Sunrise Real Estate Group Inc – ‘10QSB’ for 9/30/01 – EX-1

On:  Wednesday, 11/14/01   ·   For:  9/30/01   ·   Accession #:  1010549-1-500566   ·   File #:  0-32585

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Quarterly Report — Small Business   —   Form 10-QSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10QSB       Quarterly Report -- Small Business                     9     40K 
 2: EX-1        Information Statement                                 16     69K 

EX-1   —   Information Statement
Exhibit Table of Contents

EX-1
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EXHIBIT 10.1                                                                    
------------                                                                    

PARALLAX ENTERTAINMENT, INC.
 14110 North Dallas Parkway, Suite 130
Dallas, TX 75254
(972) 726-9203
(972) 726-7749 - Fax

 INFORMATION STATEMENT

**WE ARE NOT ASKING FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY**

INTRODUCTION                                                                    
------------                                                                    

This  Information  Statement is being furnished to the stockholders of record of
Parallax  Entertainment,  Inc.  (the  "Company")  as of October 2, 2001 ("Record
Date"),  in  connection  with the  adoption of the  Articles of Amendment to the
Articles of  Incorporation  ("Articles of Amendment")  and the 2001 Stock Option
Plan (the  "Plan")  by the  written  consent of the  holders  of a  majority  in
interest of the  Company's  voting  capital  stock  consisting  of the Company's
outstanding Common Stock, $0.01 par value ("Capital Stock").  On August 29, 2001
the Company's Board of Directors  approved and recommended  that the Articles of
Incorporation be amended in order to:                                           

     o    Increase  the  number  of  authorized  shares  of  Common  Stock  from
10,000,000 to 200,000,000.                                  
o    Authorize 1,000,000 shares of a Preferred class of stock.        

The Articles of Amendment  was approved by the written  consent dated August 29,
2001 of the stockholders owning a majority of the outstanding Capital Stock, and
the  Articles of  Amendment  were filed and  accepted by the Texas  Secretary of
State on September  14, 2001 with a delaying  provision  that it will not become
effective  until  October  4, 2001 or 20 days  after the  "Record  Date" of this
letter, which ever is later.                                                    

The Company's  Board of Directors  also  recommended  that the Company adopt the
Plan, which was previously approved by the Board of Directors by written consent
on August 29, 2001.  Stockholders  owning a majority of the outstanding  Capital
Stock approved the Plan by written consent dated August 29, 2001.               

The elimination of the need for a special meeting of stockholders to approve the
Articles of Amendment is made  possible by Articles  9.10 of the Texas  Business
Corporation Act ("TBCA"), which provides that the written consent of the holders
of outstanding  shares of voting stock,  having not less than the minimum number
of votes which would be  necessary to authorize or take such action at a meeting
at which all shares  entitled to vote  thereon  were  present and voted,  may be
substituted for such a special meeting.  Pursuant to Article 9.10, a majority of
the outstanding  shares of voting stock entitled to vote thereon are required in
order to amend the Company's  Articles of Incorporation and approve the Plan. In
order to eliminate the costs and time involved in holding a special  meeting and
in order to effect the  Articles of  Amendment  and approve the Plan as early as
possible  in order to  accomplish  the  purposes  of the  Company  as  hereafter
described,  the Board of Directors  of the Company  voted to utilize the written
consent of the  holders of a majority  in  interest  of the voting  stock of the
Company.                                                                        

On August 29, 2001, there were 1,118,800 outstanding shares of Capital Stock and
approximately  63  stockholders  of record.  The  approval  of the  Articles  of
Amendment and the Plan requires the written consent of the holders of a majority
of the outstanding  shares of Capital Stock, and each share of Capital Stock was
entitled to one vote with  respect to the  approval of the Articles of Amendment
and the Plan.  By written  consent in lieu of a meeting  dated  August 29, 2001,
holders of 622,000 shares of our Common Stock, representing approximately 55.59%
of our then outstanding voting power, approved the Articles of Amendment.  Also,
by  written  consent in lieu of a meeting  dated  August  29,  2001,  holders of
622,000  shares of our common stock,  representing  approximately  55.59% of our
then outstanding voting power, approved the Plan.                               

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Under applicable federal securities laws, the Articles of Amendment and approval
of the Plan  cannot be  affected  until at least 20  calendar  days  after  this
information  statement is sent or given to the stockholders of the Company.  The
approximate  date on which this  information  statement  is first  being sent or
given to stockholders is October 2, 2001.                                       

ARTICLES OF AMENDMENT                                                           
---------------------                                                           

On August 29, 2001, the Board of Directors approved,  subject to the approval of
the Company's stockholders, the Articles of Amendment, which:                   

     o    Increases  the  number  of  authorized  shares of  Common  Stock  from
10,000,000 to 200,000,000.                                  
o    Authorize 1,000,000 shares of a Preferred class of stock.        

In August 2001,  stockholders owning a majority of the outstanding Capital Stock
approved  the  Articles of  Amendment.  A copy of the  Articles of  Amendment is
attached to this document as Exhibit A.                                         

Current Use of Shares                                                           

As of August  29,  2001,  1,118,800  shares  of Common  Stock  were  issued  and
outstanding  and no shares of Common Stock were subject to  outstanding  options
and warrants and reserved for future issuance.                                  

As of August 29, 2001, the Company had no other class of stock authorized.      

Rights of Additional Stock                                                      

The  additional  Common Stock to be authorized by the Articles of Amendment will
have rights  identical to currently  outstanding  Common Stock.  The Articles of
Amendment  will not affect the rights of the  holders of  currently  outstanding
Common Stock, except for effects identical to increasing the number of shares of
Common stock outstanding upon any issuance of these additional shares.          

The Board of Directors may issue the Preferred  Stock in one or more series with
such voting powers, designations,  and preferences as the Board of Directors may
determine.                                                                      

Effect of the Articles of Amendment                                             

After the Articles of Amendment becomes  effective,  the Board of Directors will
have the authority to issue  additional  shares of  authorized  Common Stock and
Preferred  Stock for such  purposes and  consideration  and on such terms as the
Board of Directors may approve without  requiring  future  stockholder  approval
except as may be  required  by law and,  when and if the  Company is listed with
NASDAQ, the regulations thereof. The increase in the authorized number of shares
of Common Stock and Preferred  Stock and the subsequent  issuance of such shares
(within that limits imposed by applicable law) could have the effect of delaying
or preventing a change in control and discouraging  hostile  takeover  attempts.
Any such  issuance of  additional  stock  could have the effect of diluting  the
earnings  per share and book  value per share of  outstanding  Common  Stock and
Preferred Stock, and such additional shares would dilute the stock ownership and
voting rights of stockholders.                                                  

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Reason for the Articles of Amendment                                            

The  increase in  authorized  Common  Stock to be  effected  by the  Articles of
Amendment is necessary  to enable the Company to reserve  enough  shares for the
Plan as well as complete any future private placement of the Common Stock.      

Furthermore,  the  Board of  Directors  believes  that  the  limited  number  of
currently  authorized but unissued  shares of Common Stock unduly  restricts the
Company's ability to respond to business needs and opportunities  that may arise
in the  future.  The  Articles  of  Amendment  will  afford  the  Company  added
flexibility by increasing the number of authorized but unissued shares of Common
stock,  as well as  authorizing  a  class  of  Preferred  Stock,  for  financing
requirements, stock splits or other corporate purposes.                         

2001 STOCK OPTION PLAN                                                          
----------------------                                                          

On August 29, 2001, the Board of Directors approved,  subject to the approval of
the Company's  stockholders;  a stock option plan entitled the Stock Option Plan
(the  "Plan").  On  August  29,  2001,  stockholders  owning a  majority  of the
outstanding  Common  Stock  approved  the Plan.  A copy of the Plan is  attached
hereto as Exhibit B.                                                            

The Plan reserves an aggregate of 550,000  shares of the Company's  Common Stock
for issuance  pursuant to the exercise of stock  options which may be granted to
key  employees  and  non-employee  directors  of  the  Company  and  independent
contractors  and  consultants  to  the  Company.  The  Board  of  Directors  has
determined that the Plan will increase the  proprietary  interest in the Company
of key  employees,  non-employee  directors,  and  independent  contractors  and
consultants  and will align more closely their  interests  with the interests of
the Company.  The Plan will also increase the  Company's  ability to attract and
retain  the  services  of  experienced  and  highly   qualified   employees  and
non-employee directors.                                                         

The Plan will be  administered  by a committee whose members will be selected by
the Board (the "Committee"), or in the absence of such committee, the Plan shall
be  administered  by the entire  Board.  The Committee or the Board of Directors
will  determine,  without  limitation,  the persons who will be granted  options
under the Plan, the type of option that becomes exercisable, the duration of the
exercise period for options, and the form or forms of the instruments evidencing
options  granted under the Plan.  The  Committee or the Board of Directors,  may
adopt,  amend,  and rescind such rules and  regulations as in its opinion may be
advisable  for the  administration  of the  Plan.  The  Committee  or  Board  of
Directors  may amend or rescind the plan without  stockholder  approval,  except
when an amendment  would (a) materially  increases the number of securities that
may be issued  under  the Plan or (b)  materially  modify  the  requirements  of
eligibility for participation in the Plan.                                      

Options  granted  under the Plan may be either  options  qualifying as incentive
stock options  ("Incentive  Options") under Section 422 of the Internal  Revenue
Code of 1986,  as  amended  (the  "Code"),  or  options  that do not so  qualify
("Non-qualified  Options,"  collectively with Incentive Options, the "Options").
Any Incentive  Option  granted under the Plan must provide for an exercise price
of not less than 100% of the fair market value of the  underlying  shares on the
date of such grant, but the exercise price of any Incentive Option granted to an
eligible  employee owning more than 10% of the Company's Common Stock must be at
least 110% of such fair market value as determined on the date of the grant. The
exercise price of  Non-qualified  Options will be determined by the Committee or
the Board of Directors.                                                         

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Key  employees  and  non-employee  directors  of  the  Company  and  independent
contractors or consultants for the Company and its  subsidiaries are eligible to
receive Non-qualified Options under the Plan. Only key employees are eligible to
receive Incentive Options.                                                      

At the  Board of  Directors'  option,  the  Plan  allows  for the  proportionate
adjustment of the number of shares for outstanding  options and option price per
share in the  event  of stock  dividends,  recapitalization  resulting  in stock
splits or combinations or exchanges of shares,  but any such adjustment will not
change the total  purchase  price  payable  upon the exercise in full of options
granted under the Plan.                                                         

Options granted under the Plan are nonassignable and nontransferable,  except by
will or the laws of  decent  and  distribution.  Except  in the case of death or
disability  of an  optionee,  options  granted  may  be  exercised  only  by the
optionee. The expiration date of an option is determined by the Committee at the
time of the grant and is set forth in the applicable stock option agreement.  In
no event  may an  option be  exercisable  after  ten  years  from the date it is
granted.                                                                        

If an optionee dies or becomes  disabled (within the meaning of Section 22(e)(3)
of the  Code)  prior to  termination  of his  right to  exercise  an  option  in
accordance with the provisions of his option agreement, the option agreement may
provide  that the option  may be  exercised,  to the  extent of the shares  with
respect to which the option  could have been  exercised  by the  optionee on the
date of his death or disability,  (i) in case of death, by the optionee's estate
or by the person who  acquired  the right to  exercise  the option by bequest or
inheritance  or by reason of the  death of the  optionee  or (ii) in the case of
disability, by the optionee or his personal representative,  provided the option
is exercised  prior to the date of its expiration or not more than one year from
the date of the optionee's death or disability, whichever first occurs. The date
of disability of an optionee will be determined by the Committee.               

Federal Income Tax Consequences                                                 

Incentive  Options.  Under the Code,  an  optionee  generally  is not subject to
ordinary income tax upon the grant or exercise of an Incentive Option.  However,
an employee who  exercises an Incentive  Option by  delivering  shares of Common
Stock  previously  acquired  pursuant to the exercise of an Incentive  Option is
treated as making a Disqualifying Disposition (defined below) of these shares if
the employee  delivers the shares before the  expiration  of the holding  period
applicable to these shares.  The applicable  holding period is the longer of two
years from the date  "pyramiding" the exercise of an Incentive Option (i.e., the
exercise of the Incentive Option for one share and the use of that share to make
successive  exercise of the Incentive  Option until it is completely  exercised)
without the imposition of current income tax.                                   

The amount by which the fair market value of the shares  acquired at the time of
exercise of an Incentive  Option  exceeds the purchase price of the shares under
such  Option  will be treated as an  adjustment  to the  Optionee's  alternative
minimum taxable income for purposes of the alternative  minimum tax. If however,
there  is a  Disqualifying  Disposition  in the  year in  which  the  Option  is
exercised,  the maximum  amount of the item of  adjustment  for such year is the
gain on the disposition of the shares. If there is Disqualifying  Disposition in
a year other than the year of exercise,  the dispositions  will not result in an
adjustment for the other year.                                                  

If, subsequent to the exercise of the Incentive Option (whether paid for in cash
or in shares), the Optionee holds the shares received upon exercise for a period
that exceed (a) two years from the date such Incentive Option was granted or, if
later, (b) one year from the date of exercise (the "Required  Holding  Period"),
the difference (if any) between the amount realized from the sale of such shares
and their tax basis to the holder  will be taxed as  long-term  capital  gain or
loss.  If the holder is subject to the  alternative  minimum  tax in the year of
disposition,  the holder's tax basis in his or her shares will be increased  for
purposes of determining his alternative minimum tax for that year, by the amount
of the item of adjustment recognized with respect to such shares in the year the
Option was exercised.                                                           

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In general,  if, after exercising an Incentive  Option,  an employee disposes of
the  acquired  shares  before  the  end  of  the  Required   Holding  Period  (a
"Disqualifying  Disposition"),  an Optionee would be deemed to receive  ordinary
income in the year of the Disqualifying  Disposition,  in an amount equal to the
excess of the fair market value of the shares at the date the  Incentive  Option
was exercised over the exercise  price.  If the  Disqualifying  Disposition is a
sale or exchange which would permit a loss to be recognized under the Code (were
a loss in fact to be  sustained),  and the sales proceeds are less than the fair
market  value of the shares on the date of  exercise,  the  Optionee's  ordinary
income  would be  limited  to the gain (if any)  from the  sale.  If the  amount
realized  upon  disposition  exceeds the fair market  value of the shares on the
date of exercise, the excess would be treated as short term or long-term capital
gain, depending on whether the holding period for such shares exceeded one year.

The Company is not allowed an income tax  deduction for the grant or exercise of
an Incentive  Option of the disposition,  after the Required Holding Period,  of
shares acquired upon exercise.  In the event of Disqualifying  Disposition,  the
Company will be allowed to deduct an amount  equal to the ordinary  income to be
recognized  by the  Optionee,  provided  that  such  amount is an  ordinary  and
necessary  business expense to the Company and is reasonable,  and would satisfy
the Company's withholding obligations for this income.                          

Non-qualified Options. An Optionee granted a Non-qualified Option under the Plan
will generally recognize,  at the date of exercise of such Non-qualified Option,
ordinary income equal to the difference  between the exercise price and the fair
market value of the shares of Common Stock subject to the Non-qualified  Option.
This taxable  ordinary income will be subject to Federal income tax withholding.
The Committee or the Board of Directors may establish such rules and procedures,
as it considers  desirable in order to satisfy any  obligation of the Company to
withhold the  statutory  prescribed  minimum  amount of federal  income taxes or
other taxes with respect to the exercise of any Option  granted  under the Plan.
If the  Common  Stock  is  traded  in the  over-the-counter  market  or upon any
securities exchange,  such rules and procedures may provide that the withholding
obligation will be satisfied by the Company  withholding  shares of Common Stock
otherwise  issuable  upon  exercise of an Option in shares of Common Stock in an
amount equal to the statutory  prescribed minimum withholding  applicable to the
ordinary income resulting from the exercise of that Option.                     

If an Optionee exercises a Non-qualified  Option by delivering other shares, the
Optionee  will not  recognize  gain or loss with respect to the exchange of such
shares,  even if their then fair market value is different from the Option's tax
basis. The Optionee,  however,  will be taxed as described above with respect to
the exercise of the Non-qualified Option as if he had paid the exercise price in
cash, and the Company will generally be entitled to an equivalent tax deduction.
Provided a separate  identifiable  stock  certificate is issued  therefore,  the
Optionee's tax basis in that number of shares received on such exercise which is
equal to the number of shares surrendered on such exercise will equal to his tax
basis in the shares surrendered and his holding period for such number of shares
received  will  include  his  holding  period  for the shares  surrendered.  The
Optionee's tax basis and holding period for the  additional  shares  received on
the  exercise of the  Non-qualified  Option paid for, in whole or in part,  with
shares  will be the same as if the  Optionee  had  exercised  the  Non-qualified
Option solely for cash.                                                         

The above  discussion  is based on Federal  income tax laws and  regulations  in
effect as of the date hereof.  It does not purport to be a complete  description
of the federal  income tax  consequences  of the Plan,  nor does it describe the
consequences of the state,  local or foreign tax laws,  which may be applicable.
Accordingly,  any person receiving a grant under the Plan should consult his own
tax advisor.                                                                    

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SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT.                    
------------------------------------------------------------                    

The following table sets forth information  concerning the beneficial  ownership
of the  Company's  Common Stock as of the Record Date, by (i) each person who is
known by the Company to own beneficially  more than 5% of the Common Stock, (ii)
each  director  of the  Company,  (iii) each of the  executive  officers  of the
Company,  and (iv) all  directors  and  executive  officers  of the Company as a
group.                                                                          

--------------------          --------------------          --------------------
Common Stock        
--------------------
Amount and          
Nature of           
                        Beneficial                    % of Class (2)
Name and Address              Ownership (1)                                     
--------------------          --------------------          --------------------
Gust Kepler                   2,122,000                     77.20%              
President                     Direct                                            
And CEO                                                                         
14110 N. Dallas Parkway                                                         
Suite 130                                                                       
Dallas, TX                                                                      
75254                                                                           
USA                                                                             
---------------------         --------------------          --------------------
Bill Kepler                   10,000                        0.36%               
Vice President                Direct                                            
& Secretary                                                                     
14606 N. Dallas Parkway                                                         
#1077-2                                                                         
Dallas, TX                                                                      
75254                                                                           
USA                                                                             
--------------------          --------------------          --------------------
Rodney Burns                  162,500                       5.91%               
5840 Longvue                  Direct                                            
Frisco, TX                                                                      
75034                                                                           
USA                                                                             
--------------------          --------------------          --------------------
All Directors                 2,132,000                     77.56%              
And Executive                                                                   
Officers as a Group                                                             
(2 persons)                                                                     

(1)  Except as otherwise indicated and subject to applicable  community property
     and similar laws,  the Company  assumes that each named person has the sole
     voting and  investment  power with respect to his or her shares (other than
shares subject to options).                                           

(2)  Percent  of class is based on the  number of shares  outstanding  as of the
Record Date.                                                          

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OTHER MATTERS                                                                   
-------------                                                                   

The  information  contained  in this  document is to the best  knowledge  of the
Company,  and the  information  contained  herein with respect to the directors,
executive officers and principal  shareholders is based upon information,  which
these individuals have provided us.                                             

By Order of The Board of Directors,                           

------------------------------                                
Gust Kepler                                                   
President and CEO                                             

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EXHIBIT A                                                                       
---------                                                                       

 ARTICLES OF AMENDMENT
 TO THE ARTICLES OF INCORPORATION OF
PARALLAX ENTERTAINMENT, INC.

Pursuant to the  provisions  of Article 4.04 of the Texas  Business  Corporation
Act, the undersigned  corporation  adopts the following articles of Amendment to
the Articles of Incorporation:                                                  

 ARTICLE ONE

The name of the corporation is Parallax Entertainment, Inc.                     

 ARTICLE TWO

The following  amendment to the Articles of Incorporation  was adopted in August
2001 by the consent of the shareholders of the Corporation holding a majority of
the shares of common  stock,  pursuant to Article 9.10A and Article 2.28D of the
Texas Business  Corporation Act, to increase the authorized  common stock of the
Corporation  to  200,000,000  shares  and to  authorize  1,000,000  shares  of a
preferred class of stock:                                                       

Article Five is hereby  deleted in its  entirety  and replaced by the  following
language:                                                                       

 "Article Five: Stock"

     The corporation is authorized to issue shares of two classes of stock to be
designated  "common stock" and "preferred  stock." The Corporation is authorized
to issue a total number of  200,000,000  common shares and  1,000,000  preferred
shares; the par value of each share is $0.01.                                   

 ARTICLE THREE

The number of shares of the corporation outstanding at the time of such adoption
was 1,118,800; and the number of shares entitled to vote thereon was 1,118,800. 

ARTICLE FOUR

The holders of 622,000,  or 55.6%, of the shares of common stock outstanding and
entitled to vote on said amendment have signed a consent in writing  pursuant to
Article 9.10 adopting said amendment and any written notice  required by Article
9.10 has been given.  Article Ten of the  Articles  of  Incorporation  authorize
approval of Amendments of less than two thirds shareholders.                    

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ARTICLE FIVE

These Articles of Amendment shall be effective on October 4, 2001.              

Dated: August 29, 2001                                                          

PARALLAX ENTERTAINMENT, INCORPORATED                                            

By: /s/ Gust C. Kepler                                                          
-----------------------                                                   
Gust C. Kepler                                                        
President and CEO                                                     

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EXHIBIT B                                                                       
---------                                                                       

PARALLAX ENTERTAINMENT, INC.

 2001 EMPLOYEE STOCK OPTION PLAN

550,000 Shares

 ARTICLE I - GENERAL

1.1  Purpose of the Plan.                                                       
-------------------                                                   

     The purpose of the Parallax Entertainment,  Inc. 2001 Employee Stock Option
     Plan  (the  "Plan")  is to assist  Parallax  Entertainment,  Inc.,  a Texas
     corporation (the "Company"),  in securing and retaining Key Participants of
     outstanding  ability  by  making it  possible  to offer  them an  increased
     incentive to join or continue in the service of the Company and to increase
     their  efforts  for  its  welfare   through   participation   or  increased
participation in the ownership and growth of the Company.             

1.2  Definitions.                                                               
-----------                                                           

          (a)  "Acceleration  Event" means any event which in the opinion of the
     Board of  Directors  of the Company is likely to lead to changes in control
     of share  ownership of the  Company,  whether or not such change in control
actually occurs.                                                      

          (b) "Award"  means an Option  granted to a Key  Participant  under the
Plan.                                                                 

          (c) "Board of  Directors"  or "Board"  means the Board of Directors of
the Company.                                                          

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

   (e) "Committee" means the committee referred to in Section 1.3.

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

          (g) "Fair Market  Value" means the closing  price of the shares on the
     principal  trading market on which the Common Stock is primarily  traded on
     the day on which  such  value is to be  determined  or, if no  shares  were
     traded on such day, on the next  preceding day on which shares were traded,
     as reported by NASDAQ. If at any time shares of Common Stock are not traded
     on an exchange or in the  over-the-counter  market, Fair Market Value shall
     be  the  value   determined   by  the  Board  of   Directors  or  Committee
     administering the Plan, taking into  consideration  those factors affecting
or reflecting value which they deem appropriate.                      

          (h)  "Grantee"  means a Key  Participant  to whom an Award is  granted
under the Plan.                                                       

          (i)  "Incentive  Share" means a share of Common Stock awarded to a Key
     Participant  under Article VI hereof on such terms as are determined by the
Committee.                                                            

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          (j) "Incentive Share Agreement" means a written agreement in such form
     as the Board or Committee, as applicable,  shall approve that evidences the
terms and conditions of an award of Incentive Shares hereunder.       

          (k)  "Incentive  Stock Option"  means an option to purchase  shares of
     Common Stock which is intended to qualify as an  incentive  stock option as
defined in Section 422 of the Code.                                   

          (1) "Key Participant" means any person, including officers, directors,
     employees,  agents and consultants of the Company or any Subsidiary who are
     designated a Key Participant by the Board or Committee, as applicable,  and
     is or is expected to be primarily  responsible for the management,  growth,
     or  supervision  of some part or all of the  business of the  Company.  The
     power to  determine  who is and who is not a Key  Participant  is  reserved
solely for the Committee.                                             

          (m) "Nonqualified  Stock Option" means an option to purchase shares of
     Common Stock which is not intended to qualify as an Incentive  Stock Option
as defined in Section 422 of the Code.                                

          (n) "Option" means an Incentive  Stock Option or a Nonqualified  Stock
Option.                                                               

          (o)  "Optionee"  means a Key  Participant to whom an Option is granted
under the Plan.                                                       

          (p) "Parent" means any  corporation  which  qualifies as a parent of a
     corporation  under the  definition  of "parent  corporation"  contained  in
Section 425(e) of the Code.                                           

          (q)  "Subsidiary  "  means  any  corporation   which  qualifies  as  a
     subsidiary  of  a   corporation   under  the   definition  of   "subsidiary
corporation" contained in Section 425(f) of the Code.                 

          (r) "Term" means the.  period during which a particular  option may be
     exercised  as  determined  by the  Committee  and as provided in the option
agreement.                                                            

1.3  Administration of the Plan.                                                
--------------------------                                            

     The Plan shall be administered by a committee (the  "Committee")  appointed
     by the Board of  Directors  consisting  solely of two or more  Non-Employee
     Directors,  as defined in Rule 16b-3 (see Section 1.10,  below),  or in the
     absence of an appointment  of such a Committee,  the full Board shall serve
     as the Committee. Subject to the control of the Board, and without limiting
     the control over  decisions  described in Section 1.7, the Committee  shall
     have the power to interpret and apply the Plan and to make  regulations for
     carrying out its purpose. More particularly,  the Committee shall determine
     which  Key  Participants  shall be  granted  Options  and the terms of such
     grants. When granting Options,  the Committee shall designate the Option as
     either  an  Incentive   Stock  Option  or  a  Nonqualified   Stock  Option.
     Determinations  by  the  Committee  under  the  Plan  (including,   without
     limitation,  determinations  of the  person to  receive  Awards,  the form,
     amount  and timing of such  Awards,  and the terms and  provisions  of such
     Awards and the agreements  evidencing  same) need not be uniform and may be
     made by it  selectively  among  persons  who  receive,  or are  eligible to
     receive,  Awards under the Plan,  whether or not such persons are similarly
     situated. In serving on the Committee,  members thereof shall be considered
     to be acting in their  capacity  as members of the Board of  Directors  and
     shall be entitled to all rights of  indemnification  provided by the Bylaws
of the Company or otherwise to members of the Board of Directors.     

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1.4  Shares Subject to the Plan.                                                
--------------------------                                            

     The total number of shares that may be purchased  pursuant to Options under
     the Plan shall not exceed 550,000 shares of Common Stock. Shares subject to
     the Options which  terminate or expire prior to exercise shall be available
     for future Awards under the Plan without  again being  charged  against the
     limitation of 550,000 shares set forth above. Shares issued pursuant to the
     Plan may be either unissued shares of Common Stock or reacquired  shares of
Common Stock held in treasury.                                        

1.5  Terms and Conditions of Options.                                           
-------------------------------                                       

     All Options  shall be evidenced by agreements in such form as the Committee
     shall approve from time to time subject to the provisions of Article II and
Article III, as appropriate, and the following provisions:            
     (a)  Exercise.  The Committee shall  determine  whether the Option shall be
          exercisable  in full at any time during the Term or in  cumulative  or
noncumulative installments during the Term.                 

     (b)  Termination  of Employment or Contractor  Relationship.  An Optionee's
          Options  shall  expire  on the  expiration  of the Tern  specified  in
          Section 2.1 or 3.1 as the case may be, or upon the  occurrence of such
          events as are specified in the agreement.  In the event of exercise of
          the Option after termination of employment or contractor relationship,
          the  Optionee  may exercise the Option only with respect to the shares
          which could have been  purchased  by the  Optionee at the date of such
          termination,  and  then  only  for a  period  of 90  days  thereafter.
          However,  the  Committee  may,  but  is not  required  to,  waive  any
          requirements  made  pursuant to Section  1.5(b) so that some or all of
          the shares  subject to the  Option  may be  exercised  within the time
          limitation described in this subsection.  An Optionee's  employment or
          contractor  relationship shall be deemed to terminate on the last date
          for which he  receives a regular  wage,  salary or  contract  payment.
          Whether  military,  government  or other  service  or  other  leave of
          absence  shall   constitute  a  termination  of  employment  shall  be
          determined  in each case by the Committee at its  discretion,  and any
          determination  by the  Committee  shall be  final  and  conclusive.  A
          termination of employment or contractor  relationship  shall not occur
          where  the  Optionee   transfers  from  the  Company  to  one  of  its
Subsidiaries or transfers from a Subsidiary to the Company. 

     (c)  Death or Disability.  Upon termination of an Optionee's  employment or
          contractor   relationship   by  reason  of  death  or  disability  (as
          determined by the Committee  consistent with the definition of Section
          422(c)(7) of the Code),  the Option shall expire on the earlier of the
          expiration  of (i) the date  specified in the Option which in no event
          shall be later than 12 months after the date of such  termination,  or
          (ii) the Term  specified in Section 2.1 or 3.1 as the case may be. The
          Optionee  or his  successor  in  interest,  as the  case  may be,  may
          exercise  the  Option  only as to the  shares  that  could  have  been
          purchased  by  the  Optionee  at  the  date  of  his   termination  of
          employment.  However, the Committee may, but is not required to, waive
          any  requirements  made pursuant to Section 1.5(b) so that some or all
          of the shares  subject to the Option may be exercised  within the time
limitation described in this subsection.                    

     (d)  Payment.  Payment for shares as to which an Option is exercised  shall
          be made in such  manner and at such time or times as shall be provided
          in the option  agreement,  including cash, Common Stock of the Company
          which was  previously  acquired by the  Optionee,  or any  combination
          thereof.  The Fair Market Value of the surrendered  Common Stock as of
          the date of exercise  shall be determined in valuing Common Stock used
in payment for Options.                                     

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     (e)  Nontransferabilitv.   No  Option  granted  under  the  Plan  shall  be
          transferable  other  than  by  will  or by the  laws  of  descent  and
          distribution.  During the lifetime of the Optionee, an Option shall be
exercisable only by the Optionee.                           

     (f)  Additional  Provisions.  Each option  agreement may contain such other
          terms and conditions not inconsistent with the provisions of the Plan,
          including  the  award  of cash  amounts,  as the  Committee  may  deem
appropriate from time to time.                              

1.6  Sock Adjustments: Mergers.                                                 
-------------------------                                             

     (a)  Generally.  Notwithstanding  Section 1.4, in the event the outstanding
          shares are  increased or decreased or changed into or exchanged  for a
          different  number or kind of shares or other securities of the Company
          or of any other  corporation  by reason of any merger,  sale of stock,
          consolidation, liquidation, recapitalization,  reclassification, stock
          split up, combination of shares, stock dividend, or transaction having
          similar  effect,  the total  number of shares set forth in Section 1.4
         shall be proportionately and appropriately adjusted by the Committee.

     (b)  Options. Following a transaction described in subsection (a) above, if
          the Company continues in existence, the number and kind of shares that
          are  subject to any option  and the  option  price per share  shall be
          proportionately  and appropriately  adjusted without any change in the
          aggregate  price to be paid therefor  upon exercise of the Option.  If
          the Company will not remain in existence or  substantially  all of its
          voting  Common  Stock and Common  Stock will be  purchased by a single
          purchaser or group of purchasers  acting together,  then the Committee
          may (i) declare  that all Options  shall  terminate  30 days after the
          Committee  gives written notice to all  Optionee's of their  immediate
          right to exercise  all Options  then  outstanding  (without  regard to
          limitations on exercise otherwise  contained in the Options),  or (ii)
          notify all  Optionee's  that all Options  granted under the Plan shall
          apply with  appropriate  adjustments as determined by the Committee to
          the  securities of the successor  corporation  to which holders of the
          numbers of shares subject to such Options would have been entitled, or
          (iii) take action that is some combination of aspects of (i) and (ii).
          The  determination  by the  Committee  as to the  terms  of any of the
          foregoing  adjustments shall be conclusive and binding. Any fractional
          shares  resulting  from any of the  foregoing  adjustments  under this
section shall be disregarded and eliminated.                

1.7  Acceleration Event.                                                        
------------------                                                    

     If an  Acceleration  Event occurs in the opinion of the Board of Directors,
     based on circumstances  known to it, the Board of Directors may, but is not
     obligated  to,  direct the  Committee  to declare  that any or all  Options
     granted under the Plan shall become exercisable immediately notwithstanding
the provisions of the respective agreements granting any such Awards. 

1.8  Notification of Exercise.                                                  
------------------------                                              

     Options shall be exercised by written  notice  directed to the Secretary of
     the Company at the principal executive offices of the Company. Such written
     notice shall be accompanied  by any payment  required  pursuant'to  Section
     1.5(d).  Exercise by an Optionee's heir or the representative of his estate
     shall  be  accompanied  by  evidence  of his  authority  to so act in  form
reasonably satisfactory to the Company.                               

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1.9  Modification. Extension and Renewal of Awards.                             
---------------------------------------------                         

     Subject to the terms and conditions and within the limitations of the Plan,
     the Committee may modify,  extend or renew outstanding Awards or accept the
     surrender of outstanding  Awards (to the extent not theretofore  exercised)
     granted  under  the  Plan or  under  any  other  plan of the  Company  or a
     Subsidiary,  and authorize the granting of new Awards  pursuant to the Plan
     in  substitution  therefor,  and  the  substituted  Awards  may  bear  such
     different or additional  terms and  conditions as the Committee  shall deem
     appropriate  within  the  limitations  of  the  Plan.  Notwithstanding  the
     foregoing,  however, no modification of an Award shall, without the consent
     of  the  Grantee  holding  the  Award,   adversely  affect  the  rights  or
obligations of such Grantee.                                          

1.10. Compliance with Rule 16b-3.                                               
--------------------------                                          

     It is intended  that the  provisions of the Plan and any Award shall comply
     in all  respects  with the terms and  conditions  of Rule  16b-3  under the
     Securities  Exchange  Act of 1934,  as in effect on  January 1, 1999 and as
     amended, or any successor  provisions,  as it relates to persons subject to
     the  reporting  requirements  of Section  16(a) of such Act. Any  agreement
     granting  an Award  shall  contain  such  provisions  as are  necessary  or
     appropriate  to assure such  compliance.  To the extent that any  provision
     hereof is found not to be in  compliance  with such rule as it  relates  to
     such Act,  such  provision  shall be deemed to be  modified  so as to be in
     compliance with such rule, or if such  modification is not possible,  shall
be deemed to be null and void, as it relates to such Grantee.         

ARTICLE II - INCENTIVE STOCK OPTIONS

2.1  Terms of Incentive Stock Options.                                          
--------------------------------                                      

     Each  Incentive  Stock Option  granted under the Plan shall be  exercisable
     only during a Term fixed by the Committee; provided, however, that the Term
     shall end no later than 10 years after the date the Incentive  Stock Option
is granted.                                                           

2.2  Limitation on Options.                                                     
---------------------                                                 

Not applicable at this time.                                          

2.3  Special Rule for Ten Percent Shareholder.                                  
----------------------------------------                              

     If at the time an Incentive  Stock Option is granted,  a  participant  owns
     stock  possessing  more than ten percent (10%) of the total combined voting
     power of all classes of stock of his employer  corporation or of its Parent
     or any of its  Subsidiaries,  as determined using the attribution  rules of
     Section  424(d) of the Code,  then the terms of the Incentive  Stock Option
     shall  specify  that the  option  price  shall be at least 110% of the Fair
     Market Value of the stock  subject to the  Incentive  Stock Option and such
     Incentive  Stock Option shall not be  exercisable  after the  expiration of
five years from the date such Incentive Stock Option is granted.      

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2.4  Interpretation.                                                            
--------------                                                        

     In  interpreting  this  Article  II of  the  Plan  and  the  provisions  of
     individual option agreements, the Committee and the Board shall be governed
     by the  principles  and  requirements  of Sections  421, 422 and 425 of the
Code, and applicable Treasury Regulations.                            

ARTICLE III - NONQUALIFIED STOCK OPTIONS

3.1  Terms and Conditions of Options.                                           
-------------------------------                                       

     In addition to the  requirements  of Section 1.5, each  Nonqualified  Stock
     Option granted under the Plan shall be exercisable only during a Term fixed
by the Committee.                                                     

3.2  Section 831b) Election.                                                    
----------------------                                                

     The Company recognizes that certain persons who receive  Nonqualified Stock
     Options  may be  subject to  restrictions  regarding  their  right to trade
     Common Stock under  applicable  securities  laws. Such may cause Optionee's
     exercising  such Options not to be taxable under the  provisions of Section
     83(c) of the Code.  Accordingly,  Optionee's  exercising such  Nonqualified
     Stock Options may consider  making an election to be taxed upon exercise of
     the Option under Section 83(b) of the Code and to effect such election will
     file such election  with the Internal  Revenue  Service  within thirty (30)
     days of exercise of the Option and otherwise in accordance  with applicable
Treasury Regulations.                                                 

ARTICLE IV - ADDITIONAL PROVISIONS

4.1  Stockholder Approval.                                                      
--------------------                                                  

     The Plan shall be  submitted  for the approval of the  stockholders  of the
     Company at the first annual meeting of stockholders  held subsequent to the
     adoption of the Plan and in all events  within two years of its approval by
     the Board of Directors.  If at said meeting the stockholders of the Company
do not approve the Plan, the Plan shall terminate.                    

4.2  Compliance with Other Laws and Regulations.                                
------------------------------------------                            

     The Plan, the grant and exercise of Options  hereunder,  and the obligation
     of the  Company to sell and deliver  shares  under such  Options,  shall be
     subject to all applicable  Federal and state laws,  rules,  and regulations
     and to such  approvals by any  government  or  regulatory  agency as may be
     required.  The  Company  shall  not be  required  to issue or  deliver  any
     certificates  for shares of Common  Stock  prior to (a) the listing of such
     shares on any stock  exchange on which the Common  Stock may then be listed
     and (b) the completion of any registration or qualification or exemption of
     such shares under any Federal or state law, or any ruling or  regulation of
     any  government  body  which the  Company  shall,  in its sole  discretion,
determine to be necessary or advisable.                               

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4.3  Amendments.                                                                
----------                                                            

     The Board of Directors may  discontinue the Plan at any time, and may amend
     it  from  time  to  time,  but no  amendment,  without  approval  by 51% of
     stockholders'  vote,  may  increase the total number of shares which may be
     issued under the Plan. Other than as expressly permitted under the Plan, no
     outstanding Award may be revoked or altered in a manner  unfavorable to the
Grantee without the consent of the Grantee.                           

4.4  No Rights As Shareholder.                                                  
------------------------                                              

     No Grantee shall have any rights as a shareholder with respect to any share
     subject to his or her Option prior to the date of issuance to him or her of
a certificate or certificates for such shares.                        

4.5  Withholding.                                                               
-----------                                                           

     Whenever the Company proposes or is required to issue or transfer shares of
     Common  Stock under the Plan,  the Company  shall have the right to require
     the  Grantee to remit to the  Company an amount  sufficient  to satisfy any
     Federal,  state or local  withholding  tax  liability  in such  form as the
     Company may determine or accept in its sole discretion,  including  payment
     by  surrender  or retention of shares of Common Stock prior to the delivery
of any certificate or certificates for such shares.                   

4.6  Continued Employment Not Presumed.                                         
---------------------------------                                     

     This Plan and any document  describing this Plan and the grant of any Award
     hereunder  shall  not give any  Optionee  or other  Participant  a right to
     continued  employment or directorship by the Company or its Subsidiaries or
     affect  the right of the  Company  or its  Subsidiaries  to  terminate  the
employment or directorship of any such person with or without cause.  

4.7  Effective Date: Duration.                                                  
------------------------                                              

     The Plan shall become effective as of the date of stockholder  approval and
     shall expire ten years thereafter.  No Awards may be granted under the Plan
     after the expiration date, but Awards granted on or before that date may be
     exercised  according  to the  terms of the  related  agreements  and  shall
     continue  to be  governed  by and  interpreted  consistent  with the  terms
hereof.                                                               

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Dates Referenced Herein

				Referenced-On Page
This ‘10QSB’ Filing		Date		First		Last			Other Filings
Filed on:		11/14/01							None on these Dates
		10/4/01		1		9
		10/2/01		1		2
For Period End:		9/30/01
		9/14/01		1
		8/29/01		1		9
		1/1/99		14
									List all Filings