with a means to acquire a proprietary interest in the
                  Company's success.

2.       DEFINITIONS. Unless the context clearly requires otherwise, when
         capitalized, the following terms have the meanings set forth below.

         2.1      "AFFILIATE" means a corporation that, for purposes of Section
                  422 of the Code, is a Parent Corporation or Subsidiary
                  Corporation of the Company, direct or indirect.

         2.2      "BOARD" means the Board of Directors of the Company.

         2.3      "CODE" means the Internal Revenue Code of 1986, as amended.

         2.4      "COMMITTEE" means the committee, as specified in Section 6,
                  appointed by the Board to administer the Plan, or the Board if
                  no Committee is appointed. If the Board delegates powers to a
                  Committee, and if the Company is or becomes subject to Section
                  16 of the Exchange Act, then, if necessary to comply with
                  Section 16, the Committee will consist initially of no less
                  than 2 members of the Board, each member being a "non-employee
                  director," within the meaning of the applicable rules of the
                  Exchange Act.

         2.5      "COMPANY" means NVE Corporation, a Minnesota corporation.

         2.6      "CONSULTANT" means any person or entity, including an officer
                  or director of the Company who provides consulting, director
                  or advisory services (other than as an Employee) to the
                  Company.

<PAGE>

         2.7      "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means the
                  absence of any interruption or termination of employment in
                  the case of an Employee, or provision of services in the case
                  of a Consultant. Continuous Status as an Employee or
                  Consultant will not be deemed to be interrupted in the case of
                  sick leave, military leave or any other absence approved by
                  the Board; provided, however, that such leave is for a period
                  of not more than 90 days or reemployment upon the expiration
                  of such leave is guaranteed by contract or statute.

         2.8      "DATE OF EXERCISE" means the date the Company receives notice
                  by an Optionee of the exercise of an Option under Section 10.1
                  of the Plan. The notice indicates the number of shares of
                  Stock that Optionee intends to exercise an Option.

         2.9      "EMPLOYEE" means any person, including an officer or director
                  of the Company, who is employed by the Company.

         2.10     "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
                  amended.

         2.11     "EXERCISE PRICE" means the amount for which one share of Stock
                  may be purchased upon exercise of an Option, as specified in
                  the applicable Option Agreement.

         2.12     "FAIR MARKET VALUE" means (a) if the Stock is listed or
                  admitted to trade on a national securities exchange, the
                  closing price of the Stock, as published in the Midwest
                  Edition of The Wall Street Journal, of the principal national
                  securities exchange on which the Stock is so listed or
                  admitted to trade, on such date, or, if there is no trading of
                  the Stock on such date, then the closing price of the Stock on
                  the next preceding date on which there was trading in such
                  shares; (b) if the Stock is not listed or admitted to trade on
                  a national securities exchange, the last price for the Stock
                  on such date, as furnished by the National Association of
                  Securities Dealers, Inc. ("NASD") through the NASDAQ National
                  Market Reporting System or a similar organization if the NASD
                  is no longer reporting such information; (c) if the Stock is
                  not listed or admitted to trade on a national securities
                  exchange and is not reported on the National Market Reporting
                  System, the mean between the bid and asked price for the Stock
                  on such date, as furnished by the NASD; or (d) if the Stock is
                  not listed or admitted to trade on a national securities
                  exchange, is not reported on the National Market Reporting
                  System and if bid and asked prices for the Stock are not
                  furnished by the NASD or a similar organization, the values
                  established by any means deemed fair and reasonable by

                                       2
<PAGE>

                  the Committee for purposes of the Plan. In the event that the
                  Fair Market Value of the Stock is established by the Committee
                  for purposes of the Plan, the Committee's determination is
                  final and binding on all parties.

         2.13     "INCENTIVE STOCK OPTION" means an Option granted under the
                  Plan which is designated as an Incentive Stock Option and is
                  intended to qualify as an "incentive stock option" within the
                  meaning of Section 422 of the Code.

         2.14     "NONSTATUTORY OPTION" means an Option granted under the Plan
                  that is not intended to qualify as an incentive stock option
                  within the meaning of Section 422 of the Code. Except as
                  otherwise specified, Nonstatutory Options may be granted at
                  the times and subject to the restrictions as the Board
                  determines without conforming to the statutory rules of
                  Section 422 of the Code applicable to incentive stock options.
                  An Option granted pursuant to this Plan as an Incentive Stock
                  Option which does not qualify as an Incentive Stock Option
                  within the meaning of Section 422 of the Code at time of
                  grant, or ceases to qualify as an Incentive Stock Option
                  within the meaning of Section 422 of the Code, and is not
                  otherwise terminated pursuant to the Plan or the Stock Option
                  Agreement, will be a Nonstatutory Option for purposes of the
                  Plan.

         2.15     "OPTION" means the right, granted under the Plan, to purchase
                  Stock of the Company at the Exercise Price for a specified
                  period of time. For purposes of the Plan, an Option may be
                  either an Incentive Stock Option or a Nonstatutory Option.

         2.16     "OPTIONEE" means a person to whom an Option has been granted
                  under the Plan.

         2.17     "PARENT CORPORATION" has the meaning set forth in Section
                  424(e) of the Code with the Company being treated as the
                  employer corporation for purposes of this definition.

         2.18     "SUBSIDIARY CORPORATION" has the meaning set forth in Section
                  424(f) of the Code with the Company being treated as the
                  employer corporation for purposes of this definition.

         2.19     "SIGNIFICANT STOCKHOLDER" means an individual who, within the
                  meaning of Section 422(b)(6) of the Code, owns Stock
                  possessing more than ten percent (10%) of the total combined
                  voting power of all classes of stock of the Company or of any
                  Parent Corporation or Subsidiary Corporation of the Company.
                  In determining whether an individual is a Significant
                  Stockholder, an individual shall be

                                       3
<PAGE>

                  treated as owning Stock owned by certain relatives of the
                  individual and certain Stock owned by corporations in which
                  the individual is a shareholder, partnerships in which the
                  individual is a partner and estates or trusts of which the
                  individual is a beneficiary, all as provided in Section 424(d)
                  of the Code.

         2.20     "STOCK" means the common stock of the Company.

3.       GENDER AND NUMBER. Except when otherwise indicated by the context, any
         masculine terminology when used in the Plan also includes the feminine
         gender, and the definition of any term in the singular also includes
         the plural.

4.       SEVERABILITY. Wherever possible, each provision of the Plan is to be
         interpreted to be effective and valid under applicable law. If,
         however, any provision of the Plan is prohibited by or invalid under
         applicable law, that provision is ineffective only to the extent of the
         prohibition or invalidity, without invalidating the remainder of the
         provision or the remaining provisions of the Plan.

5.       ELIGIBILITY AND PARTICIPATION.

         5.1      ELIGIBILITY. All Employees are eligible to participate in the
                  Plan and receive Incentive Stock Options and/or Nonstatutory
                  Options. All Consultants are eligible to participate in the
                  Plan and receive Nonstatutory Options.

         5.2      ACTUAL PARTICIPATION. Subject to the provisions of the Plan,
                  the Committee may, from time to time, select from all
                  Employees and Consultants those to whom it wishes to grant
                  Options. The Committee determines the nature of and number of
                  shares of Stock subject to each Option.

6.       ADMINISTRATION.

         6.1      THE COMMITTEE. Except as provided herein, the Committee
                  administers the Plan. The Board may authorize one or more
                  officers or directors of the Company to assist in the
                  administration of the Plan, acting as a secondary committee
                  within guidelines established from time to time by the Board.
                  Within the limitations of this Section 6.1, any reference in
                  the Plan to the Committee includes the secondary committee.

         6.2      AUTHORITY OF THE COMMITTEE. The Committee has full power
                  except as limited by law or by the Articles of Incorporation
                  or Bylaws of the Company, and subject to this Plan, to
                  determine the size and types of Options; to determine the
                  terms and conditions of the Options in a manner consistent
                  with the Plan; to construe and interpret the Plan and any
                  agreement or instrument entered into under the Plan; to
                  establish, amend,

                                       4
<PAGE>

                  or waive rules and regulations for the Plan's administration;
                  and (subject to the provisions of Section 13) to amend the
                  terms and conditions of any outstanding Option to the extent
                  that the terms and conditions are within the discretion of the
                  Committee as provided in the Plan. Further, the Committee may
                  take any other action necessary or advisable for the
                  administration of the Plan. As permitted by law, the Committee
                  may delegate its authorities to the secondary Committee.

         6.3      DECISIONS BINDING. All determinations and decisions made by
                  the Committee under the Plan and all related orders or
                  resolutions of the Board of Directors are final, conclusive
                  and binding on all persons, including the Company, its
                  shareholders, Employees, Consultants, Optionees and
                  successors.

7.       STOCK SUBJECT TO THE PLAN.

         7.1      NUMBER. The total number of shares of Stock made available for
                  grant and reserved for issuance under the Plan is 2,000,000
                  shares. The aggregate number of shares of Stock available
                  under the Plan is subject to adjustment as provided in Section
                  14.1.

         7.2      LAPSED OPTIONS. If an Option expires or terminates for any
                  reason without having been exercised in full, the unpurchased
                  shares of Stock become available for other Options under the
                  Plan, unless the Plan has terminated.

8.       DURATION OF THE PLAN. Subject to shareholder approval, the Plan is in
         effect for ten (10) years from the date of its adoption by the Board.
         Any Options outstanding at the end of this period remain in effect in
         accordance with their terms. The Plan terminates before the end of this
         period if all Stock subject to the Plan has been purchased by exercise
         of Options granted under the Plan.

9.       TERMS OF STOCK OPTIONS.

         9.1      GRANT OF OPTIONS.

                  (a)      COMMITTEE DISCRETION. Subject to Section 7.1, Options
                           may be granted to Employees or Consultants at any
                           time and from time to time as determined by the
                           Committee, except that Consultants may only receive
                           Nonstatutory Options. The Committee has complete
                           discretion in determining the recipient of Options
                           among the Employees or Consultants, the number of
                           shares of Stock subject to an Option and the number
                           of Options granted to each Optionee. In making these
                           determinations, the Committee may take into account
                           the nature of services rendered by Employees or
                           Consultants, their present and potential
                           contributions to the

                                       5
<PAGE>

                           Company, and any other factors as the Committee in
                           its discretion deems relevant. The Committee also
                           determines whether an Option is to be an Incentive
                           Stock Option or a Nonstatutory Option.

                  (b)      $100,000 LIMIT. The Committee may not grant an
                           Optionee Incentive Stock Options exercisable for the
                           first time during any calendar year in excess of
                           $100,000. This limit applies to all plans of the
                           Company under which Incentive Stock Options may be
                           granted, including plans of any Parent Corporations
                           and any Subsidiary Corporations of the Company. The
                           Fair Market Value used for this calculation is the
                           Fair Market Value determined at the date of the
                           grant. This paragraph does not prevent the grant of
                           Options in excess of the maximums established this
                           paragraph, however, such excess will be treated as a
                           Nonstatutory Option.

                  (c)      1,500,000 SHARE LIMIT. No Optionee may be granted
                           Options in any fiscal year to purchase an aggregate
                           number of shares of Stock in excess of 1,500,000
                           shares per Optionee, subject to adjustment under
                           Section 14.1.

                  (d)      AUTHORITY TO AMEND. The Committee has the express
                           authority to issue amended Options for shares of
                           Stock subject to an Option previously granted. An
                           amended Option amends the terms of an Option
                           previously granted and supersedes the previous
                           Option.

                  (e)      STOCKHOLDER APPROVAL. No Options granted under the
                           Plan are exercisable before the approval of the Plan
                           by the shareholders of the Company in accordance with
                           the Bylaws of the Company.

         9.2      NO TANDEM OPTIONS. Where an Option granted under the Plan is
                  intended to be an Incentive Stock Option, the Option may not
                  contain terms under which the exercise of the Option would
                  affect the Optionee's right to exercise another Option, or
                  vice versa, so that the Option intended to be an Incentive
                  Stock Option would be deemed a tandem stock option within the
                  meaning of the regulations under Section 422 of the Code.

         9.3      OPTION AGREEMENT.

                  (a)      USE OF OPTION AGREEMENT. As determined by the
                           Committee on the date of grant, each Option is
                           evidenced by an Option agreement (the "OPTION
                           AGREEMENT") that includes the nontransferability
                           provisions of Section 12.2 and specifies: whether the
                           Option is an Incentive Stock Option or a Nonstatutory
                           Option; the Exercise Price; the duration of the
                           Option; the number of shares of Stock to which the
                           Option applies; any vesting or serial exercise
                           restrictions

                                       6
<PAGE>

                           that the Committee may impose; and any other terms or
                           conditions that the Committee may impose. An Option
                           Agreement may provide that a new Option will be
                           granted automatically to the Optionee when the
                           Optionee exercises a prior Option and pays the
                           Exercise Price using Stock under Section 9.7. The
                           Committee may require an Optionee to sign the Option
                           Agreement.

                  (b)      RESTRICTIONS ON STOCK. At the discretion of the
                           Committee, the Company may reserve to itself and/or
                           its assignees in the Option Agreement (a) a right of
                           first refusal to purchase all Stock that an Optionee,
                           or Permitted Transferee (as hereinafter defined), may
                           propose to transfer to a third party, and/or (b) a
                           right to repurchase a portion of or all Stock held by
                           an Optionee following such Optionee's termination at
                           any time within 90 days after the later to occur of
                           the Optionee's Termination Date and the date the
                           Optionee purchases Stock under the Plan, for cash
                           and/or cancellation of purchase money indebtedness,
                           at the Optionee's Exercise Price.

                  (c)      INCORPORATION BY REFERENCE. All Option Agreements
                           incorporate the provisions of the Plan by reference,
                           with different provisions to apply depending upon
                           whether the Option Agreement applies to an Incentive
                           Stock Option or to a Nonstatutory Option.

         9.4      EXERCISE PRICE. No Incentive Stock Option granted under the
                  Plan may have an Exercise Price that is less than the Fair
                  Market Value of the Stock on the date the Option is granted.
                  Incentive Stock Options granted to Significant Stockholders
                  must have an Exercise Price of not less than 110% of the Fair
                  Market Value of the Stock on the date of grant. The Exercise
                  Price for Nonstatutory Options may be less than the Fair
                  Market Value of Stock on the date the Option is granted and
                  are not subject to the restrictions applicable to Incentive
                  Stock Options.

         9.5      TERM OF OPTIONS. Each Option expires at the time determined by
                  the Committee when the Option is granted, but no Option may be
                  exercised after the 10th anniversary date of its grant. By its
                  terms, an Incentive Stock Option granted to a Significant
                  Stockholder may not be exercised after the 5th anniversary
                  date of its grant.

         9.6      EXERCISE OF OPTIONS. Options granted under the Plan are
                  exercisable at the times and subject to the restrictions and
                  conditions as the Committee in each instance approves, which
                  need not be the same for all Optionees.

         9.7      PAYMENT. Payment for all shares of Stock must be made at the
                  time that an Option, or any part thereof, is exercised, and no
                  shares may be issued until full payment has been made. Payment
                  may be made in cash, cash equivalents or other form acceptable
                  to the Committee, including without

                                       7
<PAGE>

                  limitation, in Stock having a Fair Market Value at the time of
                  the exercise equal to the Exercise Price, provided that the
                  Optionee has held such Stock for more than six months and such
                  Stock has been paid for within the meaning of Rule 144 of the
                  Securities Act of 1933, as amended, or the Optionee obtained
                  such Stock in the public market. In the case of an Incentive
                  Stock Option, the form of payment cannot prevent the Option
                  from qualifying for treatment as an "incentive stock option"
                  within the meaning of the Code. In addition, the Company may
                  establish a cashless exercise program in accordance with
                  Federal Reserve Board Regulation T.

10.      WRITTEN NOTICE, ISSUANCE OF STOCK CERTIFICATES, STOCKHOLDER PRIVILEGES

         10.1     WRITTEN NOTICE. An Optionee wishing to exercise an Option
                  gives written notice to the Chief Executive Officer of the
                  Company, in the form and manner prescribed by the Committee.

         10.2     ISSUANCE OF STOCK CERTIFICATES. As soon as practicable after
                  the receipt of written notice and payment, the Company
                  delivers to the Optionee, or to a nominee of the Optionee, a
                  certificate or certificates for the shares of Stock. The
                  certificate may bear a legend restricting transfer if required
                  under Section 15.

         10.3     RIGHTS OF A STOCKHOLDER. An Optionee or any other person
                  entitled to exercise an Option under the Plan does not have
                  dividend rights, voting rights or other rights or privileges
                  of a shareholder with respect to any Stock covered by an
                  Option until the date of issuance of a stock certificate for
                  the Stock. No adjustment is made for cash dividends or other
                  rights for which the record date is before the issuance date,
                  except as expressly provided in the Plan.

         10.4     ESCROW. To enforce any restrictions on an Optionee's Stock,
                  the Committee may require the Optionee to deposit all
                  certificates representing Stock, together with stock powers or
                  other instruments of transfer approved by the Committee,
                  appropriately endorsed in blank, with the Company or an agent
                  designated by the Company to hold in escrow until such
                  restrictions have lapsed or terminated, and the Committee may
                  cause a legend or legends referencing such restrictions to be
                  placed on the certificates.

11.      TERMINATION OF EMPLOYMENT.

         11.1     DEATH.

                  (a)      Unless otherwise determined by the Committee, if an
                           Optionee's employment in the case of an Employee, or
                           provision of services in the case of a Consultant,
                           terminates by reason of death, and prior to

                                       8
<PAGE>

                           his or her death the Employee or Consultant had been
                           in Continuous Status as an Employee or Consultant
                           since the date of grant of the Option, the Option may
                           be exercised at any time before the expiration date
                           of the Option or within six months after the date of
                           the death, whichever period is shorter, by the person
                           or persons entitled to do so under the Optionee's
                           will.

                  (b)      If an Optionee's employment in the case of an
                           Employee, or provision of service in the case of a
                           Consultant, terminates by reason of death within 30
                           days after such Employee or Consultant terminates his
                           or her Continuous Status as an Employee or
                           Consultant, the Option may be exercised at any time
                           before the expiration date of the Option or within
                           six months after the date of the death, whichever
                           period is shorter, by the person or persons entitled
                           to do so under the Optionee's will.

                  (c)      If the Optionee fails to make a testamentary
                           disposition of an Option or dies intestate, the
                           Optionee's legal representative may exercise the
                           Option. Options are exercisable only to the extent
                           that they were exercisable as of the date of death.

         11.2     TERMINATION OTHER THAN FOR CAUSE OR DUE TO DEATH.

                  (a)      TERMINATION. In the event of an Optionee's
                           termination of Continuous Status as an Employee or
                           Consultant, except when an Employee becomes a
                           Consultant, other than by reason of death or for
                           cause (as defined in Section 11.3), the Optionee may
                           exercise the portion of his Option that was
                           exercisable by the Optionee at the date of the
                           termination (the "TERMINATION DATE") at any time
                           within 30 days after the Termination Date. In any
                           event, the Option cannot be exercised after the
                           expiration of the term of the Option. Options
                           terminate if not exercised within the applicable
                           period.

                  (b)      DISABILITY. If the termination of Continuous Status
                           as an Employee or Consultant occurs due to a
                           disability, as defined in the Code, the Optionee may
                           exercise the portion of any Option that was
                           exercisable by such Optionee on Optionee's
                           Termination Date within six months after such
                           Termination Date. In any event, the Option cannot
                           be exercised after the expiration of the term of
                           the Option. Options terminate if not exercised within
                           the applicable period.

         11.3     TERMINATION FOR CAUSE.

                                       9
<PAGE>

                  (a)      TERMINATION OF OPTIONS. If the Company terminates the
                           employment, in the case of an Employee, or the
                           provision of services, in the case of a Consultant,
                           for cause (as defined below), any Option or Options
                           held by the Optionee under the Plan, to the extent
                           not exercised before the termination, terminate
                           immediately.

                  (b) DEFINITION OF "CAUSE." The term "cause" means:

                           (i)      Optionee's conviction of a felony which
                                    would materially damage the reputation of
                                    the Company; or

                           (ii)     material misappropriation by Optionee of the
                                    Company's property or other material acts of
                                    dishonesty by Optionee against the Company;
                                    or

                           (iii)    Optionee's gross negligence or willful
                                    misconduct in the performance of Optionee's
                                    duties that has a material adverse effect on
                                    the Company.

12.      RIGHTS OF OPTIONEES.

         12.1     SERVICE. Nothing in the Plan interferes with or limits in any
                  way the right of Company to terminate any Employee's
                  employment, or any Consultant's services, at any time, nor
                  confers upon any Employee any right to continue in the employ
                  of the Company, or upon any Consultant any right to continue
                  to provide services to the Company.

         12.2     RESTRICTIONS ON TRANSFER.

                  (a)      NONTRANSFERABLE. Except as otherwise provided by this
                           Section 12.2, all Options granted under the Plan are
                           nontransferable by the Optionee, other than by will
                           or the laws of descent and distribution, and are
                           exercisable during the Optionee's lifetime only by
                           the Optionee.

                  (b)      COMMITTEE DISCRETION. The Committee may, in its sole
                           discretion and with the consent of the Optionee:

                           (i)      grant Nonstatutory Options which are
                                    transferable within the restrictions of this
                                    Section 12.2;

                           (ii)     amend a then-existing Nonstatutory Option to
                                    allow for transferability of an Option
                                    within the restrictions of this Section
                                    12.2; or

                                       10
<PAGE>

                           (iii)    amend a then-existing Incentive Stock Option
                                    (whereby an Option will become a
                                    Nonstatutory Option) to allow for
                                    transferability of an Option within the
                                    restrictions of this Section 12.2
                                    (collectively, the "TRANSFERABLE OPTIONS").

                  (c)      LIMITED TRANSFERABILITY. Subject to the conditions in
                           subsection (d) below, the Committee may, in its sole
                           discretion, authorize all or a portion of the
                           Transferable Options to be on terms that permit
                           transfer of an Option by the initial Optionee of the
                           Option (the "INITIAL OPTIONEE") to:

                           (i)      the spouse, children, step-children,
                                    grandchildren, step-grandchildren, siblings
                                    or parents of the Initial Optionee
                                    ("IMMEDIATE FAMILY MEMBERS");

                           (ii)     a trust or trusts for the exclusive benefit
                                    of the Immediate Family Members;

                           (iii)    a partnership or other entity in which the
                                    Immediate Family Members are the only
                                    partners or equity owners; or

                           (iv)     a former spouse of the Initial Optionee
                                    under a qualified domestic relations order
                                    (collectively, a "PERMITTED TRANSFEREE").

                  (d)      CONDITIONS OF TRANSFER. A transfer under Section
                           12.2(c) is subject to the following conditions:

                           (i)      there may be no consideration for the
                                    transfer;

                           (ii)     the Option Agreement under which the Options
                                    are granted, or any amendment thereto, is
                                    approved by the Committee, and expressly
                                    provides for transferability in a manner
                                    consistent with this Section 12.2;

                           (iii)    any  Option or  portion  transferred  by an
                                    Initial  Optionee to a Permitted  Transferee
                                    may be exercised by the Permitted Transferee
                                    only to the same extent as  the  Initial
                                    Optionee would have been entitled to
                                    exercise it, and remains subject to all of
                                    the terms and conditions that would  have
                                    applied to the Option under the provisions
                                    of the Plan and Option Agreement, if the
                                    Initial  Optionee had not transferred the
                                    Option or portion to the Permitted
                                    Transferred;

                           (iv)     subsequent transfers of transferred Options
                                    (including sale, assignment, pledge or other
                                    transfer) are prohibited except by will or
                                    the laws of descent and distribution;

                                       11
<PAGE>

                           (v)      the Initial Optionee remains subject to
                                    applicable withholding taxes upon exercise
                                    of options transferred to a Permitted
                                    Transferee;

                           (vi)     the Company has no obligation to notify the
                                    Permitted Transferee of the expiration or
                                    early termination of any Option;

                           (vii)    the Committee may, in its sole discretion,
                                    require as a condition to the transfer of an
                                    Option, that the Permitted Transferee
                                    execute an agreement under which the
                                    Permitted Transferee would become a party to
                                    the applicable Option Agreement and agree
                                    that in the event the Company merges into or
                                    consolidates with another entity, the
                                    Company sells all or a substantial part of
                                    its assets, or the Company's Stock is
                                    subject to a tender or exchange offer, the
                                    Permitted Transferee will consent to the
                                    transfer or assumption of the Option, or
                                    accept a new option in substitution, if the
                                    Company requests the Permitted Transferee to
                                    do so; and

                           (viii)   the transfer is not effective unless and
                                    until the Initial Optionee has furnished the
                                    Committee written notice of the transfer,
                                    copies of all requested documents evidencing
                                    the transfer, and any other agreements as
                                    may be required by the Committee.

13.      AMENDMENT, MODIFICATION, AND TERMINATION OF THE PLAN.

         13.1     AMENDMENT, MODIFICATION, AND TERMINATION OF THE PLAN. The
                  Board may at any time terminate, and from time to time may
                  amend or modify, the Plan, except that without stockholder
                  approval, the Board may not:

                  (a)      increase the total amount of Stock that may be
                           purchased through Options granted under the Plan,
                           except as provided in Section 14.1;

                  (b)      change the class of Employees or Consultants eligible
                           to receive Options; or

                  (c)      change the provisions of Section 9.1 above to allow
                           an Optionee to be granted Options in any fiscal year
                           to purchase an aggregate number of shares of Stock in
                           excess of 1,500,000 shares per Optionee, subject to
                           adjustment under Section 14.1.

         13.2     OPTIONS PREVIOUSLY GRANTED. No amendment, modification or
                  termination of the Plan shall in any manner adversely affect
                  any

                                       12
<PAGE>

                  outstanding Option under the Plan without the consent of the
                  Optionee holding the Option.

14.      CHANGES IN CAPITALIZATION, DISSOLUTION, LIQUIDATION, REORGANIZATION

         14.1     ADJUSTMENTS. In the event of a subdivision of the outstanding
                  Stock, a declaration of a dividend payable in Stock, a
                  declaration of a dividend payable in a form other than Stock
                  in an amount that has a material effect on the value of the
                  Stock, a combination or consolidation of the outstanding Stock
                  (by reclassification or otherwise) into a lesser number of
                  shares of Stock, a recapitalization, a spin-off or a similar
                  occurrence, the Committee may adjust as appropriate, in its
                  sole discretion, one or more of:

                  (a)      the number of shares of Stock available for future
                           grants under Section 7;

                  (b)      the number of shares of Stock covered by each
                           outstanding Option; or

                  (c)      the Exercise Price under each outstanding Option.

         14.2     OPTIONEE RIGHTS. Except as provided in this Section 14, an
                  Optionee shall have no rights by reason of any issue by the
                  Company of any class of capital stock or securities
                  convertible into capital stock of any class, any subdivision
                  or consolidation of shares of capital stock of any class, the
                  payment of any capital stock dividend or any other increase or
                  decrease in the number of shares of capital stock of any
                  class.

         14.3     DISSOLUTION OR LIQUIDATION. To the extent not previously
                  exercised, Options terminate immediately before the
                  dissolution or liquidation of the Company.

         14.4     MERGER, EXCHANGE OR REORGANIZATION. In the event that the
                  Company is a party to a merger, exchange or reorganization,
                  outstanding Options are subject to the agreement of merger,
                  exchange or reorganization. The agreement must provide for:

                  (a)      the continuation of the outstanding Options by the
                           Company, if the Company is a surviving corporation;

                  (b)      the assumption of the outstanding Options by the
                           surviving corporation or its parent or subsidiary;

                                       13
<PAGE>

                  (c)      the substitution by the surviving corporation or its
                           parent or subsidiary of its own options for the
                           outstanding Options;

                  (d)      full exercisability or vesting and accelerated
                           expiration of the outstanding Options; or

                  (e)      settlement of the full value of the outstanding
                           Options in cash or cash equivalents followed by
                           cancellation of the Options.

         14.5     ASSET SALE. In no event are any Option exercisable during the
                  period immediately following the announcement of the sale and
                  until all revenue resulting from a sale of assets has been
                  distributed to the shareholders. In the event of the sale of
                  all or substantially all of the Company's assets, at the
                  discretion of the Company, the Options will:

                  (a)      remain outstanding;

                  (b)      be substituted for the options of the acquiring
                           corporation or its parent or subsidiary;

                  (c)      become fully vested immediately prior to the sale and
                           cancelled upon closing of the sale; or

                  (d)      be cancelled in exchange for payment of full value of
                           the outstanding Options with cash or cash
                           equivalents.

15.      SECURITIES REGISTRATION. In the event that the Company deems  it
         necessary or desirable to register under the Securities Act of 1933, as
         amended, or any other applicable statute, any Options or any Stock with
         respect to which an Option may be or has been granted or exercised, or
         to qualify any such Options or Stock under the  Securities Act of 1933,
         as amended, or any other statute, then the Optionee must cooperate with
         the Company and take such action as is necessary to permit registration
         or qualification of the Options or Stock.

         Unless the Company has determined that the following representation is
         unnecessary, each person exercising an Option under the Plan may be
         required by the Company, as a condition to the issuance of the shares
         pursuant to exercise of the Option, to make a representation in
         writing: (a) that he or she is acquiring such shares for his or her own
         account for investment and not with a view to, or for sale in
         connection with, the distribution of any part; and (b) that before any
         transfer in connection with the resale of the shares, he or she will
         obtain the written opinion of counsel for the Company, or other counsel
         acceptable to the Company, that the shares may be transferred. The
         Company may also require that the certificates representing the shares
         contain legends reflecting the foregoing. The Company will only require
         the foregoing investment representation from an Optionee,

                                       14
<PAGE>

         inscription of a legend on the Optionee's share certificate and
         placement of a stop order with the Company's transfer agent if a
         registration statement is not in effect with respect to the shares
         issued under the Plan at the time the Optionee exercises the Option.

16.      TAX WITHHOLDING.

         16.1     TAX WITHHOLDING. Company has the power and the right to deduct
                  or withhold, or require an Optionee to remit to the Company,
                  an amount sufficient to satisfy federal, state, and local
                  taxes (including the Optionee's FICA obligation) required by
                  law to be withheld with respect to any grant, exercise or
                  payment made under or as a result of the Plan. The Company is
                  not required to issue any Stock under the Plan until these
                  obligations are satisfied.

         16.2     SHARE WITHHOLDING. With respect to withholding required upon
                  the exercise of Options, or upon any other taxable event
                  hereunder, Optionees may elect, subject to the approval of the
                  Committee and compliance with applicable laws and regulation,
                  to satisfy the minimum withholding requirement, in whole or in
                  part, by having the Company withhold shares having a Fair
                  Market Value, on the date the tax is to be determined, equal
                  to the minimum withholding requirement.

17.      INDEMNIFICATION. To the extent permitted by law, each person
         who is or will have been a member of the Committee or of the
         Board is indemnified by the Company against and from any 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
         a party or in which he may be involved by reason of any action
         taken or failure to act under the Plan and against and from
         any and all amounts paid by him in settlement, with the
         Company's approval, or paid by him in satisfaction of judgment
         in any action, suit, or proceeding against him, if he gives
         the Company an opportunity, at its own expense, to handle and
         defend before he undertakes to handle and defend it on his own
         behalf. The foregoing right of indemnification is not
         exclusive of any other rights of indemnification to which
         these persons may be entitled under the Company's Articles of
         Incorporation or Bylaws, as a matter of law, or otherwise, or
         any power that the Company may have to indemnify them.

18.      REQUIREMENTS OF LAW

         18.1     REQUIREMENTS OF LAW. The granting of Options and the issuance
                  of shares of Stock upon the exercise of an Option is subject
                  to all applicable laws, rules and regulations, and to
                  approvals by any governmental agencies or national securities
                  exchanges, as may be required.

                                       15
<PAGE>

         18.2     GOVERNING LAW. To the extent not preempted by federal law, the
                  Plan, and all agreements under the Plan, are governed by the
                  laws of the State of Minnesota.

         18.3     COMPLIANCE WITH THE EXCHANGE ACT AND THE CODE. The Plan is
                  intended to comply in all respects with applicable law and
                  regulations including (a) with respect to those Optionees who
                  are officers or directors for purposes of Section 16 of the
                  Exchange Act, Rule 16b-3 of the Securities and Exchange
                  Commission, if applicable, and (b) with respect to Incentive
                  Stock Options, Code Section 422. If any provision of the Plan
                  is susceptible to more than one interpretation, the
                  interpretation should be given as is consistent with all
                  applicable law (including Rule 16b-3 and Code Section 422).
                  Notwithstanding anything herein to the contrary, with respect
                  to Optionees who are officers and directors of the Company for
                  purposes of Section 16 of the Exchange Act, no grant of an
                  Option will permit unrestricted ownership of Stock by the
                  Optionee for at least six months from the date of the grant of
                  such Option, unless the Board determines that the grant of
                  such Option otherwise satisfies the then current Rule 16b-3
                  requirements.

19.      EFFECTIVE DATE OF PLAN. Subject to Stockholder Approval of the Plan,
         the Plan shall be effective as of November 20, 2000, the date of its
         adoption by the Board.

                                       16

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