Filed pursuant to Rule 424(b)(1)
Registration No. 333-15587

PROSPECTUS

MANHATTAN BAGEL COMPANY, INC.
373,000 SHARES OF COMMON STOCK

This Prospectus relates to 373,000 shares of Common Stock, no par value per
share (the "Shares"), of Manhattan Bagel Company, Inc., a New Jersey corporation
(the "Company"), which may be sold from time to time by the entitles listed as
Selling Shareholders herein (the "Selling Shareholders"). The Company will not
receive any proceeds from the sale of the Shares by the Selling Shareholders to
the public.

The Company will pay all the expenses, estimated to be approximately $5,000,
in connection with this offering, other than underwriting commissions and
discounts and counsel fees and expenses of the Selling Shareholders.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

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

The Company's Common Stock is traded in the over-the-counter market and
included in the Nasdaq National Market under the symbol BGLS. The last reported
sale price of the Common Stock reported in the Nasdaq National Market on
February 12, 1997 was $7 3/8 per share.

THE DATE OF THIS PROSPECTUS IS FEBRUARY 14, 1997

TABLE OF CONTENTS

PAGE
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AVAILABLE INFORMATION...................................................................................... 2
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.......................................................... 3
THE COMPANY................................................................................................ 4
RISK FACTORS............................................................................................... 4
PLAN OF DISTRIBUTION....................................................................................... 8
USE OF PROCEEDS............................................................................................ 9
SELLING SHAREHOLDERS....................................................................................... 9
DESCRIPTION OF SECURITIES.................................................................................. 10
LEGAL MATTERS.............................................................................................. 10
EXPERTS.................................................................................................... 10

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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFERING DESCRIBED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION TO ANY
PERSON TO WHOM SUCH OFFER WOULD BE UNLAWFUL OR AN OFFERING OF ANY SECURITIES
OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE HEREUNDER AT ANY TIME SHALL IMPLY
THAT THE INFORMATION PROVIDED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.

AVAILABLE INFORMATION

This Prospectus does not contain all of the information set forth in the
Registration Statement of which this Prospectus is a part and which is filed
with the Securities and Exchange Commission (the "Commission"). The Company is
subject to the informational requirements of the Securities Exchange Act of 1934
(the "Exchange Act") and, in accordance therewith, files reports, proxy
statements and other information with the Commission. For further information
with respect to the Company, reference is made to such Registration Statement
and the exhibits thereto, and to such reports, proxy statements and other
information filed with the Commission.

Such Registration Statement, reports, proxy statements and other information
can be inspected and copied at the public reference facilities of the Commission
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the Commission's Regional Offices located at Room 1400, 75 Park Place,
New York, New York 10007 and Suite 1400, Northwestern Atrium Center, 500 West
Madison Street, Chicago, Illinois 60661.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The following documents filed by the Company with the Commission are
incorporated by reference:

1. The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1995.

2. The Company's Quarterly Report on Form 10-QSB for the three month period
ended March 31, 1996, as amended.

3. The Company's Quarterly Report on Form 10-QSB for the three month period
ended June 30, 1996.

4. The Company's Quarterly Report on Form 10-QSB for the three month period
ended September 30, 1996, as amended.

5. The Company's Current Report on Form 8-K, dated January 9, 1996, as
amended.

6. The Company's Current Report on Form 8-K, dated January 17, 1996, as
amended.

7. The Company's definitive proxy statement filed pursuant to Section 14 of
the Exchange Act in connection with the 1996 Annual Meeting of Shareholders and
any definitive proxy statements or information statements so filed in connection
with any subsequent meetings of shareholders.

8. The Company's Current Report on Form 8-K, dated May 23, 1996, as
amended.

9. The Company's Current Report on Form 8-K, dated June 20, 1996.

All documents filed pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Shares shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.

Copies of any and all documents that have been incorporated by reference
herein, other than exhibits to such documents, may be obtained upon request
without charge from the Company's Corporate Secretary, Manhattan Bagel Company,
Inc., 246 Industrial Way West, Eatontown, New Jersey 07724, telephone number
(908) 544-0155. Please specify the information desired when making such request.

THE COMPANY

Manhattan Bagel Company, Inc. (the "Company") manufactures bagel dough and
blends a wide variety of cream cheese spreads that are distributed to its
franchised, licensed and Company- owned stores. The bagels sold by the stores
are first boiled and then baked in the traditional "New York" style. The
Company's objective is to become one of the leading producers of fresh bagels
and bagel dough nationally, utilizing the strength of its stores and brand names
to create demand for the Company's products.

The Company believes that controlling the manufacture and distribution of
bagels and cream cheese spreads is key to ensuring product quality and
maximizing profitability. The Company operates two manufacturing plants in
Eatontown, New Jersey, including a state-of-the-art manufacturing facility which
commenced operations in April 1996. The Company also has manufacturing and
distribution facilities in Moorestown, New Jersey, Greenville, South Carolina
and Calgary, Alberta, Canada and additional distribution facilities in Richmond,
Virginia, Los Angeles, California, Longwood, Florida, West Hartford, Connecticut
and Houston, Texas. The Company plans to continue expanding and improving
manufacturing capacity by investing in systems and equipment that improve
productivity and efficiency to respond to what it expects will be steadily
increasing demand. The Company's manufacturing facilities will provide the
Company with the capacity to supply up to 425 stores at current store sales
levels. As the Company expands its store network, the Company expects to open
additional regional bagel manufacturing facilities or local distribution
facilities.

The Company also intends to expand its business through sales to sites other
than its presently existing franchised and Company-owned stores. This marketing
effort will involve co-branding of the Company's products with national or
regional chain stores, including stand-alone Company- owned or franchised stores
and in-store kiosks and other formats which offer the sale of the Company's
products at various third-party retail locations.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Prospectus, particularly statements about the
Company's business in the Company's various filings referenced under
Incorporation of Certain Information by Reference, and information under "The
Company", constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
the Company to be materially different from any future results, performance or
achievements, expressed or implied by such forward-looking statements. Readers
of this Prospectus are directed to "Risk Factors" for a discussion of such
factors.

RISK FACTORS

IN EVALUATING AN INVESTMENT IN THE COMPANY, PROSPECTIVE INVESTORS SHOULD
CAREFULLY CONSIDER THE FOLLOWING CONSIDERATIONS IN ADDITION TO THE OTHER
INFORMATION CONTAINED IN THIS PROSPECTUS.

EXPANSION

As of December 31, 1996 there were 294 Manhattan Bagel Company stores open
with over 100 additional stores in various stages of development. The opening
and success of Manhattan Bagel Company stores will depend on various factors,
including the availability of suitable sites and the negotiation of

acceptable lease terms for new locations; the ability to obtain construction and
any other necessary permits in a timely manner; the ability to meet construction
schedules; the financial and other capabilities of the Company's master
franchisees and area developers; the ability of the Company to manage the
anticipated expansion and to hire and train personnel, and general economic and
business conditions. Not all of the foregoing factors are within the control of
the Company, master franchisees, or area developers.

The Company's proposed expansion will also require the implementation of
enhanced operational and financial systems and will require additional
management, operational, and financial resources. Failure to implement these
systems and add these resources could have a material adverse effect on the
Company's results of operations and financial condition. There can be no
assurance that the Company will be able to manage its expanding operations
effectively or that it will be able to maintain or accelerate its growth. In
addition, there can be no assurance of the viability of the Manhattan Bagel
concept in new geographic regions or particular local markets.

Based upon the results of a recent review of its West Coast operations, the
Company decided to close its bagel production facility in Los Angeles and to
temporarily supply its West Coast operations from Eatontown to assure product
quality. The Company also decided to sell, franchise or close the San Francisco
locations acquired in January 1996 operating under the name Holey Bagel. As a
result of these decisions, the Company wrote off $3,010,000, comprising goodwill
($1,711,000), fixed assets ($874,000) and other assets ($425,000), relating to
assets acquired in the Holey Bagel acquisition and the sale or closure of the
Holey Bagel locations, and the Company's Los Angeles commissary acquired in June
1995. The amount of goodwill was reflective of the price of the Company's common
stock at the time of the acquisitions. The write-off was reflected in the
results of operations for the three months and nine months ended September 30,
1996.

DEPENDENCE ON FRANCHISES

The Company realizes a substantial portion of its revenues from sales of
frozen raw bagel dough and cream cheese spreads to franchisees, initial
franchise and master franchise fees, area developer fees and continuing royalty
payments from its franchisees. The Company is therefore substantially dependent
upon its ability to attract, retain and contract with suitable franchisees and
the ability of these franchisees to open and operate their stores successfully.
Should the Company experience difficulty in attracting qualified franchisees, or
the Company's franchisees encounter business or operational difficulties, the
Company's revenues will be adversely affected. Such reduction in revenues may
also negatively impact the Company's ability to sell new franchises.
Consequently, the Company's financial prospects are directly related to the
success of its franchisees in promoting the Manhattan Bagel Company concept and
the success of each Manhattan Bagel Company store, over which the Company has no
direct control. There can be no assurance that the Company or its master
franchisees or area developers will be able to successfully develop new
franchises or that the Company's franchisees will be able to successfully
develop and operate Manhattan Bagel Company stores.

FOOD SERVICE INDUSTRY

Food service businesses are often affected by changes in consumer tastes;
national, regional, and local economic conditions; demographic trends; traffic
patterns; and the type, number, and location of competing businesses. Multi-unit
food service chains such as the Company can also be substantially adversely
affected by publicity resulting from food quality, illness, injury, or other
health concerns or operating issues stemming from one store or a limited number
of stores. In addition, factors such as inflation, increased food, labor, and
employee benefits costs, regional weather conditions, and the unavailability of
experienced management and hourly employees may also adversely affect the food
service industry in general and the Company's results of operations and
financial condition in particular.

SEASONAL AND QUARTERLY FLUCTUATIONS

The Company's quarterly results of operations may be affected by the timing
of the opening of new stores, receipt of master franchise fee and area
development fee income and seasonal factors. In addition, the Company's
quarterly results could also be affected by expenses associated with the
Company's expansion.

COMPETITION; EASE OF ENTRY INTO BUSINESS

The food service industry, in general, and the take out sector, in
particular, are intensely competitive. The Company competes and can be
anticipated to compete against well established food service companies with
greater product and name recognition and with larger financial, marketing and
distribution capabilities than the Company's, as well as innumerable local food
establishments that offer similar products. In addition, Management believes
that the start-up costs associated with opening a retail food establishment
offering similar products on a stand-along basis are competitive with the
start-up costs associated with commencing a Manhattan Bagel Company store and
accordingly, such start-up costs are not an impediment to entry into the retail
bagel business. There can be no assurance that the Company can compete
successfully in this complex market.

FUTURE CAPITAL REQUIREMENTS; POSSIBLE INABILITY TO OBTAIN ADDITIONAL FINANCING

The Company's goal is to expand its network of owned and franchised bagel
stores and to set up additional bagel manufacturing and distribution facilities
to service stores in new geographical areas and supply new outlets for
distribution. Although the Company believes that the proceeds of the Company's
November 1995 offering together with cash flow from current operations will be
sufficient to fund the Company's operations for the foreseable future and to
continue its planned expansion, the Company may require additional financing to
achieve this goal. The Company anticipates obtaining such financing through bank
borrowing and debt or equity financing. There can be no assurance that it will
be successful in obtaining additional financing in amounts or on terms
acceptable to the Company. The failure to obtain such financing could have a
material adverse effect on the Company's operations and its ability to
accomplish the proposed expansion of its business.

DEPENDENCE ON KEY PERSONNEL

The Company is substantially dependent upon the personal efforts and
abilities of its senior management. The loss of any of the Company's senior
management personnel could adversely affect the Company until a suitable
replacement is found. The Company's ability to develop and market its products
and to achieve and maintain a competitive position depends, in large part, on
its ability to attract and retain qualified personnel. Competition for such
personnel is intense and there can be no assurance that the Company will be able
to attract and retain such personnel.

GOVERNMENT REGULATION

The Company's franchise operations are subject to regulation by the Federal
Trade Commission ("FTC") in compliance with the Uniform Franchise Act which
requires, among other things, that the Company prepare and update a
comprehensive disclosure document in connection with the sale and operation of
its franchises. The Company and its franchisees must also comply with state
franchising laws and a wide range of other state and local rules and regulations
applicable to their business. Continued compliance with this broad federal,
state and local regulatory network is essential and costly and the failure to
comply with such regulations may have an adverse effect on the Company and its
franchisees. Violations of franchising laws and/or state laws and regulations
regulating substantive aspects of doing business in a particular state could
subject the Company and its affiliates to rescission offers, monetary damages,
penalties, imprisonment and/or injunctive proceedings. In addition, under court
decisions in certain states

absolute vicarious liability may be imposed upon franchisors based upon claims
made against franchisees. Even if the Company is able to obtain coverage for
such claims, there can be no assurance that such insurance will be sufficient to
cover potential claims against the Company.

CONTROL BY MANAGEMENT

As of the date of this Prospectus, Messrs. Jack Grumet, Jason Gennusa and
Andrew Gennusa own beneficially an aggregate of 1,996,900 shares of Common Stock
representing approximately 28.3% of the Company's outstanding stock. The
Company's By-laws do not provide for cumulative voting. Accordingly, Messrs.
Grumet, J. Gennusa and A. Gennusa together, even though owning less than a
majority of the Company's Common Stock, in all likelihood will be able to
control the affairs of the Company.

SHARES ELIGIBLE FOR FUTURE SALE

Of the 7,453,822 shares of Common Stock of the Company currently
outstanding, 2,332,400 shares of Common Stock, including 1,996,900 shares owned
by insiders, officers and directors, will be deemed "restricted securities" as
that term is defined under the Securities Act of 1933, as amended (the
"Securities Act"), and in the future may be sold under Rule 144, which provides
that a person holding restricted securities for a period of two years may sell
every three months, in brokerage transactions or market maker transactions, an
amount equal to the greater of (a) one percent of the Company's issued and
outstanding Common Stock (approximately 74,538) or (b) the average weekly
trading volume of Common Stock during the four calendar weeks prior to such
sale. Rule 144 also permits, under certain circumstances, the sale of shares
without any quantity limitation by a person who is not an affiliate of the
Company and who has satisfied a three year holding period. All of the 1,996,100
shares of Common Stock beneficially owned by Jack Grumet, Jason Gennusa and
Andrew Gennusa may be sold under Rule 144 as of the date of this Prospectus,
subject to the volume limitations and other restrictions set forth above. Of the
remaining shares of Common Stock which are restricted securities, 137,500 shares
of Common Stock held by former stockholders of DAB upon completion of this
Offering become eligible for sale under Rule 144 on June 29, 1997 (of which
12,500 shares are subject to being sold pursuant to a currently effective
registration statement and the balance of 125,000 are the subject of this
prospectus), 65,500 shares owned by certain Selling Stockholders (including the
shares which are the subject of this prospectus) become eligible for sale under
Rule 144 commencing January 9, 1998, and 132,500 shares issued by certain
Selling Stockholders (including the shares which are the subject of this
prospectus) become eligible for sale under Rule 144 commencing on May 23, 1998.

ISSUANCE OF ADDITIONAL STOCK; ANTITAKEOVER PROVISIONS

The Company's Restated Articles of Incorporation authorize the issuance of
2,000,000 shares of Preferred Stock with such designation, rights and
preferences as may be determined from time to time by the Board of Directors.
Accordingly, the Board of Directors is empowered, without obtaining shareholder
approval, to issue Preferred Stock with dividend, liquidation, conversion,
voting or other rights that could adversely affect the voting power or other
rights of the holders of the Common Stock. In addition, the Company has
16,280,772 shares of Common Stock which are authorized and not issued, or
reserved for issuance pursuant to outstanding agreements or upon exercise of
options which have been or may be granted under the Company's 1994 Stock Option
Plan, 1996 Stock Option Plan or outstanding options or warrants. In the event of
issuance, the Preferred Stock and Common Stock could be utilized, under certain
circumstances, as a method of discouraging, delaying, or preventing a change in
the control of the Company.

CONFLICTS OF INTEREST

Messrs. Jack Grumet, Jason Gennusa and Andrew Gennusa, principal
shareholders, officers and directors of the Company, and members of their
families, have been parties to several transactions in which such individuals
have loaned money to certain franchisees to finance a portion of the start-up
costs associated with opening Manhattan Bagel Company stores. Should any such
franchisees default on the repayment of such loans, the interests of the Company
in respect of such franchisees could potentially differ from the interests of
such principal shareholders and their families. The Company currently has no
policy to reconcile conflicts which may actually arise.

SHAREHOLDER LAWSUITS

On June 20, 1996, the Company announced that following the installation of
new management at its I&J West Coast subsidiary, the Company had uncovered
certain improper bookkeeping and accounting practices at the Los Angeles
subsidiary, that it would be restating its first quarter 1996 statement of
operations to account for these improper practices and that it expected the Los
Angeles subsidiary would operate at a close to break-even level for the
remainder of 1996. As a result, the Board of Directors of the Company authorized
a full investigation into the accounting practices at the Los Angeles subsidiary
and retained special counsel to assist in the investigation. Based on the
conclusion of that investigation, the Company restated its first quarter 1996
statement of operations to reduce revenues $90,000 and record additional
expenses of $290,000. The Company has since centralized the accounting for all
operations in the corporate offices in order to better control operations.

On the day following the announcement, the stock price of the Company's
Common Stock declined from a closing price of $21.25 on June 20, 1996 to a
closing price of $13.75 on June 21, 1996. As a result, certain class action
lawsuits have been filed claiming violation of the Federal securities laws,
specifically Rule 10b-5 under the Securities Exchange Act of 1934. These
lawsuits have now been consolidated into one class action lawsuit in the Federal
District Court in New Jersey, with the time for the Company to answer or move
for dismissal not yet expired. There also remains an additional action filed
under California State law and removed to the Federal Court in New Jersey
purporting to be on behalf of a class of plaintiffs, the status of which in
relation to the class action lawsuits referred to above is unsettled. The
plaintiffs in these actions seek unspecified money damages. Discovery is in the
preliminary stage. Although the Company believes it has acted properly and has
adequate defenses to such actions, no assessment of the amount or range of any
loss that might be incurred by, or the effects thereof on, the Company should it
be found to have violated any law, can be made at this time. In addition, no
estimates can reasonably be made at this time of the costs of defense of the
actions.

OTHER LITIGATION

The Company is a defendant in a lawsuit recently filed by Jeffrey Boren,
Rochelle Boren and the trustees of the JMB Irrevocable Trust, each of whom is a
selling shareholder under this Prospectus. The Plaintiffs claim that the Company
failed to comply with contractual obligations under the Agreement and Plan of
Merger dated as of May 10, 1995, as amended, by and between the Company, DAB
Acquisition Corp., DAB Industries, Inc. and Allan Boren, with respect to the
obligations of the COmpany to register shares owned by the Plaintiffs for public
sale by them. The Plaintiffs are seeking damages in unspecified amounts. The
time to respond to the complaint has not yet expired. The Company is currently
evaluating the merits of the claims, and is unable to assess the effect on the
financial condition of the Company should there be an adverse determination of
this lawsuit.

PLAN OF DISTRIBUTION

This Prospectus relates to the sale by the Selling Shareholders of the
Shares. The Shares may be sold from time to time, in whole or in part, by the
Selling Shareholders, or their pledgees, donees, transferees,

or other successors in interest, in the over-the-counter market at then
prevailing market prices or in privately negotiated transactions. Although the
Company ultimately expects that all Shares may be sold, the actual number of
Shares that will be sold cannot be determined.

In offering the Shares, the Selling Shareholders and any selling broker or
dealer may be deemed to be statutory "underwriters" within the meaning of
Section 2(11) of the Securities Act in connection with such sales.

The Company has advised the Selling Shareholders that they, because they may
be deemed to be statutory underwriters, will be subject to the Prospectus
delivery requirements under the Securities Act. The Company has also advised the
Selling Shareholders that in the event of a "distribution" of their shares, such
Selling Shareholders, any selling broker or dealer and any "affiliated
purchasers" may be subject to Rule 10b-6 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), until its participation in that
distribution is completed. A "distribution" is defined in Rule 10b-6(c)(5) as an
offering of securities "that is distinguished from ordinary trading transactions
by the magnitude of the offering and the presence of special selling efforts and
selling methods." The Company has also advised the Selling Shareholders that
Rule 10b-7 under the Exchange Act prohibits any "stabilizing bid" or
"stabilizing purchase" for the purpose of pegging, fixing or stabilizing the
price of Common Stock in connection with this offering.

USE OF PROCEEDS

The Company will not receive any proceeds from the sale of the Shares by the
Selling Shareholders to the public.

SELLING SHAREHOLDERS

The following table sets forth the number of shares of Common Stock of the
Company beneficially owned by the Selling Shareholders on December 31, 1996, the
number of Shares covered by this Prospectus and the amount and percentage
ownership by the Selling Shareholders after the offering. All shares are
beneficially owned and the sole voting and investment power is held by the
person named.

NUMBER OF SHARES
BENEFICIALLY NUMBER OF SHARES NUMBER OF SHARES
OWNED ON COVERED BY TO BE
NAME DECEMBER 31, 1996 THIS PROSPECTUS RETAINED
- --------------------------------------------------------- ----------------- ----------------- -------------------

Gary Goldstein........................................... 32,750 32,750 -0 -
Scott Kronenberg......................................... 32,750 32,750 -0 -
Jeffrey and Rochelle Boren (1)........................... 45,000 35,000 -0 -(2)
Naftalie Deutsch, as Trustee, the JMB Irrevocable Trust
dated June 4, 1979..................................... 90,000 90,000 -0 -
Rocco Fiorentino......................................... 55,491 55,491 -0 -
John Gerber.............................................. 34,768 34,768 -0 -
Frank S. Guglielmo....................................... 42,241 42,241 -0 -
Bagel Brothers Maple, Inc................................ 50,000 50,000 -0 -

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

(1) Jeffrey and Rochelle Boren are husband and wife and own the shares as
community property.

(2) The balance of the shares owned by Jeffrey and Rochelle Boren are registered
for sale by them in a separate Registration Statement of the Company (Reg.
No. 33-97054).

DESCRIPTION OF SECURITIES

COMMON STOCK

The Company is authorized to issued 25,000,000 shares of Common Stock, no
par value. Holders of the Common Stock are entitled to one vote for each share
held of record on all matters submitted to a meeting of the stockholders.
Holders of Common Stock are entitled to share in such dividends as the Board of
Directors, in its sole discretion, may declare from time to time from funds
legally available. In the event of liquidation, each outstanding shares entitles
its holder to participate ratably in the assets remaining after payment of
liabilities. Stockholders have no preemptive rights or other rights to subscribe
or purchase additional shares of any class of stock or of any other securities
of the Company, and there are no redemptive or sinking fund provisions with
regard to the Common Stock. All outstanding shares of Common Stock are fully
paid and non-assessable. Stockholders do not have cumulative voting rights.

PREFERRED STOCK

The Board of Directors is authorized to issue 2,000,000 shares of Preferred
Stock in one or more series and to fix the rights, preferences, privileges, and
restrictions, including the dividend rights, conversion rights, voting rights,
rights and terms of redemption, redemption price or prices, liquidation
preferences, and the number of shares constituting any series or the
designations of such series, without any further vote or action by the
stockholders. The issuance of Preferred Stock may have the effect of delaying,
deferring, or preventing a change in control of the Company without further
actions of the stockholders. The issuance of Preferred Stock with conversion
rights may adversely affect the voting power of the holders of Common Stock,
including the loss of voting control to others.

Article 7 of the Restated Certificate of Incorporation of the Company,
provides for the elimination of the personal liability of directors and officers
to the Company or its stockholders for monetary damages for breach of any duty
owed to the Company or its stockholders, provided that a director or officer
shall not be relieved from liability for any breach of duty based upon any act
or omission (a) in breach of such person's duty of loyalty to the Company or its
stockholders, (b) not in good faith or involving a knowing violation of law, or
(c) resulting in receipt by such person of an improper personal benefit. In
addition, Article 8 of the Company's Restated Certificate of Incorporation
provides for the Company to indemnify its directors and officers against certain
liabilities incurred with their service in such capacities to the fullest extent
permitted under New Jersey law.

STOCK TRANSFER AGENT

The Transfer Agent of the Common Stock is Continental Stock Transfer & Trust
Company.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Morrison Cohen Singer & Weinstein, LLP, 750 Lexington Avenue, New
York, New York 10022. Jack Levy, a director of the Company is a member of that
firm. Mr. Levy owns options issued under the Company's 1994 Stock Option Plan to
purchase 9,000 shares of the Company's Common Stock, of which 6,000 are
currently exercisable or exercisable within 60 days of the date of this
Prospectus, and options issued under the Company's 1996 Stock Option Plan to
purchase 10,000 shares of the Company's Common Stock, of which 3,334 are
exercisable or exercisable within 60 days of the date of this Prospectus.

EXPERTS

The consolidated financial statements of the Company for the year ended
December 31, 1995 appearing in the Company's Annual Report on Form 10-KSB filed
for the year ended December 31, 1995 incorporated herein by reference have been
audited by Ernst & Young LLP, independent auditors as set

forth in their report thereon, and the consolidated financial statements of the
Company dated December 31, 1995 appearing in its Current Report on Form 8-K
dated May 23, 1996, as amended, which reflects the pooling-of-interest
transaction with Specialty Bakeries, Inc. incorporated herein by reference have
been audited by Ernst & Young LLP, independent auditors as set forth in their
report thereon which is based in part on the report of Rainer & Company,
independent auditors, and are included in reliance upon such reports given upon
the authority of such firms as experts in accounting and auditing.

The consolidated financial statements for the year ended December 31, 1994
incorporated by reference herein have been audited by Amper, Politziner &
Mattia, Singer Lewak Greenbaum & Goldstein LLP, and Rainer & Company,
independent auditors, as set forth in their respective reports thereon appearing
in the 1995 Form 10-KSB and appearing in its Current Report on Form 8-K dated
May 23, 1996, as amended, and are included in reliance upon such reports given
upon the authority of such firms as experts in accounting and auditing.