{"id":43119,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/agreement-and-plan-of-merger-stamps-com-inc-and-iship-com-inc.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"agreement-and-plan-of-merger-stamps-com-inc-and-iship-com-inc","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/planning\/agreement-and-plan-of-merger-stamps-com-inc-and-iship-com-inc.html","title":{"rendered":"Agreement and Plan of Merger &#8211; Stamps.com Inc. and iShip.com Inc."},"content":{"rendered":"<pre>\n================================================================================\n\n\n                         AGREEMENT AND PLAN OF MERGER\n\n                                 BY AND AMONG\n\n                               STAMPS.COM INC.,\n\n                           ROCKET ACQUISITION CORP.\n\n                                      AND\n\n                                ISHIP.COM, INC.\n\n\n                         Dated as of October 22, 1999\n\n\n================================================================================\n\n\n \n                         AGREEMENT AND PLAN OF MERGER\n\n     AGREEMENT AND PLAN OF MERGER, dated as of October 22, 1999, by and among\nStamps.com Inc., a Delaware corporation (the \"Parent\"), Rocket Acquisition\n                                              ------                      \nCorp., a Washington corporation and a wholly owned subsidiary of the Parent\n(\"Merger Sub\"), and iShip.com, Inc., a Washington corporation (the \"Company\"),\n------------                                                        -------   \nand with respect to Section 7.2 only, U.S. Stock Transfer Corporation, as\nDepositary.  Capitalized terms used and not otherwise defined herein have the\nmeanings ascribed to them in Article 10.\n\n                                   RECITALS\n\n     A.   The Boards of Directors of each of the Parent, Merger Sub and the\nCompany believe it is in the best interests of the Parent, Merger Sub and the\nCompany (as applicable) and their respective shareholders that the Parent\nacquire the Company through the merger of Merger Sub with and into the Company\n(the \"Merger\").\n      ------   \n\n     B.   The Boards of Directors of each of the Parent, Merger Sub and the\nCompany have approved this Agreement, the Merger and the other transactions\ncontemplated hereby.\n\n     C.   Pursuant to the Merger, among other things, and subject to the terms\nand conditions of this Agreement, (i) all of the issued and outstanding shares\nof capital stock of the Company shall be converted into the right to receive\nshares of common stock, par value $0.001 per share, of the Parent (\"Parent\n                                                                    ------\nCommon Stock\"), and (ii) all outstanding Company Options and Company Warrants\n------------                                                                 \nwill become exercisable for Parent Common Stock, subject to the terms and\nconditions set forth herein.\n\n     D.   As an inducement to the Parent and Merger Sub to enter into this\nAgreement, certain shareholders of the Company have, concurrently herewith,\nentered into Support Agreements with the Parent in substantially the form\nattached hereto as Exhibit A (the \"Support Agreements\") pursuant to which, among\n                   ---------       ------------------                           \nother things, such shareholders have agreed to vote the shares of Company\nCapital Stock owned by them in favor of the Merger.\n\n     E.   The Parent, Merger Sub and the Company intend that the Merger shall\nconstitute a reorganization within the meaning of Section 368(a) of the Code,\nand in furtherance thereof, intend that this Agreement shall be a \"Plan of\nReorganization\" within the meaning of Sections 354(a) and 361(a) of the Code.\n\n     F.   The Company, the Parent and Merger Sub desire to make certain\nrepresentations, warranties, covenants and agreements in connection with the\nMerger.\n\n     G.   A portion of the shares of Parent Common Stock otherwise issuable or\nreserved for issuance by the Parent in connection with the Merger shall be\nplaced in escrow as set forth in Article 7 herein.\n\n     H.   As an inducement to the Parent and Merger Sub to enter into this\nAgreement, certain officers and employees of the Company have entered into\nemployment agreements with the Parent (the \"Employment Agreements\") whose term\n                                            ---------------------             \nwill commence on the Closing Date.\n\n                                      -1-\n\n\n \n     NOW, THEREFORE, in consideration of the covenants, agreements,\nrepresentations and warranties set forth herein, the parties, intending to be\nlegally bound hereby, agree as follows:\n\n                                   ARTICLE 1\n\n                                  THE MERGER\n\n     1.1  The Merger.  At the Effective Time and subject to and upon the terms \n          ----------\nand conditions of this Agreement and the applicable provisions of the Washington\nCode, Merger Sub shall be merged with and into the Company, the separate\ncorporate existence of Merger Sub shall cease, and the Company shall continue as\nthe surviving corporation (sometimes referred to herein as the \"Surviving\n                                                                ---------\nCorporation\").\n-----------\n\n     1.2  Effective Time.  Unless this Agreement is earlier terminated pursuant \n          --------------\nto Section 8.1, the closing of the Merger (the \"Closing\") will take place as\n                                                -------\npromptly as practicable, but no later than five Business Days following\nsatisfaction or waiver of the conditions set forth in Article 6, at the offices\nof Brobeck, Phleger &amp; Harrison LLP, 38 Technology Drive, Irvine, California,\nunless another place or time is agreed to by the Parent and the Company. The\ndate upon which the Closing actually occurs is herein referred to as the\n\"Closing Date.\" On the Closing Date, the parties hereto shall cause the Merger \n ------------          \nto be consummated by filing Articles of Merger (or like instrument), in\nsubstantially the form attached hereto as Exhibit B (the \"Articles of Merger\"),\n                                          ---------       ------------------\nwith the Secretary of State of the State of Washington, in accordance with\napplicable Laws (the date and time of acceptance by the Secretary of State of\nthe State of Washington of such filing, or such later time agreed to by the\nparties and set forth in the Articles of Merger, being referred to herein as the\n\"Effective Time\").\n --------------   \n\n     1.3  Effect of the Merger on Constituent Corporations.  At the Effective \n          ------------------------------------------------\nTime, the Merger shall have the effects provided for in the applicable\nprovisions of the Washington Code. Without limiting the generality of the\nforegoing, and subject thereto, at the Effective Time, all the property, rights,\nprivileges, powers and franchises of Merger Sub and the Company shall vest in\nthe Surviving Corporation, and all debts, liabilities, obligations,\nrestrictions, disabilities and duties of Merger Sub and the Company shall become\nthe debts, liabilities, obligations, restrictions, disabilities and duties of\nthe Surviving Corporation.\n\n     1.4  Articles of Incorporation and Bylaws of Surviving Corporation.\n          ------------------------------------------------------------- \n\n          (a)  At the Effective Time, the articles of incorporation of Merger\nSub, as in effect immediately prior to the Effective Time, shall be the articles\nof incorporation of the Surviving Corporation until thereafter amended as\nprovided by law and such articles of incorporation and bylaws of the Surviving\nCorporation, except that Article I thereof shall be amended to read in its\nentirety as follows:  \"The name of the Corporation is iShip.com, Inc.\"\n\n          (b)  The bylaws of Merger Sub, as in effect immediately prior to the\nEffective Time, shall be the bylaws of the Surviving Corporation until\nthereafter amended as provided by such bylaws, the articles of incorporation and\napplicable law.\n\n     1.5  Directors and Officers of Surviving Corporation.  The directors of \n          -----------------------------------------------\nMerger Sub immediately prior to the Effective Time shall be the directors of the\nSurviving Corporation, each to hold office in accordance with the articles of\nincorporation and bylaws of the Surviving \n\n                                      -2-\n\n\n \nCorporation.  The officers of Merger Sub immediately prior to the Effective Time\nshall be the officers of the Surviving Corporation, each to hold office in\naccordance with the bylaws of the Surviving Corporation.\n\n     1.6  Maximum Number of Shares of Parent Common Stock to be Issued; Effect\n          --------------------------------------------------------------------\non Outstanding Securities of the Company.\n---------------------------------------- \n\n          (a)  The maximum number of shares of Parent Common Stock to be issued\n(including Parent Common Stock to be reserved for issuance upon exercise of any\nof the Company Options or Company Warrants to be assumed by the Parent as\nprovided herein) in the Merger and in exchange for all vested and unvested\nCompany Options and Company Warrants shall be the Aggregate Merger Share Number.\nNo increase shall be made in the number of shares of Parent Common Stock\nissuable as a result of the transactions contemplated by this Agreement arising\nfrom any consideration (except for deemed share consideration arising from the\nnet exercise provisions of any Company Options or Company Warrants, which share\nconsideration shall continue to be outstanding shares of Company Capital Stock\nat the Closing and through the Escrow Period) received by the Company from the\ndate hereof to the Effective Time as a result of any exercise, conversion or\nexchange of Company Options, or Company Warrants.\n\n          (b)  Subject to the terms and conditions of this Agreement, as of the\nEffective Time, by virtue of the Merger and without any action on the part of\nthe Parent or Merger Sub, the Company or the holder of any shares of the Company\nCapital Stock and Company Options or Company Warrants, the following shall\noccur:\n\n               (i)    Conversion of Company Common Stock.  At the Effective \n                      ----------------------------------     \nTime, each share of Company Common Stock issued and outstanding immediately\nprior to the Effective Time (other than any shares of Company Common Stock to be\ncanceled pursuant to Section 1.6(b)(iv) and any Dissenting Shares (as provided\nin Section 1.7)) will be converted automatically into the right to receive that\nnumber of shares of Parent Common Stock equal to the Common Stock Exchange\nRatio, rounded down to the nearest whole share of Parent Common Stock.\n\n               (ii)   Conversion of Series A Preferred Stock.  At the Effective \n                      --------------------------------------    \nTime, each share of Company Series A Preferred Stock issued and outstanding\nimmediately prior to the Effective Time (other than any shares of Company Series\nA Preferred Stock to be cancelled pursuant to Section 1.6(b)(iv) and any\nDissenting Shares (as provided in Section 1.7)) will be automatically converted\ninto the right to receive that number of shares of Parent Common Stock equal to\nthe Series A Exchange Ratio, rounded down to the nearest whole share of Parent\nCommon Stock.\n\n               (iii)  Conversion of Series B Preferred Stock.  At the Effective\n                      --------------------------------------                   \nTime, each share of Company Series B Preferred Stock issued and outstanding\nimmediately prior to the Effective Time (other than any shares of Company Series\nB Preferred Stock to be cancelled pursuant to Section 1.6(b)(iv) and any\nDissenting Shares (as provided in Section 1.7)) will be automatically converted\ninto the right to receive that number of shares \n\n                                      -3-\n\n\n \nof Parent Common Stock equal to the Series B Exchange Ratio, rounded down to the\nnearest whole share of Parent Common Stock.\n\n               (iv) Cancellation of Parent-Owned and Company-Owned Stock.  Each \n                    ----------------------------------------------------  \nshare of Company Capital Stock owned by the Parent or the Company or any\nSubsidiary of the Parent or the Company immediately prior to the Effective Time\nshall be automatically canceled and extinguished without any consideration in\nrespect thereof and without any further action on the part of the Parent, Merger\nSub or the Company.\n\n               (v)  Company Options and Stock Plan.  At the Effective Time all \n                    ------------------------------    \nunexpired and unexercised Company Options and Company Warrants then outstanding,\nwhether vested or unvested, together with the Company's Amended and Restated\n1997 Stock Plan (the \"Stock Plan\"), shall be assumed by the Parent in accordance\n                      ---------- \nwith provisions described below.\n\n                    (A)  At the Effective Time, each unexpired and unexercised\n     Company Option and Company Warrant then outstanding, whether vested or\n     unvested, together with the Stock Plan, shall be, in connection with the\n     Merger, assumed by the Parent. Each Company Option and Company Warrant so\n     assumed by the Parent under this Agreement shall continue to have, and be\n     subject to, the same terms and conditions as were applicable to such\n     Company Option or Company Warrant immediately prior to the Effective Time;\n     provided that (1) such Company Option or Company Warrant, as the case may\n     be, shall be exercisable for that number of whole shares of Parent Common\n     Stock equal to the product of the number of shares of Company Capital Stock\n     that were issuable upon exercise of such Company Option or Company Warrant\n     immediately prior to the Effective Time multiplied by the Exchange Ratio\n     applicable to the series or class of Company Capital Stock subject to the\n     Company Option or Company Warrant (rounded down to the nearest whole number\n     of shares of Parent Common Stock) and (2) the per share exercise price for\n     the shares of Parent Common Stock issuable upon exercise of such assumed\n     Company Option or Company Warrant, as the case may be, shall be equal to\n     the quotient determined by dividing the exercise price per share of Company\n     Capital Stock at which such Company Option or Company Warrant was\n     exercisable immediately prior to the Effective Time by the Exchange Ratio\n     applicable to the series or class of Company Capital Stock subject to the\n     Company Option or Company Warrant (rounded up to the nearest whole cent).\n\n                    (B)  It is the intention of the parties that the Company\n     Options assumed by the Parent shall qualify following the Effective Time as\n     incentive stock options as defined in Section 422 of the Code to the same\n     extent the Company Options qualified as incentive stock options immediately\n     prior to the Effective Time and the provisions of this Section 1.6(b)(v)\n     shall be applied consistent with this intent.\n\n                    (C)  At the Effective Time, the Parent shall succeed to the\n     Company's rights and assume the Company's obligations under any Restricted\n     Stock Purchase Agreements.  Any and all restrictions on the Company\n     Restricted Stock issued pursuant to the Stock Plan or such other agreements\n     which do not lapse in \n\n                                      -4-\n\n\n \n     accordance with their terms as in effect on the date of this Agreement\n     shall continue in full force and effect until such restrictions lapse\n     pursuant to the terms of such agreements.\n\n                    (D)  Notwithstanding the foregoing, the Series B Preferred\n     Stock Purchase Warrant, dated April 27, 1999 (the \"MBE Warrant\"), by and\n                                                        -----------\n     between the Company and Mail Boxes Etc. USA, Inc. (\"MBE\"), shall, subject\n                                                         ---\n     to the consent of MBE, be modified, at the Effective Time, to be a warrant\n     of the Parent on terms and subject to conditions identical to the MBE\n     Warrant, except that such warrant shall be exercisable for the number of\n     whole shares of Parent Common Stock equal to the product of the number of\n     shares of Series B Preferred Stock that were issuable upon exercise of the\n     MBE Warrant immediately prior to the Effective Time multiplied by the\n     Series B Exchange Ratio (rounded down to the nearest whole number of shares\n     of Parent Common Stock) and the per share exercise price for the shares of\n     Parent Common Stock issuable upon exercise of such warrant shall be equal\n     to the quotient determined by dividing the exercise price per share of\n     Series B Preferred Stock under the MBE Warrant by the Series B Exchange\n     Ratio (rounded up to the nearest whole cent).\n\n               (vi)   Adjustments to Exchange Ratios.  The Exchange Ratios \n                      ------------------------------   \nshall be equitably adjusted to reflect fully the effect of any stock split,\nreverse split, stock combination, stock dividend (including any dividend or\ndistribution of securities convertible into Parent Common Stock or Company\nCapital Stock), reorganization, reclassification, recapitalization or other like\nchange with respect to Parent Common Stock or Company Capital Stock occurring on\nor after the date hereof and prior to the Effective Time.\n\n               (vii)  Capital Stock of Merger Sub.  Each share of common stock, \n                      ---------------------------     \nno par value per share, of Merger Sub, issued and outstanding immediately prior\nto the Effective Time shall be converted into and exchanged for one validly\nissued, fully paid and nonassessable share of common stock, no par value per\nshare, of the Surviving Corporation. Each share certificate of Merger Sub\nevidencing ownership of any such shares shall continue to evidence ownership of\nsuch shares of capital stock of the Surviving Corporation.\n\n     1.7  Dissenting Shares.\n          ----------------- \n\n          (a)  Notwithstanding any provision of this Agreement to the contrary,\nany shares of Company Capital Stock held by a holder who has demanded and\nperfected dissenters' rights for such shares in accordance with Washington Code\nand who, as of the Effective Time, has not effectively withdrawn or lost such\ndissenters' rights (\"Dissenting Shares\") shall not be converted into or\n                     -----------------                                 \nrepresent a right to receive shares of Parent Common Stock pursuant to Section\n1.6, but the holder thereof shall only be entitled to such rights as are granted\nby the Washington Code.\n\n          (b)  Notwithstanding the provisions of subsection (a) above, if any\nholder of shares of Company Capital Stock who demands purchase of such shares\nunder the Washington Code shall effectively withdraw or lose (through failure to\nperfect or otherwise) such holder's dissenters' rights, then, as of the later of\n(i) the Effective Time or (ii) the occurrence of such withdrawal or loss, such\nholder's shares shall automatically be converted \n\n                                      -5-\n\n\n \ninto and represent only the right to receive shares of Parent Common Stock as\nprovided in Section 1.6, without interest thereon, upon surrender of the\ncertificate representing such shares.\n\n          (c)  The Company shall give the Parent (i) prompt notice of its\nreceipt of any written demands for appraisal of any shares of Company Capital\nStock, withdrawals of such demands, and any other instruments relating to the\nMerger served pursuant to the Washington Code and received by the Company and\n(ii) the opportunity to participate in all negotiations and proceedings with\nrespect to demands for appraisal of any shares of Company Capital Stock under\nthe Washington Code. The Company shall not, except with the prior written\nconsent of the Parent or as may be required under applicable law, voluntarily\nmake any payment with respect to any demands for appraisal of Company Capital\nStock or offer to settle or settle any such demands.\n\n     1.8  Exchange Procedures.\n          ------------------- \n\n          (a)  Parent Common Stock.  On the Closing Date, the Parent shall issue\n               -------------------                                              \nin accordance with this Article 1, the aggregate number of shares of Parent\nCommon Stock issuable in exchange for outstanding shares of Company Capital\nStock; provided, however, that, on behalf of the holders of Company Capital\nStock, the Parent shall deposit into an escrow account a number of shares of\nParent Common Stock equal to the Escrow Amount.  The portion of the Escrow\nAmount contributed on behalf of each holder of Company Capital Stock shall be in\nproportion to the aggregate number of shares of Parent Common Stock which such\nholder would otherwise be entitled to receive by virtue of ownership of\noutstanding shares of Company Capital Stock.\n\n          (b)  Exchange Procedures.  At the Closing, each holder of record of a\n               -------------------                                             \ncertificate or certificates (the \"Certificates\") which immediately prior to the\n                                  ------------                                 \nEffective Time represented outstanding shares of Company Capital Stock and which\nshares were converted into the right to receive shares of Parent Common Stock\npursuant to Section 1.6, shall deliver the Certificates to the Parent.  Upon\nsurrender of a Certificate for cancellation and a stock power indorsed in blank\nwith respect to the shares held pursuant to Article 7, the Parent shall deliver\nto the holder of such Certificate in exchange therefor a certificate\nrepresenting the number of whole shares of Parent Common Stock (less the number\nof shares of Parent Common Stock to be deposited in the Escrow Fund on such\nholder's behalf pursuant to Article 7 hereof), to which such holder is entitled\npursuant to Section 1.6, and the Certificate so surrendered shall be canceled.\nAs soon as practicable after the Effective Time, and subject to and in\naccordance with the provisions of Article 7 hereof, the Parent shall cause to be\ndistributed to the Depositary a certificate or certificates (in such\ndenominations as may be requested by the Depositary), registered in the name of\neach former shareholder of the Company, representing that number of shares of\nParent Common Stock equal to the Escrow Amount.  Such shares shall be\nbeneficially owned by the holders on whose behalf such shares were deposited in\nthe Escrow Fund and shall be available to compensate the Parent as provided in\nArticle 7.  Until surrendered, each outstanding Certificate will be deemed, from\nand after the Effective Time, for all corporate purposes, other than the payment\nof dividends, to evidence the ownership of the number of full shares of Parent\nCommon Stock into which such shares of Company Capital Stock shall have been so\nconverted.\n\n                                      -6-\n\n\n \n          (c)  Distributions With Respect to Unexchanged Shares of Company\n               -----------------------------------------------------------\nCapital Stock.  No dividends or other distributions with respect to Parent\n-------------                                                             \nCommon Stock declared or made after the Effective Time and with a record date\nafter the Effective Time will be paid to the holder of any unsurrendered\nCertificate with respect to the shares of Parent Common Stock represented\nthereby until the holder of record of such Certificate shall surrender such\nCertificate.  Subject to applicable law, following surrender of any such\nCertificate, there shall be paid to the record holder of the certificates\nrepresenting whole shares of Parent Common Stock issued in exchange for any such\nunsurrendered Certificates, without interest, at the time of such surrender, the\namount of dividends or other distributions with a record date after the\nEffective Time theretofore payable with respect to such shares of Parent Common\nStock.\n\n          (d)  Transfers of Ownership.  If any certificate for shares of Parent\n               ----------------------                                          \nCommon Stock is to be issued pursuant to the Merger in a name other than that in\nwhich the Certificate surrendered in exchange therefor is registered, it will be\na condition of the issuance thereof that the Certificate so surrendered will be\nproperly endorsed and otherwise in proper form for transfer and that the person\nrequesting such exchange will have paid to the Parent, or any agent designated\nby it, any transfer or other taxes required by reason of the issuance of a\ncertificate for shares of Parent Common Stock in any name other than that of the\nregistered holder of the Certificate surrendered, or established to the\nsatisfaction of the Parent or any agent designated by it that such tax has been\npaid or is not payable.\n\n     1.9  No Further Ownership Rights in Company Capital Stock.  All shares of \n          ----------------------------------------------------\nParent Common Stock issued upon the surrender for exchange of shares of Company\nCapital Stock in accordance with the terms hereof shall be deemed to have been\nissued in full satisfaction of all rights pertaining to such shares of Company\nCapital Stock, and there shall be no further registration of transfers on the\nrecords of the Company of shares of Company Capital Stock which were outstanding\nimmediately prior to the Effective Time.  If, after the Effective Time,\nCertificates are presented to the Surviving Corporation for any reason, they\nshall be canceled and exchanged as provided in this Article 1.\n\n     1.10  Lost, Stolen or Destroyed Certificates.  In the event any \n           --------------------------------------\ncertificates evidencing shares of Company Capital Stock shall have been lost,\nstolen or destroyed, the Parent shall issue certificates representing such\nshares of Parent Common Stock in exchange for such lost, stolen or destroyed\nCertificates, upon the making of an affidavit of that fact by the holder\nthereof; provided, however, that the Parent may, in its discretion and as a\ncondition precedent to the issuance thereof, require the owner of such lost,\nstolen or destroyed Certificates to provide an indemnity or deliver a bond in\nsuch sum as it may reasonably direct as indemnity against any claim that may be\nmade against the Parent with respect to the Certificates alleged to have been\nlost, stolen or destroyed.\n\n                                   ARTICLE 2\n                 REPRESENTATIONS AND WARRANTIES OF THE COMPANY\n\n     The Company hereby represents and warrants to each of Parent and Merger\nSub, subject to such exceptions as are specifically disclosed with respect to\nspecific sections of this Article 2 in the Disclosure Letter as follows:\n\n                                      -7-\n\n\n \n     2.1  Organization and Qualification.  The Company is a corporation duly \n          ------------------------------\norganized, validly existing under the laws of the State of Washington, and has\nfull corporate power and authority to conduct its business as now conducted and\nas currently proposed to be conducted and to own, use, license and lease its\nAssets and Properties. The Company is duly qualified, licensed or admitted to do\nbusiness and is in good standing in each jurisdiction in which the ownership,\nuse, licensing or leasing of its Assets and Properties, or the conduct or nature\nof its business, makes such qualification, licensing or admission necessary,\nexcept for such failures to be so duly qualified, licensed or admitted and in\ngood standing that could not reasonably be expected to have a material adverse\neffect on the Business or Condition of the Company. Section 2.1 of the\nDisclosure Letter sets forth each jurisdiction where the Company is so\nqualified, licensed or admitted to do business and separately lists each other\njurisdiction in which the Company owns, uses, licenses or leases its Assets and\nProperties, or conducts business or has employees or engages independent\ncontractors.\n\n     2.2  Authority Relative to this Agreement.  Subject only to the requisite \n          ------------------------------------\napproval of the Merger and this Agreement by the shareholders of the Company,\nthe Company has full corporate power and authority to execute and deliver this\nAgreement, to perform its obligations hereunder and to consummate the\ntransactions contemplated hereby. The execution and delivery by the Company of\nthis Agreement and the consummation by the Company of the transactions\ncontemplated hereby, and the performance by the Company of its obligations\nhereunder, have been duly and validly authorized by all necessary action by the\nBoard of Directors of the Company, and no other action on the part of the Board\nof Directors of the Company is required to authorize the execution, delivery and\nperformance of this Agreement and the consummation by the Company of the\ntransactions contemplated hereby. This Agreement has been duly and validly\nexecuted and delivered by the Company and, assuming the due authorization,\nexecution and delivery hereof by Parent and Merger Sub, constitutes a legal,\nvalid and binding obligation of the Company enforceable against the Company in\naccordance with its respective terms, except as the enforceability thereof may\nbe limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,\nmoratorium or other similar Laws relating to the enforcement of creditors'\nrights generally and by general principles of equity.\n\n     2.3  Capital Stock.\n          ------------- \n\n          (a)  The authorized capital stock of the Company consists only of\n60,000,000 shares of Common Stock, $0.0005 par value per share (the \"Company\n                                                                     -------\nCommon Stock\"), of which 7,492,720 shares of Company Common Stock are issued and\n------------                                                                    \noutstanding as of the date hereof, and 21,786,668 shares of Preferred Stock,\n$0.0005 par value per share (the \"Company Preferred Stock\").  The designation\n                                  -----------------------                    \nand status of the Company Preferred Stock is as follows: (i) 8,986,668 shares\nare designated as Series A Preferred Stock, all of which are issued and\noutstanding as of the date hereof, and (ii) 12,800,000 shares are designated as\nSeries B Preferred Stock, 10,133,334 of which are issued and outstanding as of\nthe date hereof.  All of the issued and outstanding shares of Company Common\nStock and Company Preferred Stock are validly issued, fully paid and\nnonassessable, and have not been issued in violation of any applicable federal,\nstate and foreign securities Laws or preemptive rights.  Except for shares\nissuable upon conversion of the Series A Preferred Stock or the Series B\nPreferred Stock or upon exercise of Company Options or Company \n\n                                      -8-\n\n\n \nWarrants, no shares of Company Common Stock or Company Preferred Stock are\nreserved for issuance. Section 2.3(a) of the Disclosure Letter lists the name\nand state of residence of each holder of Company Common Stock and Company\nPreferred Stock provided to the Company by such holder. With respect to any\nCompany Common Stock or Company Preferred Stock that has been issued subject to\na repurchase option on the part of the Company, Section 2.3(a) of the Disclosure\nLetter sets forth the holder thereof, the number and type of securities covered\nthereby, and the vesting schedule thereof (including a description of the\ncircumstances under which such vesting schedule can or will be accelerated).\n\n          (b)  As of the date hereof, there are no outstanding Company Options\nor Company Warrants or agreements, arrangements or understandings to which the\nCompany is a party (written or oral) to issue Options with respect to the\nCompany and there are no preemptive rights or agreements, arrangements or\nunderstandings to issue preemptive rights with respect to the issuance or sale\nof Company Capital Stock created by statute, the articles of incorporation or\nbylaws of the Company, or any agreement or other arrangement to which the\nCompany is a party or to which it is bound and there are no agreements,\narrangements or understandings to which the Company is a party (written or oral)\npursuant to which the Company has the right to elect to satisfy any Liability by\nissuing Company Common Stock or Equity Equivalents.  With respect to each\nCompany Option and Company Warrant, Section 2.3(b) of the Disclosure Letter sets\nforth the holder thereof, the number and type of securities issuable thereunder,\nand, if applicable, the exercise price therefor, the exercise period and vesting\nschedule thereof (including a description of the circumstances under which such\nvesting schedule can or will be accelerated).  All of the Company Options and\nCompany Warrants were issued in compliance with all applicable federal, state\nand foreign securities Laws.  The Company is not a party or subject to any\nagreement or understanding, and, to the Company's knowledge, there is no\nagreement, arrangement or understanding between or among any Persons which\naffects, restricts or relates to voting, giving of written consents, dividend\nrights or transferability of shares with respect to the Company Capital Stock,\nincluding without limitation any voting trust agreement or proxy.\n\n     2.4  No Subsidiaries.  The Company has no Subsidiaries and does not \n          ---------------\notherwise hold any equity, membership, partnership, joint venture or other\nownership interest in any Person.\n\n     2.5  No Conflicts.  The execution and delivery by the Company of this \n          ------------\nAgreement does not, the performance by the Company of its obligations under this\nAgreement and the consummation of the transactions contemplated hereby do not\nand will not:\n\n          (a)  conflict with or result in a violation or breach of any of the\nterms, conditions or provisions of the articles of incorporation or bylaws of\nthe Company;\n\n          (b)  except as could not reasonably be expected to have a material\nadverse effect on the Business or Condition of the Company or be expected to\nprevent or materially delay the consummation of the transactions contemplated by\nthis Agreement and subject to obtaining the consents, approvals and actions,\nmaking the filings and giving the notices disclosed in Section 2.5 of the\nDisclosure Letter, if any, conflict with or result in a violation \n\n                                      -9-\n\n\n \nor breach of any Law or Order applicable to the Company or any of its Assets and\nProperties; or\n\n          (c)  except as could not reasonably be expected to have a material\nadverse effect on the Business or Condition of the Company or be expected to\nprevent or materially delay the consummation of the transactions contemplated by\nthis Agreement, (i) conflict with or result in a violation or breach of, (ii)\nconstitute a default (or an event that, with or without notice or lapse of time\nor both, would constitute a default) under, (iii) require the Company to obtain\nany consent, approval or action of, make any filing with or give any notice to\nany Person as a result or under the terms of, (iv) result in or give to any\nPerson any right of termination, cancellation, acceleration or modification in\nor with respect to, (v) result in or give to any Person any additional rights or\nentitlement to increased, additional, accelerated or guaranteed payments or\nperformance under, (vi) result in the creation or imposition of (or the\nobligation to create or impose) any Lien upon the Company or any of its Assets\nand Properties under or (vii) result in the loss of a material benefit under,\nany of the terms, conditions or provisions of any Contract or License to which\nthe Company is a party or by which any of the Company's Assets and Properties is\nbound.\n\n     2.6  Books and Records; Organizational Documents.  The minute books and \n          -------------------------------------------\nstock record books and other similar records of the Company that have been\nprovided or made available to the Parent or its counsel prior to the execution\nof this Agreement are complete and correct in all respects and have been\nmaintained in accordance with sound business practices. Such minute books\ncontain a true and complete record of all actions taken at all meetings and by\nall written consents in lieu of meetings of the directors, shareholders and\ncommittees of the board of directors of the Company through the date hereof. The\nCompany has prior to the execution of this Agreement delivered to the Parent\ntrue and complete copies of its articles of incorporation and bylaws, both as\namended through the date hereof. The Company is not in violation of any\nprovision of its articles of incorporation or bylaws.\n\n     2.7  Company Financial Statements.\n          ---------------------------- \n\n          (a)  Section 2.7 of the Disclosure Letter sets forth the Company\nFinancials.  The Company Financials are correct and complete in all material\nrespects and have been prepared in accordance with GAAP applied on a basis\nconsistent throughout the periods indicated and consistent with each other\n(except as may be indicated in the notes thereto, and, in the case of the\nInterim Financial Statements, subject to normal year-end adjustments, which\nadjustments will not be material in amount or significance).  The Company\nFinancials present fairly and accurately the financial condition and operating\nresults of the Company as of the dates and during the periods indicated therein,\nsubject, in the case of the Interim Financial Statements, to normal year-end\nadjustments, which adjustments will not be material in amount or significance\nand except that the Interim Financial Statements may not contain footnotes.\nSince the Company's inception, there has been no change in any accounting\npolicies, principles, methods or practices, including any change with respect to\nreserves (whether for bad debts, contingent liabilities or otherwise), of the\nCompany.\n\n                                     -10-\n\n\n \n          (b)  The Company does not have as of the date hereof nor as of the\nAudited Financial Statement Date assets with a book value greater than or equal\nto $10 million, and, with respect to the fiscal year ended on the Audited\nFinancial Statement Date, the Company, did not have revenues greater than or\nequal to $10 million.\n\n     2.8  Absence of Changes.  Since the date of the Interim Financial \n          ------------------\nStatements, there has not been any material adverse change in the Business or\nCondition of the Company or any occurrence or event which, individually or in\nthe aggregate, could be reasonably expected to have any material adverse change\nin the Business or Condition of the Company. In addition, without limiting the\nforegoing, except as expressly contemplated hereby, there has not occurred since\nthe date of the Interim Financial Statements:\n\n          (a)  the entering into of any Contract, commitment or transaction or\nthe incurrence of any Liabilities outside of the ordinary course of business\nconsistent with past practice;\n\n          (b)  the entering into of any Contract in connection with any\ntransaction involving a Business Combination;\n\n          (c)  the entering into of any Contract or other commitment relating to\nany interest of the Company in any corporation, association, joint venture,\npartnership or business entity;\n\n          (d)  the entering into of any strategic alliance, joint development or\njoint marketing Contract (other than joint marketing efforts in the ordinary\ncourse of business consistent with past practice with its customers with whom\nthe Company had such a relationship at the date of the Interim Financial\nStatements);\n\n          (e)  any material amendment or other modification (or agreement to do\nso), except in the ordinary course of business consistent with past practice, or\nviolation of the terms of, any of the Contracts disclosed in the Disclosure\nLetter;\n\n          (f)  the entering into of any transaction with any officer, director,\nshareholder, Affiliate or Associate of the Company, other than pursuant to any\nContract in effect on the date of the Interim Financial Statements and disclosed\nto the Parent pursuant to Section 2.18 of the Disclosure Letter or other than\npursuant to any contract of employment and listed in Section 2.16(a) of the\nDisclosure Letter;\n\n          (g)  the entering into or amendment of any Contract pursuant to which\nany other Person is granted manufacturing, marketing, distribution, licensing or\nsimilar rights of any type or scope with respect to any products of the Company\nor Company Intellectual Property other than as contemplated by the Company's\nContracts or Licenses disclosed in the Disclosure Letter or otherwise in the\nordinary course of business consistent with past practice with a Person with\nwhom the Company had such a relationship at the date of the Interim Financial\nStatements;\n\n          (h)  the commencement of any Action or Proceeding involving or which\ncould reasonably be expected to involve the Company, or insofar as it relates to\ntheir capacity as such, any officer, director, Affiliate or Associate of the\nCompany;\n\n                                     -11-\n\n\n \n          (i)  the declaration, setting aside or payment of any dividends on or\nmaking of any other distributions (whether in cash, stock or property) in\nrespect of any Company Capital Stock or Equity Equivalents, or any split,\ncombination or reclassification of any Company Capital Stock or Equity\nEquivalents or issuance or authorization of the issuance of any other securities\nin respect of, in lieu of or in substitution for shares of Company Capital Stock\nor Equity Equivalents, or the repurchase, redemption or other acquisition,\ndirectly or indirectly, of any shares of Company Capital Stock or Equity\nEquivalents;\n\n          (j)  except for (i) the issuance of shares of Company Capital Stock\nupon exercise or conversion of then-outstanding Company Options, Company\nWarrants or Company Preferred Stock listed in Section 2.3 of the Disclosure\nLetter, or (ii) the issuance of options available for grant under the Stock Plan\nin the ordinary course of business to employees who are not officers of the\nCompany consistent with past practice, the issuance, grant, delivery, sale or\nauthorization of or proposal to issue, grant, deliver or sell, or purchase or\nproposal to purchase, any shares of Company Capital Stock, Equity Equivalents or\nmodification or amendment of the rights of any holder of any outstanding shares\nof Company Capital Stock of Equity Equivalents (including to reduce or alter the\nconsideration to be paid to the Company upon the exercise of any outstanding\nCompany Options, Company Warrants or other Equity Equivalents), nor have there\nbeen any agreements, arrangements, plans or understandings with respect to any\nsuch modification or amendment;\n\n          (k)  any amendments to the Company's articles of incorporation or\nbylaws;\n\n          (l)  any transfer (by way of a License or otherwise) to any Person of\nrights to any Company Intellectual Property other than non-exclusive transfers\nto the Company's customers, distributors or other licensees at the date of the\nInterim Financial Statements in the ordinary course of business consistent with\npast practice;\n\n          (m)  any disposition or sale of, waiver of rights to, license or lease\nof, or incurrence of any Lien on, any Assets and Properties of the Company,\nother than dispositions of inventory, or licenses of products to Persons to whom\nthe Company had granted licenses of its products at the date of the Interim\nFinancial Statements, in the ordinary course of business of the Company\nconsistent with past practice;\n\n          (n)  any purchase of any Assets and Properties of any Person other\nthan acquisitions of inventory, or licenses of products, in the ordinary course\nof business of the Company consistent with past practice;\n\n          (o)  the making of any capital expenditures or commitments by the\nCompany for additions to property, plant or equipment of the Company\nconstituting capital assets individually or in the aggregate in an amount\nexceeding $50,000;\n\n          (p)  the write-off or write-down or making of any determination to\nwrite off or write-down, or revalue, any of the Assets and Properties of the\nCompany, or change in any reserves or liabilities associated therewith,\nindividually or in the aggregate in an amount exceeding $50,000;\n\n                                     -12-\n\n\n \n          (q)  the payment, discharge or satisfaction, in an amount in excess of\n$25,000, in any one case, or $50,000 in the aggregate, of any claim or\nLiability, other than the payment, discharge or satisfaction in the ordinary\ncourse of business of Liabilities reflected or reserved against in the Company\nFinancial Statements or incurred in the ordinary course of business since the\ndate of the Interim Financial Statements;\n\n          (r)  the failure to pay or otherwise satisfy Liabilities of the\nCompany consistent with the Company's past practices, except such as are being\ncontested in good faith;\n\n          (s)  the incurrence of any Indebtedness or guarantee of any\nIndebtedness in an aggregate amount exceeding $50,000 or issuance or sale of any\ndebt securities of the Company or guarantee any debt securities of others;\n\n          (t)  the grant of any severance or termination pay to any director,\nofficer employee or consultant, except payments made pursuant to written\nContracts outstanding on the date hereof, the terms of which are disclosed in\nthe Disclosure Letter;\n\n          (u)  the increase of greater than five percent in salary, rate of\ncommissions, rate of consulting fees or any other compensation of any current or\nformer officer, director, shareholder, employee, independent contractor or\nconsultant of the Company;\n\n          (v)  the payment of any consideration of any nature whatsoever (other\nthan salary, commissions or consulting fees and customary benefits paid to any\ncurrent or former officer, director, shareholder, employee or consultant of the\nCompany) to any current or former officer, director, shareholder, employee,\nindependent contractor or consultant of the Company;\n\n          (w)  the establishment or modification of (i) targets, goals, pools or\nsimilar provisions under any Plan, employment Contract or other employee\ncompensation arrangement or independent contractor Contract or other\ncompensation arrangement or (ii) salary ranges, increased guidelines or similar\nprovisions in respect of any Plan, employment Contract or other employee\ncompensation arrangement or independent contractor Contract or other\ncompensation arrangement;\n\n          (x)  the adoption, entering into, amendment, modification or\ntermination (partial or complete) of any Plan (other than as required to comply\nwith applicable Laws or to maintain the qualified status of such plan under\nSection 401(a) of the Code);\n\n          (y)  the payment of any discretionary or stay bonus;\n\n          (z)  any action, including the acceleration of vesting of any Company\nOptions or Company Warrants, or other rights to acquire shares of capital stock\nof the Company, which could jeopardize the tax-free reorganization hereunder,\nexcept as expressly required by any Contract set forth in the Disclosure Letter;\n\n          (aa) the making or changing of any material election in respect of\nTaxes, adoption or change of any accounting method in respect of Taxes, the\nentering into of any \n\n                                     -13-\n\n\n \ntax allocation agreement, tax sharing agreement, tax indemnity agreement or\nclosing agreement, settlement or compromise of any claim or assessment in\nrespect of Taxes, or consent to any extension or waiver of the limitation period\napplicable to any claim or assessment in respect of Taxes with any Taxing\nAuthority or otherwise;\n\n          (bb) other than in the ordinary course of business, the making of any\nrepresentation or proposal to, or engagement in substantive discussions with,\nany of the holders (or their representatives) of any Indebtedness, or to or with\nany party which has issued a letter of credit which benefits the Company;\n\n          (cc) the commencement or termination of, or change in, any line of\nbusiness;\n\n          (dd) the cancellation, material amendment or failure to renew any\ninsurance policy other than in the ordinary course of business consistent with\npast practice, or failure to use commercially reasonable efforts to give all\nnotices and present all claims under all such policies in a timely fashion;\n\n          (ee) any material amendment, failure to renew, or failure to use\ncommercially reasonable efforts to maintain, its existing Approvals or failure\nto observe any Law or Order applicable to the conduct of the Company's business\nor the Company's Assets and Properties;\n\n          (ff) any physical damage, destruction or other casualty loss (whether\nor not covered by insurance) affecting any of the real or personal property or\nequipment of the Company individually or in the aggregate in an amount exceeding\n$50,000;\n\n          (gg) the repurchase, cancellation or modification of the terms of any\nCompany Capital Stock, Equity Equivalents, Company Options or Company Warrants\nor other financial instrument that derives the majority of its value from its\nconvertibility into Company Capital Stock or Equity Equivalents, other than\ntransactions entered into in the ordinary course of business and pursuant to\neither (i) contractual provisions or (ii) the Stock Plan, in either case as in\neffect at the date of this Agreement; or\n\n          (hh) any entering into of any Contract, or acquiescence by the Company\nin respect of, an arrangement or understanding to do, engage in, cause or having\nthe effect of any of the foregoing, including with respect to any Business\nCombination not otherwise restricted by the foregoing paragraphs.\n\n                                     -14-\n\n\n \n     2.9  No Undisclosed Liabilities.  Except as reflected or reserved against \n          --------------------------\nin the Company Financials, there are no Liabilities of, relating to or affecting\nthe Company or any of its Assets and Properties, other than Liabilities incurred\nin the ordinary course of business consistent with past practice since the date\nof the Interim Financial Statements and in accordance with the provisions of\nthis Agreement which, individually and in the aggregate, are not material to the\nBusiness or Condition of the Company, and are not for tort or for breach of\ncontract.\n\n     2.10  Taxes.\n           ----- \n\n          (a)  All Tax Returns required to have been filed by or with respect to\nthe Company or any affiliated, consolidated, combined, unitary or similar group\nof which the Company is or was a member (a \"Relevant Group\") have been duly and\n                                            --------------                     \ntimely filed (including any extensions), and each such Tax Return correctly and\ncompletely reflects Tax liability and all other material information required to\nbe reported thereon.  All Taxes due and payable by the Company or any member of\na Relevant Group, whether or not shown on any Tax Return, or claimed to be due\nby any Tax Authority, have been paid or accrued on the Company Financials for\nall periods (or portions thereof) through and including the date thereof.  All\nsuch Tax Returns are true, complete and correct in all material respects.\n\n          (b)  The Company has not incurred any material liability for Taxes\nother than as reflected on the Interim Financial Statements for all periods (or\nportions thereof) through and including the date thereof and will not incur\nadditional Liabilities for Taxes through and including the Closing Date, other\nthan in the ordinary course of business.  The unpaid Taxes of the Company (i)\ndid not, as of the most recent fiscal month end, exceed by any material amount\nthe reserve for liability for Income Tax (other than the reserve for deferred\ntaxes established to reflect timing differences between book and tax income) set\nforth on the face of the Company's most recent balance sheet and (ii) will not\nexceed by any material amount that reserve as adjusted for operations and\ntransactions through the Closing Date.\n\n          (c)  The Company is not a party to any agreement extending the time\nwithin which to file any Tax Return.  No claim has ever been made by a Taxing\nAuthority of any jurisdiction in which the Company does not file Tax Returns\nthat it is or may be subject to taxation by that jurisdiction.\n\n          (d)  The Company has withheld and paid all Taxes required to have been\nwithheld and paid in connection with amounts paid or owing to any employee,\ncreditor or independent contractor.\n\n          (e)  The Company does not have knowledge of any actions by any Taxing\nAuthority in connection with assessing additional Taxes against or in respect of\nit for any past period.  There is no dispute or claim concerning any Tax\nliability of the Company either (i) threatened, claimed or raised by any Taxing\nAuthority or (ii) of which the Company is aware.  There are no Liens for Taxes\nupon the Assets and Properties of the Company other than Liens for Taxes not yet\ndue.  Section 2.10 of the Disclosure Letter indicates those Tax Returns, if any,\nof the Company that have been audited or examined by Taxing Authorities, and\nindicates those Tax Returns of the Company that currently are the subject of\naudit or \n\n                                     -15-\n\n\n \nexamination.  The Company has delivered to the Parent complete and\ncorrect copies of all federal, state, local and foreign income Tax Returns filed\nby, and all Tax examination reports and statements of deficiencies assessed\nagainst or agreed to by, the Company since the fiscal year ended December 31,\n1997.\n\n          (f)  There are no outstanding agreements or waivers extending the\nstatutory period of limitation applicable to any Tax Returns required to be\nfiled by, or which include or are treated as including, the Company or with\nrespect to any Tax assessment or deficiency affecting the Company or any\nRelevant Group.\n\n          (g)  The Company has not received any written ruling related to Taxes\nor entered into any agreement with a Taxing Authority relating to Taxes.\n\n          (h)  The Company has no liability for the Taxes of any Person other\nthan the Company (i) under Section 1.1502-6 of the Treasury regulations (or any\nsimilar provision of state, local or foreign Law), (ii) as a transferee or\nsuccessor, (iii) by Contract or (iv) otherwise.\n\n          (i)  The Company (i) has neither agreed to make nor is required to\nmake any adjustment under Section 481 of the Code by reason of a change in\naccounting method and (ii) is not a \"consenting corporation\" within the meaning\nof Section 341(f)(1) of the Code.\n\n          (j)  The Company is not a party to or bound by any obligations under\nany tax sharing, tax allocation, tax indemnity or similar agreement or\narrangement.\n\n          (k)  The Company is not involved in, subject to, or a party to any\njoint venture, partnership, Contract or other arrangement that is treated as a\npartnership for federal, state, local or foreign Income Tax purposes.\n\n          (l)  The Company was not included and is not includible in the Tax\nReturn of any Relevant Group with any corporation other than such a return of\nwhich the Company is the common parent corporation.\n\n          (m)  The Company has not made any payments, is not obligated to make\nany payments, nor is a party to any Contract that under certain circumstances\ncould require it to make any payments that are not deductible as a result of the\nprovisions set forth in Section 280G of the Code or the treasury regulations\nthereunder or would result in an excise tax to the recipient of any such payment\nunder Section 4999 of the Code (other than payments for which shareholder\napproval meeting the requirements of Section 280G(c)(5) of the Code will be\nobtained prior to the Closing Date).\n\n          (n)  The Company is not nor has it ever been a United States real\nproperty holding corporation within the meaning of Section 897(c)(1)(A)(ii) of\nthe Code.\n\n                                     -16-\n\n\n \n     2.11  Legal Proceedings.\n           ----------------- \n\n          (a)  Except as set forth in Section 2.11 of the Disclosure Letter:\n\n               (i)  there are no Actions or Proceedings pending or, to the\nknowledge of the Company, threatened against, relating to or affecting the\nCompany or its Assets and Properties; and\n\n               (ii)  the Company has not received notice, and does not otherwise\nhave knowledge, of any Orders outstanding against the Company.\n\n          (b)  Prior to the execution of this Agreement, the Company has\ndelivered to the Parent all responses of counsel for the Company to auditor's\nrequests for information since the Company's inception (together with any\nupdates provided by such counsel) regarding Actions or Proceedings pending or\nthreatened against, relating to or affecting the Company.  Section 2.11(b) of\nthe Disclosure Letter sets forth all Actions or Proceedings relating to or\naffecting the Company or any of its Assets and Properties since the Company's\ninception and prior to the date hereof.\n\n     2.12  Compliance with Laws and Orders.  The Company has not violated, and \n           -------------------------------\nis not currently in default under, any Law or Order applicable to the Company or\nany of its Assets and Properties, except for any such violations or defaults\nthat could not reasonably be expected to have a material adverse effect on the\nBusiness or Condition of the Company.\n\n     2.13  Plans; ERISA.\n           ------------   \n\n          (a)  For purposes of this Agreement, the term \"Plans\" shall mean (i)\n                                                         -----                \nall \"employee benefit plans\" (as such term is defined in Section 3(3) of the\nEmployee Retirement Income Security Act of 1974, as amended (\"ERISA\"), of which\n                                                              -----            \nany of the Company or any member of the same controlled group of businesses as\nthe Company within the meaning of Section 4001(a)(14) of ERISA (an \"ERISA\n                                                                    -----\nAffiliate\") is or ever was a sponsor or participating employer or as to which\n---------                                                                    \nthe Company or any of its ERISA Affiliates makes contributions or is or has been\nrequired to make contributions, and (ii) any similar employment, severance or\nother arrangement or policy of any of the Company or any of its ERISA Affiliates\n(whether written or oral) providing for health, life, vision or dental insurance\ncoverage (including self-insured arrangements), workers' compensation,\ndisability benefits, supplemental unemployment benefits, vacation benefits or\nretirement benefits, fringe benefits, or for profit sharing, deferred\ncompensation, bonuses, stock options, stock appreciation or other forms of\nincentive compensation or post-retirement insurance, compensation or benefits.\nExcept as disclosed on Section 2.13 of the Disclosure Letter, (i) neither the\nCompany nor any of its ERISA Affiliates maintains or sponsors (or ever\nmaintained or sponsored), or makes or is required to make contributions to, any\nPlans, (ii) none of the Plans is or was a \"multi-employer plan\", as defined in\nSection 3(37) of ERISA, (iii) none of the Plans is or was a \"defined benefit\npension plan\" within the meaning of Section 3(35) of ERISA, (iv) none of the\nPlans provides or provided post-retirement medical or health benefits, other\nthan as required under applicable Laws, (v) none of the Plans is or was a\n\"welfare benefit fund,\" as defined in Section 419(e) of the Code, or an\norganization described in Sections 501(c)(9) or 501(c)(20) of the Code, (vi)\nneither the \n\n                                     -17-\n\n\n \nCompany nor any of its ERISA Affiliates is or was a party to any collective\nbargaining agreement and (vii) neither the Company nor any of its ERISA\nAffiliates has announced or otherwise made any commitment to create or amend any\nPlan (other than as required to comply with applicable Laws or to maintain the\nqualified status of a Plan under Section 401(a) of the Code). Notwithstanding\nany statement or indication in this Agreement to the contrary, there are no\nPlans (a) as to which the Parent will be required to make any contributions or\nwith respect to which the Parent shall have any obligation or liability\nwhatsoever, whether on behalf of any of the current employees of the Company or\non behalf of any other Person, after the Closing (other than current deferred\ncontributions to the Company's 401(k) plan and the current month's premium for\nhealth plan coverage), or (b) which the Parent or the Surviving Corporation will\nnot be able to terminate immediately after the Closing in accordance with their\nterms, ERISA and the Code. With respect to each of such Plans, at the Closing\nthere will be no unrecorded liabilities with respect to the establishment,\nimplementation, operation, administration or termination of any such Plan, or\nthe termination of the participation in any such Plan by the Company or its\nERISA Affiliates. The Company has delivered to the Parent true and complete\ncopies of: (i) each of the Plans and any related funding agreements thereto\n(including insurance contracts) including all amendments, all of which are\nlegally valid and binding and in full force and effect and there are no defaults\nthereunder, (ii) the currently effective Summary Plan Description pertaining to\neach of the Plans, (iii) the annual reports filed for each of the Plans since\ninception (including all related schedules), if applicable, (iv) the most\nrecently filed PBGC Form 1 (if applicable), (v) the most recent Internal Revenue\nService determination letter for each Plan which is intended to constitute a\nqualified plan under Section 401 of the Code and each amendment to each of the\nforegoing documents and (vi) for each unfunded Plan, if any, financial\nstatements consisting of (A) the consolidated statement of assets and\nliabilities of such Plan as of its most recent valuation date, and (B) the\nstatement of changes in fund balance and in financial position or the statement\nof changes in net assets available for benefits under such Plan for the most\nrecently-ended plan year, which such financial statements shall fairly present\nthe financial condition and the results of operations of such Plan in accordance\nwith GAAP, consistently applied, as of such dates.\n\n          (b)  The present value of all accrued benefits under any Plans subject\nto Title IV of ERISA shall not, as of the Closing Date, exceed the value of the\nassets of such Plans allocated to such accrued benefits, based upon the\napplicable provisions of the Code and ERISA, and each such Plan shall be capable\nof being terminated as of the Closing Date in a \"standard termination\" under\nSection 4041(b) of ERISA.  With respect to each Plan that is subject to Title IV\nof ERISA, (i) no amount is due or owing from the Company or any of its ERISA\nAffiliates to the PGBC or to any \"multi-employer Plan\" as defined in Section\n3(37) of ERISA on account of any withdrawal therefrom and (ii) no such Plan has\nbeen terminated other than in accordance with ERISA or at a time when the Plan\nwas not sufficiently funded.  The transactions contemplated hereunder,\nincluding, without limitation, the termination of any Plan at or prior to the\nClosing, shall not result in any such withdrawal or other liability under any\napplicable Laws.\n\n          (c)  Neither the Company nor any of its ERISA Affiliates is subject to\nany material liability, tax or penalty whatsoever to any person or agency\nwhomsoever as a result of engaging in a prohibited transaction under ERISA or\nthe Code, and neither the Company nor any of its ERISA Affiliates has any\nknowledge of any circumstances which reasonably \n\n                                     -18-\n\n\n \nmight result in any material liability, tax or penalty, including, but not\nlimited to, a penalty under Section 502 of ERISA, as a result of a breach of any\nduty under ERISA or under other Laws. Each Plan which is required to comply with\nthe provisions of Sections 4980B and 4980C of the Code, or with the requirements\nreferred to in Section 4980D of the Code, has complied in all material respects.\nNo event has occurred which could subject any Plan to Tax under Section 511 of\nthe Code. None of the Plans subject to Title IV of ERISA has been completely or\npartially terminated nor has there been any \"reportable event,\" as such term is\ndefined in Section 4043(b) of ERISA, with respect to any of the Plans since the\neffective date of ERISA nor has any notice of intent to terminate been filed or\ngiven with respect to any such Plan. There has been no (i) withdrawal by the\nCompany or any of its ERISA Affiliates that is a substantial employer from a\nsingle-employer plan which is a Plan and which has two or more contributing\nsponsors at least two of whom are not under common control, as referred to in\nSection 4063(b) of ERISA, or (ii) cessation by the Company or any of its ERISA\nAffiliates of operations at a facility causing more than twenty percent of Plan\nparticipants to be separated from employment, as referred to in Section 4062(f)\nof ERISA. Neither the Company nor any of its ERISA Affiliates, nor any other\norganization of which any of them are a successor or parent corporation as\ndefined in Section 4069(b) of ERISA, have engaged in any transaction described\nin Section 4069(a) of ERISA.\n\n          (d)  None of the Plans nor any trust created thereunder has incurred\nany \"accumulated funding deficiency\" as such term is defined in Section 412 of\nthe Code, whether or not waived, since the effective date of said Section 412,\nand no condition has occurred or exists which by the passage of time could be\nexpected to result in an accumulated funding deficiency as of the last day of\nthe current plan year of any such Plan.  Furthermore, neither the Company nor\nany of its ERISA Affiliates has any unfunded liability under ERISA in respect of\nany of the Plans (except with respect to current deferred contributions under\nthe Company's 401(k) plan and the current month's premium for health plan\ncoverage).  Each of the Plans which is intended to be a qualified plan under\nSection 401(a) of the Code has received a favorable determination letter from\nthe Internal Revenue Service or has time remaining to apply for a determination\nletter and make such changes as may be required under the remedial amendment\nperiod of Section 401(b) of the Code.  Each Plan has been operated in accordance\nwith its terms and with the provisions of the Code.  All of the Plans have been\nadministered and maintained in compliance with ERISA, the Code and all other\napplicable Laws, except as could not have a material adverse effect on the\nBusiness or Condition of the Company.  All contributions required to be made to\neach of the Plans under the terms of that Plan, ERISA, the Code or any other\napplicable Laws have been timely made.  Each Plan intended to meet the\nrequirements for tax-favored treatment under Subchapter B of Chapter 1 of the\nCode meet such requirements.  There are no Liens against the property of the\nCompany or any of its ERISA Affiliates under Section 412(n) of the Code or\nSection 302(f) or 4068 of ERISA.  The Interim Financial Statements properly\nreflect all amounts required to be accrued as liabilities to date under each of\nthe Plans.  There is no contract, agreement or benefit arrangement covering any\nemployee of the Company or any Subsidiary which, individually or collectively,\ncould give rise to the payment of any amount which would constitute an \"excess\nparachute payment\" (as defined in Section 280G of the Code) (other than payments\nfor which shareholder approval meeting the requirements of Section 280G(c)(5) of\nthe Code will be obtained prior to the Closing Date).  Except as disclosed in\nSection 2.13(d) of the Disclosure Letter, the execution and \n\n                                     -19-\n\n\n \nperformance of this Agreement will not (i) result in any obligation or liability\n(with respect to accrued benefits or otherwise) of the Parent or the Surviving\nCorporation to the PBGC, any Plan, or any present or former employee of the\nParent or the Surviving Corporation, (ii) be a trigger event under any Plan that\nwill result in any payment (whether of severance pay or otherwise) becoming due\nto any present or former employee, officer, director, shareholder, contractor,\nor consultant, or any of their dependents, or (iii) accelerate the time of\npayment or vesting, or increase the amount, of compensation due to any employee,\nofficer, director, shareholder, contractor, or consultant of the Company (except\nas required in connection with any termination or partial termination of a\nqualified Plan and except for acceleration of options under the Stock Plan and\naccelerated lapsing of repurchase rights under Company Common Stock purchase\nagreements). With respect to any insurance policy which provides, or has\nprovided, funding for benefits under any Plan, (i) there is and will be no\nliability of the Company or the Parent in the nature of a retroactive or\nretrospective rate adjustment, loss sharing arrangement, or actual or contingent\nliability as of the Closing Date, nor would there be any such liability if such\ninsurance policy were terminated as of the Closing Date, and (ii) no insurance\ncompany issuing any such policy is in receivership, conservatorship, bankruptcy,\nliquidation, or similar proceeding, and, to the knowledge of the Company, no\nsuch proceedings with respect to any insurer are imminent.\n\n          (e)  Other than routine claims for benefits under the Plans, there are\nno pending, or, to the best knowledge of the Company, threatened, Actions or\nProceedings involving the Plans, or the fiduciaries, administrators, or trustees\nof any of the Plans or the Company or any of its ERISA Affiliates as the\nemployer or sponsor under any Plan, with any of the IRS, the Department of\nLabor, the PBGC, any participant in or beneficiary of any Plan or any other\nperson whomsoever.  The Company knows of no reasonable basis for any such claim,\nlawsuit, dispute, action or controversy.\n\n     2.14  Title to Property.  The Company has good and marketable title to all \n           -----------------\nof its properties, interests in properties and assets, real and personal,\nreflected in the Company Financials or acquired after the Financial Statement\nDate (except properties, interests in properties and assets sold or otherwise\ndisposed of since the Financial Statement Date in the ordinary course of\nbusiness), or with respect to leased properties and assets, valid leasehold\ninterests in, free and clear of all mortgages, liens, pledges, charges or\nencumbrances of any kind or character, except (i) the lien of current taxes not\nyet due and payable, (ii) such imperfections of title, liens and easements as do\nnot and will not materially detract from or interfere with the use of the\nproperties subject thereto or affected thereby, or otherwise materially impair\nbusiness operations involving such properties and (iii) liens securing debt\nwhich is reflected on the Company Financials. The plants, property and equipment\nof Company that are used in the operations of its business are in good operating\ncondition and repair, subject to normal wear and tear. All properties used as of\nthe applicable date in the operations of Company are reflected in the Company\nFinancials to the extent generally accepted accounting principles require the\nsame to be reflected.\n\n     2.15  Intellectual Property.\n           --------------------- \n\n          (a)  Section 2.15(a) of the Disclosure Letter lists all Company\nRegistered Intellectual Property and lists any proceedings or actions pending as\nof the date hereof \n\n                                     -20-\n\n\n \nbefore any court, tribunal (including the PTO or equivalent authority anywhere\nin the world) related to any of the Company Registered Intellectual Property.\n\n          (b)  Each item of Company Intellectual Property, including all Company\nRegistered Intellectual Property listed in Section 2.15(a) of the Disclosure\nLetter is owned exclusively by the Company (excluding Intellectual Property\nlicensed to the Company under any License) and is free and clear of any Liens.\nThe Company (i) owns exclusively all trademarks, service marks and trade names\nused in connection with the operation or conduct of the business of the Company,\nincluding the sale of any products or technology or the provision of any\nservices by the Company and (ii) owns exclusively, and has good title to, all\ncopyrighted works that are Company products or other works of authorship that\nthe Company otherwise purports to own; provided, however, that such works may\nincorporate copyrighted works or works of authorship of third parties which are\nlicensed to the Company or are in the public domain.\n\n          (c)  To the extent that any Company Intellectual Property has been\ndeveloped or created by any Person other than the Company, the Company has a\nwritten agreement with such Person with respect thereto and the Company has\neither (i) obtained ownership of, and is the exclusive owner of, all such\nIntellectual Property by operation of law or by valid assignment of any such\nrights or (ii) has obtained a License under or to such Intellectual Property.\n\n          (d)  Except pursuant to agreements listed in Section 2.15(d) of the\nDisclosure Letter, the Company has not transferred ownership of or granted any\nLicense  or other right to use or authorized the retention of any rights to use\nany Intellectual Property that is or was Company Intellectual Property, to any\nother Person.\n\n          (e)  The Company Intellectual Property constitutes all the\nIntellectual Property used in and\/or necessary to the conduct of the Company's\nbusiness as it currently is conducted, including, without limitation, the\ndesign, development, distribution, marketing, manufacture, use, import, license,\nand sale of the products, technology and services of the Company (including\nproducts, technology, or services currently under development).\n\n          (f)  The Contracts and Licenses listed in Section 2.15(f) of the\nDisclosure Letter include all Contracts and Licenses to which the Company is a\nparty with respect to any Intellectual Property.  No Person other than the\nCompany has ownership rights to improvements made by the Company in Intellectual\nProperty which has been licensed to the Company.\n\n          (g)  Section 2.15(g) of the Disclosure Letter lists all Contracts,\nLicenses and agreements between the Company and any other Person wherein or\nwhereby the Company has agreed to, or assumed, any obligation or duty to\nwarrant, indemnify, reimburse, hold harmless, guaranty or otherwise assume or\nincur any obligation or Liability or provide a right of rescission with respect\nto the infringement or misappropriation by the Company or such other Person of\nthe Intellectual Property of any Person other than the Company.\n\n                                     -21-\n\n\n \n          (h)  To the knowledge of the Company, the operation of the business of\nthe Company as currently conducted or as presently proposed to be conducted,\nincluding the Company's design, development, use, import, manufacture and sale\nof the products, technology or services (including products, technology or\nservices currently under development) of the Company does not infringe or\nmisappropriate the Intellectual Property of any Person, violate the rights of\nany Person (including rights to privacy or publicity and moral rights), or\nconstitute unfair competition or trade practices under any Laws, and the Company\nhas not received notice from any Person claiming that such operation or any act,\nproduct, technology or service (including products, technology or services\ncurrently under development) of the Company infringes or misappropriates the\nIntellectual Property of any Person or constitutes unfair competition or trade\npractices under any Law, including notice of third party patent or other\nIntellectual Property rights from a potential licensor of such rights.\n\n          (i)  Each item of Company Registered Intellectual Property is valid\nand subsisting, and all necessary registration, maintenance, renewal fees,\nannuity fees and taxes in connection with such Registered Intellectual Property\nhave been paid and all necessary documents and certificates in connection with\nsuch Company Registered Intellectual Property have been filed with the relevant\npatent, copyright, trademark or other authorities in the United States or\nforeign jurisdictions, as the case may be, for the purposes of maintaining such\nRegistered Intellectual Property. In each case in which the Company has acquired\nany Intellectual Property rights from any Person, the Company has obtained a\nvalid and enforceable assignment sufficient to irrevocably transfer all rights\nin such Intellectual Property (including the right to seek past and future\ndamages with respect to such Intellectual Property) to the Company and, to the\nmaximum extent provided for by, and in accordance with, applicable Laws, the\nCompany has recorded each such assignment with the relevant Governmental or\nRegulatory Authority, including the PTO, the U.S. Copyright Office, or their\nrespective equivalents in any relevant foreign jurisdiction, as the case may be.\n\n          (j)  There are no Contracts or Licenses between the Company and any\nother Person with respect to Company Intellectual Property under which there is\nany dispute known to the Company regarding the scope of such Contract or\nLicense, or performance under such Contract or License, including with respect\nto any payments to be made or received by the Company thereunder.\n\n          (k)  To the knowledge of the Company, no Person is infringing or\nmisappropriating any Company Intellectual Property.\n\n          (l)  The Company has taken all reasonable steps to protect the\nCompany's rights in confidential information and trade secrets of the Company or\nprovided by any other Person to the Company subject to a duty of\nconfidentiality.  Without limiting the foregoing, the Company has, and enforces,\na policy requiring each employee, consultant and independent contractor to\nexecute proprietary information, confidentiality and invention and copyright\nassignment agreements substantially in the form set forth in Section 2.15(l) of\nthe Disclosure Letter, and all current and former employees, consultants and\nindependent contractors of the Company have executed such an agreement.\n\n                                     -22-\n\n\n \n          (m)  No Company Intellectual Property or product, technology or\nservice of the Company is subject to any Order or Action or Proceeding that\nrestricts, or that is reasonably expected to restrict in any manner, the use,\ntransfer or licensing of any Company Intellectual Property by the Company or\nthat may affect the validity, use or enforceability of such Company Intellectual\nProperty.\n\n          (n)  To the knowledge of the Company, no (i) product, technology,\nservice or publication of the Company, (ii) material published or distributed by\nthe Company or (iii) conduct or statement of the Company constitutes material,\nfalse advertising or otherwise violates any Law.\n\n          (o)  To the knowledge of the Company, the Company has taken all\nactions necessary and appropriate to assure that there shall be no material\nadverse change to its business or electronic systems or material interruptions\nin the delivery of the Company's products and services by reason of the advent\nof the year 2000, including, without limitation, that all of its products\n(including products currently under development) will, without interruption or\nmanual intervention, continue to consistently, predictably and accurately\nrecord, store, process, calculate and present calendar dates falling on and\nafter (and if applicable, spans of time including) January 1, 2000, and will\nconsistently, predictably and accurately calculate any information dependent on\nor relating to such dates in the same manner, and with the same functionality,\ndata integrity and performance, as such products record, store, process,\ncalculate and present calendar dates on or before December 31, 1999, or\ncalculate any information dependent on or relating to such dates.\n\n          (p)  Neither this Agreement nor any transactions contemplated by this\nAgreement will result in the Parent's granting any rights or licenses with\nrespect to the Intellectual Property of the Parent to any Person pursuant to any\nContract to which the Company is a party or by which any of its Assets and\nProperties are bound.\n\n          (q)  Neither this Agreement nor any transactions contemplated by this\nAgreement will result in the Company losing any rights or licenses with respect\nto any Intellectual Property pursuant to any Contract to which the Company is a\nparty or by which it has any rights or licenses with respect any Intellectual\nProperty.\n\n     2.16  Contracts.\n           ---------  \n\n          (a)  Section 2.16(a)(1) of the Disclosure Letter contains a true and\ncomplete list of each of the Contracts (true and complete copies or, if none,\nreasonably complete and accurate written descriptions of which, together with\nall amendments and supplements thereto and all waivers of any terms thereof,\nhave been made available to the Parent prior to the execution of this\nAgreement).  Section 2.16(a)(2) of the Disclosure Letter contains a true and\ncomplete list of each Contract of the Company not terminable by the Company upon\nthirty days (or less) notice by the Company without penalty or obligation to\nmake payments based on such termination.\n\n          (b)  Each Contract required to be disclosed in Section 2.16(a) of the\nDisclosure Letter is in full force and effect and constitutes a legal, valid and\nbinding agreement, enforceable against the Company in accordance with its terms,\nexcept as the \n\n                                     -23-\n\n\n \nenforceability thereof may be limited by bankruptcy, insolvency, fraudulent\nconveyance, reorganization, moratorium or other similar Laws relating to the\nenforcement of creditors' rights generally and by general principles of equity.\nTo the knowledge of the Company, no other party to such Contract is, nor has\nreceived notice that it is, in material violation or material breach of or\ndefault under any such Contract (or with notice or lapse of time or both, would\nbe in material violation or material breach of or default under any such\nContract). To the knowledge of the Company, each such contract is a legal, valid\nand binding obligation of each other party to such Contract, enforceable against\neach other party to such contract, except as the enforceability thereof may be\nlimited by bankruptcy, insolvency, fraudulent conveyance, reorganization,\nmoratorium or other similar Laws relating to the enforcement of creditors'\nrights generally and by general principles of equity.\n\n          (c)  The Company is not a party to or bound by any Contract that (i)\nautomatically terminates or allows termination by the other party thereto upon\nconsummation of the transactions contemplated by this Agreement or (ii) contains\nany covenant or other provision which limits the Company's ability to compete\nwith any Person in any line of business or in any area or territory.\n\n     2.17  Insurance.  The Company has policies of insurance and bonds of the \n           ---------\ntype and in amounts customarily carried by persons conducting businesses or\nowning assets similar to those of Company. There is no material claim pending\nunder any of such policies or bonds as to which coverage has been questioned,\ndenied or disputed by the underwriters of such policies or bonds. All premiums\ndue and payable under all such policies and bonds have been paid and the Company\nis otherwise in compliance with the terms of such policies and bonds. The\nCompany has no knowledge of any threatened termination of, or material premium\nincrease with respect to, any of such policies.\n\n     2.18  Affiliate Transactions.\n           ----------------------   \n\n          (a)  Except as disclosed in Section 2.18(a) of the Disclosure Letter,\n(i) there are no Contracts or Liabilities between the Company, on the one hand,\nand (A) any current or former officer, director, shareholder, or to the\nCompany's knowledge, any Affiliate or Associate of the Company or (B) any Person\nwho, to the Company's knowledge, is an Associate of any such officer, director,\nshareholder or Affiliate, on the other hand, (ii) the Company does not provide\nor cause to be provided any assets, services or facilities to any such current\nor former officer, director, shareholder, Affiliate or Associate, (iii) neither\nthe Company nor any such current or former officer, director, shareholder,\nAffiliate or Associate provides or causes to be provided any assets, services or\nfacilities to the Company and (iv) the Company does not beneficially own,\ndirectly or indirectly, any Investment Assets of any such current or former\nofficer, director, shareholder, Affiliate or Associate.\n\n          (b)  Each of the Contracts and Liabilities listed in Section 2.18(a)\nof the Disclosure Letter were entered into or incurred, as the case may be, on\nterms no less favorable to the Company (in the reasonable judgment of the\nCompany) than if such Contract or Liability was entered into or incurred on an\narm's-length basis on competitive terms. Any Contract to which the Company is a\nparty and in which any director of the Company has a financial interest in such\nContract was approved in accordance with the Washington Code.\n\n                                     -24-\n\n\n \n     2.19  Employees; Labor Relations.\n           --------------------------  \n\n          (a)  Except as set forth in Section 2.19(a) of the Disclosure Letter,\nthe Company is not a party to any collective bargaining agreement and there is\nno unfair labor practice or labor arbitration proceedings pending with respect\nto the Company, or, to the knowledge of the Company, threatened, and there are\nno facts or circumstances known to the Company that could reasonably be expected\nto give rise to such complaint or claim. To the knowledge of the Company, there\nare no organizational efforts presently underway or threatened involving any\nemployees of the Company or any of the employees performing work for the Company\nbut provided by an outside employment agency, if any.  There has been no work\nstoppage, strike or other concerted action by employees of the Company.\n\n          (b)  All employees of the Company are employed at will.  Section\n2.19(b) of the Disclosure Letter sets forth, individually and by category, the\nname of each officer, employee and consultant, together with such person's\nposition or function, annual base salary or wage and any incentive, severance or\nbonus arrangements with respect to such person.  Except as set forth in Section\n2.19(b) of the Disclosure Letter, the completion of the transactions\ncontemplated by this Agreement will not result in any payment or increased\npayment becoming due from the Company to any officer, director, or employee of,\nor consultant to, the Company, and to the knowledge of the Company no employee\nof the Company has made any threat, or otherwise revealed an intent, to\nterminate such employee's relationship with the Company, for any reason,\nincluding because of the consummation of the transactions contemplated by this\nAgreement.   The Company is not a party to any agreement for the provision of\nlabor from any outside agency.  To the knowledge of the Company, there have been\nno claims by employees of such outside agencies, if any, with regard to\nemployees assigned to work for the Company, and no claims by any governmental\nagency with regard to such employees except as set forth in Section 2.19(b) of\nthe Disclosure Letter.\n\n          (c)  Since the Company's inception, except as set forth in Section\n2.19(c) of the Disclosure Letter, there have been no federal or state claims\nbased on sex, sexual or other harassment, age, disability, race or other\ndiscrimination or common law claims, including claims of wrongful termination,\nby any employees of the Company or by any of the employees performing work for\nthe Company but provided by an outside employment agency, and there are no facts\nor circumstances known to the Company that could reasonably be expected to give\nrise to such complaint or claim.  Except as could not reasonably be expected to\nhave a material adverse effect on the Business or Condition of the Company, the\nCompany has complied with all laws related to the employment of employees.\nExcept as set forth in Section 2.19(c) of the Disclosure Letter, the Company has\nnot received any notice of any claim that it has not complied in any material\nrespect with any Laws relating to the employment of employees, including,\nwithout limitation, any provisions thereof relating to wages, hours, collective\nbargaining, the payment of Social Security and similar taxes, equal employment\nopportunity, employment discrimination, the WARN Act, employee safety, or that\nit is liable for any arrearages of wages or any taxes or penalties for failure\nto comply with any of the foregoing.\n\n          (d)  The Company has no written policies and\/or employee handbooks or\nmanuals except as set forth in Section 2.19(d) of the Disclosure Letter.\n\n                                     -25-\n\n\n \n          (e)  To the knowledge of the Company, no officer, employee or\nconsultant of the Company is obligated under any Contract or other agreement or\nsubject to any Order or Law that would interfere with the Company's business as\ncurrently conducted.  Neither the execution nor delivery of this Agreement, nor\nthe carrying on of the Company's business as presently conducted nor any\nactivity of such officers, employees or consultants in connection with the\ncarrying on of the Company's business as presently conducted, will conflict with\nor result in a breach of the terms, conditions or provisions of, constitute a\ndefault under, or trigger a condition precedent to any rights under any Contract\nor other agreement under which any of such officer's, employees or consultants\nis now bound.\n\n     2.20  Environmental Matters.\n           --------------------- \n\n          (a)  The Company possesses any and all Environmental Permits necessary\nto or required for the operation of its business.  The Company will obtain any\nEnvironmental Permits that must be obtained as of or immediately after the\nClosing in order for the Surviving Corporation to conduct the business of the\nCompany as it was conducted prior to the Closing.\n\n          (b)  The Company is in compliance with (i) all terms, conditions and\nprovisions of its Environmental Permits and (ii) all Environmental Laws.\n\n          (c)  Neither the Company nor any predecessor of the Company nor any\nentity previously owned by the Company has received any notice of alleged,\nactual or potential responsibility for, or any inquiry regarding, (i) any\nRelease or threatened or suspected Release of any Hazardous Material, or (ii)\nany violation of Environmental Law.\n\n          (d)  Neither the Company nor any predecessor of the Company nor any\nentity previously owned by the Company has any obligation or liability with\nrespect to any Hazardous Material, including any Release or threatened or\nsuspected Release of any Hazardous Material, and there are no past or present\nevents, facts or circumstances which could form the basis of any such obligation\nor liability.\n\n          (e)  No Releases of Hazardous Material(s) have occurred at, from, in,\nto, on, or under any Site and no Hazardous Material is present in, on, about or\nmigrating to or from any Site.\n\n          (f)  Neither the Company, nor any predecessor of the Company, nor any\nentity previously owned by the Company, has transported or arranged for the\ntreatment, storage, handling, disposal or transportation of any Hazardous\nMaterial at or to any location.\n\n          (g)  No Site is a current or proposed Environmental Clean-up Site.\n\n          (h)  There are no Liens under or pursuant to any Environmental Law on\nany Site.\n\n          (i)  There is no (i) underground storage tank, active or abandoned,\n(ii) polychlorinated biphenyl containing equipment, (iii) asbestos-containing\nmaterial, (iv) radon, (v) lead-based paint or (vi) urea formaldehyde at any\nSite.  Any underground storage tank meets all 1998 upgrade requirements.\n\n                                     -26-\n\n\n \n          (j)  There have been no environmental investigations, studies, audits,\ntests, reviews or other analyses conducted with respect to any Site which have\nnot been delivered to the Parent prior to execution of this Agreement.\n\n          (k) The Company is not a party, whether as a direct signatory or as\nsuccessor, assign, third party beneficiary or otherwise, to, and is not\notherwise bound by, any lease or other contract under which the Company is\nobligated or may be obligated by any representation, warranty, covenant,\nrestriction, indemnification or other undertaking respecting Hazardous Materials\nor under which any other person is or has been released respecting Hazardous\nMaterials.\n\n          (l)  The Company and any predecessors of the Company and any entity\npreviously owned by the Company have provided all notifications and warnings,\nmade all reports, and kept and maintained all records required pursuant to\nEnvironmental Laws.\n\n     2.21  Substantial Partnerships.  None of United Parcel Service General \n           ------------------------\nServices Co. (\"UPS\"), MBE and eBay Incorporated (\"eBay\") intend, and none of \n               ---                                ----\nthe foregoing have threatened, to terminate or refuse to perform their\nobligations to, or adversely affect their relationship with, the Company as a\nresult of the execution of this Agreement or the consummation of the\ntransactions contemplated hereby. In addition, each of UPS, MBE and eBay have\nwaived any express or implied rights of first refusal, rights of first offer or\ntermination rights which may be triggered by the execution of this Agreement and\nthe contemplation and consummation of the transactions described in this\nAgreement.\n\n     2.22  Accounts Receivable.  The accounts and notes receivable of the \n           -------------------\nCompany reflected on the Company Financials, and all accounts and notes\nreceivable arising subsequent to the Unaudited Financial Statement Date, (a)\narose from bona fide sales transactions in the ordinary course of business,\nconsistent with past practice, and are payable on ordinary trade terms, (b) are\nlegal, valid and binding obligations of the respective debtors enforceable in\naccordance with their respective terms, (c) are not subject to any valid set-off\nor counterclaim and (d) do not represent obligations for goods sold on\nconsignment, on approval or on a sale-or-return basis or subject to any other\nrepurchase or return arrangement.\n\n                                     -27-\n\n\n \n     2.23  Other Negotiations; Brokers; Third Party Expenses.  Neither the \n           -------------------------------------------------\nCompany nor, to the knowledge of the Company, any of its Affiliates (nor any\ninvestment banker, financial advisor, attorney, accountant or other Person\nretained by or acting for or on behalf of the Company or any such Affiliate) (a)\nhas entered into any Contract that conflicts with, or could be expected to delay\nor prevent, any of the transactions contemplated by this Agreement or (b) has\nentered into any Contract or had any discussions with any Person regarding any\ntransaction involving the Company which could result in the Parent, the Company\nor any general partner, limited partner, manager, officer, director, employee,\nagent or Affiliate of any of them being subject to any claim for liability to\nsaid Person as a result of entering into this Agreement or consummating the\ntransactions contemplated hereby. Section 2.23 of the Disclosure Letter sets\nforth the principal terms and conditions of any Contract with respect to, and a\nreasonable estimate of, all Third Party Expenses expected to be incurred by the\nCompany in connection with the negotiation and effectuation of the terms and\nconditions of this Agreement and the transactions contemplated hereby.\n\n     2.24  Foreign Corrupt Practices Act.  Neither the Company, nor to the \n           -----------------------------\nknowledge of the Company, any agent, employee or other Person associated with or\nacting on behalf of the Company has, directly or indirectly, used any corporate\nfunds for unlawful contributions, gifts, entertainment or other unlawful\nexpenses relating to political activity, made any unlawful payment to foreign or\ndomestic government officials or employees or to foreign or domestic political\nparties or campaigns from corporate funds, violated any provision of the Foreign\nCorrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff,\ninfluence payment, kickback or other similar unlawful payment.\n\n     2.25  Financial Projections.  The Company has made available to the Parent \n           ---------------------\ncertain financial projections with respect to the Company's business which\nprojections were prepared for internal use only. The Company makes no\nrepresentation or warranty regarding the accuracy of such projections or as to\nwhether such projections will be achieved, except that the Company represents\nand warrants that such projections were prepared in good faith and are based on\nassumptions believed by it to be reasonable.\n\n     2.26  Approvals.\n           --------- \n\n          (a)  Section 2.26(a) of the Disclosure Letter contains a list of all\nmaterial Approvals of Governmental or Regulatory Authorities relating to the\nbusiness conducted by the Company which are required to be given to or obtained\nby the Company from any and all Governmental or Regulatory Authorities in\nconnection with the consummation of the transactions contemplated by this\nAgreement.\n\n          (b)  Section 2.26(b) of the Disclosure Letter contains a list of all\nmaterial non-Governmental or Regulatory Authority Approvals which are required\nto be given to or obtained by the Company from any and all third parties in\nconnection with the consummation of the transactions contemplated by this\nAgreement.\n\n          (c)  The Company has obtained all material Approvals from Governmental\nor Regulatory Authorities necessary to conduct the business conducted by the\nCompany in the manner as it is currently being conducted and since its\ninception, there has been no written notice received by the Company of any\nmaterial violation or material non-\n\n                                     -28-\n\n\n \ncompliance with any such Approvals.  All material Approvals from Governmental or\nRegulatory Authorities necessary to conduct the business conducted by the\nCompany as it is currently being conducted are set forth in Section 2.26(c) of\nthe Disclosure Letter.\n\n          (d)  The affirmative vote or consent of the holders of two-thirds of\nthe outstanding shares of each of (i) the Company Common Stock and (ii) the\nSeries A Preferred Stock and the Series B Preferred Stock, voting together as a\nclass, are the only votes of the holders of any of the Company Capital Stock\nnecessary to approve this Agreement and the Merger and the transactions\ncontemplated hereby.\n\n          (e)  The shareholders of Company that have concurrently herewith\nentered into Support Agreements constitute (x) the holders of a majority of the\nCompany Common Stock and (y) the Holders of two-thirds of the Series A Preferred\nStock and the Series B Preferred Stock, voting together as a class, in each case\napproving this Agreement and the Merger and the transactions contemplated\nhereby.\n\n     2.27  Takeover Statutes.  No Takeover Statute applicable to the Company is \n           -----------------\napplicable to the Merger or the transactions contemplated hereby. The Company\nhas not adopted any shareholder rights plan or similar \"poison pill\"\narrangement, provision or understanding.\n\n     2.28  Registration Statement; Information Sheet\/Prospectus.  The \n           ----------------------------------------------------\ninformation supplied by the Company for inclusion in the Registration Statement\non Form S-4 of the Parent relating to the offer and sale of shares of Parent\nCommon Stock in connection with the transactions contemplated by this Agreement\n(the \"Registration Statement\") pursuant to which the shares of Parent Common \n      ----------------------                    \nStock issuable hereunder will be registered for public resale shall not at the\ntime the Registration Statement is declared effective by the SEC contain any\nuntrue statement of a material fact or omit to state any material fact required\nto be stated therein or necessary in order to make the statements therein, not\nmisleading. The information supplied by the Company for inclusion in the joint\nproxy statement\/prospectus to be sent to the stockholders of the Parent in\nconnection with the approval, under the NASD's rules, of the issuance of shares\nof Parent Common Stock hereunder (such information statement\/prospectus as\namended or supplemented is referred to herein as the \"Proxy\nStatement\/Prospectus\") shall not, on the date the Proxy Statement\/Prospectus is \n--------------------------                                   \nfirst mailed to the Parent's stockholders, on the date of the special meeting of\nthe stockholders of Parent convened for the purpose of voting on (a) this\nAgreement and (b) an amendment to the Parent's 1999 Stock Incentive Plan to\nincrease the number of shares of Parent Common Stock issuable thereunder (the\n\"Parent Stockholders' Meeting\") and at the Effective Time, contain any \n ----------------------------                             \nstatement which, at such time, is false or misleading, with respect\nto any material fact, or omit to state any material fact necessary in order to\nmake the statements made therein, in light of the circumstances under which they\nare made, not false or misleading; or omit to state any material fact necessary\nto correct any statement in any earlier communication which has become false or\nmisleading.  If at any time prior to the Effective Time any event or information\nshould be discovered by the Company which should be set forth in an amendment to\nthe Registration Statement or a supplement to the Proxy Statement\/Prospectus,\nthe Company shall promptly inform the Parent.  Notwithstanding the foregoing,\nthe Company makes no representation, warranty or covenant \n\n                                     -29-\n\n\n \nwith respect to any information supplied by the Parent or Merger Sub which is\ncontained in any of the foregoing documents.\n\n     2.29  Disclosure.  No representation or warranty contained in this \n           ----------\nAgreement, and no statement contained in the Disclosure Letter or in any\ncertificate delivered to the Parent pursuant to this Agreement (including the\nCompany Financials including the notes thereto) contains or will contain any\nuntrue statement of a material fact or omits or will omit to state a material\nfact necessary in order to make the statements herein or therein, in the light\nof the circumstances under which they were made, not misleading.\n\n                                   ARTICLE 3\n            REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB\n\n     Parent and Merger Sub hereby represent and warrant to the Company as\nfollows:\n\n     3.1  Organization and Qualification.  Each of the Parent and Merger Sub is \n          ------------------------------\na corporation duly organized, validly existing and in good standing under the\nLaws of its jurisdiction of incorporation, each with full corporate power and\nauthority to conduct its business as now conducted and as currently proposed to\nbe conducted and to own, use and lease its Assets and Properties. Each of the\nParent and Merger Sub are duly qualified, licensed or admitted to do business\nand are in good standing in each jurisdiction in which the ownership, use,\nlicensing or leasing of its Assets and Properties, or the conduct or nature of\nits business, makes such qualification, licensing or admission necessary, except\nfor such failures to be so duly qualified, licensed or admitted and in good\nstanding that could not reasonably be expected to have a material adverse effect\non the Business or Condition of the Parent and its subsidiaries, taken as a\nwhole.\n\n     3.2  Authority Relative to this Agreement.  Each of the Parent and Merger \n          ------------------------------------\nSub has full corporate power and authority to execute and deliver this\nAgreement, to perform their obligations hereunder and to consummate the\ntransactions contemplated hereby. The execution and delivery by the Parent and\nMerger Sub of this Agreement and the consummation by the Parent and Merger Sub\nof the transactions contemplated hereby have been duly and validly authorized by\nall necessary action by the Board of Directors of each of the Parent and Merger\nSub, and no other action on the part of the Board of Directors of either the\nParent or Merger Sub is required to authorize the execution, delivery and\nperformance of this Agreement and the consummation by the Parent and Merger Sub\nof the transactions contemplated hereby. This Agreement has been duly and\nvalidly executed and delivered by the Parent and Merger Sub and, assuming the\ndue authorization, execution and delivery hereof by the Company, constitutes a\nlegal, valid and binding obligation of the Parent and Merger Sub enforceable\nagainst the Parent and Merger Sub in accordance with its respective terms,\nexcept as the enforceability thereof may be limited by bankruptcy, insolvency,\nfraudulent conveyance, reorganization, moratorium or other similar Laws relating\nto the enforcement of creditors' rights generally and by general principles of\nequity.\n\n     3.3  SEC Documents; the Parent Financial Statements.\n          ----------------------------------------------   \n\n          (a)  As of their respective filing dates, all SEC Documents filed by\nthe Parent since June 30, 1999 and all SEC Documents filed after the date hereof\nbut before the \n\n                                     -30-\n\n\n \nClosing complied or will comply in all material respects with the requirements\nof the Securities Act and the Exchange Act and the rules and regulations of the\nSEC thereunder, as the case may be, and none of the SEC Documents contained or\nwill contain any untrue statement of a material fact or omitted to state a\nmaterial fact required to be stated therein or necessary to make the statements\nmade therein, in light of the circumstances in which they were made, not\nmisleading, except to the extent such SEC Documents are corrected, updated or\nsuperseded by a document subsequently filed with the SEC.\n\n          (b)  The financial statements of the Parent, including the notes\nthereto, included in the SEC Documents (the \"Parent Financial Statements\")\n                                             ---------------------------  \ncomply as to form in all material respects with the published rules and\nregulations of the SEC with respect thereto, have been prepared in accordance\nwith GAAP consistently applied (except as may be indicated in the notes thereto\nor, in the case of unaudited statements, as permitted by Form 10-Q under the\nExchange Act) and present fairly the financial position of the Parent at the\ndates thereof and the results of its operations and cash flows for the periods\nthen ended (subject, in the case of unaudited financial statements, to normal\nyear-end adjustments).  There has been no change in the Parent's accounting\npolicies except as described in the notes to the Parent Financial Statements.\n\n          (c)  Except as reflected or reserved against in the Parent Financial\nStatements, the Parent has no material Liabilities or other obligations, except\nfor Liabilities and obligations (i) incurred in the ordinary course of business\nsince the date of the most recent Parent Financial Statements or (ii) that would\nnot be required to be reflected or reserved against in the balance sheet of the\nParent prepared in accordance with GAAP.\n\n     3.4  No Conflicts.  The execution and delivery by the Parent and Merger \n          ------------\nSub of this Agreement does not, and the performance by the Parent of its\nobligations under this Agreement and the consummation of the transactions\ncontemplated hereby do not and will not:\n\n          (a)  conflict with or result in a violation or breach of any of the\nterms, conditions or provisions of the certificate of incorporation of the\nParent, articles of incorporation of Merger Sub or bylaws of each of the Parent\nor Merger Sub;\n\n          (b)  conflict with or result in a violation or breach of any Law or\nOrder applicable to the Parent or Merger Sub or their respective Assets or\nProperties;\n\n          (c)  except as would not have a material adverse effect on the\nBusiness or Condition of the Parent or Merger Sub, (i) conflict with or result\nin a violation or breach of, (ii) constitute a default (or an event that, with\nor without notice or lapse of time or both, would constitute a default) under,\n(iii) require the Parent to obtain any consent, approval or action of, make any\nfiling with or give any notice to any Person as a result of the terms of, (iv)\nresult in or give to any Person any right of termination, cancellation,\nacceleration or modification in or with respect to, (v) result in or give to any\nperson any additional rights or entitlement to increased, additional,\naccelerated or guaranteed payments or performance under, (vi) result in the\ncreation or imposition of (or the obligation to create or impose) any Lien upon\nthe Parent or Merger Sub or any of their respective Assets or Properties or\n(vii) result in the loss of a material benefit under, any of the terms,\nconditions or provisions of\n\n                                     -31-\n\n\n \nany Contract or License to which the Parent or Merger Sub is a party or by which\nany of their Assets and Properties are bound, except for (A) the expiration or\ntermination of any waiting period under the HSR Act and (B) consents, approvals\nor actions of third parties that have been obtained.\n\n     3.5  Ownership of Merger Sub; No Prior Activities.  As of the date hereof \n          --------------------------------------------\nand the Effective Time, except for obligations or Liabilities incurred in\nconnection with its incorporation or organization and the transactions\ncontemplated by this Agreement and except for this Agreement and any other\nagreements or arrangements contemplated by this Agreement, Merger Sub has not\nand will not have incurred, directly or indirectly, through any subsidiary or\naffiliate, any obligations or liabilities or engaged in any business activities\nof any type or kind whatsoever or entered into any agreements or arrangements\nwith any Person.\n\n     3.6  Investment Advisors.  Except for Thomas Weisel Partners LLC, no \n          -------------------\nbroker, investment banker, financial advisor or other Person is entitled to any\nbroker's, finder's, financial advisor's or similar fee or commission in\nconnection with this Agreement and the transactions contemplated hereby based on\narrangements made by or on behalf of the Parent.\n\n     3.7  Absence of Certain Changes or Events.  Since June 30, 1999 (\"Parent \n          ------------------------------------                         ------\nBalance Sheet Date\"), the Parent has conducted its business in the ordinary \n------------------ \ncourse in a manner consistent with past practice and there has not occurred: (i)\nany declaration, setting aside, or payment of a dividend or other distribution\nwith respect to the shares of the Parent, or any direct or indirect redemption,\npurchase or other acquisition by the Parent of any of its shares of capital\nstock; (ii) any material amendment or change to the Parent's certificate of\nincorporation or bylaws; or (iii) any negotiation or agreement by the Parent to\ndo any of the things described in the preceding clauses (i) or (ii) (other than\nnegotiations with the Company and its representatives regarding the transactions\ncontemplated by this Agreement).\n\n     3.8  Compliance with Laws.  The Parent and its subsidiaries have complied \n          --------------------\nwith, are not in violation of, and have not received any notices of violation\nwith respect to, any federal, state, local or foreign statute, law or regulation\nwith respect to the conduct of their business, or the ownership or operation of\ntheir business, except for such violations or failures to comply which would not\nreasonably be expected to have a material adverse effect on the Parent and its\nsubsidiaries, taken as a whole.\n\n     3.9  Tax Matters.  Neither the Parent nor any of its subsidiaries nor, to \n          -----------\nthe knowledge of the Parent, any of their respective Affiliates or agents is\naware of any agreement, plan or other circumstance that would prevent the Merger\nfrom constituting a reorganization under Section 368(a) of the Code.\n\n     3.10  Intellectual Property Rights.  Except as otherwise described in the \n           ----------------------------\nParent's SEC Documents: (a) the Parent owns or possesses adequate rights to use\nall patents, patent rights or licenses, inventions, collaborative research\nagreements, trade secrets, know-how, trademarks, service marks, trade names and\ncopyrights which are necessary to conduct its businesses as currently conducted,\n(b) the expiration of any patents, patent rights, trade secrets, trademarks,\nservice marks, trade names or copyrights would not reasonably be\n\n                                     -32-\n\n\n \nexpected to result in a material adverse effect on the Parent and its\nsubsidiaries, taken as a whole, (c) the Parent has not received any notice of,\nand has no knowledge of, any infringement of or conflict with asserted rights of\nthe Parent by others with respect to any patent, patent rights, inventions,\ntrade secrets, know-how, trademarks, service marks, trade names or copyrights\nand (d) the Parent has not received any notice of, and has no knowledge of, any\ninfringement of or conflict with asserted rights of others with respect to any\npatent, patent rights, inventions, trade secrets, know-how, trademarks, service\nmarks, trade names or copyrights which, singly or in the aggregate, if the\nsubject of an unfavorable decision, ruling or finding, would reasonably be\nexpected to have a material adverse effect on the Parent and its subsidiaries,\ntaken as a whole. Except as otherwise disclosed in the Parent's SEC Documents,\nthere is no claim being made against the Parent regarding patents, patent rights\nor licenses, inventions, collaborative research, trade secrets, know-how,\ntrademarks, service marks, trade names or copyrights. Except as otherwise\ndisclosed in the Parent's SEC Documents, the Parent, to its knowledge, does not\nin the current conduct of its business nor as or currently proposed to be\nconducted infringe or conflict with any right or patent of any third party, or\nany discovery, invention, product or process which is the subject of a patent\napplication filed by any third party, known to the Parent, which such\ninfringement or conflict is reasonably likely to result in a material adverse\neffect on the Parent and its subsidiaries, taken as a whole.\n\n     3.11  Year 2000 Preparedness.  There are no issues related to the Parent's \n           ----------------------\npreparedness for the Year 2000 that (a) are of a character required to be\ndescribed or referred to in the Parent's SEC Documents which have not been\naccurately described in the Parent's SEC documents or (b) would reasonably be\nexpected to result in any material adverse effect on the Parent and its\nsubsidiaries, taken as a whole, or that would reasonably be expected to\nmaterially affect their Assets or Properties. To the Parent's knowledge, all\ninternal computer systems and each Constituent Component of those systems and\nall computer-related products and each Constituent Component of those products\nof the Parent fully comply with Year 2000 Qualification Requirements. \"Year 2000\n                                                                       ---------\nQualification Requirements\" means that the internal computer systems and each \n--------------------------\nConstituent Component of those systems and all computer-related products and\neach Constituent Component of those products of the Parent (i) have been\nreviewed to confirm that they store, process (including sorting and performing\nmathematical operations, calculations and computations), input and output data\ncontaining date and information correctly regardless of whether the date\ncontains dates and times before, on or after January 1, 2000, (ii) have been\ndesignated to ensure date and time entry recognition and calculations, and date\ndata interface values that reflect the century, (iii) accurately manage and\nmanipulate data involving dates and times, including single century formulas and\nmulti-century formulas, and will not cause an abnormal ending scenario within\nthe application or generate incorrect values or invalid results involving such\ndates, (iv) accurately process any date rollover and (v) accept and respond to\ntwo-digit year date input in a manner that resolves any ambiguities as to the\ncentury. \"Constituent Component\" means all software (including operating \n          ---------------------       \nsystems, programs, packages and utilities), firmware, hardware, networking\ncomponents, and peripherals provided as part of the configuration. The Parent\nhas inquired of material vendors as to their preparedness for the Year 2000 and\nhas disclosed in the Parent's SEC Documents any issues that would reasonably be\nexpected to result in a material adverse effect on the Parent and its\nsubsidiaries, taken as a whole.\n\n                                     -33-\n\n\n \n                                   ARTICLE 4\n                      CONDUCT PRIOR TO THE EFFECTIVE TIME\n\n     4.1  Conduct of Business of the Company.  During the period from the date \n          ----------------------------------\nof this Agreement and continuing until the earlier of the termination of this\nAgreement and the Effective Time, the Company agrees (unless the Parent shall\ngive its prior consent in writing) to carry on its business in the ordinary\ncourse consistent with past practice, to pay its Liabilities, including, but not\nlimited to, Taxes consistent with the Company's past practices, to pay or\nperform other obligations when due consistent with the Company's past practices,\nsubject to any good faith disputes over such Liabilities and, to the extent\nconsistent with such business, to use reasonable efforts and institute all\npolicies to preserve intact its present business organization, keep available\nthe services of its present officers and key employees and preserve its\nrelationships with customers, suppliers, distributors, licensors, licensees,\nindependent contractors, shareholders and other Persons having business dealings\nwith it, all with the express purpose and intent of preserving unimpaired its\ngoodwill and ongoing businesses at the Effective Time. Except as expressly\ncontemplated by this Agreement and as set forth in Section 4.1 of the Disclosure\nLetter, the Company shall not, without the prior written consent of the Parent,\ntake, or agree in writing or otherwise to take, any of the actions described in\nSections 2.9(a) through (ii) above, or any other action that could make any of\nits representations or warranties contained in this Agreement untrue or\nincorrect or prevent the Company from performing or cause the Company not to\nperform its agreements and covenants hereunder.\n\n     4.2  No Solicitation.  Until the earlier of the Effective Time and the \n          ---------------\ndate of termination of this Agreement pursuant to the provisions of Section 8.1\nhereof, the Company will not (nor will the Company permit any of the Company's\nofficers, directors, shareholders, attorneys, investment advisors, agents,\nrepresentatives, Affiliates or Associates to) directly or indirectly, take any\nof the following actions with any Person other than the Parent and its\ndesignees: (a) solicit, initiate, entertain, review, or encourage any proposals\nor offers from, or conduct discussions with or engage in negotiations with, any\nPerson relating to any possible Business Combination with the Company or any of\nits Subsidiaries (whether such Subsidiaries are in existence on the date hereof\nor are hereafter organized), (b) provide information with respect to the Company\nto any Person, other than the Parent, relating to, or otherwise cooperate with,\nfacilitate or encourage any effort or attempt by any such Person with regard to,\nany possible Business Combination with the Company or any Subsidiary of the\nCompany (whether such Subsidiaries are in existence on the date hereof or are\nhereafter organized), (c) enter into a Contract with any Person, other than the\nParent, providing for a Business Combination with the Company or any Subsidiary\n(whether such Subsidiaries are in existence on the date hereof or are hereafter\norganized), or (d) make or authorize any statement, recommendation or\nsolicitation in support of any possible Business Combination with the Company or\nany Subsidiary (whether such Subsidiary is in existence on the date hereof or\nare hereafter organized) other than by the Parent.  Each of the foregoing\nprovisions (a) through (d) shall be a \"Triggering Event.\"  In addition to the\n                                       -----------------\nforegoing, if the Company receives prior to the Effective Time or the\ntermination of this Agreement any offer or proposal (formal or informal)\nrelating to any of the above, the Company shall immediately notify the Parent\nthereof and provide the Parent with the details thereof including the identity\nof the Person or Persons making such offer or proposal, and will keep the Parent\nfully informed of the status and details of any such offer or proposal.  Each of\nthe Company \n\n                                     -34-\n\n\n \nand the Parent acknowledge that this Section 4.2 was a significant inducement\nfor the Parent to enter into this Agreement and the absence of such provision\nwould have resulted in either (i) a material reduction in the merger\nconsideration to be paid to the shareholders of the Company or (ii) a failure to\ninduce the Parent to enter into this Agreement.\n\n                                   ARTICLE 5\n                             ADDITIONAL AGREEMENTS\n\n     5.1  Proxy Statement\/Prospectus; Registration Statement.\n          -------------------------------------------------- \n\n          (a)  As soon as practicable, the Parent and the Company shall prepare,\nand the Parent shall file with the SEC, the Registration Statement.  The Company\nagrees to provide promptly to the other such information concerning its business\nand financial statements and affairs as, in the reasonable judgment of the\nCompany or its counsel, may be required or appropriate for inclusion in the\nProxy Statement\/Prospectus or the Registration Statement, or in any amendments\nor supplements thereto, and to cause its counsel and auditors to cooperate with\nthe other's counsel and auditors in the preparation of the same.  The Company\nwill promptly advise the Parent, and the Parent will promptly advise the\nCompany, in writing if at any time prior to the Effective Time either the\nCompany or the Parent shall obtain knowledge of any facts that might make it\nnecessary or appropriate to amend or supplement the Registration Statement in\norder to make the statements contained or incorporated by reference therein not\nmisleading or to comply with applicable law.\n\n          (b)  The Proxy Statement\/Prospectus shall include a recommendation of\nthe board of directors of each of the Parent and the Company that the Parent\nstockholders or the Company shareholders, as the case may be, approve the\nproposal submitted to them which are intended to facilitate the consummation of\nthe transactions contemplated by this Agreement.\n\n     5.2  Shareholder Approval.\n          -------------------- \n\n          (a)  The Company shall take all action necessary in accordance with\nWashington Code and its articles of incorporation and bylaws to convene a\nmeeting of the Company's shareholders to vote on the approval and adoption of\nthis Agreement and the Merger (the \"Company Shareholders Meeting\") or to secure\n                                    ----------------------------               \na written consent of its shareholders within twenty days of the date the\nRegistration Statement becomes Effective under the Securities Act.  The Company\nshall consult with the Parent regarding the date of the Company Shareholders\nMeeting or written consent and use all reasonable efforts and shall not postpone\nthe date of the Company Shareholders Meeting or written consent.  The Company\nshall use its best efforts to solicit from shareholders of Company proxies or\nwritten consent, as the case may be, in favor of the Merger and shall take all\nother action necessary or advisable to secure the vote or consent of\nshareholders required to effect the Merger.\n\n          (b)  The Parent shall promptly after the date hereof take all action\nnecessary in accordance with the Delaware Code and its certificate of\nincorporation and bylaws to convene the Parent Stockholders Meeting or to secure\nthe written consent of its stockholders.  The Parent shall consult with the\nCompany regarding the date of the Parent \n\n                                     -35-\n\n\n \nStockholders Meeting or written consent of its stockholders and use all\nreasonable efforts and shall not postpone or adjourn (other than for the absence\nof a quorum) the Parent Stockholders Meeting. The Parent shall use its best\nefforts to solicit from its stockholders' proxies or written consents in favor\nof the Merger and shall take all other action necessary or advisable to secure\nthe vote or consent of its stockholders required to effect the Merger.\n\n     5.3  Access to Information.  Between the date of this Agreement and the \n          ---------------------\nearlier of the Effective Time or the termination of this Agreement, upon\nreasonable notice the Company shall (a) give the Parent, Merger Sub and their\nrespective officers, employees, accountants, counsel, financing sources and\nother agents and representatives full access during the Company's normal\nbusiness hours to all buildings, offices, and other facilities and to all Books\nand Records of the Company, whether located on the premises of the Company or at\nanother location, (b) permit Parent and Merger Sub to make such inspections as\nthey may reasonably require, (c) cause its officers to furnish the Parent and\nMerger Sub such financial, operating, technical and product data and other\ninformation with respect to the business and Assets and Properties of the\nCompany as the Parent and Merger Sub from time to time may request, including\nwithout limitation financial statements and schedules, (d) allow the Parent and\nMerger Sub the opportunity to interview third parties and business partners and\nsuch employees and other personnel and Affiliates of the Company with the\nCompany's prior written consent, which consent shall not be unreasonably\nwithheld or delayed and (e) assist and cooperate with the Parent and Merger Sub\nin the development of integration plans for implementation by the Parent and the\nSurviving Corporation following the Effective Time; provided, however, that no\ninvestigation pursuant to this Section 5.3 shall affect or be deemed to modify\nany representation or warranty made by the Company herein.\n\n     5.4  Confidentiality.  The parties acknowledge that the Parent and Company \n          ---------------\nhave previously executed a mutual non-disclosure agreement, dated May 14, 1999\n(the \"Confidentiality Agreement\"), which Confidentiality Agreement shall\n      -------------------------\ncontinue in full force and effect in accordance with its terms.\n\n     5.5  Expenses; Termination Fee.\n          -------------------------\n\n          (a)  Whether or not the Merger is consummated, all fees and expenses\nincurred in connection with the Merger including all legal, accounting,\nfinancial advisory, consulting and all other fees and expenses of third parties\n(\"Third Party Expenses\") incurred by a party in connection with the negotiation\n  --------------------                                                         \nand effectuation of the terms and conditions of this Agreement and the\ntransactions contemplated hereby, shall be the obligation of the respective\nparty incurring such fees and expenses; provided, that, if the Merger is\nconsummated, the Parent agrees to pay the Estimated Third Party Expenses (as set\nforth on Section 2.23 of the Disclosure Letter) incurred by the Company which do\nnot exceed $200,000 in the aggregate plus any Third Party Expenses reasonably\nincurred in excess of such $200,000 directly attributable to preparation of the\nRegistration Statement and the Company agrees that the Parent will have full\nrecourse to the Escrow Fund for payment of Third Party Expenses in excess of\nEstimated Third Party Expenses, whether such Third Party Expenses have been paid\nby the Company, accrued by the Company or have been incurred (and not accrued\nand paid) by the Company.\n\n                                     -36-\n\n\n \n          (b)  In the event this Agreement is terminated by the Parent under\nSection 8.1(h), the Company shall promptly, but in no event later than one day\nafter the date of such termination, pay the Parent a fee equal to $5,000,000 in\nimmediately available funds.\n\n     5.6  Public Disclosure.  Unless otherwise required by Law (including \n          -----------------\nfederal and state securities laws) or, as to the Parent, by the rules and\nregulations of the NASD, prior to the Effective Time, no disclosure (whether or\nnot in response to any inquiry) of the existence of any subject matter of, or\nthe terms and conditions of, this Agreement shall be made by any party hereto\nunless approved by the Parent and the Company prior to release; provided,\nhowever, that such approval shall not be unreasonably withheld or delayed.\n\n     5.7  Approvals.  Each party shall use commercially reasonable efforts to \n          ---------\nobtain the Approvals from Governmental or Regulatory Authorities or under any of\nthe Contracts or other agreements as may be required in connection with the\nMerger so as to preserve all rights of and benefits to the Company thereunder\nand each party shall provide the other party with such assistance and\ninformation as is reasonably required to obtain such Approvals (the payment of\nmoney for any such Approvals, other than filing fees, being unreasonable).\n\n     5.8  Notification of Certain Matters.  The Company shall give prompt \n          -------------------------------\nnotice to the Parent, and the Parent shall give prompt notice to the Company, of\n(i) the occurrence or non-occurrence of any event, the occurrence or non-\noccurrence of which is likely to cause any representation or warranty of the\nCompany, the Parent or Merger Sub, respectively, contained in this Agreement to\nbe untrue or inaccurate at or prior to the Closing Date and (ii) any failure of\nthe Company, the Parent or Merger Sub, as the case may be, to comply with or\nsatisfy any covenant, condition or agreement to be complied with or satisfied by\nit hereunder; provided, however, that the delivery of any notice pursuant to\nthis Section 5.8 shall not limit or otherwise affect any remedies available to\nthe party receiving such notice.\n\n     5.9  Company Affiliate Agreements.  Schedule 5.9 of the Disclosure Letter \n          ----------------------------\nsets forth those persons who, in the Company's reasonable judgment, are or, as\nof the Closing Date, may be \"affiliates\" of the Company within the meaning of\nRule 145 under the Securities Act (the \"Company Affiliates\"). The Company shall\n                                        ------------------\nprovide the Parent such information and documents as the Parent shall reasonably\nrequest for purposes of reviewing such list. The Company shall use its\ncommercially reasonable efforts to deliver or cause to be delivered to the\nParent on or prior to the Closing from each of the Company Affiliates, an\nexecuted affiliate agreement in the form attached hereto as Exhibit C (a\n\"Company Affiliate Agreement\").\n ---------------------------\n\n     5.10  Additional Documents and Further Assurances.  Each party hereto, at \n           -------------------------------------------\nthe request of the other party hereto, shall execute and deliver such other\ninstruments and do and perform such other acts and things (including, but not\nlimited to, all action reasonably necessary to seek and obtain any and all\nconsents and approvals of any Government or Regulatory Authority or Person;\nprovided, however, that the Parent shall not be obligated to consent to any\ndivestitures or operational limitations or activities in connection therewith)\nas may be necessary or desirable for effecting completely the consummation of\nthis Agreement and the transactions contemplated hereby. The Company shall cause\nits shareholders to appoint, not later than two Business Days prior to the\nClosing Date, an individual, \n\n                                     -37-\n\n\n \nreasonably acceptable to the Parent, to act as Shareholders' Agent as\ncontemplated by Article 7.\n\n     5.11  Form S-8.  The Parent shall file a registration statement on Form \n           --------\nS-8 for the shares of Parent Common Stock issuable with respect to assumed\nCompany Options to the extent the shares of Parent Common Stock issuable upon\nexercise of such Company Options qualify for registration on Form S-8. Such Form\nS-8 shall be filed on the date of expiration of any lock-up period imposed by\nany underwriter in connection with any follow-on stock offering by the Parent\nand agreed to by all of the Parent's officers, directors and holders (other than\nformer shareholders of the Company) of five percent or more of the outstanding\nshares of Parent Common Stock.\n\n     5.12  NNM Listing of Additional Shares Application.  The Parent shall use \n           --------------------------------------------\nits commercially reasonable efforts to cause to be authorized for quotation on\nthe NNM the shares of Parent Common Stock issuable in connection with the Merger\nand the shares of Parent Common Stock issuable upon exercise, after the Closing\nDate, of the Company Options or the Company Warrants, in each case upon official\nnotice of issuance.\n\n     5.13  Company's Auditors.  The Company will use commercially reasonable \n           ------------------\nefforts to cause its management and its independent auditors to facilitate on a\ntimely basis (i) the preparation of financial statements (including pro forma\nfinancial statements if required) as required by the Parent to comply with\napplicable SEC regulations, (ii) the review of any Company audit or review work\npapers since the Company's inception, including the examination of selected\ninterim financial statements and data and (iii) the delivery of such\nrepresentations from the Company's independent accountants as may be reasonably\nrequested by the Parent or its accountants. The Company shall use commercially\nreasonable efforts to obtain a binding fee quotation (on the same basis as the\nCompany's fee arrangement with such accountants) and the engagement of its\nindependent auditors to provide consents and comfort letters requested by the\nParent.\n\n     5.14  Takeover Statutes.  If any Takeover Statute is or may become \n           -----------------\napplicable to the transactions contemplated hereby, the Board of Directors of\nthe Company will grant such approvals and take such actions as are necessary so\nthat the transactions contemplated hereby may be consummated as promptly as\npracticable on the terms contemplated hereby and otherwise act to eliminate the\neffects of any Takeover Statute on any of the transactions contemplated hereby.\n\n     5.15  Supplemental Disclosure Letter.  The Company shall deliver on the \n           ------------------------------\nClosing Date a supplement to the Disclosure Letter updating all of the\ndisclosures accompanying the representations and warranties of the Company in\nthis Agreement. Such supplement to the Disclosure Letter shall not affect the\nParent's rights and remedies under Article 7.\n\n     5.16  Tax Treatment.  The Parent, the Company and the Surviving \n           -------------\nCorporation shall each use its best efforts (before and after the Effective\nTime) to cause the Merger to qualify as a reorganization under the provisions of\nSection 368 of the Code and to obtain the opinions of counsel referred to in\nSection 6.1(c), including the execution of the letters of representation\nreferred to therein.\n\n                                     -38-\n\n\n \n     5.17  Parent Board Representation.  The Parent shall use its\n           ---------------------------\ncommercially reasonable efforts to cause two persons, nominated by the Company,\nat least ten days prior to the date of the Parent Stockholders' Meeting (the\n\"Board Nominees\"), to be elected to the board of directors of the Parent as of\n---------------                                                               \nthe Effective Time.\n\n                                   ARTICLE 6\n                           CONDITIONS TO THE MERGER\n\n     6.1  Conditions to Obligations of Each Party to Effect the Merger.  The \n          ------------------------------------------------------------\nrespective obligations of each party to this Agreement to effect the Merger\nshall be subject to the satisfaction at or prior to the Effective Time of the\nfollowing conditions, any of which may be waived, in writing, by agreement of\nthe parties hereto:\n\n          (a)  Governmental and Regulatory Approvals.  Approvals from any\n               -------------------------------------                     \nGovernmental or Regulatory Authority (if any) deemed appropriate or necessary by\nany party to this Agreement shall have been timely obtained; and any waiting\nperiod under the HSR Act with respect to the receipt of Parent Common Stock by a\nshareholder of the Company shall have expired or been terminated.\n\n          (b)  No Injunctions or Regulatory Restraints; Illegality.  No \n               ---------------------------------------------------    \ntemporary restraining order, preliminary or permanent injunction or other Order\nissued by any court of competent jurisdiction or Governmental or Regulatory\nAuthority or other legal or regulatory restraint or prohibition preventing the\nconsummation of the Merger shall be in effect; nor shall there be any action\ntaken, or any Law or Order enacted, entered, enforced or deemed applicable to\nthe Merger or the other transactions contemplated by the terms of this Agreement\nthat would prohibit the consummation of the Merger or which would permit\nconsummation of the Merger only if certain divestitures were made or if the\nParent were to agree to limitations on its business activities or operations.\n\n          (c)  Tax Opinions.  The Parent and the Company shall each have \n               ------------   \nreceived written opinions from their counsel, in form and substance reasonably\nsatisfactory to each of them, to the effect that the Merger will constitute a\nreorganization within the meaning of Section 368(a) of the Code.  The parties to\nthis Agreement agree to make such reasonable representations as requested by\nsuch counsel for the purpose of rendering such opinions.\n\n          (d)  Stockholder\/Shareholder Approval.  The (a) increase in number of\n               --------------------------------                                \nshares of Parent Common Stock issuable under the Parent's 1999 Stock Incentive\nPlan and (b) Agreement shall have been approved and adopted by the requisite\nvotes of the Parent's stockholders and the Merger shall have been approved by\nthe Company's shareholders in accordance with applicable Laws.\n\n          (e)  Registration Statement.  The Registration Statement shall have\n               ----------------------                                        \nbeen declared effective by the SEC and no stop order shall be in effect and no\nActions or Proceedings for that purpose shall be pending or, to the knowledge of\nthe parties hereto, threatened with respect to the Registration Statement.\n\n     6.2  Additional Conditions to Obligations of the Company.  The obligations \n          ---------------------------------------------------\nof the Company to consummate the Merger and the transactions contemplated by\nthis Agreement \n\n                                     -39-\n\n\n \nshall be subject to the satisfaction at or prior to the Effective Time of each\nof the following conditions, any of which may be waived, in writing, exclusively\nby the Company:\n\n          (a)  Representations and Warranties.  Each of the representations and\n               ------------------------------                                  \nwarranties made by Parent and Merger Sub in this Agreement shall be true and\ncorrect in all material respects (if not qualified by materiality) and in all\nrespects (if qualified by materiality) when made and on and as of the Effective\nTime as though such representation or warranty was made on and as of the\nEffective Time, and any representation or warranty made as of a specified date\nearlier than the Effective Time shall also have been true and correct in all\nmaterial respects (if not qualified by materiality) and in all respects (if\nqualified by materiality) on and as of such earlier date.\n\n          (b)  Performance.  Parent and Merger Sub shall have performed and\n               -----------                                                 \ncomplied with in all material respects each agreement, covenant and obligation\nrequired by this Agreement to be so performed or complied with by the Parent or\nMerger Sub at or before the Effective Time.\n\n          (c)  Officers' Certificate.  The Parent shall have delivered to the\n               ---------------------                                         \nCompany a certificate, dated the Closing Date and executed by an authorized\nofficer confirming the satisfaction of the conditions specified in Sections\n6.2(a) and 6.2(b).\n\n          (d)  NNM Listing.  The shares of Parent Common Stock issuable to\n               -----------                                                \nshareholders of the Company pursuant to this Agreement and such other shares\nrequired to be reserved for issuance in connection with the Merger will be\nconverted upon disposition shall have been authorized for quotation on the NNM\nupon official notice of issuance.\n\n          (e)  Parent Board Representation.  The Board Nominees shall have been\n               ---------------------------                                     \nelected to the board of directors of the Parent.\n\n     6.3  Additional Conditions to the Obligations of Parent and Merger Sub.\n          -----------------------------------------------------------------\nThe obligations of Parent and Merger Sub to consummate the Merger and the\ntransactions contemplated by this Agreement shall be subject to the satisfaction\nat or prior to the Effective Time of each of the following conditions, any of\nwhich may be waived, in writing, exclusively by the Parent:\n\n          (a)  Representations and Warranties.  Each of the representations and\n               ------------------------------                                  \nwarranties made by the Company in this Agreement shall be true and correct in\nall material respects (if not qualified by materiality) and in all respects (if\nqualified by materiality) when made and, after giving effect to the supplement\nto the Disclosure Letter made pursuant to Section 5.15, on and as of the\nEffective Time as though such representation or warranty was made on and as of\nthe Effective Time; provided, however, and any representation or warranty made\nas of a specified date earlier than the Effective Time shall also have been true\nand correct in all material respects (if not qualified by materiality) and in\nall respects (if qualified by materiality) on and as of such earlier date.\n\n          (b)  Performance.  The Company shall have performed and complied with\n               -----------                                                     \nin all material respects each agreement, covenant and obligation required by\nthis Agreement to be so performed or complied with by the Company on or before\nthe Effective Time.\n\n                                     -40-\n\n\n \n          (c)  Officers' Certificate.  The Company shall have delivered to the\n               ---------------------                                          \nParent a certificate, dated the Closing Date and executed by its President and\nChief Executive Officer confirming the satisfaction of the conditions specified\nin Sections 6.3(a) and 6.3(b).\n\n          (d)  Third Party Consents.  The Parent shall have been furnished with\n               --------------------                                            \nevidence satisfactory to it that the Company has obtained the consents,\napprovals and waivers listed in Section 2.6 of the Disclosure Letter (except for\nsuch consents, approvals and waivers the failure of which to receive could not\nbe expected to have a material adverse effect on the Business or Condition of\nthe Surviving Corporation).\n\n          (e)  Limitation on Dissent.  The holders of less than five percent of\n               ---------------------                                           \nthe outstanding shares of Company Common Stock shall have exercised, nor shall\nthey have any continuing right to exercise, appraisal, dissenters' or similar\nrights under applicable Law with respect to their shares arising out of or\nrelated to the transactions contemplated by this Agreement.\n\n          (f)  No Material Adverse Change.  There shall have occurred no \n               --------------------------   \nmaterial adverse change or event or circumstance which could reasonably be\nexpected to have a material adverse change in the Business or Condition of the\nCompany since the date hereof.\n\n          (g)  Legal Proceedings.  No Governmental or Regulatory Authority shall\n               -----------------                                                \nhave notified either party to this Agreement that it intends to commence\nproceedings to restrain or prohibit the transactions contemplated hereby or\nforce rescission, unless such Governmental or Regulatory Authority shall have\nwithdrawn such notice and abandoned any such proceedings prior to the time which\notherwise would have been the Closing Date.\n\n          (h)  Termination of Pension Plan.  If required by the Parent in\n               ---------------------------                               \nwriting, Company shall, immediately prior to the Effective Time, terminate the\nCompany's 401(k) Plan (the \"401(k) Plan\"); provided that the Parent shall pay\n                            -----------                                      \nall reasonable costs reasonably incurred in connection with such termination of\nthe 401(k) Plan,  and no further contributions shall be made to the 401(k) Plan,\nexcept for contributions received from participants prior to the termination\ndate of the 401(k) Plan and contributions made on behalf of Participants in the\n401(k) Plan that are based on compensation earned on or before such termination.\nThe Company shall provide to the Parent (i) executed resolutions by the board of\ndirectors of the Company authorizing the termination and (ii) an executed\namendment to the 401(k) Plan sufficient to assure compliance with all applicable\nrequirements of the Code and regulations thereunder so that the tax-qualified\nstatus of the 401(k) Plan will be maintained at the time of termination.\n\n          (i)  Affiliate Agreements.  Each Company Affiliate shall have executed\n               --------------------                                             \nand delivered to the Company and the Parent a Company Affiliate Agreement and\nsuch agreements shall be in full force and effect.\n\n          (j)  Employees.  The Employment Agreements shall continue to be in \n               ---------    \nfull force and effect (and none of Persons a party thereto shall have given any\nnotice or other indication that they will not continue to be willing to be\nemployed by the Parent following the Merger).  The number of engineering and R&amp;D\nemployees of the Company as of the Closing shall be at least 95% of the number\nof such employees as of the date of this \n\n                                     -41-\n\n\n \nAgreement (excluding any such employee who, as of the date of this Agreement,\nhas given notice or other indication that they will not continue to be willing\nto be employed by the Parent following the Merger); provided that the Parent\nshall take no action indicating that the compensation and benefits of such\nemployees after the Closing would, in the aggregate, be less favorable than the\ncompensation and benefits received by such employees on the date of this\nAgreement.\n\n          (k)  Consents of UPS, MBE and eBay. The Support Agreements with each \n               -----------------------------   \nof UPS and MBE shall continue to be in full force and effect and none of them or\neBay shall have given notice of their intent to materially change or terminate\ntheir business relationship with the Company or that such party will not\ncontinue to perform the terms of its business relationship with the Company.\n\n          (l)  Lock-up Agreements. Each shareholder of the Company who is\n               ------------------                                        \nrequested by any underwriter of the Parent to deliver a lock-up agreement shall\nhave delivered an executed lock-up agreement in such form as required by any\nunderwriter of the Parent and agreed to by all of the Parent's officers,\ndirectors and holders (other than former shareholders of the Company) of five\npercent or more of the outstanding shares of Parent Common Stock.\n\n          (m)  Appointment of Shareholders' Agent. By action of the holders of \n               ----------------------------------     \nat least two thirds of the outstanding shares of capital stock of the Company\n(calculated on an as if converted basis) shall have appointed an individual,\nreasonably acceptable to the Parent, to act as their agent and attorney-in-fact\nin the manner contemplated by Article 7 (the \"Shareholders' Agent\"), who shall\n                                              -------------------             \nhave signed an agreement to be bound to this Agreement as Shareholders' Agent.\n\n                                   ARTICLE 7\n            SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND\n                         AGREEMENTS; ESCROW PROVISIONS\n\n     7.1  Survival of Representations, Warranties, Covenants and Agreements.\n          -----------------------------------------------------------------\nExcept as otherwise provided in Section 8.2, all of the representations,\nwarranties, covenants and agreements of the Company, Parent and Merger Sub\ncontained in this Agreement or in any instrument delivered pursuant to this\nAgreement shall survive the Merger and continue until the first anniversary of\nthe Closing Date (the \"Expiration Date\").\n\n     7.2  Escrow Provisions.\n          ----------------- \n\n          (a)  Establishment of the Escrow Fund.  As soon as practicable after\n               --------------------------------                               \nthe Effective Time, the Escrow Amount, without any act of any shareholder of the\nCompany, will be deposited with the Depositary (plus a proportionate share of\nany additional shares of Parent Common Stock as may be issued upon any stock\nsplits, stock dividends or recapitalizations effected by the Parent following\nthe Effective Time), such deposit to constitute the Escrow Fund to be governed\nby the terms set forth herein.  The portion of the Escrow Amount contributed on\nbehalf of each shareholder of the Company shall be in proportion to the\naggregate number of shares of Parent Common Stock which such holder would\notherwise be entitled under Section 1.6.\n\n                                     -42-\n\n\n \n          (b)  Recourse to the Escrow Fund.  The Escrow Fund shall be available\n               ---------------------------                                     \nto compensate the Parent and the Surviving Corporation, and their respective\nofficers, directors, employees, agents, Affiliates and Associates for any and\nall Losses (whether or not involving a Third Party Claim), incurred or sustained\nby the Parent or Merger Sub, their respective officers, directors, employees,\nagents, Affiliates or Associates, directly or indirectly, as a result of any\ninaccuracy or breach of any representation, warranty, covenant or agreement of\nthe Company contained herein or in any instrument delivered pursuant to this\nAgreement.  The Parent, Merger Sub and the Company each acknowledge that such\nLosses, if any, would relate to unresolved contingencies existing at the\nEffective Time, which if resolved at the Effective Time would have led to a\nreduction in the aggregate Merger consideration to be paid to the shareholders\nof the Company.  The Escrow Fund shall be the sole post closing remedy of the\nParent and the Surviving Corporation for any breach of any representation,\nwarranty, agreement or covenant contained herein (other than claims for fraud or\nnegligent misrepresentation; provided, that no former shareholder of the Company\nshall be liable to the Parent or the Surviving Corporation for acts of fraud or\nnegligent misrepresentation by Persons other than that former shareholder of the\nCompany).\n\n          (c)  Escrow Period; Distribution of Escrow Fund upon Termination of\n               --------------------------------------------------------------\nEscrow Period.  Subject to the following requirements, the Escrow Fund shall be\n-------------                                                                  \nin existence immediately following the Effective Time and shall terminate at\n5:00 p.m., Pacific Time, on the Expiration Date (the period of time from the\nEffective Time through and including the Expiration Date is referred to herein\nas the \"Escrow Period\"); and all shares of Parent Common Stock remaining in the\n        -------------                                                          \nEscrow Fund shall be distributed as set forth in the last sentence of this\nSection 7.2(c); provided, however, that the Escrow Period shall not terminate\nwith respect to such amount (or some portion thereof) that is necessary in the\nreasonable judgment of the Parent, subject to the objection of the Shareholders'\nAgent and the subsequent arbitration of the matter in the manner as provided in\nSection 7.2(g) hereof, to satisfy any unsatisfied claims under this Section 7.2\nconcerning facts and circumstances existing prior to the termination of such\nEscrow Period which claims are specified in any Officer's Certificate delivered\nto the Depositary prior to termination of such Escrow Period.  As soon as all\nsuch claims, if any, have been resolved, the Depositary shall deliver to the\nformer shareholders of the Company the remaining portion of the Escrow Fund not\nrequired to satisfy such claims.  Deliveries of shares of Parent Common Stock\nremaining in the Escrow Fund to the former shareholders of the Company pursuant\nto this Section 7.2(c) shall be made ratably in proportion to their respective\ncontributions to the Escrow Fund and the Parent shall use its commercially\nreasonable efforts to have such shares delivered within five Business Days of\nsuch resolution.\n\n          (d)  Protection of Escrow Fund.\n               ------------------------- \n\n               (i)  The Depositary shall hold and safeguard the Escrow Fund\nduring the Escrow Period, shall treat such fund as a trust fund in accordance\nwith the terms of this Agreement and not as the property of the Parent and shall\nhold and dispose of the Escrow Fund only in accordance with the terms hereof.\n\n               (ii) Any shares of Parent Common Stock or other Equity\nEquivalents securities issued or distributed by the Parent (\"New Shares\") in\n                                                             ---------- \nrespect of Parent Common Stock in the Escrow Fund which have not been released\nfrom the Escrow\n\n                                     -43-\n\n\n \nFund shall be added to the Escrow Fund. New Shares issued in respect of shares\nof Parent Common Stock which have been released from the Escrow Fund shall not\nbe added to the Escrow Fund but shall be distributed to the record holders\nthereof. Cash dividends on Parent Common Stock shall not be added to the Escrow\nFund but shall be distributed to the former shareholders of the Company ratably\nin proportion to their respective contributions to the Escrow Fund.\n\n               (iii)  Each former shareholder of the Company shall have voting\nrights with respect to the shares of Parent Common Stock contributed to the\nEscrow Fund by such former shareholder of the Company (and on any voting\nsecurities added to the Escrow Fund in respect of such shares of Parent Common\nStock).\n\n          (e)  Claims Upon Escrow Fund.\n               ----------------------- \n\n               (i)   Upon receipt by the Depositary at any time on or before the\nlast day of the Escrow Period of a certificate signed by any officer of the\nParent (an \"Officer's Certificate\"): (A) stating that the Parent has paid or\n            ---------------------- \nproperly accrued or reasonably anticipates that it will have to pay or accrue\nLosses, directly or indirectly, as a result of any inaccuracy or breach of any\nrepresentation, warranty, covenant or agreement of the Company contained herein\nor in any instrument delivered pursuant to this Agreement, and (B) specifying in\nreasonable detail the bona fide individual items of Losses included in the\namount so stated, the date each such item was paid or properly accrued, or the\nbona fide basis for such anticipated liability, and the nature of the\nmisrepresentation, breach of warranty, agreement or covenant to which such item\nis related, the Depositary shall, subject to the provisions of Section 7.2(f)\nhereof, deliver to the Parent out of the Escrow Fund, as promptly as\npracticable, shares of Parent Common Stock held in the Escrow Fund in an amount\nequal to such Losses. No claim may be made against the Escrow Fund until the\naggregate indemnifiable losses exceed $50,000 and then such claim may be made\nfor such $50,000 of indemnifiable Losses and any Losses in excess of $50,000.\n\n               (ii)  For the purposes of determining the number of shares of\nParent Common Stock to be delivered to the Parent out of the Escrow Fund\npursuant to Section 7.2(e)(i), the shares of Parent Common Stock shall be valued\nat the Closing Price.\n\n          (f)  Objections to Claims.  At the time of delivery of any Officer's\n               --------------------                                           \nCertificate to the Depositary, a duplicate copy of such certificate shall be\ndelivered to the Shareholders' Agent and for a period of thirty days after such\ndelivery, the Depositary shall make no delivery to the Parent of any Escrow\nAmounts pursuant to Section 7.2(e) hereof unless the Depositary shall have\nreceived written authorization from the Shareholders' Agent to make such\ndelivery.  After the expiration of such thirty-day period, the Depositary shall\nmake delivery of shares of Parent Common Stock from the Escrow Fund in\naccordance with Section 7.2(e) hereof; provided that no such payment or delivery\nmay be made if the Shareholders' Agent shall object in a written statement to\nthe claim made in the Officer's Certificate, and such statement shall have been\ndelivered to the Depositary prior to the expiration of such thirty-day period.\n\n                                     -44-\n\n\n \n          (g)  Resolution of Conflicts; Arbitration.\n               ------------------------------------ \n\n               (i)    In case the Shareholders' Agent shall object in writing to\nany claim or claims made in any Officer's Certificate, the Shareholders' Agent\nand the Parent shall attempt in good faith to agree upon the rights of the\nrespective parties with respect to each of such claims. If the Shareholders'\nAgent and the Parent should so agree, a memorandum setting forth such agreement\nshall be prepared and signed by both parties and shall be furnished to the\nDepositary. The Depositary shall be entitled to rely on any such memorandum and\ndistribute shares of Parent Common Stock from the Escrow Fund in accordance with\nthe terms thereof.\n\n               (ii)   If no such agreement can be reached after good faith\nnegotiation, either the Parent or the Shareholders' Agent may demand arbitration\nof the dispute unless the amount of the damage or loss is at issue in a pending\nAction or Proceeding involving a Third Party Claim, in which event arbitration\nshall not be commenced until such amount is ascertained or both parties agree to\narbitration; and in either event the matter shall be settled by arbitration\nconducted by three arbitrators, one selected by the Parent and one selected by\nthe Shareholders' Agent, and the two arbitrators selected by the Parent and the\nShareholders' Agent shall select a third arbitrator. The arbitrators shall set a\nlimited time period and establish procedures designed to reduce the cost and\ntime for discovery of information relating to any dispute while allowing the\nparties an opportunity, adequate as determined in the sole judgment of the\narbitrators, to discover relevant information from the opposing parties about\nthe subject matter of the dispute. The arbitrators shall rule upon motions to\ncompel, limit or allow discovery as they shall deem appropriate given the nature\nand extent of the disputed claim. The arbitrators shall also have the authority\nto impose sanctions, including attorney's fees and other costs incurred by the\nparties, to the same extent as a court of law or equity, should the arbitrators\ndetermine that discovery was sought without substantial justification or that\ndiscovery was refused or objected to by a party without substantial\njustification. The decision of a majority of the three arbitrators as to the\nvalidity and amount of any claim in such Officer's Certificate shall be binding\nand conclusive upon the parties to this Agreement, and notwithstanding anything\nin Section 7.2(f) hereof, the Depositary shall be entitled to act in accordance\nwith such decision and make or withhold payments out of the Escrow Fund in\naccordance therewith. Such decision shall be written and shall be supported by\nwritten findings of fact and conclusions regarding the dispute which shall set\nforth the award, judgment, decree or order awarded by the arbitrators.\n\n               (iii)  Judgment upon any award rendered by the arbitrators may be\nentered in any court having competent jurisdiction.  Any such arbitration shall\nbe held in the city and county of Los Angeles, California under the commercial\nrules of arbitration then in effect of the American Arbitration Association.\nFor purposes of this Section 7.2(g), in any arbitration hereunder in which any\nclaim or the amount thereof stated in the Officer's Certificate is at issue, the\nParent shall be deemed to be the Non-Prevailing Party in the event that the\narbitrators award the Parent less than the sum of one-half of the bona fide\ndisputed amount of any Losses; otherwise, the former shareholders of the Company\nas represented by the Shareholders' Agent shall be deemed to be the Non-\nPrevailing Party.  The Non-Prevailing Party to an arbitration shall pay its own\nexpenses, the fees of each arbitrator, the \n\n                                     -45-\n\n\n \nadministrative costs of the arbitration and the expenses, including without\nlimitation, reasonable attorneys' fees and costs, incurred by the other party to\nthe arbitration.\n\n          (h)  Shareholders' Agent of the Shareholders; Power of Attorney.\n               ---------------------------------------------------------- \n\n               (i)  In the event that the Merger is approved by the shareholders\nof the Company, effective upon such vote, and without further act of any\nshareholder, the Shareholders' Agent shall be appointed as agent and attorney-\nin-fact for each former shareholder of the Company (except such shareholders, if\nany, as shall have perfected their appraisal or dissenters' rights under the\nWashington Code), for and on behalf of former shareholders of the Company, to\ngive and receive notices and communications, to authorize delivery to the Parent\nof shares of Parent Common Stock from the Escrow Fund in satisfaction of claims\nby the Parent, to object to such deliveries, to agree to, negotiate, enter into\nsettlements and compromises of, and demand arbitration and comply with orders of\ncourts and awards of arbitrators with respect to such claims, and to take all\nactions necessary or appropriate in the judgment of the Shareholders' Agent for\nthe accomplishment of the foregoing. Such agency may be changed by the former\nshareholders of the Company from time to time upon not less than thirty days\nprior written notice to the Parent; provided, however, that the Shareholders'\nAgent may not be removed unless holders of a two-thirds interest in the Escrow\nFund agree to such removal and to the identity of the substituted shareholder\nagent. Any vacancy in the position of Shareholders' Agent may be filled by\napproval of the holders of a majority in interest of the Escrow Fund. No bond\nshall be required of the Shareholders' Agent, and the Shareholders' Agent shall\nnot receive compensation for his services. Notices or communications to or from\nthe Shareholders' Agent shall constitute notice to or from each of the former\nshareholders of the Company.\n\n               (ii) The Shareholders' Agent shall not be liable for any act done\nor omitted hereunder as Shareholders' Agent while acting in good faith and in\nthe exercise of reasonable judgment.\n\n          (i)  Actions of the Shareholders' Agent.  A decision, act, consent or\n               ----------------------------------                              \ninstruction of the Shareholders' Agent shall constitute a decision of all the\nformer shareholders of the Company for whom a portion of the Escrow Amount\notherwise issuable to them are deposited in the Escrow Fund and shall be final,\nbinding and conclusive upon each of such shareholders, and the Depositary and\nthe Parent may rely upon any such decision, act, consent or instruction of the\nShareholders' Agent as being the decision, act, consent or instruction of every\nsuch shareholder of the Company.  The Depositary and the Parent are hereby\nrelieved from any liability to any person for any acts done by them in\naccordance with such decision, act, consent or instruction of the Shareholders'\nAgent.\n\n          (j)  Third-Party Claims.  In the event the Parent becomes aware of a\n               ------------------                                             \nthird-party claim (a \"Third Party Claim\") which the Parent reasonably expects\n                      -----------------                                      \nmay result in a demand against the Escrow Fund, the Parent shall notify the\nShareholders' Agent of such claim, and the Shareholders' Agent, as\nrepresentative for the shareholders of the Company, shall be entitled, at their\nexpense, to participate in any defense of such claim.  The Parent shall have the\nright in its sole discretion to settle any Third Party Claim; provided, however,\nthat if the Parent settles any Third Party Claim without the Shareholders'\nAgent's consent (which consent shall not be unreasonably withheld or delayed),\nthe Parent may not make a \n\n                                     -46-\n\n\n \nclaim against the Escrow Fund with respect to the amount of Losses incurred by\nthe Parent in such settlement. In the event that the Shareholders' Agent has\nconsented to any such settlement, the Shareholders' Agent shall have no power or\nauthority to object under any provision of this Article 7 to the amount of any\nclaim by the Parent against the Escrow Fund with respect to the amount of Losses\nincurred by the Parent in such settlement.\n\n          (k)  Depositary's Duties.\n               ------------------- \n\n               (i)    The Depositary shall be obligated only for the performance\nof such duties as are specifically set forth herein, and as set forth in any\nadditional written escrow instructions which the Depositary may receive after\nthe date of this Agreement which are signed by an officer of the Parent and the\nShareholders' Agent, and may rely and shall be protected in relying or\nrefraining from acting on any instrument reasonably believed to be genuine and\nto have been signed or presented by the proper party or parties. The Depositary\nshall not be liable for any act done or omitted hereunder as Depositary while\nacting in good faith and in the exercise of reasonable judgment, and any act\ndone or omitted pursuant to the advice of counsel shall be conclusive evidence\nof such good faith.\n\n               (ii)   The Depositary is hereby expressly authorized to comply\nwith and obey Orders of any court of law or Governmental or Regulatory\nAuthority, notwithstanding any notices, warnings or other communications from\nany party or any other person to the contrary. In case the Depositary obeys or\ncomplies with any such Order, the Depositary shall not be liable to any of the\nparties hereto or to any other person by reason of such compliance,\nnotwithstanding any such Order being subsequently reversed, modified, annulled,\nset aside, vacated or found to have been entered without jurisdiction or proper\nauthority.\n\n               (iii)  The Depositary shall not be liable in any respect on\naccount of the identity, authority or rights of the parties executing or\ndelivering or purporting to execute or deliver this Agreement or any documents\nor papers deposited or called for hereunder.\n\n               (iv)   The Depositary shall not be liable for the expiration of\nany rights under any statute of limitations with respect to this Agreement or\nany documents deposited with the Depositary.\n\n               (v)    In performing any duties under the Agreement, the\nDepositary shall not be liable to any party for damages, losses, or expenses,\nexcept for gross negligence or willful misconduct on the part of the Depositary.\nThe Depositary shall not incur any such liability for (A) any act or failure to\nact made or omitted in good faith, or (B) any action taken or omitted in\nreliance upon any instrument, including any written statement or affidavit\nprovided for in this Agreement that the Depositary shall in good faith believe\nto be genuine, nor will the Depositary be liable or responsible for forgeries,\nfraud, impersonations or determining the scope of any representative authority.\nIn addition, the Depositary may consult with legal counsel in connection with\nthe Depositary's duties under this Agreement and shall be fully protected in any\nact taken, suffered, or permitted by it in good faith in accordance with the\nadvice of counsel. The Depositary is not responsible for determining and\nverifying the authority of any person acting or purporting to act on behalf of\nany party to this Agreement.\n\n                                     -47-\n\n\n \n               (vi)   If any controversy arises between the parties to this\nAgreement, or with any other party, concerning the subject matter of this\nAgreement, its terms or conditions, the Depositary will not be required to\ndetermine the controversy or to take any action regarding it. The Depositary may\nhold all documents and shares of Parent Common Stock and may wait for settlement\nof any such controversy by final appropriate legal proceedings or other means\nas, in the Depositary's discretion, the Depositary may be required, despite what\nmay be set forth elsewhere in this Agreement. In such event, the Depositary will\nnot be liable for any damages. Furthermore, the Depositary may at its option,\nfile an action of interpleader requiring the parties to answer and litigate any\nclaims and rights among themselves. The Depositary is authorized to deposit with\nthe clerk of the court all documents and shares of Parent Common Stock held in\nescrow, except all costs, expenses, charges and reasonable attorneys' fees\nincurred by the Depositary due to the interpleader action and which the parties\njointly and severally agree to pay. Upon initiating such action, the Depositary\nshall be fully released and discharged of and from all obligations and liability\nimposed by the terms of this Agreement.\n\n               (vii)  The parties and their respective successors and assigns\nagree jointly and severally to indemnify and hold the Depositary harmless\nagainst any and all Losses incurred by the Depositary in connection with the\nperformance of the Depositary's duties under this Agreement, including but not\nlimited to any litigation arising from this Agreement or involving its subject\nmatter.\n\n               (viii) The Depositary may resign at any time upon giving at least\nthirty days written notice to the parties; provided, however, that no such\nresignation shall become effective until the appointment of a successor\nDepositary which shall be accomplished as follows:  the parties shall use their\ncommercially reasonable efforts to mutually agree on a successor depositary\nwithin thirty days after receiving such notice.  If the parties fail to agree\nupon a successor depositary within such time, the Depositary shall have the\nright to appoint a successor depositary authorized to do business in the State\nof California; provided, that such successor depositary shall be consented to by\nthe Parent and the Shareholders' Representative (which consent shall not be\nunreasonably withheld or delayed).  The successor depositary shall execute and\ndeliver an instrument accepting such appointment and it shall, without further\nacts, be vested with all the estates, properties, rights, powers, and duties of\nthe predecessor depositary as if originally named as Depositary.  The Depositary\nshall be discharged from any further duties and liability under this Agreement.\n\n          (l)  Fees.  All fees of the Depositary for performance of its duties\n               ----                                                           \nhereunder shall be paid by the Parent in accordance with the fee schedule\npreviously delivered to the Parent.  In the event that the conditions of this\nAgreement are not promptly fulfilled, or if the Depositary renders any service\nnot provided for in this Agreement, or if the parties request a substantial\nmodification of its terms, or if any controversy arises, or if the Depositary is\nmade a party to, or intervenes in, any Action or Proceeding pertaining to this\nescrow or its subject matter, the Depositary shall be reasonably compensated for\nsuch extraordinary services and reimbursed for all costs, attorney's fees, and\nexpenses occasioned by such default, delay, controversy or Action or Proceeding.\nThe Parent agrees to pay these sums upon demand.\n\n                                     -48-\n\n\n \n                                   ARTICLE 8\n                       TERMINATION, AMENDMENT AND WAIVER\n\n     8.1  Termination.  Except as provided in Section 8.2 below, this Agreement \n          -----------\nmay be terminated and the Merger abandoned at any time prior to the Effective\nTime:\n\n          (a)  by mutual agreement of the Company, Parent and Merger Sub;\n\n          (b)  by the Parent, Merger Sub or the Company if:  (i) the Effective\nTime has not occurred before 5:00 p.m.  (Pacific Time) on February 29, 2000\n(provided, however, that the right to terminate this Agreement under this clause\n8.1(b)(i) shall not be available to any party whose failure to fulfill any\nobligation hereunder has been the cause of, or resulted in, the failure of the\nEffective Time to occur on or before such date); (ii) there shall be a final\nnonappealable order of a federal or state court in effect preventing\nconsummation of the Merger; or (iii) there shall be any statute, rule,\nregulation or order enacted, promulgated or issued or deemed applicable to the\nMerger by any Governmental or Regulatory Authority that would make consummation\nof the Merger illegal;\n\n          (c)  by the Parent and Merger Sub, if there shall be any action taken,\nor any Law or Order enacted, promulgated or issued or deemed applicable to the\nMerger, by any Governmental or Regulatory Authority, which would:  (i) prohibit\nthe Parent's or the Merger Sub's ownership or operation of all or any portion of\nthe business of the Company or (ii) compel the Parent or Merger Sub to dispose\nof or hold separate all or a portion of the Assets and Properties of the Company\nas a result of the Merger;\n\n          (d)  by the Parent, if there has been a breach of any representation,\nwarranty, covenant or agreement contained in this Agreement on the part of the\nCompany and (i) the Company has not cured such breach within fifteen days\nfollowing receipt by the Company of written notice of such breach or is not\nusing its commercially reasonable efforts to cure such breach after written\nnotice of such breach to the Company (provided, however, that, no cure period\nshall be required for a breach which by its nature cannot be cured) and (ii) as\na result of such breach the conditions set forth in Section 6.3(a) or 6.3(b), as\nthe case may be, would not then be satisfied;\n\n          (e)  by the Company, if there has been a breach of any representation,\nwarranty, covenant or agreement contained in this Agreement on the part of the\nParent or Merger Sub and (i) the Parent has not cured such breach within fifteen\ndays following receipt by the Company of written notice of such breach or is not\nusing its commercially reasonable efforts to cure such breach after written\nnotice of such breach to the Parent (provided, however, that no cure period\nshall be required for a breach which by its nature cannot be cured), and (ii) as\na result of such breach the conditions set forth in Section 6.2(a) or 6.2(b), as\nthe case may be, would not then be satisfied;\n\n          (f)  by the Parent, if the Merger shall not have been approved at the\nSpecial Meeting by the requisite votes of the Company's shareholders in\naccordance with the Washington Code;\n\n          (g)  by the Company, if the Merger shall not have been approved by the\nParent's shareholders at the Parent Special Meeting; or\n\n                                     -49-\n\n\n \n          (h)  by the Parent, if a Triggering Event (as defined in Section 4.2\nhereof) shall have occurred.\n\n     8.2  Effect of Termination.  In the event of a valid termination of this \n          ---------------------\nAgreement as provided in Section 8.1, this Agreement shall forthwith become void\nand there shall be no liability or obligation on the part of the Parent, Merger\nSub or the Company, or their respective officers, directors or shareholders or\nAffiliates or Associates; provided, however, that each party shall remain liable\nfor any willful breaches of this Agreement prior to its termination; and\nprovided further that, the provisions of Sections 5.4, 5.5, 5.6, 8.2, 9.6, 9.9\nand 9.10 of this Agreement shall remain in full force and effect and survive any\ntermination of this Agreement.\n\n                                   ARTICLE 9\n                           MISCELLANEOUS PROVISIONS\n\n     9.1  Notices.  All notices, requests and other communications hereunder \n          -------\nmust be in writing and will be deemed to have been duly given only if delivered\npersonally against written receipt or by facsimile transmission against\nfacsimile confirmation, return receipt requested, or mailed by overnight courier\nprepaid, to the parties at the following addresses or facsimile numbers:\n\n          If to the Parent or Merger Sub to:\n\n          Stamps.com Inc.\n          3420 Ocean Park Boulevard, Suite 1040\n          Santa Monica, California  90405\n          Facsimile No.:  (310) 314-8523\n          Attn: Chief Executive Officer and\n          Attn: Senior Director, Legal Affairs\n\n          with a copy (which shall not constitute notice) to:\n\n          Brobeck, Phleger &amp; Harrison LLP\n          38 Technology Drive\n          Irvine, California  92618\n          Facsimile No.:  (949) 790-6301\n          Attn:  Bruce R. Hallett\n\n          If to the Company to:\n\n          iShip.com, Inc.\n          3535 Factoria Boulevard SE, Suite 500\n          Bellevue, Washington  98006\n          Facsimile No.:  (425) 602-5025\n          Attn: President and Chief Executive Officer\n\n                                     -50-\n\n\n \n          with a copy (which shall not constitute notice) to:\n\n          Venture Law Group, a Professional Corporation\n          4750 Carillion Point\n          Kirkland, Washington  98033\n          Facsimile No.:  (425) 739-8750\n          Attn:  Craig E. Sherman\n\nAll such notices, requests and other communications will (i) if delivered\npersonally to the address as provided in this Section, be deemed given upon\ndelivery, (ii) if delivered by facsimile transmission to the facsimile number as\nprovided for in this Section, be deemed given upon facsimile confirmation, and\n(iii) if delivered by overnight courier to the address as provided in this\nSection, be deemed given on the earlier of the first Business Day following the\ndate sent by such overnight courier or upon receipt (in each case regardless of\nwhether such notice, request or other communication is received by any other\nPerson to whom a copy of such notice is to be delivered pursuant to this\nSection).  Any party from time to time may change its address, facsimile number\nor other information for the purpose of notices to that party by giving notice\nspecifying such change to the other party hereto.\n\n     9.2  Entire Agreement.  This Agreement and the Confidentiality Agreement \n          ----------------\nsupersedes all prior discussions and agreements between the parties with respect\nto the subject matter hereof and thereof and contains the sole and entire\nagreement between the parties hereto with respect to the subject matter hereof\nand thereof.\n\n     9.3  Further Assurances; Post-Closing Cooperation.  At any time or from \n          --------------------------------------------\ntime to time after the Closing, the parties shall execute and deliver to the\nother party such other documents and instruments, provide such materials and\ninformation and take such other actions as the other party may reasonably\nrequest to consummate the transactions contemplated by this Agreement and\notherwise to cause the other party to fulfill its obligations under this\nAgreement and the transactions contemplated hereby.\n\n     9.4  Amendment; Waiver.  Except as otherwise required by applicable law \n          -----------------\nafter the shareholders of the Company approve the Merger and this Agreement,\nthis Agreement may be amended by the parties hereto at any time by execution of\nan instrument in writing signed on behalf of each of the parties hereto. Any\nterm or condition of this Agreement may be waived at any time by the party that\nis entitled to the benefit thereof, but no such waiver shall be effective unless\nset forth in a written instrument duly executed by or on behalf of the party\nwaiving such term or condition. No waiver by any party of any term or condition\nof this Agreement, in any one or more instances, shall be deemed to be or\nconstrued as a waiver of the same or any other term or condition of this\nAgreement on any future occasion. All remedies, either under this Agreement or\nby Law or otherwise afforded, will be cumulative and not alternative.\n\n     9.5  Third Party Beneficiaries.  The terms and provisions of this \n          -------------------------\nAgreement are intended solely for the benefit of each party hereto and their\nrespective successors or permitted assigns, and it is not the intention of the\nparties to confer third-party beneficiary rights, and this Agreement does not\nconfer any such rights, upon any other Person other than any Person entitled to\nindemnity under Article 7.\n\n                                     -51-\n\n\n \n     9.6  No Assignment; Binding Effect.  Neither this Agreement nor any right, \n          -----------------------------\ninterest or obligation hereunder may be assigned (by operation of law or\notherwise) by any party without the prior written consent of the other party and\nany attempt to do so will be void. Subject to the preceding sentence, this\nAgreement is binding upon, inures to the benefit of and is enforceable by the\nparties hereto and their respective successors and assigns.\n\n     9.7  Headings.  The headings and table of contents used in this Agreement \n          --------\nhave been inserted for convenience of reference only and do not define or limit\nthe provisions hereof.\n\n     9.8  Invalid Provisions.  If any provision of this Agreement is held to be \n          ------------------\nillegal, invalid or unenforceable under any present or future Law, and if the\nrights or obligations of any party hereto under this Agreement will not be\nmaterially and adversely affected thereby, (a) such provision will be fully\nseverable, (b) this Agreement will be construed and enforced as if such illegal,\ninvalid or unenforceable provision had never comprised a part hereof, (c) the\nremaining provisions of this Agreement will remain in full force and effect and\nwill not be affected by the illegal, invalid or unenforceable provision or by\nits severance from this Agreement and (d) in lieu of such illegal, invalid or\nunenforceable provision, there will be added automatically as a part of this\nAgreement a legal, valid and enforceable provision as similar in terms to such\nillegal, invalid or unenforceable provision as may be possible.\n\n     9.9  Governing Law.  Other than the mandatory provisions of the Washington \n          -------------\nCode, this Agreement shall be governed by and construed in accordance with the\ndomestic laws of the State of California, without giving effect to any choice of\nlaw or conflict of law provision or rule (whether of the State of California or\nany other jurisdiction) that would cause the application of the laws of any\njurisdiction other than the State of California.\n\n     9.10  Construction.  The parties hereto agree that this Agreement is the \n           ------------\nproduct of negotiation between sophisticated parties, all of whom were\nrepresented by counsel, and each of whom had an opportunity to participate in\nand did participate in, the drafting of each provision hereof. Accordingly,\nambiguities in this Agreement, if any, shall not be construed strictly or in\nfavor of or against any party hereto but rather shall be given a fair and\nreasonable construction without regard to the rule of contra preferentum.\n\n     9.11  Counterparts.  This Agreement may be executed in any number of \n           ------------\ncounterparts, each of which will be deemed an original, but all of which\ntogether will constitute one and the same instrument.\n\n     9.12  Specific Performance.  The parties hereto agree that irreparable \n           --------------------\ndamage would occur in the event that any of the provisions of this Agreement\nwere not performed in accordance with their specific terms or were otherwise\nbreached. Except where this Agreement specifically provides for arbitration, it\nis agreed that the parties shall be entitled to an injunction or injunctions to\nprevent breaches of this Agreement and to enforce specifically the terms and\nprovisions hereof in any court of the United States or any state having\njurisdiction, this being in addition to any other remedy to which they are\nentitled at law or in equity.\n\n                                     -52-\n\n\n \n                                  ARTICLE 10\n\n                                  DEFINITIONS\n\n     10.1  Definitions.\n           ----------- \n\n          (a)  As used in this Agreement, the following defined terms shall have\nthe meanings indicated below:\n\n          \"Actions or Proceedings\" means any action, suit, complaint, petition,\ninvestigation, proceeding, arbitration, litigation or Governmental or Regulatory\nAuthority investigation, audit or other proceeding, whether civil or criminal,\nin law or in equity, or before any arbitrator or Governmental or Regulatory\nAuthority.\n\n          \"Affiliate\" means, as applied to any Person, (a) any other Person\ndirectly or indirectly controlling, controlled by or under common control with,\nthat Person, (b) any other Person that owns or controls (i) ten percent or more\nof any class of equity securities of that Person or any of its Affiliates or\n(ii) ten percent or more of any class of equity securities (including any equity\nsecurities issuable upon the exercise of any option or convertible security) of\nthat Person or any of its Affiliates, or (c) any director, partner, officer,\nmanager, agent, employee or relative of such Person.  For the purposes of this\ndefinition, \"control\" (including with correlative meanings, the terms\n\"controlling,\" \"controlled by,\" and \"under common control with\") as applied to\nany Person, means the possession, directly or indirectly, of the power to direct\nor cause the direction of the management and policies of that Person, whether\nthrough ownership of voting securities or by contract or otherwise.\n\n          \"Aggregate Company Share Number\" means the sum of (a) the aggregate\nnumber of shares of Company Common Stock outstanding immediately prior to the\nEffective Time (including all shares of Company Common Stock issued or issuable\nupon exercise, conversion or exchange of all unvested and vested Company Options\nor Company Warrants which are not exercised, converted, exchanged or expired as\nof the Effective Time), (b) the aggregate number of shares of Series A Preferred\nStock outstanding immediately prior to the Effective Time and (c) the aggregate\nnumber of shares of Series B Preferred Stock outstanding immediately prior to\nthe Effective Time.\n\n          \"Aggregate Merger Share Number\" means 8,000,000 shares of Parent\nCommon Stock (as appropriately adjusted to reflect the effect of any stock\nsplit, stock dividend, stock combination, reorganization, reclassification or\nsimilar change by the Parent occurring after the date of this Agreement and\nprior to the Effective Time).\n\n          \"Agreement\" means this Agreement and Plan of Merger, the Exhibits and\nthe Disclosure Letter and the certificates and instruments delivered in\nconnection herewith, or incorporated by reference, as the same may be amended or\nsupplemented from time to time in accordance with the terms hereof.\n\n          \"Articles of Merger\" has the meaning ascribed to it in Section 1.2.\n\n          \"Approval\" means any approval, authorization, consent, permit,\nqualification or registration, or any waiver of any of the foregoing, required\nto be obtained from or made \n\n                                     -53-\n\n\n \nwith, or any notice, statement or other communication required to be filed with\nor delivered to, any Governmental or Regulatory Authority or any other Person.\n\n          \"Assets and Properties\" of any Person means all assets and properties\nof every kind, nature, character and description (whether real, personal or\nmixed, whether tangible or intangible, whether absolute, accrued, contingent,\nfixed or otherwise and wherever situated), including, but not limited to, the\ngoodwill related thereto, operated, owned, licensed or leased by such Person,\nincluding cash, cash equivalents, Investment Assets, accounts and notes\nreceivable, chattel paper, documents, instruments, general intangibles, real\nestate, equipment, inventory, goods and Intellectual Property.\n\n          \"Associate\" means, with respect to any Person, any corporation or\nother business organization of which such Person is an officer or partner or is\nthe beneficial owner, directly or indirectly, of ten percent or more of any\nclass of equity securities, any trust or estate in which such Person has a\nsubstantial beneficial interest or as to which such Person serves as a trustee\nor in a similar capacity and any relative or spouse of such Person, or any\nrelative of such spouse, who has the same home as such Person.\n\n          \"Audited Financial Statement Date\" means December 31, 1998.\n\n          \"Audited Financial Statements\" means the audited balance sheets of the\nCompany as of each of the fiscal years ended December 31, 1997 and December 31,\n1998, respectively, and the related audited statements of operations,\nshareholders' equity and cash flows for each of the fiscal years then ended, in\neach case, including the notes thereto.\n\n          \"Books and Records\" means all files, documents, instruments, papers,\nbooks and records relating to the Business or Condition of the Company,\nincluding financial statements, internal reports, Tax Returns and related work\npapers and letters from accountants, budgets, pricing guidelines, ledgers,\njournals, deeds, title policies, minute books, stock certificates and books,\nstock transfer ledgers, Contracts, Licenses, customer lists, computer files and\nprograms (including data processing files and records), retrieval programs,\noperating data and plans and environmental studies and plans.\n\n          \"Business Combination\" means, with respect to any Person, (i) any\nmerger, consolidation or other business combination to which such Person is a\nparty, (ii) any sale, dividend, split or other disposition of any capital stock\nor other equity interests of such Person, (iii) any tender offer (including a\nself tender), exchange offer, recapitalization, restructuring, liquidation,\ndissolution or similar or extraordinary transaction, (iv) any sale, dividend or\nother disposition of all or a material portion of the Assets and Properties of\nsuch Person or (v) the entering into of any agreement or understanding, the\ngranting of any rights or options, or the acquiescence of the Company, with\nrespect to any of the foregoing.\n\n          \"Business Day\" means a day other than Saturday, Sunday or any day on\nwhich banks located in the State of California are authorized or obligated to\nclose.\n\n          \"Business or Condition of the Company\" means the business, condition\n(financial or otherwise), results of operations, prospects or Assets and\nProperties of the Company.\n\n                                     -54-\n\n\n \n          \"Certificates\" has the meaning ascribed to it in Section 1.8(b).\n\n          \"Closing\" means the closing of the transactions contemplated by\nSection 1.2.\n\n          \"Closing Date\" has the meaning ascribed to it in Section 1.2.\n\n          \"Closing Price\" means the average closing sales price of Parent Common\nStock as traded on the NNM and reported by The Wall Street Journal, for the\nthirty consecutive trading days ending on and including the third trading day\nprior to the Closing Date.\n\n          \"Code\" means the Internal Revenue Code of 1986, as amended, and the\nrules and regulations promulgated thereunder.\n\n          \"Common Stock Exchange Ratio\" means the quotient obtained by dividing\n(x) the Aggregate Merger Share Number minus the Liquidation Share Number by (y)\nthe Aggregate Company Share Number.\n\n          \"Company\" has the meaning ascribed to it in the forepart of this\nAgreement.\n\n          \"Company Affiliates\" has the meaning ascribed to it in Section 5.9.\n\n          \"Company Affiliate Agreement\" has the meaning ascribed to it in\nSection 5.9.\n\n          \"Company Capital Stock\" means the Company Common Stock and Company\nPreferred Stock.\n\n          \"Company Common Stock\" has the meaning ascribed to it in Section\n2.3(a).\n\n          \"Company Financials\" means the Audited Financial Statements and the\nInterim Financial Statements.\n\n          \"Company Intellectual Property\" shall mean any Intellectual Property\nthat is (i) owned by; (ii) licensed to; or (iii) was developed or created by or\nfor the Company.\n\n          \"Company Option(s)\" means any Option to purchase Company Capital\nStock, excluding the Company Warrants.\n\n          \"Company Preferred Stock\" has the meaning ascribed to it in Section\n2.3(a).\n\n          \"Company Registered Intellectual Property\" means all Registered\nIntellectual Property owned by, or filed in the name of, the Company.\n\n          \"Company Restricted Stock\" means shares of Company Capital Stock which\nare subject to a repurchase option by the Company.\n\n          \"Company Warrants\" means all of the warrants to purchase Company\nCapital Stock listed on Section 2.3(b) of the Disclosure Letter.\n\n                                     -55-\n\n\n \n          \"Contract\" means any material contract, arrangement or understanding\n(whether written, oral or otherwise), including without limitation:\n\n               (a)  any distributor, sales, advertising, agency or\nmanufacturer's representative contract;\n\n               (b)  any continuing contract for the purchase of materials,\nsupplies, equipment or services involving in the case of any such contact more\nthan $50,000 over the life of the contract;\n\n               (c)  any contract that expires or may be renewed at the option of\nany person other than the Company so as to expire more than one year after the\ndate of this Agreement;\n\n               (d)  any trust indenture, mortgage, promissory note, loan\nagreement or other contract for the borrowing of money, any currency exchange,\ncommodities or other hedging arrangement or any leasing transaction of the type\nrequired to be capitalized in accordance with generally accepted accounting\nprinciples;\n\n               (e)  any contract for capital expenditures in excess of $50,000\nin the aggregate;\n\n               (f)  any contract limiting the freedom of the Company to engage\nin any line of business or to compete with any other Person as that term is\ndefined in the Exchange Act, as defined herein, or any confidentiality, secrecy\nor non-disclosure contract;\n\n               (g)  any contract pursuant to which the Company is a lessor of\nany machinery, equipment, motor vehicles, office furniture, fixtures or other\npersonal property;\n\n               (h)  any contract with any person with whom the Company does not\ndeal at arm's length\n\n               (i)  any agreement of guarantee, support, indemnification,\nassumption or endorsement of, or any similar commitment with respect to, the\nobligations, liabilities (whether accrued, absolute, contingent or otherwise) or\nindebtedness of any other Person; or\n\n               (j)  any contract granting or assigning Intellectual Property to\nor of the Company, except for contracts granting non-exclusive licenses in the\nordinary course of business consistent with past practice.\n\n          \"Delaware Code\" means the General Corporation Law of the State of\nDelaware and all amendments and additions thereto.\n\n          \"Depositary\" means U.S. Stock Transfer Corporation (or other\ninstitution acceptable to the Parent and the Shareholders' Agent).\n\n          \"Disclosure Letter\" means the letter delivered on the date hereof to\nParent and Merger Sub by or on behalf of the Company, containing all lists,\ndescriptions, \n\n                                     -56-\n\n\n\n \nexceptions and other information and materials as are required to be included\ntherein in connection with the representations and warranties made by the\nCompany in Article 2 of this Agreement or otherwise.\n\n          \"Dissenting Shares\" has the meaning ascribed to it in Section 1.7(a).\n\n          \"Effective Time\" has the meaning ascribed to it in Section 1.2.\n\n          \"Employment Agreements\" has the meaning ascribed to it in the\nrecitals.\n\n          \"Environment\" means air, surface water, ground water, or land,\nincluding land surface or subsurface, and any receptors such as Persons,\nwildlife, fish, biota or other natural resources.\n\n          \"Environmental Clean-up Site\" means any location which is listed or\nproposed for listing on the National Priorities List, the Comprehensive\nEnvironmental Response, Compensation and Liability Information System, or on any\nsimilar state list of sites relating to investigation or cleanup, or which is\nthe subject of any pending or threatened action, suit, proceeding, or\ninvestigation related to or arising from any location at which there has been a\nRelease or threatened or suspected Release of a Hazardous Material.\n\n          \"Environmental Law\" means any federal, state, local or foreign\nenvironmental, health and safety or other Law relating to of Hazardous\nMaterials, including without limitation, the Comprehensive, Environmental\nResponse Compensation and Liability Act, the Clean  Air Act, the Federal Water\nPollution Control Act, the Solid Waste Disposal Act, the Federal Insecticide,\nFungicide and Rodenticide Act, and the California Safe Drinking Water and Toxic\nEnforcement Act.\n\n          \"Environmental Permit\" means any permit, license, approval, consent or\nauthorization required under or in connection with any Environmental Law and\nincludes without limitation any and all orders, consent orders or binding\nagreements issued or entered into by a Governmental or Regulatory Authority.\n\n          \"Equity Equivalents\" means securities (including Options to purchase\nany shares of Company Capital Stock) which, by their terms, are or may be\nexercisable, convertible or exchangeable for or into common stock, preferred\nstock or other securities at the election of the holder thereof.\n\n          \"ERISA\" has the meaning ascribed to it in Section 2.13(a).\n\n          \"ERISA Affiliate\" has the meaning ascribed to it in Section 2.13(a).\n\n          \"Escrow Amount\" means ten percent of the Aggregate Merger Share\nNumber.\n\n          \"Escrow Period\" has the meaning ascribed to it in Section 7.2(c).\n\n          \"Exchange Act\" means the Securities Exchange Act of 1934, as amended,\nand the rules and regulations of the SEC thereunder.\n\n                                     -57-\n\n\n \n          \"Exchange Ratios\" means the Series A Exchange Ratio, the Series B\nExchange Ratio and the Common Stock Exchange Ratio.\n\n          \"Expiration Date\" has the meaning ascribed to it in Section 7.1.\n\n          \"Financial Statement Date\" means December 31, 1998.\n\n          \"GAAP\" means generally accepted accounting principles in the United\nStates, as in effect from time to time.\n\n          \"Governmental or Regulatory Authority\" means any court, tribunal,\narbitrator, authority, agency, bureau, board, commission, postal service,\ndepartment, official or other instrumentality of the United States, any foreign\ncountry, international treaty organization or any domestic or foreign state,\ncounty, city or other political subdivision, and shall include any stock\nexchange, quotation service and the NASD and any Person exercising the powers of\nany of the foregoing.\n\n          \"Hazardous Material\" means (a) any chemical, material, substance or\nwaste including, containing or constituting petroleum or petroleum products,\nsolvents (including, but not limited to, chlorinated solvents), nuclear or\nradioactive materials, asbestos in any form that is or could become friable,\nradon, lead-based paint, urea formaldehyde foam insulation or polychlorinated\nbiphenyls, (b) any chemicals, materials, substances or wastes which are now\ndefined as or included in the definition of \"hazardous substances,\" \"hazardous\nwastes,\" \"hazardous materials,\" \"extremely hazardous wastes,\" \"restricted\nhazardous wastes,\" \"toxic substances,\" \"toxic pollutants\" or words of similar\nimport under any Environmental Law; or (c) any other chemical, material,\nsubstance or waste which is regulated by any Governmental or Regulatory\nAuthority or which could constitute a nuisance.\n\n          \"HSR Act\" means the Hart-Scott-Rodino Antitrust Improvements Act of\n1976, as amended, and the rules and regulations promulgated thereunder.\n\n          \"Income Tax\" means (i) any income, alternative or add-on minimum tax,\ngross income, gross receipts, franchise, profits, including estimated taxes\nrelating to any of the foregoing, or other similar tax or other like assessment\nor charge of similar kind whatsoever, excluding any Other Tax, together with any\ninterest and any penalty, addition to tax or additional amount imposed by any\nTaxing Authority responsible for the imposition of any such Tax (domestic or\nforeign); or (ii) any liability of a Person for the payment of any taxes,\ninterest, penalty, addition to tax or like additional amount resulting from the\napplication of Treas. Reg. (S)1.1502-6 or comparable provisions of any Taxing\nAuthority in respect of a Tax Return of a Relevant Group.\n\n          \"Indebtedness\" of any Person means all obligations of such Person (a)\nfor borrowed money, (b) evidenced by notes, bonds, debentures or similar\ninstruments, (c) for the deferred purchase price of goods or services (other\nthan trade payables or accruals incurred in the ordinary course of business),\n(d) under capital leases and (e) in the nature of guarantees of any obligations\nof any other Person.\n\n                                     -58-\n\n\n \n          \"Intellectual Property\" means all trademarks and trademark rights,\ntrade names and trade name rights, service marks and service mark rights,\nservice names and service name rights, patents and patent rights, utility models\nand utility model rights, copyrights, works of authorship, moral rights, mask\nwork rights, brand names, trade dress, product designs, product packaging,\nbusiness and product names, logos, slogans, rights of publicity, trade secrets,\ninventions (whether patentable or not), invention disclosures, improvements,\nprocesses, formulae, algorithms, industrial models, designs, specifications,\ntechnology, methodologies, computer software (including all source code and\nobject code), firmware, development tools, flow charts, annotations, all Web\naddresses, sites and domain names, all data bases and data collections and all\nrights therein, any other confidential and proprietary right or information,\nwhether or not subject to statutory registration, and all related technical\ninformation, manufacturing, engineering and technical drawings, know-how and all\npending applications for and registrations of patents, utility models,\ntrademarks, service marks and copyrights, and the right to sue for past\ninfringement, if any, in connection with any of the foregoing, and all\ndocuments, disks, records, files and other media on which any of the foregoing\nis stored.\n\n          \"Interim Financial Statements\" means the unaudited balance sheet of\nthe Company as of August 31, 1999, and the related unaudited statement of\noperations and statement of cash flows for the eight-month period ended on such\ndate.\n\n          \"Investment Assets\" means all debentures, notes and other evidences of\nIndebtedness, stocks, securities (including rights to purchase and securities\nconvertible into or exchangeable for other securities), interests in joint\nventures and general and limited partnerships, mortgage loans and other\ninvestment or portfolio assets owned of record or beneficially by the Company.\n\n          \"IRS\" means the United States Internal Revenue Service or any\nsuccessor entity.\n\n          \"Laws\" means any law, statute, order, decree, consent decree,\njudgment, rule, regulation, ordinance or other pronouncement having the effect\nof law whether in the United States, any foreign country, or any domestic or\nforeign state, county, city or other political subdivision or of any\nGovernmental or Regulatory Authority.\n\n          \"Liabilities\" means all Indebtedness, obligations and other\nliabilities of a Person, whether absolute, accrued, contingent (or based upon\nany contingency), known or unknown, fixed or otherwise, or whether due or to\nbecome due.\n\n          \"License\" means any Contract that grants a Person the right to use or\notherwise enjoy the benefits of any Intellectual Property (including, without\nlimitation, any covenants not to sue with respect to any Intellectual Property).\n\n          \"Lien(s)\" means any mortgage, pledge, assessment, security interest,\nlease, lien, easement, license, covenant, condition, restriction, adverse claim,\nlevy, charge, option, equity, adverse claim or restriction or other encumbrance\nof any kind, or any conditional sale Contract, title retention Contract or other\nContract to give any of the foregoing, except \n\n                                     -59-\n\n\n \nfor any (a) restrictions on transfer generally arising under any applicable\nfederal or state securities law or (b) liens incurred in the ordinary course of\nbusiness.\n\n          \"Liquidation Share Number\" means the quotient of (x) the Series A\nLiquidation Preference plus the Series B Liquidation Preference divided by (y)\nthe Closing Price.\n\n          \"Losses\" means any and all damages, fines, fees, Taxes, penalties,\ndeficiencies, losses, costs (including, but not limited to, indemnification\npayments made to any Persons) and expenses, including interest, reasonable\nexpenses of investigation, court costs, reasonable fees and expenses of\nattorneys, accountants and other experts or other expenses of litigation or\nother proceedings or of any claim, default or assessment (such fees and expenses\nto include all fees and expenses, including the reasonable fees and expenses of\nattorneys, incurred in connection with (i) the investigation or defense of any\nThird Party Claims or (ii) asserting or disputing any rights under this\nAgreement against any party hereto or otherwise).\n\n          \"Merger\" has the meaning ascribed to it in the recitals to this\nAgreement.\n\n          \"Merger Sub\" has the meaning ascribed to it in the forepart of this\nAgreement.\n\n          \"NASD\" means the National Association of Securities Dealers, Inc.\n\n          \"New Shares\" has the meaning ascribed to it in Section 7.2(d)(ii).\n\n          \"NNM\" means the distinct tier of The Nasdaq Stock Market referred to\nas the Nasdaq National Market.\n\n          \"Officer's Certificate\" has the meaning ascribed to it in Section\n7.2(e)(i).\n\n          \"Option\" with respect to any Person means any security, right,\nsubscription, warrant, option, \"phantom\" stock right or other Contract that\ngives the right to (i) purchase or otherwise receive or be issued any shares of\ncapital stock or other equity interests of such Person or any security of any\nkind convertible into or exchangeable or exercisable for any shares of capital\nstock or other equity interests of such Person; (ii) receive any benefits or\nrights similar to any rights enjoyed by or accruing to the holder of shares of\ncapital stock or other equity interests of such Person, including any rights to\nparticipate in the equity, income or election of directors or officers of such\nPerson, excluding, however, the Company Preferred Stock; or (iii) whose value is\nin whole or in part dependent on the value of any class or series of Company\nCapital Stock or the value of the equity interests of the Company.\n\n          \"Order\" means any writ, judgment, decree, injunction or similar order\nof any Governmental or Regulatory Authority (in each such case whether\npreliminary or final and whether subject to appeal or review or not).\n\n          \"Other Tax\" means any sales, use, ad valorem, business license,\nwithholding, payroll, employment, excise, stamp, transfer, recording,\noccupation, premium, property, \n\n                                     -60-\n\n\n \nvalue added, custom duty, severance, windfall profit or license tax,\ngovernmental fee or other similar assessment or charge, together with any\ninterest and any penalty, addition to tax or additional amount imposed by any\nTaxing Authority responsible for the imposition of any such tax (domestic or\nforeign).\n\n          \"Parent\" has the meaning ascribed to it in the forepart of this\nAgreement.\n\n          \"Parent Common Stock\" has the meaning ascribed to it in the recitals.\n\n          \"Parent Financial Statements\" has the meaning ascribed to it in\nSection 3.3.\n\n          \"PBGC\" means the Pension Benefit Guaranty Corporation established\nunder ERISA.\n\n          \"Permit\" means any license, permit, franchise or authorization.\n\n          \"Person\" means any natural person, corporation, general partnership,\nlimited partnership, limited liability company or partnership, proprietorship,\nother business organization, postal service, trust, union, association or\nGovernmental or Regulatory Authority.\n\n          \"Plan\" has the meaning ascribed to it in Section 2.13(a).\n\n          \"PTO\" means the United States Patent and Trademark Office.\n\n          \"Registered Intellectual Property\" shall mean all United States,\ninternational and foreign: (i) patents, patent applications (including\nprovisional applications); (ii) registered trademarks and servicemarks,\napplications to register trademarks, intent-to-use applications, other\nregistrations or applications to trademarks or servicemarks, or trademarks or\nservicemarks in which common law rights are owned or otherwise controlled; (iii)\nregistered copyrights and applications for copyright registration; (iv) any mask\nwork registrations and applications to register mask works; and (v) any other\nIntellectual Property that is the subject of an application, certificate,\nfiling, registration or other document issued by, filed with, or recorded by,\nany state, government or other public legal authority.\n\n          \"Release\" means any spilling, leaking, pumping, pouring, emitting,\nemptying, discharging, injecting, escaping, leaching, dumping or disposing of a\nHazardous Material into the Environment.\n\n          \"Relevant Group\" has the meaning ascribed to it in Section 2.10(a).\n\n          \"Restricted Stock Purchase Agreements\" means the Stock Purchase\nAgreements listed on Schedule 1.6(b)(v) of the Disclosure Letter.\n\n          \"SEC\" means the Securities and Exchange Commission or any successor\nentity.\n\n                                     -61-\n\n\n \n          \"SEC Documents\" means, with respect to any Person, each report,\nschedule, form, statement or other document filed with the SEC by such Person\npursuant to Section 12 or 13(a) of the Exchange Act.\n\n          \"Securities Act\" means the Securities Act of 1933, as amended, and the\nrules and regulations promulgated thereunder.\n\n          \"Series A Exchange Ratio\" means (a) the Common Stock Exchange Ratio\nplus (b) the quotient of (i) $0.375 divided by (ii) the Closing Price.\n\n          \"Series A Liquidation Preference\" means the product of (i) the number\nof shares of Series A Preferred Stock outstanding immediately prior to the\nEffective Time and (ii) $0.375.\n\n          \"Series A Preferred Stock\" means the Series A Preferred Stock of the\nCompany.\n\n          \"Series B Exchange Ratio\" means (a) the Common Stock Exchange Ratio\nplus (b) the quotient of (i) $0.75 divided by (ii) the Closing Price.\n\n          \"Series B Liquidation Preference\" means the product of (i) the sum of\nthe number of shares of Series B Preferred Stock outstanding immediately prior\nto the Effective Time and the number of shares of Series B Preferred Stock\nissuable upon the exercise of the MBE Warrant and (ii) $0.75.\n\n          \"Series B Preferred Stock\" means the Series B Preferred Stock of the\nCompany.\n\n          \"Shareholders' Agent\" has the meaning ascribed to it in Section\n6.3(m).\n\n          \"Site\" means any of the real properties currently or previously owned,\nleased, occupied, used or operated by the Company, any predecessors of the\nCompany, or any entities previously owned by the Company, including all soil,\nsubsoil, surface waters and groundwater.\n\n          \"Stock Plan\" has the meaning ascribed to it in Section 1.6(c)(iv).\n\n          \"Subsidiary\" means any Person in which the Company or the Parent, as\nthe context requires, directly or indirectly through Subsidiaries or otherwise,\nbeneficially owns at least 50% of either the equity interest in, or the voting\ncontrol of, such Person, whether or not existing on the date hereof.\n\n          \"Support Agreement\" has the meaning ascribed to it in the recitals.\n\n          \"Surviving Corporation\" has the meaning ascribed to it in Section 1.1.\n\n          \"Takeover Statute\" means a \"fair price,\" \"moratorium,\" \"control share\nacquisition,\" \"interested shareholder\" or other similar antitakeover statute or\nregulation enacted under state or federal laws in the United States.\n\n                                     -62-\n\n\n \n          \"Tax\" or \"Taxes\" means Income Taxes and\/or Other Taxes, as the context\nrequires.\n\n          \"Tax Laws\" means the Code, federal, state, county, local or foreign\nlaws relating to Taxes and any regulations or official administrative\npronouncements released thereunder.\n\n          \"Tax Returns\" means any return, report, information return, schedule,\ncertificate, statement or other document (including any related or supporting\ninformation) filed or required to be filed with, or, where none is required to\nbe filed with a Taxing Authority, the statement or other document issued by, a\nTaxing Authority in connection with any Tax.\n\n          \"Taxing Authority\" means any governmental agency, board, bureau, body,\ndepartment or authority of any United States federal, state or local\njurisdiction or any foreign jurisdiction, having or purporting to exercise\njurisdiction with respect to any Tax.\n\n          \"Third Party Claim\" has the meaning ascribed to it in Section 7.2(j).\n\n          \"Third Party Expenses\" has the meaning ascribed to it in Section 5.5.\n\n          \"Washington Code\" means the Washington Business Corporations Act and\nall amendments and additions thereto.\n\n          (b)  Unless the context of this Agreement otherwise requires, (i)\nwords of any gender include each other gender and the neuter, (ii) words using\nthe singular or plural number also include the plural or singular number,\nrespectively, (iii) the terms \"hereof,\" \"herein,\" \"hereby\" and derivative or\nsimilar words refer to this entire Agreement as a whole and not to any\nparticular Article, Section or other subdivision, (iv) the terms \"Article\" or\n\"Section\" or other subdivision refer to the specified Article, Section or other\nsubdivision of the body of this Agreement, (v) the phrases \"ordinary course of\nbusiness\" and \"ordinary course of business consistent with past practice\" refer\nto the business and practice of the Company, (vi) the words \"include,\"\n\"includes\" and \"including\" shall be deemed to be followed by the phrase \"without\nlimitation,\" and (vii) when a reference is made in this Agreement to Exhibits,\nsuch reference shall be to an Exhibit to this Agreement unless otherwise\nindicated. All accounting terms used herein and not expressly defined herein\nshall have the meanings given to them under GAAP. The term \"party\" or \"parties\"\nwhen used herein refer to the Parent and Merger Sub, on the one hand, and the\nCompany, on the other hand.\n\n          (c)  When used herein, the phrase \"to the knowledge of\" any Person,\n\"to the best knowledge of\" any Person, \"known to\" any Person or any similar\nphrase, means (i) with respect to any Person who is an individual, the actual\nknowledge of such Person, (ii) with respect to any other Person, the actual\nknowledge of the directors and officers of such Person and other individuals\nthat have a similar position or have similar powers and duties as the officers\nand directors of such Person, and (iii) in the case of each of (i) and (ii), the\nknowledge of facts that such individuals should have after due inquiry.\n\n                                     -63-\n\n\n \n     IN WITNESS WHEREOF, the Parent, Merger Sub and Company and with respect to\nSection 7.2 only, the Depositary have caused this Agreement to be signed by\ntheir duly authorized representatives, all as of the date first written above.\n\nSTAMPS.COM INC.                        ISHIP.COM, INC.\n\n \n\nBy: \/s\/ John M. Payne                  By: \/s\/ Stephen M. Teglovic\n   --------------------------------       --------------------------------------\n   John M. Payne                          Stephen M. Teglovic\n   Chairman and Chief Executive Officer   President and Chief Executive Officer\n  \n\nROCKET ACQUISITION CORP.\n\nBy: \/s\/ John M. Payne\n   --------------------------------       \n   John M. Payne\n   Chairman and Chief Executive Officer\n\n\nU.S. STOCK TRANSFER CORPORATION,\nas Depositary\n\n\n\nBy: \/s\/ Carol J. Clays\n   --------------------------------       \n   Name:  Carol J. Clays\n   Title: Assistant Vice President\n\n\n \n                               TABLE OF CONTENTS\n                               -----------------\n\n\n<caption> \n                                                                          Page\n                                                                          ----\n                                                                        \nARTICLE 1 THE MERGER......................................................  2\n     1.1   The Merger.....................................................  2\n     1.2   Effective Time.................................................  2\n     1.3   Effect of the Merger on Constituent Corporations...............  2\n     1.4   Articles of Incorporation and Bylaws of Surviving Corporation..  2\n     1.5   Directors and Officers of Surviving Corporation................  2\n     1.6   Maximum Number of Shares of Parent Common Stock to be\n           Issued; Effect on Outstanding Securities of the Company........  3\n     1.7   Dissenting Shares..............................................  5\n     1.8   Exchange Procedures............................................  6\n     1.9   No Further Ownership Rights in Company Capital Stock...........  7\n     1.10  Lost, Stolen or Destroyed Certificates.........................  7\n\nARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................  7\n     2.1   Organization and Qualification.................................  8\n     2.2   Authority Relative to this Agreement...........................  8\n     2.3   Capital Stock..................................................  8\n     2.4   No Subsidiaries................................................  9\n     2.5   No Conflicts...................................................  9\n     2.6   Books and Records; Organizational Documents.................... 10\n     2.7   Company Financial Statements................................... 10\n     2.8   Absence of Changes............................................. 11\n     2.9   No Undisclosed Liabilities..................................... 15\n     2.10  Taxes.......................................................... 15\n     2.11  Legal Proceedings.............................................. 17\n     2.12  Compliance with Laws and Orders................................ 17\n     2.13  Plans; ERISA................................................... 17\n     2.14  Title to Property.............................................. 20\n     2.15  Intellectual Property.......................................... 20\n     2.16  Contracts...................................................... 23\n     2.17  Insurance...................................................... 24\n     2.18  Affiliate Transactions......................................... 24\n     2.19  Employees; Labor Relations..................................... 25\n     2.20  Environmental Matters.......................................... 26\n     2.21  Substantial Partnerships....................................... 27\n     2.22  Accounts Receivable............................................ 27\n     2.23  Other Negotiations; Brokers; Third Party Expenses.............. 28\n     2.24  Foreign Corrupt Practices Act.................................. 28\n     2.25  Financial Projections.......................................... 28\n     2.26  Approvals...................................................... 28\n     2.27  Takeover Statutes.............................................. 29\n     2.28  Registration Statement; Information Sheet\/Prospectus........... 29\n     2.29  Disclosure..................................................... 30\n \n\n                                      -i-\n\n\n \n\n\n<caption> \n                                                                          Page\n                                                                          ----\n                                                                        \nARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB......... 30\n     3.1   Organization and Qualification................................. 30\n     3.2   Authority Relative to this Agreement........................... 30\n     3.3   SEC Documents; the Parent Financial Statements................. 30\n     3.4   No Conflicts................................................... 31\n     3.5   Ownership of Merger Sub; No Prior Activities................... 32\n     3.6   Investment Advisors............................................ 32\n     3.7   Absence of Certain Changes or Events........................... 32\n     3.8   Compliance with Laws........................................... 32\n     3.9   Tax Matters.................................................... 32\n     3.10  Intellectual Property Rights................................... 32\n     3.11  Year 2000 Preparedness......................................... 33\n\nARTICLE 4 CONDUCT PRIOR TO THE EFFECTIVE TIME............................. 34\n     4.1   Conduct of Business of the Company............................. 34\n     4.2   No Solicitation................................................ 34\n\nARTICLE 5 ADDITIONAL AGREEMENTS........................................... 35\n     5.1   Proxy Statement\/Prospectus; Registration Statement............. 35\n     5.2   Shareholder Approval........................................... 35\n     5.3   Access to Information.......................................... 36   \n     5.4   Confidentiality................................................ 36\n     5.5   Expenses; Termination Fee...................................... 36\n     5.6   Public Disclosure.............................................. 37\n     5.7   Approvals...................................................... 37 \n     5.8   Notification of Certain Matters................................ 37  \n     5.9   Company Affiliate Agreements................................... 37   \n     5.10  Additional Documents and Further Assurances.................... 37\n     5.11  Form S-8....................................................... 38\n     5.12  NNM Listing of Additional Shares Application................... 38\n     5.13  Company's Auditors............................................. 38  \n     5.14  Takeover Statutes.............................................. 38  \n     5.15  Supplemental Disclosure Letter................................. 38   \n     5.16  Tax Treatment.................................................. 38  \n     5.17  Parent Board Representation.................................... 39   \n\nARTICLE 6 CONDITIONS TO THE MERGER........................................ 39\n     6.1   Conditions to Obligations of Each Party to Effect the Merger... 39\n     6.2   Additional Conditions to Obligations of the Company............ 39\n     6.3   Additional Conditions to the Obligations of Parent and \n           Merger Sub..................................................... 40\n \n\n                                     -ii-\n\n\n \n\n\n<caption> \n                                                                          Page\n                                                                          ----\n                                                                        \nARTICLE 7 SURVIVAL OF REPRESENTATIONS, WARRANTIES, \n           COVENANTS AND  AGREEMENTS; ESCROW PROVISIONS................... 42\n     7.1   Survival of Representations, Warranties, Covenants and\n           Agreements..................................................... 42  \n     7.2   Escrow Provisions.............................................. 42   \n\nARTICLE 8 TERMINATION, AMENDMENT AND WAIVER............................... 49\n     8.1   Termination.................................................... 49\n     8.2   Effect of Termination.......................................... 50   \n\nARTICLE 9 MISCELLANEOUS PROVISIONS........................................ 50\n     9.1   Notices........................................................ 50\n     9.2   Entire Agreement............................................... 51\n     9.3   Further Assurances; Post-Closing Cooperation................... 51  \n     9.4   Amendment; Waiver.............................................. 51  \n     9.5   Third Party Beneficiaries...................................... 51  \n     9.6   No Assignment; Binding Effect.................................. 52  \n     9.7   Headings....................................................... 52  \n     9.8   Invalid Provisions............................................. 52  \n     9.9   Governing Law.................................................. 52  \n     9.10  Construction................................................... 52  \n     9.11  Counterparts................................................... 52  \n     9.12  Specific Performance........................................... 52  \n\nARTICLE 10 DEFINITIONS.................................................... 53\n     10.1  Definitions.................................................... 53\n\n\nExhibit A - Form of Support Agreements\nExhibit B - Form of Articles of Merger\nExhibit C - Form of Company Affiliate Agreement\n\n                                     -iii-\n\n<\/caption><\/caption><\/caption><\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[8913],"corporate_contracts_industries":[9501],"corporate_contracts_types":[9622,9626],"class_list":["post-43119","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-stampscom-inc","corporate_contracts_industries-retail__misc","corporate_contracts_types-planning","corporate_contracts_types-planning__merger"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43119","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43119"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43119"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43119"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43119"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}