Agreement and Plan of Reorganization - Portable Software Corp. and 7Software Inc.


                      AGREEMENT AND PLAN OF REORGANIZATION


                THIS AGREEMENT AND PLAN OF REORGANIZATION (the "AGREEMENT") is
entered into as of this 30th day of June, 1998, by and among Portable Software
Corporation, A Washington corporation ("PORTABLE"), PSC Merger Corp., a Delaware
corporation and a wholly-owned subsidiary of Portable ("PORTABLE SUBSIDIARY"),
and 7Software, Inc., a California corporation ("SEVEN"), and Melissa Widner and
Andrew Dent, the principal shareholders of Seven (the "PRINCIPAL SHAREHOLDERS").


                                    RECITALS


         A. The parties intend that, subject to the terms and conditions of this
Agreement, Portable Subsidiary will merge with and into Seven in a reverse
triangular merger with Seven to be the surviving corporation of the Merger, all
pursuant to the terms and conditions of this Agreement and an Agreement of
Merger substantially in the form of Exhibit A (the "AGREEMENT OF MERGER") and
the applicable provisions of the laws of the States of Delaware and California.
Upon the effectiveness of the Merger, all the outstanding capital stock of Seven
will be converted into capital stock of Portable, and Portable will assume all
outstanding options to purchase shares of capital stock of Seven, as provided in
this Agreement and the Agreement of Merger.

         B. The Merger is intended to be treated as a tax-free reorganization
pursuant to the provisions of Section 368(a)(1)(A) of the Internal Revenue Code
of 1986, as amended (the "CODE"), by virtue of the provisions of Section
368(a)(2)(E) of the Code.

                NOW, THEREFORE, the parties hereto hereby agree as follows:

         1.       CERTAIN DEFINITIONS

                  As used in this Agreement, the following terms will have the
meanings set forth below:

                  1.1 The "MERGER" means the statutory merger of Portable
Subsidiary with and into Seven to be effected pursuant to the terms and
conditions of this Agreement.

                  1.2 The "EFFECTIVE TIME" means the time and date on which the
Merger first becomes legally effective under the laws of the States of
California and Delaware as a result of: (i) the filing with the California
Secretary of State of the Agreement of 



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Merger and any required officers' certificates; and (ii) the filing with the
Delaware Secretary of State of the Agreement of Merger and any required
officers' certificates or, in lieu thereof at Portable's option, a Certificate
of Merger (the "CERTIFICATE OF MERGER"), conforming to the requirements of
Section 252 of the Delaware General Corporation Law.

                  1.3 "PORTABLE COMMON STOCK" means Portable's Common Stock, no
par value per share.

                  1.4 "SEVEN COMMON STOCK" means Seven's Common Stock, no par
value per share.

                  1.5 "SEVEN OPTIONS" means, collectively, options to purchase
shares of Seven Common Stock granted by Seven to Seven employees or consultants
(a) under the its 1997 Stock Option Plan (the "SEVEN OPTION PLAN") or (b)
outside of its 1997 Stock Option Plan as disclosed in the Seven Disclosure
Schedule.

                  1.6 "SEVEN DERIVATIVE SECURITIES" means, collectively: (a) any
warrant, option, right or other security issued by Seven that entitles the
holder thereof to purchase or otherwise acquire any shares of the capital stock
of Seven (collectively, "SEVEN STOCK RIGHTS"); (b) any note, evidence of
indebtedness, stock or other security of Seven that is convertible into or
exchangeable for any shares of the capital stock of Seven or any Seven Stock
Rights ("SEVEN CONVERTIBLE SECURITY"); and (c) any warrant, option, right, note,
evidence of indebtedness, stock or other security issued by Seven that entitles
the holder thereof to purchase or otherwise acquire any Seven Stock Rights or
any Seven Convertible Security from Seven; provided, however, that the term
"Seven Derivative Securities" does not include any of the Seven Options.

                  1.7 "NUMBER OF FULLY DILUTED SEVEN SHARES" means that number
of shares of Seven Common Stock that is equal to the sum of: (a) the total
number of shares of Seven Common Stock that are issued and outstanding
immediately prior to the Effective Time; plus (b) the total number of shares of
Seven Common Stock subject to or issuable under all Seven Options that are
issued and outstanding immediately prior to the Effective Time; plus (c) the
total number of shares of Seven Common Stock that, immediately prior to the
Effective Time, are, directly or indirectly, ultimately or potentially issuable
by Seven upon the exercise, conversion or exchange of all Seven Derivative
Securities (if any) that are issued and outstanding immediately prior to the
Effective Time.

                  1.8 "SEVEN SHAREHOLDERS" means those persons (each being
individually referred to herein as a "SEVEN SHAREHOLDER") who, immediately prior
to the Effective Time, hold the shares of Seven Common Stock that are
outstanding immediately prior to the Effective Time; provided, however, that for
purposes of Section 2.4 and Section 11 of this Agreement, the term "Seven
Shareholders" means only those Seven Shareholders (as defined above in this
Section) who are issued shares of Portable Common Stock in the Merger.

                  1.9 "SEVEN DISSENTING SHARES" means any shares of any capital
stock of Seven that (i) are outstanding immediately prior to the Effective Time
and qualify fully as "dissenting shares" within the meaning of Section 1300(b)
of the California Corporations Code and (ii) with respect to which dissenter's
rights to require the purchase of such dissenting shares 

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for cash at their fair market value in accordance with Chapter 13 of the
California Corporations Code have been duly and properly exercised and perfected
in connection with the Merger.

                  1.10 "PORTABLE MERGER SHARES" means 2,082,118 shares of
Portable Common Stock.

                  1.11 "CONVERSION RATIO" means the quotient obtained by
dividing (a) the number of shares of Portable Common Stock constituting the
Portable Merger Shares by (b) the Number of Fully Diluted Seven Shares. For
example, if the Number of Fully Diluted Seven Shares is 2,446,294, then the
Conversion Ratio will be 2,082,118 divided by 2,446,294, or approximately
0.851132.

                  1.12 "KNOWLEDGE," when used with reference to Seven or Seven
Shareholders, means the collective actual knowledge of the Seven Shareholders,
the President and/or Chief Executive Officer of Seven, the Chief Financial
Officer of Seven and/or any Vice President of Seven.

         2.       PLAN OF REORGANIZATION

                  2.1 The Merger. Subject to the terms and conditions of this
Agreement, Portable Subsidiary will be merged with and into Seven pursuant to
this Agreement and the Agreement of Merger and in accordance with applicable
provisions of the laws of the States of Delaware and California as follows:

                           2.1.1 Conversion of Subsidiary Stock. At the
Effective Time, each share of the Common Stock of Portable Subsidiary that is
issued and outstanding immediately prior to the Effective Time will, by virtue
of the Merger and without the need for any further action on the part of the
holder thereof, be converted into and become one share of Seven Common Stock
that is issued and outstanding immediately after the Effective Time, and the
shares of Seven Common Stock into which the shares of Portable Subsidiary are so
converted in the Merger will be the only shares of capital stock of Seven that
are issued and outstanding immediately after the Effective Time.

                           2.1.2 Conversion of Shares. Each share of Seven
Common Stock, issued and outstanding immediately prior to the Effective Time
other than shares, if any, for which dissenters rights have been or will be
perfected in compliance with applicable law, will by virtue of the Merger and at
the Effective Time, and without further action on the part of any holder
thereof, be converted into a number of shares of Portable Common Stock that is
equal to the Conversion Ratio, subject to the provisions of 2.2 regarding the
elimination of fractional shares.

                           2.1.3 Adjustments for Capital Changes. If, prior to
the Effective Time, Portable or Seven recapitalizes through a split-up of its
outstanding shares into a greater number, or a combination of its outstanding
shares into a lesser number, reorganizes, reclassifies or otherwise changes its
outstanding shares into the same or a different number of shares of other
classes (other than through a split-up or combination of shares provided for in
the previous clause), or declares a dividend on its outstanding shares payable
in shares or securities 

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convertible into shares, the Conversion Ratio and the number of Portable Merger
Shares will be adjusted appropriately so as to maintain the proportionate
interests of the shareholders and optionholders of Portable and Seven in the
outstanding equity of Portable immediately following the Merger as contemplated
by this Agreement.

                           2.1.4 Dissenting Shares. Holders of shares of Seven
Common Stock who have complied with all requirements for perfecting
shareholders' rights of appraisal, as set forth in Section 1300 et seq of the
California General Corporation Law (the "CALIFORNIA LAW"), shall be entitled to
their rights under the California Law with respect to such shares.

                2.2 Fractional Shares. No fractional shares of Portable Common
Stock will be issued in connection with the Merger, but in lieu thereof each
holder of Seven Common Stock who would otherwise be entitled to receive a
fraction of a share of Portable Common Stock will receive from Portable,
promptly after the Effective Time, an amount of cash (without interest)
determined by multiplying such fraction by $1.00.

                2.3 Seven Options. Each Seven Option that is outstanding
immediately prior to the Effective Time shall, by virtue of the Merger at the
Effective Time and without further action on the part of any holder thereof, be
assumed by Portable and converted into an option (a "PORTABLE OPTION") to
purchase after the Effective Time that number of shares of Portable Common
Stock, determined by multiplying the number of shares of Seven Common Stock
subject to such Seven Option immediately prior to the Effective Time by the
Conversion Ratio, at an exercise price per share of Portable Common Stock equal
to the exercise price per share of the Seven Option immediately prior to the
Effective Time divided by the Conversion Ratio and rounded up to the nearest
whole cent. If the foregoing calculation results in an assumed option being
exercisable for a fraction of a share, then the number of shares of Portable
Common Stock subject to such option will be rounded down to the nearest whole
number with no cash being payable for such fractional share. The terms,
exercisability, vesting schedule, status as an "incentive stock option" under
Section 422 of the Code, if applicable, and all other terms of the Seven Options
will otherwise be unchanged. Continuous employment with Seven will be credited
to an optionee for purposes of determining the number of shares subject to such
optionee's Portable Option which may have become vested from time to time.

                2.4 Escrow Agreement. At the closing of the Merger (the
"CLOSING"), Portable will withhold seventeen and one-half percent (17 1/2%) of
the Portable Merger Shares to be issued to each Seven Shareholder in accordance
with Section 2.1 (rounded down to the nearest whole number of shares to be
issued to each Seven Shareholder, and such that the shares to be withheld from
the Principal Shareholders will be divided equally between vested and unvested
shares as specified in the Escrow Agreement (as defined below)) and deliver such
shares (the "ESCROW SHARES") to the State Street Bank & Trust Company of
California, N.A. (the "ESCROW AGENT"), as escrow agent, to be held by Escrow
Agent as collateral for the indemnification obligations of Seven and the
Principal Shareholders under Section 11.2 and pursuant to the provisions of an
escrow agreement (the "ESCROW AGREEMENT") in substantially the form of Exhibit
2.4. The Escrow Shares will be represented by a certificate or certificates
issued in the name of the Escrow Agent and will be held by the Escrow Agent from
the Closing until the one year 


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anniversary of the Closing Date (the "ESCROW PERIOD"). In the event that the
Merger is approved by the Seven Shareholders as provided herein, the Seven
Shareholders shall, without any further act of any Seven Shareholder, be deemed
to have consented to and approved (i) the use of the Escrow Shares as collateral
for the indemnification obligations of Seven and the Principal Shareholders
under Section 11.2 in the manner set forth in the Escrow Agreement, (ii) the
appointment of Melissa Widner as the representative of the Seven Shareholders
(the "REPRESENTATIVE") under the Escrow Agreement and as the attorney-in-fact
and agent for and on behalf of each Seven Shareholder (other than holders of
Seven Dissenting Shares), and the taking by the Representative of any and all
actions and the making of any decisions required or permitted to be taken by her
under the Escrow Agreement (including, without limitation, the exercise of the
power to authorize delivery to Portable of Escrow Shares in satisfaction of
claims by Portable; agree to, negotiate, enter into settlements and compromises
of and demand arbitration and comply with orders of courts and awards of
arbitrators with respect to such claims; resolve any claim made pursuant to
Section 11.2; and take all actions necessary in the judgment of the
Representative for the accomplishment of the foregoing) and (iii) to all of the
other terms, conditions and limitations in the Escrow Agreement. In the event
that the Escrow Agent is unable or unwilling to serve as escrow agent, the
parties agree that Fenwick & West LLP, or a third party mutually agreed upon
between Portable and the Representative, may serve as escrow agent under the
Escrow Agreement on substantially the same terms as the Escrow Agreement.

                2.5 Effects of the Merger. At the Effective Time: (a) the
separate existence of Portable Subsidiary will cease and Portable Subsidiary
will be merged with and into Seven, and Seven will be the surviving corporation,
pursuant to the terms of the Agreement of Merger, (b) the Articles of
Incorporation and Bylaws of Seven will be amended to read as set forth in
Exhibit 2.5 attached hereto, and will be the Articles of Incorporation and
Bylaws of the surviving corporation, (c) each share of Portable Subsidiary
Common Stock outstanding immediately prior to the Effective Time will continue
to be an identical outstanding share of the surviving corporation, (d) each
share of Seven Common Stock and each Seven Option outstanding immediately prior
to the Effective Time will be converted as provide in Sections 2.1, 2.2 and 2.3;
(e) the officers and directors of the Surviving Corporation will be the officers
and directors of Portable Subsidiary, and (f) the Merger will, from and after
the Effective Time, have all of the effects provided by applicable law.

                2.6 Further Assurances. Seven agrees that if, at any time before
or after the Effective Time, Portable considers or is advised that any further
deeds, assignments or assurances are reasonably necessary or desirable to vest,
perfect or confirm in Portable title to any property or rights of Seven,
Portable and its proper officers and directors may execute and deliver all such
proper deeds, assignments and assurances and do all other things necessary or
desirable to vest, perfect or confirm title to such property or rights in
Portable and otherwise to carry out the purpose of this Agreement, in the name
of Seven or otherwise.

                2.7 Tax-Free Reorganization. The parties intend to adopt this
Agreement as a tax-free plan of reorganization and to consummate the Merger in
accordance with the provisions of Section 368(a)(1)(A) of the Code. The parties
believe that the value of the Portable Common 

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Stock to be received in the Merger is equal, in each instance, to the value of
the Seven Common Stock to be surrendered in exchange therefor. The Portable
Common Stock issued in the Merger will be issued solely in exchange for the
Seven Common Stock, and no other transaction other than the Merger represents,
provides for or is intended to be an adjustment to, the consideration paid for
the Seven Common Stock. Except for cash paid in lieu of fractional shares or for
Seven Dissenting Shares, no consideration that could constitute "other property"
within the meaning of Section 356 of the Code is being paid by Portable for the
Seven Common Stock in the Merger. The parties shall not take a position on any
tax returns inconsistent with this Section 2.7. In addition, Portable represents
now, and as of the Closing Date, that it presently intends to continue Seven's
historic business or use a significant portion of Seven's business assets in a
business.

                  2.8 Securities Laws Matters. Portable shall issue the shares
of Portable Common Stock to be issued in the Merger pursuant to Section 2.1.2 of
the Agreement and the Portable Options to be issued in the Merger pursuant to an
exemption from registration under Section 4(2) and/or Regulation D promulgated
under the 1933 Act and the exemption from qualification under Section 25120 of
the California Corporation Code (the "CCC") provided by Section 25103(h) of the
CCC, and shall make any requisite filings within the time prescribed by
applicable law. In connection therewith, (a) each Seven Shareholder shall
execute and deliver to Portable an Investment Representation letter in the form
of Exhibit 2.8A hereto (the "INVESTMENT REPRESENTATION LETTER"); and (b)
substantially all of the holders of outstanding Seven Options shall execute and
deliver to Portable an Optionee Investment Representation Letter in the form of
Exhibit 2.8B hereto (the "OPTIONEE INVESTMENT REPRESENTATION LETTER").

                  2.9 Purchase Accounting. The parties intend that the Merger be
treated as a purchase for accounting purposes.

         3.       REPRESENTATIONS AND WARRANTIES OF SEVEN AND THE PRINCIPAL
                  SHAREHOLDERS

                  As an inducement to Portable to enter into this Agreement,
each of the Principal Shareholders and Seven hereby jointly and severally
represents and warrants to Portable that, except as set forth on the Seven
Disclosure Schedule delivered to Portable herewith as Exhibit 3.0 (the "SEVEN
DISCLOSURE SCHEDULE").

                  3.1 Organization and Good Standing. Seven is a corporation
duly organized, validly existing and in good standing under the laws of
California, has the corporate power and authority to own, operate and lease its
properties and to carry on its business as now conducted and as proposed to be
conducted, and is qualified as a foreign corporation in each jurisdiction in
which a failure to be so qualified could reasonably be expected to have a
material adverse effect on its present or expected operations or financial
condition.

                  3.2 Power, Authorization and Validity.

                           3.2.1 Seven has the right, power, legal capacity and
authority to enter into and perform its obligations under this Agreement, and
all agreements to which Seven is or will 

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be a party that are required to be executed pursuant to this Agreement (the
"SEVEN ANCILLARY AGREEMENTS") and Seven has all requisite corporate power and
authority to consummate the Merger. The execution, delivery and performance of
this Agreement and the Seven Ancillary Agreements have been duly and validly
approved and authorized by Seven's Board of Directors. Each of the Principal
Shareholders has the right, power, legal capacity, and authority to enter into,
execute, deliver, and perform his or her respective obligations under this
Agreement and each of the Ancillary Agreements to be executed and delivered by
such Principal Shareholder (the "PRINCIPAL SHAREHOLDER ANCILLARY AGREEMENTS").

                           3.2.2 No filing, authorization or approval,
governmental or otherwise, is necessary to enable Seven or any Principal
Shareholder to enter into, and to perform its obligations under, this Agreement,
the Seven Ancillary Agreements, and the Shareholder Ancillary Agreements except
for (a) the filing of the Agreement of Merger with the California and Delaware
Secretaries of State, and the filing of appropriate documents with the relevant
authorities of other states in which Seven is qualified to do business, if any,
(b) such filings as may be required to comply with federal and state securities
laws, and (c) the approval of the Seven Shareholders of the transactions
contemplated hereby.

                           3.2.3 This Agreement and the Seven Ancillary
Agreements are, or when executed by Seven will be, valid and binding obligations
of Seven, except as to the effect, if any, of (a) applicable bankruptcy and
other similar laws affecting the rights of creditors generally and (b) rules of
law governing specific performance, injunctive relief and other equitable
remedies; provided, however, that the Agreement of Merger will not be effective
until filed with the Delaware and California Secretaries of State. This
Agreement and each of the Principal Shareholder Ancillary Agreements are, or
when executed by the each Principal Shareholder will be, valid and binding
obligations of such Principal Shareholder enforceable in accordance with their
respective terms, except as to the effect, if any, of (a) applicable bankruptcy
and other similar laws affecting the rights of creditors generally and (b) rules
of law governing specific performance, injunctive relief and other equitable
remedies; provided, however, that the Agreement of Merger will not be effective
until filed with the Delaware and California Secretaries of State.

                  3.3 Capitalization. The authorized capital stock of Seven
consists of 10,000,000 shares of Common Stock, no par value, of which 2,082,294
shares are issued and outstanding, and 5,000,000 shares of Preferred Stock, none
of which are issued or outstanding. Options to purchase a total of 366,000
shares of Seven Common Stock are outstanding. All issued and outstanding shares
of Seven Common Stock have been duly authorized and validly issued, are fully
paid and nonassessable, are not subject to any right of rescission, and have
been offered, issued, sold and delivered by Seven in compliance with all
registration or qualification requirements (or applicable exemptions therefrom)
of applicable federal and state securities laws. A list of all holders of Seven
Options, Seven Derivative Securities, the number of shares, options and warrants
held by each is set forth on the Seven Disclosure Schedule. Except as set forth
in this Section, there are no options, warrants, calls, commitments, conversion
privileges or preemptive or other rights or agreements outstanding to purchase
any of Seven's authorized but unissued capital stock or any securities
convertible into or exchangeable for shares of Seven 



                                      -7-

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Common Stock or obligating Seven to grant, extend, or enter into any such
option, warrant, call, right, commitment, conversion privilege or other right or
agreement, and there is no liability for dividends accrued but unpaid. There are
no voting agreements, rights of first refusal or other restrictions (other than
normal restrictions on transfer under applicable federal and state securities
laws) applicable to any of Seven's outstanding securities. Seven is not under
any obligation to register under the Securities Act any of its presently
outstanding securities or any securities that may be subsequently issued.

                3.4 Subsidiaries. Seven does not have any subsidiaries or any
interest, direct or indirect, in any corporation, partnership, joint venture or
other business entity.

                3.5 No Violation of Existing Agreements. Neither the execution
and delivery of this Agreement nor any Seven Ancillary Agreement by Seven or any
of the Principal Shareholders, nor the consummation of the transactions
contemplated hereby, will conflict with, or (with or without notice or lapse of
time, or both) result in a termination, breach, impairment or violation of (a)
any provision of the Articles of Incorporation or Bylaws of Seven, as currently
in effect, (b) in any material respect, any material instrument or contract,
letter of intent or memorandum of understanding, or commitment to which Seven is
a party or by which Seven is bound, or (c) any federal, state, local or foreign
judgment, writ, decree, order, statute, rule or regulation applicable to Seven
or its assets or properties. The consummation of the Merger in and of itself
will not require the consent of any third party and will not have a material
adverse effect upon any rights, licenses, franchises, leases or agreements of
Seven pursuant to the terms of those agreements.

                3.6 Litigation. There is no action, proceeding, claim or
investigation pending against Seven before any court or administrative agency
that if determined adversely to Seven may reasonably be expected to have a
material adverse effect on the present or future operations or financial
condition of Seven, nor, to the best of Seven's knowledge, has any such action,
proceeding, claim or investigation been threatened. There is, to the best of
Seven's knowledge, no reasonable basis for any shareholder or former shareholder
of Seven, or any other person, firm, corporation, or entity, to assert a claim
against Seven based upon: (a) ownership or rights to ownership of any shares of
Seven Common Stock (except for dissenter's rights with respect to shares of
Portable Common Stock issuable by virtue of the Merger), (b) any rights as a
Seven shareholder, including any option or preemptive rights or rights to notice
or to vote, (c) any rights under any agreement among Seven and its shareholders,
or (d) Seven entering into this Agreement or any Seven Ancillary Agreement or
any of the transactions contemplated hereby or thereby. There is no judgment,
decree, injunction, rule, or order of any governmental entity or agency, court
or arbitrator outstanding against Seven.

                3.7 Taxes. Seven has filed all federal, state, local and foreign
tax returns required to be filed, has paid all taxes required to be paid in
respect of all periods for which returns have been filed, has established an
adequate accrual or reserve for the payment of all taxes payable in respect of
the periods subsequent to the periods covered by the most recent applicable tax
returns, has made all necessary estimated tax payments, and has no material
liability for taxes in excess of the amount so paid or accruals or reserves so
established. Seven is 


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   9

not delinquent in the payment of any tax or in the filing of any tax returns,
and no deficiencies for any tax have been threatened, claimed, proposed or
assessed. No tax return of Seven has ever been audited by the Internal Revenue
Service or any state taxing agency or authority. For the purposes of this
Section, the terms "TAX" and "TAXES" include all federal, state, local and
foreign income, gains, franchise, excise, property, sales, use, employment,
license, payroll, occupation, recording, value added or transfer taxes,
governmental charges, fees, levies or assessments (whether payable directly or
by withholding), and, with respect to such taxes, any estimated tax, interest
and penalties or additions to tax and interest on such penalties and additions
to tax. To Seven's knowledge, all elections and notices required by Section
83(b) of the Code and any analogous provisions of applicable state tax laws have
been timely filed by all individuals who have purchased shares of Seven Common
Stock, and the Principal Shareholders expressly assume any liability for any
failure to file any such elections and notices.

                3.8 Seven Financial Statements. Seven has delivered to Portable
as Exhibit 3.8 Seven's unaudited balance sheet as of June 1, 1998 (the "SEVEN
BALANCE SHEET") and income statement for the six month period then ended
(collectively, the "SEVEN FINANCIAL STATEMENTS"). The Seven Financial Statements
(a) are in accordance with the books and records of Seven, and (b) fairly
present the financial condition of Seven at the date therein indicated and the
results of operations for each period therein specified. Seven has no material
debt, liability or obligation of any nature, whether accrued, absolute,
contingent or otherwise, whether due or to become due, and which is required to
be reflected in a financial statement prepared in accordance with generally
accepted accounting principles, that is not reflected or reserved against in the
Seven Financial Statements, except for those that may have been incurred after
the date of the Seven Financial Statements in the ordinary course of its
business, consistent with past practice and that are not material in amount
either individually or collectively.

                3.9 Title to Properties. Seven has good and marketable title to
all of its assets as shown on the Seven Balance Sheet, free and clear of all
liens, charges, restrictions or encumbrances (other than for taxes not yet due
and payable). All machinery and equipment included in such properties is in good
condition and repair, normal wear and tear excepted, and all leases of real or
personal property to which Seven is a party are fully effective and afford Seven
peaceful and undisturbed possession of the subject matter of the lease. Seven is
not in violation of any zoning, building, safety or environmental ordinance,
regulation or requirement or other law or regulation applicable to the operation
of owned or leased properties (the violation of which would have a material
adverse effect on its business), or has received any notice of violation with
which it has not complied. Seven does not own any real property.

                3.10 Absence of Certain Changes. Since the date of the Seven
Balance Sheet, there has not been with respect to Seven any:

                           (a) material change in the financial condition,
properties, assets, liabilities, business or operations thereof which change by
itself or in conjunction with all other such changes, whether or not arising in
the ordinary course of business, has had or will have a material adverse effect
on Seven;


                                      -9-


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                           (b) material contingent liability incurred by Seven
as guarantor or otherwise with respect to the obligations of others;

                           (c) mortgage, encumbrance or lien placed on any of
Seven's properties;

                           (d) material obligation or liability incurred by
Seven other than obligations and liabilities incurred in the ordinary course of
business;

                           (e) purchase, license or sale or other disposition,
or any agreement or other arrangement for the purchase, license, sale or other
disposition, of any of the properties or assets of Seven other than in the
ordinary course of business;

                           (f) damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the properties, assets
or business of Seven;

                           (g) declaration, setting aside or payment of any
dividend on, or the making of any other distribution in respect of, the capital
stock thereof, any split, combination or recapitalization of the capital stock
thereof or any direct or indirect redemption, purchase or other acquisition of
the capital stock of Seven;

                           (h) change in the compensation payable or to become
payable to any of its officers, employees or agents, or any bonus payment or
arrangement made to or with any of such officers, employees or agents;

                           (i) change with respect to the management,
supervisory or other key personnel thereof;

                           (j) transfer or grant of a right under any Seven IP
Rights (as such term is defined in Section 3.12 below) other than those
transferred or granted in the ordinary course of its business consistent with
past practice;

                           (k) issuance or sale of any debt or equity securities
of Seven or any options or other rights to acquire from Seven, directly or
indirectly, any debt or equity securities;

                           (l) payment or discharge of a material lien or
liability thereof which lien was not either shown on the Seven Balance Sheet or
incurred in the ordinary course of business thereafter; or

                           (m) obligation or liability incurred thereby to any
of its officers, directors or shareholders or any loans or advances made thereby
to any of its officers, directors or shareholders except normal compensation and
expense allowances payable to officers.

                3.11 Contracts and Commitments. The Seven Disclosure Schedule
sets forth a list of each of the following written or oral contracts,
agreements, or commitments to which Seven is a party or by which it or any of
its assets or properties are bound: (i) any stock 

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redemption or purchase agreement, financing agreement, license, lease or
franchise, (ii) any contract providing for the development of software for
Seven, or the license of software to Seven which is used or incorporated in any
products currently distributed by Seven, (iii) license agreement as licensor or
licensee (except for standard non-exclusive hardware and software licenses
granted to end-user customers by Seven, and standard non-exclusive hardware and
software licenses arising from the purchase of "off the shelf" or standard
products by Seven, in the ordinary course of business); (iv) material agreement
for the lease of real or personal property; (v) joint venture contract or
arrangement or any other agreement that involves a sharing of profits with other
persons; (vi) instrument evidencing or related in any way to indebtedness for
borrowed money by way of direct loan, sale of debt securities, purchase money
obligation, conditional sale, guarantee, or otherwise, except for trade
indebtedness incurred in the ordinary course of business, and except as
disclosed in the Seven Financial Statements; (vii) contract containing covenants
purporting to limit Seven's freedom to compete in any line of business in any
geographic area; (viii) contract involving a potential commitment or payment of
$10,000 or more; (ix) contract for the sale, license, distribution, or
manufacture of products or services which is not terminable upon ninety (90)
days' or less notice without cost or other liability to Seven or in which Seven
has granted or received manufacturing rights most favored customer pricing
provisions or exclusive marketing rights relating to any product or services,
groups of products or services, or territory; (x) contract or commitment for the
employment of any officer, employee or consultant of Seven, or any other type of
contract or understanding with any officer, employee, consultant or director
that is not immediately terminable by Seven without liability; (xi) agreement or
instrument governing any Seven IP Right; or (xii) any agreement relating to the
sale, issuance, grant, exercise, award, purchase, repurchase, or redemption of
any shares of capital stock or other securities of Seven or options, warrants,
or other rights to acquire such capital stock or securities, or options,
warrants or other rights therefor. A copy of each agreement or document listed
on the Seven Disclosure Schedule identified to this Section 3.11 has been
delivered to Portable's counsel. Seven is not nor to its knowledge is any other
party in default in any material respect under any contract, obligation or
commitment listed on the Seven Disclosure Schedule identified to this Section
3.11 or that is otherwise material to the business of Seven. Seven is not a
party to any contract or arrangement which has had or could reasonably be
expected to have a material adverse effect on its business or prospects. All
agreements, contracts, plans, leases, instruments, arrangements, licenses and
commitments listed on the Seven Disclosure Schedule identified to this Section
3.11 are valid and in full force and effect.

                3.12 Intellectual Property. To Seven's knowledge, Seven owns, or
has the right to use, sell or license all Intellectual Property Rights (as
defined below) necessary or required for the conduct of its business as
presently conducted (such Intellectual Property Rights being hereinafter
collectively referred to as the "SEVEN IP RIGHTS") and such rights to use, sell
or license are reasonably sufficient for the conduct of its business. As used
herein, the term "INTELLECTUAL PROPERTY RIGHTS" shall mean all worldwide
industrial and intellectual property rights, including, without limitation,
patents, patent applications, patent rights, trademarks, trademark applications,
trade names, service marks, service mark applications, copyright, copyright
applications, franchises, licenses, inventories, know-how, trade secrets,
customer lists, proprietary processes and formulae, all source and object code,
algorithms, architecture, structure, display screens, layouts, inventions,
development tools and all documentation and 


                                      -11-



   12

media constituting, describing or relating to the above, including, without
limitation, manuals, memoranda and records.

                           (a) The Seven Disclosure Schedule lists (i) all
patents, copyrights, trademarks, service marks, any renewal rights for any of
the foregoing, and any applications and registrations for any of the foregoing
which are included in the Seven IP Rights and owned by Seven; (ii) all hardware
products, software products, and services that are currently published, offered
or under development by Seven; and (iii) all licenses, sublicenses and other
agreements to which Seven is a party either as licensor or licensee or pursuant
to which Seven has rights substantially equivalent to those of a licensor or
licensee (other than standard non-exclusive hardware and software licenses
arising from the purchase of "off the shelf" or standard products by Seven). The
disclosures described in (iii) hereof include the identities of the parties to
the relevant agreements, a description of the nature and subject matter thereof
(including without limitation a description of all exclusivity, rights of first
refusal, and noncompetition provisions), and the applicable royalty or summary
of formula or procedure for divorcing such royalty.

                           (b) All Seven IP Rights which consist of a license or
another right to third party property are set forth on the Seven Disclosure
Schedule. To Seven's knowledge, all other Seven IP Rights consists solely of
items and rights which are either: (i) owned by Seven, or (ii) in the public
domain. To Seven's knowledge, Seven has all rights in the Seven IP Rights
necessary to carry out Seven's current, former and anticipated future
activities, including without limitation rights to make, use, exclude others
from using, reproduce, modify, adapt, create derivative works based on,
translate, distribute (directly and indirectly), transmit, display and perform
publicly, license, rent, lease, assign, and sell the Seven IP Rights in all
geographic locations and fields of use, and to sublicense any or all such rights
to third parties, including the right to grant further sublicenses.

                           (c) Seven is not, nor as a result of the execution or
delivery of this Agreement, or performance of Seven's obligations hereunder,
will Seven be, in violation of any license, sublicense or agreement to which
Seven is a party or otherwise bound. Except as specifically described in the
Seven Disclosure Schedule, Seven is not obligated to provide any consideration
(whether financial or otherwise) to any third party, nor is any third party
otherwise entitled to any consideration with respect to any exercise of rights
by Seven or Portable in the Seven IP Rights.

                           (d) The use, manufacturing, distribution, licensing,
sublicensing, sale, or any other exercise of rights in any product, work,
technology or process as now used or offered or proposed for use, licensing or
sale by Seven does not infringe on any copyright, trade secret, trademark,
service mark, trade name, firm name, logo, trade dress, mask work or patent of
any person; provided, however, that with respect to patent infringement, such
representation is limited to Seven's knowledge. No claims (i) challenging the
validity, effectiveness, or ownership by Seven of any of the Seven IP Rights, or
(ii) to the effect that the use, distribution, licensing, sublicensing, sale or
any other exercise of rights in any product, work technology or process as now
used or offered, proposed for use, licensing, sublicensing or sale, or under
development by Seven infringes or will infringe on any Intellectual Property
Right of any person have been 


                                      -12-



   13

asserted or, to the best knowledge of Seven and each of the Principal
Shareholders, are threatened by any person nor are there any valid grounds for
any bona fide claim of any such kind. All granted or issued patents and mask
works and all registered trademarks listed on the Seven Disclosure Schedule and
all copyright registrations held by Seven are valid, enforceable and subsisting.
To the best knowledge of Seven and each of the Principal Shareholders, there is
no unauthorized use, infringement or misappropriation of any of the Seven IP
Rights by any third party, employee or former employer.

                3.13 Compliance with Laws. Seven has complied, and is now and at
the Closing Date will be in full compliance, in all material respects with all
applicable laws, ordinances, regulations, and rules, and all orders, writs,
injunctions, awards, judgments, and decrees applicable to it or to the assets,
properties, and business thereof. Seven has received all permits and approvals
from, and has made all filings with, third parties, including government
agencies and authorities, that are necessary in connection with its present
business, except to the extent the failure to obtain such permits and approvals
and to make such filings would not have a material adverse effect on Seven's
present or future operations or financial condition. To the best of Seven's
knowledge, there are no legal or administrative proceedings or investigations
pending or threatened, that, if enacted or determined adversely to Seven, would
result in any material adverse change in its present or future operations or
financial condition.

                3.14 Certain Transactions and Agreements. None of the officers
of Seven, nor any member of their immediate families, has any direct or indirect
ownership interest in any firm or corporation that competes with Seven (except
with respect to any interest in less than one percent of the stock of any
corporation whose stock is publicly traded). None of said officers or directors,
or any member of their immediate families, is directly or indirectly interested
in any contract or informal arrangement with Seven, except for normal
compensation for services as an officer, director or employee thereof. None of
said officers or directors or family members has any interest in any property,
real or personal, tangible or intangible, including inventions, patents,
copyrights, trademarks or trade names or trade secrets, used in or pertaining to
the business of Seven, except for the normal rights of a shareholder.

                3.15. Employees, ERISA and Other Compliance.

                        3.15.1 Except as set forth in the Seven Disclosure
Schedule, Seven does not have any employment contracts or consulting agreements
currently in effect that are not terminable at will (other than agreements with
the sole purpose of providing for the confidentiality of proprietary information
or assignment of inventions). All officers, employees and consultants of Seven
having access to proprietary information have executed and delivered to Seven an
agreement regarding the protection of such proprietary information and the
assignment of inventions to Seven; copies of the form of all such agreements
have been delivered to Portable's counsel.

                        3.15.2 Seven (i) has never been and is not now subject
to a union organizing effort, (ii) is not subject to any collective bargaining
agreement with respect to any of its employees, (iii) is not subject to any
other contract, written or oral, with any trade or labor union, employees'
association or similar organization, or (iv) does not have any current labor
disputes. 


                                      -13-



   14

Seven has good labor relations, and has no knowledge of any facts indicating
that the consummation of the transactions contemplated hereby will have a
material adverse effect on such labor relations, and has no knowledge that any
of its key employees intends to leave its employ.

                        3.15.3 The Seven Disclosure Schedule identifies each
"employee benefit plan" (each a "SEVEN EMPLOYEE PLAN") as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). To the knowledge of each of the Principal Shareholders and Seven,
after reasonable inquiry with legal counsel, each Seven Employee Plan is in
material compliance with ERISA and the Code.

                        3.15.4 The Seven Disclosure Schedule lists each
employment, severance or other similar contract, arrangement or policy and each
plan or arrangement (written or oral) providing for insurance coverage
(including any self-insured arrangements), workers' benefits, vacation benefits,
severance benefits, disability benefits, death benefits, hospitalization
benefits, retirement benefits, deferred compensation, profit-sharing, bonuses,
stock options, stock purchase, phantom stock, stock appreciation or other forms
of incentive compensation or post-retirement insurance, compensation or benefits
for employees, consultants or directors which (A) is not a Seven Employee Plan,
(B) is entered into, maintained or contributed to, as the case may be, by Seven
and (C) covers any employee or former employee of Seven (such contracts, plans
and arrangements as are described in this Section 3.15.4 are herein referred to
collectively as the "SEVEN BENEFIT ARRANGEMENTS"). Each Seven Benefit
Arrangement has been maintained in substantial compliance in all material
respects with its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations which are applicable to such Seven
Benefit Arrangement. Seven has delivered to Portable or its counsel a complete
and correct copy or description of each Seven Benefit Arrangement.

                        3.15.5 No benefit payable or which may become payable by
Seven pursuant to any Seven Employee Plan or any Seven Benefit Arrangement or as
a result of or arising under this Agreement shall constitute an "excess
parachute payment" (as defined in Section 280G(b)(1) of the Code) which is
subject to the imposition of an excise tax under Section 4999 of the Code or
which would not be deductible by reason of Section 280G of the Code.

                        3.15.6 Seven is in compliance in all material respects
with all applicable laws, agreements and contracts relating to employment,
employment practices, wages, hours, and terms and conditions of employment,
including, but not limited to, employee compensation matters, but not including
ERISA.

                        3.15.7 No employee of Seven is in violation of any term
of any employment contract, patent disclosure agreement, noncompetition
agreement, or any other contract or agreement, or any restrictive covenant
relating to the right of any such employee to be employed thereby, or to use
trade secrets or proprietary information of others, and the employment of such
employees does not subject Seven to any liability.


                                      -14-


   15

                        3.15.8 Seven has provided a list of all employees,
officers and consultants of Seven and their current compensation to Portable.

                        3.15.9 Seven is not a party to any (a) agreement with
any executive officer or other key employee thereof (i) the benefits of which
are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving Seven in the nature of any of the
transactions contemplated by this Agreement and the Agreement of Merger, (ii)
providing any term of employment or compensation guarantee, or (iii) providing
severance benefits or other benefits after the termination of employment of such
employee regardless of the reason for such termination of employment, or (b)
agreement or plan, including, without limitation, any stock option plan, stock
appreciation rights plan or stock purchase plan, any of the benefits of which
will be materially increased, or the vesting of benefits of which will be
materially accelerated, by the occurrence of any of the transactions
contemplated by this Agreement and the Agreement of Merger or the value of any
of the benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement and the Agreement of Merger.

                3.16 Corporate Documents. Seven has made available to Portable
for examination all documents and information listed in the Seven Disclosure
Schedule or other exhibits called for by this Agreement which has been requested
by Portable's legal counsel, including, without limitation, the following: (a)
copies of Seven's Articles of Incorporation and Bylaws as currently in effect;
(b) its Minute Book containing all records of all proceedings, consents,
actions, and meetings of the shareholders, the board of directors and any
committees thereof; (c) its stock ledger and journal reflecting all stock
issuances and transfers; and (d) all permits, orders, and consents issued by any
regulatory agency with respect to Seven, or any securities of Seven, and all
applications for such permits, orders, and consents.

                3.17 No Brokers. Neither Seven nor any of the Seven Shareholders
is obligated for the payment of fees or expenses of any investment banker,
broker or finder in connection with the origin, negotiation or execution of this
Agreement or the Agreement of Merger or in connection with any transaction
contemplated hereby or thereby.

                3.18 Disclosure. To Seven's knowledge, neither this Agreement,
its exhibits and schedules, nor any of the certificates or documents to be
delivered by Seven to Portable under this Agreement, taken together, contains
any untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements contained herein and therein, in light
of the circumstances under which such statements were made, not misleading.

                3.19 Books and Records. The books, records and accounts of Seven
(a) are in all material respects true, complete and correct, (b) have been
maintained in accordance with good business practices on a basis consistent with
prior years, (c) are stated in reasonable detail and accurately and fairly
reflect the transactions and dispositions of the assets of Seven, and (d)
accurately and fairly reflect the basis for the Seven Financial Statements.

                3.20 Insurance. Seven maintains and at all times during the
prior year has maintained fire and casualty, general liability, business
interruption, product liability, and 


                                      -15-

   16

sprinkler and water damage insurance which it believes to be reasonably prudent
for similarly sized and similarly situated businesses.

                3.21 Environmental Matters.

                        To their knowledge:

                        3.21.1 During the period that Seven has leased or owned
its properties or owned or operated any facilities, there have been no
disposals, releases or threatened releases of Hazardous Materials (as defined
below) on, from or under such properties or facilities. No knowledge of any
presence, disposals, releases or threatened releases of Hazardous Materials on,
from or under any of such properties or facilities, occurred prior to Seven
having taken possession of any of such properties or facilities. For the
purposes of this Agreement, the terms "disposal," "release," and "threatened
release" shall have the definitions assigned thereto by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
Section 9601 et seq., as amended ("CERCLA"). For the purposes of this Agreement
"HAZARDOUS MATERIALS" shall mean any hazardous or toxic substance, material or
waste which is or becomes prior to the Closing regulated under, or defined as a
"hazardous substance," "pollutant," "contaminant," "toxic chemical," "hazardous
materials," "toxic substance" or "hazardous chemical" under (1) CERCLA; (2) any
similar federal, state or local law; or (3) regulations promulgated under any of
the above laws or statutes.

                        3.21.2 None of the properties or facilities of Seven is
in violation of any federal, state or local law, ordinance, regulation or order
relating to industrial hygiene or to the environmental conditions on, under or
about such properties or facilities, including, but not limited to, soil and
ground water condition. During the time that Seven has owned or leased its
respective properties and facilities, neither Seven nor, any third party, has
used, generated, manufactured or stored on, under or about such properties or
facilities or transported to or from such properties or facilities any Hazardous
Materials.

                        3.21.3 During the time that Seven has owned or leased
its respective properties and facilities, there has been no litigation brought
or threatened against Seven by, or any settlement reached by Seven with, any
party or parties alleging the presence, disposal, release or threatened release
of any Hazardous Materials on, from or under any of such properties or
facilities.

        4. REPRESENTATIONS AND WARRANTIES OF PORTABLE AND PORTABLE SUBSIDIARY

                As an inducement to Seven and the Principal Shareholders to
enter into this Agreement, Portable and Portable Subsidiary, jointly and
severally, hereby represent and warrant that, except as set forth on the
Portable Disclosure Schedule delivered to Seven as Exhibit 4.0 (the "PORTABLE
DISCLOSURE SCHEDULE"):

                4.1 Organization and Good Standing. Portable is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Washington, and has the 


                                      -16-



   17

corporate power and authority to own, operate and lease its properties and to
carry on its business as now conducted and as proposed to be conducted. Portable
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power and
authority to own, operate, and lease its properties and to carry on its business
as proposed to be conducted. Portable Subsidiary was formed solely for the
purpose of the Merger, and has not conducted any business other than related to
such purpose.

                4.2 Power, Authorization and Validity.

                        4.2.1 Portable has the right, power, legal capacity and
authority to enter into and perform its obligations under this Agreement, and
all agreements to which Portable is or will be a party that are required to be
executed pursuant to this Agreement (the "PORTABLE ANCILLARY AGREEMENTS"). The
execution, delivery and performance of this Agreement and the Portable Ancillary
Agreements have been duly and validly approved and authorized by Portable's
Board of Directors, and do not require the approval by Portable's shareholders.
Portable Subsidiary has the right, power and authority to execute, deliver and
perform its obligations under this Agreement, and upon approval of the Merger
and the Agreement of Merger by Portable Subsidiary's sole stockholder, Portable
Subsidiary will have the right, power and authority to execute, deliver and
perform the Agreement of Merger and all agreements to which Portable Subsidiary
is or will be a party that are required to be executed pursuant to this
Agreement (the "PORTABLE SUBSIDIARY ANCILLARY AGREEMENTS"). The execution,
delivery and performance of this Agreement, the Agreement of Merger and all
other Portable Subsidiary Ancillary Agreements by Portable Subsidiary have been
duly and validly approved and authorized by Portable Subsidiary's Board of
Directors.

                        4.2.2 No filing, authorization or approval, governmental
or otherwise, is necessary to enable Portable or Portable Subsidiary to enter
into, and to perform their respective obligations under, this Agreement, the
Portable Ancillary Agreements and the Portable Subsidiary Ancillary Agreements
except for (a) the filing of the Agreement of Merger with the California and the
Delaware Secretary of State, (b) the recording of the Agreement of Merger in the
office of the Recorder of the Delaware county in which Portable Subsidiary's
registered office is located, and (c) such filings as may be required to comply
with federal and state securities laws.

                        4.2.3 This Agreement and the Portable Ancillary
Agreements are, or when executed by Portable will be, valid and binding
obligations of Portable enforceable in accordance with their respective terms,
except as to the effect, if any, of (a) applicable bankruptcy and other similar
laws affecting the rights of creditors generally, (b) rules of law governing
specific performance, injunctive relief and other equitable remedies and (c) the
enforceability of provisions requiring indemnification in connection with the
offering, issuance or sale of securities; provided, however, that the Agreement
of Merger will not be effective until filed with the Delaware and California
Secretaries of State. This Agreement and the Portable Subsidiary Ancillary
Agreements are, or when executed by Portable Subsidiary will be, valid and
binding obligations of Portable Subsidiary, enforceable in accordance with their
respective terms, except as to the effect, if any, of (a) applicable bankruptcy
and other similar laws affecting the rights of 

                                      -17-




   18

creditors generally and (b) rules of law and equity governing specific
performance, injunctive relief and other equitable remedies; provided, however,
that the Agreement of Merger will not be effective until filed with the Delaware
and California Secretaries of State.

                4.3. Capitalization. At the close of business on May 17, 1998,
there were outstanding, on a fully-diluted basis, 30,846,194 shares of Portable
Common Stock (including shares issuable upon conversion of outstanding Preferred
Stock or exercise of outstanding options and warrants, shares available for
grant under the Portable's Stock Option Plan, and any other rights to, directly
or indirectly, acquire shares or options or warrants to acquire shares of
Portable capital stock). All of such outstanding shares of Portable Common Stock
have been duly authorized and validly issued, are fully paid and nonassessable,
are not subject to any right of rescission, and have been offered, issued, sold
and delivered by Portable in compliance with all registration or qualification
requirements (or applicable exemptions therefrom) of applicable federal and
state securities laws. The Portable Merger Shares, when issued in accordance
with this Agreement (and with respect to the Portable Merger Shares to be issued
upon the exercise of Portable Options, when issued in accordance with the
agreements governing such Portable Options), will be duly authorized, validly
issued, fully paid and nonassessable, and will have been offered, issued, sold
and delivered by Portable in compliance with all registration or qualification
requirements (or applicable exemptions therefrom) of applicable federal and
state securities laws.

                4.4 No Violation of Existing Agreements. Neither the execution
and delivery of this Agreement nor any Portable Ancillary Agreement, nor the
consummation of the transactions contemplated hereby, will conflict with, or
(with or without notice or lapse of time, or both) result in a termination,
breach, impairment or violation of (a) any provision of the Certificate of
Incorporation or Bylaws of Portable, as currently in effect, (b) in any material
respect, any material instrument or contract to which Portable is a party or by
which Portable is bound, or (c) any federal, state, local or foreign judgment,
writ, decree, order, statute, rule or regulation applicable to Portable or its
assets or properties.

                4.5 Portable Financial Statements. Portable has delivered to
Seven as Exhibit 4.5 Portable's unaudited balance sheet as of April 30, 1998
(the "PORTABLE BALANCE SHEET"), Portable's income statement for the period then
ended and Portable's audited financial statements for the Portable's 1996 and
1997 fiscal years (collectively, the "PORTABLE FINANCIAL STATEMENTS"). The
Portable Financial Statements (a) are in accordance with the books and records
of Portable, and (b) fairly present the financial condition of Portable at the
date therein indicated and the results of operations for each period therein
specified. Portable has no material debt, liability or obligation of any nature,
whether accrued, absolute, contingent or otherwise, whether due or to become
due, and which is required to be reflected in a financial statement prepared in
accordance with generally accepted accounting principles, that is not reflected
or reserved against in the Portable Financial Statements, except for those that
may have been incurred after the date of the Portable Financial Statements in
the ordinary course of its business, consistent with past practice and that are
not material in amount either individually or collectively.


                                      -18-


   19

                4.6 Absence of Certain Changes. Since the date of the Portable
Balance Sheet, there has not been any change in the financial condition,
properties, assets, liabilities, business or operations of Portable which change
by itself or in conjunction with all other such changes, whether or not arising
in the ordinary course of business, has had or will have a material adverse
effect on Portable.

                4.7 No Brokers. Portable is not obligated for the payment of
fees or expenses of any investment banker, broker or finder in connection with
the origin, negotiation or execution of this Agreement or the Agreement of
Merger or in connection with any transaction contemplated hereby or thereby.

                4.8 No Violation of Existing Agreements. Portable has not
received notice from any third party that it is or would, with the passage of
time, be (i) in material violation of any provision of the Articles of
Incorporation or Bylaws; or (ii) in default or violation of any material term,
condition or provision of (a) any material judgment, decree, order, injunction
or stipulation applicable to Portable or (b) any currently effective material
agreement, note, mortgage, indenture, contract, lease or instrument, permit,
concession, franchise or license, which default or violation would have a
material adverse effect on the business, operations or financial condition of
Portable.

                4.9 Litigation. There is no action, claim, suit, arbitration,
proceeding, claim or investigation pending against Portable before any court,
administrative agency or arbitrator that, if determined adversely to Portable,
is likely to have a material adverse effect on Portable's financial condition or
results of operation, nor, to Portable's knowledge, has any such action, suit,
proceeding, arbitration, claim or investigation been threatened.

                4.10 Disclosure. To Portable's knowledge, neither this
Agreement, its exhibits and schedules, nor any of the certificates or documents
to be delivered by Portable to Seven under this Agreement, taken together,
contains any untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements contained herein and therein, in
light of the circumstances under which such statements were made, not
misleading.

        5. PRE-CLOSING COVENANTS OF SEVEN AND THE PRINCIPAL SHAREHOLDERS

                During the period from the date of this Agreement until the
Effective Time, Seven and each Principal Shareholder covenants and agrees as
follows:

                5.1 Advice of Changes. Seven will promptly advise Portable in
writing (a) of any event occurring subsequent to the date of this Agreement of
which Seven has knowledge that would render any representation or warranty of
Seven contained in this Agreement, if made on or as of the date of such event or
the Closing Date, untrue or inaccurate in any material respect and (b) of any
material adverse change in Seven's business, results of operations or financial
condition.



                                      -19-


   20

                5.2 Maintenance of Business. Seven will use its best efforts to
carry on and preserve its business and its relationships with customers,
suppliers, employees and others in substantially the same manner as it has prior
to the date hereof. If Seven becomes aware of a material deterioration in the
relationship with any customer, supplier or key employee, it will promptly bring
such information to the attention of Portable in writing and, if requested by
Portable, will exert its best efforts to restore the relationship.

                5.3 Conduct of Business. Seven will continue to conduct its
business and maintain its business relationships in the ordinary and usual
course and will not, without the prior written consent of the President of
Portable (which may be given verbally to be promptly followed by written
confirmation):

                        (a) borrow any money except for expenses incurred in the
ordinary course consistent with past practice, or lend any money;

                        (b) enter into any transaction or agreement not in the
ordinary course of business consistent with past practice (other than the
engagement of a purchaser representative);

                        (c) encumber or permit to be encumbered any of its
assets;

                        (d) dispose of any of its assets;

                        (e) enter into any lease or contract for the purchase or
sale of any property;

                        (f) pay any bonus, increased salary or special
remuneration to any officer, employee or consultant (except pursuant to existing
arrangements previously disclosed to and approved in writing by Portable) or
enter into any new employment or consulting agreement with any such person or
terminate any employee;

                        (g) change any of its accounting methods;

                        (h) declare, set aside or pay any cash or stock dividend
or other distribution in respect of capital stock, or redeem or otherwise
acquire any of its capital stock;

                        (i) amend or terminate any contract, agreement or
license to which it is a party (including any royalty arrangement);

                        (j) lend any amount to any person or entity, other than
advances for travel and expenses which are incurred in the ordinary course of
business consistent with past practice, not material in amount and documented by
receipts for the claimed amounts;

                        (k) guarantee or act as a surety for any obligation
except for the endorsement of checks and other negotiable instruments in the
ordinary course of business, consistent with past practice, which are not
material in amount;


                                      -20-


   21

                        (l) waive or release any material right or claim except
in the ordinary course of business, consistent with past practice;

                        (m) issue or sell any shares of its capital stock of any
class (except upon the exercise of an option or warrant currently outstanding),
or any other of its securities, or issue or create any warrants, obligations,
subscriptions, options, convertible securities, or other commitments to issue
shares of capital stock, or accelerate the vesting of any outstanding option or
other security;

                        (n) split or combine the outstanding shares of its
capital stock of any class or enter into any recapitalization affecting the
number of outstanding shares of its capital stock of any class or affecting any
other of its securities;

                        (o) merge, consolidate or reorganize with, or acquire
any entity;

                        (p) amend its Articles of Incorporation or Bylaws;


                        (q) license any of its technology or intellectual
property (other than to end-users in the ordinary course of business pursuant to
its standard end-user license agreement);

                        (r) change any insurance coverage or issue any
certificates of insurance; or

                        (s) agree to do, any of the things described in the
preceding clauses 5.3(a) through 5.3(r).

                5.4 Shareholders Approval. Seven will hold a special meeting of
its shareholders (the "SHAREHOLDERS MEETING") (or solicit the written consent of
its shareholders in lieu thereof) at the earliest practicable date to submit
this Agreement, the Merger and related matters for the consideration and
approval of the Seven Shareholders, which approval will be recommended by
Seven's Board of Directors and management. Such meeting (or the solicitation of
a written consent in lieu thereof) will be called, held and conducted, and any
proxies will be solicited, in compliance with applicable law.

                5.5 Regulatory Approvals. Seven will execute and file, or join
in the execution and filing, of any application or other document that may be
necessary in order to obtain the authorization, approval or consent of any
governmental body, federal, state, local or foreign which may be reasonably
required, or which Portable may reasonably request, in connection with the
consummation of the transactions contemplated by this Agreement. Seven will use
its best efforts to obtain all such authorizations, approvals and consents.

                5.6 Necessary Consents. Seven will use its best efforts to
obtain such written consents and take such other actions as may be necessary or
appropriate to allow the consummation of the transactions contemplated hereby
and to allow Portable to carry on Seven's business after the Closing.


                                      -21-

   22

                5.7 Litigation. Seven will notify Portable in writing promptly
after learning of any material actions, suits, proceedings or investigations by
or before any court, board or governmental agency, initiated by or against it or
known by it to be threatened against it.

                5.8 No Other Negotiations. From the date hereof until the
earlier of termination of this Agreement or consummation of the Merger, Seven
will not, and will not authorize or permit any officer, director, employee or
affiliate of Seven, or any other person, on its behalf to, directly or
indirectly, solicit or encourage any offer from any party or consider any
inquiries or proposals received from any other party, participate in any
negotiations regarding, or furnish to any person any information with respect
to, or otherwise cooperate with, facilitate or encourage any effort or attempt
by any person (other than Portable), concerning the possible disposition of all
or any substantial portion of Seven's business, assets or capital stock by
merger, sale or any other means or concerning any investment in Seven. Seven
will promptly notify Portable orally and in writing of any such inquiries or
proposals.

                5.9 Access to Information. Until the Closing, Seven will allow
Portable and its agents reasonable access the files, books, records and offices
of Seven, including, without limitation, any and all information relating to
Seven's taxes, commitments, contracts, leases, licenses, and real, personal and
intangible property and financial condition. Seven will cause its accountants to
cooperate with Portable and its agents in making available all financial
information reasonably requested, including without limitation the right to
examine all working papers pertaining to all financial statements prepared or
audited by such accountants.

                5.10 Satisfaction of Conditions Precedent. Seven will use its
best efforts to satisfy or cause to be satisfied all the conditions precedent
which are set forth in Section 9, and Seven will use its best efforts to cause
the transactions contemplated by this Agreement to be consummated, and, without
limiting the generality of the foregoing, to obtain all consents and
authorizations of third parties and to make all filings with, and give all
notices to, third parties that may be necessary or reasonably required on its
part in order to effect the transactions contemplated hereby.

                  5.11 Seven Dissenting Shares. As promptly as practicable after
the date of the Shareholders' Meeting and prior to the Closing Date, Seven shall
furnish Portable with the name and address of each holder of Seven Dissenting
Shares ("SEVEN DISSENTING SHAREHOLDER") and the number of Seven Dissenting
Shares owned by such Seven Dissenting Shareholder.

                  5.12 Blue Sky Laws. Seven shall use its best efforts to assist
Portable to the extent necessary to comply with the securities and Blue Sky laws
of all jurisdictions which are applicable in connection with the Merger.

        6. PORTABLE PRE-CLOSING COVENANTS

                During the period from the date of this Agreement until the
Effective Time, Portable covenants and agrees as follows:


                                      -22-


   23

                6.1 Advice of Changes. Portable will promptly advise Seven in
writing (a) of any event occurring subsequent to the date of this Agreement that
would render any representation or warranty of Portable contained in this
Agreement, if made on or as of the date of such event or the Closing Date,
untrue or inaccurate in any material respect and (b) of any material adverse
change in Portable's business, results of operations or financial condition.

                6.2 Regulatory Approvals. Portable will execute and file, or
join in the execution and filing, of any application or other document that may
be necessary in order to obtain the authorization, approval or consent of any
governmental body, federal, state, local or foreign, which may be reasonably
required, or which Seven may reasonably request, in connection with the
consummation of the transactions contemplated by this Agreement. Portable will
use its best efforts to obtain all such authorizations, approvals and consents.

                6.3 Satisfaction of Conditions Precedent. Portable will use its
best efforts to satisfy or cause to be satisfied all the conditions precedent
which are set forth in Section 8, and Portable will use its best efforts to
cause the transactions contemplated by this Agreement to be consummated, and,
without limiting the generality of the foregoing, to obtain all consents and
authorizations of third parties and to make all filings with, and give all
notices to, third parties that may be necessary or reasonably required on its
part in order to effect the transactions contemplated hereby.

                6.4 Blue Sky Laws. Portable shall take such steps as may be
necessary to comply with the securities and Blue Sky laws of all jurisdictions
which are applicable in connection with the Merger.

                6.5 Employee Matters. Portable will have extended written offers
of employment to each of the Seven employees listed on Exhibit 6.5.

        7. CLOSING MATTERS

                7.1 The Closing. Subject to termination of this Agreement as
provided in Section 10 below, the Closing will take place at the offices of
Fenwick & West, Two Palo Alto Square, Palo Alto, California 94306 at 1:30 p.m.,
Pacific Standard Time on June 30, 1998, or, if all conditions to closing have
not been satisfied or waived by such date, such other place, time and date as
Seven and Portable may mutually select (the "Closing Date"). Concurrently with
the Closing, the Agreement of Merger will be filed in the office of the Delaware
and California Secretaries of State. The Agreement of Merger provides that the
Merger shall become effective upon filing with the California Secretary of
State.

                7.2 Exchange of Certificates.

                        7.2.1 As of the Effective Time, all shares of Seven
Common Stock that are outstanding immediately prior thereto will, by virtue of
the Merger and without further action, cease to exist and will be converted into
the right to receive from Portable the number of shares 

                                      -23-




   24

of Portable Common Stock determined as set forth in Section 2.1.2, subject to
Sections 2.1.3, 2.1.4 and 2.2.

                        7.2.2 As soon as practicable after the Effective Time,
each holder of shares of Seven Common Stock that are not Seven Dissenting Shares
will surrender the certificate(s) for such shares (the "SEVEN CERTIFICATES"),
duly endorsed as requested by Portable, to Portable for cancellation. Within
five (5) business days of the date that Portable receives written confirmation
of the Effective Time, and conditioned upon Portable's receipt of such Seven
Certificates and any other documentation deliverable by any such holder under
this Agreement, Portable will issue to each tendering holder of Seven
Certificates a certificate for the number of shares of Portable Common Stock to
which such holder is entitled pursuant to Section 2.1.2 hereof, less the shares
of Portable Common Stock deposited into escrow pursuant to Section 2.4 hereof,
and distribute any cash payable under Section 2.2.

                        7.2.3 No dividends or distributions payable to holders
of record of Portable Common Stock after the Effective Time, or cash payable in
lieu of fractional shares, will be paid to the holder of any unsurrendered Seven
Certificate(s) until the holder of the Seven Certificate(s) surrenders such
Seven Certificate(s). Subject to the effect, if any, of applicable escheat and
other laws, following surrender of any Seven Certificate, there will be
delivered to the person entitled thereto, without interest, the amount of any
dividends and distributions therefor paid with respect to Portable Common Stock
so withheld as of any date subsequent to the Effective Time and prior to such
date of delivery.

                        7.2.4 All Portable Common Stock delivered upon the
surrender of Seven Common Stock in accordance with the terms hereof will be
deemed to have been delivered in full satisfaction of all rights pertaining to
such Seven Common Stock. There will be no further registration of transfers on
the stock transfer books of Seven or its transfer agent of the Seven Common
Stock. If, after the Effective Time, Seven Certificates are presented for any
reason, they will be canceled and exchanged as provided in this Section 7.2.

                        7.2.5 Until certificates representing Seven Common Stock
outstanding prior to the Merger are surrendered pursuant to Section 7.2.2 above,
such certificates will be deemed, for all purposes, to evidence ownership of the
number of shares of Portable Common Stock into which the Seven Common Stock will
have been converted, reduced by the number of shares withheld as Escrow Shares.

                7.3 Assumption of Options. As soon as practicable after the
Effective Time, Portable will notify in writing each holder of a Seven Option of
the assumption of such Seven Option by Portable, and the number of shares of
Portable Common Stock that are then subject to such Portable Option and the
exercise price of such Portable Option, as determined pursuant to Sections 2.1
and 2.3 hereof.


                                      -24-



   25



        8. CONDITIONS TO OBLIGATIONS OF SEVEN

                The obligations of Seven and the Principal Shareholders
hereunder are subject to the fulfillment or satisfaction, on and as of the
Closing, of each of the following conditions (any one or more of which may be
waived by Seven, but only in a writing signed by Seven):

                8.1 Accuracy of Representations and Warranties. The
representations and warranties of Portable and Portable Subsidiary set forth in
Section 4 shall be true and accurate in every material respect on and as of the
Closing with the same force and effect as if they had been made at the Closing,
and Seven shall receive a certificate to such effect executed by Portable's
President and Chief Financial Officer.

                8.2 Covenants. Portable shall have performed and complied in all
material respects with all of its covenants contained in Section 6 on or before
the Closing, and Seven shall receive a certificate to such effect signed by
Portable's President and Chief Financial Officer.

                8.3 Compliance with Law. There shall be no order, decree, or
ruling by any court or governmental agency or threat thereof, or any other fact
or circumstance, which would prohibit or render illegal the transactions
contemplated by this Agreement.

                8.4 Government Consents. There shall have been obtained at or
prior to the Closing Date such permits or authorizations, and there shall have
been taken such other action, as may be required to consummate the Merger by any
regulatory authority having jurisdiction over the parties and the actions herein
proposed to be taken, including but not limited to requirements under applicable
federal and state securities laws.

                8.5 Opinion of Portable's Counsel. Seven shall have received
from counsel to Portable, an opinion substantially in the form of Exhibit 8.5.

                8.6 Employment and Non-Competition Agreements. Portable shall
execute and deliver Employment and Non-Competition Agreements in favor of
Melissa Widner and Andrew Dent substantially in the forms attached as Exhibit
8.6A and 8.6B.

                8.7 No Litigation. No litigation or proceeding shall be
threatened or pending for the purpose or with the probable effect of enjoining
or preventing the consummation of any of the transactions contemplated by this
Agreement, or which could be reasonably expected to have a material adverse
effect on the present or future operations or financial condition of Portable.

        9. CONDITIONS TO OBLIGATIONS OF PORTABLE

                The obligations of Portable hereunder are subject to the
fulfillment or satisfaction on, and as of the Closing, of each of the following
conditions (any one or more of which may be waived by Portable, but only in a
writing signed by a duly authorized representative of Portable):


                                      -25-


   26

                9.1 Accuracy of Representations and Warranties. The
representations and warranties of Seven and the Principal Shareholders set forth
in Section 3 shall be true and accurate in every material respect on and as of
the Closing with the same force and effect as if they had been made at the
Closing, and Portable shall receive a certificate to such effect executed by
Seven's President and Chief Financial Officer.

                9.2 Covenants. Seven shall have performed and complied in all
material respects with all of its covenants contained in Section 5 on or before
the Closing, and Portable shall receive a certificate to such effect signed by
Seven's President and Chief Financial Officer.

                9.3 Compliance with Law. There shall be no order, decree, or
ruling by any court or governmental agency or threat thereof, or any other fact
or circumstance, which would prohibit or render illegal the transactions
contemplated by this Agreement.

                9.4 Government Consents. There shall have been obtained at or
prior to the Closing Date such permits or authorizations, and there shall have
been taken such other action, as may be required to consummate the Merger by any
regulatory authority having jurisdiction over the parties and the actions herein
proposed to be taken, including but not limited to requirements under applicable
federal and state securities laws.

                9.5 Opinion of Seven's Counsel. Portable shall have received
from counsel to Seven, an opinion substantially in the form of Exhibit 9.5.

                9.6 Consents. Portable shall have received duly executed copies
of all material third-party consents, approvals, assignments, waivers,
authorizations or other certificates specified on Exhibit 9.6.

                9.7 No Litigation. No litigation or proceeding shall be
threatened or pending for the purpose or with the probable effect of enjoining
or preventing the consummation of any of the transactions contemplated by this
Agreement, or which could be reasonably expected to have a material adverse
effect on the present or future operations or financial condition of Seven.

                9.8 Requisite Approvals. The principal terms of this Agreement
and the Agreement of Merger shall have been approved and adopted by Seven
Shareholders, as required by applicable law and Seven's Articles of
Incorporation and Bylaws. Not less than ninety percent (90%) of the outstanding
equity securities of Seven shall have voted in favor of the Merger.

                9.9 Seven Dissenting Shares. The Seven Dissenting Shares shall
not constitute more than five percent (5%) of the total number of shares of
Seven Common Stock outstanding immediately prior to the Effective Time.

                9.10 Escrow. Portable shall have received the Escrow Agreement
executed by Seven and Melissa Widner, as the Representative for all Seven
Shareholders, the Escrow Agent and by all shareholders of Seven voting for
approval of this Agreement and the Merger providing for the escrow of the Escrow
Shares on the terms and conditions of the Escrow Agreement.

                                      -26-


   27

                9.11 Exercise of Seven Derivative Securities. All outstanding
Seven Derivative Securities shall have been exercised in full and thereby
converted into shares of Seven Common Stock.

                9.12 Employment and Non-Competition Agreements. Portable shall
have received from each of Melissa Widner and Andrew Dent a duly executed
Employment and Non-Competition Agreement substantially in the form attached as
Exhibit 8.6.

                9.13 Termination of Rights. Any registration rights, rights of
refusal, rights to any liquidation preference, or redemption rights of any Seven
Shareholder shall have been terminated or waived as of the Closing.

                9.14 Maximum Number of Shares. Immediately prior to the Merger,
Seven shall not have outstanding a Number of Fully Diluted Seven Shares that
would require the issuance of more than 2,082,118 shares of Portable Common
Stock (including options exercisable therefor) in exchange therefor.

                9.15 Resignation of Directors. By virtue of the Merger at the
Effective Time and without further action on the part of any person, the
directors of Seven in office immediately prior to the Effective Time of the
Merger will be deemed to have resigned as directors of Seven effective as of the
Effective Time.

                9.16 Investment Letters Executed. Each of the Seven Shareholders
shall have executed and delivered to Seven an Investment Representation Letter,
and substantially all of the holders of outstanding Seven Options shall have
executed and delivered to Portable an Optionee Investment Representation Letter.

                9.17 Continued Employment of Certain Employees. Each of the
persons listed on Exhibit 9.17 will be employed by Seven on the Closing Date.

        10. TERMINATION OF AGREEMENT

                10.1 Prior to Closing.

                        10.1.1 This Agreement may be terminated at any time
prior to the Closing by the mutual written consent of each of the parties
hereto.

                        10.1.2 Unless otherwise agreed by the parties hereto,
this Agreement will be terminated if all conditions to the Closing have not been
satisfied or waived on or before July 15, 1998.

                10.2 At the Closing. At the Closing, this Agreement may be
terminated and abandoned:


                                      -27-


   28

                        10.2.1 By Portable if any of the conditions precedent to
Portable's obligations set forth in Section 9 above have not been fulfilled or
waived at and as of the Closing; or

                        10.2.2 By Seven if any of the conditions precedent to
Seven's obligations set forth in Section 8 above have not been fulfilled or
waived at and as of the Closing.

                        Any termination of this Agreement under this Section
10.2 will be effective by the delivery of notice of the terminating party to the
other party hereto.

                10.3 No Liability. Any termination of this Agreement pursuant to
this Section 10 will be without further obligation or liability upon any party
in favor of the other party hereto other than the obligations provided in
Sections 12.2 and 12.16 and in the Reciprocal Nondisclosure Agreement between
Seven and Portable dated February 1, 1998, which will survive termination of
this Agreement; provided, however, that nothing herein will limit the obligation
of Seven and Portable to use their best efforts to cause the Merger to be
consummated, as set forth in Sections 5.10 and 6.3 hereof, respectively.

                10.4 Break-Up Fee. Portable agrees to pay Seven a "break-up fee"
of Five Hundred Thousand Dollars ($500,000.00) in the event the Closing fails to
occur unless such failure is due to the failure or non-satisfaction of
conditions set forth in Sections 9.1, 9.2, 9.5, 9.6, 9.8, 9.9, 9.10, 9.11, 9.12,
9.13, 9.14, 9.16 or 9.17. Such amounts shall be paid to Seven within thirty (30)
days of the termination of this Agreement in cash, or partly in cash and partly
by cancellation of that certain Note dated May 23, 1998 payable to Portable
described in the Seven Disclosure Schedule.

        11.     SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION AND REMEDIES,
                CONTINUING COVENANTS

                11.1 Survival of Representations. All representations,
warranties and covenants of Portable contained in this Agreement will remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of the parties to this Agreement, until the earlier of the
termination of this Agreement or one year after the Closing Date, whereupon such
representations, warranties and covenants will expire (except for covenants that
by their terms survive for a longer period). Unless otherwise specified herein,
all representations, warranties and covenants of Seven will survive the
Effective Time and will continue until the expiration of the period set forth in
the previous sentence and covenants that by their terms survive thereafter will
continue to survive in accordance with their terms.

                11.2 Agreement to Indemnify. Subject to the limitations set
forth in this Section 11, Seven will indemnify and hold harmless Portable and
its officers, directors, agents and employees, and each person, if any, who
controls or may control Portable within the meaning of the Securities Act
(hereinafter referred to individually as an "INDEMNIFIED PERSON" and
collectively as "INDEMNIFIED PERSONS") from and against any and all claims,
demands, actions, causes of actions, losses, costs, damages, liabilities and
expenses including, without 


                                      -28-



   29

limitation, reasonable legal fees actually incurred by Portable (hereinafter
referred to as "DAMAGES"):

                        (a) Arising out of any misrepresentation or breach of or
default in connection with any of the representations, warranties and covenants
given or made by Seven in this Agreement or any certificate, document or
instrument delivered by or on behalf of Seven pursuant hereto (other than with
respect to changes in the truth or accuracy of the representations and
warranties of Seven under this Agreement after the date hereof if Seven has
advised Portable of such changes in an update to Exhibit 3.0 delivered prior to
the Closing and Portable has nonetheless proceeded with the Closing); or

                        (b) Resulting from any failure of any Seven Shareholders
to have good, valid and marketable title to the issued and outstanding Seven
Common Stock held by such shareholders, free and clear of all liens, claims,
pledges, options, adverse claims, assessments or charges of any nature
whatsoever, or to have full right, capacity and authority to vote such Seven
Common Stock in favor of the Merger and the other transactions contemplated by
the Agreement of Merger.

        In seeking indemnification for Damages under this Section, the
Indemnified Persons shall exercise their remedies solely with respect to the
Escrow Shares and any other assets deposited in escrow pursuant to the Escrow
Agreement; provided, however, that no such claim for Damages will be asserted
after the expiration of the Escrow Period. Except for intentional fraud: (i) no
Seven Shareholder shall have any liability to an Indemnified Person under this
Agreement except to the extent of such Seven Shareholder's Escrow Shares and any
other assets deposited under the Escrow Agreement and (ii) the remedies set
forth in this Section 11.2 shall be the exclusive remedies of Portable and the
other Indemnified Persons hereunder against any Seven Shareholder. The
indemnification provided for in this Section 11.2 shall not apply unless the
aggregate Damages for which one or more Indemnified Persons is entitled to
indemnification exceeds Twenty-Five Thousand Dollars ($25,000) (the "BASKET"),
in which case the indemnification provided for in this Section 11.2 shall apply
to the extent the aggregate Damages for which one or more Indemnified Persons is
entitled to indemnification exceeds Twelve Thousand Five Hundred Dollars
($12,500).

                11.3 Notice and Defense of Third Party Claims.

                        (a) The Indemnified Persons shall give prompt written
notice to the Representative of any claim by a third party that might give rise
to a claim by the Indemnified Persons based upon the indemnity agreement
contained in Section 11.2 hereof, stating the nature and basis of such claim and
the amount thereof, to the extent known. The Indemnified Persons shall have the
sole right to control the defense of any such action, suit or proceeding. The
Representative shall be kept fully informed of such action, suit or proceeding
at all stages thereof. In addition, the Representative may, at its expense,
participate in the defense of any such action, suit or proceeding with one
counsel of its choice; provided, however, that the Indemnified Persons shall at
all times have the right to control such defense. The parties hereto 

                                      -29-


   30

shall render to each other such assistance as they may reasonably require of
each other in order to ensure the proper and adequate defense of any such
action, suit or proceeding.

                        (b) Neither the Indemnified Persons nor the
Representative shall make any settlement of any claims without the written
consent of the others, which consent shall not be unreasonably withheld.

        12. MISCELLANEOUS

                12.1 Governing Law. The internal laws of the State of California
(irrespective of its choice of law principles) will govern the validity of this
Agreement, the construction of its terms, and the interpretation and enforcement
of the rights and duties of the parties hereto.

                12.2 Assignment; Binding Upon Successors and Assigns. Neither
party hereto may assign any of its rights or obligations hereunder without the
prior written consent of the other party hereto. This Agreement will be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.

                12.3 Severability. If any provision of this Agreement, or the
application thereof, will for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto. The parties further agree to replace such void
or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic, business and
other purposes of the void or unenforceable provision.

                12.4 Counterparts. This Agreement may be executed in any number
of counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of which together will constitute one and the
same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, will bear the signatures of
both parties reflected hereon as signatories.

                12.5 Other Remedies. Except as otherwise provided herein, any
and all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby or by law
on such party, and the exercise of any one remedy will not preclude the exercise
of any other.

                12.6 Amendment and Waivers. Any term or provision of this
Agreement may be amended, and the observance of any term of this Agreement may
be waived (either generally or in a particular instance and either retroactively
or prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof or default in the performance hereof will
not be deemed to constitute a waiver of any other default or any succeeding
breach or default. The Agreement may be amended by the parties hereto at any
time before or after approval of the Seven Shareholders, but, after such
approval, no amendment will 


                                      -30-


   31

be made which by applicable law requires the further approval of the Seven
Shareholders without obtaining such further approval.

                12.7 No Waiver. The failure of any party to enforce any of the
provisions hereof will not be construed to be a waiver of the right of such
party thereafter to enforce such provisions.

                12.8 Expenses. Portable will pay promptly (and in any event
within thirty (30) days) upon demand the reasonable legal and accounting fees
and expenses, in excess of $2,000, incurred by Seven in this transaction, not to
exceed a combined total of $55,000.

                12.9 Attorneys' Fees. Should suit be brought to enforce or
interpret any part of this Agreement, the prevailing party will be entitled to
recover, as an element of the costs of suit and not as damages, reasonable
attorneys' fees to be fixed by the court (including without limitation, costs,
expenses and fees on any appeal). The prevailing party will be entitled to
recover its costs of suit, regardless of whether such suit proceeds to final
judgment.

                12.10 Notices. Any notice or other communication required or
permitted to be given under this Agreement will be in writing, will be delivered
personally or by registered or certified mail, postage prepaid and will be
deemed given upon delivery, if delivered personally, or three days after deposit
in the mails, if mailed, to the following addresses:

                (i)  If to Portable or Portable Subsidiary:

                           Portable Software Corporation
                           6222-185th Street, N.E.
                           Redmond, WA  98122
                           Attention:  Fred Ingham

                           with a copy to:

                           Fenwick & West LLP
                           Two Palo Alto Square
                           Palo Alto, CA  94306
                           Attention:  Matthew P. Quilter, Esq.

                (ii) If to Seven:

                           7Software, Inc.
                           25 Loyola Avenue
                           Menlo Park, CA  94025
                           Attention:  President

                           with a copy to:

                           Gray Cary Ware & Freidenrich


                                      -31-

   32

                           400 Hamilton Avenue
                           Palo Alto, CA  94301
                           Attention:  Peter M. Astiz, Esq.

or to such other address as a party may have furnished to the other parties in
writing pursuant to this Section 12.10.

                12.11 Construction of Agreement. This Agreement has been
negotiated by the respective parties hereto and their attorneys and the language
hereof will not be construed for or against either party. A reference to a
Section or an exhibit will mean a Section in, or exhibit to, this Agreement
unless otherwise explicitly set forth. The titles and headings herein are for
reference purposes only and will not in any manner limit the construction of
this Agreement which will be considered as a whole.

                12.12 No Joint Venture. Nothing contained in this Agreement will
be deemed or construed as creating a joint venture or partnership between any of
the parties hereto. No party is by virtue of this Agreement authorized as an
agent, employee or legal representative of any other party. No party will have
the power to control the activities and operations of any other and their status
is, and at all times, will continue to be, that of independent contractors with
respect to each other. No party will have any power or authority to bind or
commit any other. No party will hold itself out as having any authority or
relationship in contravention of this Section.

                12.13 Further Assurances. Each party agrees to cooperate fully
with the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to evidence and reflect the transactions described
herein and contemplated hereby and to carry into effect the intents and purposes
of this Agreement.

                12.14 Absence of Third Party Beneficiary Rights. No provisions
of this Agreement are intended, nor will be interpreted, to provide or create
any third party beneficiary rights or any other rights of any kind in any
client, customer, affiliate, shareholder, partner or any party hereto or any
other person or entity unless specifically provided otherwise herein, and,
except as so provided, all provisions hereof will be personal solely between the
parties to this Agreement.

                12.15 Public Announcement. Portable will, at its discretion
issue a press release announcing the Merger, within six (6) months after the
Effective Date. Portable may issue such press releases, and make such other
disclosures regarding the Merger, as it determines are required under applicable
securities laws or regulatory rules. Prior to the publication of such press
release (unless this Agreement has been terminated), neither party will make any
public announcement relating to this Agreement or the transactions contemplated
hereby.

                12.16 Confidentiality. Seven and Portable each recognize that
they have received and will receive confidential information concerning the
other during the course of the Merger negotiations and preparations.
Accordingly, Portable and Seven and each Principal 

                                      -32-

   33


Shareholder each agrees (a) to use its respective best efforts to prevent the
unauthorized disclosure of any confidential information concerning the other
that was or is disclosed during the course of such negotiations and
preparations, and is clearly designated in writing as confidential at the time
of disclosure, and (b) to not make use of or permit to be used any such
confidential information other than for the purpose of effectuating the Merger
and related transactions. The obligations of this section will not apply to
information that (i) is or becomes part of the public domain, (ii) is disclosed
by the disclosing party to third parties without restrictions on disclosure,
(iii) is received by the receiving party from a third party without breach of a
nondisclosure obligation to the other party or (iv) is required to be disclosed
by law. If this Agreement is terminated, all copies of documents containing
confidential information shall be returned by the receiving party to the
disclosing party.

                12.17 Entire Agreement. This Agreement and the exhibits hereto
constitute the entire understanding and agreement of the parties hereto with
respect to the subject matter hereof and supersede all prior and contemporaneous
agreements or understandings, inducements or conditions, express or implied,
written or oral, between the parties with respect hereto other than the
Reciprocal Nondisclosure Agreement between Seven and Portable dated February 1,
1998. The express terms hereof control and supersede any course of performance
or usage of the trade inconsistent with any of the terms hereof.


                                      -33-

   34




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


PORTABLE SOFTWARE CORPORATION         7SOFTWARE, INC.

By: /s/ STERLING WILSON               By: /s/ MELISSA WIDNER
   -----------------------------         ---------------------------------------
   Sterling Wilson, Chief                Melissa Widner
   Financial Officer                     CEO/President


PSC MERGER CORP.

By: /s/ DOUGLAS CHOI
   -----------------------------
   Douglas Choi, President


PRINCIPAL SHAREHOLDERS:

/s/ MELISSA WIDNER                    /s/ ANDREW DENT
--------------------------------      ------------------------------------------
Melissa Widner                        Andrew Dent



                                      -34-

   35



                                    Exhibit A

                               Agreement of Merger



   36



                                   Exhibit 2.4

                                Escrow Agreement



   37



                                   Exhibit 2.5

                      Amended Articles and Bylaws of Seven



   38



                                  Exhibit 2.8A

                        Investment Representation Letter



   39



                                  Exhibit 2.8B

                    Optionee Investment Representation Letter



   40



                                   Exhibit 3.0

                            Seven Disclosure Schedule



   41



                                   Exhibit 3.8

                           Seven Financial Statements



   42



                                   Exhibit 4.0

                          Portable Disclosure Schedule

         This disclosure schedule (this "DISCLOSURE SCHEDULE") contains
exceptions to the representations and warranties made by Portable and Portable
Subsidiary in Section 4 of the Agreement and Plan of Reorganization dated as of
June 30, 1998 (the "AGREEMENT") by and among Portable, Portable Subsidiary,
Seven and the Principal Shareholders. The section references used herein are to
particular subsections in Section 4 of the Agreement. Any information disclosed
under any section in this Disclosure Schedule is deemed to be disclosed and
incorporated in any other section of this Disclosure Schedule where such
disclosure would or might be appropriate. Capitalized terms used in this
Disclosure Agreement, unless otherwise specified, have the same meanings given
to them in the Agreement. Nothing in this Disclosure Schedule constitutes an
admission to any third party of any liability or obligation of Portable or
Portable Subsidiary to any third party, nor an admission that any matter
referred to herein is or would be material or would be reasonably likely to
result in a material adverse effect on Portable or Portable Subsidiary.

        Section 4.3. Capitalization.



   43



                                   Exhibit 4.5

                          Portable Financial Statements



   44



                                   Exhibit 6.5

                           Persons Offered Employment

                                   Andrew Dent
                                   Elena Donio
                                   Terry Glenn
                                    Ian Huynh
                                 Vincent Payette
                                  Kristin Reams
                                 Karen Skjervem
                                 Erik Wahlstrom
                                 Melissa Widner