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<SEC-DOCUMENT>0000912057-00-052416.txt : 20020425
<SEC-HEADER>0000912057-00-052416.hdr.sgml : 20020425
ACCESSION NUMBER:		0000912057-00-052416
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20001121
ITEM INFORMATION:		Changes in control of registrant
ITEM INFORMATION:		Acquisition or disposition of assets
FILED AS OF DATE:		20001206
DATE AS OF CHANGE:		20001207

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NVE CORP /NEW/
		CENTRAL INDEX KEY:			0000724910
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-PREPACKAGED SOFTWARE [7372]
		IRS NUMBER:				411424202
		STATE OF INCORPORATION:			MN
		FISCAL YEAR END:			0331

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	005-59937
		FILM NUMBER:		00784314

	BUSINESS ADDRESS:	
		STREET 1:		11409 VALLEY VIEW ROAD
		CITY:			EDEN PRAIRIE
		STATE:			MN
		ZIP:			55344
		BUSINESS PHONE:		9528299217

	MAIL ADDRESS:	
		STREET 1:		11409 VALLEY VIEW ROAD
		CITY:			EDEN PRAIRIE
		STATE:			MN
		ZIP:			55344

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PREMIS CORP
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>a2032518z8-k.txt
<DESCRIPTION>FORM 8-K
<TEXT>

<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K


                                 CURRENT REPORT
                       PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934


Date of Report (date of earliest event reported):      November 21, 2000
                                                 ------------------------------

                                 NVE Corporation
                                ----------------
             (Exact name of registrant as specified in its charter)


                                    Minnesota
                                   ----------
                 (State or other jurisdiction of incorporation)



         0-12196                                          41-1424202
- -------------------------------                        ------------------------
Commission File Number                                          I.R.S. Employer
                                                          Identification number

11409 Valley View Road, Eden Prairie, Minnesota                           55344
- -----------------------------------------------                           -----
(Address of principal executive offices)                             (Zip code)

Issuer's telephone number, including area code: (952) 829-9217
                                               -----------------

                               PREMIS Corporation
                 13220 County Road 6, Plymouth, Minnesota 55441
                 ----------------------------------------------
          (Former name or former address, if changed since last report)

<PAGE>

ITEM 1.  CHANGE IN CONTROL OF REGISTRANT.

         Effective as of November 21, 2000 (the "Effective Date"), and
pursuant to that certain Agreement and Plan of Merger (the "Agreement"),
dated as of September 22, 2000, by and between Nonvolatile Electronics,
Incorporated (NVE), a Minnesota corporation ("Merged NVE"), and PREMIS
Corporation ("Premis"), a Minnesota corporation, Merged NVE has successfully
merged with and into Premis (the "Merger"), with Premis surviving under the
new name NVE Corporation (the "Company"). In connection with the Merger, as
of November 20, 2000 (the "Record Date"), all outstanding shares of common
stock of Premis held as of the Record Date were converted in a reverse
stock-split to .2 shares of common stock of Premis. Similarly, as of the
Effective Date, all shares of common stock of Merged NVE outstanding
immediately prior to the Effective Date were converted into 3.5 shares of
stock of the Company. As this was a stock for stock transaction, no loans
were utilized in connection with the Merger. A copy of the Agreement is
incorporated as an exhibit to this Form 8-K by reference to the Definitive
Proxy Statement on Schedule 14 filed by Premis on November 16, 2000, and is
incorporated herein in its entirety. The foregoing description is modified by
such reference.

         As of the Effective Date, and pursuant to the terms of the Agreement,
the directors of the Company are James Daughton, Terrance Glarner, Herbert
Goronkin and Robert Irish, the former directors of Merged NVE. Such directors
have elected the following officers: James Daughton, President and Chief
Executive Officer, and Richard George, Treasurer and Chief Financial Officer.
Both Dr. Daughton and Mr. George held similar offices for Merged NVE.

         Prior to the Merger, F.T. Biermeier, the President and Chief
Executive Officer of Premis, controlled Premis by holding 36.6% of the
outstanding shares of common stock of Premis. As a result of the Merger,
however, the controlling shareholders of Merged NVE have obtained control of
the Company. Set forth below is certain information with respect to
approximate beneficial ownership of the Company as of November 21, 2000, by
each director, all directors and officers as a group and all persons owning
more than 5% or more of the common stock of the Company. Except as otherwise
noted below, each person and group identified below possesses all voting and
investment discretion with respect to the shares listed below.

<TABLE>
<CAPTION>
                  NAME                               ADDRESS            SHARES OWNED         PERCENT
                  ----                               -------            ------------         -------
<S>                                       <C>                           <C>                  <C>
Norwest Equity Partners(1)                3600 IDS Center                 7,577,434           44.8%
                                          80 S. 8th St.
                                          Minneapolis, MN 55402

James Daughton                            18687 Melrose Chase             2,700,632(2)         16%
                                          Eden Prairie, MN 55347

Motorola, Inc.                            c/o Don McLellan                1,750,000           10.3%
                                          1303 East Allonquin Rd.
                                          Schaumberg, IL 60196

Herbert Goronkin                          8641 S. Willow Dr.                      0            0%
                                          Tempe, AZ 85284

Richard George                            5145 Tifton Dr.                   472,500(3)        2.8%
                                          Edina, MN 55439

Robert Irish                              17910-39th Place North            182,261(4)        1.1%
                                          Plymouth, MN 55446-1318

Terrence Glarner                          3600 IDS Center                     3,200(5)        .02%

<PAGE>

                                          80 S. 8th St.
                                          Minneapolis, MN 55402

All Company directors, officers and owners                               12,686,027            75%
of more than 5% of the stock as a group
(7 persons)
</TABLE>

(1)      Includes shares held by Norwest Equity Partners IV, LLP, and Norwest
         Equity Partners V, LLP.

(2)      Excludes options to purchase up to 175,000 shares of common stock of
         the Company.

(3)      Excluded options to purchase up to 35,000 shares of common stock of the
         Company.

(4)      Includes shares of common stock of the Company controlled by Mr. Irish
         in various accounts. Excludes options to purchase up to 7,000 shares of
         common stock of the Company.

(5)      Excludes options to purchase up to 29,000 shares of common stock of the
         Company.


ITEM 2.  ACQUISITION OR DISPOSITION OF ASSETS

         The Merger of Merged NVE with and into Premis, with the Company
surviving, was a stock for stock transaction and no loans were utilized in the
transaction. The consideration provided by the parties pursuant to the Agreement
was negotiated between Merged NVE and Premis. In evaluating the Merger, Premis
considered whether it would be in best interests of its shareholders to acquire
a technology business through a merger or whether it should liquidate the
corporation and distribute the remaining assets to its shareholders. Merged NVE
considered the value of Premis's status as a publicly reporting company, its
ability to succeed to the reporting status of Premis and the cash assets of
Premis.

         As of the Effective Date, pursuant to Rule 12g-3 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Company became the
successor issuer to Premis for reporting purposes under the Exchange Act and
elects to report under the Exchange Act as of the Effective Date. As such, in
order to comply with that certain letter dated as of April 7, 2000, addressed to
the Director of Listing Qualifications of the Nasdaq Stock Exchange, Inc., by
the Office of Small Business of the Securities and Exchange Commission, the
Company is providing the forgoing information.

                           FORWARD LOOKING STATEMENTS

         Statements included in this Current Report on Form 8-K, except for the
historical information contained herein, may be forward-looking statements
within the meaning of Section 21E of the Exchange Act, which are subject to the
safe harbor created by that statute, and further, may contain forward-looking
statements that are made in reliance upon the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. The words or phrases "will
likely result," "are expected to," "will continue," "is anticipated,"
"estimate," "project," "believe" or similar expressions identify forward-looking
statements. Actual results may be different from those described in the
forward-looking statements. Future events involve risks and uncertainties. Some
of these risks and uncertainties are outside the control of management. Readers
are cautioned against placing undue reliance on the forward-looking statements
due to these risks and uncertainties and are cautioned to review the historical
information and statements of risk contained in the Company's Securities and
Exchange Commission reports.


                                       2
<PAGE>

                           DESCRIPTION OF THE BUSINESS

GENERAL

         As a result of the Merger, the Company has acquired the business of
developing, producing and marketing components that combine giant
magnetoresistance (GMR) materials with integrated circuits. Merged NVE was
formed in 1989 as the result of research completed by Dr. James Daughton while
employed with Honeywell. Historically, Merged NVE has been a research and
development (R&D) company funded largely by government contracts, and to a
lesser extent by licenses, royalties and the sales of products and stock.
Contract R&D has not only supplied revenues, but additionally, it has helped to
supplement the R&D required for the product areas and fund operations. In each
of 1999 and 1998, Merged NVE spent approximately 825,000 hours on R&D
activities. In 1999, approximately $4,847,000 of the costs associated with such
R&D were borne directly by the customers of Merged NVE, and in 1998,
approximately $3,906,000 of the costs associated with such R&D were borne
directly by the customers of Merged NVE.

         Merged NVE first sold and shipped products using GMR materials in 1995,
and produced the first known products combining GMR materials with integrated
circuits in 1998. At the time of the Merger, Merged NVE was recognized as a
leader in both the development and application of GMR materials and other
advanced magnetic materials. The largest customer of Merged NVE at the time of
the Merger was the United States government and, although no current problems
exist with respect to any government contract or with the Company's vibrant
relationship with the government funding vehicles, disqualification as a vendor
to the United States government would be a serious setback for the Company on a
going forward basis and would likely hamper future R&D activity.

         Merged NVE developed the capability to deposit and optically define
conductor, dielectric and metal films, and to fully integrate circuit and
magnetic device design. Additionally, Merged NVE acquired certification to
manufacture products under ISO 9001. Due to product sales abroad, however,
Merged NVE also acquired some limited revenue risks from fluctuations in values
of foreign currency. The product areas acquired by the Company, including
sensors, signal isolators and nonvolatile memories, are discussed below.

PRODUCTS

         SENSORS. Sensors combine integrated circuits with GMR material. This
GMR material is deposited in layers and lithographically formed into resistors
which change value when introduced to a magnetic field. The resistors are then
connected together with transistors to form circuits that are sensitive to
magnetic fields. These circuits are then packaged in much the same way as
conventional integrated circuits. Other products developed by Merged NVE are
produced by similar methods.

         Sensors are quite small and they are very sensitive to magnetic
fields. In addition, they are able to operate at relatively high temperatures
(125 degrees Centigrade and higher). This combination of attributes should allow
them to be used in a variety of industrial control applications.

         Over the past year, Merged NVE has concentrated its marketing efforts
on pneumatic cylinder position sensing. As a result, three of the top four users
of sensors have started integrating the Merged NVE sensor, and several other
smaller users are in the process of converting to the Merged NVE sensor. New
applications the Company may target include currency detection, in-bearing
sensors, pacemakers, anti-skid brake systems ("ABS"), currency detection and
medical electronics.

         As a result of the Merger, the Company has acquired US and foreign
patents for the GMR materials used in its sensor and a US patent for the circuit
configuration. The Company has also


                                       3
<PAGE>

obtained know-how in the following areas: sputtering of the GMR materials;
maintenance of process and packaging compatibility with integrated circuits;
plating of thick magnetic materials for shielding and flux concentration; sensor
and circuit design; and testing techniques. At this time, the Company does not
know of any direct competitor that manufactures a similar sensor.

         Historically, Merged NVE has used a combination of distributors,
manufacturers' representatives and direct sales for sales of the sensor. The
Company plans to continue to use this combination for the foreseeable future.
Distributors handle smaller orders (typically under $1000), while manufacturers'
representatives and direct sales account for larger orders. The largest sensor
order from Merged NVE totaled approximately $100,000.

         Prior to the Merger, Merged NVE was in the process of developing
sensors for the industrial controls, ABS and currency detection markets. The
Company will continue this development, as it typically takes from three to five
years from start of development to sales in the automotive markets, and from one
to three years from the start of development to sales in the industrial controls
market.

         ISOLATORS. Isolators reduce or eliminate ground noise in
communications carried by wire which is the result of connecting electrical
circuits having independent grounds. In some cases, isolators may also
provide for limited protection against electrical damage. The isolator
developed by Merged NVE uses the ISOLOOP-Registered Trademark-, an integrated
coil made by integrated circuit techniques that are electrically insulated from
a sensor made from GMR resistors and integrated circuits, and packaged in a
standard integrated circuit package. The resulting isolator is faster and
smaller than any other existing known approach, as well as being very cost
competitive.

         The two main competing technologies of which the Company is aware
are opto-isolators and inductive isolators. The fastest opto-isolators currently
run at frequencies below 20 million cycles per second, whereas
ISOLOOP-Registered Trademark- isolators operate at 100 million cycles per
second, with the potential to run ten times faster than the frequency currently
achieved. Inductive isolators require special data encoding in order to transmit
logic signals, whereas ISOLOOP-Registered Trademark- isolators do not require
such signals. Furthermore, ISOLOOP-Registered Trademark- isolators require less
board area than either the opto-isolators or the inductive isolators.

         Isolators are commonly used in a variety of communication networks.
Differences in ground potentials between pieces of electronics gear are
virtually impossible to eliminate, and the resulting noise is often much larger
than the logic signals transmitted. The isolator can virtually eliminate this
noise.

         As a result of the high speed of the ISOLOOP-Registered Trademark-
isolators, signal isolation in high speed communications will be possible for
systems using random signal transmission in wires. Isolation in back planes
of PC's and other high speed systems may enable these systems to operate at
higher speeds.

         As ISOLOOP-Registered Trademark- products have the potential for
high growth, the Company currently anticipates that the sales of isolator
products will account for a significant portion of the Company's revenues in the
future.

         The Company has acquired Merged NVE's basic patent on the use of a
magnetic sensor and integrated coils to construct an isolator. Patents
containing several improvements on this basic patent have also been filed.
These patents, together with know-how in the design, processing, packaging
and testing of the ISOLOOP-Registered Trademark- products, are the primary
barriers to those competing with the Company' isolator products.

         Initial distribution channels for isolators have been established in
the United States, Europe, Japan, Korea, China and Taiwan. Domestically, up to
the time of the Merger, Merged NVE had used direct sales and appointed
distributors for distribution of its isolators, however, future distribution
may include the use of


                                       4
<PAGE>

additional distributors or manufacturers' representatives. Additionally, the
Company has participated in initial discussions with a major producer of
opto-isolators who may be interested in "private labeling" of
ISOLOOP-Registered Trademark-products. Prior to the Merger, sales of
isolators have typically been for purposes of design analysis and low volume
production. Additionally, isolators have been sold to many large electronics
and semiconductor corporations for testing purposes. The Company believes
that, initially, its isolators may be used in applications of data
communications in the industrial and telecommunications markets. The typical
time from design to production orders in these markets is one to three years.

         MRAM. Magnetoresistive computer memory technology ("MRAM") is a
nonvolatile memory, meaning that data is retained after electrical power to the
memory chip is removed, invented by Dr. Arthur Pohm and Dr. James Daughton while
they were employed at Honeywell. In MRAM, data is stored in the magnetism of
thin films of iron, nickel and cobalt alloys and then recovered through the
magnetoresistive properties of devices made chiefly of these alloys. Dr. James
Daughton founded Merged NVE with the intent to develop one or more commercial
applications for MRAM and other GMR products. After the discovery of GMR, and in
conjunction therewith, a considerable amount of innovative work in MRAM had been
done at Merged NVE. In fact, Merged NVE invented several memory cells and modes
of operation that are being adapted by several large companies including
Motorola, IBM and Honeywell. Although MRAM is not currently in production at the
Company or elsewhere, there are ongoing development efforts at various
companies, including Motorola, Honeywell, USTC, IBM and Hewlett Packard.

         The advantages that MRAM has over other solid state nonvolatile memory
technologies are its ability to write fast (less than 100 billionths of a
second) and indefinitely (other competing technologies are limited to about one
million write cycles and will wear out with continuous writing in less than a
second). Applications that could potentially use these properties include:
cameras and copiers, reconfigurable computing, cell phones and other "imbedded"
memory applications.

         The Company believes that the patent coverage it acquired from Merged
NVE for MRAM is broad. Not only did it acquire the intellectual property of
Merged NVE relating to MRAM, but further, the Company believes that it has
either acquired or will have the right to acquire a sublicense for Honeywell
MRAM technology. The Company further acquired rights under license agreements
with Motorola and USTC. If MRAM products are produced under the Company's
license agreements, it could potentially earn significant revenues from initial
payments and royalties.

         There is also potential for the Company to produce MRAM niche products.
The Company is currently funded under a research contract to develop a memory
chip for use in reconfigurable computing.

         As MRAM is still in development stages at the Company and elsewhere, it
is difficult to forecast the potential revenues that the Company could earn from
the licensing and sale of niche memory. Current forecasts anticipate minor
revenues from MRAM for the next several years, however, this forecast may
change if holders of MRAM licenses have success in their product development and
introduction.

CONTRACT R&D

         As was the case for Merged NVE, contract R&D will provide a majority of
the Company's revenues. Contract R&D was the source of Merged NVE's underlying
patents and product developments for the sensor, isolator and MRAM products.


                                       5
<PAGE>

         The Company acquired 16 US patents and 14 patents pending, from Merged
NVE. Additionally, the Company acquired 2 foreign patents and 6 foreign patents
pending. The Company's issued U.S. and foreign patents are listed in exhibits
99.1 and 99.2, which are attached to this current report in Form 8-K. By virtue
of a technology license agreement with Dr. James Daughton, the Company believes
that it either has acquired or may acquire rights to sublicense certain of
Honeywell's intellectual property in the MRAM technology.

         It is projected that activities in this area will result in additional
intellectual property, enhancement to current product lines, license revenue and
possibilities for future product areas. While contract R&D will be a very
important component of the Company's business, the percentage of total revenues
from contract R&D may shrink if there is significant growth in product sales.

COMPETITION

         Three of the Company's chief competitors in sensors are Honeywell,
Allegro and Phillips. Honeywell and Phillips make magnetoresistive sensors using
a traditional nickel iron alloy rather than the GMR materials used by the
Company. Allegro makes very cost competitive sensors using a Silicon Hall,
however, Silicon Hall sensors are not as sensitive to magnetic fields as those
of the Company. These competitors, as well as several other sensor producers,
have greater financial resources and larger R&D budgets and more fully developed
distribution systems than those of the Company.

         Agilient, a Hewlett Packard spin-off, is the leading producer of
high speed opto-isolators. Some of the other top producers of opto-isolators
are Infineon, NEC, Toshiba and Fairchild Semi-conductor. These competitors,
as well as several other isolator producers, have greater financial resources
and larger R&D budgets and more fully developed distribution systems than
those of the Company.

         Motorola, IBM, Hewlett Packard, USTC and Honeywell have significant R&D
efforts in MRAM technology. Hewlett Packard and USTC have stated they plan to
introduce MRAM products in the next year, and Motorola has stated that it plans
to introduce MRAM products within the next couple of years. Significant new
inventions by larger companies with greater financial resources and R&D budgets
could erode the value of the Company's MRAM technology, and the licenses
thereto.

EMPLOYEES

         The Company currently has 56 employees, 49 of which are full-time
employees: one executive, four administrative employees, six sales and marketing
employees, 20 technicians and 25 scientists. Nine current employees have earned
doctorate degrees. No employee of the Company is represented by a labor union or
is subject to a collective bargaining agreement, and the Company believes that
it maintains good relations with its employees.

RISK FACTORS

         THE LIQUIDITY OF THE COMMON STOCK OF THE COMPANY MAY BE LIMITED BY
BROKER-DEALER REGULATIONS CONCERNING SALES OF "PENNY STOCK." Federal regulations
promulgated under the Exchange Act regulate the trading of so-called "penny
stocks" (the "Penny Stock Rules"), which are generally defined as any security
not listed on a national securities exchange or Nasdaq, priced at less than
$5.00 per share and offered by an issuer with limited net tangible assets and
revenues. In addition, equity securities listed on Nasdaq that are priced at
less than $5.00 per share are deemed penny stocks for the limited purpose of
Section 15(b)(6) of the Exchange Act. Therefore, trading of common stock of the
Company, if it is priced below $5.00 per share (which is consistent with current
pricing), will be subject to the provisions of Section 15(b)(6) of the Exchange
Act, which make it unlawful for any broker-dealer to participate in a
distribution of any penny stock without the consent of the SEC if, in the
exercise of reasonable care, the


                                       6
<PAGE>

broker-dealer is aware of or should have been aware of the participation of a
previously sanctioned person. In such event, it may be more difficult for
broker-dealers to sell the common stock of the Company, and purchasers of shares
of common stock of the Company may experience difficulty in selling such shares
in the future in secondary trading markets.

         So long as the common stock of the Company is not traded in the Nasdaq
SmallCap Market or Nasdaq National Market, trading, if any, is subject to the
Penny Stock Rules. Under Exchange Act Rule 15g-8, broker-dealers must take
certain steps prior to selling a penny stock. Many brokers refrain from any
trading in such stock as a result of the requirements which include:

         -        obtaining financial and investment information from the
                  investor;

         -        obtaining a written suitability questionnaire and purchase
                  agreement signed by the investor;

         -        providing the investor with a written identification of the
                  shares being offered and in what quantity; and

         -        delivering to the investor a written statement setting forth
                  the basis on which the broker-dealer approved the investor's
                  account for the transaction.

         If the Penny Stock Rules are not followed, the investor has no
obligation to purchase the shares. Accordingly, the application of the Penny
Stock Rules makes it more difficult for broker-dealers to sell the common stock,
and purchasers may have difficulty in selling the shares in secondary trading
markets.

         EFFECTIVE ON JULY 17, 1998, THE COMMON STOCK OF THE COMPANY WAS
DELISTED FROM TRADING ON THE NASDAQ NATIONAL MARKET AND THE NASDAQ SMALLCAP
MARKET. The Company may apply for initial listing of its common stock on the
Nasdaq SmallCap Market. To qualify, however, the Company must comply with the
applicable requirements for initial inclusion on the Nasdaq SmallCap Market.
Failure to comply with these requirements, which requirements are not currently
being met by the Company, may result in the common stock of the Company not
qualifying for listing on the Nasdaq SmallCap Market. For listing on the Nasdaq
National Market, the Company would have to comply with certain initial listing
requirements that are more stringent than the comparable initial listing
requirements for the Nasdaq SmallCap Market.

         YOU MAY EXPERIENCE VOLATILITY IN THE PRICE OF THE COMMON STOCK OF THE
COMPANY. The market price of the common stock of the Company may be highly
volatile and could be subject to wide fluctuations in response to quarterly
variations in operating results; announcements of technological innovations or
new software by the Company or its competitors, services or products; changes in
financial estimates by securities analysts or other events or factors; and
significant sales into a low volume trading market, many of which are beyond the
control of the Company. In addition, the stock market has experienced
significant price and volume fluctuations that have particularly affected the
market prices of equity securities of many technology and service companies and
that often have been unrelated to the operating performance of such companies.
These broad market fluctuations may adversely affect the market price of the
common stock of the Company. In the past, following periods of volatility in the
market price for a company's securities, securities class action litigation
often has been instituted. Such litigation could result in substantial costs and
a diversion of management attention and resources, which could have a material
adverse effect on the business, financial condition and operating results of the
Company.


                                       7
<PAGE>

         THE COMPANY DOES NOT INTEND TO PAY DIVIDENDS. The Company plans to
retain all earnings in the foreseeable future for continued growth and does not
expect to declare or pay any cash dividends in the foreseeable future. Moreover,
the ability by the Company to pay dividends in the future may be restricted by
its covenants with commercial lenders and institutional investors.

         THE COMPANY WILL BE CONTROLLED BY A SMALL NUMBER OF SHAREHOLDERS.
Currently, the directors, executive officers and certain principal shareholders
of the Company beneficially own approximately 75% of the outstanding common
stock. As a result, such directors, officers and certain principal shareholders
may have the ability to effectively control the election of the entire Board of
Directors and the affairs of the Company, including, but not limited to, all
fundamental corporate transactions such as acquisitions, mergers, consolidations
and the sale of substantially all of the assets of the Company.

         THE DIRECTORS OF THE COMPANY MAY CREATE ADDITIONAL CLASSES OF STOCK
WITHOUT SHAREHOLDER ACTION. The Board of Directors of the Company may at any
time, without any action by the shareholders of the Company, designate and issue
such classes or series of capital stock as it deems appropriate, and establish
the rights, preferences and privileges of such capital stock, including
dividend, liquidation and voting rights. No shares of preferred stock or other
senior security are currently designated, and there is no current plan to
designate or issue any such securities. The ability of the Board of Directors of
the Company to designate and issue additional classes or series of capital
stock could impede or deter an unsolicited tender offer or takeover proposal
regarding the Company. The issuance of additional shares having preferential
rights could adversely affect the voting power and other rights of holders of
the common stock of the Company.

         MINNESOTA LAW CONTAINS CERTAIN ANTI-TAKEOVER PROVISIONS. Certain
provisions of Minnesota law applicable to the Company could have the effect of
discouraging certain attempts to acquire the Company, which could deprive the
shareholders of the Company of opportunities to sell their shares at prices
higher than prevailing market prices and may also have a depressive effect on
the market price of the securities of the Company.

         THE LIABILITY OF THE MANAGEMENT OF THE COMPANY WILL BE LIMITED. The
Articles of Incorporation of the Company provide, as permitted by Minnesota law,
that its directors shall have no personal liability for certain breaches of
their fiduciary duties to the Company. This provision may reduce the likelihood
of derivative litigation against directors and may discourage shareholders from
bringing a lawsuit against directors for a breach of their duty.

         THE COMPANY WILL BE DEPENDENT ON KEY PERSONNEL. For the foreseeable
future, the Company will place substantial reliance upon the personal efforts
and abilities of Dr. James Daughton, President and Chief Executive Officer. The
loss of Dr. Daughton's services likely would have a material adverse effect on
the business, operations, revenues and/or prospects of the Company. The Company
currently has key man life insurance covering Dr. Daughton. The success of the
Company is also dependent upon its ability to retain and hire additional highly
skilled personnel. Competition among technology companies for experienced
personnel is intense. There can be no assurance that the Company will be able to
retain such personnel or hire and retain additional qualified and skilled
personnel.

         THE SUCCESS OF THE PROPOSED OPERATIONS OF THE COMPANY IS HIGHLY
SPECULATIVE. The success of the proposed plan of operation will depend to a
great extent on the operations, financial condition and management of the
Company.

         THE COMPANY WILL DEPEND ON CONTRACTS WITH VARIOUS GOVERNMENTAL SOURCES.
The contracts that the Company has with the government provide that they may be
cancelled at any time for any or no


                                       8
<PAGE>

reason. The cancellation of any contract could mean that the Company would have
to curtail or stop operations or close permanently.

         THERE ARE RISKS ASSOCIATED WITH MANAGEMENT OF A CHANGING BUSINESS. The
Company has experienced substantial changes in and expansion of its business and
operations and expects that it will continue to experience periods of rapid
change in connection with the intended development of GMR material-based
products. The past expansion of Merged NVE has placed, and any future expansion
of the Company would place, significant demands on the administrative,
operational, financial and other resources of the Company. The Company expects
operating expenses and staffing levels to increase substantially in the future.
In particular, the Company intends to hire a significant number of additional
skilled personnel, including persons with experience in the semiconductor
industry, and, in particular, persons with sales and marketing experience.
Competition for such personnel is intense, and there can be no assurance that
the Company will be able to attract or retain additional highly qualified senior
managers and technical persons in the future. The Company also expects to expend
resources with respect to future expansion of its accounting and internal
management systems and the implementation of a variety of new systems and
procedures. In addition, the Company expects that future expansion will continue
to challenge its ability to hire, train, motivate and manage its associates. If
the revenues of the Company do not increase in proportion to its operating
expenses, the management systems of the Company do not expand to meet increasing
demands, the Company fails to attract and retain qualified personnel or the
management of the Company otherwise fails to manage the expansion of the Company
effectively, there would be a material adverse effect on the business, financial
condition and operating results of the Company.

         THERE ARE RISKS ASSOCIATED WITH ENTERING NEW MARKETS. To obtain market
share in the sales of sensors and isolators requires time for manufacturers to
test, design and prototype new products. New product development cycles may take
several years before a product is ready for market and sold in volume. During
the development period, the Company or its representatives must assist the
manufacturer with samples and technical support while achieving only minimal
revenues. These long manufacturer development cycles may extend beyond the
financial strength of the Company or the will of its distributors to endure.

         THE COMPANY FACES THE RISK OF PRODUCT LIABILITY CLAIMS. The Company,
like all manufacturers, faces the risk of product liability claims. The Company
will obtain product liability insurance to meet its current risks and will
continue to evaluate risks as sales increase and product lines expand. There is
no assurance, however, that the coverage limits of the insurance policy of the
Company will be adequate. Litigation could result in substantial costs to, and a
diversion of effort by, the Company, but may be necessary to defend the Company
against such claims. Adverse determinations in any litigation could subject the
Company to significant liabilities to third parties and prevent the Company from
developing, selling or using its products, any of which could have a material
adverse affect on the business of the Company.

         THE COMPANY WILL NEED ADDITIONAL FINANCING. The Company expects that it
will need to raise additional funds in order to support more rapid expansion,
develop new or enhanced services and products, respond to competitive pressures,
acquire complementary businesses or technologies or respond to unanticipated
requirements. If additional funds are raised through the issuance of equity
securities, the percentage ownership of shareholders will be reduced,
shareholders may experience additional dilution in net book value per share or
such equity securities may have rights, preferences or privileges senior to
those of the holders of the common stock of the Company. Additional financing
may not be available when needed on terms favorable to the Company, if at all.
If adequate funds are not available on acceptable terms, the Company may be
unable to develop or enhance its services and products, take advantage of future
opportunities or respond to competitive pressures or unanticipated


                                       9
<PAGE>

requirements, any of which could have a material adverse effect on the business,
financial condition and operating results of the Company.

         THE COMPANY MAY UNDERTAKE ACQUISITIONS, JOINT VENTURES AND OTHER
STRATEGIC RELATIONSHIPS. While the Company has no current agreements with
respect to any potential acquisitions, the Company may make acquisitions in the
future. Acquisitions entail numerous risks, including difficulties in the
assimilation of acquired operations and products, diversion of management's
attention from other business concerns, amortization of acquired intangible
assets and potential loss of key employees of acquired companies. No assurance
can be given as to the ability of the Company to consummate any acquisitions or
integrate successfully any operations, personnel, services or products that
might be acquired in the future, and the failure of the Company to do so could
have a material adverse effect on the business, financial condition and
operating results of the Company.

         THE COMPANY WILL BE DEPENDANT UPON ITS PROPRIETARY TECHNOLOGY. The
Company holds several U.S. and foreign patents, as well as several pending
patents. There is no assurance that any of the pending patents will issue.
Additionally, as the Company will rely on a combination of trade secret
practices and non-disclosure agreements with it employees and vendors to protect
its rights to its products, there can be no assurance that any steps taken by
the Company will be adequate to deter misappropriation of its proprietary rights
or the development of competing products. Further, there is no assurance that
the products of the Company do not infringe on the legal rights of others. Any
such claims, with or without merit, can be time consuming and costly to defend.

         THE COMPANY MAY FIND ITS MRAM PATENTS AND SUBLICENSE RIGHTS TO BE
INSUFFICIENTLY BROAD TO INSURE ITS PARTICIPATION IN A SUCCESSFUL MRAM MARKET.
The Company believes that the patents it has issued and applied for, and the
sublicense that it has either acquired or will have the right to acquire from
Honeywell, are important to MRAM technology. If MRAM becomes a successful
application of GMR technology in the manufacturing of computer memory, no
assurances can be given that it will require the use of the patents of the
Company or Honeywell, and therefore, generate future license fees and royalties
for the Company.

                             DESCRIPTION OF PROPERTY

         The principal executive office of the Company is located at 11409
Valley View Road, Eden Prairie, Minnesota 55344. The Company leases this space,
which consists of approximately 5950 square feet of office space, pursuant to a
five year lease agreement. The lease agreement will terminate on December 31,
2003. The annual rent is $54,948, $56,604, $58,272, $ 60,048 and $61,836,
respectively, which is payable in monthly installments on the first day of the
month.

          DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

DIRECTORS AND EXECUTIVE OFFICERS

         The directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>
Name                    Age          Position
- ------------------    ---------      ------------------------------------------------
<S>                   <C>            <C>
James Daughton           64          President, Chief Executive Officer and Director
Richard George           56          Treasurer and Chief Financial Officer
Terrance Glarner         57          Director
Herbert Goronkin         64          Director
Robert Irish             61          Director
</TABLE>


                                       10
<PAGE>

         James Daughton, President, Chief Executive Officer and Director, age
64, has been an officer and director of the Company since the Effective Date
of the Merger. Prior to the Merger, Dr. Daughton served as a director of
Merged NVE from its inception in 1989 to the Effective Date of the Merger,
and the President of Merged NVE from 1992 to the Effective Date of the
Merger. From 1974 to 1989, Dr. Daughton held various positions in research
and product development, including the position of Vice President of The
Solid State Development Center for Honeywell, Inc. From 1964 to 1974, Dr.
Daughton held various positions in the development of magnetic and
semiconductor memory devices for IBM Corporation. Dr. Daughton received a
doctorate in electrical engineering from Iowa State University in 1963. He is
a member of advisory boards at Iowa State University and the University of
New Orleans, and is an adjunct professor of physics at the University of
Minnesota. He has more than 20 issued or pending patents, primarily dealing
with thin magnetic films and devices.

         Richard George, Treasurer and Chief Financial Officer, age 56, has been
an officer of the Company since the Effective Date of the Merger. Prior to the
Merger, Mr. George served as the Chief Financial Officer of Merged NVE from
March, 1995 to the Effective Date of the Merger. From 1991 to 1995, Mr. George
served as Controller for Merged NVE. From 1966 to 1991, Mr. George held various
financial and financial management positions in the areas of operations and
contracts at Honeywell Inc. Mr. George received a B.A. in economics in 1966 from
the University of Minnesota, where he later took graduate courses in law and
management.

         Terrence Glarner, Director, age 57, has been a director of the Company
since the Effective Date of the Merger. Prior to the Merger, Mr. Glarner served
as a director of Merged NVE from August, 1999 to the Effective Time of the
Merger. Since February, 1993, Mr. Glarner has been the President of West Concord
Ventures, Inc. Mr. Glarner also consults with Norwest Venture Capital, an entity
affiliated with Norwest Growth Fund, Inc. Prior to starting West Concord
Ventures, Inc., Mr. Glarner was the President of North Star Ventures, Inc. from
1988 to February 1993, a firm which he joined in 1976. From 1968 to 1976, Mr.
Glarner was a Securities Analyst and Vice President in the Research Department
of Dain Bosworth, Inc. Mr. Glarner has a B.A. in English from the University of
St. Thomas, a J.D. from the University of Minnesota School of Law and is a
Chartered Financial Analyst. Mr. Glarner supervised investments in approximately
100 small companies during his involvement with North Star Ventures. Mr. Glarner
currently serves as a director on the following publicly held companies:
Aetrium, Cima Labs, Datakey and FSI. He is also a director of Oncotech, Inc.

         Herbert Goronkin, Director, age 64, has been a director of the Company
since the Effective Date of the Merger. Prior to the Merger, Mr. Goronkin served
as a director of Merged NVE from 1995 to the Effective Date of the Merger. From
1977 to the present, Dr. Goronkin has held various positions including the
position of Vice President and Director of the Physical Research Laboratory at
Motorola Laboratories in Phoenix, Arizona. Dr. Goronkin has more than 25 patents
and has authored numerous papers. He received B.S., M.S. and Doctorate degrees
in physics from Temple University in 1961, 1962 and 1973, respectively. He is a
Fellow of the IEEE and a member of both the American Physical Society and Sigma
Xi.

         Robert Irish, Director, age 61, has been a director of the Company
since the Effective Date of the Merger. Prior to the Merger, Mr. Irish served as
a director of Merged NVE from 1992 to the Effective Date of the Merger.
Additionally, Mr. Irish was a founding investor in Merged NVE. Mr. Irish
recently formed the RICE Group to consult in Information Technology. Since 1994,
Mr. Irish has held a number of sales, consulting and technical positions, most
recently with Compuware and Prodea Software. From 1988 to 1994, Mr. Irish acted
as a consultant and co-investor with Norwest Venture Capital. From 1981 to 1988,
Mr. Irish was the Executive Vice President of Centron DPL, responsible for


                                       11
<PAGE>

technical marketing, product marketing and research and development. Prior to
that time, from 1966 to 1981, Mr. Irish worked at IBM in management, sales and
systems. Mr. Irish attended Rensselaer Polytechnic Institute and received a B.S.
in Physics from Syracuse University in 1965. He has 3 issued patents dealing
with magnetic intrusion detection systems.

                             EXECUTIVE COMPENSATION

         The following table sets forth the compensation paid to the executive
officers of Merged NVE whose compensation exceeded $100,000 per year for the
years 1999, 1998 and 1997:

<TABLE>
<CAPTION>
                                                          ANNUAL                             OTHER
                                                       COMPENSATION                        COMPENSATION
                                    -------------------------------------------------------------------------
NAME AND TITLE                            YEAR             SALARY            BONUS
- --------------                            ----             ------            ------
<S>                                       <C>             <C>               <C>           <C>
James Daughton(1)..................       1999            $147,500          $80,000          $33,925(2)
   President and CEO                      1998            $137,500          $40,000          $31,625(2)
                                          1997            $120,000                0          $27,600(2)

John Myers.........................       1999            $102,080          $15,000          $23,478(2)
   Vice President                         1998             $96,480          $10,000          $22,190(2)
                                          1997             $85,807                0          $19,736(2)
</TABLE>

(1)      For a description of the stock and options held by Dr. Daughton, please
         see the table set forth in Item 1 of this Current Report on Form 8-K
         regarding beneficial ownership of the Company.

(2)      Representing 2% matching contributions to the Company's Employee
         Retirement 401(k), together with other fringe benefits such as
         insurance premiums.

         It is expected that the Company will compensate outside directors with
stock options of the Company under terms to be determined.

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Prior to the Merger, Terrence Glarner was a member of the Boards of
Directors of both Merged NVE and Premis. Mr. Glarner held shares of common stock
of Premis and options to purchase shares of common stock of both Premis and
Merged NVE. Furthermore, Mr. Glarner acted as an associate of Norwest Venture
Capital, a significant shareholder Merged NVE. Mr. Glarner was instrumental in
the introduction of Premis and Merged NVE. Mr. Glarner did not receive any
special fee or other compensation in connection with the Merger and he abstained
from voting on the Merger as a director of both Merged NVE and Premis. Mr.
Glarner did, however, vote for the Merger on behalf of Norwest Venture Capital
and individually as a shareholder of Premis.

         Prior to the Merger, Robert Irish, held shares of common stock of both
Merged NVE and Premis. Mr. Irish voted for the Merger as both a shareholder of
Merged NVE and Premis.

                            DESCRIPTION OF SECURITIES

CAPITAL STOCK

         The authorized capital stock of the Company consists of 50,000,000
shares, 30,000,000 shares of which are designated common stock, $.01 par value,
and 20,000,000 shares of which are undesignated


                                       12
<PAGE>

shares, $.01 par value. As of November 21, 2000, 16,919,008 shares of common
stock of the Company are issued and outstanding, all of which will be fully paid
and non-assessable.

COMMON STOCK

         Holders of common stock of the Company have no preemptive,
subscription, conversion or redemption rights pertaining to the shares. The
absence of preemptive rights could result in a dilution of the interest of
existing shareholders, should additional shares of the common stock of the
Company or other capital stock convertible into common stock of the Company be
issued. Holders of shares of common stock of the Company are entitled to receive
such dividends, as may be declared by the Board of Directors of the Company, out
of assets legally available therefore, and to share ratably in the assets of the
Company available upon liquidation. Each share of common stock of the Company
entitles the holder thereof to one vote, in person or by proxy, upon all matters
submitted for a vote by the shareholders of the Company. Holders of common stock
of the Company do not have cumulative voting rights for the election of
directors. Thus, the owners of a majority of the voting power outstanding may
elect all of the directors, if they choose to do so, and the owners of the
balance of such shares would not be able to elect any directors.

         The rights of holders of the shares of common stock of the Company may
become subject in the future to prior and superior rights and preferences in the
event that the Board of Directors of the Company establishes one or more
additional classes of common stock, or one or more series of preferred stock.

PREFERRED STOCK

         At present, the Company has no plans to authorize or issue any shares
of preferred stock.

WARRANTS AND OPTIONS

         As of November 21, 2000, there are options to purchase up to
1,629,314 shares of common stock of the Company, at exercise prices ranging
from approximately $.125 to $25, and warrants to purchase up to 313,145
shares of common stock of the Company, at exercise prices ranging from
approximately $.17 to $.57, currently outstanding. The options expire at
various dates through 2007, and the warrants expire at various dates through
2001.

TRANSFER AGENT

         The transfer agent and registrar for the common stock of the Company is
Corporate Stock Transfer, Inc. The offices of Corporate Stock Transfer, Inc. are
located at 3200 Cherry Creek Drive South, #430, Denver, Colorado 80209.

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF MERGED NVE

GENERAL

         As a result of the Merger, the Company acquired the business of
developing, producing and selling components that combine certain magnetic
materials with integrated circuits. Over the past several years, Merged NVE
engaged in materials and device research and development funded principally by
contracts and grants from agencies of the US government. Merged NVE was able to
license some of its technology, principally nonvolatile memory technology, and
has used license payments to establish product designs and production of sensor
and isolator products. The Company will


                                       13
<PAGE>

seek to expand product revenue while still relying on government contracts for
basic technology development. The expansion of product revenue will require
additional product development and marketing expenditures as well as increased
working capital to fund receivables and inventories. Further, the Company will
seek investment and revenue from license agreements to fund these expenditures.

RESULTS FROM OPERATIONS

TWELVE MONTHS ENDED DECEMBER 31, 1999 AND DECEMBER 31, 1998

         Revenues for the twelve months ending December 31, 1999 were
$5,802,873, a decrease of 3.47% from revenues of $6,011,293 for the year ending
December 31, 1998. The decrease in revenue was due primarily to an
extraordinarily high license revenue in 1998 of $1,900,000 compared with a
license revenue of $500,000 in 1999.

         Costs of sales increased by approximately 13.8% to $4,842,677 for the
year ending December 31, 1999, compared to $4,253,754 for the year ending
December 31, 1998. Much of this cost of sales increase was due to matching
requirements for funding under terms of an Advance Technology Program ("ATP") on
isolators with the Department of Commerce.

         Gross Margins decreased by approximately 45.4% to $960,196 for the
current quarter and for the year ending December 31, 1999, as compared to
$1,757,540 for the year ending December 31, 1998. These decreases were due
primarily to higher cost of sales and lower license revenue in 1999.

         Research and development expenses (non-contract) decreased by
approximately 35.7% to $304,400 for the year ending December 31, 1999, as
compared to $473,128 for the year ending December 31, 1998. These decreases were
supplemented by contract funding for isolators under an ATP from the Department
of Commerce.

         Selling, general and administrative expenses for the year ending
December 31, 1999, increased by 20.1% to $1,052,538 compared to $876,614 for the
year ending December 31, 1998. The increase is due in part to higher legal costs
for patent activities.

         Other Income/Expenses showed gains of $24,566 for the year ending
December 31, 1999, compared to $28,758 for the year ending December 31, 1998.
Lower interest income and higher interest expense were the primary causes for
the difference.

         Merged NVE had a net loss for the year ending December 31, 1999, of
$423,333 compared to net income of $377,540 for the year ending December 31,
1998. The primary causes were a lower license revenue in 1999 compared to 1998,
and an increase in costs of sales due to matching requirements on an isolator
research and development contract from the Department of Commerce.

INFLATION

         Inflation has not had a significant impact on the operations of Merged
NVE since its inception. Prices for products of Merged NVE and for the materials
and labor going into such products are governed by market conditions. It is
possible that inflation in future years could impact both materials and labor in
the production of products. Rates paid by the US Government on research and
development contracts are adjustable with inflation.

         MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY


                                       14
<PAGE>

         The common stock of the Company is traded on the OTC Bulletin Board
under the symbol, "NVEC." The following table sets forth, for the fiscal
quarters indicated, a summary of the high and low closing prices of the common
stock of the Company. Prices through July 17, 1998, are high and low closing
sale prices as reported by the Nasdaq National Market. Effective the close of
business on July 17, 1998, the common stock of Premis was delisted from the
Nasdaq National Market for failure to satisfy the revised listing maintenance
standards adopted by Nasdaq. Prices for the periods after July 17, 1998,
represent high and low bids as reported on the OTC Bulletin Board. Such bid
information reflects inter-dealer prices, without retail mark-up, mark-down or
commissions and does not necessarily reflect actual transactions.

<TABLE>
<CAPTION>
                                                     COMMON STOCK
                                                     ------------
                                                LOW                 HIGH
                                                ---                 ----
        <S>                                   <C>                  <C>
        FISCAL 1998
        First Quarter                         $1.125               $1.797
        Second Quarter                          .75                1.406
        Third Quarter                           .75                1.313
        Fourth Quarter                         .375                 1.00

        FISCAL 1999
        First Quarter                          $.594               $.938
        Second Quarter                         .734                1.000
        Third Quarter                          .250                1.282
        Fourth Quarter                         .375                1.406

        FISCAL 2000
        First Quarter                          $.438               $1.031
        Second Quarter                         .438                 818
</TABLE>

         The Company has never paid or declared any cash dividends on its common
stock. On December 4, 1999, in connection with the final sale of assets, Premis
made a distribution in partial liquidation to its shareholders.

         As of the Effective Date of the Merger, the Company had approximately
190 shareholders of record.

                                LEGAL PROCEEDINGS

         The Company is not currently a party to any pending legal proceeding
nor is any property of the Company subject to such proceeding. Furthermore, the
Company is not aware of any potential claims, by any governmental authority or
otherwise, that may be brought against it.

                     RECENT SALES OF UNREGISTERED SECURITIES

         The following sets forth information with respect to all unregistered
sales of securities by Merged NVE within the past three years:

         In December 1997, the Company issued 10,000 shares of its common stock
to an individual in connection with the purchase of vested option shares at an
exercise price of $.125 per share pursuant to the Company's 1990 Stock Option
Plan.


                                       15
<PAGE>

         In 1998, the Company issued an aggregate of 39,600 shares of its common
stock to four individuals in connection with the purchase of vested option
shares at an exercise price ranging from $.125 to $.50 per share pursuant to the
Company's 1990 Stock Option Plan.

         In February 1998 and March 1998, the Company issued an aggregate of
8,380 shares of its common stock to three individuals in connection with the
purchase of warrant shares at an exercise price of $.60 per share.

         In May 1998 and December 1998, the Company issued nonqualified and
incentive stock options to twelve individuals to purchase an aggregate of
157,500 shares of its common stock at an exercise price of $.60 per share,
exercisable over a five-year period, pursuant to its 1990 Stock Option Plan.

         In April 1999 and May 1999, the Company issued an aggregate of 8,500
shares of its common stock to three individuals in connection with the purchase
of vested option shares at an exercise price ranging from $.125 to $.60 per
share pursuant to the Company's 1990 Stock Option Plan.

         In December 1999, the Company issued an aggregate of 182,836 shares
of its common stock to nineteen individuals pursuant to a private offering to
its employees at a purchase price of $2.00.

         In 1999, the Company issued nonqualified and incentive stock options to
four individuals to purchase an aggregate of 23,500 shares of its common stock
at an exercise price of $.60 per share, exercisable over a five-year period,
pursuant to its 1990 Stock Option Plan.

         In 2000, the Company issued an aggregate of 87,000 shares of its common
stock to six individuals in connection with the purchase of vested option shares
at an exercise price ranging from $.125 to $.60 per share pursuant to the
Company's 1990 Stock Option Plan.

         In 2000, the Company issued an aggregate of 19,020 shares of its common
stock to two individuals in connection with the purchase of warrant shares
pursuant to a cashless exercise provided such warrants.

         In 2000, the Company issued nonqualified and incentive stock options to
eight individuals to purchase an aggregate of 118,500 shares of its common stock
at an exercise price of $.60 per share, exercisable over a five-year period,
pursuant to its 1990 Stock Option Plan.

         No underwriter was used with respect to any sales of the
unregistered securities described herein. Exemption from registration for the
sales of the securities disclosed above was claimed pursuant to Section 4(2)
of the Securities Act of 1993, as amended, (the "Act") as a transaction by an
issuer not involving a public offering; Regulation D of the Act as a sale of
securities without registration or Rule 701 of the Act as a sale of
securities pursuant to certain compensatory benefit plans and contracts
relating to compensation.

                                     16
<PAGE>

                    INDEMNIFICATION OF DIRECTORS AND OFFICERS

         The Company has provisions in its Articles of Incorporation and Bylaws
to (i) eliminate the personal liability of its directors for monetary damages
resulting from breaches of their fiduciary duty (however, such provisions do not
eliminate liability for breaches of the duty of loyalty, acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, the improper payment of dividends or redemption of stock or for any
transaction from which the director derived an improper personal benefit) and
(ii) indemnify its directors and officers to the fullest extent permitted by
Minnesota law, including circumstances in which indemnification is otherwise
discretionary. The Company believes that these provisions are necessary to
attract and retain qualified persons as directors and officers.

         Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, the Company has
been informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in that Act and is,
therefore, unenforceable.

ITEM 7.  FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS


                                       17
<PAGE>

2.1      Agreement and Plan of Merger, dated as of September 22, 2000, by and
         between Nonvolatile Electronics, Incorporated (NVE) and PREMIS
         Corporation.(1)

3.1      Articles of Incorporation of NVE Corporation.(1)

3.2      By-laws of NVE Corporation.

10.1     NVE Corporation 2000 Stock Option Plan.

24.1     Consent of Accountants.(2)

24.2     Audited Financial Statements for December 1999.(2)

24.3     Unaudited Pro Forma Balance Sheet, as of September 30, 2000.(2)

99.1     List of NVE Corporation's Issued U.S. Patents.

99.2     List of NVE Corporation's Issued Foreign Patents.


- -------------------------------------------------------------------------------

    (1)  Incorporated by reference to the Definitive Proxy Statement on
Schedule 14 filed by PREMIS Corporation on November 16, 2000.

    (2)  No financial statements are filed herewith. The Company is required to
file financial statements by amendment hereto not later than 60 days after the
date that this Current Report on Form 8-K must be filed.



                                       18

<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on behalf of the
undersigned thereunto duly authorized.



                                        NVE CORPORATION


Dated:   December 6, 2000               By      /s/ Dr. James Daughton
                                          --------------------------------------

                                                 Dr. James Daughton
                                                 Chief Executive Officer



                                        By       /s/ Richard George
                                          --------------------------------------

                                                 Richard George
                                                 Chief Financial Officer


                                       19
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.2
<SEQUENCE>2
<FILENAME>a2032518zex-3_2.txt
<DESCRIPTION>EXHIBIT 3.2
<TEXT>

<PAGE>

EXHIBIT 3.2

                                     BYLAWS
                                       OF
                                 NVE CORPORATION

                                    ARTICLE I
                                NAME AND ADDRESS

SECTION 1. NAME. The name of the Corporation is NVE Corporation.

SECTION 2. REGISTERED OFFICE AND AGENT. The address of the registered office is
5805 Amy Drive, Edina, Minnesota 55436; and the name of the registered agent at
this address is James M. Daughton.

                                   ARTICLE II
                                   FISCAL YEAR

SECTION 1. FISCAL YEAR. The fiscal year of this Corporation shall begin on April
1 and end on March 31.

                                   ARTICLE III
                             SHAREHOLDERS' MEETINGS

SECTION 1. PLACE OF MEETINGS. Meetings of the shareholders shall be held at the
registered office of the Corporation or at any other place the Board of
Directors may from time to time select.

SECTION 2. ANNUAL MEETING. The annual meeting of the shareholders shall be held
on February 15 of each year, if this day is not a holiday, and if a holiday,
then on the first following day that is not a legal holiday. Failure to hold the
annual meeting at the designated time shall not work a forfeiture or dissolution
of the Corporation.

SECTION 3. SPECIAL MEETINGS. Special meetings of the shareholders may be called
by the president, the Board of Directors, or the holders of not less than three
percent of the shares outstanding and entitled to vote.

SECTION 4. NOTICE OF MEETINGS & WAIVER. Written notice stating the place, day,
hour of the meeting, and the purpose or purposes for which the meeting is
called, shall be delivered not less than 10 nor more than 60 days before the
date of an annual meeting and not less than 3 nor more than 60 days before the
date of a special meeting, either personally or by mail, by or at the direction
of the President, or other officer or persons calling the meeting, to each
registered holder entitled to vote at such meeting.

SECTION 5. PROXIES. A shareholder entitled to vote may cast or authorize the
casting of a vote by filing a written appointment of a proxy with an officer of
the Corporation on or before the meeting at which the appointment is to be
effective. A proxy shall not be valid after 11 months from the date of its
execution.

<PAGE>

SECTION 6. QUORUM. A majority of the shares entitled to vote, represented in
person or by proxy, shall constitute a quorum at a meeting of shareholders.
If a quorum is present the affirmative votes of a majority of the shareholders
in attendance shall approve the action. The shareholders present at a duly
organized meeting may continue to do business until adjournment, notwithstanding
the withdrawal of enough shareholders to leave less than a quorum.

SECTION 7. CLOSING OF TRANSFER BOOKS AND FIXING RECORD DATE. For the purpose of
determining shareholders entitled to notice of or to vote at any meeting of
shareholders, or any adjournment thereof, or entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any other
proper purpose, the Board of Directors of the Corporation may provide that the
stock transfer book shall be closed for a stated period but not to exceed, in
any case, 50 days. If the stock transfer books shall be closed for the purpose
of determining shareholders entitled to notice of or to vote at a meeting of
shareholders, the books shall be closed for at least 10 days immediately
preceding the meeting. If the stock transfer books are not closed and no record
date is fixed for the determination of shareholders entitled to notice or to
vote at a meeting of shareholders or shareholders entitled to receive payment of
a dividend, the date on which notice of the meeting is mailed or the date on
which the resolution of the Board of Directors declaring the dividend is
adopted, as the case may be, shall be the record date for the determination of
shareholders.

SECTION 8. ACTION WITHOUT A MEETING. An action required, or permitted to be
taken at a meeting of the shareholders may be taken without a meeting by written
action signed by all of the shareholders entitled to vote on that action. The
written action is effective when it has been signed by all of those
shareholders, unless a different effective time is provided in the written
action.

                                   ARTICLE IV
                             THE BOARD OF DIRECTORS

SECTION 1. NUMBER AND QUALIFICATIONS. The businesses and affairs of the
Corporation shall be managed by a Board of Directors initially comprised of five
members, who need not be residents of the State of Minnesota or shareholders of
the Corporation.

SECTION 2. ELECTION. Members of the initial Board of Directors shall hold office
until the first annual meeting of shareholders and until their successors shall
have been elected and qualified. At the first annual meeting of shareholders,
and at each annual meeting thereafter, the shareholders shall elect Directors to
hold office until the next succeeding annual meeting. Each Director shall hold
office for the term for which he is elected and until his successor shall be
elected and qualified.

SECTION 3. VACANCIES. Any vacancy occurring in the Board of Directors may be
filled by the affirmative vote of a majority of the remaining Directors though
less than a quorum of the Board of Directors. A Director elected to fill a
vacancy shall be elected for the unexpired term of his predecessor in office.


                                       2

<PAGE>

SECTION 4. COMPENSATION. The Board of Directors may fix the compensation of
directors. A director may serve the Corporation in a capacity other than that of
director and receive compensation for the services rendered in that other
capacity.

SECTION 5. REMOVAL. Any one or all of the directors may be removed at any time,
with or without cause, by the vote of a majority of the shares entitled to vote
at an election of directors.

SECTION 6. RESIGNATION. A director may resign at any time by giving written
notice to the Corporation. The resignation is effective without acceptance when
the notice is given to the Corporation, unless a later effective time is
specified in the notice.

                                    ARTICLE V
                              MEETINGS OF THE BOARD

SECTION 1. PLACE OF MEETINGS. Meetings of the Board of Directors may be held at
the registered office of the Corporation or at any other place the board may
select.

SECTION 2. ANNUAL MEETING. The Board of Directors shall meet each year
immediately after the annual meeting of the officers and conduct other business.

SECTION 3. SPECIAL MEETINGS. Special meetings of the Board of Directors may be
called at any time by the president or by any two (2) members of the board.

SECTION 4. NOTICE OF MEETINGS. Notice of the annual meeting of the Board of
Directors need not be given. Written notice of each special meeting, setting
forth the time and place of the meeting shall be given to each director at least
10 days before the meeting. This notice may be given either personally, or by
sending a copy of the notice through the United States mail or by telegram,
charges prepaid, to the address of each director appearing on the books of the
Corporation.

SECTION 5. WAIVER OF NOTICE. A director may waive in writing notice of a special
meeting of the board either before or after the meeting; and his waiver shall be
deemed the equivalent of giving notice. Attendance of a director at a meeting
shall constitute waiver of notice of that meeting unless he attends for the
express purpose of objecting to the transaction of business because the meeting
has not been lawfully called or convened.

SECTION 6. QUORUM. At meetings of the Board of Directors a majority of the
directors in office shall be necessary to constitute a quorum for the
transaction of business. If a quorum is present, the acts of a majority of the
directors in attendance shall be the acts of the board.

SECTION 7. ACTION WITHOUT A MEETING. Any action that may be taken at a meeting
of the directors may be taken without a meeting if a consent in writing, setting
forth the action so to be taken, shall be signed by all directors.


                                       3

<PAGE>

                                   ARTICLE VI
                                  THE OFFICERS

SECTION 1. OFFICERS. The executive officers of the Corporation shall be chosen
by the Board of Directors and shall consist of a President, who is the Chief
Executive Officer and a Chief Financial Officer. Two or more offices may be held
by the same person. Other officers, assistant officers, agents and employees
that the Board of Directors from time to time may deem necessary may be elected
or appointed by the board.

Officers shall hold office until their successors are chosen and have qualified,
unless they are sooner removed from office as provided in these bylaws.

SECTION 2. VACANCIES. Whenever vacancies shall occur in any office by death,
resignation, increase in the number of offices of the Corporation, or otherwise,
the same shall be filled by the Board of Directors and the officer so elected
shall hold office until his successor is chosen and qualified.

SECTION 3. SALARIES. The Board of Directors shall fix the salaries of the
officers of the Corporation. The salaries of other agents and employees of the
Corporation may be fixed by the Board of Directors or by an officer to whom that
function has been delegated by the board.

SECTION 4. REMOVAL OF OFFICERS AND AGENTS. An officer or agent of the
Corporation may be removed by a majority vote of the Board of Directors whenever
in their judgment the best interests of the Corporation will be served by the
removal. The removal shall be without prejudice to the contract rights, if any,
of the person so removed.

SECTION 5. THE PRESIDENT (CHIEF EXECUTIVE OFFICER). The president shall:

                  (a) Have general active management of the business of the
         Corporation;

                  (b) When present, preside at all meetings of the board and of
         the shareholders;

                  (c) See that all orders and resolutions of the board are
         carried into effect;

                  (d) Sign and deliver in the name of the Corporation any deeds,
         mortgages, bonds, contracts or other instruments pertaining to the
         business of the Corporation, except in cases in which the authority to
         sign and deliver is required by law to be exercised by another person
         or is expressly delegated by the articles or bylaws or by the board to
         some other officer or agent of the Corporation;

                  (e) Maintain records of and, whenever necessary, certify all
         proceedings of the board and the shareholders; and

                  (f) Perform other duties prescribed by the board.

SECTION 6. CHIEF FINANCIAL OFFICER. The chief financial officer shall:

                  (a) Keep accurate financial records for the Corporation;


                                       4

<PAGE>

                  (b) Deposit all money, drafts, and checks in the name of and
         to the credit of the Corporation in the banks and depositories
         designated by the board;

                  (c) Endorse for deposit all notes, checks, and drafts received
         by the Corporation as ordered by the board, making proper vouchers
         therefor;

                  (d) Disburse corporate funds and issue checks and drafts in
         the name of the Corporation, as ordered by the board;

                  (e) Render to the chief executive officer and the board,
         whenever requested, an account of all transactions by the chief
         financial officer and of the financial condition of the Corporation;
         and

                  (f) Perform other duties prescribed by the board or by the
         chief executive officer.

SECTION 7. DELEGATION OF DUTIES. Whenever an officer is absent or whenever for
any reason the Board of Directors may deem it desirable, the board may delegate
the powers and duties of an officer to any other officer or officers or to any
director or directors.

                                   ARTICLE VII
                  SHARE CERTIFICATES AND THE TRANSFER OF SHARES

SECTION 1. SHARE CERTIFICATES. The share certificates shall be in a form
approved by the Board of Directors. Each certificate shall be signed by the
president.

SECTION 2. REGISTERED SHAREHOLDERS. The Corporation shall be entitled to treat
the holder of record of shares as the holder in fact and, except as otherwise
provided by the laws of Minnesota, shall not be bound to recognize any equitable
or other claim to or interest in the shares.

SECTION 3. TRANSFER OF SHARES. Shares of the Corporation shall only be
transferred on its books upon the surrender to the Corporation of the share
certificates duly indorsed or accompanied by proper evidence of succession,
assignment or authority to transfer. In that event, the surrendered certificates
shall be canceled, new certificates issued to the person entitled to them, and
the transaction recorded on the books of the Corporation.

SECTION 4. LOST CERTIFICATES. The Board of Directors may direct a new
certificate to be issued in place of a certificate alleged to have been
destroyed or lost if the owner makes an affidavit that it is destroyed or lost.
The board, in its discretion, may as a condition precedent to issuing the new
certificate, require the owner to give the Corporation a bond as indemnity
against any claim that may be made against the Corporation on the certificate
allegedly destroyed or lost.

                                  ARTICLE VIII
                             SPECIAL CORPORATE ACTS

SECTION 1. EXECUTION OF WRITTEN INSTRUMENTS. Contracts, deeds, documents and
instruments shall be executed by the president unless the Board of Directors
shall in a particular situation designate another procedure for their execution.


                                       5

<PAGE>

SECTION 2. SIGNING OF CHECKS AND NOTES. Checks, notes, drafts, and demands for
money shall be signed by the officer or officers from time to time designated by
the Board of Directors.

SECTION 3. VOTING SHARES HELD IN OTHER CORPORATIONS. In the absence of other
arrangement by the Board of Directors, shares of stock issued by any other
corporation and owned or controlled by this Corporation may be voted at any
shareholders' meeting of the Corporation by the president of this Corporation
or, if he is not present at the meeting, by such person as the president of the
Corporation shall by duly executed proxy designate to represent the Corporation
at the meeting.

                                   ARTICLE IX
                                   AMENDMENTS

SECTION 1. AMENDMENTS. The power to alter, amend, or repeal the Bylaws, or to
adopt new Bylaws is vested in the Board of Directors. The Bylaws may contain any
provision for the regulations and management of the affairs of the Corporation
not prohibited by law or the Articles of Incorporation.


                                       6
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>a2032518zex-10_1.txt
<DESCRIPTION>EXHIBIT 10.1
<TEXT>

<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 3,620,500
                  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
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>4
<FILENAME>a2032518zex-99_1.txt
<DESCRIPTION>EXHIBIT 99.1
<TEXT>


<PAGE>

EXHIBIT 99.1


                                 NVE CORPORATION
                                ISSUED US PATENTS

OFFSET MAGNETORESISTIVE MEMORY STRUCTURES
         US Patent No. 5,251,170                     Issued 10/5/93
         J. Daughton, A. Pohm                        14 Claims

METHOD FOR SENSING DATA IN A MAGNETORESISTIVE MEMORY USING LARGE FRACTIONS OF
MEMORY CELL FILMS FOR DATA STORAGE
         US Patent No. 5,420,819                     Issued 5/30/95
         A. Pohm                                     14 Claims

METHOD FOR FORMING OFFSET MAGNETORESISTIVE MEMORY STRUCTURES
         US Patent No. 5,424,236                     Issued 6/13/95
         J. Daughton, A. Pohm                        7 Claims

MAGNETORESISTIVE STRUCTURE COMPRISING FERROMAGNETIC THIN FILMS AND INTERMEDIATE
LAYERS OF LESS THAN 30 ANGSTROMS FORMED OF ALLOYS HAVING IMMISCIBLE COMPONENTS
         US Patent No. 5,569,544                     Issued 10/29/96
         J. Daughton                                 42 Claims

MAGNETORESISTIVE STRUCTURE WITH OF ALLOY LAYER HAVING TWO SUBSTANTIALLY
IMMISCSIBLE COMPONENTS
         US Patent No. 5,595,830                     Issued 1/21/97
         J. Daughton,                                50 Claims

MAGNETORESISTIVE STRUCTURE COMPRISING FERROMAGNETIC THIN FILMS AND INTERMEDIATE
ALLOY LAYER HAVING MAGNETIC CONCENTRATOR AND SHIELDING PERMEABLE MASSES
         US Patent No. 5,617,071                     Issued 4/1/97
         J. Daughton,                                16 Claims

MAGNETORESISTIVE MEMORY USING LARGE FRACTIONS OF MEMORY CELL FILMS FOR DATA
STORAGE
         US Patent No. 5,636,159                     Issued 6/3/97
         A. Pohm                                     15 Claims

MAGNETIC FIELD SENSORS INDIVIDUALIZED FIELD REDUCERS
         US Patent No. 5,729,137                     Issued 3/17/98
         J.Daughton, Theodore M. Hermann             22 Claims

<PAGE>

MAGNETORESISTIVE MEMORY USING LARGE FRACTIONS OF MEMORY CELL FILMS FOR DATA
STORAGE
         US Patent No. 5,768,180                     Issued 6/16/98
         A. Pohm                                     22 Claims

MAGNETIC CURRENT SENSOR
         US Patent No. 5,831,426                     Issued 11/3/98
         William C. Black, Theodore M Hermann        17 Claims

MAGNETORESISTIVE MEMORY USING LARGE FRACTION OF MEMORY CELLS FILMS FOR STORAGE
         US Patent No. 5,892,708                     Issued 4/6/99
         A. Pohm                                     10 Claims

GIANT MAGNETORESISTIVE EFFECT MEMORY CELL
         US Patent No. 5,949,707                     Issued 9/7/99
         A. Pohm, B. Everitt                         45 Claims

GIANT MAGNETORESISTIVE EFFECT MEMORY CELL
         US Patent No. 5,966,322                     Issued 10/12/99
         A. Pohm, B. Everitt                         40 Claims

SPIN DEPENDENT TUNNELING MEMORY
         US Patent No. 6,021,065                     Issued 2/1/00
         J. Daughton, A. Pohm                        14 Claims

SPIN DEPENDENT TUNNELING SENSOR
         US Patent No. 6,072,382                     Issued 6/6/00
         J. Daughton, A. Pohm, M. Tondra             25 Claims


SPIN DEPENDENT TUNNELING MEMORY
         US Patent No. 6,147,900                     Issued 11/14/00
         A. Pohm                                     24 Claims



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>5
<FILENAME>a2032518zex-99_2.txt
<DESCRIPTION>EXHIBIT 99.2
<TEXT>


<PAGE>

EXHIBIT 99.2


                                 NVE CORPORATION
                             ISSUED FOREIGN PATENTS

MAGNETORESISTIVE MEMORY STRUCTURE LARGE FRACTION UTILIZATION
         Patent No. 663 099                          Issued 6/23/99
         A. Pohm                                     5 Claims


MAGNETORESISTIVE STRUCTURE WITH ALLOY LAYER
         Patent No. 744,076                          Issued 7/26/00
         J. Daughton                                 10 Claims
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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