{"id":43133,"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-u-s-office-products-co-and-mail.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"agreement-and-plan-of-merger-u-s-office-products-co-and-mail","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/planning\/agreement-and-plan-of-merger-u-s-office-products-co-and-mail.html","title":{"rendered":"Agreement and Plan of Merger &#8211; U. S. Office Products Co. and Mail Boxes Etc."},"content":{"rendered":"<pre>\n--------------------------------------------------------------------------------\n\n\n\n\n                             AGREEMENT AND PLAN OF MERGER\n\n\n\n                               Dated as of May 22, 1997\n\n\n\n                                        Among\n\n\n                            U. S. OFFICE PRODUCTS COMPANY,\n\n\n\n                              SANTA FE ACQUISITION CORP.\n\n\n\n                                         And\n\n\n\n                                   MAIL BOXES ETC.\n\n\n\n\n--------------------------------------------------------------------------------\n\n\n\n                                  TABLE OF CONTENTS\n\n                                                                          PAGE\n\n                                      ARTICLE I\n\nTHE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2\n    SECTION 1.1  The Merger. . . . . . . . . . . . . . . . . . . . . . . . . 2\n    SECTION 1.2  Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 2\n    SECTION 1.3  Effective Time. . . . . . . . . . . . . . . . . . . . . . . 2\n    SECTION 1.4  Effects of the Merger . . . . . . . . . . . . . . . . . . . 2\n    SECTION 1.5  Articles of Incorporation and By-laws . . . . . . . . . . . 2\n    SECTION 1.6  Directors and Officers. . . . . . . . . . . . . . . . . . . 2\n    SECTION 1.7  Additional Actions. . . . . . . . . . . . . . . . . . . . . 3\n\n                                      ARTICLE II\n\nEFFECT OF THE MERGER ON THE CAPITAL STOCK OF THECONSTITUENT CORPORATIONS;\nEXCHANGE OF CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . 3\n    SECTION 2.1  Effect on Capital Stock . . . . . . . . . . . . . . . . . . 3\n    SECTION 2.2  Exchange of Certificates. . . . . . . . . . . . . . . . . . 4\n    SECTION 2.3  Dissenters' Rights. . . . . . . . . . . . . . . . . . . . . 6\n\n                                     ARTICLE III\n\nREPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . 6\n    SECTION 3.1  Representations and Warranties of the Company . . . . . . . 6\n    SECTION 3.2  Representations and Warranties of Parent. . . . . . . . . . 24\n\n                                      ARTICLE IV\n\nCOVENANTS RELATING TO CONDUCT OF BUSINESS. . . . . . . . . . . . . . . . . . 27\n    SECTION 4.1  Conduct of Business . . . . . . . . . . . . . . . . . . . . 27\n    SECTION 4.2  No Inconsistent Activities. . . . . . . . . . . . . . . . . 29\n\n                                      ARTICLE V\n\nADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30\n    SECTION 5.1  Preparation of Form S-4 and the Proxy Statement;\n                 Stockholders' Meeting . . . . . . . . . . . . . . . . . . . 30\n    SECTION 5.2  Access to Information; Confidentiality. . . . . . . . . . . 31\n    SECTION 5.3  Reasonable Efforts; Notification. . . . . . . . . . . . . . 31\n    SECTION 5.4  Stock Option Plans. . . . . . . . . . . . . . . . . . . . . 32\n    SECTION 5.5  Conveyance Taxes. . . . . . . . . . . . . . . . . . . . . . 33\n    SECTION 5.6  Indemnification, Exculpation and Insurance. . . . . . . . . 33\n    SECTION 5.7  Fees and Expenses . . . . . . . . . . . . . . . . . . . . . 33\n    SECTION 5.8  Public Announcements. . . . . . . . . . . . . . . . . . . . 34\n    SECTION 5.9  Affiliates; Accounting and Tax Treatment. . . . . . . . . . 34\n\n\n\n                                      ARTICLE VI\n\nCONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34\n    SECTION 6.1  Conditions to Each Party's Obligations to Effect\n                 the Merger. . . . . . . . . . . . . . . . . . . . . . . . . 34\n    SECTION 6.2  Additional Conditions to Obligations of Parent and Sub. . . 35\n    SECTION 6.3  Additional Conditions to Obligations of the Company . . . . 36\n\n                                     ARTICLE VII\n\nTERMINATION, AMENDMENT AND WAIVER. . . . . . . . . . . . . . . . . . . . . . 37\n    SECTION 7.1  Termination . . . . . . . . . . . . . . . . . . . . . . . . 37\n    SECTION 7.2  Effect of Termination . . . . . . . . . . . . . . . . . . . 39\n    SECTION 7.3  Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 39\n    SECTION 7.4  Extension; Waiver . . . . . . . . . . . . . . . . . . . . . 39\n    SECTION 7.5  Termination Fee . . . . . . . . . . . . . . . . . . . . . . 39\n\n                                     ARTICLE VIII\n\nGENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40\n    SECTION 8.1  Nonsurvival of Representations and Warranties . . . . . . . 40\n    SECTION 8.2  Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 40\n    SECTION 8.3  Definitions . . . . . . . . . . . . . . . . . . . . . . . . 41\n    SECTION 8.4  Interpretation. . . . . . . . . . . . . . . . . . . . . . . 42\n    SECTION 8.5  Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 42\n    SECTION 8.6  Entire Agreement; No Third-Party Beneficiaries. . . . . . . 42\n    SECTION 8.7  Governing Law . . . . . . . . . . . . . . . . . . . . . . . 42\n    SECTION 8.8  Assignment. . . . . . . . . . . . . . . . . . . . . . . . . 42\n    SECTION 8.9  Enforcement . . . . . . . . . . . . . . . . . . . . . . . . 42\n\n\n\n                                       EXHIBITS\n\n    EXHIBIT A    - Agreement of Merger\n    EXHIBIT B    - Form of Voting Agreement\n    EXHIBIT 5.9  - Form of the Company Affiliate Letter\n    EXHIBIT 6.2  - Form of Opinion of O'Melveny &amp; Myers LLP\n    EXHIBIT 6.3  - Form of Opinion of Morgan, Lewis &amp; Bockius LLP\n\n\n                                         -ii-\n\n\n\n                             AGREEMENT AND PLAN OF MERGER\n\n\n          AGREEMENT AND PLAN OF MERGER, dated as of May 22, 1997, among U. S.\nOFFICE PRODUCTS COMPANY, a Delaware corporation (\"PARENT\"), SANTA FE ACQUISITION\nCORP., a California corporation and a direct, wholly-owned subsidiary of Parent\n(\"SUB\"), and MAIL BOXES ETC., a California corporation (the \"COMPANY\").\n\n\n                                      BACKGROUND\n\n\n          A.        The respective Boards of Directors of Parent, Sub and the\nCompany have approved the merger of Sub with and into the Company (the\n\"MERGER\"), upon the terms and subject to the conditions set forth in this\nAgreement and in accordance with the General Corporation Law of the State of\nCalifornia (the \"CGCL\"), whereby each issued and outstanding share of common\nstock of the Company, no par value per share (the \"COMPANY COMMON STOCK\"), other\nthan shares to be cancelled in accordance with Section 2.1(b), will be converted\ninto the right to receive a certain number of shares of common stock, $.001 par\nvalue per share, of Parent (\"PARENT COMMON STOCK\"), such number to be determined\nas provided herein.\n\n          B.        The Merger requires the approval of the holders of a\nmajority of the outstanding shares of the Company Common Stock (the \"COMPANY\nSTOCKHOLDER APPROVAL\").\n\n          C.        Parent, Sub and the Company desire to make certain\nrepresentations, warranties, covenants and agreements in connection with the\nMerger and also to prescribe various conditions to the Merger.\n\n          D.        For federal income tax purposes, it is intended that the\nMerger will qualify as a reorganization within the meaning of Sections\n368(a)(1)(A) and (a)(2)(E) of the Internal Revenue Code of 1986, as amended (the\n\"CODE\").\n\n          E.        For accounting purposes, it is intended that the Merger will\nbe accounted for as a \"pooling-of-interests.\"\n\n          F.        Concurrently with the execution of this Agreement and as an\ninducement to Parent to enter into this Agreement, Michael Dooling, Anthony\nDeSio, and United Parcel Service, stockholders of the Company (the \"SIGNIFICANT\nSTOCKHOLDERS\"), have entered into a voting agreement with Parent (the\n\"SIGNIFICANT STOCKHOLDER AGREEMENT\") in the form of Exhibit B hereto pursuant to\nwhich the Significant Stockholders have, among other things, agreed to vote\ntheir shares of the Company Common Stock in favor of the Merger.  In addition,\nconcurrent with the execution of this Agreement, the Company has obtained from\neach other affiliate of the Company a written agreement in substantially the\nform of Exhibit 5.9 hereto and a copy of such agreement has been delivered to\nParent.\n\n\n                                      AGREEMENT\n\n          In consideration of the representations, warranties, covenants and\nagreements contained in this Agreement, the parties agree as follows:\n\n\n\n                                      ARTICLE I\n\n                                      THE MERGER\n\n          SECTION 1.1    THE MERGER.  Upon the terms and subject to the\nconditions set forth in this Agreement, and in accordance with the CGCL, Sub\nshall be merged with and into the Company at the Effective Time (as defined in\nSection 1.3).  Following the Merger, the separate corporate existence of Sub\nshall cease and the Company shall continue as the surviving corporation (the\n\"SURVIVING CORPORATION\") and shall succeed to and assume all the rights and\nobligations of the Company and of Sub in accordance with the CGCL.\n\n          SECTION 1.2    CLOSING.  The closing of the Merger will take place at\n10:00 a.m. on a date to be specified by the parties, which shall be no later\nthan the second business day after satisfaction or waiver of the conditions set\nforth in Article VI (the \"CLOSING DATE\"), at the offices of O'Melveny &amp; Myers\nLLP, Suite 1700, 610 Newport Center Drive, Newport Beach, California 92660,\nunless another time, date or place is agreed to in writing by the parties\nhereto.\n\n          SECTION 1.3    EFFECTIVE TIME.  Subject to the provisions of this\nAgreement, on the Closing Date the parties shall file with the California\nSecretary of State (i) a copy of the Agreement of Merger attached hereto as\nExhibit A, (ii) an officers' certificate for each of Sub and the Company, and\n(iii) a certificate of satisfaction of the California Franchise Tax Board for\neach of Sub and the Company, all as required by Section 1103 of the CGCL (such\ndocuments, the \"MERGER DOCUMENTS\"), and shall make all other filings or\nrecordings required under the CGCL.  The Merger shall become effective at such\ntime as the Merger Documents are duly filed with the California Secretary of\nState, or at such other time as Sub and the Company shall agree should be\nspecified in the documents to be filed with the Secretary of State (the date and\ntime of such filing, or such later date or time as may be set forth therein,\nbeing the \"EFFECTIVE TIME\").\n\n          SECTION 1.4    EFFECTS OF THE MERGER.  The Merger shall have the\neffects set forth in Section 1107 of the CGCL and all other effects specified in\nthe applicable provisions of the CGCL.\n\n          SECTION 1.5    ARTICLES OF INCORPORATION AND BY-LAWS.\n\n          (a)       From and after the Effective Time, the articles of\nincorporation of the Company shall be the articles of incorporation of the\nSurviving Corporation until thereafter changed or amended as provided therein or\nby applicable law.\n\n          (b)       From and after the Effective Time, the bylaws of Sub shall\nbe the Bylaws of the Surviving Corporation until thereafter changed or amended\nas provided therein or by applicable law.\n\n          SECTION 1.6    DIRECTORS AND OFFICERS.  The initial directors of the\nSurviving Corporation shall be the directors of Sub immediately prior to the\nEffective Time, each to serve until their successors have been duly elected or\nappointed and qualified or until their earlier death, resignation or removal in\naccordance with the Surviving Corporation's articles of incorporation and\nbylaws.  The initial officers of the Surviving Corporation shall be the officers\nof the Company immediately prior to the Effective Time, with the addition of \nMark D. Director as Assistant Secretary of the Surviving Corporation, each to\nserve until their successors have been duly elected or appointed and qualified\nor\n\n\n                                         -2-\n\n\n\nuntil their earlier death, resignation or removal in accordance with the\nSurviving Corporation's articles of incorporation and bylaws.\n\n          SECTION 1.7    ADDITIONAL ACTIONS.  If, at any time after the\nEffective Time, the Surviving Corporation shall consider or be advised that any\ndeeds, bills of sale, assignments, assurances or any other actions or things are\nnecessary or desirable to vest, perfect or confirm of record or otherwise in the\nSurviving Corporation its right, title or interest in, to or under any of the\nrights, properties or assets of Sub or the Company or otherwise to carry out\nthis Agreement, the officers and directors of the Surviving Corporation shall be\nauthorized to execute and deliver, in the name and on behalf of Sub or the\nCompany, all such deeds, bills of sale, assignments and assurances and to take\nand do, in the name and on behalf of Sub or the Company, all such other actions\nand things as may be necessary or desirable to vest, perfect or confirm any and\nall right, title and interest in, to and under such rights, properties or assets\nin the Surviving Corporation or otherwise to carry out this Agreement.\n\n\n                                      ARTICLE II\n\n                   EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE\n                  CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES\n\n          SECTION 2.1    EFFECT ON CAPITAL STOCK.  At the Effective Time, by\nvirtue of the Merger and without any action on the part of Parent, Sub, the\nCompany, or the holders of any shares of the Company Common Stock or any shares\nof capital stock of Sub:\n\n          (a)       CAPITAL STOCK OF SUB.  Each share of the capital stock of\nSub issued and outstanding immediately prior to the Effective Time shall be\nconverted into and exchanged for one fully paid and nonassessable share of\ncommon stock of the Surviving Corporation.\n\n          (b)       CANCELLATION OF PARENT OWNED STOCK.  Each share of the\nCompany Common Stock that is owned by Parent, Sub or any other subsidiary of\nParent immediately prior to the Effective Time shall automatically be cancelled\nand retired without any conversion thereof and no consideration shall be\ndelivered with respect thereto.\n\n          (c)       CONVERSION OF COMMON STOCK.  Each share of Company Common\nStock issued and outstanding as of the Effective Time, other than shares to be\ncancelled in accordance with Section 2.1(b) or that are held by stockholders\n(\"DISSENTING STOCKHOLDERS\") duly exercising dissenters' rights pursuant to\nChapter 13 of the CGCL and Section 2.3 hereof, shall be converted, subject to\nSection 2.2(d), into the right to receive one share of Parent Common Stock (the\n\"EXCHANGE RATIO\"), subject to adjustment as provided for in this Section 2.1(c).\nThe Exchange Ratio shall not be adjusted if the Share Value (as defined below)\nis equal to or greater than $23.00, but no greater than $29.00.  If the Share\nValue is greater than $29.00, then the Exchange Ratio shall automatically be\nadjusted to equal the quotient of (i) $29.00 divided by (ii) the Share Value. \nIf the Share Value is less than $23.00, then, if the Company has notified Parent\nof its election to terminate this Agreement pursuant to Section 7.1(i) hereof,\nParent shall have the option in its sole and absolute discretion, but not the\nobligation, to adjust the Exchange Ratio to be equal to the quotient of (iii)\n$23.00, divided by (iv) the Share Value, and the Company shall be obligated to\naccept such adjustment.  If the Share Value is less than $23.00, and if the\nCompany does not elect to terminate this Agreement pursuant to Section 7.1(i),\nthe Exchange Ratio shall be unchanged.\n\n\n                                         -3-\n\n\n\nFor purposes hereof, the \"SHARE VALUE\" shall be an amount equal to the average\nclosing price for the Parent Common Stock as reported on the Nasdaq National\nMarket System for the twenty (20) consecutive trading days prior to the date two\n(2) business days prior to the Company Stockholders' Meeting (as defined in\nSection 5.1(d), so long as the Closing Date occurs within five business days of\nthe Company Stockholders' Meeting or, if the Closing Date is more than five\nbusiness days after the Company Stockholders' Meeting, the Closing Date.\n\nAs of the Effective Time, all such shares of the Company Common Stock shall no\nlonger be outstanding and shall automatically be cancelled and retired and shall\ncease to exist, and each certificate previously representing any such shares\nshall thereafter represent only the right to receive a certificate representing\nthe shares of Parent Common Stock into which such the Company Common Stock was\nconverted in the Merger.  The holders of such certificates previously evidencing\nsuch shares of the Company Common Stock outstanding immediately prior to the\nEffective Time shall cease to have any rights with respect to such shares of the\nCompany Common Stock as of the Effective Time except as otherwise provided\nherein or by law.  Such certificates previously representing shares of the\nCompany Common Stock shall be exchanged for certificates representing whole\nshares of Parent Common Stock issued in consideration therefor upon the\nsurrender of such certificates in accordance with the provisions of Section 2.2,\nwithout interest.  No fractional shares of Parent Common Stock shall be issued,\nand, in lieu thereof, a cash payment shall be made pursuant to Section 2.2(d).\n\n          SECTION 2.2    EXCHANGE OF CERTIFICATES.\n\n          (a)       EXCHANGE PROCEDURE.  As soon as reasonably practicable after\nthe Effective Time, Parent shall cause to be mailed to each holder of record of\na certificate or certificates which immediately prior to the Effective Time\nrepresented outstanding shares of the Company Common Stock (the \"CERTIFICATES\"),\n(i) a letter of transmittal (which shall be in customary form and shall specify\nthat delivery shall be effected, and risk of loss and title to the Certificates\nshall pass, only upon proper delivery of the Certificates to Parent's transfer\nagent (the \"TRANSFER AGENT\")), and (ii) instructions for use in effecting the\nsurrender of the Certificates in exchange for certificates representing shares\nof Parent Common Stock.  Upon surrender of a Certificate for cancellation to the\nTransfer Agent, together with such letter of transmittal, duly executed, and\nsuch other documents as may reasonably be required by the Transfer Agent, the\nholder of such Certificate shall be entitled to receive in exchange therefor a\ncertificate evidencing that number of whole shares of Parent Common Stock which\nsuch holder has the right to receive in respect of the shares of the Company\nCommon Stock formerly evidenced by such Certificate (after taking into account\nall shares of the Company Common Stock then held of record by such holder), cash\nin lieu of fractional shares of Parent Common Stock to which such holder is\nentitled pursuant to Section 2.2(d) and any dividends or other distributions to\nwhich such holder is entitled pursuant to Section 2.2(b), and the Certificate so\nsurrendered shall forthwith be cancelled.  In the event of a transfer of\nownership of the Company Common Stock which is not registered in the transfer\nrecords of the Company, a certificate representing the proper number of shares\nof Parent Common Stock may be issued to a person other than the person in whose\nname the Certificate so surrendered is registered, if such Certificate,\naccompanied by all documents required to evidence and effect such transfer,\nshall be properly endorsed with signature guarantee or otherwise be in proper\nform for transfer and the person requesting such payment shall pay any transfer\nor other taxes required by reason of the issuance of shares of Parent Common\nStock to a person other than the registered holder of such Certificate or\nestablish to the satisfaction of Parent that such tax has been paid or is not\napplicable.  Until surrendered as contemplated by this Section 2.2, each\nCertificate shall be deemed at any time after the Effective Time to represent\nonly the right to receive upon such surrender the certificate evidencing whole\nshares of Parent Common Stock, cash in lieu of any fractional shares of Parent\nCommon Stock to which such holder is\n\n\n                                         -4-\n\n\n\nentitled pursuant to Section 2.2(d) and any dividends or other distributions to\nwhich such holder is entitled pursuant to Section 2.2(b).  No interest will be\npaid or will accrue on any cash payable pursuant to Section 2.2(b) or 2.2(d).\n\n          (b)       DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES.  No\ndividends or other distributions declared or made after the Effective Time with\nrespect to Parent Common Stock with a record date after the Effective Time shall\nbe paid to the holder of any unsurrendered Certificate with respect to the\nshares of Parent Common Stock represented thereby, and no cash payment in lieu\nof fractional shares shall be paid to any such holder pursuant to Section\n2.2(d), in each case until the surrender of such Certificate in accordance with\nthis Article II.  Subject to the effect of applicable escheat laws, following\nsurrender of such Certificate, there shall be paid to the holder of the\ncertificate representing whole shares of Parent Common Stock issued in exchange\ntherefor, without interest, (i) at the time of such surrender, the amount of any\nsuch cash payable in lieu of a fractional share of Parent Common Stock to which\nsuch holder is entitled pursuant to Section 2.2(d) and the amount of dividends\nor other distributions with a record date after the Effective Time theretofore\npaid with respect to such whole shares of Parent Common Stock, and (ii) at the\nappropriate payment date, the amount of dividends or other distributions with a\nrecord date after the Effective Time but prior to such surrender and with a\npayment date subsequent to such surrender payable with respect to such whole\nshares of Parent Common Stock.\n\n          (c)       NO FURTHER OWNERSHIP RIGHTS IN THE COMPANY COMMON STOCK. \nAll shares of Parent Common Stock issued upon the surrender for exchange of\nCertificates in accordance with the terms of this Article II (including any cash\npaid pursuant to Section 2.2(b) or 2.2(d)) shall be deemed to have been issued\n(and paid) in full satisfaction of all rights pertaining to the shares of the\nCompany Common Stock theretofore represented by such Certificates, SUBJECT,\nHOWEVER, to the Surviving Corporation's obligation to pay any dividends or make\nany other distributions with a record date prior to the Effective Time which may\nhave been declared or made by the Company on such shares of the Company Common\nStock in accordance with the terms of this Agreement or prior to the date of\nthis Agreement and which remain unpaid at the Effective Time and have not been\npaid prior to surrender.  At the Effective Time, the stock transfer books of the\nCompany shall be closed, and there shall be no further registrations of\ntransfers of shares of the Company Common Stock thereafter on the records of the\nCompany.  If, after the Effective Time, Certificates are presented to the\nSurviving Corporation, Parent or the Transfer Agent for any reason, they shall\nbe cancelled and exchanged as provided in this Article II.\n\n          (d)       NO FRACTIONAL SHARES.\n\n          (i)       No Certificates or scrip representing fractional shares of\n     Parent Common Stock shall be issued upon the surrender for exchange of\n     Certificates, and such fractional share interests will not entitle the\n     owner thereof to vote or to any rights of a stockholder of Parent.\n\n          (ii)      Each holder of shares of Company Common Stock issued and\n     outstanding at the Effective Time who would otherwise be entitled to\n     receive a fractional share of Parent Common Stock upon surrender of stock\n     certificates for exchange pursuant to this Article II (after taking into\n     account all shares of Company Common Stock then held by such holder) shall\n     receive, in lieu thereof, cash in an amount equal to the value of such\n     fractional shares, which shall be equal to the fraction of a share of\n     Parent Common Stock that would otherwise be issued multiplied by the Share\n     Value.\n\n\n                                         -5-\n\n\n\n          (iii)     As soon as practicable after the determination of the amount\n     of cash, if any, to be paid to holders of Certificates with respect to any\n     fractional share interests, Parent shall promptly pay such amounts to such\n     holders of Certificates subject to and in accordance with the terms of\n     Section 2.2(b).\n\n          (e)       NO LIABILITY.  None of Parent, Sub, the Company or the\nTransfer Agent shall be liable to any holder of shares of the Company Common\nStock for any shares of Parent Common Stock (or dividends or distributions with\nrespect thereto) or cash otherwise deliverable or payable to any holder of\nshares of the Company Common Stock to a public official pursuant to any\napplicable abandoned property, escheat or similar law.\n\n          SECTION 2.3    DISSENTERS' RIGHTS.  If any Dissenting Stockholder\nshall be entitled to require the Company to purchase such stockholder's shares\nfor their fair market value, as provided in Chapter 13 of the CGCL, the Company\nshall give Parent notice thereof and Parent shall have the right to participate\nin all negotiations and proceedings with respect to any such demands.  Neither\nthe Company nor the Surviving Corporation shall, except with the prior written\nconsent of Parent, voluntarily make any payment with respect to, or settle or\noffer to settle, any such demand for payment.  If any Dissenting Stockholder\nshall fail to perfect or shall have effectively withdrawn or lost the right to\ndissent, the shares held by such stockholder shall thereupon be entitled to be\nsurrendered in exchange for shares of Parent Common Stock as provided by\nSections 2.1 and 2.2 hereof.\n\n\n                                     ARTICLE III\n\n                            REPRESENTATIONS AND WARRANTIES\n\n          SECTION 3.1    REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  Except\nas set forth on the disclosure schedule (provided that an item on such\ndisclosure schedule shall be deemed to qualify only the particular subsection or\nsubsections of this Section 3.1 specified for such item) delivered by the\nCompany to Parent prior to the execution of this Agreement (the \"COMPANY\nDISCLOSURE SCHEDULE\"), the Company represents and warrants to Parent and Sub as\nfollows:\n\n          (a)       ORGANIZATION, STANDING AND CORPORATE POWER.  The Company and\neach of its subsidiaries is a corporation duly organized, validly existing and\nin good standing under the laws of the jurisdiction in which it is organized and\nhas the requisite corporate power and authority to carry on its business as now\nbeing conducted.  The Company and each of its subsidiaries is duly qualified or\nlicensed to do business and is in good standing in each jurisdiction in which\nthe nature of its business or the ownership or leasing of its properties makes\nsuch qualification or licensing necessary, other than in such jurisdictions\nwhere the failure to be so qualified or licensed would not, individually or in\nthe aggregate, have a \"material adverse effect\" (as defined in Section 8.3) on\nthe Company.\n\n          (b)       SUBSIDIARIES.  The Company Disclosure Schedule lists each\nsubsidiary of the Company and its jurisdiction of incorporation or organization.\nAll of the outstanding shares of capital stock of each such subsidiary have been\nvalidly issued and are fully paid and nonassessable and are owned by the\nCompany, by another subsidiary of the Company or by the Company and another such\nsubsidiary, free and clear of all pledges, claims, liens, charges, encumbrances\nand security interests of any kind or nature whatsoever (collectively, \"LIENS\").\nExcept for the capital stock of its subsidiaries, and as disclosed in the\nCompany Disclosure Schedule, the Company does not own, directly or indirectly,\nany capital stock or other ownership interest in any corporation, partnership,\njoint venture or other entity.\n\n\n                                         -6-\n\n\n\n          (c)       CAPITAL STRUCTURE.  The authorized capital stock of the\nCompany consists of 40,000,000 shares of the Company Common Stock, no par value\nper share, and 10,000,000 shares of preferred stock, no par value per share (the\n\"COMPANY PREFERRED STOCK\").  At the close of business on April 30, 1997,\n(i) 11,300,273 shares of the Company Common Stock and no shares of the Company\nPreferred Stock were issued and outstanding, (ii) 1,281,882 shares of the\nCompany Common Stock were reserved for issuance upon exercise of outstanding\nStock Options (as defined in Section 5.4), and (iii) an aggregate of  2,779,127\nshares of the Company Common Stock were reserved for issuance under the\nCompany's Stock Option\/Purchase Plans (as defined in Section 5.4).  Except as\nset forth above, at the close of business on April 30, 1997 and since April 30,\n1997, no shares of capital stock or other voting securities of the Company were\nissued, reserved for issuance or outstanding and since April 30, 1997 no shares\nof capital stock or other voting securities of the Company have been issued by\nthe Company except upon exercise of Stock Options outstanding on April 30, 1997.\nThere are no outstanding stock appreciation rights of the Company and no\noutstanding limited stock appreciation rights or other rights to redeem for cash\noptions or warrants of the Company.  All outstanding shares of capital stock of\nthe Company are, and all shares which may be issued upon the exercise of Stock\nOptions will be, when issued, duly authorized, validly issued, fully paid and\nnonassessable and not subject to preemptive rights.   All of the issued and\noutstanding shares of the capital stock of the Company were offered, issued,\nsold and delivered by the Company in compliance with all applicable state and\nfederal laws concerning the issuance of securities.  There are no bonds,\ndebentures, notes or other indebtedness of the Company having the right to vote\n(or convertible into, or exchangeable for, securities having the right to vote)\non any matters on which stockholders of the Company may vote.  Except as set\nforth above, as of the date of this Agreement, there are no outstanding\nsecurities, options, warrants, calls, rights, commitments, agreements,\narrangements or undertakings of any kind to which the Company or any of its\nsubsidiaries is a party or by which any of them is bound obligating the Company\nor any of its subsidiaries to issue, deliver or sell, or cause to be issued,\ndelivered or sold, additional shares of capital stock or other voting securities\nof the Company or of any of its subsidiaries or obligating the Company or any of\nits subsidiaries to issue, grant, extend or enter into any such security,\noption, warrant, call, right, commitment, agreement, arrangement or undertaking.\nThere are no outstanding contractual obligations of the Company or any of its\nsubsidiaries to repurchase, redeem or otherwise acquire any shares of capital\nstock (or options to acquire any such shares) of the Company or any of its\nsubsidiaries.  There are no agreements, arrangements or commitments of any\ncharacter (contingent or otherwise) pursuant to which the Company or any of its\nsubsidiaries is required to file a registration statement under the Securities\nAct of 1933, as amended (the \"SECURITIES ACT\"), or which otherwise relate to the\nregistration of any securities of the Company.\n\n          (d)       AUTHORITY; NONCONTRAVENTION.\n\n          (i)       The Company has the requisite corporate power and authority\n     to enter into this Agreement and, subject to the Company Stockholder\n     Approval, to consummate the transactions contemplated by this Agreement. \n     The execution and delivery of this Agreement by the Company and the\n     consummation by the Company of the transactions contemplated by this\n     Agreement have been duly authorized by all necessary corporate action on\n     the part of the Company, subject to the Company Stockholder Approval of\n     this Agreement.  This Agreement has been duly executed and delivered by the\n     Company and constitutes a valid and binding obligation of the Company,\n     enforceable against the Company in accordance with its terms, except to the\n     extent such enforcement may be limited by applicable bankruptcy,\n     reorganization, moratorium or other such law.  The execution and delivery\n     of this Agreement does not, and the consummation of the transactions\n     contemplated by this Agreement and compliance with the provisions of this\n     Agreement will not, conflict with, or result in any violation of or default\n     (with\n\n\n                                         -7-\n\n\n\n     or without notice or lapse of time, or both) under, or give rise to a right\n     of termination, cancellation or acceleration of any obligation or to loss\n     of any benefit under, or result in the creation of any Lien upon any of the\n     properties or assets of the Company or any of its subsidiaries under,\n     (i) the articles of incorporation or bylaws of the Company or the\n     comparable charter or organizational documents of any of its subsidiaries,\n     (ii) any loan or credit agreement, note, bond, mortgage, indenture, lease\n     or other agreement, instrument, permit, concession, franchise or license\n     applicable to or, in the case of franchises or licenses, granted by, the\n     Company or any of its subsidiaries or otherwise applicable to their\n     respective properties or assets or (iii) subject to the governmental\n     filings and other matters referred to in the following sentence, any\n     judgment, order, decree, injunction, statute, law, ordinance, rule or\n     regulation applicable to the Company or any of its subsidiaries or their\n     respective properties or assets, other than, in the case of clause (ii),\n     any such conflicts, violations, defaults, rights or Liens that would not,\n     individually or in the aggregate, have a material adverse effect on the\n     Company.\n\n          (ii)      No consent, approval, order or authorization of, or\n     registration, declaration or filing with, any federal, state or local\n     government or any court, administrative or regulatory agency or commission\n     or other governmental authority or agency, domestic or foreign (a\n     \"GOVERNMENTAL ENTITY\"), is required by the Company or any of its\n     subsidiaries in connection with the execution and delivery of this\n     Agreement by the Company or the consummation by the Company of the\n     transactions contemplated by this Agreement, except for (A) the filing with\n     the Federal Trade Commission and the Antitrust Division of the Department\n     of Justice (the \"SPECIFIED AGENCIES\") of a premerger notification and\n     report form by the Company under the Hart-Scott-Rodino Antitrust\n     Improvements Act of 1976 (the \"HSR ACT\"), (B) the filing with the\n     Securities and Exchange Commission (the \"SEC\") of (1) the Proxy Statement\n     (as defined in Section 5.1) and (2) such reports under Section 13(a) of the\n     Securities Exchange Act of 1934, as amended (the \"EXCHANGE ACT\"), as may be\n     required in connection with this Agreement and the transactions\n     contemplated by this Agreement and (C) the filing of the Merger Documents\n     with the California Secretary of State and appropriate documents with the\n     relevant authorities of other states in which the Company is qualified to\n     do business.\n\n          (iii)     The Company hereby represents that its Board of Directors,\n     at a meeting duly called and held, has unanimously (A) determined that this\n     Agreement and the transactions contemplated hereby, including the Merger,\n     are fair to and in the best interest of the Company's stockholders, (B)\n     approved this Agreement and the transactions contemplated hereby, including\n     the Merger, which approval satisfies in full the requirements of the CGCL\n     with respect to the transactions contemplated hereby, and (C) resolved to\n     recommend approval and adoption of this Agreement and the Merger by its\n     stockholders.\n\n          (e)       SEC DOCUMENTS; FINANCIAL STATEMENTS.\n\n          (i)       The Company has filed with the SEC all reports and forms and\n     other documents required to be filed by it pursuant to relevant United\n     States securities statutes, regulations, policies and rules (the \"SEC\n     DOCUMENTS\"), all of which have complied in all material respects with all\n     applicable requirements of such statutes, regulations, policies and rules. \n     As of their respective dates, none of the SEC Documents, except as revised\n     or superseded by a later filed SEC Document, without regard to any\n     amendments or filings after the date hereof, contained any untrue statement\n     of a material fact or omitted to state a material fact required to be\n     stated therein or necessary in order to make the statements therein, in\n     light of the circumstances under which they were made, not misleading.  In\n     addition, nothing has come to the attention of the Company\n\n\n                                         -8-\n\n\n\n     since the date any SEC Document was filed that would have made, as of the\n     filing date, any statement in any SEC Document untrue in a material\n     respect, or that, if omitted to be stated as of the filing date, would have\n     made the statements in such SEC Document, in light of the circumstances\n     under which they were made, misleading.  Except to the extent that\n     information contained in any SEC Document has been revised or superseded by\n     a later-filed SEC Document filed and publicly available prior to the date\n     of this Agreement, none of the SEC Documents contains any untrue statement\n     of a material fact or omits to state any material fact required to be\n     stated therein or necessary in order to make the statements therein, in\n     light of the circumstances under which they were made, not misleading.  The\n     financial statements of the Company included in the SEC Documents have been\n     prepared in accordance with generally accepted accounting principles\n     (except, in the case of unaudited statements, as permitted by Form 10-Q of\n     the SEC) applied on a consistent basis during the periods involved (except\n     as may be indicated in the notes thereto) and fairly present the\n     consolidated financial position of the Company and its consolidated\n     subsidiaries as of the dates thereof and the consolidated results of their\n     operations and cash flows for the periods then ended (subject, in the case\n     of unaudited statements, to the omission of footnote information and normal\n     year-end audit adjustments consisting of normal, recurring accruals that\n     are not material).\n\n          (ii)      The books, records and accounts of the Company and its\n     subsidiaries (A) have been maintained in accordance with good business\n     practices on a basis consistent with prior years, (B) are stated in\n     reasonable detail and accurately and fairly reflect in all material\n     respects the transactions and dispositions of the assets of the Company and\n     its subsidiaries and (C) accurately and fairly reflect in all material\n     respects the basis for the Company's financial statements.  The Company has\n     devised and maintains a system of internal accounting controls sufficient\n     to provide reasonable assurances that (D) transactions are executed in\n     accordance with management's general or specific authorization; and (E)\n     transactions are recorded as necessary (1) to permit preparation of\n     financial statements in conformity with generally accepted accounting\n     principles or any other criteria applicable to such statements and (2) to\n     maintain accountability for assets.\n\n          (iii)     Except as set forth in the SEC Documents filed prior to the\n     date of this Agreement, and except for liabilities and obligations incurred\n     in the ordinary course of business consistent with past practice since\n     April 30, 1996, neither the Company nor any of its subsidiaries has any\n     material liabilities or obligations of any nature (whether accrued,\n     absolute, contingent or otherwise).\n\n          (f)       INFORMATION SUPPLIED.  None of the information supplied or\nto be supplied by the Company specifically for inclusion or incorporation by\nreference in (i) the Form S-4 (as defined in Section 5.1) will, at the time the\nForm S-4 is filed with the SEC, at any time it is amended or supplemented or at\nthe time it becomes effective under the Securities Act, contain any untrue\nstatement of a material fact or omit to state any material fact required to be\nstated therein or necessary to make the statements therein, in light of the\ncircumstances under which they are made, not misleading or (ii) the Proxy\nStatement will, at the date it is first mailed to the Company's stockholders or\nat the time of the Company Stockholders' Meeting, contain any untrue statement\nof a material fact or omit to state any material fact required to be stated\ntherein or necessary in order to make the statements therein, in light of the\ncircumstances under which they are made, not misleading.  The Proxy Statement\nwill comply as to form in all material respects with the requirements of the\nExchange Act and the rules and regulations thereunder, except that no\nrepresentation or warranty is made by the Company with respect to statements\n\n\n                                         -9-\n\n\n\nmade or incorporated by reference therein based on information supplied by\nParent or Sub specifically for inclusion or incorporation by reference in the\nProxy Statement.\n\n          (g)       NO DEFAULTS.  Neither the Company nor any of its\nsubsidiaries is, or has received notice that it would be with the passage of\ntime, in default or violation of any term, condition or provision of (i) the\narticles of incorporation or bylaws of the Company or the comparable charter or\norganizational documents of any of its subsidiaries, (ii) any loan or credit\nagreement, note, bond, mortgage, indenture, lease or other agreement,\ninstrument, permit, concession, franchise or license applicable to or, in the\ncase of franchises or licenses, granted by, the Company or any of its\nsubsidiaries or otherwise applicable to their respective properties or assets or\n(iii) any judgment, order, decree, injunction, statute, law, ordinance, rule or\nregulation applicable to the Company or any of its subsidiaries or their\nrespective properties or assets, other than, in the case of clause (ii) and,\nwith respect to statutes, laws, ordinances, rules or regulations, clause (iii),\nany such defaults or violations that would not, individually or in the\naggregate, have a material adverse effect on the Company.\n\n          (h)       ABSENCE OF CERTAIN CHANGES OR EVENTS.  Except as disclosed\nin the SEC Documents filed prior to the date of this Agreement, since April 30,\n1996 the Company and its subsidiaries have conducted their businesses only in\nthe ordinary course consistent with prior practice, and there has not been\n(i) any material adverse change in the Company's business, operations, affairs,\nprospects, properties, assets, profits or condition (financial or otherwise),\n(ii) any declaration, setting aside or payment of any dividend or other\ndistribution (whether in cash, stock or property) with respect to any of the\nCompany's capital stock, (iii) any split, combination or reclassification of any\nof its capital stock or any issuance or the authorization of any issuance of any\nother securities in respect of, in lieu of or in substitution for shares of its\ncapital stock, (iv) any amendment of any material term of any outstanding\nsecurity of the Company or any subsidiary, (v) any sale, encumbrance, assignment\nor transfer of any assets or properties, except in the ordinary of course of\nbusiness and on terms consistent with past practices, (vi) any material\nacquisition of any corporation, partnership or other business organization or\ndivision or any acquisition, lease or other purchase of material assets, (vii)\nany incurrence, assumption or guarantee by the Company or any subsidiary of any\nindebtedness for borrowed money, other than in the ordinary course of business\nand in amounts and on terms consistent with past practices, or any change in the\nmaterial terms of any such indebtedness or guarantee of the Company or any\nsubsidiary (including indebtedness of a third party subject to any such\nguarantee), (viii) any granting by the Company or any of its subsidiaries to any\nofficer or employee of the Company or any of its subsidiaries of any increase in\ncompensation, except in the ordinary course of business consistent with prior\npractice or as was required under employment agreements in effect as of the date\nof the most recent audited financial statements included in the SEC Documents\nfiled prior to the date of this Agreement (a list of all such employment\nagreements being set forth in Schedule 3.1(h) to Section 3.1(h) of the Company\nDisclosure Schedule), (ix) any granting by the Company or any of its\nsubsidiaries to any such officer or employee of any increase in severance or\ntermination pay, except as was required under employment, severance or\ntermination agreements in effect as of the date of the most recent audited\nfinancial statements included in the SEC Documents filed prior to the date of\nthis Agreement, (x) any entry into, or renewal or modification of, by the\nCompany or any of its subsidiaries of any employment, consulting, severance or\ntermination agreement with any such officer or employee, (xi) any damage,\ndestruction or loss, whether or not covered by insurance, that, individually or\nin the aggregate, has or could have a material adverse effect or (xii) any\nchange in accounting methods, principles or practices by the Company materially\naffecting its assets, liabilities or business, except insofar as may have been\nrequired by a change in generally accepted accounting principles.\n\n\n                                         -10-\n\n\n\n          (i)       LITIGATION.  Except as disclosed in the SEC Documents filed\nprior to the date of this Agreement, there is no claim, suit, action,\ninvestigation, audit or proceeding pending or, to the knowledge of the Company,\nthreatened against the Company or any of its subsidiaries that, individually or\nin the aggregate, could reasonably be expected to have a material adverse effect\non the Company; nor is there any judgment, order, decree or injunction\napplicable to the Company or any of its subsidiaries that, individually or in\nthe aggregate, could reasonably be expected to have any such effect.\n\n          (j)       ABSENCE OF CHANGES IN BENEFIT PLANS.\n\n          (i)       Except as disclosed in the SEC Documents filed prior to the\n     date of this Agreement or as required by applicable law, since April 30,\n     1996, there has not been any adoption or amendment in any material respect\n     by the Company or any of its subsidiaries of any collective bargaining\n     agreement or any bonus, pension, profit sharing, deferred compensation,\n     incentive compensation, stock ownership, stock purchase, stock option,\n     phantom stock, retirement, vacation, severance, disability, death benefit,\n     hospitalization, medical or other plan, arrangement or understanding\n     (whether or not legally binding) providing benefits to any current or\n     former employee, officer or director of the Company or any of its\n     subsidiaries.  Except as disclosed in the SEC Documents filed prior to the\n     date of this Agreement, there exist no employment, consulting, severance,\n     termination or indemnification agreements, arrangements or understandings\n     between the Company or any of its subsidiaries and any current or former\n     officer or director of the Company or any of its subsidiaries.  Except as\n     disclosed in the SEC Documents filed prior to the date of this Agreement,\n     since April 30, 1996, neither the Company nor any of its subsidiaries has\n     taken any action to accelerate any rights or benefits under any collective\n     bargaining, bonus, profit sharing, thrift, compensation, stock option,\n     restricted stock, pension, retirement, deferred compensation, employment,\n     termination, severance or other plan, agreement, trust, fund, policy or\n     arrangement for the benefit of any director or officer or for the benefit\n     of employees generally.\n\n          (ii)      Neither the execution and delivery of this Agreement nor the\n     consummation of the transactions contemplated hereby will (A) result in any\n     payment (including severance, unemployment compensation, parachute payment,\n     bonus or otherwise) becoming due to any director, employee or independent\n     contractor of the Company or any of its subsidiaries under any Company\n     Benefit Arrangement or Company Benefit Plan (each as defined in Section\n     3.1(k)) or otherwise, (B) materially increase any benefits otherwise\n     payable under any Company Benefit Arrangement or Company Benefit Plan or\n     otherwise or (C) result in the acceleration of the time of payment or\n     vesting of any such benefits.\n\n          (k)       EMPLOYEE BENEFIT PLANS.\n\n          (i)       Definitions.\n\n                    (A)  \"BENEFIT ARRANGEMENT\" means any benefit arrangement,\n          obligation, custom, or practice, whether or not legally enforceable,\n          to provide benefits, other than salary, as compensation for services\n          rendered, to present or former directors, employees, agents, or\n          independent contractors, other than any obligation, arrangement,\n          custom or practice that is an Employee Benefit Plan, including without\n          limitation employment agreements, severance agreements, executive\n          compensation\n\n\n                                         -11-\n\n\n\n          arrangements, incentive programs or arrangements, sick leave, vacation\n          pay, severance pay policies, plant closing benefits, salary\n          continuation for disability, consulting, or other compensation\n          arrangements, workers' compensation, retirement, deferred\n          compensation, bonus, stock option or purchase, hospitalization,\n          medical insurance, life insurance, tuition reimbursement or\n          scholarship programs, any plans subject to Section 125 of the Code,\n          and any plans providing benefits or payments in the event of a change\n          of control, change in ownership, or sale of a substantial portion\n          (including all or substantially all) of the assets of any business or\n          portion thereof, in each case with respect to any present or former\n          employees, directors, or agents.\n\n                    (B)  \"COMPANY BENEFIT ARRANGEMENT\" means any Benefit\n          Arrangement sponsored or maintained by the Company or any of its\n          subsidiaries or with respect to which the Company or any of its\n          subsidiaries has or may have any liability (whether actual or\n          contingent), in each case with respect to any present or former\n          directors, employees, or agents of the Company and its subsidiaries.\n\n                    (C)  \"COMPANY PLAN\" means any Employee Benefit Plan for\n          which the Company or any of its subsidiaries is the \"plan sponsor\" (as\n          defined in Section 3(16)(B) of ERISA) or any Employee Benefit Plan\n          maintained by the Company or any of its subsidiaries or to which the\n          Company or any of its subsidiaries is obligated to make payments, in\n          each case with respect to any present or former employees of the\n          Company or any of its subsidiaries .\n\n                    (D)  \"EMPLOYEE BENEFIT PLAN\" has the meaning given in\n          Section 3(3) of ERISA.\n\n                    (E)  \"ERISA\" means the Employee Retirement Income Security\n          Act of 1974, as amended, and all regulations and rules issued\n          thereunder, or any successor law.\n\n                    (F)  \"ERISA AFFILIATE\" means any person that, together with\n          the Company, would be or was at any time treated as a single employer\n          under Section 414 of the Code or Section 4001 of ERISA and any general\n          partnership of which the Company or any of its subsidiaries is or has\n          been a general partner.\n\n                    (G)  \"MULTIEMPLOYER PLAN\" means any Employee Benefit Plan\n          described in Section 3(37) of ERISA.\n\n                    (H)  \"QUALIFIED PLAN\" means any Employee Benefit Plan that\n          meets, purports to meet, or is intended to meet the requirements of\n          Section 401(a) of the Code.\n\n                    (I)  \"WELFARE PLAN\" means any Employee Benefit Plan\n          described in Section 3(1) of ERISA.\n\n          (ii)      The Company Disclosure Schedule contains a complete and\n     accurate list of all Company Plans and Company Benefit Arrangements,  and\n     specifically identifies all Company Plans (if any) that are Qualified\n     Plans.\n\n          (iii)     With respect, as applicable, to Employee Benefit Plans and\n     Benefit Arrangements and except to the extent that failure of any\n     representation or warranty in this Section 3.1(k) would not result in a\n     liability to the Company in excess of $250,000:\n\n\n                                         -12-\n\n\n\n                    (A)  true, correct, and complete copies of all the following\n          documents with respect to each Company Plan and Company Benefit\n          Arrangement, to the extent applicable, have been made available to\n          Parent: (1) all documents constituting the Company Plans and Company\n          Benefit Arrangements, including but not limited to, trust agreements,\n          insurance policies, service agreements, and formal and informal\n          amendments thereto; (2) the most recent Forms 5500 or 5500C\/R and any\n          financial statements attached thereto and those for the prior three\n          (3) years; (3) the last Internal Revenue Service (\"IRS\") determination\n          letter, the last IRS determination letter that covered the\n          qualification of the entire plan (if different), and the materials\n          submitted by the Company and its subsidiaries to obtain those letters;\n          (4) the most recent summary plan description; (5) the most recent\n          written descriptions of all non-written agreements relating to any\n          such plan or arrangement;  (6) all reports submitted within the four\n          (4) years preceding the date of this Agreement (and still in the\n          possession of or available to the Company) by third-party\n          administrators, actuaries, investment managers, consultants or other\n          independent contractors; (7) all notices that were given within the\n          three (3) years preceding the date of this Agreement by the IRS,\n          Department of Labor, or any other governmental agency or entity with\n          respect to any plan or arrangement; and (8) the most recent employee\n          manuals or handbooks containing personnel or employee relations\n          policies;\n\n                    (B)  the Mail Boxes Etc. Stock Purchase and Salaried Savings\n          Plan and Trust (the  \"COMPANY 401(k) PLAN\") is the only Qualified\n          Plan.  Neither the Company nor any of its subsidiaries has ever\n          maintained or contributed to another Qualified Plan.  The Company\n          401(k) Plan qualifies under Section 401(a) of the Code, and any trusts\n          maintained pursuant thereto are exempt from federal income taxation\n          under Section 501 of the Code, and nothing has occurred with respect\n          to the design or operation of any Qualified Plans that could cause the\n          loss of such qualification or exemption or the imposition of any\n          liability, lien, penalty, or tax under ERISA or the Code;\n\n                    (C)  neither the Company nor any of its subsidiaries has\n          ever sponsored or maintained, had any obligation to sponsor or\n          maintain, or had any liability (whether actual or contingent) with\n          respect to any Employee Benefit Plan subject to Section 302 of ERISA\n          or Section 412 of the Code or Title IV of ERISA (including any\n          Multiemployer Plan);\n\n                    (D)  each Company Plan and each Company Benefit Arrangement\n          has been maintained in accordance with its constituent documents and\n          with all applicable provisions of the Code, ERISA and other laws,\n          including federal and state securities laws;\n\n                    (E)  there are no pending claims or lawsuits by, against, or\n          relating to any Employee Benefit Plans or Benefit Arrangements that\n          are not Company Plans or Company Benefit Arrangements that would, if\n          successful, result in liability of the Company or any of its\n          subsidiaries, and no claims or lawsuits have been, to the knowledge of\n          the Company, asserted, instituted or threatened by, against, or\n          relating to any Company Plan or Company Benefit Arrangement, against\n          the assets of any trust or other funding arrangement under any such\n          Company Plan, by or against the Company with respect to any Company\n          Plan or Company Benefit Arrangement, or by or against the plan\n          administrator or any fiduciary of any Company Plan or Company Benefit\n\n\n                                         -13-\n\n\n\n          Arrangement; and the Company does not have knowledge of any fact that\n          would reasonably be expected to form the basis for any such claim or\n          lawsuit that, if successful, would reasonably be expected to result in\n          liability of the Company or any of its subsidiaries. The Company Plans\n          and Company Benefit Arrangements are not presently under audit or\n          examination (nor has notice been received of a potential audit or\n          examination) by the IRS, the Department of Labor, or any other\n          governmental agency or entity, and no matters are pending with respect\n          to the Company 401(k) Plan under the IRS's Voluntary Compliance\n          Resolution program, its Closing Agreement Program, or other similar\n          programs;\n\n                    (F)  no Company Plan or Company Benefit Arrangement contains\n          any provision or is subject to any law that would prohibit the\n          transactions contemplated by this Agreement or that would give rise to\n          any vesting of benefits, severance, termination, or other payments or\n          liabilities as a result of the transactions contemplated by this\n          Agreement;\n\n                    (G)  with respect to each Company Plan, there has occurred\n          no non-exempt  \"prohibited transaction\" (within the meaning of Section\n          4975 of the Code) or transaction prohibited by Section 406 of ERISA or\n          breach of any fiduciary duty described in Section 404 of ERISA that\n          would, if successful, result in any liability for the Company, any of\n          its subsidiaries, or any of its or their officers, directors, or\n          employees;\n\n                    (H)  all reporting, disclosure, and notice requirements of\n          ERISA and the Code have been fully and completely satisfied with\n          respect to each Company Plan and each Company Benefit Arrangement;\n\n                    (I)  all amendments and actions required to bring the\n          Company Benefit Plans into conformity with the applicable provisions\n          of ERISA, the Code, and other applicable laws have been made or taken\n          except to the extent such amendments or actions (1) are not required\n          by law to be made or taken until after the Effective Time and (2) are\n          disclosed on the Company Disclosure Schedule;\n\n                    (J)  payment has been made of all amounts that the Company\n          and its subsidiaries are required to pay as contributions to the\n          Company Benefit Plans as of the last day of the most recent fiscal\n          year of each of the plans ended before the date of this Agreement; all\n          benefits accrued under any unfunded Company Plan or Company Benefit\n          Arrangement will have been paid, accrued, or otherwise adequately\n          reserved in accordance with generally accepted accounting principles\n          as of April 30, 1996; and all monies withheld from employee paychecks\n          with respect to Company Plans have been transferred to the appropriate\n          plan within 30 days of such withholding;\n\n                    (K)  neither the Company nor any of its subsidiaries has\n          prepaid or prefunded any Welfare Plan through a trust, reserve,\n          premium stabilization, or similar account, nor does the Company or any\n          of its subsidiaries provide benefits through a voluntary employee\n          beneficiary association as defined in Section 501(c)(9);\n\n                    (L)  no statement, either written or oral, has been made by\n          the Company or\n\n\n                                         -14-\n\n\n\n          any of its subsidiaries to any person with regard to any Company Plan\n          or Company Benefit Arrangement that was not in accordance with the\n          Company Plan or Company Benefit Arrangement and that could have a\n          material adverse effect on the Company;\n\n                    (M)  neither the Company nor any of its subsidiaries has any\n          liability (whether actual or contingent) with respect to any Employee\n          Benefit Plan or Benefit Arrangement that is not a Company Benefit\n          Arrangement or with respect to any Employee Benefit Plan sponsored or\n          maintained (or which has been or should have been sponsored or\n          maintained) by any ERISA Affiliate;\n\n                    (N)  all group health plans of the Company and its\n          affiliates have been operated in material compliance with the\n          requirements of Sections 4980B (and its predecessor) and 5000 of the\n          Code, and the Company and its subsidiaries have provided to\n          individuals entitled thereto all required notices and coverage\n          pursuant to Section 4980B with respect to any \"qualifying event\" (as\n          defined therein);\n\n                    (O)  no employee or former employee of the Company or any of\n          its subsidiaries or beneficiary of any such employee or former\n          employee is, by reason of such employee's or former employee's\n          employment, entitled to receive any benefits, including, without\n          limitation, death or medical benefits (whether or not insured) beyond\n          retirement or other termination of employment as described in\n          Statement of Financial Accounting Standards No. 106, other than (1)\n          death or retirement benefits under a Qualified Plan or (2)\n          continuation coverage mandated under Section 4980B of the Code or\n          other applicable law.\n\n          (l)       TAXES.\n\n          (i)       Each of the Company and its subsidiaries has timely filed\n     all Tax Returns due on or before the Effective Time, and all such Tax\n     Returns are true, correct, and complete in all material respects.\n\n          (ii)      Each of the Company and its subsidiaries has paid in full on\n     a timely basis all Taxes owed by it, whether or not shown on any Tax\n     Return, except for any portions of Taxes owed as would be immaterial in\n     amount and significance.\n\n          (iii)     The amount of the Company's consolidated liability for\n     unpaid Taxes as shown on the Company's balance sheet dated January 31, 1997\n     did not exceed the amount of the then current liability accruals for Taxes\n     (excluding reserves for deferred Taxes) shown on the Company's balance\n     sheet as of such date included in the SEC Documents.\n\n          (iv)      The amount of the Company's consolidated liability for\n     unpaid Taxes for all periods or portions thereof ending on or before the\n     Effective Time as such liability may ultimately be determined does and will\n     not exceed the amount of the current liability accruals for Taxes\n     (excluding reserves for deferred Taxes) as such accruals are reflected on\n     the books and records of the Company on the Effective Time.\n\n          (v)       There are no ongoing examinations or claims against the\n     Company or any of its subsidiaries for Taxes, and no notice of any audit,\n     examination, or claim for Taxes, whether pending or threatened, has been\n     received.\n\n\n                                         -15-\n\n\n\n          (vi)      The Company has a taxable year ended on April 30 in each\n     year\n\n          (vii)     The Company currently utilizes the accrual method of\n     accounting for income Tax purposes and such method of accounting has not\n     changed since its incorporation.  The Company has not agreed to, and is not\n     and will not be required to, make any adjustments under Code Section 481(a)\n     as a result of a change in accounting methods.\n\n          (viii)    Each of the Company and its subsidiaries has withheld and\n     paid over to the proper governmental authorities all Taxes required to have\n     been withheld and paid over (except for any amounts that are immaterial in\n     amount and significance), and complied with all information reporting and\n     backup withholding requirements, including maintenance of required records\n     with respect thereto, in connection with amounts paid to any employee,\n     independent contractor, creditor, or other third party.\n\n          (ix)      Copies of (A) any Tax examinations, (B) extensions of\n     statutory limitations for the collection or assessment of Taxes and (C) the\n     Tax Returns of each of the Company and its subsidiaries for the last fiscal\n     year have been made available to Parent.\n\n          (x)       There are (and as of immediately following the Effective\n     there will be) no Liens on the assets of the Company or any of its\n     subsidiaries relating to or attributable to Taxes.\n\n          (xi)      To the Company's knowledge, there is no basis for the\n     assertion of any claim relating or attributable to Taxes which, if\n     adversely determined, would result in any Lien on the assets of the Company\n     or any of its subsidiaries or otherwise have a material adverse effect on\n     the Company.\n\n          (xii)     None of the assets of the Company and its subsidiaries are\n     treated as \"tax exempt use property\" within the meaning of Section 168(h)\n     of the Code.\n\n          (xiii)    There are no contracts, agreements, plans or arrangements,\n     including without limitation the provisions of this Agreement, covering any\n     employee or former employee of the Company or any of its subsidiaries that,\n     individually or collectively, could give rise to the payment of any amount\n     (or portion thereof) that would not be deductible pursuant to Sections\n     280G, 404 or 162 of the Code.\n\n          (xiv)     The Company has not filed any consent agreement under\n     Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code\n     apply to any disposition of a subsection (f) asset (as defined in Section\n     341(f)(4) of the Code) owned by the Company.\n\n          (xv)      None of the Company or any of its subsidiaries is, or has\n     been at any time, a party to a tax sharing, tax indemnity or tax allocation\n     agreement, and neither the Company nor any of its subsidiaries has assumed\n     the tax liability of any other person under contract.\n\n          (xvi)     The Company is not, and has not been at any time, a \"United\n     States real property holding corporation\" within the meaning of Section\n     897(c)(2) of the Code.\n\n          (xvii)    The Company's tax basis in its consolidated assets for\n     purposes of determining its future amortization, depreciation and other\n     federal income tax deductions is accurately\n\n\n                                         -16-\n\n\n\n     reflected on the Company's tax books and records, except for any variations\n     that are immaterial in amount and significance.\n\n          (xviii)   The Company has not been a member of an affiliated group\n     filing a consolidated federal income Tax Return and does not have any\n     liability for the Taxes of another person under Treas. Reg. Section\n     1.1502-6 (or any similar provision of state, local or foreign law), as a\n     transferee or successor, by contract or otherwise.\n\n          (xix)     The Company does not have a net recognized built-in gain\n     within the meaning of Section 1374 of the Code.\n\nFor purposes of this Agreement, (A) the term \"TAX\" shall include any tax or\nsimilar governmental charge, impost or levy (including without limitation income\ntaxes, franchise taxes, transfer taxes or fees, sales taxes, use taxes, gross\nreceipts taxes, value added taxes, employment taxes, excise taxes, ad valorem\ntaxes, property taxes, withholding taxes, payroll taxes, minimum taxes or\nwindfall profit taxes) together with any related penalties, fines, additions to\ntax or interest imposed by the United States or any state, county, local or\nforeign government or subdivision or agency thereof; and (B) the term \"TAX\nRETURN\" shall mean any return (including any information return), report,\nstatement, schedule, notice, form, estimate, or declaration of estimated tax\nrelating to or required to be filed with any governmental authority in\nconnection with the determination, assessment, collection or payment of any Tax.\n\n          (m)       COMPLIANCE WITH APPLICABLE LAWS.  The Company and its\nsubsidiaries have conducted their businesses in accordance with all applicable\nfederal, state, local and foreign laws, regulations and rules, except where the\nfailure to do so would not, individually or in the aggregate, have a material\nadverse effect on the Company.\n\n          (n)       ENVIRONMENTAL MATTERS.\n\n          (i)       No underground storage tanks and no amount of any substance\n     that has been designated by any Governmental Entity or by applicable\n     federal, state, local or other applicable law to be radioactive, toxic,\n     hazardous or otherwise a danger to health or the environment, including,\n     without limitation, PCBs, asbestos, petroleum, urea-formaldehyde and all\n     substances listed as hazardous substances pursuant to the Comprehensive\n     Environmental Response, Compensation, and Liability Act of 1980, as\n     amended, or defined as a hazardous waste pursuant to the United States\n     Resource Conservation and Recovery Act of 1976, as amended, and the\n     regulations promulgated pursuant to said laws, but excluding office and\n     janitorial supplies properly and safely maintained (a \"HAZARDOUS\n     MATERIAL\"), are present in, on or under any property, including the land\n     and the improvements, ground water and surface water thereof, that the\n     Company or its subsidiaries has at any time owned, operated, occupied or\n     leased.  The Company Disclosure Schedule identifies all underground and\n     aboveground storage tanks, and the capacity, age, and contents of such\n     tanks, located on real property owned or leased by the Company and its\n     subsidiaries.\n\n          (ii)      Neither the Company nor any of its subsidiaries has\n     transported, stored, used, manufactured, disposed of or released, or\n     exposed its employees or others to, Hazardous Materials in violation of any\n     law in effect on or before the Effective Time, nor has the Company or any\n     of its subsidiaries disposed of, transported, sold, or manufactured any\n     product containing a Hazardous Material (collectively, the \"COMPANY\n     HAZARDOUS MATERIALS ACTIVITIES\") in violation of any formal rule,\n     regulation, treaty or statute promulgated by any Governmental Entity in\n\n\n                                         -17-\n\n\n\n     effect prior to or as of the date hereof to prohibit, regulate or control\n     Hazardous Materials or any Company Hazardous Material Activity, except to\n     the extent such Hazardous Materials Activities do not, individually or in\n     the aggregate, have a material adverse effect on the Company.\n\n          (iii)     Each of the Company and its subsidiaries currently holds all\n     environmental approvals, permits, licenses, clearances and consents (the\n     \"ENVIRONMENTAL PERMITS\") necessary for the conduct of the Company Hazardous\n     Material Activities of the Company and its subsidiaries as such activities\n     and business are currently being conducted.  All Environmental Permits are\n     in full force and effect.  The Company and each of its subsidiaries (A) is\n     in compliance in all material respects with all terms and conditions of the\n     Environmental Permits and (B) is in compliance in all material respects\n     with all other limitations, restrictions, conditions, standards,\n     prohibitions, requirements, obligations, schedules and timetables contained\n     in the laws of all Governmental Entities relating to pollution or\n     protection of the environment or contained in any regulation or decree or\n     judgment issued, entered, promulgated or approved thereunder.  To the\n     Company's knowledge, there are no circumstances that may prevent or\n     interfere with such compliance in the future.  The Company Disclosure\n     Schedule includes a listing and description of all Environmental Permits\n     currently held by the Company and its subsidiaries.\n\n          (iv)      No action, proceeding, revocation proceeding, amendment\n     procedure, writ, injunction or claim is pending, or to the knowledge of the\n     Company, threatened concerning any Environmental Permit, Hazardous Material\n     or any Company Hazardous Materials Activity. To the Company's knowledge,\n     there are no past or present actions, activities, circumstances,\n     conditions, events, or incidents that are reasonably expected to involve\n     the Company or any of its subsidiaries (or any person or entity whose\n     liability the Company or any of its subsidiaries has retained or assumed,\n     either by contract or operation of law) in any environmental litigation, or\n     impose upon the Company or any of its subsidiaries (or any person or entity\n     whose liability the Company or any of its subsidiaries has retained or\n     assumed, either by contract or operation of law) any environmental\n     liability including without limitation common law tort liability, except\n     for actions, activities, circumstances, conditions or incidents which,\n     individually or in the aggregate, would not have a material adverse effect\n     on the Company.\n\n          (o)       INTELLECTUAL PROPERTY.\n\n          (i)       The Company and its subsidiaries own or possess adequate and\n     enforceable licenses or other rights to use (including foreign rights), all\n     copyrights, patents, trade names, trade secrets, registered and\n     unregistered trademarks, trade dress franchises, domain names and similar\n     rights now used or employed in the business of the Company and its\n     subsidiaries (the \"INTELLECTUAL PROPERTY\") and such rights will not cease\n     to be valid rights of the Company and its subsidiaries by reason of the\n     execution, delivery and performance of this Agreement or the consummation\n     of the transactions contemplated hereby.\n\n          (ii)      The Company has delivered to Parent a list of all of the\n     Intellectual Property of the Company and its subsidiaries.  The Company\n     Disclosure Schedule also sets forth: (i) for each patent, the number,\n     normal expiration date and subject matter for each country in which such\n     patent has been issued, or, if applicable, the application number, date of\n     filing and subject matter for each country; (ii) for each trademark, the\n     application serial number or registration number, the class of goods\n     covered and the expiration date for each country in which a trademark has\n     been registered; and (iii) for each copyright, the number and date of\n     filing for each country in\n\n\n                                         -18-\n\n\n\n     which a copyright has been filed.  The Company Disclosure Schedule includes\n     all unregistered and common law rights to Intellectual Property that are\n     material to the Company. The Intellectual Property listed in the Company\n     Disclosure Schedule is all such property used by the Company or any of its\n     subsidiaries in connection with their businesses.  True, correct and\n     complete copies of all patents (including all pending applications) owned,\n     controlled, created or used by or on behalf of the Company and its\n     subsidiaries have been provided to Parent.  All pending patent applications\n     have been duly filed.\n\n          (iii)     Neither the Company nor any of its subsidiaries has any\n     obligation to compensate any person for the use of any Intellectual\n     Property, and neither the Company nor any of its subsidiaries has granted\n     to any person any license, option or other rights to use in any manner any\n     of its Intellectual Property, whether requiring the payment of royalties or\n     not, other than licenses to the Company of franchisees or licenses in the\n     ordinary course of business.\n\n          (iv)      Neither the Company nor any of its subsidiaries has received\n     any notice of invalidity or infringement of any rights of others with\n     respect to the Intellectual Property.  No person has notified the Company\n     or any of its subsidiaries that it is claiming any ownership of or right to\n     use such Intellectual Property.  No person, to the best knowledge of the\n     Company, is infringing upon any such Intellectual Property in any way,\n     except where such use would not have a material adverse effect on the\n     Company.  The use of the Intellectual Property by the Company and its\n     subsidiaries does not and will not conflict with, infringe upon or\n     otherwise violate the valid rights of any third party in or to such\n     Intellectual Property, and no action has been instituted against or notices\n     received by the Company or any subsidiary that are presently outstanding\n     alleging that the use of the Intellectual Property infringes upon or\n     otherwise violates any rights of a third party in or to such Intellectual\n     Property.\n\n          (p)       FINANCIAL ADVISORS.  No financial advisor, investment\nbanker, broker or other person, other than ABN AMRO Chicago Corporation, the\nfees and expenses of which will be paid by the Company, is entitled to any\nfinancial advisor's, finder's or other similar fee or commission in connection\nwith the transactions contemplated by this Agreement based upon arrangements\nmade by or on behalf of the Company.  A true, correct and complete copy of the\nCompany's definitive engagement letter with ABN AMRO Chicago Corporation is\nincluded in the Company Disclosure Schedule.\n\n          (q)       ACCOUNTING MATTERS.  Neither the Company nor any of its\naffiliates has taken or agreed to take any action or is aware of any condition\nthat would prevent Parent from accounting for the business combination to be\neffected by the Merger as a pooling-of-interests.\n\n          (r)       VOTING REQUIREMENTS.  The Company Stockholder Approval is\nthe only vote of the holders of any class or series of the Company's securities\nnecessary to approve this Agreement and the transactions contemplated by this\nAgreement.\n\n          (s)       DISCLOSURE.  No representation or warranty made by the\nCompany in this Agreement or in the Company Disclosure Schedule, nor any\ndocument, written information, statement, financial statement, certificate or\nExhibit prepared and furnished or to be prepared and furnished by the Company or\nits representatives pursuant hereto or in connection with the transactions\ncontemplated hereby, when taken together, contains or contained (as of the date\nmade) any untrue statement of a material fact when made, or omits or omitted (as\nthe case may be) to state a material fact necessary to make the statements or\nfacts contained herein or therein not misleading in light of the circumstances\nunder which they were made.\n\n\n                                         -19-\n\n\n\n          (t)       FAIRNESS AND POOLING OPINIONS.  The Company's Board of\nDirectors has received written opinions (a) from ABN AMRO Chicago Corporation\nthat the Exchange Ratio is fair to the Company from a financial point of view\n(the \"COMPANY FAIRNESS OPINION\") and (b) from Ernst &amp; Young LLP that, in\naccordance with generally accepted accounting principles and applicable rules\nand regulations of the SEC, the Company is a poolable entity and the Merger\nshould be treated as a \"pooling of interests\" for accounting purposes (the\n\"COMPANY POOLING OPINION\").\n\n          (u)       RESTRICTIONS ON BUSINESS ACTIVITIES.  There is no material\nagreement, judgment, injunction, order or decree binding upon the Company or any\nof its subsidiaries that has or could reasonably be expected to have the effect\nof prohibiting or materially impairing any business practice of the Company or\nany of its subsidiaries, any acquisition of property by the Company or any of\nits subsidiaries or the conduct of any existing business by the Company or any\nof its subsidiaries or that would be applicable to any parent or affiliate of\nthe Company or its subsidiaries.\n\n          (v)       FRANCHISING MATTERS. \n\n          (i)  DISCLOSURE DOCUMENTS.  The Company's past and present franchise\n     disclosure documents and\/or franchise offering circulars (collectively\n     \"FOCs\") for any area franchises, individual franchises, any other type of\n     franchise the Company offers, and\/or, if applicable, any licenses: (A)\n     materially comply with all applicable Federal Trade Commission (\"FTC\")\n     franchise disclosure regulations, any other applicable foreign or federal\n     laws and regulations, state franchise and business opportunity sales laws\n     and regulations, and local laws and regulations; (B) include and accurately\n     state all material information (including but not limited to the discussion\n     of litigation matters) set forth in them; (C) do not omit any required\n     material information;  (D) accurately state the Company's position that it\n     does not provide to prospective area or individual franchisees \"earnings\n     claims\" information (as that term is defined in the FTC's franchise\n     disclosure regulations and the North American Securities Administrators\n     Association's current Uniform Franchise Offering Circular Guidelines);  (E)\n     have been timely revised to reflect any material changes or developments in\n     the Company's franchise system, agreements, operations, financial\n     condition, litigation matters, or other matters requiring disclosure under\n     any applicable foreign, federal, state, and\/or local law; and (F) include\n     all material documents (including but not limited to audited financial\n     statements for the Company) required by any applicable foreign, federal,\n     state, and\/or local law to be provided to prospective area franchisees,\n     individual franchisees and\/or, if applicable, any licensees.\n\n          (ii) FRANCHISE AND LICENSE AGREEMENTS.  The Company's past and present\n     agreements with its area franchisees, individual franchisees, and licenses:\n     (A) materially comply with applicable foreign, federal, state, and\/or local\n     laws and regulations; (B) do not include provisions that would prevent or\n     otherwise impair the Company's ability to undergo a change in ownership or\n     control or require the Company to notify any area franchisees, individual\n     franchisees, and\/or licensees of such a change in ownership or control; (C)\n     do not obligate the Company to buy back or otherwise acquire the stock,\n     assets, or contractual rights of area franchisees, individual franchisees,\n     and\/or licensees; (D) do not impose on the Company an obligation to\n     guarantee the lease obligations, third party financing obligations, or\n     other material obligations to third parties of the area franchisees,\n     individual franchisees, and\/or licensees; (E) impose on area franchisees,\n     individual franchisees, and licensees an obligation to comply with all\n     applicable federal, state, and local laws and regulations; and (F) impose\n     on area franchisees, individual franchisees, and licensees an obligation to\n     maintain commercially reasonable insurance that names the Company as an\n     additional insured, requires the insurer to notify the Company before it\n     terminates any such\n\n\n                                         -20-\n\n\n\n     insurance policy for nonpayment, and permits the Company to make such\n     payments to maintain such insurance coverage on behalf of any non-paying\n     area franchisee, individual franchisee, or licensee.  \n\n          (iii) REGISTRATION AND DISCLOSURE COMPLIANCE.  All of the area\n     franchises, individual franchises, and licenses of the Company have been\n     sold in material compliance with applicable foreign, federal, state, and\/or\n     local franchise disclosure and registration requirements.  As a result, \n\n          (A)       each prospective area franchisee, individual franchisee,\n                    and, if applicable, licensee was provided with any required\n                    FOC at the earlier of (1) the first personal face-to-face\n                    meeting between the Company and the then prospect for the\n                    purposes of discussing the acquisition of an area franchise,\n                    individual franchise, or, if applicable, license, (2) at\n                    least ten business days before the execution of any\n                    agreement with the Company or the payment of any funds to\n                    the Company by the prospective area franchisee, individual\n                    franchisee, or, if applicable, licensee, or (3) within any\n                    other minimum time period imposed by law;\n\n          (B)       at least five business days before execution of any\n                    agreements with the Company, each prospective area\n                    franchisee, individual franchisee, and, if applicable,\n                    licensee was provided with a completed execution copy of the\n                    Company's area franchise agreement, individual franchise\n                    agreement, or, if applicable, license agreement,\n                    respectively, together with any related documents (E.G.,\n                    spousal consent form, phone transfer agreement, software\n                    license, security agreement, equipment lease, national\n                    account agreement) with all pertinent specific information\n                    for such prospective area franchisee, individual franchisee,\n                    or, if applicable, licensee set forth in those agreements\n                    and documents; \n\n          (C)       each FOC provided to a prospective area franchisee,\n                    individual franchisee, or, if applicable, licensee complied\n                    in all material respects at the time of the delivery of such\n                    FOC with applicable foreign, federal, state, and\/or local\n                    laws regarding such franchise offering circulars;\n\n          (D)       each of the Company's required FOCs were either properly\n                    registered with appropriate franchise regulatory\n                    authorities, covered by a proper notice filing with\n                    appropriate franchise regulatory authorities, or qualified\n                    for an exemption from such registration or notice filing\n                    requirements; \n\n          (E)       each of the Company's offerings were, where applicable,\n                    either properly registered with appropriate business\n                    opportunity sales authorities or qualified for an exemption\n                    from such registration requirements;\n\n          (F)       the Company obtained signed acknowledgments of receipt for\n                    the delivery of each FOC to prospective area franchisees,\n                    individual franchisees, and, if applicable, licensees;  \n\n          (G)       to the extent that the Company may have experienced lapses\n                    in one or more jurisdictions for its registrations for area\n                    franchise offerings, individual franchise\n\n\n                                         -21-\n\n\n\n                    offerings, and\/or, if applicable, license offerings, the\n                    Company did not offer or sell during the period of any such\n                    lapses any such area franchises, individual franchises, or,\n                    if applicable, licenses for franchises (1) in those\n                    jurisdictions, (2) to be operated outside those\n                    jurisdictions by residents of those jurisdictions, or (3)\n                    the sale of which might otherwise have triggered the\n                    application of the franchise registration laws of those\n                    jurisdictions during the periods of any such lapse;\n\n          (H)       to the extent required by foreign, federal, state, and\/or\n                    local law, the Company has complied with all applicable\n                    franchise advertising filing requirements; \n\n          (I)       to the best of its knowledge, the Company is not aware of\n                    any instances in which any of its employees, sales agents,\n                    or sales brokers for area franchises, individual franchises,\n                    or, if applicable, licenses provided information to\n                    prospective area franchisees, individual franchisees, or, if\n                    applicable, individual licensees, that materially differed\n                    from the information contained in the FOCs provided to such\n                    prospects (including but not limited to \"earnings claim\"\n                    information);\n\n          (J)       where required, the Company properly filed with appropriate\n                    franchise regulatory authorities amendments to its FOCs to\n                    reflect any material changes or developments in the\n                    Company's franchise system, agreements, operations,\n                    financial condition, litigation or other matters requiring\n                    disclosure; \n\n          (K)       where required, the Company complied with foreign, federal,\n                    state, and\/or local laws (including in particular those of\n                    California and North Dakota) requiring registration,\n                    disclosure, and\/or other compliance activities associated\n                    with any \"material modifications\" made to the Company's then\n                    current area franchises, individual franchises, or, if\n                    applicable, licenses; and\n\n          (L)       the Company properly and timely converted the format of its\n                    FOCs from the prior format prescribed by the Uniform\n                    Franchise Offering Circular guidelines to the so-called\n                    \"plain English\" guidelines currently in effect for FOCs\n                    prepared in accordance with Uniform Franchise Offering\n                    Circular guidelines.\n\n          (iv)  FRANCHISE AND RELATED LITIGATION.  The Company's April 1997 FOCs\n     for its universal area franchise agreement and universal individual\n     franchise agreement set forth accurate summary information about \n\n          (A)       any governmental regulatory, criminal, and\/or material civil\n                    actions pending against the Company alleging a violation of\n                    a foreign and\/or United States franchise, antitrust or\n                    securities law, fraud, unfair or deceptive practices, or\n                    comparable allegations as well as actions other than\n                    ordinary routine litigation incidental to the Company's\n                    business which are significant in the context of the number\n                    of the Company's franchisees and the size, nature or\n                    financial condition of the franchise system or its business\n                    operations; \n\n          (B)       any convictions of a felony, nolo contendre pleas to a\n                    felony charge, and adverse final judgments in a civil action\n                    in foreign countries and\/or the United States since April\n                    1987 as well as all material actions since April 1987\n                    involving\n\n\n                                         -22-\n\n\n\n                    violation of a franchise, antitrust or securities law,\n                    fraud, unfair or deceptive practices, or comparable\n                    allegations; and\n\n          (C)       all currently effective injunctive or restrictive orders or\n                    decrees relating to the franchise area under a foreign,\n                    federal, state, or local franchise, securities, antitrust,\n                    trade regulation, or trade practices law resulting from a\n                    concluded or pending action or proceeding brought by a\n                    public agency.\n\nIn addition, the Company has not received notice of any threatened\nadministrative, criminal and\/or material civil action against it and\/or any\npersons disclosed in Item II of the Company's April 1997 FOCs for its Universal\nArea Franchise Agreement and Universal Individual Franchise Agreement where such\nthreatened administrative, criminal and\/or material civil action alleges a\nviolation of a foreign and\/or United States franchise, antitrust law, or\nsecurities law, fraud, unfair or deceptive practices, or comparable allegations\nas well as actions other than ordinary routine litigation incidental to the\nCompany's business which are significant in the context of the number of the\nCompany's franchisees and the size, nature, or financial condition of the\nfranchise system or its business operations.\n\n          (v)  FRANCHISEE RELATIONS AND OPERATIONS.  All expenditures from the\n     National Media Fund, which is administered by the Advertising Advisory\n     Council (comprised of ten elected domestic franchisee or area franchisee\n     representatives and a representative of the Company), are approved by that\n     Council and all expenditures from the National Media Fund are authorized\n     verbally and in writing by such Council.  The Company is not aware of any\n     material allegations that any of the expenditures from the National Media\n     Fund have been unauthorized by the Advertising Advisory Council, paid to\n     the Company for anything other than expressly permitted by the contractual\n     provisions associated with the National Media Fund, or was otherwise\n     improper.  In the Company's communications with its area franchisees,\n     individual franchisees, licensees, and representative groups of those area\n     franchisees, individual franchisees, and\/or licensees, the Company is not\n     aware of any material misstatements regarding its operations, franchise\n     system, agreements, financial condition, litigation matters, or plans that\n     could be used as a basis for a successful fraud, misrepresentation, or\n     franchise law violation claim against the Company.  The Company has taken\n     and continues to take commercially reasonable efforts to protect the\n     confidentiality of its current Operations Manual.\n     \n          (vi)      FRANCHISE TERMINATIONS.  The Company's termination of or\n     effort to terminate or refusal to renew any area franchisee, individual\n     franchisee, or, if applicable, licensee, has complied with applicable\n     federal, state, and\/or local franchise termination laws and regulations\n     including, in particular, but not limited to, having provided any such area\n     franchisee, individual franchisee, or, if applicable, licensee involved in\n     such a nonrenewal or termination any statutorily required notice and\n     opportunity to cure.  The Company has complied with all other applicable\n     foreign, federal, state, and\/or local laws and\/or regulations relating to\n     ongoing franchise relationships, the termination of such relationships,\n     and\/or the non-renewal of such relationships.\n\n          (vii)       CONTRACTS. \n\n          (i)       The Company Disclosure Schedule lists each written or oral\n     contract, agreement, arrangement, lease, instrument, mortgage or commitment\n     to which the Company or its Subsidiaries is a party or may be bound\n     (\"CONTRACT\") (A) which involves payments by or to the Company or its\n     Subsidiaries of more than $200,000 per annum, excluding those Contracts\n     that\n\n\n                                         -23-\n\n\n\n     (x) involve payments by franchisees or licensees to the Company, or (y) are\n     between the Company (on its own behalf or on behalf of its franchisees) and\n     vendors entered into in the ordinary course of business, provided, however,\n     that this exclusion shall not apply to any Contract governing material\n     outside vendor relationships entered into after April 30, 1996 and not\n     previously filed as an exhibit to the SEC Documents; (B) material\n     amendments to any compensation agreement or arrangement (including\n     severance agreement or arrangement) with any officer, director or 5%\n     stockholder or any former officer or director, if such amendment has not\n     previously been filed with the Company's SEC Documents; (C) material\n     amendments to franchise agreements, master agreements, area agreements or\n     franchise offering circulars; (D) international franchise agreements; (E)\n     which is an arrangement limiting or restraining the Company or any\n     subsidiary or any successor thereto from engaging or competing in any\n     manner or in any business; (F) under which the Company or any subsidiary\n     guarantees the payment or performance by others or in any way is or will be\n     liable with respect to obligations of any other person; or (G) which is a\n     material arrangement not made in the ordinary course of business.  \n\n          (ii)      There have been filed as exhibits to, or incorporated by\n     reference in, the Form 10-K of the Company for the year ended April 30,\n     1996 all Contracts which, as of the date hereof, are material as described\n     in Item 601(b)(10) of Regulation S-K.  \n\n          (iii)     All Contracts are valid and binding and in full force and\n     effect on the date of this Agreement except to the extent they have\n     previously expired in accordance with their terms.  None of the Company,\n     the subsidiaries nor, to the Company's knowledge, any other parties, have\n     violated any provision of, or committed or failed to perform any act which\n     with notice, lapse of time or both would constitute a default under the\n     provisions of, any Contract, the termination or violation of which, or the\n     default under which, could reasonably be expected to have a material\n     adverse effect on the Company.  True and complete copies of all Contracts\n     listed on the Company Disclosure Schedule or listed in the Form 10-K of the\n     Company for the year ended April 30, 1996, together with all amendments\n     thereto, have been delivered to Parent.\n\n          SECTION 3.2    REPRESENTATIONS AND WARRANTIES OF PARENT.  Except as\nset forth on the disclosure schedule (provided that an item on such disclosure\nschedule shall be deemed to qualify only the particular subsection or\nsubsections of this Section 3.2 specified for such item) delivered by Parent to\nthe Company prior to the execution of this Agreement (the \"PARENT DISCLOSURE\nSCHEDULE\"), Parent represents and warrants to the Company as follows:\n\n          (a)       ORGANIZATION, STANDING AND CORPORATE POWER.  Parent is a\ncorporation duly organized, validly existing and in good standing under the laws\nof the State of Delaware and has the requisite corporate power and authority to\ncarry on its business as now being conducted.  Parent is duly qualified or\nlicensed to do business and is in good standing in each jurisdiction in which\nthe nature of its business or the ownership or leasing of its properties makes\nsuch qualification or licensing necessary, other than in such jurisdictions\nwhere the failure to be so qualified or licensed would not, individually or in\nthe aggregate, have a material adverse effect on Parent.\n\n          (b)       CAPITAL STRUCTURE.  The authorized capital stock of Parent\nconsists of 500,000,000 shares of Parent Common Stock, and 500,000 shares of\npreferred stock, $.001 par value per share (\"PARENT PREFERRED STOCK\").  No\nshares of Parent Preferred Stock are outstanding on the date of this Agreement. \nAt the close of business on April 26, 1997, (i) 69,652,669 shares of Parent\nCommon Stock were issued and outstanding, (ii) no shares of Parent Common Stock\nwere held by Parent in its treasury, (iii) 7,588,774 shares of Parent Common\nStock were reserved for issuance upon exercise of\n\n\n                                         -24-\n\n\n\noutstanding options to purchase shares of Parent Common Stock granted to\nemployees of or consultants to Parent or its subsidiaries or affiliates under\nthe terms of Parent's 1994 Amended and Restated Long-Term Incentive Compensation\nPlan (the \"PARENT STOCK OPTION PLAN\"),  (iv) 9,896,181 shares of Parent Common\nStock were reserved for issuance upon exercise of Parent's outstanding\nconvertible subordinated notes, as described in Parent SEC Documents (as defined\nbelow), (v) 500,000 shares of Parent Common Stock were reserved or available for\nissuance under the terms of the Parent's Employee Stock Purchase Plan, as\ndescribed in the Parent SEC Documents, (vi) 750,000 shares of Parent Common\nStock were reserved or available for issuance under the terms of the Parent's\n1996 Non-Employee Directors' Stock Plan, as described in the Parent SEC\nDocuments, and (vii) the number of shares of Parent Common Stock available for\nissuance upon exercise of options issued under the terms of the Parent Stock\nOption Plan automatically increases to 20% of the total number of issued and\noutstanding shares of Parent Common Stock, as described in the Parent SEC\nDocuments.  Except as set forth above, at the close of business on April 26,\n1997, no shares of capital stock or other voting securities of the Parent were\nissued, reserved for issuance or outstanding, and since April 26, 1997 until the\ndate hereof no shares of capital stock or other voting securities have been\nissued by Parent except (y) upon the exercise of options or other rights\noutstanding at April 26, 1997 under the plans listed in the third sentence of\nthis subsection (b), and (z) the issuance of not more than 56,769 shares of\nParent Common Stock in connection with acquisitions.  All outstanding shares of\ncapital stock of Parent are, and all shares which may be issued pursuant to this\nAgreement will be, when issued, duly authorized, validly issued, fully paid and\nnonassessable and not subject to preemptive rights.  Except for the Convertible\nSubordinated Notes due 2001 and the Convertible Subordinated Notes due 2003 as\ndescribed in the Parent SEC Documents, there are no bonds, debentures, notes or\nother indebtedness of Parent having the right to vote (or convertible into, or\nexchangeable for, securities having the right to vote) on any matters on which\nstockholders of Parent may vote.  Except as set forth above, as of the date of\nthis Agreement, there are no outstanding securities, options, warrants, calls,\nrights, commitments, agreements, arrangements or undertakings of any kind to\nwhich Parent is a party or by which it is bound obligating Parent to issue,\ndeliver or sell, or cause to be issued, delivered or sold, additional shares of\ncapital stock or other voting securities of Parent or obligating Parent to\nissue, grant, extend or enter into any such security, option, warrant, call,\nright, commitment, agreement, arrangement or undertaking, except for options and\nother equity compensation granted by Parent with respect to no more than\n4,000,000 shares of Parent Common Stock since April 26, 1997.  There are no\noutstanding contractual obligations of Parent to repurchase, redeem or otherwise\nacquire any shares of capital stock of Parent.  As of the date of this\nAgreement, the authorized capital stock of Sub consists of 1,000 shares of\ncommon stock, no par value per share, of which 100 shares have been validly\nissued, all of which are fully paid and nonassessable and are owned by Parent\nfree and clear of any Liens.\n\n          (c)       AUTHORITY; NONCONTRAVENTION.\n\n          (i)       Parent and Sub have the requisite corporate power and\n     authority to enter into this Agreement and to consummate the transactions\n     contemplated by this Agreement.  The execution and delivery of this\n     Agreement and the consummation of the transactions contemplated by this\n     Agreement have been duly authorized by all necessary corporate action on\n     the part of Parent and Sub.  This Agreement has been duly executed and\n     delivered by Parent and Sub and constitutes a valid and binding obligation\n     of each such party, enforceable against each such party in accordance with\n     its terms, except to the extent such enforcement may be limited by\n     applicable bankruptcy, reorganization, moratorium, or other law.  The\n     execution and delivery of this Agreement does not, and the consummation of\n     the transactions contemplated by this Agreement and compliance with the\n     provisions of this Agreement will not, conflict with, or result in any\n     violation of, or default (with or without notice or lapse of time, or both)\n     under, or give rise to a\n\n\n                                         -25-\n\n\n\n     right of termination, cancellation or acceleration of any obligation or to\n     loss of any benefit under, or result in the creation of any Lien upon any\n     of the properties or assets of Parent or any of its subsidiaries under, (i)\n     the articles incorporation or bylaws of Parent or Sub or the comparable\n     charter or organizational documents of any other subsidiary of Parent,\n     (ii) any loan or credit agreement, note, bond, mortgage, indenture, lease\n     or other agreement, instrument, permit, concession, franchise or license\n     applicable to Parent or any of its subsidiaries or their respective\n     properties or assets or (iii) subject to the governmental filings and other\n     matters referred to in the following sentence, any judgment, order, decree,\n     injunction, statute, law, ordinance, rule or regulation applicable to\n     Parent or any of its subsidiaries or their respective properties or assets,\n     other than, in the case of clause (ii), any such conflicts, violations or\n     defaults that would not, individually or in the aggregate, have a material\n     adverse effect on Parent.\n\n          (ii)      No consent, approval, order or authorization of, or\n     registration, declaration or filing with any Governmental Entity is\n     required by Parent or any of its subsidiaries in connection with the\n     execution and delivery of this Agreement or the consummation by Parent or\n     Sub, as the case may be, of any of the transactions contemplated by this\n     Agreement, except for (A) the filing with the Specified Agencies of a\n     premerger notification and report form under the HSR Act, (ii) the filing\n     with the SEC of (1) the Form S-4 and (2) such reports under Sections 13(a),\n     13(d) and 16(a) of the Exchange Act as may be required in connection with\n     this Agreement and the transactions contemplated by this Agreement, (C) the\n     filing of the Merger Documents with the California Secretary of State and\n     appropriate documents with the relevant authorities of other states, as\n     required under applicable law, and (D) such other consents, approvals,\n     orders, authorizations, registrations, declarations and filings, including\n     under (1) the laws of any foreign country in which the Company or any of\n     its subsidiaries conducts any business or owns any property or assets or as\n     otherwise required under applicable foreign law or (2) the \"takeover\" or\n     \"blue sky\" laws of various states, the failure of which to be obtained or\n     made would not, individually or in the aggregate, have a material adverse\n     effect on Parent or prevent or materially delay the consummation of any of\n     the transactions contemplated by this Agreement.\n\n          (d)       SEC DOCUMENTS; FINANCIAL STATEMENTS.  Parent has filed with\nthe SEC all required reports and forms and other documents required to be filed\nby it pursuant to relevant United States securities statutes, regulations,\npolicies and rules (the \"PARENT SEC DOCUMENTS\"), all of which have complied in\nall material respects with all applicable requirements of such statutes,\nregulations, policies and rules.  As of their respective dates, none of the\nParent SEC Documents, except as revised or superseded by a later filed Parent\nSEC Document, without regard to any amendments or filings after the date hereof,\ncontained any untrue statement of a material fact or omitted to state a material\nfact required to be stated therein or necessary in order to make the statements\ntherein, in light of the circumstances under which they were made, not\nmisleading.  In addition, nothing has come to the attention of Parent since the\ndate any Parent SEC Document was filed that would have made, as of the filing\ndate, any statement in any Parent SEC Document untrue in a material respect, or\nthat, if omitted to be stated as of the filing date, would have made the\nstatements in such Parent SEC Document, in light of the circumstances under\nwhich they were made, misleading.  Except to the extent that information\ncontained in any Parent SEC Document has been revised or superseded by a\nlater-filed Parent SEC Document filed and publicly available prior to the date\nof this Agreement, none of the Parent SEC Documents contains any untrue\nstatement of a material fact or omits to state any material fact required to be\nstated therein or necessary in order to make the statements therein, in light of\nthe circumstances under which they were made, not misleading.  The financial\nstatements of Parent included in the Parent SEC Documents have been prepared in\naccordance with generally accepted accounting principles (except, in the case of\nunaudited statements, as permitted by Form 10-Q of the SEC) applied on a\nconsistent basis during the\n\n\n                                         -26-\n\n\n\nperiods involved (except as may be indicated in the notes thereto) and fairly\npresent the consolidated financial position of Parent and its consolidated\nsubsidiaries as of the dates thereof and the consolidated results of their\noperations and cash flows for the periods then ended (subject, in the case of\nunaudited statements, to the omission of footnote information and normal\nyear-end adjustments).\n\n          (e)       INFORMATION SUPPLIED.  None of the information supplied or\nto be supplied by Parent or Sub for inclusion or incorporation by reference in\n(i) the Form S-4 will, at the time the Form S-4 is filed with the SEC, at any\ntime it is amended or supplemented or at the time it becomes effective under the\nSecurities Act, contain any untrue statement of a material fact or omit to state\nany material fact required to be stated therein or necessary to make the\nstatements therein, in light of the circumstances under which they are made, not\nmisleading or (ii) the Proxy Statement will, at the date the Proxy Statement is\nfirst mailed to the Company's Stockholders or at the time of the Company\nStockholders' Meeting, contain any untrue statement of a material fact or omit\nto state any material fact required to be stated therein or necessary in order\nto make the statements therein, in light of the circumstances under which they\nare made, not misleading.  The Form S-4 will comply as to form in all material\nrespects with the requirements of the Securities Act and the rules and\nregulations promulgated thereunder, except that no representation or warranty is\nmade by Parent or Sub with respect to statements made or incorporated by\nreference in either the Form S-4 or the Proxy Statement based on information\nsupplied by the Company specifically for inclusion or incorporation by reference\ntherein.\n\n          (f)       FINANCIAL ADVISORS.  No financial advisor, investment\nbanker, broker or other person is entitled to any financial advisor's, finder's\nor other similar fee or commission in connection with the transactions\ncontemplated by this Agreement based upon arrangements made by or on behalf of\nParent.\n\n          (g)       ACCOUNTING MATTERS.  Neither Parent nor any of its\naffiliates has taken or agreed to take any action or is aware of any condition\nthat would prevent Parent from accounting for the business combination to be\neffected by the Merger as a pooling-of-interests.\n\n          (h)       POOLING OPINION.  Parent's Board of Directors has received a\nwritten opinion from Price Waterhouse LLP that, in accordance with generally\naccepted accounting principles and applicable rules and regulations of the SEC,\nParent is a poolable entity and the Merger should be treated as a \"pooling of\ninterests\" for accounting purposes (the \"PARENT POOLING OPINION\").\n\n                                      ARTICLE IV\n\n                      COVENANTS RELATING TO CONDUCT OF BUSINESS\n\n\n          SECTION 4.1    CONDUCT OF BUSINESS.\n\n          (a)       CONDUCT OF BUSINESS BY THE COMPANY.  During the period from\nthe date of this Agreement to the Effective Time, the Company shall, and shall\ncause its subsidiaries to, carry on their respective businesses in the ordinary\ncourse.  Without limiting the generality of the foregoing, between the date of\nthis Agreement and the Effective Time, except (1) as contemplated by this\nAgreement, (2) as set forth in Section 4.1(a) of the Company Disclosure\nSchedule, or (3) with the prior written consent of Parent, the Company shall\nnot, and shall not permit any of its subsidiaries to:\n\n\n                                         -27-\n\n\n\n          (i)       (A)  declare, set aside or pay (whether in cash, stock,\n     property or otherwise) any dividends on, or make any other distributions in\n     respect of, any of its capital stock, other than dividends and\n     distributions by any direct or indirect wholly owned subsidiary of the\n     Company to its parent, (B) split, combine or reclassify any of its capital\n     stock or issue or authorize the issuance of any other securities in respect\n     of, in lieu of or in substitution for shares of its capital stock or\n     (C) purchase, redeem or otherwise acquire any shares of capital stock of\n     the Company or any of its subsidiaries or any other securities thereof or\n     any rights, warrants or options to acquire any such shares or other\n     securities;\n\n          (ii)      other than the issuance of the Company Common Stock upon the\n     exercise of Stock Options outstanding on the date of this Agreement in\n     accordance with their present terms or in accordance with the present terms\n     of any employment agreements existing on the date of this Agreement and\n     described in Section 4.1(a) of the Company Disclosure Schedule, (A) issue,\n     deliver, sell, award, pledge, dispose of or otherwise encumber or authorize\n     or propose the issuance, delivery, grant, sale, award, pledge or other\n     encumbrance (including limitations in voting rights) or authorization of,\n     any shares of its capital stock (including, without limitation, pursuant to\n     the Company's Employee Stock Bonus Plan), any voting securities or any\n     securities convertible into, or any rights, warrants or options to acquire,\n     any such shares, voting securities or convertible securities or (B) amend\n     or otherwise modify the terms of any such rights, warrants or options\n     (except as expressly contemplated by this Agreement);\n\n          (iii)     amend its articles of incorporation, bylaws or other\n     comparable charter or organizational documents, except as may be necessary\n     in connection with a change in the number of directors on the Company's\n     Board of Directors;\n\n          (iv)      mortgage or otherwise encumber or subject to any Lien, or\n     sell, lease, exchange or otherwise dispose of any of, its properties or\n     assets, except in the ordinary course of business consistent with past\n     practice;\n\n          (v)       acquire (by merger, consolidation or acquisition of stock or\n     assets) any material corporation, partnership or other business\n     organization or division thereof or acquire, lease or otherwise purchase\n     assets other than in the ordinary course of business, or sell, lease or\n     otherwise dispose of a material subsidiary or a material amount of assets\n     or securities;\n\n          (vi)      (A) increase the rate or terms of compensation payable or to\n     become payable generally to any of the Company's or any of its\n     subsidiaries' directors, executive officers, or employees other than usual\n     and customary salary increases to employees; (B) pay or agree to pay any\n     pension, retirement allowance or other employee benefit not provided for by\n     any existing Pension Plan, Benefit Plan or employment agreement described\n     in the Company SEC Documents filed prior to the date of this Agreement;\n     (C) except as set forth in Section 4.1(a)(v) of the Company Disclosure\n     Schedule, commit itself to any additional pension, profit sharing, bonus,\n     incentive, deferred compensation, stock purchase, stock option, stock\n     appreciation right, group insurance, severance pay, continuation pay,\n     termination pay, retirement or other employee benefit plan, agreement or\n     arrangement, or increase the rate or terms of any employee plan or benefit\n     arrangement or (D) increase the rate of compensation under or otherwise\n     change the terms of any existing employment agreement; provided, HOWEVER,\n     that nothing in this clause (D) shall preclude payments under the terms of\n     the existing incentive compensation plans of the Company in accordance with\n     past practice or under the terms of any employment agreements in existence\n     as of the date hereof; \n\n\n                                         -28-\n\n\n\n          (vii)     change its fiscal year;\n\n          (viii)    waive any material right or claim of the Company or settle\n     any litigation or material dispute;\n\n          (ix)      incur any indebtedness for borrowed money or guarantee any\n     such indebtedness of another person except in the ordinary course of\n     business;\n\n          (x)       amend any form of franchise agreement (including master and\n     area agreements) or other Contract in a material respect or amend any\n     individual franchise agreement other than in the ordinary course of\n     business or in a manner that would conflict with the provisions of this\n     Agreement or create any liability as a result of the consummation of the\n     transactions contemplated by this Agreement; or\n\n          (xi)      authorize any of, or commit or agree to take any of, the\n     foregoing actions.\n\n          (b)       OTHER ACTIONS.  The Company and Parent shall not, and shall\nnot permit any of their respect subsidiaries to, take any action that would\nresult in (i) any of the representations and warranties of such party set forth\nin this Agreement that are qualified as to materiality becoming untrue or\n(ii) any of such representations and warranties that are not so qualified\nbecoming untrue in any material respect.\n\n          SECTION 4.2    NO INCONSISTENT ACTIVITIES.  In light of the\nconsideration given by the Board of Directors of the Company prior to the\nexecution of this Agreement to, among other things, the transactions\ncontemplated hereby, and in light of advice received from the Company's\nfinancial advisors, the Company agrees that it shall (a) terminate any existing\ndiscussions and\/or negotiations with other parties concerning the potential\nacquisition of the Company or any other transaction that would be inconsistent\nwith the transactions contemplated hereby, and (b) not, nor shall it permit any\nof its subsidiaries to, nor shall it authorize or permit any officer, director\nor employee of, or any investment banker, attorney or other advisor or\nrepresentative of, the Company or any of its subsidiaries to, directly or\nindirectly, solicit or initiate, or encourage the submission of, any Takeover\nProposal (as defined below), or participate in any discussions or negotiations\nregarding, or furnish to any person any information with respect to, or take any\nother action to facilitate any inquiries or the making of any proposal that\nconstitutes, or may reasonably be expected to lead to, any Takeover Proposal;\nprovided, however, that the foregoing clauses (a) and (b) shall not prohibit the\nCompany's Board of Directors from furnishing information to or entering into\ndiscussions or negotiations with any person or entity that makes an unsolicited\nbona fide proposal to acquire the Company pursuant to a merger, consolidation,\nshare exchange, purchase of a substantial portion of the assets, business\ncombination or other similar transaction, if, and only to the extent that,\n(i) the Company's Board of Directors determines in good faith, after considering\napplicable law and receiving the written advice of outside counsel, that such\naction is required by its fiduciary duties to the Company's Stockholders  under\napplicable law, (ii) the Company's Board of Directors determines in good faith,\nafter receiving the written advice of its financial advisors, that such\nunsolicited proposal is financially superior to the transaction contemplated\nhereby and the party making the proposal has demonstrated that the funds\nnecessary for its proposal are reasonably likely to be available (a \"SUPERIOR\nPROPOSAL\"), and (iii) prior to furnishing such information to, or entering into\ndiscussions or negotiations with, such person or entity, the Company provides\nwritten notice to Parent to the effect that it is furnishing information to, or\nentering into discussions or negotiations with, such person or entity and\nreceives from such person or entity an executed confidentiality agreement in\nreasonably customary form.  The Company shall notify Parent orally and in\nwriting of any inquiries,\n\n\n                                         -29-\n\n\n\noffers or proposals with respect to a Takeover Proposal (including without\nlimitation the terms and conditions of any such proposal, the identity of the\nperson making it and all other information reasonably requested by Parent),\nwithin 24 hours of the receipt thereof, shall keep Parent informed of the status\nand details of any such inquiry, offer or proposal and answer Parent's questions\nwith respect thereto, and shall give Parent five business days' advance notice\nof any agreement to be entered into with, or any information to be supplied to,\nany person making such inquiry, offer or proposal.  For purposes of this\nAgreement, \"TAKEOVER PROPOSAL\" means any written proposal for a merger,\nconsolidation, purchase of assets, tender offer or other business combination\ninvolving the Company or any of its subsidiaries or any proposal or offer to\nacquire in any manner, directly or indirectly, an equity interest in, any voting\nsecurities of, or a substantial portion of the assets of, the Company or any of\nits subsidiaries, other than the transactions contemplated by this Agreement. \nNeither the Company nor any of its subsidiaries shall, directly or indirectly,\nrelease any third party from any confidentiality agreement.  Nothing contained\nherein shall prohibit the Company or its Board of Directors from disclosing to\nits stockholders a position as contemplated by Rule 14d-9 and Rule 14e-2(a)\nunder the Exchange Act with respect to a Takeover Proposal by means of a tender\noffer.\n\n\n                                      ARTICLE V\n\n                                ADDITIONAL AGREEMENTS\n\n          SECTION 5.1    PREPARATION OF FORM S-4 AND THE PROXY STATEMENT;\nSTOCKHOLDERS' MEETING.\n\n          (a)       As promptly as reasonably practicable after the execution of\nthis Agreement, (i) the Company shall prepare and file with the SEC a proxy\nstatement relating to the meeting of the Company's stockholders to be held to\nobtain the Company Stockholder Approval (together with any amendments thereof or\nsupplements thereto, the \"PROXY STATEMENT\") and (ii) Parent shall prepare and\nfile with the SEC a registration statement on Form S-4 (together with all\namendments thereto, the \"FORM S-4\") in which the Proxy Statement shall be\nincluded as a prospectus, in connection with the registration under the\nSecurities Act of the shares of Parent Common Stock to be issued to the\nstockholders of the Company pursuant to the Merger.  Each of Parent and the\nCompany shall use all reasonable efforts to cause the Form S-4 to become\neffective as promptly as practicable, and shall take all or any action required\nunder any applicable federal or state securities laws in connection with the\nissuance of shares of Parent Common Stock pursuant to the Merger.  Each of\nParent and the Company shall furnish all information concerning itself to the\nother as the other may reasonably request in connection with such actions and\nthe preparation of the Form S-4 and Proxy Statement.  The Company authorizes\nParent to utilize in the Form S-4 and in all such state filed materials, the\ninformation concerning the Company and its subsidiaries provided to Parent in\nconnection with, or contained in, the Proxy Statement.  Parent promptly will\nadvise the Company when the Form S-4 has become effective and of any supplements\nor amendments thereto, and the Company shall not distribute any written material\nthat would constitute, as advised by counsel to the Company, a \"prospectus\"\nrelating to the Merger or the Parent Common Stock within the meaning of the\nSecurities Act or any applicable state securities law without the prior written\nconsent of Parent.  As promptly as practicable after the Form S-4 shall have\nbecome effective, the Company and Parent shall mail the Proxy Statement to the\nCompany's stockholders.\n\n          (b)       Parent agrees promptly to advise the Company if at any time\nprior to the meeting of stockholders of the Company to approve the Merger any\ninformation provided by it in the Proxy Statement is or becomes incorrect or\nincomplete in any material respect and to provide the Company\n\n\n                                         -30-\n\n\n\nwith the information needed to correct such inaccuracy or omission.  Parent will\nfurnish the Company with such supplemental information as may be necessary in\norder to cause the Proxy Statement, insofar as it relates to Parent and its\nsubsidiaries, to comply with applicable law after the mailing thereof to the\nstockholders of the Company.\n\n          (c)       The Company agrees promptly to advise Parent if at any time\nprior to the meeting of its stockholders any information provided by it in the\nProxy Statement is or becomes incorrect or incomplete in any material respect\nand to provide Parent with the information needed to correct such inaccuracy or\nomission.  The Company will furnish Parent with such supplemental information as\nmay be necessary in order to cause the Proxy Statement, insofar as it relates to\nthe Company and its subsidiaries, to comply with applicable law after the\nmailing thereof to stockholders of the Company.\n\n          (d)       As soon as reasonably practicable following the date of this\nAgreement, the Company shall call and hold a meeting of its stockholders (the\n\"COMPANY STOCKHOLDERS' MEETING\") for the purpose of obtaining the Company\nStockholder Approval.  The Company shall use its best efforts to solicit from\nits stockholders proxies, and shall take all other action necessary or advisable\nto secure the vote or consent of stockholders required by applicable law or\notherwise to obtain the Company Stockholder Approval and through its Board of\nDirectors shall (subject to their fiduciary duties) recommend to its\nstockholders the giving of the Company Stockholder Approval.\n\n          SECTION 5.2    ACCESS TO INFORMATION; CONFIDENTIALITY.  Each of the\nCompany and Parent shall, and shall cause each of its respective subsidiaries\nto, afford to the other party, and to the officers, employees, accountants,\ncounsel, financial advisors and other representatives of such other party,\nreasonable access during normal business hours during the period prior to the\nEffective Time to all their respective properties, books, contracts,\ncommitments, personnel and records and, during such period, each of the Company\nand Parent shall, and shall cause each of its respective subsidiaries to,\nfurnish promptly to the other party, (a) a copy of each report, schedule,\nregistration statement and other document filed by it during such period\npursuant to the requirements of federal or state securities laws and (b) all\nother information concerning its business, properties and personnel as such\nother party may reasonably request.  Except to the extent otherwise required by\nlaw, each of the Company and Parent will hold, and will cause its respective\nofficers, employees, accountants, counsel, financial advisers and other\nrepresentatives and affiliates to hold, any confidential information in\naccordance with the Confidentiality Agreement dated February 28, 1997, between\nParent and the Company (the \"CONFIDENTIALITY AGREEMENT\").\n\n          SECTION 5.3    REASONABLE EFFORTS; NOTIFICATION.\n\n          (a)       Upon the terms and subject to the conditions set forth in\nthis Agreement, each of the parties agrees to use reasonable efforts to take, or\ncause to be taken, all actions, and to do, or cause to be done, and to assist\nand cooperate with the other parties in doing, all things necessary, proper or\nadvisable to consummate and make effective, in the most expeditious manner\npracticable, the Merger and the other transactions contemplated by this\nAgreement, including (i) the making of all necessary registrations and filings\n(including filings with Governmental Entities, if any), (ii) the obtaining of\nall necessary consents, approvals or waivers from third parties and (iii) the\nexecution and delivery of any additional instruments necessary to consummate the\ntransactions contemplated by, and to fully carry out the purposes of, this\nAgreement.\n\n\n                                         -31-\n\n\n\n          (b)       the Company shall give prompt written notice to Parent, and\nParent shall give prompt written notice to the Company, of (i) any\nrepresentation or warranty made by it contained in this Agreement that is\nqualified as to materiality becoming untrue or any such representation or\nwarranty that is not so qualified becoming untrue in any material respect or\n(ii) the failure by it to comply with or satisfy any covenant, condition or\nagreement to be complied with or satisfied by it under this Agreement; provided,\nHOWEVER, that no such notification shall affect the representations, warranties,\ncovenants or agreements of the parties or the conditions to the obligations of\nthe parties under this Agreement.\n\n          SECTION 5.4    STOCK OPTION PLANS.\n\n          (a)       As soon as practicable following the date of this Agreement,\nthe Board of Directors of the Company (or, if appropriate, any committee\nadministering the Stock Option\/Purchase Plans (as defined below)) shall adopt\nsuch resolutions or take such other actions as are required, if any,  to adjust\nthe terms of all outstanding stock options to purchase shares of the Company\nCommon Stock (\"STOCK OPTIONS\") heretofore granted under any stock option, stock\npurchase, restricted stock unit or stock appreciation rights plan, program or\narrangement of the Company, including, without limitation, the Restated 1985\nStock Option Plan, the Santa Fe 1995 Employee Stock Option Plan, and the Santa\nFe 1995 Stock Option Plan for Non-Employee Directors (collectively, the \"STOCK\nOPTION\/PURCHASE PLANS\") as is necessary to provide that each Stock Option\noutstanding immediately prior to the Effective Time, whether or not then\nexercisable, shall be immediately converted as of the Effective Time into the\nright to purchase from Parent the Option Conversion Number (as defined below) of\nshares of Parent Common Stock (each, an \"ADJUSTED OPTION\").  Each Adjusted\nOption will have substantially the same terms as the Stock Option to which it is\nrelated, including the same vesting schedule (other than to the extent\naccelerated pursuant to the terms of such Stock Option, Stock Option\/Purchase\nPlans or in accordance with the present terms of any employment agreements\nexisting on the date hereof, which Stock Option shall remain exercisable\nfollowing the Effective Time in accordance with the provisions of the Stock\nOption Plan under which granted), except for its exercise price and the number\nand kind of shares subject thereto.  The exercise price of any Adjusted Option\n(the \"ADJUSTED EXERCISE PRICE\") shall be an amount equal to the exercise price\nof the Stock Option related to such Adjusted Option as of the date of this\nAgreement divided by the Exchange Ratio.  The \"OPTION CONVERSION NUMBER\" for any\nAdjusted Option shall be equal to the number of shares purchasable pursuant to\nthe Stock Option related to such Adjusted Option as of the date of this\nAgreement multiplied by the Exchange Ratio.  No certificates or scrip\nrepresenting fractional shares of Parent Common Stock shall be issued upon the\nexercise of any Adjusted Option, and no fractional share interest will entitle\nthe owner thereof to vote or to any rights of a stockholder of Parent.  Each\nholder of any Adjusted Option who exercises such Adjusted Option in accordance\nwith its terms and this Agreement who would otherwise have been entitled to\nreceive a fraction of a share of Parent Common Stock (after taking into account\nall Adjusted Options delivered by such holder on the date such Adjusted Options\nare exercised) shall receive, in lieu thereof, cash (without interest) in an\namount equal to such fractional part of a share of Parent Common Stock\nmultiplied by the closing price of Parent Common Stock on the Nasdaq National\nMarket System (as reported by THE WALL STREET JOURNAL or, if not reported\nthereby, any other authoritative source) on the trading date immediately\npreceding the date such Adjusted Options are exercised.\n\n          (b)       Parent agrees to take such actions as are necessary for the\nconversion of such Stock Options of the Company pursuant to Section 5.4(a) into\nAdjusted Options, including the reservation, issuance and listing of Parent\nCommon Stock.\n\n          (c)       A holder of an Adjusted Option may exercise such Adjusted\nOption in whole or in part in accordance with its terms by delivering a properly\nexecuted notice of exercise to Parent,\n\n\n                                         -32-\n\n\n\ntogether with the consideration therefor and the federal withholding tax\ninformation, if any, required in accordance with the related Stock Option Plan.\n\n          SECTION 5.5    CONVEYANCE TAXES.  Parent and the Company shall\ncooperate in the preparation, execution and filing of all returns,\nquestionnaires, applications or other documents regarding any real property\ntransfer or gains, sales, use, transfer, value added, stock transfer and stamp\ntaxes, any transfer, recording, registration and other fees, and any similar\ntaxes which become payable by Parent or the Company in connection with the\ntransactions contemplated hereby that are required or permitted to be filed on\nor before the Effective Time.  All of such taxes and expenses shall be borne by\nParent.\n\n          SECTION 5.6    INDEMNIFICATION, EXCULPATION AND INSURANCE.\n\n          (a)       The articles of incorporation and the bylaws of the\nSurviving Corporation shall contain the provisions with respect to\nindemnification and exculpation from liability set forth in the Company's\narticles of incorporation and bylaws on the date of this Agreement, which\nprovisions shall not be amended, repealed or otherwise modified for a period of\nsix years from the Effective Time in any manner that would adversely affect the\nrights thereunder of individuals who on or prior to the Effective Time were\ndirectors, officers, employees or agents of the Company, unless such\nmodification is required by law.  Parent hereby unconditionally and irrevocably\nguarantees for the benefit of the Company's directors and officers the\nobligations of the Company and the Surviving Corporation under the foregoing\nindemnification arrangements, including any such existing indemnification\nagreements to which the Company is a party; provided, however, that in no event\nshall the amount of such guarantee exceed an amount permitted for such a\nguarantee under the terms of Parent's credit agreement.\n\n          (b)       If Parent, the Surviving Corporation or any of their\nsuccessors or assigns (i) consolidates with or merges into any other person and\nshall not be the continuing or surviving corporation or entity of such\nconsolidation or merger or (ii) transfers all or substantially all of its\nproperties and assets to any person, then and in each such case, proper\nprovisions shall be made so that the successors and assigns of Parent or the\nSurviving Corporation, as the case may be, shall assume the obligations set\nforth in this Section 5.6.\n\n          (c)       Parent shall, to the fullest extent permitted by applicable\nlaw, indemnify and defend (and bear all costs and expenses, including without\nlimitation reasonable attorneys' fees and costs, associated therewith) each\nofficer and director of the Company serving as such immediately before the\nEffective Time for and against any and all claims, damages and losses relating\nto or arising out of (i) their performance of their respective Company duties\nprior to the Effective Time, or (ii) the consummation of any of the transactions\ncontemplated in this Agreement  Parent shall cause the Surviving Corporation to\nprovide officers' and directors' liability insurance in respect of acts or\nomissions occurring prior to the Effective Time covering each such person\ncurrently covered by the Company's officers' and directors' liability insurance\npolicy on terms with respect to coverage and amount no less favorable than those\nof such policy in effect on the date hereof (or, if such insurance policy cannot\nbe obtained, such insurance policy on terms with respect to coverage and amount\nas favorable as can be obtained, subject to the proviso at the conclusion of\nthis sentence), provided, however, that the aggregate cost of such insurance\nover such four-year period shall not exceed the product of four multiplied by\nthe premium cost for such policy during the year ended April 30, 1997.\n\n          SECTION 5.7    FEES AND EXPENSES.  Except as provided in Section 7.5,\nwhether or not the Merger is consummated, all costs and expenses incurred in\nconnection with this Agreement and the transactions contemplated hereby shall be\npaid by the prty incurring such expenses, except that those\n\n\n                                         -33-\n\n\n\nexpenses incurred in connection with printing and mailing the Proxy Statement\nand Form S-4, will be shared equally by Parent and the Company.\n\n          SECTION 5.8    PUBLIC ANNOUNCEMENTS.  Parent and Sub, on the one hand,\nand the Company, on the other hand, will consult with each other before issuing,\nand provide each other the opportunity to review and comment upon, any press\nrelease or other public statements with respect to the transactions contemplated\nby this Agreement, including the Merger, and shall not issue any such press\nrelease or make any such public statement prior to such consultation, except as\nmay be required by applicable law, court process or by obligations pursuant to\nany listing agreement with any national securities exchange.\n\n          SECTION 5.9    AFFILIATES; ACCOUNTING AND TAX TREATMENT.\n\n          (a)       The Company shall (i) promptly deliver to Parent a letter\nidentifying all persons who may be deemed affiliates of the Company under\nRule 145 of the Securities Act or otherwise under applicable SEC accounting\nreleases with respect to pooling-of-interests accounting treatment and (ii) at\nleast 30 days prior to the Effective Time obtain (if not previously obtained)\nfrom each such affiliate a written agreement substantially in the form of\nExhibit 5.9 hereto.  The Company shall obtain such a written agreement as soon\nas practicable from any person who may be deemed to have become an affiliate of\nthe Company after the Company's delivery of the letters referred to in clause\n(i) above and prior to the Effective Time.\n\n          (b)       Promptly after the date hereof, Parent shall provide the\nCompany with information regarding Parent's compliance procedures for ensuring\nthat those persons deemed to be affiliates of Parent under Rule 145 of the\nSecurities Act or otherwise under applicable SEC accounting releases with\nrespect to pooling-of-interests accounting treatment are required to abide by\nthose restrictions on transactions involving their shares of Parent Common Stock\n(or securities convertible into, or exercisable for, shares of Parent Common\nStock) that are necessary to preserve the Merger's qualification for\npooling-of-interests accounting treatment.  If the Company, after consultation\nwith its outside legal and financial advisors reasonably concludes that\nsupplemental assurances are necessary to permit the satisfaction of any of the\nother covenants or any of the conditions precedent set forth in the Agreement,\nthen Parent shall cooperate with the Company to implement mutually acceptable\nsupplemental arrangements, including without limitation, obtaining written\naffiliate agreements from Parent's affiliates substantially in the form of\nExhibit 5.9 attached hereto.\n\n          (c)       Each party hereto shall use its best efforts to (i) cause\nthe Merger to qualify, and shall not take any actions which could prevent the\nMerger from qualifying, for pooling-of-interests accounting treatment and as a\nreorganization under the provisions of Section 368(a) of the Code, and (ii)\nobtain the opinions of counsel referred to in Section 6.3(c).\n\n\n                                      ARTICLE VI\n\n                                 CONDITIONS PRECEDENT\n\n          SECTION 6.1    CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE\nMERGER.  The respective obligation of each party to effect the Merger is subject\nto the satisfaction or waiver on or prior to the Closing Date of the following\nconditions:\n\n\n                                         -34-\n\n\n\n          (a)       STOCKHOLDER APPROVALS.  The Company Stockholder Approval\nshall have been obtained.\n\n          (b)       NASDAQ LISTING.  The shares of Parent Common Stock issuable\nto the Company's stockholders pursuant to this Agreement and under the Stock\nOption Plans shall have been authorized for quotation on the Nasdaq National\nMarket System, subject to official notice of issuance.\n\n          (c)       NO INJUNCTIONS OR RESTRAINTS.  No litigation brought by a\nGovernmental Entity shall be pending, and no litigation shall be threatened by\nany Governmental Entity, which seeks to enjoin or prohibit the consummation of\nthe Merger, and no temporary restraining order, preliminary or permanent\ninjunction or other order issued by any court of competent jurisdiction or other\nlegal restraint or prohibition preventing the consummation of the Merger shall\nbe in effect.  For the purposes of this Agreement, litigation shall be deemed to\nbe \"threatened\" by the Federal Trade Commission or Department of Justice only if\nthe Federal Trade Commission or the Department of Justice, as the case may be,\nshall have publicly announced or shall have advised Parent, Sub or the Company\nthat it has authorized its staff to commence proceedings in federal court\nseeking injunctive relief against, or to commence administrative proceedings\nchallenging, the transactions contemplated by this Agreement.\n\n          (d)       FORM S-4.  The Form S-4 shall have been declared effective\nby the SEC under the Securities Act.  No stop order suspending the effectiveness\nof the Form S-4 shall have been issued by the SEC, and no proceedings for that\npurpose shall have been initiated or, to the knowledge of Parent or the Company,\nthreatened by the SEC.\n\n          (e)       HSR ACT.  The applicable waiting period (and any extension\nthereof) under the HSR Act shall have expired or been terminated.\n\n          (f)       APPROVALS.  Other than the filing of the Merger Documents in\naccordance with the CGCL, all authorizations, consents, waivers, orders or\napprovals required to be obtained, and all filings, notices or declarations\nrequired to be made, by Parent, Sub and the Company prior to the consummation of\nthe Merger and the transactions contemplated hereunder shall have been obtained\nfrom, and made with, all required Governmental Entities, except for such\nauthorizations, consents, waivers, orders, approvals, filings, notices or\ndeclarations the failure to obtain or make which would not, individually or in\nthe aggregate, have a material adverse effect, at or after the Effective Time,\non the Company, the Surviving Corporation or Parent.\n\n          (g)       TAX OPINION.  The Company shall have received the opinion of\nO'Melveny &amp; Myers LLP, counsel to the Company, dated the date of the Proxy\nStatement, to the effect that the Merger will be treated for federal income tax\npurposes as a reorganization qualifying under the provisions of Section 368(a)\nof the Code, which opinion shall not have been withdrawn or modified in any\nmaterial respect.  The issuance of such opinion shall be conditioned on the\nreceipt of customary representation letters.\n\n          SECTION 6.2    ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND SUB.\nThe obligations of Parent and Sub to effect the Merger are also subject to the\nfollowing conditions:\n\n          (a)       REPRESENTATIONS AND WARRANTIES.  Each of the representations\nand warranties of the Company contained in this Agreement to the extent\nqualified as to materiality shall be true and correct in all respects, and to\nthe extent not so qualified shall be true and correct in all material respects,\nin each case as of the Closing Date as though made on and as of the Closing\nDate, provided that those\n\n\n                                         -35-\n\n\n\nrepresentations and warranties which address matters only as of a particular\ndate shall remain true and correct in all respects (or in all material respects,\nas the case may be) as of such date.  Parent shall have received a certificate\nof the President or any Vice President of the Company and the Chief Financial\nOfficer of the Company to such effect.\n\n          (b)       AGREEMENTS AND COVENANTS.  The Company shall have performed\nor complied in all material respects with all agreements and covenants required\nby this Agreement to be performed or complied with by it on or prior to the\nClosing Date.  Parent shall have received a certificate of the President or any\nVice President of the Company and the Chief Financial Officer of the Company to\nsuch effect.\n\n          (c)       CONSENTS UNDER AGREEMENTS.  The Company shall have obtained\nthe consent or approval of each person whose consent or approval shall be\nrequired in connection with the Merger under all loan or credit agreements,\nfranchise agreements, notes, mortgages, indentures, leases, or other agreements\nor instruments to which it or any of its subsidiaries is a party, except those\nfor which failure to obtain such consents and approvals would not, individually\nand in the aggregate, have a material adverse effect on the Surviving\nCorporation or Parent after the Effective Time.\n\n          (d)       POOLING OPINIONS.  The Parent Pooling Opinion shall have\nbeen confirmed by Price Waterhouse LLP in writing to Parent's Board of Directors\non the Effective Time.  The Company Pooling Opinion shall have been confirmed by\nErnst &amp; Young LLP in writing to the Company's Board of Directors on the\nEffective Time.  In addition, no event shall have occurred which would establish\nwith reasonable certainty that the Merger would not be treated as a \"pooling of\ninterests\" for accounting purposes.\n\n          (e)       AFFILIATE AGREEMENTS.  Parent shall have received from each\nperson who may be deemed to be an affiliate of the Company (under Rule 145 of\nthe Securities Act or otherwise under applicable SEC accounting releases with\nrespect to pooling-of-interests accounting treatment) on or prior to the Closing\nDate a signed agreement substantially in the form of Exhibit 5.9 hereto.\n\n          (f)       DISSENTING STOCKHOLDERS.  The shares of Company Common Stock\nvoted against the Merger shall not exceed 5% of the total number of issued and\noutstanding shares of Company Common Stock entitled to vote thereon.\n\n          (g)       OPINION OF THE COMPANY COUNSEL.  Parent shall have received\nthe opinions of O'Melveny &amp; Myers LLP, counsel to the Company, and the Company's\nGeneral Counsel, in form and substance reasonably satisfactory to Parent,\ncovering the matters set forth in Exhibit 6.2 attached hereto.\n\n          (h)       NO MATERIAL ADVERSE CHANGE.  From and including the date\nhereof, there shall not have occurred any material adverse change with respect\nto the Company.\n\n          SECTION 6.3    ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. \nThe obligations of the Company to effect the Merger are also subject to the\nfollowing conditions:\n\n          (a)       REPRESENTATIONS AND WARRANTIES.  Each of the representations\nand warranties of Parent contained in this Agreement to the extent qualified as\nto materiality shall be true and correct in all respects, and to the extent not\nso qualified shall be true and correct in all material respects, in each case as\nof the Closing Date as though made on and as of the Closing Date, provided that\nthose representations and warranties which address matters only as of a\nparticular date shall remain true and\n\n\n                                         -36-\n\n\n\ncorrect in all respects (or in all material respects, as the case may be) as of\nsuch date.  The Company shall have received a certificate of the President or\nany Vice President of Parent and the Chief Financial Officer of Parent to such\neffect.\n\n          (b)       AGREEMENTS AND COVENANTS.  Parent shall have performed or\ncomplied in all material respects with all agreements and covenants required by\nthis Agreement to be performed or complied with by it on or prior to the Closing\nDate.  The Company shall have received a certificate of the President or any\nVice President of the Company and the Chief Financial Officer of the Company to\nsuch effect.\n\n          (c)       FAIRNESS OPINION.  The Company Fairness Opinion shall have\nbeen confirmed by ABN AMRO Chicago Corporation in writing to the Company's Board\nof Directors as of the date the Proxy Statement was first mailed to the\nCompany's stockholders and shall not have subsequently been withdrawn.\n\n          (d)       OPINION OF PARENT COUNSEL.  The Company shall have received\nan opinion of Morgan, Lewis &amp; Bockius LLP, counsel to Parent, in form and\nsubstance reasonably satisfactory to the Company, covering the matters set forth\nin Exhibit 6.3 attached hereto.\n\n\n                                     ARTICLE VII\n\n                          TERMINATION, AMENDMENT AND WAIVER\n\n          SECTION 7.1    TERMINATION.  This Agreement may be terminated at any\ntime prior to the Effective Time, whether before or after approval by the\nstockholders of the Company or of Parent:\n\n          (a)       by mutual written consent of Parent and the Company;\n\n          (b)       by Parent (provided that Parent is not then in material\nbreach of any representation, warranty, covenant or other agreement contained\nherein), upon a breach of any representation, warranty, covenant or agreement on\nthe part of the Company set forth in this Agreement, or if any representation or\nwarranty of the Company shall have become untrue, in either case such that the\nconditions set forth in Section 6.2(a) or Section 6.2(b), as the case may be,\nwould be incapable of being satisfied by October 31, 1997; provided that, in any\ncase, a willful breach shall be deemed to cause such conditions to be incapable\nof being satisfied for purposes of this Section 7.1(b);\n\n          (c)       by the Company (provided that the Company is not then in\nmaterial breach of any representation, warranty, covenant or other agreement\ncontained herein), upon a breach of any representation, warranty, covenant or\nagreement on the part of Parent set forth in this Agreement, or if any\nrepresentation or warranty of Parent shall have become untrue, in either case\nsuch that the conditions set forth in Section 6.3(a) or Section 6.3(b), as the\ncase may be, would be incapable of being satisfied by October 31, 1997; provided\nthat, in any case a willful breach shall be deemed to cause such conditions to\nbe incapable of being satisfied for purposes of this Section 7.1(c);\n\n          (d)       by either Parent or the Company, if any Governmental Entity\nshall have issued an order, decree, injunction or ruling or taken any other\naction permanently enjoining, restraining or otherwise prohibiting the\nconsummation of the Merger and such order, decree, injunction or ruling or other\naction shall have become final and nonappealable; \n\n\n                                         -37-\n\n\n\n          (e)       by either Parent or the Company, if the Merger shall not\nhave occurred by October 31, 1997, unless the failure to consummate the Merger\nis the result of a breach of a covenant set forth in this Agreement or a willful\nand material breach of any representation or warranty set forth in this\nAgreement by the party seeking to terminate this Agreement;\n\n          (f)       by either Parent or the Company (provided that if the\nterminating party is the Company, the Company shall not be in material breach of\nany of its obligations hereunder), if the approval of the stockholders of the\nCompany required for the consummation of the Merger shall not have been obtained\nby reason of the failure to obtain the required vote at a duly held meeting of\nthe Company's stockholders or at any adjournment or postponement thereof;\n\n          (g)       by the Company, prior to the approval of the Merger by its\nstockholders, upon five business days' prior notice to Parent, if, as a result\nof a Superior Proposal by a party other than Parent or any of its affiliates,\nthe Company's Board of Directors determines in good faith that their fiduciary\nobligations under applicable law require that such Superior Proposal be\naccepted; provided, however, that (i) the Company's Board of Directors shall\nhave concluded in good faith, after considering provisions of applicable law and\nafter giving effect to all concessions which may be offered by Parent pursuant\nto clause (ii) below, after receiving the written advice of outside counsel,\nthat such action is required by its fiduciary duties to the Company's\nStockholders under applicable law and (ii) prior to any such termination and\nprior to accepting, or entering into any agreement regarding, the Superior\nProposal the Company shall provide Parent (for at least the five business days\nfollowing the receipt of the notice) an opportunity to amend this Agreement to\nprovide for terms substantially similar to those included in the Superior\nProposal, and in addition the Company shall, and shall cause its respective\nfinancial and legal advisors to, negotiate in good faith with Parent to make\nsuch adjustments in the terms and conditions of this Agreement as would enable\nthe Company to proceed with the transactions contemplated hereby.  In the event\nthat Parent, in its sole discretion, determines to amend this Agreement as\nprovided above, then the Company shall enter into such amendment and shall not\nenter into any agreement regarding the specific Superior Proposal under\nconsideration;\n\n          (h)       by Parent, if the Board of Directors of the Company (or any\ncommittee thereof) (i) withdraws or modifies adversely its approval and\nrecommendation of the Merger or this Agreement, (ii) within ten days after\nParent's request, shall fail to reaffirm such approval or recommendation,\n(iii) shall approve or recommend any Takeover Proposal, other than with Parent\nor an affiliate thereof, or a Tender Offer or Exchange Offer for 15% or more is\ncommenced and the Company's Board of Directors fails to recommend against\nacceptance of such Tender Offer or Exchange Offer, (iv) shall resolve to take\nany of the actions specified in this Section 7.1(h); or (v) fails to call and\nhold the Company Stockholder's Meeting  within forty (40) days after the SEC\ndeclares the Form S-4 effective; provided, however, that the disclosure by the\nCompany of only the existence and terms of a Takeover Proposal, which disclosure\nincludes a reaffirmation of the approval and recommendation of the Company's\nBoard of Directors with respect to the Merger and this Agreement as described in\nSection 3.1(d)(iii) hereof, shall not constitute a withdrawal or adverse\nmodification within the meaning of clause (i) of this subsection (h); or\n\n          (i)       by the Company, if the Share Value would be less than $23.00\nper share unless Parent, within three days after receipt of written notice by\nthe Company of its intention to so terminate, shall have elected to adjust the\nExchange Ratio pursuant to the fourth sentence of Section 2.1(c) hereof.\n\n\n                                         -38-\n\n\n\n          SECTION 7.2    EFFECT OF TERMINATION.  In the event of termination of\nthis Agreement by either the Company or Parent as provided in Section 7.1, this\nAgreement shall forthwith become void and have no effect, without any liability\nor obligation on the part of Parent, Sub or the Company or their respective\nofficers or directors, except as set forth in Section 3.1(p), Section 5.7 and\nSection 7.5, which Sections shall survive termination, and except to the extent\nthat such termination results from the willful and material breach by a party of\nany of its representations, warranties, covenants or agreements set forth in\nthis Agreement.\n\n          SECTION 7.3    AMENDMENT.  This Agreement may be amended by the\nparties at any time before or after approval hereof by the stockholders of the\nCompany; provided, however, that after such stockholder approval there shall not\nbe made any amendment that by law requires further approval by the stockholders\nof the Company without the further approval of such stockholders as required by\nlaw.  This Agreement may not be amended except by an instrument in writing\nsigned on behalf of all of the parties.\n\n          SECTION 7.4    EXTENSION; WAIVER.  At any time prior to the Effective\nTime, the parties may (a) extend the time for the performance of any of the\nobligations or other acts of the other parties, (b) waive any inaccuracies in\nthe representations and warranties contained in this Agreement or in any\ndocument delivered pursuant to this Agreement or (c) subject to the proviso of\nSection 7.3, waive compliance with any of the agreements or conditions contained\nin this Agreement.  Any agreement on the part of a party to any such extension\nor waiver shall be valid only if set forth in an instrument in writing, signed\non behalf of such party.  The failure of any party to this Agreement to assert\nany of its rights under this Agreement or otherwise shall not constitute a\nwaiver of those rights.\n\n          SECTION 7.5    TERMINATION FEE.\n\n          (a)       In the event that (i) the Company terminates this Agreement\npursuant to Section 7.1(g), Parent terminates this Agreement pursuant to Section\n7.1(h) or Parent terminates this Agreement as a result of the Company's material\nbreach of Section 4.2, or (ii) Parent or the Company terminates this Agreement\npursuant to Section 7.1(e) and within six months after such termination the\nCompany shall have entered into a definitive agreement with any person (other\nthan Parent or any of its affiliates) regarding a Takeover Proposal, or (iii)\nCompany Stockholder Approval is not received and at the time of such termination\nor prior to the Company Stockholders' Meeting there shall have been a Takeover\nProposal (whether or not such Takeover Proposal shall have been rejected or\nshall have been withdrawn prior to the time of such termination or of the\nCompany Stockholders' Meeting), and the Company shall have entered into a\ndefinitive agreement with any person (other than Parent or any of its\naffiliates) with any person within one year of termination then the Company\nshall pay to Parent (by wire transfer of immediately available funds, and as a\ncondition to termination in the case of a termination pursuant to Section\n7.1(g)) a cash termination fee in an aggregate amount equal to (A) 3% of the\nproduct of the number of outstanding shares of Company Common Stock on a fully\ndiluted basis (as though all options or other securities convertible into or\nexercisable or exchangeable for shares of Company Common Stock had been so\nconverted, exercised or exchanged) on the date hereof, multiplied by $24.50, or,\n(B) if greater and if the Company enters into a definitive agreement with\nrespect to a Takeover Proposal within six months following termination of this\nAgreement under Section 7.1(e), Section 7.1(f), Section 7.1(g), or Section\n7.1(h), then 3% of the product of the number of outstanding shares of Company\nCommon Stock on a fully diluted basis (as though all options or other securities\nconvertible into or exercisable or exchangeable for shares of Company Common\nStock had been so converted, exercised or exchanged) on the date such definitive\nagreement is executed, multiplied by the value per share of Company Common Stock\nof the consideration to be paid in such Takeover Proposal.  If the Company is\nobligated to pay\n\n\n                                         -39-\n\n\n\nsuch termination fee pursuant to clause (i) of the preceding sentence, then the\nCompany shall pay on account of such fee on the date of termination of this\nAgreement the fee calculated under clause (A) of the immediately preceding\nsentence, and, if the Company subsequently enters into a definitive agreement\nwith respect to a Takeover Proposal within six months following termination of\nthis Agreement, the Company shall immediately pay to Parent the amount, if any,\nby which the termination fee calculated under clause (B) of the immediately\npreceding sentence exceeds the termination fee calculated under clause (A) of\nthe immediately preceding sentence.\n\n          (b)       Upon the termination of this Agreement for one of the\nreasons set forth in Section 7.5(a), the Company shall pay to Parent (by wire\ntransfer of immediately available funds), and as a condition to termination in\nthe case of a termination pursuant to Section 7.1(g) hereof, a cash amount equal\nto 1% of the product of the number of outstanding shares of Company Common Stock\non a fully diluted basis (as though all options or other securities convertible\ninto or exercisable or exchangeable for shares of Company Common Stock had been\nso converted, exercised or exchanged) on the date hereof multiplied by $24.50 at\nthe time of termination, to cover Parent's and Sub's legal, accounting,\nprinting, investment banking and other costs, expenses and fees incurred in\nconnection with the transactions contemplated by this Agreement.\n\n          (c)       Upon the termination of this Agreement because Company\nStockholder Approval is not received and at the time of such termination or\nprior to the Company Stockholders' Meeting there shall have been a Takeover\nProposal, the Company shall pay to Parent (by wire transfer of immediately\navailable funds) the amount set forth in Section 7.5(b) hereof, plus an amount\nequal to one-half of 1% of the product of the number of outstanding shares of\nCompany Common Stock on a fully diluted basis (as though all options or other\nsecurities convertible into or exercisable or exchangeable for shares of Company\nCommon Stock had been so converted, exercised or exchanged) on the date hereof\nmultiplied by $24.50 at the time of termination.  If the fee required to be paid\nby this subsection (c) has been paid and thereafter the Company is required to\npay amounts under subsection (a) and (b) by reason of clause (iii) of subsection\n(a), then the fee paid under this subsection (c) shall offset such amounts\nrequired to be paid by reason of such clause (iii) of subsection (a).\n\n          (d)       The Company agrees that the agreements contained in\nSection 7.5(a) and 7.5(b) are an integral part of the transactions contemplated\nby this Agreement.  If the Company fails to promptly pay Parent any fee due\nunder Section 7.5(a) or 7.5(b), the Company shall pay the costs and expenses\n(including legal fees and expenses) in connection with any action, including the\nfiling of any lawsuit or other legal action, taken to collect payment, together\nwith interest on the amount of any unpaid fee at the publicly announced prime\nrate of Bankers Trust Company from the date such fee was first due.\n\n                                     ARTICLE VIII\n\n                                  GENERAL PROVISIONS\n\n          SECTION 8.1    NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES.  None of\nthe representations and warranties in this Agreement or in any instrument\ndelivered pursuant to this Agreement shall survive the Effective Time.  This\nSection 8.1 shall not limit any covenant or agreement of the parties which by\nits terms contemplates performance after the Effective Time of the Merger.\n\n          SECTION 8.2    NOTICES.  All notices, requests, claims, demands and\nother communications under this Agreement shall be in writing and shall be\ndeemed given if delivered personally or sent by telefax (with confirmation of\ntransmission) or by overnight courier (with proof of\n\n\n                                         -40-\n\n\n\ndelivery) to the parties at the following addresses (or at such other address\nfor a party as shall be specified by like notice):\n\n          (a)       if to Parent or Sub or, after the Effective Time the\n                    Company, to\n\n                    U.S. Office Products Company\n                    1025 Thomas Jefferson Street, NW  \n                    Washington, DC  20007\n                    Facsimile:  (202) 339-6733\n                    Attention:  Mark D. Director, Esquire\n\n                    with a required copy to:\n\n                    Morgan, Lewis &amp; Bockius LLP\n                    1800 M Street, NW\n                    Washington, DC  20036\n                    Facsimile:  (202) 467-7176 \n                    Attention:  Linda L. Griggs, Esq.\n\n\n          (b)       if, prior to the Effective Time, to the Company, to\n\n                    Mail Boxes Etc.\n                    6060 Cornerstone Court West\n                    San Diego, CA  92121\n                    Facsimile: (619) 625-3196\n                    Attention:  Bruce M. Rosenberg, Esq.\n\n                    with a required copy to:\n\n                    O'Melveny &amp; Myers LLP\n                    Suite 1700\n                    610 Newport Center Drive\n                    Newport Beach, CA 92660\n                    Facsimile:  (714) 669-6994\n                    Attention:  J. Jay Herron, Esq.\n\n\n          SECTION 8.3    DEFINITIONS. For purposes of this Agreement:\n\n          (a)       an \"affiliate\" of any person means another person that,\ndirectly or indirectly, through one or more intermediaries, controls, is\ncontrolled by, or is under common control with, such first person;\n\n          (b)       \"material adverse change\" or \"material adverse effect\"\nmeans, when used in connection with the Company, the Surviving Corporation or\nParent, a material adverse effect on the business, operations, financial\ncondition or results of operations of such party and its subsidiaries taken as a\nwhole;\n\n\n                                         -41-\n\n\n\n          (c)       \"person\" means an individual, corporation, partnership,\njoint venture, association, trust, unincorporated organization or other entity;\nand\n\n          (d)       a \"subsidiary\" of any person means another person, an amount\nof the voting securities, other voting ownership or voting partnership interests\nof which is sufficient to elect at least a majority of its directors or other\ngoverning body (or, if there are no such voting interests, more than 50% of the\nequity interest of which) is owned directly or indirectly by such first person.\n\n          SECTION 8.4    INTERPRETATION.  When a reference is made in this\nAgreement to a Section, Exhibit or Schedule, such reference shall be to a\nSection of, or an Exhibit or Schedule to, this Agreement unless otherwise\nindicated.  The table of contents and headings contained in this Agreement are\nfor reference purposes only and shall not affect in any way the meaning or\ninterpretation of this Agreement.  Whenever the words \"include,\" \"includes\" and\n\"including\" are used in this Agreement, they shall be deemed to be followed by\nthe words \"without limitation.\"\n\n          SECTION 8.5    COUNTERPARTS.  This Agreement may be executed in one or\nmore counterparts, all of which shall be considered one and the same agreement\nand shall become effective when one or more counterparts have been signed by\neach of the parties and delivered to the other parties.\n\n          SECTION 8.6    ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES.  This\nAgreement and the Confidentiality Agreement constitute the entire agreement, and\nsupersede all prior agreements and understandings, both written and oral, among\nthe parties with respect to the subject matter of this Agreement and except for\nthe provisions of Article II and Sections 5.4 and 5.6, are not intended to\nconfer upon any person other than the parties hereto any rights or remedies\nhereunder.\n\n          SECTION 8.7    GOVERNING LAW.  This Agreement shall be governed by,\nand construed and enforced in accordance with, the laws of the State of\nCalifornia, regardless of the laws that might otherwise govern under applicable\nprinciples of conflict of laws thereof.\n\n          SECTION 8.8    ASSIGNMENT.  Neither this Agreement nor any of the\nrights, interests or obligations under this Agreement shall be assigned, in\nwhole or in part, by operation of law or otherwise by any of the parties without\nthe prior written consent of the other parties.  Subject to the preceding\nsentence, this Agreement will be binding upon, inure to the benefit of, and be\nenforceable by, the parties and their respective successors and assigns.\n\n          SECTION 8.9    ENFORCEMENT.  The parties agree that irreparable damage\nwould occur in the event that any of the provisions of this Agreement were not\nperformed in accordance with their specific terms or were otherwise breached. \nIt is accordingly agreed that the parties shall be entitled to an injunction or\ninjunctions to prevent breaches of this Agreement and to enforce specifically\nthe terms and provisions of this Agreement in any court of the United States\nlocated in the State of California or in California State court, this being in\naddition to any other remedy to which they are entitled at law or in equity.  In\naddition, each of the parties hereto (a) consents to submit itself to the\npersonal jurisdiction of any federal court located in the State of California or\nany California State court in the event any dispute arises out of this Agreement\nor any of the transactions contemplated by this Agreement, (b) agrees that it\nwill not attempt to deny or defeat such personal jurisdiction by motion or other\nrequest for leave from any such court and (c) agrees that it will not bring any\naction relating to this Agreement in any court other than a federal or State\ncourt sitting in the State of California.\n\n\n                                         -42-\n\n\n\n          IN WITNESS WHEREOF, Parent, Sub and the Company have caused this\nAgreement to be signed by their respective officers thereunto duly authorized,\nall as of the date first written above.\n\nAttest:                                 \"PARENT\"\n\n                                        U. S. OFFICE PRODUCTS COMPANY,\n                                        a Delaware corporation\n\n\n\nBy:   \/s\/ Mark D. Director              By:   \/s\/ Jonathan J. Ledecky\n     -----------------------------           --------------------------------\n     Mark D. Director                        Jonathan J. Ledecky\n     Executive Vice President and            Chairman and Chief Executive \n     General Counsel                         Officer\n\n\n\nAttest:                                 \"SUB\"\n\n                                        SANTA FE ACQUISITION CORP.,\n                                        a California corporation\n\n\nBy:   \/s\/ Kathleen D. Delaney           By:   \/s\/ Mark D. Director\n     -----------------------------           -------------------------------\n     Kathleen D. Delaney                     Mark D. Director\n     Assistant Secretary                     President\n\n\nAttest:                                 \"COMPANY\"\n\n                                        MAIL BOXES ETC.\n\n\n\n\nBy:   \/s\/ Bruce M. Rosenberg            By:   \/s\/ Anthony W. Desio\n     -----------------------------           -------------------------------\n     Bruce M. Rosenberg                      Anthony W. DeSio\n     Vice President, General Counsel         Chief Executive Officer\n     and Secretary\n\n\n                                         -43-\n\n\n                                       \n                                   EXHIBIT A\n\n                               AGREEMENT OF MERGER\n\n     AGREEMENT OF MERGER entered into on [Closing Date] by and among Santa Fe \nAcquisition Corp. (\"Sub\"), its parent corporation, U.S. Office Products \nCompany (\"Parent\"), and Mail Boxes Etc. (\"MBE\"):\n\n     1.  Sub, which is a corporation incorporated under the General \nCorporation Law of the State of California, and which is sometimes \nhereinafter referred to as the \"disappearing corporation,\" shall be merged \nwith and into MBE, which is a corporation incorporated under the General \nCorporation Law of the State of California, and which is sometimes \nhereinafter referred to as the \"surviving corporation.\"\n\n     2.  The separate existence of the disappearing corporation shall cease \nupon the effective date of the merger.\n\n     3.  The surviving corporation shall continue its existence under its \npresent name.\n\n     4.  Each issued and outstanding share of the capital stock of the \ndisappearing corporation shall, upon the effective date of the merger, be \nconverted into one share of the capital stock of the surviving corporation. \nEach of the issued and outstanding shares of the capital stock of the \nsurviving corporation (except for such shares owned by Parent, which shall be \ncancelled without consideration) shall, upon the effective date of the \nmerger, be converted into [      ] shares of Parent Common Stock.\n\n     5.  Each holder of shares of capital stock of MBE who would otherwise be \nentitled to receive a fractional share of Parent Common Stock upon surrender \nof stock certificates for exchange, shall receive, in lieu thereof, cash in \nan amount equal to the fair value of such fractional share, which shall be \nequal to the fraction of a share of Parent Common Stock that would otherwise \nbe issued multiplied by $___________.\n\n     6.  The merger shall have the effects set forth in Section 1107 of the \nGeneral Corporation Law.\n\n     7.  The disappearing corporation and the surviving corporation hereby \nagree that they will cause to be executed and filed and\/or recorded any \ndocument or documents prescribed by the laws of the State of California, and \nthat they will cause to be performed all necessary acts therein and elsewhere \nto effectuate the merger.\n\n\n\n     IN WITNESS WHEREOF, the parties hereto have executed this Agreement the \nday and year first above written.\n\n                                     U.S. OFFICE PRODUCTS COMPANY\n\n\n                                     By: ____________________________________\n\n                                     By: ____________________________________\n                                         [Assistant] Secretary\n\n\n                                     SANTA FE ACQUISITION CORP.\n\n\n                                     By: ____________________________________\n\n                                     By: ____________________________________\n                                         [Assistant] Secretary\n\n\n                                     MAIL BOXES ETC.\n\n\n                                     By: _____________________________________\n                                         James H. Amos, Jr.\n                                         President and Chief Operating Officer\n\n\n                                     By: _____________________________________\n                                         Bruce M. Rosenberg\n                                         Vice President, General Counsel\n                                         and Secretary\n\n\n\n\n\n                                     EXHIBIT B\n\n\n                               FORM OF VOTING AGREEMENT\n\n                                                                    May __, 1997\n\n\n\nU.S. Office Products Company\n1025 Thomas Jefferson Street, N.W.\nSuite 600 East\nWashington, D.C. 20007\n\n         Re   Agreement of Principal Shareholders Concerning \n              Transfer and Voting of Shares of Mail Boxes Etc.                  \n              ------------------------------------------------\n         We understand that you and Mail Boxes Etc. (the \"Company\"), of which\nthe undersigned are principal stockholders, are prepared to enter into an\nagreement for the merger of a wholly-owned subsidiary (\"Sub\") of U.S. Office\nProducts Company into the Company, but that you have conditioned your\nwillingness to proceed with such agreement (the \"Agreement\") upon your receipt\nfrom us of assurances satisfactory to you of our support of and commitment to\nthe merger.  We are familiar with the Agreement and the terms and conditions of\nthe merger.  Terms used but not otherwise defined herein shall have the same\nmeanings as are given them in the Agreement.  In order to evidence such\ncommitment and to induce you to enter into the Agreement, we hereby represent\nand warrant to you and agree with you as follows:\n\n         1.   VOTING.  We will vote or cause to be voted all shares of capital\nstock of the Company owned of record or beneficially owned or held in any\ncapacity by any of us or under any of our control in favor of the merger and\nother transactions provided for in or contemplated by the Agreement and against\nany inconsistent proposals or transactions.  Each of us hereby irrevocably\nappoints you, during the term of this letter agreement, as proxy for and on\nbehalf of us to vote (including, without limitation, the taking of action by\nwritten consent) such shares, for and in our name, place and stead for the\nmatters and in the manner contemplated by this Section 1.\n\n\n                                          1\n\n\n\n\n         2.   OWNERSHIP.  As of the date hereof, our only ownership of, or\ninterest in, equity securities or convertible debt securities of the Company\nconsists solely of the interests described in Schedule 1 hereto (collectively,\nthe \"Shares\").\n\n         3.   RESTRICTION ON TRANSFER.  Other than as may be permitted pursuant\nto the Affiliate Agreement of even date herewith among us, you and the Company,\nwe will not sell, transfer, pledge or otherwise dispose of any of the Shares or\nany interest therein or agree to sell, transfer, pledge or otherwise dispose of\nany of the Shares or any interest therein, without your express written consent.\nAny transferee of the Shares must, as a condition to receipt of such shares,\nagree to be bound by the terms hereof.\n\n         4.   NO DISSENTERS RIGHT.  Each of us agree not to exercise any rights\n(including, without limitation, under Chapter 13 of the CGCL) to dissent or\ndemand appraisal of any Shares owned by us with respect to the Merger.\n\n         5.   NO SOLICITATION.  From the date hereof until the termination\nhereof, we will not, directly or indirectly, (i) take any action to solicit,\ninitiate or encourage any Takeover Proposal or (ii) engage in negotiations or\ndiscussions with, or disclose any nonpublic information relating to the Company\nor any subsidiary of the Company to, or otherwise assist, facilitate or\nencourage, any person (other than Parent and Sub) that may be considering\nmaking, or has made, a Takeover Proposal.  Such Stockholder will promptly notify\nSub after receipt of any Takeover Proposal or any indication that any such third\nparty is considering making a Takeover Proposal or any request for nonpublic\ninformation relating to the Company or any subsidiary of the Company or for\naccess to the properties, books or records of the Company or any such subsidiary\nby any such third party that may be considering making, or has made, a Takeover\nProposal and will keep Parent fully informed of the status and details of any\nsuch Takeover Proposal, indication or request.  The foregoing provisions of this\nSection 5 shall not be construed to limit actions taken, or to require actions\nto be taken, by any Stockholder who is, or one or more of whose directors,\npartners, officers or employees is, a director or officer of the Company that\nare required or restricted by such director's fiduciary\n\n\n                                          2\n\n\n\n\nduties or such officer's employment duties, or permitted by the Agreement, and\nthat, in each case, are undertaken solely in such person's capacity as a\ndirector or officer of the Company and, in the case of an officer of the\nCompany, as directed by the Board of Directors after the Board of Directors has\ndelivered the notice contemplated by clause (iii) of Section 4.2 of the\nAgreement.\n\n         6.   TERMINATION.  This letter agreement and our obligations hereunder\nwill terminate on the earlier of (i) the Effective Time (as defined in the\nAgreement) or (ii) the termination of the Agreement in accordance with its\nterms.\n\n         7.   EFFECTIVE DATE; SUCCESSION; REMEDIES.  Upon your acceptance and\nexecution of the Agreement, this letter agreement shall mutually bind and\nbenefit you and us, any of our heirs, successors and assigns and any of your\nsuccessors.  You will not\n\n\n                        [This space intentionally left blank]\n\n\n\n                                          3\n\n\n\n\nassign the benefit of this letter agreement other than to a wholly owned\nsubsidiary.  We agree that in light of the inadequacy of damages as a remedy,\nspecific performance shall be available to you, in addition to any other\nremedies you may have for the violation of this letter agreement.\n\n         8.   NATURE OF HOLDINGS; SHARES. \n All references herein to our holdings of the Shares shall be deemed to include\nShares held or controlled by any of us, individually, jointly (as community\nproperty or otherwise), or in any other capacity, and shall extend to any\nsecurities issued to any of us in respect of the Shares.\n\n                             Very truly yours,\n\n\n                             _____________________________\n                                                                \n\n\nACCEPTED:                    \n\n___________________________\n\n\nBy_________________________  \n\n\n                                         4\n\n\n\n                                    Schedule 1\n\nClass       No. of Shares            Record Owner           Beneficial Owner\n------      -------------            ------------           ----------------\n                                          \n\n\n                                     EXHIBIT 5.9\n\n\n\n                                       FORM OF \n                                 AFFILIATE AGREEMENT\n\n\n         THIS AFFILIATE AGREEMENT (the \"Agreement\") is made and entered into as\nof May __, 1997 by and among U.S. OFFICE PRODUCTS COMPANY, a Delaware\ncorporation (\"USOP\"), MAIL BOXES ETC., a California corporation (\"Company\"), and\nthe undersigned affiliate of the Company (\"Affiliate\").\n\n                                       RECITALS\n\n    A.   The Company, USOP and Santa Fe Acquisition Corp., a wholly-owned\nsubsidiary of USOP (\"Newco\"), have entered into an Agreement and Plan of Merger\n(the \"Merger Agreement\") and the Company and Newco have entered or will enter\ninto an Agreement of Merger, which agreements (collectively, the \"Merger\nAgreements\") provide for the merger (the \"Merger\") of Newco with and into the\nCompany, with the Company as the surviving corporation (the \"Surviving\nCorporation\").  Pursuant to the Merger, all outstanding capital stock of the\nCompany will be converted into common stock, $0.001 par value, of USOP (the\n\"USOP Stock\").\n\n    B.   Affiliate may, as a result of the Merger, receive shares of USOP Stock\n(the \"Shares\") in exchange for shares owned by Affiliate of the common stock, no\npar value, of the Company (the \"Company Stock\").\n\n    C.   Affiliate understands that, because the Merger will be accounted for\nusing the \"pooling of interests\" method and Affiliate may be deemed, as of the\ndate hereof, to be an \"affiliate\" of the Company, as such term is defined for\npurposes of paragraphs (c) and (d) of Rule 145 of the rules and regulations of\nthe Securities and Exchange Commission (the \"Commission\") under the Securities\nAct of 1933, as amended (the \"Securities Act\"), the Shares beneficially owned by\nAffiliate may only be disposed of in conformity with the limitations described\nherein\n\n    NOW THEREFORE, the parties agree as follows:\n\n\n\n\n    1.   AGREEMENT TO RETAIN SHARES.  Affiliate agrees not to transfer, sell,\nor otherwise dispose of or direct or cause the sale, transfer or other\ndisposition of, or reduce Affiliate's risk relative to, any shares of the\nCompany Stock (except for the conversion of the Company Stock into USOP Stock in\nthe Merger) or Shares held by Affiliate or on Affiliate's behalf, whether owned\non the date hereof or after acquired, within the 30 days prior to the Effective\nTime (as defined in the Merger Agreement).\n\n    Affiliate further agrees not to transfer, sell or otherwise dispose of, \nor direct or cause the sale, transfer or other disposition of, or reduce \nAffiliate's risk relative to, any Shares held by Affiliate or on Affiliate's \nbehalf or received by Affiliate or on Affiliate's behalf in or as a result of \nthe Merger or otherwise, until after the date (the \"Expiration Date\") USOP \nshall have publicly released a report in the form of a quarterly earnings \nreport, registration statement filed with the Commission, a report filed with \nthe Commission on Form 10-K, 10-Q or 8-K or any other public filing, \nstatement or public announcement which includes the combined financial \nresults (including combined sales and net income) of USOP and the Company for \na period of at least 30 days of combined operations of USOP and the Company \nfollowing the Effective Time.  Notwithstanding the foregoing, Affiliate \nunderstands that Affiliate will not be prohibited from selling up to 10% of \nthe Shares Affiliate holds at the Effective Time (a \"DE MINIMIS sale\") during \nthe period beginning on the Effective Time and ending on the Expiration Date \n(the \"Restricted Period\") if (i) the requirements of Rule 145 are complied \nwith; (ii) any such DE MINIMIS sale by Affiliate together with all other DE \nMINIMIS sales by affiliates of the Company and USOP during the Restricted \nPeriod do not exceed 1% of the shares of USOP Stock delivered in the Merger; \nand (iii) Affiliate has received the DE MINIMIS Sale Acknowledgment (as \ndefined in Section 7(g) below) from USOP.\n\n    2.   REPRESENTATIONS, WARRANTIES AND COVENANTS OF AFFILIATE.  Affiliate\nrepresents, warrants and covenants as follows:\n\n         (a)  Affiliate has full power and authority to execute this Agreement,\nto make the representations, warranties and covenants herein contained and to\nperform Affiliate's obligations hereunder.\n\n\n                                          2\n\n\n\n\n         (b)  Affiliate does not have any present commitment, plan or intention\nto sell (or engage in a risk-reducing or other arrangement which would be\ntreated as a sale for federal income tax purposes), transfer or otherwise\ndispose of any Company Stock prior to and in contemplation of the Merger or any\nof the USOP Stock to be received in the Merger.\n\n         (c)  Affiliate will not sell, transfer, or otherwise dispose of, or\nmake any offer or agreement relating to any of the foregoing with respect to,\nany Shares, except: (i) in a transaction described in Rule 145(d) under the\nSecurities Act; (ii) in a transaction that is otherwise exempt from the\nregistration requirements of the Securities Act, or (iii) pursuant to an\neffective registration statement under the Securities Act.\n\n    3.   RULES 144 AND 145.  From and after the Effective Time of the Merger\nand for so long as is necessary in order to permit Affiliate to sell the Shares\npursuant to Rule 145 and, to the extent applicable, Rule 144 under the\nSecurities Act, USOP will use reasonable efforts to file on a timely basis all\nreports required to be filed by it pursuant to the Securities Exchange Act of\n1934, as amended, and the rules and regulations thereunder, as the same shall be\nin effect at the time, referred to in paragraph (c) of Rule 144 under the\nSecurities Act, in order to permit Affiliate to sell, transfer or otherwise\ndispose of the Shares held by it pursuant to the terms and conditions of Rule\n145 and the applicable provisions of Rule 144.\n\n    4.   LIMITED RESALES.  USOP acknowledges that the provisions of Section\n2(b) of this Agreement will be satisfied as to any sale by the undersigned of\nthe Shares pursuant to Rule 145(d) under the Securities Act, upon receipt of a\nbroker's letter and a letter from the undersigned with respect to that sale\nstating that the applicable requirements of Rule 145(d)(1) have been met or a\nletter from the undersigned stating that the requirements of Rule 145(d)(1) are\ninapplicable by virtue of Rule 145(d)(2) or Rule 145(d)(3); provided, however,\nthat USOP has no reasonable basis to believe that such sales were not made in\ncompliance with such provisions of Rule 145(d) and subject to any changes in\nRule 145 after the date of this Agreement.\n\n    5.   LEGENDS.  Affiliate also understands and agrees that stop transfer\ninstructions will be given to USOP's transfer agent with respect to certificates\nevidencing the Shares and that there\n\n\n                                          3\n\n\n\n\nwill be placed on the certificate evidencing the Shares legends stating in\nsubstance:\n\n    THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,\n    TRANSFERRED OR ASSIGNED, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE\n    EFFECT TO ANY ATTEMPTED SALE, TRANSFER OR ASSIGNMENT, PRIOR TO THE\n    PUBLICATION AND DISSEMINATION OF FINANCIAL STATEMENTS BY THE ISSUER\n    WHICH INCLUDE THE RESULTS OF AT LEAST THIRTY (30) DAYS OF COMBINED\n    OPERATIONS OF THE ISSUER AND THE SURVIVING CORPORATION OF THE MERGER\n    BETWEEN SANTA FE ACQUISITION CORP. AND MAIL BOXES ETC. UPON THE\n    WRITTEN REQUEST OF THE HOLDER OF THIS CERTIFICATE, THE ISSUER AGREES\n    TO REMOVE THIS RESTRICTIVE LEGEND (AND ANY STOP ORDER PLACED WITH THE\n    TRANSFER AGENTS) WHEN THIS REQUIREMENT HAS BEEN MET.\n\nand\n\n    THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A\n    TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF\n    1933, AS AMENDED, APPLIES.  THESE SHARES MAY ONLY BE TRANSFERRED IN\n    ACCORDANCE WITH THE TERMS OF SUCH RULE.\n\nAfter the Expiration Date, USOP agrees to deliver instructions to its transfer\nagent to remove the above legends, and replace such legends with the following\nlegend:\n\n    THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A\n    TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF\n    1933, AS AMENDED, APPLIES.  THESE SHARES MAY ONLY BE TRANSFERRED IN\n    ACCORDANCE WITH THE TERMS OF SUCH RULE.\n\nUSOP agrees to remove promptly such stop transfer instructions and legend by\ndelivery of instructions to its transfer agent to remove such legend upon (i)\nthe transfer of the Shares represented by such certificate pursuant to a\nregistration statement under the Securities Act or in accordance with the\napplicable provisions of Rule 145 under the Securities Act (including, without\nlimitation, paragraph (d) thereof), (ii) the expiration of the restrictive\nperiod set forth in Rule 145(d), or (iii) the delivery by Affiliate to USOP of a\ncopy of a letter from the staff of the Commission, or an opinion of counsel in\n\n\n                                          4\n\n\n\n\nform and substance reasonably satisfactory to USOP, to the effect that such\nlegend is not required for purposes of the Securities Act.\n\n    6.   TERMINATION.  This Agreement shall be terminated and shall be of no\nfurther force and effect upon the termination of the Merger Agreement pursuant\nto Section 7.1 of the Merger Agreement.\n\n    7.   MISCELLANEOUS.\n\n         (a)  COUNTERPARTS.  This Agreement may be executed in one or more\ncounterparts, each of which shall be deemed an original, and all of which\ntogether shall constitute one and the same instrument.\n\n         (b)  BINDING AGREEMENT.  This Agreement will inure to the benefit of\nand be binding upon and enforceable against the parties and their successors and\nassigns, including administrators, executors, representatives, heirs, legatees\nand devisees of Affiliate and pledgees holding USOP Stock as collateral.\n\n         (c)  WAIVER.  No waiver by any party hereto of any condition or of any\nbreach of any provision of this Agreement shall be effective unless in writing\nand signed by each party hereto.\n\n         (d)  GOVERNING LAW.  This Agreement shall be governed by and\nconstrued, interpreted and enforced in accordance with the laws of the State of\nDelaware.  \n\n         (e)  EFFECT OF HEADINGS.  The Section headings herein are for\nconvenience only and shall not affect the construction or interpretation of this\nAgreement.\n\n         (f)  THIRD PARK RELIANCE.  Counsel to and independent auditors for the\nparties shall be entitled to rely upon this Agreement\n\n         (g)  DE MINIMIS SALES.  Prior to effecting any DE MINIMIS sale,\nAffiliate shall provide USOP written notice of Affiliate's intent to do so (the\n\"DE MINIMIS sale notice\").  If to the knowledge of USOP, and such proposed DE\nMINIMIS sale by Affiliate together with all other DE MINIMIS sales by affiliates\n\n\n                                          5\n\n\n\n\nof the Company and USOP during the Restricted Period would not exceed 1% of the\ntotal outstanding shares of USOP, then, within three business days of receipt of\nthe DE MINIMIS sale notice, USOP shall provide Affiliate with its written\nacknowledgement to such effect (the \"DE MINIMIS Sale Acknowledgement\").\n\n    IN WITNESS WHEREOF, the parties have caused this Agreement to be duly\nexecuted on the day and year first above written.\n\nU.S. OFFICE PRODUCTS COMPANY      AFFILIATE\n\n\nBy:  _______________________      __________________________                  \nTitle:                                    \n\n\n\nMAIL BOXES ETC.                   \n\n\nBy:   __________________________   \nTitle:\n\n\n                                          6\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[8113],"corporate_contracts_industries":[],"corporate_contracts_types":[9622,9626],"class_list":["post-43133","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-mail-boxes-etc","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\/43133","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=43133"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43133"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43133"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43133"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}