{"id":43215,"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-reorganization-usweb-corp-and-xcom-corp.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"agreement-and-plan-of-reorganization-usweb-corp-and-xcom-corp","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/planning\/agreement-and-plan-of-reorganization-usweb-corp-and-xcom-corp.html","title":{"rendered":"Agreement and Plan of Reorganization &#8211; USWeb Corp. and XCom Corp."},"content":{"rendered":"<pre>\n                     AGREEMENT AND PLAN OF REORGANIZATION\n\n                                  BY AND AMONG\n\n                               USWEB CORPORATION\n\n                       USWEB ACQUISITION CORPORATION 101\n\n                                      AND\n\n                                XCOM CORPORATION\n\n\n                           DATED AS OF MARCH 16, 1997\n\n\n \n                               INDEX OF EXHIBITS\n\n\nEXHIBIT           DESCRIPTION\n- -------           -----------\n             \nExhibit A         Principal Shareholders\n\nExhibit C         Schedule of Exceptions\n\nExhibit D         Option Agreement\n\nExhibit E         Form of Shareholder Certificate\n\n \n\n                               TABLE OF CONTENTS\n\n                                                                            PAGE\n \n ARTICLE I - THE MERGER                                                       2\n\n 1.1    The Merger.                                                           2\n\n 1.2    Effective Time.                                                       2\n\n 1.3    Effect of the Merger.                                                 2\n\n 1.4    Certificate of Incorporation; Bylaws.                                 2\n\n 1.5    Directors and Officers.                                               3\n\n 1.6    Effect of Merger on the Capital Stock of the Constituent \n        Corporations.                                                         3\n\n 1.7    Surrender of Certificates.                                            4\n\n 1.8    No Further Ownership Rights in Company Common Stock.                  6\n\n 1.9    Lost, Stolen or Destroyed Certificates.                               6\n\n 1.10   Purchase Price Adjustments.                                           6\n\n 1.11   Parent Common Stock.                                                  8\n\n 1.12   Tax Consequences.                                                     8\n\n 1.13   Taking of Necessary Action; Further Action.                           8\n\n \n\n                                      ix\n\n\n \n                               TABLE OF CONTENTS\n                                  (CONTINUED)\n\n                                                                            PAGE\n                                                                      \nARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND \nTHE PRINCIPAL SHAREHOLDERS                                                    9\n\n 2.1    Organization of the Company.                                          9\n\n 2.2    Company Capital Structure.                                            9\n\n 2.3    Subsidiaries.                                                         9\n\n 2.4    Authority.                                                           10\n\n 2.5    No Conflict.                                                         10\n\n 2.6    Consents.                                                            10\n\n 2.7    Company Financial Statements.                                        11\n\n 2.8    No Undisclosed Liabilities.                                          11\n\n 2.9    No Changes.                                                          11\n\n 2.10   Tax Matters.                                                         13\n\n 2.11   Restrictions on Business Activities.                                 14\n\n 2.12   Title to Properties; Absence of Liens and Encumbrances; \n        Condition of Equipment.                                              15\n\n 2.13   Intellectual Property.                                               15\n\n 2.14   Agreements, Contracts and Commitments.                               18\n\n 2.15   Interested Party Transactions.                                       20\n\n 2.16   Governmental Authorization.                                          20\n\n 2.17   Litigation.                                                          20\n\n 2.18   Accounts Receivable.                                                 20\n\n 2.19   Minute Books.                                                        21\n\n 2.20   Environmental Matters.                                               21\n\n 2.21   Brokers' and Finders' Fees; Third Party Expenses.                    22\n\n 2.22   Employee Benefit Plans and Compensation.                             22\n\n 2.23   Insurance.                                                           25\n\n 2.24   Compliance with Laws.                                                25\n\n 2.25   Third Party Consents.                                                25\n\n 2.26   Warranties; Indemnities.                                             25\n\n 2.27   Complete Copies of Materials.                                        25\n\n 2.28   Representations Complete.                                            25 \n\n 2.29   Business Plan.                                                       25\n\n \n\n                                                                              ii\n\n\n \n                               TABLE OF CONTENTS\n                                  (CONTINUED)\n \n                                                                            PAGE\n                                                                        \n 2.30   Backlog Report.                                                      25\n\n 2.31   Securities Law Compliance.                                           26\n\n 2.32   Principal Shareholder Investment Representations.                    26\n\nARTICLE III                                                                  27\n\n 3.1    Organization, Standing and Power.                                    27\n\n 3.2    Authority; Consents.                                                 27\n\n 3.3    Capital Structure.                                                   27\n\n 3.4    Brokers' and Finders' Fees.                                          28\n\n 3.5    Similar Transactions.                                                28\n\n 3.6    No Changes.                                                          28\n\nARTICLE IV                                                                   29\n\n 4.1    Conduct of Business of the Company.                                  29\n\n 4.2    No Solicitation.                                                     31\n\nARTICLE V                                                                    31\n\n 5.1    Parent's Right of First Refusal.                                     31\n\n 5.2    Market Standoff Agreement.                                           33\n\n 5.3    Restriction on Competition.                                          33\n\n 5.4    Confidentiality.                                                     34\n\n 5.5    Expenses.                                                            34\n\n 5.6    Public Disclosure.                                                   34\n\n 5.7    Post-Closing Employment of Company Employees.                        35\n\n 5.8    Treatment of Affiliate Warrants.                                     36\n\n 5.9    Access to Information.                                               37\n\n 5.10   Public Disclosure.                                                   37\n\n 5.11   Consents.                                                            37\n\n 5.12   FIRPTA Compliance.                                                   37\n\n 5.13   Best Efforts.                                                        37\n\n 5.14   Notification of Certain Matters.                                     38\n\n 5.15   Tax Returns.  N\/A - reserved for Sub-S corporations                  38\n\n \n\niii\n\n\n \n                               TABLE OF CONTENTS\n                                  (CONTINUED)\n\n                                                                            PAGE\n\n 5.16   Additional Documents and Further Assurances.                         38\n\n 5.17   Section 368 Compliance.                                              38\n\n 5.18   Parent Policies.                                                     38\n\nARTICLE VI                                                                   38\n\n 6.1    Conditions to Obligations of Each Party to Effect the Merger.        38\n\n 6.2    Additional Conditions to Obligations of Company.                     39\n\n 6.3    Additional Conditions to the Obligations of Parent and Sub.          39\n\nARTICLE VII                                                                  41\n\n 7.1    Survival of Representations and Warranties.                          41\n\n 7.2    Escrow Arrangements; Setoff.                                         41\n\nARTICLE VIII                                                                 49\n\n 8.1    Termination.                                                         49\n\n 8.2    Effect of Termination.                                               50\n\n 8.3    Amendment.                                                           50\n\n 8.4    Extension; Waiver.                                                   51\n\nARTICLE IX                                                                   51\n\n 9.1    Notices.                                                             51\n\n 9.2    Interpretation.                                                      52\n\n 9.3    Counterparts.                                                        52\n\n 9.4    Entire Agreement; Assignment.                                        52\n\n 9.5    Severability.                                                        52\n\n 9.6    Other Remedies.                                                      52\n\n 9.7    Governing Law.                                                       53\n\n 9.8    Rules of Construction.                                               53\n\n \n\n                                                                              iv\n \n\n\n \n                      AGREEMENT AND PLAN OF REORGANIZATION\n\n     This AGREEMENT AND PLAN OF REORGANIZATION (the \"Agreement\") is made and\n                                                     ---------\nentered into as of March 16, 1997, among USWeb Corporation, a Utah corporation\n(\"Parent\"), USWeb Acquisition Corporation 101, a Delaware corporation and a\n  ------\nwholly owned subsidiary of Parent (\"Sub\"),  XCom Corporation, a California\n                                    ---\ncorporation (the \"Company\"), and the individuals listed on Exhibit A attached\n                  -------\nhereto (such individuals being hereinafter referred to collectively as the\n\"Principal Shareholders\" and individually as a \"Principal Shareholder\").\n ----------------------                         ---------------------\n\n\n                                    RECITALS\n\n     A.    The Boards of Directors of each of the Company, Parent and Sub\nbelieve it is in the best interests of each company and their respective\nshareholders that Parent acquire the Company through the statutory merger of the\nCompany with and into Sub (the \"Merger\") and, in furtherance thereof, have\napproved the Merger.\n\n     B.    Pursuant to the Merger, among other things, all of the issued and\noutstanding shares of capital stock of the Company shall be converted into the\nright to receive shares of Common Stock of Parent.\n\n     C.    Fifty Percent (50%) of the shares of Common Stock of Parent otherwise\npayable in connection with the Merger shall be placed in a one-year escrow for\nthe purposes of (i) satisfying damages, losses, expenses and other similar\ncharges which result from breaches of representations, warranties or covenants\nor (ii) making adjustments to the purchase price paid by the Parent.\n\n     D.    The Company, the Principal Shareholders, Parent and Sub desire to\nmake certain representations, warranties, covenants and other agreements in\nconnection with the Merger.\n\n     E.    The parties hereto desire that each employee of the Company prior to\nthe Merger shall be offered an opportunity of employment by the Sub following\nthe Merger.  Each party understands and agrees that any such employee or the Sub\nshall have the right to terminate any such employment at any time.\n\n     NOW, THEREFORE, in consideration of the covenants, promises and\nrepresentations set forth herein, and for other good and valuable consideration,\nthe parties agree as follows:\n\n                                       1\n\n\n \n                                   ARTICLE I\n\n                                   THE MERGER\n\n     1.1  The Merger.  At the Effective Time (as defined in Section 1.2) and\n          ----------                                                            \nsubject to and upon the terms and conditions of this Agreement and the\napplicable provisions of the corporations laws of the states of Delaware\n(\"Delaware Law\") and California (the \"California Law\"), the Company shall be\nmerged with and into the Sub, the separate corporate existence of the Company\nshall cease and Sub shall continue as the surviving corporation and as a wholly\nowned subsidiary of Parent.  Sub as the surviving corporation after the Merger\nis hereinafter sometimes referred to as the \"Surviving Corporation.\"\n\n     1.2  Effective Time.  Unless this Agreement is earlier terminated\n          --------------  \npursuant to Section 8.1, the closing of the Merger (the \"Closing\") will take\n                                                         -------\nplace as promptly as practicable, but no later than five (5) business days\nfollowing satisfaction or waiver of the conditions set forth in Article VI, at\nthe offices of Wilson Sonsini Goodrich &amp; Rosati, 650 Page Mill Road, Palo Alto,\nCalifornia, unless another place or time is agreed to in writing by Parent and\nthe Company.  The date upon which the Closing actually occurs is herein referred\nto as the \"Closing Date.\"  On the Closing Date, the parties hereto shall cause\n           ------------\nthe Merger to be consummated by submitting for filing an Agreement and Plan of\nMerger (or like instrument) with the Secretary of State of Delaware and the\nSecretary of State of California (the \"Merger Articles\"), in accordance with the\n                                       ---------------\nrelevant provisions of applicable law (the later of the times of filing with the\nSecretary of State of Delaware and the Secretary of State of California being\nreferred to herein as the \"Effective Time\").\n                           --------------\n\n     1.3  Effect of the Merger.  At the Effective Time, the effect of the\n          --------------------                                             \nMerger shall be as provided in the applicable provisions of Delaware Law and\nCalifornia Law.  Without limiting the generality of the foregoing, and subject\nthereto, at the Effective Time, all the property, rights, privileges, powers and\nfranchises of the Company and Sub shall vest in the Surviving Corporation, and\nall debts, liabilities and duties of the Company and Sub shall become the debts,\nliabilities and duties of the Surviving Corporation.\n\n     1.4  Certificate of Incorporation; Bylaws.\n          ------------------------------------   \n\n          (a) Unless otherwise determined by Parent prior to the Effective Time,\nat the Effective Time, the Certificate of Incorporation of Sub shall be the\nCertificate of Incorporation of the Surviving Corporation until thereafter\namended as provided by law and such Certificate of Incorporation.\n\n          (b) The Bylaws of Sub, as in effect immediately prior to the Effective\nTime, shall be the Bylaws of the Surviving Corporation until thereafter amended.\n\n\n                                       2\n\n\n \n     1.5  Directors and Officers.   The director(s) of Sub immediately prior\n          ----------------------                                              \nto the Effective Time shall be the initial director(s) of the Surviving\nCorporation, each to hold office in accordance with the Certificate of\nIncorporation and Bylaws of the Surviving Corporation.  The officers of Sub\nimmediately prior to the Effective Time shall be the initial officers of the\nSurviving Corporation, each to hold office in accordance with the Bylaws of the\nSurviving Corporation.\n\n     1.6  Effect of Merger on the Capital Stock of the Constituent Corporations.\n          ---------------------------------------------------------------------\n\n          (a) Exchange of Stock; Purchase Price Adjustments.  As of the\n              ---------------------------------------------\nEffective Time of the Merger, each share of the Company's Common Stock, no par\nvalue (the \"Company Common Stock\"), that is issued and outstanding immediately\n            --------------------\nprior to the Effective Time (other than any  dissenting shares under applicable\nstate law) shall, by virtue of the Merger and without any action on the part of\nSub, the Company, or the Company's shareholders (the \"Company Shareholders\"), be\n                                                      --------------------\ncanceled and extinguished and each Company Shareholder shall have (i) the right\nto receive such Company Shareholder's pro rata portion (based on such Company\nShareholders' equity ownership in the Company as represented to Parent by the\nCompany) of that number of shares of the Parent's Common Stock, par value $.001\nper share (the \"Parent Common Stock\") equal to $2,586,666 (the \"Original\n                -------------------\nPurchase Price\") divided by the Fair Value Per Share (as defined in Section\n1.6(e) below) as of the Closing Date, subject to Section 7.2 hereof, plus the\ncontingent right to receive  additional shares of Parent Common Stock as\nprovided in Section 1.10 of this Agreement (the \"Purchase Price Adjustment\").\n                                                 -------------------------\nThe Original Purchase Price and the Purchase Price Adjustment are hereinafter\ncollectively referred to as the \"Merger Consideration.\"\n                                 --------------------\n\n          (b)  Stock Options.   N\/A\n               -------------\n\n          (c) Adjustments to Parent Common Stock.  The number of shares of\n              ----------------------------------\nParent Common Stock issuable hereunder shall be adjusted to reflect fully the\neffect of any stock split, reverse split, stock dividend (including any dividend\nor distribution of securities convertible into Parent Common Stock or Company\nCommon Stock), reorganization, recapitalization or other like change with\nrespect to Parent Common Stock or Company Common Stock occurring after the date\nhereof.\n\n          (d) Fractional Shares.  No fractional share of Parent Common Stock\n              -----------------\nshall be issued in the Merger, including the Purchase Price Adjustment pursuant\nto Section 1.10 below, or pursuant to any stock option or stock bonus issued to\na Company employee that becomes an employee of Parent or Sub following the\nMerger.  In lieu thereof, the number of shares otherwise issued or issuable\nshall be rounded to the nearest whole share, with one-half share or more being\nrounded up.\n\n          (e)  Definitions.\n               ------------\n\n          (i) Aggregate Common Number.  The \"Aggregate Common Number\" shall mean\n              -----------------------\nthe aggregate number of shares of Company Common Stock outstanding immediately\nprior to the Effective Time.\n\n                                       3\n\n\n \n          (ii)   Fair Value Per Share.  The Fair Value Per Share of Parent's\n                 --------------------\nCommon Stock, as of any particular date, shall mean, if the Parent's Common\nStock is then traded on an exchange or national quotation system, the average\nclosing price per share of Parent's Common Stock as traded on such exchange or\nnational quotation system during the 10 trading day period ending three business\ndays prior to the date of determination or, if not so traded, the fair market\nvalue per share of such Parent's Common Stock as most recently determined by the\nParent's Board of Directors acting in good faith.\n\n          (iii)  Escrow Amount; Escrow Agent.  The \"Escrow Amount\" shall be\n                 ---------------------------\nequal to Fifty Percent (50%) of the number of shares of Parent Common Stock\nconstituting the Original Purchase Price.  The Escrow Agent shall be the\nsecretary of the Parent, or his designee, so long as the Parent is a privately\nheld company.  Thereafter, any transfer agent for the Parent's Common Stock may\nbe appointed Escrow Agent.\n\n          (iv)   Exchange Ratio.  The \"Exchange Ratio\" shall mean the quotient\n                 --------------\nobtained by dividing (i) (X) the Original Purchase Price divided by (Y) the Fair\nValue Per Share as of the Effective Date by (ii) the Aggregate Common Number.\nFor illustrative purposes only, if the Original Purchase Price were $2,000,000,\nthe Fair Value Per Share were $2.50 and the Aggregate Common Number were\n3,400,000, then the Exchange Ratio would be ($2,000,000 \/ $2.50) \/ 3,400,000 =\n .23529, so each share of Company Common Stock would be exchanged for .23529\nshares of Parent's Common Stock.  If the facts were the same but the Aggregate\nCommon Number were 1,500, then the calculation would be ($2,000,000 \/ $2.50)\n\/1,500 = 533.33, so each share of Company Common Stock would be exchanged for\n533.33 shares of Parent's Common Stock.\n\n     1.7  Surrender of Certificates.\n          -------------------------   \n\n          (a) Exchange Agent.  The Secretary of Parent or such other entity\n              --------------\nreasonably designated by Parent shall serve as exchange agent (the \"Exchange\nAgent\") in the Merger.\n\n          (b) Parent to Provide Common Stock.  Promptly after the Effective\n              ------------------------------\nTime, Parent shall make available to the Exchange Agent for exchange in\naccordance with this Article I the Original Purchase Price issuable pursuant to\nSection 1.6(a) in exchange for outstanding shares of Company Common Stock;\nprovided that, on behalf of the Company Shareholders, Parent shall deposit the\nEscrow Amount into an escrow account.\n\n                                       4\n\n\n \n          (c) Exchange Procedures.  Promptly after the Effective Time, the\n              -------------------\nSurviving Corporation shall cause to be mailed to each Company Shareholder (i) a\nletter of transmittal (which shall specify that delivery shall be effected, and\nrisk of loss and title to the certificates (the \"Certificates\") which\n                                                 ------------\nimmediately prior to the Effective Time represented outstanding shares of\nCompany Common Stock whose shares were converted into the right to receive the\nMerger Consideration pursuant to Section 1.6, shall pass, only upon delivery of\nthe Certificates to the Exchange Agent and shall be in such form and have such\nother provisions as Parent may reasonably specify) and (ii) instructions for use\nin effecting the surrender of the Certificates in exchange for the Merger\nConsideration.  Upon surrender of a Certificate for cancellation to the Exchange\nAgent or to such other agent or agents as may be appointed by Parent, together\nwith such letter of transmittal, duly completed and validly executed in\naccordance with the instructions thereto, the Company Shareholder shall be\nentitled to receive in exchange therefor a certificate representing the number\nof shares issuable to such Company Shareholder as part of the Original Purchase\nPrice (less the number of shares of Parent Common Stock to be deposited in the\nEscrow Fund (as defined in Article VII) on such holder's behalf pursuant to\nArticle VII hereof) and the Certificate so surrendered shall forthwith be\ncanceled.  As soon as practicable after the Effective Time, and subject to and\nin accordance with the provisions of Article VII hereof, Parent shall cause to\nbe distributed to the Escrow Agent (as defined in Article VII) a certificate or\ncertificates representing that number of shares of Parent Common Stock equal to\nthe Escrow Amount.  Such consideration shall be beneficially owned by the\nholders on whose behalf such consideration were deposited in the Escrow Fund and\nshall be available to compensate Parent as provided in Article VII.  Until\nsurrendered to the Exchange Agent, each outstanding Certificate that, prior to\nthe Effective Time, represented shares of Company Common Stock will be deemed\nfrom and after the Effective Time, for all corporate purposes, other than the\npayment of dividends, to evidence only the right to receive Merger Consideration\npursuant to Section 1.6 hereof.\n\n          (d) Distributions With Respect to Unexchanged Shares.  No dividends or\n              ------------------------------------------------\nother distributions declared or made after the Effective Time with respect to\nParent Common Stock with a record date after the Effective Time will be paid to\nthe holder of any unsurrendered Certificate with respect to the shares of Parent\nCommon Stock issuable upon conversion of the shares of Company Common Stock\nrepresented thereby until the holder of record of such Certificate shall\nsurrender such Certificate.  Subject to applicable law, following surrender of\nany such Certificate, there shall be paid to the record holder of the\ncertificates representing whole shares of Parent Common Stock issued in exchange\ntherefor, without interest, at the time of such surrender, the amount of\ndividends or other distributions with a record date after the Effective Time\ntheretofore paid with respect to such whole shares of Parent Common Stock.\n\n          (e) Transfers of Ownership.  If any certificate for shares of Parent\n              ----------------------\nCommon Stock is to be issued in a name other than that in which the Certificate\nsurrendered in exchange therefor is registered, it will be a condition of the\nissuance thereof that the Certificate so surrendered will be properly endorsed\nand otherwise in proper form for transfer and that the person requesting such\nexchange will have paid to Sub or any agent designated by it any transfer or\nother taxes required by reason of the issuance of a certificate for shares of\nParent Common Stock in any name other than that of the registered holder of the\nCertificate surrendered or have \n\n                                       5\n\n\n \nestablished to the satisfaction of Sub or any agent designated by it that such\ntax has been paid or is not payable.\n\n          (f) No Liability.  Notwithstanding anything to the contrary in this\n              ------------\nSection 1.7, none of the Exchange Agent, the Surviving Corporation or any party\nhereto shall be liable to a holder of shares of Parent Common Stock or Company\nCommon Stock for any amount properly paid to a public official pursuant to any\napplicable abandoned property, escheat or similar law.\n\n     1.8  No Further Ownership Rights in Company Common Stock.  All shares of\n          ---------------------------------------------------                  \nParent Common Stock issued upon the surrender for exchange of shares of Company\nCommon Stock in accordance with the terms hereof shall be deemed to have been\nissued in full satisfaction of all rights pertaining to such shares of Company\ncapital stock, and there shall be no further registration of transfers on the\nrecords of the Surviving Corporation of shares of Company capital stock which\nwere outstanding immediately prior to the Effective Time.  If, after the\nEffective Time, Certificates are presented to the Surviving Corporation for any\nreason, they shall be canceled and exchanged as provided in this Article I.\n\n     1.9  Lost, Stolen or Destroyed Certificates.   In the event any\n          --------------------------------------  \nCertificates shall have been lost, stolen or destroyed, the Exchange Agent shall\nissue in exchange for such lost, stolen or destroyed Certificates, upon the\nmaking of an affidavit of that fact by the holder thereof, such shares of Parent\nCommon Stock as may be required pursuant to Section 1.6(a); provided, however,\nthat Sub may, in its discretion and as a condition precedent to the issuance\nthereof, require the owner of such lost, stolen or destroyed Certificates to\ndeliver a bond in such sum as it may reasonably direct as indemnity against any\nclaim that may be made against Parent,  Sub or the Exchange Agent with respect\nto the Certificates alleged to have been lost, stolen or destroyed.\n\n     1.10 Purchase Price Adjustments.   The Original Purchase Price shall be\n          --------------------------  \nsubject to adjustment as follows:\n\n          (a) Six-Month Adjustment.  At the close of business on the last\n              --------------------\nbusiness day of the sixth full month after the Closing Date (the \"First\n                                                                  -----\nAdjustment Date\"), the Parent shall conduct a valuation of the Sub according to\n- ---------------\nthe operation of the Parent's affiliate valuation method (the \"Valuation\n                                                               ---------\nMethod\").  Parent shall then calculate the \"First Adjustment to Purchase Price\"\n- ------\nas follows:\n\n          FAPP = FADV -  OPP\n\nwhere     FAPP is the First Adjustment to Purchase Price;\n          FADV is the First Adjustment Date Value as calculated on the First\n          Adjustment Date using the Valuation Method; and\n          OPP is the Original Purchase Price.\n\n               (i) If FAPP is greater than zero, then the Parent shall pay to\nthe Company Shareholders promptly after the First Adjustment Date a number of\nshares calculated as follows:\n\n                                       6\n\n\n \n          FSP = (FAPP \/ FVPSFAD) x .25\n\nwhere     FSP is the \"First Shares Payment\";\n          FAPP is the First Adjustment to Purchase Price as calculated above;\n          and\n          FVPSFAD is the Fair Value Per Share of the Parent's Common Stock on\n          the First Adjustment Date.\n\n               (ii) If FAPP is less than zero, then the Escrow Agent shall pay\nto Parent from the Escrow Amount promptly after the First Adjustment Date a\nnumber of shares calculated as follows:\n\n          FSP = (-FAPP \/ FVPSCD)\n\nwhere     FSP is the \"First Shares Payment\";\n          FAPP is the First Adjustment to Purchase Price as calculated above;\n          and\n          FVPSCD is the Fair Value Per Share of the Parent's Common Stock on the\n          Closing Date.\n\nIf FAPP equals zero, no adjustment to the Original Purchase Price shall be made\nfor the First Adjustment Date.\n\n          (b) Twelve-Month Adjustment.  At the close of business on the last\n              -----------------------\nbusiness day of the twelfth full month after the Closing Date (the \"Second\nAdjustment Date\"), the Parent shall conduct a valuation of the Sub according to\nthe Valuation Model, attached as Exhibit B.  Parent shall then calculate the\n\"Second Adjustment to Purchase Price\" as follows:\n\n          SAPP = SADV - FADV\n\nwhere     SAPP is the Second Adjustment to Purchase Price;\n          SADV is the Second Adjustment Date Value as calculated on the Second\n          Adjustment Date using the Valuation Method; and\n          FADV is the First Adjustment Date Value.\n\n               (i) If SAPP is greater than zero, then the Parent shall pay to\nthe Company Shareholders promptly after the Second Adjustment Date a number of\nshares calculated as follows:\n\n          SSP = (SAPP \/ FVPSSAD) x .25\n\nwhere     SSP is the \"Second Shares Payment\";\n          SAPP is the Second Adjustment to Purchase Price as calculated above;\n          and\n          FVPSSAD is the Fair Value Per Share of the Parent's Common Stock on\n          the Second Adjustment Date.\n\n                                       7\n\n\n \n               (ii) If SAPP is less than zero, then the Escrow Agent shall pay\nto Parent from the Escrow Amount promptly after the Second Adjustment Date a\nnumber of shares calculated as follows:\n\n          SSP = (-SAPP \/ FVPSCD)\n\nwhere     SSP is the \"Second Shares Payment\";\n          SAPP is the Second Adjustment to Purchase Price as calculated above;\n          and\n          FVPSCD is the Fair Value Per Share of the Parent's Common Stock on the\n          Closing Date.\n\nIf SAPP equals zero, no adjustment to the Original Purchase Price shall be made\nfor the Second Adjustment Date.\n\n     1.11 Parent Common Stock.  The shares of Parent Common Stock issued in\n          -------------------                                                \nconnection with the Merger will be issued in a transaction exempt from\nregistration under the Securities Act of 1933, as amended (the \"Securities\n                                                                ----------\nAct\"), by reason of Section 4(2) of the Securities Act or Regulation D\n- ---\nthereunder.  Such shares may not be transferred or resold thereafter except in\ncompliance with the terms of this Agreement and following registration under the\nSecurities Act or in reliance on an exemption from registration under the\nSecurities Act.\n\n     1.12 Tax Consequences.  It is intended by the parties hereto that the\n          ----------------                                                  \nMerger will constitute a reorganization within the meaning of Section 368 of the\nInternal Revenue Code of 1986, as amended (the \"Code\").  Each party has\nconsulted its own tax advisors with respect to the tax consequences of the\nMerger.\n\n     1.13 Taking of Necessary Action; Further Action.  If, at any time after\n          ------------------------------------------                          \nthe Effective Time, any further action is necessary or desirable to carry out\nthe purposes of this Agreement and to vest the Surviving Corporation with full\nright, title and possession to all assets, property, rights, privileges, powers\nand franchises of the Company and Sub, the officers and directors of the\nCompany, Parent and Sub are fully authorized in the name of their respective\ncorporations or otherwise to take, and will take, all such lawful and necessary\naction.\n\n                                   ARTICLE II\n\n                 REPRESENTATIONS AND WARRANTIES OF THE COMPANY\n                         AND THE PRINCIPAL SHAREHOLDERS\n\n     The Company and the Principal Shareholders hereby, jointly and severally,\nrepresent and warrant to Parent and Sub, subject to such exceptions as are\nspecifically disclosed in Exhibit C attached hereto (referencing the appropriate\n                          ---------\nsection and paragraph numbers), as follows:\n\n                                       8\n\n\n \n     2.1  Organization of the Company.  The Company is a corporation duly\n          ---------------------------                                      \norganized, validly existing and in good standing under the laws of the State of\nCalifornia.  The Company has the corporate power to own its properties and to\ncarry on its business as now being conducted.  The Company is duly qualified to\ndo business and in good standing as a foreign corporation in each jurisdiction\nin which the failure to be so qualified would have a material adverse effect on\nthe business, assets (including intangible assets), financial condition, results\nof operations or prospects of the Company (hereinafter referred to as a\n\"Material Adverse Effect\").  The Company has delivered a true and correct copy\n -----------------------\nof its Articles of Incorporation and Bylaws, each as amended to date, to Parent.\nExhibit C lists the directors and officers of the Company.  The operations now\nbeing conducted by the Company have not been conducted under any other name.\n\n     2.2  Company Capital Structure.\n\n          (a) The authorized capital stock of the Company consists of __________\nshares of authorized Common Stock of which __________ shares are issued and\noutstanding.  There are no other classes or series of capital stock of the\nCompany of any kind outstanding or issuable.  The Company Common Stock is held\nby the persons, with the domicile addresses and in the amounts set forth on\nExhibit C.  All outstanding shares of Company Common Stock are duly authorized,\n- ---------\nvalidly issued, fully paid and non-assessable and not subject to preemptive\nrights created by statute, the Articles of Incorporation or Bylaws of the\nCompany or any agreement to which the Company  is a party or by which it is\nbound.\n\n          (b) There are no options, warrants, calls, rights, commitments or\nagreements of any character, written or oral, to which the Company  is a party\nor by which it is bound obligating the Company  to issue, deliver, sell,\nrepurchase or redeem, or cause to be issued, delivered, sold, repurchased or\nredeemed, any shares of the capital stock of the Company or obligating the\nCompany  to grant, extend, accelerate the vesting of, change the price of,\notherwise amend or enter into any such option, warrant, call, right, commitment\nor agreement.  As a result of the Merger, Parent will be the record and sole\nbeneficial owner of all outstanding capital stock of the Company and rights to\nacquire or receive Company Capital Stock.\n\n     2.3  Subsidiaries.  The Company does not have any subsidiaries or\n          ------------                                                  \naffiliated companies and does not otherwise own any shares in the capital of or\nany interest in, or control, directly or indirectly, any other corporation,\npartnership, association, joint venture or other business entity. The Company\nhas never had any subsidiaries or affiliated companies and has never otherwise\nowned shares in the capital of or any interest in or control, directly or\nindirectly of, any other corporation, partnership association, joint venture or\nother business entity.\n\n\n                                       9\n\n\n \n     2.4  Authority.  Each of the Company and the Principal Shareholders has\n          ---------                                                          \nall requisite corporate power and authority to enter into this Agreement to\nwhich it is a party and to consummate the transactions contemplated hereby and\nthereby.  The execution and delivery of this Agreement and the consummation of\nthe transactions contemplated hereby and thereby have been duly authorized by\nall necessary corporate action on the part of the Company and the Principal\nShareholders, and no further action is required on their part to authorize the\nAgreement and the transactions contemplated hereby and thereby.  This Agreement\nhas been duly executed and delivered by the Company and the Principal\nShareholders and, assuming the due authorization, execution and delivery by the\nother parties hereto and thereto, constitutes the valid and binding obligation\nof the Company and the Principal Shareholders, enforceable in accordance with\nits terms, subject to the laws of general application relating to bankruptcy,\ninsolvency and the relief of debtors and to rules of law governing specific\nperformance, injunctive relief or other equitable remedies.\n\n     2.5  No Conflict.  The execution and delivery of this Agreement does not,\n          -----------                                                           \nand the consummation of the transactions contemplated hereby and thereby will\nnot, conflict with, or result in any violation of, or default under (with or\nwithout notice or lapse of time, or both), or give rise to a right of\ntermination, cancellation, modification or acceleration of any obligation or\nloss of any benefit under (any such event, a \"Conflict\") (i) any provision of\n                                              --------\nthe Articles of Incorporation and Bylaws the Company, (ii) any mortgage,\nindenture, lease, contract or other agreement or instrument, permit, concession,\nfranchise or license to which the Company or any of its properties or assets is\nsubject, or (iii) any judgment, order, decree, statute, law, ordinance, rule or\nregulation applicable to the Company or its properties or assets.\n\n     2.6  Consents.   No consent, waiver, approval, order or authorization of,\n          --------                                                              \nor registration, declaration or filing with, any court, administrative agency or\ncommission or other federal, state, county, local or other foreign governmental\nauthority, instrumentality, agency or commission (\"Governmental Entity\") or any\n                                                   -------------------\nthird party, including a party to any agreement with the Company (so as not to\ntrigger any Conflict), is required by or with respect to the Company in\nconnection with the execution and delivery of this Agreement or the consummation\nof the transactions contemplated hereby, except for (i) such consents, waivers,\napprovals, orders, authorizations, registrations, declarations and filings as\nmay be required under applicable securities laws thereby, and (ii) the filing of\nthe Agreement of Merger with the Secretary of State of the State of California.\n\n                                      10\n\n\n \n     2.7  Company Financial Statements.  Exhibit C sets forth the Company's\n          ----------------------------   ---------\naudited balance sheet as of December 31, 1996 and the related audited statements\nof income and cash flow for year then ended (the \"Audited Financials\") and the\n                                                  ------------------\nCompany's unaudited balance sheet of February 28, 1997, and the related\nunaudited statements of income and cash flow for the Six (6) months then ended\n(the \"Unaudited Financials\").  The Audited Financials and the Unaudited\n      --------------------\nFinancials are correct in all material respects and have been prepared in\naccordance with United States generally accepted accounting principles\n(\"USGAAP\") applied on a basis consistent throughout the periods indicated and\n  ------\nconsistent with each other.  The Audited and Unaudited Financials present fairly\nin all material respects the financial condition, operating results and cash\nflows of the Company as of the dates and during the periods indicated therein,\nsubject in the case of the Unaudited Financials, to normal year-end adjustments,\nwhich will not be material in amount or significance.  The Company's audited\nBalance Sheet as of December 31, 1996 shall be referred to as the \"Balance\n                                                                   -------\nSheet\".\n- -----\n\n     2.8  No Undisclosed Liabilities.   Except as set forth in Exhibit C, none\n          --------------------------                           ---------\nof the Company has any liability, indebtedness, obligation, expense, claim,\ndeficiency, guaranty or endorsement of any type, whether accrued, absolute,\ncontingent, matured, unmatured or other (whether or not required to be reflected\nin financial statements in accordance with USGAAP), which individually or in the\naggregate (i) has not been reflected in the Balance Sheet, or (ii) has not\narisen in the ordinary course of business consistent with past practices since\nDecember 31, 1996.\n\n     2.9  No Changes.  Except as set forth in Exhibit C, since December 31,\n          ----------                          ---------\n1996, there has not been, occurred or arisen any:\n\n          (a) transaction by the Company except in the ordinary course of\nbusiness as conducted on that date and consistent with past practices;\n\n          (b) amendments or changes to the Articles of Incorporation or Bylaws\nof the Company;\n\n          (c) capital expenditure or commitment by the Company, either\nindividually or in the aggregate, exceeding $25,000;\n\n          (d) destruction of, damage to or loss of any material assets, business\nor customer of the Company (whether or not covered by insurance);\n\n          (e) labor trouble or claim of wrongful discharge or other unlawful\nlabor practice or action;\n\n          (f) change in accounting methods or practices (including any change in\ndepreciation or amortization policies or rates) by the Company;\n\n          (g) revaluation by the Company of any of its assets;\n\n                                      11\n\n\n \n          (h) declaration, setting aside or payment of a dividend or other\ndistribution with respect to the Company's capital stock, or any direct or\nindirect redemption, purchase or other acquisition by the Company of any of its\ncapital stock;\n\n          (i) increase in the salary or other compensation payable or to become\npayable by the Company to any of its officers, directors, employees or advisors,\nor the declaration, payment or commitment or obligation of any kind for the\npayment, by the Company, of a bonus or other additional salary or compensation\nto any such person;\n\n          (j) any agreement, contract, lease or commitment (collectively a\n                                                                          \n\"Company Agreement\") or any extension or modification the terms of any Company\n -----------------\nAgreement which (i) involves the payment of greater than $25,000 per annum or\nwhich extends for more than one year, (ii) involves any payment or obligation to\nany affiliate of the Company other than in the ordinary course of business as\nconducted on that date and consistent with past practices, or (iii) involves the\nsale of any material assets;\n\n          (k) sale, lease, license or other disposition of any of the assets or\nproperties of the Company, or any creation of any security interest in such\nassets or properties except in the ordinary course of business as conducted on\nthat date and consistent with past practices;\n\n          (l) amendment or termination of any material contract, agreement or\nlicense to which the Company is a party or by which it is bound;\n\n          (m) loan by the Company to any person or entity, incurring by the\nCompany of any indebtedness, guaranteeing by the Company of any indebtedness,\nissuance or sale of any debt securities of the Company or guaranteeing of any\ndebt securities of others, except for advances to employees for travel and\nbusiness expenses in the ordinary course of business, consistent with past\npractices;\n\n          (n) waiver or release of any right or claim of the Company, including\nany write-off or other compromise of any account receivable of the Company;\n\n          (o) the commencement or notice or threat of commencement of any\nlawsuit or proceeding against investigation of the Company or its affairs;\n\n          (p) notice of any claim of ownership by a third party of the Company's\nIntellectual Property (as defined in Section 2.13 below) or of infringement by\nthe Company of any third party's Intellectual Property rights;\n\n          (q) issuance or sale by the Company of any of its shares of capital\nstock, or securities exchangeable, convertible or exercisable therefor, or of\nany other of its securities;\n\n                                      12\n\n\n \n          (r) change in pricing or royalties set or charged by the Company to\nits customers or licensees or in pricing or royalties set or charged by persons\nwho have licensed Intellectual Property (as defined in Section 2.13 below) to\nthe Company;\n\n          (s) any event or condition of any character that has or may have a\nMaterial Adverse Effect on the Company or;\n\n          (t) negotiation or agreement by the Company or any officer or employee\nthereof to do any of the things described in the preceding clauses (a) through\n(s) (other than negotiations with Parent and its representatives regarding the\ntransactions contemplated by this Agreement).\n\n     2.10 Tax Matters.\n          -----------   \n\n          (a) Definition of Taxes.  For the purposes of this Agreement, \"Tax\"\n              -------------------                                        ---\nor, collectively, \"Taxes,\" means (i) any and all federal, state, local and\n                   -----\nforeign taxes, assessments and other governmental charges, duties, impositions\nand liabilities, including taxes based upon or measured by gross receipts,\nincome, profits, sales, use and occupation, and value added, ad valorem,\ntransfer, franchise, withholding, payroll, recapture, employment, excise and\nproperty taxes, together with all interest, penalties and additions imposed with\nrespect to such amounts; (ii) any liability for the payment of any amounts of\nthe type described in clause (i) as a result of being a member of an affiliated,\nconsolidated, combined or unitary group for any period; and (iii) any liability\nfor the payment of any amounts of the type described in clause (i) or (ii) as a\nresult of any express or implied obligation to indemnify any other person or as\na result of any obligations under any agreements or arrangements with any other\nperson with respect to such amounts and including any liability for taxes of a\npredecessor entity.\n\n          (b) Tax Returns and Audits.  Except as set forth in Exhibit C:\n              ----------------------                          ---------\n\n          (i)   The Company as of the Closing Date will have prepared and timely\nfiled or made a timely request for extension for all required federal, state,\nlocal and foreign returns, estimates, information statements and reports\n(\"Returns\") relating to any and all Taxes concerning or attributable to the\n  -------\nCompany [or Subsidiaries, as the case may be], or its operations and such\nReturns are true and correct and have been completed in accordance with\napplicable law.\n\n          (ii)  The Company as of the Exchange Date (A) will have paid or\naccrued all Taxes it is required to pay or accrue as shown on the Returns and\n(B) will have withheld and timely remitted with respect to its employees all\nincome taxes and other Taxes required to be withheld and remitted.\n\n          (iii) The Company has not been delinquent in the payment of any Tax\nnor is there any Tax deficiency outstanding, assessed or proposed against the\nCompany, nor has the Company executed any waiver of any statute of limitations\non or extending the period for the assessment or collection of any Tax.\n\n                                      13\n\n\n \n          (iv)   No audit or other examination of any Return of the Company,  is\npresently in progress, nor has the Company been notified of any request for such\nan audit or other examination.\n\n          (v)    The Company has no liabilities for unpaid federal, state, local\nand foreign Taxes which have not been accrued or reserved against in accordance\nwith USGAAP on the Balance Sheet, whether asserted or unasserted, contingent or\notherwise.\n\n          (vi)   The Company has made available to Parent or its legal counsel,\ncopies of all foreign, federal and state income and all state sales and use\nReturns filed for all years as to which any applicable statute of limitations\nhas not expired.\n\n          (vii)  There are no Liens of any sort on the assets of the Company\nthe relating to or attributable to Taxes other than Liens for taxes not yet due\nand payable.\n\n          (viii) The Company Shareholders have no knowledge of any basis for\nthe assertion of any claim relating or attributable to Taxes which, if adversely\ndetermined, would result in any Lien on any material assets of the Company.\n\n          (ix)   As of the Closing, there will not be any contract, agreement,\nplan or arrangement, including but not limited to the provisions of this\nAgreement, covering any employee or former employee of the Company that,\nindividually or collectively, could give rise to the payment of any amount that\nwould not be deductible by the Company as an expense under Sections 162, 280G or\n404 of the Code.\n\n          (x)    The Company is not a party to a tax sharing, indemnification or\nallocation agreement nor does the Company owe any amount under any such\nagreement.\n\n          (xi)   The Company uses the accrual method of accounting for income\ntax purposes and its tax basis in its assets for purposes of determining its\nfuture amortization, depreciation and other federal income tax deductions is\naccurately reflected on the Company's tax books and records.\n\n     2.11 Restrictions on Business Activities.   There is no agreement\n          -----------------------------------                           \n(noncompete or otherwise), commitment, judgment, injunction, order or decree to\nwhich the Company or any Principal Shareholder is a party or otherwise binding\nupon the Company which has or may  have the effect of prohibiting or impairing\nany business practice of the Company, any acquisition of property (tangible or\nintangible) by the Company or the conduct of business by the Company. The\nCompany has not entered into any agreement under which the Company is restricted\nfrom providing services to customers or potential customers or any class of\ncustomers, in any geographic area, during any period of time or in any segment\nof the market.\n\n                                      14\n\n\n \n     2.12 Title to Properties; Absence of Liens and Encumbrances; Condition of\n          --------------------------------------------------------------------\n          Equipment.\n          ---------                                                     \n\n          (a) The Company does not own any real property, nor has it ever owned\nany real property.  Exhibit C sets forth a list of all real property currently\n                    ---------\nleased by the Company the name of the lessor, the date of the lease and each\namendment thereto and, with respect to any current lease, the aggregate annual\nrental and\/or other fees payable under any such lease.  All such current leases\nare in full force and effect, are valid and effective in accordance with their\nrespective terms, and there is not, under any of such leases, any existing\ndefault or event of default (or event which with notice or lapse of time, or\nboth, would constitute a default).\n\n          (b) The Company has good and valid title to, or, in the case of leased\nproperties and assets, valid leasehold interests in, all of its tangible\nproperties and assets, real, personal and mixed, used or held for use in its\nbusiness, free and clear of any Liens, except as reflected in the Company\nFinancials or in Exhibit C and except for liens for taxes not yet due and\n                 ---------\npayable and such imperfections of title and encumbrances, if any, which are not\nmaterial in character, amount or extent, and which do not detract from the\nvalue, or interfere with the present use, of the property subject thereto or\naffected thereby.\n\n          (c) Exhibit C lists all material items of equipment (the \"Equipment\")\n              ---------                                             ---------\nowned or leased by the Company and such Equipment is, taken as a whole, (i)\nadequate for the conduct of the business of the Company as currently conducted\nand (ii) in good operating condition, regularly and properly maintained, subject\nto normal wear and tear.\n\n          (d) The Company has sole and exclusive ownership, free and clear of\nany Liens, of all customer files and other customer information relating to\ncustomers of the Company's [and the Subsidiaries'] current and former customers\n(the \"Customer Information\").  No third party possesses any claims or rights\n      --------------------\nwith respect to use of the Customer Information.\n\n     2.13 Intellectual Property.\n          ---------------------   \n\n          (a) For the purposes of this Agreement, the following terms have the\nfollowing definitions:\n\n          \"Intellectual Property\" shall mean any or all of the following and all\n           ---------------------\nrights in, arising out of, or associated therewith:  (i) all United States and\nforeign patents and applications therefor and all reissues, divisions, renewals,\nextensions, provisionals, continuations and continuations-in-part thereof; (ii)\nall inventions (whether patentable or not), invention disclosures, improvements,\ntrade secrets, proprietary information, know how, technology, technical data and\ncustomer lists, and all documentation relating to any of the foregoing; (iii)\nall copyrights, copyrights registrations and applications therefor, and all\nother rights corresponding thereto throughout the world; (iv) all mask works,\nmask work registrations and applications therefor, and all other rights\ncorresponding thereto throughout the world; (v) all industrial designs and any\nregistrations and applications therefor throughout the world; (vi) all trade\nnames, logos, common law trademarks and service marks; \n\n                                      15\n\n\n \ntrademark and service mark registrations and applications therefor throughout\nthe world; (vii) all databases and data collections and all rights therein\nthroughout the world; and (viii) all computer software including all source\ncode, object code, firmware, development tools, files, records and data, all\nmedia on which any of the foregoing is recorded, and all documentation related\nto any of the foregoing throughout the world.\n\n          \"Intellectual Property of Company\" shall mean any Intellectual\n           --------------------------------\nProperty that:  (i) is owned by or exclusively licensed to the Company, or (ii)\nwhich is necessary to the operation of the Company, including the design,\nmanufacture and use of the products or performance of the services of the\nCompany as it currently is operated or is reasonably anticipated to be operated\nin the future, but shall specifically not include any rights in or to materials\ncreated for clients as \"work-made-for-hire\" or which are subject to an exclusive\nassignment or license in favor of clients of the Company.\n\n          (b) Exhibit C lists all of Company's United States and foreign: (i)\n              ---------\npatents, patent applications (including provisional applications); (ii)\nregistered trademarks, applications to register trademarks, intent-to-use\napplications, or other registrations related to trademarks; (iii) registered\ncopyrights and applications for copyright registration; (iv) mask work\nregistrations and applications to register mask works; and (v) any other\nIntellectual Property of Company that is the subject of an application,\ncertificate or registration filed with, issued by, or recorded by, any state,\ngovernment or other public legal authority (all of the foregoing, the\n\"Registered Intellectual Property\").\n\n          (c) Each item of Registered Intellectual Property is valid and\nsubsisting, all necessary registration, maintenance and renewal fees in\nconnection with such Registered Intellectual Property have been made and all\nnecessary documents and certificates in connection with such Registered\nIntellectual Property have been filed with the relevant patent, copyright,\ntrademark or other authorities in the United States or foreign jurisdictions, as\nthe case may be, for the purposes of maintaining such Registered Intellectual\nProperty.\n\n          (d) The contracts, licenses and agreements listed in Exhibit C include\n                                                               ---------\nall contracts, licenses and agreement, to which the Company is a party with\nrespect to any Intellectual Property with a value or cost in excess of $10,000,\nother than \"shrink wrap\" and similar commercial end-user licenses.\n\n          (e) The contracts, licenses and agreements listed in Exhibit C are in\n                                                               ---------\nfull force and effect.  The consummation of the transactions contemplated by\nthis Agreement will neither violate nor result in the breach, modification,\ncancellation, termination, or suspension of the contracts, licenses and\nagreements in Exhibit C.  The Company is in compliance with, and has not\n              ---------\nbreached any term of, the contracts, licenses and agreements listed in Exhibit\n                                                                       -------\nC, and, to the knowledge of the Company and the Principal Shareholders, all\n- -\nother parties to the contracts, licenses and agreements listed in Exhibit C are,\n                                                                  ---------\nin compliance with, and have not breached any term of, the contracts, licenses\nand agreements.  Following the Closing Date, Sub will be permitted to exercise\nall of the Company's [and the Subsidiaries'] rights under the contracts,\nlicenses and agreements listed in Exhibit C without the payment of any\n                                  ---------\nadditional amounts or consideration other than ongoing fees, royalties or\npayments which the Company would otherwise be required to pay.\n\n                                      16\n\n\n \n          (f) Except as set forth in Exhibit C:  (i) no person has any rights to\n                                     ---------\nuse any of the Intellectual Property of the Company; and (ii) the Company has\nnot granted to any Person, or authorized any Person to retain, any rights in the\nIntellectual Property of Company.\n\n          (g) Except as set forth in Exhibit C:  (i) the Company owns and has\n                                     ---------\ngood and exclusive title to each item of Intellectual Property listed in Exhibit\n                                                                         -------\nC, free and clear of any lien or encumbrance; and (ii) the Company owns, or has\n- -\nthe right, pursuant to a valid Contract to use or operate under, all other\nIntellectual Property of the Company.\n\n          (h) The operation of the business of the Company as it currently is\nconducted or is reasonably contemplated to be conducted, including its design,\ndevelopment, manufacture and sale of its products (including with respect to\nproducts currently under development) and provision of services, does not\ninfringe or misappropriate the Intellectual Property of any other person,\nviolate the rights of any person (including rights to privacy or publicity),\nconstitute unfair competition.\n\n          (i) The Company has not received notice from any person that the\noperation of the business of the Company, including its design, development,\nmanufacture and sale of its products (including with respect to products\ncurrently under development) and provision of its services, infringes or\nmisappropriates the Intellectual Property of any person, violates the rights of\nany person (including rights to privacy or publicity), or constitutes unfair\ncompetition.\n\n          (j) The Company owns or has the right to all Intellectual Property\nnecessary to the conduct of its business as it currently is conducted or is\nreasonably contemplated to be conducted, including, without limitation, the\ndesign, development, manufacture and sale of all products currently manufactured\nor sold by the Company under development by the Company and the performance of\nall services provided or contemplated to be provided by the Company.\n\n          (k) Exhibit C lists all contracts, licenses and agreements between the\n              ---------\nCompany and any other person wherein or whereby the Company has agreed to, or\nassumed, any obligation or duty to indemnify, hold harmless or otherwise assume\nor incur any obligation or liability with respect to the infringement by the\nCompany or such other Person of the Intellectual Property rights of any other\nperson.\n\n          (l) Except as listed in Exhibit C, there are no contracts, licenses\n                                  ---------\nand agreements between the Company and any other person with respect to Company\nIntellectual Property under which there is any dispute known to the Company or\nthe Principal Shareholders regarding the scope of such agreement, or performance\nunder such agreement including with respect to any payments to be made or\nreceived by the Company thereunder.\n\n          (m) Except as listed in Exhibit C, to the knowledge of the Company and\n                                  ---------\nthe Principal Shareholders, no person is infringing or misappropriating any of\nthe Intellectual Property of Company.\n\n                                      17\n\n\n \n          (n) Except as listed in Exhibit C, there are no claims asserted\n                                  ---------\nagainst the Company or against any customer of the Company, related to any\nproduct or service of the Company.\n\n          (o) No Intellectual Property of Company or product or service of the\nCompany is subject to any outstanding decree, order, judgment, or stipulation\nrestricting in any manner the use or licensing thereof by the Company.\n\n          (p) The Company has, and enforces, a policy requiring each employee\nand contractor to execute proprietary information and confidentiality agreements\nsubstantially in the Company's standard forms and all current and former\nemployees and contractors of the Company have executed such an agreement.\n\n          (q) No (i) product, service or publication of the Company, (ii)\nmaterial published or distributed by the Company or (iii) conduct or statement\nof Company, constitutes obscene material, a defamatory statement or material, or\nviolates any rights, including rights of publicity or privacy, of any person.\n\n     2.14 Agreements, Contracts and Commitments.\n          -------------------------------------   \n\n          (a) Except as set forth in Exhibit C, the Company does not have, or is\n                                     ---------\nnot bound by:\n\n              (i)   any collective bargaining agreement,\n\n              (ii)  any agreements or arrangements that contain any severance\npay or post-employment liabilities or obligations,\n\n              (iii) any bonus, deferred compensation, pension, profit sharing or\nretirement plans, or any other employee benefit plans or arrangements,\n\n              (iv)  any employment or consulting agreement, contract or\ncommitment with an employee or individual consultant or salesperson or\nconsulting or sales agreement, contract or commitment with a firm or other\norganization,\n\n              (v)   any agreement or plan, including, without limitation, any\nstock option plan, stock appreciation rights plan or stock purchase plan, any of\nthe benefits of which will be increased, or the vesting of benefits of which\nwill be accelerated, by the occurrence of any of the transactions contemplated\nby this Agreement or the value of any of the benefits of which will be\ncalculated on the basis of any of the transactions contemplated by this\nAgreement,\n\n              (vi)  any fidelity or surety bond or completion bond,\n\n                                      18\n\n\n \n              (vii)  any lease of personal property having a value individually\nin excess of $25,000,\n\n              (viii) any agreement of indemnification or guaranty, other than\nas set forth in agreements listed in Exhibit C,\n                                     ---------\n\n              (ix)   any agreement, contract or commitment containing any\ncovenant limiting the freedom of the Company to engage in any line of business\nor to compete with any person,\n\n              (x)    any agreement, contract or commitment relating to capital\nexpenditures and involving future payments in excess of $25,000,\n\n              (xi)   any agreement, contract or commitment relating to the\ndisposition or acquisition of assets or any interest in any business enterprise\noutside the ordinary course of the Company's business,\n\n              (xii)  any mortgages, indentures, loans or credit agreements,\nsecurity agreements or other agreements or instruments relating to the borrowing\nof money or extension of credit, including guaranties referred to in clause\n(viii) hereof,\n\n              (xiii) any purchase order or contract for the purchase of\nmaterials involving $25,000 or more,\n\n              (xiv)  any construction contracts,\n\n              (xv)   any distribution, joint marketing or development agreement,\nor\n\n              (xvi)  any other agreement, contract or commitment that involves\n$25,000 or more or is not cancelable without penalty within thirty (30) days.\n\n     (b)  The Company has not breached, violated or defaulted under, or received\nnotice that it has breached, violated or defaulted under, any of the terms or\nconditions of any agreement, contract, license or commitment to which it is a\nparty, by which it benefits or by which it is bound (any such agreement,\ncontract, license or commitment, a \"Contract\"), nor is the Company or any\n                                    --------\nPrincipal Shareholder aware of any event that would constitute such a breach,\nviolation or default with the lapse of time, giving of notice or both. Each\nContract is in full force and effect and, except as otherwise disclosed in\nExhibit C, is not subject to any default thereunder by any party obligated to\n- ---------\nthe Company pursuant thereto. The Company has obtained, or will obtain prior to\nthe Closing Date, all necessary consents, waivers and approvals of parties to\nany Contract as are required thereunder in connection with the Merger so that\nall such Contracts will remain in effect without modification after the Closing.\n\n                                      19\n\n\n \n     2.15 Interested Party Transactions.  No officer, director or Principal\n          -----------------------------                                      \nShareholder of the Company (nor any ancestor, sibling, descendant or spouse of\nany of such persons, or any trust, partnership or corporation in which any of\nsuch persons has or has had an interest), has or has had, directly or\nindirectly, (i) an interest in any entity which furnished or sold, or furnishes\nor sells, services or products that the Company furnishes or sells, or proposes\nto furnish or sell, or (ii) any interest in any entity that purchases from or\nsells or furnishes to, the Company, any goods or services or (iii) a beneficial\ninterest in any Contract; provided, that ownership of no more than one percent\n(1%) of the outstanding voting stock of a publicly traded corporation shall not\nbe deemed an \"interest in any entity\" for purposes of this Section 2.15.\n\n     2.16 Governmental Authorization.  Exhibit C accurately lists each\n          --------------------------   ---------\nconsent, license, permit, grant or other authorization issued to the Company by\na governmental entity (i) pursuant to which the Company currently operates or\nholds any interest in any of its properties or (ii) which is required for the\noperation of its business or the holding of any such interest (herein\ncollectively called \"Company Authorizations\").  The Company Authorizations are\n                     ----------------------\nin full force and effect and constitute all Company Authorizations required to\npermit the Company to operate or conduct its business or hold any interest in\nits properties or assets.\n\n     2.17 Litigation.  There is no action, suit or proceeding of any nature\n          ----------                                                         \npending, or to the Company's or the Principal Shareholders' knowledge\nthreatened, against the Company, its properties or any of its officers or\ndirectors, nor, to the knowledge of the Principal Shareholders, is there any\nreasonable basis therefor.  There is no investigation pending or, to the\nCompany's or Principals Shareholders' knowledge threatened, against the Company,\nits properties or any of its officers or directors (nor, to the best knowledge\nof the Principal Shareholders, is there any reasonable basis therefor) by or\nbefore any governmental entity.  No governmental entity has at any time\nchallenged or questioned the legal right of the Company to manufacture, offer or\nsell any of its products or services in the present manner or style thereof.\n\n     2.18 Accounts Receivable.\n          -------------------   \n\n          (a) The Company has made available to Parent a list of all accounts\nreceivable of the Company as of March 13, 1997, (\"Accounts Receivable\") along\n                                                  -------------------\nwith a range of days elapsed since invoice.\n\n          (b) All Accounts Receivable of the Company [and its Subsidiaries]\narose in the ordinary course of business, are carried at values determined in\naccordance with USGAAP consistently applied and are collectible except to the\nextent of reserves therefor set forth in the Balance Sheet.  No person has any\nLien on any of such Accounts Receivable and no request or agreement for\ndeduction or discount has been made with respect to any of such Accounts\nReceivable.\n\n\n                                      20\n\n\n \n     2.19 Minute Books.  The minutes of the Company made available to counsel\n          ------------                                                         \nfor Parent are the only minutes of the Company and contain a reasonably accurate\nsummary of all meetings of the Board of Directors (or committees thereof) of the\nCompany and its shareholders or actions by written consent since the time of\nincorporation of the Company.\n\n     2.20 Environmental Matters.\n          ---------------------   \n\n          (a) Hazardous Material.  The Company has not: (i) operated any\n              ------------------\nunderground storage tanks at any property that the Company has at any time\nowned, operated, occupied or leased; or (ii) illegally released any material\namount of any substance that has been designated by any Governmental Entity or\nby applicable federal, state or local law to be radioactive, toxic, hazardous or\notherwise a danger to health or the environment, including, without limitation,\nPBS, asbestos, petroleum, and urea-formaldehyde and all substances listed as\nhazardous substances pursuant to the Comprehensive Environmental Response,\nCompensation, and Liability Act of 1980, as amended, or defined as a hazardous\nwaste pursuant to the United States Resource Conservation and Recovery Act of\n1976, as amended, and the regulations promulgated pursuant to said laws (a\n\"Hazardous Material\"), but excluding office and janitorial supplies properly and\n ------------------\nsafely maintained.  No Hazardous Materials are present as a result of the\ndeliberate actions of the Company or, to the Company's or Principal\nShareholders' knowledge, as a result of any actions of any third party or\notherwise, in, on or under any property, including the land and the\nimprovements, ground water and surface water thereof, that the Company has at\nany time owned, operated, occupied or leased.\n\n          (b) Hazardous Materials Activities.  The Company has not transported,\n              ------------------------------\nstored, used, manufactured, disposed of, released or exposed its employees or\nothers to Hazardous Materials in violation of any law in effect on or before the\nClosing Date, nor has either the Company disposed of, transported, sold, or\nmanufactured any product containing a Hazardous Material (any or all of the\nforegoing being collectively referred to as \"Hazardous Materials Activities\") in\n                                             ------------------------------\nviolation of any rule, regulation, treaty or statute promulgated by any\nGovernmental Entity in effect prior to or as of the date hereof to prohibit,\nregulate or control Hazardous Materials or any Hazardous Material Activity.\n\n          (c) Permits.  The Company currently holds all environmental approvals,\n              -------\npermits, licenses, clearances and consents (the \"Environmental Permits\")\nnecessary for the conduct of the Company's Hazardous Material Activities and\nother businesses of the Company as such activities and businesses are currently\nbeing conducted.\n\n          (d) Environmental Liabilities.  No action, proceeding, revocation\n              -------------------------\nproceeding, amendment procedure, writ, injunction or claim is pending, or to the\nPrincipal Shareholders' knowledge, threatened concerning any Environmental\nPermit, Hazardous Material or any Hazardous Materials Activity of the Company.\nThe Principal Shareholders are not aware of any fact or circumstance which could\ninvolve the Company in any environmental litigation or impose upon the Company\nany environmental liability.\n\n                                      21\n\n\n \n     2.21 Brokers' and Finders' Fees; Third Party Expenses.  Except as set\n          ------------------------------------------------                    \nforth in Exhibit C, the Company has not incurred, nor will it incur, directly or\n         ---------\nindirectly, any liability for brokers' or finders' fees or agents' commissions\nor any similar charges in connection with the Agreement or any transaction\ncontemplated hereby.  Exhibit C sets forth the principal terms and conditions of\nany agreement, written or oral, with respect to such fees.  Exhibit C sets forth\n                                                            ---------\nthe Company's current reasonable estimate of all third party expenses expected\nto be incurred by the Company in connection with the negotiation and\neffectuation of the terms and conditions of this Agreement and the transactions\ncontemplated hereby.\n\n     2.22 Employee Benefit Plans and Compensation.\n          ---------------------------------------   \n\n          (a) For purposes of this Section 2.22, the following terms shall have\nthe meanings set forth below:\n\n              (i)   \"Employee Plan\" shall refer to any plan, program, policy,\n                     -------------\npractice, contract, agreement or other arrangement providing for bonuses,\nseverance, termination pay, performance awards, stock or stock-related awards,\nfringe benefits or other employee benefits of any kind, whether formal or\ninformal, funded or unfunded and whether or not legally binding, including\nwithout limitation, any plan which is or has been maintained, contributed to, or\nrequired to be contributed to, by the Company for the benefit of any \"Employee\"\n(as defined below), and pursuant to which the Company has or may have any\nmaterial liability, contingent or otherwise; and\n\n              (ii)  \"Employee\" shall mean any current, former, or retired\n                     --------\nemployee, officer, or director of the Company.\n\n              (iii) \"Employee Agreement\" shall refer to each employment,\n                     ------------------\nseverance, consulting or similar agreement or contract between the Company and\nany Employee;\n\n          (b) Schedule.  Exhibit C contains an accurate and complete list of\n              --------\neach Company Employee Plan and each Employee Agreement, together with a schedule\nof all liabilities, whether or not accrued, under each such Company Employee\nPlan.  The Company does not have any plan or commitment, whether legally binding\nor not, to establish any new Company Employee Plan or Employee Agreement, to\nmodify any Company Employee Plan or Employee Agreement (except to the extent\nrequired by law or to conform any such Company Employee Plan or Employee\nAgreement to the requirements of any applicable law, in each case as previously\ndisclosed to Parent in writing, or as required by this Agreement), or to enter\ninto any Company Employee Plan or Employee Agreement, nor does it have any\nintention or commitment to do any of the foregoing.\n\n          (c) Documents.  The Company has provided to Parent: (i) correct and\n              ---------\ncomplete copies of all documents embodying each Employee Plan and each Employee\nAgreement including all amendments thereto and copies of all forms of agreement\nand enrollment used therewith; (ii) the most recent annual actuarial valuations,\nif any, prepared for each Employee Plan; (iii) the three most recent annual\nreports (Series 5500 and all schedules thereto), if any, required under ERISA or\nthe Code in connection with each Company Employee Plan or related trust; (iv)\nthe most recent summary plan description together with the most recent summary\nof material modifications, if any, required under \n\n                                      22\n\n\n \nERISA with respect to each Company Employee Plan; (v) all IRS determination\nletters and rulings relating to Company Employee Plans and copies of all\napplications and correspondence to or from the IRS or the Department of Labor\n(\"DOL\") with respect to any Company Employee Plan; (vi) if the Employee Plan is\nfunded, the most recent annual and periodic accounting of Employee Plan assets;\nand (vii) all communications material to any Employee or Employees relating to\nany Employee Plan and any proposed Employee Plans, in each case, relating to any\namendments, terminations, establishments, increases or decreases in benefits,\nacceleration of payments or vesting schedules or other events which would result\nin any liability to the Company.\n\n          (d) Employee Plan Compliance.  (i) The Company have performed all\n              ------------------------\nobligations required to be performed by them under each Employee Plan and each\nEmployee Plan has been established and maintained in accordance with its terms\nand in compliance with all applicable laws, statutes, orders, rules and\nregulations, including ERISA and the Code; (ii) no \"prohibited transaction,\"\nwithin the meaning of Section 4975 of the Code or Section 406 of ERISA, has\noccurred with respect to any Company Employee Plan; (iii) there are no actions,\nsuits or claims pending, or, to the knowledge of the Company or the Principal\nShareholders threatened or anticipated (other than routine claims for benefits)\nagainst any Employee Plan or against the assets of any Employee Plan; (iii) each\nEmployee Plan can be amended, terminated or otherwise discontinued after the\nClosing Date in accordance with its terms, without liability to the Company,\nParent or Sub (other than ordinary administration expenses typically incurred in\na termination event); (iv) there are no inquiries or proceedings pending or, to\nthe knowledge of the Company or any Principal Shareholders threatened by the IRS\nor DOL with respect to any Company Employee Plan; and (v)  the Company is not\nsubject to any penalty or tax with respect to any Company Employee Plan under\nSection 402(i) of ERISA or Section 4975 through 4980 of the Code.\n\n          (e) Pension Plans.  The Company does not now, nor has it ever,\n              -------------\nmaintained, established, sponsored, participated in, or contributed to, any\nPension Plan which is subject to Part 3 of Subtitle B of Title I of ERISA, Title\nIV of ERISA or Section 412 of the Code.\n\n          (f) Multiemployer Plans.  At no time has the Company contributed to or\n              -------------------\nbeen requested to contribute to any Multiemployer Plan.\n\n          (g) No Post-Employment Obligations.  Except as set forth in Exhibit C,\n              ------------------------------                          ---------\nno Company Employee Plan provides, or has any liability to provide, life\ninsurance, medical or other employee benefits to any Employee upon his or her\nretirement or termination of employment for any reason, except as may be\nrequired by statute, and the Company has  not represented, promised or\ncontracted (whether in oral or written form) to any Employee (either\nindividually or to Employees as a group) that such Employee(s) would be provided\nwith life insurance, medical or other employee welfare benefits upon their\nretirement or termination of employment, except to the extent required by\nstatute.\n\n                                      23\n\n\n \n          (h) Continuing Liabilities.  No Employee Plan provides, or has any\n              ----------------------\nliability to provide, life insurance, medical or other employee benefits to any\nEmployee upon his or her retirement or termination of employment for any reason,\nexcept as may be required by statute, and the Company has not represented,\npromised or contracted (whether in oral or written form) to any Employee (either\nindividually or to Employees as a group) that such Employee(s) would be provided\nwith life insurance, medical or other employee welfare benefits upon their\nretirement or termination of employment, except to the extent required by\nstatute.\n\n          (i) No Conflicts.  The execution of this Agreement and the\n              ------------\nconsummation of the transactions contemplated hereby will not (either alone or\nupon the occurrence of any additional or subsequent events) constitute an event\nunder any Employee Plan, Employee Agreement, trust or loan that will or may\nresult in any payment (whether of severance pay or otherwise), acceleration,\nforgiveness of indebtedness, vesting, distribution, increase in benefits or\nobligation to fund benefits with respect to any Employee.\n\n          (j) Employment Matters.  The Company (i) is in compliance with all\n              ------------------\napplicable laws, rules and regulations respecting employment, employment\npractices, terms and conditions of employment and wages and hours, in each case,\nwith respect to Employees; (ii) has withheld all amounts required by law or by\nagreement to be withheld from the wages, salaries and other payments to\nEmployees; (iii) is not liable for any arrears of wages or any taxes or any\npenalty for failure to comply with any of the foregoing; and (iv) is not liable\nfor any payment to any trust or other fund or to any governmental or\nadministrative authority, with respect to unemployment compensation benefits,\nsocial security or other benefits for Employees (other than routine payments to\nbe made in the normal course of business and consistent with past practice).\n\n          (k) Labor.  No work stoppage or labor strike against the Company is\n              -----\npending, or to the knowledge of the Company and the Principal Shareholders,\nthreatened.  The Company is not involved in or threatened with any labor\ndispute, grievance, or litigation relating to labor, safety, discrimination, or\nharassment matters involving any Employee, including, without limitation,\ncharges of unfair labor practices, discrimination, or harassment complaints,\nwhich, if adversely determined, would, individually or in the aggregate, result\nin liability to the Company, Parent or Sub.  The Company has not engaged in any\nunfair labor practices which could, individually or in the aggregate, directly\nor indirectly result in a liability to the Company, Parent or Sub.  The Company\nis not presently, or has in the past, been a party to, or bound by, any\ncollective bargaining agreement or union contract with respect to Employees and\nno collective bargaining agreement is being negotiated by the Company.\n\n                                      24\n\n\n \n     2.23 Insurance.   Exhibit C lists all insurance policies and fidelity\n          ---------    ---------\nbonds covering the assets, business, equipment, properties, operations,\nemployees, officers and directors of the Company. There is no claim by the\nCompany pending under any of such policies or bonds as to which coverage has\nbeen questioned, denied or disputed by the underwriters of such policies or\nbonds.  All premiums due and payable under all such policies and bonds have been\npaid and the Company are otherwise in compliance with the terms of such policies\nand bonds (or other policies and bonds providing substantially similar insurance\ncoverage).  The Company and the Principal Shareholders have no knowledge of any\nthreatened termination of, or premium increase with respect to, any of such\npolicies.\n\n     2.24 Compliance with Laws.  The Company has complied with, are not in\n          --------------------                                              \nviolation of, and have not received any notices of violation with respect to,\nany foreign, federal, state or local statute, law or regulation.\n\n     2.25 Third Party Consents.  Except as set forth in Exhibit C, no consent\n          --------------------                          ---------\nor approval is needed from any third party in order to effect the Merger or any\nof the transactions contemplated by this Agreement.\n\n     2.26 Warranties; Indemnities.  Exhibit C sets forth a summary of all\n          -----------------------   ---------\nwarranties and indemnities relating to products sold or services rendered by the\nCompany, and no warranty or indemnity has been given by the Company which\ndiffers therefrom in any respect.  Exhibit C also indicates all warranty and\n                                   ---------\nindemnity claims in excess of $25,000 made against the Company.\n\n     2.27 Complete Copies of Materials.  The Company has delivered or made\n          ----------------------------                                      \navailable true and complete copies of each document (or summaries of same) that\nhas been requested by Parent or its counsel.\n\n     2.28 Representations Complete.  None of the representations or guarantees\n          ------------------------                                              \nmade by the Company or the Principal Shareholders (as modified by the Exhibit\n                                                                      -------\nC), nor any statement made in Exhibit C or any certificate furnished by the\n- -\nCompany or the Principal Shareholders pursuant to this Agreement, or furnished\nin or in connection with documents mailed or delivered to the Company\nShareholders in connection with soliciting their consent to this Agreement and\nthe Merger, contains or will contain at the Closing, any untrue statement of a\nmaterial fact, or omits or will omit at the Closing to state any material fact\nnecessary in order to make the statements contained herein or therein, in the\nlight of the circumstances under which made, not misleading.\n\n     2.29 Business Plan.  The Company has provided to Parent a current,\n          -------------                                                  \naccurate and detailed business plan for the Company's planned operations during\nthe twelve months following the Closing Date which includes, without limitation,\na description of the Company's capital requirements, staffing needs, and a pro\nforma income statement.  The business plan is attached to Exhibit C hereto.\n                                                          ---------\n\n     2.30 Backlog Report.    The Company has provided to Parent a detailed and\n          ---------------                                                     \naccurate list of all orders booked but not yet completed, giving the status of\neach order as of a recent date.  The backlog report is attached to Exhibit C\n                                                                   ---------\nhereto.\n\n                                      25\n\n\n \n     2.31 Securities Law Compliance.  The Company will make no distribution\n          -------------------------\nof any security issued by Parent unless such distribution is in compliance with\napplicable state and federal securities laws.\n\n     2.32 Principal Shareholder Investment Representations.  Each of the\n          ------------------------------------------------\nPrincipal Shareholders represents and warrants to the Parent as follows:\n\n          (a) Experience.  The Principal Shareholder is able to assess the\n              ----------\ntechnology, markets, management and strategy of the Parent and to fend for\nitself in transactions such as the one contemplated by this Agreement, has such\nknowledge and experience in financial and business matters that the Principal\nShareholder is capable of evaluating the merits and risks inherent in holding\nstock of the Parent, and has the ability to bear the economic risks of the\ninvestment.\n\n          (b) Investment.  The Principal Shareholder accepts the shares of the\n              ----------\nParent Common Stock as investment for the Principal Shareholder's own account\nand not with the view to, or for resale in connection with, any distribution\nthereof.  The Principal Shareholder understands that the Parent Common Stock has\nnot been registered under the Securities Act by reason of a specific exemption\nfrom the registration provisions of the Securities Act which depends upon, among\nother things, the bona fide nature of the investment intent as expressed herein.\nThe Principal Shareholder further represents that it does not have any contract,\nundertaking, agreement or arrangement with any person to sell, transfer or grant\nparticipation to any third person with respect to any of the Parent Common\nStock.  The Principal Shareholder understands and acknowledges that the\nprovision of Parent Common Stock pursuant to this Agreement will not be\nregistered under the Securities Act on the ground that the issuance of\nsecurities hereunder is exempt from the registration requirements of the\nSecurities Act.\n\n          (c) Rule 144.  The Principal Shareholder acknowledges that the Parent\n              --------\nCommon Stock must be held indefinitely unless subsequently registered under the\nSecurities Act or an exemption from such registration is available.  The\nPrincipal Shareholder is aware of the provisions of Rule 144 promulgated under\nthe Securities Act which permit limited resale of shares purchased in a private\nplacement subject to the satisfaction of certain conditions.  The Principal\nShareholder covenants that, in the absence of an effective registration\nstatement covering the stock in question, the Principal Shareholder will sell,\ntransfer, or otherwise dispose of the Parent Common Stock only in a manner\nconsistent with the Principal Shareholder's representations and covenants set\nforth herein.  In connection therewith, the Principal Shareholder  acknowledges\nthat the Parent will make a notation on its stock books regarding the\nrestrictions on transfers set forth in this Article and will transfer securities\non the books of the Parent only to the extent not inconsistent therewith.\n\n          (d) No Public Market.  The Principal Shareholder understands that no\n              ----------------\npublic market now exists for any of the securities issued by the Parent, and\nthat no public market may ever exist for such securities.\n\n                                      26\n\n\n \n          (e) Access to Data.  The Principal Shareholder has received and\n              --------------\nreviewed information about the Parent and has had an opportunity to review and\ndiscuss the Parent's business, management and financial affairs with its\nmanagement.  The Principal Shareholder understands that such discussions, as\nwell as any written information issued by the Parent, were intended to describe\nthe aspects of the Parent's business and prospects which the Parent believes to\nbe material, but were not necessarily a thorough or exhaustive description.\n\n                                  ARTICLE III\n\n                REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB\n\n     Parent and Sub represent and warrant to the Company as follows:\n\n     3.1  Organization, Standing and Power.  Parent is a corporation duly\n          --------------------------------                                 \norganized, validly existing and in good standing under the laws of the State of\nUtah.  Sub is a corporation duly organized, validly existing and in good\nstanding under the laws of Delaware.  Each of Parent and Sub has the corporate\npower to own its properties and to carry on its business as now being conducted\nand is duly qualified to do business and is in good standing in each\njurisdiction in which the failure to be so qualified would have a material\nadverse effect on the ability of Parent and Sub to consummate the transactions\ncontemplated hereby.\n\n     3.2  Authority; Consents.  Parent and Sub have all requisite corporate\n          -------------------                                                \npower and authority to enter into this Agreement and to consummate the\ntransactions contemplated hereby.  The execution and delivery of this Agreement\nand the consummation of the transactions contemplated hereby have been duly\nauthorized by all necessary corporate action on the part of Parent and Sub.\nThis Agreement has been duly executed and delivered by Parent and Sub and\nconstitutes the valid and binding obligations of Parent and Sub, enforceable in\naccordance with its terms, except as such enforceability may be limited by\nprinciples of public policy and subject to the laws of general application\nrelating to bankruptcy, insolvency and the relief of debtors and rules of law\ngoverning specific performance, injunctive relief or other equitable remedies.\nThe execution and delivery of this Agreement by Parent and Sub does not, and, as\nof the Closing, the consummation of the transactions contemplated hereby and\nthereby will not, Conflict with (i) any provision of the respective Articles of\nIncorporation or Bylaws of Parent or Sub or (ii) any agreement or instrument,\npermit, judgment, statute, law, rule or regulation applicable to Parent or Sub.\nNo consent, waiver, approval, or registration, declaration or filing with, any\nGovernmental Entity or any third party is required by or with respect to any of\nthe Parent or Sub in connection with the execution and delivery of this\nAgreement or the consummation of the transactions contemplated hereby.\n\n     3.3  Capital Structure.\n          -----------------   \n\n          (a) The authorized stock of Parent consists of 50,000,000 shares of\nCommon Stock, $.001 par value, of which 29,767,708 shares were issued and\noutstanding as of December 31, 1996, and 27,988,501 shares of Preferred Stock,\n$.001 par value, of which 18,518,500 shares \n\n                                      27\n\n\n \nare designated Series A Preferred Stock, all of which are issued and\noutstanding, and 9,310,001 shares are designated Series B Preferred Stock, all\nof which are issued and outstanding. All such shares have been duly authorized,\nand all such issued and outstanding shares have been validly issued, are fully\npaid and nonassessable and are free of any liens or encumbrances other than any\nliens or encumbrances created by or imposed upon the holders thereof. Parent has\nalso reserved (i) 3,900,000 shares of Common Stock for issuance to employees and\nconsultants pursuant to Parent's 1996 Stock Option Plan, (ii) 160,000 shares of\nSeries A Preferred Stock for issuance upon the exercise of outstanding warrants\nto purchase Series A Preferred Stock (the \"Warrant Stock\"), (iii) 160,000 shares\n                                           -------------\nof Common Stock for issuance upon conversion of the Warrant Stock and (iv)\n1,000,000 shares of Common Stock for issuance upon the exercise of outstanding\nwarrants to purchase Common Stock. In February, 1997, the Board of Directors of\nthe Company approved (i) increasing the authorized shares of Common Stock to\n100,000,000 shares, (ii) increasing the number of authorized shares of Preferred\nStock to 37,764,153 shares, in preparation for a sale of Series C Preferred\nStock, and (iii) adopting the Company's 1997 Acquisition Stock Option Plan,\nreserving 10,000,000 shares of Common Stock thereunder; all of these actions are\ncurrently pending. There are no other options, warrants, calls, rights,\ncommitments or agreements of any character to which Parent is a party or by\nwhich it is bound obligating Parent to issue, deliver, sell, repurchase or\nredeem, or cause to be issued, delivered, sold, repurchased or redeemed, any\nshares of the capital stock of Parent or obligating Parent to grant, extend or\nenter into any such option, warrant, call, right, commitment or agreement.\n\n          (b) The shares of Parent Common Stock to be issued pursuant to the\nMerger will be duly authorized, validly issued, fully paid and non-assessable.\n\n     3.4  Brokers' and Finders' Fees.  The Parent has not incurred, nor will\n          --------------------------                                           \nit incur, directly or indirectly, any liability for brokers' or finders' fees or\nagents' commissions or any similar charges in connection with this Agreement or\nany transaction contemplated hereby.\n\n     3.5  Similar Transactions.  Each party understands and agrees that the\n          --------------------                                               \nParent may acquire other entities that are in a business similar to that of the\nCompany.  In the event that, prior to the Second Adjustment Date, Parent\nacquires another entity similar to the Company on terms substantially more\nfavorable to the equity owners of such entity after taking into account the\nsimilarities and differences of the businesses, then the valuation of the\nCompany at the First Adjustment Date and the Second Adjustment Date shall be\nrecalculated to take into account such favorable treatment and the First\nAdjustment to Purchase Price and Second Adjustment to Purchase Price shall be\nrecalculated promptly on such more favorable basis. Any additional shares due to\nthe Sellers upon such recalculation shall be issued promptly to the Company\nShareholders.\n\n     3.6  No Changes. Except as otherwise disclosed in this Agreement, there\n          ----------\nhave been no material adverse changes to the Parent's financial condition or\noperating information from the information contained in the Franchise Offering\nCircular dated effective December 23, 1996, and the Confidential Offering\nMemorandum dated February 1997, relating to Parent's $18,000,000 Series C\nPreferred Stock Offering.\n\n                                      28\n\n\n \n                                   ARTICLE IV\n\n                      CONDUCT PRIOR TO THE EFFECTIVE TIME\n\n     4.1  Conduct of Business of the Company.   During the period from the\n          ----------------------------------                                \ndate of this Agreement and continuing until the earlier of the termination of\nthis Agreement or the Effective Time, the Company agrees (except to the extent\nthat Parent shall otherwise consent in writing), to carry on its business in the\nusual, regular and ordinary course in substantially the same manner as\nheretofore conducted, to pay debts and Taxes when due, to pay or perform other\nobligations when due, and, to the extent consistent with such business, use all\nreasonable efforts consistent with past practice and policies to preserve intact\nthe Company's present business organization, keep available the services of\npresent officers and key employees and preserve relationships with customers,\nsuppliers, distributors, licensors, licensees, and others having business\ndealings with it, all with the goal of preserving unimpaired the Company's\ngoodwill and ongoing businesses at the Effective Time.  The Company shall\npromptly notify Parent of any event or occurrence or emergency not in the\nordinary course of business of the Company, and any material event involving the\nCompany. Except as expressly contemplated by this Agreement, the Company shall\nnot, without the prior written consent of Parent:\n\n          (a) Enter into any commitment or transaction not in the ordinary\ncourse of business or any commitment or transaction of the type described in\nSection 2.9 hereof;\n\n          (b) Transfer to any person or entity any rights to the Intellectual\nProperty of the Company;\n\n          (c) Enter into or amend any agreements pursuant to which any other\nparty is granted marketing, distribution or similar rights of any type or scope\nwith respect to any products of the Company;\n\n          (d) Amend or otherwise modify (or agree to do so), except in the\nordinary course of business, or violate the terms of, any of the agreements set\nforth or described in Exhibit C;\n                      ---------\n\n          (e)  Commence any litigation;\n\n          (f) Declare, set aside or pay any dividends on or make any other\ndistributions (whether in cash, stock or property) in respect of any of its\ncapital stock, or split, combine or reclassify any of its capital stock or issue\nor authorize the issuance of any other securities in respect of, in lieu of or\nin substitution for shares of capital stock of the Company, or repurchase,\nredeem or otherwise acquire, directly or indirectly, any shares of its capital\nstock (or options, warrants or other rights exercisable therefor);\n\n          (g) Issue, grant, deliver or sell or authorize or propose the\nissuance, grant, delivery or sale of, or purchase or propose the purchase of,\nany shares of its capital stock or \n\n                                      29\n\n\n \nsecurities convertible into, or subscriptions, rights, warrants or options to\nacquire, or other agreements or commitments of any character obligating it to\nissue any such shares or other convertible securities;\n\n          (h) Cause or permit any amendments to its Articles of Incorporation or\nBylaws;\n\n          (i) Acquire or agree to acquire by merging or consolidating with, or\nby purchasing any assets or equity securities of, or by any other manner, any\nbusiness or any corporation, partnership, association or other business\norganization or division thereof, or otherwise acquire or agree to acquire any\nassets which are material, individually or in the aggregate, to its business;\n\n          (j) Sell, lease, license or otherwise dispose of any of its properties\nor assets, except in the ordinary course of business and consistent with past\npractices;\n\n          (k) Incur any indebtedness for borrowed money or guarantee any such\nindebtedness or issue or sell any debt securities or guarantee any debt\nsecurities of others;\n\n          (l) Grant any loans to others or purchase debt securities of others or\namend the terms of any outstanding loan agreement, except in the ordinary course\nof business and consistent with past practices;\n\n          (m) Grant any severance or termination pay (i) to any director or\nofficer or (ii) to any other employee except payments made pursuant to standard\nwritten agreements outstanding on the date hereof;\n\n          (n) Adopt or amend any employee benefit plan, or enter into any\nemployment contract, pay or agree to pay any special bonus or special\nremuneration to any director or employee, or increase the salaries or wage rates\nof its employees;\n\n          (o) Revalue any of its assets, including without limitation writing\ndown the value of inventory or writing off notes or accounts receivable other\nthan in the ordinary course of business;\n\n          (p) Take any action which could jeopardize the tax-free reorganization\nhereunder;\n\n          (q) Pay, discharge or satisfy, in an amount in excess of $10,000 (in\nany one case) or $25,000 (in the aggregate), any claim, liability or obligation\n(absolute, accrued, asserted or unasserted, contingent or otherwise), other than\nthe payment, discharge or satisfaction in the ordinary course of business of\nliabilities reflected or reserved against in the Financial Statements (or the\nnotes thereto);\n\n                                      30\n\n\n \n          (r) Make or change any material election in respect of Taxes, adopt or\nchange any accounting method in respect of Taxes, enter into any closing\nagreement, settle any claim or assessment in respect of Taxes, or consent to any\nextension or waiver of the limitation period applicable to any claim or\nassessment in respect of Taxes;\n\n          (s) Enter into any strategic alliance or joint marketing arrangement\nor agreement; or\n\n          (t) Take, or agree in writing or otherwise to take, any of the actions\ndescribed in Sections 4.1(a) through (s) above, or any other action that would\nprevent the Company from performing or cause the Company not to perform its\ncovenants hereunder.\n\n     4.2  No Solicitation.   Until the earlier of the Effective Time or the\n          ---------------                                                    \ndate of termination of this Agreement pursuant to the provisions of Section 8.1\nhereof, neither the Company nor any of the Principal Shareholders will (nor will\nthe Company permit any of the Company's officers, directors, agents,\nrepresentatives or affiliates to) directly or indirectly, take any of the\nfollowing actions with any party other than Parent and its designees:  (a)\nsolicit, conduct discussions with or engage in negotiations with any person,\nrelating to the possible acquisition of the Company (whether by way of merger,\npurchase of capital stock, purchase of assets or otherwise) or any material\nportion of its or their capital stock or assets, (b) provide information with\nrespect to it to any person, other than Parent, relating to the possible\nacquisition of the Company (whether by way of merger, purchase of capital stock,\npurchase of assets or otherwise) or any material portion of its or their capital\nstock or assets, (c) enter into an agreement with any person, other than Parent,\nproviding for the acquisition of the Company (whether by way of merger, purchase\nof capital stock, purchase of assets or otherwise) or any material portion of\nits or their capital stock or assets or (d) make or authorize any statement,\nrecommendation or solicitation in support of any possible acquisition of the\nCompany (whether by way of merger, purchase of capital stock, purchase of assets\nor otherwise) or any material portion of its or their capital stock or assets by\nany person, other than by Parent. In addition to the foregoing, if the Company\nor either Company Shareholder receives prior to the Effective Time or the\ntermination of this Agreement any offer or proposal relating to any of the\nabove, the Company or the Company Shareholder, as applicable shall immediately\nnotify Parent thereof, including information as to the identity of the offeror\nor the party making any such offer or proposal and the specific terms of such\noffer or proposal, as the case may be, and such other information related\nthereto as Parent may reasonably request.\n\n                                   ARTICLE V\n\n                             ADDITIONAL AGREEMENTS\n\n     5.1  Parent's Right of First Refusal.\n\n          (a) Parent's Right of First Refusal.  Before any shares issued\n              -------------------------------\npursuant to this Agreement (the \"Shares\") may be sold or otherwise transferred\n(including transfer by gift or \n\n                                      31\n\n\n \noperation of law), or any Shares held by a transferee (either being sometimes\nreferred to herein as the \"Holder\") may be sold, the Parent or its assignee(s)\nshall have a right of first refusal to purchase such Shares on the terms and\nconditions set forth in this Section (the \"Right of First Refusal\").\n\n          (b) Notice of Proposed Transfer.  The Holder of the Shares shall\n              ---------------------------\ndeliver to the Parent a written notice (the \"Notice\") stating: (i) the Holder's\nbona fide intention to sell or otherwise transfer such Shares; (ii) the name of\neach proposed purchaser or other transferee (\"Proposed Transferee\"); (iii) the\nnumber of Shares to be transferred to each Proposed Transferee; and (iv) the\nbona fide cash price or other consideration for which the Holder proposes to\ntransfer the Shares (the \"Offered Price\"), and the Holder shall offer the Shares\nat the Offered Price to the Parent or its assignee(s).\n\n          (c) Exercise of Right of First Refusal.  At any time within thirty\n              ----------------------------------\n(30) days after receipt of the Notice, the Parent or its assignee(s) may, by\ngiving written notice to the Holder, elect to purchase all, but not less than\nall, of the Shares proposed to be transferred to any one or more of the Proposed\nTransferees, at the purchase price determined in accordance with subsection (d)\nbelow.\n\n          (d) Purchase Price.  The purchase price (\"Parent Purchase Price\") for\n              --------------\nthe Shares purchased by the Parent or its assignee(s) under this Section shall\nbe the Offered Price.  If the Offered Price includes consideration other than\ncash, the Parent may match such non-cash consideration with such other cash or\nnon-cash consideration as shall be determined by the Board of Directors of the\nParent in good faith.\n\n          (e) Payment.  Payment of the Parent Purchase Price shall be made, at\n              -------\nthe option of the Parent or its assignee(s), in cash (by check), by cancellation\nof all or a portion of any outstanding indebtedness of the Holder to the Parent\n(or, in the case of repurchase by an assignee, to the assignee), or by any\ncombination thereof within 30 days after receipt of the Notice or in the manner\nand at the times set forth in the Notice.\n\n          (f) Holder's Right to Transfer.  If all of the Shares proposed in the\n              --------------------------\nNotice to be transferred to a given Proposed Transferee are not purchased by the\nParent or its assignee(s) as provided in this Section, then the Holder may sell\nor otherwise transfer such Shares to that Proposed Transferee at the Offered\nPrice or at a higher price, provided that such sale or other transfer is\nconsummated within 120 days after the date of the Notice and provided further\nthat any such sale or other transfer is effected in accordance with any\napplicable securities laws and the Proposed Transferee agrees in writing that\nthe provisions of this Section shall continue to apply to the Shares in the\nhands of such Proposed Transferee.  If the Shares described in the Notice are\nnot transferred to the Proposed Transferee within such period, a new Notice\nshall be given to the Parent, and the Parent or its assignees shall again be\noffered the Right of First Refusal before any Shares held by the Holder may be\nsold or otherwise transferred.\n\n          (g) Exception for Certain Family Transfers.  Anything to the contrary\n              --------------------------------------\ncontained in this Section notwithstanding, the transfer of any or all of the\nShares during the Holder's lifetime or on the Holder's death by will or\nintestacy to the Holder's immediate family or a trust for the \n\n                                      32\n\n\n \nbenefit of the Holder's immediate family shall be exempt from the provisions of\nthis Section. \"Immediate Family\" as used herein shall mean spouse, lineal\ndescendant or antecedent, brother or sister. In such case, the transferee or\nother recipient shall receive and hold the Shares so transferred subject to the\nprovisions of this Section, and there shall be no further transfer of such\nShares except in accordance with the terms of this Section.\n\n          (h) Termination of Right of First Refusal.  The Right of First Refusal\n              -------------------------------------\nshall terminate as to any Shares 90 days after the first sale of Common Stock of\nthe Parent to the general public pursuant to a registration statement filed with\nand declared effective by the Securities and Exchange Commission under the\nSecurities Act of 1933, as amended.\n\n     5.2  Market Standoff Agreement.  Each Company Shareholder hereby agrees\n          --------------------------                                          \nthat if so requested by the Company or any representative of the underwriters in\nconnection with any registration of the offering of any Shares of the Company\nunder the Securities Act, such Company Shareholder shall not sell or otherwise\ntransfer, pledge, hypothecate or otherwise decrease his market risk or\nbeneficial ownership in any Shares or other securities of the Company during the\n180-day period following the date of the final Prospectus contained in a\nregistration statement of the Company filed under the Securities Act; provided,\nhowever, that such restriction shall only apply to the first registration\nstatement of the Company to become effective under the Securities Act which\nincludes securities to be sold on behalf of the Company to the general public in\nan underwritten public offering under the Securities Act.  The Company may\nimpose stop-transfer instructions with respect to securities subject to the\nforegoing restrictions until the end of such 180-day period.\n\n     5.3  Restriction on Competition.\n          ---------------------------\n\n          (a) Restricted Activities.  For a period of three (3) years beginning\n              ---------------------\non the Closing Date, no Principal Shareholder shall:\n\n               (i)   engage in, including as an employee, consultant or\notherwise, or own any interest (except as a passive investor of less than five\npercent (5%) of total debt and equity) in any business or other activity that\nwould compete with the Parent's; or\n\n               (ii)  divert or attempt to divert any existing or prospective\nbusiness or customers of the Parent (including any affiliates of the Parent) to\nany other person or entity, by direct or indirect inducement or otherwise, or do\nor perform, directly or indirectly, any other act injurious or prejudicial to\nthe goodwill associated with the Parent or its affiliates; or\n\n               (iii) solicit any person for employment who is at that time\nalready employed by Parent or any of its affiliates, or otherwise directly or\nindirectly induce or seek to induce such person to leave his or her employment.\n\n          (b)  Scope of Restriction.\n               ---------------------\n\n                                      33\n\n\n \n               (i) This Section shall apply in the SMSA where the Company is\nlocated.\n\n               (ii)  In the event that any other provision of this Section 5.3\n     or the application of any such provision shall be held to be prohibited or\n     unenforceable in any jurisdiction, such provision shall, as to such\n     jurisdiction, be ineffective to the extent of such prohibition or\n     unenforceability. The remaining provisions of this covenant to refrain from\n     competition shall remain in full force and effect, and any such prohibition\n     or unenforceability in any jurisdiction shall not invalidate or render\n     unenforceable such provision in any other jurisdiction. The parties shall\n     use their best efforts to replace the provision that is contrary to law\n     with a legal one approximating to the extent possible the original intent\n     of the parties.\n\n               (iii) In the event that a Principal Shareholder, who also is a\nNew Employee, is terminated from employment by Parent without cause at any time\nwithin three (3) years of the Closing Date, then the term of the restrictions\nimposed by this Section 5.3 shall be reduced to six (6) months and that\nterminated Principal Shareholder\/New Employee shall receive severance benefits\nfrom Parent equal to six (6) months salary and employee benefits.\n\n     5.4  Confidentiality.  Each of the parties hereto hereby agrees to keep\n          ---------------                                                     \nsuch information or knowledge obtained pursuant to the negotiation and execution\nof this Agreement, or the effectuation of the transactions contemplated hereby,\nconfidential; provided, however, that the foregoing shall not apply to\ninformation or knowledge which (a) a party can demonstrate was already lawfully\nin its possession prior to the disclosure thereof by the other party, (b) is or\nbecomes generally known to the public and did not become so known through any\nviolation of law or this Agreement by the non-disclosing party, (c) is later\nlawfully acquired by such party from other sources, (d) is required to be\ndisclosed by order of court or government agency after seeking any reasonably\navailable protection against general disclosure or (e) which is disclosed in the\ncourse of any litigation between any of the parties hereto; it being understood\nthat the parties may disclose relevant information and knowledge to their\nrespective employees and agents on a need to know basis, provided that the\nparties cause such employees and agents to treat such information and knowledge\nconfidentially.\n\n     5.5  Expenses.  Whether or not the Acquisition is consummated, all fees\n          --------                                                            \nand expenses incurred in connection with the Acquisition including, without\nlimitation, all legal, accounting, financial advisory, consulting and all other\nfees and expenses of third parties incurred by a party in connection with the\nnegotiation and effectuation of the terms and conditions of this Agreement and\nthe transactions contemplated hereby, shall be the obligation of the respective\nparty incurring such fees and expenses.\n\n     5.6  Public Disclosure.  Unless otherwise required by law or any\n          -----------------                                            \napplicable rule of a stock exchange or quotation system upon which a parties'\nsecurities are listed, prior to the Closing Date, no disclosure (whether or not\nin response to an inquiry) of the subject matter of this Agreement shall be made\nby the Company or the Principal Shareholders unless approved by Parent prior to\nrelease, provided that such approval shall not be unreasonably withheld, subject\nto Parent's and the Company's or the Principal Shareholders' obligation to\ncomply with applicable securities laws.\n\n                                      34\n\n\n \n     5.7  Post-Closing Employment of Company Employees.\n          --------------------------------------------   \n\n          (a) Company shall terminate each employee of Company on and as of the\nClosing Date, effective as of close of business on the Closing Date.  Parent\nwill hire on the Closing Date, effective as of the close of business on the\nClosing Date, on an \"at will\" basis and subject to Parent's terms, conditions\nand policies of employment, if any, each of those persons who are employed by\nCompany and are terminated by Company on the Closing Date pursuant to the\nforegoing sentence.  Nothing contained in this Section is intended or shall be\ndeemed to (a) require Parent to employ such persons for any fixed or pre-\ndetermined time after the Closing, or (b) confer upon any employee of Company,\npast, present, or future, any rights of employment of any nature, it being\nunderstood and agreed that the provisions of this Section are intended to set\nforth an agreement among Parent and Company, and are not intended to benefit any\npersons not party to this Agreement, including such employees.  Parent and\nCompany hereby agree to adopt the alternate procedure of Rev. Proc. 96-60 for\npurposes of employer payroll withholding.\n\n          (b) In connection with hiring the Company's employees (the \"New\n                                                                      ---\nEmployees\") as set forth in Section 5.7(a) above, Parent shall grant to the New\n- ---------\nEmployees incentive stock options to purchase Parent Common Stock in an\naggregate number equal to the number of shares paid as the Original Purchase\nPrice.  Such incentive stock options shall be issued to the New Employees, and\nin the amounts, requested by the Company in writing at the Closing.  The\nexercise price of each option shall be the fair market value of the Common Stock\nsubject to such option on the Closing Date as determined in good faith and\nauthorized by the Board of Directors of the Parent.  Such options shall not be\nexercisable at the date of grant, but shall become exercisable as to one-thirty-\nsixth (1\/36) of the shares subject to such option each month after the effective\ndate of this Agreement, provided, however, that no option shall become\nexercisable with respect to any shares at any time following the date that the\nNew Employee to whom the option was granted ceases to be an employee or\nconsultant of the Parent (an \"Employee Termination\"), and provided further that\nthe term of any such option shall expire if not exercised, and to the extent not\nexercisable, ninety (90) days after the date of the Employee Termination.\nAccordingly, any New Employee who receives an option must exercise it (but only\nto the extent then exercisable), if at all, within ninety (90) days after an\nEmployee Termination.  Notwithstanding the foregoing, in the event of any\nEmployee Termination due to the death or disability of the New Employee, the New\nEmployee or his estate shall have twelve (12) months to exercise the option to\nthe extent it was exercisable on the date of the Employee Termination;\nthereafter, the option shall terminate as to any unexercised portion.   New\nEmployee acknowledges that New Employee will be taxed under the Code on the\ndifference between the fair market value of shares purchased pursuant to any\nexercised option less the exercise price paid on the date of any such exercise\nand that the Parent may withhold any applicable taxes from New Employee's\nregular pay or, if insufficient, that New Employee will make any required\nwithholding payment to the Parent.  New Employee also acknowledges that there\nmay be state or local tax due upon exercise of the option, and that any such tax\nis the obligation of the New Employee and not the Parent.  The terms of the\noptions as described in this paragraph are subject to the definitive form of\noption agreement attached hereto as Exhibit D.\n                                    ---------  \n\n                                      35\n\n\n \n          (c) Also in connection with hiring the New Employees, Parent agrees to\nissue to each of them a bonus payable in Parent Common Stock equal to the\naggregate exercise price of the options described in Section 5.7(b) above.  Such\nbonus payment shall be paid in Common Stock and shall be, as to each New\nEmployee, for such number of shares of Parent Common Stock as shall be equal, on\nthe date paid, and in the good faith judgment of the Parent's Board of\nDirectors, to the aggregate exercise price of the exercisable portion of the\noption granted to the New Employee described in the foregoing paragraph.  New\nEmployee acknowledges that there may be federal, state or local tax due upon\nreceipt of the bonus, that Parent may withhold any applicable taxes from New\nEmployee's regular pay or, if insufficient, that New Employee will make any\nrequired withholding payment to Parent, and that any such tax is the obligation\nof the New Employee and not the Parent.\n\n          (d) In addition to the stock option (the \"Original Option\") and stock\nbonus grants described in subsections (b) and (c) of this Section, in the event\nthat any additional shares of Parent's Common Stock are issued pursuant to the\nPurchase Price Adjustment provisions of Section 1.10, an additional option, in\nform and substance substantially similar to the Original Option (but with an\nexercise price determined based on the date of issuance) (the \"Additional\nOption\"), and an additional stock bonus commitment (the \"Additional Stock\nBonus\") proportionate to the Additional Option, in form and substance\nsubstantially similar to that described in paragraph (c) of this Section, shall\nbe issued by the Parent to any then-remaining employee of Parent or Sub who\nreceived an Original Option.  The number of shares subject to any such\nAdditional Option shall be calculated by taking the number of shares issued\npursuant to such Purchase Price Adjustment provisions multiplied by three (3)\nand then determining the individual recipients' pro rata share based on the\nnumber of shares subject to each recipient's Original Option compared to the\nnumber of shares subject to all Original Options granted.  For each recipient,\nthe number of shares granted in the Additional Stock Bonus shall be\nproportionate to the Additional Option.  Any such Additional Options and\nAdditional Stock Bonuses shall be granted at the next regularly scheduled\nmeeting of the Parent's board of directors following the date of any Purchase\nPrice Adjustment pursuant to Section 1.10.\n\n     5.8  Treatment of Affiliate Warrants.  To the extent that any affiliate\n          -------------------------------                                     \nof the Company has received or has the right to receive any warrants under\nParent's Affiliate Warrant Program, the warrants received or to be received\nthereunder shall remain in full force and effect and, to the extent required to\nmake calculations of shares issuable under such warrants, Parent shall estimate\nin good faith the business measures of the Surviving Corporation as necessary to\nsuch calculations, with the intent of preserving the economic value of such\nwarrants to the holders thereof following the completion of the acquisition\ncontemplated hereby.\n\n                                      36\n\n\n \n     5.9  Access to Information.  The Company shall afford Parent and its\n          ---------------------                                            \naccountants, counsel and other representatives, reasonable access during normal\nbusiness hours during the period prior to the Effective Time to (a) all of the\nCompany's properties, books, contracts, commitments and records, and (b) all\nother information concerning the business, properties and personnel (subject to\nrestrictions imposed by applicable law) of the Company as Parent may reasonably\nrequest.  The Company agrees to provide to Parent and its accountants, counsel\nand other representatives copies of internal financial statements promptly upon\nrequest.  No information or knowledge obtained in any investigation pursuant to\nthis Section 5.9 shall affect or be deemed to modify any representation or\nwarranty contained herein or the conditions to the obligations of the parties to\nconsummate the Merger.\n\n     5.10 Public Disclosure.  Unless otherwise required by law, prior to the\n          -----------------                                                   \nEffective Time, no disclosure (whether or not in response to an inquiry) of the\nsubject matter of this Agreement shall be made by any party hereto unless\napproved by Parent and the Company prior to release, provided that such approval\nshall not be unreasonably withheld.\n\n     5.11 Consents.  The Company shall use its best efforts to obtain the\n          --------                                                         \nconsents, waivers and approvals under any of the Contracts as may be required in\nconnection with the Merger (all of such consents, waivers and approvals are set\nforth in Exhibit C) so as to preserve all rights of, and benefits to, the\n         ---------\nCompany thereunder.\n\n     5.12 FIRPTA Compliance.  On the Closing Date, the Company shall deliver\n          -----------------                                                   \nto Parent a properly executed statement in a form reasonably acceptable to\nParent for purposes of satisfying Parent's obligations under Treasury Regulation\nSection 1.1445-2(c)(3).\n\n     5.13 Best Efforts.  Subject to the terms and conditions provided in this\n          ------------                                                         \nAgreement, each of the parties hereto shall use its best efforts to take\npromptly, or cause to be taken, all actions, and to do promptly, or cause to be\ndone, all things necessary, proper or advisable under applicable laws and\nregulations to consummate and make effective the transactions contemplated\nhereby to obtain all necessary waivers, consents and approvals and to effect all\nnecessary registrations and filings and to remove any injunctions or other\nimpediments or delays, legal or otherwise, in order to consummate and make\neffective the transactions contemplated by this Agreement for the purpose of\nsecuring to the parties hereto the benefits contemplated by this Agreement;\nprovided that Parent shall not be required to agree to any divestiture by Parent\nor the Company or any of Parent's subsidiaries or affiliates of shares of\ncapital stock or of any business, assets or property of Parent or its affiliates\nor of the Company or its affiliates, or the imposition of any material\nlimitation on the ability of any of them to conduct their businesses or to own\nor exercise control of such assets, properties and stock.\n\n                                      37\n\n\n \n     5.14 Notification of Certain Matters.  The Company shall give prompt\n          -------------------------------                                  \nnotice to Parent, and Parent shall give prompt notice to the Company, of (i) the\noccurrence or non-occurrence of any event, the occurrence or non-occurrence of\nwhich is likely to cause any representation or warranty of the Company or the\nPrincipal Shareholders and Parent, respectively, contained in this Agreement to\nbe untrue or inaccurate at or prior to the Effective Time and (ii) any failure\nof the Company or Parent, as the case may be, to comply with or satisfy any\ncovenant, condition or agreement to be complied with or satisfied by it\nhereunder; provided, however, that the delivery of any notice pursuant to this\nSection 5.14 shall not limit or otherwise affect any remedies available to the\nparty receiving such notice.\n\n     5.15 Tax Returns.  N\/A - reserved for Sub-S corporations\n          -----------  \n\n     5.16 Additional Documents and Further Assurances.  Each party hereto, at\n          -------------------------------------------                          \nthe request of another party hereto, shall execute and deliver such other\ninstruments and do and perform such other acts and things as may be necessary or\ndesirable for effecting completely the consummation of this Agreement and the\ntransactions contemplated hereby.\n\n     5.17 Section 368 Compliance.  From and after the Effective Time, neither\n          ----------------------                                                \nParent, Sub, or the Company shall take any action that will cause the Merger not\nto be treated as a reorganization within the meaning of Section 368 of the Code.\n\n     5.18 Parent Policies.  Sellers acknowledge that Parent has implemented\n          ---------------                                                    \npolicies regarding the operation of subsidiary entities such as the Company will\nbe following the Merger.  Sellers acknowledge and agree that such policies, or\nany such amended or replacement policies that are reasonably similar in scope,\nnature or effect, are anticipated to be in place following the Merger, and\nSellers hereby indicate their intention to act in substantial compliance with\nall such policies.  Such policies shall not provide for Parent overhead\nallocations from Parent to Company or Sub, unless otherwise agreed in advance by\nthe parties.\n\n\n                                   ARTICLE VI\n\n                            CONDITIONS TO THE MERGER\n\n     6.1  Conditions to Obligations of Each Party to Effect the Merger.  The\n          ------------------------------------------------------------\nrespective obligations of each party to this Agreement to effect the Merger\nshall be subject to the satisfaction at or prior to the Effective Time of the\nfollowing conditions:\n\n          (a) No Injunctions or Restraints; Illegality.  No temporary\n              ----------------------------------------\nrestraining order, preliminary or permanent injunction or other order issued by\nany court of competent jurisdiction or other legal restraint or prohibition\npreventing the consummation of the Merger shall be in effect, nor shall any\nproceeding brought by an administrative agency or commission or other\ngovernmental authority or instrumentality, domestic or foreign, seeking any of\nthe foregoing be pending; nor shall there be any action taken, or any statute,\nrule, regulation or order enacted, \n\n                                      38\n\n\n \nentered, enforced or deemed applicable to the Merger, which makes the\nconsummation of the Merger illegal.\n\n          (b) Litigation.  There shall be no action, suit, claim or proceeding\n              ----------\nof any nature pending, or overtly threatened, against the Parent, Sub or the\nCompany, their respective properties or any of their officers or directors,\narising out of, or in any way connected with, the Merger or the other\ntransactions contemplated by the terms of this Agreement.\n\n     6.2  Additional Conditions to Obligations of Company.  The obligations of\n          ------------------------------------------------                      \nthe Company to consummate and effect this Agreement and the transactions\ncontemplated hereby shall be subject to the satisfaction at or prior to the\nEffective Time of each of the following conditions, any of which may be waived,\nin writing, exclusively by the Company:\n\n          (a) Representations, Warranties and Covenants.  The representations\n              -----------------------------------------\nand warranties of Parent and Sub in this Agreement shall be true and correct in\nall material respects on and as of the Effective Time as though such\nrepresentations and warranties were made on and as of such time and each of\nParent and Sub shall have performed and complied in all material respects with\nall covenants and obligations of this Agreement required to be performed and\ncomplied with by it as of the Effective Time.\n\n          (b) Certificate of the Parent.  Company shall have been provided with\n              -------------------------\na certificate executed on behalf of the Parent by its President to the effect\nthat, as of the Effective Time:\n\n              (i) all representations and warranties made by the Parent and Sub\nin this Agreement are true and correct in all material respects;\n\n              (ii) all covenants and obligations of this Agreement to be\nperformed by the Parent on or before such date have been so performed in all\nmaterial respects.\n\n          (c) Claims.  There shall not have occurred any claims (whether or not\n              ------\nasserted in litigation) which may materially and adversely affect the\nconsummation of the transactions contemplated hereby or the business, assets\n(including intangible assets), financial condition or results of operations of\nthe Parent, taken as a whole.\n\n          (d) No Material Adverse Changes.  There shall not have occurred any\n              ---------------------------\nmaterial adverse change in the business, assets (including intangible assets),\nfinancial condition, results of operations of the Parent, taken as a whole since\nDecember 31, 1996.\n\n     6.3  Additional Conditions to the Obligations of Parent and Sub.    The\n          ----------------------------------------------------------\nobligations of Parent and Sub to consummate and effect this Agreement and the\ntransactions contemplated hereby shall be subject to the satisfaction at or\nprior to the Effective Time of each of the following conditions, any of which\nmay be waived, in writing, exclusively by Parent:\n\n                                      39\n\n\n \n          (a) Representations, Warranties and Covenants.  The representations\n              -----------------------------------------\nand warranties of the Company and the Principal Shareholders in this Agreement\nshall be true and correct in all material respects on and as of the Effective\nTime as though such representations and warranties were made on and as of the\nEffective Time and the Company shall have performed and complied in all material\nrespects with all covenants and obligations of this Agreement required to be\nperformed and complied with by it as of the Effective Time.\n\n          (b) Certificate of the Company and Principal Shareholders.  Parent\n              -----------------------------------------------------\nshall have been provided with a certificate executed by the Principal\nShareholders and executed on behalf of the Company by its Chief Executive\nOfficer to the effect that, as of the Effective Time:\n\n              (i)  all representations and warranties made by the Company and\nthe Principal Shareholders in this Agreement are true and correct in all\nmaterial respects; and\n\n              (ii) all covenants and obligations of this Agreement to be\nperformed by the Company on or before such date have been so performed in all\nmaterial respects.\n\n          (c) Claims.  There shall not have occurred any claims (whether or not\n              ------\nasserted in litigation) which may materially and adversely affect the\nconsummation of the transactions contemplated hereby or may have a Material\nAdverse Effect.\n\n          (d) Third Party Consents.  Any and all consents, waivers, and\n              --------------------\napprovals listed in Exhibit C shall have been obtained.\n                    ---------\n\n          (e) Shareholder Certificate.  Each of the Company Shareholders shall\n              -----------------------\nhave executed and delivered to Parent a Shareholder Certificate in the form\nattached hereto as Exhibit E.\n                   ---------\n\n          (f) No Material Adverse Changes.  There shall not have occurred any\n              ---------------------------\nmaterial adverse change in the business, assets (including intangible assets),\nresults of operations, liabilities (contingent or accrued), financial condition\nor prospects of the Company since December 31, 1996.\n\n          (g) Company Shareholder Approval.  Each of the Company Shareholders\n              ----------------------------\nshall have approved this Agreement and the Merger and the transactions\ncontemplated thereby, and no Company Shareholder shall have exercised, or have\nany continuing right to exercise, appraisal, dissenters' or similar rights by\nvirtue of the Merger.\n\n                                      40\n\n\n \n                                  ARTICLE VII\n\n               SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW\n\n     7.1  Survival of Representations and Warranties.  All of the Company's\n          ------------------------------------------                         \nand the Principal Shareholders' representations and warranties in this Agreement\nor in any instrument delivered pursuant hereto shall terminate on the third\nanniversary of the Effective Time; provided, however, that the representations\nand warranties relating or pertaining to any Tax or Returns related to such Tax\nset forth in Section 2.10 hereof or relating to environmental laws or matters\nset forth in Section 2.20 hereof, shall survive until ninety (90) days following\nthe expiration of all applicable statutes of limitations, or extensions thereof,\ngoverning each Tax or Returns related to such Tax or environmental laws or\nmatters.  All of the Parent's and Sub's representations and warranties contained\nherein or in any instrument delivered pursuant to this Agreement shall terminate\nat the Effective Time.\n\n     7.2  Escrow Arrangements; Setoff.\n          ---------------------------\n\n          (a) Escrow Fund; Setoff from Purchase Price Adjustments.  As partial\n              ---------------------------------------------------\nsecurity for the indemnity provided for in Section 7.3 and the Purchase Price\nAdjustments provided for in Section 1.10, (i) at the Effective Time, the Company\nShareholders will be deemed to have received and deposited with the Escrow Agent\n(as defined in Section 1.6(e)(iii) above) the Escrow Amount (plus any additional\nshares that may be issued upon any stock split, stock dividend or\nrecapitalization effected by Parent after the Effective Time) without any act of\nany Company Shareholder.  On and after the Effective Time, the Escrow Amount\nshall form an escrow fund (the \"Escrow Fund\") to be governed by the terms set\nforth herein at Parent's cost and expense.  The Escrow Agent may execute this\nAgreement following the date hereof and prior to the Effective Time, and such\nlater execution, if so executed after the date hereof, shall not affect the\nbinding nature of this Agreement as of the date hereof between the other\nsignatories hereto.  The portion of the Escrow Amount contributed on behalf of\neach Company Shareholder shall be the pro rata amount calculated pursuant to\nSection 1.6(a) of this Agreement.  In addition to seeking indemnification under\nSection 7.3 from the Escrow Fund and setting off amounts from the Purchase Price\nAdjustment, Parent may, in its discretion, seek indemnification for Losses\ndirectly from the Principal Shareholders, but only after first proceeding\nagainst the Escrow Fund so long as it exists and is not subject to other claims.\nNothing herein shall limit the liability of the Parent, the Company or the\nPrincipal Shareholders for any breach of any representation, warranty or\ncovenant if the Merger does not close.  Parent may not receive any shares from\nthe Escrow Fund (other than as a Purchase Price Adjustment) unless Officer's\nCertificates (as defined in subsection (d) below) identifying losses, the\naggregate of which exceed $25,000, have been delivered to the Shareholder\nRepresentative (as defined below) and the Escrow Agent as provided in paragraph\n(d) below.  The Company Shareholders shall not have any right of contribution\nfrom the Company with respect to any Loss claimed by Parent or Sub after the\nEffective Time.\n\n                                      41\n\n\n \n          (b) Escrow Period; Distribution upon Termination of Escrow Periods.\n              --------------------------------------------------------------\nSubject to the following requirements, the Escrow Fund shall be in existence\nimmediately following the Effective Time and shall terminate at 5:00 p.m.,\nPacific Time, on the date of the first anniversary of the Effective Time (the\n\"Escrow Period\"); provided that the Escrow Period shall not terminate with\n -------------\nrespect to such amount (or some portion thereof) if in the reasonable judgment\nof Parent, subject to the objection of the Shareholder Representative and the\nsubsequent arbitration of the matter in the manner provided in this Section 7.2,\nsuch amount (or some portion thereof) together with the aggregate amount\nremaining in the Escrow Fund is necessary to satisfy any unsatisfied claims\nspecified in any Officer's Certificate delivered to the Escrow Agent prior to\ntermination of such Escrow Period with respect to facts and circumstances\nexisting prior to the termination of such Escrow Period.  As soon as all such\nclaims have been resolved, the Escrow Agent shall deliver to the Company\nShareholders the remaining portion of the Escrow Fund not required to satisfy\nsuch claims.  Deliveries of Escrow Amounts to the Company Shareholders pursuant\nto this Section 7.2(b) shall be made in proportion to their respective original\ncontributions to the Escrow Fund.\n\n          (c)  Protection of Escrow Fund.\n               -------------------------\n\n               (i)   The Escrow Agent shall hold and safeguard the Escrow Fund\nduring the Escrow Period, shall treat such fund as a trust fund in accordance\nwith the terms of this Agreement and not as the property of Parent and shall\nhold and dispose of the Escrow Fund only in accordance with the terms hereof.\n\n               (ii)  Any shares of Parent Common Stock or other equity\nsecurities issued or distributed by Parent (including shares issued upon a stock\nsplit) (\"New Shares\") in respect of Parent Common Stock in the Escrow Fund which\n         ----------\nhave not been released from the Escrow Fund shall be added to the Escrow Fund\nand become a part thereof. New Shares issued in respect of shares of Parent\nCommon Stock which have been released from the Escrow Fund shall not be added to\nthe Escrow Fund but shall be distributed to the record holders thereof. Cash\ndividends on Parent Common Stock shall not be added to the Escrow Fund but shall\nbe distributed to the record holders thereof.\n\n               (iii) Each Company Shareholder shall have voting rights with\nrespect to the shares of Parent Common Stock contributed to the Escrow Fund by\nsuch Company Shareholder (and on any voting securities added to the Escrow Fund\nin respect of such shares of Parent Common Stock).\n\n                                      42\n\n\n \n          (d)  Claims Upon Escrow Fund.\n               -----------------------\n\n               (i) Upon receipt by the Escrow Agent at any time on or before the\nlast day of the Escrow Period of a certificate signed by any officer of Parent\n(an \"Officer's Certificate\"): (A) stating that Parent has paid or accrued\n     ---------------------\nLosses, and (B) specifying in reasonable detail the individual items of Losses\nincluded in the amount so stated, the date each such item was paid or accrued,\nor the basis for such anticipated liability, and the nature of the\nmisrepresentation, breach of warranty or covenant to which such item is related,\nthe Escrow Agent shall, subject to the provisions of Section 7.2(e) hereof,\ndeliver to Parent out of the Escrow Fund, as promptly as practicable, cash or\nshares of Parent Common Stock (at the election of Parent) held in the Escrow\nFund in an amount equal to such Losses.\n\n          (e) Objections to Claims.  At the time of delivery of any Officer's\n              --------------------\nCertificate to the Escrow Agent, a duplicate copy of such certificate shall be\ndelivered to the Shareholder Representative and for a period of thirty (30) days\nafter such delivery, the Escrow Agent shall make no delivery to Parent of any\nEscrow Amounts pursuant to Section 7.2(d) hereof unless the Escrow Agent shall\nhave received written authorization from the Shareholder Representative to make\nsuch delivery.  After the expiration of such thirty (30) day period, the Escrow\nAgent shall make delivery of the Escrow Amount from the Escrow Fund in\naccordance with Section 7.2(d) hereof, provided that no such payment or delivery\nmay be made if the Shareholder Representative shall object in a written\nstatement to the claim made in the Officer's Certificate, and such statement\nshall have been delivered to the Escrow Agent prior to the expiration of such\nthirty (30) day period.\n\n          (f) Indemnification and Setoff Claims.  In the event Parent shall have\n              ---------------------------------\nincurred any Losses for which Parent wishes to seek indemnification directly\nfrom the Company Shareholders out of the Escrow Fund pursuant to this Section\n7.2, Parent shall deliver to the Shareholder Representative an Officer's\nCertificate: (A) stating that Parent has paid or accrued Losses and (B)\nspecifying in reasonable detail the individual items of Losses included in the\namount so stated, the date each such item was paid or accrued, or the basis for\nsuch anticipated liability, and the nature of the misrepresentation, breach of\nwarranty or covenant to which such item is related.\n\n          (g) Actions Against Company Shareholders.  In the event that Parent\n              ------------------------------------\nhas elected to pursue indemnity directly from the Principal Shareholders, the\nPrincipal Shareholders shall promptly, and in no event later than 30 days after\ndelivery of the Officer's Certificate, wire transfer to Parent the amount of\nsuch Loss, unless the Company or the Principal Shareholders, as the case may be,\ncontest such claim by following the procedures set forth in Section 7.2(i).\n\n          (h) Valuation of Parent Common Stock.  For the purposes of determining\n              --------------------------------\nthe number of shares of Parent Common Stock to be delivered to Parent out of the\nEscrow Fund as indemnity pursuant to Section 7.3 hereof, the shares of Parent\nCommon Stock shall be valued at (i) if the Parent's Common Stock shall be\npublicly traded, a price equal to the average closing price of the Parent Common\nStock in trading on the relevant stock exchange or quotation system during the\ntwenty business day period ending three days prior to the date of the Officer's\nCertificate stating the \n\n                                      43\n\n\n \nclaim with respect to which such shares are delivered, and (ii) if the Parents'\nCommon Stock is not so publicly traded, the fair market value per share as\ndetermined by the Parent's board of directors in good faith on the date closest\nto the date of the Officer's Certificate.\n\n     (i)  Resolution of Conflicts; Arbitration.\n          ------------------------------------\n\n          (i)   In case the Shareholder Representative shall object in writing\nto any claim or claims made in any Officer's Certificate within thirty (30) days\nafter delivery of such Officer's Certificate, the Shareholder Representative and\nParent shall attempt in good faith to agree upon the rights of the respective\nparties with respect to each of such claims. If the Shareholder Representative\nand Parent should so agree, a memorandum setting forth such agreement shall be\nprepared and signed by both parties. If any claim against the Escrow Fund was\nsought, such memorandum shall be furnished to the Escrow Agent and the Escrow\nAgent shall be entitled to rely on any such memorandum and make payment out of\nthe Escrow Fund in accordance with the terms thereof.\n\n          (ii)  If no such agreement can be reached after good faith negotiation\n(or in any event after 60 days from the date of the Officer's Certificate),\neither Parent or the Shareholder Representative may demand arbitration of the\nmatter unless the amount of the damage or loss is at issue in pending litigation\nwith a third party, in which event arbitration shall not be commenced until such\namount is ascertained or both parties agree to arbitration; and in either such\nevent the matter shall be settled by arbitration conducted by three arbitrators.\nParent and the Shareholder Representative shall each select one arbitrator, and\nthe two arbitrators so selected shall select a third arbitrator.  The\narbitrators shall set a limited time period and establish procedures designed to\nreduce the cost and time for discovery while allowing the parties an\nopportunity, adequate in the sole judgment of the arbitrators, to discover\nrelevant information from the opposing parties about the subject matter of the\ndispute.  The arbitrators shall rule upon motions to compel or limit discovery\nand shall have the authority to impose sanctions, including attorneys' fees and\ncosts, to the same extent as a court of law or equity, should the arbitrators\ndetermine that discovery was sought without substantial justification or that\ndiscovery was refused or objected to without substantial justification.  The\ndecision of a majority of the three arbitrators as to the validity and amount of\nany claim in such Officer's Certificate shall be binding and conclusive upon the\nparties to this Agreement.  Notwithstanding anything in Section 7.2(e) hereof,\nthe Escrow Agent shall be entitled to act in accordance with such decision and\nmake or withhold payments out of the Escrow Fund in accordance therewith.  Such\ndecision shall be written and shall be supported by written findings of fact and\nconclusions which shall set forth the award, judgment, decree or order awarded\nby the arbitrators.\n\n          (iii) Judgment upon any award rendered by the arbitrators may be\nentered in any court having jurisdiction.  Any such arbitration shall be held in\nSanta Clara County, California under the rules then in effect of the American\nArbitration Association.  The arbitrators shall determine how all expenses\nrelating to the arbitration shall be paid, including without limitation, the\nrespective expenses of each party, the fees of each arbitrator and the\nadministrative fee of the American Arbitration Association.\n\n                                      44\n\n\n \n          (j) Third-Party Claims.  In the event Parent becomes aware of a third-\n              ------------------\nparty claim which Parent believes may result in Losses, Parent shall notify the\nShareholder Representative of such claim, and the Shareholder Representative\nshall be entitled, at the Company Shareholders' expense, to participate in any\ndefense of such claim.  Parent shall have the right in its sole discretion to\nsettle any such claim; provided, however, that except with the consent of the\nShareholder Representative, no settlement of any such claim with third-party\nclaimants shall be determinative of the amount of any claim pursuant to this\nSection 7.2.  In the event that the Shareholder Representative has consented to\nany such settlement, the Company Shareholders shall have no standing to object\nunder any provision of this Article 7.2 to the amount of any claim by Parent\nagainst the Escrow Fund with respect to such settlement.\n\n          (k)  Shareholder Representative.\n               --------------------------\n\n               (i)  In the event that the Merger is approved, effective upon\nsuch vote, and without further act of any shareholder, John B. Witchel shall be\nappointed as agent and attorney-in-fact (the \"Shareholder Representative\") for\n                                              --------------------------\neach Company Shareholder, for and on behalf of shareholders of the Company, to\ngive and receive notices and communications, to authorize delivery to Parent of\npayments from the Escrow Fund in satisfaction of claims by Parent, to object to\nsuch deliveries, to agree to, negotiate, enter into settlements and compromises\nof, and demand arbitration and comply with orders of courts and awards of\narbitrators with respect to such claims, and to take all actions necessary or\nappropriate in the judgment of the Shareholder Representative for the\naccomplishment of the foregoing. Such agency may be changed by the shareholders\nof the Company from time to time upon not less than thirty (30) days prior\nwritten notice to Parent; provided that the Shareholder Representative may not\nbe removed unless a majority-in-interest of the Company Shareholders agree to\nsuch removal and to the identity of the substituted agent. No bond shall be\nrequired of the Shareholder Representative, and the Shareholder Representative\nshall not receive compensation for services as such. Notices or communications\nto or from the Shareholder Representative shall constitute notice to or from\neach of the Company Shareholders or their permitted transferees.\n\n               (ii)  The Shareholder Representative shall not be liable for any\nact done or omitted hereunder as Shareholder Representative while acting in good\nfaith and in the exercise of reasonable judgment. The Company Shareholders shall\nseverally indemnify the Shareholder Representative and hold him or her harmless\nagainst any loss, liability or expense incurred without negligence or bad faith\non the part of the Shareholder Representative and arising out of or in\nconnection with the acceptance or administration of the Shareholders\nRepresentative's duties hereunder, including the reasonable fees and expenses of\nany legal counsel retained by the Shareholder Representative.\n\n                                      45\n\n\n \n          (l) Actions of the Shareholder Representative.  A decision, act,\n              -----------------------------------------\nconsent or instruction of the Shareholder Representative shall constitute a\ndecision of all the Company Shareholders and shall be final, binding and\nconclusive upon each of such Company Shareholder, and the Escrow Agent and\nParent may rely upon any such decision, act, consent or instruction of the\nShareholder Representative as being the decision, act, consent or instruction of\neach and every such Company Shareholder.  The Escrow Agent and Parent are hereby\nrelieved from any liability to any person for any acts done by them in\naccordance with such decision, act, consent or instruction of the Shareholder\nRepresentative.\n\n          (m)  Escrow Agent's Duties.\n               ---------------------\n\n               (i)   The Escrow Agent shall be obligated only for the\nperformance of such duties as are specifically set forth herein, and as set\nforth in any additional written escrow instructions which the Escrow Agent may\nreceive after the date of this Agreement which are signed by an officer of\nParent and the Shareholder Representative, and may rely and shall be protected\nin relying or refraining from acting on any instrument reasonably believed to be\ngenuine and to have been signed or presented by the proper party or parties. The\nEscrow Agent shall not be liable for any act done or omitted hereunder as Escrow\nAgent while acting in good faith and in the exercise of reasonable judgment, and\nany act done or omitted pursuant to the advice of counsel shall be conclusive\nevidence of such good faith.\n\n               (ii)  The Escrow Agent is hereby expressly authorized to\ndisregard any and all warnings given by any of the parties hereto or by any\nother person, excepting only orders or process of courts of law, and is hereby\nexpressly authorized to comply with and obey orders, judgments or decrees of any\ncourt. In case the Escrow Agent obeys or complies with any such order, judgment\nor decree of any court, the Escrow Agent shall not be liable to any of the\nparties hereto or to any other person by reason of such compliance,\nnotwithstanding any such order, judgment or decree being subsequently reversed,\nmodified, annulled, set aside, vacated or found to have been entered without\njurisdiction.\n\n               (iii) The Escrow Agent shall not be liable in any respect on\naccount of the identity, authority or rights of the parties executing or\ndelivering or purporting to execute or deliver this Agreement or any documents\nor papers deposited or called for hereunder.\n\n               (iv)  The Escrow Agent shall not be liable for the expiration of\nany rights under any statute of limitations with respect to this Agreement or\nany documents deposited with the Escrow Agent.\n\n               (v)   In performing any duties under the Agreement, the Escrow\nAgent shall not be liable to any party for damages, losses, or expenses, except\nfor gross negligence or willful misconduct on the part of the Escrow Agent. The\nEscrow Agent shall not incur any such liability for (A) any act or failure to\nact made or omitted in good faith, or (B) any action taken or omitted in\nreliance upon any instrument, including any written statement or affidavit\nprovided for in this Agreement that the Escrow Agent shall in good faith believe\nto be genuine, nor will the Escrow \n\n                                      46\n\n\n \nAgent be liable or responsible for forgeries, fraud, impersonations, or\ndetermining the scope of any representative authority. In addition, the Escrow\nAgent may consult with the legal counsel in connection with Escrow Agent's\nduties under this Agreement and shall be fully protected in any act taken,\nsuffered, or permitted by such Escrow Agent in good faith in accordance with the\nadvice of counsel. The Escrow Agent is not responsible for determining and\nverifying the authority of any person acting or purporting to act on behalf of\nany party to this Agreement.\n\n          (vi)   If any controversy arises between the parties to this\nAgreement, or with any other party, concerning the subject matter of this\nAgreement, its terms or conditions, the Escrow Agent will not be required to\ndetermine the controversy or to take any action regarding it. The Escrow Agent\nmay hold all documents and the Escrow Amount and may wait for settlement of any\nsuch controversy by final appropriate legal proceedings or other means as, in\nthe Escrow Agent's discretion, the Escrow Agent may be required, despite what\nmay be set forth elsewhere in this Agreement. In such event, the Escrow Agent\nwill not be liable for damage.\n\n                 Furthermore, the Escrow Agent may at its option, file an action\nof interpleader, in arbitration or otherwise, as the circumstances may require,\nrequiring the Parties to answer and litigate any claims and rights among\nthemselves. The Escrow Agent is authorized to deposit with the clerk of the\ncourt all documents and shares of Parent Common Stock held in escrow, except all\ncost, expenses, charges and reasonable attorney fees incurred by the Escrow\nAgent due to the interpleader action and which the parties jointly and severally\nagree to pay. Upon initiating such action, the Escrow Agent shall be fully\nreleased and discharged of and from all obligations and liability imposed by the\nterms of this Agreement.\n\n          (vii)  The parties and their respective successors and assigns\nagree jointly and severally to indemnify and hold Escrow Agent harmless against\nany and all losses, claims, damages, liabilities, and expenses, including\nreasonable costs of investigation, counsel fees, including allocated costs of\nin-house counsel and disbursements that may be imposed on the Escrow Agent or\nincurred by the Escrow Agent in connection with the performance of the Escrow\nAgent's duties under this Agreement, including but not limited to any litigation\narising from this Agreement or involving its subject matter other than arising\nout of its gross negligence or willful misconduct.\n\n          (viii) The Escrow Agent may resign at any time upon giving at least\nthirty (30) days written notice to the parties to this Agreement; provided,\nhowever, that no such resignation shall become effective until the appointment\nof a successor escrow agent which shall be accomplished as follows:  the parties\nshall use their best efforts to agree on a successor escrow agent within thirty\n(30) days after receiving such notice.  If Parent and the Shareholder\nRepresentative fail to agree upon a successor escrow agent within such time, the\nEscrow Agent shall have the right to appoint a successor escrow agent authorized\nto do business in the state of California.  The successor escrow agent shall\nexecute and deliver an instrument accepting such appointment and it shall,\nwithout further acts, be vested with all the estates, properties, rights,\npowers, and duties of the predecessor Escrow Agent as if originally named as\nEscrow Agent.  Thereafter, the Escrow Agent shall be discharged from any further\nduties and liability under this Agreement.\n\n                                      47\n\n\n \n          (n) Fees.  All fees of the Escrow Agent for performance of its duties\n              ----\nhereunder shall be paid by Parent in accordance with the standard fee schedule\nof the Escrow Agent.  It is understood that the fees and usual charges agreed\nupon for services of the Escrow Agent shall be considered compensation for\nordinary services as contemplated by this Agreement.  In the event that the\nconditions of this Agreement are not promptly fulfilled, or if the Escrow Agent\nrenders any service not provided for in this Agreement, or if the parties hereto\nrequest a substantial modification of its terms, or if any controversy arises,\nor if the Escrow Agent is made a party to, or intervenes in, any litigation\npertaining to the Escrow Fund or its subject matter, the Escrow Agent shall be\nreasonably compensated for such extraordinary services and reimbursed for all\ncosts, attorney's fees, including allocated costs of in-house counsel, and\nexpenses occasioned by such default, delay, controversy or litigation.  The\nParent promises to pay these sums upon demand.\n\n     7.3  Indemnity.\n          ---------\n\n          (a) The Principal Shareholders hereby agree to indemnify and hold\nParent and its subsidiaries, directors, officers and agents harmless against and\nin respect of any loss, cost, expense, claim, liability, deficiency, judgment or\ndamage (hereinafter, individually, a \"Loss\"; and collectively, \"Losses\")\nincurred by Parent, its subsidiaries, officers, directors and agents (i) as a\nresult of any inaccuracy in or breach of a representation or warranty of the\nCompany or the Principal Shareholders contained in this Agreement or any failure\nby the Company or any Principal Shareholder to perform or comply with any\ncovenant contained in this Agreement and (ii) by reason of the failure of the\nCompany and the Principal Shareholders to perform their obligations hereunder.\n\n          (b)  Parent hereby agrees to indemnify and hold the Company and its\nsubsidiaries, directors, officers and agents harmless against and in respect of\nany loss, cost, expense, claim, liability, deficiency, judgment or damage\n(hereinafter, individually, a \"Loss\"; and collectively, \"Losses\") incurred by\nthe Company, its subsidiaries, officers, directors and agents (i) as a result of\nany inaccuracy in or breach of a representation or warranty of Parent contained\nin this Agreement or any failure by Parent to perform or comply with any\ncovenant contained in this Agreement and (ii) by reason of the failure of Parent\nto perform its obligations hereunder.\n\n          (c) Expiration of Indemnification.  The indemnification obligations\n              -----------------------------\nunder this Section 7.3 shall terminate at 5:00 p.m., Pacific Time on the third\nanniversary of the Effective Date, but shall not terminate as to any Loss (or a\npotential claim by an appropriate party) asserted in good faith prior to such\ndate; provided, however, that the representations and warranties with respect to\nTaxes (Section 2.10) and environmental laws (Section 2.20) shall survive until\nthe expiration of the applicable statute of limitations, if any.\n\n          (d) Procedure for Indemnification.  In the event that either party\n              -----------------------------\nshall incur or suffer any Losses in respect of which indemnification may be\nsought by such party pursuant to the provisions of this Article, the indemnified\nparty shall assert a claim for indemnification by written notice (a \"Notice\") to\nthe Parent, or the Surviving Corporation and the Shareholder Representative, as\nthe case may be, briefly stating the nature and basis of such claim.  In the\ncase of Losses arising by reason of any third-party claim, the Notice shall be\ngiven within 25 days of the filing or other \n\n                                      48\n\n\n \nwritten assertion of any such claim against Parent, but the failure of Parent to\ngive the Notice within such time period shall not relieve the Company and the\nPrincipal Shareholders of any liability that the Company and the Principal\nShareholders may have to Parent except to the extent that the Company and the\nPrincipal Shareholders are actually prejudiced thereby; provided, however, that\nany such notice shall be given no later than the date of the expiration of the\napplicable indemnification obligation of the Company and the Principal\nShareholders as set forth in Section 7.3(c) above. The indemnified party shall\nprovide the other party on request all information and documentation reasonably\nnecessary to support and verify any Losses which the indemnified party believes\ngive rise to a claim for indemnification hereunder and shall give reasonable\naccess to all books, records and personnel in the possession or under the\ncontrol of that party which would have bearing on such claim.\n\n          (e) Arbitration.  Any controversy involving a claim by an indemnified\n              -----------\nparty pursuant to this Section 7.3 shall be finally settled by arbitration in\nSanta Clara County, California in accordance with the then current Commercial\nArbitration Rules of the American Arbitration Association; and judgment upon the\naward rendered by the arbitrator may be entered in any court having jurisdiction\nthereof.  Such arbitration shall be conducted by an arbitrator chosen by mutual\nagreement of Parent and the Company and the Principal Shareholders.  Failing\nsuch agreement, the arbitration shall be conducted by three independent\narbitrators, none of whom shall have any competitive interest with Parent or the\nCompany and the Principal Shareholders.  Parent shall choose one such\narbitrator, the Company and the Principal Shareholders shall choose one such\narbitrator, and such two arbitrators shall mutually select a third arbitrator.\nAny decision of two such arbitrators shall be binding on Parent and the Company\nand the Principal Shareholders.  Each party shall pay its own costs and expenses\n(including counsel fees) of any such arbitration except that the arbitrator can\ncompel one party to pay all or a portion of the other party's costs and\nexpenses.\n\n\n                                  ARTICLE VIII\n\n                       TERMINATION, AMENDMENT AND WAIVER\n\n     8.1  Termination.  Except as provided in Section 8.2 below, this\n          -----------                                                  \nAgreement may be terminated and the Merger abandoned at any time prior to the\nEffective Time:\n\n          (a) by mutual consent of the Company and Parent;\n\n          (b) by Parent or the Company if:  (i) the Effective Time has not\noccurred by April 15, 1997; (ii) there shall be a final nonappealable order of a\nfederal or state court in effect preventing consummation of the Merger; or (iii)\nthere shall be any statute, rule, regulation or order enacted, promulgated or\nissued or deemed applicable to the Merger by any governmental entity that would\nmake consummation of the Merger illegal;\n\n          (c) by Parent or the Company if there shall be any action taken, or\nany statute, rule, regulation or order enacted, promulgated or issued or deemed\napplicable to the Merger by \n\n                                      49\n\n\n \nany Governmental Entity, which would: (i) prohibit Parent's or Sub's ownership\nor operation of any portion of the business of the Company or (ii) compel Parent\nor the Company to dispose of or hold separate all or a portion of the business\nor assets of the Sub or Parent as a result of the Merger;\n\n          (d) by Parent if it is not in material breach of its obligations under\nthis Agreement and there has been a material breach of any representation,\nwarranty, covenant or agreement contained in this Agreement on the part of the\nCompany or the Principal Shareholders and such breach has not been cured within\nten (10) calendar days after written notice to the Company (provided that, no\ncure period shall be required for a breach which by its nature cannot be cured);\n\n          (e) by the Company if neither it nor the Principal Shareholders are in\nmaterial breach of their respective obligations under this Agreement and there\nhas been a material breach of any representation, warranty, covenant or\nagreement contained in this Agreement on the part of Parent or Sub and such\nbreach has not been cured within ten (10) calendar days after written notice to\nParent (provided that, no cure period shall be required for a breach which by\nits nature cannot be cured); or\n\n          (f) by Parent, Sub, Company, or Principal Shareholders if an event\nhaving a Material Adverse Effect on the Company shall have occurred after the\ndate of this Agreement.\n\n     Where action is taken to terminate this Agreement pursuant to this Section\n8.1, it shall be sufficient for such action to be authorized by the Board of\nDirectors (as applicable) of the party taking such action.\n\n     8.2  Effect of Termination.  In the event of termination of this\n          ---------------------                                        \nAgreement as provided in Section 8.1, this Agreement shall forthwith become void\nand there shall be no liability or obligation on the part of Parent, Sub or the\nCompany, or their respective officers, directors or shareholders, provided that\neach party shall remain liable for any breaches of this Agreement prior to its\ntermination; provided further that, the provisions of Sections 5.4 and 5.5 and\nArticle IX of this Agreement shall remain in full force and effect and survive\nany termination of this Agreement.\n\n     8.3  Amendment.  Except as is otherwise required by applicable law after\n          ---------                                                           \nthe Company Shareholders approve this Agreement, this Agreement may be amended\nby the parties hereto at any time by execution of an instrument in writing\nsigned on behalf of each of the parties hereto.\n\n                                      50\n\n\n \n     8.4  Extension; Waiver.   At any time prior to the Effective Time, Parent\n          -----------------                                                     \nand Sub, on the one hand, and the Company, on the other, may, to the extent\nlegally allowed, (i) extend the time for the performance of any of the\nobligations of the other party hereto, (ii) waive any inaccuracies in the\nrepresentations and warranties made to such party contained herein or in any\ndocument delivered pursuant hereto, and (iii) waive compliance with any of the\nagreements or conditions for the benefit of such party contained herein.  Any\nagreement on the part of a party hereto to any such extension or waiver shall be\nvalid only if set forth in an instrument in writing signed on behalf of such\nparty.\n\n                                   ARTICLE IX\n\n                               GENERAL PROVISIONS\n\n     9.1  Notices.  All notices and other communications hereunder shall be in\n          -------                                                               \nwriting and shall be deemed given if delivered personally or by commercial\nmessenger or courier service, or mailed by registered or certified mail (return\nreceipt requested) or sent via facsimile (with acknowledgment of complete\ntransmission) to the parties at the following addresses (or at such other\naddress for a party as shall be specified by like notice):\n\n     (a)  if to Parent or Sub, to:\n\n               USWeb Corporation\n               2880 Lakeside Drive\n               Santa Clara, California  95054\n               Attn:  Chief Financial Officer\n               Telecopy No.:  (408) 987-3240\n\n               with a copy to:\n\n               Wilson Sonsini Goodrich &amp; Rosati, P.C.\n               650 Page Mill Road\n               Palo Alto, California 94304\n               Attention:  Mark Bonham, Esq.\n               Telecopy No.:  (415) 493-6811\n\n     (b) if to Company or to a Principal Shareholder to:\n\n               John B. Witchel\n               4 Carl Street\n               San Francisco, CA  94117\n               Attention:\n               Telecopy No.:  415\/284.1235\n\n                                      51\n\n\n \n               with a copy to:\n               Joshua M. Glantz\n               243 East 78th Street - #12\n               New York, NY  10021\n               Attention:\n               Telecopy No.:  212\/393.9431\n\n     9.2  Interpretation.  The words \"include,\" \"includes\" and \"including\"\n          --------------                                                    \nwhen used herein shall be deemed in each case to be followed by the words\n\"without limitation.\"  The table of contents and headings contained in this\nAgreement are for reference purposes only and shall not affect in any way the\nmeaning or interpretation of this Agreement.\n\n     9.3  Counterparts.  This Agreement may be executed in one or more\n          ------------                                                  \ncounterparts, all of which shall be considered one and the same agreement and\nshall become effective when one or more counterparts have been signed by each of\nthe parties and delivered to the other party, it being understood that all\nparties need not sign the same counterpart.\n\n     9.4  Entire Agreement; Assignment.  This Agreement, and Exhibits hereto\n          ----------------------------                                        \nand the documents and instruments and other agreements among the parties hereto\nreferenced herein:  (a) constitute the entire agreement among the parties with\nrespect to the subject matter hereof and supersede all prior agreements and\nunderstandings both written and oral, among the parties with respect to the\nsubject matter hereof; (b) are not intended to confer upon any other person any\nrights or remedies hereunder; and (c) shall not be assigned by operation of law\nor otherwise except as otherwise specifically provided, except that Parent and\nSub may assign their respective rights and delegate their respective obligations\nhereunder to their respective affiliates.\n\n     9.5  Severability.  In the event that any provision of this Agreement or\n          ------------                                                         \nthe application thereof, becomes or is declared by a court of competent\njurisdiction to be illegal, void or unenforceable, the remainder of this\nAgreement will continue in full force and effect and the application of such\nprovision to other persons or circumstances will be interpreted so as reasonably\nto effect the intent of the parties hereto.  The parties further agree to\nreplace such void or unenforceable provision of this Agreement with a valid and\nenforceable provision that will achieve, to the extent possible, the economic,\nbusiness and other purposes of such void or unenforceable provision.\n\n     9.6  Other Remedies.  Except as otherwise provided herein, any and all\n          --------------                                                     \nremedies herein expressly conferred upon a party will be deemed cumulative with\nand not exclusive of any other remedy conferred hereby, or by law or equity upon\nsuch party, and the exercise by a party of any one remedy will not preclude the\nexercise of any other remedy.\n\n                                      52\n\n\n \n     9.7  Governing Law.  This Agreement shall be governed by and construed in\n          -------------                                                         \naccordance with the laws of the State of California, regardless of the laws that\nmight otherwise govern under applicable principles of conflicts of laws thereof.\nEach of the parties hereto irrevocably consents to the exclusive jurisdiction\nand venue of any court within Santa Clara County, State of California, in\nconnection with any matter based upon or arising out of this Agreement or the\nmatters contemplated herein, agrees that process may be served upon them in any\nmanner authorized by the laws of the State of California for such persons and\nwaives and covenants not to assert or plead any objection which they might\notherwise have to such jurisdiction, venue and such process.\n\n     9.8  Rules of Construction.  The parties hereto agree that they have been\n          ---------------------                                                 \nrepresented by counsel during the negotiation and execution of this Agreement\nand, therefore, waive the application of any law, regulation, holding or rule of\nconstruction providing that ambiguities in an agreement or other document will\nbe construed against the party drafting such agreement or document.\n\n     IN WITNESS WHEREOF, Parent, Sub, the Company and the Principal Shareholders\nhave caused this Agreement to be signed by their duly authorized respective\nofficers, all as of the date first written above.\n\nCOMPANY                                  USWEB CORPORATION\n\nBy:                                      By:\n   President\n                                         Title:\n\n\nESCROW AGENT                             USWEB ACQUISITION CORPORATION 101\n\nBy:                                      By:\n\nTitle:                                   Title:\n\n\n                                         PRINCIPAL SHAREHOLDERS\n\n\n_______________________________________  _______________________________________\nJohn B. Witchel, Principal Shareholder   Roger D. McAulay, Principal Shareholder\n\n\n_______________________________________\nJoshua M. Glantz, Principal Shareholder\n\n                                      53\n\n\n \n                                   EXHIBIT A\n                                   ---------\n\n                             Principal Shareholders\n\n           Name              Number of Shares*\n\nJohn Brown Witchel                500,001\nRoger Douglas McAulay             344,889\nJoshua Michael Glantz              86,222\n\n- ----------------\n*On an as fully converted to Common Stock, fully diluted basis.\n\n                                      54\n\n\n \n                                   EXHIBIT B\n\n                                Valuation Model\n\n                                      55\n\n\n \n                                   EXHIBIT C\n                                   ---------\n\n                             Schedule of Exceptions\n\n\n                                      56\n\n\n \n                                   EXHIBIT D\n                                   ---------\n\n                            Form of Option Agreement\n\n\n                                      57\n\n\n \n                                   EXHIBIT E\n                                   ---------\n\n                        Form of Shareholder Certificate\n\n                                      58\n\n\n\n\n\n<document>\n\n<type>EX-2.2\n\n<sequence>3\n\n<description>AGREEMENT &amp; PLAN OF REORG. (CORP.103)\n\n<text>\n\n\n\n \n                                                                     EXHIBIT 2.2\n\n\n                      AGREEMENT AND PLAN OF REORGANIZATION\n\n                                  BY AND AMONG\n\n                               USWEB CORPORATION\n\n                       USWEB ACQUISITION CORPORATION 103\n\n                                      AND\n\n                            FETCH INTERACTIVE, INC.\n\n\n                           DATED AS OF MARCH 31, 1997\n\n\n \n                               INDEX OF EXHIBITS\n                                        \n\n\nEXHIBIT           DESCRIPTION\n- -----------------------------\n\nExhibit A         Principal Shareholder\n\nExhibit C         Schedule of Exceptions\n\nExhibit D         Option Agreement\n\nExhibit E         Form of Shareholder Certificate\n\n\n<table> \n\n<caption> \n                               TABLE OF CONTENTS\n                                                                                    PAGE\n                                                                                    ----\n\n<c>                                                                              \n<c>\nARTICLE I - THE MERGER                                                               2\n\n 1.1    The Merger.                                                                  2 \n\n 1.2    Effective Time.                                                              2\n\n 1.3    Effect of the Merger.                                                        2\n\n 1.4    Certificate of Incorporation; Bylaws.                                        2\n\n 1.5    Directors and Officers.                                                      3\n\n 1.6    Effect of Merger on the Capital Stock of the Constituent Corporations.       3\n\n 1.7    Surrender of Certificates.                                                   4\n\n 1.8    No Further Ownership Rights in Company Common Stock.                         6\n\n 1.9    Lost, Stolen or Destroyed Certificates.                                      6\n\n 1.10   Purchase Price Adjustments.                                                  6\n\n 1.11   Parent Common Stock.                                                         8\n\n 1.12   Tax Consequences.                                                            8\n\n 1.13   Taking of Necessary Action; Further Action.                                  8\n\n<\/c><\/c><\/caption><\/table> \ni\n\n\n\n \n                               TABLE OF CONTENTS\n                                  (CONTINUED)\n\n<table>\n\n<caption>\n                                                                                   PAGE\n                                                                                   ----\n\n<c>                                                                             \n<c>\nARTICLE II - REPRESENTATIONS AND WARRANTIES OF\nTHE COMPANY AND THE PRINCIPAL SHAREHOLDERS                                           9\n\n 2.1   Organization of the Company.                                                  9\n\n 2.2   Company Capital Structure.                                                    9\n\n 2.3   Subsidiaries.                                                                 9\n\n 2.4   Authority.                                                                   10\n\n 2.5   No Conflict.                                                                 10\n\n 2.6   Consents.                                                                    10\n\n 2.7   Company Financial Statements.                                                11\n\n 2.8   No Undisclosed Liabilities.                                                  11\n\n 2.9   No Changes.                                                                  11\n\n 2.10  Tax Matters.                                                                 13\n\n 2.11  Restrictions on Business Activities.                                         14\n\n 2.12  Title to Properties; Absence of Liens and Encumbrances;\n       Condition of Equipment.                                                      15\n\n 2.13  Intellectual Property.                                                       15\n\n 2.14  Agreements, Contracts and Commitments.                                       18\n\n 2.15  Interested Party Transactions.                                               20\n\n 2.16  Governmental Authorization.                                                  20\n\n 2.17  Litigation.                                                                  20\n\n 2.18  Accounts Receivable.                                                         20\n\n 2.19  Minute Books.                                                                21\n\n 2.20  Environmental Matters.                                                       21\n\n 2.21  Brokers' and Finders' Fees; Third Party Expenses.                            22\n\n 2.22  Employee Benefit Plans and Compensation.                                     22\n\n 2.23  Insurance.                                                                   25\n\n 2.24  Compliance with Laws.                                                        25\n\n 2.25  Third Party Consents.                                                        25\n\n 2.26  Warranties; Indemnities.                                                     25\n\n 2.27  Complete Copies of Materials.                                                25\n\n 2.28  Representations Complete.                                                    25\n\n 2.29  Business Plan.                                                               25\n\n<\/c><\/c><\/caption><\/table>\n                                                                              ii\n\n\n \n                               TABLE OF CONTENTS\n                                  (CONTINUED)\n\n<table> \n\n<caption> \n                                                                                   PAGE\n                                                                                   ----\n\n<c>                                                                              \n<c>\n 2.30   Backlog Report.                                                              25\n\n 2.31   Securities Law Compliance.                                                   26\n\n 2.32   Principal Shareholder Investment Representations.                            26\n\nARTICLE III                                                                         27\n\n 3.1    Organization, Standing and Power.                                           27\n\n 3.2    Authority; Consents.                                                        27\n\n 3.3    Capital Structure.                                                          27\n\n 3.4    Brokers' and Finders' Fees.                                                 28\n\n 3.5    Similar Transactions.                                                       28\n\n 3.6    No Changes.                                                                 28\n\nARTICLE IV                                                                          29\n\n 4.1    Conduct of Business of the Company.                                         29\n\n 4.2    No Solicitation.                                                            31\n\nARTICLE V                                                                           31\n\n 5.1    Parent's Right of First Refusal.                                            31\n\n 5.2    Market Standoff Agreement.                                                  33\n\n 5.3    Restriction on Competition.                                                 33\n\n 5.4    Confidentiality.                                                            34\n\n 5.5    Expenses.                                                                   34\n\n 5.6    Public Disclosure.                                                          34\n\n 5.7    Post-Closing Employment of Company Employees.                               35\n\n 5.8    Treatment of Affiliate Warrants.                                            36\n\n 5.9    Access to Information.                                                      37\n\n 5.10   Public Disclosure.                                                          37\n\n 5.11   Consents.                                                                   37\n\n 5.12   FIRPTA Compliance.                                                          37\n\n 5.13   Best Efforts.                                                               37\n\n 5.14   Notification of Certain Matters.                                            38\n\n 5.15   Tax Returns.  N\/A - reserved for Sub-S corporations                         38\n\n<\/c><\/c><\/caption><\/table> \niii\n\n\n \n                               TABLE OF CONTENTS\n                                  (CONTINUED)\n\n<table> \n\n<caption> \n                                                                                   PAGE\n                                                                                   ----\n\n<c>                                                                              \n<c>\n 5.16   Additional Documents and Further Assurances.                                38\n \n 5.17   Section 368 Compliance.                                                     38\n\n 5.18   Parent Policies.                                                            38\n\nARTICLE VI                                                                          38\n\n 6.1    Conditions to Obligations of Each Party to Effect the Merger.               38\n\n 6.2    Additional Conditions to Obligations of Company.                            39\n\n 6.3    Additional Conditions to the Obligations of Parent and Sub.                 39\n\nARTICLE VII                                                                         41\n\n 7.1    Survival of Representations and Warranties.                                 41\n\n 7.2    Escrow Arrangements; Setoff.                                                41\n\nARTICLE VIII                                                                        49\n\n 8.1    Termination.                                                                49\n\n 8.2    Effect of Termination.                                                      50\n\n 8.3    Amendment.                                                                  50\n\n 8.4    Extension; Waiver.                                                          51\n\nARTICLE IX                                                                          51\n\n 9.1    Notices.                                                                    51\n\n 9.2    Interpretation.                                                             52\n\n 9.3    Counterparts.                                                               52\n\n 9.4    Entire Agreement; Assignment.                                               52\n\n 9.5    Severability.                                                               52\n\n 9.6    Other Remedies.                                                             52\n\n 9.7    Governing Law.                                                              53\n\n 9.8    Rules of Construction.                                                      53\n\n<\/c><\/c><\/caption><\/table>\n                                                                              iv\n \n\n\n \n                      AGREEMENT AND PLAN OF REORGANIZATION\n\n\n     This AGREEMENT AND PLAN OF REORGANIZATION (the \"Agreement\") is made and\n                                                     ---------\nentered into as of March 31, 1997, among USWeb Corporation, a Utah corporation\n(\"Parent\"), USWeb Acquisition Corporation 103, a Delaware corporation and a\n  ------\nwholly owned subsidiary of Parent (\"Sub\"), FETCH Interactive, Inc., a Wisconsin\n                                    ---\ncorporation (the \"Company\"), and the individual listed on Exhibit A attached\n                  -------                                 ---------\nhereto (such individual being hereinafter referred to individually as a\n\"Principal Shareholder\").\n ---------------------\n\n\n                                    RECITALS\n\n     A.    The Boards of Directors of each of the Company, Parent and Sub\nbelieve it is in the best interests of each company and their respective\nshareholders that Parent acquire the Company through the statutory merger of the\nCompany with and into Sub (the \"Merger\") and, in furtherance thereof, have\napproved the Merger.\n\n     B.    Pursuant to the Merger, among other things, all of the issued and\noutstanding shares of capital stock of the Company shall be converted into the\nright to receive shares of Common Stock of Parent.\n\n     C.    Fifty Percent (50%) of the shares of Common Stock of Parent otherwise\npayable in connection with the Merger shall be placed in a one-year escrow for\nthe purposes of (i) satisfying damages, losses, expenses and other similar\ncharges which result from breaches of representations, warranties or covenants\nor (ii) making adjustments to the purchase price paid by the Parent.\n\n     D.    The Company, the Principal Shareholder, Parent and Sub desire to make\ncertain representations, warranties, covenants and other agreements in\nconnection with the Merger.\n\n     E.    The parties hereto desire that each employee of the Company prior to\nthe Merger shall be offered an opportunity of employment by the Sub following\nthe Merger.  Each party understands and agrees that any such employee or the Sub\nshall have the right to terminate any such employment at any time.\n\n     NOW, THEREFORE, in consideration of the covenants, promises and\nrepresentations set forth herein, and for other good and valuable consideration,\nthe parties agree as follows:\n\n                                       1\n\n\n \n                                   ARTICLE I\n\n                                   THE MERGER\n\n     1.1  The Merger.    At the Effective Time (as defined in Section 1.2) and\n          ----------                                                            \nsubject to and upon the terms and conditions of this Agreement and the\napplicable provisions of the corporations laws of the states of Delaware\n(\"Delaware Law\") and Wisconsin (the \"Wisconsin Law\"), the Company shall be\nmerged with and into the Sub, the separate corporate existence of the Company\nshall cease and Sub shall continue as the surviving corporation and as a wholly\nowned subsidiary of Parent.  Sub as the surviving corporation after the Merger\nis hereinafter sometimes referred to as the \"Surviving Corporation.\"\n\n     1.2  Effective Time.  Unless this Agreement is earlier terminated\n          --------------  \npursuant to Section 8.1, the closing of the Merger (the \"Closing\") will take\n                                                         -------\nplace as promptly as practicable, but no later than five (5) business days\nfollowing satisfaction or waiver of the conditions set forth in Article VI, at\nthe offices of Wilson Sonsini Goodrich &amp; Rosati, 650 Page Mill Road, Palo Alto,\nCalifornia, unless another place or time is agreed to in writing by Parent and\nthe Company.  The date upon which the Closing actually occurs is herein referred\nto as the \"Closing Date.\"  On the Closing Date, the parties hereto shall cause\n           ------------\nthe Merger to be consummated by submitting for filing an Agreement and Plan of\nMerger (or like instrument) with the Secretary of State of Delaware and the\nSecretary of State of Wisconsin (the \"Merger Articles\"), in accordance with the\n                                      ---------------\nrelevant provisions of applicable law (the later of the times of filing with the\nSecretary of State of Delaware and the Secretary of State of Wisconsin being\nreferred to herein as the \"Effective Time\").\n                           --------------\n\n     1.3  Effect of the Merger.  At the Effective Time, the effect of the\n          --------------------                                             \nMerger shall be as provided in the applicable provisions of Delaware Law and\nWisconsin Law.  Without limiting the generality of the foregoing, and subject\nthereto, at the Effective Time, all the property, rights, privileges, powers and\nfranchises of the Company and Sub shall vest in the Surviving Corporation, and\nall debts, liabilities and duties of the Company and Sub shall become the debts,\nliabilities and duties of the Surviving Corporation.\n\n     1.4  Certificate of Incorporation; Bylaws.\n          ------------------------------------   \n\n          (a) Unless otherwise determined by Parent prior to the Effective Time,\nat the Effective Time, the Certificate of Incorporation of Sub shall be the\nCertificate of Incorporation of the Surviving Corporation until thereafter\namended as provided by law and such Certificate of Incorporation.\n\n          (b) The Bylaws of Sub, as in effect immediately prior to the Effective\nTime, shall be the Bylaws of the Surviving Corporation until thereafter amended.\n\n                                       2\n\n\n \n    1.5  Directors and Officers.   The director(s) of Sub immediately prior\n         ----------------------                                              \nto the Effective Time shall be the initial director(s) of the Surviving\nCorporation, each to hold office in accordance with the Certificate of\nIncorporation and Bylaws of the Surviving Corporation.  The officers of Sub\nimmediately prior to the Effective Time shall be the initial officers of the\nSurviving Corporation, each to hold office in accordance with the Bylaws of the\nSurviving Corporation.\n\n    1.6  Effect of Merger on the Capital Stock of the Constituent Corporations.\n         ---------------------------------------------------------------------\n\n\n         (a) Exchange of Stock; Purchase Price Adjustments.  As of the\n             ---------------------------------------------\nEffective Time of the Merger, each share of the Company's Common Stock, no par\nvalue (the \"Company Common Stock\"), that is issued and outstanding immediately\n            --------------------\nprior to the Effective Time (other than any  dissenting shares under applicable\nstate law) shall, by virtue of the Merger and without any action on the part of\nSub, the Company, or the Company's shareholders (the \"Company Shareholders\"), be\n                                                      --------------------\ncanceled and extinguished and each Company Shareholder shall have (i) the right\nto receive such Company Shareholder's pro rata portion (based on such Company\nShareholders' equity ownership in the Company as represented to Parent by the\nCompany) of that number of shares of the Parent's Common Stock, par value $.001\nper share (the \"Parent Common Stock\") equal to $3,137,653 (The \"Original\n                -------------------                             --------\nPurchase Price\") divided by the Fair Value Per Share (as defined in Section\n- --------------\n1.6(e) below) as of the Closing Date, subject to Section 7.2 hereof, plus the\ncontingent right to receive  additional shares of Parent Common Stock as\nprovided in Section 1.10 of this Agreement (The \"Purchase Price Adjustment\").\n                                                 -------------------------\nthe Original Purchase Price and the Purchase Price Adjustment are hereinafter\ncollectively referred to as the \"Merger Consideration.\"\n                                 --------------------\n\n         (b) Stock Options.   N\/A\n             -------------\n\n         (c) Adjustments to Parent Common Stock.  The number of shares of\n             ----------------------------------\nParent Common Stock issuable hereunder shall be adjusted to reflect fully the\neffect of any stock split, reverse split, stock dividend (including any dividend\nor distribution of securities convertible into Parent Common Stock or Company\nCommon Stock), reorganization, recapitalization or other like change with\nrespect to Parent Common Stock or Company Common Stock occurring after the date\nhereof.\n\n         (d) Fractional Shares.  No fractional share of Parent Common Stock\n             -----------------\nshall be issued in the Merger, including the Purchase Price Adjustment pursuant\nto Section 1.10 below, or pursuant to any stock option or stock bonus issued to\na Company employee that becomes an employee of Parent or Sub following the\nMerger.  In lieu thereof, the number of shares otherwise issued or issuable\nshall be rounded to the nearest whole share, with one-half share or more being\nrounded up.\n\n         (e)  Definitions.\n              -----------\n\n              (i) Aggregate Common Number.  The \"Aggregate Common Number\" shall\n                  -----------------------\nmean the aggregate number of shares of Company Common Stock outstanding \nimmediately prior to the Effective Time.\n\n                                       3\n\n\n \n          (ii) Fair Value Per Share.  The Fair Value Per Share of Parent's\n               --------------------\nCommon Stock, as of any particular date, shall mean, if the Parent's Common\nStock is then traded on an exchange or national quotation system, the average\nclosing price per share of Parent's Common Stock as traded on such exchange or\nnational quotation system during the 10 trading day period ending three business\ndays prior to the date of determination or, if not so traded, the fair market\nvalue per share of such Parent's Common Stock as most recently determined by the\nParent's Board of Directors acting in good faith.\n\n          (iii)     Escrow Amount; Escrow Agent.  The \"Escrow Amount\" shall be\n                    ---------------------------\nequal to Fifty Percent (50%) of the number of shares of Parent Common Stock\nconstituting the Original Purchase Price.  The Escrow Agent shall be the\nsecretary of the Parent, or his designee, so long as the Parent is a privately\nheld company.  Thereafter, any transfer agent for the Parent's Common Stock may\nbe appointed Escrow Agent.\n\n          (iv) Exchange Ratio.  The \"Exchange Ratio\" shall mean the quotient\n               --------------\nobtained by dividing (i) (X) the Original Purchase Price divided by (Y) the Fair\nValue Per Share as of the Effective Date by (ii) the Aggregate Common Number.\nFor illustrative purposes only, if the Original Purchase Price were $2,000,000,\nthe Fair Value Per Share were $2.50 and the Aggregate Common Number were\n3,400,000, then the Exchange Ratio would be ($2,000,000 \/ $2.50) \/ 3,400,000 =\n .23529, so each share of Company Common Stock would be exchanged for .23529\nshares of Parent's Common Stock.  If the facts were the same but the Aggregate\nCommon Number were 1,500, then the calculation would be ($2,000,000 \/ $2.50)\n\/1,500 = 533.33, so each share of Company Common Stock would be exchanged for\n533.33 shares of Parent's Common Stock.\n\n     1.7  Surrender of Certificates.\n          -------------------------   \n\n          (a) Exchange Agent.  The Secretary of Parent or such other entity\n              --------------\nreasonably designated by Parent shall serve as exchange agent (the \"Exchange\n                                                                    --------\nAgent\") in the Merger.\n- -----\n\n          (b) Parent to Provide Common Stock.  Promptly after the Effective\n              ------------------------------\nTime, Parent shall make available to the Exchange Agent for exchange in\naccordance with this Article I the Original Purchase Price issuable pursuant to\nSection 1.6(a) in exchange for outstanding shares of Company Common Stock;\nprovided that, on behalf of the Company Shareholders, Parent shall deposit the\nEscrow Amount into an escrow account.\n\n                                       4\n\n\n \n          (c) Exchange Procedures.  Promptly after the Effective Time, the\n              -------------------\nSurviving Corporation shall cause to be mailed to each Company Shareholder (i) a\nletter of transmittal (which shall specify that delivery shall be effected, and\nrisk of loss and title to the certificates (the \"Certificates\") which\n                                                 ------------\nimmediately prior to the Effective Time represented outstanding shares of\nCompany Common Stock whose shares were converted into the right to receive the\nMerger Consideration pursuant to Section 1.6, shall pass, only upon delivery of\nthe Certificates to the Exchange Agent and shall be in such form and have such\nother provisions as Parent may reasonably specify) and (ii) instructions for use\nin effecting the surrender of the Certificates in exchange for the Merger\nConsideration.  Upon surrender of a Certificate for cancellation to the Exchange\nAgent or to such other agent or agents as may be appointed by Parent, together\nwith such letter of transmittal, duly completed and validly executed in\naccordance with the instructions thereto, the Company Shareholder shall be\nentitled to receive in exchange therefor a certificate representing the number\nof shares issuable to such Company Shareholder as part of the Original Purchase\nPrice (less the number of shares of Parent Common Stock to be deposited in the\nEscrow Fund (as defined in Article VII) on such holder's behalf pursuant to\nArticle VII hereof) and the Certificate so surrendered shall forthwith be\ncanceled.  As soon as practicable after the Effective Time, and subject to and\nin accordance with the provisions of Article VII hereof, Parent shall cause to\nbe distributed to the Escrow Agent (as defined in Article VII) a certificate or\ncertificates representing that number of shares of Parent Common Stock equal to\nthe Escrow Amount.  Such consideration shall be beneficially owned by the\nholders on whose behalf such consideration were deposited in the Escrow Fund and\nshall be available to compensate Parent as provided in Article VII.  Until\nsurrendered to the Exchange Agent, each outstanding Certificate that, prior to\nthe Effective Time, represented shares of Company Common Stock will be deemed\nfrom and after the Effective Time, for all corporate purposes, other than the\npayment of dividends, to evidence only the right to receive Merger Consideration\npursuant to Section 1.6 hereof.\n\n          (d) Distributions With Respect to Unexchanged Shares.  No dividends or\n              ------------------------------------------------\nother distributions declared or made after the Effective Time with respect to\nParent Common Stock with a record date after the Effective Time will be paid to\nthe holder of any unsurrendered Certificate with respect to the shares of Parent\nCommon Stock issuable upon conversion of the shares of Company Common Stock\nrepresented thereby until the holder of record of such Certificate shall\nsurrender such Certificate.  Subject to applicable law, following surrender of\nany such Certificate, there shall be paid to the record holder of the\ncertificates representing whole shares of Parent Common Stock issued in exchange\ntherefor, without interest, at the time of such surrender, the amount of\ndividends or other distributions with a record date after the Effective Time\ntheretofore paid with respect to such whole shares of Parent Common Stock.\n\n          (e) Transfers of Ownership.  If any certificate for shares of Parent\n              ----------------------\nCommon Stock is to be issued in a name other than that in which the Certificate\nsurrendered in exchange therefor is registered, it will be a condition of the\nissuance thereof that the Certificate so surrendered will be properly endorsed\nand otherwise in proper form for transfer and that the person requesting such\nexchange will have paid to Sub or any agent designated by it any transfer or\nother taxes required by reason of the issuance of a certificate for shares of\nParent Common Stock in any name other than that of the registered holder of the\nCertificate surrendered or have \n\n                                       5\n\n\n \nestablished to the satisfaction of Sub or any agent designated by it that such\ntax has been paid or is not payable.\n\n          (f) No Liability.  Notwithstanding anything to the contrary in this\n              ------------\nSection 1.7, none of the Exchange Agent, the Surviving Corporation or any party\nhereto shall be liable to a holder of shares of Parent Common Stock or Company\nCommon Stock for any amount properly paid to a public official pursuant to any\napplicable abandoned property, escheat or similar law.\n\n     1.8  No Further Ownership Rights in Company Common Stock.  All shares of\n          ---------------------------------------------------                  \nParent Common Stock issued upon the surrender for exchange of shares of Company\nCommon Stock in accordance with the terms hereof shall be deemed to have been\nissued in full satisfaction of all rights pertaining to such shares of Company\ncapital stock, and there shall be no further registration of transfers on the\nrecords of the Surviving Corporation of shares of Company capital stock which\nwere outstanding immediately prior to the Effective Time.  If, after the\nEffective Time, Certificates are presented to the Surviving Corporation for any\nreason, they shall be canceled and exchanged as provided in this Article I.\n\n     1.9  Lost, Stolen or Destroyed Certificates.   In the event any\n          --------------------------------------  \nCertificates shall have been lost, stolen or destroyed, the Exchange Agent shall\nissue in exchange for such lost, stolen or destroyed Certificates, upon the\nmaking of an affidavit of that fact by the holder thereof, such shares of Parent\nCommon Stock as may be required pursuant to Section 1.6(a); provided, however,\nthat Sub may, in its discretion and as a condition precedent to the issuance\nthereof, require the owner of such lost, stolen or destroyed Certificates to\ndeliver a bond in such sum as it may reasonably direct as indemnity against any\nclaim that may be made against Parent,  Sub or the Exchange Agent with respect\nto the Certificates alleged to have been lost, stolen or destroyed.\n\n     1.10 Purchase Price Adjustments.   The Original Purchase Price shall be\n          --------------------------  \nsubject to adjustment as follows:\n\n          (a) Six-Month Adjustment.  At the close of business on the last\n              --------------------\nbusiness day of the sixth full month after the Closing Date (the \"First\n                                                                  -----\nAdjustment Date\"), the Parent shall conduct a valuation of the Sub according to\n- ---------------\nthe operation of the Parent's affiliate valuation method (the \"Valuation\n                                                               ---------\nMethod\").  Parent shall then calculate the \"First Adjustment to Purchase Price\"\n- ------\nas follows:\n\n          FAPP = FADV -  OPP\n\nwhere     FAPP is the First Adjustment to Purchase Price;\n          FADV is the First Adjustment Date Value as calculated on the First\n          Adjustment Date using the Valuation Method; and\n          OPP is the Original Purchase Price.\n\n                (i) If FAPP is greater than zero, then the Parent shall pay to\nthe Company Shareholders promptly after the First Adjustment Date a number of\nshares calculated as follows:\n\n                                       6\n\n\n \n          FSP = (FAPP \/ FVPSFAD) x .25\n\nwhere     FSP is the \"First Shares Payment\";\n          FAPP is the First Adjustment to Purchase Price as calculated above;\n          and\n          FVPSFAD is the Fair Value Per Share of the Parent's Common Stock on\n          the First Adjustment Date.\n\n          (ii) If FAPP is less than zero, then the Escrow Agent shall pay to\nParent from the Escrow Amount promptly after the First Adjustment Date a number\nof shares calculated as follows:\n\n          FSP = (-FAPP \/ FVPSCD)\n\nwhere     FSP is the \"First Shares Payment\";\n          FAPP is the First Adjustment to Purchase Price as calculated above;\n          and\n          FVPSCD is the Fair Value Per Share of the Parent's Common Stock on the\n          Closing Date.\n\nIf FAPP equals zero, no adjustment to the Original Purchase Price shall be made\nfor the First Adjustment Date.\n\n          (b) Twelve-Month Adjustment.  At the close of business on the last\n              -----------------------\nbusiness day of the twelfth full month after the Closing Date (the \"Second\n                                                                    ------\nAdjustment Date\"), the Parent shall conduct a valuation of the Sub according to\n- ---------------\nthe Valuation Model, attached as Exhibit B.  Parent shall then calculate the\n    ---------------              ---------\n\"Second Adjustment to Purchase Price\" as follows:\n\n          SAPP = SADV - FADV\n\nwhere     SAPP is the Second Adjustment to Purchase Price;\n          SADV is the Second Adjustment Date Value as calculated on the Second\n          Adjustment Date using the Valuation Method; and\n          FADV is the First Adjustment Date Value.\n\n                 (i) If SAPP is greater than zero, then the Parent shall pay to\nthe Company Shareholders promptly after the Second Adjustment Date a number of\nshares calculated as follows:\n\n          SSP = (SAPP \/ FVPSSAD) x .25\n\nwhere     SSP is the \"Second Shares Payment\";\n          SAPP is the Second Adjustment to Purchase Price as calculated above;\n          and\n          FVPSSAD is the Fair Value Per Share of the Parent's Common Stock on\n          the Second Adjustment Date.\n\n                                       7\n\n\n \n              (ii) If SAPP is less than zero, then the Escrow Agent shall pay to\nParent from the Escrow Amount promptly after the Second Adjustment Date a number\nof shares calculated as follows:\n\n          SSP = (-SAPP \/ FVPSCD)\n\nwhere     SSP is the \"Second Shares Payment\";\n          SAPP is the Second Adjustment to Purchase Price as calculated above;\n          and\n          FVPSCD is the Fair Value Per Share of the Parent's Common Stock on the\n          Closing Date.\n\nIf SAPP equals zero, no adjustment to the Original Purchase Price shall be made\nfor the Second Adjustment Date.\n\n     1.11 Parent Common Stock.  The shares of Parent Common Stock issued in\n          -------------------                                                \nconnection with the Merger will be issued in a transaction exempt from\nregistration under the Securities Act of 1933, as amended (the \"Securities\n                                                                ----------\nAct\"), by reason of Section 4(2) of the Securities Act or Regulation D\n- ---\nthereunder.  Such shares may not be transferred or resold thereafter except in\ncompliance with the terms of this Agreement and following registration under the\nSecurities Act or in reliance on an exemption from registration under the\nSecurities Act.\n\n     1.12 Tax Consequences.  It is intended by the parties hereto that the\n          ----------------                                                  \nMerger will constitute a reorganization within the meaning of Section 368 of the\nInternal Revenue Code of 1986, as amended (the \"Code\").  Each party has\nconsulted its own tax advisors with respect to the tax consequences of the\nMerger.\n\n     1.13 Taking of Necessary Action; Further Action.  If, at any time after\n          ------------------------------------------                          \nthe Effective Time, any further action is necessary or desirable to carry out\nthe purposes of this Agreement and to vest the Surviving Corporation with full\nright, title and possession to all assets, property, rights, privileges, powers\nand franchises of the Company and Sub, the officers and directors of the\nCompany, Parent and Sub are fully authorized in the name of their respective\ncorporations or otherwise to take, and will take, all such lawful and necessary\naction.\n\n                                   ARTICLE II\n\n                 REPRESENTATIONS AND WARRANTIES OF THE COMPANY\n                         AND THE PRINCIPAL SHAREHOLDER\n\n     The Company and the Principal Shareholder hereby, jointly and severally,\nrepresent and warrant to Parent and Sub, subject to such exceptions as are\nspecifically disclosed in Exhibit C attached hereto (referencing the appropriate\n                          ---------\nsection and paragraph numbers), as follows:\n\n                                       8\n\n\n \n     2.1  Organization of the Company.  The Company is a corporation duly\n          ---------------------------                                      \norganized, validly existing and in good standing under the laws of the State of\nWisconsin.  The Company has the corporate power to own its properties and to\ncarry on its business as now being conducted.  The Company is duly qualified to\ndo business and in good standing as a foreign corporation in each jurisdiction\nin which the failure to be so qualified would have a material adverse effect on\nthe business, assets (including intangible assets), financial condition, results\nof operations or prospects of the Company (hereinafter referred to as a\n\"Material Adverse Effect\").  The Company has delivered a true and correct copy\n- ------------------------\nof its Articles of Incorporation and Bylaws, each as amended to date, to Parent.\nExhibit C lists the directors and officers of the Company.  The operations now\n- ---------\nbeing conducted by the Company have not been conducted under any other name.\n\n     2.2  Company Capital Structure.\n\n          (a) The authorized capital stock of the Company consists of 2,500\nshares of authorized Common Stock of which 1,179 shares are issued and\noutstanding.  There are no other classes or series of capital stock of the\nCompany of any kind outstanding or issuable.  The Company Common Stock is held\nby the persons, with the domicile addresses and in the amounts set forth on\nExhibit C.  All outstanding shares of Company Common Stock are duly authorized,\n- ---------\nvalidly issued, fully paid and non-assessable and not subject to preemptive\nrights created by statute, the Articles of Incorporation or Bylaws of the\nCompany or any agreement to which the Company  is a party or by which it is\nbound.\n\n          (b) There are no options, warrants, calls, rights, commitments or\nagreements of any character, written or oral, to which the Company  is a party\nor by which it is bound obligating the Company  to issue, deliver, sell,\nrepurchase or redeem, or cause to be issued, delivered, sold, repurchased or\nredeemed, any shares of the capital stock of the Company or obligating the\nCompany  to grant, extend, accelerate the vesting of, change the price of,\notherwise amend or enter into any such option, warrant, call, right, commitment\nor agreement.  As a result of the Merger, Parent will be the record and sole\nbeneficial owner of all outstanding capital stock of the Company and rights to\nacquire or receive Company Capital Stock.\n\n     2.3  Subsidiaries.  The Company does not have any subsidiaries or\n          ------------                                                  \naffiliated companies and does not otherwise own any shares in the capital of or\nany interest in, or control, directly or indirectly, any other corporation,\npartnership, association, joint venture or other business entity. The Company\nhas never had any subsidiaries or affiliated companies and has never otherwise\nowned shares in the capital of or any interest in or control, directly or\nindirectly of, any other corporation, partnership association, joint venture or\nother business entity.\n\n                                       9\n\n\n \n     2.4  Authority.  Each of the Company and the Principal Shareholder has all\n          ---------                                                             \nrequisite corporate power and authority to enter into this Agreement to which it\nis a party and to consummate the transactions contemplated hereby and thereby.\nThe execution and delivery of this Agreement and the consummation of the\ntransactions contemplated hereby and thereby have been duly authorized by all\nnecessary corporate action on the part of the Company and the Principal\nShareholder, and no further action is required on their part to authorize the\nAgreement and the transactions contemplated hereby and thereby.  This Agreement\nhas been duly executed and delivered by the Company and the Principal\nShareholder and, assuming the due authorization, execution and delivery by the\nother parties hereto and thereto, constitutes the valid and binding obligation\nof the Company and the Principal Shareholder, enforceable in accordance with its\nterms, subject to the laws of general application relating to bankruptcy,\ninsolvency and the relief of debtors and to rules of law governing specific\nperformance, injunctive relief or other equitable remedies.  The Principal\nShareholder owns all property interests which are the subject of this Agreement\nas his sole and separate property, and that he has sole authority to transfer\nsuch interests, as contemplated by this Agreement.\n\n     2.5  No Conflict.  The execution and delivery of this Agreement does not,\n          -----------                                                           \nand the consummation of the transactions contemplated hereby and thereby will\nnot, conflict with, or result in any violation of, or default under (with or\nwithout notice or lapse of time, or both), or give rise to a right of\ntermination, cancellation, modification or acceleration of any obligation or\nloss of any benefit under (any such event, a \"Conflict\") (i) any provision of\n                                              --------\nthe Articles of Incorporation and Bylaws the Company, (ii) any mortgage,\nindenture, lease, contract or other agreement or instrument, permit, concession,\nfranchise or license to which the Company or any of its properties or assets is\nsubject, or (iii) any judgment, order, decree, statute, law, ordinance, rule or\nregulation applicable to the Company or its properties or assets.\n\n     2.6  Consents.   No consent, waiver, approval, order or authorization of,\n          --------                                                              \nor registration, declaration or filing with, any court, administrative agency or\ncommission or other federal, state, county, local or other foreign governmental\nauthority, instrumentality, agency or commission (\"Governmental Entity\") or any\n                                                   -------------------\nthird party, including a party to any agreement with the Company (so as not to\ntrigger any Conflict), is required by or with respect to the Company in\nconnection with the execution and delivery of this Agreement or the consummation\nof the transactions contemplated hereby, except for (i) such consents, waivers,\napprovals, orders, authorizations, registrations, declarations and filings as\nmay be required under applicable securities laws thereby, and (ii) the filing of\nthe Agreement of Merger with the Secretary of State of the State of Wisconsin.\n\n                                      10\n\n\n \n     2.7  Company Financial Statements.  Exhibit C sets forth the Company's\n          ----------------------------   ---------\naudited balance sheet as of December 31, 1996 and the related audited statements\nof income and cash flow for year then ended (the \"Audited Financials\") and the\n                                                  ------------------\nCompany's unaudited balance sheet of February 28, 1997, and the related\nunaudited statements of income and cash flow for the Six (6) months then ended\n(the \"Unaudited Financials\").  The Audited Financials and the Unaudited\n      --------------------\nFinancials are correct in all material respects and have been prepared in\naccordance with United States generally accepted accounting principles\n(\"USGAAP\") applied on a basis consistent throughout the periods indicated and\n  ------\nconsistent with each other.  The Audited and Unaudited Financials present fairly\nin all material respects the financial condition, operating results and cash\nflows of the Company as of the dates and during the periods indicated therein,\nsubject in the case of the Unaudited Financials, to normal year-end adjustments,\nwhich will not be material in amount or significance.  The Company's audited\nBalance Sheet as of December 31, 1996 shall be referred to as the \"Balance\n                                                                   -------\nSheet\".\n- -----\n\n     2.8  No Undisclosed Liabilities.   Except as set forth in Exhibit C, none\n          --------------------------                           ---------\nof the Company has any liability, indebtedness, obligation, expense, claim,\ndeficiency, guaranty or endorsement of any type, whether accrued, absolute,\ncontingent, matured, unmatured or other (whether or not required to be reflected\nin financial statements in accordance with USGAAP), which individually or in the\naggregate (i) has not been reflected in the Balance Sheet, or (ii) has not\narisen in the ordinary course of business consistent with past practices since\nDecember 31, 1996.\n\n     2.9  No Changes.  Except as set forth in Exhibit C, since December 31,\n          ----------                          ---------\n1996, there has not been, occurred or arisen any:\n\n          (a) transaction by the Company except in the ordinary course of\nbusiness as conducted on that date and consistent with past practices;\n\n          (b) amendments or changes to the Articles of Incorporation or Bylaws\nof the Company;\n\n          (c) capital expenditure or commitment by the Company, either\nindividually or in the aggregate, exceeding $25,000;\n\n          (d) destruction of, damage to or loss of any material assets, business\nor customer of the Company (whether or not covered by insurance);\n\n          (e) labor trouble or claim of wrongful discharge or other unlawful\nlabor practice or action;\n\n          (f) change in accounting methods or practices (including any change in\ndepreciation or amortization policies or rates) by the Company;\n\n          (g) revaluation by the Company of any of its assets;\n\n                                      11\n\n\n \n          (h) declaration, setting aside or payment of a dividend or other\ndistribution with respect to the Company's capital stock, or any direct or\nindirect redemption, purchase or other acquisition by the Company of any of its\ncapital stock;\n\n          (i) increase in the salary or other compensation payable or to become\npayable by the Company to any of its officers, directors, employees or advisors,\nor the declaration, payment or commitment or obligation of any kind for the\npayment, by the Company, of a bonus or other additional salary or compensation\nto any such person;\n\n          (j) any agreement, contract, lease or commitment (collectively a\n                                                                          \n\"Company Agreement\") or any extension or modification the terms of any Company\n -----------------\nAgreement which (i) involves the payment of greater than $25,000 per annum or\nwhich extends for more than one year, (ii) involves any payment or obligation to\nany affiliate of the Company other than in the ordinary course of business as\nconducted on that date and consistent with past practices, or (iii) involves the\nsale of any material assets;\n\n          (k) sale, lease, license or other disposition of any of the assets or\nproperties of the Company, or any creation of any security interest in such\nassets or properties except in the ordinary course of business as conducted on\nthat date and consistent with past practices;\n\n          (l) amendment or termination of any material contract, agreement or\nlicense to which the Company is a party or by which it is bound;\n\n          (m) loan by the Company to any person or entity, incurring by the\nCompany of any indebtedness, guaranteeing by the Company of any indebtedness,\nissuance or sale of any debt securities of the Company or guaranteeing of any\ndebt securities of others, except for advances to employees for travel and\nbusiness expenses in the ordinary course of business, consistent with past\npractices;\n\n          (n) waiver or release of any right or claim of the Company, including\nany write-off or other compromise of any account receivable of the Company;\n\n          (o) the commencement or notice or threat of commencement of any\nlawsuit or proceeding against investigation of the Company or its affairs;\n\n          (p) notice of any claim of ownership by a third party of the Company's\nIntellectual Property (as defined in Section 2.13 below) or of infringement by\nthe Company of any third party's Intellectual Property rights;\n\n          (q) issuance or sale by the Company of any of its shares of capital\nstock, or securities exchangeable, convertible or exercisable therefor, or of\nany other of its securities;\n\n                                      12\n\n\n \n          (r) change in pricing or royalties set or charged by the Company to\nits customers or licensees or in pricing or royalties set or charged by persons\nwho have licensed Intellectual Property (as defined in Section 2.13 below) to\nthe Company;\n\n          (s) any event or condition of any character that has or may have a\nMaterial Adverse Effect on the Company or;\n\n          (t) negotiation or agreement by the Company or any officer or employee\nthereof to do any of the things described in the preceding clauses (a) through\n(s) (other than negotiations with Parent and its representatives regarding the\ntransactions contemplated by this Agreement).\n\n     2.10 Tax Matters.\n          -----------   \n\n          (a) Definition of Taxes.  For the purposes of this Agreement, \"Tax\"\n              -------------------                                        ---\nor, collectively, \"Taxes,\" means (i) any and all federal, state, local and\n                   -----\nforeign taxes, assessments and other governmental charges, duties, impositions\nand liabilities, including taxes based upon or measured by gross receipts,\nincome, profits, sales, use and occupation, and value added, ad valorem,\ntransfer, franchise, withholding, payroll, recapture, employment, excise and\nproperty taxes, together with all interest, penalties and additions imposed with\nrespect to such amounts; (ii) any liability for the payment of any amounts of\nthe type described in clause (i) as a result of being a member of an affiliated,\nconsolidated, combined or unitary group for any period; and (iii) any liability\nfor the payment of any amounts of the type described in clause (i) or (ii) as a\nresult of any express or implied obligation to indemnify any other person or as\na result of any obligations under any agreements or arrangements with any other\nperson with respect to such amounts and including any liability for taxes of a\npredecessor entity.\n\n          (b) Tax Returns and Audits.  Except as set forth in Exhibit C:\n              ----------------------                          ---------\n\n          (i) The Company as of the Closing Date will have prepared and timely\nfiled or made a timely request for extension for all required federal, state,\nlocal and foreign returns, estimates, information statements and reports\n(\"Returns\") relating to any and all Taxes concerning or attributable to the\n  -------\nCompany [or Subsidiaries, as the case may be], or its operations and such\nReturns are true and correct and have been completed in accordance with\napplicable law.\n\n          (ii) The Company as of the Exchange Date (A) will have paid or accrued\nall Taxes it is required to pay or accrue as shown on the Returns and (B) will\nhave withheld and timely remitted with respect to its employees all income taxes\nand other Taxes required to be withheld and remitted.\n\n          (iii) The Company has not been delinquent in the payment of any Tax\nnor is there any Tax deficiency outstanding, assessed or proposed against the\nCompany, nor has the Company executed any waiver of any statute of limitations\non or extending the period for the assessment or collection of any Tax.\n\n                                      13\n\n\n \n          (iv) No audit or other examination of any Return of the Company,  is\npresently in progress, nor has the Company been notified of any request for such\nan audit or other examination.\n\n          (v) The Company has no liabilities for unpaid federal, state, local\nand foreign Taxes which have not been accrued or reserved against in accordance\nwith USGAAP on the Balance Sheet, whether asserted or unasserted, contingent or\notherwise.\n\n          (vi) The Company has made available to Parent or its legal counsel,\ncopies of all foreign, federal and state income and all state sales and use\nReturns filed for all years as to which any applicable statute of limitations\nhas not expired.\n\n          (vii) There are no Liens of any sort on the assets of the Company\nthe relating to or attributable to Taxes other than Liens for taxes not yet due\nand payable.\n\n          (viii) The Company Shareholders have no knowledge of any basis for\nthe assertion of any claim relating or attributable to Taxes which, if adversely\ndetermined, would result in any Lien on any material assets of the Company.\n\n          (ix) As of the Closing, there will not be any contract, agreement,\nplan or arrangement, including but not limited to the provisions of this\nAgreement, covering any employee or former employee of the Company that,\nindividually or collectively, could give rise to the payment of any amount that\nwould not be deductible by the Company as an expense under Sections 162, 280G or\n404 of the Code.\n\n          (x) The Company is not a party to a tax sharing, indemnification or\nallocation agreement nor does the Company owe any amount under any such\nagreement.\n\n          (xi) The Company uses the accrual method of accounting for income tax\npurposes and its tax basis in its assets for purposes of determining its future\namortization, depreciation and other federal income tax deductions is accurately\nreflected on the Company's tax books and records.\n\n     2.11 Restrictions on Business Activities.   There is no agreement\n          -----------------------------------                           \n(noncompete or otherwise), commitment, judgment, injunction, order or decree to\nwhich the Company or any Principal Shareholder is a party or otherwise binding\nupon the Company which has or may  have the effect of prohibiting or impairing\nany business practice of the Company, any acquisition of property (tangible or\nintangible) by the Company or the conduct of business by the Company. The\nCompany has not entered into any agreement under which the Company is restricted\nfrom providing services to customers or potential customers or any class of\ncustomers, in any geographic area, during any period of time or in any segment\nof the market.\n\n                                      14\n\n\n \n     2.12 Title to Properties; Absence of Liens and Encumbrances; Condition of\n          --------------------------------------------------------------------\n          Equipment.\n          ---------                                                     \n\n          (a) The Company does not own any real property, nor has it ever owned\nany real property.  Exhibit C sets forth a list of all real property currently\n                    ---------\nleased by the Company the name of the lessor, the date of the lease and each\namendment thereto and, with respect to any current lease, the aggregate annual\nrental and\/or other fees payable under any such lease.  All such current leases\nare in full force and effect, are valid and effective in accordance with their\nrespective terms, and there is not, under any of such leases, any existing\ndefault or event of default (or event which with notice or lapse of time, or\nboth, would constitute a default).\n\n          (b) The Company has good and valid title to, or, in the case of leased\nproperties and assets, valid leasehold interests in, all of its tangible\nproperties and assets, real, personal and mixed, used or held for use in its\nbusiness, free and clear of any Liens, except as reflected in the Company\nFinancials or in Exhibit C and except for liens for taxes not yet due and\n                 ---------\npayable and such imperfections of title and encumbrances, if any, which are not\nmaterial in character, amount or extent, and which do not detract from the\nvalue, or interfere with the present use, of the property subject thereto or\naffected thereby.\n\n          (c) Exhibit C lists all material items of equipment (the \"Equipment\")\n              ---------                                             ---------\nowned or leased by the Company and such Equipment is, taken as a whole, (i)\nadequate for the conduct of the business of the Company as currently conducted\nand (ii) in good operating condition, regularly and properly maintained, subject\nto normal wear and tear.\n\n          (d) The Company has sole and exclusive ownership, free and clear of\nany Liens, of all customer files and other customer information relating to\ncustomers of the Company's [and the Subsidiaries'] current and former customers\n(the \"Customer Information\").  No third party possesses any claims or rights\n      --------------------\nwith respect to use of the Customer Information.\n\n     2.13 Intellectual Property.\n          ---------------------   \n\n          (a) For the purposes of this Agreement, the following terms have the\nfollowing definitions:\n\n          \"Intellectual Property\" shall mean any or all of the following and all\n           ---------------------\nrights in, arising out of, or associated therewith:  (i) all United States and\nforeign patents and applications therefor and all reissues, divisions, renewals,\nextensions, provisionals, continuations and continuations-in-part thereof; (ii)\nall inventions (whether patentable or not), invention disclosures, improvements,\ntrade secrets, proprietary information, know how, technology, technical data and\ncustomer lists, and all documentation relating to any of the foregoing; (iii)\nall copyrights, copyrights registrations and applications therefor, and all\nother rights corresponding thereto throughout the world; (iv) all mask works,\nmask work registrations and applications therefor, and all other rights\ncorresponding thereto throughout the world; (v) all industrial designs and any\nregistrations and applications therefor throughout the world; (vi) all trade\nnames, logos, common law trademarks and service marks; \n\n                                      15\n\n\n \ntrademark and service mark registrations and applications therefor throughout\nthe world; (vii) all databases and data collections and all rights therein\nthroughout the world; and (viii) all computer software including all source\ncode, object code, firmware, development tools, files, records and data, all\nmedia on which any of the foregoing is recorded, and all documentation related\nto any of the foregoing throughout the world.\n\n          \"Intellectual Property of Company\" shall mean any Intellectual\n           --------------------------------\nProperty that:  (i) is owned by or exclusively licensed to the Company, or (ii)\nwhich is necessary to the operation of the Company, including the design,\nmanufacture and use of the products or performance of the services of the\nCompany as it currently is operated or is reasonably anticipated to be operated\nin the future, but shall specifically not include any rights in or to materials\ncreated for clients as \"work-made-for-hire\" or which are subject to an exclusive\nassignment or license in favor of clients of the Company.\n\n          (b) Exhibit C lists all of Company's United States and foreign: (i)\n              ---------\npatents, patent applications (including provisional applications); (ii)\nregistered trademarks, applications to register trademarks, intent-to-use\napplications, or other registrations related to trademarks; (iii) registered\ncopyrights and applications for copyright registration; (iv) mask work\nregistrations and applications to register mask works; and (v) any other\nIntellectual Property of Company that is the subject of an application,\ncertificate or registration filed with, issued by, or recorded by, any state,\ngovernment or other public legal authority (all of the foregoing, the\n\"Registered Intellectual Property\").\n\n          (c) Each item of Registered Intellectual Property is valid and\nsubsisting, all necessary registration, maintenance and renewal fees in\nconnection with such Registered Intellectual Property have been made and all\nnecessary documents and certificates in connection with such Registered\nIntellectual Property have been filed with the relevant patent, copyright,\ntrademark or other authorities in the United States or foreign jurisdictions, as\nthe case may be, for the purposes of maintaining such Registered Intellectual\nProperty.\n\n          (d) The contracts, licenses and agreements listed in Exhibit C include\n                                                               ---------\nall contracts, licenses and agreement, to which the Company is a party with\nrespect to any Intellectual Property with a value or cost in excess of $10,000,\nother than \"shrink wrap\" and similar commercial end-user licenses.\n\n          (e) The contracts, licenses and agreements listed in Exhibit C are in\n                                                               ---------\nfull force and effect.  The consummation of the transactions contemplated by\nthis Agreement will neither violate nor result in the breach, modification,\ncancellation, termination, or suspension of the contracts, licenses and\nagreements in Exhibit C.  The Company is in compliance with, and has not\n              ---------\nbreached any term of, the contracts, licenses and agreements listed in Exhibit\n                                                                       -------\nC, and, to the knowledge of the Company and the Principal Shareholder, all other\n- -\nparties to the contracts, licenses and agreements listed in Exhibit C are, in\n                                                            ---------\ncompliance with, and have not breached any term of, the contracts, licenses and\nagreements.  Following the Closing Date, Sub will be permitted to exercise all\nof the Company's [and the Subsidiaries'] rights under the contracts, licenses\nand agreements listed in Exhibit C without the payment of any additional amounts\n                         ---------\nor consideration other than ongoing fees, royalties or payments which the\nCompany would otherwise be required to pay.\n\n                                      16\n\n\n \n          (f) Except as set forth in Exhibit C:  (i) no person has any rights to\n                                     ---------\nuse any of the Intellectual Property of the Company; and (ii) the Company has\nnot granted to any Person, or authorized any Person to retain, any rights in the\nIntellectual Property of Company.\n\n          (g) Except as set forth in Exhibit C:  (i) the Company owns and has\n                                     ---------\ngood and exclusive title to each item of Intellectual Property listed in Exhibit\n                                                                         -------\nC, free and clear of any lien or encumbrance; and (ii) the Company owns, or has\n- - \nthe right, pursuant to a valid Contract to use or operate under, all other\nIntellectual Property of the Company.\n\n          (h) The operation of the business of the Company as it currently is\nconducted or is reasonably contemplated to be conducted, including its design,\ndevelopment, manufacture and sale of its products (including with respect to\nproducts currently under development) and provision of services, does not\ninfringe or misappropriate the Intellectual Property of any other person,\nviolate the rights of any person (including rights to privacy or publicity),\nconstitute unfair competition.\n\n          (i) The Company has not received notice from any person that the\noperation of the business of the Company, including its design, development,\nmanufacture and sale of its products (including with respect to products\ncurrently under development) and provision of its services, infringes or\nmisappropriates the Intellectual Property of any person, violates the rights of\nany person (including rights to privacy or publicity), or constitutes unfair\ncompetition.\n\n          (j) The Company owns or has the right to all Intellectual Property\nnecessary to the conduct of its business as it currently is conducted or is\nreasonably contemplated to be conducted, including, without limitation, the\ndesign, development, manufacture and sale of all products currently manufactured\nor sold by the Company under development by the Company and the performance of\nall services provided or contemplated to be provided by the Company.\n\n          (k) Exhibit C lists all contracts, licenses and agreements between the\n              ---------\nCompany and any other person wherein or whereby the Company has agreed to, or\nassumed, any obligation or duty to indemnify, hold harmless or otherwise assume\nor incur any obligation or liability with respect to the infringement by the\nCompany or such other Person of the Intellectual Property rights of any other\nperson,\n\n          (l) Except as listed in Exhibit C, there are no contracts, licenses\n                                  ---------\nand agreements between the Company and any other person with respect to Company\nIntellectual Property under which there is any dispute known to the Company or\nthe Principal Shareholder regarding the scope of such agreement, or performance\nunder such agreement including with respect to any payments to be made or\nreceived by the Company thereunder.\n\n          (m) Except as listed in Exhibit C, to the knowledge of the Company and\n                                  ---------\nthe Principal Shareholder, no person is infringing or misappropriating any of\nthe Intellectual Property of Company.\n\n                                      17\n\n\n\n          (n) Except as listed in Exhibit C, there are no claims asserted\n                                  ---------\nagainst the Company or against any customer of the Company, related to any\nproduct or service of the Company.\n \n          (o) No Intellectual Property of Company or product or service of the\nCompany is subject to any outstanding decree, order, judgment, or stipulation\nrestricting in any manner the use or licensing thereof by the Company.\n\n          (p) The Company has, and enforces, a policy requiring each employee\nand contractor to execute proprietary information and confidentiality agreements\nsubstantially in the Company's standard forms and all current and former\nemployees and contractors of the Company have executed such an agreement.\n\n          (q) No (i) product, service or publication of the Company, (ii)\nmaterial published or distributed by the Company or (iii) conduct or statement\nof Company, constitutes obscene material, a defamatory statement or material, or\nviolates any rights, including rights of publicity or privacy, of any person.\n\n     2.14 Agreements, Contracts and Commitments.\n          -------------------------------------   \n\n          (a) Except as set forth in Exhibit C, the Company does not have, or is\n                                     ---------\nnot bound by:\n\n\n               (i) any collective bargaining agreement,\n\n               (ii) any agreements or arrangements that contain any severance\npay or post-employment liabilities or obligations,\n\n               (iii) any bonus, deferred compensation, pension, profit sharing\nor retirement plans, or any other employee benefit plans or arrangements,\n\n               (iv) any employment or consulting agreement, contract or\ncommitment with an employee or individual consultant or salesperson or\nconsulting or sales agreement, contract or commitment with a firm or other\norganization,\n\n               (v) any agreement or plan, including, without limitation, any\nstock option plan, stock appreciation rights plan or stock purchase plan, any of\nthe benefits of which will be increased, or the vesting of benefits of which\nwill be accelerated, by the occurrence of any of the transactions contemplated\nby this Agreement or the value of any of the benefits of which will be\ncalculated on the basis of any of the transactions contemplated by this\nAgreement,\n\n               (vi) any fidelity or surety bond or completion bond,\n\n                                      18\n\n\n \n               (vii)  any lease of personal property having a value individually\nin excess of $25,000,\n\n               (viii)  any agreement of indemnification or guaranty, other than\nas set forth in agreements listed in Exhibit C,\n                                     ----------\n\n               (ix) any agreement, contract or commitment containing any\ncovenant limiting the freedom of the Company to engage in any line of business\nor to compete with any person,\n\n               (x) any agreement, contract or commitment relating to capital\nexpenditures and involving future payments in excess of $25,000,\n\n               (xi) any agreement, contract or commitment relating to the\ndisposition or acquisition of assets or any interest in any business enterprise\noutside the ordinary course of the Company's business,\n\n               (xii) any mortgages, indentures, loans or credit agreements,\nsecurity agreements or other agreements or instruments relating to the borrowing\nof money or extension of credit, including guaranties referred to in clause\n(viii) hereof,\n\n               (xiii) any purchase order or contract for the purchase of\nmaterials involving $25,000 or more,\n\n               (xiv)  any construction contracts,\n\n               (xv) any distribution, joint marketing or development agreement,\nor\n\n               (xvi) any other agreement, contract or commitment that involves\n$25,000 or more or is not cancelable without penalty within thirty (30) days.\n\n          (b)  The Company has not breached, violated or defaulted under, or\nreceived notice that it has breached, violated or defaulted under, any of the\nterms or conditions of any agreement, contract, license or commitment to which\nit is a party, by which it benefits or by which it is bound (any such agreement,\ncontract, license or commitment, a \"Contract\"), nor is the Company or any \n                                    --------    \nPrincipal Shareholder aware of any event that would constitute such a breach,\nviolation or default with the lapse of time, giving of notice or both. Each\nContract is in full force and effect and, except as otherwise disclosed in\nExhibit C, is not subject to any default thereunder by any party obligated\n- ---------\nto the Company pursuant thereto. The Company has obtained, or will obtain prior\nto the Closing Date, all necessary consents, waivers and approvals of parties to\nany Contract as are required thereunder in connection with the Merger so that\nall such Contracts will remain in effect without modification after the Closing.\n\n                                      19\n\n\n \n     2.15 Interested Party Transactions.  No officer, director or Principal\n          -----------------------------                                      \nShareholder of the Company (nor any ancestor, sibling, descendant or spouse of\nany of such persons, or any trust, partnership or corporation in which any of\nsuch persons has or has had an interest), has or has had, directly or\nindirectly, (i) an interest in any entity which furnished or sold, or furnishes\nor sells, services or products that the Company furnishes or sells, or proposes\nto furnish or sell, or (ii) any interest in any entity that purchases from or\nsells or furnishes to, the Company, any goods or services or (iii) a beneficial\ninterest in any Contract; provided, that ownership of no more than one percent\n(1%) of the outstanding voting stock of a publicly traded corporation shall not\nbe deemed an \"interest in any entity\" for purposes of this Section 2.15.\n\n     2.16 Governmental Authorization.    Exhibit C accurately lists each\n          --------------------------     ---------\nconsent, license, permit, grant or other authorization issued to the Company by\na governmental entity (i) pursuant to which the Company currently operates or\nholds any interest in any of its properties or (ii) which is required for the\noperation of its business or the holding of any such interest (herein\ncollectively called \"Company Authorizations\").  The Company Authorizations are\n                     ----------------------\nin full force and effect and constitute all Company Authorizations required to\npermit the Company to operate or conduct its business or hold any interest in\nits properties or assets.\n\n     2.17 Litigation.  There is no action, suit or proceeding of any nature\n          ----------                                                         \npending, or to the Company's or the Principal Shareholder' knowledge threatened,\nagainst the Company, its properties or any of its officers or directors, nor, to\nthe knowledge of the Principal Shareholder, is there any reasonable basis\ntherefor.  There is no investigation pending or, to the Company's or Principals\nShareholders' knowledge threatened, against the Company, its properties or any\nof its officers or directors (nor, to the best knowledge of the Principal\nShareholder, is there any reasonable basis therefor) by or before any\ngovernmental entity.  No governmental entity has at any time challenged or\nquestioned the legal right of the Company to manufacture, offer or sell any of\nits products or services in the present manner or style thereof.\n\n     2.18 Accounts Receivable.\n          -------------------   \n\n          (a) The Company has made available to Parent a list of all accounts\nreceivable of the Company as of March 13, 1997, (\"Accounts Receivable\") along\n                                                  -------------------\nwith a range of days elapsed since invoice.\n\n          (b) All Accounts Receivable of the Company [and its Subsidiaries]\narose in the ordinary course of business, are carried at values determined in\naccordance with USGAAP consistently applied and are collectible except to the\nextent of reserves therefor set forth in the Balance Sheet.  No person has any\nLien on any of such Accounts Receivable and no request or agreement for\ndeduction or discount has been made with respect to any of such Accounts\nReceivable.\n \n                                      20\n\n\n \n     2.19 Minute Books.  The minutes of the Company made available to counsel\n          ------------                                                         \nfor Parent are the only minutes of the Company and contain a reasonably accurate\nsummary of all meetings of the Board of Directors (or committees thereof) of the\nCompany and its shareholders or actions by written consent since the time of\nincorporation of the Company.\n\n     2.20 Environmental Matters.\n          ---------------------   \n\n          (a) Hazardous Material.  The Company has not: (i) operated any\n              ------------------\nunderground storage tanks at any property that the Company has at any time\nowned, operated, occupied or leased; or (ii) illegally released any material\namount of any substance that has been designated by any Governmental Entity or\nby applicable federal, state or local law to be radioactive, toxic, hazardous or\notherwise a danger to health or the environment, including, without limitation,\nPBS, asbestos, petroleum, and urea-formaldehyde and all substances listed as\nhazardous substances pursuant to the Comprehensive Environmental Response,\nCompensation, and Liability Act of 1980, as amended, or defined as a hazardous\nwaste pursuant to the United States Resource Conservation and Recovery Act of\n1976, as amended, and the regulations promulgated pursuant to said laws (a\n\"Hazardous Material\"), but excluding office and janitorial supplies properly and\n ------------------\nsafely maintained.  No Hazardous Materials are present as a result of the\ndeliberate actions of the Company or, to the Company's or Principal Shareholder'\nknowledge, as a result of any actions of any third party or otherwise, in, on or\nunder any property, including the land and the improvements, ground water and\nsurface water thereof, that the Company has at any time owned, operated,\noccupied or leased.\n\n          (b) Hazardous Materials Activities.  The Company has not transported,\n              ------------------------------\nstored, used, manufactured, disposed of, released or exposed its employees or\nothers to Hazardous Materials in violation of any law in effect on or before the\nClosing Date, nor has either the Company disposed of, transported, sold, or\nmanufactured any product containing a Hazardous Material (any or all of the\nforegoing being collectively referred to as \"Hazardous Materials Activities\") in\n                                             ------------------------------\nviolation of any rule, regulation, treaty or statute promulgated by any\nGovernmental Entity in effect prior to or as of the date hereof to prohibit,\nregulate or control Hazardous Materials or any Hazardous Material Activity.\n\n          (c) Permits.  The Company currently holds all environmental approvals,\n              -------\npermits, licenses, clearances and consents (the \"Environmental Permits\")\n                                                 ---------------------\nnecessary for the conduct of the Company's Hazardous Material Activities and\nother businesses of the Company as such activities and businesses are currently\nbeing conducted.\n\n          (d) Environmental Liabilities.  No action, proceeding, revocation\n              -------------------------\nproceeding, amendment procedure, writ, injunction or claim is pending, or to the\nPrincipal Shareholder' knowledge, threatened concerning any Environmental\nPermit, Hazardous Material or any Hazardous Materials Activity of the Company.\nThe Principal Shareholder are not aware of any fact or circumstance which could\ninvolve the Company in any environmental litigation or impose upon the Company\nany environmental liability.\n\n                                      21\n\n\n \n     2.21 Brokers' and Finders' Fees; Third Party Expenses.  Except as set\n          ------------------------------------------------                    \nforth in Exhibit C, the Company has not incurred, nor will it incur, directly or\n         ---------\nindirectly, any liability for brokers' or finders' fees or agents' commissions\nor any similar charges in connection with the Agreement or any transaction\ncontemplated hereby.  Exhibit C sets forth the principal terms and conditions of\n                      ---------\nany agreement, written or oral, with respect to such fees.  Exhibit C sets forth\n                                                            ---------\nthe Company's current reasonable estimate of all third party expenses expected\nto be incurred by the Company in connection with the negotiation and\neffectuation of the terms and conditions of this Agreement and the transactions\ncontemplated hereby.\n\n     2.22 Employee Benefit Plans and Compensation.\n          ---------------------------------------   \n\n          (a) For purposes of this Section 2.22, the following terms shall have\nthe meanings set forth below:\n\n              (i) \"Employee Plan\" shall refer to any plan, program, policy,\n                   -------------\npractice, contract, agreement or other arrangement providing for bonuses,\nseverance, termination pay, performance awards, stock or stock-related awards,\nfringe benefits or other employee benefits of any kind, whether formal or\ninformal, funded or unfunded and whether or not legally binding, including\nwithout limitation, any plan which is or has been maintained, contributed to, or\nrequired to be contributed to, by the Company for the benefit of any \"Employee\"\n(as defined below), and pursuant to which the Company has or may have any\nmaterial liability, contingent or otherwise; and\n\n              (ii) \"Employee\" shall mean any current, former, or retired\n                    --------\nemployee, officer, or director of the Company.\n\n              (iii) \"Employee Agreement\" shall refer to each employment,\n                     ------------------\nseverance, consulting or similar agreement or contract between the Company and\nany Employee;\n\n          (b) Schedule.  Exhibit C contains an accurate and complete list of\n              --------   ---------\neach Company Employee Plan and each Employee Agreement, together with a schedule\nof all liabilities, whether or not accrued, under each such Company Employee\nPlan.  The Company does not have any plan or commitment, whether legally binding\nor not, to establish any new Company Employee Plan or Employee Agreement, to\nmodify any Company Employee Plan or Employee Agreement (except to the extent\nrequired by law or to conform any such Company Employee Plan or Employee\nAgreement to the requirements of any applicable law, in each case as previously\ndisclosed to Parent in writing, or as required by this Agreement), or to enter\ninto any Company Employee Plan or Employee Agreement, nor does it have any\nintention or commitment to do any of the foregoing.\n\n          (c) Documents.  The Company has provided to Parent: (i) correct and\n              ---------\ncomplete copies of all documents embodying each Employee Plan and each Employee\nAgreement including all amendments thereto and copies of all forms of agreement\nand enrollment used therewith; (ii) the most recent annual actuarial valuations,\nif any, prepared for each Employee Plan; (iii) the three most recent annual\nreports (Series 5500 and all schedules thereto), if any, required under \n\n                                      22\n\n\n \nERISA or the Code in connection with each Company Employee Plan or related\ntrust; (iv) the most recent summary plan description together with the most\nrecent summary of material modifications, if any, required under ERISA with\nrespect to each Company Employee Plan; (v) all IRS determination letters and\nrulings relating to Company Employee Plans and copies of all applications and\ncorrespondence to or from the IRS or the Department of Labor (\"DOL\") with\nrespect to any Company Employee Plan; (vi) if the Employee Plan is funded, the\nmost recent annual and periodic accounting of Employee Plan assets; and (vii)\nall communications material to any Employee or Employees relating to any\nEmployee Plan and any proposed Employee Plans, in each case, relating to any\namendments, terminations, establishments, increases or decreases in benefits,\nacceleration of payments or vesting schedules or other events which would result\nin any liability to the Company.\n\n          (d) Employee Plan Compliance.  (i) The Company have performed all\n              ------------------------\nobligations required to be performed by them under each Employee Plan and each\nEmployee Plan has been established and maintained in accordance with its terms\nand in compliance with all applicable laws, statutes, orders, rules and\nregulations, including ERISA and the Code; (ii) no \"prohibited transaction,\"\nwithin the meaning of Section 4975 of the Code or Section 406 of ERISA, has\noccurred with respect to any Company Employee Plan; (iii) there are no actions,\nsuits or claims pending, or, to the knowledge of the Company or the Principal\nShareholder threatened or anticipated (other than routine claims for benefits)\nagainst any Employee Plan or against the assets of any Employee Plan; (iii) each\nEmployee Plan can be amended, terminated or otherwise discontinued after the\nClosing Date in accordance with its terms, without liability to the Company,\nParent or Sub (other than ordinary administration expenses typically incurred in\na termination event); (iv) there are no inquiries or proceedings pending or, to\nthe knowledge of the Company or any Principal Shareholder threatened by the IRS\nor DOL with respect to any Company Employee Plan; and (v)  the Company is not\nsubject to any penalty or tax with respect to any Company Employee Plan under\nSection 402(i) of ERISA or Section 4975 through 4980 of the Code.\n\n          (e) Pension Plans.  The Company does not now, nor has it ever,\n              -------------\nmaintained, established, sponsored, participated in, or contributed to, any\nPension Plan which is subject to Part 3 of Subtitle B of Title I of ERISA, Title\nIV of ERISA or Section 412 of the Code.\n\n          (f) Multiemployer Plans.  At no time has the Company contributed to or\n              -------------------\nbeen requested to contribute to any Multiemployer Plan.\n\n          (g) No Post-Employment Obligations.  Except as set forth in Exhibit C,\n              ------------------------------                          ---------\nno Company Employee Plan provides, or has any liability to provide, life\ninsurance, medical or other employee benefits to any Employee upon his or her\nretirement or termination of employment for any reason, except as may be\nrequired by statute, and the Company has  not]represented, promised or\ncontracted (whether in oral or written form) to any Employee (either\nindividually or to Employees as a group) that such Employee(s) would be provided\nwith life insurance, medical or other employee welfare benefits upon their\nretirement or termination of employment, except to the extent required by\nstatute.\n\n                                      23\n\n\n \n          (h) Continuing Liabilities.  No Employee Plan provides, or has any\n              ----------------------\nliability to provide, life insurance, medical or other employee benefits to any\nEmployee upon his or her retirement or termination of employment for any reason,\nexcept as may be required by statute, and the Company has not represented,\npromised or contracted (whether in oral or written form) to any Employee (either\nindividually or to Employees as a group) that such Employee(s) would be provided\nwith life insurance, medical or other employee welfare benefits upon their\nretirement or termination of employment, except to the extent required by\nstatute.\n\n          (i) No Conflicts.  The execution of this Agreement and the\n              ------------\nconsummation of the transactions contemplated hereby will not (either alone or\nupon the occurrence of any additional or subsequent events) constitute an event\nunder any Employee Plan, Employee Agreement, trust or loan that will or may\nresult in any payment (whether of severance pay or otherwise), acceleration,\nforgiveness of indebtedness, vesting, distribution, increase in benefits or\nobligation to fund benefits with respect to any Employee.\n\n          (j) Employment Matters.  The Company (i) is in compliance with all\n              ------------------\napplicable laws, rules and regulations respecting employment, employment\npractices, terms and conditions of employment and wages and hours, in each case,\nwith respect to Employees; (ii) has withheld all amounts required by law or by\nagreement to be withheld from the wages, salaries and other payments to\nEmployees; (iii) is not liable for any arrears of wages or any taxes or any\npenalty for failure to comply with any of the foregoing; and (iv) is not liable\nfor any payment to any trust or other fund or to any governmental or\nadministrative authority, with respect to unemployment compensation benefits,\nsocial security or other benefits for Employees (other than routine payments to\nbe made in the normal course of business and consistent with past practice).\n\n          (k) Labor.  No work stoppage or labor strike against the Company is\n              -----\npending, or to the knowledge of the Company and the Principal Shareholder,\nthreatened.  The Company is not involved in or threatened with any labor\ndispute, grievance, or litigation relating to labor, safety, discrimination, or\nharassment matters involving any Employee, including, without limitation,\ncharges of unfair labor practices, discrimination, or harassment complaints,\nwhich, if adversely determined, would, individually or in the aggregate, result\nin liability to the Company, Parent or Sub.  The Company has not engaged in any\nunfair labor practices which could, individually or in the aggregate, directly\nor indirectly result in a liability to the Company, Parent or Sub.  The Company\nis not presently, or has in the past, been a party to, or bound by, any\ncollective bargaining agreement or union contract with respect to Employees and\nno collective bargaining agreement is being negotiated by the Company.\n\n                                      24\n\n\n \n     2.23 Insurance.   Exhibit C lists all insurance policies and fidelity\n          ---------    ---------\nbonds covering the assets, business, equipment, properties, operations,\nemployees, officers and directors of the Company. There is no claim by the\nCompany pending under any of such policies or bonds as to which coverage has\nbeen questioned, denied or disputed by the underwriters of such policies or\nbonds.  All premiums due and payable under all such policies and bonds have been\npaid and the Company are otherwise in compliance with the terms of such policies\nand bonds (or other policies and bonds providing substantially similar insurance\ncoverage).  The Company and the Principal Shareholder have no knowledge of any\nthreatened termination of, or premium increase with respect to, any of such\npolicies.\n\n     2.24 Compliance with Laws.  The Company has complied with, are not in\n          --------------------                                              \nviolation of, and have not received any notices of violation with respect to,\nany foreign, federal, state or local statute, law or regulation.\n\n     2.25 Third Party Consents.  Except as set forth in Exhibit C, no consent\n          --------------------                          ---------\nor approval is needed from any third party in order to effect the Merger or any\nof the transactions contemplated by this Agreement.\n\n     2.26 Warranties; Indemnities.  Exhibit C sets forth a summary of all\n          -----------------------   ---------\nwarranties and indemnities relating to products sold or services rendered by the\nCompany, and no warranty or indemnity has been given by the Company which\ndiffers therefrom in any respect.  Exhibit C also indicates all warranty and\n                                   ---------\nindemnity claims in excess of $25,000 made against the Company.\n\n     2.27 Complete Copies of Materials.  The Company has delivered or made\n          ----------------------------                                      \navailable true and complete copies of each document (or summaries of same) that\nhas been requested by Parent or its counsel.\n\n     2.28 Representations Complete.  None of the representations or guarantees\n          ------------------------                                              \nmade by the Company or the Principal Shareholder (as modified by the Exhibit C),\n                                                                     ---------\nnor any statement made in Exhibit C or any certificate furnished by the Company\n                          ---------\nor the Principal Shareholder pursuant to this Agreement, or furnished in or in\nconnection with documents mailed or delivered to the Company Shareholders in\nconnection with soliciting their consent to this Agreement and the Merger,\ncontains or will contain at the Closing, any untrue statement of a material\nfact, or omits or will omit at the Closing to state any material fact necessary\nin order to make the statements contained herein or therein, in the light of the\ncircumstances under which made, not misleading.\n\n     2.29 Business Plan.  The Company has provided to Parent a current,\n          -------------                                                  \naccurate and detailed business plan for the Company's planned operations during\nthe twelve months following the Closing Date which includes, without limitation,\na description of the Company's capital requirements, staffing needs, and a pro\nforma income statement.  The business plan is attached to Exhibit C hereto.\n                                                          ---------\n\n     2.30 Backlog Report.    The Company has provided to Parent a detailed and\n          ---------------                                                     \naccurate list of all orders booked but not yet completed, giving the status of\neach order as of a recent date.  The backlog report is attached to Exhibit C\n                                                                   ---------\nhereto.\n\n                                      25\n\n\n \n     2.31 Securities Law Compliance.  The Company will make no distribution\n          -------------------------\nof any security issued by Parent unless such distribution is in compliance with\napplicable state and federal securities laws.\n\n     2.32 Principal Shareholder Investment Representations.    Each of the\n          -------------------------------------------------               \nPrincipal Shareholder represents and warrants to the Parent as follows:\n\n          (a) Experience.  The Principal Shareholder is able to assess the\n              ----------\ntechnology, markets, management and strategy of the Parent and to fend for\nitself in transactions such as the one contemplated by this Agreement, has such\nknowledge and experience in financial and business matters that the Principal\nShareholder is capable of evaluating the merits and risks inherent in holding\nstock of the Parent, and has the ability to bear the economic risks of the\ninvestment.\n\n          (b) Investment.  The Principal Shareholder accepts the shares of the\n              ----------\nParent Common Stock as investment for the Principal Shareholder's own account\nand not with the view to, or for resale in connection with, any distribution\nthereof.  The Principal Shareholder understands that the Parent Common Stock has\nnot been registered under the Securities Act by reason of a specific exemption\nfrom the registration provisions of the Securities Act which depends upon, among\nother things, the bona fide nature of the investment intent as expressed herein.\nThe Principal Shareholder further represents that it does not have any contract,\nundertaking, agreement or arrangement with any person to sell, transfer or grant\nparticipation to any third person with respect to any of the Parent Common\nStock.  The Principal Shareholder understands and acknowledges that the\nprovision of Parent Common Stock pursuant to this Agreement will not be\nregistered under the Securities Act on the ground that the issuance of\nsecurities hereunder is exempt from the registration requirements of the\nSecurities Act.\n\n          (c) Rule 144.  The Principal Shareholder acknowledges that the Parent\n              --------\nCommon Stock must be held indefinitely unless subsequently registered under the\nSecurities Act or an exemption from such registration is available.  The\nPrincipal Shareholder is aware of the provisions of Rule 144 promulgated under\nthe Securities Act which permit limited resale of shares purchased in a private\nplacement subject to the satisfaction of certain conditions.  The Principal\nShareholder covenants that, in the absence of an effective registration\nstatement covering the stock in question, the Principal Shareholder will sell,\ntransfer, or otherwise dispose of the Parent Common Stock only in a manner\nconsistent with the Principal Shareholder's representations and covenants set\nforth herein.  In connection therewith, the Principal Shareholder  acknowledges\nthat the Parent will make a notation on its stock books regarding the\nrestrictions on transfers set forth in this Article and will transfer securities\non the books of the Parent only to the extent not inconsistent therewith.\n\n          (d) No Public Market.  The Principal Shareholder understands that no\n              ----------------\npublic market now exists for any of the securities issued by the Parent, and\nthat no public market may ever exist for such securities.\n\n                                      26\n\n\n \n          (e) Access to Data.  The Principal Shareholder has received and\n              --------------\nreviewed information about the Parent and has had an opportunity to review and\ndiscuss the Parent's business, management and financial affairs with its\nmanagement.  The Principal Shareholder understands that such discussions, as\nwell as any written information issued by the Parent, were intended to describe\nthe aspects of the Parent's business and prospects which the Parent believes to\nbe material, but were not necessarily a thorough or exhaustive description.\n\n                                  ARTICLE III\n\n                REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB\n\n     Parent and Sub represent and warrant to the Company as follows:\n\n     3.1  Organization, Standing and Power.  Parent is a corporation duly\n          --------------------------------                                 \norganized, validly existing and in good standing under the laws of the State of\nUtah.  Sub is a corporation duly organized, validly existing and in good\nstanding under the laws of Delaware.  Each of Parent and Sub has the corporate\npower to own its properties and to carry on its business as now being conducted\nand is duly qualified to do business and is in good standing in each\njurisdiction in which the failure to be so qualified would have a material\nadverse effect on the ability of Parent and Sub to consummate the transactions\ncontemplated hereby.\n\n     3.2  Authority; Consents.  Parent and Sub have all requisite corporate\n          -------------------                                                \npower and authority to enter into this Agreement and to consummate the\ntransactions contemplated hereby.  The execution and delivery of this Agreement\nand the consummation of the transactions contemplated hereby have been duly\nauthorized by all necessary corporate action on the part of Parent and Sub.\nThis Agreement has been duly executed and delivered by Parent and Sub and\nconstitutes the valid and binding obligations of Parent and Sub, enforceable in\naccordance with its terms, except as such enforceability may be limited by\nprinciples of public policy and subject to the laws of general application\nrelating to bankruptcy, insolvency and the relief of debtors and rules of law\ngoverning specific performance, injunctive relief or other equitable remedies.\nThe execution and delivery of this Agreement by Parent and Sub does not, and, as\nof the Closing, the consummation of the transactions contemplated hereby and\nthereby will not, Conflict with (i) any provision of the respective Articles of\nIncorporation or Bylaws of Parent or Sub or (ii) any agreement or instrument,\npermit, judgment, statute, law, rule or regulation applicable to Parent or Sub.\nNo consent, waiver, approval, or registration, declaration or filing with, any\nGovernmental Entity or any third party is required by or with respect to any of\nthe Parent or Sub in connection with the execution and delivery of this\nAgreement or the consummation of the transactions contemplated hereby.\n\n     3.3  Capital Structure.\n          -----------------   \n\n          (a) The authorized stock of Parent consists of 50,000,000 shares of\nCommon Stock, $.001 par value, of which 29,767,708 shares were issued and\noutstanding as of December 31, 1996, and 27,988,501 shares of Preferred Stock,\n$.001 par value, of which 18,518,500 shares \n\n                                      27\n\n\n \nare designated Series A Preferred Stock, all of which are issued and\noutstanding, and 9,310,001 shares are designated Series B Preferred Stock, all\nof which are issued and outstanding. All such shares have been duly authorized,\nand all such issued and outstanding shares have been validly issued, are fully\npaid and nonassessable and are free of any liens or encumbrances other than any\nliens or encumbrances created by or imposed upon the holders thereof. Parent has\nalso reserved (i) 3,900,000 shares of Common Stock for issuance to employees and\nconsultants pursuant to Parent's 1996 Stock Option Plan, (ii) 160,000 shares of\nSeries A Preferred Stock for issuance upon the exercise of outstanding warrants\nto purchase Series A Preferred Stock (the \"Warrant Stock\"), (iii) 160,000 shares\n                                           -------------\nof Common Stock for issuance upon conversion of the Warrant Stock and (iv)\n1,000,000 shares of Common Stock for issuance upon the exercise of outstanding\nwarrants to purchase Common Stock. In February, 1997, the Board of Directors of\nthe Company approved (i) increasing the authorized shares of Common Stock to\n100,000,000 shares, (ii) increasing the number of authorized shares of Preferred\nStock to 37,764,153 shares, in preparation for a sale of Series C Preferred\nStock, and (iii) adopting the Company's 1997 Acquisition Stock Option Plan,\nreserving 10,000,000 shares of Common Stock thereunder; all of these actions are\ncurrently pending. There are no other options, warrants, calls, rights,\ncommitments or agreements of any character to which Parent is a party or by\nwhich it is bound obligating Parent to issue, deliver, sell, repurchase or\nredeem, or cause to be issued, delivered, sold, repurchased or redeemed, any\nshares of the capital stock of Parent or obligating Parent to grant, extend or\nenter into any such option, warrant, call, right, commitment or agreement.\n\n          (b) The shares of Parent Common Stock to be issued pursuant to the\nMerger will be duly authorized, validly issued, fully paid and non-assessable.\n\n     3.4  Brokers' and Finders' Fees. The Parent has not incurred, nor will\n          --------------------------                                           \nit incur, directly or indirectly, any liability for brokers' or finders' fees or\nagents' commissions or any similar charges in connection with this Agreement or\nany transaction contemplated hereby.\n\n     3.5  Similar Transactions.  Each party understands and agrees that the\n          --------------------                                               \nParent may acquire other entities that are in a business similar to that of the\nCompany.  In the event that, prior to the Second Adjustment Date, Parent\nacquires another entity similar to the Company on terms substantially more\nfavorable to the equity owners of such entity after taking into account the\nsimilarities and differences of the businesses, then the valuation of the\nCompany at the First Adjustment  Date and the Second Adjustment Date shall be\nrecalculated to take into account such favorable treatment and the First\nAdjustment to Purchase Price and Second Adjustment to Purchase Price shall be\nrecalculated promptly on such more favorable basis.  Any additional shares due\nto the Sellers upon such recalculation shall be issued promptly to the Company\nShareholders.\n\n     3.6  No Changes. Except as otherwise disclosed in this Agreement, there\n          ----------\nhave been no material adverse changes to the Parent's financial condition or\noperating information from the information contained in the Franchise Offering\nCircular dated effective December 23, 1996, and the Confidential Offering\nMemorandum dated February 1997, relating to Parent's $18,000,000 Series C\nPreferred Stock Offering.\n\n                                      28\n\n\n \n                                   ARTICLE IV\n\n                      CONDUCT PRIOR TO THE EFFECTIVE TIME\n\n     4.1  Conduct of Business of the Company.   During the period from the\n          ----------------------------------                                \ndate of this Agreement and continuing until the earlier of the termination of\nthis Agreement or the Effective Time, the Company agrees (except to the extent\nthat Parent shall otherwise consent in writing), to carry on its business in the\nusual, regular and ordinary course in substantially the same manner as\nheretofore conducted, to pay debts and Taxes when due, to pay or perform other\nobligations when due, and, to the extent consistent with such business, use all\nreasonable efforts consistent with past practice and policies to preserve intact\nthe Company's present business organization, keep available the services of\npresent officers and key employees and preserve relationships with customers,\nsuppliers, distributors, licensors, licensees, and others having business\ndealings with it, all with the goal of preserving unimpaired the Company's\ngoodwill and ongoing businesses at the Effective Time.  The Company shall\npromptly notify Parent of any event or occurrence or emergency not in the\nordinary course of business of the Company, and any material event involving the\nCompany. Except as expressly contemplated by this Agreement, the Company shall\nnot, without the prior written consent of Parent:\n\n          (a) Enter into any commitment or transaction not in the ordinary\ncourse of business or any commitment or transaction of the type described in\nSection 2.9 hereof;\n\n          (b) Transfer to any person or entity any rights to the Intellectual\nProperty of the Company;\n\n          (c) Enter into or amend any agreements pursuant to which any other\nparty is granted marketing, distribution or similar rights of any type or scope\nwith respect to any products of the Company;\n\n          (d) Amend or otherwise modify (or agree to do so), except in the\nordinary course of business, or violate the terms of, any of the agreements set\nforth or described in Exhibit C;\n                      ----------\n\n          (e)  Commence any litigation;\n\n          (f) Declare, set aside or pay any dividends on or make any other\ndistributions (whether in cash, stock or property) in respect of any of its\ncapital stock, or split, combine or reclassify any of its capital stock or issue\nor authorize the issuance of any other securities in respect of, in lieu of or\nin substitution for shares of capital stock of the Company, or repurchase,\nredeem or otherwise acquire, directly or indirectly, any shares of its capital\nstock (or options, warrants or other rights exercisable therefor);\n\n          (g) Issue, grant, deliver or sell or authorize or propose the\nissuance, grant, delivery or sale of, or purchase or propose the purchase of,\nany shares of its capital stock or \n\n                                      29\n\n\n \nsecurities convertible into, or subscriptions, rights, warrants or options to\nacquire, or other agreements or commitments of any character obligating it to\nissue any such shares or other convertible securities;\n\n          (h) Cause or permit any amendments to its Articles of Incorporation or\nBylaws;\n\n          (i) Acquire or agree to acquire by merging or consolidating with, or\nby purchasing any assets or equity securities of, or by any other manner, any\nbusiness or any corporation, partnership, association or other business\norganization or division thereof, or otherwise acquire or agree to acquire any\nassets which are material, individually or in the aggregate, to its business;\n\n          (j) Sell, lease, license or otherwise dispose of any of its properties\nor assets, except in the ordinary course of business and consistent with past\npractices;\n\n          (k) Incur any indebtedness for borrowed money or guarantee any such\nindebtedness or issue or sell any debt securities or guarantee any debt\nsecurities of others;\n\n          (l) Grant any loans to others or purchase debt securities of others or\namend the terms of any outstanding loan agreement, except in the ordinary course\nof business and consistent with past practices;\n\n          (m) Grant any severance or termination pay (i) to any director or\nofficer or (ii) to any other employee except payments made pursuant to standard\nwritten agreements outstanding on the date hereof;\n\n          (n) Adopt or amend any employee benefit plan, or enter into any\nemployment contract, pay or agree to pay any special bonus or special\nremuneration to any director or employee, or increase the salaries or wage rates\nof its employees;\n\n          (o) Revalue any of its assets, including without limitation writing\ndown the value of inventory or writing off notes or accounts receivable other\nthan in the ordinary course of business;\n\n          (p) Take any action which could jeopardize the tax-free reorganization\nhereunder;\n\n          (q) Pay, discharge or satisfy, in an amount in excess of $10,000 (in\nany one case) or $25,000 (in the aggregate), any claim, liability or obligation\n(absolute, accrued, asserted or unasserted, contingent or otherwise), other than\nthe payment, discharge or satisfaction in the ordinary course of business of\nliabilities reflected or reserved against in the Financial Statements (or the\nnotes thereto);\n\n                                      30\n\n\n \n          (r) Make or change any material election in respect of Taxes, adopt or\nchange any accounting method in respect of Taxes, enter into any closing\nagreement, settle any claim or assessment in respect of Taxes, or consent to any\nextension or waiver of the limitation period applicable to any claim or\nassessment in respect of Taxes;\n\n          (s) Enter into any strategic alliance or joint marketing arrangement\nor agreement; or\n\n          (t) Take, or agree in writing or otherwise to take, any of the actions\ndescribed in Sections 4.1(a) through (s) above, or any other action that would\nprevent the Company from performing or cause the Company not to perform its\ncovenants hereunder.\n\n     4.2  No Solicitation.   Until the earlier of the Effective Time or the\n          ---------------                                                    \ndate of termination of this Agreement pursuant to the provisions of Section 8.1\nhereof, neither the Company nor any of the Principal Shareholder will (nor will\nthe Company permit any of the Company's officers, directors, agents,\nrepresentatives or affiliates to) directly or indirectly, take any of the\nfollowing actions with any party other than Parent and its designees:  (a)\nsolicit, conduct discussions with or engage in negotiations with any person,\nrelating to the possible acquisition of the Company  (whether by way of merger,\npurchase of capital stock, purchase of assets or otherwise) or any material\nportion of its or their capital stock or assets, (b) provide information with\nrespect to it to any person, other than Parent, relating to the possible\nacquisition of the Company (whether by way of merger, purchase of capital stock,\npurchase of assets or otherwise) or any material portion of its or their capital\nstock or assets, (c) enter into an agreement with any person, other than Parent,\nproviding for the acquisition of the Company (whether by way of merger, purchase\nof capital stock, purchase of assets or otherwise) or any material portion of\nits or their capital stock or assets or (d) make or authorize any statement,\nrecommendation or solicitation in support of any possible acquisition of the\nCompany (whether by way of merger, purchase of capital stock, purchase of assets\nor otherwise) or any material portion of its or their capital stock or assets by\nany person, other than by Parent.  In addition to the foregoing, if the Company\nor either Company Shareholder receives prior to the Effective Time or the\ntermination of this Agreement any offer or proposal relating to any of the\nabove, the Company or the Company Shareholder, as applicable shall immediately\nnotify Parent thereof, including information as to the identity of the offeror\nor the party making any such offer or proposal and the specific terms of such\noffer or proposal, as the case may be, and such other information related\nthereto as Parent may reasonably request.\n\n\n                                   ARTICLE V\n\n                             ADDITIONAL AGREEMENTS\n\n     5.1  Parent's Right of First Refusal.\n\n          (a) Parent's Right of First Refusal.  Before any shares issued\n              -------------------------------\npursuant to this Agreement (the \"Shares\") may be sold or otherwise transferred\n(including transfer by gift or \n\n                                      31\n\n\n \noperation of law), or any Shares held by a transferee (either being sometimes\nreferred to herein as the \"Holder\") may be sold, the Parent or its assignee(s)\nshall have a right of first refusal to purchase such Shares on the terms and\nconditions set forth in this Section (the \"Right of First Refusal\").\n                                           -----------------------\n\n          (b) Notice of Proposed Transfer.  The Holder of the Shares shall\n              ---------------------------\ndeliver to the Parent a written notice (the \"Notice\") stating:  (i) the Holder's\nbona fide intention to sell or otherwise transfer such Shares; (ii) the name of\neach proposed purchaser or other transferee (\"Proposed Transferee\"); (iii) the\nnumber of Shares to be transferred to each Proposed Transferee; and (iv) the\nbona fide cash price or other consideration for which the Holder proposes to\ntransfer the Shares (the \"Offered Price\"), and the Holder shall offer the Shares\nat the Offered Price to the Parent or its assignee(s).\n\n          (c) Exercise of Right of First Refusal.  At any time within thirty\n              ----------------------------------\n(30) days after receipt of the Notice, the Parent or its assignee(s) may, by\ngiving written notice to the Holder, elect to purchase all, but not less than\nall, of the Shares proposed to be transferred to any one or more of the Proposed\nTransferees, at the purchase price determined in accordance with subsection (d)\nbelow.\n\n          (d) Purchase Price.  The purchase price (\"Parent Purchase Price\") for\n              --------------\nthe Shares purchased by the Parent or its assignee(s) under this Section shall\nbe the Offered Price.  If the Offered Price includes consideration other than\ncash, the Parent may match such non-cash consideration with such other cash or\nnon-cash consideration as shall be determined by the Board of Directors of the\nParent in good faith.\n\n          (e) Payment.  Payment of the Parent Purchase Price shall be made, at\n              -------\nthe option of the Parent or its assignee(s), in cash (by check), by cancellation\nof all or a portion of any outstanding indebtedness of the Holder to the Parent\n(or, in the case of repurchase by an assignee, to the assignee), or by any\ncombination thereof within 30 days after receipt of the Notice or in the manner\nand at the times set forth in the Notice.\n\n          (f) Holder's Right to Transfer.  If all of the Shares proposed in the\n              --------------------------\nNotice to be transferred to a given Proposed Transferee are not purchased by the\nParent or its assignee(s) as provided in this Section, then the Holder may sell\nor otherwise transfer such Shares to that Proposed Transferee at the Offered\nPrice or at a higher price, provided that such sale or other transfer is\nconsummated within 120 days after the date of the Notice and provided further\nthat any such sale or other transfer is effected in accordance with any\napplicable securities laws and the Proposed Transferee agrees in writing that\nthe provisions of this Section shall continue to apply to the Shares in the\nhands of such Proposed Transferee.  If the Shares described in the Notice are\nnot transferred to the Proposed Transferee within such period, a new Notice\nshall be given to the Parent, and the Parent or its assignees shall again be\noffered the Right of First Refusal before any Shares held by the Holder may be\nsold or otherwise transferred.\n\n          (g) Exception for Certain Family Transfers.  Anything to the contrary\n              --------------------------------------\ncontained in this Section notwithstanding, the transfer of any or all of the\nShares during the Holder's lifetime or on the Holder's death by will or\nintestacy to the Holder's immediate family or a trust for the \n\n                                      32\n\n\n \nbenefit of the Holder's immediate family shall be exempt from the provisions of\nthis Section. \"Immediate Family\" as used herein shall mean spouse, lineal\ndescendant or antecedent, brother or sister. In such case, the transferee or\nother recipient shall receive and hold the Shares so transferred subject to the\nprovisions of this Section, and there shall be no further transfer of such\nShares except in accordance with the terms of this Section.\n\n          (h) Termination of Right of First Refusal.  The Right of First Refusal\n              -------------------------------------\nshall terminate as to any Shares 90 days after the first sale of Common Stock of\nthe Parent to the general public pursuant to a registration statement filed with\nand declared effective by the Securities and Exchange Commission under the\nSecurities Act of 1933, as amended.\n\n     5.2  Market Standoff Agreement.   Each Company Shareholder hereby agrees\n          --------------------------                                          \nthat if so requested by the Company or any representative of the underwriters in\nconnection with any registration of the offering of any Shares of the Company\nunder the Securities Act, such Company Shareholder shall not sell or otherwise\ntransfer, pledge, hypothecate or otherwise decrease his market risk or\nbeneficial ownership in any Shares or other securities of the Company during the\n180-day period following the date of the final Prospectus contained in a\nregistration statement of the Company filed under the Securities Act; provided,\nhowever, that such restriction shall only apply to the first registration\nstatement of the Company to become effective under the Securities Act which\nincludes securities to be sold on behalf of the Company to the general public in\nan underwritten public offering under the Securities Act.  The Company may\nimpose stop-transfer instructions with respect to securities subject to the\nforegoing restrictions until the end of such 180-day period.\n\n     5.3  Restriction on Competition.\n          ---------------------------\n\n          (a) Restricted Activities.  For a period of three (3) years beginning\n              ---------------------\non the Closing Date, no Principal Shareholder shall:\n\n                  (i) engage in, including as an employee, consultant or\notherwise, or own any interest (except as a passive investor of less than five\npercent (5%) of total debt and equity) in any business or other activity that\nwould compete with the Parent's; or\n\n                  (ii) divert or attempt to divert any existing or prospective\nbusiness or customers of the Parent (including any affiliates of the Parent) to\nany other person or entity, by direct or indirect inducement or otherwise, or do\nor perform, directly or indirectly, any other act injurious or prejudicial to\nthe goodwill associated with the Parent or its affiliates; or\n\n                  (iii) solicit any person for employment who is at that time\nalready employed by Parent or any of its affiliates, or otherwise directly or\nindirectly induce or seek to induce such person to leave his or her employment.\n\n          (b)  Scope of Restriction.\n               ---------------------\n\n                                      33\n\n\n \n                    (i) This Section shall apply in the SMSA where the Company\nis located.\n\n                    (ii) In the event that any other provision of this Section\n5.3 or the application of any such provision shall be held to be prohibited or\nunenforceable in any jurisdiction, such provision shall, as to such\njurisdiction, be ineffective to the extent of such prohibition or\nunenforceability. The remaining provisions of this covenant to refrain from\ncompetition shall remain in full force and effect, and any such prohibition or\nunenforceability in any jurisdiction shall not invalidate or render\nunenforceable such provision in any other jurisdiction. The parties shall use\ntheir best efforts to replace the provision that is contrary to law with a legal\none approximating to the extent possible the original intent of the parties.\n\n                    (iii) In the event that a Principal Shareholder, who also is\na New Employee, is terminated from employment by Parent without cause at any\ntime within three (3) years of the Closing Date, then the term of the\nrestrictions imposed by this Section 5.3 shall be reduced to six (6) months and\nthat terminated Principal Shareholder\/New Employee shall receive severance\nbenefits from Parent equal to six (6) months salary and employee benefits.\n\n     5.4  Confidentiality.  Each of the parties hereto hereby agrees to keep\n          ---------------                                                     \nsuch information or knowledge obtained pursuant to the negotiation and execution\nof this Agreement, or the effectuation of the transactions contemplated hereby,\nconfidential; provided, however, that the foregoing shall not apply to\ninformation or knowledge which (a) a party can demonstrate was already lawfully\nin its possession prior to the disclosure thereof by the other party, (b) is or\nbecomes generally known to the public and did not become so known through any\nviolation of law or this Agreement by the non-disclosing party, (c) is later\nlawfully acquired by such party from other sources, (d) is required to be\ndisclosed by order of court or government agency after seeking any reasonably\navailable protection against general disclosure or (e) which is disclosed in the\ncourse of any litigation between any of the parties hereto; it being understood\nthat the parties may disclose relevant information and knowledge to their\nrespective employees and agents on a need to know basis, provided that the\nparties cause such employees and agents to treat such information and knowledge\nconfidentially.\n\n     5.5  Expenses.  Whether or not the Acquisition is consummated, all fees\n          --------                                                            \nand expenses incurred in connection with the Acquisition including, without\nlimitation, all legal, accounting, financial advisory, consulting and all other\nfees and expenses of third parties incurred by a party in connection with the\nnegotiation and effectuation of the terms and conditions of this Agreement and\nthe transactions contemplated hereby, shall be the obligation of the respective\nparty incurring such fees and expenses.\n\n     5.6  Public Disclosure.  Unless otherwise required by law or any\n          -----------------                                            \napplicable rule of a stock exchange or quotation system upon which a parties'\nsecurities are listed, prior to the Closing Date, no disclosure (whether or not\nin response to an inquiry) of the subject matter of this Agreement shall be made\nby the Company or the Principal Shareholder unless approved by Parent prior to\nrelease, provided that such approval shall not be unreasonably withheld, subject\nto Parent's and the Company's or the Principal Shareholder' obligation to comply\nwith applicable securities laws.\n\n                                      34\n\n\n \n     5.7  Post-Closing Employment of Company Employees.\n          --------------------------------------------   \n\n          (a) Company shall terminate each employee of Company on and as of the\nClosing Date, effective as of close of business on the Closing Date.  Parent\nwill hire on the Closing Date, effective as of the close of business on the\nClosing Date, on an \"at will\" basis and subject to Parent's terms, conditions\nand policies of employment, if any, each of those persons who are employed by\nCompany and are terminated by Company on the Closing Date pursuant to the\nforegoing sentence.  Nothing contained in this Section is intended or shall be\ndeemed to (a) require Parent to employ such persons for any fixed or pre-\ndetermined time after the Closing, or (b) confer upon any employee of Company,\npast, present, or future, any rights of employment of any nature, it being\nunderstood and agreed that the provisions of this Section  are intended to set\nforth an agreement among Parent and Company, and are not intended to benefit any\npersons not party to this Agreement, including such employees.  Parent and\nCompany hereby agree to adopt the alternate procedure of Rev. Proc. 96-60 for\npurposes of employer payroll withholding.\n\n          (b) In connection with hiring the Company's employees (the \"New\n                                                                      ---\nEmployees\") as set forth in Section 5.7(a) above, Parent shall grant to the New\n- ---------\nEmployees incentive stock options to purchase Parent Common Stock in an\naggregate number equal to the number of shares paid as the Original Purchase\nPrice.  Such incentive stock options shall be issued to the New Employees, and\nin the amounts, requested by the Company in writing at the Closing.  The\nexercise price of each option shall be the fair market value of the Common Stock\nsubject to such option on the Closing Date as determined in good faith and\nauthorized by the Board of Directors of the Parent.  Such options shall not be\nexercisable at the date of grant, but shall become exercisable as to one-thirty-\nsixth (1\/36) of the shares subject to such option each month after the effective\ndate of this Agreement, provided, however, that no option shall become\nexercisable with respect to any shares at any time following the date that the\nNew Employee to whom the option was granted ceases to be an employee or\nconsultant of the Parent (an \"Employee Termination\"), and provided further that\nthe term of any such option shall expire if not exercised, and to the extent not\nexercisable, ninety (90) days after the date of the Employee Termination.\nAccordingly, any New Employee who receives an option must exercise it (but only\nto the extent then exercisable), if at all, within ninety (90) days after an\nEmployee Termination.  Notwithstanding the foregoing, in the event of any\nEmployee Termination due to the death or disability of the New Employee, the New\nEmployee or his estate shall have twelve (12) months to exercise the option to\nthe extent it was exercisable on the date of the Employee Termination;\nthereafter, the option shall terminate as to any unexercised portion.   New\nEmployee acknowledges that New Employee will be taxed under the Code on the\ndifference between the fair market value of shares purchased pursuant to any\nexercised option less the exercise price paid on the date of any such exercise\nand that the Parent may withhold any applicable taxes from New Employee's\nregular pay or, if insufficient, that New Employee will make any required\nwithholding payment to the Parent.  New Employee also acknowledges that there\nmay be state or local tax due upon exercise of the option, and that any such tax\nis the obligation of the New Employee and not the Parent.  The terms of the\noptions as described in this paragraph are subject to the definitive form of\noption agreement attached hereto as Exhibit D.\n                                    ---------\n\n                                      35\n\n\n \n          (c) Also in connection with hiring the New Employees, Parent agrees to\nissue to each of them a bonus payable in Parent Common Stock equal to the\naggregate exercise price of the options described in Section 5.7(b) above.  Such\nbonus payment shall be paid in Common Stock on the earlier of (i) the date three\nyears subsequent to the Closing Date or (ii) with respect to any individual New\nEmployee, the date of Employee Termination.  Such bonus shall be, as to each New\nEmployee, for such number of shares of Parent Common Stock as shall be equal, on\nthe date paid, and in the good faith judgment of the Parent's Board of\nDirectors, to the aggregate exercise price of the exercisable portion of the\noption granted to the New Employee described in the foregoing paragraph.  New\nEmployee acknowledges that there may be federal, state or local tax due upon\nreceipt of the bonus, that Parent may withhold any applicable taxes from New\nEmployee's regular pay or, if insufficient, that New Employee will make any\nrequired withholding payment to Parent, and that any such tax is the obligation\nof the New Employee and not the Parent.\n\n          (d) In addition to the stock option (the \"Original Option\") and stock\nbonus grants described in subsections (b) and (c) of this Section, in the event\nthat any additional shares of Parent's Common Stock are issued pursuant to the\nPurchase Price Adjustment provisions of Section 1.10, an additional option, in\nform and substance substantially similar to the Original Option (but with an\nexercise price determined based on the date of issuance) (the \"Additional\nOption\"), and an additional stock bonus commitment (the \"Additional Stock\nBonus\") proportionate to the Additional Option, in form and substance\nsubstantially similar to that described in paragraph (c) of this Section, shall\nbe issued by the Parent to any then-remaining employee of Parent or Sub who\nreceived an Original Option.  The number of shares subject to any such\nAdditional Option shall be calculated by taking the number of shares issued\npursuant to such Purchase Price Adjustment provisions multiplied by three (3)\nand then determining the individual recipients' pro rata share based on the\nnumber of shares subject to each recipient's Original Option compared to the\nnumber of shares subject to all Original Options granted.  For each recipient,\nthe number of shares granted in the Additional Stock Bonus shall be\nproportionate to the Additional Option.  Any such Additional Options and\nAdditional Stock Bonuses shall be granted at the next regularly scheduled\nmeeting of the Parent's board of directors following the date of any Purchase\nPrice Adjustment pursuant to Section 1.10.\n\n     5.8  Treatment of Affiliate Warrants.  To the extent that any affiliate\n          -------------------------------                                     \nof the Company has received or has the right to receive any warrants under\nParent's Affiliate Warrant Program, the warrants received or to be received\nthereunder shall remain in full force and effect and, to the extent required to\nmake calculations of shares issuable under such warrants, Parent shall estimate\nin good faith the business measures of the Surviving Corporation as necessary to\nsuch calculations, with the intent of preserving the economic value of such\nwarrants to the holders thereof following the completion of the acquisition\ncontemplated hereby.\n\n                                      36\n\n\n \n     5.9  Access to Information.  The Company shall afford Parent and its\n          ---------------------                                            \naccountants, counsel and other representatives, reasonable access during normal\nbusiness hours during the period prior to the Effective Time to (a) all of the\nCompany's properties, books, contracts, commitments and records, and (b) all\nother information concerning the business, properties and personnel (subject to\nrestrictions imposed by applicable law) of the Company as Parent may reasonably\nrequest.  The Company agrees to provide to Parent and its accountants, counsel\nand other representatives copies of internal financial statements promptly upon\nrequest.  No information or knowledge obtained in any investigation pursuant to\nthis Section 5.9 shall affect or be deemed to modify any representation or\nwarranty contained herein or the conditions to the obligations of the parties to\nconsummate the Merger.\n\n     5.10 Public Disclosure.  Unless otherwise required by law, prior to the\n          -----------------                                                   \nEffective Time, no disclosure (whether or not in response to an inquiry) of the\nsubject matter of this Agreement shall be made by any party hereto unless\napproved by Parent and the Company prior to release, provided that such approval\nshall not be unreasonably withheld.\n\n     5.11 Consents.  The Company shall use its best efforts to obtain the\n          --------                                                         \nconsents, waivers and approvals under any of the Contracts as may be required in\nconnection with the Merger (all of such consents, waivers and approvals are set\nforth in Exhibit C) so as to preserve all rights of, and benefits to, the\n         ---------\nCompany thereunder.\n\n     5.12 FIRPTA Compliance.  On the Closing Date, the Company shall deliver\n          -----------------                                                   \nto Parent a properly executed statement in a form reasonably acceptable to\nParent for purposes of satisfying Parent's obligations under Treasury Regulation\nSection 1.1445-2(c)(3).\n\n     5.13 Best Efforts.  Subject to the terms and conditions provided in this\n          ------------                                                         \nAgreement, each of the parties hereto shall use its best efforts to take\npromptly, or cause to be taken, all actions, and to do promptly, or cause to be\ndone, all things necessary, proper or advisable under applicable laws and\nregulations to consummate and make effective the transactions contemplated\nhereby to obtain all necessary waivers, consents and approvals and to effect all\nnecessary registrations and filings and to remove any injunctions or other\nimpediments or delays, legal or otherwise, in order to consummate and make\neffective the transactions contemplated by this Agreement for the purpose of\nsecuring to the parties hereto the benefits contemplated by this Agreement;\nprovided that Parent shall not be required to agree to any divestiture by Parent\nor the Company or any of Parent's subsidiaries or affiliates of shares of\ncapital stock or of any business, assets or property of Parent or its affiliates\nor of the Company or its affiliates, or the imposition of any material\nlimitation on the ability of any of them to conduct their businesses or to own\nor exercise control of such assets, properties and stock.\n\n                                      37\n\n\n \n     5.14 Notification of Certain Matters.  The Company shall give prompt\n          -------------------------------                                  \nnotice to Parent, and Parent shall give prompt notice to the Company, of (i) the\noccurrence or non-occurrence of any event, the occurrence or non-occurrence of\nwhich is likely to cause any representation or warranty of the (A) Company or\nthe Principal Shareholder or (B) Parent, respectively, contained in this\nAgreement to be untrue or inaccurate at or prior to the Effective Time and (ii)\nany failure of the Company or Parent, as the case may be, to comply with or\nsatisfy any covenant, condition or agreement to be complied with or satisfied by\nit hereunder; provided, however, that the delivery of any notice pursuant to\nthis Section 5.14 shall not limit or otherwise affect any remedies available to\nthe party receiving such notice.\n\n     5.15 Tax Returns.  N\/A - reserved for Sub-S corporations\n          -----------  ----------------------------------------\n\n     5.16 Additional Documents and Further Assurances.  Each party hereto, at\n          -------------------------------------------                          \nthe request of another party hereto, shall execute and deliver such other\ninstruments and do and perform such other acts and things as may be necessary or\ndesirable for effecting completely the consummation of this Agreement and the\ntransactions contemplated hereby.\n\n     5.17 Section 368 Compliance.  From and after the Effective Time, neither\n          ----------------------                                                \nParent, Sub, or the Company shall take any action that will cause the Merger not\nto be treated as a reorganization within the meaning of Section 368 of the Code.\n\n     5.18 Parent Policies.  Sellers acknowledge that Parent has implemented\n          ---------------                                                    \npolicies regarding the operation of subsidiary entities such as the Company will\nbe following the Merger.  Sellers acknowledge and agree that such policies, or\nany such amended or replacement policies that are reasonably similar in scope,\nnature or effect, are anticipated to be in place following the Merger, and\nSellers hereby indicate their intention to act in substantial compliance with\nall such policies.  Such policies shall not provide for Parent overhead\nallocations from Parent to Company or Sub, unless otherwise agreed in advance by\nthe parties.\n\n\n                                   ARTICLE VI\n\n                            CONDITIONS TO THE MERGER\n\n     6.1  Conditions to Obligations of Each Party to Effect the Merger.    The\n          -------------------------------------------------------------       \nrespective obligations of each party to this Agreement to effect the Merger\nshall be subject to the satisfaction at or prior to the Effective Time of the\nfollowing conditions:\n\n          (a) No Injunctions or Restraints; Illegality.  No temporary\n              ----------------------------------------\nrestraining order, preliminary or permanent injunction or other order issued by\nany court of competent jurisdiction or other legal restraint or prohibition\npreventing the consummation of the Merger shall be in effect, nor shall any\nproceeding brought by an administrative agency or commission or other\ngovernmental authority or instrumentality, domestic or foreign, seeking any of\nthe foregoing be pending; nor shall there be any action taken, or any statute,\nrule, regulation or order enacted, \n\n                                      38\n\n\n \nentered, enforced or deemed applicable to the Merger, which makes the\nconsummation of the Merger illegal.\n\n          (b) Litigation.  There shall be no action, suit, claim or proceeding\n              ----------\nof any nature pending, or overtly threatened, against the Parent, Sub or the\nCompany, their respective properties or any of their officers or directors,\narising out of, or in any way connected with, the Merger or the other\ntransactions contemplated by the terms of this Agreement.\n\n     6.2  Additional Conditions to Obligations of Company.    The obligations of\n          ------------------------------------------------                      \nthe Company to consummate and effect this Agreement and the transactions\ncontemplated hereby shall be subject to the satisfaction at or prior to the\nEffective Time of each of the following conditions, any of which may be waived,\nin writing, exclusively by the Company:\n\n          (a) Representations, Warranties and Covenants.  The representations\n              -----------------------------------------\nand warranties of Parent and Sub in this Agreement shall be true and correct in\nall material respects on and as of the Effective Time as though such\nrepresentations and warranties were made on and as of such time and each of\nParent and Sub shall have performed and complied in all material respects with\nall covenants and obligations of this Agreement required to be performed and\ncomplied with by it as of the Effective Time.\n\n          (b) Certificate of the Parent.  Company shall have been provided with\n              -------------------------\na certificate executed on behalf of the Parent by its President to the effect\nthat, as of the Effective Time:\n\n              (i) all representations and warranties made by the Parent and Sub\nin this Agreement are true and correct in all material respects;\n\n              (ii) all covenants and obligations of this Agreement to be\nperformed by the Parent on or before such date have been so performed in all\nmaterial respects.\n\n          (c) Claims.  There shall not have occurred any claims (whether or not\n              ------\nasserted in litigation) which may materially and adversely affect the\nconsummation of the transactions contemplated hereby or the business, assets\n(including intangible assets), financial condition or results of operations of\nthe Parent, taken as a whole.\n\n          (d) No Material Adverse Changes.  There shall not have occurred any\n              ---------------------------\nmaterial adverse change in the business, assets (including intangible assets),\nfinancial condition, results of operations of the Parent, taken as a whole since\nDecember 31, 1996.\n\n     6.3  Additional Conditions to the Obligations of Parent and Sub.    The\n          -----------------------------------------------------------       \nobligations of Parent and Sub to consummate and effect this Agreement and the\ntransactions contemplated hereby shall be subject to the satisfaction at or\nprior to the Effective Time of each of the following conditions, any of which\nmay be waived, in writing, exclusively by Parent:\n\n                                      39\n\n\n \n          (a) Representations, Warranties and Covenants.  The representations\n              -----------------------------------------\nand warranties of the Company and the Principal Shareholder in this Agreement\nshall be true and correct in all material respects on and as of the Effective\nTime as though such representations and warranties were made on and as of the\nEffective Time and the Company shall have performed and complied in all material\nrespects with all covenants and obligations of this Agreement required to be\nperformed and complied with by it as of the Effective Time.\n\n          (b) Certificate of the Company and Principal Shareholders.  Parent\n              -----------------------------------------------------\nshall have been provided with a certificate executed by the Principal\nShareholder and executed on behalf of the Company by its Chief Executive Officer\nto the effect that, as of the Effective Time:\n\n              (i) all representations and warranties made by the Company and the\nPrincipal Shareholder in this Agreement are true and correct in all material\nrespects; and\n\n              (ii) all covenants and obligations of this Agreement to be\nperformed by the Company on or before such date have been so performed in all\nmaterial respects.\n\n          (c) Claims.  There shall not have occurred any claims (whether or not\n              ------\nasserted in litigation) which may materially and adversely affect the\nconsummation of the transactions contemplated hereby or may have a Material\nAdverse Effect.\n\n          (d) Third Party Consents.  Any and all consents, waivers, and\n              --------------------\napprovals listed in Exhibit C shall have been obtained.\n\n          (e) Shareholder Certificate.  Each of the Company Shareholders shall\n              -----------------------\nhave executed and delivered to Parent a Shareholder Certificate in the form\nattached hereto as Exhibit E.\n\n          (f) No Material Adverse Changes.  There shall not have occurred any\n              ---------------------------\nmaterial adverse change in the business, assets (including intangible assets),\nresults of operations, liabilities (contingent or accrued), financial condition\nor prospects of the Company since December 31, 1996.\n\n          (g) Company Shareholder Approval.  Each of the Company Shareholders\n              ----------------------------\nshall have approved this Agreement and the Merger and the transactions\ncontemplated thereby, and no Company Shareholder shall have exercised, or have\nany continuing right to exercise, appraisal, dissenters' or similar rights by\nvirtue of the Merger.\n\n                                      40\n\n\n \n                                  ARTICLE VII\n\n               SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW\n\n     7.1  Survival of Representations and Warranties.  All of the Company's\n          ------------------------------------------                         \nand the Principal Shareholder' representations and warranties in this Agreement\nor in any instrument delivered pursuant hereto shall terminate on the third\nanniversary of the Effective Time; provided, however, that the representations\nand warranties relating or pertaining to any Tax or Returns related to such Tax\nset forth in Section 2.10 hereof or relating to environmental laws or matters\nset forth in Section 2.20 hereof, shall survive until ninety (90) days following\nthe expiration of all applicable statutes of limitations, or extensions thereof,\ngoverning each Tax or Returns related to such Tax or environmental laws or\nmatters.  All of the Parent's and Sub's representations and warranties contained\nherein or in any instrument delivered pursuant to this Agreement shall terminate\nat the Effective Time.\n\n     7.2  Escrow Arrangements; Setoff.\n          ---------------------------\n\n          (a) Escrow Fund; Setoff from Purchase Price Adjustments.  As partial\n              ---------------------------------------------------\nsecurity for the indemnity provided for in Section 7.3 and the Purchase Price\nAdjustments provided for in Section 1.10, (i) at the Effective Time, the Company\nShareholders will be deemed to have received and deposited with the Escrow Agent\n(as defined in Section 1.6(e)(iii) above) the Escrow Amount (plus any additional\nshares that may be issued upon any stock split, stock dividend or\nrecapitalization effected by Parent after the Effective Time) without any act of\nany Company Shareholder.  On and after the Effective Time, the Escrow Amount\nshall form an escrow fund (the \"Escrow Fund\") to be governed by the terms set\n                                -----------\nforth herein at Parent's cost and expense.  The Escrow Agent may execute this\nAgreement following the date hereof and prior to the Effective Time, and such\nlater execution, if so executed after the date hereof, shall not affect the\nbinding nature of this Agreement as of the date hereof between the other\nsignatories hereto.  The portion of the Escrow Amount contributed on behalf of\neach Company Shareholder shall be the pro rata amount calculated pursuant to\nSection 1.6(a) of this Agreement.  In addition to seeking indemnification under\nSection 7.3 from the Escrow Fund and setting off amounts from the Purchase Price\nAdjustment, Parent may, in its discretion, seek indemnification for Losses\ndirectly from the Principal Shareholder, but only after first proceeding against\nthe Escrow Fund so long as it exists and is not subject to other claims.\nNothing herein shall limit the liability of the Parent, the Company or the\nPrincipal Shareholder for any breach of any representation, warranty or covenant\nif the Merger does not close.  Parent may not receive any shares from the Escrow\nFund (other than as a Purchase Price Adjustment) unless Officer's Certificates\n(as defined in subsection (d) below) identifying losses, the aggregate of which\nexceed $25,000, have been delivered to the Shareholder Representative (as\ndefined below) and the Escrow Agent as provided in paragraph (d) below.  The\nCompany Shareholders shall not have any right of contribution from the Company\nwith respect to any Loss claimed by Parent or Sub after the Effective Time.\n\n                                      41\n\n\n \n          (b) Escrow Period; Distribution upon Termination of Escrow Periods.\n              ----------------------------------------------------------------\nSubject to the following requirements, the Escrow Fund shall be in existence\nimmediately following the Effective Time and shall terminate at 5:00 p.m.,\nPacific Time, on the date of the first anniversary of the Effective Time (the\n\"Escrow Period\"); provided that the Escrow Period shall not terminate with\n -------------\nrespect to such amount (or some portion thereof) if in the reasonable judgment\nof Parent, subject to the objection of the Shareholder Representative and the\nsubsequent arbitration of the matter in the manner provided in this Section 7.2,\nsuch amount (or some portion thereof) together with the aggregate amount\nremaining in the Escrow Fund is necessary to satisfy any unsatisfied claims\nspecified in any Officer's Certificate delivered to the Escrow Agent prior to\ntermination of such Escrow Period with respect to facts and circumstances\nexisting prior to the termination of such Escrow Period.  As soon as all such\nclaims have been resolved, the Escrow Agent shall deliver to the Company\nShareholders the remaining portion of the Escrow Fund not required to satisfy\nsuch claims.  Deliveries of Escrow Amounts to the Company Shareholders pursuant\nto this Section 7.2(b) shall be made in proportion to their respective original\ncontributions to the Escrow Fund.\n\n          (c)  Protection of Escrow Fund.\n               -------------------------\n\n               (i) The Escrow Agent shall hold and safeguard the Escrow Fund\nduring the Escrow Period, shall treat such fund as a trust fund in accordance\nwith the terms of this Agreement and not as the property of Parent and shall\nhold and dispose of the Escrow Fund only in accordance with the terms hereof.\n\n              (ii) Any shares of Parent Common Stock or other equity securities\nissued or distributed by Parent (including shares issued upon a stock split)\n(\"New Shares\") in respect of Parent Common Stock in the Escrow Fund which have\n  ----------\nnot been released from the Escrow Fund shall be added to the Escrow Fund and\nbecome a part thereof.  New Shares issued in respect of shares of Parent Common\nStock which have been released from the Escrow Fund shall not be added to the\nEscrow Fund but shall be distributed to the record holders thereof.  Cash\ndividends on Parent Common Stock shall not be added to the Escrow Fund but shall\nbe distributed to the record holders thereof.\n\n              (iii) Each Company Shareholder shall have voting rights with\nrespect to the shares of Parent Common Stock contributed to the Escrow Fund by\nsuch Company Shareholder (and on any voting securities added to the Escrow Fund\nin respect of such shares of Parent Common Stock).\n\n                                      42\n\n\n \n          (d)  Claims Upon Escrow Fund.\n               ------------------------\n\n               (i) Upon receipt by the Escrow Agent at any time on or before the\nlast day of the Escrow Period of a certificate signed by any officer of Parent\n(an \"Officer's Certificate\"): (A) stating that Parent has paid or accrued\nLosses, and (B) specifying in reasonable detail the individual items of Losses\nincluded in the amount so stated, the date each such item was paid or accrued,\nor the basis for such anticipated liability, and the nature of the\nmisrepresentation, breach of warranty or covenant to which such item is related,\nthe Escrow Agent shall, subject to the provisions of Section 7.2(e) hereof,\ndeliver to Parent out of the Escrow Fund, as promptly as practicable, cash or\nshares of Parent Common Stock (at the election of Parent) held in the Escrow\nFund in an amount equal to such Losses.\n\n          (e) Objections to Claims.  At the time of delivery of any Officer's\n              --------------------\nCertificate to the Escrow Agent, a duplicate copy of such certificate shall be\ndelivered to the Shareholder Representative and for a period of thirty (30) days\nafter such delivery, the Escrow Agent shall make no delivery to Parent of any\nEscrow Amounts pursuant to Section 7.2(d) hereof unless the Escrow Agent shall\nhave received written authorization from the Shareholder Representative to make\nsuch delivery.  After the expiration of such thirty (30) day period, the Escrow\nAgent shall make delivery of the Escrow Amount from the Escrow Fund in\naccordance with Section 7.2(d) hereof, provided that no such payment or delivery\nmay be made if the Shareholder Representative shall object in a written\nstatement to the claim made in the Officer's Certificate, and such statement\nshall have been delivered to the Escrow Agent prior to the expiration of such\nthirty (30) day period.\n\n          (f) Indemnification and Setoff Claims.  In the event Parent shall have\n              ---------------------------------\nincurred any Losses for which Parent wishes to seek indemnification directly\nfrom the Company Shareholders out of the Escrow Fund pursuant to this Section\n7.2, Parent shall deliver to the Shareholder Representative an Officer's\nCertificate: (A) stating that Parent has paid or accrued Losses and (B)\nspecifying in reasonable detail the individual items of Losses included in the\namount so stated, the date each such item was paid or accrued, or the basis for\nsuch anticipated liability, and the nature of the misrepresentation, breach of\nwarranty or covenant to which such item is related.\n\n          (g) Actions Against Company Shareholders.  In the event that Parent\n              ------------------------------------\nhas elected to pursue indemnity directly from the Principal Shareholder, the\nPrincipal Shareholder shall promptly, and in no event later than 30 days after\ndelivery of the Officer's Certificate, wire transfer to Parent the amount of\nsuch Loss, unless the Company or the Principal Shareholder, as the case may be,\ncontest such claim by following the procedures set forth in Section 7.2(i).\n\n          (h) Valuation of Parent Common Stock.  For the purposes of determining\n              --------------------------------\nthe number of shares of Parent Common Stock to be delivered to Parent out of the\nEscrow Fund as indemnity pursuant to Section 7.3 hereof, the shares of Parent\nCommon Stock shall be valued at (i) if the Parent's Common Stock shall be\npublicly traded, a price equal to the average closing price of the Parent Common\nStock in trading on the relevant stock exchange or quotation system during the\nten business day period ending three days prior to the date of the Officer's\nCertificate stating the claim \n\n                                      43\n\n\n \nwith respect to which such shares are delivered, and (ii) if the Parents' Common\nStock is not so publicly traded, the fair market value per share as determined\nby the Parent's board of directors in good faith on the date closest to the date\nof the Officer's Certificate.\n\n          (i) Resolution of Conflicts; Arbitration.\n              -------------------------------------\n\n              (i) In case the Shareholder Representative shall object in writing\nto any claim or claims made in any Officer's Certificate within thirty (30) days\nafter delivery of such Officer's Certificate, the Shareholder Representative and\nParent shall attempt in good faith to agree upon the rights of the respective\nparties with respect to each of such claims. If the Shareholder Representative\nand Parent should so agree, a memorandum setting forth such agreement shall be\nprepared and signed by both parties. If any claim against the Escrow Fund was\nsought, such memorandum shall be furnished to the Escrow Agent and the Escrow\nAgent shall be entitled to rely on any such memorandum and make payment out of\nthe Escrow Fund in accordance with the terms thereof.\n\n              (ii) If no such agreement can be reached after good faith\nnegotiation (or in any event after 60 days from the date of the Officer's\nCertificate), either Parent or the Shareholder Representative may demand\narbitration of the matter unless the amount of the damage or loss is at issue in\npending litigation with a third party, in which event arbitration shall not be\ncommenced until such amount is ascertained or both parties agree to arbitration;\nand in either such event the matter shall be settled by arbitration conducted by\nthree arbitrators. Parent and the Shareholder Representative shall each select\none arbitrator, and the two arbitrators so selected shall select a third\narbitrator. The arbitrators shall set a limited time period and establish\nprocedures designed to reduce the cost and time for discovery while allowing the\nparties an opportunity, adequate in the sole judgment of the arbitrators, to\ndiscover relevant information from the opposing parties about the subject matter\nof the dispute. The arbitrators shall rule upon motions to compel or limit\ndiscovery and shall have the authority to impose sanctions, including attorneys'\nfees and costs, to the same extent as a court of law or equity, should the\narbitrators determine that discovery was sought without substantial\njustification or that discovery was refused or objected to without substantial\njustification. The decision of a majority of the three arbitrators as to the\nvalidity and amount of any claim in such Officer's Certificate shall be binding\nand conclusive upon the parties to this Agreement. Notwithstanding anything in\nSection 7.2(e) hereof, the Escrow Agent shall be entitled to act in accordance\nwith such decision and make or withhold payments out of the Escrow Fund in\naccordance therewith. Such decision shall be written and shall be supported by\nwritten findings of fact and conclusions which shall set forth the award,\njudgment, decree or order awarded by the arbitrators.\n\n              (iii) Judgment upon any award rendered by the arbitrators may be\nentered in any court having jurisdiction.  Any such arbitration shall be held in\nSanta Clara County, California under the rules then in effect of the American\nArbitration Association.  The arbitrators shall determine how all expenses\nrelating to the arbitration shall be paid, including without limitation, the\nrespective expenses of each party, the fees of each arbitrator and the\nadministrative fee of the American Arbitration Association.\n\n                                      44\n\n\n \n          (j) Third-Party Claims.  In the event Parent becomes aware of a third-\n              ------------------\nparty claim which Parent believes may result in Losses, Parent shall notify the\nShareholder Representative of such claim, and the Shareholder Representative\nshall be entitled, at the Company Shareholders' expense, to participate in any\ndefense of such claim.  Parent shall have the right in its sole discretion to\nsettle any such claim; provided, however, that except with the consent of the\nShareholder Representative, no settlement of any such claim with third-party\nclaimants shall be determinative of the amount of any claim pursuant to this\nSection 7.2.  In the event that the Shareholder Representative has consented to\nany such settlement, the Company Shareholders shall have no standing to object\nunder any provision of this Article 7.2 to the amount of any claim by Parent\nagainst the Escrow Fund with respect to such settlement.\n\n          (k)  Shareholder Representative.\n               ---------------------------\n\n          (i) In the event that the Merger is approved, effective upon such\nvote, and without further act of any shareholder, Bruce A. Findley shall be\nappointed as agent and attorney-in-fact (the \"Shareholder Representative\") for\n                                              --------------------------\neach Company Shareholder, for and on behalf of shareholders of the Company, to\ngive and receive notices and communications, to authorize delivery to Parent of\npayments from the Escrow Fund in satisfaction of claims by Parent, to object to\nsuch deliveries, to agree to, negotiate, enter into settlements and compromises\nof, and demand arbitration and comply with orders of courts and awards of\narbitrators with respect to such claims, and to take all actions necessary or\nappropriate in the judgment of the Shareholder Representative for the\naccomplishment of the foregoing.  Such agency may be changed by the shareholders\nof the Company from time to time upon not less than thirty (30) days prior\nwritten notice to Parent; provided that the Shareholder Representative may not\nbe removed unless a majority-in-interest of the Company Shareholders agree to\nsuch removal and to the identity of the substituted agent.  No bond shall be\nrequired of the Shareholder Representative, and the Shareholder Representative\nshall not receive compensation for services as such.  Notices or communications\nto or from the Shareholder Representative shall constitute notice to or from\neach of the Company Shareholders or their permitted transferees.\n\n          (ii) The Shareholder Representative shall not be liable for any act\ndone or omitted hereunder as Shareholder Representative while acting in good\nfaith and in the exercise of reasonable judgment.  The Company Shareholders\nshall severally indemnify the Shareholder Representative and hold him or her\nharmless against any loss, liability or expense incurred without negligence or\nbad faith on the part of the Shareholder Representative and arising out of or in\nconnection with the acceptance or administration of the Shareholders\nRepresentative's duties hereunder, including the reasonable fees and expenses of\nany legal counsel retained by the Shareholder Representative.\n\n                                      45\n\n\n \n          (l) Actions of the Shareholder Representative.  A decision, act,\n              -----------------------------------------\nconsent or instruction of the Shareholder Representative shall constitute a\ndecision of all the Company Shareholders and shall be final, binding and\nconclusive upon each of such Company Shareholder, and the Escrow Agent and\nParent may rely upon any such decision, act, consent or instruction of the\nShareholder Representative as being the decision, act, consent or instruction of\neach and every such Company Shareholder.  The Escrow Agent and Parent are hereby\nrelieved from any liability to any person for any acts done by them in\naccordance with such decision, act, consent or instruction of the Shareholder\nRepresentative.\n\n          (m)  Escrow Agent's Duties.\n               ----------------------\n\n               (i) The Escrow Agent shall be obligated only for the performance\nof such duties as are specifically set forth herein, and as set forth in any\nadditional written escrow instructions which the Escrow Agent may receive after\nthe date of this Agreement which are signed by an officer of Parent and the\nShareholder Representative, and may rely and shall be protected in relying or\nrefraining from acting on any instrument reasonably believed to be genuine and\nto have been signed or presented by the proper party or parties. The Escrow\nAgent shall not be liable for any act done or omitted hereunder as Escrow Agent\nwhile acting in good faith and in the exercise of reasonable judgment, and any\nact done or omitted pursuant to the advice of counsel shall be conclusive\nevidence of such good faith.\n\n              (ii) The Escrow Agent is hereby expressly authorized to disregard\nany and all warnings given by any of the parties hereto or by any other person,\nexcepting only orders or process of courts of law, and is hereby expressly\nauthorized to comply with and obey orders, judgments or decrees of any court. In\ncase the Escrow Agent obeys or complies with any such order, judgment or decree\nof any court, the Escrow Agent shall not be liable to any of the parties hereto\nor to any other person by reason of such compliance, notwithstanding any such\norder, judgment or decree being subsequently reversed, modified, annulled, set\naside, vacated or found to have been entered without jurisdiction.\n\n              (iii) The Escrow Agent shall not be liable in any respect on\naccount of the identity, authority or rights of the parties executing or\ndelivering or purporting to execute or deliver this Agreement or any documents\nor papers deposited or called for hereunder.\n\n              (iv) The Escrow Agent shall not be liable for the expiration of\nany rights under any statute of limitations with respect to this Agreement or\nany documents deposited with the Escrow Agent.\n\n              (v) In performing any duties under the Agreement, the Escrow Agent\nshall not be liable to any party for damages, losses, or expenses, except for\ngross negligence or willful misconduct on the part of the Escrow Agent.  The\nEscrow Agent shall not incur any such liability for (A) any act or failure to\nact made or omitted in good faith, or (B) any action taken or omitted in\nreliance upon any instrument, including any written statement or affidavit\nprovided for in this Agreement that the Escrow Agent shall in good faith believe\nto be genuine, nor will the Escrow \n\n                                      46\n\n\n \nAgent be liable or responsible for forgeries, fraud, impersonations, or\ndetermining the scope of any representative authority. In addition, the Escrow\nAgent may consult with the legal counsel in connection with Escrow Agent's\nduties under this Agreement and shall be fully protected in any act taken,\nsuffered, or permitted by such Escrow Agent in good faith in accordance with the\nadvice of counsel. The Escrow Agent is not responsible for determining and\nverifying the authority of any person acting or purporting to act on behalf of\nany party to this Agreement.\n\n          (vi) If any controversy arises between the parties to this Agreement,\nor with any other party, concerning the subject matter of this Agreement, its\nterms or conditions, the Escrow Agent will not be required to determine the\ncontroversy or to take any action regarding it.  The Escrow Agent may hold all\ndocuments and the Escrow Amount and may wait for settlement of any such\ncontroversy by final appropriate legal proceedings or other means as, in the\nEscrow Agent's discretion, the Escrow Agent may be required, despite what may be\nset forth elsewhere in this Agreement.  In such event, the Escrow Agent will not\nbe liable for damage.\n\n          Furthermore, the Escrow Agent may at its option, file an action of\ninterpleader, in arbitration or otherwise, as the circumstances may require,\nrequiring the Parties to answer and litigate any claims and rights among\nthemselves.  The Escrow Agent is authorized to deposit with the clerk of the\ncourt all documents and shares of Parent Common Stock held in escrow, except all\ncost, expenses, charges and reasonable attorney fees incurred by the Escrow\nAgent due to the interpleader action and which the parties jointly and severally\nagree to pay.  Upon initiating such action, the Escrow Agent shall be fully\nreleased and discharged of and from all obligations and liability imposed by the\nterms of this Agreement.\n\n          (vii) The parties and their respective successors and assigns\nagree jointly and severally to indemnify and hold Escrow Agent harmless against\nany and all losses, claims, damages, liabilities, and expenses, including\nreasonable costs of investigation, counsel fees, including allocated costs of\nin-house counsel and disbursements that may be imposed on the Escrow Agent or\nincurred by the Escrow Agent in connection with the performance of the Escrow\nAgent's duties under this Agreement, including but not limited to any litigation\narising from this Agreement or involving its subject matter other than arising\nout of its gross negligence or willful misconduct.\n\n          (viii) The Escrow Agent may resign at any time upon giving at least\nthirty (30) days written notice to the parties to this Agreement; provided,\nhowever, that no such resignation shall become effective until the appointment\nof a successor escrow agent which shall be accomplished as follows:  the parties\nshall use their best efforts to agree on a successor escrow agent within thirty\n(30) days after receiving such notice.  If Parent and the Shareholder\nRepresentative fail to agree upon a successor escrow agent within such time, the\nEscrow Agent shall have the right to appoint a successor escrow agent authorized\nto do business in the state of California.  The successor escrow agent shall\nexecute and deliver an instrument accepting such appointment and it shall,\nwithout further acts, be vested with all the estates, properties, rights,\npowers, and duties of the predecessor Escrow Agent as if originally named as\nEscrow Agent.  Thereafter, the Escrow Agent shall be discharged from any further\nduties and liability under this Agreement.\n\n                                      47\n\n\n \n          (n) Fees.  All fees of the Escrow Agent for performance of its duties\n              ----\nhereunder shall be paid by Parent in accordance with the standard fee schedule\nof the Escrow Agent.  It is understood that the fees and usual charges agreed\nupon for services of the Escrow Agent shall be considered compensation for\nordinary services as contemplated by this Agreement.  In the event that the\nconditions of this Agreement are not promptly fulfilled, or if the Escrow Agent\nrenders any service not provided for in this Agreement, or if the parties hereto\nrequest a substantial modification of its terms, or if any controversy arises,\nor if the Escrow Agent is made a party to, or intervenes in, any litigation\npertaining to the Escrow Fund or its subject matter, the Escrow Agent shall be\nreasonably compensated for such extraordinary services and reimbursed for all\ncosts, attorney's fees, including allocated costs of in-house counsel, and\nexpenses occasioned by such default, delay, controversy or litigation.  The\nParent promises to pay these sums upon demand.\n\n     7.3  Indemnity.\n          ----------\n\n          (a) The Principal Shareholder hereby agree to indemnify and hold\nParent and its subsidiaries, directors, officers and agents harmless against and\nin respect of any loss, cost, expense, claim, liability, deficiency, judgment or\ndamage (hereinafter, individually, a \"Loss\"; and collectively, \"Losses\")\nincurred by Parent, its subsidiaries, officers, directors and agents (i) as a\nresult of any inaccuracy in or breach of a representation or warranty of the\nCompany or the Principal Shareholder contained in this Agreement or any failure\nby the Company or any Principal Shareholder to perform or comply with any\ncovenant contained in this Agreement and (ii) by reason of the failure of the\nCompany and the Principal Shareholder to perform their obligations hereunder.\n\n          (b)  Parent hereby agrees to indemnify and hold the Company and its\nsubsidiaries, directors, officers and agents harmless against and in respect of\nany loss, cost, expense, claim, liability, deficiency, judgment or damage\n(hereinafter, individually, a \"Loss\"; and collectively, \"Losses\") incurred by\nthe Company, its subsidiaries, officers, directors and agents (i) as a result of\nany inaccuracy in or breach of a representation or warranty of Parent contained\nin this Agreement or any failure by Parent to perform or comply with any\ncovenant contained in this Agreement and (ii) by reason of the failure of Parent\nto perform its obligations hereunder.\n\n          (c) Expiration of Indemnification.  The indemnification obligations\n              -----------------------------\nunder this Section 7.3 shall terminate at 5:00 p.m., Pacific Time on the third\nanniversary of the Effective Date, but shall not terminate as to any Loss (or a\npotential claim by an appropriate party) asserted in good faith prior to such\ndate; provided, however, that the representations and warranties with respect to\nTaxes (Section 2.10) and environmental laws (Section 2.20) shall survive until\nthe expiration of the applicable statute of limitations, if any.\n\n          (d) Procedure for Indemnification.  In the event that either party\n              -----------------------------\nshall incur or suffer any Losses in respect of which indemnification may be\nsought by such party pursuant to the provisions of this Article, the indemnified\nparty shall assert a claim for indemnification by written notice (a \"Notice\") to\nthe Parent, or the Surviving Corporation and the Shareholder Representative, as\nthe case may be, briefly stating the nature and basis of such claim.  In the\ncase of Losses arising by reason of any third-party claim, the Notice shall be\ngiven within 25 days of the filing or other \n\n                                      48\n\n\n \nwritten assertion of any such claim against Parent, but the failure of Parent to\ngive the Notice within such time period shall not relieve the Company and the\nPrincipal Shareholder of any liability that the Company and the Principal\nShareholder may have to Parent except to the extent that the Company and the\nPrincipal Shareholder are actually prejudiced thereby; provided, however, that\nany such notice shall be given no later than the date of the expiration of the\napplicable indemnification obligation of the Company and the Principal\nShareholder as set forth in Section 7.3(c) above. The indemnified party shall\nprovide the other party on request all information and documentation reasonably\nnecessary to support and verify any Losses which the indemnified party believes\ngive rise to a claim for indemnification hereunder and shall give reasonable\naccess to all books, records and personnel in the possession or under the\ncontrol of that party which would have bearing on such claim.\n\n          (e) Arbitration.  Any controversy involving a claim by an indemnified\n              -----------\nparty pursuant to this Section 7.3 shall be finally settled by arbitration in\nSanta Clara County, California in accordance with the then current Commercial\nArbitration Rules of the American Arbitration Association; and judgment upon the\naward rendered by the arbitrator may be entered in any court having jurisdiction\nthereof.  Such arbitration shall be conducted by an arbitrator chosen by mutual\nagreement of Parent and the Company and the Principal Shareholder.  Failing such\nagreement, the arbitration shall be conducted by three independent arbitrators,\nnone of whom shall have any competitive interest with Parent or the Company and\nthe Principal Shareholder.  Parent shall choose one such arbitrator, the Company\nand the Principal Shareholder shall choose one such arbitrator, and such two\narbitrators shall mutually select a third arbitrator.  Any decision of two such\narbitrators shall be binding on Parent and the Company and the Principal\nShareholder.  Each party shall pay its own costs and expenses (including counsel\nfees) of any such arbitration except that the arbitrator can compel one party to\npay all or a portion of the other party's costs and expenses.\n\n\n                                  ARTICLE VIII\n\n                       TERMINATION, AMENDMENT AND WAIVER\n\n     8.1  Termination.  Except as provided in Section 8.2 below, this\n          -----------                                                  \nAgreement may be terminated and the Merger abandoned at any time prior to the\nEffective Time:\n\n          (a) by mutual consent of the Company and Parent;\n\n          (b) by Parent or the Company if: (i) the Effective Time has not\noccurred by April 30, 1997; (ii) there shall be a final nonappealable order of a\nfederal or state court in effect preventing consummation of the Merger; or (iii)\nthere shall be any statute, rule, regulation or order enacted, promulgated or\nissued or deemed applicable to the Merger by any governmental entity that would\nmake consummation of the Merger illegal;\n\n          (c) by Parent or the Company if there shall be any action taken, or\nany statute, rule, regulation or order enacted, promulgated or issued or deemed\napplicable to the Merger by \n\n                                      49\n\n\n \nany Governmental Entity, which would: (i) prohibit Parent's or Sub's ownership\nor operation of any portion of the business of the Company or (ii) compel Parent\nor the Company to dispose of or hold separate all or a portion of the business\nor assets of the Sub or Parent as a result of the Merger;\n\n          (d) by Parent if it is not in material breach of its obligations under\nthis Agreement and there has been a material breach of any representation,\nwarranty, covenant or agreement contained in this Agreement on the part of the\nCompany or the Principal Shareholder and such breach has not been cured within\nten (10) calendar days after written notice to the Company (provided that, no\ncure period shall be required for a breach which by its nature cannot be cured);\n\n          (e) by the Company if neither it nor the Principal Shareholder are in\nmaterial breach of their respective obligations under this Agreement and there\nhas been a material breach of any representation, warranty, covenant or\nagreement contained in this Agreement on the part of Parent or Sub and such\nbreach has not been cured within ten (10) calendar days after written notice to\nParent (provided that, no cure period shall be required for a breach which by\nits nature cannot be cured); or\n\n          (f) by Parent, Sub, Company, or Principal Shareholder if an event\nhaving a Material Adverse Effect on the Company shall have occurred after the\ndate of this Agreement.\n\n     Where action is taken to terminate this Agreement pursuant to this Section\n8.1, it shall be sufficient for such action to be authorized by the Board of\nDirectors (as applicable) of the party taking such action.\n\n     8.2  Effect of Termination.  In the event of termination of this\n          ---------------------                                        \nAgreement as provided in Section 8.1, this Agreement shall forthwith become void\nand there shall be no liability or obligation on the part of Parent, Sub or the\nCompany, or their respective officers, directors or shareholders, provided that\neach party shall remain liable for any breaches of this Agreement prior to its\ntermination; provided further that, the provisions of Sections 5.4 and 5.5 and\nArticle IX of this Agreement shall remain in full force and effect and survive\nany termination of this Agreement.\n\n     8.3  Amendment.  Except as is otherwise required by applicable law after\n          ---------                                                           \nthe Company Shareholders approve this Agreement, this Agreement may be amended\nby the parties hereto at any time by execution of an instrument in writing\nsigned on behalf of each of the parties hereto.\n\n                                      50\n\n\n \n     8.4  Extension; Waiver.   At any time prior to the Effective Time, Parent\n          -----------------                                                     \nand Sub, on the one hand, and the Company, on the other, may, to the extent\nlegally allowed, (i) extend the time for the performance of any of the\nobligations of the other party hereto, (ii) waive any inaccuracies in the\nrepresentations and warranties made to such party contained herein or in any\ndocument delivered pursuant hereto, and (iii) waive compliance with any of the\nagreements or conditions for the benefit of such party contained herein.  Any\nagreement on the part of a party hereto to any such extension or waiver shall be\nvalid only if set forth in an instrument in writing signed on behalf of such\nparty.\n\n                                   ARTICLE IX\n\n                               GENERAL PROVISIONS\n\n     9.1  Notices.  All notices and other communications hereunder shall be in\n          -------                                                               \nwriting and shall be deemed given if delivered personally or by commercial\nmessenger or courier service, or mailed by registered or certified mail (return\nreceipt requested) or sent via facsimile (with acknowledgment of complete\ntransmission) to the parties at the following addresses (or at such other\naddress for a party as shall be specified by like notice):\n\n     (a)  if to Parent or Sub, to:\n\n               USWeb Corporation\n               2880 Lakeside Drive\n               Santa Clara, California  95054\n               Attn:  Chief Financial Officer\n               Telecopy No.: (408) 987-3240\n\n               with a copy to:\n\n               Wilson Sonsini Goodrich &amp; Rosati, P.C.\n               650 Page Mill Road\n               Palo Alto, California 94304\n               Attention:  Mark Bonham, Esq.\n               Telecopy No.: (415) 493-6811\n\n     (b) if to Company or to a Principal Shareholder to:\n\n               Fetch Interactive, Inc.\n               17125 W. Cleveland Avenue\n               New Berlin, WI  53151\n               Attention:   John Ruf\n               Telecopy No.:  414\/784.1070\n\n                                      51\n\n\n \n               with a copy to:\n \n               Shearer Lanctot &amp; Noelke                    \n               44 Montgomery Street - Suite 3585\n               San Francisco, CA  94104\n               Attention:  Carl Noelke\n               Telecopy No.:  415\/986.1851\n\n     9.2  Interpretation.  The words \"include,\" \"includes\" and \"including\"\n          --------------                                                    \nwhen used herein shall be deemed in each case to be followed by the words\n\"without limitation.\"  The table of contents and headings contained in this\nAgreement are for reference purposes only and shall not affect in any way the\nmeaning or interpretation of this Agreement.\n\n     9.3  Counterparts.  This Agreement may be executed in one or more\n          ------------                                                  \ncounterparts, all of which shall be considered one and the same agreement and\nshall become effective when one or more counterparts have been signed by each of\nthe parties and delivered to the other party, it being understood that all\nparties need not sign the same counterpart.\n\n     9.4  Entire Agreement; Assignment.  This Agreement, and Exhibits hereto\n          ----------------------------                                        \nand the documents and instruments and other agreements among the parties hereto\nreferenced herein:  (a) constitute the entire agreement among the parties with\nrespect to the subject matter hereof and supersede all prior agreements and\nunderstandings both written and oral, among the parties with respect to the\nsubject matter hereof; (b) are not intended to confer upon any other person any\nrights or remedies hereunder; and (c) shall not be assigned by operation of law\nor otherwise except as otherwise specifically provided, except that Parent and\nSub may assign their respective rights and delegate their respective obligations\nhereunder to their respective affiliates.\n\n     9.5  Severability.  In the event that any provision of this Agreement or\n          ------------                                                         \nthe application thereof, becomes or is declared by a court of competent\njurisdiction to be illegal, void or unenforceable, the remainder of this\nAgreement will continue in full force and effect and the application of such\nprovision to other persons or circumstances will be interpreted so as reasonably\nto effect the intent of the parties hereto.  The parties further agree to\nreplace such void or unenforceable provision of this Agreement with a valid and\nenforceable provision that will achieve, to the extent possible, the economic,\nbusiness and other purposes of such void or unenforceable provision.\n\n     9.6  Other Remedies.  Except as otherwise provided herein, any and all\n          --------------                                                     \nremedies herein expressly conferred upon a party will be deemed cumulative with\nand not exclusive of any other remedy conferred hereby, or by law or equity upon\nsuch party, and the exercise by a party of any one remedy will not preclude the\nexercise of any other remedy.\n\n                                      52\n\n\n \n     9.7  Governing Law.  This Agreement shall be governed by and construed in\n          -------------                                                         \naccordance with the laws of the State of California, regardless of the laws that\nmight otherwise govern under applicable principles of conflicts of laws thereof.\nEach of the parties hereto irrevocably consents to the exclusive jurisdiction\nand venue of any court within Santa Clara County, State of California, in\nconnection with any matter based upon or arising out of this Agreement or the\nmatters contemplated herein, agrees that process may be served upon them in any\nmanner authorized by the laws of the State of California for such persons and\nwaives and covenants not to assert or plead any objection which they might\notherwise have to such jurisdiction, venue and such process.\n\n     9.8  Rules of Construction.  The parties hereto agree that they have been\n          ---------------------                                                 \nrepresented by counsel during the negotiation and execution of this Agreement\nand, therefore, waive the application of any law, regulation, holding or rule of\nconstruction providing that ambiguities in an agreement or other document will\nbe construed against the party drafting such agreement or document.\n\n     IN WITNESS WHEREOF, Parent, Sub, the Company and the Principal Shareholder\nhave caused this Agreement to be signed by their duly authorized respective\nofficers, all as of the date first written above.\n\n\nCOMPANY                              USWEB CORPORATION\n\n\nBy: Bruce A. Findley                 By:\n   President\n                                     Title:\n\n\nESCROW AGENT                         USWEB ACQUISITION CORPORATION 103\n\nBy:                                  By:\n\nTitle:                               Title:\n\n\n                                     PRINCIPAL SHAREHOLDER\n\n\n                                     __________________________________\n                                     Bruce A. Findley\n\n\n                                      53\n\n\n \n                                   EXHIBIT A\n                                   ---------\n\n                             Principal Shareholder\n\n\n\n           Name              Number of Shares\/*\/\n \n     Bruce A. Findley                1,187\n- -----------------------\n\/*\/On an as fully converted to Common Stock, fully diluted basis. \n \n                                      54\n\n\n \n                                    EXHIBIT B\n                                        \n                                Valuation Model\n\n\n                                      55\n\n\n \n                                   EXHIBIT C\n                                   ---------\n\n                             Schedule of Exceptions\n\n                                      56\n\n\n \n                                   EXHIBIT D\n                                   ---------\n\n                            Form of Option Agreement\n\n                                      57\n\n\n \n                                   EXHIBIT E\n                                   ---------\n\n                        Form of Shareholder Certificate\n\n                                      58\n\n<\/text>\n\n<\/description><\/sequence><\/type><\/document>\n\n<document>\n\n<type>EX-2.3\n\n<sequence>4\n\n<description>AGREEMENT &amp; PLAN OF REORG. (CORP.106)\n\n<text>\n\n\n\n \n                                                                     EXHIBIT 2.3\n\n\n                     AGREEMENT AND PLAN OF REORGANIZATION\n\n                                 BY AND AMONG\n\n                               USWEB CORPORATION\n\n                       USWEB ACQUISITION CORPORATION 106\n\n                                      AND\n\n                      NEWLINK COMMUNICATIONS CORPORATION\n\n\n                          DATED AS OF MARCH 31, 1997\n\n\n \n                               INDEX OF EXHIBITS\n                                        \n\n\nEXHIBIT           DESCRIPTION\n- -----------------------------\n\nExhibit A         Principal Shareholders\n\nExhibit B         Valuation Model\n\nExhibit C         Schedule of Exceptions\n\nExhibit D         Option Agreement\n\nExhibit E         Form of Shareholder Certificate\n\n\n                               TABLE OF CONTENTS\n                                                                            PAGE\nARTICLE I - THE MERGER\n\n 1.1    The Merger.                                                           2\n\n 1.2    Effective Time.                                                       2\n\n 1.3    Effect of the Merger.                                                 2\n\n 1.4    Certificate of Incorporation; Bylaws.                                 2\n\n 1.5    Directors and Officers.                                               3\n\n 1.6    Effect of Merger on the Capital Stock of the Constituent Corporations.3\n\n 1.7    Surrender of Certificates.                                            4\n\n 1.8    No Further Ownership Rights in Company Common Stock.                  6\n\n 1.9    Lost, Stolen or Destroyed Certificates.                               6\n\n 1.10   Purchase Price Adjustments.                                           6\n\n 1.11   Parent Common Stock.                                                  8\n\n 1.12   Tax Consequences.                                                     8\n\n 1.13   Taking of Necessary Action; Further Action.                           8\n\ni\n\n\n \n                               TABLE OF CONTENTS\n                                  (CONTINUED)\n\n                                                                            PAGE\n                                                                            ----\n\nARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE PRINCIPAL\nSHAREHOLDERS                                                                  9\n\n 2.1    Organization of the Company.                                          9\n\n 2.2    Company Capital Structure.                                            9\n\n 2.3    Subsidiaries.                                                         9\n\n 2.4    Authority.                                                           10\n\n 2.5    No Conflict.                                                         10\n\n 2.6    Consents.                                                            10\n\n 2.7    Company Financial Statements.                                        11\n\n 2.8    No Undisclosed Liabilities.                                          11\n\n 2.9    No Changes.                                                          11\n\n 2.10   Tax Matters.                                                         13\n\n 2.11   Restrictions on Business Activities.                                 14\n\n 2.12   Title to Properties; Absence of Liens and Encumbrances; Condition of\n        Equipment.                                                           15\n\n 2.13   Intellectual Property.                                               15\n\n 2.14   Agreements, Contracts and Commitments.                               18\n\n 2.15   Interested Party Transactions.                                       20\n\n 2.16   Governmental Authorization.                                          20\n\n 2.17   Litigation.                                                          20\n\n 2.18   Accounts Receivable.                                                 20\n\n 2.19   Minute Books.                                                        21\n\n 2.20   Environmental Matters.                                               21\n\n 2.21   Brokers' and Finders' Fees; Third Party Expenses.                    22\n\n 2.22   Employee Benefit Plans and Compensation.                             22\n\n 2.23   Insurance.                                                           25\n\n 2.24   Compliance with Laws.                                                25\n\n 2.25   Third Party Consents.                                                25\n\n 2.26   Warranties; Indemnities.                                             25\n\n 2.27   Complete Copies of Materials.                                        25\n\n 2.28   Representations Complete.                                            25\n\n 2.29   Business Plan.                                                       254\n\nii\n\n\n \n                               TABLE OF CONTENTS\n                                  (CONTINUED)\n\n                                                                            PAGE\n                                                                            ----\n 2.30   Backlog Report.                                                      25\n\n 2.31   Securities Law Compliance.                                           26\n\n 2.32   Principal Shareholder Investment Representations.                    26\n\nARTICLE III                                                                  27\n\n 3.1    Organization, Standing and Power.                                    27\n\n 3.2    Authority; Consents.                                                 27\n\n 3.3    Capital Structure.                                                   27\n\n 3.4    Brokers' and Finders' Fees.                                          28\n\n 3.5    Similar Transactions.                                                28\n\n 3.6    No Changes.                                                          28\n\nARTICLE IV                                                                   29\n\n 4.1    Conduct of Business of the Company.                                  29\n\n 4.2    No Solicitation.                                                     31\n\nARTICLE V                                                                    31\n\n 5.1    Parent's Right of First Refusal.                                     31 \n\n 5.2    Market Standoff Agreement.                                           33\n\n 5.3    Restriction on Competition.                                          33 \n\n 5.4    Confidentiality.                                                     34\n\n 5.5    Expenses.                                                            34 \n\n 5.6    Public Disclosure.                                                   34\n\n 5.7    Post-Closing Employment of Company Employees.                        35\n\n 5.8    Treatment of Affiliate Warrants.                                     37\n\n 5.9    Access to Information.                                               37\n\n 5.10   Public Disclosure.                                                   37\n\n 5.11   Consents.                                                            37\n\n 5.12   FIRPTA Compliance.                                                   37\n\n 5.13   Best Efforts.                                                        38\n\n 5.14   Notification of Certain Matters.                                     38 \n\n 5.15   Tax Returns.  N\/A - reserved for Sub-S corporations                  38\n\n                                                                            iii\n\n\n \n                               TABLE OF CONTENTS\n                                  (CONTINUED)\n\n                                                                            PAGE\n                                                                            ----\n 5.16   Additional Documents and Further Assurances.                         38 \n\n 5.17   Section 368 Compliance.                                              38\n\n 5.18   Parent Policies.                                                     39\n\nARTICLE VI                                                                   39\n\n 6.1    Conditions to Obligations of Each Party to Effect the Merger.        39\n\n 6.2    Additional Conditions to Obligations of Company.                     39 \n\n 6.3    Additional Conditions to the Obligations of Parent and Sub.          40\n\nARTICLE VII                                                                  41\n\n 7.1    Survival of Representations and Warranties.                          41\n\n 7.2    Escrow Arrangements; Setoff.                                         41\n\nARTICLE VIII                                                                 49\n\n 8.1    Termination.                                                         49\n\n 8.2    Effect of Termination.                                               50\n\n 8.3    Amendment.                                                           50\n\n 8.4    Extension; Waiver.                                                   51\n\nARTICLE IX                                                                   51\n\n 9.1    Notices.                                                             51\n\n 9.2    Interpretation.                                                      52\n\n 9.3    Counterparts.                                                        52\n\n 9.4    Entire Agreement; Assignment.                                        52\n\n 9.5    Severability.                                                        52\n\n 9.6    Other Remedies.                                                      52\n\n 9.7    Governing Law.                                                       53\n\n 9.8    Rules of Construction.                                               53\n\niv\n\n\n \n                      AGREEMENT AND PLAN OF REORGANIZATION\n\n\n     This AGREEMENT AND PLAN OF REORGANIZATION (the \"Agreement\") is made and\n                                                     ---------\nentered into as of March 31, 1997, among USWeb Corporation, a Utah corporation\n(\"Parent\"), USWeb Acquisition Corporation 106, a Delaware corporation and a\n  ------\nwholly owned subsidiary of Parent (\"Sub\"), NewLink Communications Corporation, a\n                                    ---\nCalifornia corporation (the \"Company\"), and the individuals listed on Exhibit A\n                             -------\nattached hereto (such individuals being hereinafter referred to collectively as\nthe \"Principal Shareholders\" and individually as a \"Principal Shareholder\").\n     ----------------------                         ---------------------\n\n                                    RECITALS\n\n     A.    The Boards of Directors of each of the Company, Parent and Sub\nbelieve it is in the best interests of each company and their respective\nshareholders that Parent acquire the Company through the statutory merger of the\nCompany with and into Sub (the \"Merger\") and, in furtherance thereof, have\napproved the Merger.\n\n     B.    Pursuant to the Merger, among other things, all of the issued and\noutstanding shares of capital stock of the Company shall be converted into the\nright to receive shares of Common Stock of Parent.\n\n     C.    Fifty Percent (50%) of the shares of Common Stock of Parent otherwise\npayable in connection with the Merger shall be placed in a one-year escrow for\nthe purposes of (i) satisfying damages, losses, expenses and other similar\ncharges which result from breaches of representations, warranties or covenants\nor (ii) making adjustments to the purchase price paid by the Parent.\n\n     D.    The Company, the Principal Shareholders, Parent and Sub desire to\nmake certain representations, warranties, covenants and other agreements in\nconnection with the Merger.\n\n     E.    The parties hereto desire that each employee of the Company prior to\nthe Merger shall be offered an opportunity of employment by the Sub following\nthe Merger.  Each party understands and agrees that any such employee or the Sub\nshall have the right to terminate any such employment at any time.\n\n     NOW, THEREFORE, in consideration of the covenants, promises and\nrepresentations set forth herein, and for other good and valuable consideration,\nthe parties agree as follows:\n\n                                       1\n\n\n \n                                   ARTICLE I\n\n                                   THE MERGER\n\n     1.1  The Merger.  At the Effective Time (as defined in Section 1.2) and\n          ----------                                                            \nsubject to and upon the terms and conditions of this Agreement and the\napplicable provisions of the corporations laws of the states of Delaware\n(\"Delaware Law\") and California (the \"California Law\"), the Company shall be\nmerged with and into the Sub, the separate corporate existence of the Company\nshall cease and Sub shall continue as the surviving corporation and as a wholly\nowned subsidiary of Parent.  Sub as the surviving corporation after the Merger\nis hereinafter sometimes referred to as the \"Surviving Corporation.\"\n\n     1.2  Effective Time.  Unless this Agreement is earlier terminated\n          -------------- \npursuant to Section 8.1, the closing of the Merger (the \"Closing\") will take\n                                                         -------\nplace as promptly as practicable, but no later than five (5) business days\nfollowing satisfaction or waiver of the conditions set forth in Article VI, at\nthe offices of Wilson Sonsini Goodrich &amp; Rosati, 650 Page Mill Road, Palo Alto,\nCalifornia, unless another place or time is agreed to in writing by Parent and\nthe Company.  The date upon which the Closing actually occurs is herein referred\nto as the \"Closing Date.\"  On the Closing Date, the parties hereto shall cause\n           ------------\nthe Merger to be consummated by submitting for filing an Agreement and Plan of\nMerger (or like instrument) with the Secretary of State of Delaware and the\nSecretary of State of California (the \"Merger Articles\"), in accordance with the\n                                       ---------------\nrelevant provisions of applicable law (the later of the times of filing with the\nSecretary of State of Delaware and the Secretary of State of California being\nreferred to herein as the \"Effective Time\").\n                           --------------\n\n     1.3  Effect of the Merger.  At the Effective Time, the effect of the\n          --------------------                                             \nMerger shall be as provided in the applicable provisions of Delaware Law and\nCalifornia Law.  Without limiting the generality of the foregoing, and subject\nthereto, at the Effective Time, all the property, rights, privileges, powers and\nfranchises of the Company and Sub shall vest in the Surviving Corporation, and\nall debts, liabilities and duties of the Company and Sub shall become the debts,\nliabilities and duties of the Surviving Corporation.\n\n     1.4  Certificate of Incorporation; Bylaws.\n          ------------------------------------   \n\n          (a) Unless otherwise determined by Parent prior to the Effective Time,\nat the Effective Time, the Certificate of Incorporation of Sub shall be the\nCertificate of Incorporation of the Surviving Corporation until thereafter\namended as provided by law and such Certificate of Incorporation.\n\n          (b) The Bylaws of Sub, as in effect immediately prior to the Effective\nTime, shall be the Bylaws of the Surviving Corporation until thereafter amended.\n\n                                       2\n\n\n \n     1.5  Directors and Officers.   The director(s) of Sub immediately prior\n          ----------------------                                              \nto the Effective Time shall be the initial director(s) of the Surviving\nCorporation, each to hold office in accordance with the Certificate of\nIncorporation and Bylaws of the Surviving Corporation.  The officers of Sub\nimmediately prior to the Effective Time shall be the initial officers of the\nSurviving Corporation, each to hold office in accordance with the Bylaws of the\nSurviving Corporation.\n\n     1.6  Effect of Merger on the Capital Stock of the Constituent Corporations.\n          ---------------------------------------------------------------------\n\n          (a) Exchange of Stock; Purchase Price Adjustments.  As of the\n              ---------------------------------------------\nEffective Time of the Merger, each share of the Company's Common Stock, no par\nvalue (the \"Company Common Stock\"), that is issued and outstanding immediately\n            --------------------\nprior to the Effective Time (other than any  dissenting shares under applicable\nstate law) shall, by virtue of the Merger and without any action on the part of\nSub, the Company, or the Company's shareholders (the \"Company Shareholders\"), be\n                                                      --------------------\ncanceled and extinguished and each Company Shareholder shall have (i) the right\nto receive such Company Shareholder's pro rata portion (based on such Company\nShareholders' equity ownership in the Company as represented to Parent by the\nCompany) of that number of shares of the Parent's Common Stock, par value $.001\nper share (the \"Parent Common Stock\") equal to $2,873,475 (the \"Original\n                -------------------                             --------\nPurchase Price\") divided by the Fair Value Per Share (as defined in Section\n- --------------\n1.6(e) below) as of the closing date, subject to Section 7.2 hereof, plus the\ncontingent right to receive  additional shares of Parent Common Stock as\nprovided in Section 1.10 of this Agreement (the \"Purchase Price Adjustment\").\n                                                 -------------------------\nThe Original Purchase Price and the Purchase Price Adjustment are hereinafter\ncollectively referred to as the \"Merger Consideration.\"\n                                 --------------------\n\n          (b)  Stock Options.   N\/A\n               -------------\n\n          (c) Adjustments to Parent Common Stock.  The number of shares of\n              ----------------------------------\nParent Common Stock issuable hereunder shall be adjusted to reflect fully the\neffect of any stock split, reverse split, stock dividend (including any dividend\nor distribution of securities convertible into Parent Common Stock or Company\nCommon Stock), reorganization, recapitalization or other like change with\nrespect to Parent Common Stock or Company Common Stock occurring after the date\nhereof.\n\n          (d) Fractional Shares.  No fractional share of Parent Common Stock\n              -----------------\nshall be issued in the Merger, including the Purchase Price Adjustment pursuant\nto Section 1.10 below, or pursuant to any stock option or stock bonus issued to\na Company employee that becomes an employee of Parent or Sub following the\nMerger.  In lieu thereof, the number of shares otherwise issued or issuable\nshall be rounded to the nearest whole share, with one-half share or more being\nrounded up.\n\n          (e)  Definitions.\n               -----------\n\n               (i)   Aggregate Common Number. The \"Aggregate Common Number\"\n                     -----------------------\nshall mean the aggregate number of shares of Company Common Stock outstanding\nimmediately prior to the Effective Time.\n\n                                       3\n\n\n \n               (ii)  Fair Value Per Share.  The Fair Value Per Share of Parent's\n                     -------------------- \nCommon Stock, as of any particular date, shall mean, if the Parent's Common\nStock is then traded on an exchange or national quotation system, the average\nclosing price per share of Parent's Common Stock as traded on such exchange or\nnational quotation system during the 10 trading day period ending three business\ndays prior to the date of determination or, if not so traded, the fair market\nvalue per share of such Parent's Common Stock as most recently determined by the\nParent's Board of Directors acting in good faith.\n\n               (iii) Escrow Amount; Escrow Agent.  The \"Escrow Amount\" shall be\n                     ---------------------------\nequal to Fifty Percent (50%) of the number of shares of Parent Common Stock\nconstituting the Original Purchase Price.  The Escrow Agent shall be the\nsecretary of the Parent, or his designee, so long as the Parent is a privately\nheld company.  Thereafter, any transfer agent for the Parent's Common Stock may\nbe appointed Escrow Agent.\n\n               (iv)  Exchange Ratio. The \"Exchange Ratio\" shall mean the\n                     --------------\nquotient obtained by dividing (i) (X) the Original Purchase Price divided by (Y)\nthe Fair Value Per Share as of the Effective Date by (ii) the Aggregate Common\nNumber. For illustrative purposes only, if the Original Purchase Price were\n$2,000,000, the Fair Value Per Share were $2.50 and the Aggregate Common Number\nwere 3,400,000, then the Exchange Ratio would be ($2,000,000 \/ $2.50) \/\n3,400,000 = .23529, so each share of Company Common Stock would be exchanged for\n .23529 shares of Parent's Common Stock. If the facts were the same but the\nAggregate Common Number were 1,500, then the calculation would be ($2,000,000 \/\n$2.50) \/1,500 = 533.33, so each share of Company Common Stock would be exchanged\nfor 533.33 shares of Parent's Common Stock.\n\n     1.7  Surrender of Certificates.\n          -------------------------   \n\n          (a) Exchange Agent.  The Secretary of Parent or such other entity\n              --------------\nreasonably designated by Parent shall serve as exchange agent (the \"Exchange\n                                                                    --------\nAgent\") in the Merger.\n- -----\n\n          (b) Parent to Provide Common Stock.  Promptly after the Effective\n              ------------------------------\nTime, Parent shall make available to the Exchange Agent for exchange in\naccordance with this Article I the Original Purchase Price issuable pursuant to\nSection 1.6(a) in exchange for outstanding shares of Company Common Stock;\nprovided that, on behalf of the Company Shareholders, Parent shall deposit the\nEscrow Amount into an escrow account.\n\n                                       4\n\n\n \n          (c) Exchange Procedures.  Promptly after the Effective Time, the\n              -------------------\nSurviving Corporation shall cause to be mailed to each Company Shareholder (i) a\nletter of transmittal (which shall specify that delivery shall be effected, and\nrisk of loss and title to the certificates (the \"Certificates\") which\n                                                 ------------\nimmediately prior to the Effective Time represented outstanding shares of\nCompany Common Stock whose shares were converted into the right to receive the\nMerger Consideration pursuant to Section 1.6, shall pass, only upon delivery of\nthe Certificates to the Exchange Agent and shall be in such form and have such\nother provisions as Parent may reasonably specify) and (ii) instructions for use\nin effecting the surrender of the Certificates in exchange for the Merger\nConsideration.  Upon surrender of a Certificate for cancellation to the Exchange\nAgent or to such other agent or agents as may be appointed by Parent, together\nwith such letter of transmittal, duly completed and validly executed in\naccordance with the instructions thereto, the Company Shareholder shall be\nentitled to receive in exchange therefor a certificate representing the number\nof shares issuable to such Company Shareholder as part of the Original Purchase\nPrice (less the number of shares of Parent Common Stock to be deposited in the\nEscrow Fund (as defined in Article VII) on such holder's behalf pursuant to\nArticle VII hereof) and the Certificate so surrendered shall forthwith be\ncanceled.  As soon as practicable after the Effective Time, and subject to and\nin accordance with the provisions of Article VII hereof, Parent shall cause to\nbe distributed to the Escrow Agent (as defined in Article VII) a certificate or\ncertificates representing that number of shares of Parent Common Stock equal to\nthe Escrow Amount.  Such consideration shall be beneficially owned by the\nholders on whose behalf such consideration were deposited in the Escrow Fund and\nshall be available to compensate Parent as provided in Article VII.  Until\nsurrendered to the Exchange Agent, each outstanding Certificate that, prior to\nthe Effective Time, represented shares of Company Common Stock will be deemed\nfrom and after the Effective Time, for all corporate purposes, other than the\npayment of dividends, to evidence only the right to receive Merger Consideration\npursuant to Section 1.6 hereof.\n\n          (d) Distributions With Respect to Unexchanged Shares.  No dividends or\n              ------------------------------------------------\nother distributions declared or made after the Effective Time with respect to\nParent Common Stock with a record date after the Effective Time will be paid to\nthe holder of any unsurrendered Certificate with respect to the shares of Parent\nCommon Stock issuable upon conversion of the shares of Company Common Stock\nrepresented thereby until the holder of record of such Certificate shall\nsurrender such Certificate.  Subject to applicable law, following surrender of\nany such Certificate, there shall be paid to the record holder of the\ncertificates representing whole shares of Parent Common Stock issued in exchange\ntherefor, without interest, at the time of such surrender, the amount of\ndividends or other distributions with a record date after the Effective Time\ntheretofore paid with respect to such whole shares of Parent Common Stock.\n\n          (e) Transfers of Ownership.  If any certificate for shares of Parent\n              ----------------------\nCommon Stock is to be issued in a name other than that in which the Certificate\nsurrendered in exchange therefor is registered, it will be a condition of the\nissuance thereof that the Certificate so surrendered will be properly endorsed\nand otherwise in proper form for transfer and that the person requesting such\nexchange will have paid to Sub or any agent designated by it any transfer or\nother taxes required by reason of the issuance of a certificate for shares of\nParent Common Stock in any name other than that of the registered holder of the\nCertificate surrendered or have \n\n                                       5\n\n\n \nestablished to the satisfaction of Sub or any agent designated by it that such\ntax has been paid or is not payable.\n\n          (f) No Liability.  Notwithstanding anything to the contrary in this\n              ------------\nSection 1.7, none of the Exchange Agent, the Surviving Corporation or any party\nhereto shall be liable to a holder of shares of Parent Common Stock or Company\nCommon Stock for any amount properly paid to a public official pursuant to any\napplicable abandoned property, escheat or similar law.\n\n     1.8  No Further Ownership Rights in Company Common Stock.  All shares of\n          ---------------------------------------------------                  \nParent Common Stock issued upon the surrender for exchange of shares of Company\nCommon Stock in accordance with the terms hereof shall be deemed to have been\nissued in full satisfaction of all rights pertaining to such shares of Company\ncapital stock, and there shall be no further registration of transfers on the\nrecords of the Surviving Corporation of shares of Company capital stock which\nwere outstanding immediately prior to the Effective Time.  If, after the\nEffective Time, Certificates are presented to the Surviving Corporation for any\nreason, they shall be canceled and exchanged as provided in this Article I.\n\n     1.9  Lost, Stolen or Destroyed Certificates.   In the event any\n          --------------------------------------\nCertificates shall have been lost, stolen or destroyed, the Exchange Agent shall\nissue in exchange for such lost, stolen or destroyed Certificates, upon the\nmaking of an affidavit of that fact by the holder thereof, such shares of Parent\nCommon Stock as may be required pursuant to Section 1.6(a); provided, however,\nthat Sub may, in its discretion and as a condition precedent to the issuance\nthereof, require the owner of such lost, stolen or destroyed Certificates to\ndeliver a bond in such sum as it may reasonably direct as indemnity against any\nclaim that may be made against Parent,  Sub or the Exchange Agent with respect\nto the Certificates alleged to have been lost, stolen or destroyed.\n\n     1.10 Purchase Price Adjustments.   The Original Purchase Price shall be\n          --------------------------  \nsubject to adjustment as follows:\n\n          (a) Six-Month Adjustment.  At the close of business on the last\n              --------------------\nbusiness day of the sixth full month after the Closing Date (the \"First\n                                                                  -----\nAdjustment Date\"), the Parent shall conduct a valuation of the Sub according to\n- ---------------\nthe operation of the Parent's affiliate valuation method (the \"Valuation\n                                                               ---------\nMethod\").  Parent shall then calculate the \"First Adjustment to Purchase Price\"\n- ------\nas follows:\n\n          FAPP = FADV -  OPP\n\nwhere     FAPP is the First Adjustment to Purchase Price;\n          FADV is the First Adjustment Date Value as calculated on the First\n          Adjustment Date using the Valuation Method; and\n          OPP is the Original Purchase Price.\n\n               (i)   If FAPP is greater than zero, then the Parent shall pay to\nthe Company Shareholders promptly after the First Adjustment Date a number of\nshares calculated as follows:\n\n                                       6\n\n\n \n          FSP = (FAPP \/ FVPSFAD) x .25\n\nwhere     FSP is the \"First Shares Payment\";\n          FAPP is the First Adjustment to Purchase Price as calculated above;\n          and\n          FVPSFAD is the Fair Value Per Share of the Parent's Common Stock on\n          the First Adjustment Date.\n\n               (ii)  If FAPP is less than zero, then the Escrow Agent shall pay\nto Parent from the Escrow Amount promptly after the First Adjustment Date a\nnumber of shares calculated as follows:\n\n          FSP = (-FAPP \/ FVPSCD)\n\nwhere     FSP is the \"First Shares Payment\";\n          FAPP is the First Adjustment to Purchase Price as calculated above;\n          and\n          FVPSCD is the Fair Value Per Share of the Parent's Common Stock on the\n          Closing Date.\n\nIf FAPP equals zero, no adjustment to the Original Purchase Price shall be made\nfor the First Adjustment Date.\n\n          (b) Twelve-Month Adjustment.  At the close of business on the last\n              -----------------------\nbusiness day of the twelfth full month after the Closing Date (the \"Second\n                                                                    ------\nAdjustment Date\"), the Parent shall conduct a valuation of the Sub according to\n- ---------------\nthe Valuation Model, attached as Exhibit B.  Parent shall then calculate the\n    ---------------              ---------\n\"Second Adjustment to Purchase Price\" as follows:\n\n          SAPP = SADV - FADV\n\nwhere     SAPP is the Second Adjustment to Purchase Price;\n          SADV is the Second Adjustment Date Value as calculated on the Second\n          Adjustment Date using the Valuation Method; and\n          FADV is the First Adjustment Date Value.\n\n               (i)   If SAPP is greater than zero, then the Parent shall pay to\nthe Company Shareholders promptly after the Second Adjustment Date a number of\nshares calculated as follows:\n\n          SSP = (SAPP \/ FVPSSAD) x .25\n\nwhere     SSP is the \"Second Shares Payment\";\n          SAPP is the Second Adjustment to Purchase Price as calculated above;\n          and\n          FVPSSAD is the Fair Value Per Share of the Parent's Common Stock on\n          the Second Adjustment Date.\n\n                                       7\n\n\n \n               (ii)  If SAPP is less than zero, then the Escrow Agent shall pay\nto Parent from the Escrow Amount promptly after the Second Adjustment Date a\nnumber of shares calculated as follows:\n\n          SSP = (-SAPP \/ FVPSCD)\n\nwhere     SSP is the \"Second Shares Payment\";\n          SAPP is the Second Adjustment to Purchase Price as calculated above;\n          and\n          FVPSCD is the Fair Value Per Share of the Parent's Common Stock on the\n          Closing Date.\n\nIf SAPP equals zero, no adjustment to the Original Purchase Price shall be made\nfor the Second Adjustment Date.\n\n     1.11 Parent Common Stock.  The shares of Parent Common Stock issued in\n          -------------------                                                \nconnection with the Merger will be issued in a transaction exempt from\nregistration under the Securities Act of 1933, as amended (the \"Securities\n                                                                ----------\nAct\"), by reason of Section 4(2) of the Securities Act or Regulation D\n- ---\nthereunder.  Such shares may not be transferred or resold thereafter except in\ncompliance with the terms of this Agreement and following registration under the\nSecurities Act or in reliance on an exemption from registration under the\nSecurities Act.\n\n     1.12 Tax Consequences.  It is intended by the parties hereto that the\n          ----------------                                                  \nMerger will constitute a reorganization within the meaning of Section 368 of the\nInternal Revenue Code of 1986, as amended (the \"Code\").  Each party has\nconsulted its own tax advisors with respect to the tax consequences of the\nMerger.\n\n     1.13 Taking of Necessary Action; Further Action.  If, at any time after\n          ------------------------------------------                          \nthe Effective Time, any further action is necessary or desirable to carry out\nthe purposes of this Agreement and to vest the Surviving Corporation with full\nright, title and possession to all assets, property, rights, privileges, powers\nand franchises of the Company and Sub, the officers and directors of the\nCompany, Parent and Sub are fully authorized in the name of their respective\ncorporations or otherwise to take, and will take, all such lawful and necessary\naction.\n\n                                   ARTICLE II\n\n                 REPRESENTATIONS AND WARRANTIES OF THE COMPANY\n                         AND THE PRINCIPAL SHAREHOLDERS\n\n     The Company and the Principal Shareholders hereby, jointly and severally,\nrepresent and warrant to Parent and Sub, subject to such exceptions as are\nspecifically disclosed in Exhibit C attached hereto (referencing the appropriate\n                          ---------\nsection and paragraph numbers), as follows:\n\n                                       8\n\n\n \n     2.1  Organization of the Company.  The Company is a corporation duly\n          ---------------------------                                      \norganized, validly existing and in good standing under the laws of the State of\nCalifornia.  The Company has the corporate power to own its properties and to\ncarry on its business as now being conducted.  The Company is duly qualified to\ndo business and in good standing as a foreign corporation in each jurisdiction\nin which the failure to be so qualified would have a material adverse effect on\nthe business, assets (including intangible assets), financial condition, results\nof operations or prospects of the Company (hereinafter referred to as a\n\"Material Adverse Effect\").  The Company has delivered a true and correct copy\n -----------------------\nof its Articles of Incorporation and Bylaws, each as amended to date, to Parent.\nExhibit C lists the directors and officers of the Company.  The operations now\n- ---------\nbeing conducted by the Company have not been conducted under any other name.\n\n     2.2  Company Capital Structure.\n\n          (a) The authorized capital stock of the Company consists of 10,000\nshares of authorized Common Stock of which 10,000 shares are issued and\noutstanding.  There are no other classes or series of capital stock of the\nCompany of any kind outstanding or issuable.  The Company Common Stock is held\nby the persons, with the domicile addresses and in the amounts set forth on\nExhibit C.  All outstanding shares of Company Common Stock are duly authorized,\nvalidly issued, fully paid and non-assessable and not subject to preemptive\nrights created by statute, the Articles of Incorporation or Bylaws of the\nCompany or any agreement to which the Company  is a party or by which it is\nbound.\n\n          (b) There are no options, warrants, calls, rights, commitments or\nagreements of any character, written or oral, to which the Company is a party\nor by which it is bound obligating the Company  to issue, deliver, sell,\nrepurchase or redeem, or cause to be issued, delivered, sold, repurchased or\nredeemed, any shares of the capital stock of the Company or obligating the\nCompany  to grant, extend, accelerate the vesting of, change the price of,\notherwise amend or enter into any such option, warrant, call, right, commitment\nor agreement.  As a result of the Merger, Parent will be the record and sole\nbeneficial owner of all outstanding capital stock of the Company and rights to\nacquire or receive Company Capital Stock.\n\n     2.3  Subsidiaries.  The Company does not have any subsidiaries or\n          ------------                                                  \naffiliated companies and does not otherwise own any shares in the capital of or\nany interest in, or control, directly or indirectly, any other corporation,\npartnership, association, joint venture or other business entity. The Company\nhas never had any subsidiaries or affiliated companies and has never otherwise\nowned shares in the capital of or any interest in or control, directly or\nindirectly of, any other corporation, partnership association, joint venture or\nother business entity.\n\n                                       9\n\n\n \n     2.4  Authority.  Each of the Company and the Principal Shareholders has\n          ---------                                                          \nall requisite corporate power and authority to enter into this Agreement to\nwhich it is a party and to consummate the transactions contemplated hereby and\nthereby.  The execution and delivery of this Agreement and the consummation of\nthe transactions contemplated hereby and thereby have been duly authorized by\nall necessary corporate action on the part of the Company and the Principal\nShareholders, and no further action is required on their part to authorize the\nAgreement and the transactions contemplated hereby and thereby.  This Agreement\nhas been duly executed and delivered by the Company and the Principal\nShareholders and, assuming the due authorization, execution and delivery by the\nother parties hereto and thereto, constitutes the valid and binding obligation\nof the Company and the Principal Shareholders, enforceable in accordance with\nits terms, subject to the laws of general application relating to bankruptcy,\ninsolvency and the relief of debtors and to rules of law governing specific\nperformance, injunctive relief or other equitable remedies.\n\n     2.5  No Conflict.  The execution and delivery of this Agreement does not,\n          -----------                                                           \nand the consummation of the transactions contemplated hereby and thereby will\nnot, conflict with, or result in any violation of, or default under (with or\nwithout notice or lapse of time, or both), or give rise to a right of\ntermination, cancellation, modification or acceleration of any obligation or\nloss of any benefit under (any such event, a \"Conflict\") (i) any provision of\n                                              --------\nthe Articles of Incorporation and Bylaws the Company, (ii) any mortgage,\nindenture, lease, contract or other agreement or instrument, permit, concession,\nfranchise or license to which the Company or any of its properties or assets is\nsubject, or (iii) any judgment, order, decree, statute, law, ordinance, rule or\nregulation applicable to the Company or its properties or assets.\n\n     2.6  Consents.  No consent, waiver, approval, order or authorization of, or\n          --------\nregistration, declaration or filing with, any court, administrative agency or\ncommission or other federal, state, county, local or other foreign governmental\nauthority, instrumentality, agency or commission (\"Governmental Entity\") or any\n                                                   -------------------\nthird party, including a party to any agreement with the Company (so as not to\ntrigger any Conflict), is required by or with respect to the Company in\nconnection with the execution and delivery of this Agreement or the consummation\nof the transactions contemplated hereby, except for (i) such consents, waivers,\napprovals, orders, authorizations, registrations, declarations and filings as\nmay be required under applicable securities laws thereby, and (ii) the filing of\nthe Agreement of Merger with the Secretary of State of the State of California.\n\n\n                                      10\n\n\n \n     2.7  Company Financial Statements.  Exhibit C sets forth the Company's\n          ----------------------------   ---------\naudited balance sheet as of December 31, 1996 and the related audited statements\nof income and cash flow for year then ended (the \"Audited Financials\") and the\n                                                  ------------------\nCompany's unaudited balance sheet of March 31, 1997, and the related unaudited\nstatements of income and cash flow for the Six (6) months then ended (the\n\"Unaudited Financials\").  The Audited Financials and the Unaudited Financials\n --------------------\nare correct in all material respects and have been prepared in accordance with\nUnited States generally accepted accounting principles (\"USGAAP\") applied on a\n                                                        --------\nbasis consistent throughout the periods indicated and consistent with each\nother.  The Audited and Unaudited Financials present fairly in all material\nrespects the financial condition, operating results and cash flows of the\nCompany as of the dates and during the periods indicated therein, subject in the\ncase of the Unaudited Financials, to normal year-end adjustments, which will not\nbe material in amount or significance.  The Company's audited Balance Sheet as\nof December 31, 1996 shall be referred to as the \"Balance Sheet\".\n                                                 ---------------\n\n     2.8  No Undisclosed Liabilities.  Except as set forth in Exhibit C, none\n          --------------------------                          ---------\nof the Company has any liability, indebtedness, obligation, expense, claim,\ndeficiency, guaranty or endorsement of any type, whether accrued, absolute,\ncontingent, matured, unmatured or other (whether or not required to be reflected\nin financial statements in accordance with USGAAP), which individually or in the\naggregate (i) has not been reflected in the Balance Sheet, or (ii) has not\narisen in the ordinary course of business consistent with past practices since\nDecember 31, 1996.\n\n     2.9  No Changes.  Except as set forth in Exhibit C, since December 31,\n          ----------                          ---------\n1996, there has not been, occurred or arisen any:\n\n          (a) transaction by the Company except in the ordinary course of\nbusiness as conducted on that date and consistent with past practices;\n\n          (b) amendments or changes to the Articles of Incorporation or Bylaws\nof the Company;\n\n          (c) capital expenditure or commitment by the Company, either\nindividually or in the aggregate, exceeding $25,000;\n\n          (d) destruction of, damage to or loss of any material assets, business\nor customer of the Company (whether or not covered by insurance);\n\n          (e) labor trouble or claim of wrongful discharge or other unlawful\nlabor practice or action;\n\n          (f) change in accounting methods or practices (including any change in\ndepreciation or amortization policies or rates) by the Company;\n\n          (g) revaluation by the Company of any of its assets;\n\n                                      11\n\n\n \n          (h) declaration, setting aside or payment of a dividend or other\ndistribution with respect to the Company's capital stock, or any direct or\nindirect redemption, purchase or other acquisition by the Company of any of its\ncapital stock;\n\n          (i) increase in the salary or other compensation payable or to become\npayable by the Company to any of its officers, directors, employees or advisors,\nor the declaration, payment or commitment or obligation of any kind for the\npayment, by the Company, of a bonus or other additional salary or compensation\nto any such person;\n\n          (j) any agreement, contract, lease or commitment (collectively a\n                                                                          \n\"Company Agreement\") or any extension or modification the terms of any Company\n- -------------------\nAgreement which (i) involves the payment of greater than $25,000 per annum or\nwhich extends for more than one year, (ii) involves any payment or obligation to\nany affiliate of the Company other than in the ordinary course of business as\nconducted on that date and consistent with past practices, or (iii) involves the\nsale of any material assets;\n\n          (k) sale, lease, license or other disposition of any of the assets or\nproperties of the Company, or any creation of any security interest in such\nassets or properties except in the ordinary course of business as conducted on\nthat date and consistent with past practices;\n\n          (l) amendment or termination of any material contract, agreement or\nlicense to which the Company is a party or by which it is bound;\n\n          (m) loan by the Company to any person or entity, incurring by the\nCompany of any indebtedness, guaranteeing by the Company of any indebtedness,\nissuance or sale of any debt securities of the Company or guaranteeing of any\ndebt securities of others, except for advances to employees for travel and\nbusiness expenses in the ordinary course of business, consistent with past\npractices;\n\n          (n) waiver or release of any right or claim of the Company, including\nany write-off or other compromise of any account receivable of the Company;\n\n          (o) the commencement or notice or threat of commencement of any\nlawsuit or proceeding against investigation of the Company or its affairs;\n\n          (p) notice of any claim of ownership by a third party of the Company's\nIntellectual Property (as defined in Section 2.13 below) or of infringement by\nthe Company of any third party's Intellectual Property rights;\n\n          (q) issuance or sale by the Company of any of its shares of capital\nstock, or securities exchangeable, convertible or exercisable therefor, or of\nany other of its securities;\n\n\n                                      12\n\n\n \n          (r) change in pricing or royalties set or charged by the Company to\nits customers or licensees or in pricing or royalties set or charged by persons\nwho have licensed Intellectual Property (as defined in Section 2.13 below) to\nthe Company;\n\n          (s) any event or condition of any character that has or may have a\nMaterial Adverse Effect on the Company or;\n\n          (t) negotiation or agreement by the Company or any officer or employee\nthereof to do any of the things described in the preceding clauses (a) through\n(s) (other than negotiations with Parent and its representatives regarding the\ntransactions contemplated by this Agreement).\n\n     2.10 Tax Matters.\n          -----------   \n\n          (a) Definition of Taxes.  For the purposes of this Agreement, \"Tax\"\n              -------------------                                       -----\nor, collectively, \"Taxes,\" means (i) any and all federal, state, local and\n                  --------\nforeign taxes, assessments and other governmental charges, duties, impositions\nand liabilities, including taxes based upon or measured by gross receipts,\nincome, profits, sales, use and occupation, and value added, ad valorem,\ntransfer, franchise, withholding, payroll, recapture, employment, excise and\nproperty taxes, together with all interest, penalties and additions imposed with\nrespect to such amounts; (ii) any liability for the payment of any amounts of\nthe type described in clause (i) as a result of being a member of an affiliated,\nconsolidated, combined or unitary group for any period; and (iii) any liability\nfor the payment of any amounts of the type described in clause (i) or (ii) as a\nresult of any express or implied obligation to indemnify any other person or as\na result of any obligations under any agreements or arrangements with any other\nperson with respect to such amounts and including any liability for taxes of a\npredecessor entity.\n\n          (b)  Tax Returns and Audits.  Except as set forth in Exhibit C:\n               ----------------------                          ---------\n\n               (i)   The Company as of the Closing Date will have prepared and\ntimely filed or made a timely request for extension for all required federal,\nstate, local and foreign returns, estimates, information statements and reports\n(\"Returns\") relating to any and all Taxes concerning or attributable to the\n ---------\nCompany or its operations and such Returns are true and correct and have been\ncompleted in accordance with applicable law.\n\n               (ii)  The Company as of the Closing Date (A) will have paid or\naccrued all Taxes it is required to pay or accrue as shown on the Returns and\n(B) will have withheld and timely remitted with respect to its employees all\nincome taxes and other Taxes required to be withheld and remitted.\n\n               (iii) The Company has not been delinquent in the payment of any\nTax nor is there any Tax deficiency outstanding, assessed or proposed against\nthe Company,  nor has the Company executed any waiver of any statute of\nlimitations on or extending the period for the assessment or collection of any\nTax.\n\n                                      13\n\n\n \n               (iv)  No audit or other examination of any Return of the Company,\nis presently in progress, nor has the Company been notified of any request for\nsuch an audit or other examination.\n\n               (v)   The Company has no liabilities for unpaid federal, state,\nlocal and foreign Taxes which have not been accrued or reserved against in\naccordance with USGAAP on the Balance Sheet, whether asserted or unasserted,\ncontingent or otherwise.\n\n               (vi)  The Company has made available to Parent or its legal\ncounsel, copies of all foreign, federal and state income and all state sales and\nuse Returns filed for all years as to which any applicable statute of\nlimitations has not expired.\n\n               (vii) There are no Liens of any sort on the assets of the Company\nthe relating to or attributable to Taxes other than Liens for taxes not yet due\nand payable.\n\n               (viii) The Company Shareholders have no knowledge of any basis \nfor the assertion of any claim relating or attributable to Taxes which, if\nadversely determined, would result in any Lien on any material assets of the\nCompany.\n\n               (ix)  As of the Closing, there will not be any contract,\nagreement, plan or arrangement, including but not limited to the provisions of\nthis Agreement, covering any employee or former employee of the Company that,\nindividually or collectively, could give rise to the payment of any amount that\nwould not be deductible by the Company as an expense under Sections 162, 280G or\n404 of the Code.\n\n               (x)   The Company is not a party to a tax sharing,\nindemnification or allocation agreement nor does the Company owe any amount\nunder any such agreement.\n\n               (xi)  The Company uses the accrual method of accounting for\nincome tax purposes and its tax basis in its assets for purposes of determining\nits future amortization, depreciation and other federal income tax deductions is\naccurately reflected on the Company's tax books and records.\n\n     2.11 Restrictions on Business Activities.   There is no agreement\n          -----------------------------------                           \n(noncompete or otherwise), commitment, judgment, injunction, order or decree to\nwhich the Company or any Principal Shareholder is a party or otherwise binding\nupon the Company which has or may  have the effect of prohibiting or impairing\nany business practice of the Company, any acquisition of property (tangible or\nintangible) by the Company or the conduct of business by the Company. The\nCompany has not entered into any agreement under which the Company is restricted\nfrom providing services to customers or potential customers or any class of\ncustomers, in any geographic area, during any period of time or in any segment\nof the market.\n\n                                      14\n\n\n \n     2.12 Title to Properties; Absence of Liens and Encumbrances; Condition of\n          --------------------------------------------------------------------\nEquipment.\n- ---------                                                     \n\n          (a)  The Company does not own any real property, nor has it ever owned\nany real property.  Exhibit C sets forth a list of all real property currently\n                    ---------\nleased by the Company the name of the lessor, the date of the lease and each\namendment thereto and, with respect to any current lease, the aggregate annual\nrental and\/or other fees payable under any such lease.  All such current leases\nare in full force and effect, are valid and effective in accordance with their\nrespective terms, and there is not, under any of such leases, any existing\ndefault or event of default (or event which with notice or lapse of time, or\nboth, would constitute a default).\n\n          (b) The Company has good and valid title to, or, in the case of leased\nproperties and assets, valid leasehold interests in, all of its tangible\nproperties and assets, real, personal and mixed, used or held for use in its\nbusiness, free and clear of any Liens, except as reflected in the Company\nFinancials or in Exhibit C and except for liens for taxes not yet due and\n                 ---------\npayable and such imperfections of title and encumbrances, if any, which are not\nmaterial in character, amount or extent, and which do not detract from the\nvalue, or interfere with the present use, of the property subject thereto or\naffected thereby.\n\n          (c) Exhibit C lists all material items of equipment (the \"Equipment\")\n              ---------                                             ---------\nowned or leased by the Company and such Equipment is, taken as a whole, (i)\nadequate for the conduct of the business of the Company as currently conducted\nand (ii) in good operating condition, regularly and properly maintained, subject\nto normal wear and tear.\n\n          (d) The Company has sole and exclusive ownership, free and clear of\nany Liens, of all customer files and other customer information relating to\ncustomers of the Company's current and former customers (the \"Customer\n                                                              --------\nInformation\").  No third party possesses any claims or rights with respect to\n- -----------\nuse of the Customer Information.\n\n     2.13 Intellectual Property.\n          ---------------------   \n\n          (a)  For the purposes of this Agreement, the following terms have the\nfollowing definitions:\n\n          \"Intellectual Property\" shall mean any or all of the following and all\n           ---------------------\nrights in, arising out of, or associated therewith:  (i) all United States and\nforeign patents and applications therefor and all reissues, divisions, renewals,\nextensions, provisionals, continuations and continuations-in-part thereof; (ii)\nall inventions (whether patentable or not), invention disclosures, improvements,\ntrade secrets, proprietary information, know how, technology, technical data and\ncustomer lists, and all documentation relating to any of the foregoing; (iii)\nall copyrights, copyrights registrations and applications therefor, and all\nother rights corresponding thereto throughout the world; (iv) all mask works,\nmask work registrations and applications therefor, and all other rights\ncorresponding thereto throughout the world; (v) all industrial designs and any\nregistrations and applications therefor throughout the world; (vi) all trade\nnames, logos, common law trademarks and service marks; \n\n                                      15\n\n\n \ntrademark and service mark registrations and applications therefor throughout\nthe world; (vii) all databases and data collections and all rights therein\nthroughout the world; and (viii) all computer software including all source\ncode, object code, firmware, development tools, files, records and data, all\nmedia on which any of the foregoing is recorded, and all documentation related\nto any of the foregoing throughout the world.\n\n          \"Intellectual Property of Company\" shall mean any Intellectual\n           --------------------------------\nProperty that:  (i) is owned by or exclusively licensed to the Company, or (ii)\nwhich is necessary to the operation of the Company, including the design,\nmanufacture and use of the products or performance of the services of the\nCompany as it currently is operated or is reasonably anticipated to be operated\nin the future, but shall specifically not include any rights in or to materials\ncreated for clients as \"work-made-for-hire\" or which are subject to an exclusive\nassignment or license in favor of clients of the Company.\n\n          (b) Exhibit C lists all of Company's United States and foreign: (i)\n              ---------\npatents, patent applications (including provisional applications); (ii)\nregistered trademarks, applications to register trademarks, intent-to-use\napplications, or other registrations related to trademarks; (iii) registered\ncopyrights and applications for copyright registration; (iv) mask work\nregistrations and applications to register mask works; and (v) any other\nIntellectual Property of Company that is the subject of an application,\ncertificate or registration filed with, issued by, or recorded by, any state,\ngovernment or other public legal authority (all of the foregoing, the\n\"Registered Intellectual Property\").\n\n          (c) Each item of Registered Intellectual Property is valid and\nsubsisting, all necessary registration, maintenance and renewal fees in\nconnection with such Registered Intellectual Property have been made and all\nnecessary documents and certificates in connection with such Registered\nIntellectual Property have been filed with the relevant patent, copyright,\ntrademark or other authorities in the United States or foreign jurisdictions, as\nthe case may be, for the purposes of maintaining such Registered Intellectual\nProperty.\n\n          (d) The contracts, licenses and agreements listed in Exhibit C include\n                                                               ---------\nall contracts, licenses and agreement, to which the Company is a party with\nrespect to any Intellectual Property with a value or cost in excess of $10,000,\nother than \"shrink wrap\" and similar commercial end-user licenses.\n\n          (e) The contracts, licenses and agreements listed in Exhibit C are in\n                                                               ---------\nfull force and effect. The consummation of the transactions contemplated by this\nAgreement will neither violate nor result in the breach, modification,\ncancellation, termination, or suspension of the contracts, licenses and\nagreements in Exhibit C. The Company is in compliance with, and has not\n              ---------\nbreached any term of, the contracts, licenses and agreements listed in Exhibit\n                                                                       -------\nC, and, to the knowledge of the Company and the Principal Shareholders, all\n- -\nother parties to the contracts, licenses and agreements listed in Exhibit C are,\n                                                                  ---------\nin compliance with, and have not breached any term of, the contracts, licenses\nand agreements.  Following the Closing Date, Sub will be permitted to exercise\nall of the Company's rights under the contracts, licenses and agreements listed\nin Exhibit C without the payment of any additional amounts or consideration\n   ---------\nother than ongoing fees, royalties or payments which the Company would otherwise\nbe required to pay.\n\n\n                                      16\n\n\n \n          (f)  Except as set forth in Exhibit C:  (i) no person has any rights \n                                      ---------\nto use any of the Intellectual Property of the Company; and (ii) the Company has\nnot granted to any Person, or authorized any Person to retain, any rights in the\nIntellectual Property of Company.\n\n          (g)  Except as set forth in Exhibit C:  (i) the Company owns and has\n                                      ---------\ngood and exclusive title to each item of Intellectual Property listed in Exhibit\n                                                                         -------\nC, free and clear of any lien or encumbrance; and (ii) the Company owns, or has\n- -\nthe right, pursuant to a valid Contract to use or operate under, all other\nIntellectual Property of the Company.\n\n          (h)  The operation of the business of the Company as it currently is\nconducted or is reasonably contemplated to be conducted, including its design,\ndevelopment, manufacture and sale of its products (including with respect to\nproducts currently under development) and provision of services, does not\ninfringe or misappropriate the Intellectual Property of any other person,\nviolate the rights of any person (including rights to privacy or publicity),\nconstitute unfair competition.\n\n          (i)  The Company has not received notice from any person that the\noperation of the business of the Company, including its design, development,\nmanufacture and sale of its products (including with respect to products\ncurrently under development) and provision of its services, infringes or\nmisappropriates the Intellectual Property of any person, violates the rights of\nany person (including rights to privacy or publicity), or constitutes unfair\ncompetition.\n\n          (j)  The Company owns or has the right to all Intellectual Property\nnecessary to the conduct of its business as it currently is conducted or is\nreasonably contemplated to be conducted, including, without limitation, the\ndesign, development, manufacture and sale of all products currently manufactured\nor sold by the Company under development by the Company and the performance of\nall services provided or contemplated to be provided by the Company.\n\n          (k)  Exhibit C lists all contracts, licenses and agreements between\n               ---------\nthe Company and any other person wherein or whereby the Company has agreed to,\nor assumed, any obligation or duty to indemnify, hold harmless or otherwise\nassume or incur any obligation or liability with respect to the infringement by\nthe Company or such other Person of the Intellectual Property rights of any\nother person,\n\n          (l)  Except as listed in Exhibit C, there are no contracts, licenses\n                                   ---------\nand agreements between the Company and any other person with respect to Company\nIntellectual Property under which there is any dispute known to the Company or\nthe Principal Shareholders regarding the scope of such agreement, or performance\nunder such agreement including with respect to any payments to be made or\nreceived by the Company thereunder.\n\n          (m)  Except as listed in Exhibit C, to the knowledge of the Company\n                                   ---------\nand the Principal Shareholders, no person is infringing or misappropriating any\nof the Intellectual Property of Company.\n\n\n                                      17\n\n\n \n          (n)  Except as listed in Exhibit C, there are no claims asserted\n                                   ---------\nagainst the Company or against any customer of the Company, related to any\nproduct or service of the Company.\n\n          (o)  No Intellectual Property of Company or product or service of the\nCompany is subject to any outstanding decree, order, judgment, or stipulation\nrestricting in any manner the use or licensing thereof by the Company.\n\n          (p)  The Company has, and enforces, a policy requiring each employee\nand contractor to execute proprietary information and confidentiality agreements\nsubstantially in the Company's standard forms and all current and former\nemployees and contractors of the Company have executed such an agreement.\n\n          (q)  No (i) product, service or publication of the Company, (ii)\nmaterial published or distributed by the Company or (iii) conduct or statement\nof Company, constitutes obscene material, a defamatory statement or material, or\nviolates any rights, including rights of publicity or privacy, of any person.\n\n     2.14 Agreements, Contracts and Commitments.\n          -------------------------------------   \n\n          (a)  Except as set forth in Exhibit C, the Company does not have, or\n                                      ---------\nis not bound by:\n\n               (i)   any collective bargaining agreement,\n\n               (ii)  any agreements or arrangements that contain any severance\npay or post-employment liabilities or obligations,\n\n               (iii) any bonus, deferred compensation, pension, profit sharing\nor retirement plans, or any other employee benefit plans or arrangements,\n\n               (iv)  any employment or consulting agreement, contract or\ncommitment with an employee or individual consultant or salesperson or\nconsulting or sales agreement, contract or commitment with a firm or other\norganization,\n\n               (v)   any agreement or plan, including, without limitation, any\nstock option plan, stock appreciation rights plan or stock purchase plan, any of\nthe benefits of which will be increased, or the vesting of benefits of which\nwill be accelerated, by the occurrence of any of the transactions contemplated\nby this Agreement or the value of any of the benefits of which will be\ncalculated on the basis of any of the transactions contemplated by this\nAgreement,\n\n               (vi)  any fidelity or surety bond or completion bond,\n\n                                      18\n\n\n \n               (vii) any lease of personal property having a value individually\nin excess of $25,000,\n\n               (viii) any agreement of indemnification or guaranty, other than\nas set forth in agreements listed in Exhibit C,\n                                     ----------\n\n               (ix)  any agreement, contract or commitment containing any\ncovenant limiting the freedom of the Company to engage in any line of business\nor to compete with any person,\n\n               (x)   any agreement, contract or commitment relating to capital\nexpenditures and involving future payments in excess of $25,000,\n\n               (xi)  any agreement, contract or commitment relating to the\ndisposition or acquisition of assets or any interest in any business enterprise\noutside the ordinary course of the Company's business,\n\n               (xii) any mortgages, indentures, loans or credit agreements,\nsecurity agreements or other agreements or instruments relating to the borrowing\nof money or extension of credit, including guaranties referred to in clause\n(viii) hereof,\n\n               (xiii) any purchase order or contract for the purchase of\nmaterials involving $25,000 or more,\n\n               (xiv) any construction contracts,\n\n               (xv)  any distribution, joint marketing or development agreement,\nor\n\n               (xvi) any other agreement, contract or commitment that involves\n$25,000 or more or is not cancelable without penalty within thirty (30) days.\n\n          (b)  The Company has not breached, violated or defaulted under, or\nreceived notice that it has breached, violated or defaulted under, any of the\nterms or conditions of any agreement, contract, license or commitment to which\nit is a party, by which it benefits or by which it is bound (any such agreement,\ncontract, license or commitment, a \"Contract\"), nor is the Company or any\n                                    --------    \nPrincipal Shareholder aware of any event that would constitute such a breach,\nviolation or default with the lapse of time, giving of notice or both. Each\nContract is in full force and effect and, except as otherwise disclosed in\nExhibit C, is not subject to any default thereunder by any party obligated to\n- ---------\nthe Company pursuant thereto. The Company has obtained, or will obtain prior to\nthe Closing Date, all necessary consents, waivers and approvals of parties to\nany Contract as are required thereunder in connection with the Merger so that\nall such Contracts will remain in effect without modification after the Closing.\n\n                                      19\n\n\n \n     2.15 Interested Party Transactions.  No officer, director or Principal\n          -----------------------------                                      \nShareholder of the Company (nor any ancestor, sibling, descendant or spouse of\nany of such persons, or any trust, partnership or corporation in which any of\nsuch persons has or has had an interest), has or has had, directly or\nindirectly, (i) an interest in any entity which furnished or sold, or furnishes\nor sells, services or products that the Company furnishes or sells, or proposes\nto furnish or sell, or (ii) any interest in any entity that purchases from or\nsells or furnishes to, the Company, any goods or services or (iii) a beneficial\ninterest in any Contract; provided, that ownership of no more than one percent\n(1%) of the outstanding voting stock of a publicly traded corporation shall not\nbe deemed an \"interest in any entity\" for purposes of this Section 2.15.\n\n     2.16 Governmental Authorization.  Exhibit C accurately lists each\n          --------------------------   ---------\nconsent, license, permit, grant or other authorization issued to the Company by\na governmental entity (i) pursuant to which the Company currently operates or\nholds any interest in any of its properties or (ii) which is required for the\noperation of its business or the holding of any such interest (herein\ncollectively called \"Company Authorizations\").  The Company Authorizations are\n                     ----------------------\nin full force and effect and constitute all Company Authorizations required to\npermit the Company to operate or conduct its business or hold any interest in\nits properties or assets.\n\n     2.17 Litigation.  There is no action, suit or proceeding of any nature\n          ----------                                                         \npending, or to the Company's or the Principal Shareholders' knowledge\nthreatened, against the Company, its properties or any of its officers or\ndirectors, nor, to the knowledge of the Principal Shareholders, is there any\nreasonable basis therefor.  There is no investigation pending or, to the\nCompany's or Principals Shareholders' knowledge threatened, against the Company,\nits properties or any of its officers or directors (nor, to the best knowledge\nof the Principal Shareholders, is there any reasonable basis therefor) by or\nbefore any governmental entity.  No governmental entity has at any time\nchallenged or questioned the legal right of the Company to manufacture, offer or\nsell any of its products or services in the present manner or style thereof.\n\n     2.18 Accounts Receivable.\n          -------------------   \n\n          (a)  The Company has made available to Parent a list of all accounts\nreceivable of the Company as of March 31, 1997, (\"Accounts Receivable\") along\n                                                  -------------------\nwith a range of days elapsed since invoice.\n\n          (b)  All Accounts Receivable of the Company arose in the ordinary\ncourse of business, are carried at values determined in accordance with USGAAP\nconsistently applied and are collectible except to the extent of reserves\ntherefor set forth in the Balance Sheet.  No person has any Lien on any of such\nAccounts Receivable and no request or agreement for deduction or discount has\nbeen made with respect to any of such Accounts Receivable.\n \n\n                                      20\n\n\n \n     2.19 Minute Books.  The minutes of the Company made available to counsel\n          ------------                                                         \nfor Parent are the only minutes of the Company and contain a reasonably accurate\nsummary of all meetings of the Board of Directors (or committees thereof) of the\nCompany and its shareholders or actions by written consent since the time of\nincorporation of the Company.\n\n     2.20 Environmental Matters.\n          ---------------------   \n\n          (a) Hazardous Material.  The Company has not: (i) operated any\n              ------------------\nunderground storage tanks at any property that the Company has at any time\nowned, operated, occupied or leased; or (ii) illegally released any material\namount of any substance that has been designated by any Governmental Entity or\nby applicable federal, state or local law to be radioactive, toxic, hazardous or\notherwise a danger to health or the environment, including, without limitation,\nPBS, asbestos, petroleum, and urea-formaldehyde and all substances listed as\nhazardous substances pursuant to the Comprehensive Environmental Response,\nCompensation, and Liability Act of 1980, as amended, or defined as a hazardous\nwaste pursuant to the United States Resource Conservation and Recovery Act of\n1976, as amended, and the regulations promulgated pursuant to said laws (a\n\"Hazardous Material\"), but excluding office and janitorial supplies properly and\n ------------------\nsafely maintained.  No Hazardous Materials are present as a result of the\ndeliberate actions of the Company or, to the Company's or Principal\nShareholders' knowledge, as a result of any actions of any third party or\notherwise, in, on or under any property, including the land and the\nimprovements, ground water and surface water thereof, that the Company has at\nany time owned, operated, occupied or leased.\n\n          (b)  Hazardous Materials Activities.  The Company has not transported,\n               ------------------------------\nstored, used, manufactured, disposed of, released or exposed its employees or\nothers to Hazardous Materials in violation of any law in effect on or before the\nClosing Date, nor has either the Company disposed of, transported, sold, or\nmanufactured any product containing a Hazardous Material (any or all of the\nforegoing being collectively referred to as \"Hazardous Materials Activities\") in\n                                             ------------------------------\nviolation of any rule, regulation, treaty or statute promulgated by any\nGovernmental Entity in effect prior to or as of the date hereof to prohibit,\nregulate or control Hazardous Materials or any Hazardous Material Activity.\n\n          (c)  Permits. The Company currently holds all environmental approvals,\n               -------\npermits, licenses, clearances and consents (the \"Environmental Permits\")\n                                                 ---------------------\nnecessary for the conduct of the Company's Hazardous Material Activities and\nother businesses of the Company as such activities and businesses are currently\nbeing conducted.\n\n          (d)  Environmental Liabilities.  No action, proceeding, revocation\n               -------------------------\nproceeding, amendment procedure, writ, injunction or claim is pending, or to the\nPrincipal Shareholders' knowledge, threatened concerning any Environmental\nPermit, Hazardous Material or any Hazardous Materials Activity of the Company.\nThe Principal Shareholders are not aware of any fact or circumstance which could\ninvolve the Company in any environmental litigation or impose upon the Company\nany environmental liability.\n\n\n                                      21\n\n\n \n     2.21 Brokers' and Finders' Fees: Third Party Expenses.  Except as set\n          ------------------------------------------------                    \nforth in Exhibit C, the Company has not incurred, nor will it incur, directly or\n         ---------\nindirectly, any liability for brokers' or finders' fees or agents' commissions\nor any similar charges in connection with the Agreement or any transaction\ncontemplated hereby.  Exhibit C sets forth the principal terms and conditions of\n                      ---------\nany agreement, written or oral, with respect to such fees.  Exhibit C sets forth\n                                                            ---------\nthe Company's current reasonable estimate of all third party expenses expected\nto be incurred by the Company in connection with the negotiation and\neffectuation of the terms and conditions of this Agreement and the transactions\ncontemplated hereby.\n\n     2.22 Employee Benefit Plans and Compensation.\n          ---------------------------------------   \n\n          (a)  For purposes of this Section 2.22, the following terms shall have\nthe meanings set forth below:\n\n               (i)   \"Employee Plan\" shall refer to any plan, program, policy,\n                      -------------\npractice, contract, agreement or other arrangement providing for bonuses,\nseverance, termination pay, performance awards, stock or stock-related awards,\nfringe benefits or other employee benefits of any kind, whether formal or\ninformal, funded or unfunded and whether or not legally binding, including\nwithout limitation, any plan which is or has been maintained, contributed to, or\nrequired to be contributed to, by the Company for the benefit of any \"Employee\"\n(as defined below), and pursuant to which the Company has or may have any\nmaterial liability, contingent or otherwise; and\n\n               (ii)  \"Employee\" shall mean any current, former, or retired\n                      --------\nemployee, officer, or director of the Company.\n\n               (iii) \"Employee Agreement\" shall refer to each employment,\n                      ------------------\nseverance, consulting or similar agreement or contract between the Company and\nany Employee;\n\n          (b)  Schedule.  Exhibit C contains an accurate and complete list of\n               --------   ---------\neach Company Employee Plan and each Employee Agreement, together with a schedule\nof all liabilities, whether or not accrued, under each such Company Employee\nPlan.  The Company does not have any plan or commitment, whether legally binding\nor not, to establish any new Company Employee Plan or Employee Agreement, to\nmodify any Company Employee Plan or Employee Agreement (except to the extent\nrequired by law or to conform any such Company Employee Plan or Employee\nAgreement to the requirements of any applicable law, in each case as previously\ndisclosed to Parent in writing, or as required by this Agreement), or to enter\ninto any Company Employee Plan or Employee Agreement, nor does it have any\nintention or commitment to do any of the foregoing.\n\n          (c)  Documents.  The Company has provided to Parent: (i) correct and\n               ---------\ncomplete copies of all documents embodying each Employee Plan and each Employee\nAgreement including all amendments thereto and copies of all forms of agreement\nand enrollment used therewith; (ii) the most recent annual actuarial valuations,\nif any, prepared for each Employee Plan; (iii) the three most recent annual\nreports (Series 5500 and all schedules thereto), if any, required under \n\n                                      22\n\n\n \nERISA or the Code in connection with each Company Employee Plan or related\ntrust; (iv) the most recent summary plan description together with the most\nrecent summary of material modifications, if any, required under ERISA with\nrespect to each Company Employee Plan; (v) all IRS determination letters and\nrulings relating to Company Employee Plans and copies of all applications and\ncorrespondence to or from the IRS or the Department of Labor (\"DOL\") with\nrespect to any Company Employee Plan; (vi) if the Employee Plan is funded, the\nmost recent annual and periodic accounting of Employee Plan assets; and (vii)\nall communications material to any Employee or Employees relating to any\nEmployee Plan and any proposed Employee Plans, in each case, relating to any\namendments, terminations, establishments, increases or decreases in benefits,\nacceleration of payments or vesting schedules or other events which would result\nin any liability to the Company.\n\n          (d) Employee Plan Compliance.  (i) The Company have performed all\n              ------------------------\nobligations required to be performed by them under each Employee Plan and each\nEmployee Plan has been established and maintained in accordance with its terms\nand in compliance with all applicable laws, statutes, orders, rules and\nregulations, including ERISA and the Code; (ii) no \"prohibited transaction,\"\nwithin the meaning of Section 4975 of the Code or Section 406 of ERISA, has\noccurred with respect to any Company Employee Plan; (iii) there are no actions,\nsuits or claims pending, or, to the knowledge of the Company or the Principal\nShareholders threatened or anticipated (other than routine claims for benefits)\nagainst any Employee Plan or against the assets of any Employee Plan; (iii) each\nEmployee Plan can be amended, terminated or otherwise discontinued after the\nClosing Date in accordance with its terms, without liability to the Company,\nParent or Sub (other than ordinary administration expenses typically incurred in\na termination event); (iv) there are no inquiries or proceedings pending or, to\nthe knowledge of the Company or any Principal Shareholders threatened by the IRS\nor DOL with respect to any Company Employee Plan; and (v)  the Company is not\nsubject to any penalty or tax with respect to any Company Employee Plan under\nSection 402(i) of ERISA or Section 4975 through 4980 of the Code.\n\n          (e)  Pension Plans.  The Company does not now, nor has it ever,\n               -------------\nmaintained, established, sponsored, participated in, or contributed to, any\nPension Plan which is subject to Part 3 of Subtitle B of Title I of ERISA, Title\nIV of ERISA or Section 412 of the Code.\n\n          (f)  Multiemployer Plans.  At no time has the Company contributed to\n               -------------------\nor been requested to contribute to any Multiemployer Plan.\n\n          (g)  No Post-Employment Obligations. Except as set forth in Exhibit C,\n               ------------------------------                         ---------\nno Company Employee Plan provides, or has any liability to provide, life\ninsurance, medical or other employee benefits to any Employee upon his or her\nretirement or termination of employment for any reason, except as may be\nrequired by statute, and the Company has  not]represented, promised or\ncontracted (whether in oral or written form) to any Employee (either\nindividually or to Employees as a group) that such Employee(s) would be provided\nwith life insurance, medical or other employee welfare benefits upon their\nretirement or termination of employment, except to the extent required by\nstatute.\n\n                                      23\n\n\n \n          (h)  Continuing Liabilities.  No Employee Plan provides, or has any\n               ----------------------\nliability to provide, life insurance, medical or other employee benefits to any\nEmployee upon his or her retirement or termination of employment for any reason,\nexcept as may be required by statute, and the Company has not represented,\npromised or contracted (whether in oral or written form) to any Employee (either\nindividually or to Employees as a group) that such Employee(s) would be provided\nwith life insurance, medical or other employee welfare benefits upon their\nretirement or termination of employment, except to the extent required by\nstatute.\n\n          (i)  No Conflicts.  The execution of this Agreement and the\n               ------------\nconsummation of the transactions contemplated hereby will not (either alone or\nupon the occurrence of any additional or subsequent events) constitute an event\nunder any Employee Plan, Employee Agreement, trust or loan that will or may\nresult in any payment (whether of severance pay or otherwise), acceleration,\nforgiveness of indebtedness, vesting, distribution, increase in benefits or\nobligation to fund benefits with respect to any Employee.\n\n          (j)  Employment Matters.  The Company (i) is in compliance with all\n               ------------------\napplicable laws, rules and regulations respecting employment, employment\npractices, terms and conditions of employment and wages and hours, in each case,\nwith respect to Employees; (ii) has withheld all amounts required by law or by\nagreement to be withheld from the wages, salaries and other payments to\nEmployees; (iii) is not liable for any arrears of wages or any taxes or any\npenalty for failure to comply with any of the foregoing; and (iv) is not liable\nfor any payment to any trust or other fund or to any governmental or\nadministrative authority, with respect to unemployment compensation benefits,\nsocial security or other benefits for Employees (other than routine payments to\nbe made in the normal course of business and consistent with past practice).\n\n          (k)  Labor.  No work stoppage or labor strike against the Company is\n              ------\npending, or to the knowledge of the Company and the Principal Shareholders,\nthreatened.  The Company is not involved in or threatened with any labor\ndispute, grievance, or litigation relating to labor, safety, discrimination, or\nharassment matters involving any Employee, including, without limitation,\ncharges of unfair labor practices, discrimination, or harassment complaints,\nwhich, if adversely determined, would, individually or in the aggregate, result\nin liability to the Company, Parent or Sub.  The Company has not engaged in any\nunfair labor practices which could, individually or in the aggregate, directly\nor indirectly result in a liability to the Company, Parent or Sub.  The Company\nis not presently, or has in the past, been a party to, or bound by, any\ncollective bargaining agreement or union contract with respect to Employees and\nno collective bargaining agreement is being negotiated by the Company.\n\n\n                                      24\n\n\n \n     2.23 Insurance.   Exhibit C lists all insurance policies and fidelity\n          ---------    ---------\nbonds covering the assets, business, equipment, properties, operations,\nemployees, officers and directors of the Company. There is no claim by the\nCompany pending under any of such policies or bonds as to which coverage has\nbeen questioned, denied or disputed by the underwriters of such policies or\nbonds.  All premiums due and payable under all such policies and bonds have been\npaid and the Company are otherwise in compliance with the terms of such policies\nand bonds (or other policies and bonds providing substantially similar insurance\ncoverage).  The Company and the Principal Shareholders have no knowledge of any\nthreatened termination of, or premium increase with respect to, any of such\npolicies.\n\n     2.24 Compliance with Laws.  The Company has complied with, are not in\n          --------------------                                              \nviolation of, and have not received any notices of violation with respect to,\nany foreign, federal, state or local statute, law or regulation.\n\n     2.25 Third Party Consents.  Except as set forth in Exhibit C, no consent\n          --------------------                          ---------\nor approval is needed from any third party in order to effect the Merger or any\nof the transactions contemplated by this Agreement.\n\n     2.26 Warranties; Indemnities.  Exhibit C sets forth a summary of all\n          -----------------------   ---------\nwarranties and indemnities relating to products sold or services rendered by the\nCompany, and no warranty or indemnity has been given by the Company which\ndiffers therefrom in any respect.  Exhibit C also indicates all warranty and\nindemnity claims in excess of $25,000 made against the Company.\n\n     2.27 Complete Copies of Materials.  The Company has delivered or made\n          ----------------------------                                      \navailable true and complete copies of each document (or summaries of same) that\nhas been requested by Parent or its counsel.\n\n     2.28 Representations Complete.  None of the representations or guarantees\n          ------------------------                                              \nmade by the Company or the Principal Shareholders (as modified by the Exhibit\n                                                                      -------\nC), nor any statement made in Exhibit C or any certificate furnished by the\n- -                             ---------\nCompany or the Principal Shareholders pursuant to this Agreement, or furnished\nin or in connection with documents mailed or delivered to the Company\nShareholders in connection with soliciting their consent to this Agreement and\nthe Merger, contains or will contain at the Closing, any untrue statement of a\nmaterial fact, or omits or will omit at the Closing to state any material fact\nnecessary in order to make the statements contained herein or therein, in the\nlight of the circumstances under which made, not misleading.\n\n     2.29 Business Plan.  The Company has provided to Parent a current,\n          -------------                                                  \naccurate and detailed business plan for the Company's planned operations during\nthe twelve months following the Closing Date which includes, without limitation,\na description of the Company's capital requirements, staffing needs, and a pro\nforma income statement.  The business plan is attached to Exhibit C hereto.\n                                                          ---------\n\n     2.30 Backlog Report.    The Company has provided to Parent a detailed and\n          ---------------                                                     \naccurate list of all orders booked but not yet completed, giving the status of\neach order as of a recent date.  The backlog report is attached to Exhibit C\n                                                                   ---------\nhereto.\n\n\n                                      25\n\n\n \n     2.31 Securities Law Compliance.     The Company will make no distribution\n          -------------------------                                        \nof any security issued by Parent unless such distribution is in compliance with\napplicable state and federal securities laws.\n\n     2.32 Principal Shareholder Investment Representations.    Each of the\n          ------------------------------------------------               \nPrincipal Shareholders represents and warrants to the Parent as follows:\n\n          (a)  Experience.  The Principal Shareholder is able to assess the\n               ----------\ntechnology, markets, management and strategy of the Parent and to fend for\nitself in transactions such as the one contemplated by this Agreement, has such\nknowledge and experience in financial and business matters that the Principal\nShareholder is capable of evaluating the merits and risks inherent in holding\nstock of the Parent, and has the ability to bear the economic risks of the\ninvestment.\n\n          (b)  Investment.  The Principal Shareholder accepts the shares of the\n               ----------\nParent Common Stock as investment for the Principal Shareholder's own account\nand not with the view to, or for resale in connection with, any distribution\nthereof.  The Principal Shareholder understands that the Parent Common Stock has\nnot been registered under the Securities Act by reason of a specific exemption\nfrom the registration provisions of the Securities Act which depends upon, among\nother things, the bona fide nature of the investment intent as expressed herein.\nThe Principal Shareholder further represents that it does not have any contract,\nundertaking, agreement or arrangement with any person to sell, transfer or grant\nparticipation to any third person with respect to any of the Parent Common\nStock.  The Principal Shareholder understands and acknowledges that the\nprovision of Parent Common Stock pursuant to this Agreement will not be\nregistered under the Securities Act on the ground that the issuance of\nsecurities hereunder is exempt from the registration requirements of the\nSecurities Act.\n\n          (c)  Rule 144.  The Principal Shareholder acknowledges that the Parent\n               --------\nCommon Stock must be held indefinitely unless subsequently registered under the\nSecurities Act or an exemption from such registration is available.  The\nPrincipal Shareholder is aware of the provisions of Rule 144 promulgated under\nthe Securities Act which permit limited resale of shares purchased in a private\nplacement subject to the satisfaction of certain conditions.  The Principal\nShareholder covenants that, in the absence of an effective registration\nstatement covering the stock in question, the Principal Shareholder will sell,\ntransfer, or otherwise dispose of the Parent Common Stock only in a manner\nconsistent with the Principal Shareholder's representations and covenants set\nforth herein.  In connection therewith, the Principal Shareholder  acknowledges\nthat the Parent will make a notation on its stock books regarding the\nrestrictions on transfers set forth in this Article and will transfer securities\non the books of the Parent only to the extent not inconsistent therewith.\n\n          (d)  No Public Market.  The Principal Shareholder understands that no\n               ----------------\npublic market now exists for any of the securities issued by the Parent, and\nthat no public market may ever exist for such securities.\n\n\n                                      26\n\n\n \n          (e)  Access to Data.  The Principal Shareholder has received and\n               --------------\nreviewed information about the Parent and has had an opportunity to review and\ndiscuss the Parent's business, management and financial affairs with its\nmanagement.  The Principal Shareholder understands that such discussions, as\nwell as any written information issued by the Parent, were intended to describe\nthe aspects of the Parent's business and prospects which the Parent believes to\nbe material, but were not necessarily a thorough or exhaustive description.\n\n                                  ARTICLE III\n\n                REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB\n\n     Parent and Sub represent and warrant to the Company as follows:\n\n     3.1  Organization, Standing and Power.  Parent is a corporation duly\n          --------------------------------                                 \norganized, validly existing and in good standing under the laws of the State of\nUtah.  Sub is a corporation duly organized, validly existing and in good\nstanding under the laws of Delaware.  Each of Parent and Sub has the corporate\npower to own its properties and to carry on its business as now being conducted\nand is duly qualified to do business and is in good standing in each\njurisdiction in which the failure to be so qualified would have a material\nadverse effect on the ability of Parent and Sub to consummate the transactions\ncontemplated hereby.\n\n     3.2  Authority; Consents.  Parent and Sub have all requisite corporate\n          -------------------                                                \npower and authority to enter into this Agreement and to consummate the\ntransactions contemplated hereby.  The execution and delivery of this Agreement\nand the consummation of the transactions contemplated hereby have been duly\nauthorized by all necessary corporate action on the part of Parent and Sub.\nThis Agreement has been duly executed and delivered by Parent and Sub and\nconstitutes the valid and binding obligations of Parent and Sub, enforceable in\naccordance with its terms, except as such enforceability may be limited by\nprinciples of public policy and subject to the laws of general application\nrelating to bankruptcy, insolvency and the relief of debtors and rules of law\ngoverning specific performance, injunctive relief or other equitable remedies.\nThe execution and delivery of this Agreement by Parent and Sub does not, and, as\nof the Closing, the consummation of the transactions contemplated hereby and\nthereby will not, Conflict with (i) any provision of the respective Articles of\nIncorporation or Bylaws of Parent or Sub or (ii) any agreement or instrument,\npermit, judgment, statute, law, rule or regulation applicable to Parent or Sub.\nNo consent, waiver, approval, or registration, declaration or filing with, any\nGovernmental Entity or any third party is required by or with respect to any of\nthe Parent or Sub in connection with the execution and delivery of this\nAgreement or the consummation of the transactions contemplated hereby.\n\n     3.3  Capital Structure.\n          -----------------   \n\n          (a)  The authorized stock of Parent consists of 50,000,000 shares of\nCommon Stock, $.001 par value, of which 29,767,708 shares were issued and\noutstanding as of December 31, 1996, and 27,988,501 shares of Preferred Stock,\n$.001 par value, of which 18,518,500 shares \n\n                                      27\n\n\n \nare designated Series A Preferred Stock, all of which are issued and\noutstanding, and 9,310,001 shares are designated Series B Preferred Stock, all\nof which are issued and outstanding. All such shares have been duly authorized,\nand all such issued and outstanding shares have been validly issued, are fully\npaid and nonassessable and are free of any liens or encumbrances other than any\nliens or encumbrances created by or imposed upon the holders thereof. Parent has\nalso reserved (i) 3,900,000 shares of Common Stock for issuance to employees and\nconsultants pursuant to Parent's 1996 Stock Option Plan, (ii) 160,000 shares of\nSeries A Preferred Stock for issuance upon the exercise of outstanding warrants\nto purchase Series A Preferred Stock (the \"Warrant Stock\"), (iii) 160,000 shares\n                                           -------------\nof Common Stock for issuance upon conversion of the Warrant Stock and (iv)\n1,000,000 shares of Common Stock for issuance upon the exercise of outstanding\nwarrants to purchase Common Stock. In February, 1997, the Board of Directors of\nthe Company approved (i) increasing the authorized shares of Common Stock to\n100,000,000 shares, (ii) increasing the number of authorized shares of Preferred\nStock to 37,764,153 shares, in preparation for a sale of Series C Preferred\nStock, and (iii) adopting the Company's 1997 Acquisition Stock Option Plan,\nreserving 10,000,000 shares of Common Stock thereunder; all of these actions are\ncurrently pending. There are no other options, warrants, calls, rights,\ncommitments or agreements of any character to which Parent is a party or by\nwhich it is bound obligating Parent to issue, deliver, sell, repurchase or\nredeem, or cause to be issued, delivered, sold, repurchased or redeemed, any\nshares of the capital stock of Parent or obligating Parent to grant, extend or\nenter into any such option, warrant, call, right, commitment or agreement.\n\n          (b)  The shares of Parent Common Stock to be issued pursuant to the\nMerger will be duly authorized, validly issued, fully paid and non-assessable.\n\n     3.4  Brokers' and Finders' Fees. The Parent has not incurred, nor will\n          --------------------------                                           \nit incur, directly or indirectly, any liability for brokers' or finders' fees or\nagents' commissions or any similar charges in connection with this Agreement or\nany transaction contemplated hereby.\n\n     3.5  Similar Transactions.  Each party understands and agrees that the\n          --------------------                                               \nParent may acquire other entities that are in a business similar to that of the\nCompany.  In the event that, prior to the Second Adjustment Date, Parent\nacquires another entity similar to the Company on terms substantially more\nfavorable to the equity owners of such entity after taking into account the\nsimilarities and differences of the businesses, then the valuation of the\nCompany at the First Adjustment  Date and the Second Adjustment Date shall be\nrecalculated to take into account such favorable treatment and the First\nAdjustment to Purchase Price and Second Adjustment to Purchase Price shall be\nrecalculated promptly on such more favorable basis.  Any additional shares due\nto the Sellers upon such recalculation shall be issued promptly to the Company\nShareholders.\n\n     3.6  No Changes. Except as otherwise disclosed in this Agreement, there\n          ----------\nhave been no material adverse changes to the Parent's financial condition or\noperating information from the information contained in the Franchise Offering\nCircular dated effective December 23, 1996, and the Confidential Offering\nMemorandum dated February 1997, relating to Parent's $18,000,000 Series C\nPreferred Stock Offering.\n\n\n                                      28\n\n\n \n                                   ARTICLE IV\n\n                      CONDUCT PRIOR TO THE EFFECTIVE TIME\n\n     4.1  Conduct of Business of the Company.   During the period from the\n          ----------------------------------                                \ndate of this Agreement and continuing until the earlier of the termination of\nthis Agreement or the Effective Time, the Company agrees (except to the extent\nthat Parent shall otherwise consent in writing), to carry on its business in the\nusual, regular and ordinary course in substantially the same manner as\nheretofore conducted, to pay debts and Taxes when due, to pay or perform other\nobligations when due, and, to the extent consistent with such business, use all\nreasonable efforts consistent with past practice and policies to preserve intact\nthe Company's present business organization, keep available the services of\npresent officers and key employees and preserve relationships with customers,\nsuppliers, distributors, licensors, licensees, and others having business\ndealings with it, all with the goal of preserving unimpaired the Company's\ngoodwill and ongoing businesses at the Effective Time.  The Company shall\npromptly notify Parent of any event or occurrence or emergency not in the\nordinary course of business of the Company, and any material event involving the\nCompany. Except as expressly contemplated by this Agreement, the Company shall\nnot, without the prior written consent of Parent:\n\n          (a)  Enter into any commitment or transaction not in the ordinary\ncourse of business or any commitment or transaction of the type described in\nSection 2.9 hereof;\n\n          (b)  Transfer to any person or entity any rights to the Intellectual\nProperty of the Company;\n\n          (c)  Enter into or amend any agreements pursuant to which any other\nparty is granted marketing, distribution or similar rights of any type or scope\nwith respect to any products of the Company;\n\n          (d)  Amend or otherwise modify (or agree to do so), except in the\nordinary course of business, or violate the terms of, any of the agreements set\nforth or described in Exhibit C;\n                      ---------\n\n          (e)  Commence any litigation;\n\n          (f)  Declare, set aside or pay any dividends on or make any other\ndistributions (whether in cash, stock or property) in respect of any of its\ncapital stock, or split, combine or reclassify any of its capital stock or issue\nor authorize the issuance of any other securities in respect of, in lieu of or\nin substitution for shares of capital stock of the Company, or repurchase,\nredeem or otherwise acquire, directly or indirectly, any shares of its capital\nstock (or options, warrants or other rights exercisable therefor);\n\n          (g)  Issue, grant, deliver or sell or authorize or propose the\nissuance, grant, delivery or sale of, or purchase or propose the purchase of,\nany shares of its capital stock or\n\n                                      29\n\n\n \nsecurities convertible into, or subscriptions, rights, warrants or options to\nacquire, or other agreements or commitments of any character obligating it to\nissue any such shares or other convertible securities;\n\n          (h)  Cause or permit any amendments to its Articles of Incorporation\nor Bylaws;\n\n          (i)  Acquire or agree to acquire by merging or consolidating with, or\nby purchasing any assets or equity securities of, or by any other manner, any\nbusiness or any corporation, partnership, association or other business\norganization or division thereof, or otherwise acquire or agree to acquire any\nassets which are material, individually or in the aggregate, to its business;\n\n          (j)  Sell, lease, license or otherwise dispose of any of its\nproperties or assets, except in the ordinary course of business and consistent\nwith past practices;\n\n          (k)  Incur any indebtedness for borrowed money or guarantee any such\nindebtedness or issue or sell any debt securities or guarantee any debt\nsecurities of others;\n\n          (l)  Grant any loans to others or purchase debt securities of others\nor amend the terms of any outstanding loan agreement, except in the ordinary\ncourse of business and consistent with past practices;\n\n          (m)  Grant any severance or termination pay (i) to any director or\nofficer or (ii) to any other employee except payments made pursuant to standard\nwritten agreements outstanding on the date hereof;\n\n          (n)  Adopt or amend any employee benefit plan, or enter into any\nemployment contract, pay or agree to pay any special bonus or special\nremuneration to any director or employee, or increase the salaries or wage rates\nof its employees;\n\n          (o)  Revalue any of its assets, including without limitation writing\ndown the value of inventory or writing off notes or accounts receivable other\nthan in the ordinary course of business;\n\n          (p)  Take any action which could jeopardize the tax-free\nreorganization hereunder;\n\n          (q)  Pay, discharge or satisfy, in an amount in excess of $10,000 (in\nany one case) or $25,000 (in the aggregate), any claim, liability or obligation\n(absolute, accrued, asserted or unasserted, contingent or otherwise), other than\nthe payment, discharge or satisfaction in the ordinary course of business of\nliabilities reflected or reserved against in the Financial Statements (or the\nnotes thereto);\n\n\n                                      30\n\n\n \n          (r)  Make or change any material election in respect of Taxes, adopt\nor change any accounting method in respect of Taxes, enter into any closing\nagreement, settle any claim or assessment in respect of Taxes, or consent to any\nextension or waiver of the limitation period applicable to any claim or\nassessment in respect of Taxes;\n\n          (s)  Enter into any strategic alliance or joint marketing arrangement\nor agreement; or\n\n          (t)  Take, or agree in writing or otherwise to take, any of the\nactions described in Sections 4.1(a) through (s) above, or any other action that\nwould prevent the Company from performing or cause the Company not to perform\nits covenants hereunder.\n\n     4.2  No Solicitation.   Until the earlier of the Effective Time or the\n          ---------------                                                    \ndate of termination of this Agreement pursuant to the provisions of Section 8.1\nhereof, neither the Company nor any of the Principal Shareholders will (nor will\nthe Company permit any of the Company's officers, directors, agents,\nrepresentatives or affiliates to) directly or indirectly, take any of the\nfollowing actions with any party other than Parent and its designees:  (a)\nsolicit, conduct discussions with or engage in negotiations with any person,\nrelating to the possible acquisition of the Company  (whether by way of merger,\npurchase of capital stock, purchase of assets or otherwise) or any material\nportion of its or their capital stock or assets, (b) provide information with\nrespect to it to any person, other than Parent, relating to the possible\nacquisition of the Company (whether by way of merger, purchase of capital stock,\npurchase of assets or otherwise) or any material portion of its or their capital\nstock or assets, (c) enter into an agreement with any person, other than Parent,\nproviding for the acquisition of the Company (whether by way of merger, purchase\nof capital stock, purchase of assets or otherwise) or any material portion of\nits or their capital stock or assets or (d) make or authorize any statement,\nrecommendation or solicitation in support of any possible acquisition of the\nCompany (whether by way of merger, purchase of capital stock, purchase of assets\nor otherwise) or any material portion of its or their capital stock or assets by\nany person, other than by Parent.  In addition to the foregoing, if the Company\nor either Company Shareholder receives prior to the Effective Time or the\ntermination of this Agreement any offer or proposal relating to any of the\nabove, the Company or the Company Shareholder, as applicable shall immediately\nnotify Parent thereof, including information as to the identity of the offeror\nor the party making any such offer or proposal and the specific terms of such\noffer or proposal, as the case may be, and such other information related\nthereto as Parent may reasonably request.\n\n\n                                   ARTICLE V\n\n                             ADDITIONAL AGREEMENTS\n\n     5.1  Parent's Right of First Refusal.\n\n          (a)  Parent's Right of First Refusal.  Before any shares issued\n               -------------------------------\npursuant to this Agreement (the \"Shares\") may be sold or otherwise transferred\n(including transfer by gift or \n\n                                      31\n\n\n \noperation of law), or any Shares held by a transferee (either being sometimes\nreferred to herein as the \"Holder\") may be sold, the Parent or its assignee(s)\nshall have a right of first refusal to \"Right of First Refusal\").\n\n          (b)  Notice of Proposed Transfer.  The Holder of the Shares shall\n               ---------------------------\ndeliver to the Parent a written notice (the \"Notice\") stating:  (i) the Holder's\nbona fide intention to sell or otherwise transfer such Shares; (ii) the name of\neach proposed purchaser or other transferee (\"Proposed Transferee\"); (iii) the\nnumber of Shares to be transferred to each Proposed Transferee; and (iv) the\nbona fide cash price or other consideration for which the Holder proposes to\ntransfer the Shares (the \"Offered Price\"), and the Holder shall offer the Shares\nat the Offered Price to the Parent or its assignee(s).\n\n          (c)  Exercise of Right of First Refusal.  At any time within thirty\n               ----------------------------------\n(30) days after receipt of the Notice, the Parent or its assignee(s) may, by\ngiving written notice to the Holder, elect to purchase all, but not less than\nall, of the Shares proposed to be transferred to any one or more of the Proposed\nTransferees, at the purchase price determined in accordance with subsection (d)\nbelow.\n\n          (d)  Purchase Price.  The purchase price (\"Parent Purchase Price\") for\n               --------------\nthe Shares purchased by the Parent or its assignee(s) under this Section shall\nbe the Offered Price.  If the Offered Price includes consideration other than\ncash, the Parent may match such non-cash consideration with such other cash or\nnon-cash consideration as shall be determined by the Board of Directors of the\nParent in good faith.\n\n          (e)  Payment.  Payment of the Parent Purchase Price shall be made, at\n               -------\nthe option of the Parent or its assignee(s), in cash (by check), by cancellation\nof all or a portion of any outstanding indebtedness of the Holder to the Parent\n(or, in the case of repurchase by an assignee, to the assignee), or by any\ncombination thereof within 30 days after receipt of the Notice or in the manner\nand at the times set forth in the Notice.\n\n          (f) Holder's Right to Transfer.  If all of the Shares proposed in the\n              --------------------------\nNotice to be transferred to a given Proposed Transferee are not purchased by the\nParent or its assignee(s) as provided in this Section, then the Holder may sell\nor otherwise transfer such Shares to that Proposed Transferee at the Offered\nPrice or at a higher price, provided that such sale or other transfer is\nconsummated within 120 days after the date of the Notice and provided further\nthat any such sale or other transfer is effected in accordance with any\napplicable securities laws and the Proposed Transferee agrees in writing that\nthe provisions of this Section shall continue to apply to the Shares in the\nhands of such Proposed Transferee.  If the Shares described in the Notice are\nnot transferred to the Proposed Transferee within such period, a new Notice\nshall be given to the Parent, and the Parent or its assignees shall again be\noffered the Right of First Refusal before any Shares held by the Holder may be\nsold or otherwise transferred.\n\n          (g)  Exception for Certain Family Transfers.  Anything to the contrary\n               --------------------------------------\ncontained in this Section notwithstanding, the transfer of any or all of the\nShares during the Holder's lifetime or on the Holder's death by will or\nintestacy to the Holder's immediate family or a trust for the \n\n                                      32\n\n\n \nbenefit of the Holder's immediate family shall be exempt from the provisions of\nthis Section. \"Immediate Family\" as used herein shall mean spouse, lineal\ndescendant or antecedent, brother or sister. In such case, the transferee or\nother recipient shall receive and hold the Shares so transferred subject to the\nprovisions of this Section, and there shall be no further transfer of such\nShares except in accordance with the terms of this Section.\n\n          (h)  Termination of Right of First Refusal. The Right of First Refusal\n               ------------------------------------- \nshall terminate as to any Shares 90 days after the first sale of Common Stock of\nthe Parent to the general public pursuant to a registration statement filed with\nand declared effective by the Securities and Exchange Commission under the\nSecurities Act of 1933, as amended.\n\n     5.2  Market Standoff Agreement. Each Company Shareholder hereby agrees that\n          -------------------------                                          \nif so requested by the Company or any representative of the underwriters in\nconnection with any registration of the offering of any Shares of the Company\nunder the Securities Act, such Company Shareholder shall not sell or otherwise\ntransfer, pledge, hypothecate or otherwise decrease his market risk or\nbeneficial ownership in any Shares or other securities of the Company during the\n180-day period following the date of the final Prospectus contained in a\nregistration statement of the Company filed under the Securities Act; provided,\nhowever, that such restriction shall only apply to the first registration\nstatement of the Company to become effective under the Securities Act which\nincludes securities to be sold on behalf of the Company to the general public in\nan underwritten public offering under the Securities Act.  The Company may\nimpose stop-transfer instructions with respect to securities subject to the\nforegoing restrictions until the end of such 180-day period.\n\n     5.3  Restriction on Competition.\n          --------------------------\n\n          (a)  Restricted Activities.  For a period of three (3) years beginning\n               ---------------------\non the Closing Date, no Principal Shareholder shall:\n\n               (i)   engage in, including as an employee, consultant or\notherwise, or own any interest (except as a passive investor of less than five\npercent (5%) of total debt and equity) in any business or other activity that\nwould compete with the Parent's; or\n\n               (ii)  divert or attempt to divert any existing or prospective\nbusiness or customers of the Parent (including any affiliates of the Parent) to\nany other person or entity, by direct or indirect inducement or otherwise, or do\nor perform, directly or indirectly, any other act injurious or prejudicial to\nthe goodwill associated with the Parent or its affiliates; or\n\n               (iii) solicit any person for employment who is at that time\nalready employed by Parent or any of its affiliates, or otherwise directly or\nindirectly induce or seek to induce such person to leave his or her employment.\n\n          (b)  Scope of Restriction.\n               --------------------\n\n                                      33\n\n\n \n               (i)   This Section shall apply in the SMSA where the Company\nis located.\n\n               (ii)  In the event that any other provision of this Section 5.3\nor the application of any such provision shall be held to be prohibited or\nunenforceable in any jurisdiction, such provision shall, as to such\njurisdiction, be ineffective to the extent of such prohibition or\nunenforceability. The remaining provisions of this covenant to refrain from\ncompetition shall remain in full force and effect, and any such prohibition or\nunenforceability in any jurisdiction shall not invalidate or render\nunenforceable such provision in any other jurisdiction. The parties shall use\ntheir best efforts to replace the provision that is contrary to law with a legal\none approximating to the extent possible the original intent of the parties.\n\n               (iii) In the event that a Principal Shareholder, who also is a\nNew Employee, is terminated from employment by Parent without cause at any time\nwithin three (3) years of the Closing Date, then the term of the restrictions\nimposed by this Section 5.3 shall be reduced to six (6) months and that\nterminated Principal Shareholder\/New Employee shall receive severance benefits\nfrom Parent equal to six (6) months salary and employee benefits.\n\n     5.4  Confidentiality.  Each of the parties hereto hereby agrees to keep\n          ---------------                                                     \nsuch information or knowledge obtained pursuant to the negotiation and execution\nof this Agreement, or the effectuation of the transactions contemplated hereby,\nconfidential; provided, however, that the foregoing shall not apply to\ninformation or knowledge which (a) a party can demonstrate was already lawfully\nin its possession prior to the disclosure thereof by the other party, (b) is or\nbecomes generally known to the public and did not become so known through any\nviolation of law or this Agreement by the non-disclosing party, (c) is later\nlawfully acquired by such party from other sources, (d) is required to be\ndisclosed by order of court or government agency after seeking any reasonably\navailable protection against general disclosure or (e) which is disclosed in the\ncourse of any litigation between any of the parties hereto; it being understood\nthat the parties may disclose relevant information and knowledge to their\nrespective employees and agents on a need to know basis, provided that the\nparties cause such employees and agents to treat such information and knowledge\nconfidentially.\n\n     5.5  Expenses.  Whether or not the Acquisition is consummated, all fees\n          --------                                                            \nand expenses incurred in connection with the Acquisition including, without\nlimitation, all legal, accounting, financial advisory, consulting and all other\nfees and expenses of third parties incurred by a party in connection with the\nnegotiation and effectuation of the terms and conditions of this Agreement and\nthe transactions contemplated hereby, shall be the obligation of the respective\nparty incurring such fees and expenses.\n\n     5.6  Public Disclosure.  Unless otherwise required by law or any\n          -----------------                                            \napplicable rule of a stock exchange or quotation system upon which a parties'\nsecurities are listed, prior to the Closing Date, no disclosure (whether or not\nin response to an inquiry) of the subject matter of this Agreement shall be made\nby the Company or the Principal Shareholders unless approved by Parent prior to\nrelease, provided that such approval shall not be unreasonably withheld, subject\nto Parent's and the Company's or the Principal Shareholders' obligation to\ncomply with applicable securities laws.\n\n\n                                      34\n\n\n \n     5.7  Post-Closing Employment of Company Employees.\n          --------------------------------------------   \n\n          (a)  Company shall terminate each employee of Company on and as of the\nClosing Date, effective as of close of business on the Closing Date.  Parent\nwill hire on the Closing Date, effective as of the close of business on the\nClosing Date, on an \"at will\" basis and subject to Parent's terms, conditions\nand policies of employment, if any, each of those persons who are employed by\nCompany and are terminated by Company on the Closing Date pursuant to the\nforegoing sentence.  Nothing contained in this Section is intended or shall be\ndeemed to (a) require Parent to employ such persons for any fixed or pre-\ndetermined time after the Closing, or (b) confer upon any employee of Company,\npast, present, or future, any rights of employment of any nature, it being\nunderstood and agreed that the provisions of this Section  are intended to set\nforth an agreement among Parent and Company, and are not intended to benefit any\npersons not party to this Agreement, including such employees.  Parent and\nCompany hereby agree to adopt the alternate procedure of Rev. Proc. 96-60 for\npurposes of employer payroll withholding.\n\n          (b)  In connection with hiring the Company's employees (the \"New\n                                                                       ---\nEmployees\") as set forth in Section 5.7(a) above, Parent shall grant to the New\n- ---------\nEmployees incentive stock options to purchase Parent Common Stock in an\naggregate number equal to the number of shares paid as the Original Purchase\nPrice.  Such incentive stock options shall be issued to the New Employees, and\nin the amounts, requested by the Company in writing at the Closing.  The\nexercise price of each option shall be the fair market value of the Common Stock\nsubject to such option on the Closing Date as determined in good faith and\nauthorized by the Board of Directors of the Parent.  Such options shall not be\nexercisable at the date of grant, but shall become exercisable as to one-thirty-\nsixth (1\/36) of the shares subject to such option each month after the effective\ndate of this Agreement, provided, however, that no option shall become\nexercisable with respect to any shares at any time following the date that the\nNew Employee to whom the option was granted ceases to be an employee or\nconsultant of the Parent (an \"Employee Termination\"), and provided further that\nthe term of any such option shall expire if not exercised, and to the extent not\nexercisable, ninety (90) days after the date of the Employee Termination.\nAccordingly, any New Employee who receives an option must exercise it (but only\nto the extent then exercisable), if at all, within ninety (90) days after an\nEmployee Termination.  Notwithstanding the foregoing, in the event of any\nEmployee Termination due to the death or disability of the New Employee, the New\nEmployee or his estate shall have twelve (12) months to exercise the option to\nthe extent it was exercisable on the date of the Employee Termination;\nthereafter, the option shall terminate as to any unexercised portion.   New\nEmployee acknowledges that New Employee will be taxed under the Code on the\ndifference between the fair market value of shares purchased pursuant to any\nexercised option less the exercise price paid on the date of any such exercise\nand that the Parent may withhold any applicable taxes from New Employee's\nregular pay or, if insufficient, that New Employee will make any required\nwithholding payment to the Parent.  New Employee also acknowledges that there\nmay be state or local tax due upon exercise of the option, and that any such tax\nis the obligation of the New Employee and not the Parent.  The terms of the\noptions as described in this paragraph are subject to the definitive form of\noption agreement attached hereto as Exhibit D.\n                                    ---------\n                                      35\n\n\n \n          (c)  Also in connection with hiring the New Employees, Parent agrees\nto issue to each of them a bonus payable in Parent Common Stock equal to the\naggregate exercise price of the options described in Section 5.7(b) above. Such\nbonus payment shall be paid in Common Stock on the earlier of (i) the date three\nyears subsequent to the Closing Date or (ii) with respect to any individual New\nEmployee, the date of Employee Termination. Such bonus shall be, as to each New\nEmployee, for such number of shares of Parent Common Stock as shall be equal, on\nthe date paid, and in the good faith judgment of the Parent's Board of\nDirectors, to the aggregate exercise price of the exercisable portion of the\noption granted to the New Employee described in the foregoing paragraph. The\nbonus payment described in this paragraph shall be made to such New Employee on\nthe earlier of: (i) in the event that the New Employee's employment by Parent or\nany wholly owned subsidiary of Parent terminates before the date three years\nsubsequent to the date of this Agreement, on the date of such termination (but\nonly that number of shares required pursuant to this paragraph), (ii) if on the\ndate three years subsequent to the date of this Agreement the Parent shall have\na class of equity securities that has been publicly traded on a national\nexchange or quotation system for at leasy 180 days, then on such date three\nyears subsequent to the date of this Agreement, and (iii) in the event that on\nthe date three years subsequent to the date of this Agreement the Parent shall\nnot have a class of equity securities that has been publicly traded on a\nnational securities exchange or quotation system for at least 180 days, then on\nthe first business day after the date three years subsequent to the date of this\nAgreement that the Parent shall have a class of equity securities that has been\npublicly traded on a national securities exchange or quotation system for 180\ndays. New Employee acknowledges that there may be federal, state or local tax\ndue upon receipt of the bonus, that Parent may withhold any applicable taxes\nfrom New Employee's regular pay or, if insufficient, that New Employee will make\nany required withholding payment to Parent, and that any such tax is the\nobligation of the New Employee and not the Parent.\n\n          (d)  In addition to the stock option (the \"Original Option\") and stock\nbonus grants described in subsections (b) and (c) of this Section, in the event\nthat any additional shares of Parent's Common Stock are issued pursuant to the\nPurchase Price Adjustment provisions of Section 1.10, an additional option, in\nform and substance substantially similar to the Original Option (but with an\nexercise price determined based on the date of issuance) (the \"Additional\nOption\"), and an additional stock bonus commitment (the \"Additional Stock\nBonus\") proportionate to the Additional Option, in form and substance\nsubstantially similar to that described in paragraph (c) of this Section, shall\nbe issued by the Parent to any then-remaining employee of Parent or Sub who\nreceived an Original Option.  The number of shares subject to any such\nAdditional Option shall be calculated by taking the number of shares issued\npursuant to such Purchase Price Adjustment provisions multiplied by three (3)\nand then determining the individual recipients' pro rata share based on the\nnumber of shares subject to each recipient's Original Option compared to the\nnumber of shares subject to the total of Original Options granted to then\nremaining employees.  For each recipient, the number of shares granted in the\nAdditional Stock Bonus shall be proportionate to the Additional Option.  Any\nsuch Additional Options and Additional Stock Bonuses shall be granted at the\nnext regularly scheduled meeting of the Parent's board of directors following\nthe date of any Purchase Price Adjustment pursuant to Section 1.10.\n\n\n                                      36\n\n\n \n     5.8  Treatment of Affiliate Warrants.  To the extent that any affiliate\n          -------------------------------                                     \nof the Company has received or has the right to receive any warrants under\nParent's Affiliate Warrant Program, the warrants received or to be received\nthereunder shall remain in full force and effect and, to the extent required to\nmake calculations of shares issuable under such warrants, Parent shall estimate\nin good faith the business measures of the Surviving Corporation as necessary to\nsuch calculations, with the intent of preserving the economic value of such\nwarrants to the holders thereof following the completion of the acquisition\ncontemplated hereby.\n\n     5.9  Access to Information.  The Company shall afford Parent and its\n          ---------------------                                            \naccountants, counsel and other representatives, reasonable access during normal\nbusiness hours during the period prior to the Effective Time to (a) all of the\nCompany's properties, books, contracts, commitments and records, and (b) all\nother information concerning the business, properties and personnel (subject to\nrestrictions imposed by applicable law) of the Company as Parent may reasonably\nrequest.  The Company agrees to provide to Parent and its accountants, counsel\nand other representatives copies of internal financial statements promptly upon\nrequest.  No information or knowledge obtained in any investigation pursuant to\nthis Section 5.9 shall affect or be deemed to modify any representation or\nwarranty contained herein or the conditions to the obligations of the parties to\nconsummate the Merger.\n\n     5.10 Public Disclosure.  Unless otherwise required by law, prior to the\n          -----------------                                                   \nEffective Time, no disclosure (whether or not in response to an inquiry) of the\nsubject matter of this Agreement shall be made by any party hereto unless\napproved by Parent and the Company prior to release, provided that such approval\nshall not be unreasonably withheld.\n\n     5.11 Consents.  The Company shall use its best efforts to obtain the\n          --------                                                         \nconsents, waivers and approvals under any of the Contracts as may be required in\nconnection with the Merger (all of such consents, waivers and approvals are set\nforth in Exhibit C) so as to preserve all rights of, and benefits to, the\n         ---------\nCompany thereunder.\n\n     5.12 FIRPTA Compliance.  On the Closing Date, the Company shall deliver\n          -----------------                                                   \nto Parent a properly executed statement in a form reasonably acceptable to\nParent for purposes of satisfying Parent's obligations under Treasury Regulation\nSection 1.1445-2(c)(3).\n\n                                      37\n\n\n \n     5.13 Best Efforts.  Subject to the terms and conditions provided in this\n          ------------                                                         \nAgreement, each of the parties hereto shall use its best efforts to take\npromptly, or cause to be taken, all actions, and to do promptly, or cause to be\ndone, all things necessary, proper or advisable under applicable laws and\nregulations to consummate and make effective the transactions contemplated\nhereby to obtain all necessary waivers, consents and approvals and to effect all\nnecessary registrations and filings and to remove any injunctions or other\nimpediments or delays, legal or otherwise, in order to consummate and make\neffective the transactions contemplated by this Agreement for the purpose of\nsecuring to the parties hereto the benefits contemplated by this Agreement;\nprovided that Parent shall not be required to agree to any divestiture by Parent\nor the Company or any of Parent's subsidiaries or affiliates of shares of\ncapital stock or of any business, assets or property of Parent or its affiliates\nor of the Company or its affiliates, or the imposition of any material\nlimitation on the ability of any of them to conduct their businesses or to own\nor exercise control of such assets, properties and stock.\n\n     5.14 Notification of Certain Matters.  The Company shall give prompt\n          -------------------------------                                  \nnotice to Parent, and Parent shall give prompt notice to the Company, of (i) the\noccurrence or non-occurrence of any event, the occurrence or non-occurrence of\nwhich is likely to cause any representation or warranty of the Company or the\nPrincipal Shareholders and Parent, respectively, contained in this Agreement to\nbe untrue or inaccurate at or prior to the Effective Time and (ii) any failure\nof the Company or Parent, as the case may be, to comply with or satisfy any\ncovenant, condition or agreement to be complied with or satisfied by it\nhereunder; provided, however, that the delivery of any notice pursuant to this\nSection 5.14 shall not limit or otherwise affect any remedies available to the\nparty receiving such notice.\n\n     5.15 Preparation of Tax Returns.   The Principal Shareholders shall\n          -------------------------- \nprepare or cause to be prepared and file or cause to be filed all income Tax\nReturns for the Company for all periods ending on or prior to the Closing Date\nwhich are filed after the Closing Date.  Such returns shall be prepared in\naccordance with applicable law and past practices consistently applied.  The\nPrincipal Shareholders shall permit Parent to review and comment on each such\nTax Return prior to filing.  The Principal Shareholders shall reimburse the\nCompany for any income Taxes of the Company with respect to all periods or\nportions thereof ending on or prior to the Closing Date.\n\n     5.16 Additional Documents and Further Assurances.  Each party hereto, at\n          -------------------------------------------                          \nthe request of another party hereto, shall execute and deliver such other\ninstruments and do and perform such other acts and things as may be necessary or\ndesirable for effecting completely the consummation of this Agreement and the\ntransactions contemplated hereby.\n\n     5.17 Section 368 Compliance.  From and after the Effective Time, neither\n          ----------------------                                                \nParent, Sub, or the Company shall take any action that will cause the Merger not\nto be treated as a reorganization within the meaning of Section 368 of the Code.\n\n\n                                      38\n\n\n \n     5.18 Parent Policies.  Sellers acknowledge that Parent has implemented\n          ---------------                                                    \npolicies regarding the operation of subsidiary entities such as the Company will\nbe following the Merger.  Sellers acknowledge and agree that such policies, or\nany such amended or replacement policies that are reasonably similar in scope,\nnature or effect, are anticipated to be in place following the Merger, and\nSellers hereby indicate their intention to act in substantial compliance with\nall such policies.  Such policies shall not provide for Parent overhead\nallocations from Parent to Company or Sub, unless otherwise agreed in advance by\nthe parties.\n\n\n                                   ARTICLE VI\n\n                            CONDITIONS TO THE MERGER\n\n     6.1  Conditions to Obligations of Each Party to Effect the Merger.    The\n          ------------------------------------------------------------       \nrespective obligations of each party to this Agreement to effect the Merger\nshall be subject to the satisfaction at or prior to the Effective Time of the\nfollowing conditions:\n\n          (a)  No Injunctions or Restraints; Illegality.  No temporary\n               ----------------------------------------\nrestraining order, preliminary or permanent injunction or other order issued by\nany court of competent jurisdiction or other legal restraint or prohibition\npreventing the consummation of the Merger shall be in effect, nor shall any\nproceeding brought by an administrative agency or commission or other\ngovernmental authority or instrumentality, domestic or foreign, seeking any of\nthe foregoing be pending; nor shall there be any action taken, or any statute,\nrule, regulation or order enacted, entered, enforced or deemed applicable to the\nMerger, which makes the consummation of the Merger illegal.\n\n          (b)  Litigation.  There shall be no action, suit, claim or proceeding\n               ----------\nof any nature pending, or overtly threatened, against the Parent, Sub or the\nCompany, their respective properties or any of their officers or directors,\narising out of, or in any way connected with, the Merger or the other\ntransactions contemplated by the terms of this Agreement.\n\n     6.2  Additional Conditions to Obligations of Company.    The obligations of\n          -----------------------------------------------                      \nthe Company to consummate and effect this Agreement and the transactions\ncontemplated hereby shall be subject to the satisfaction at or prior to the\nEffective Time of each of the following conditions, any of which may be waived,\nin writing, exclusively by the Company:\n\n          (a)  Representations, Warranties and Covenants.  The representations\n               -----------------------------------------\nand warranties of Parent and Sub in this Agreement shall be true and correct in\nall material respects on and as of the Effective Time as though such\nrepresentations and warranties were made on and as of such time and each of\nParent and Sub shall have performed and complied in all material respects with\nall covenants and obligations of this Agreement required to be performed and\ncomplied with by it as of the Effective Time.\n\n                                      39\n\n\n \n          (b)  Certificate of the Parent.  Company shall have been provided with\n               -------------------------\na certificate executed on behalf of the Parent by its President to the effect\nthat, as of the Effective Time:\n\n               (i)   all representations and warranties made by the Parent and\nSub in this Agreement are true and correct in all material respects;\n\n               (ii)  all covenants and obligations of this Agreement to be\nperformed by the Parent on or before such date have been so performed in all\nmaterial respects.\n\n          (c)  Claims.  There shall not have occurred any claims (whether or not\n               ------\nasserted in litigation) which may materially and adversely affect the\nconsummation of the transactions contemplated hereby or the business, assets\n(including intangible assets), financial condition or results of operations of\nthe Parent, taken as a whole.\n\n          (d)  No Material Adverse Changes.  There shall not have occurred any\n               ---------------------------\nmaterial adverse change in the business, assets (including intangible assets),\nfinancial condition, results of operations of the Parent, taken as a whole since\nDecember 31, 1996.\n\n     6.3  Additional Conditions to the Obligations of Parent and Sub.    The\n          ----------------------------------------------------------       \nobligations of Parent and Sub to consummate and effect this Agreement and the\ntransactions contemplated hereby shall be subject to the satisfaction at or\nprior to the Effective Time of each of the following conditions, any of which\nmay be waived, in writing, exclusively by Parent:\n\n          (a)  Representations, Warranties and Covenants.  The representations\n               -----------------------------------------\nand warranties of the Company and the Principal Shareholders in this Agreement\nshall be true and correct in all material respects on and as of the Effective\nTime as though such representations and warranties were made on and as of the\nEffective Time and the Company shall have performed and complied in all material\nrespects with all covenants and obligations of this Agreement required to be\nperformed and complied with by it as of the Effective Time.\n\n          (b)  Certificate of the Company and Principal Shareholders.  Parent\n               -----------------------------------------------------\nshall have been provided with a certificate executed by the Principal\nShareholders and executed on behalf of the Company by its Chief Executive\nOfficer to the effect that, as of the Effective Time:\n\n               (i)   all representations and warranties made by the Company and\nthe Principal Shareholders in this Agreement are true and correct in all\nmaterial respects; and\n\n               (ii)  all covenants and obligations of this Agreement to be\nperformed by the Company on or before such date have been so performed in all\nmaterial respects.\n\n          (c)  Claims.  There shall not have occurred any claims (whether or not\n               ------\nasserted in litigation) which may materially and adversely affect the\nconsummation of the transactions contemplated hereby or may have a Material\nAdverse Effect.\n\n                                      40\n\n\n \n          (d)  Third Party Consents.  Any and all consents, waivers, and\n               --------------------\napprovals listed in Exhibit C shall have been obtained.\n                    ---------\n\n          (e)  Shareholder Certificate.  Each of the Company Shareholders shall\n               -----------------------\nhave executed and delivered to Parent a Shareholder Certificate in the form\nattached hereto as Exhibit E.\n                   ---------\n\n          (f)  No Material Adverse Changes.  There shall not have occurred any\n               ---------------------------\nmaterial adverse change in the business, assets (including intangible assets),\nresults of operations, liabilities (contingent or accrued), financial condition\nor prospects of the Company since December 31, 1996.\n\n          (g)  Company Shareholder Approval.  Each of the Company Shareholders\n               ----------------------------\nshall have approved this Agreement and the Merger and the transactions\ncontemplated thereby, and no Company Shareholder shall have exercised, or have\nany continuing right to exercise, appraisal, dissenters' or similar rights by\nvirtue of the Merger.\n\n\n                                  ARTICLE VII\n\n               SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW\n\n     7.1  Survival of Representations and Warranties.  All of the Company's\n          ------------------------------------------                         \nand the Principal Shareholders' representations and warranties in this Agreement\nor in any instrument delivered pursuant hereto shall terminate on the third\nanniversary of the Effective Time; provided, however, that the representations\nand warranties relating or pertaining to any Tax or Returns related to such Tax\nset forth in Section 2.10 hereof or relating to environmental laws or matters\nset forth in Section 2.20 hereof, shall survive until ninety (90) days following\nthe expiration of all applicable statutes of limitations, or extensions thereof,\ngoverning each Tax or Returns related to such Tax or environmental laws or\nmatters.  All of the Parent's and Sub's representations and warranties contained\nherein or in any instrument delivered pursuant to this Agreement shall terminate\nat the Effective Time.\n\n     7.2  Escrow Arrangements; Setoff.\n          ---------------------------\n\n          (a)  Escrow Fund; Setoff from Purchase Price Adjustments.  As partial\n               ---------------------------------------------------\nsecurity for the indemnity provided for in Section 7.3 and the Purchase Price\nAdjustments provided for in Section 1.10, (i) at the Effective Time, the Company\nShareholders will be deemed to have received and deposited with the Escrow Agent\n(as defined in Section 1.6(e)(iii) above) the Escrow Amount (plus any additional\nshares that may be issued upon any stock split, stock dividend or\nrecapitalization effected by Parent after the Effective Time) without any act of\nany Company Shareholder.  On and after the Effective Time, the Escrow Amount\nshall form an escrow fund (the \"Escrow Fund\") to be governed by the terms set\nforth herein at Parent's cost and expense.  The \n\n                                      41\n\n\n \nEscrow Agent may execute this Agreement following the date hereof and prior to\nthe Effective Time, and such later execution, if so executed after the date\nhereof, shall not affect the binding nature of this Agreement as of the date\nhereof between the other signatories hereto. The portion of the Escrow Amount\ncontributed on behalf of each Company Shareholder shall be the pro rata amount\ncalculated pursuant to Section 1.6(a) of this Agreement. In addition to seeking\nindemnification under Section 7.3 from the Escrow Fund and setting off amounts\nfrom the Purchase Price Adjustment, Parent may, in its discretion, seek\nindemnification for Losses directly from the Principal Shareholders, but only\nafter first proceeding against the Escrow Fund so long as it exists and is not\nsubject to other claims. Nothing herein shall limit the liability of the Parent,\nthe Company or the Principal Shareholders for any breach of any representation,\nwarranty or covenant if the Merger does not close. Parent may not receive any\nshares from the Escrow Fund (other than as a Purchase Price Adjustment) unless\nOfficer's Certificates (as defined in subsection (d) below) identifying losses,\nthe aggregate of which exceed $28,750, have been delivered to the Shareholder\nRepresentative (as defined below) and the Escrow Agent as provided in paragraph\n(d) below. The Company Shareholders shall not have any right of contribution\nfrom the Company with respect to any Loss claimed by Parent or Sub after the\nEffective Time.\n\n          (b)  Escrow Period; Distribution upon Termination of Escrow Periods.\n               --------------------------------------------------------------\nSubject to the following requirements, the Escrow Fund shall be in existence\nimmediately following the Effective Time and shall terminate at 5:00 p.m.,\nPacific Time, on the date of the first anniversary of the Effective Time (the\n\"Escrow Period\"); provided that the Escrow Period shall not terminate with\n -------------\nrespect to such amount (or some portion thereof) if in the reasonable judgment\nof Parent, subject to the objection of the Shareholder Representative and the\nsubsequent arbitration of the matter in the manner provided in this Section 7.2,\nsuch amount (or some portion thereof) together with the aggregate amount\nremaining in the Escrow Fund is necessary to satisfy any unsatisfied claims\nspecified in any Officer's Certificate delivered to the Escrow Agent prior to\ntermination of such Escrow Period with respect to facts and circumstances\nexisting prior to the termination of such Escrow Period.  As soon as all such\nclaims have been resolved, the Escrow Agent shall deliver to the Company\nShareholders the remaining portion of the Escrow Fund not required to satisfy\nsuch claims.  Deliveries of Escrow Amounts to the Company Shareholders pursuant\nto this Section 7.2(b) shall be made in proportion to their respective original\ncontributions to the Escrow Fund.\n\n          (c)  Protection of Escrow Fund.\n               -------------------------\n\n               (i)   The Escrow Agent shall hold and safeguard the Escrow Fund\nduring the Escrow Period, shall treat such fund as a trust fund in accordance\nwith the terms of this Agreement and not as the property of Parent and shall\nhold and dispose of the Escrow Fund only in accordance with the terms hereof.\n\n               (ii)  Any shares of Parent Common Stock or other equity\nsecurities issued or distributed by Parent (including shares issued upon a stock\nsplit) (\"New Shares\") in respect of Parent Common Stock in the Escrow Fund which\n         ----------\nhave not been released from the Escrow Fund shall be added to the Escrow Fund\nand become a part thereof. New Shares issued in respect of\n\n                                      42\n\n\n \nshares of Parent Common Stock which have been released from the Escrow Fund\nshall not be added to the Escrow Fund but shall be distributed to the record\nholders thereof. Cash dividends on Parent Common Stock shall not be added to the\nEscrow Fund but shall be distributed to the record holders thereof.\n\n               (iii) Each Company Shareholder shall have voting rights with\nrespect to the shares of Parent Common Stock contributed to the Escrow Fund by\nsuch Company Shareholder (and on any voting securities added to the Escrow Fund\nin respect of such shares of Parent Common Stock).\n\n          (d)  Claims Upon Escrow Fund.\n               ------------------------\n\n               (i)   Upon receipt by the Escrow Agent at any time on or before\nthe last day of the Escrow Period of a certificate signed by any officer of\nParent (an Officer's Certificate\"): (A) stating that Parent has paid or accrued\nLosses, and (B) specifying in reasonable detail the individual items of Losses\nincluded in the amount so stated, the date each such item was paid or accrued,\nor the basis for such anticipated liability, and the nature of the\nmisrepresentation, breach of warranty or covenant to which such item is related,\nthe Escrow Agent shall, subject to the provisions of Section 7.2(e) hereof,\ndeliver to Parent out of the Escrow Fund, as promptly as practicable, cash or\nshares of Parent Common Stock (at the election of Parent) held in the Escrow\nFund in an amount equal to such Losses.\n\n          (e)  Objections to Claims.  At the time of delivery of any Officer's\n               --------------------\nCertificate to the Escrow Agent, a duplicate copy of such certificate shall be\ndelivered to the Shareholder Representative and for a period of thirty (30) days\nafter such delivery, the Escrow Agent shall make no delivery to Parent of any\nEscrow Amounts pursuant to Section 7.2(d) hereof unless the Escrow Agent shall\nhave received written authorization from the Shareholder Representative to make\nsuch delivery.  After the expiration of such thirty (30) day period, the Escrow\nAgent shall make delivery of the Escrow Amount from the Escrow Fund in\naccordance with Section 7.2(d) hereof, provided that no such payment or delivery\nmay be made if the Shareholder Representative shall object in a written\nstatement to the claim made in the Officer's Certificate, and such statement\nshall have been delivered to the Escrow Agent prior to the expiration of such\nthirty (30) day period.\n\n          (f)  Indemnification and Setoff Claims. In the event Parent shall have\n               ---------------------------------\nincurred any Losses for which Parent wishes to seek indemnification directly\nfrom the Company Shareholders out of the Escrow Fund pursuant to this Section\n7.2, Parent shall deliver to the Shareholder Representative an Officer's\nCertificate: (A) stating that Parent has paid or accrued Losses and (B)\nspecifying in reasonable detail the individual items of Losses included in the\namount so stated, the date each such item was paid or accrued, or the basis for\nsuch anticipated liability, and the nature of the misrepresentation, breach of\nwarranty or covenant to which such item is related.\n\n          (g)  Actions Against Company Shareholders.  In the event that Parent\n               ------------------------------------\nhas elected to pursue indemnity directly from the Principal Shareholders, the\nPrincipal Shareholders shall \n\n                                      43\n\n\n \npromptly, and in no event later than 30 days after delivery of the Officer's\nCertificate, wire transfer to Parent the amount of such Loss, unless the Company\nor the Principal Shareholders, as the case may be, contest such claim by\nfollowing the procedures set forth in Section 7.2(i).\n\n          (h)  Valuation of Parent Common Stock. For the purposes of determining\n               --------------------------------\nthe number of shares of Parent Common Stock to be delivered to Parent out of the\nEscrow Fund as indemnity pursuant to Section 7.3 hereof, the shares of Parent\nCommon Stock shall be valued at (i) if the Parent's Common Stock shall be\npublicly traded, a price equal to the average closing price of the Parent Common\nStock in trading on the relevant stock exchange or quotation system during the\ntwenty business day period ending three days prior to the date of the Officer's\nCertificate stating the claim with respect to which such shares are delivered,\nand (ii) if the Parents' Common Stock is not so publicly traded, the fair market\nvalue per share as determined by the Parent's board of directors in good faith\non the date closest to the date of the Officer's Certificate.\n\n          (i)  Resolution of Conflicts; Arbitration.\n               ------------------------------------\n\n               (i)   In case the Shareholder Representative shall object in\nwriting to any claim or claims made in any Officer's Certificate within thirty\n(30) days after delivery of such Officer's Certificate, the Shareholder\nRepresentative and Parent shall attempt in good faith to agree upon the rights\nof the respective parties with respect to each of such claims. If the\nShareholder Representative and Parent should so agree, a memorandum setting\nforth such agreement shall be prepared and signed by both parties. If any claim\nagainst the Escrow Fund was sought, such memorandum shall be furnished to the\nEscrow Agent and the Escrow Agent shall be entitled to rely on any such\nmemorandum and make payment out of the Escrow Fund in accordance with the terms\nthereof.\n\n               (ii)  If no such agreement can be reached after good faith\nnegotiation (or in any event after 60 days from the date of the Officer's\nCertificate), either Parent or the Shareholder Representative may demand\narbitration of the matter unless the amount of the damage or loss is at issue in\npending litigation with a third party, in which event arbitration shall not be\ncommenced until such amount is ascertained or both parties agree to arbitration;\nand in either such event the matter shall be settled by arbitration conducted by\nthree arbitrators. Parent and the Shareholder Representative shall each select\none arbitrator, and the two arbitrators so selected shall select a third\narbitrator. The arbitrators shall set a limited time period and establish\nprocedures designed to reduce the cost and time for discovery while allowing the\nparties an opportunity, adequate in the sole judgment of the arbitrators, to\ndiscover relevant information from the opposing parties about the subject matter\nof the dispute. The arbitrators shall rule upon motions to compel or limit\ndiscovery and shall have the authority to impose sanctions, including attorneys'\nfees and costs, to the same extent as a court of law or equity, should the\narbitrators determine that discovery was sought without substantial\njustification or that discovery was refused or objected to without substantial\njustification. The decision of a majority of the three arbitrators as to the\nvalidity and amount of any claim in such Officer's Certificate shall be binding\nand conclusive upon the parties to this Agreement. Notwithstanding anything in\nSection 7.2(e) hereof, the Escrow Agent shall be entitled to act in accordance\nwith such decision and make or withhold payments out of the Escrow Fund in\n\n                                      44\n\n\n \naccordance therewith. Such decision shall be written and shall be supported by\nwritten findings of fact and conclusions which shall set forth the award,\njudgment, decree or order awarded by the arbitrators.\n\n               (iii) Judgment upon any award rendered by the arbitrators may be\nentered in any court having jurisdiction.  Any such arbitration shall be held in\nSanta Clara County, California under the rules then in effect of the American\nArbitration Association.  The arbitrators shall determine how all expenses\nrelating to the arbitration shall be paid, including without limitation, the\nrespective expenses of each party, the fees of each arbitrator and the\nadministrative fee of the American Arbitration Association.\n\n          (j)  Third-Party Claims.  In the event Parent becomes aware of a \n               ------------------\nthird-party claim which Parent believes may result in Losses, Parent shall\nnotify the Shareholder Representative of such claim, and the Shareholder\nRepresentative shall be entitled, at the Company Shareholders' expense, to\nparticipate in any defense of such claim. Parent shall have the right in its\nsole discretion to settle any such claim; provided, however, that except with\nthe consent of the Shareholder Representative, no settlement of any such claim\nwith third-party claimants shall be determinative of the amount of any claim\npursuant to this Section 7.2. In the event that the Shareholder Representative\nhas consented to any such settlement, the Company Shareholders shall have no\nstanding to object under any provision of this Article 7.2 to the amount of any\nclaim by Parent against the Escrow Fund with respect to such settlement.\n\n          (k)  Shareholder Representative.\n               --------------------------\n\n               (i)   In the event that the Merger is approved, effective upon\nsuch vote, and without further act of any shareholder, Michael E. Kacaba shall\nbe appointed as agent and attorney-in-fact (the \"Shareholder Representative\")\nfor each Company Shareholder, for and on behalf of shareholders of the Company,\nto give and receive notices and communications, to authorize delivery to Parent\nof payments from the Escrow Fund in satisfaction of claims by Parent, to object\nto such deliveries, to agree to, negotiate, enter into settlements and\ncompromises of, and demand arbitration and comply with orders of courts and\nawards of arbitrators with respect to such claims, and to take all actions\nnecessary or appropriate in the judgment of the Shareholder Representative for\nthe accomplishment of the foregoing. Such agency may be changed by the\nshareholders of the Company from time to time upon not less than thirty (30)\ndays prior written notice to Parent; provided that the Shareholder\nRepresentative may not be removed unless a majority-in-interest of the Company\nShareholders agree to such removal and to the identity of the substituted agent.\nNo bond shall be required of the Shareholder Representative, and the Shareholder\nRepresentative shall not receive compensation for services as such. Notices or\ncommunications to or from the Shareholder Representative shall constitute notice\nto or from each of the Company Shareholders or their permitted transferees.\n\n               (ii)  The Shareholder Representative shall not be liable for any\nact done or omitted hereunder as Shareholder \n\n                                      45\n\n\n \nRepresentative while acting in good faith and in the exercise of reasonable\njudgment. The Company Shareholders shall severally indemnify the Shareholder\nRepresentative and hold him or her harmless against any loss, liability or\nexpense incurred without negligence or bad faith on the part of the Shareholder\nRepresentative and arising out of or in connection with the acceptance or\nadministration of the Shareholders Representative's duties hereunder, including\nthe reasonable fees and expenses of any legal counsel retained by the\nShareholder Representative.\n\n          (l)  Actions of the Shareholder Representative.  A decision, act,\n               -----------------------------------------\nconsent or instruction of the Shareholder Representative shall constitute a\ndecision of all the Company Shareholders and shall be final, binding and\nconclusive upon each of such Company Shareholder, and the Escrow Agent and\nParent may rely upon any such decision, act, consent or instruction of the\nShareholder Representative as being the decision, act, consent or instruction of\neach and every such Company Shareholder.  The Escrow Agent and Parent are hereby\nrelieved from any liability to any person for any acts done by them in\naccordance with such decision, act, consent or instruction of the Shareholder\nRepresentative.\n\n          (m)  Escrow Agent's Duties.\n               ---------------------\n\n               (i)   The Escrow Agent shall be obligated only for the\nperformance of such duties as are specifically set forth herein, and as set\nforth in any additional written escrow instructions which the Escrow Agent may\nreceive after the date of this Agreement which are signed by an officer of\nParent and the Shareholder Representative, and may rely and shall be protected\nin relying or refraining from acting on any instrument reasonably believed to be\ngenuine and to have been signed or presented by the proper party or parties. The\nEscrow Agent shall not be liable for any act done or omitted hereunder as Escrow\nAgent while acting in good faith and in the exercise of reasonable judgment, and\nany act done or omitted pursuant to the advice of counsel shall be conclusive\nevidence of such good faith.\n\n               (ii)  The Escrow Agent is hereby expressly authorized to\ndisregard any and all warnings given by any of the parties hereto or by any\nother person, excepting only orders or process of courts of law, and is hereby\nexpressly authorized to comply with and obey orders, judgments or decrees of any\ncourt. In case the Escrow Agent obeys or complies with any such order, judgment\nor decree of any court, the Escrow Agent shall not be liable to any of the\nparties hereto or to any other person by reason of such compliance,\nnotwithstanding any such order, judgment or decree being subsequently reversed,\nmodified, annulled, set aside, vacated or found to have been entered without\njurisdiction.\n\n               (iii) The Escrow Agent shall not be liable in any respect on\naccount of the identity, authority or rights of the parties executing or\ndelivering or purporting to execute or deliver this Agreement or any documents\nor papers deposited or called for hereunder.\n\n               (iv)  The Escrow Agent shall not be liable for the expiration of\nany rights under any statute of limitations with respect to this Agreement or\nany documents deposited with the Escrow Agent.\n\n                                      46\n\n\n \n               (v)   In performing any duties under the Agreement, the Escrow\nAgent shall not be liable to any party for damages, losses, or expenses, except\nfor gross negligence or willful misconduct on the part of the Escrow Agent. The\nEscrow Agent shall not incur any such liability for (A) any act or failure to\nact made or omitted in good faith, or (B) any action taken or omitted in\nreliance upon any instrument, including any written statement or affidavit\nprovided for in this Agreement that the Escrow Agent shall in good faith believe\nto be genuine, nor will the Escrow Agent be liable or responsible for forgeries,\nfraud, impersonations, or determining the scope of any representative authority.\nIn addition, the Escrow Agent may consult with the legal counsel in connection\nwith Escrow Agent's duties under this Agreement and shall be fully protected in\nany act taken, suffered, or permitted by such Escrow Agent in good faith in\naccordance with the advice of counsel. The Escrow Agent is not responsible for\ndetermining and verifying the authority of any person acting or purporting to\nact on behalf of any party to this Agreement.\n\n               (vi)  If any controversy arises between the parties to this\nAgreement, or with any other party, concerning the subject matter of this\nAgreement, its terms or conditions, the Escrow Agent will not be required to\ndetermine the controversy or to take any action regarding it. The Escrow Agent\nmay hold all documents and the Escrow Amount and may wait for settlement of any\nsuch controversy by final appropriate legal proceedings or other means as, in\nthe Escrow Agent's discretion, the Escrow Agent may be required, despite what\nmay be set forth elsewhere in this Agreement. In such event, the Escrow Agent\nwill not be liable for damage.\n\n               Furthermore, the Escrow Agent may at its option, file an action\nof interpleader, in arbitration or otherwise, as the circumstances may require,\nrequiring the Parties to answer and litigate any claims and rights among\nthemselves. The Escrow Agent is authorized to deposit with the clerk of the\ncourt all documents and shares of Parent Common Stock held in escrow, except all\ncost, expenses, charges and reasonable attorney fees incurred by the Escrow\nAgent due to the interpleader action and which the parties jointly and severally\nagree to pay. Upon initiating such action, the Escrow Agent shall be fully\nreleased and discharged of and from all obligations and liability imposed by the\nterms of this Agreement.\n\n               (vii) The parties and their respective successors and assigns\nagree jointly and severally to indemnify and hold Escrow Agent harmless against\nany and all losses, claims, damages, liabilities, and expenses, including\nreasonable costs of investigation, counsel fees, including allocated costs of\nin-house counsel and disbursements that may be imposed on the Escrow Agent or\nincurred by the Escrow Agent in connection with the performance of the Escrow\nAgent's duties under this Agreement, including but not limited to any litigation\narising from this Agreement or involving its subject matter other than arising\nout of its gross negligence or willful misconduct.\n\n               (viii) The Escrow Agent may resign at any time upon giving at\nleast thirty (30) days written notice to the parties to this Agreement;\nprovided, however, that no such resignation shall become effective until the\nappointment of a successor escrow agent which shall be accomplished as follows:\nthe parties shall use their best efforts to agree on a successor escrow agent\nwithin thirty (30) days after receiving such notice. If Parent and the\nShareholder Representative fail to agree upon a successor escrow agent within\nsuch time, the Escrow Agent shall have the right to \n\n                                      47\n\n\n \nappoint a successor escrow agent authorized to do business in the state of\nCalifornia. The successor escrow agent shall execute and deliver an instrument\naccepting such appointment and it shall, without further acts, be vested with\nall the estates, properties, rights, powers, and duties of the predecessor\nEscrow Agent as if originally named as Escrow Agent. Thereafter, the Escrow\nAgent shall be discharged from any further duties and liability under this\nAgreement.\n\n          (n)  Fees.  All fees of the Escrow Agent for performance of its duties\n               ----\nhereunder shall be paid by Parent in accordance with the standard fee schedule\nof the Escrow Agent.  It is understood that the fees and usual charges agreed\nupon for services of the Escrow Agent shall be considered compensation for\nordinary services as contemplated by this Agreement.  In the event that the\nconditions of this Agreement are not promptly fulfilled, or if the Escrow Agent\nrenders any service not provided for in this Agreement, or if the parties hereto\nrequest a substantial modification of its terms, or if any controversy arises,\nor if the Escrow Agent is made a party to, or intervenes in, any litigation\npertaining to the Escrow Fund or its subject matter, the Escrow Agent shall be\nreasonably compensated for such extraordinary services and reimbursed for all\ncosts, attorney's fees, including allocated costs of in-house counsel, and\nexpenses occasioned by such default, delay, controversy or litigation.  The\nParent promises to pay these sums upon demand.\n\n     7.3  Indemnity.\n          ---------\n\n          (a)  The Principal Shareholders hereby agree to indemnify and hold\nParent and its subsidiaries, directors, officers and agents harmless against and\nin respect of any loss, cost, expense, claim, liability, deficiency, judgment or\ndamage (hereinafter, individually, a \"Loss\"; and collectively, \"Losses\")\nincurred by Parent, its subsidiaries, officers, directors and agents (i) as a\nresult of any inaccuracy in or breach of a representation or warranty of the\nCompany or the Principal Shareholders contained in this Agreement or any\nfailure by the Company or any Principal Shareholder to perform or comply with\nany covenant contained in this Agreement and (ii) by reason of the failure of\nthe Company and the Principal Shareholders to perform their obligations\nhereunder.\n\n          (b)  Parent hereby agrees to indemnify and hold the Company and its\nsubsidiaries, directors, officers and agents harmless against and in respect of\nany loss, cost, expense, claim, liability, deficiency, judgment or damage\n(hereinafter, individually, a \"Loss\"; and collectively, \"Losses\") incurred by\nthe Company, its subsidiaries, officers, directors and agents (i) as a result of\nany inaccuracy in or breach of a representation or warranty of Parent contained\nin this Agreement or any failure by Parent to perform or comply with any\ncovenant contained in this Agreement and (ii) by reason of the failure of Parent\nto perform its obligations hereunder.\n\n          (c)  Expiration of Indemnification.  The indemnification obligations\n               -----------------------------\nunder this Section 7.3 shall terminate at 5:00 p.m., Pacific Time on the third\nanniversary of the Effective Date, but shall not terminate as to any Loss (or a\npotential claim by an appropriate party) asserted in good faith prior to such\ndate; provided, however, that the representations and warranties with respect to\nTaxes (Section 2.10) and environmental laws (Section 2.20) shall survive until\nthe expiration of the applicable statute of limitations, if any.\n\n                                      48\n\n\n \n          (d)  Procedure for Indemnification.  In the event that either party\n               -----------------------------\nshall incur or suffer any Losses in respect of which indemnification may be\nsought by such party pursuant to the provisions of this Article, the indemnified\nparty shall assert a claim for indemnification by written notice (a \"Notice\") to\nthe Parent, or the Surviving Corporation and the Shareholder Representative, as\nthe case may be, briefly stating the nature and basis of such claim.  In the\ncase of Losses arising by reason of any third-party claim, the Notice shall be\ngiven within 25 days of the filing or other written assertion of any such claim\nagainst Parent, but the failure of Parent to give the Notice within such time\nperiod shall not relieve the Company and the Principal Shareholders of any\nliability that the Company and the Principal Shareholders may have to Parent\nexcept to the extent that the Company and the Principal Shareholders are\nactually prejudiced thereby; provided, however, that any such notice shall be\ngiven no later than the date of the expiration of the applicable indemnification\nobligation of the Company and the Principal Shareholders as set forth in Section\n7.3(c) above.  The indemnified party shall provide the other party on request\nall information and documentation reasonably necessary to support and verify any\nLosses which the indemnified party believes give rise to a claim for\nindemnification hereunder and shall give reasonable access to all books, records\nand personnel in the possession or under the control of that party which would\nhave bearing on such claim.\n\n          (e)  Arbitration.  Any controversy involving a claim by an indemnified\n               -----------\nparty pursuant to this Section 7.3 shall be finally settled by arbitration in\nSanta Clara County, California in accordance with the then current Commercial\nArbitration Rules of the American Arbitration Association; and judgment upon the\naward rendered by the arbitrator may be entered in any court having jurisdiction\nthereof.  Such arbitration shall be conducted by an arbitrator chosen by mutual\nagreement of Parent and the Company and the Principal Shareholders.  Failing\nsuch agreement, the arbitration shall be conducted by three independent\narbitrators, none of whom shall have any competitive interest with Parent or the\nCompany and the Principal Shareholders.  Parent shall choose one such\narbitrator, the Company and the Principal Shareholders shall choose one such\narbitrator, and such two arbitrators shall mutually select a third arbitrator.\nAny decision of two such arbitrators shall be binding on Parent and the Company\nand the Principal Shareholders.  Each party shall pay its own costs and expenses\n(including counsel fees) of any such arbitration except that the arbitrator can\ncompel one party to pay all or a portion of the other party's costs and\nexpenses.\n\n\n                                  ARTICLE VIII\n\n                       TERMINATION, AMENDMENT AND WAIVER\n\n     8.1  Termination.  Except as provided in Section 8.2 below, this\n          -----------                                                  \nAgreement may be terminated and the Merger abandoned at any time prior to the\nEffective Time:\n\n          (a)  by mutual consent of the Company and Parent;\n\n          (b)  by Parent or the Company if:  (i) the Effective Time has not\noccurred by May 31, 1997; (ii) there shall be a final nonappealable order of a\nfederal or state court in effect \n\n                                      49\n\n\n \npreventing consummation of the Merger; or (iii) there shall be any statute,\nrule, regulation or order enacted, promulgated or issued or deemed applicable to\nthe Merger by any governmental entity that would make consummation of the Merger\nillegal;\n\n          (c)  by Parent or the Company if there shall be any action taken, or\nany statute, rule, regulation or order enacted, promulgated or issued or deemed\napplicable to the Merger by any Governmental Entity, which would:  (i) prohibit\nParent's or Sub's ownership or operation of any portion of the business of the\nCompany or (ii) compel Parent or the Company to dispose of or hold separate all\nor a portion of the business or assets of the Sub or Parent as a result of the\nMerger;\n\n          (d)  by Parent if it is not in material breach of its obligations\nunder this Agreement and there has been a material breach of any representation,\nwarranty, covenant or agreement contained in this Agreement on the part of the\nCompany or the Principal Shareholders and such breach has not been cured within\nten (10) calendar days after written notice to the Company (provided that, no\ncure period shall be required for a breach which by its nature cannot be cured);\n\n          (e)  by the Company if neither it nor the Principal Shareholders are\nin material breach of their respective obligations under this Agreement and\nthere has been a material breach of any representation, warranty, covenant or\nagreement contained in this Agreement on the part of Parent or Sub and such\nbreach has not been cured within ten (10) calendar days after written notice to\nParent (provided that, no cure period shall be required for a breach which by\nits nature cannot be cured); or\n\n          (f)  by Parent, Sub, Company, or Principal Shareholders if an event\nhaving a Material Adverse Effect on the Company shall have occurred after the\ndate of this Agreement.\n\n     Where action is taken to terminate this Agreement pursuant to this Section\n8.1, it shall be sufficient for such action to be authorized by the Board of\nDirectors (as applicable) of the party taking such action.\n\n     8.2  Effect of Termination.  In the event of termination of this\n          ---------------------                                        \nAgreement as provided in Section 8.1, this Agreement shall forthwith become void\nand there shall be no liability or obligation on the part of Parent, Sub or the\nCompany, or their respective officers, directors or shareholders, provided that\neach party shall remain liable for any breaches of this Agreement prior to its\ntermination; provided further that, the provisions of Sections 5.4 and 5.5 and\nArticle IX of this Agreement shall remain in full force and effect and survive\nany termination of this Agreement.\n\n     8.3  Amendment.  Except as is otherwise required by applicable law after\n          ---------                                                           \nthe Company Shareholders approve this Agreement, this Agreement may be amended\nby the parties hereto at any time by execution of an instrument in writing\nsigned on behalf of each of the parties hereto.\n\n                                      50\n\n\n \n     8.4  Extension; Waiver.   At any time prior to the Effective Time, Parent\n          -----------------                                                     \nand Sub, on the one hand, and the Company, on the other, may, to the extent\nlegally allowed, (i) extend the time for the performance of any of the\nobligations of the other party hereto, (ii) waive any inaccuracies in the\nrepresentations and warranties made to such party contained herein or in any\ndocument delivered pursuant hereto, and (iii) waive compliance with any of the\nagreements or conditions for the benefit of such party contained herein.  Any\nagreement on the part of a party hereto to any such extension or waiver shall be\nvalid only if set forth in an instrument in writing signed on behalf of such\nparty.\n\n                                   ARTICLE IX\n\n                               GENERAL PROVISIONS\n\n     9.1  Notices.  All notices and other communications hereunder shall be in\n          -------                                                               \nwriting and shall be deemed given if delivered personally or by commercial\nmessenger or courier service, or mailed by registered or certified mail (return\nreceipt requested) or sent via facsimile (with acknowledgment of complete\ntransmission) to the parties at the following addresses (or at such other\naddress for a party as shall be specified by like notice):\n\n          (a)  if to Parent or Sub, to:\n\n                     USWeb Corporation\n                     2880 Lakeside Drive\n                     Santa Clara, California  95054\n                     Attn: Chief Financial Officer\n                     Telecopy No.: (408) 987-3240\n\n                     with a copy to:\n\n                     Wilson Sonsini Goodrich &amp; Rosati, P.C.\n                     650 Page Mill Road\n                     Palo Alto, California 94304\n                     Attention: Mark Bonham, Esq.\n                     Telecopy No.: (415) 493-6811\n\n          (b)  if to Company or to a Principal Shareholder to:\n\n                     Michael E. Kacaba                      \n                     5110 Goldleaf Circle - Suite 275\n                     Los Angeles, CA  90056 \n                     Telecopy No.: (213)290.3050\n \n\n                                      51\n\n\n \n                     with a copy to:\n\n \n \n \n                     Attention:\n                     Telecopy No.:\n\n     9.2  Interpretation.  The words \"include,\" \"includes\" and \"including\"\n          --------------                                                    \nwhen used herein shall be deemed in each case to be followed by the words\n\"without limitation.\"  The table of contents and headings contained in this\nAgreement are for reference purposes only and shall not affect in any way the\nmeaning or interpretation of this Agreement.\n\n     9.3  Counterparts.  This Agreement may be executed in one or more\n          ------------                                                  \ncounterparts, all of which shall be considered one and the same agreement and\nshall become effective when one or more counterparts have been signed by each of\nthe parties and delivered to the other party, it being understood that all\nparties need not sign the same counterpart.\n\n     9.4  Entire Agreement; Assignment.  This Agreement, and Exhibits hereto\n          ----------------------------                                        \nand the documents and instruments and other agreements among the parties hereto\nreferenced herein:  (a) constitute the entire agreement among the parties with\nrespect to the subject matter hereof and supersede all prior agreements and\nunderstandings both written and oral, among the parties with respect to the\nsubject matter hereof; (b) are not intended to confer upon any other person any\nrights or remedies hereunder; and (c) shall not be assigned by operation of law\nor otherwise except as otherwise specifically provided, except that Parent and\nSub may assign their respective rights and delegate their respective obligations\nhereunder to their respective affiliates.\n\n     9.5  Severability.  In the event that any provision of this Agreement or\n          ------------                                                         \nthe application thereof, becomes or is declared by a court of competent\njurisdiction to be illegal, void or unenforceable, the remainder of this\nAgreement will continue in full force and effect and the application of such\nprovision to other persons or circumstances will be interpreted so as reasonably\nto effect the intent of the parties hereto.  The parties further agree to\nreplace such void or unenforceable provision of this Agreement with a valid and\nenforceable provision that will achieve, to the extent possible, the economic,\nbusiness and other purposes of such void or unenforceable provision.\n\n     9.6  Other Remedies.  Except as otherwise provided herein, any and all\n          --------------                                                     \nremedies herein expressly conferred upon a party will be deemed cumulative with\nand not exclusive of any other remedy conferred hereby, or by law or equity upon\nsuch party, and the exercise by a party of any one remedy will not preclude the\nexercise of any other remedy.\n\n                                      52\n\n\n \n     9.7  Governing Law.  This Agreement shall be governed by and construed in\n          -------------                                                         \naccordance with the laws of the State of California, regardless of the laws that\nmight otherwise govern under applicable principles of conflicts of laws thereof.\nEach of the parties hereto irrevocably consents to the exclusive jurisdiction\nand venue of any court within Santa Clara County, State of California, in\nconnection with any matter based upon or arising out of this Agreement or the\nmatters contemplated herein, agrees that process may be served upon them in any\nmanner authorized by the laws of the State of California for such persons and\nwaives and covenants not to assert or plead any objection which they might\notherwise have to such jurisdiction, venue and such process.\n\n     9.8  Rules of Construction.  The parties hereto agree that they have been\n          ---------------------                                                 \nrepresented by counsel during the negotiation and execution of this Agreement\nand, therefore, waive the application of any law, regulation, holding or rule of\nconstruction providing that ambiguities in an agreement or other document will\nbe construed against the party drafting such agreement or document.\n\n     IN WITNESS WHEREOF, Parent, Sub, the Company and the Principal Shareholders\nhave caused this Agreement to be signed by their duly authorized respective\nofficers, all as of the date first written above.\n\n\nCOMPANY                              USWEB CORPORATION\n\n\nBy:                                  By:\n   President\n                                     Title:\n\n\nESCROW AGENT                         USWEB ACQUISITION CORPORATION 106\n\nBy:                                  By:\n\nTitle:                               Title:\n\n\n                                     PRINCIPAL SHAREHOLDERS\n\n\n                                     __________________________________\n                                     Michael E. Kacaba\n\n                                      53 \n\n\n \n                                     __________________________________\n                                     Ronald M. Hom\n\n \n\n                                     __________________________________\n                                     David M. Johnson\n\n                  (ATTACH SPOUSAL CONSENTS AS REQUIRED)\n\n                                      54\n\n\n \n                                   EXHIBIT A\n                                   ---------\n\n                            Principal Shareholders\n\n \n \nName                          Number of Shares*\n\nMichael E. Kacaba                 3,333.34\n\nRonald M. Hom                     3,333.33\n \nDavid M. Johnson                  3,333.33\n- -------------------------\n*On an as fully converted to Common Stock, fully diluted basis.\n\n                                      55\n\n\n \n                                    EXHIBIT B\n                                        \n\n                            Valuation Model\n\n\n\n                                      56\n\n\n \n                                   EXHIBIT C\n                                   ---------\n\n                            Schedule of Exceptions\n\n\n\n\n                                      57\n\n\n \n                                   EXHIBIT D\n                                   ---------\n\n\n                            Form of Option Agreement\n\n\n                                      58\n\n\n \n                                   EXHIBIT E\n                                   ---------\n\n                        Form of Shareholder Certificate\n\n\n\n                                      59\n\n<\/text>\n\n<\/description><\/sequence><\/type><\/document>\n\n<document>\n\n<type>EX-2.4\n\n<sequence>5\n\n<description>AGREEMENT &amp; PLAN OF REORG. (CORP.107)\n\n<text>\n\n\n\n \n                                                                     EXHIBIT 2.4\n\n                      AGREEMENT AND PLAN OF REORGANIZATION\n\n                                  BY AND AMONG\n\n                               USWEB CORPORATION\n\n                       USWEB ACQUISITION CORPORATION 107\n\n                                      AND\n\n                              INTERNETOFFICE, LLC\n\n\n                           DATED AS OF APRIL 30, 1997\n\n\n \n                               INDEX OF EXHIBITS\n                                        \nEXHIBIT           DESCRIPTION\n- -----------------------------\n\nExhibit A         Principal Shareholders\n\nExhibit B         Valuation Model\n\nExhibit C         Schedule of Exceptions\n\nExhibit D         Option Agreement\n\nExhibit E         Form of Shareholder Certificate\n\n\n                               TABLE OF CONTENTS\n        \n\n<table> \n\n<caption> \n                                                                                  PAGE\n                                                                                  ----\n                                                                               \n<c>\nARTICLE I - THE MERGER                                                               2\n\n 1.1    The Merger.                                                                  2\n\n 1.2    Effective Time.                                                              2\n\n 1.3    Effect of the Merger.                                                        2\n\n 1.4    Certificate of Incorporation; Operating Agreement.                           2\n\n 1.5    Directors and Officers.                                                      3\n\n 1.6    Effect of Merger on the Capital Stock of the Constituent Corporations.       3\n\n 1.7    Surrender of Certificates.                                                   4\n\n 1.8    No Further Ownership Rights in Company Membership Units.                     6\n\n 1.9    Lost, Stolen or Destroyed Certificates.                                      6\n\n 1.10   Purchase Price Adjustments.                                                  6\n\n 1.11   Parent Common Stock.                                                         8\n\n 1.12   Tax Consequences.                                                            8\n \n 1.13   Taking of Necessary Action; Further Action.                                  8\n\n<\/c><\/caption><\/table> \ni\n\n\n \n                               TABLE OF CONTENTS\n                                  (CONTINUED)\n\n<table> \n\n<caption> \n                                                                                  PAGE\n                                                                               \n<c>\nARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE PRINCIPAL\nSHAREHOLDERS                                                                         9\n\n 2.1   Organization of the Company.                                                  9\n                                     \n 2.2   Company Capital Structure.                                                    9\n                                     \n 2.3   Subsidiaries.                                                                 9\n                                     \n 2.4   Authority.                                                                   10\n                                     \n 2.5   No Conflict.                                                                 10\n                                     \n 2.6   Consents.                                                                    10\n                                     \n 2.7   Company Financial Statements.                                                11\n                                     \n 2.8   No Undisclosed Liabilities.                                                  11\n                                     \n 2.9   No Changes.                                                                  11\n\n 2.10  Tax Matters.                                                                 13\n\n 2.11  Restrictions on Business Activities.                                         14\n\n 2.12  Title to Properties; Absence of Liens and Encumbrances; Condition of \n       Equipment.                                                                   15\n\n 2.13  Intellectual Property.                                                       15\n\n 2.14  Agreements, Contracts and Commitments.                                       18\n\n 2.15  Interested Party Transactions.                                               20\n\n 2.16  Governmental Authorization.                                                  20\n\n 2.17  Litigation.                                                                  20\n\n 2.18  Accounts Receivable.                                                         20\n\n 2.19  Minute Books.                                                                20\n\n 2.20  Environmental Matters.                                                       21\n\n 2.21  Brokers' and Finders' Fees; Third Party Expenses.                            22\n\n 2.22  Employee Benefit Plans and Compensation.                                     22\n\n 2.23  Insurance.                                                                   25\n\n 2.24  Compliance with Laws.                                                        25\n\n 2.25  Third Party Consents.                                                        25\n\n 2.26  Warranties; Indemnities.                                                     25\n\n 2.27  Complete Copies of Materials.                                                25\n\n 2.28  Representations Complete.                                                    25\n\n 2.29  Business Plan.                                                               25\n\n<\/c><\/caption><\/table> \n                                                                              ii\n\n\n \n                               TABLE OF CONTENTS\n                                  (CONTINUED)\n\n<table> \n\n<caption> \n                                                                                  PAGE\n                                                                                  ----\n                                                                               \n<c>\n 2.30  Backlog Report.                                                              25\n\n 2.31  Securities Law Compliance.                                                   26\n\n 2.32  Principal Shareholder Investment Representations.                            26\n\nARTICLE III                                                                         27\n\n 3.1   Organization, Standing and Power.                                            27\n                                        \n 3.2   Authority; Consents.                                                         27\n                                        \n 3.3   Capital Structure.                                                           27\n                                        \n 3.4   Brokers' and Finders' Fees.                                                  28\n                                        \n 3.5   Similar Transactions.                                                        28\n                                        \n 3.6   No Changes.                                                                  29\n\nARTICLE IV                                                                          29\n\n 4.1   Conduct of Business of the Company.                                          29\n                                           \n 4.2   No Solicitation.                                                             31\n\nARTICLE V                                                                           32\n\n 5.1   Parent's Right of First Refusal.                                             32\n                                       \n 5.2   Market Standoff Agreement.                                                   33\n                                       \n 5.3   Restriction on Competition.                                                  33\n\n 5.4   Confidentiality.                                                             34\n\n 5.5   Expenses.                                                                    35\n                                                      \n 5.6   Public Disclosure.                                                           35\n                                                      \n 5.7   Post-Closing Employment of Company Employees.                                35\n                                                      \n 5.8   Treatment of Affiliate Warrants.                                             37\n                                                      \n 5.9   Access to Information.                                                       37\n\n 5.10  Public Disclosure.                                                           37\n\n 5.11  Consents.                                                                    37\n\n 5.12  FIRPTA Compliance.                                                           37\n\n 5.13  Best Efforts.                                                                38\n\n 5.14  Notification of Certain Matters.                                             38\n\n 5.15  Tax Returns.  N\/A - reserved for Sub-S corporations                          38\n\n<\/c><\/caption><\/table> \niii\n\n\n \n                               TABLE OF CONTENTS\n                                  (CONTINUED)\n\n<table> \n\n<caption> \n                                                                                  PAGE\n                                                                                  ----\n                                                                               \n<c>\n 5.16  Additional Documents and Further Assurances.                                 38\n\n 5.17  Section 368 Compliance.                                                      38\n\n 5.18  Parent Policies.                                                             39\n\nARTICLE VI                                                                          39\n\n 6.1   Conditions to Obligations of Each Party to Effect the Merger.                39\n                                                                      \n 6.2   Additional Conditions to Obligations of Company.                             39\n                                                                      \n 6.3   Additional Conditions to the Obligations of Parent and Sub.                  40\n\nARTICLE VII                                                                         41\n\n 7.1   Survival of Representations and Warranties.                                  41\n                                                  \n 7.2   Escrow Arrangements; Setoff.                                                 41  \n\nARTICLE VIII                                                                        49\n\n 8.1   Termination.                                                                 49\n                              \n 8.2   Effect of Termination.                                                       50\n                              \n 8.3   Amendment.                                                                   50\n                              \n 8.4   Extension; Waiver.                                                           51\n\nARTICLE IX                                                                          51\n\n 9.1   Notices.                                                                     51\n\n 9.2   Interpretation.                                                              52\n\n 9.3   Counterparts.                                                                52\n\n 9.4   Entire Agreement; Assignment.                                                52\n\n 9.5   Severability.                                                                52\n\n 9.6   Other Remedies.                                                              52\n\n 9.7   Governing Law.                                                               53\n\n 9.8   Rules of Construction.                                                       53\n\n<\/c><\/caption><\/table> \n                                                                              iv\n\n\n \n                      AGREEMENT AND PLAN OF REORGANIZATION\n\n\n     This AGREEMENT AND PLAN OF REORGANIZATION (the \"Agreement\") is made and\n                                                     ---------\nentered into as of April 30, 1997, among USWeb Corporation, a Utah corporation\n(\"Parent\"), USWeb Acquisition Corporation 107, a Delaware corporation and a\n  ------\nwholly owned subsidiary of Parent (\"Sub\"), Internetoffice, LLC, a Georgia\n                                    ---\nlimited liability company (the \"Company\"), and the individuals listed on Exhibit\n                                -------                                  -------\nA attached hereto (such individuals being hereinafter referred to collectively\n- -\nas the \"Principal Shareholders\" and individually as a \"Principal Shareholder\").\n        ----------------------                         ---------------------\n\n\n                                    RECITALS\n\n     A.    The Boards of Directors of each of the Company, Parent and Sub\nbelieve it is in the best interests of each company and their respective members\nthat Parent acquire the Company through the statutory merger of the Company with\nand into Sub (the \"Merger\") and, in furtherance thereof, have approved the\nMerger.\n\n     B.    Pursuant to the Merger, among other things, all of the issued and\noutstanding Membership Units of the Company shall be converted into the right to\nreceive shares of Common Stock of Parent.\n\n     C.    Fifty Percent (50%) of the shares of Common Stock of Parent otherwise\npayable in connection with the Merger shall be placed in a one-year escrow for\nthe purposes of (i) satisfying damages, losses, expenses and other similar\ncharges which result from breaches of representations, warranties or covenants\nor (ii) making adjustments to the purchase price paid by the Parent.\n\n     D.    The Company, the Principal Shareholders, Parent and Sub desire to\nmake certain representations, warranties, covenants and other agreements in\nconnection with the Merger.\n\n     E.    The parties hereto desire that each employee of the Company prior to\nthe Merger shall be offered an opportunity of employment by the Sub following\nthe Merger.  Each party understands and agrees that any such employee or the Sub\nshall have the right to terminate any such employment at any time.\n\n     NOW, THEREFORE, in consideration of the covenants, promises and\nrepresentations set forth herein, and for other good and valuable consideration,\nthe parties agree as follows:\n\n                                       1\n\n\n \n                                   ARTICLE I\n\n                                   THE MERGER\n\n     1.1  The Merger.  At the Effective Time (as defined in Section 1.2) and\n          ----------                                                            \nsubject to and upon the terms and conditions of this Agreement and the\napplicable provisions of the corporations laws of the states of Delaware\n(\"Delaware Law\") and the limited liability company laws of the State of Georgia\n(the \"Georgia Law\"), the Company shall be merged with and into the Sub, the\nseparate corporate existence of the Company shall cease and Sub shall continue\nas the surviving corporation and as a wholly owned subsidiary of Parent.  Sub as\nthe surviving corporation after the Merger is hereinafter sometimes referred to\nas the \"Surviving Corporation.\"\n\n     1.2  Effective Time.  Unless this Agreement is earlier terminated\n          --------------\npursuant to Section 8.1, the closing of the Merger (the \"Closing\") will take\n                                                         -------\nplace as promptly as practicable, but no later than five (5) business days\nfollowing satisfaction or waiver of the conditions set forth in Article VI, at\nthe offices of Wilson Sonsini Goodrich &amp; Rosati, 650 Page Mill Road, Palo Alto,\nCalifornia, unless another place or time is agreed to in writing by Parent and\nthe Company.  The date upon which the Closing actually occurs is herein referred\nto as the \"Closing Date.\"  On the Closing Date, the parties hereto shall cause\n           ------------\nthe Merger to be consummated by submitting for filing an Agreement and Plan of\nMerger (or like instrument) with the Secretary of State of Delaware and the\nSecretary of State of Georgia (the \"Merger Articles\"), in accordance with the\n                                    ---------------\nrelevant provisions of applicable law (the later of the times of filing with the\nSecretary of State of Delaware and the Secretary of State of Georgia being\nreferred to herein as the \"Effective Time\").\n                           --------------\n\n     1.3  Effect of the Merger.  At the Effective Time, the effect of the\n          --------------------                                             \nMerger shall be as provided in the applicable provisions of Delaware Law and the\nlimited liability company laws of the State of Georgia.  Without limiting the\ngenerality of the foregoing, and subject thereto, at the Effective Time, all the\nproperty, rights, privileges, powers and franchises of the Company and Sub shall\nvest in the Surviving Corporation, and all debts, liabilities and duties of the\nCompany and Sub shall become the debts, liabilities and duties of the Surviving\nCorporation.\n\n     1.4  Certificate of Incorporation; Operating Agreement.\n          -------------------------------------------------   \n\n          (a) Unless otherwise determined by Parent prior to the Effective Time,\nat the Effective Time, the Certificate of Incorporation of Sub shall be the\nCertificate of Incorporation of the Surviving Corporation until thereafter\namended as provided by law and such Certificate of Incorporation.\n\n          (b) The Operating Agreement of Sub, as in effect immediately prior to\nthe Effective Time, shall be the Operating Agreement of the Surviving\nCorporation until thereafter amended.\n\n                                       2\n\n\n \n     1.5  Directors and Officers.   The director(s) of Sub immediately prior\n          ----------------------                                              \nto the Effective Time shall be the initial director(s) of the Surviving\nCorporation, each to hold office in accordance with the Certificate of\nIncorporation and Operating Agreement of the Surviving Corporation.  The\nofficers of Sub immediately prior to the Effective Time shall be the initial\nofficers of the Surviving Corporation, each to hold office in accordance with\nthe Operating Agreement of the Surviving Corporation.\n\n     1.6  Effect of Merger on the Capital Stock of the Constituent Corporations.\n          ---------------------------------------------------------------------\n\n          (a) Exchange of Membership Units for Stock; Purchase Price\n              ------------------------------------------------------\nAdjustments.  As of the Effective Time of the Merger, each of the Company's\n- -----------                                             \nMembership Units, (the \"Company Membership Units\"), that is issued and\n                        ------------------------\noutstanding immediately prior to the Effective Time (other than any  dissenting\nCompany Membership Units under applicable state law) shall, by virtue of the\nMerger and without any action on the part of Sub, the Company, or the Company's\nMembers (the \"Company Members\"), be canceled and extinguished and each Company\n              ---------------\nmember shall have (i) the right to receive such Company member's pro rata\nportion (based on such Company members' equity ownership in the Company as\nrepresented to Parent by the Company) of that number of shares of the Parent's\nCommon Stock,  (the \"Parent Common Stock\") equal to $4,859,478 (the \"Original\n                     -------------------                             --------\nPurchase Price\") divided by the Fair Value Per Share (as defined in Section\n- --------------\n1.6(e) below) as of the Closing Date, subject to Section 7.2 hereof, plus the\ncontingent right to receive  additional shares of Parent Common Stock as\nprovided in Section 1.10 of this Agreement (the \"Purchase Price Adjustment\").\n                                                 -------------------------\nThe Original Purchase Price may be adjusted to reflect rounding pursuant to\nSection 1.6(d).  The Original Purchase Price and the Purchase Price Adjustment\nare hereinafter collectively referred to as the \"Merger Consideration.\"\n                                                 --------------------\n\n          (b)  Stock Options.  N\/A\n               -------------\n\n          (c) Adjustments to Parent Common Stock.  The number of shares of\n              ----------------------------------\nParent Common Stock issuable hereunder shall be adjusted to reflect fully the\neffect of any stock split, reverse split, stock dividend (including any dividend\nor distribution of securities convertible into Parent Common Stock or Company\nMembership Units), reorganization, recapitalization or other like change with\nrespect to Parent Common Stock or Company Membership Units occurring after the\ndate hereof.\n\n          (d) Fractional Shares.  No fractional share of Parent Common Stock\n              -----------------\nshall be issued in the Merger, including the Purchase Price Adjustment pursuant\nto Section 1.10 below, or pursuant to any stock option or stock bonus issued to\na Company employee that becomes an employee of Parent or Sub following the\nMerger.  In lieu thereof, the number of shares otherwise issued or issuable\nshall be rounded to the nearest whole share, with one-half share or more being\nrounded up.\n\n                                       3\n\n\n \n          (e)  Definitions.\n               ------------\n\n               (i) Aggregate Common Number. The \"Aggregate Common Number\" shall\n                   -----------------------\nmean the aggregate number of shares of Company Membership Units outstanding\nimmediately prior to the Effective Time.\n\n              (ii) Fair Value Per Share.  The Fair Value Per Share of Parent's\n                   --------------------\nCommon Stock, as of any particular date, shall mean, if the Parent's Common\nStock is then traded on an exchange or national quotation system, the average\nclosing price per share of Parent's Common Stock as traded on such exchange or\nnational quotation system during the 10 trading day period ending three business\ndays prior to the date of determination or, if not so traded, the fair market\nvalue per share of such Parent's Common Stock as most recently determined by the\nParent's Board of Directors acting in good faith.\n\n             (iii) Escrow Amount; Escrow Agent.  The \"Escrow Amount\" shall be\n                   ---------------------------\nequal to Fifty Percent (50%) of the number of shares of Parent Common Stock\nconstituting the Original Purchase Price.  The Escrow Agent shall be the\nsecretary of the Parent, or his designee, so long as the Parent is a privately\nheld company.  Thereafter, any transfer agent for the Parent's Common Stock may\nbe appointed Escrow Agent.\n\n              (iv) Exchange Ratio.  The \"Exchange Ratio\" shall mean the quotient\n                   --------------\nobtained by dividing (i) (X) the Original Purchase Price divided by (Y) the Fair\nValue Per Share as of the Effective Date by (ii) the Aggregate Common Number.\nFor illustrative purposes only, if the Original Purchase Price were $2,000,000,\nthe Fair Value Per Share were $2.50 and the Aggregate Common Number were\n3,400,000, then the Exchange Ratio would be ($2,000,000 \/ $2.50) \/ 3,400,000 =\n .23529, so each share of Company Membership Units would be exchanged for .23529\nshares of Parent's Common Stock.  If the facts were the same but the Aggregate\nCommon Number were 1,500, then the calculation would be ($2,000,000 \/ $2.50)\n\/1,500 = 533.33, so each share of Company Membership Units would be exchanged\nfor 533.33 shares of Parent's Common Stock.\n\n     1.7  Surrender of Certificates.\n          -------------------------   \n\n          (a) Exchange Agent.  The Secretary of Parent or such other entity\n              --------------\nreasonably designated by Parent shall serve as exchange agent (the \"Exchange\n                                                                    --------\nAgent\") in the Merger.\n- -----\n\n          (b) Parent to Provide Common Stock.  Promptly after the Effective\n              ------------------------------\nTime, Parent shall make available to the Exchange Agent for exchange in\naccordance with this Article I the Original Purchase Price issuable pursuant to\nSection 1.6(a) in exchange for outstanding shares of Company Membership Units;\nprovided that, on behalf of the Company Members, Parent shall deposit the Escrow\nAmount into an escrow account.\n\n          (c) Exchange Procedures.  Promptly after the Effective Time, the\n              -------------------\nSurviving Corporation shall cause to be mailed to each Company Members (i) a\nletter of transmittal (which\n\n                                       4\n\n\n \nshall specify that delivery shall be effected, and risk of loss and title to the\nCompany Membership Units, which immediately prior to the Effective Time\nrepresented all Company Membership Interests which were converted into the right\nto receive the Merger Consideration pursuant to Section 1.6, shall pass, only\nupon delivery of a written power (the \"Transfer Power\") to the Exchange Agent\nand shall be in such form and have such other provisions as Parent may\nreasonably specify) and (ii) instructions for use in effecting the surrender of\nthe Certificates in exchange for the Merger Consideration. Upon surrender of a\nCertificate for cancellation to the Exchange Agent which Transfer Power shall be\nin such form and have such other provisions as Parent may reasonably specify)\nand (ii) instructions for use in executing and delivering the Transfer Powers in\nexchange for the Merger Consideration. Upon a surrender of a Transfer Power for\ncancellation of Company Membership Units to the Exchange Agent or to such other\nagent or agents as may be appointed by Parent, together with such letter of\ntransmittal, duly completed and validly executed in accordance with the\ninstructions thereto, the Company Member shall be entitled to receive in\nexchange therefor a certificate representing the number of shares issuable to\nsuch Company Member as part of the Original Price (less the number of shares of\nParent Common Stock to be deposited in the Escrow Fund (as defined in Article\nVII) on such holder's behalf pursuant to Article VII hereof and the Company\nMembership Units transferred by the Transfer Power shall forthwith be canceled\nand such Membership Interests extinguished. As soon as practicable after the\nEffective Time, and subject to and in accordance with the provisions of Article\nVII hereof, Parent shall cause to be distributed to the Escrow Agent (as defined\nin Article VII) a certificate or certificates representing that number of shares\nof Parent Common Stock equal to the Escrow Amount. Such consideration shall be\nbeneficially owned by the holders on whose behalf such consideration were\ndeposited in the Escrow Fund and shall be available to compensate Parent as\nprovided in Article VII. Until the holder of Company Membership Units properly\nexecutes and delivers a Transfer Power to the Exchange Agent, each holder's\noutstanding Company Membership Units will be deemed from and after the Effective\nTime, for all purposes, other than the payment of dividends, to evidence only\nthe right to receive Merger Consideration pursuant to Section 1.6 hereof.\n\n          (d) Distributions With Respect to Unexchanged Shares.  No dividends or\n              ------------------------------------------------\nother distributions declared or made after the Effective Time with respect to\nParent Common Stock with a record date after the Effective Time will be paid to\nthe holder of any unsurrendered Certificate with respect to the shares of Parent\nCommon Stock issuable upon conversion of the shares of Company Membership Units\nrepresented thereby until the holder of record of such Certificate shall\nsurrender such Certificate.  Subject to applicable law, following surrender of\nany such Certificate, there shall be paid to the record holder of the\ncertificates representing whole shares of Parent Common Stock issued in exchange\ntherefor, without interest, at the time of such surrender, the amount of\ndividends or other distributions with a record date after the Effective Time\ntheretofore paid with respect to such whole shares of Parent Common Stock.\n\n          (e) Transfers of Ownership.  If any certificate for shares of Parent\n              ----------------------\nCommon Stock is to be issued in a name other than that in which the Certificate\nsurrendered in exchange therefor is registered, it will be a condition of the\nissuance thereof that the Certificate so surrendered will be properly endorsed\nand otherwise in proper form for transfer and that the\n\n                                       5\n\n\n \nperson requesting such exchange will have paid to Sub or any agent designated by\nit any transfer or other taxes required by reason of the issuance of a\ncertificate for shares of Parent Common Stock in any name other than that of the\nregistered holder of the Certificate surrendered or have established to the\nsatisfaction of Sub or any agent designated by it that such tax has been paid or\nis not payable.\n\n          (f) No Liability.  Notwithstanding anything to the contrary in this\n              ------------\nSection 1.7, none of the Exchange Agent, the Surviving Corporation or any party\nhereto shall be liable to a holder of shares of Parent Common Stock or Company\nMembership Units for any amount properly paid to a public official pursuant to\nany applicable abandoned property, escheat or similar law.\n\n     1.8  No Further Ownership Rights in Company Common Stock.  All shares of\n          ---------------------------------------------------                  \nParent Common Stock issued upon the surrender for exchange of shares of Company\nMembership Units in accordance with the terms hereof shall be deemed to have\nbeen issued in full satisfaction of all rights pertaining to such shares of\nCompany  capital stock, and there shall be no further registration of transfers\non the records of the Surviving Corporation of shares of Company capital stock\nwhich were outstanding immediately prior to the Effective Time.  If, after the\nEffective Time, Certificates are presented to the Surviving Corporation for any\nreason, they shall be canceled and exchanged as provided in this Article I.\n\n     1.9  Lost, Stolen or Destroyed Certificates.  N\/A - reserved for Stock\n          --------------------------------------\nCorporations.\n\n     1.10 Purchase Price Adjustments.   The Original Purchase Price shall be\n          --------------------------\nsubject to adjustment as follows:\n\n          (a)  Six-Month Adjustment.  At the close of business on the last\n              ---------------------\nbusiness day of the sixth full month after the Closing Date (the \"First\n                                                                  -----\nAdjustment Date\"), the Parent shall conduct a valuation of the Sub according to\n- ---------------\nthe operation of the Parent's affiliate valuation model (the \"Valuation Model\").\n                                                              ---------------\nParent shall then calculate the \"First Adjustment to Purchase Price\" as follows:\n\n          FAPP = FADV -  OPP\n\nwhere     FAPP is the First Adjustment to Purchase Price;\n          FADV is the First Adjustment Date Value as calculated on the First\n          Adjustment Date using the Valuation Model; and\n          OPP is the Original Purchase Price.\n\n          (i) If FAPP is greater than zero, then the Parent shall pay to the\nCompany Members promptly after the First Adjustment Date a number of shares\ncalculated as follows:\n          FSP = (FAPP \/ FVPSFAD) x .25\n\nwhere     FSP is the \"First Shares Payment\";\n          FAPP is the First Adjustment to Purchase Price as calculated above;\n          and\n\n                                       6\n\n\n \n          FVPSFAD is the Fair Value Per Share of the Parent's Common Stock on\n          the First Adjustment Date.\n\n          (ii) If FAPP is less than zero, then the Escrow Agent shall pay to\nParent from the Escrow Amount promptly after the First Adjustment Date a number\nof shares calculated as follows:\n\n          FSP = (-FAPP \/ FVPSCD)\n\nwhere     FSP is the \"First Shares Payment\";\n          FAPP is the First Adjustment to Purchase Price as calculated above;\n          and\n          FVPSCD is the Fair Value Per Share of the Parent's Common Stock on the\n          Closing Date.\n\nIf FAPP equals zero, no adjustment to the Original Purchase Price shall be made\nfor the First Adjustment Date.\n\n          (b) Twelve-Month Adjustment.  At the close of business on the last\n              -----------------------\nbusiness day of the twelfth full month after the Closing Date (the \"Second\n                                                                    ------\nAdjustment Date\"), the Parent shall conduct a valuation of the Sub according to\n- ---------------\nthe Valuation Model, attached as Exhibit B.  Parent shall then calculate the\n    ---------------              ---------\n\"Second Adjustment to Purchase Price\" as follows:\n\n          SAPP = SADV - FADV\n\nwhere     SAPP is the Second Adjustment to Purchase Price;\n          SADV is the Second Adjustment Date Value as calculated on the Second\n          Adjustment Date using the Valuation Model; and\n          FADV is the First Adjustment Date Value.\n\n          (i) If SAPP is greater than zero, then the Parent shall pay to the\nCompany Members promptly after the Second Adjustment Date a number of shares\ncalculated as follows:\n\n          SSP = (SAPP \/ FVPSSAD) x .25\n\nwhere     SSP is the \"Second Shares Payment\";\n          SAPP is the Second Adjustment to Purchase Price as calculated above;\n          and\n          FVPSSAD is the Fair Value Per Share of the Parent's Common Stock on\n          the Second Adjustment Date.\n\n          (ii) If SAPP is less than zero, then the Escrow Agent shall pay to\nParent from the Escrow Amount promptly after the Second Adjustment Date a number\nof shares calculated as follows:\n\n          SSP = (-SAPP \/ FVPSCD)\n\n                                       7\n\n\n \nwhere     SSP is the \"Second Shares Payment\";\n          SAPP is the Second Adjustment to Purchase Price as calculated above;\n          and\n          FVPSCD is the Fair Value Per Share of the Parent's Common Stock on the\n          Closing Date.\n\nIf SAPP equals zero, no adjustment to the Original Purchase Price shall be made\nfor the Second Adjustment Date.\n\n     1.11 Parent Common Stock.  The shares of Parent Common Stock issued in\n          -------------------                                                \nconnection with the Merger will be issued in a transaction exempt from\nregistration under the Securities Act of 1933, as amended (the \"Securities\n                                                                ----------\nAct\"), by reason of Section 4(2) of the Securities Act or Regulation D\n- ---\nthereunder.  Such shares may not be transferred or resold thereafter except in\ncompliance with the terms of this Agreement and following registration under the\nSecurities Act or in reliance on an exemption from registration under the\nSecurities Act.\n\n     1.12 Tax Consequences.  It is intended by the parties hereto that the\n          ----------------                                                  \nMerger will constitute a reorganization within the meaning of Section 368 of the\nInternal Revenue Code of 1986, as amended (the \"Code\").  Each party has\nconsulted its own tax advisors with respect to the tax consequences of the\nMerger.\n\n     1.13 Taking of Necessary Action; Further Action.  If, at any time after\n          ------------------------------------------                          \nthe Effective Time, any further action is necessary or desirable to carry out\nthe purposes of this Agreement and to vest the Surviving Corporation with full\nright, title and possession to all assets, property, rights, privileges, powers\nand franchises of the Company and Sub, the officers and directors of the\nCompany, Parent and Sub are fully authorized in the name of their respective\ncorporations or otherwise to take, and will take, all such lawful and necessary\naction.\n\n\n                                   ARTICLE II\n\n                 REPRESENTATIONS AND WARRANTIES OF THE COMPANY\n                         AND THE PRINCIPAL SHAREHOLDERS\n\n     The Company and the Principal Shareholders hereby, jointly and severally,\nrepresent and warrant to Parent and Sub, subject to such exceptions as are\nspecifically disclosed in Exhibit C attached hereto (referencing the appropriate\n                          ---------\nsection and paragraph numbers), as follows:\n\n                                       8\n\n\n \n     2.1  Organization of the Company.  The Company is a limited liability\n          ---------------------------                                       \ncompany duly organized, validly existing and in good standing under the limited\nliability company  laws of the State of Georgia.  The Company has the corporate\npower to own its properties and to carry on its business as now being conducted.\nThe Company is duly qualified to do business and in good standing as a foreign\ncorporation in each jurisdiction in which the failure to be so qualified would\nhave a material adverse effect on the business, assets (including intangible\nassets), financial condition, results of operations or prospects of the Company\n(hereinafter referred to as a \"Material Adverse Effect\").  The Company has\n                               -----------------------\ndelivered a true and correct copy of its Articles of Organization and Operating\nAgreement, each as amended to date, to Parent.  Exhibit C lists the directors\n                                                ---------\nand officers of the Company.  The operations now being conducted by the Company\nhave not been conducted under any other name.\n\n     2.2  Company Capital Structure.\n\n          (a) The authorized capitalization of the Company consists of 842,507\nMembership Units, all of which are issued and outstanding.  There are no other\nclasses or series of capital stock of the Company of any kind outstanding or\nissuable.  The Company Membership Units are held by the persons, with the\ndomicile addresses and in the amounts set forth on Exhibit C.  All outstanding\n                                                   ---------\nCompany Membership Units are duly authorized, validly issued, fully paid and\nnon-assessable and not subject to preemptive rights created by statute, the\nArticles of Organization or Operating Agreement of the Company or any agreement\nto which the Company is a party or by which it is bound.\n\n          (b) There are no options, warrants, calls, rights, commitments or\nagreements of any character, written or oral, to which the Company  is a party\nor by which it is bound obligating the Company  to issue, deliver, sell,\nrepurchase or redeem, or cause to be issued, delivered, sold, repurchased or\nredeemed, any shares of the capital stock of the Company or obligating the\nCompany  to grant, extend, accelerate the vesting of, change the price of,\notherwise amend or enter into any such option, warrant, call, right, commitment\nor agreement.  As a result of the Merger, Parent will be the record and sole\nbeneficial owner of all outstanding Membership Units of the Company and rights\nto acquire or receive Membership Units.\n\n     2.3  Subsidiaries.  The Company does not have any subsidiaries or\n          ------------                                                  \naffiliated companies and does not otherwise own any shares in the capital of or\nany interest in, or control, directly or indirectly, any other corporation,\npartnership, association, joint venture or other business entity. The Company\nhas never had any subsidiaries or affiliated companies and has never otherwise\nowned shares in the capital of or any interest in or control, directly or\nindirectly of, any other corporation, partnership association, joint venture or\nother business entity.\n\n                                       9\n\n\n \n     2.4  Authority.  Each of the Company and the Principal Shareholders has\n          ---------                                                          \nall requisite corporate power and authority to enter into this Agreement to\nwhich it is a party and to consummate the transactions contemplated hereby and\nthereby.  The execution and delivery of this Agreement and the consummation of\nthe transactions contemplated hereby and thereby have been duly authorized by\nall necessary corporate action on the part of the Company and the Principal\nShareholders, and no further action is required on their part to authorize the\nAgreement and the transactions contemplated hereby and thereby.  This Agreement\nhas been duly executed and delivered by the Company and the Principal\nShareholders and, assuming the due authorization, execution and delivery by the\nother parties hereto and thereto, constitutes the valid and binding obligation\nof the Company and the Principal Shareholders, enforceable in accordance with\nits terms, subject to the laws of general application relating to bankruptcy,\ninsolvency and the relief of debtors and to rules of law governing specific\nperformance, injunctive relief or other equitable remedies.\n\n     2.5  No Conflict.  The execution and delivery of this Agreement does not,\n          -----------                                                           \nand the consummation of the transactions contemplated hereby and thereby will\nnot, conflict with, or result in any violation of, or default under (with or\nwithout notice or lapse of time, or both), or give rise to a right of\ntermination, cancellation, modification or acceleration of any obligation or\nloss of any benefit under (any such event, a \"Conflict\") (i) any provision of\n                                              --------\nthe Articles of Organization and Operating Agreement the Company, (ii) any\nmortgage, indenture, lease, contract or other agreement or instrument, permit,\nconcession, franchise or license to which the Company or any of its properties\nor assets is subject, or (iii) any judgment, order, decree, statute, law,\nordinance, rule or regulation applicable to the Company or its properties or\nassets.\n\n     2.6  Consents.   No consent, waiver, approval, order or authorization of,\n          --------                                                              \nor registration, declaration or filing with, any court, administrative agency or\ncommission or other federal, state, county, local or other foreign governmental\nauthority, instrumentality, agency or commission (\"Governmental Entity\") or any\n                                                   -------------------\nthird party, including a party to any agreement with the Company (so as not to\ntrigger any Conflict), is required by or with respect to the Company in\nconnection with the execution and delivery of this Agreement or the consummation\nof the transactions contemplated hereby, except for (i) such consents, waivers,\napprovals, orders, authorizations, registrations, declarations and filings as\nmay be required under applicable securities laws thereby, and (ii) the filing of\nthe Agreement of Merger with the Secretary of State of the State of Georgia.\n\n                                      10\n\n\n \n     2.7  Company Financial Statements.  Exhibit C sets forth the Company's\n          ----------------------------   ---------\naudited balance sheet as of December 31, 1996 and the related audited statements\nof income and cash flow for year then ended (the \"Audited Financials\") and the\n                                                  ------------------\nCompany's unaudited balance sheet of April 30, 1997, and the related unaudited\nstatements of income and cash flow for the Six (6) months then ended (the\n\"Unaudited Financials\").  The Audited Financials and the Unaudited Financials\n --------------------\nare correct in all material respects and have been prepared in accordance with\nUnited States generally accepted accounting principles (\"USGAAP\") applied on a\n                                                         ------\nbasis consistent throughout the periods indicated and consistent with each\nother.  The Audited and Unaudited Financials present fairly in all material\nrespects the financial condition, operating results and cash flows of the\nCompany as of the dates and during the periods indicated therein, subject in the\ncase of the Unaudited Financials, to normal year-end adjustments, which will not\nbe material in amount or significance.  The Company's audited Balance Sheet as\nof December 31, 1996 shall be referred to as the \"Balance Sheet\".\n                                                  -------------\n\n     2.8  No Undisclosed Liabilities.   Except as set forth in Exhibit C, none\n          --------------------------                           ---------\nof the Company has any liability, indebtedness, obligation, expense, claim,\ndeficiency, guaranty or endorsement of any type, whether accrued, absolute,\ncontingent, matured, unmatured or other (whether or not required to be reflected\nin financial statements in accordance with USGAAP), which individually or in the\naggregate (i) has not been reflected in the Balance Sheet, or (ii) has not\narisen in the ordinary course of business consistent with past practices since\nDecember 31, 1996.\n\n     2.9  No Changes.  Except as set forth in Exhibit C, since December 31,\n          ----------                          ---------\n1996, there has not been, occurred or arisen any:\n\n          (a) transaction by the Company except in the ordinary course of\nbusiness as conducted on that date and consistent with past practices;\n\n          (b) amendments or changes to the Articles of Organization or operating\nAgreement of the Company;\n\n          (c) capital expenditure or commitment by the Company, either\nindividually or in the aggregate, exceeding $25,000;\n\n          (d) destruction of, damage to or loss of any material assets, business\nor customer of the Company (whether or not covered by insurance);\n\n          (e) labor trouble or claim of wrongful discharge or other unlawful\nlabor practice or action;\n\n          (f) change in accounting methods or practices (including any change in\ndepreciation or amortization policies or rates) by the Company;\n\n          (g) revaluation by the Company of any of its assets;\n\n                                      11\n\n\n \n          (h) declaration, setting aside or payment of a dividend or other\ndistribution with respect to the Company's capital stock, or any direct or\nindirect redemption, purchase or other acquisition by the Company of any of its\ncapital stock;\n\n          (i) increase in the salary or other compensation payable or to become\npayable by the Company to any of its officers, directors, employees or advisors,\nor the declaration, payment or commitment or obligation of any kind for the\npayment, by the Company, of a bonus or other additional salary or compensation\nto any such person;\n\n          (j) any agreement, contract, lease or commitment (collectively a\n                                                                          \n\"Company Agreement\") or any extension or modification the terms of any Company\n -----------------\nAgreement which (i) involves the payment of greater than $25,000 per annum or\nwhich extends for more than one year, (ii) involves any payment or obligation to\nany affiliate of the Company other than in the ordinary course of business as\nconducted on that date and consistent with past practices, or (iii) involves the\nsale of any material assets;\n\n          (k) sale, lease, license or other disposition of any of the assets or\nproperties of the Company, or any creation of any security interest in such\nassets or properties except in the ordinary course of business as conducted on\nthat date and consistent with past practices;\n\n          (l) amendment or termination of any material contract, agreement or\nlicense to which the Company is a party or by which it is bound;\n\n          (m) loan by the Company to any person or entity, incurring by the\nCompany of any indebtedness, guaranteeing by the Company of any indebtedness,\nissuance or sale of any debt securities of the Company or guaranteeing of any\ndebt securities of others, except for advances to employees for travel and\nbusiness expenses in the ordinary course of business, consistent with past\npractices;\n\n          (n) waiver or release of any right or claim of the Company, including\nany write-off or other compromise of any account receivable of the Company;\n\n          (o) the commencement or notice or threat of commencement of any\nlawsuit or proceeding against investigation of the Company or its affairs;\n\n          (p) notice of any claim of ownership by a third party of the Company's\nIntellectual Property (as defined in Section 2.13 below) or of infringement by\nthe Company of any third party's Intellectual Property rights;\n\n          (q) issuance or sale by the Company of any of its shares of capital\nstock, or securities exchangeable, convertible or exercisable therefor, or of\nany other of its securities;\n\n                                      12\n\n\n \n          (r) change in pricing or royalties set or charged by the Company to\nits customers or licensees or in pricing or royalties set or charged by persons\nwho have licensed Intellectual Property (as defined in Section 2.13 below) to\nthe Company;\n\n          (s) any event or condition of any character that has or may have a\nMaterial Adverse Effect on the Company or;\n\n          (t) negotiation or agreement by the Company or any officer or employee\nthereof to do any of the things described in the preceding clauses (a) through\n(s) (other than negotiations with Parent and its representatives regarding the\ntransactions contemplated by this Agreement).\n\n     2.10 Tax Matters.\n          -----------   \n\n          (a) Definition of Taxes.  For the purposes of this Agreement, \"Tax\"\n              -------------------                                        ---\nor, collectively, \"Taxes,\" means (i) any and all federal, state, local and\n                   -----\nforeign taxes, assessments and other governmental charges, duties, impositions\nand liabilities, including taxes based upon or measured by gross receipts,\nincome, profits, sales, use and occupation, and value added, ad valorem,\ntransfer, franchise, withholding, payroll, recapture, employment, excise and\nproperty taxes, together with all interest, penalties and additions imposed with\nrespect to such amounts; (ii) any liability for the payment of any amounts of\nthe type described in clause (i) as a result of being a member of an affiliated,\nconsolidated, combined or unitary group for any period; and (iii) any liability\nfor the payment of any amounts of the type described in clause (i) or (ii) as a\nresult of any express or implied obligation to indemnify any other person or as\na result of any obligations under any agreements or arrangements with any other\nperson with respect to such amounts and including any liability for taxes of a\npredecessor entity.\n\n          (b) Tax Returns and Audits.  Except as set forth in Exhibit C:\n              ----------------------                          ---------\n\n          (i) The Company as of the Closing Date will have prepared and timely\nfiled or made a timely request for extension for all required federal, state,\nlocal and foreign returns, estimates, information statements and reports\n(\"Returns\") relating to any and all Taxes concerning or attributable to the\n  -------\nCompany, or its operations and such Returns are true and correct and have been\ncompleted in accordance with applicable law.\n\n          (ii) The Company as of the Closing Date (A) will have paid or accrued\nall Taxes it is required to pay or accrue as shown on the Returns and (B) will\nhave withheld and timely remitted with respect to its employees all income taxes\nand other Taxes required to be withheld and remitted.\n\n          (iii)  The Company has not been delinquent in the payment of any\nTax nor is there any Tax deficiency outstanding, assessed or proposed against\nthe Company,  nor has the Company executed any waiver of any statute of\nlimitations on or extending the period for the assessment or collection of any\nTax.\n\n                                      13\n\n\n \n          (iv) No audit or other examination of any Return of the Company,  is\npresently in progress, nor has the Company been notified of any request for such\nan audit or other examination.\n\n          (v) The Company has no liabilities for unpaid federal, state, local\nand foreign Taxes which have not been accrued or reserved against in accordance\nwith USGAAP on the Balance Sheet, whether asserted or unasserted, contingent or\notherwise.\n\n          (vi) The Company has made available to Parent or its legal counsel,\ncopies of all foreign, federal and state income and all state sales and use\nReturns filed for all years as to which any applicable statute of limitations\nhas not expired.\n\n          (vii) There are no Liens of any sort on the assets of the Company\nthe relating to or attributable to Taxes other than Liens for taxes not yet due\nand payable.\n\n          (viii) The Company Members have no knowledge of any basis for the\nassertion of any claim relating or attributable to Taxes which, if adversely\ndetermined, would result in any Lien on any material assets of the Company.\n\n          (ix) As of the Closing, there will not be any contract, agreement,\nplan or arrangement, including but not limited to the provisions of this\nAgreement, covering any employee or former employee of the Company that,\nindividually or collectively, could give rise to the payment of any amount that\nwould not be deductible by the Company as an expense under Sections 162, 280G or\n404 of the Code.\n\n          (x) The Company is not a party to a tax sharing, indemnification or\nallocation agreement nor does the Company owe any amount under any such\nagreement.\n\n          (xi) The Company uses the accrual method of accounting for income tax\npurposes and its tax basis in its assets for purposes of determining its future\namortization, depreciation and other federal income tax deductions is accurately\nreflected on the Company's tax books and records.\n\n     2.11 Restrictions on Business Activities.   There is no agreement\n          -----------------------------------                           \n(noncompete or otherwise), commitment, judgment, injunction, order or decree to\nwhich the Company or any Principal Shareholder is a party or otherwise binding\nupon the Company which has or may  have the effect of prohibiting or impairing\nany business practice of the Company, any acquisition of property (tangible or\nintangible) by the Company or the conduct of business by the Company. The\nCompany has not entered into any agreement under which the Company is restricted\nfrom providing services to customers or potential customers or any class of\ncustomers, in any geographic area, during any period of time or in any segment\nof the market.\n\n                                      14\n\n\n \n     2.12 Title to Properties; Absence of Liens and Encumbrances; Condition of\n          --------------------------------------------------------------------\nEquipment.\n- ---------                                                     \n\n          (a) The Company does not own any real property, nor has it ever owned\nany real property.  Exhibit C sets forth a list of all real property currently\n                    ---------\nleased by the Company the name of the lessor, the date of the lease and each\namendment thereto and, with respect to any current lease, the aggregate annual\nrental and\/or other fees payable under any such lease.  All such current leases\nare in full force and effect, are valid and effective in accordance with their\nrespective terms, and there is not, under any of such leases, any existing\ndefault or event of default (or event which with notice or lapse of time, or\nboth, would constitute a default).\n\n          (b) The Company has good and valid title to, or, in the case of leased\nproperties and assets, valid leasehold interests in, all of its tangible\nproperties and assets, real, personal and mixed, used or held for use in its\nbusiness, free and clear of any Liens, except as reflected in the Company\nFinancials or in Exhibit C and except for liens for taxes not yet due and\n                 ---------\npayable and such imperfections of title and encumbrances, if any, which are not\nmaterial in character, amount or extent, and which do not detract from the\nvalue, or interfere with the present use, of the property subject thereto or\naffected thereby.\n\n          (c) Exhibit C lists all material items of equipment (the \"Equipment\")\n              ---------                                             ---------\nowned or leased by the Company and such Equipment is, taken as a whole, (i)\nadequate for the conduct of the business of the Company as currently conducted\nand (ii) in good operating condition, regularly and properly maintained, subject\nto normal wear and tear.\n\n          (d) The Company has sole and exclusive ownership, free and clear of\nany Liens, of all customer files and other customer information relating to\nCompany's current and former customers (the \"Customer Information\").  No third\n                                             --------------------\nparty possesses any claims or rights with respect to use of the Customer\nInformation.\n\n     2.13 Intellectual Property.\n          ---------------------   \n\n          (a) For the purposes of this Agreement, the following terms have the\nfollowing definitions:\n\n          \"Intellectual Property\" shall mean any or all of the following and all\n           ---------------------\nrights in, arising out of, or associated therewith:  (i) all United States and\nforeign patents and applications therefor and all reissues, divisions, renewals,\nextensions, provisionals, continuations and continuations-in-part thereof; (ii)\nall inventions (whether patentable or not), invention disclosures, improvements,\ntrade secrets, proprietary information, know how, technology, technical data and\ncustomer lists, and all documentation relating to any of the foregoing; (iii)\nall copyrights, copyrights registrations and applications therefor, and all\nother rights corresponding thereto throughout the world; (iv) all mask works,\nmask work registrations and applications therefor, and all other rights\ncorresponding thereto throughout the world; (v) all industrial designs and any\nregistrations and applications therefor throughout the world; (vi) all trade\nnames, logos, common law trademarks and service marks;\n\n                                      15\n\n\n \ntrademark and service mark registrations and applications therefor throughout\nthe world; (vii) all databases and data collections and all rights therein\nthroughout the world; and (viii) all computer software including all source\ncode, object code, firmware, development tools, files, records and data, all\nmedia on which any of the foregoing is recorded, and all documentation related\nto any of the foregoing throughout the world.\n\n          \"Intellectual Property of Company\" shall mean any Intellectual\n           --------------------------------\nProperty that:  (i) is owned by or exclusively licensed to the Company, or (ii)\nwhich is necessary to the operation of the Company, including the design,\nmanufacture and use of the products or performance of the services of the\nCompany as it currently is operated or is reasonably anticipated to be operated\nin the future, but shall specifically not include any rights in or to materials\ncreated for clients as \"work-made-for-hire\" or which are subject to an exclusive\nassignment or license in favor of clients of the Company.\n\n          (b) Exhibit C lists all of Company's United States and foreign: (i)\n              ---------\npatents, patent applications (including provisional applications); (ii)\nregistered trademarks, applications to register trademarks, intent-to-use\napplications, or other registrations related to trademarks; (iii) registered\ncopyrights and applications for copyright registration; (iv) mask work\nregistrations and applications to register mask works; and (v) any other\nIntellectual Property of Company that is the subject of an application,\ncertificate or registration filed with, issued by, or recorded by, any state,\ngovernment or other public legal authority (all of the foregoing, the\n\"Registered Intellectual Property\").\n\n          (c) Each item of Registered Intellectual Property is valid and\nsubsisting, all necessary registration, maintenance and renewal fees in\nconnection with such Registered Intellectual Property have been made and all\nnecessary documents and certificates in connection with such Registered\nIntellectual Property have been filed with the relevant patent, copyright,\ntrademark or other authorities in the United States or foreign jurisdictions, as\nthe case may be, for the purposes of maintaining such Registered Intellectual\nProperty.\n\n          (d) The contracts, licenses and agreements listed in Exhibit C include\n                                                               ---------\nall contracts, licenses and agreement, to which the Company is a party with\nrespect to any Intellectual Property with a value or cost in excess of $10,000,\nother than \"shrink wrap\" and similar commercial end-user licenses.\n\n          (e) The contracts, licenses and agreements listed in Exhibit C are in\n                                                               ---------\nfull force and effect.  The consummation of the transactions contemplated by\nthis Agreement will neither violate nor result in the breach, modification,\ncancellation, termination, or suspension of the contracts, licenses and\nagreements in Exhibit C.  The Company is in compliance with, and has not\n              ---------\nbreached any term of, the contracts, licenses and agreements listed in Exhibit\n                                                                       -------\nC, and, to the knowledge of the Company and the Principal Shareholders, all\n- -\nother parties to the contracts, licenses and agreements listed in Exhibit C are,\n                                                                  ---------\nin compliance with, and have not breached any term of, the contracts, licenses\nand agreements.  Following the Closing Date, Sub will be permitted to exercise\nall of the Company's  rights under the contracts, licenses and agreements listed\nin Exhibit C without the payment of any additional amounts or consideration\n   ---------\nother than ongoing fees, royalties or payments which the Company would otherwise\nbe required to pay.\n\n                                      16\n\n\n \n          (f) Except as set forth in Exhibit C:  (i) no person has any rights to\n                                     ---------\nuse any of the Intellectual Property of the Company; and (ii) the Company has\nnot granted to any Person, or authorized any Person to retain, any rights in the\nIntellectual Property of Company.\n\n          (g) Except as set forth in Exhibit C:  (i) the Company owns and has\n                                     ---------\ngood and exclusive title to each item of Intellectual Property listed in Exhibit\n                                                                         -------\nC, free and clear of any lien or encumbrance; and (ii) the Company owns, or has\n- -\nthe right, pursuant to a valid Contract to use or operate under, all other\nIntellectual Property of the Company.\n\n          (h) The operation of the business of the Company as it currently is\nconducted or is reasonably contemplated to be conducted, including its design,\ndevelopment, manufacture and sale of its products (including with respect to\nproducts currently under development) and provision of services, does not\ninfringe or misappropriate the Intellectual Property of any other person,\nviolate the rights of any person (including rights to privacy or publicity),\nconstitute unfair competition.\n\n          (i) The Company has not received notice from any person that the\noperation of the business of the Company, including its design, development,\nmanufacture and sale of its products (including with respect to products\ncurrently under development) and provision of its services, infringes or\nmisappropriates the Intellectual Property of any person, violates the rights of\nany person (including rights to privacy or publicity), or constitutes unfair\ncompetition.\n\n          (j) The Company owns or has the right to all Intellectual Property\nnecessary to the conduct of its business as it currently is conducted or is\nreasonably contemplated to be conducted, including, without limitation, the\ndesign, development, manufacture and sale of all products currently manufactured\nor sold by the Company under development by the Company and the performance of\nall services provided or contemplated to be provided by the Company.\n\n          (k) Exhibit C lists all contracts, licenses and agreements between the\n              ---------\nCompany and any other person wherein or whereby the Company has agreed to, or\nassumed, any obligation or duty to indemnify, hold harmless or otherwise assume\nor incur any obligation or liability with respect to the infringement by the\nCompany or such other Person of the Intellectual Property rights of any other\nperson,\n\n          (l) Except as listed in Exhibit C, there are no contracts, licenses\n                                  ---------\nand agreements between the Company and any other person with respect to Company\nIntellectual Property under which there is any dispute known to the Company or\nthe Principal Shareholders regarding the scope of such agreement, or performance\nunder such agreement including with respect to any payments to be made or\nreceived by the Company thereunder.\n\n          (m) Except as listed in Exhibit C, to the knowledge of the Company and\n                                  ---------\nthe Principal Shareholders, no person is infringing or misappropriating any of\nthe Intellectual Property of Company.\n\n                                      17\n\n\n \n          (n) Except as listed in Exhibit C, there are no claims asserted\n                                  ---------\nagainst the Company or against any customer of the Company, related to any\nproduct or service of the Company.\n\n          (o) No Intellectual Property of Company or product or service of the\nCompany is subject to any outstanding decree, order, judgment, or stipulation\nrestricting in any manner the use or licensing thereof by the Company.\n\n          (p) The Company has, and enforces, a policy requiring each employee\nand contractor to execute proprietary information and confidentiality agreements\nsubstantially in the Company's standard forms and all current and former\nemployees and contractors of the Company have executed such an agreement.\n\n          (q) No (i) product, service or publication of the Company, (ii)\nmaterial published or distributed by the Company or (iii) conduct or statement\nof Company, constitutes obscene material, a defamatory statement or material, or\nviolates any rights, including rights of publicity or privacy, of any person.\n\n     2.14 Agreements, Contracts and Commitments.\n          -------------------------------------   \n\n          (a) Except as set forth in Exhibit C, the Company does not have, or is\n                                     ---------\nnot bound by:\n\n               (i) any collective bargaining agreement,\n\n               (ii) any agreements or arrangements that contain any severance\npay or post-employment liabilities or obligations,\n\n              (iii) any bonus, deferred compensation, pension, profit sharing or\nretirement plans, or any other employee benefit plans or arrangements,\n\n               (iv) any employment or consulting agreement, contract or\ncommitment with an employee or individual consultant or salesperson or\nconsulting or sales agreement, contract or commitment with a firm or other\norganization,\n\n                (v) any agreement or plan, including, without limitation, any\nstock option plan, stock appreciation rights plan or stock purchase plan, any of\nthe benefits of which will be increased, or the vesting of benefits of which\nwill be accelerated, by the occurrence of any of the transactions contemplated\nby this Agreement or the value of any of the benefits of which will be\ncalculated on the basis of any of the transactions contemplated by this\nAgreement,\n\n               (vi) any fidelity or surety bond or completion bond,\n\n                                      18\n\n\n \n               (vii)  any lease of personal property having a value individually\nin excess of $25,000,\n\n               (viii)  any agreement of indemnification or guaranty, other than\nas set forth in agreements listed in Exhibit C,\n                                     ---------\n\n               (ix) any agreement, contract or commitment containing any\ncovenant limiting the freedom of the Company to engage in any line of business\nor to compete with any person,\n\n               (x) any agreement, contract or commitment relating to capital\nexpenditures and involving future payments in excess of $25,000,\n\n               (xi) any agreement, contract or commitment relating to the\ndisposition or acquisition of assets or any interest in any business enterprise\noutside the ordinary course of the Company's business,\n\n               (xii) any mortgages, indentures, loans or credit agreements,\nsecurity agreements or other agreements or instruments relating to the borrowing\nof money or extension of credit, including guaranties referred to in clause\n(viii) hereof,\n\n               (xiii)  any purchase order or contract for the purchase of\nmaterials involving $25,000 or more,\n\n               (xiv)  any construction contracts,\n\n               (xv) any distribution, joint marketing or development agreement,\nor\n\n               (xvi) any other agreement, contract or commitment that involves\n$25,000 or more or is not cancelable without penalty within thirty (30) days.\n\n          (b) The Company has not breached, violated or defaulted under, or\nreceivednotice that it has breached, violated or defaulted under, any of the\nterms or conditions of any agreement, contract, license or commitment to which\nit is a party, by which it benefits or by which it is bound (any such agreement,\ncontract, license or commitment, a \"Contract\"), nor is the Company or any\n                                    --------\nPrincipal Shareholder aware of any event that would constitute such a breach,\nviolation or default with the lapse of time, giving of notice or both. Each\nContract is in full force and effect and, except as otherwise disclosed in\nExhibit C, is not subject to any default thereunder by any party obligated to\n- ---------\nthe Company pursuant thereto. The Company has obtained, or will obtain prior to\nthe Closing Date, all necessary consents, waivers and approvals of parties to\nany Contract as are required thereunder in connection with the Merger so that\nall such Contracts will remain in effect without modification after the Closing.\n\n                                      19\n\n\n \n     2.15 Interested Party Transactions.  No officer, director or Principal\n          -----------------------------                                      \nShareholder of the Company (nor any ancestor, sibling, descendant or spouse of\nany of such persons, or any trust, partnership or corporation in which any of\nsuch persons has or has had an interest), has or has had, directly or\nindirectly, (i) an interest in any entity which furnished or sold, or furnishes\nor sells, services or products that the Company furnishes or sells, or proposes\nto furnish or sell, or (ii) any interest in any entity that purchases from or\nsells or furnishes to, the Company, any goods or services or (iii) a beneficial\ninterest in any Contract; provided, that ownership of no more than one percent\n(1%) of the outstanding voting stock of a publicly traded corporation shall not\nbe deemed an \"interest in any entity\" for purposes of this Section 2.15.\n\n     2.16 Governmental Authorization.  Exhibit C accurately lists each\n          --------------------------   ---------\nconsent, license, permit, grant or other authorization issued to the Company by\na governmental entity (i) pursuant to which the Company currently operates or\nholds any interest in any of its properties or (ii) which is required for the\noperation of its business or the holding of any such interest (herein\ncollectively called \"Company Authorizations\").  The Company Authorizations are\n                     ----------------------\nin full force and effect and constitute all Company Authorizations required to\npermit the Company to operate or conduct its business or hold any interest in\nits properties or assets.\n\n     2.17 Litigation.  There is no action, suit or proceeding of any nature\n          ----------                                                         \npending, or to the Company's or the Principal Shareholders' knowledge\nthreatened, against the Company, its properties or any of its officers or\ndirectors, nor, to the knowledge of the Principal Shareholders, is there any\nreasonable basis therefor.  There is no investigation pending or, to the\nCompany's or Principals Shareholders' knowledge threatened, against the Company,\nits properties or any of its officers or directors (nor, to the best knowledge\nof the Principal Shareholders, is there any reasonable basis therefor) by or\nbefore any governmental entity.  No governmental entity has at any time\nchallenged or questioned the legal right of the Company to manufacture, offer or\nsell any of its products or services in the present manner or style thereof.\n\n     2.18 Accounts Receivable.\n          -------------------   \n\n          (a) The Company has made available to Parent a list of all accounts\nreceivable of the Company as of  April 30, 1997, (\"Accounts Receivable\") along\n                                                   -------------------\nwith a range of days elapsed since invoice.\n\n          (b) All Accounts Receivable of the Company arose in the ordinary\ncourse of business, are carried at values determined in accordance with USGAAP\nconsistently applied and are collectible except to the extent of reserves\ntherefor set forth in the Balance Sheet.  No person has any Lien on any of such\nAccounts Receivable and no request or agreement for deduction or discount has\nbeen made with respect to any of such Accounts Receivable.\n \n     2.19 Minute Books.  The minutes of the Company made available to counsel\n          ------------                                                         \nfor Parent are the only minutes of the Company and contain a reasonably accurate\nsummary of all meetings of the Board of Directors (or committees thereof) of the\nCompany and its Members or actions by written consent since the time of\nincorporation of the Company.\n\n                                      20\n\n\n \n     2.20 Environmental Matters.\n          ---------------------   \n\n          (a) Hazardous Material.  The Company has not: (i) operated any\n              ------------------\nunderground storage tanks at any property that the Company has at any time\nowned, operated, occupied or leased; or (ii) illegally released any material\namount of any substance that has been designated by any Governmental Entity or\nby applicable federal, state or local law to be radioactive, toxic, hazardous or\notherwise a danger to health or the environment, including, without limitation,\nPBS, asbestos, petroleum, and urea-formaldehyde and all substances listed as\nhazardous substances pursuant to the Comprehensive Environmental Response,\nCompensation, and Liability Act of 1980, as amended, or defined as a hazardous\nwaste pursuant to the United States Resource Conservation and Recovery Act of\n1976, as amended, and the regulations promulgated pursuant to said laws (a\n\"Hazardous Material\"), but excluding office and janitorial supplies properly and\n ------------------\nsafely maintained.  No Hazardous Materials are present as a result of the\ndeliberate actions of the Company or, to the Company's or Principal\nShareholders' knowledge, as a result of any actions of any third party or\notherwise, in, on or under any property, including the land and the\nimprovements, ground water and surface water thereof, that the Company has at\nany time owned, operated, occupied or leased.\n\n          (b) Hazardous Materials Activities.  The Company has not transported,\n              ------------------------------\nstored, used, manufactured, disposed of, released or exposed its employees or\nothers to Hazardous Materials in violation of any law in effect on or before the\nClosing Date, nor has either the Company disposed of, transported, sold, or\nmanufactured any product containing a Hazardous Material (any or all of the\nforegoing being collectively referred to as \"Hazardous Materials Activities\") in\n                                             ------------------------------\nviolation of any rule, regulation, treaty or statute promulgated by any\nGovernmental Entity in effect prior to or as of the date hereof to prohibit,\nregulate or control Hazardous Materials or any Hazardous Material Activity.\n\n          (c) Permits.  The Company currently holds all environmental approvals,\n              -------\npermits, licenses, clearances and consents (the \"Environmental Permits\")\n                                                 ---------------------\nnecessary for the conduct of the Company's Hazardous Material Activities and\nother businesses of the Company as such activities and businesses are currently\nbeing conducted.\n\n          (d) Environmental Liabilities.  No action, proceeding, revocation\n              -------------------------\nproceeding, amendment procedure, writ, injunction or claim is pending, or to the\nPrincipal Shareholders' knowledge, threatened concerning any Environmental\nPermit, Hazardous Material or any Hazardous Materials Activity of the Company.\nThe Principal Shareholders are not aware of any fact or circumstance which could\ninvolve the Company in any environmental litigation or impose upon the Company\nany environmental liability.\n\n                                      21\n\n\n \n     2.21 Brokers' and Finders' Fees; Third Party Expenses.  Except as set\n          ------------------------------------------------                    \nforth in Exhibit C, the Company has not incurred, nor will it incur, directly or\n         ---------\nindirectly, any liability for brokers' or finders' fees or agents' commissions\nor any similar charges in connection with the Agreement or any transaction\ncontemplated hereby.  Exhibit C sets forth the principal terms and conditions of\n                      ---------\nany agreement, written or oral, with respect to such fees.  Exhibit C sets forth\n                                                            ---------\nthe Company's current reasonable estimate of all third party expenses expected\nto be incurred by the Company in connection with the negotiation and\neffectuation of the terms and conditions of this Agreement and the transactions\ncontemplated hereby.\n\n     2.22 Employee Benefit Plans and Compensation.\n          ---------------------------------------   \n\n          (a) For purposes of this Section 2.22, the following terms shall have\nthe meanings set forth below:\n\n              (i) \"Employee Plan\" shall refer to any plan, program, policy,\n                   -------------\npractice, contract, agreement or other arrangement providing for bonuses,\nseverance, termination pay, performance awards, stock or stock-related awards,\nfringe benefits or other employee benefits of any kind, whether formal or\ninformal, funded or unfunded and whether or not legally binding, including\nwithout limitation, any plan which is or has been maintained, contributed to, or\nrequired to be contributed to, by the Company for the benefit of any \"Employee\"\n(as defined below), and pursuant to which the Company has or may have any\nmaterial liability, contingent or otherwise; and\n\n              (ii) \"Employee\" shall mean any current, former, or retired\n                    --------\nemployee, officer, or director of the Company.\n\n              (iii) \"Employee Agreement\" shall refer to each employment,\n                     ------------------\nseverance, consulting or similar agreement or contract between the Company and\nany Employee;\n\n          (b) Schedule.  Exhibit C contains an accurate and complete list of\n              --------   ---------\neach Company Employee Plan and each Employee Agreement, together with a schedule\nof all liabilities, whether or not accrued, under each such Company Employee\nPlan.  The Company does not have any plan or commitment, whether legally binding\nor not, to establish any new Company Employee Plan or Employee Agreement, to\nmodify any Company Employee Plan or Employee Agreement (except to the extent\nrequired by law or to conform any such Company Employee Plan or Employee\nAgreement to the requirements of any applicable law, in each case as previously\ndisclosed to Parent in writing, or as required by this Agreement), or to enter\ninto any Company Employee Plan or Employee Agreement, nor does it have any\nintention or commitment to do any of the foregoing.\n\n          (c) Documents.  The Company has provided to Parent: (i) correct and\n              ---------\ncomplete copies of all documents embodying each Employee Plan and each Employee\nAgreement including all amendments thereto and copies of all forms of agreement\nand enrollment used therewith; (ii) the most recent annual actuarial valuations,\nif any, prepared for each Employee Plan; (iii) the three most recent annual\nreports (Series 5500 and all schedules thereto), if any, required under\n\n                                      22\n\n\n \nERISA or the Code in connection with each Company Employee Plan or related\ntrust; (iv) the most recent summary plan description together with the most\nrecent summary of material modifications, if any, required under ERISA with\nrespect to each Company Employee Plan; (v) all IRS determination letters and\nrulings relating to Company Employee Plans and copies of all applications and\ncorrespondence to or from the IRS or the Department of Labor (\"DOL\") with\nrespect to any Company Employee Plan; (vi) if the Employee Plan is funded, the\nmost recent annual and periodic accounting of Employee Plan assets; and (vii)\nall communications material to any Employee or Employees relating to any\nEmployee Plan and any proposed Employee Plans, in each case, relating to any\namendments, terminations, establishments, increases or decreases in benefits,\nacceleration of payments or vesting schedules or other events which would result\nin any liability to the Company.\n\n          (d) Employee Plan Compliance.  (i) The Company have performed all\n              ------------------------\nobligations required to be performed by them under each Employee Plan and each\nEmployee Plan has been established and maintained in accordance with its terms\nand in compliance with all applicable laws, statutes, orders, rules and\nregulations, including ERISA and the Code; (ii) no \"prohibited transaction,\"\nwithin the meaning of Section 4975 of the Code or Section 406 of ERISA, has\noccurred with respect to any Company Employee Plan; (iii) there are no actions,\nsuits or claims pending, or, to the knowledge of the Company or the Principal\nShareholders threatened or anticipated (other than routine claims for benefits)\nagainst any Employee Plan or against the assets of any Employee Plan; (iii) each\nEmployee Plan can be amended, terminated or otherwise discontinued after the\nClosing Date in accordance with its terms, without liability to the Company,\nParent or Sub (other than ordinary administration expenses typically incurred in\na termination event); (iv) there are no inquiries or proceedings pending or, to\nthe knowledge of the Company or any Principal Shareholders threatened by the IRS\nor DOL with respect to any Company Employee Plan; and (v)  the Company is not\nsubject to any penalty or tax with respect to any Company Employee Plan under\nSection 402(i) of ERISA or Section 4975 through 4980 of the Code.\n\n          (e) Pension Plans.  The Company does not now, nor has it ever,\n              -------------\nmaintained, established, sponsored, participated in, or contributed to, any\nPension Plan which is subject to Part 3 of Subtitle B of Title I of ERISA, Title\nIV of ERISA or Section 412 of the Code.\n\n          (f) Multiemployer Plans.  At no time has the Company contributed to or\n              -------------------\nbeen requested to contribute to any Multiemployer Plan.\n\n          (g) No Post-Employment Obligations.  Except as set forth in Exhibit C,\n              ------------------------------                          ---------\nno Company Employee Plan provides, or has any liability to provide, life\ninsurance, medical or other employee benefits to any Employee upon his or her\nretirement or termination of employment for any reason, except as may be\nrequired by statute, and the Company has  not]represented, promised or\ncontracted (whether in oral or written form) to any Employee (either\nindividually or to Employees as a group) that such Employee(s) would be provided\nwith life insurance, medical or other employee welfare benefits upon their\nretirement or termination of employment, except to the extent required by\nstatute.\n\n                                      23\n\n\n \n          (h) Continuing Liabilities.  No Employee Plan provides, or has any\n              ----------------------\nliability to provide, life insurance, medical or other employee benefits to any\nEmployee upon his or her retirement or termination of employment for any reason,\nexcept as may be required by statute, and the Company has not represented,\npromised or contracted (whether in oral or written form) to any Employee (either\nindividually or to Employees as a group) that such Employee(s) would be provided\nwith life insurance, medical or other employee welfare benefits upon their\nretirement or termination of employment, except to the extent required by\nstatute.\n\n          (i) No Conflicts.  The execution of this Agreement and the\n              ------------\nconsummation of the transactions contemplated hereby will not (either alone or\nupon the occurrence of any additional or subsequent events) constitute an event\nunder any Employee Plan, Employee Agreement, trust or loan that will or may\nresult in any payment (whether of severance pay or otherwise), acceleration,\nforgiveness of indebtedness, vesting, distribution, increase in benefits or\nobligation to fund benefits with respect to any Employee.\n\n          (j) Employment Matters.  The Company (i) is in compliance with all\n              ------------------\napplicable laws, rules and regulations respecting employment, employment\npractices, terms and conditions of employment and wages and hours, in each case,\nwith respect to Employees; (ii) has withheld all amounts required by law or by\nagreement to be withheld from the wages, salaries and other payments to\nEmployees; (iii) is not liable for any arrears of wages or any taxes or any\npenalty for failure to comply with any of the foregoing; and (iv) is not liable\nfor any payment to any trust or other fund or to any governmental or\nadministrative authority, with respect to unemployment compensation benefits,\nsocial security or other benefits for Employees (other than routine payments to\nbe made in the normal course of business and consistent with past practice).\n\n          (k) Labor.  No work stoppage or labor strike against the Company is\n              -----\npending, or to the knowledge of the Company and the Principal Shareholders,\nthreatened.  The Company is not involved in or threatened with any labor\ndispute, grievance, or litigation relating to labor, safety, discrimination, or\nharassment matters involving any Employee, including, without limitation,\ncharges of unfair labor practices, discrimination, or harassment complaints,\nwhich, if adversely determined, would, individually or in the aggregate, result\nin liability to the Company, Parent or Sub.  The Company has not engaged in any\nunfair labor practices which could, individually or in the aggregate, directly\nor indirectly result in a liability to the Company, Parent or Sub.  The Company\nis not presently, or has in the past, been a party to, or bound by, any\ncollective bargaining agreement or union contract with respect to Employees and\nno collective bargaining agreement is being negotiated by the Company.\n\n                                      24\n\n\n \n     2.23 Insurance.   Exhibit C lists all insurance policies and fidelity\n          ---------    ---------\nbonds covering the assets, business, equipment, properties, operations,\nemployees, officers and directors of the Company. There is no claim by the\nCompany pending under any of such policies or bonds as to which coverage has\nbeen questioned, denied or disputed by the underwriters of such policies or\nbonds.  All premiums due and payable under all such policies and bonds have been\npaid and the Company are otherwise in compliance with the terms of such policies\nand bonds (or other policies and bonds providing substantially similar insurance\ncoverage).  The Company and the Principal Shareholders have no knowledge of any\nthreatened termination of, or premium increase with respect to, any of such\npolicies.\n\n     2.24 Compliance with Laws.  The Company has complied with, are not in\n          --------------------                                              \nviolation of, and have not received any notices of violation with respect to,\nany foreign, federal, state or local statute, law or regulation.\n\n     2.25 Third Party Consents.  Except as set forth in Exhibit C, no consent\n          --------------------                          ---------\nor approval is needed from any third party in order to effect the Merger or any\nof the transactions contemplated by this Agreement.\n\n     2.26 Warranties; Indemnities.  Exhibit C sets forth a summary of all\n          -----------------------   ---------\nwarranties and indemnities relating to products sold or services rendered by the\nCompany, and no warranty or indemnity has been given by the Company which\ndiffers therefrom in any respect.  Exhibit C also indicates all warranty and\n                                   ---------\nindemnity claims in excess of $25,000 made against the Company.\n\n     2.27 Complete Copies of Materials.  The Company has delivered or made\n          ----------------------------                                      \navailable true and complete copies of each document (or summaries of same) that\nhas been requested by Parent or its counsel.\n\n     2.28 Representations Complete.  None of the representations or guarantees\n          ------------------------                                              \nmade by the Company or the Principal Shareholders (as modified by the Exhibit\n                                                                      -------\nC), nor any statement made in Exhibit C or any certificate furnished by the\n- -                             ---------\nCompany or the Principal Shareholders pursuant to this Agreement, or furnished\nin or in connection with documents mailed or delivered to the Company Members in\nconnection with soliciting their consent to this Agreement and the Merger,\ncontains or will contain at the Closing, any untrue statement of a material\nfact, or omits or will omit at the Closing to state any material fact necessary\nin order to make the statements contained herein or therein, in the light of the\ncircumstances under which made, not misleading.\n\n     2.29 Business Plan.  The Company has provided to Parent a current,\n          -------------                                                  \naccurate and detailed business plan for the Company's planned operations during\nthe twelve months following the Closing Date which includes, without limitation,\na description of the Company's capital requirements, staffing needs, and a pro\nforma income statement.  The business plan is attached to Exhibit C hereto.\n                                                          ---------\n\n     2.30 Backlog Report.  The Company has provided to Parent a detailed and\n          ---------------                                                     \naccurate list of all orders booked but not yet completed, giving the status of\neach order as of a recent date.  The backlog report is attached to Exhibit C\n                                                                   ---------\nhereto.\n\n                                      25\n\n\n \n     2.31 Securities Law Compliance.  The Company will make no distribution\n          -------------------------\nof any security issued by Parent unless such distribution is in compliance with\napplicable state and federal securities laws.\n\n     2.32 Principal Shareholder Investment Representations.  Each of the\n          -------------------------------------------------               \nPrincipal Shareholders represents and warrants to the Parent as follows:\n\n          (a) Experience.  The Principal Shareholder is able to assess the\n              ----------\ntechnology, markets, management and strategy of the Parent and to fend for\nitself in transactions such as the one contemplated by this Agreement, has such\nknowledge and experience in financial and business matters that the Principal\nShareholder is capable of evaluating the merits and risks inherent in holding\nstock of the Parent, and has the ability to bear the economic risks of the\ninvestment.\n\n          (b) Investment.  The Principal Shareholder accepts the shares of the\n              ----------\nParent Common Stock as investment for the Principal Shareholder's own account\nand not with the view to, or for resale in connection with, any distribution\nthereof.  The Principal Shareholder understands that the Parent Common Stock has\nnot been registered under the Securities Act by reason of a specific exemption\nfrom the registration provisions of the Securities Act which depends upon, among\nother things, the bona fide nature of the investment intent as expressed herein.\nThe Principal Shareholder further represents that it does not have any contract,\nundertaking, agreement or arrangement with any person to sell, transfer or grant\nparticipation to any third person with respect to any of the Parent Common\nStock.  The Principal Shareholder understands and acknowledges that the\nprovision of Parent Common Stock pursuant to this Agreement will not be\nregistered under the Securities Act on the ground that the issuance of\nsecurities hereunder is exempt from the registration requirements of the\nSecurities Act.\n\n          (c) Rule 144.  The Principal Shareholder acknowledges that the Parent\n              --------\nCommon Stock must be held indefinitely unless subsequently registered under the\nSecurities Act or an exemption from such registration is available.  The\nPrincipal Shareholder is aware of the provisions of Rule 144 promulgated under\nthe Securities Act which permit limited resale of shares purchased in a private\nplacement subject to the satisfaction of certain conditions.  The Principal\nShareholder covenants that, in the absence of an effective registration\nstatement covering the stock in question, the Principal Shareholder will sell,\ntransfer, or otherwise dispose of the Parent Common Stock only in a manner\nconsistent with the Principal Shareholder's representations and covenants set\nforth herein.  In connection therewith, the Principal Shareholder  acknowledges\nthat the Parent will make a notation on its stock books regarding the\nrestrictions on transfers set forth in this Article and will transfer securities\non the books of the Parent only to the extent not inconsistent therewith.\n\n          (d) No Public Market.  The Principal Shareholder understands that no\n              ----------------\npublic market now exists for any of the securities issued by the Parent, and\nthat no public market may ever exist for such securities.\n\n                                      26\n\n\n \n          (e) Access to Data.  The Principal Shareholder has received and\n              --------------\nreviewed information about the Parent and has had an opportunity to review and\ndiscuss the Parent's business, management and financial affairs with its\nmanagement.  The Principal Shareholder understands that such discussions, as\nwell as any written information issued by the Parent, were intended to describe\nthe aspects of the Parent's business and prospects which the Parent believes to\nbe material, but were not necessarily a thorough or exhaustive description.\n\n                                  ARTICLE III\n\n                REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB\n\n     Parent and Sub represent and warrant to the Company as follows:\n\n     3.1  Organization, Standing and Power.  Parent is a corporation duly\n          --------------------------------                                 \norganized, validly existing and in good standing under the laws of the State of\nUtah.  Sub is a corporation duly organized, validly existing and in good\nstanding under the laws of Delaware.  Each of Parent and Sub has the corporate\npower to own its properties and to carry on its business as now being conducted\nand is duly qualified to do business and is in good standing in each\njurisdiction in which the failure to be so qualified would have a material\nadverse effect on the ability of Parent and Sub to consummate the transactions\ncontemplated hereby.\n\n     3.2  Authority; Consents.  Parent and Sub have all requisite corporate\n          -------------------                                                \npower and authority to enter into this Agreement and to consummate the\ntransactions contemplated hereby.  The execution and delivery of this Agreement\nand the consummation of the transactions contemplated hereby have been duly\nauthorized by all necessary corporate action on the part of Parent and Sub.\nThis Agreement has been duly executed and delivered by Parent and Sub and\nconstitutes the valid and binding obligations of Parent and Sub, enforceable in\naccordance with its terms, except as such enforceability may be limited by\nprinciples of public policy and subject to the laws of general application\nrelating to bankruptcy, insolvency and the relief of debtors and rules of law\ngoverning specific performance, injunctive relief or other equitable remedies.\nThe execution and delivery of this Agreement by Parent and Sub does not, and, as\nof the Closing, the consummation of the transactions contemplated hereby and\nthereby will not, Conflict with (i) any provision of the respective Articles of\nOrganization or Operating Agreement of Parent or Sub or (ii) any agreement or\ninstrument, permit, judgment, statute, law, rule or regulation applicable to\nParent or Sub.  No consent, waiver, approval, or registration, declaration or\nfiling with, any Governmental Entity or any third party is required by or with\nrespect to any of the Parent or Sub in connection with the execution and\ndelivery of this Agreement or the consummation of the transactions contemplated\nhereby.\n\n     3.3  Capital Structure.\n          -----------------   \n\n          (a) The authorized stock of Parent consists of 50,000,000 shares of\nCommon Stock, $.001 par value, of which 29,767,708 shares were issued and\noutstanding as of December 31, 1996, and 27,988,501 shares of Preferred Stock,\n$.001 par value, of which are designated\n\n                                      27\n\n\n \nSeries A Preferred Stock, 18,518,500 shares all of which are issued and\noutstanding, and 9,310,001 shares are designated Series B Preferred Stock, all\nof which are issued and outstanding. All such shares have been duly authorized,\nand all such issued and outstanding shares have been validly issued, are fully\npaid and nonassessable and are free of any liens or encumbrances other than any\nliens or encumbrances created by or imposed upon the holders thereof. Parent has\nalso reserved (i) 3,900,000 shares of Common Stock for issuance to employees and\nconsultants pursuant to Parent's 1996 Employee Stock Option Plans, (ii) 160,000\nshares of Series A Preferred Stock for issuance upon the exercise of outstanding\nwarrants to purchase Series A Preferred Stock (the \"Warrant Stock\"), (iii)\n                                                    -------------\n160,000 shares of Common Stock for issuance upon conversion of the Warrant Stock\nand (iv) 1,000,000 shares of Common Stock for issuance upon the exercise of\nwarrants issued or outstanding warrants to purchase issuable pursuant to the\nCompany's Affiliate Warrants Program. In February, 1997, the Board of Directors\nof the Company approved (i) increasing the authorized shares of Stock to\n100,000,000 shares, (ii) increasing the number of authorized shares of Preferred\nStock to 37,764,153 shares, in preparation for a sale of Series C Preferred\nStock, and (iii) adopting the Company's 1997 Acquisition Stock Option Plan,\nreserving 10,000,000 shares of Common Stock for issuance thereunder; all of\nthese actions are currently pending Common Stock. In February, 1997, the Board\nof Directors of the Company approved (i) increasing the authorized shares of\nCommon Stock to 100,000,000 shares, (ii) increasing the number of authorized\nshares of Preferred Stock to 37,764,153 shares, in preparation for a sale of\nSeries C Preferred Stock, and (iii) adopting the Company's 1997 Acquisition\nStock Option Plan, reserving 10,000,000 shares of Common Stock thereunder; all\nof these actions are currently pending. There are no other options, warrants,\ncalls, rights, commitments or agreements of any character to which Parent is a\nparty or by which it is bound obligating Parent to issue, deliver, sell,\nrepurchase or redeem, or cause to be issued, delivered, sold, repurchased or\nredeemed, any shares of the capital stock of Parent or obligating Parent to\ngrant, extend or enter into any such option, warrant, call, right, commitment or\nagreement.\n\n          (b) The shares of Parent Common Stock to be issued pursuant to the\nMerger will be duly authorized, validly issued, fully paid and non-assessable.\n\n     3.4  Brokers' and Finders' Fees. The Parent has not incurred, nor will\n          --------------------------                                           \nit incur, directly or indirectly, any liability for brokers' or finders' fees or\nagents' commissions or any similar charges in connection with this Agreement or\nany transaction contemplated hereby.\n\n     3.5  Similar Transactions.  Each party understands and agrees that the\n          --------------------                                               \nParent may acquire other entities that are in a business similar to that of the\nCompany.  In the event that, prior to the Second Adjustment Date, Parent\nacquires another entity similar to the Company on terms substantially more\nfavorable to the equity owners of such entity after taking into account the\nsimilarities and differences of the businesses, then the valuation of the\nCompany at the First Adjustment  Date and the Second Adjustment Date shall be\nrecalculated to take into account such favorable treatment and the First\nAdjustment to Purchase Price and Second Adjustment to Purchase Price shall be\nrecalculated promptly on such more favorable basis.  Any additional shares due\nto the Sellers upon such recalculation shall be issued promptly to the Company\nMembers.\n\n                                      28\n\n\n \n     3.6  No Changes. Except as otherwise disclosed in this Agreement, there\n          ----------\nhave been no material adverse changes to the Parent's financial condition or\noperating information from the information contained in the Franchise Offering\nCircular dated effective December 23, 1996, and the Confidential Offering\nMemorandum dated February 1997, relating to Parent's $18,000,000 Series C\nPreferred Stock Offering.\n\n                                   ARTICLE IV\n\n                      CONDUCT PRIOR TO THE EFFECTIVE TIME\n\n     4.1  Conduct of Business of the Company.   During the period from the\n          ----------------------------------\ndate of this Agreement and continuing until the earlier of the termination of\nthis Agreement or the Effective Time, the Company agrees (except to the extent\nthat Parent shall otherwise consent in writing), to carry on its business in the\nusual, regular and ordinary course in substantially the same manner as\nheretofore conducted, to pay debts and Taxes when due, to pay or perform other\nobligations when due, and, to the extent consistent with such business, use all\nreasonable efforts consistent with past practice and policies to preserve intact\nthe Company's present business organization, keep available the services of\npresent officers and key employees and preserve relationships with customers,\nsuppliers, distributors, licensors, licensees, and others having business\ndealings with it, all with the goal of preserving unimpaired the Company's\ngoodwill and ongoing businesses at the Effective Time.  The Company shall\npromptly notify Parent of any event or occurrence or emergency not in the\nordinary course of business of the Company, and any material event involving the\nCompany. Except as expressly contemplated by this Agreement, the Company shall\nnot, without the prior written consent of Parent:\n\n          (a) Enter into any commitment or transaction not in the ordinary\ncourse of business or any commitment or transaction of the type described in\nSection 2.9 hereof;\n\n          (b) Transfer to any person or entity any rights to the Intellectual\nProperty of the Company;\n\n          (c) Enter into or amend any agreements pursuant to which any other\nparty is granted marketing, distribution or similar rights of any type or scope\nwith respect to any products of the Company;\n\n          (d) Amend or otherwise modify (or agree to do so), except in the\nordinary course of business, or violate the terms of, any of the agreements set\nforth or described in Exhibit C;\n                      ----------\n\n          (e)  Commence any litigation;\n\n          (f) Declare, set aside or pay any dividends on or make any other\ndistributions (whether in cash, stock or property) in respect of any of its\ncapital stock, or split, combine or reclassify any of its capital stock or issue\nor authorize the issuance of any other securities in\n\n                                      29\n\n\n \nrespect of, in lieu of or in substitution for shares of capital stock of the\nCompany, or repurchase, redeem or otherwise acquire, directly or indirectly, any\nshares of its capital stock (or options, warrants or other rights exercisable\ntherefor);\n\n          (g) Issue, grant, deliver or sell or authorize or propose the\nissuance, grant, delivery or sale of, or purchase or propose the purchase of,\nany shares of its capital stock or securities convertible into, or\nsubscriptions, rights, warrants or options to acquire, or other agreements or\ncommitments of any character obligating it to issue any such shares or other\nconvertible securities;\n\n          (h) Cause or permit any amendments to its Articles of Organization or\nOperating Agreement;\n\n          (i) Acquire or agree to acquire by merging or consolidating with, or\nby purchasing any assets or equity securities of, or by any other manner, any\nbusiness or any corporation, partnership, association or other business\norganization or division thereof, or otherwise acquire or agree to acquire any\nassets which are material, individually or in the aggregate, to its business;\n\n          (j) Sell, lease, license or otherwise dispose of any of its properties\nor assets, except in the ordinary course of business and consistent with past\npractices;\n\n          (k) Incur any indebtedness for borrowed money or guarantee any such\nindebtedness or issue or sell any debt securities or guarantee any debt\nsecurities of others;\n\n          (l) Grant any loans to others or purchase debt securities of others or\namend the terms of any outstanding loan agreement, except in the ordinary course\nof business and consistent with past practices;\n\n          (m) Grant any severance or termination pay (i) to any director or\nofficer or (ii) to any other employee except payments made pursuant to standard\nwritten agreements outstanding on the date hereof;\n\n          (n) Adopt or amend any employee benefit plan, or enter into any\nemployment contract, pay or agree to pay any special bonus or special\nremuneration to any director or employee, or increase the salaries or wage rates\nof its employees;\n\n          (o) Revalue any of its assets, including without limitation writing\ndown the value of inventory or writing off notes or accounts receivable other\nthan in the ordinary course of business;\n\n          (p) Take any action which could jeopardize the tax-free reorganization\nhereunder;\n\n                                      30\n\n\n \n          (q) Pay, discharge or satisfy, in an amount in excess of $10,000 (in\nany one case) or $25,000 (in the aggregate), any claim, liability or obligation\n(absolute, accrued, asserted or unasserted, contingent or otherwise), other than\nthe payment, discharge or satisfaction in the ordinary course of business of\nliabilities reflected or reserved against in the Financial Statements (or the\nnotes thereto);\n\n          (r) Make or change any material election in respect of Taxes, adopt or\nchange any accounting method in respect of Taxes, enter into any closing\nagreement, settle any claim or assessment in respect of Taxes, or consent to any\nextension or waiver of the limitation period applicable to any claim or\nassessment in respect of Taxes;\n\n          (s) Enter into any strategic alliance or joint marketing arrangement\nor agreement; or\n\n          (t) Take, or agree in writing or otherwise to take, any of the actions\ndescribed in Sections 4.1(a) through (s) above, or any other action that would\nprevent the Company from performing or cause the Company not to perform its\ncovenants hereunder.\n\n     4.2  No Solicitation.   Until the earlier of the Effective Time or the\n          ---------------                                                    \ndate of termination of this Agreement pursuant to the provisions of Section 8.1\nhereof, neither the Company nor any of the Principal Shareholders will (nor will\nthe Company permit any of the Company's officers, directors, agents,\nrepresentatives or affiliates to) directly or indirectly, take any of the\nfollowing actions with any party other than Parent and its designees:  (a)\nsolicit, conduct discussions with or engage in negotiations with any person,\nrelating to the possible acquisition of the Company  (whether by way of merger,\npurchase of capital stock, purchase of assets or otherwise) or any material\nportion of its or their capital stock or assets, (b) provide information with\nrespect to it to any person, other than Parent, relating to the possible\nacquisition of the Company (whether by way of merger, purchase of capital stock,\npurchase of assets or otherwise) or any material portion of its or their capital\nstock or assets, (c) enter into an agreement with any person, other than Parent,\nproviding for the acquisition of the Company (whether by way of merger, purchase\nof capital stock, purchase of assets or otherwise) or any material portion of\nits or their capital stock or assets or (d) make or authorize any statement,\nrecommendation or solicitation in support of any possible acquisition of the\nCompany (whether by way of merger, purchase of capital stock, purchase of assets\nor otherwise) or any material portion of its or their capital stock or assets by\nany person, other than by Parent.  In addition to the foregoing, if the Company\nor either Company member receives prior to the Effective Time or the termination\nof this Agreement any offer or proposal relating to any of the above, the\nCompany or the Company member, as applicable shall immediately notify Parent\nthereof, including information as to the identity of the offeror or the party\nmaking any such offer or proposal and the specific terms of such offer or\nproposal, as the case may be, and such other information related thereto as\nParent may reasonably request.\n\n                                      31\n\n\n \n                                   ARTICLE V\n\n                             ADDITIONAL AGREEMENTS\n\n     5.1  Parent's Right of First Refusal.\n\n          (a) Parent's Right of First Refusal.  Before any shares issued\n              -------------------------------\npursuant to this Agreement (the \"Shares\") may be sold or otherwise transferred\n(including transfer by gift or operation of law), or any Shares held by a\ntransferee (either being sometimes referred to herein as the \"Holder\") may be\nsold, the Parent or its assignee(s) shall have a right of first refusal to\npurchase such Shares on the terms and conditions set forth in this Section (the\n\"Right of First Refusal\").\n\n          (b) Notice of Proposed Transfer.  The Holder of the Shares shall\n              ---------------------------\ndeliver to the Parent a written notice (the \"Notice\") stating:  (i) the Holder's\nbona fide intention to sell or otherwise transfer such Shares; (ii) the name of\neach proposed purchaser or other transferee (\"Proposed Transferee\"); (iii) the\nnumber of Shares to be transferred to each Proposed Transferee; and (iv) the\nbona fide cash price or other consideration for which the Holder proposes to\ntransfer the Shares (the \"Offered Price\"), and the Holder shall offer the Shares\nat the Offered Price to the Parent or its assignee(s).\n\n          (c) Exercise of Right of First Refusal.  At any time within thirty\n              ----------------------------------\n(30) days after receipt of the Notice, the Parent or its assignee(s) may, by\ngiving written notice to the Holder, elect to purchase all, but not less than\nall, of the Shares proposed to be transferred to any one or more of the Proposed\nTransferees, at the purchase price determined in accordance with subsection (d)\nbelow.\n\n          (d) Purchase Price.  The purchase price (\"Parent Purchase Price\") for\n              --------------\nthe Shares purchased by the Parent or its assignee(s) under this Section shall\nbe the Offered Price.  If the Offered Price includes consideration other than\ncash, the Parent may match such non-cash consideration with such other cash or\nnon-cash consideration as shall be determined by the Board of Directors of the\nParent in good faith.\n\n          (e) Payment.  Payment of the Parent Purchase Price shall be made, at\n              -------\nthe option of the Parent or its assignee(s), in cash (by check), by cancellation\nof all or a portion of any outstanding indebtedness of the Holder to the Parent\n(or, in the case of repurchase by an assignee, to the assignee), or by any\ncombination thereof within 30 days after receipt of the Notice or in the manner\nand at the times set forth in the Notice.\n\n          (f) Holder's Right to Transfer.  If all of the Shares proposed in the\n              --------------------------\nNotice to be transferred to a given Proposed Transferee are not purchased by the\nParent or its assignee(s) as provided in this Section, then the Holder may sell\nor otherwise transfer such Shares to that Proposed Transferee at the Offered\nPrice or at a higher price, provided that such sale or other transfer is\nconsummated within 120 days after the date of the Notice and provided further\nthat any such sale or other transfer is effected in accordance with any\napplicable securities laws and the Proposed Transferee agrees in writing that\nthe provisions of this Section shall continue to apply to the Shares\n\n                                      32\n\n\n \nin the hands of such Proposed Transferee. If the Shares described in the Notice\nare not transferred to the Proposed Transferee within such period, a new Notice\nshall be given to the Parent, and the Parent or its assignees shall again be\noffered the Right of First Refusal before any Shares held by the Holder may be\nsold or otherwise transferred.\n\n          (g) Exception for Certain Family Transfers.  Anything to the contrary\n              --------------------------------------\ncontained in this Section notwithstanding, the transfer of any or all of the\nShares during the Holder's lifetime or on the Holder's death by will or\nintestacy to the Holder's immediate family or a trust for the benefit of the\nHolder's immediate family shall be exempt from the provisions of this Section.\n\"Immediate Family\" as used herein shall mean spouse, lineal descendant or\nantecedent, brother or sister, or domestic partner.  In such case, the\ntransferee or other recipient shall receive and hold the Shares so transferred\nsubject to the provisions of this Section, and there shall be no further\ntransfer of such Shares except in accordance with the terms of this Section.\n\n          (h) Termination of Right of First Refusal.  The Right of First Refusal\n              -------------------------------------\nshall terminate as to any Shares 90 days after the first sale of Common Stock of\nthe Parent to the general public pursuant to a registration statement filed with\nand declared effective by the Securities and Exchange Commission under the\nSecurities Act of 1933, as amended.\n\n     5.2  Market Standoff Agreement.  Each Company member hereby agrees that\n          --------------------------                                          \nif so requested by the Company or any representative of the underwriters in\nconnection with any registration of the offering of any Shares of the Company\nunder the Securities Act, such Company member shall not sell or otherwise\ntransfer, pledge, hypothecate or otherwise decrease his market risk or\nbeneficial ownership in any Shares or other securities of the Company during the\n180-day period following the date of the final Prospectus contained in a\nregistration statement of the Company filed under the Securities Act; provided,\nhowever, that such restriction shall only apply to the first registration\nstatement of the Company to become effective under the Securities Act which\nincludes securities to be sold on behalf of the Company to the general public in\nan underwritten public offering under the Securities Act.  The Company may\nimpose stop-transfer instructions with respect to securities subject to the\nforegoing restrictions until the end of such 180-day period.\n\n     5.3  Restriction on Competition.\n          ---------------------------\n\n          (a) Restricted Activities.  For a period of three (3) years beginning\n              ---------------------\non the Closing Date, no Principal Shareholder shall:\n\n              (i) engage in, including as an employee, consultant or otherwise,\nor own any interest (except as a passive investor of less than five percent (5%)\nof total debt and equity) in any business or other activity that would compete\nwith the Parent's; or\n\n              (ii) divert or attempt to divert any existing or prospective\nbusiness or customers of the Parent (including any affiliates of the Parent) to\nany other person or entity, by direct or indirect inducement or otherwise, or do\nor perform, directly or indirectly, any other act injurious or prejudicial to\nthe goodwill associated with the Parent or its affiliates; or\n\n                                      33\n\n\n \n               (iii)  solicit any person for employment who is at that time\nalready employed by Parent or any of its affiliates, or otherwise directly or\nindirectly induce or seek to induce such person to leave his or her employment.\n\n          (b)  Scope of Restriction.\n               ---------------------\n\n               (i) This Section shall apply in the SMSA where the Company is\nlocated, except that this Section shall not apply to activities of the Principal\nShareholders relating to (A) Faxweb(R), (B) ISP Helpdesk Software, ( C ) ISP\nCustomer Service Software, and (D) ISP Billing Software. This section shall\nprevent Principal Shareholders from being employed full-time by or owning\ngreater than a 10% interest in a business which prepares complete Web sites for\ncustomers on a professional services basis, but this Section shall not prevent\nPrincipal Shareholders from being employed by, consulting for, or otherwise\nforming relationships with businesses which otherwise provide products and\nservices related to the Internet.\n\n               (ii) In the event that any other provision of this Section 5.3 or\nthe application of any such provision shall be held to be prohibited or\nunenforceable in any jurisdiction, such provision shall, as to such\njurisdiction, be ineffective to the extent of such prohibition or\nunenforceability. The remaining provisions of this covenant to refrain from\ncompetition shall remain in full force and effect, and any such prohibition or\nunenforceability in any jurisdiction shall not invalidate or render\nunenforceable such provision in any other jurisdiction. The parties shall use\ntheir best efforts to replace the provision that is contrary to law with a legal\none approximating to the extent possible the original intent of the parties.\n\n               (iii) In the event that a Principal Shareholder, who also is a\nNew Employee, is terminated from employment by Parent without cause at any time\nwithin three (3) years of the Closing Date, then the term of the restrictions\nimposed by this Section 5.3 shall be reduced to six (6) months and that\nterminated Principal Shareholder\/New Employee shall receive severance benefits\nfrom Parent equal to six (6) months salary and employee benefits.\n\n     5.4  Confidentiality.  Each of the parties hereto hereby agrees to keep\n          ---------------                                                     \nsuch information or knowledge obtained pursuant to the negotiation and execution\nof this Agreement, or the effectuation of the transactions contemplated hereby,\nconfidential; provided, however, that the foregoing shall not apply to\ninformation or knowledge which (a) a party can demonstrate was already lawfully\nin its possession prior to the disclosure thereof by the other party, (b) is or\nbecomes generally known to the public and did not become so known through any\nviolation of law or this Agreement by the non-disclosing party, (c) is later\nlawfully acquired by such party from other sources, (d) is required to be\ndisclosed by order of court or government agency after seeking any reasonably\navailable protection against general disclosure or (e) which is disclosed in the\ncourse of any litigation between any of the parties hereto; it being understood\nthat the parties may disclose relevant information and knowledge to their\nrespective employees and agents on a need to know basis, provided that the\nparties cause such employees and agents to treat such information and knowledge\nconfidentially.\n\n                                      34\n\n\n \n     5.5  Expenses.  Whether or not the Acquisition is consummated, all fees\n          --------                                                            \nand expenses incurred in connection with the Acquisition including, without\nlimitation, all legal, accounting, financial advisory, consulting and all other\nfees and expenses of third parties incurred by a party in connection with the\nnegotiation and effectuation of the terms and conditions of this Agreement and\nthe transactions contemplated hereby, shall be the obligation of the respective\nparty incurring such fees and expenses.\n\n     5.6  Public Disclosure.  Unless otherwise required by law or any\n          -----------------                                            \napplicable rule of a stock exchange or quotation system upon which a parties'\nsecurities are listed, prior to the Closing Date, no disclosure (whether or not\nin response to an inquiry) of the subject matter of this Agreement shall be made\nby the Company or the Principal Shareholders unless approved by Parent prior to\nrelease, provided that such approval shall not be unreasonably withheld, subject\nto Parent's and the Company's or the Principal Shareholders' obligation to\ncomply with applicable securities laws.\n\n     5.7  Post-Closing Employment of Company Employees.\n          --------------------------------------------   \n\n          (a) Company shall terminate each employee of Company on and as of the\nClosing Date, effective as of close of business on the Closing Date.  Parent\nwill hire on the Closing Date, effective as of the close of business on the\nClosing Date, on an \"at will\" basis and subject to Parent's terms, conditions\nand policies of employment, if any, each of those persons who are employed by\nCompany and are terminated by Company on the Closing Date pursuant to the\nforegoing sentence.  Nothing contained in this Section is intended or shall be\ndeemed to (a) require Parent to employ such persons for any fixed or pre-\ndetermined time after the Closing, or (b) confer upon any employee of Company,\npast, present, or future, any rights of employment of any nature, it being\nunderstood and agreed that the provisions of this Section  are intended to set\nforth an agreement among Parent and Company, and are not intended to benefit any\npersons not party to this Agreement, including such employees.  Parent and\nCompany hereby agree to adopt the alternate procedure of Rev. Proc. 96-60 for\npurposes of employer payroll withholding.\n\n          (b) In connection with hiring the Company's employees (the \"New\n                                                                      ---\nEmployees\") as set forth in Section 5.7(a) above, Parent shall grant to the New\n- ---------\nEmployees incentive stock options to purchase Parent Common Stock in an\naggregate number equal to the number of shares paid as the Original Purchase\nPrice.  Such incentive stock options shall be issued to the New Employees, and\nin the amounts, requested by the Company in writing at the Closing.  The\nexercise price of each option shall be the fair market value of the Common Stock\nsubject to such option on the Closing Date as determined in good faith and\nauthorized by the Board of Directors of the Parent.  Such options shall not be\nexercisable at the date of grant, but shall become exercisable as to one-thirty-\nsixth (1\/36) of the shares subject to such option each month after the effective\ndate of this Agreement, provided, however, that no option shall become\nexercisable with respect to any shares at any time following the date that the\nNew Employee to whom the option was granted ceases to be an employee or\nconsultant of the Parent (an \"Employee Termination\"), and provided further that\nthe term of any such option shall expire if not exercised, and to the extent not\nexercisable, ninety (90) days after the date of the Employee Termination.\nAccordingly, any New Employee who receives an option must exercise it (but only\nto the extent then exercisable), if at all, within ninety (90) days after an\n\n                                      35\n\n\n \nEmployee Termination.  Notwithstanding the foregoing, in the event of any\nEmployee Termination due to the death or disability of the New Employee, the New\nEmployee or his estate shall have twelve (12) months to exercise the option to\nthe extent it was exercisable on the date of the Employee Termination;\nthereafter, the option shall terminate as to any unexercised portion.   New\nEmployee acknowledges that New Employee will be taxed under the Code on the\ndifference between the fair market value of shares purchased pursuant to any\nexercised option less the exercise price paid on the date of any such exercise\nand that the Parent may withhold any applicable taxes from New Employee's\nregular pay or, if insufficient, that New Employee will make any required\nwithholding payment to the Parent.  New Employee also acknowledges that there\nmay be state or local tax due upon exercise of the option, and that any such tax\nis the obligation of the New Employee and not the Parent.  The terms of the\noptions as described in this paragraph are subject to the definitive form of\noption agreement attached hereto as Exhibit D.\n                                    ---------\n\n          (c) Also in connection with hiring the New Employees, Parent agrees to\nissue to each of them a bonus payable in Parent Common Stock equal to the\naggregate exercise price of the options described in Section 5.7(b) above.  Such\nbonus payment shall be paid in Common Stock on the earlier of (i) the date three\nyears subsequent to the Closing Date or (ii) with respect to any individual New\nEmployee, the date of Employee Termination.  Such bonus shall be, as to each New\nEmployee, for such number of shares of Parent Common Stock as shall be equal, on\nthe date paid, and in the good faith judgment of the Parent's Board of\nDirectors, to the aggregate exercise price of the exercisable portion of the\noption granted to the New Employee described in the foregoing paragraph.  New\nEmployee acknowledges that there may be federal, state or local tax due upon\nreceipt of the bonus, that Parent may withhold any applicable taxes from New\nEmployee's regular pay or, if insufficient, that New Employee will make any\nrequired withholding payment to Parent, and that any such tax is the obligation\nof the New Employee and not the Parent.\n\n          (d) In addition to the stock option (the \"Original Option\") and stock\nbonus grants described in subsections (b) and (c) of this Section, in the event\nthat any additional shares of Parent's Common Stock are issued pursuant to the\nPurchase Price Adjustment provisions of Section 1.10, an additional option, in\nform and substance substantially similar to the Original Option (but with an\nexercise price determined based on the date of issuance) (the \"Additional\nOption\"), and an additional stock bonus commitment (the \"Additional Stock\nBonus\") proportionate to the Additional Option, in form and substance\nsubstantially similar to that described in paragraph (c) of this Section, shall\nbe issued by the Parent to any then-remaining employee of Parent or Sub who\nreceived an Original Option.  The number of shares subject to any such\nAdditional Option shall be calculated by taking the number of shares issued\npursuant to such Purchase Price Adjustment provisions multiplied by three (3)\nand then determining the individual recipients' pro rata share based on the\nnumber of shares subject to each recipient's Original Option compared to the\nnumber of shares subject to the total of Original Options granted to then-\nremaining employees.  For each recipient, the number of shares granted in the\nAdditional Stock Bonus shall be proportionate to the Additional Option.  Any\nsuch Additional Options and Additional Stock Bonuses shall be granted at the\nnext regularly scheduled meeting of the Parent's board of directors following\nthe date of any Purchase Price Adjustment pursuant to Section 1.10.\n\n                                      36\n\n\n \n     5.8  Treatment of Affiliate Warrants.  To the extent that any affiliate\n          -------------------------------                                     \nof the Company has received or has the right to receive any warrants under\nParent's Affiliate Warrant Program, the warrants received or to be received\nthereunder shall remain in full force and effect and, to the extent required to\nmake calculations of shares issuable under such warrants, Parent shall estimate\nin good faith the business measures of the Surviving Corporation as necessary to\nsuch calculations, with the intent of preserving the economic value of such\nwarrants to the holders thereof following the completion of the acquisition\ncontemplated hereby.\n\n     5.9  Access to Information.  The Company shall afford Parent and its\n          ---------------------                                            \naccountants, counsel and other representatives, reasonable access during normal\nbusiness hours during the period prior to the Effective Time to (a) all of the\nCompany's properties, books, contracts, commitments and records, and (b) all\nother information concerning the business, properties and personnel (subject to\nrestrictions imposed by applicable law) of the Company as Parent may reasonably\nrequest.  The Company agrees to provide to Parent and its accountants, counsel\nand other representatives copies of internal financial statements promptly upon\nrequest.  No information or knowledge obtained in any investigation pursuant to\nthis Section 5.9 shall affect or be deemed to modify any representation or\nwarranty contained herein or the conditions to the obligations of the parties to\nconsummate the Merger.\n\n     5.10 Public Disclosure.  Unless otherwise required by law, prior to the\n          -----------------                                                   \nEffective Time, no disclosure (whether or not in response to an inquiry) of the\nsubject matter of this Agreement shall be made by any party hereto unless\napproved by Parent and the Company prior to release, provided that such approval\nshall not be unreasonably withheld.\n\n     5.11 Consents.  The Company shall use its best efforts to obtain the\n          --------                                                         \nconsents, waivers and approvals under any of the Contracts as may be required in\nconnection with the Merger (all of such consents, waivers and approvals are set\nforth in Exhibit C) so as to preserve all rights of, and benefits to, the\n         ---------\nCompany thereunder.\n\n     5.12 FIRPTA Compliance.  On the Closing Date, the Company shall deliver\n          -----------------                                                   \nto Parent a properly executed statement in a form reasonably acceptable to\nParent for purposes of satisfying Parent's obligations under Treasury Regulation\nSection 1.1445-2(c)(3).\n\n                                      37\n\n\n \n     5.13 Best Efforts.  Subject to the terms and conditions provided in this\n          ------------                                                         \nAgreement, each of the parties hereto shall use its best efforts to take\npromptly, or cause to be taken, all actions, and to do promptly, or cause to be\ndone, all things necessary, proper or advisable under applicable laws and\nregulations to consummate and make effective the transactions contemplated\nhereby to obtain all necessary waivers, consents and approvals and to effect all\nnecessary registrations and filings and to remove any injunctions or other\nimpediments or delays, legal or otherwise, in order to consummate and make\neffective the transactions contemplated by this Agreement for the purpose of\nsecuring to the parties hereto the benefits contemplated by this Agreement;\nprovided that Parent shall not be required to agree to any divestiture by Parent\nor the Company or any of Parent's subsidiaries or affiliates of shares of\ncapital stock or of any business, assets or property of Parent or its affiliates\nor of the Company or its affiliates, or the imposition of any material\nlimitation on the ability of any of them to conduct their businesses or to own\nor exercise control of such assets, properties and stock.\n\n     5.14 Notification of Certain Matters.  The Company shall give prompt\n          -------------------------------                                  \nnotice to Parent, and Parent shall give prompt notice to the Company, of (i) the\noccurrence or non-occurrence of any event, the occurrence or non-occurrence of\nwhich is likely to cause any representation or warranty of the Company or the\nPrincipal Shareholders and Parent, respectively, contained in this Agreement to\nbe untrue or inaccurate at or prior to the Effective Time and (ii) any failure\nof the Company or Parent, as the case may be, to comply with or satisfy any\ncovenant, condition or agreement to be complied with or satisfied by it\nhereunder; provided, however, that the delivery of any notice pursuant to this\nSection 5.14 shall not limit or otherwise affect any remedies available to the\nparty receiving such notice.\n\n     5.15 Preparation of Tax Returns.  The Principal Shareholders shall\n          --------------------------\nprepare or cause to be prepared and file or cause to be filed all income Tax\nReturns for the Company for all periods ending on or prior to the Closing Date\nwhich are filed after the Closing Date.  Such returns shall be prepared in\naccordance with applicable law and past practices consistently applied.  The\nPrincipal Shareholders shall permit Parent to review and comment on each such\nTax Returns prior to filing.  The Principal Shareholders shall reimburse the\nCompany for any income Taxes of the Company with respect to all periods or\nportions thereof ending on or prior to the Closing Date.\n\n     5.16 Additional Documents and Further Assurances.  Each party hereto, at\n          -------------------------------------------                          \nthe request of another party hereto, shall execute and deliver such other\ninstruments and do and perform such other acts and things as may be necessary or\ndesirable for effecting completely the consummation of this Agreement and the\ntransactions contemplated hereby.\n\n     5.17 Section 368 Compliance.  From and after the Effective Time, neither\n          ----------------------                                                \nParent, Sub, or the Company shall take any action that will cause the Merger not\nto be treated as a reorganization within the meaning of Section 368 of the Code.\n\n                                      38\n\n\n \n     5.18 Parent Policies.  The Company and Principal Shareholders acknowledge\n          ---------------                                                       \nthat Parent has implemented policies regarding the operation of subsidiary\nentities such as the Company will be following the Merger. The Company and\nPrincipal Shareholders acknowledge and agree that such policies, or any such\namended or replacement policies that are reasonably similar in scope, nature or\neffect, are anticipated to be in place following the Merger, and the Company and\nPrincipal Shareholders hereby indicate their intention to act in substantial\ncompliance with all such policies.  Such policies shall not provide for Parent\noverhead allocations from Parent to Company or Sub, unless otherwise agreed in\nadvance by the parties.\n\n\n                                   ARTICLE VI\n\n                            CONDITIONS TO THE MERGER\n\n     6.1  Conditions to Obligations of Each Party to Effect the Merger.  The\n          -------------------------------------------------------------       \nrespective obligations of each party to this Agreement to effect the Merger\nshall be subject to the satisfaction at or prior to the Effective Time of the\nfollowing conditions:\n\n          (a) No Injunctions or Restraints; Illegality.  No temporary\n              ----------------------------------------\nrestraining order, preliminary or permanent injunction or other order issued by\nany court of competent jurisdiction or other legal restraint or prohibition\npreventing the consummation of the Merger shall be in effect, nor shall any\nproceeding brought by an administrative agency or commission or other\ngovernmental authority or instrumentality, domestic or foreign, seeking any of\nthe foregoing be pending; nor shall there be any action taken, or any statute,\nrule, regulation or order enacted, entered, enforced or deemed applicable to the\nMerger, which makes the consummation of the Merger illegal.\n\n          (b) Litigation.  There shall be no action, suit, claim or proceeding\n              ----------\nof any nature pending, or overtly threatened, against the Parent, Sub or the\nCompany, their respective properties or any of their officers or directors,\narising out of, or in any way connected with, the Merger or the other\ntransactions contemplated by the terms of this Agreement.\n\n     6.2  Additional Conditions to Obligations of Company.  The obligations of\n          ------------------------------------------------                      \nthe Company to consummate and effect this Agreement and the transactions\ncontemplated hereby shall be subject to the satisfaction at or prior to the\nEffective Time of each of the following conditions, any of which may be waived,\nin writing, exclusively by the Company:\n\n          (a) Representations, Warranties and Covenants.  The representations\n              -----------------------------------------\nand warranties of Parent and Sub in this Agreement shall be true and correct in\nall material respects on and as of the Effective Time as though such\nrepresentations and warranties were made on and as of such time and each of\nParent and Sub shall have performed and complied in all material respects with\nall covenants and obligations of this Agreement required to be performed and\ncomplied with by it as of the Effective Time.\n\n                                      39\n\n\n \n          (b) Certificate of the Parent.  Company shall have been provided with\n              -------------------------\na certificate executed on behalf of the Parent by its President to the effect\nthat, as of the Effective Time:\n\n              (i) all representations and warranties made by the Parent and Sub\nin this Agreement are true and correct in all material respects;\n\n              (ii) all covenants and obligations of this Agreement to be\nperformed by the Parent on or before such date have been so performed in all\nmaterial respects.\n\n          (c) Claims.  There shall not have occurred any claims (whether or not\n              ------\nasserted in litigation) which may materially and adversely affect the\nconsummation of the transactions contemplated hereby or the business, assets\n(including intangible assets), financial condition or results of operations of\nthe Parent, taken as a whole.\n\n          (d) No Material Adverse Changes.  There shall not have occurred any\n              ---------------------------\nmaterial adverse change in the business, assets (including intangible assets),\nfinancial condition, results of operations of the Parent, taken as a whole since\nDecember 31, 1996.\n\n     6.3  Additional Conditions to the Obligations of Parent and Sub.  The\n          -----------------------------------------------------------       \nobligations of Parent and Sub to consummate and effect this Agreement and the\ntransactions contemplated hereby shall be subject to the satisfaction at or\nprior to the Effective Time of each of the following conditions, any of which\nmay be waived, in writing, exclusively by Parent:\n\n          (a) Representations, Warranties and Covenants.  The representations\n              -----------------------------------------\nand warranties of the Company and the Principal Shareholders in this Agreement\nshall be true and correct in all material respects on and as of the Effective\nTime as though such representations and warranties were made on and as of the\nEffective Time and the Company shall have performed and complied in all material\nrespects with all covenants and obligations of this Agreement required to be\nperformed and complied with by it as of the Effective Time.\n\n          (b) Certificate of the Company and Principal Shareholders.  Parent\n              -----------------------------------------------------\nshall have been provided with a certificate executed by the Principal\nShareholders and executed on behalf of the Company by its Chief Executive\nOfficer to the effect that, as of the Effective Time:\n\n              (i) all representations and warranties made by the Company and the\nPrincipal Shareholders in this Agreement are true and correct in all material\nrespects; and\n\n              (ii) all covenants and obligations of this Agreement to be\nperformed by the Company on or before such date have been so performed in all\nmaterial respects.\n\n          (c) Claims.  There shall not have occurred any claims (whether or not\n              ------\nasserted in litigation) which may materially and adversely affect the\nconsummation of the transactions contemplated hereby or may have a Material\nAdverse Effect.\n\n                                      40\n\n\n \n          (d) Third Party Consents.  Any and all consents, waivers, and\n              --------------------\napprovals listed in Exhibit C shall have been obtained.\n\n          (e) Shareholder Certificate.  Each of the Company Members shall have\n              -----------------------\nexecuted and delivered to Parent a Shareholder Certificate in the form attached\nhereto as Exhibit E.\n          ---------\n\n          (f) No Material Adverse Changes.  There shall not have occurred any\n              ---------------------------\nmaterial adverse change in the business, assets (including intangible assets),\nresults of operations, liabilities (contingent or accrued), financial condition\nor prospects of the Company since December 31, 1996.\n\n          (g) Company Member Approval.  Each of the Company Members shall have\n              -----------------------\napproved this Agreement and the Merger and the transactions contemplated\nthereby, and no Company Member shall have exercised, or have any continuing\nright to exercise, appraisal, dissenters' or similar rights by virtue of the\nMerger.\n\n\n                                  ARTICLE VII\n\n               SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW\n\n     7.1  Survival of Representations and Warranties.  All of the Company's\n          ------------------------------------------                         \nand the Principal Shareholders' representations and warranties in this Agreement\nor in any instrument delivered pursuant hereto shall terminate on the third\nanniversary of the Effective Time; provided, however, that the representations\nand warranties relating or pertaining to any Tax or Returns related to such Tax\nset forth in Section 2.10 hereof or relating to environmental laws or matters\nset forth in Section 2.20 hereof, shall survive until ninety (90) days following\nthe expiration of all applicable statutes of limitations, or extensions thereof,\ngoverning each Tax or Returns related to such Tax or environmental laws or\nmatters.  All of the Parent's and Sub's representations and warranties contained\nherein or in any instrument delivered pursuant to this Agreement shall terminate\nat the Effective Time.\n\n     7.2  Escrow Arrangements; Setoff.\n          ---------------------------\n\n          (a) Escrow Fund; Setoff from Purchase Price Adjustments.  As partial\n              ---------------------------------------------------\nsecurity for the indemnity provided for in Section 7.3 and the Purchase Price\nAdjustments provided for in Section 1.10, (i) at the Effective Time, the Company\nMembers will be deemed to have received and deposited with the Escrow Agent (as\ndefined in Section 1.6(e)(iii) above) the Escrow Amount (plus any additional\nshares that may be issued upon any stock split, stock dividend or\nrecapitalization effected by Parent after the Effective Time) without any act of\nany Company Member.  On and after the Effective Time, the Escrow Amount shall\nform an escrow fund (the \"Escrow Fund\") to be governed by the terms set forth\n                          -----------\nherein at Parent's cost and expense.  The Escrow Agent may execute this\nAgreement following the date hereof and prior to the Effective\n\n                                      41\n\n\n \nTime, and such later execution, if so executed after the date hereof, shall not\naffect the binding nature of this Agreement as of the date hereof between the\nother signatories hereto. The portion of the Escrow Amount contributed on behalf\nof each Company Member shall be the pro rata amount calculated pursuant to\nSection 1.6(a) of this Agreement. In addition to seeking indemnification under\nSection 7.3 from the Escrow Fund and setting off amounts from the Purchase Price\nAdjustment, Parent may, in its discretion, seek indemnification for Losses\ndirectly from the Principal Shareholders, but only after first proceeding\nagainst the Escrow Fund so long as it exists and is not subject to other claims.\nNothing herein shall limit the liability of the Parent, the Company or the\nPrincipal Shareholders for any breach of any representation, warranty or\ncovenant if the Merger does not close. Parent may not receive any shares from\nthe Escrow Fund (other than as a Purchase Price Adjustment) unless Officer's\nCertificates (as defined in subsection (d) below) identifying losses, the\naggregate of which exceed $31,000, have been delivered to the Shareholder\nRepresentative (as defined below) and the Escrow Agent as provided in paragraph\n(d) below. The Company Members shall not have any right of contribution from the\nCompany with respect to any Loss claimed by Parent or Sub after the Effective\nTime.\n\n          (b) Escrow Period; Distribution upon Termination of Escrow Periods.\n              --------------------------------------------------------------\nSubject to the following requirements, the Escrow Fund shall be in existence\nimmediately following the Effective Time and shall terminate at 5:00 p.m.,\nPacific Time, on the date of the first anniversary of the Effective Time (the\n\"Escrow Period\"); provided that the Escrow Period shall not terminate with\n -------------\nrespect to such amount (or some portion thereof) if in the reasonable judgment\nof Parent, subject to the objection of the Shareholder Representative and the\nsubsequent arbitration of the matter in the manner provided in this Section 7.2,\nsuch amount (or some portion thereof) together with the aggregate amount\nremaining in the Escrow Fund is necessary to satisfy any unsatisfied claims\nspecified in any Officer's Certificate delivered to the Escrow Agent prior to\ntermination of such Escrow Period with respect to facts and circumstances\nexisting prior to the termination of such Escrow Period.  As soon as all such\nclaims have been resolved, the Escrow Agent shall deliver to the Company Members\nthe remaining portion of the Escrow Fund not required to satisfy such claims.\nDeliveries of Escrow Amounts to the Company Members pursuant to this Section\n7.2(b) shall be made in proportion to their respective original contributions to\nthe Escrow Fund.\n\n          (c)  Protection of Escrow Fund.\n               --------------------------\n\n               (i) The Escrow Agent shall hold and safeguard the Escrow Fund\nduring the Escrow Period, shall treat such fund as a trust fund in accordance\nwith the terms of this Agreement and not as the property of Parent and shall\nhold and dispose of the Escrow Fund only in accordance with the terms hereof.\n\n               (ii) Any shares of Parent Common Stock or other equity securities\nissued or distributed by Parent (including shares issued upon a stock split)\n(\"New Shares\") in respect of Parent Common Stock in the Escrow Fund which have\n  ----------\nnot been released from the Escrow Fund shall be added to the Escrow Fund and\nbecome a part thereof.  New Shares issued in respect of shares of Parent Common\nStock which have been released from the Escrow Fund shall not be\n\n                                      42\n\n\n \nadded to the Escrow Fund but shall be distributed to the record holders thereof.\nCash dividends on Parent Common Stock shall not be added to the Escrow Fund but\nshall be distributed to the record holders thereof.\n\n               (iii) Each Company Member shall have voting rights with respect\nto the shares of Parent Common Stock contributed to the Escrow Fund by such\nCompany Member (and on any voting securities added to the Escrow Fund in respect\nof such shares of Parent Common Stock).\n\n          (d)  Claims Upon Escrow Fund.\n               ------------------------\n\n          (i) Upon receipt by the Escrow Agent at any time on or before the last\nday of the Escrow Period of a certificate signed by any officer of Parent (an\n\"Officer's Certificate\"):  (A) stating that Parent has paid or accrued Losses,\n ---------------------\nand (B) specifying in reasonable detail the individual items of Losses included\nin the amount so stated, the date each such item was paid or accrued, or the\nbasis for such anticipated liability, and the nature of the misrepresentation,\nbreach of warranty or covenant to which such item is related, the Escrow Agent\nshall, subject to the provisions of Section 7.2(e) hereof, deliver to Parent out\nof the Escrow Fund, as promptly as practicable, cash or shares of Parent Common\nStock (at the election of Parent) held in the Escrow Fund in an amount equal to\nsuch Losses.\n\n          (e) Objections to Claims.  At the time of delivery of any Officer's\n              --------------------\nCertificate to the Escrow Agent, a duplicate copy of such certificate shall be\ndelivered to the Members Representative and for a period of thirty (30) days\nafter such delivery, the Escrow Agent shall make no delivery to Parent of any\nEscrow Amounts pursuant to Section 7.2(d) hereof unless the Escrow Agent shall\nhave received written authorization from the Member Representative to make such\ndelivery.  After the expiration of such thirty (30) day period, the Escrow Agent\nshall make delivery of the Escrow Amount from the Escrow Fund in accordance with\nSection 7.2(d) hereof, provided that no such payment or delivery may be made if\nthe Member Representative shall object in a written statement to the claim made\nin the Officer's Certificate, and such statement shall have been delivered to\nthe Escrow Agent prior to the expiration of such thirty (30) day period.\n\n          (f) Indemnification and Setoff Claims.  In the event Parent shall have\n              ---------------------------------\nincurred any Losses for which Parent wishes to seek indemnification directly\nfrom the Company Members out of the Escrow Fund pursuant to this Section 7.2,\nParent shall deliver to the Member Representative an Officer's Certificate: (A)\nstating that Parent has paid or accrued Losses and (B) specifying in reasonable\ndetail the individual items of Losses included in the amount so stated, the date\neach such item was paid or accrued, or the basis for such anticipated liability,\nand the nature of the misrepresentation, breach of warranty or covenant to which\nsuch item is related.\n\n          (g) Actions Against Principal Shareholders.  In the event that Parent\n              --------------------------------------\nhas elected to pursue indemnity directly from the Principal Shareholders, the\nPrincipal Shareholders shall promptly, and in no event later than 30 days after\ndelivery of the Officer's Certificate, wire transfer\n\n                                      43\n\n\n \nto Parent the amount of such Loss, unless the Company or the Principal\nShareholders, as the case may be, contest such claim by following the procedures\nset forth in Section 7.2(i).\n\n          (h) Valuation of Parent Common Stock.  For the purposes of determining\n              --------------------------------\nthe number of shares of Parent Common Stock to be delivered to Parent out of the\nEscrow Fund as indemnity pursuant to Section 7.3 hereof, the shares of Parent\nCommon Stock shall be valued at (i) if the Parent's Common Stock shall be\npublicly traded, a price equal to the average closing price of the Parent Common\nStock in trading on the relevant stock exchange or quotation system during the\nten business day period ending three days prior to the date of the Officer's\nCertificate stating the claim with respect to which such shares are delivered,\nand (ii) if the Parents' Common Stock is not so publicly traded, the fair market\nvalue per share as determined by the Parent's board of directors in good faith\non the date closest to the date of the Officer's Certificate.\n\n          (i) Resolution of Conflicts; Arbitration.\n              -------------------------------------\n\n              (i) In case the Member Representative shall object in writing to\nany claim or claims made in any Officer's Certificate within thirty (30) days\nafter delivery of such Officer's Certificate, the Member Representative and\nParent shall attempt in good faith to agree upon the rights of the respective\nparties with respect to each of such claims. If the Member Representative and\nParent should so agree, a memorandum setting forth such agreement shall be\nprepared and signed by both parties. If any claim against the Escrow Fund was\nsought, such memorandum shall be furnished to the Escrow Agent and the Escrow\nAgent shall be entitled to rely on any such memorandum and make payment out of\nthe Escrow Fund in accordance with the terms thereof.\n\n              (ii) If no such agreement can be reached after good faith\nnegotiation (or in any event after 60 days from the date of the Officer's\nCertificate), either Parent or the Member Representative may demand arbitration\nof the matter unless the amount of the damage or loss is at issue in pending\nlitigation with a third party, in which event arbitration shall not be commenced\nuntil such amount is ascertained or both parties agree to arbitration; and in\neither such event the matter shall be settled by arbitration conducted by three\narbitrators. Parent and the Member Representative shall each select one\narbitrator, and the two arbitrators so selected shall select a third arbitrator.\nThe arbitrators shall set a limited time period and establish procedures\ndesigned to reduce the cost and time for discovery while allowing the parties an\nopportunity, adequate in the sole judgment of the arbitrators, to discover\nrelevant information from the opposing parties about the subject matter of the\ndispute. The arbitrators shall rule upon motions to compel or limit discovery\nand shall have the authority to impose sanctions, including attorneys' fees and\ncosts, to the same extent as a court of law or equity, should the arbitrators\ndetermine that discovery was sought without substantial justification or that\ndiscovery was refused or objected to without substantial justification. The\ndecision of a majority of the three arbitrators as to the validity and amount of\nany claim in such Officer's Certificate shall be binding and conclusive upon the\nparties to this Agreement. Notwithstanding anything in Section 7.2(e) hereof,\nthe Escrow Agent shall be entitled to act in accordance with such decision and\nmake or withhold payments out of the Escrow Fund in accordance therewith. Such\ndecision shall be written and shall be supported by written findings of fact and\nconclusions which shall set forth the award, judgment, decree or order awarded\nby the arbitrators.\n\n                                      44\n\n\n \n              (iii)  Judgment upon any award rendered by the arbitrators may be\nentered in any court having jurisdiction.  Any such arbitration shall be held in\nSanta Clara County, California under the rules then in effect of the American\nArbitration Association.  The arbitrators shall determine how all expenses\nrelating to the arbitration shall be paid, including without limitation, the\nrespective expenses of each party, the fees of each arbitrator and the\nadministrative fee of the American Arbitration Association.\n\n          (j) Third-Party Claims.  In the event Parent becomes aware of a third-\n              ------------------\nparty claim which Parent believes may result in Losses, Parent shall notify the\nMember Representative of such claim, and the Member Representative shall be\nentitled, at the Company Members' expense, to participate in any defense of such\nclaim.  Parent shall have the right in its sole discretion to settle any such\nclaim; provided, however, that except with the consent of the Member\nRepresentative, no settlement of any such claim with third-party claimants shall\nbe determinative of the amount of any claim pursuant to this Section 7.2.  In\nthe event that the Member Representative has consented to any such settlement,\nthe Company Members shall have no standing to object under any provision of this\nSection 7.2 to the amount of any claim by Parent against the Escrow Fund with\nrespect to such settlement.\n\n          (k)  Member Representative.\n               ---------------------\n\n               (i) In the event that the Merger is approved, effective upon such\nvote, and without further act of any Member, Charles R. Bobo II shall be\nappointed as agent and attorney-in-fact (the \"Member Representative\") for each\n                                              ---------------------\nCompany Members, for and on behalf of the Members of the Company, to give and\nreceive notices and communications, to authorize delivery to Parent of payments\nfrom the Escrow Fund in satisfaction of claims by Parent, to object to such\ndeliveries, to agree to, negotiate, enter into settlements and compromises of,\nand demand arbitration and comply with orders of courts and awards of\narbitrators with respect to such claims, and to take all actions necessary or\nappropriate in the judgment of the Member Representative for the accomplishment\nof the foregoing.  Such agency may be changed by the members of the Company from\ntime to time upon not less than thirty (30) days prior written notice to Parent;\nprovided that the Member Representative may not be removed unless a majority-in-\ninterest of the Company Members agree to such removal and to the identity of the\nsubstituted agent.  No bond shall be required of the Member Representative, and\nthe Member Representative shall not receive compensation for services as such.\nNotices or communications to or from the Member Representative shall constitute\nnotice to or from each of the Company Members or their permitted transferees.\n\n               (ii) The Member Representative shall not be liable for any act\ndone or omitted hereunder as Member Representative while acting in good faith\nand in the exercise of reasonable judgment. The Company Members shall severally\nindemnify the Member Representative and hold him or her harmless against any\nloss, liability or expense incurred without negligence or bad faith on the part\nof the Member Representative and arising out of or in connection with the\nacceptance or administration of the members Representative's duties hereunder,\nincluding the reasonable fees and expenses of any legal counsel retained by the\nMember Representative.\n\n                                      45\n\n\n \n          (l) Actions of the Member Representative.  A decision, act, consent or\n              ------------------------------------\ninstruction of the Member Representative shall constitute a decision of all the\nCompany Members and shall be final, binding and conclusive upon each of such\nCompany Member, and the Escrow Agent and Parent may rely upon any such decision,\nact, consent or instruction of the Member Representative as being the decision,\nact, consent or instruction of each and every such Company Member.  The Escrow\nAgent and Parent are hereby relieved from any liability to any person for any\nacts done by them in accordance with such decision, act, consent or instruction\nof the Member Representative.\n\n          (m)  Escrow Agent's Duties.\n               ---------------------\n\n               (i) The Escrow Agent shall be obligated only for the performance\nof such duties as are specifically set forth herein, and as set forth in any\nadditional written escrow instructions which the Escrow Agent may receive after\nthe date of this Agreement which are signed by an officer of Parent and the\nMember Representative, and may rely and shall be protected in relying or\nrefraining from acting on any instrument reasonably believed to be genuine and\nto have been signed or presented by the proper party or parties. The Escrow\nAgent shall not be liable for any act done or omitted hereunder as Escrow Agent\nwhile acting in good faith and in the exercise of reasonable judgment, and any\nact done or omitted pursuant to the advice of counsel shall be conclusive\nevidence of such good faith.\n\n               (ii) The Escrow Agent is hereby expressly authorized to disregard\nany and all warnings given by any of the parties hereto or by any other person,\nexcepting only orders or process of courts of law, and is hereby expressly\nauthorized to comply with and obey orders, judgments or decrees of any court. In\ncase the Escrow Agent obeys or complies with any such order, judgment or decree\nof any court, the Escrow Agent shall not be liable to any of the parties hereto\nor to any other person by reason of such compliance, notwithstanding any such\norder, judgment or decree being subsequently reversed, modified, annulled, set\naside, vacated or found to have been entered without jurisdiction.\n\n               (iii)  The Escrow Agent shall not be liable in any respect on\naccount of the identity, authority or rights of the parties executing or\ndelivering or purporting to execute or deliver this Agreement or any documents\nor papers deposited or called for hereunder.\n\n               (iv) The Escrow Agent shall not be liable for the expiration of\nany rights under any statute of limitations with respect to this Agreement or\nany documents deposited with the Escrow Agent.\n\n               (v) In performing any duties under the Agreement, the Escrow\nAgent shall not be liable to any party for damages, losses, or expenses, except\nfor gross negligence or willful misconduct on the part of the Escrow Agent. The\nEscrow Agent shall not incur any such liability for (A) any act or failure to\nact made or omitted in good faith, or (B) any action taken or omitted in\nreliance upon any instrument, including any written statement or affidavit\nprovided for in this Agreement that the Escrow Agent shall in good faith believe\nto be genuine, nor will the Escrow\n\n                                      46\n\n\n \nAgent be liable or responsible for forgeries, fraud, impersonations, or\ndetermining the scope of any representative authority. In addition, the Escrow\nAgent may consult with the legal counsel in connection with Escrow Agent's\nduties under this Agreement and shall be fully protected in any act taken,\nsuffered, or permitted by such Escrow Agent in good faith in accordance with the\nadvice of counsel. The Escrow Agent is not responsible for determining and\nverifying the authority of any person acting or purporting to act on behalf of\nany party to this Agreement.\n\n          (vi) If any controversy arises between the parties to this Agreement,\nor with any other party, concerning the subject matter of this Agreement, its\nterms or conditions, the Escrow Agent will not be required to determine the\ncontroversy or to take any action regarding it.  The Escrow Agent may hold all\ndocuments and the Escrow Amount and may wait for settlement of any such\ncontroversy by final appropriate legal proceedings or other means as, in the\nEscrow Agent's discretion, the Escrow Agent may be required, despite what may be\nset forth elsewhere in this Agreement.  In such event, the Escrow Agent will not\nbe liable for damage.\n\n          Furthermore, the Escrow Agent may at its option, file an action of\ninterpleader, in arbitration or otherwise, as the circumstances may require,\nrequiring the Parties to answer and litigate any claims and rights among\nthemselves.  The Escrow Agent is authorized to deposit with the clerk of the\ncourt all documents and shares of Parent Common Stock held in escrow, except all\ncost, expenses, charges and reasonable attorney fees incurred by the Escrow\nAgent due to the interpleader action and which the parties jointly and severally\nagree to pay.  Upon initiating such action, the Escrow Agent shall be fully\nreleased and discharged of and from all obligations and liability imposed by the\nterms of this Agreement.\n\n          (vii) The parties and their respective successors and assigns agree\njointly and severally to indemnify and hold Escrow Agent harmless against any\nand all losses, claims, damages, liabilities, and expenses, including reasonable\ncosts of investigation, counsel fees, including allocated costs of in-house\ncounsel and disbursements that may be imposed on the Escrow Agent or incurred by\nthe Escrow Agent in connection with the performance of the Escrow Agent's duties\nunder this Agreement, including but not limited to any litigation arising from\nthis Agreement or involving its subject matter other than arising out of its\ngross negligence or willful misconduct.\n\n          (viii) The Escrow Agent may resign at any time upon giving at least\nthirty (30) days written notice to the parties to this Agreement; provided,\nhowever, that no such resignation shall become effective until the appointment\nof a successor escrow agent which shall be accomplished as follows:  the parties\nshall use their best efforts to agree on a successor escrow agent within thirty\n(30) days after receiving such notice.  If Parent and the Member Representative\nfail to agree upon a successor escrow agent within such time, the Escrow Agent\nshall have the right to appoint a successor escrow agent authorized to do\nbusiness in the state of California.  The successor escrow agent shall execute\nand deliver an instrument accepting such appointment and it shall, without\nfurther acts, be vested with all the estates, properties, rights, powers, and\nduties of the predecessor Escrow Agent as if originally named as Escrow Agent.\nThereafter, the Escrow Agent shall be discharged from any further duties and\nliability under this Agreement.\n\n                                      47\n\n\n \n          (n) Fees.  All fees of the Escrow Agent for performance of its duties\n              ----\nhereunder shall be paid by Parent in accordance with the standard fee schedule\nof the Escrow Agent.  It is understood that the fees and usual charges agreed\nupon for services of the Escrow Agent shall be considered compensation for\nordinary services as contemplated by this Agreement.  In the event that the\nconditions of this Agreement are not promptly fulfilled, or if the Escrow Agent\nrenders any service not provided for in this Agreement, or if the parties hereto\nrequest a substantial modification of its terms, or if any controversy arises,\nor if the Escrow Agent is made a party to, or intervenes in, any litigation\npertaining to the Escrow Fund or its subject matter, the Escrow Agent shall be\nreasonably compensated for such extraordinary services and reimbursed for all\ncosts, attorney's fees, including allocated costs of in-house counsel, and\nexpenses occasioned by such default, delay, controversy or litigation.  The\nParent promises to pay these sums upon demand.\n\n     7.3  Indemnity.\n          ----------\n\n          (a) The Principal Shareholders hereby agree to indemnify and hold\nParent and its subsidiaries, directors, officers and agents harmless against and\nin respect of any loss, cost, expense, claim, liability, deficiency, judgment or\ndamage (hereinafter, individually, a \"Loss\"; and collectively, \"Losses\")\nincurred by Parent, its subsidiaries, officers, directors and agents (i) as a\nresult of any inaccuracy in or breach of a representation or warranty of the\nCompany or the Principal Shareholders contained in this Agreement or any failure\nby the Company or any Principal Shareholder to perform or comply with any\ncovenant contained in this Agreement and (ii) by reason of the failure of the\nCompany and the Principal Shareholders to perform their obligations hereunder.\n\n          (b)  Parent hereby agrees to indemnify and hold the Company and its\nsubsidiaries, directors, officers and agents harmless against and in respect of\nany loss, cost, expense, claim, liability, deficiency, judgment or damage\n(hereinafter, individually, a \"Loss\"; and collectively, \"Losses\") incurred by\nthe Company, its subsidiaries, officers, directors and agents (i) as a result of\nany inaccuracy in or breach of a representation or warranty of Parent contained\nin this Agreement or any failure by Parent to perform or comply with any\ncovenant contained in this Agreement and (ii) by reason of the failure of Parent\nto perform its obligations hereunder.\n\n          (c) Expiration of Indemnification.  The indemnification obligations\n              -----------------------------\nunder this Section 7.3 shall terminate at 5:00 p.m., Pacific Time on the third\nanniversary of the Effective Date, but shall not terminate as to any Loss (or a\npotential claim by an appropriate party) asserted in good faith prior to such\ndate; provided, however, that the representations and warranties with respect to\nTaxes (Section 2.10) and environmental laws (Section 2.20) shall survive until\nthe expiration of the applicable statute of limitations, if any.\n\n          (d) Procedure for Indemnification.  In the event that either party\n              -----------------------------\nshall incur or suffer any Losses in respect of which indemnification may be\nsought by such party pursuant to the provisions of this Article, the indemnified\nparty shall assert a claim for indemnification by written notice (a \"Notice\") to\nthe Parent, or the Surviving Corporation and the Member Representative, as the\ncase may be, briefly stating the nature and basis of such claim.  In the case of\nLosses arising by reason of any third-party claim, the Notice shall be given\nwithin 25 days of the filing or other written\n\n                                      48\n\n\n \nassertion of any such claim against Parent, but the failure of Parent to give\nthe Notice within such time period shall not relieve the Company and the\nPrincipal Shareholders of any liability that the Company and the Principal\nShareholders may have to Parent except to the extent that the Company and the\nPrincipal Shareholders are actually prejudiced thereby; provided, however, that\nany such notice shall be given no later than the date of the expiration of the\napplicable indemnification obligation of the Company and the Principal\nShareholders as set forth in Section 7.3(c) above. The indemnified party shall\nprovide the other party on request all information and documentation reasonably\nnecessary to support and verify any Losses which the indemnified party believes\ngive rise to a claim for indemnification hereunder and shall give reasonable\naccess to all books, records and personnel in the possession or under the\ncontrol of that party which would have bearing on such claim.\n\n          (e) Arbitration.  Any controversy involving a claim by an indemnified\n              -----------\nparty pursuant to this Section 7.3 shall be finally settled by arbitration in\nSanta Clara County, California in accordance with the then current Commercial\nArbitration Rules of the American Arbitration Association; and judgment upon the\naward rendered by the arbitrator may be entered in any court having jurisdiction\nthereof.  Such arbitration shall be conducted by an arbitrator chosen by mutual\nagreement of Parent and the Company and the Principal Shareholders.  Failing\nsuch agreement, the arbitration shall be conducted by three independent\narbitrators, none of whom shall have any competitive interest with Parent or the\nCompany and the Principal Shareholders.  Parent shall choose one such\narbitrator, the Company and the Principal Shareholders shall choose one such\narbitrator, and such two arbitrators shall mutually select a third arbitrator.\nAny decision of two such arbitrators shall be binding on Parent and the Company\nand the Principal Shareholders.  Each party shall pay its own costs and expenses\n(including counsel fees) of any such arbitration except that the arbitrator can\ncompel one party to pay all or a portion of the other party's costs and\nexpenses.\n\n\n                                  ARTICLE VIII\n\n                       TERMINATION, AMENDMENT AND WAIVER\n\n     8.1  Termination.  Except as provided in Section 8.2 below, this\n          -----------                                                  \nAgreement may be terminated and the Merger abandoned at any time prior to the\nEffective Time:\n\n          (a) by mutual consent of the Company and Parent;\n\n          (b) by Parent or the Company if:  (i) the Effective Time has not\noccurred by May 15, 1997; (ii) there shall be a final nonappealable order of a\nfederal or state court in effect preventing consummation of the Merger; or (iii)\nthere shall be any statute, rule, regulation or order enacted, promulgated or\nissued or deemed applicable to the Merger by any governmental entity that would\nmake consummation of the Merger illegal;\n\n          (c) by Parent or the Company if there shall be any action taken, or\nany statute, rule, regulation or order enacted, promulgated or issued or deemed\napplicable to the Merger by\n\n                                      49\n\n\n \nany Governmental Entity, which would: (i) prohibit Parent's or Sub's ownership\nor operation of any portion of the business of the Company or (ii) compel Parent\nor the Company to dispose of or hold separate all or a portion of the business\nor assets of the Sub or Parent as a result of the Merger;\n\n          (d) by Parent if it is not in material breach of its obligations under\nthis Agreement and there has been a material breach of any representation,\nwarranty, covenant or agreement contained in this Agreement on the part of the\nCompany or the Principal Shareholders and such breach has not been cured within\nten (10) calendar days after written notice to the Company (provided that, no\ncure period shall be required for a breach which by its nature cannot be cured);\n\n          (e) by the Company if neither it nor the Principal Shareholders are in\nmaterial breach of their respective obligations under this Agreement and there\nhas been a material breach of any representation, warranty, covenant or\nagreement contained in this Agreement on the part of Parent or Sub and such\nbreach has not been cured within ten (10) calendar days after written notice to\nParent (provided that, no cure period shall be required for a breach which by\nits nature cannot be cured); or\n\n          (f) by Parent, Sub, Company, or Principal Shareholders if an event\nhaving a Material Adverse Effect on the Company shall have occurred after the\ndate of this Agreement.\n\n     Where action is taken to terminate this Agreement pursuant to this Section\n8.1, it shall be sufficient for such action to be authorized by the Board of\nDirectors (as applicable) of the party taking such action.\n\n     8.2  Effect of Termination.  In the event of termination of this\n          ---------------------                                        \nAgreement as provided in Section 8.1, this Agreement shall forthwith become void\nand there shall be no liability or obligation on the part of Parent, Sub or the\nCompany, or their respective officers, directors or members, provided that each\nparty shall remain liable for any breaches of this Agreement prior to its\ntermination; provided further that, the provisions of Sections 5.4 and 5.5 and\nArticle IX of this Agreement shall remain in full force and effect and survive\nany termination of this Agreement.\n\n     8.3  Amendment.  Except as is otherwise required by applicable law after\n          ---------                                                           \nthe Company Members approve this Agreement, this Agreement may be amended by the\nparties hereto at any time by execution of an instrument in writing signed on\nbehalf of each of the parties hereto.\n\n                                      50\n\n\n \n     8.4  Extension; Waiver.  At any time prior to the Effective Time, Parent\n          -----------------                                                     \nand Sub, on the one hand, and the Company, on the other, may, to the extent\nlegally allowed, (i) extend the time for the performance of any of the\nobligations of the other party hereto, (ii) waive any inaccuracies in the\nrepresentations and warranties made to such party contained herein or in any\ndocument delivered pursuant hereto, and (iii) waive compliance with any of the\nagreements or conditions for the benefit of such party contained herein.  Any\nagreement on the part of a party hereto to any such extension or waiver shall be\nvalid only if set forth in an instrument in writing signed on behalf of such\nparty.\n\n\n                                   ARTICLE IX\n\n                               GENERAL PROVISIONS\n\n     9.1  Notices.  All notices and other communications hereunder shall be in\n          -------                                                               \nwriting and shall be deemed given if delivered personally or by commercial\nmessenger or courier service, or mailed by registered or certified mail (return\nreceipt requested) or sent via facsimile (with acknowledgment of complete\ntransmission) to the parties at the following addresses (or at such other\naddress for a party as shall be specified by like notice):\n\n     (a)  if to Parent or Sub, to:\n\n               USWeb Corporation\n               2880 Lakeside Drive\n               Santa Clara, California  95054\n               Attn:  Chief Financial Officer\n               Telecopy No.:  (408) 987-3240\n\n               with a copy to:\n\n               Wilson Sonsini Goodrich &amp; Rosati, P.C.\n               650 Page Mill Road\n               Palo Alto, California 94304\n               Attention:  Mark Bonham, Esq.\n               Telecopy No.:  (415) 493-6811\n\n     (b) if to Company or to a Principal Shareholder to:\n\n               Charles R. Bobo II\n               3300 NE Expressway - Suite 8-A\n               Atlanta, GA  30341\n               Telecopy No.:  404\/249.6803\n\n                                      51\n\n\n \n               with a copy to:\n \n               Lawler &amp; Tanner\n               200 Galleria Parkway - Suite 1640\n               Atlanta, GA  30339\n               Attention:  Greg Jacobs\n               Telecopy No.:  770\/563.8810\n\n     9.2  Interpretation.  The words \"include,\" \"includes\" and \"including\"\n          --------------                                                    \nwhen used herein shall be deemed in each case to be followed by the words\n\"without limitation.\"  The table of contents and headings contained in this\nAgreement are for reference purposes only and shall not affect in any way the\nmeaning or interpretation of this Agreement.\n\n     9.3  Counterparts.  This Agreement may be executed in one or more\n          ------------                                                  \ncounterparts, all of which shall be considered one and the same agreement and\nshall become effective when one or more counterparts have been signed by each of\nthe parties and delivered to the other party, it being understood that all\nparties need not sign the same counterpart.\n\n     9.4  Entire Agreement; Assignment.  This Agreement, and Exhibits hereto\n          ----------------------------                                        \nand the documents and instruments and other agreements among the parties hereto\nreferenced herein:  (a) constitute the entire agreement among the parties with\nrespect to the subject matter hereof and supersede all prior agreements and\nunderstandings both written and oral, among the parties with respect to the\nsubject matter hereof; (b) are not intended to confer upon any other person any\nrights or remedies hereunder; and (c) shall not be assigned by operation of law\nor otherwise except as otherwise specifically provided, except that Parent and\nSub may assign their respective rights and delegate their respective obligations\nhereunder to their respective affiliates.\n\n     9.5  Severability.  In the event that any provision of this Agreement or\n          ------------                                                         \nthe application thereof, becomes or is declared by a court of competent\njurisdiction to be illegal, void or unenforceable, the remainder of this\nAgreement will continue in full force and effect and the application of such\nprovision to other persons or circumstances will be interpreted so as reasonably\nto effect the intent of the parties hereto.  The parties further agree to\nreplace such void or unenforceable provision of this Agreement with a valid and\nenforceable provision that will achieve, to the extent possible, the economic,\nbusiness and other purposes of such void or unenforceable provision.\n\n     9.6  Other Remedies.  Except as otherwise provided herein, any and all\n          --------------                                                     \nremedies herein expressly conferred upon a party will be deemed cumulative with\nand not exclusive of any other remedy conferred hereby, or by law or equity upon\nsuch party, and the exercise by a party of any one remedy will not preclude the\nexercise of any other remedy.\n\n                                      52\n\n\n \n     9.7  Governing Law.  This Agreement shall be governed by and construed in\n          -------------                                                         \naccordance with the laws of the State of California, regardless of the laws that\nmight otherwise govern under applicable principles of conflicts of laws thereof.\nEach of the parties hereto irrevocably consents to the exclusive jurisdiction\nand venue of any court within Santa Clara County, State of California, in\nconnection with any matter based upon or arising out of this Agreement or the\nmatters contemplated herein, agrees that process may be served upon them in any\nmanner authorized by the laws of the State of California for such persons and\nwaives and covenants not to assert or plead any objection which they might\notherwise have to such jurisdiction, venue and such process.\n\n     9.8  Rules of Construction.  The parties hereto agree that they have been\n          ---------------------                                                 \nrepresented by counsel during the negotiation and execution of this Agreement\nand, therefore, waive the application of any law, regulation, holding or rule of\nconstruction providing that ambiguities in an agreement or other document will\nbe construed against the party drafting such agreement or document.\n\n     IN WITNESS WHEREOF, Parent, Sub, the Company and the Principal Shareholders\nhave caused this Agreement to be signed by their duly authorized respective\nofficers, all as of the date first written above.\n\n\nCOMPANY                              USWEB CORPORATION\n\n\nBy:__________________________        By:______________________\n   President                         Title:\n \n\nESCROW AGENT                         USWEB ACQUISITION CORPORATION 107\n\n\nBy: _________________________        By:______________________\n\nTitle:                               Title:\n\n\n                                     PRINCIPAL SHAREHOLDERS\n\n                                     _______________________\n                                     Charles R. Bobo II\n\n                                     _______________________\n                                     Paulette Collins\n\n                                     _______________________\n                                     Sonya M. Brooks\n\n                                      53\n\n\n \n                                INDEX OF EXHIBITS\n                                        \n\n\nEXHIBIT           DESCRIPTION\n- -----------------------------\n\nExhibit A         Principal Shareholders\n\nExhibit C         Schedule of Exceptions\n\nExhibit D         Option Agreement\n\nExhibit E         Form of Shareholder Certificate\n \n                                      54\n\n\n \n                                   EXHIBIT A\n                                   ---------\n\n                             Principal Shareholders\n\n\n           Name              Number of Membership Units*\n\n           Charles R. Bobo II        532,555\n \n           Paulette Collins          155,060\n\n           Sonya M. Brooks           94,072\n\n\n\n- ----------\n*On an as fully converted to Common Stock, fully diluted basis.\n\n                                      55\n\n\n \n                                   EXHIBIT B\n\n                                Valuation Model\n\n                                      56\n\n\n \n                                   EXHIBIT C\n                                   ---------\n\n                            Schedule of Exceptions\n\n                                      57\n\n\n \n                                   EXHIBIT D\n                                   ---------\n\n                            Form of Option Agreement\n\n                                      58\n\n\n \n                                   EXHIBIT E\n                                   ---------\n\n                        Form of Shareholder Certificate\n\n                                      59\n\n<\/text>\n\n<\/description><\/sequence><\/type><\/document>\n\n<document>\n\n<type>EX-2.5\n\n<sequence>6\n\n<description>AGREEMENT &amp; PLAN OF REORG. (CORP.102)\n\n<text>\n\n\n\n \n                                                                     EXHIBIT 2.5\n\n\n                      AGREEMENT AND PLAN OF REORGANIZATION\n\n                                  BY AND AMONG\n\n                               USWeb Corporation\n\n                       USWeb Acquisition Corporation 102\n\n                                      AND\n\n                               Infopreneurs Inc.\n\n\n                           Dated as of March 31, 1997\n\n\n \n                               TABLE OF CONTENTS\n\n<table>\n\n<caption>\n \n                                                                            Page\n                                                                            ----\n                                                                        \n<c>\nARTICLE I - THE MERGER.........................................................    2\n \n1.1    The Merger..............................................................    2\n1.2    Effective Time..........................................................    2\n1.3    Effect of the Merger....................................................    2\n1.4    Certificate of Incorporation; Bylaws....................................    2\n1.5    Directors and Officers..................................................    2\n1.6    Effect of Merger on the Capital Stock of the Constituent Corporations...    3\n1.7    Surrender of Certificates...............................................    4\n1.8    No Further Ownership Rights in Company Common Stock.....................    5\n1.9    Lost, Stolen or Destroyed Certificates..................................    5\n1.10   Purchase Price Adjustments..............................................    6\n1.11   Parent Common Stock.....................................................    8\n1.12   Taking of Necessary Action; Further Action..............................    8\n\nARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND                     \n             THE PRINCIPAL SHAREHOLDERS........................................    8\n \n2.1    Organization of the Company.............................................    8\n2.2    Company Capital Structure...............................................    9\n2.3    Subsidiaries............................................................    9\n2.4    Authority...............................................................    9\n2.5    No Conflict.............................................................   10\n2.6    Consents................................................................   10\n2.7    Company Financial Statements............................................   10\n2.8    No Undisclosed Liabilities..............................................   10\n2.9    No Changes..............................................................   11\n2.10   Tax Matters.............................................................   12\n2.11   Restrictions on Business Activities.....................................   14\n2.12   Title to Properties; Absence of Liens and Encumbrances; Condition\n       of Equipment............................................................   14\n2.13   Intellectual Property...................................................   15\n2.14   Agreements, Contracts and Commitments...................................   18\n2.15   Interested Party Transactions...........................................   20\n2.16   Governmental Authorization..............................................   20\n2.17   Litigation..............................................................   20\n2.18   Accounts Receivable.....................................................   20\n2.19   Minute Books............................................................   20\n\n<\/c><\/caption><\/table> \n                                      -i-\n\n\n \n\n<table> \n                                                                             \n<c> \n2.20   Environmental Matters...................................................   21\n2.21   Brokers' and Finders' Fees; Third Party Expenses........................   21\n2.22   Employee Benefit Plans and Compensation.................................   22\n2.23   Insurance...............................................................   24\n2.24   Compliance with Laws....................................................   24\n2.25   Third Party Consents....................................................   25\n2.26   Warranties; Indemnities.................................................   25\n2.27   Complete Copies of Materials............................................   25\n2.28   Representations Complete................................................   25\n2.29   Business Plan...........................................................   25\n2.30   Backlog Report..........................................................   25\n2.31   Principal Shareholder Investment Representations........................   25\n \nARTICLE III - REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.................   26\n \n3.1    Organization, Standing and Power........................................   26\n3.2    Authority; Consents.....................................................   26\n3.3    Capital Structure.......................................................   26\n3.4    Brokers' and Finders' Fees..............................................   27\n3.5    No Changes..............................................................   27\n3.6    Issuance of Parent Common Stock.........................................   28\n3.7    Representations Complete................................................   28\n3.8    Complete Copies of Materials............................................   28\n \nARTICLE IV - CONDUCT PRIOR TO THE EFFECTIVE TIME...............................   28\n \n4.1    Conduct of Business of the Company......................................   28\n4.2    No Solicitation.........................................................   31\n \nARTICLE V - ADDITIONAL AGREEMENTS.............................................    31\n \n5.1    Parents Right of First Refusal..........................................   31\n5.2    Market Standoff Agreement...............................................   33\n5.3    Restriction on Competition..............................................   33\n5.4    Confidentiality.........................................................   34\n5.5    Expenses................................................................   35\n5.6    Public Disclosure.......................................................   35\n5.7    Post-Closing Employment of Company Employees............................   35\n5.8    Treatment of Affiliate Warrants.........................................   37\n5.9    Access to Information...................................................   37\n5.10   Consents................................................................   38\n5.11   FIRPTA Compliance.......................................................   38\n\n<\/c><\/table> \n                                     -ii-\n\n\n \n\n<table> \n\n                                                                           \n<c>\n\n5.12   Best Efforts............................................................   38\n5.13   Notification of Certain Matters.........................................   38\n5.14   Preparation of Tax Returns..............................................   38\n5.15   Additional Documents and Further Assurances.............................   39\n5.16   Section 368 Compliance..................................................   39\n5.17   Parent Policies.........................................................   39\n5.18   Similar Transactions....................................................   39\n5.19   Operation of Sub During Adjustment Periods..............................   39\n \nARTICLE VI - CONDITIONS TO THE MERGER..........................................   40\n \n6.1    Conditions to Obligations of Each Party to Effect the Merger............   40\n6.2    Additional Conditions to Obligations of Company.........................   41\n6.3    Additional Conditions to the Obligations of Parent and Sub..............   41\n \nARTICLE VII - SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW...............   43\n \n7.1    Survival of Representations and Warranties..............................   43\n7.2    Escrow Arrangements; Setoff.............................................   43\n7.3    Indemnity...............................................................   50\n \nARTICLE VIII - TERMINATION, AMENDMENT AND WAIVER...............................   52\n \n8.1    Termination.............................................................   52\n8.2    Effect of Termination...................................................   53\n8.3    Amendment...............................................................   53\n8.4    Extension; Waiver.......................................................   53\n \nARTICLE IX - GENERAL PROVISIONS................................................   54\n \n9.1    Notices.................................................................   54\n9.2    Interpretation..........................................................   55\n9.3    Counterparts............................................................   55\n9.4    Entire Agreement; Assignment............................................   55\n9.5    Severability............................................................   55\n9.6    Other Remedies..........................................................   55\n9.7    Governing Law...........................................................   56\n9.8    Rules of Construction...................................................   56\n\n<\/c><\/table>\n\n                                     -ii-\n\n\n \n                               INDEX OF EXHIBITS\n\n\nExhibit A      Principal Shareholders\n\nExhibit B      Valuation Model\n\nExhibit C      Schedule of Exceptions\n\nExhibit C-1    Parent Capital Structure as of June 30, 1997\n\nExhibit D      Form of Shareholder Certificate\n\nExhibit E      Option Agreement\n\nExhibit F      Form of Employment Agreement\n\n\n\n                                     -iv-\n\n\n \n                     AGREEMENT AND PLAN OF REORGANIZATION\n\n\n     This AGREEMENT AND PLAN OF REORGANIZATION (the \"Agreement\") is made and\n                                                     ---------              \nentered into as of  March 31, 1997, among USWeb Corporation, a Utah corporation\n(\"Parent\"), USWeb Acquisition Corporation 102, a Delaware corporation and a\n  ------                                                                   \nwholly owned subsidiary of Parent (\"Sub\"), Infopreneurs Inc., a Delaware\n                                    ---                                 \ncorporation (the \"Company\"), and the individuals listed on Exhibit A attached\n                  -------                                  ---------         \nhereto (such individuals being hereinafter referred to collectively as the\n                                                                          \n\"Principal Shareholders\" and individually as a \"Principal Shareholder\").\n ----------------------                         ---------------------   \n\n\n                                    RECITALS\n\n     A.  The Boards of Directors of each of the Company, Parent and Sub believe\nit is in the best interests of each company and their respective shareholders\nthat Parent acquire the Company through the statutory merger of the Company with\nand into Sub (the \"Merger\") and, in furtherance thereof, have approved the\n                   ------                                                 \nMerger.\n\n     B.  Pursuant to the Merger, among other things, all of the issued and\noutstanding shares of capital stock of the Company shall be converted into the\nright to receive shares of Common Stock of Parent.\n\n     C.  Fifty Percent (50%) of the shares of Common Stock of Parent otherwise\npayable in connection with the Merger shall be placed in a one-year escrow for\nthe purposes of (i) satisfying damages, losses, expenses and other similar\ncharges which result from breaches of representations, warranties or covenants\nor (ii) making adjustments to the purchase price paid by the Parent.\n\n     D.  The Company, the Principal Shareholders, Parent and Sub desire to make\ncertain representations, warranties, covenants and other agreements in\nconnection with the Merger.\n\n     E.  The parties hereto desire that each employee of the Company prior to\nthe Merger shall be offered an opportunity of employment by the Sub following\nthe Merger.\n\n     NOW, THEREFORE, in consideration of the covenants, promises and\nrepresentations set forth herein, and for other good and valuable consideration,\nthe parties agree as follows:\n\n\n \n                                   ARTICLE I\n\n                                   THE MERGER\n\n     I.1  The Merger.  At the Effective Time (as defined in Section 1.2) and\n          ----------                                                        \nsubject to and upon the terms and conditions of this Agreement and the\napplicable provisions of the corporations law of the state of Delaware\n                                                                      \n(\"Delaware Law\"), the Company shall be merged with and into the Sub, the\n --------------                                                          \nseparate corporate existence of the Company shall cease and Sub shall continue\nas the surviving corporation and as a wholly owned subsidiary of Parent.  Sub as\nthe surviving corporation after the Merger is hereinafter sometimes referred to\nas the \"Surviving Corporation.\"\n        ---------------------  \n\n     I.2  Effective Time.  Unless this Agreement is earlier terminated pursuant\n          --------------                                                       \nto Section 8.1, the closing of the Merger (the \"Closing\") will take place as\n                                                -------                     \npromptly as practicable, but no later than five (5) business days following\nsatisfaction or waiver of the conditions set forth in Article VI, at the offices\nof Wilson Sonsini Goodrich &amp; Rosati, 650 Page Mill Road, Palo Alto, California,\nunless another place or time is agreed to in writing by Parent and the Company.\nThe date upon which the Closing actually occurs is herein referred to as the\n                                                                            \n\"Closing Date.\"  On the Closing Date, the parties hereto shall cause the Merger\n ------------                                                                  \nto be consummated by submitting for filing an Agreement and Plan of Merger (or\nlike instrument) with the Secretary of State of Delaware (the \"Merger\n                                                               ------\nArticles\"), in accordance with the relevant provisions of applicable law (the\n- --------\ntime of filing with the Secretary of State of Delaware being referred to herein\nas the \"Effective Time\").\n        --------------   \n\n     I.3  Effect of the Merger.  At the Effective Time, the effect of the Merger\n          --------------------                                                  \nshall be as provided in the applicable provisions of Delaware Law.  Without\nlimiting the generality of the foregoing, and subject thereto, at the Effective\nTime, all the property, rights, privileges, powers and franchises of the Company\nand Sub shall vest in the Surviving Corporation, and all debts, liabilities and\nduties of the Company and Sub shall become the debts, liabilities and duties of\nthe Surviving Corporation.\n\n     I.4  Certificate of Incorporation; Bylaws.\n          ------------------------------------ \n\n          (a) Unless otherwise determined by Parent prior to the Effective Time,\nat the Effective Time, the Certificate of Incorporation of Sub shall be the\nCertificate of Incorporation of the Surviving Corporation until thereafter\namended as provided by law and such Certificate of Incorporation.\n\n          (b) The Bylaws of Sub, as in effect immediately prior to the Effective\nTime, shall be the Bylaws of the Surviving Corporation until thereafter amended.\n\n     I.5  Directors and Officers.  The director(s) of Sub immediately prior to\n          ----------------------                                              \nthe Effective Time shall be the initial director(s) of the Surviving\nCorporation, each to hold office in accordance with the Certificate of\nIncorporation and Bylaws of the Surviving Corporation.  The officers of Sub\nimmediately prior to the Effective Time shall be the initial officers of the\nSurviving Corporation, \n\n                                      -2-\n\n\n \neach to hold office in accordance with the Bylaws of the Surviving Corporation.\n\n     I.6  Effect of Merger on the Capital Stock of the Constituent Corporations.\n          --------------------------------------------------------------------- \n\n          (a) Exchange of Stock; Purchase Price Adjustments.  As of the\n              ---------------------------------------------            \nEffective Time of the Merger, each share of the Company's Common Stock, no par\nvalue (the \"Company Common Stock\"), that is issued and outstanding immediately\n            --------------------                                              \nprior to the Effective Time (other than any dissenting shares under applicable\nstate law) shall, by virtue of the Merger and without any action on the part of\nSub, the Company, or the Company's shareholders (the \"Company Shareholders\"), be\n                                                      --------------------      \ncanceled and extinguished and each Company Shareholder shall have (i) the right\nto receive, subject to Section 7.2 hereof, such Company Shareholder's pro rata\nportion (based on such Company Shareholders' equity ownership in the Company as\nrepresented to Parent by the Company) of that number of shares of the Parent's\nCommon Stock, par value $.001 per share (the \"Parent Common Stock\") equal to\n                                              -------------------           \n$6,805,146 (the \"Original Purchase Price\") divided by $2.25, plus (ii) the\n                 -----------------------                                  \ncontingent right to receive  additional shares of Parent Common Stock as\nprovided in Section 1.10 of this Agreement (the \"Purchase Price Adjustment\").\n                                                 -------------------------    \nThe Original Purchase Price and the Purchase Price Adjustment are hereinafter\ncollectively referred to as the \"Merger Consideration.\"\n                                 --------------------  \n\n          (b) Stock Options.  The Company has no option plans.\n              -------------                                   \n\n          (c) Adjustments to Parent Common Stock.  The number of shares of\n              ----------------------------------                          \nParent Common Stock issuable hereunder shall be adjusted to reflect fully the\neffect of any stock split, reverse split, stock dividend (including any dividend\nor distribution of securities convertible into Parent Common Stock or Company\nCommon Stock), reorganization, recapitalization or other like change with\nrespect to Parent Common Stock occurring after the date hereof.\n\n          (d) Fractional Shares.  No fractional share of Parent Common Stock\n              -----------------                                             \nshall be issued in the Merger, including the Purchase Price Adjustments pursuant\nto Section 1.10 below, or pursuant to any stock option or stock bonus issued to\na Company employee that becomes an employee of Parent or Sub following the\nMerger.  In lieu thereof, the number of shares otherwise issued or issuable\nshall be rounded to the nearest whole share, with one-half share or more being\nrounded up.\n\n          (e)  Definitions.\n               ----------- \n\n          (i) Aggregate Common Number.  The \"Aggregate Common Number\" shall mean\n              -----------------------        -----------------------            \nthe aggregate number of shares of Company Common Stock outstanding immediately\nprior to the Effective Time.\n\n          (ii) Fair Value Per Share.  The Fair Value Per Share of Parent's\n               --------------------                                       \nCommon Stock, as of any particular date, shall mean, if the Parent's Common\nStock is then traded on an exchange or national quotation system, the average\nclosing price per share of Parent's Common Stock as traded on such exchange or\nnational quotation system during the 10 trading day period ending three business\ndays prior to the date of determination or, if not so traded, the fair market\n\n                                      -3-\n\n\n \nvalue per share of such Parent's Common Stock as most recently determined by the\nParent's Board of Directors acting in good faith prior to the date of the\noccurrence of the event requiring such determination.\n\n          (iii)     Escrow Amount; Escrow Agent.  The \"Escrow Amount\" shall be\n                    ---------------------------        -------------          \nequal to Fifty Percent (50%) of the number of shares of Parent Common Stock\nconstituting the Original Purchase Price.  The Escrow Agent shall be the\nsecretary of the Parent, or his designee, so long as the Parent is a privately\nheld company.  Thereafter, any transfer agent for the Parent's Common Stock may\nbe appointed Escrow Agent.\n\n     I.7  Surrender of Certificates.\n          ------------------------- \n\n          (a) Exchange Agent.  The Secretary of Parent or such other entity\n              --------------                                               \nreasonably designated by Parent shall serve as exchange agent (the \"Exchange\n                                                                    --------\nAgent\") in the Merger.\n- -----                 \n\n          (b) Parent to Provide Common Stock.  Promptly after the Effective\n              ------------------------------                               \nTime, Parent shall make available to the Exchange Agent for exchange in\naccordance with this Article I the Original Purchase Price issuable pursuant to\nSection 1.6(a) in exchange for outstanding shares of Company Common Stock;\nprovided that, on behalf of the Company Shareholders, Parent shall deposit the\nEscrow Amount into the Escrow Fund.\n\n          (c) Exchange Procedures.  Promptly after the Effective Time, the\n              -------------------                                         \nSurviving Corporation shall cause to be mailed to each Company Shareholder (i) a\nletter of transmittal substantially consistent with the terms of this Agreement\n(which shall specify that delivery shall be effected, and risk of loss and title\nto the certificates (the \"Certificates\"), which immediately prior to the\n                          ------------                                  \nEffective Time represented outstanding shares of Company Common Stock whose\nshares were converted into the right to receive the Merger Consideration\npursuant to Section 1.6, shall pass only upon delivery of the Certificates to\nthe Exchange Agent and shall be in such form and have such other provisions as\nParent may reasonably specify) and (ii) instructions for use in effecting the\nsurrender of the Certificates in exchange for the Merger Consideration.  Upon\nsurrender of a Certificate for cancellation to the Exchange Agent or to such\nother agent or agents as may be appointed by Parent, together with such letter\nof transmittal, duly completed and validly executed in accordance with the\ninstructions thereto, the Company Shareholder shall receive in exchange\ntherefor, as soon as practicable thereafter, a certificate representing the\nnumber of shares issuable to such Company Shareholder as part of the Original\nPurchase Price (less the number of shares of Parent Common Stock to be deposited\nin the Escrow Fund (as defined in Article VII) on such holder's behalf pursuant\nto Article VII hereof) and the Certificate so surrendered shall forthwith be\ncanceled.  As soon as practicable after the Effective Time, and subject to and\nin accordance with the provisions of Article VII hereof, Parent shall cause to\nbe distributed to the Escrow Agent (as defined in Article VII) a certificate or\ncertificates representing that number of shares of Parent Common Stock equal to\nthe Escrow Amount.  Such consideration shall be beneficially owned by the\nholders on whose behalf such consideration were deposited in the Escrow Fund and\nshall be available to compensate Parent as provided in Article VII.  Until\nsurrendered to the Exchange Agent, each \n\n                                      -4-\n\n\n \noutstanding Certificate that, prior to the Effective Time, represented shares of\nCompany Common Stock will be deemed from and after the Effective Time, for all\ncorporate purposes, other than the payment of dividends, to evidence only the\nright to receive Merger Consideration pursuant to Section 1.6 hereof.\n\n          (d) Distributions With Respect to Unexchanged Shares.  No dividends or\n              ------------------------------------------------                  \nother distributions declared or made after the Effective Time with respect to\nParent Common Stock with a record date after the Effective Time will be paid to\nthe holder of any unsurrendered Certificate with respect to the shares of Parent\nCommon Stock issuable upon conversion of the shares of Company Common Stock\nrepresented thereby until the holder of record of such Certificate shall\nsurrender such Certificate.  Subject to applicable law, following surrender of\nany such Certificate, there shall be paid to the record holder of the\ncertificates representing whole shares of Parent Common Stock issued in exchange\ntherefor, without interest, at the time of such surrender, the amount of\ndividends or other distributions with a record date after the Effective Time\ntheretofore paid with respect to such whole shares of Parent Common Stock.\n\n          (e) Transfers of Ownership.  If any certificate for shares of Parent\n              ----------------------                                          \nCommon Stock is to be issued in a name other than that in which the Certificate\nsurrendered in exchange therefor is registered, it will be a condition of the\nissuance thereof that the Certificate so surrendered will be properly endorsed\nand otherwise in proper form for transfer and that the person requesting such\nexchange will have paid to Sub or any agent designated by it any transfer or\nother taxes required by reason of the issuance of a certificate for shares of\nParent Common Stock in any name other than that of the registered holder of the\nCertificate surrendered or have established to the satisfaction of Sub or any\nagent designated by it that such tax has been paid or is not payable.\n\n          (f) No Liability.  Notwithstanding anything to the contrary in this\n              ------------                                                   \nSection 1.7, none of the Exchange Agent, the Surviving Corporation or any party\nhereto shall be liable to a holder of shares of Parent Common Stock or Company\nCommon Stock for any amount properly paid to a public official pursuant to any\napplicable abandoned property, escheat or similar law.\n\n     I.8  No Further Ownership Rights in Company Common Stock.  All shares of\n          ---------------------------------------------------                \nParent Common Stock issued upon the surrender for exchange of shares of Company\nCommon Stock in accordance with the terms hereof shall be deemed to have been\nissued in full satisfaction of all rights pertaining to such shares of Company\ncapital stock, and there shall be no further registration of transfers on the\nrecords of the Surviving Corporation of shares of Company capital stock which\nwere outstanding immediately prior to the Effective Time.  If, after the\nEffective Time, Certificates are presented to the Surviving Corporation for any\nreason, they shall be canceled and exchanged as provided in this Article I.\n\n     I.9  Lost, Stolen or Destroyed Certificates.  In the event any Certificates\n          --------------------------------------                                \nshall have been lost, stolen or destroyed, the Exchange Agent shall issue in\nexchange for such lost, stolen or destroyed Certificates, upon the making of an\naffidavit of that fact by the holder thereof, such shares of Parent Common Stock\nas may be required pursuant to Section 1.6(a); provided, however, that Sub \n\n                                      -6-\n\n\n \nmay, in its discretion and as a condition precedent to the issuance thereof,\nrequire the owner of such lost, stolen or destroyed Certificates to deliver a\nbond in such sum as it may reasonably direct as indemnity against any claim that\nmay be made against Parent, Sub or the Exchange Agent with respect to the\nCertificates alleged to have been lost, stolen or destroyed.\n\n     I.10 Purchase Price Adjustments.   The Original Purchase Price shall be\n          --------------------------                                        \nsubject to adjustment as follows:\n\n          (a) Six-Month Adjustment.  On or before January 10, 1998, the Parent\n              --------------------                                            \nshall conduct a valuation of the Sub as of the close of business on December 31,\n1997 (the \"First Adjustment Date\") according to the operation of the Parent's\n           ---------------------                                             \naffiliate Valuation Model (the \"Valuation Model\"), attached as Exhibit B.\n                                ---------------                ---------  \nParent shall then calculate the \"First Adjustment to Purchase Price\" as follows:\n                                 ----------------------------------             \n\n          FAPP = FADV -  OPP\n\nwhere     FAPP is the First Adjustment to Purchase Price;\n          FADV is the First Adjustment Date Value as calculated on the First\n          Adjustment Date using the Valuation Model; and\n          OPP is the Original Purchase Price.\n\n          (i) If FAPP is greater than zero, then the Parent shall pay to the\nCompany Shareholders promptly after the First Adjustment Date a number of shares\ncalculated as follows:\n\n          FSP = (FAPP \/ FVPSFAD) x .25\n\nwhere     FSP is the \"First Shares Payment\";\n                      --------------------  \n          FAPP is the First Adjustment to Purchase Price as calculated above;\n          and\n          FVPSFAD is the Fair Value Per Share of the Parent's Common Stock on\n          the First Adjustment Date.\n\n          (ii) If FAPP is less than zero, then the Escrow Agent shall pay to\nParent no earlier than 10 days after, but no later than 30 days after, delivery\nby Parent of its calculation of the FAPP to both the Escrow Agent and the\nShareholder Representative from the Escrow Amount a number of shares calculated\nas follows:\n\n          FSP = (-FAPP \/ $2.25)\n\nwhere     FSP is the \"First Shares Payment\"; and\n                      --------------------      \n          FAPP is the First Adjustment to Purchase Price as calculated above.\n\nIf FAPP equals zero, no adjustment to the Original Purchase Price shall be made\nfor the First Adjustment Date.\n\n                                      -6-\n\n\n \n          (b) Twelve-Month Adjustment.  On or before July 10, 1998, the Parent\n              -----------------------                                         \nshall conduct a valuation of the Sub as of the close of business on June 30,\n1998 (the \"Second Adjustment Date\") according to the Valuation Model.  Parent\n           ----------------------                                            \nshall then calculate the \"Second Adjustment to Purchase Price\" as follows:\n                          -----------------------------------             \n\n          SAPP = SADV - FADV\n\nwhere     SAPP is the Second Adjustment to Purchase Price;\n          SADV is the Second Adjustment Date Value as calculated on the Second\n          Adjustment Date using the Valuation Model; and\n          FADV is the First Adjustment Date Value.\n\n          (i) If SAPP is greater than zero, then the Parent shall pay to the\nCompany Shareholders a number of shares calculated as follows:\n\n          SSP = (SAPP \/ FVPSSAD) x .25\n\nwhere     SSP is the \"Second Shares Payment\";\n                      ---------------------  \n          SAPP is the Second Adjustment to Purchase Price as calculated above;\n          and\n          FVPSSAD is the Fair Value Per Share of the Parent's Common Stock on\n          the Second Adjustment Date.\n\n          (ii) If SAPP is less than zero, then the Escrow Agent shall pay to\nParent no earlier than 10 days after, but no later than 30 days after, delivery\nby Parent of its calculation of the FAPP to both the Escrow Agent and the\nShareholder Representative from the Escrow Amount promptly after the Second\nAdjustment Date a number of shares calculated as follows:\n\n          SSP = (-SAPP \/ $2.25)\n\nwhere     SSP is the \"Second Shares Payment\"; and\n                      ---------------------      \n          SAPP is the Second Adjustment to Purchase Price as calculated above.\n\nIf SAPP equals zero, no adjustment to the Original Purchase Price shall be made\nfor the Second Adjustment Date.\n\n          (c) Valuation Model Determination.  In conducting any valuation of Sub\n              -----------------------------                                     \nfor purposes of this Section 1.10, Parent shall employ only those financial and\naccounting principles, practices and procedures that were used to determine the\nOriginal Purchase Price in accordance with the Valuation Model (including,\nwithout limitation, Parent's determination of appropriate accruals,\nclassifications and reserves).  The parties hereto agree that: (i) the\n                                                                      \n\"Subjective Incremental Multiplier\" referred to in the Valuation Model is based\n- ----------------------------------                                             \nupon the quality of the chief executive officer of Sub, the quality of Sub's\nfinance staff, the quality of Sub's sales and marketing staff, the quality of\n\n                                      -7-\n\n\n \nSub's technology staff, the quality of Sub's operations staff, the scaleability\nof Sub's overall enterprise, and the referenceability of Sub's customer\naccounts; (ii) the evaluation of Sub's performance in each such area shall be\nmade by Parent at Parent's sole discretion; and (iii) if any \"Loss\" (as defined\n                                                              ----             \nin Section 7.3(a) below) adversely affects either the FADV or the SADV (or\nboth), then Parent must either (A) claim indemnification for such Loss pursuant\nto (and subject in all respects to the provisions of) Article VII hereof, in\nwhich case Parent must eliminate any negative impact of such Loss from the FADV,\nor the SADV, or both (as applicable), or (B) calculate the FADV, or the SADV, or\nboth (as applicable) while taking such Loss into full account in calculating\nsuch valuations, in which case Parent (or any other indemnified party) shall be\nprohibited from claiming indemnification for such Loss pursuant to Article VII\nhereof.\n\n     I.11 Parent Common Stock.  The shares of Parent Common Stock issued in\n          -------------------                                              \nconnection with the Merger have not been registered under the Securities Act of\n1933, as amended (the \"Securities Act\").  Such shares may not be transferred or\n                       --------------                                          \nresold thereafter except in compliance with the terms of this Agreement and\nfollowing registration under the Securities Act or in reliance on an exemption\nfrom registration under the Securities Act.\n\n     I.12 Taking of Necessary Action; Further Action.  If, at any time after the\n          ------------------------------------------                            \nEffective Time, any further action is necessary or desirable to carry out the\npurposes of this Agreement and to vest the Surviving Corporation with full\nright, title and possession to all assets, property, rights, privileges, powers\nand franchises of the Company and Sub, the officers and directors of the\nCompany, Parent and Sub are fully authorized in the name of their respective\ncorporations or otherwise to take, and will take, all such lawful and necessary\naction.\n\n\n                                   ARTICLE II\n\n                 REPRESENTATIONS AND WARRANTIES OF THE COMPANY\n                         AND THE PRINCIPAL SHAREHOLDERS\n\n     The Company and the Principal Shareholders hereby, jointly and severally\n(except for Section 2.31, as to which the Company and the Principal Shareholders\nrepresent and warrant only severally), represent and warrant to Parent and Sub\nas of the date of this Agreement, subject to such exceptions as are specifically\ndisclosed in Exhibit C attached hereto (referencing the appropriate section and\n             ---------                                                         \nparagraph numbers), as follows.  For purposes of this Article II and Article IV\nbelow, any representation, warranty or covenant made by the Company shall be\ndeemed to have been made by each of the Company and any subsidiary of the\nCompany.  If the Closing has not occurred on or before June 30, 1997, the\nCompany shall prepare a revised version of Exhibit C as of such date, and all\n                                           ---------                         \nrepresentations, warranties and covenants shall be deemed delivered as of such\ndate.\n\n     II.1 Organization of the Company.  The Company is a corporation duly\n          ---------------------------                                    \norganized, validly existing and in good standing under the laws of the State of\nDelaware.  The Company has the corporate power to own its properties and to\ncarry on its business as now being conducted.  The Company \n\n                                      -8-\n\n\n \nis duly qualified to do business and in good standing as a foreign corporation\nin each jurisdiction in which the failure to be so qualified would have a\nmaterial adverse effect on the business, assets (including intangible assets),\nfinancial condition, results of operations or prospects of the Company\n(hereinafter referred to as a \"Material Adverse Effect\").  The Company has \n                               ----------------------- \ndelivered a true and correct copy of its Articles of Incorporation and Bylaws,\neach as amended to date, to Parent. Exhibit C lists the directors and officers\n                                    ---------\nof the Company. The operations now being conducted by the Company have not been\nconducted under any other name.\n\n     II.2 Company Capital Structure.\n          ------------------------- \n\n          (a) The authorized capital stock of the Company consists of 3,000\nshares of authorized Common Stock of which 2,100 shares are currently issued and\nwill be outstanding on the Closing Date.  There are no other classes or series\nof capital stock of the Company of any kind outstanding or issuable.  The\nCompany Common Stock is owned by the persons, with the domicile addresses and in\nthe amounts set forth on Exhibit C.  All outstanding shares of Company Common\n                         ---------                                           \nStock are duly authorized, validly issued, fully paid and non-assessable and not\nsubject to preemptive rights created by statute, the Articles of Incorporation\nor Bylaws of the Company or any agreement to which the Company  is a party or by\nwhich it is bound.\n\n          (b) Except as set forth in Exhibit C, there are no options, warrants,\n                                     ---------                                 \ncalls, rights, commitments or agreements of any character, written or oral, to\nwhich the Company  is a party or by which it is bound obligating the Company to\nissue, deliver, sell, repurchase or redeem, or cause to be issued, delivered,\nsold, repurchased or redeemed, any shares of the capital stock of the Company or\nobligating the Company to grant, extend, accelerate the vesting of, change the\nprice of, otherwise amend or enter into any such option, warrant, call, right,\ncommitment or agreement.\n\n     II.3 Subsidiaries.  Except as set forth in Exhibit C, (i) the Company does\n          ------------                          ---------                      \nnot have any subsidiaries or affiliated companies and does not otherwise own any\nshares in the capital of or any interest in, or control, directly or indirectly,\nany other corporation, partnership, association, joint venture or other business\nentity, and (ii) the Company has never had any subsidiaries or affiliated\ncompanies and has never otherwise owned shares in the capital of or any interest\nin or control, directly or indirectly, of any other corporation, partnership\nassociation, joint venture or other business entity.\n\n     II.4 Authority.  Each of the Company and the Principal Shareholders has all\n          ---------                                                             \nrequisite corporate power and authority to enter into this Agreement to which it\nis a party and to consummate the transactions contemplated hereby and thereby.\nThe execution and delivery of this Agreement and the consummation of the\ntransactions contemplated hereby and thereby have been duly authorized by all\nnecessary corporate action (except for obtaining stockholder approval) on the\npart of the Company and the Principal Shareholders, and no further action is\nrequired on their part to authorize the Agreement and the transactions\ncontemplated hereby and thereby (except for obtaining stockholder approval).\nThis Agreement has been duly executed and delivered by the Company and the\nPrincipal Shareholders and, assuming the due authorization, execution and\ndelivery by the other \n\n                                      -9-\n\n\n \nparties hereto and thereto, constitutes the valid and binding obligation of the\nCompany and the Principal Shareholders, enforceable in accordance with its\nterms, subject to the laws of general application relating to bankruptcy,\ninsolvency and the relief of debtors and to rules of law governing specific\nperformance, injunctive relief or other equitable remedies.\n\n     II.5 No Conflict.  The execution and delivery of this Agreement does not,\n          -----------                                                         \nand the consummation of the transactions contemplated hereby and thereby will\nnot, conflict with, or result in any violation of, or default under (with or\nwithout notice or lapse of time, or both), or give rise to a right of\ntermination, cancellation, modification or acceleration of any obligation or\nloss of any benefit under (any such event, a \"Conflict\") (i) any provision of\n                                              --------                       \nthe Articles of Incorporation and Bylaws the Company, (ii) any mortgage,\nindenture, lease, contract or other agreement or instrument, permit, concession,\nfranchise or license to which the Company or any of its properties or assets is\nsubject, or (iii) any judgment, order, decree, statute, law, ordinance, rule or\nregulation applicable to the Company or its properties or assets.\n\n     II.6 Consents.   No consent, waiver, approval, order or authorization of,\n          --------                                                            \nor registration, declaration or filing with, any court, administrative agency or\ncommission or other federal, state, county, local or other foreign governmental\nauthority, instrumentality, agency or commission (\"Governmental Entity\") or any\n                                                   -------------------         \nthird party, including a party to any agreement with the Company (so as not to\ntrigger any Conflict), is required by or with respect to the Company in\nconnection with the execution and delivery of this Agreement or the consummation\nof the transactions contemplated hereby, except for (i) such consents, waivers,\napprovals, orders, authorizations, registrations, declarations and filings as\nmay be required under applicable securities laws thereby, and (ii) the filing of\nthe Agreement of Merger with the Secretary of State of the State of Delaware.\n\n     II.7 Company Financial Statements.  Exhibit C sets forth copies of (i) the\n          ----------------------------   ---------                             \nCompany's unaudited balance sheet as of December 31, 1996 and the related\nunaudited statement of income for the seven-month period then ended (the \"1996\n                                                                          ----\nFinancials\"), and (ii) the Company's unaudited balance sheet as of June 30, 1997\n- ----------                                                                      \nand the related unaudited statement of income for the six-month period then\nended (the \"1997 Financials\") (the 1996 Financials and the 1997 Financials being\n            ---------------                                                     \nsometimes collectively referred to herein as the \"Company Financials\").  The\n                                                  ------------------        \nCompany Financials are correct in all material respects and have been prepared\nin accordance with United States generally accepted accounting principles\n(\"USGAAP\") applied on a basis consistent throughout the periods indicated and\n  ------                                                                     \nconsistent with each other.  The Company Financials present fairly in all\nmaterial respects the financial condition and the results of operations of the\nCompany as of the dates and during the periods indicated therein, subject in the\ncase of the 1997 Financials to normal year-end adjustments applied on a\nconsistent basis.  The Company's audited balance sheet as of December 31, 1996\n(including the notes and schedules thereto), which shall be delivered by the\nCompany to Parent and Merger Sub prior to the Effective Time pursuant to Section\n6.3(h) hereof, shall be referred to herein as the \"Balance Sheet.\"\n                                                   -------------  \n\n     II.8 No Undisclosed Liabilities.  Except as set forth in Exhibit C, the\n          --------------------------                          ---------     \nCompany has no liability, indebtedness, obligation, expense, claim, deficiency,\nguaranty or endorsement of any type, \n\n                                     -10-\n\n\n \nwhether accrued, absolute, contingent, matured, unmatured or other (whether or\nnot required to be reflected in financial statements in accordance with USGAAP),\nwhich individually or in the aggregate (i) has not been reflected in the Balance\nSheet, or (ii) has not arisen in the ordinary course of business consistent with\npast practices since December 31, 1996.\n\n     II.9 No Changes.  Except as set forth in Exhibit C, since December 31,\n          ----------                          ---------                    \n1996, there has not been, occurred or arisen any:\n\n          (a) transaction by the Company except in the ordinary course of\nbusiness as conducted on that date and consistent with past practices;\n\n          (b) amendments or changes to the Articles of Incorporation or Bylaws\nof the Company;\n\n          (c) capital expenditure or commitment by the Company, either\nindividually or in the aggregate, exceeding $25,000;\n\n          (d) destruction of, damage to or loss of any material assets, business\nor customer of the Company (whether or not covered by insurance);\n\n          (e) labor trouble or claim of wrongful discharge or other unlawful\nlabor practice or action;\n\n          (f) change in accounting methods or practices (including any change in\ndepreciation or amortization policies or rates) by the Company;\n\n          (g) revaluation by the Company of any of its assets;\n\n          (h) declaration, setting aside or payment of a dividend or other\ndistribution with respect to the Company's capital stock, or any direct or\nindirect redemption, purchase or other acquisition by the Company of any of its\ncapital stock;\n\n          (i) increase in the salary or other compensation payable or to become\npayable by the Company to any of its officers, directors, employees or advisors,\nor the declaration, payment or commitment or obligation of any kind for the\npayment, by the Company, of a bonus or other additional salary or compensation\nto any such person;\n\n          (j) any agreement, contract, lease or commitment (collectively a\n\"Company Agreement\") or any extension or modification of the terms of any\n -----------------                                                       \nCompany Agreement which (i) involves the payment by the Company of greater than\n$25,000 per annum or which extends for more than one year, (ii) involves any\nCompany payment or obligation to any affiliate of the Company other than in the\nordinary course of business as conducted on that date and consistent with past\npractices, or (iii) involves the sale of any material assets;\n\n                                     -11-\n\n\n \n          (k) sale, lease, license or other disposition of any of the assets or\nproperties of the Company, or any creation of any security interest in such\nassets or properties except in the ordinary course of business as conducted on\nthat date and consistent with past practices;\n\n          (l) amendment or termination of any material contract, agreement or\nlicense to which the Company is a party or by which it is bound;\n\n          (m) loan by the Company to any person or entity, incurring by the\nCompany of any indebtedness, guaranteeing by the Company of any indebtedness,\nissuance or sale of any debt securities of the Company or guaranteeing of any\ndebt securities of others, except for advances to employees for travel and\nbusiness expenses in the ordinary course of business, consistent with past\npractices;\n\n          (n) waiver or release of any right or claim of the Company, including\nany write-off or other compromise of any account receivable of the Company;\n\n          (o) the commencement or notice or threat of commencement of any\nlawsuit or proceeding against, or investigation of, the Company or its affairs;\n\n          (p) notice of any claim of ownership by a third party of the Company's\nIntellectual Property (as defined in Section 2.13 below) or of infringement by\nthe Company of any third party's Intellectual Property rights;\n\n          (q) issuance or sale by the Company of any of its shares of capital\nstock, or securities exchangeable, convertible or exercisable therefor, or of\nany other of its securities;\n\n          (r) change in pricing or royalties set or charged by the Company to\nits customers or licensees or in pricing or royalties set or charged by persons\nwho have licensed Intellectual Property (as defined in Section 2.13 below) to\nthe Company;\n\n          (s) any event or condition of any character that has or may have a\nMaterial Adverse Effect on the Company; or\n\n          (t) negotiation or agreement by the Company or any officer or employee\nthereof to do any of the things described in the preceding clauses (a) through\n(s) (other than negotiations with Parent and its representatives regarding the\ntransactions contemplated by this Agreement).\n\n     II.10  Tax Matters.\n            ----------- \n\n          (a) Definition of Taxes.  For the purposes of this Agreement, \"Tax\"\n              -------------------                                        --- \nor, collectively, \"Taxes,\" means (i) any and all federal, state, local and\n                   -----                                                  \nforeign taxes, assessments and other governmental charges, duties, impositions\nand liabilities, including taxes based upon or \n\n                                     -12-\n\n\n \nmeasured by gross receipts, income, profits, sales, use and occupation, and\nvalue added, ad valorem, transfer, franchise, withholding, payroll, recapture,\nemployment, excise and property taxes, together with all interest, penalties and\nadditions imposed with respect to such amounts; (ii) any liability for the\npayment of any amounts of the type described in clause (i) as a result of being\na member of an affiliated, consolidated, combined or unitary group for any\nperiod; and (iii) any liability for the payment of any amounts of the type\ndescribed in clause (i) or (ii) as a result of any express or implied obligation\nto indemnify any other person or as a result of any obligations under any\nagreements or arrangements with any other person with respect to such amounts\nand including any liability for taxes of a predecessor entity.\n\n          (b) Tax Returns and Audits.  Except as set forth in Exhibit C:\n              ----------------------                          --------- \n\n          (i) The Company as of the Closing Date will have prepared and timely\nfiled or made a timely request for extension for all required federal, state,\nlocal and foreign returns, estimates, information statements and reports\n                                                                        \n(\"Returns\") relating to any and all Taxes concerning or attributable to the\n  -------                                                                  \nCompany or its operations which are required to be filed on or prior to the\nClosing Date, and such Returns are true and correct and have been completed in\naccordance with applicable law.\n\n          (ii) The Company as of the Closing Date (A) will have paid or accrued\nall Taxes it is required to pay or accrue as shown on the Returns and (B) will\nhave withheld and timely remitted with respect to its employees all income taxes\nand other Taxes required to be withheld and remitted.\n\n          (iii)  The Company has not been delinquent in the payment of any\nTax nor is there any Tax deficiency outstanding, assessed or proposed against\nthe Company,  nor has the Company executed any waiver of any statute of\nlimitations on or extending the period for the assessment or collection of any\nTax.\n\n          (iv) No audit or other examination of any Return of the Company,  is\npresently in progress, nor has the Company been notified of any request for such\nan audit or other examination.\n\n          (v) The Company has no liabilities for unpaid federal, state, local\nand foreign Taxes which have not been accrued or reserved against in accordance\nwith USGAAP on the Balance Sheet, whether asserted or unasserted, contingent or\notherwise, relating to the seven-month period ended December 31, 1996.\n\n          (vi) The Company has made available to Parent or its legal counsel,\ncopies of all foreign, federal and state income and all state sales and use\nReturns filed for all years as to which any applicable statute of limitations\nhas not expired.\n\n          (vii)     There is no mortgage, pledge, security interest or lien or\nother \n\n                                     -13-\n\n\n \nencumbrance (each a \"Lien\") of any sort on the assets of the Company\n                     ----                                           \nrelating to or attributable to Taxes other than Liens for taxes not yet due and\npayable.\n\n          (viii)    The Company Shareholders have no knowledge of any basis for\nthe assertion of any claim relating or attributable to Taxes which, if adversely\ndetermined, would result in any Lien on any material assets of the Company.\n\n          (ix) As of the Closing, there will not be any contract, agreement,\nplan or arrangement (except as may be contemplated in the provisions of this\nAgreement) covering any employee or former employee of the Company that,\nindividually or collectively, could give rise to the payment of any amount that\nwould not be deductible by the Company as an expense under Sections 162, 280G or\n404 of the Code.\n\n          (x) The Company is not a party to a tax sharing, indemnification or\nallocation agreement nor does the Company owe any amount under any such\nagreement.\n\n          (xi) The Company uses the accrual method of accounting for income tax\npurposes and its tax basis in its assets for purposes of determining its future\namortization, depreciation and other federal income tax deductions is accurately\nreflected on the Company's tax books and records.\n\n     II.11  Restrictions on Business Activities.  Except as set forth in Exhibit\n            -----------------------------------                          -------\nC, there is no agreement (noncompete or otherwise), commitment, judgment,\n- -                                                                        \ninjunction, order or decree to which the Company or any Principal Shareholder is\na party or otherwise binding upon the Company which has or may  have the effect\nof prohibiting or impairing any business practice of the Company, any\nacquisition of property (tangible or intangible) by the Company or the conduct\nof business by the Company.  The Company has not entered into any agreement\nunder which the Company is restricted from providing services to customers or\npotential customers or any class of customers, in any geographic area, during\nany period of time or in any segment of the market.\n\n     II.12  Title to Properties; Absence of Liens and Encumbrances; Condition of\n            --------------------------------------------------------------------\nEquipment.\n- --------- \n\n          (a) The Company does not own any real property, nor has it ever owned\nany real property.  Exhibit C sets forth a list of all real property currently\n                    ---------                                                 \nleased by the Company the name of the lessor, the date of the lease and each\namendment thereto and, with respect to any current lease, the aggregate annual\nrental and\/or other fees payable under any such lease.  All such current leases\nare in full force and effect, are valid and effective in accordance with their\nrespective terms, and there is not, under any of such leases, any existing\ndefault or event of default (or event which with notice or lapse of time, or\nboth, would constitute a default).\n\n          (b) The Company has good and valid title to, or, in the case of leased\nproperties and assets, valid leasehold interests in, all of its tangible\nproperties and assets, real, personal and mixed, used or held for use in its\nbusiness, free and clear of any Liens, except as reflected in the \n\n                                     -14-\n\n\n \nCompany Financials or in Exhibit C and except for Liens for taxes not yet due\n                         ---------\nand payable and such imperfections of title and encumbrances, if any, which are\nnot material in character, amount or extent, and which do not detract from the\nvalue, or interfere with the present use, of the property subject thereto or\naffected thereby.\n\n          (c) Exhibit C lists all material items of equipment (the \"Equipment\")\n              ---------                                             ---------  \nowned or leased by the Company and such Equipment is, taken as a whole, (i)\nadequate for the conduct of the business of the Company as currently conducted\nand (ii) in good operating condition, regularly and properly maintained, subject\nto normal wear and tear.\n\n          (d) The Company has sole and exclusive ownership, free and clear of\nany Liens, of all customer files and other customer information relating to\nCompany's current and former customers (the \"Customer Information\").  Other\n                                             --------------------          \nthan normal rights of Company's customers to their own information, no third\nparty possesses any claims or rights with respect to use of the Customer\nInformation.\n\n     II.13  Intellectual Property.\n            --------------------- \n\n          (a) For the purposes of this Agreement, the following terms have the\nfollowing definitions:\n\n          \"Intellectual Property\" shall mean any or all of the following and all\n           ---------------------                                                \nrights in, arising out of, or associated therewith:  (i) all United States and\nforeign patents and applications therefor and all reissues, divisions, renewals,\nextensions, provisionals, continuations and continuations-in-part thereof; (ii)\nall inventions (whether patentable or not), invention disclosures, improvements,\ntrade secrets, proprietary information, know how, technology, technical data and\ncustomer lists, and all documentation relating to any of the foregoing; (iii)\nall copyrights, copyrights registrations and applications therefor, and all\nother rights corresponding thereto throughout the world; (iv) all mask works,\nmask work registrations and applications therefor, and all other rights\ncorresponding thereto throughout the world; (v) all industrial designs and any\nregistrations and applications therefor throughout the world; (vi) all trade\nnames, logos, common law trademarks and service marks; trademark and service\nmark registrations and applications therefor throughout the world; (vii) all\ndatabases and data collections and all rights therein throughout the world; and\n(viii) all computer software including all source code, object code, firmware,\ndevelopment tools, files, records and data, all media on which any of the\nforegoing is recorded, and all documentation related to any of the foregoing\nthroughout the world.\n\n          \"Intellectual Property of Company\" shall mean any Intellectual\n           --------------------------------                             \nProperty that:  (i) is owned by or exclusively licensed to the Company, or (ii)\nwhich is necessary to the operation of the Company, including the design,\nmanufacture and use of the products or performance of the services of the\nCompany as it currently is operated or is reasonably anticipated to be operated\nin the future, but shall specifically not include any rights in or to materials\ncreated for clients as \"work-made-for-hire\" or which are subject to an exclusive\n                        ------------------                                      \nassignment or license in favor of clients of the Company.\n\n                                     -15-\n\n\n \n          (b) Exhibit C lists all of the Company's United States and foreign:\n              ---------                                                      \n(i) patents, patent applications (including provisional applications); (ii)\nregistered trademarks, applications to register trademarks, intent-to-use\napplications, or other registrations related to trademarks; (iii) registered\ncopyrights and applications for copyright registration; (iv) mask work\nregistrations and applications to register mask works; and (v) any other\nIntellectual Property of Company that is the subject of an application,\ncertificate or registration filed with, issued by, or recorded by, any state,\ngovernment or other public legal authority (all of the foregoing, the\n\"Registered Intellectual Property\").\n --------------------------------   \n\n          (c) Each item of Registered Intellectual Property is valid and\nsubsisting, all necessary registration, maintenance and renewal fees in\nconnection with such Registered Intellectual Property have been made and all\nnecessary documents and certificates in connection with such Registered\nIntellectual Property have been filed with the relevant patent, copyright,\ntrademark or other authorities in the United States or foreign jurisdictions, as\nthe case may be, for the purposes of maintaining such Registered Intellectual\nProperty.\n\n          (d) The contracts, licenses and agreements listed in Exhibit C include\n                                                               ---------        \nall contracts, licenses and agreements to which the Company is a party with\nrespect to any Intellectual Property with a value or cost in excess of $10,000,\nother than \"shrink wrap\" and similar commercial end-user licenses.\n            -----------                                           \n\n          (e) The contracts, licenses and agreements listed in Exhibit C with\n                                                               ---------     \nrespect to any Intellectual Property (the \"Intellectual Property Contracts\") are\n                                           -------------------------------      \nin full force and effect.  The consummation of the transactions contemplated by\nthis Agreement will neither violate nor result in the breach, modification,\ncancellation, termination, or suspension of any Intellectual Property Contract.\nThe Company is in compliance with, and has not breached any term of any\nIntellectual Property Contract, and, to the knowledge of the Company and the\nPrincipal Shareholders, all other parties to the Intellectual Property Contracts\nare in compliance with, and have not breached any term of, such contracts.\nFollowing the Closing Date, Sub will be permitted to exercise all the Company's\nrights under the Intellectual Property Contracts without the payment of any\nadditional amounts or consideration other than ongoing fees, royalties or\npayments which the Company would otherwise be required to pay.\n\n          (f) Except as set forth in Exhibit C:  (i) no person has any rights to\n                                     ---------                                  \nuse any of the Intellectual Property of the Company; and (ii) the Company has\nnot granted to any Person, or authorized any Person to retain, any rights in the\nIntellectual Property of Company.\n\n          (g) Except as set forth in Exhibit C:  (i) the Company owns and has\n                                     ---------                               \ngood and exclusive title to each item of Intellectual Property listed in Exhibit\n                                                                         -------\nC, free and clear of any Lien; and (ii) the Company owns, or has the right,\n- -                                                                          \npursuant to a valid Contract to use or operate under, all other Intellectual\nProperty of the Company.\n\n                                     -16-\n\n\n \n          (h) The operation of the business of the Company as it currently is\nconducted or is reasonably contemplated to be conducted, including its design,\ndevelopment, manufacture and sale of its products (including with respect to\nproducts currently under development) and provision of services, does not\ninfringe or misappropriate the Intellectual Property of any other person,\nviolate the rights of any person (including rights to privacy or publicity), or\nconstitute unfair competition.\n\n          (i) The Company has not received notice from any person that the\noperation of the business of the Company, including its design, development,\nmanufacture and sale of its products (including with respect to products\ncurrently under development) and provision of its services, infringes or\nmisappropriates the Intellectual Property of any person, violates the rights of\nany person (including rights to privacy or publicity), or constitutes unfair\ncompetition.\n\n          (j) The Company owns or has the right to all Intellectual Property\nnecessary to the conduct of its business as it currently is conducted or is\nreasonably contemplated to be conducted, including, without limitation, the\ndesign, development, manufacture and sale of all products currently manufactured\nor sold by the Company or under development by the Company and the performance\nof all services provided or contemplated to be provided by the Company.\n\n          (k) Exhibit C lists all contracts, licenses and agreements between the\n              ---------                                                         \nCompany and any other person wherein or whereby the Company has agreed to, or\nassumed, any obligation or duty to indemnify, hold harmless or otherwise assume\nor incur any obligation or liability with respect to the infringement by the\nCompany or such other Person of the Intellectual Property rights of any other\nperson,\n\n          (l) Except as listed in Exhibit C, there are no contracts, licenses\n                                  ---------                                  \nand agreements between the Company and any other person with respect to Company\nIntellectual Property under which there is any dispute known to the Company or\nthe Principal Shareholders regarding the scope of such agreement or performance\nunder such agreement, including with respect to any payments to be made or\nreceived by the Company thereunder.\n\n          (m) Except as listed in Exhibit C, to the knowledge of the Company and\n                                  ---------                                     \nthe Principal Shareholders, no person is infringing or misappropriating any of\nthe Intellectual Property of Company.\n\n          (n) Except as listed in Exhibit C, there are no claims asserted\n                                  ---------                              \nagainst the Company or against any customer of the Company, related to any\nproduct or service of the Company.\n\n          (o) No Intellectual Property of Company or product or service of the\nCompany is subject to any outstanding decree, order, judgment, or stipulation\nrestricting in any manner the use or licensing thereof by the Company.\n\n          (p) The Company has, and enforces, a policy requiring each employee\nand \n\n                                     -17-\n\n\n \ncontractor to execute proprietary information and confidentiality agreements\nsubstantially in the Company's standard forms and all current and former\nemployees and contractors of the Company have executed such an agreement.\n\n          (q) No (i) product, service or publication of the Company, (ii)\nmaterial published or distributed by the Company or (iii) conduct or statement\nof the Company, constitutes obscene material, a defamatory statement or\nmaterial, or violates any rights, including rights of publicity or privacy, of\nany person.\n\n     II.14  Agreements, Contracts and Commitments.\n            ------------------------------------- \n\n          (a) Except as set forth in Exhibit C, the Company does not have, or is\n                                     ---------                                  \nnot bound by (other than pursuant to applicable law):\n\n                 (i) any collective bargaining agreement,\n\n                 (ii) any agreements or arrangements that contain any severance\npay or post-employment liabilities or obligations,\n\n                 (iii) any bonus, deferred compensation, pension, profit sharing\nor retirement plans, or any other employee benefit plans or arrangements,\n\n                 (iv)  any employment or consulting agreement, contract or\ncommitment with an employee or individual consultant or salesperson or\nconsulting or sales agreement, contract or commitment with a firm or other\norganization,\n\n                 (v)   any agreement or plan, including, without limitation, any\nstock option plan, stock appreciation rights plan or stock purchase plan, any of\nthe benefits of which will be increased, or the vesting of benefits of which\nwill be accelerated, by the occurrence of any of the transactions contemplated\nby this Agreement or the value of any of the benefits of which will be\ncalculated on the basis of any of the transactions contemplated by this\nAgreement,\n\n                 (vi) any fidelity or surety bond or completion bond,\n\n                 (vii)  any lease of personal property having a value\nindividually in excess of $25,000,\n\n                 (viii)  any agreement of indemnification or guaranty, other\nthan as set forth in agreements listed in Exhibit C,\n                                          --------- \n\n                 (ix)    any agreement, contract or commitment containing any\ncovenant limiting the freedom of the Company to engage in any line of business\nor to compete with any person,\n\n                                     -18-\n\n\n \n                 (x)     any agreement, contract or commitment relating to\ncapital expenditures and involving future payments in excess of $25,000,\n\n                 (xi)    any agreement, contract or commitment relating to the\ndisposition or acquisition of assets or any interest in any business enterprise\noutside the ordinary course of the Company's business,\n\n                 (xii)   any mortgages, indentures, loans or credit agreements,\nsecurity agreements or other agreements or instruments relating to the borrowing\nof money or extension of credit, including guaranties referred to in clause\n(viii) hereof,\n\n                 (xiii)  any purchase order or contract for the purchase of\nmaterials involving $25,000 or more,\n\n                 (xiv)  any construction contracts,\n\n                 (xv)   any distribution, joint marketing or development\nagreement, or\n\n                 (xvi)  any other agreement, contract or commitment that\ninvolves $25,000 or more or is not cancelable without penalty within thirty (30)\ndays.\n\n          (b) The Company has not breached, violated or defaulted under, or\nreceived notice that it has breached, violated or defaulted under, any of the\nterms or conditions of any agreement, contract, license or commitment to which\nit is a party, by which it benefits or by which it is bound (any such agreement,\ncontract, license or commitment, a \"Contract\"), nor does the Company or any\n                                    --------                               \nPrincipal Shareholder know of any event that would constitute such a breach,\nviolation or default with the lapse of time, giving of notice or both.  Each\nContract is in full force and effect and, except as otherwise disclosed in\nExhibit C, is not, to the knowledge of the Company or any Principal Shareholder,\n- ---------                                                                       \nsubject to any default thereunder by any party obligated to the Company pursuant\nthereto.  The Company has obtained, or will obtain prior to the Closing Date,\nall necessary consents, waivers and approvals of parties to any Contract as are\nrequired thereunder in connection with the Merger so that all such Contracts\nwill remain in effect without modification after the Closing.\n\n     II.15  Interested Party Transactions.  Except as set forth in Exhibit C, no\n            -----------------------------                          ---------    \nofficer, director or Principal Shareholder of the Company (nor any ancestor,\nsibling, descendant or spouse of any of such persons, or any trust, partnership\nor corporation in which any of such persons has or has had an interest), has or\nhas had, directly or indirectly, (i) an interest in any entity which furnished\nor sold, or furnishes or sells, services or products that the Company furnishes\nor sells, or proposes to furnish or sell, or (ii) any interest in any entity\nthat purchases from or sells or furnishes to, the Company, any goods or services\nor (iii) a beneficial interest in any Contract; provided, that ownership of no\nmore than one percent (1%) of the outstanding voting stock of a publicly traded\ncorporation shall not be deemed an \"interest in any entity\" for purposes of this\n                                    ----------------------                      \nSection 2.15.\n\n                                     -19-\n\n\n \n     II.16  Governmental Authorization.  Exhibit C accurately lists each\n            --------------------------   ---------                      \nconsent, license, permit, grant or other authorization issued to the Company by\na Governmental Entity (i) pursuant to which the Company currently operates or\nholds any interest in any of its properties or (ii) which is required for the\noperation of its business or the holding of any such interest (herein\ncollectively called \"Company Authorizations\").  The Company Authorizations are\n                     ----------------------                                   \nin full force and effect and constitute all Company Authorizations required to\npermit the Company to operate or conduct its business or hold any interest in\nits properties or assets.\n\n     II.17  Litigation.  There is no action, suit or proceeding of any nature\n            ----------                                                       \npending, or to the Company's or the Principal Shareholders' knowledge\nthreatened, against the Company, its properties or any of its officers or\ndirectors, nor, to the knowledge of the Principal Shareholders, is there any\nreasonable basis therefor.  There is no investigation pending or, to the\nCompany's or Principal Shareholders' knowledge threatened, against the Company,\nits properties or any of its officers or directors (nor, to the best knowledge\nof the Principal Shareholders, is there any reasonable basis therefor) by or\nbefore any Governmental Entity.  No Governmental Entity has at any time\nchallenged or questioned the legal right of the Company to manufacture, offer or\nsell any of its products or services in the present manner or style thereof.\n\n     II.18  Accounts Receivable.\n            ------------------- \n\n          (a) Prior to the Closing, the Company will make available to Parent a\nlist of all accounts receivable of the Company as of May 31, 1997 (\"Accounts\n                                                                    --------\nReceivable\"), along with a range of days elapsed since invoice.\n- ----------                                                     \n\n          (b) All Accounts Receivable of the Company arose in the ordinary\ncourse of business, are carried at values determined in accordance with USGAAP\nconsistently applied and are collectible except to the extent of reserves\ntherefor set forth in the Company Financials.  No person has any Lien on any of\nsuch Accounts Receivable and no request or agreement for deduction or discount\nhas been made with respect to any of such Accounts Receivable.\n\n     II.19  Minute Books.  The minutes of the Company made available to counsel\n            ------------                                                       \nfor Parent are the only minutes of the Company and contain a reasonably accurate\nsummary of all meetings of the Board of Directors (or committees thereof) of the\nCompany and its shareholders or actions by written consent since the time of\nincorporation of the Company.\n\n     II.20  Environmental Matters.\n            --------------------- \n\n          (a) Hazardous Material.  The Company has not: (i) operated any\n              ------------------                                        \nunderground storage tanks at any property that the Company has at any time\nowned, operated, occupied or leased; or (ii) illegally released any material\namount of any substance that has been designated by any Governmental Entity or\nby applicable federal, state or local law to be radioactive, toxic, hazardous or\notherwise a danger to health or the environment, including, without limitation,\nPBS, asbestos, \n\n                                     -20-\n\n\n \npetroleum, and urea-formaldehyde and all substances listed as hazardous\nsubstances pursuant to the Comprehensive Environmental Response, Compensation,\nand Liability Act of 1980, as amended, or defined as a hazardous waste pursuant\nto the United States Resource Conservation and Recovery Act of 1976, as amended,\nand the regulations promulgated pursuant to said laws (a \"Hazardous Material\"), \n                                                          ------------------\nbut excluding office and janitorial supplies properly and safely maintained. No\nHazardous Materials are present as a result of the deliberate actions of the\nCompany or, to the Company's or Principal Shareholders' knowledge, as a result\nof any actions of any third party or otherwise, in, on or under any property,\nincluding the land and the improvements, ground water and surface water thereof,\nduring the period that the Company has owned, operated, occupied or leased such\nproperty.\n\n          (b) Hazardous Materials Activities.  The Company has not transported,\n              ------------------------------                                   \nstored, used, manufactured, disposed of, released or exposed its employees or\nothers to Hazardous Materials in violation of any law in effect, nor has the\nCompany disposed of, transported, sold, or manufactured any product containing\na Hazardous Material (any or all of the foregoing being collectively referred to\nas \"Hazardous Materials Activities\") in violation of any rule, regulation,\n    ------------------------------                                        \ntreaty or statute promulgated by any Governmental Entity in effect prior to or\nas of the date hereof to prohibit, regulate or control Hazardous Materials or\nany Hazardous Material Activity.\n\n          (c) Permits.  The Company currently holds all environmental approvals,\n              -------                                                           \npermits, licenses, clearances and consents (the \"Environmental Permits\")\n                                                 ---------------------  \nnecessary for the conduct of the Company's Hazardous Material Activities and\nother businesses of the Company as such activities and businesses are currently\nbeing conducted.\n\n          (d) Environmental Liabilities.  No action, proceeding, revocation\n              -------------------------                                    \nproceeding, amendment procedure, writ, injunction or claim is pending, or to the\nPrincipal Shareholders' knowledge, threatened concerning any Environmental\nPermit, Hazardous Material or any Hazardous Materials Activity of the Company.\nThe Principal Shareholders have no knowledge of any fact or circumstance which\ncould involve the Company in any environmental litigation or impose upon the\nCompany any environmental liability.\n\n     II.21  Brokers' and Finders' Fees; Third Party Expenses.  Except as set\n            ------------------------------------------------                \nforth in Exhibit C, the Company has not incurred, nor will it incur, directly or\n         ---------                                                              \nindirectly, any liability for brokers' or finders' fees or agents' commissions\nor any similar charges in connection with the Agreement or any transaction\ncontemplated hereby.  Exhibit C sets forth the principal terms and conditions of\n                      ---------                                                 \nany agreement, written or oral, with respect to such fees.  Exhibit C sets forth\n                                                            ---------           \nthe Company's current reasonable estimate of all third party expenses expected\nto be incurred by the Company in connection with the negotiation and\neffectuation of the terms and conditions of this Agreement and the transactions\ncontemplated hereby.\n\n     II.22  Employee Benefit Plans and Compensation.\n            --------------------------------------- \n\n          (a) For purposes of this Section 2.22, the following terms shall have\n\n                                     -21-\n\n\n \nthe meanings set forth below:\n\n                 (i) \"Employee Plan\" shall refer to any plan, program, policy,\n                      -------------                                           \npractice, contract, agreement or other arrangement established by the Company\nproviding for bonuses, severance, termination pay, performance awards, stock or\nstock-related awards, fringe benefits or other employee benefits of any kind,\nwhether formal or informal, funded or unfunded and whether or not legally\nbinding, including without limitation, any plan which is or has been maintained,\ncon tributed to, or required to be contributed to, by the Company for the\nbenefit of any \"Employee\" (as defined below), and pursuant to which the Company\n                --------                                                       \nhas or may have any material liability, contingent or otherwise;\n\n                 (ii)   \"Employee\" shall mean any current, former, or retired\n                         --------                                            \nemployee, officer, or director of the Company; and\n\n                (iii)    \"Employee Agreement\" shall refer to each employment,\n                          ------------------                                 \nseverance, consulting or similar agreement or contract between the Company and\nany Employee.\n\n          (b) Schedule.  Exhibit C contains an accurate and complete list of\n              --------   ---------                                          \neach Company Employee Plan and each Employee Agreement, together with a schedule\nof all liabilities, whether or not accrued, under each such Company Employee\nPlan.  The Company does not have any plan or commitment, whether legally binding\nor not, to establish any new Company Employee Plan or Employee Agreement, to\nmodify any Company Employee Plan or Employee Agreement (except to the extent (i)\nrequired by law or to conform any such Company Employee Plan or Employee\nAgreement to the requirements of any applicable law, in each case as previously\ndisclosed to Parent in writing, or (ii) as required or contemplated by the terms\nof this Agreement), or to enter into any Company Employee Plan or Employee\nAgreement, nor does it have any intention or commitment to do any of the\nforegoing.\n\n          (c) Documents.  The Company has provided to Parent: (i) correct and\n              ---------                                                      \ncomplete copies of all documents embodying each Employee Plan and each Employee\nAgreement including all amendments thereto and copies of all forms of agreement\nand enrollment used therewith; (ii) the most recent annual actuarial valuations,\nif any, prepared for each Employee Plan; (iii) the three most recent annual\nreports (Series 5500 and all schedules thereto), if any, required under ERISA or\nthe Code in connection with each Company Employee Plan or related trust; (iv)\nthe most recent summary plan description together with the most recent summary\nof material modifications, if any, required under ERISA with respect to each\nCompany Employee Plan; (v) all IRS determination letters and rulings relating to\nCompany Employee Plans and copies of all applications and corre spondence to or\nfrom the IRS or the Department of Labor (\"DOL\") with respect to any Company\n                                          ---                              \nEmployee Plan; (vi) if the Employee Plan is funded, the most recent annual and\nperiodic accounting of Employee Plan assets; and (vii) all communications\nmaterial to any Employee or Employees relating to any Employee Plan and any\nproposed Employee Plans, in each case, relating to any amendments, terminations,\nestablishments, increases or decreases in benefits, acceleration of payments or\nvesting schedules or other events which would result in any liability to the\nCompany.\n\n                                     -22-\n\n\n \n          (d) Employee Plan Compliance.  (i) The Company has performed all\n              ------------------------                                    \nobligations required to be performed by it under each Employee Plan and each\nEmployee Plan has been established and maintained in accordance with its terms\nand in compliance with all applicable laws, statutes, orders, rules and\nregulations, including ERISA and the Code; (ii) no \"prohibited transaction,\"\n                                                    ----------------------  \nwithin the meaning of Section 4975 of the Code or Section 406 of ERISA, has\noccurred with respect to any Company Employee Plan; (iii) there are no actions,\nsuits or claims pending, or, to the knowledge of the Company or the Principal\nShareholders threatened or anticipated (other than routine claims for benefits)\nagainst any Employee Plan or against the assets of any Employee Plan; (iii) each\nEmployee Plan can be amended, terminated or otherwise discontinued after the\nClosing Date in accordance with its terms, without liability to the Company,\nParent or Sub (other than ordinary administration expenses typically incurred in\na termination event); (iv) there are no inquiries or proceedings pending or, to\nthe knowledge of the Company or any Principal Shareholders threatened by the IRS\nor DOL with respect to any Company Employee Plan; and (v) the Company is not\nsubject to any penalty or tax with respect to any Company Employee Plan under\nSection 402(i) of ERISA or Section 4975 through 4980 of the Code.\n\n          (e) Pension Plans.  The Company does not now, nor has it ever,\n              -------------                                             \nmaintained, established, sponsored, participated in, or contributed to, any\nPension Plan which is subject to Part 3 of Subtitle B of Title I of ERISA, Title\nIV of ERISA or Section 412 of the Code.\n\n          (f) Multiemployer Plans.  At no time has the Company contributed to or\n              -------------------                                               \nbeen requested to contribute to any Multiemployer Plan.\n\n          (g) No Post-Employment Obligations.  Except as set forth in Exhibit C\n              ------------------------------                          ---------\nor as contemplated by the terms of this Agreement, no Company Employee Plan\nprovides, or has any liability to provide, life insurance, medical or other\nemployee benefits to any Employee upon his or her retirement or termination of\nemployment for any reason, except as may be required by statute, and the Company\nhas not represented, promised or contracted (whether in oral or written form) to\nany Employee (either individually or to Employees as a group) that such\nEmployee(s) would be provided with life insurance, medical or other employee\nbenefits upon their retirement or termination of employment, except to the\nextent required by statute.\n\n          (h) No Conflicts.  The execution of this Agreement and the\n              ------------                                          \nconsummation of the transactions contemplated hereby will not constitute an\nevent under any Employee Plan, Employee Agreement, trust or loan that will or\nmay result in any payment (whether of severance pay or otherwise), acceleration,\nforgiveness of indebtedness, vesting, distribution, increase in benefits or\nobligation to fund benefits with respect to any Employee.\n\n          (i) Employment Matters.  Except as set forth in Exhibit C, the Company\n              ------------------                          ---------             \n(i) is in compliance with all applicable laws, rules and regulations respecting\nemployment, employment practices, terms and conditions of employment and wages\nand hours, in each case, with respect to Employees; (ii) has withheld all\namounts required by law or by agreement to be withheld from the \n\n                                     -23-\n\n\n \nwages, salaries and other payments to Employees; (iii) is not liable for any\narrears of wages or any taxes or any penalty for failure to comply with any of\nthe foregoing; and (iv) is not liable for any payment to any trust or other fund\nor to any governmental or administrative authority, with respect to unemployment\ncompensation benefits, social security or other benefits for Employees (other\nthan routine payments to be made in the normal course of business and consistent\nwith past practice).\n\n          (j) Labor.  No work stoppage or labor strike against the Company is\n              -----                                                          \npending, or to the knowledge of the Company and the Principal Shareholders,\nthreatened.  The Company is not involved in or, to the knowledge of the\nPrincipal Shareholders, threatened with any labor dispute, grievance, or\nlitigation relating to labor, safety, discrimination, or harassment matters\ninvolving any Employee, including, without limitation, charges of unfair labor\npractices, discrimination, or harassment complaints, which, if adversely\ndetermined, would, individually or in the aggregate, result in liability to the\nCompany, Parent or Sub.  The Company has not engaged in any unfair labor\npractices which could, individually or in the aggregate, directly or indirectly\nresult in a liability to the Company, Parent or Sub.  The Company is not\npresently, or has in the past, been a party to, or bound by, any collective\nbargaining agreement or union contract with respect to Employees and no\ncollective bargaining agreement is being negotiated by the Company.\n\n     II.23  Insurance.  Exhibit C lists all insurance policies and fidelity\n            ---------   ---------                                          \nbonds covering the assets, business, equipment, properties, operations,\nemployees, officers and directors of the Company.  There is no claim by the\nCompany pending under any of such policies or bonds as to which coverage has\nbeen questioned, denied or disputed by the underwriters of such policies or\nbonds.  All premiums due and payable under all such policies and bonds have been\npaid and the Company is otherwise in compliance with the terms of such policies\nand bonds (or other policies and bonds providing substantially similar insurance\ncoverage).  The Company and the Principal Shareholders have no knowledge of any\nthreatened termination of, or premium increase with respect to, any of such\npolicies.\n\n     II.24  Compliance with Laws.  The Company has complied with, is not in\n            --------------------                                           \nviolation of, and has not received any notices of violation with respect to, any\nforeign, federal, state or local statute, law or regulation.\n\n     II.25  Third Party Consents.  Except as set forth in Exhibit C, no consent\n            --------------------                          ---------            \nor approval is needed from any third party in order to effect the Merger or any\nof the transactions contemplated by this Agreement.\n\n     II.26  Warranties; Indemnities.  Exhibit C sets forth a summary of all\n            -----------------------   ---------                            \nwarranties and indemnities relating to products sold or services rendered by the\nCompany, and no warranty or indemnity has been given by the Company which\ndiffers therefrom in any material respect.  Exhibit C also indicates all\n                                            ---------                   \nwarranty and indemnity claims in excess of $25,000 made against the Company.\n\n\n                                     -24-\n\n\n \n     II.27  Complete Copies of Materials.  The Company has delivered or made\n            ----------------------------                                    \navailable true and complete copies of each document (or summaries of same) that\nhas been requested by Parent or its counsel.\n\n     II.28  Representations Complete.  None of the representations or warranties\n            ------------------------                                            \nmade by the Company or the Principal Shareholders (as modified by the Exhibit\n                                                                      -------\nC), nor any statement made in Exhibit C or any certificate furnished by the\n                              ---------                                    \nCompany or the Principal Shareholders pursuant to this Agreement, or furnished\nin or in connection with documents mailed or delivered to the Company\nShareholders in connection with soliciting their consent to this Agreement and\nthe Merger, contains or will contain at the Closing, any untrue statement of a\nmaterial fact, or omits or will omit at the Closing to state any material fact\nnecessary in order to make the statements contained herein or therein, in the\nlight of the circumstances under which made, not misleading.\n\n     II.29  Business Plan.  The Company will provide to Parent a true and\n            -------------                                                \ncomplete copy of a business plan for the Company's planned operations during the\nperiod beginning July 1, 1997 and ending June 30, 1998 (the \"Business Plan\"),\n                                                             -------------   \nwhich will include, without limitation, a description of the Company's capital\nrequirements, staffing needs, and a pro forma income statement.  The Business\nPlan is attached to Exhibit C hereto.\n                    ---------        \n\n     II.30  Backlog Report.  The Company has provided to Parent a detailed and\n            --------------                                                    \naccurate list of all orders booked but not yet completed, giving the status of\neach order as of a recent date.  The backlog report is attached to Exhibit C\n                                                                   ---------\nhereto.\n\n     II.31  Principal Shareholder Investment Representations.  Each Principal\n            ------------------------------------------------                 \nShareholder, severally and not jointly, hereby makes all of the representations\nand warranties set forth in Section 1 of the Shareholder's Certificate attached\nhereto as Exhibit D as if such representations and warranties were set forth in\n          ---------                                                            \nfull herein.\n\n\n                                  ARTICLE III\n\n                REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB\n\n     Parent and Sub represent and warrant to the Company as follows:\n\n     III.1  Organization, Standing and Power.  Parent is a corporation duly\n            --------------------------------                               \norganized, validly existing and in good standing under the laws of the State of\nUtah.  Sub is a corporation duly organized, validly existing and in good\nstanding under the laws of Delaware.  Each of Parent and Sub has the corporate\npower to own its properties and to carry on its business as now being conducted\nand is duly qualified to do business and is in good standing in each\njurisdiction in which the failure to be so qualified would have a material\nadverse effect on the business, assets (including tangible assets), financial\ncondition, results of operations or prospects of Parent or Sub.  Parent has\ndelivered to the Company a true and correct copy of the Articles of\nIncorporation and Bylaws, each \n\n                                     -25-\n\n\n \nas amended to date, of each of Parent and Sub.\n\n     III.2  Authority; Consents.  Each of Parent and Sub has all requisite\n            -------------------                                           \ncorporate power and authority to enter into this Agreement and to consummate the\ntransactions contemplated hereby.  The execution and delivery of this Agreement\nand the consummation of the transactions contemplated hereby have been duly\nauthorized by all necessary corporate action on the part of Parent and Sub and\nno further action is required on their part to authorize the Agreement and the\ntransactions contemplated hereby and thereby.  This Agreement has been duly\nexecuted and delivered by Parent and Sub and constitutes the valid and binding\nobligations of Parent and Sub, enforceable in accordance with its terms, subject\nto the laws of general application relating to bankruptcy, insolvency and the\nrelief of debtors and rules of law governing specific performance, injunctive\nrelief or other equitable remedies. The execution and delivery of this Agreement\nby Parent and Sub does not, and, as of the Closing, the consummation of the\ntransactions contemplated hereby and thereby will not, Conflict with (i) any\nprovision of the respective Articles of Incorporation or Bylaws of Parent or\nSub, (ii) any mortgage, indenture, lease, contract or other agreement or\ninstrument, permit, concession, franchise or license to which Parent or Sub or\nany of their respective properties or assets is subject, or (iii) any judgment,\norder, decree, statute, law, ordinance rule or regulation applicable to Parent\nor Sub.  No consent, waiver, approval, or registration, declaration or filing\nwith, any Governmental Entity or any third party, including a party to any\nagreement with Parent or Sub (so as not to trigger any Conflict), is required by\nor with respect to any of the Parent or Sub in connection with the execution and\ndelivery of this Agreement or the consummation of the transactions contemplated\nhereby.\n\n     III.3  Capital Structure.\n            ----------------- \n\n          (a)  (i)  The authorized stock of Parent consists of 50,000,000 shares\nof Common Stock, $.001 par value, of which 19,137,001 shares are issued and\noutstanding and 27,988,501 shares of Preferred Stock, $.001 par value, of which\n18,678,500 shares are designated Series A Preferred Stock, 18,518,500 of which\nare issued and outstanding, and 9,310,001 shares are designated Series B\nPreferred Stock, all of which are issued and outstanding.  All such shares have\nbeen duly authorized, and all such issued and outstanding shares have been\nvalidly issued, are fully paid and nonassessable and are free of any liens or\nencumbrances other than any liens or encumbrances created by or imposed upon the\nholders thereof.  Parent has also reserved (i) 3,900,000 shares of Common Stock\nfor issuance to employees and consultants pursuant to Parent's 1996 Stock Option\nPlan and 1996 Equity Compensation Plan, (ii) 160,000 shares of Series A\nPreferred Stock for issuance upon the exercise of outstanding warrants to\npurchase Series A Preferred Stock (the \"Warrant Stock\"), (iii) 160,000 shares of\n                                        -------------                           \nCommon Stock for issuance upon conversion of the Warrant Stock, (iv) 1,000,000\nshares of Common Stock for issuance upon the exercise of warrants to purchase\nCommon Stock issued or issuable pursuant to the Company's 1997 Affiliate Warrant\nProgram, (v) 300,000 shares of Common Stock for issuance upon the exercise of\nother warrants to purchase Common Stock, and (vi) 10,000,000 shares of Common\nStock for issuance under the Parent's 1997 Acquisition Stock Option Plan.  There\nare no other options, warrants, calls, rights, commitments or agreements of any\ncharacter to which Parent is a party or by which it is bound obligating Parent\nto issue, deliver, sell, repurchase \n\n                                     -26-\n\n\n \nor redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any\nshares of the capital stock of Parent or obligating Parent to grant, extend or\nenter into any such option, warrant, call, right, commitment or agreement.\n\n          (ii) If the Closing has not occurred on or before June 30, 1997, the\nCompany shall prepare a revised version of Section 3(a)(i) above as of such\ndate, and attach it hereto as Exhibit C-1.\n                              ----------- \n\n          (b) The shares of Parent Common Stock to be issued pursuant to the\nMerger will be duly authorized, validly issued, fully paid and non-assessable\nand not subject to any unwaived preemptive rights.\n\n     III.4  Brokers' and Finders' Fees. The Parent has not incurred, nor will it\n            --------------------------                                          \nincur, directly or indirectly, any liability for brokers' or finders' fees or\nagents' commissions or any similar charges in connection with this Agreement or\nany transaction contemplated hereby.\n\n     III.5  No Changes. Except as otherwise disclosed in this Agreement or in\n            ----------                                                       \nExhibit C-1 hereto, there have been no material adverse changes to the Parent's\n- -----------                                                                    \nfinancial condition or operating results from the information contained in (i)\nParent's Franchise Offering Circular dated effective December 23, 1996, (ii) the\nConfidential Offering Memorandum dated February 1997, relating to Parent's\nSeries C Preferred Stock offering, (iii) the Parent's audited balance sheet as\nof December 31, 1996 and statements of operations and cash flows for the year\nthen ended (the \"Parent Audited Financial Statements\") and (iv) if the Closing\n                 -----------------------------------                          \nshall not have occurred on or before June 30, 1997, (A) the Parent's unaudited\npro forma consolidated balance sheet as of June 30, 1997, and the related\nunaudited pro forma consolidated statements of income and cash flows for the\nsix-month period then ended (the \"Parent Unaudited Financial Statements\"), and\n                                  -------------------------------------       \n(B) an updated version of the Audited Financial Statements, all of which Parent\nshall deliver to the Company prior to the Closing.  The Offering Circular, the\nConfidential Offering Memorandum, the Parent Audited Financial Statements, and\nthe Parent Unaudited Financial Statements are collectively referred to herein as\nthe \"Parent Documents.\"  Each financial statement included in the Parent\n     ----------------                                                   \nDocuments has been prepared in accordance with USGAAP applied on a consistent\nbasis throughout the periods indicated, and fairly presents the financial\ncondition, results of operations and cash flows of the Parent and its\nsubsidiaries as of the dates and for the periods indicated therein, subject in\nthe case of the Parent Unaudited Financial Statements, to normal year-end\nadjustments applied on a consistent basis.\n\n     III.6  Issuance of Parent Common Stock.  Parent shall at all times reserve\n            -------------------------------                                    \nsufficient shares of Parent Common Stock to satisfy any issuances required to be\nmade to the Company Shareholders and New Employees in accordance with Parent's\nobligations under this Agreement.\n\n     III.7  Representations Complete.  None of the representations or warranties\n            ------------------------                                            \nmade by Parent or Sub, nor any of the statements made in Exhibit C-1 or any\n                                                         -----------       \ncertificate furnished by Parent or Sub pursuant to this Agreement, or furnished\nin connection with the Merger, contains or will \n\n                                     -27-\n\n\n \ncontain at the Closing or at the time it was furnished to the Company\nShareholders with respect to obtaining the approval referred to in Section\n6.2(e) hereof any untrue statement of a material fact, or omits or will omit on\nthe Closing Date or at the time it was furnished to the Company Shareholders\nwith respect to the approval referred to in Section 6.2(e) hereof to state any\nmaterial fact necessary in order to make the statements contained herein or\ntherein, in light of the circumstances under which made, not misleading.\n\n     III.8  Complete Copies of Materials.  Parent has delivered or made\n            ----------------------------                               \navailable true and complete copies of each document (or summaries of same) that\nhas been requested by the Company, the Principal Shareholders or their\nrespective counsel.\n\n\n                                   ARTICLE IV\n\n                      CONDUCT PRIOR TO THE EFFECTIVE TIME\n\n     IV.1 Conduct of Business of the Company.  During the period from the date\n          ----------------------------------                                  \nof this Agreement and continuing until the earlier of the termination of this\nAgreement or the Effective Time, the Company agrees (except to the extent that\nParent shall otherwise consent in writing), to carry on its business in the\nusual, regular and ordinary course in substantially the same manner as\nheretofore conducted, to pay debts and Taxes when due, to pay or perform other\nobligations when due, and, to the extent consistent with such business, use all\nreasonable efforts consistent with past practice and policies to preserve intact\nthe Company's present business organization, keep available the services of\npresent officers and key employees and preserve relationships with customers,\nsuppliers, distributors, licensors, licensees, and others having business\ndealings with it, all with the goal of preserving unimpaired the Company's\ngoodwill and ongoing businesses at the Effective Time.  The Company shall\npromptly notify Parent of any event or occurrence or emergency not in the\nordinary course of business of the Company, and any material event involving the\nCompany. Except as expressly contemplated by this Agreement or set forth on\nExhibit C, the Company shall not, without the prior written consent of Parent:\n- ---------                                                                     \n\n          (a) Enter into any commitment or transaction not in the ordinary\ncourse of business or any commitment or transaction of the type described in\nSection 2.9 hereof;\n\n          (b) Transfer to any person or entity any rights to the Intellectual\nProperty of the Company;\n\n          (c) Enter into or amend any agreements pursuant to which any other\nparty is granted marketing, distribution or similar rights of any type or scope\nwith respect to any products of the Company;\n\n          (d) Amend or otherwise modify (or agree to do so), except in the\nordinary course of business, or violate the terms of, any of the agreements set\nforth or described in \n\n                                     -28-\n\n\n \nExhibit C;\n- --------- \n\n          (e)  Commence any litigation;\n\n          (f) Declare, set aside or pay any dividends on or make any other\ndistributions (whether in cash, stock or property) in respect of any of its\ncapital stock, or split, combine or reclassify any of its capital stock or issue\nor authorize the issuance of any other securities in respect of, in lieu of or\nin substitution for shares of capital stock of the Company, or repurchase,\nredeem or otherwise acquire, directly or indirectly, any shares of its capital\nstock (or options, warrants or other rights exercisable therefor);\n\n          (g) Issue, grant, deliver or sell or authorize or propose the\nissuance, grant, delivery or sale of, or purchase or propose the purchase of,\nany shares of its capital stock or securities con vertible into, or\nsubscriptions, rights, warrants or options to acquire, or other agreements or\ncommitments of any character obligating it to issue any such shares or other\nconvertible securities;\n\n          (h) Cause or permit any amendments to its Articles of Incorporation or\nBylaws;\n\n          (i) Acquire or agree to acquire by merging or consolidating with, or\nby purchasing any assets or equity securities of, or by any other manner, any\nbusiness or any corporation, partnership, association or other business\norganization or division thereof, or otherwise acquire or agree to acquire any\nassets which are material, individually or in the aggregate, to its business;\n\n          (j) Sell, lease, license or otherwise dispose of any of its properties\nor assets, except in the ordinary course of business and consistent with past\npractices;\n\n          (k) Incur any indebtedness for borrowed money or guarantee any such\nindebtedness or issue or sell any debt securities or guarantee any debt\nsecurities of others;\n\n          (l) Grant any loans to others or purchase debt securities of others or\namend the terms of any outstanding loan agreement, except in the ordinary course\nof business and consistent with past practices;\n\n          (m) Grant any severance or termination pay (i) to any director or\nofficer or (ii) to any other employee except payments made pursuant to standard\nwritten agreements outstanding on the date hereof;\n\n          (n) Adopt or amend any employee benefit plan, or enter into any\nemployment contract, pay or agree to pay any special bonus or special\nremuneration to any director or employee, or increase the salaries or wage rates\nof its employees;\n\n          (o) Revalue any of its assets, including without limitation writing\ndown the \n\n                                     -29-\n\n\n \nvalue of inventory or writing off notes or accounts receivable other than in the\nordinary course of business;\n\n          (p) Take any action which could jeopardize the tax-free reorganization\nhereunder;\n\n          (q) Pay, discharge or satisfy, in an amount in excess of $10,000 (in\nany one case) or $25,000 (in the aggregate), any claim, liability or obligation\n(absolute, accrued, asserted or unasserted, contingent or otherwise), other than\nthe payment, discharge or satisfaction in the ordinary course of business of\nliabilities reflected or reserved against in the Company Financials (or the\nnotes thereto);\n\n          (r) Make or change any material election in respect of Taxes, adopt or\nchange any accounting method in respect of Taxes, enter into any closing\nagreement, settle any claim or assessment in respect of Taxes, or consent to any\nextension or waiver of the limitation period applicable to any claim or\nassessment in respect of Taxes;\n\n          (s) Enter into any strategic alliance or joint marketing arrangement\nor agreement; or\n\n          (t) Take, or agree in writing or otherwise to take, any of the actions\ndescribed in Sections 4.1(a) through (s) above, or any other action that would\nprevent the Company from performing or cause the Company not to perform its\ncovenants hereunder.\n\n          If the Closing shall not have occurred on or before June 30, 1997, the\nParent shall be deemed to have consented to any action taken by the Company that\nwould otherwise constitute a breach of a covenant set forth in this Section 4.1,\nprovided that each such action is set forth on the revised version of Exhibit C\n- -------- ----                                                         ---------\nprepared as of such date.\n\n     IV.2 No Solicitation.  Until the earlier of the Effective Time or the date\n          ---------------                                                      \nof termination of this Agreement pursuant to the provisions of Section 8.1\nhereof, neither the Company nor any of the Principal Shareholders will (nor will\nthe Company permit any of the Company's officers, directors, agents,\nrepresentatives or affiliates to) directly or indirectly, take any of the\nfollowing actions with any party other than Parent and its designees:  (a)\nsolicit, conduct discussions with or engage in negotiations with any person,\nrelating to the possible acquisition of the Company (whether by way of merger,\npurchase of capital stock, purchase of assets or otherwise) or any material\nportion of its or their capital stock or assets, (b) provide information with\nrespect to it to any person, other than Parent, relating to the possible\nacquisition of the Company (whether by way of merger, purchase of capital stock,\npurchase of assets or otherwise) or any material portion of its or their capital\nstock or assets, (c) enter into an agreement with any person, other than Parent,\nproviding for the acquisition of the Company (whether by way of merger, purchase\nof capital stock, purchase of assets or otherwise) or any material portion of\nits or their capital stock or assets or (d) make or authorize any statement,\nrecommendation or solicitation in support of any possible\n\n                                     -30-\n\n\n \nacquisition of the Company (whether by way of merger, purchase of capital stock,\npurchase of assets or otherwise) or any material portion of its or their capital\nstock or assets by any person, other than by Parent. In addition to the\nforegoing, if the Company or any Principal Shareholder receives prior to the\nEffective Time or the termination of this Agreement any offer or proposal\nrelating to any of the above, the Company or the Principal Shareholder, as\napplicable shall immediately notify Parent thereof, including information as to\nthe identity of the offeror or the party making any such offer or proposal and\nthe specific terms of such offer or proposal, as the case may be, and such other\ninformation related thereto as Parent may reasonably request.\n\n\n                                   ARTICLE V\n\n                             ADDITIONAL AGREEMENTS\n\n     V.1  Parent's Right of First Refusal.\n          ------------------------------- \n\n          (a) Parent's Right of First Refusal.  Before any shares issued\n              -------------------------------                           \npursuant to this Agreement (the \"Shares\") may be sold or otherwise transferred\n                                 ------                                       \n(including transfer by gift or operation of law), or any Shares held by a\ntransferee (either being sometimes referred to herein as the \"Holder\") may be\n                                                              ------         \nsold, the Parent or its assignee(s) shall have a right of first refusal to\npurchase such Shares on the terms and conditions set forth in this Section (the\n\"Right of First Refusal\").\n ----------------------   \n\n          (b) Notice of Proposed Transfer.  The Holder of the Shares shall\n              ---------------------------                                 \ndeliver to the Parent a written notice (the \"Notice\") stating:  (i) the Holder's\n                                             ------                             \nbona fide intention to sell or otherwise transfer such Shares; (ii) the name of\neach proposed purchaser or other transferee (\"Proposed Transferee\"); (iii) the\n                                              -------------------             \nnumber of Shares to be transferred to each Proposed Transferee; and (iv) the\nbona fide cash price or other consideration for which the Holder proposes to\ntransfer the Shares (the \"Offered Price\"), and the Holder shall offer the Shares\n                          -------------                                         \nat the Offered Price to the Parent or its assignee(s).\n\n          (c) Exercise of Right of First Refusal.  At any time within thirty\n              ----------------------------------                            \n(30) days after receipt of the Notice, the Parent or its assignee(s) may, by\ngiving written notice to the Holder, elect to purchase all, but not less than\nall, of the Shares proposed to be transferred to any one or more of the Proposed\nTransferees, at the purchase price determined in accordance with subsection (d)\nbelow.\n\n          (d) Purchase Price.  The purchase price (\"Parent Purchase Price\") for\n              --------------                        ---------------------      \nthe Shares purchased by the Parent or its assignee(s) under this Section shall\nbe the Offered Price.  If the Offered Price includes consideration other than\ncash, the Parent may match such non-cash considera tion with such other cash or\nnon-cash consideration as shall be determined by the Board of Directors of the\nParent in good faith.  If the Shares are being transferred by gift (other than\npursuant to Section 5.1(g) below), the Parent Purchase Price shall be the\nproduct of the Fair Value \n\n                                     -31-\n\n\n \nPer Share multiplied by the number of Shares proposed to be gifted.\n\n          (e) Payment.  Payment of the Parent Purchase Price shall be made, at\n              -------                                                         \nthe option of the Parent or its assignee(s), in cash (by check), by wire\ntransfer, by cancellation of all or a portion of any outstanding indebtedness of\nthe Holder to the Parent (or, in the case of repurchase by an assignee, to the\nassignee), or by any combination thereof within 30 days after receipt of the\nNotice or in the manner and at the times set forth in the Notice; provided,\n                                                                  -------- \nhowever, that no claims by Parent for indemnification for Losses from the Escrow\n- -------                                                                         \nFund or the Principal Shareholders which have been disputed by the Principal\nShareholders shall be considered \"indebtedness\" for purposes of this Section\n                                  ------------                              \n5.1(e).\n\n          (f) Holder's Right to Transfer.  If all of the Shares proposed in the\n              --------------------------                                       \nNotice to be transferred to a given Proposed Transferee are not purchased by the\nParent or its assignee(s) as provided in this Section, then the Holder may sell\nor otherwise transfer such Shares to that Proposed Transferee at the Offered\nPrice or at a higher price, provided that such sale or other transfer is\nconsummated within 120 days after the date of the Notice and provided further\nthat any such sale or other transfer is effected in accordance with any\napplicable securities laws and the Proposed Transferee agrees in writing that\nthe provisions of this Section shall continue to apply to the Shares in the\nhands of such Proposed Transferee.  If the Shares described in the Notice are\nnot transferred to the Proposed Transferee within such period, a new Notice\nshall be given to the Parent, and the Parent or its assignees shall again be\noffered the Right of First Refusal before any Shares held by the Holder may be\nsold or otherwise transferred.\n\n          (g) Exception for Certain Family Transfers.  Anything to the contrary\n              --------------------------------------                           \ncontained in this Section notwithstanding, the transfer of any or all of the\nShares during the Holder's lifetime or on the Holder's death by will or\nintestacy to the Holder's immediate family or a trust for the benefit of the\nHolders immediate family shall be exempt from the provisions of this Section.\n\"Immediate Family\" as used herein shall mean spouse, lineal descendant or\n ----------------                                                        \nantecedent, brother or sister.  In such case, the transferee or other recipient\nshall receive and hold the Shares so transferred subject to the provisions of\nthis Section, and there shall be no further transfer of such Shares except in\naccordance with the terms of this Section.\n\n          (h) Termination of Right of First Refusal.  The Right of First Refusal\n              -------------------------------------                             \nshall terminate as to any Shares 90 days after the first sale of Common Stock of\nthe Parent to the general public pursuant to a registration statement filed with\nand declared effective by the Securities and Exchange Commission under the\nSecurities Act of 1933, as amended.\n\n     V.2  Market Standoff Agreement.  Each Company Shareholder hereby agrees\n          -------------------------                                         \nthat if so requested by the Parent or any representative of the underwriters in\nconnection with any registration of the offering of any Shares under the\nSecurities Act, such Company Shareholder shall not sell or otherwise transfer,\npledge, hypothecate or otherwise decrease his market risk or beneficial\nownership in any Shares or other securities of the Parent during the 180-day\nperiod following the date of the final Prospectus contained in a registration\nstatement of the Parent filed under the \n\n                                     -32-\n\n\n \nSecurities Act; provided, however, that such restriction shall only apply to the\nfirst registration statement of the Parent to become effective under the\nSecurities Act which includes securities to be sold on behalf of the Parent to\nthe general public in an underwritten public offering under the Securities Act.\nThe Parent may impose stop-transfer instructions with respect to securities\nsubject to the foregoing restrictions until the end of such 180-day period.\n\n     V.3  Restriction on Competition.\n          -------------------------- \n\n          (a) Restricted Activities.  For a period of three (3) years beginning\n              ---------------------                                            \non the Closing Date, no Principal Shareholder shall:\n\n          (i) engage in, including as an employee, consultant or otherwise, or\nown any interest (except as a passive investor of less than five percent (5%) of\ntotal debt and equity) in any business or other activity that would compete with\nthe Parent's; or\n\n          (ii) divert or attempt to divert any existing or prospective business\nor customers of the Parent (including any affiliates of the Parent) to any other\nperson or entity, by direct or indirect inducement or otherwise, or do or\nperform, directly or indirectly, any other act injurious or prejudicial to the\ngoodwill associated with the Parent or its affiliates; or\n\n          (iii)     solicit any person for employment who is at that time\nalready employed by Parent or any of its affiliates, or otherwise directly or\nindirectly induce or seek to induce such person to leave his or her employment.\n\n          (b)  Scope of Restriction.\n               -------------------- \n\n          (i) This Section shall apply in the SMSA where the Company is\nlocated.\n\n          (ii) In the event that any other provision of this Section 5.3 or the\napplication of any such provision shall be held to be prohibited or\nunenforceable in any jurisdiction, such provision shall, as to such\njurisdiction, be ineffective to the extent of such prohibition or\nunenforceability.  The remaining provisions of this covenant to refrain from\ncompetition shall remain in full force and effect, and any such prohibition or\nunenforceability in any jurisdiction shall not invalidate or render\nunenforceable such provision in any other jurisdiction.  The parties shall use\ntheir best efforts to replace the provision that is contrary to law with a legal\none approximating to the extent possible the original intent of the parties.\n\n          (iii)  In the event that a Principal Shareholder, who also is a New\nEmployee, is terminated from employment by Parent without cause at any time\nwithin three (3) years of the Closing Date, then the term of the restrictions\nimposed by this Section 5.3 shall be reduced to six (6) months and that\nterminated Principal Shareholder\/New Employee shall receive severance benefits\nfrom Parent equal to six (6) months salary and employee benefits. For the\npurposes solely of this Agreement, \"cause\" for a Principal Shareholder's\n                                    -----                               \ntermination shall exist at \n\n                                     -33-\n\n\n \nany time upon the occurrence of any of the following events:\n\n          (c) acts of dishonesty by the Principal Shareholder;\n\n          (d) gross negligence or willful malfeasance by the Principal\nShareholder in the performance of his duties;\n\n          (e) the Principal Shareholder's conviction of a crime relating to his\nemployment, or of any felony;\n\n          (f) physical or mental disability of the Principal Shareholder which\nprevents performance of his duties for a consecutive period of at least 120\ndays, or at least 150 days in a period of 200 days; or\n\n          (g) death of the Principal Shareholder.\n\n     V.4  Confidentiality.  Each of the parties hereto hereby agrees to keep\n          ---------------                                                   \nsuch information or knowledge obtained pursuant to the negotiation and execution\nof this Agreement, or the effectuation of the transactions contemplated hereby,\nconfidential; provided, however, that the foregoing shall not apply to\n              --------  -------                                       \ninformation or knowledge which (a) a party can demonstrate was already lawfully\nin its possession prior to the disclosure thereof by the other party, (b) is or\nbecomes generally known to the public and did not become so known through any\nviolation of law or this Agreement by the non-disclosing party, (c) is later\nlawfully acquired by such party from other sources, or (d) is required to be\ndisclosed by order of court or government agency after seeking any reasonably\navailable protection against general disclosure; it being understood that the\nparties may disclose relevant information and knowledge to their respective\nemployees and agents on a need to know basis, provided that the parties cause\nsuch employees and agents to treat such information and knowledge\nconfidentially.\n\n     V.5  Expenses.  Whether or not the Acquisition is consummated, all fees and\n          --------                                                              \nexpenses incurred in connection with the Acquisition including, without\nlimitation, all legal, accounting, financial advisory, consulting and all other\nfees and expenses of third parties incurred by a party in connection with the\nnegotiation and effectuation of the terms and conditions of this Agreement and\nthe transactions contemplated hereby, shall be the obligation of the respective\nparty incurring such fees and expenses.\n\n     V.6  Public Disclosure.  Unless otherwise required by law or any applicable\n          -----------------                                                     \nrule of a stock exchange or quotation system upon which a parties' securities\nare listed, prior to the Closing Date, no disclosure (whether or not in response\nto an inquiry) of the subject matter of this Agreement shall be made by the\nCompany or the Principal Shareholders unless (a) approved by Parent prior to\nrelease, provided that such approval shall not be unreasonably withheld, subject\nto Parent's and the Company's or the Principal Shareholders' obligation to\ncomply with applicable securities laws or fiduciary obligations, and (b) except\nthat the Company and the Principal Shareholders shall be entitled to disclose\ninformation necessary to respond to or explain any \n\n                                     -34-\n\n\n \nmaterially inaccurate public disclosure made by Parent or Sub concerning this\nAgreement or the transactions contemplated hereby.\n\n     V.7  Post-Closing Employment of Company Employees.\n          -------------------------------------------- \n\n          (a) Company shall terminate each employee of Company on and as of the\nClosing Date, effective as of close of business on the Closing Date.  Except as\nprovided in Section 5.19 hereof Parent will hire on the Closing Date, effective\nas of the close of business on the Closing Date, on an \"at will\" basis and\n                                                        -------           \nsubject to Parent's terms, conditions and policies of employment, if any, each\nof those persons who are employed by Company and are terminated by Company on\nthe Closing Date pursuant to the foregoing sentence.  Nothing contained in this\nSection is intended or shall be deemed to (a) require Parent to employ such\npersons for any fixed or pre-determined time after the Closing, or (b) confer\nupon any employee of Company, past, present, or future, any rights of employment\nof any nature, it being understood and agreed that the provisions of this\nSection are intended to set forth an agreement among Parent and Company, and are\nnot intended to benefit any persons not party to this Agreement, including such\nemployees.  Parent and Company hereby agree to adopt the alternate procedure of\nRev. Proc. 96-60 for purposes of employer payroll withholding.\n\n          (b) In connection with hiring the Company's employees (the \"New\n                                                                      ---\nEmployees\") as set forth in Section 5.7(a) above, Parent shall grant to the New\n- ---------                                                                      \nEmployees stock options (each an \"Original Option\") to purchase Parent Common\n                                  ---------------                            \nStock in an aggregate number equal to the number of shares paid as the Original\nPurchase Price.  Such stock options shall be incentive stock options to the\nextent permissible under applicable law.  Such incentive stock options shall be\nissued to the New Employees, and in the amounts, requested by the Company in\nwriting at the Closing.  The exercise price of each option shall be the fair\nmarket value of the Common Stock subject to such option on the Closing Date as\ndetermined in good faith and authorized by the Board of Directors of the Parent.\nSuch options shall not be exercisable at the date of grant, but shall become\nexercisable as to one-thirty-sixth (1\/36) of the shares subject to such option\neach month after the Closing Date, provided, however, that no option shall\nbecome exercisable with respect to any shares at any time following the date\nthat the New Employee to whom the option was granted ceases to be an employee or\nconsultant of the Parent (an \"Employee Termination\"), and provided further that\n                              --------------------                             \nthe term of any such option shall expire if not exercised, and to the extent not\nexercisable, ninety (90) days after the date of the Employee Termination.\nAccordingly, any New Employee who receives an option must exercise it (but only\nto the extent then exercisable), if at all, within ninety (90) days after an\nEmployee Termination.  Notwithstanding the foregoing, in the event of any\nEmployee Termination due to the death or disability of the New Employee, the New\nEmployee or his estate shall have twelve (12) months to exercise the option to\nthe extent it was exercisable on the date of the Employee Termination;\nthereafter, the option shall terminate as to any unexercised portion.  New\nEmployee acknowledges that New Employee may be taxed under the Code on the\ndifference between the fair market value of shares purchased pursuant to any\nexercised option less the exercise price paid on the date of any such exercise\nand that the Parent may withhold any applicable taxes from New Employee's\nregular pay or, if insufficient, that New \n\n                                     -35-\n\n\n \nEmployee will make any required withholding payment to the Parent. New Employee\nalso acknowledges that there may be state or local tax due upon exercise of the\noption, and that any such tax is the obligation of the New Employee and not the\nParent. The terms of the options as described in this paragraph are subject to\nthe definitive form of option agreement attached hereto as Exhibit E.\n                                                           --------- \n\n          (c) Also in connection with hiring the New Employees, Parent agrees to\nissue to each of them a bonus payable in Parent Common Stock equal to the\naggregate exercise price of the Original Options (the \"Stock Bonus\").  The Stock\n                                                       -----------              \nBonus shall be, as to each New Employee, for such number of shares of Parent\nCommon Stock as shall be equal, on the date paid, and in the good faith judgment\nof the Parent's Board of Directors, to the aggregate exercise price of the\nexercisable portion of such New Employee's Original Option.  The Stock Bonus\nshall be made to such New Employee on the earlier of: (i) in the event that the\nNew Employee's employment by Parent or any wholly owned subsidiary of Parent\nterminates before the date five years subsequent to the date of this Agreement,\non the date of such termination (but only that number of shares required\npursuant to this paragraph), (ii) if on the date three years subsequent to the\ndate of this Agreement the Parent shall have a class of equity securities that\nhas been publicly traded on a national exchange or quotation system for at least\n180 days, then on such date three years subsequent to the date of this Agreement\nand (iii) in the event that on the date three years subsequent to the date of\nthis Agreement the Parent shall not have a class of equity securities that has\nbeen publicly traded on a national securities exchange or quotation system for\nat least 180 days, then on the first business day after the date three years\nsubsequent to the date of this Agreement that the Parent shall have a class of\nequity securities that has been publicly traded on a national securities\nexchange or quotation system for 180 days.  New Employee acknowledges that there\nmay be federal, state or local tax due upon receipt of the Stock Bonus, that\nParent may withhold any applicable taxes from New Employee's regular pay or, if\ninsufficient, that New Employee will make any required withholding payment to\nParent, and that any such tax is the obligation of the New Employee and not the\nParent.\n\n          (d) In addition to the Original Option and the Stock Bonus, in the\nevent that any additional shares of Parent's Common Stock are issued pursuant to\nthe Purchase Price Adjustment provisions of Section 1.10, an additional option,\nin form and substance substantially similar to the Original Option (but with an\nexercise price determined based on the date of issuance) (the \"Additional\n                                                               ----------\nOption\"), and an additional stock bonus commitment (the \"Additional Stock\n- ------                                                   ----------------\nBonus\") proportionate to the Additional Option, in form and substance\n- -----\nsubstantially similar to that described in paragraph (c) of this Section, shall\nbe issued by the Parent to any then-remaining employee or consultant of Parent\nor Sub who received an Original Option.  The number of shares subject to any\nsuch Additional Option shall be calculated by taking the number of shares issued\npursuant to such Purchase Price Adjustment provisions multiplied by three (3)\nand then determining the individual recipients' pro rata share based on the\nnumber of shares subject to each recipient's Original Option compared to the\nnumber of shares subject to the total of Original Options granted to then\nremaining employees and consultants.  For each recipient, the number of shares\ngranted in the Additional Stock Bonus shall be proportionate to the Additional\nOption.  Any \n\n                                     -36-\n\n\n \nsuch Additional Options and Additional Stock Bonuses shall be granted at the\nnext regularly scheduled meeting of the Parent's board of directors following\nthe date of any Purchase Price Adjustment pursuant to Section 1.10.\n\n     V.8  Treatment of Affiliate Warrants.  To the extent that any affiliate of\n          -------------------------------                                      \nthe Company has received or has the right to receive any warrants under Parent's\nAffiliate Warrant Program, the warrants received or to be received thereunder\nshall remain in full force and effect and, to the extent required to make\ncalculations of shares issuable under such warrants, Parent shall estimate in\ngood faith the business measures of the Surviving Corporation as necessary to\nsuch calculations, with the intent of preserving the economic value of such\nwarrants to the holders thereof following the completion of the acquisition\ncontemplated hereby.\n\n     V.9  Access to Information.  The Company shall afford Parent and its\n          ---------------------                                          \naccountants, counsel and other representatives, reasonable access during normal\nbusiness hours during the period prior to the Effective Time to (a) all of the\nCompany's properties, books, contracts, commitments and records, and (b) all\nother information concerning the business, properties and personnel (subject to\nrestrictions imposed by applicable law) of the Company as Parent may reasonably\nrequest.  The Company agrees to provide to Parent and its accountants, counsel\nand other representatives copies of internal financial statements promptly upon\nrequest.  No information or knowledge obtained in any investigation pursuant to\nthis Section 5.9 shall affect or be deemed to modify any representation or\nwarranty contained herein or the conditions to the obligations of the parties to\nconsummate the Merger.\n\n     V.10 Consents.  The Company shall use its best efforts to obtain the\n          --------                                                       \nconsents, waivers and approvals under any of the Contracts as may be required in\nconnection with the Merger (all of such consents, waivers and approvals are set\nforth in Exhibit C) so as to preserve all rights of, and benefits to, the\n         ---------                                                       \nCompany thereunder.\n\n     V.11 FIRPTA Compliance.  On the Closing Date, the Company shall deliver to\n          -----------------                                                    \nParent a properly executed statement in a form reasonably acceptable to Parent\nfor purposes of satisfying Parent's obligations under Treasury Regulation\nSection 1.1445-2(c)(3).\n\n     V.12 Best Efforts.  Subject to the terms and conditions provided in this\n          ------------                                                       \nAgreement, each of the parties hereto shall use its best efforts to take\npromptly, or cause to be taken, all actions, and to do promptly, or cause to be\ndone, all things necessary, proper or advisable under applicable laws and\nregulations to consummate and make effective the transactions contemplated\nhereby to obtain all necessary waivers, consents and approvals and to effect all\nnecessary registrations and filings and to remove any injunctions or other\nimpediments or delays, legal or otherwise, in order to consummate and make\neffective the transactions contemplated by this Agreement for the purpose of\nsecuring to the parties hereto the benefits contemplated by this Agreement;\nprovided that, other than as set forth in or contemplated by this Agreement,\n- -------- ----                                                               \nneither the Parent nor the Company or any Principal Shareholder shall be\nrequired to agree to any divestiture by the Parent or the Company or any of the\nParent's or the Company's subsidiaries or affiliates of shares of capital \n\n                                     -37-\n\n\n \nstock or of any business, assets or property of the Parent or its affiliates or\nof the Company or its affiliates, or the imposition of any material limitation\non the ability of any of them to conduct their businesses or to own or exercise\ncontrol of such assets, properties and stock.\n\n     V.13 Notification of Certain Matters.  The Company shall give prompt notice\n          -------------------------------                                       \nto Parent, and Parent shall give prompt notice to the Company, of (i) the\noccurrence or non-occurrence of any event, the occurrence or non-occurrence of\nwhich is likely to cause any representation or warranty of the Company or the\nPrincipal Shareholders and Parent, respectively, contained in this Agreement to\nbe untrue or inaccurate at or prior to the Effective Time and (ii) any failure\nof the Company or Parent, as the case may be, to comply with or satisfy any\ncovenant, condition or agreement to be complied with or satisfied by it\nhereunder; provided, however, that the delivery of any notice pursuant to this\nSection 5.13 shall not limit or otherwise affect any remedies available to the\nparty receiving such notice.\n\n     V.14 Preparation of Tax Returns.  The Principal Shareholders shall prepare\n          --------------------------                                           \nor cause to be prepared and file or cause to be filed all Tax Returns for the\nCompany for all periods ending on or prior to the Closing Date which are\nrequired to be filed after the Closing Date.  Such returns shall be prepared in\naccordance with applicable law and past practices consistently applied.  The\nPrincipal Shareholders shall permit Parent to review and comment on each such\nTax Return prior to filing; provided, however, that any such review by Parent\n                            --------  -------                                \nshall be completed prior to, and the Principal Shareholders shall be entitled to\ncause such Tax Returns to be filed by, any applicable filing deadline.  Parent\nshall cause Sub to afford the Principal Shareholders access during normal\nbusiness hours to all of the books and records (financial and otherwise) of the\nSub or the Company relating to any period prior to the Closing Date and\nnecessary for the preparation of such tax Returns, and to cause the Tax Returns\nto be properly executed, timely filed and vigorously defended in any audit or\nother review by the applicable tax authorities.  To the extent not reserved\nagainst or provided for in the Company Financials or the Company's accounts\nexisting on or prior to the Closing Date, the Principal Shareholders shall\nreimburse the Company for any Taxes of the Company with respect to all periods\nor portions thereof ending on or prior to the Closing Date.\n\n     V.15 Additional Documents and Further Assurances.  Each party hereto, at\n          -------------------------------------------                        \nthe request of another party hereto, shall execute and deliver such other\ninstruments and do and perform such other acts and things as may be necessary or\ndesirable for effecting completely the consummation of this Agreement and the\ntransactions contemplated hereby.\n\n     V.16 Section 368 Compliance.  From and after the Effective Time, neither\n          ----------------------                                             \nParent, Sub, or the Company shall take any action that will cause the Merger not\nto be treated as a reorganization within the meaning of Section 368 of the\nInternal Revenue Code of 1986, as amended (the \"Code\").\n                                                ----   \n\n     V.17 Parent Policies.  The Company and Principal Shareholders acknowledge\n          ---------------                                                     \nthat Parent has implemented policies regarding the operation of subsidiary\nentities such as the Company will be following the Merger. The Company and\nPrincipal Shareholders acknowledge and agree that \n\n                                     -38-\n\n\n \nsuch policies, or any such amended or replacement policies that are reasonably\nsimilar in scope, nature or effect, are anticipated to be in place following the\nMerger, and the Company and Principal Shareholders hereby indicate their\nintention to act in substantial compliance with all such policies subject to the\nprovisions of Section 5.19 hereof. Such policies shall not provide for Parent\noverhead allocations from Parent to Company or Sub, unless otherwise agreed in\nadvance by the parties.\n\n     V.18 Similar Transactions.  Each party understands and agrees that the\n          --------------------                                             \nParent may acquire other entities that are in a business similar to that of the\nCompany.  In the event that, prior to the Second Adjustment Date, Parent\nacquires another entity similar to the Company on terms substantially more\nfavorable to the equity owners of such entity after taking into account the\nsimilarities and differences of the businesses, then the valuation of the\nCompany at the First Adjustment Date and the Second Adjustment Date shall be\nrecalculated to take into account such favorable treatment and the First\nAdjustment to Purchase Price and Second Adjustment to Purchase Price shall be\nrecalculated promptly on such more favorable basis.  Any additional shares due\nto the Company Shareholders upon such recalculation shall be issued promptly to\nthe Company Shareholders.\n\n     V.19 Operation of Sub During Adjustment Periods.  In consideration of, and\n          ------------------------------------------                           \nto accommodate the unusually high rate of growth projected for, the Surviving\nCorporation in the Business Plan (which has been thoroughly reviewed by and\nagreed to by the Parent after numerous changes and modifications to accomodate\nthe Parent's needs and desires going forward), the Parent, Sub, the Company and\nthe Principal Shareholders agree to the following:\n\n          (a) The Parent and each Principal Shareholder shall have entered into\nan employment agreement substantially in the form attached hereto as Exhibit F.\n                                                                     --------- \n\n          (b) Until the close of business on the last business day of the\ntwelfth full month after the Closing Date:\n\n          (i) Sub shall have the same geographic terms it had while operating as\na franchisee of Parent prior to the transaction contemplated hereby until Parent\nand the Principal Shareholders shall mutually agree otherwise.\n\n          (ii)  If the Shareholder Representative of Sub so requests in writing\n(the \"Funding Request\"), Parent agrees to transfer to Sub's bank account within\n      ---------------                                                          \nfive (5) days of receipt of a Funding Request sufficient cash to fund (1) the\noperating losses of Sub (without taking into account any non-cash charges, such\nas depreciation or amortization) plus (2) any other expenditures of cash which\nSub reflects to make which are not reflected in the computation of the operating\nloss, it being the intention of the parties hereto that the funding commitment\nby Parent to Sub pursuant to this Section 5.19(b)(ii) is based on negative\ncashflow that is not affected by non-cash occurrences.  The calculation of the\nsum of (1) and (2) above must be set forth in the Funding Request and is subject\nto the review of Parent to ensure a correct computation.  The maximum amount of\nfunds that Parent shall be obligated to transfer pursuant to this subsection\n5.19(b)(ii) shall \n\n                                     -39-\n\n\n \nbe the Monthly Limit (as defined below) in any particular calendar month and\n$1,200,000 in the aggregate. The Monthly Limit shall initially be set at\n$250,000 for the month of July 1997, and shall be increased (or decreased) for\neach successive calendar month by the amount by which the aggregate amount of\nfunds transferred by Parent pursuant to this subsection 5.19(b)(ii) is lower (or\ngreater) than the prior month's Monthly Limit. For example, if in the first\nmonth Parent transfers $200,000, then the Monthly Limit in the second month\nshall be increased to $300,000; if in the second month the Parent transfers\n$350,000, then the Monthly Limit in the third month shall be reduced to\n$250,000. Notwithstanding the foregoing, Parent's obligation to provide funds to\nSub pursuant to this subsection 5.19(b)(ii) shall terminate and be nonrenewable\nif the cumulative sum from July 1, 1997 to the last day of any calendar month\nsubsequent to the Closing Date of either the \"Total Revenues\" or the \"Profit (or\nLoss) Before Taxes\" of the Sub is below (or above in the case of a projected\nloss) 100% of the projected cumulative sum set forth in the Business Plan to the\nlast day of such calendar month.\n\n          (iii)     Parent agrees not to direct Sub to take any action\nmaterially inconsistent with the Business Plan unless (A) substantially all of\nParent's subsidiaries are being directed to take similar action or (B) the\naction is designed to increase Sub's valuation as calculated by the Valuation\nModel.\n\n          (c) The Principal Shareholders shall have the right to cause the Sub\nto retain as consultants, under four-year contracts, any non-employee Company\nShareholders, and such consultants shall have the same rights and privileges as\nall other Company Shareholders (including, without limitation, the right to\nparticipate (i) as Company Shareholders in all Purchase Price Adjustments, and\n(ii) as New Employees with respect to the Original Options, Additional Options,\nand the Stock Bonus and the Additional Stock Bonus(es) referred to in Section\n5.7 hereof), other than any rights granted to each Principal Shareholder\npursuant to Section 5.19(a) above and the form of employment agreement attached\nhereto as Exhibit F.\n          --------- \n\n\n                                   ARTICLE VI\n\n                            CONDITIONS TO THE MERGER\n\n     VI.1 Conditions to Obligations of Each Party to Effect the Merger.  The\n          ------------------------------------------------------------      \nrespective obligations of each party to this Agreement to effect the Merger\nshall be subject to the satisfaction at or prior to the Effective Time of the\nfollowing conditions:\n\n          (a) No Injunctions or Restraints; Illegality.  No temporary\n              ----------------------------------------               \nrestraining order, preliminary or permanent injunction or other order issued by\nany court of competent jurisdiction or other legal restraint or prohibition\npreventing the consummation of the Merger shall be in effect, nor shall any\nproceeding brought by an administrative agency or commission or other\ngovernmental authority or instrumentality, domestic or foreign, seeking any of\nthe foregoing be pending; nor shall there be any action taken, or any statute,\nrule, regulation or order enacted, \n\n                                     -40-\n\n\n \nentered, enforced or deemed applicable to the Merger, which makes the\nconsummation of the Merger illegal.\n\n          (b) Litigation.  There shall be no action, suit, claim or proceeding\n              ----------                                                      \nof any nature pending, or overtly threatened, against the Parent, Sub or the\nCompany, their respective properties or any of their officers or directors,\narising out of, or in any way connected with, the Merger or the other\ntransactions contemplated by the terms of this Agreement.\n\n     VI.2 Additional Conditions to Obligations of Company.  The obligations of\n          -----------------------------------------------                     \nthe Company and the Principal Shareholders to consummate and effect this\nAgreement and the transactions contemplated hereby shall be subject to the\nsatisfaction at or prior to the Effective Time of each of the following\nconditions, any of which may be waived, in writing, exclusively by the Company:\n\n          (a) Representations, Warranties and Covenants.  The representations\n              -----------------------------------------                      \nand warranties of Parent and Sub in this Agreement shall be true and correct in\nall material respects on and as of the Effective Time as though such\nrepresentations and warranties were made on and as of such time and each of\nParent and Sub shall have performed and complied in all material respects with\nall covenants and obligations of this Agreement required to be performed and\ncomplied with by it as of the Effective Time.\n\n          (b) Certificate of the Parent.  Company shall have been provided with\n              -------------------------                                        \na certificate executed on behalf of the Parent by its President to the effect\nthat, as of the Effective Time:\n\n          (i) all representations and warranties made by the Parent and Sub in\nthis Agreement are true and correct in all material respects;\n\n          (ii) all covenants and obligations of this Agreement to be performed\nby the Parent on or before such date have been so performed in all material\nrespects.\n\n          (c) Claims.  There shall not have occurred any claims (whether or not\n              ------                                                           \nasserted in litigation) which may materially and adversely affect the\nconsummation of the transactions contemplated hereby or the business, assets\n(including intangible assets), financial condition, results of operations of the\nParent.\n\n          (d) No Material Adverse Changes.  There shall not have occurred any\n              ---------------------------                                    \nmaterial adverse change in the business, assets (including intangible assets),\nfinancial condition, results of operations of the Parent, taken as a whole since\nDecember 31, 1996.\n\n          (e) Company Stockholder Approval.  The Company's stockholders shall\n              ----------------------------                                   \nhave approved the Agreement and the Merger and the transactions contemplated\nthereby in accordance with Delaware Law.\n\n     VI.3 Additional Conditions to the Obligations of Parent and Sub.  The\n          ----------------------------------------------------------      \nobligations of \n\n                                     -41-\n\n\n \nParent and Sub to consummate and effect this Agreement and the transactions\ncontemplated hereby shall be subject to the satisfaction at or prior to the\nEffective Time of each of the following conditions, any of which may be waived,\nin writing, exclusively by Parent:\n\n          (a) Representations, Warranties and Covenants.  The representations\n              -----------------------------------------                      \nand warranties of the Company and the Principal Shareholders in this Agreement\nshall be true and correct in all material respects on and as of the Effective\nTime as though such representations and warranties were made on and as of the\nEffective Time and the Company shall have performed and complied in all material\nrespects with all covenants and obligations of this Agreement required to be\nperformed and complied with by it as of the Effective Time.\n\n          (b) Certificate of the Company and Principal Shareholders.  Parent\n              -----------------------------------------------------         \nshall have been provided with a certificate executed by the Principal\nShareholders and executed on behalf of the Company by its Chief Executive\nOfficer to the effect that, as of the Effective Time:\n\n          (i) all representations and warranties made by the Company and the\nPrincipal Shareholders in this Agreement are true and correct in all material\nrespects; and\n\n          (ii) all covenants and obligations of this Agreement to be performed\nby the Company on or before such date have been so performed in all material\nrespects.\n\n          (c) Claims.  There shall not have occurred any claims (whether or not\n              ------                                                           \nasserted in litigation) which may materially and adversely affect the\nconsummation of the transactions contemplated hereby or may have a Material\nAdverse Effect.\n\n          (d) Third Party Consents.  Any and all consents, waivers, and\n              --------------------                                     \napprovals listed in Exhibit C shall have been obtained.\n                    ---------                          \n\n          (e) Shareholder Certificate.  Each of the Company Shareholders shall\n              -----------------------                                         \nhave executed and delivered to Parent a Shareholder Certificate in the form\nattached hereto as Exhibit E.\n                   --------- \n\n          (f) No Material Adverse Changes.  There shall not have occurred any\n              ---------------------------                                    \nmaterial adverse change in the business, assets (including intangible assets),\nresults of operations, liabilities (contingent or accrued) or financial\ncondition of the Company since December 31, 1996.\n\n          (g) Company Shareholder Approval.  The Company Shareholders shall have\n              ----------------------------                                      \napproved this Agreement and the Merger and the transactions contemplated\nthereby, and no Company Shareholder shall have exercised, or have any continuing\nright to exercise, appraisal, dissenters' or similar rights by virtue of the\nMerger.\n\n          (h) Audited 1996 Financial Statements.  The Company shall have\n              ---------------------------------                         \ndelivered to Parent a copy of the Company's audited balance sheet as of December\n31, 1996 and the related \n\n                                     -42-\n\n\n \naudited statements of income and cash flows for the seven-month period then\nended, together with the notes thereto and auditors' report thereon.\n\n\n                                  ARTICLE VII\n\n               SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW\n\n     VII.1  Survival of Representations and Warranties.  All of the Company's\n            ------------------------------------------                       \nand the Principal Shareholders' representations and warranties in this Agreement\nor in any instrument delivered pursuant hereto shall terminate on the date that\nis 18 months after the Effective Time; provided, however, that the\nrepresentations and warranties relating or pertaining to any Tax or Returns\nrelated to such Tax set forth in Section 2.10 hereof or relating to\nenvironmental laws or matters set forth in Section 2.20 hereof, shall survive\nuntil ninety (90) days following the expiration of all applicable statutes of\nlimitations, or extensions thereof, governing each Tax or Returns related to\nsuch Tax or environmental laws or matters.  All of the Parent's and Sub's\nrepresentations and warranties contained herein or in any instrument delivered\npursuant to this Agreement shall terminate on the date that is 18 months after\nthe Effective Time.\n\n     VII.2  Escrow Arrangements; Setoff.\n            --------------------------- \n\n          (a) Escrow Fund; Setoff from Purchase Price Adjustments.  As partial\n              ---------------------------------------------------             \nsecurity for the indemnity provided for in Section 7.3 and the Purchase Price\nAdjustments provided for in Section 1.10, (i) at the Effective Time, the Company\nShareholders will be deemed to have received and deposited with the Escrow Agent\n(as defined in Section 1.6(e)(iii) above) the Escrow Amount (plus any additional\nshares that may be issued upon any stock split, stock dividend or\nrecapitalization effected by Parent after the Effective Time) without any act of\nany Company Shareholder.  On and after the Effective Time, the Escrow Amount\nshall form an escrow fund (the \"Escrow Fund\") to be governed by the terms set\n                                -----------                                  \nforth herein at Parent's cost and expense.  The Escrow Agent may execute this\nAgreement following the date hereof and prior to the Effective Time, and such\nlater execution, if so executed after the date hereof, shall not affect the\nbinding nature of this Agreement as of the date hereof between the other\nsignatories hereto.  The portion of the Escrow Amount contributed on behalf of\neach Company Shareholder shall be the pro rata amount calculated pursuant to Sec\ntion 1.6(a) of this Agreement.  In addition to seeking indemnification under\nSection 7.3 from the Escrow Fund and setting off amounts from the Purchase Price\nAdjustment, Parent may, in its discretion, seek indemnification for Losses\ndirectly from the Principal Shareholders, but only after first proceeding\nagainst the Escrow Fund so long as it exists and is not subject to other claims.\n[Nothing herein shall limit the liability of Parent, the Company or the\nPrincipal Shareholders for any breach of any representation, warranty or\ncovenant, if the Merger does not close]  Parent may not receive any shares from\nthe Escrow Fund (other than as a Purchase Price Adjustment) unless Officer's\nCertificates (as defined in subsection (d) below) identifying losses, the\naggregate of which exceed $136,000, have been delivered to the Shareholder\nRepresentative (as defined below) and the Escrow Agent as provided \n\n                                     -43-\n\n\n \nin paragraph (d) below. The Company Shareholders shall not have any right of\ncontribution from the Company with respect to any Loss claimed by Parent or Sub\nafter the Effective Time.\n\n          (b) Escrow Period; Distribution upon Termination of Escrow Periods.\n              --------------------------------------------------------------  \nSubject to the following requirements, the Escrow Fund shall be in existence\nimmediately following the Effective Time and shall terminate at 5:00 p.m.,\nPacific Time, on the date of the first anniversary of the Effective Time (the\n\"Escrow Period\"); provided that the Escrow Period shall not terminate with\n- --------------                                                            \nrespect to such amount (or some portion thereof) if in the reasonable judgment\nof Parent, subject to the objection of the Shareholder Representative and the\nsubsequent arbitration of the matter in the manner provided in this Section 7.2,\nsuch amount (or some portion thereof) together with the aggregate amount\nremaining in the Escrow Fund is necessary to satisfy any unsatisfied claims\nspecified in any Officer's Certificate delivered to the Escrow Agent prior to\nthe first anniversary of the Effective Time with respect to facts and\ncircumstances existing prior to such first anniversary of the Effective Time.\nAs soon as all such claims have been resolved, the Escrow Agent shall deliver to\nthe Company Shareholders the remaining portion of the Escrow Fund not required\nto satisfy such claims.  Deliveries of Escrow Amounts to the Company\nShareholders pursuant to this Section 7.2(b) shall be made in proportion to\ntheir respective original contributions to the Escrow Fund.\n\n          (c)  Protection of Escrow Fund.\n               ------------------------- \n\n          (i) The Escrow Agent shall hold and safeguard the Escrow Fund during\nthe Escrow Period, shall treat such fund as a trust fund in accordance with the\nterms of this Agreement and not as the property of Parent and shall hold and\ndispose of the Escrow Fund only in accordance with the terms hereof.\n\n          (ii) Any shares of Parent Common Stock or other equity securities\nissued or distributed by Parent (including shares issued upon a stock split)\n(\"New Shares\") in respect of Parent Common Stock in the Escrow Fund which have\n- ------------                                                                  \nnot been released from the Escrow Fund shall be added to the Escrow Fund and\nbecome a part thereof.  New Shares issued in respect of shares of Parent Common\nStock which have been released from the Escrow Fund shall not be added to the\nEscrow Fund but shall be distributed to the record holders thereof.  Cash\ndividends on Parent Common Stock shall not be added to the Escrow Fund but shall\nbe distributed to the record holders thereof.\n\n          (iii)     Each Company Shareholder shall have voting rights with\nrespect to the shares of Parent Common Stock contributed to the Escrow Fund by\nsuch Company Shareholder (and on any voting securities added to the Escrow Fund\nin respect of such shares of Parent Common Stock).\n\n          (d) Claims Upon Escrow Fund.  Upon receipt by the Escrow Agent at any\n              -----------------------                                          \ntime on or before the last day of the Escrow Period of a certificate signed by\nany officer of Parent (an \"Officer's Certificate\"):  (A) stating that Parent has\n                           ---------------------                                \npaid or accrued Losses, and (B) specifying in \n\n                                     -44-\n\n\n \nreasonable detail the individual items of Losses included in the amount so\nstated, the date each such item was paid or accrued, or the basis for such\nanticipated liability, and the nature of the misrepresentation, breach of\nwarranty or covenant to which such item is related, the Escrow Agent shall,\nsubject to the provisions of Section 7.2(e) hereof, deliver to Parent out of the\nEscrow Fund, as promptly as practicable, cash or shares of Parent Common Stock\n(at the election of Parent) held in the Escrow Fund in an amount equal to such\nLosses.\n\n          (e) Objections to Claims.  At the time of delivery of any Officer's\n              --------------------                                           \nCertificate to the Escrow Agent, a duplicate copy of such certificate shall be\ndelivered to the Shareholder Representative and for a period of thirty (30) days\nafter such delivery, the Escrow Agent shall make no delivery to Parent of any\nEscrow Amounts pursuant to Section 7.2(d) hereof unless the Escrow Agent shall\nhave received written authorization from the Shareholder Representative to make\nsuch delivery.  After the expiration of such thirty (30) day period, the Escrow\nAgent shall make delivery of the Escrow Amount from the Escrow Fund in\naccordance with Section 7.2(d) hereof, provided that no such payment or delivery\nmay be made if the Shareholder Representative shall object in a written\nstatement to the claim made in the Officer's Certificate, and such statement\nshall have been delivered to the Escrow Agent prior to the expiration of such\nthirty (30) day period.\n\n          (f) Indemnification and Setoff Claims.  In the event Parent shall have\n              ---------------------------------                                 \nincurred any Losses for which Parent wishes to seek indemnification directly\nfrom the Company Shareholders out of the Escrow Fund pursuant to this Section\n7.2, Parent shall deliver to the Shareholder Representative an Officer's\nCertificate: (A) stating that Parent has paid or accrued Losses and (B)\nspecifying in reasonable detail the individual items of Losses included in the\namount so stated, the date each such item was paid or accrued, or the basis for\nsuch anticipated liability, and the nature of the misrepresentation, breach of\nwarranty or covenant to which such item is related.\n\n          (g) Actions Against Principal Shareholders.  In the event that Parent\n              --------------------------------------                           \nhas elected to pursue indemnity directly from the Principal Shareholders, the\nPrincipal Shareholders shall promptly, and in no event later than 30 days after\ndelivery of the Officer's Certificate, wire transfer to Parent the amount of\nsuch Loss, unless the Company or the Principal Shareholders, as the case may be,\ncontest such claim by following the procedures set forth in Section 7.2(i).\n\n          (h) Valuation of Parent Common Stock.  For the purposes of determining\n              --------------------------------                                  \nthe number of shares of Parent Common Stock to be delivered to Parent out of the\nEscrow Fund as indemnity pursuant to Section 7.3 hereof, the shares of Parent\nCommon Stock shall be valued at (i) if the Parent's Common Stock shall be\npublicly traded, a price equal to the average closing price of the Parent Common\nStock in trading on the relevant stock exchange or quotation system during the\nten business day period ending three days prior to the date of the Officer's\nCertificate stating the claim with respect to which such shares are delivered,\nand (ii) if the Parents' Common Stock is not so publicly traded, the fair market\nvalue per share as determined by the Parent's board of directors in good faith\non the date closest to the date of the Officer's Certificate.\n\n                                     -45-\n\n\n \n          (i) Resolution of Conflicts; Arbitration.\n              ------------------------------------ \n\n          (i) In case the Shareholder Representative shall object in writing to\nany claim or claims made in any Officer's Certificate within thirty (30) days\nafter delivery of such Officer's Certificate, the Shareholder Representative and\nParent shall attempt in good faith to agree upon the rights of the respective\nparties with respect to each of such claims.  If the Shareholder Representative\nand Parent should so agree, a memorandum setting forth such agreement shall be\nprepared and signed by both parties.  If any claim against the Escrow Fund was\nsought, such memorandum shall be furnished to the Escrow Agent and the Escrow\nAgent shall be entitled to rely on any such memorandum, and comply with the\nterms thereof.\n\n          (ii) If no such agreement can be reached after good faith negotiation\n(or in any event after 60 days from the date of the Officer's Certificate),\neither Parent or the Shareholder Representative may demand arbitration of the\nmatter unless the amount of the damage or loss is at issue in pending litigation\nwith a third party, in which event arbitration shall not be commenced until such\namount is ascertained or both parties agree to arbitration; and in either such\nevent the matter shall be settled by arbitration conducted by three arbitrators.\nParent and the Shareholder Representative shall each select one arbitrator, and\nthe two arbitrators so selected shall select a third arbitrator.  The\narbitrators shall set a limited time period and establish procedures designed to\nreduce the cost and time for discovery while allowing the parties an\nopportunity, adequate in the sole judgment of the arbitrators, to discover\nrelevant information from the opposing parties about the subject matter of the\ndispute.  The arbitrators shall rule upon motions to compel or limit discovery\nand shall have the authority to impose sanctions, including attorneys' fees and\ncosts, to the same extent as a court of law or equity, should the arbitrators\ndetermine that discovery was sought without substantial justification or that\ndiscovery was refused or objected to without substantial justification.  The\ndecision of a majority of the three arbitrators as to the validity and amount of\nany claim in such Officer's Certificate shall be binding and conclusive upon the\nparties to this Agreement.  Notwith standing anything in Section 7.2(e) hereof,\nthe Escrow Agent shall be entitled to act in accordance with such decision and\nmake or withhold payments out of the Escrow Fund in accordance therewith.  Such\ndecision shall be written and shall be supported by written findings of fact and\nconclusions which shall set forth the award, judgment, decree or order awarded\nby the arbitrators.\n\n          (iii)     Judgment upon any award rendered by the arbitrators may be\nentered in any court having jurisdiction.  Any such arbitration shall be held in\nSanta Clara County, California in accordance with the then current Commercial\nArbitration Rules of the American Arbitration Association.  The arbitrators\nshall determine how all expenses relating to the arbitration shall be paid,\nincluding without limitation, the respective expenses of each party, the fees of\neach arbitrator and the administrative fee of the American Arbitration\nAssociation.\n\n          (j) Third-Party Claims.  In the event Parent becomes aware of a third-\n              ------------------                                               \nparty claim which Parent believes may result in Losses, Parent shall notify the\nShareholder \n\n                                     -46-\n\n\n \nRepresentative of such claim, and the Shareholder Representative shall be\nentitled, at the Company Shareholders' expense, to participate in any defense of\nsuch claim. Parent shall have the right in its sole discretion to settle any\nsuch claim; provided, however, that except with the consent of the Shareholder\nRepresentative, no settlement of any such claim with third-party claimants shall\nbe determinative of the amount of any claim pursuant to this Section 7.2. In the\nevent that the Shareholder Representative has consented to any such settlement,\nthe Company Shareholders shall have no standing to object under any provision of\nthis Section 7.2 to the amount of any claim by Parent against the Escrow Fund\nwith respect to such settlement.\n\n          (k)  Shareholder Representative.\n               -------------------------- \n\n          (i) In the event that the Merger is approved, effective upon such\nvote, and without further act of any shareholder, Andrew Taubman shall be\nappointed as agent and attorney-in-fact (the \"Shareholder Representative\") for\n                                              --------------------------      \neach Company Shareholder, for and on behalf of share holders of the Company, to\ngive and receive notices and communications, to authorize delivery to Parent of\npayments from the Escrow Fund in satisfaction of claims by Parent, to object to\nsuch deliveries, to agree to, negotiate, enter into settlements and compromises\nof, and demand arbitration and comply with orders of courts and awards of\narbitrators with respect to such claims, and to take all actions necessary or\nappropriate in the judgment of the Shareholder Representative for the\naccomplishment of the foregoing.  Such agency may be changed by the Company\nShareholders from time to time upon not less than ten (10) days prior written\nnotice to Parent; provided that the Shareholder Representative may not be\nremoved unless a majority-in-interest of the Company Shareholders agree to such\nremoval and to the identity of the substituted agent.  No bond shall be required\nof the Shareholder Representative, and the Shareholder Representative shall not\nreceive compensation for services as such.  Notices or communications to or from\nthe Shareholder Representative shall constitute notice to or from each of the\nCompany Shareholders or their permitted transferees.\n\n          (ii) The Shareholder Representative shall not be liable for any act\ndone or omitted hereunder as Shareholder Representative while acting in good\nfaith and in the exercise of reasonable judgment.  The Company Shareholders\nshall severally indemnify the Shareholder Representative and hold him or her\nharmless against any loss, liability or expense incurred without negligence or\nbad faith on the part of the Shareholder Representative and arising out of or in\nconnection with the acceptance or administration of the Shareholders\nRepresentative's duties hereunder, including the reasonable fees and expenses of\nany legal counsel retained by the Shareholder Representative.\n\n          (l) Actions of the Shareholder Representative.  A decision, act,\n              -----------------------------------------                   \nconsent or instruction of the Shareholder Representative shall constitute a\ndecision of all the Company Shareholders and shall be final, binding and\nconclusive upon each of such Company Shareholder, and the Escrow Agent and\nParent may rely upon any such decision, act, consent or instruction of the\nShareholder Representative as being the decision, act, consent or instruction of\neach and every such Company Shareholder.  The Escrow Agent and Parent are hereby\nrelieved from any liability \n\n                                     -47-\n\n\n \nto any person for any acts done by them in accordance with such decision, act,\nconsent or instruction of the Shareholder Representative.\n\n          (m)  Escrow Agent's Duties.\n               --------------------- \n\n          (i) The Escrow Agent shall be obligated only for the performance of\nsuch duties as are specifically set forth herein, and as set forth in any\nadditional written escrow instructions which the Escrow Agent may receive after\nthe date of this Agreement which are signed by an officer of Parent and the\nShareholder Representative, and may rely and shall be protected in relying or\nrefraining from acting on any instrument reasonably believed to be genuine and\nto have been signed or presented by the proper party or parties.  The Escrow\nAgent shall not be liable for any act done or omitted hereunder as Escrow Agent\nwhile acting in good faith and in the exercise of reasonable judgment, and any\nact done or omitted pursuant to the written advice of outside counsel shall be\nconclusive evidence of such good faith.\n\n          (ii) The Escrow Agent is hereby expressly authorized to disregard any\nand all warnings given by any of the parties hereto or by any other person,\nexcepting only orders or process of courts of law, and is hereby expressly\nauthorized to comply with and obey orders, judgments or decrees of any court.\nIn case the Escrow Agent obeys or complies with any such order, judgment or\ndecree of any court, the Escrow Agent shall not be liable to any of the parties\nhereto or to any other person by reason of such compliance, notwithstanding any\nsuch order, judgment or decree being subsequently reversed, modified, annulled,\nset aside, vacated or found to have been entered without jurisdiction.\n\n          (iii)     The Escrow Agent shall not be liable in any respect on\naccount of the identity, authority or rights of the parties executing or\ndelivering or purporting to execute or deliver this Agreement or any documents\nor papers deposited or called for hereunder.\n\n          (iv) The Escrow Agent shall not be liable for the expiration of any\nrights under any statute of limitations with respect to this Agreement or any\ndocuments deposited with the Escrow Agent.\n\n          (v) In performing any duties under the Agreement, the Escrow Agent\nshall not be liable to any party for damages, losses, or expenses, except for\ngross negligence or willful misconduct on the part of the Escrow Agent.  The\nEscrow Agent shall not incur any such liability for (A) any act or failure to\nact made or omitted in good faith, or (B) any action taken or omitted in\nreliance upon any instrument, including any written statement or affidavit\nprovided for in this Agreement that the Escrow Agent shall in good faith believe\nto be genuine, nor will the Escrow Agent be liable or responsible for forgeries,\nfraud, impersonations, or determining the scope of any representative authority.\nIn addition, the Escrow Agent may consult with legal counsel in connection with\nEscrow Agent's duties under this Agreement and shall be fully protected in any\nact taken, suffered, or permitted by such Escrow Agent in good faith in\naccordance with the written advice of outside counsel.  The Escrow Agent is not\nresponsible for \n\n                                     -48-\n\n\n \ndetermining and verifying the authority of any person acting or purporting to\nact on behalf of any party to this Agreement.\n\n          (vi) If any controversy arises between the parties to this Agreement,\nor with any other party, concerning the subject matter of this Agreement, its\nterms or conditions, the Escrow Agent will not be required to determine the\ncontroversy or to take any action regarding it.  The Escrow Agent may hold all\ndocuments and the Escrow Amount and may wait for settlement of any such\ncontroversy by final appropriate legal proceedings or other means as, in the\nEscrow Agent's discretion, the Escrow Agent may be required, despite what may be\nset forth elsewhere in this Agreement.  In such event, the Escrow Agent will not\nbe liable for damage.\n\n          Furthermore, the Escrow Agent may at its option, file an action of\ninterpleader, in arbitration or otherwise, as the circumstances may require,\nrequiring the Parties to answer and litigate any claims and rights among\nthemselves.  The Escrow Agent is authorized to deposit with the clerk of the\ncourt all documents and shares of Parent Common Stock held in escrow, except all\ncost, expenses, charges and reasonable attorney fees incurred by the Escrow\nAgent due to the interpleader action and which the parties jointly and severally\nagree to pay.  Upon initiating such action, the Escrow Agent shall be fully\nreleased and discharged of and from all obligations and liability imposed by the\nterms of this Agreement.\n\n          (vii)     The parties and their respective successors and assigns\nagree jointly and severally to indemnify and hold Escrow Agent harmless against\nany and all losses, claims, damages, liabilities, and expenses, including\nreasonable costs of investigation, counsel fees, including allocated costs of\nin-house counsel and disbursements that may be imposed on the Escrow Agent or\nincurred by the Escrow Agent in connection with the performance of the Escrow\nAgent's duties under this Agreement, including but not limited to any litigation\narising from this Agreement or involving its subject matter other than arising\nout of its gross negligence or willful misconduct.\n\n          (viii)    The Escrow Agent may resign at any time upon giving at least\nthirty (30) days written notice to the parties to this Agreement; provided,\nhowever, that no such resignation shall become effective until the appointment\nof a successor escrow agent which shall be accomplished as follows:  the\nparties shall use their best efforts to agree on a successor escrow agent within\nthirty (30) days after receiving such notice.  If Parent and the Shareholder\nRepresentative fail to agree upon a successor escrow agent within such time, the\nEscrow Agent shall have the right to appoint a successor escrow agent authorized\nto do business in the state of California.  The successor escrow agent shall\nexecute and deliver an instrument accepting such appointment and it shall,\nwithout further acts, be vested with all the estates, properties, rights,\npowers, and duties of the predecessor Escrow Agent as if originally named as\nEscrow Agent.  Thereafter, the Escrow Agent shall be discharged from any further\nduties and liability under this Agreement.\n\n          (n) Fees.  All fees of the Escrow Agent for performance of its duties\n              ----                                                             \nhereunder \n\n                                     -49-\n\n\n \nshall be paid by Parent in accordance with the standard fee schedule\nof the Escrow Agent.  It is understood that the fees and usual charges agreed\nupon for services of the Escrow Agent shall be considered compensation for\nordinary services as contemplated by this Agreement.  In the event that the\nconditions of this Agreement are not promptly fulfilled, or if the Escrow Agent\nrenders any service not provided for in this Agreement, or if the parties hereto\nrequest a substantial modification of its terms, or if any controversy arises,\nor if the Escrow Agent is made a party to, or intervenes in, any litigation\npertaining to the Escrow Fund or its subject matter, the Escrow Agent shall be\nreasonably compensated for such extraordinary services and reimbursed for all\ncosts, attorney's fees, including allocated costs of in-house counsel, and\nexpenses occasioned by such default, delay, controversy or litigation.  The\nParent promises to pay these sums upon demand.\n\n     VII.3  Indemnity.\n            --------- \n\n          (a) Principal Shareholder Indemnity.  The Principal Shareholders\n              -------------------------------                             \nhereby agree to indemnify and hold Parent and its subsidiaries, directors,\nofficers and agents harmless against and in respect of any loss, cost, expense,\nclaim, liability, deficiency, judgment or damage (hereinafter, individually, a\n\"Loss\"; and collectively, \"Losses\") incurred by Parent, its subsidiaries,\n- -----                      ------                                        \nofficers, directors and agents (i) as a result of any inaccuracy in or breach of\na representation or warranty of the Company or the Principal Shareholders\ncontained in this Agreement or any failure by the Company or any Principal\nShareholder to perform or comply with any covenant contained in this Agreement\nand (ii) by reason of the failure of the Company and the Principal Shareholders\nto perform their obligations hereunder.\n\n          (b) Parent Indemnity.  Parent hereby agrees to indemnify and hold the\n              ----------------                                                 \nCompany, the Preferred Shareholders and the Company's directors, officers and\nagents harmless against and in respect of any loss, cost, expense, claim,\nliability, deficiency, judgment or damage (hereinafter, individually, a \"Loss\";\n                                                                         ----  \nand collectively, \"Losses\") incurred by the Company, its officers, directors and\n                   ------                                                       \nagents (i) as a result of any inaccuracy in or breach of a representation or\nwarranty of Parent contained in this Agreement or any failure by Parent to\nperform or comply with any covenant contained in this Agreement and (ii) by\nreason of the failure of Parent to perform its obligations hereunder.\n\n          (c) Tax Indemnity.  Parent shall indemnify and hold harmless each\n              -------------                                                \nCompany Shareholder and New Employee against any tax, cost (including interest\nand penalties), expense, claim, liability, deficiency, judgment or damage\n(collectively, \"Tax Losses\") (i) arising solely as a result of any final\n                ----------                                              \ndetermination by a Governmental Entity that the Merger does not constitute a\nreorganization within the meaning of Section 368(a) of the Code and\/or (ii) in\nconnection with the portion of any proceeding conducted by a Governmental Entity\nthat is related solely to such determination.  In determining the amount of\nindemnification under this Section 7.3(c), the parties shall deduct from the\napplicable Tax Losses any reduction in taxes that the Company Shareholder (or\nNew Employee) is able to realize at the time of such final determination by the\ntimely filing of an amended tax return solely as a result of any increase in\nsuch Company Shareholder's (or New \n\n                                     -50-\n\n\n \nEmployee's) basis in the Parent Common Stock occurring solely as a result of\nsuch final determination. Upon notification of any claim for indemnification\narising under this Section 7.3(c), Parent shall have the right (but not the\nobligation) to assume timely the defense of that portion of any audit or\nlitigation which (i) relates solely to the issue of whether the Merger\nconstitutes a reorganization with the meaning of Section 368(a) of the Code, and\n(ii) could result in the payment of amounts under this Section 7.3(c), and upon\nParent's assumption of such defense, Parent will conduct such defense at\nParent's expense until a final determination is concluded.\n\n          (d) Expiration of Indemnification.  The indemnification obligations\n              -----------------------------                                  \nunder this Section 7.3 shall terminate at 5:00 p.m., Pacific Time on the date\nthat is 18 months after the Effective Date, but shall not terminate as to any\nLoss (or a potential claim by an appropriate party) asserted in good faith prior\nto such date; provided, however, that the representations and warranties with\nrespect to Taxes (Section 2.10) and, environmental laws (Section 2.20), and the\ntax indemnification (Section 7.3(c)) shall survive until the expiration of the\napplicable statute of limitations, if any.\n\n          (e) Procedure for Indemnification.  In the event that either party\n              -----------------------------                                 \nshall incur or suffer any Losses in respect of which indemnification may be\nsought by such party pursuant to the provisions of this Article, the indemnified\nparty shall assert a claim for indemnification by written notice (a \"Notice\") to\n                                                                     ------     \nthe Parent, or the Surviving Corporation and the Shareholder Representative, as\nthe case may be, briefly stating the nature and basis of such claim.  In the\ncase of Losses arising by reason of any third-party claim, the Notice shall be\ngiven within 25 days of the filing or other written assertion of any such claim\nagainst Parent, but the failure of Parent to give the Notice within such time\nperiod shall not relieve the Company and the Principal Shareholders of any\nliability that the Company and the Principal Shareholders may have to Parent\nexcept to the extent that the Company and the Principal Shareholders are\nactually prejudiced thereby; provided, however, that any such notice shall be\ngiven no later than the date of the expiration of the applicable indemnification\nobli gation of the Company and the Principal Shareholders as set forth in\nSection 7.3(d) above.  The indemnified party shall provide the other party on\nrequest all information and documentation reasonably necessary to support and\nverify any Losses which the indemnified party believes give rise to a claim for\nindemnification hereunder and shall give reasonable access to all books, records\nand personnel in the possession or under the control of that party which would\nhave bearing on such claim.\n\n          (f) Limitations on Indemnification.\n              ------------------------------ \n\n          (i) No amounts shall be paid by the Parent or the Principal\nShareholders for indemnification pursuant to this Section 7.3 unless the\naggregate amount payable hereunder for all Losses is in excess of $136,000, in\nwhich event only the amount of Losses in excess of $136,000 shall be payable by\nthe Parent or the Principal Shareholders hereunder.\n\n          (ii) Notwithstanding the foregoing, no amount shall be paid by the\nParent for indemnification pursuant to Section 7.3(c) unless:\n\n                                     -51-\n\n\n \n          (A)  for a Company Shareholder, the amount payable pursuant to such\nsection is in excess of the product of (1) the number of shares of Parent Common\nStock received by such Company Shareholder pursuant to Section 1.6(a) hereof\ndivided by the aggregate number of shares of Parent Common Stock received by all\nCompany Shareholders pursuant to Section 1.6(a) hereof, multiplied by (2)\n$136,000; or\n\n          (B)  for a New Employee who is not also a Company Shareholder, the\namount payable pursuant to such section is in excess of the product of (1) the\nnumber of shares of Parent Common Stock subject to the Original Option received\nby such New Employee pursuant to Section 5.7(b) hereof divided by the aggregate\nnumber of shares of Parent Common Stock subject to all Original Options received\nby all New Employees pursuant to Section 5.7(b) hereof, multiplied by (2)\n$136,000.\n\n\n                                  ARTICLE VIII\n\n                       TERMINATION, AMENDMENT AND WAIVER\n\n     VIII.1  Termination.  Except as provided in Section 8.2 below, this\n             -----------                                                \nAgreement may be terminated and the Merger abandoned at any time prior to the\nEffective Time:\n\n          (a) by mutual consent of the Company and Parent;\n\n          (b) by Parent or the Company if:  (i) the Effective Time has not\noccurred by September 30, 1997; (ii) there shall be a final nonappealable order\nof a federal or state court in effect preventing consummation of the Merger; or\n(iii) there shall be any statute, rule, regulation or order enacted, promulgated\nor issued or deemed applicable to the Merger by any governmental entity that\nwould make consummation of the Merger illegal;\n\n          (c) by Parent or the Company if there shall be any action taken, or\nany statute, rule, regulation or order enacted, promulgated or issued or deemed\napplicable to the Merger by any Governmental Entity, which would:  (i) prohibit\nParent's or Sub's ownership or operation of any portion of the business of the\nCompany; (ii) compel Parent or the Company to dispose of or hold separate all or\na portion of the business or assets of the Sub or Parent as a result of the\nMerger; or (iii) have any material adverse effect upon the Surviving Corporation\nbefore the Closing that would materially adversely affect any aspect of the\nvaluation of Sub after the Effective Time in connection with the determination\nof any Purchase Price Adjustments before the Closing.\n\n          (d) by Parent if it is not in material breach of its obligations under\nthis Agreement and there has been a material breach of any representation,\nwarranty, covenant or agreement contained in this Agreement on the part of the\nCompany or the Principal Shareholders and such breach has not been cured within\nten (10) calendar days after written notice to the \n\n                                     -52-\n\n\n \nCompany (provided that, no cure period shall be required for a breach which by\nits nature cannot be cured);\n\n          (e) by the Company if neither it nor the Principal Shareholders are in\nmaterial breach of their respective obligations under this Agreement and there\nhas been a material breach of any representation, warranty, covenant or\nagreement contained in this Agreement on the part of Parent or Sub and such\nbreach has not been cured within ten (10) calendar days after written notice to\nParent (provided that, no cure period shall be required for a breach which by\nits nature cannot be cured); or\n\n          (f) by Parent, Sub, Company, or Principal Shareholders if an event\nhaving a Material Adverse Effect on the Company shall have occurred after the\ndate of this Agreement.\n\n     Where action is taken to terminate this Agreement pursuant to this Section\n8.1, it shall be sufficient for such action to be authorized by the Board of\nDirectors (as applicable) of the party taking such action.\n\n     VIII.2  Effect of Termination.  In the event of termination of this\n             ---------------------                                      \nAgreement as provided in Section 8.1, this Agreement shall forthwith become void\nand there shall be no liability or obligation on the part of Parent, Sub or the\nCompany, or their respective officers, directors or shareholders, provided that\neach party shall remain liable for any breaches of this Agreement prior to its\ntermination; provided further that, the provisions of Sections 5.4 and 5.5 and\nArticle IX of this Agreement shall remain in full force and effect and survive\nany termination of this Agreement.\n\n     VIII.3  Amendment.  Except as is otherwise required by applicable law after\n             ---------                                                          \nthe Company Shareholders approve this Agreement, this Agreement may be amended\nby the parties hereto at any time by execution of an instrument in writing\nsigned on behalf of each of the parties hereto.\n\n     VIII.4  Extension; Waiver.  At any time prior to the Effective Time, Parent\n             -----------------                                                  \nand Sub, on the one hand, and the Company, on the other, may, to the extent\nlegally allowed, (i) extend the time for the performance of any of the\nobligations of the other party hereto, (ii) waive any inaccuracies in the\nrepresentations and warranties made to such party contained herein or in any\ndocument delivered pursuant hereto, and (iii) waive compliance with any of the\nagreements or conditions for the benefit of such party contained herein.  Any\nagreement on the part of a party hereto to any such extension or waiver shall be\nvalid only if set forth in an instrument in writing signed on behalf of such\nparty.\n\n\n                                   ARTICLE IX\n\n                               GENERAL PROVISIONS\n\n     IX.1 Notices.  All notices and other communications hereunder shall be in\n          -------                                                             \nwriting and \n\n                                     -53-\n\n\n \nshall be deemed given if delivered personally or by commercial messenger or\ncourier service, or mailed by registered or certified mail (return receipt\nrequested) or sent via facsimile (with acknowledgment of complete transmission)\nto the parties at the following addresses (or at such other address for a party\nas shall be specified by like notice):\n\n          (a)  if to Parent or Sub, to:\n\n               USWeb Corporation\n               2880 Lakeside Drive\n               Santa Clara, California  95054\n               Attn:  Chief Financial Officer\n               Telecopy No.:  (408) 987-3240\n\n               with a copy to:\n\n               Wilson Sonsini Goodrich &amp; Rosati, P.C.\n               650 Page Mill Road\n               Palo Alto, California 94304\n               Attention:  Mark Bonham, Esq.\n               Telecopy No.:  (415) 493-6811\n\n          (b)  if to Company, to:\n\n               Infopreneurs Inc.\n               c\/o USWeb D.C.\n               7220 Wisconsin Avenue, 4th Floor\n               Bethesda, Maryland  20814\n               Attention:  Mr. Andrew E. Taubman\n               Telecopy No.:  (301) 652-5778\n\n               with a copy to:\n\n               Blumenfeld &amp; Cohen\n               Sumner Square - Suite 700\n               1615 M Street, N.W.\n               Washington, DC  20036\n               Attention:  Glenn Manishin, Esq.\n               Telecopy No.:  (202) 955-6460\n\n          (c) if to the Principal Shareholders, to:\n\n               Mr. Andrew E. Taubman\n               c\/o USWeb D.C.\n\n                                     -54-\n\n\n \n               7220 Wisconsin Avenue, 4th Floor\n               Bethesda, Maryland  20814\n               Telecopy No.:  (301) 652-5778\n\n     IX.2 Interpretation.  The words \"include,\" \"includes\" and \"including\" when\n          --------------              -------    --------       ---------      \nused herein shall be deemed in each case to be followed by the words \"without\n                                                                      -------\nlimitation.\"  The table of contents and headings contained in this Agreement are\n- ----------                                                                      \nfor reference purposes only and shall not affect in any way the meaning or\ninterpretation of this Agreement.\n\n     IX.3 Counterparts.  This Agreement may be executed in one or more\n          ------------                                                \ncounterparts, all of which shall be considered one and the same agreement and\nshall become effective when one or more counterparts have been signed by each of\nthe parties and delivered to the other party, it being understood that all\nparties need not sign the same counterpart.\n\n     IX.4 Entire Agreement; Assignment.  This Agreement, and Exhibits hereto and\n          ----------------------------                                          \nthe documents and instruments and other agreements among the parties hereto\nreferenced herein:  (a) constitute the entire agreement among the parties with\nrespect to the subject matter hereof and supersede all prior agreements and\nunderstandings both written and oral, among the parties with respect to the\nsubject matter hereof; (b) are not intended to confer upon any other person any\nrights or remedies hereunder, except as expressly set forth herein; and (c)\nshall not be assigned by operation of law or otherwise except as otherwise\nspecifically provided.\n\n     IX.5 Severability.  In the event that any provision of this Agreement or\n          ------------                                                       \nthe application thereof, becomes or is declared by a court of competent\njurisdiction to be illegal, void or unenforceable, the remainder of this\nAgreement will continue in full force and effect and the application of such\nprovision to other persons or circumstances will be interpreted so as reasonably\nto effect the intent of the parties hereto.  The parties further agree to\nreplace such void or unenforceable provision of this Agreement with a valid and\nenforceable provision that will achieve, to the extent possible, the economic,\nbusiness and other purposes of such void or unenforceable provision; provided,\n                                                                     -------- \nhowever, that no such replacement provision relating to the Merger Consideration\n- -------                                                                         \nor the matters set forth in Sections 5.7 and\/or 5.19 hereof shall become\neffective without the prior written consent of the Parent, the Company and the\nPrincipal Shareholders.\n\n     IX.6 Other Remedies.  Except as otherwise provided herein, any and all\n          --------------                                                   \nremedies herein expressly conferred upon a party will be deemed cumulative with\nand not exclusive of any other remedy conferred hereby, or by law or equity upon\nsuch party, and the exercise by a party of any one remedy will not preclude the\nexercise of any other remedy.\n\n     IX.7 Governing Law.  This Agreement shall be governed by and construed in\n          -------------                                                       \naccordance with the laws of the State of California, regardless of the laws that\nmight otherwise govern under applicable principles of conflicts of laws thereof.\nEach of the parties hereto irrevocably consents to the exclusive jurisdiction\nand venue of any court within Santa Clara County, State of California, \n\n                                     -55-\n\n\n \nin connection with any matter based upon or arising out of this Agreement or the\nmatters contemplated herein, agrees that process may be served upon them in any\nmanner authorized by the laws of the State of California for such persons and\nwaives and covenants not to assert or plead any objection which they might\notherwise have to such jurisdiction, venue and such process.\n\n     IX.8 Rules of Construction.  The parties hereto agree that they have been\n          ---------------------                                               \nrepresented by counsel during the negotiation and execution of this Agreement\nand, therefore, waive the application of any law, regulation, holding or rule of\nconstruction providing that ambiguities in an agreement or other document will\nbe construed against the party drafting such agreement or document.\n\n     IX.9 Arbitration.  Any controversy arising out of this Agreement, including\n          -----------                                                           \na claim by an indemnified party pursuant to Section 7.3 hereof, shall be finally\nsettled by arbitration in Santa Clara County, California in accordance with the\nthen current Commercial Arbitration Rules of the American Arbitration\nAssociation; and judgment upon the award rendered by the arbitrator may be\nentered in any court having jurisdiction thereof.  Such arbitration shall be\nconducted by an arbitrator chosen by mutual agreement of Parent and the\nPrincipal Shareholders.  Failing such agreement, the arbitration shall be\nconducted by three independent arbitrators, none of whom shall have any\ncompetitive interest with Parent or the Principal Shareholders.  Parent shall\nchoose one such arbitrator and the Principal Shareholders shall choose one such\narbitrator, and such two arbitrators shall mutually select a third arbitrator.\nAny decision of two such arbitrators shall be binding on Parent, Sub and the\nCompany and the Principal Shareholders.  Each party shall pay its own costs and\nexpenses (including counsel fees) of any such arbitration except that the\narbitrator can compel one party to pay all or a portion of the other party's\ncosts and expenses.\n\n                                     -56-\n\n\n \n     IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement\nto be signed by their duly authorized respective officers, and the Principal\nShareholders have personally signed this Agreement, all on this 31st day of\nMarch 1997.\n\nINFOPRENEURS INC.                   USWEB CORPORATION\n\n\nSignature:_______________           Signature:_________________\n\nName:____________________           Name:______________________\n\nTitle:___________________           Title:_____________________\n\n\nESCROW AGENT                        USWEB ACQUISITION CORPORATION 102\n\n\nSignature:_______________           Signature:_________________\n\n\nName:____________________           Name:______________________\n\n\nTitle:___________________           Title:_____________________\n\n\n                                    PRINCIPAL SHAREHOLDERS\n\n\n\n                                    ____________________________ \n                                    Andrew Taubman\n\n\n                                    ____________________________ \n                                    Mark Lupke\n\n\n\n                                     -57- \n\n\n \n                                   EXHIBIT A\n                                   ---------\n\n                             PRINCIPAL SHAREHOLDERS\n\n \n \n      NAME                           NUMBER OF SHARES\n                                     OF PARENT COMMON \n                                     STOCK TO BE ISSUED ON \n                                     THE CLOSING DATE\n \n\n      Andrew Taubman                  1,144,993\n \n\n      Mark Lupke                        426,312\n\n\n \n                                   EXHIBIT B\n                                   ---------\n                                        \n                                VALUATION MODEL\n\n\n     The following spreadsheet was prepared using Microsoft Excel 97.  All\nreferences to cell numbers and formulas are based upon the standard notations\nused in this application.\n\n\n \n                                   EXHIBIT C\n                                   ---------\n\n                             SCHEDULE OF EXCEPTIONS\n\n\n \n                                  EXHIBIT C-1\n                                  -----------\n\n                  PARENT CAPITAL STRUCTURE AS OF JUNE 30, 1997\n\n\n     The authorized stock of Parent consists of 100,000,000 shares of Common\nStock, $.001 par value, of which 23,423,331 shares are issued and outstanding,\nand 38,188,501 shares of Preferred Stock, $.001 par value, of which 18,678,500\nshares are designated Series A Preferred Stock, 18,518,500 of which are issued\nand outstanding, 9,310,001 shares are designated Series B Preferred Stock, all\nof which are issued and outstanding, and 10,200,000 shares are designated Series\nC Preferred Stock, 8,454,580 of which are issued and outstanding.  All such\nshares have been duly authorized, and all such issued and outstanding shares\nhave been validly issued, are fully paid and nonassessable and are free of any\nliens or encumbrances other than any liens or encumbrances created by or imposed\nupon the holders thereof.  Parent has also reserved (i) 3,900,000 shares of\nCommon Stock for issuance to employees and consultants pursuant to Parent's 1996\nStock Option Plan and 1996 Equity Compensation Plan, (ii) 160,000 shares of\nSeries A Preferred Stock and 2,113,647 shares of Series C Preferred Stock for\nissuance upon the exercise of outstanding warrants to purchase Series A\nPreferred Stock and Series C Preferred Stock, respectively (the \"Warrant\n                                                                 -------\nStock\"), (iii) 2,273,647 shares of Common Stock for issuance upon conversion of\n- -----\nthe Warrant Stock, (iv) 1,000,000 shares of Common Stock for issuance upon the\nexercise of outstanding warrants to purchase Common Stock issued or issuable\npursuant to the Company's 1997 Affiliate Warrant Program, (v) 300,000 shares of\nCommon Stock for issuance upon the exercise of other warrants to purchase Common\nStock, and (vi) 10,000,000 shares of Common Stock for issuance pursuant to the\nexercise of options issued or issuable under the Parent's 1997 Acquisition Stock\nOption Plan. There are no other options, warrants, calls, rights, commitments or\nagreements of any character to which Parent is a party or by which it is bound\nobligating Parent to issue, deliver, sell, repurchase or redeem, or cause to be\nissued, delivered, sold, repurchased or redeemed, any shares of the capital\nstock of Parent or obligating Parent to grant, extend or enter into any such\noption, warrant, call, right, commitment or agreement.\n\n\n \n                                   EXHIBIT D\n                                   ---------\n\n                               USWEB CORPORATION\n                       1997 ACQUISITION STOCK OPTION PLAN\n                                NOTICE OF GRANT\n\n\n     Unless otherwise defined herein, the terms defined in the 1997 Acquisition\nStock Option Plan (the \"Plan\") shall have the same defined meanings in this\n                        ----                                               \nNotice of Grant.\n\n[Optionee's Name and Address]\n- -----------------------------\n \n \n- ----------------------------- \n \n\n     You have been granted an option to purchase Common Stock of the Company,\nsubject to the terms and conditions of the Plan and this Stock Option Agreement,\nas follows:\n\n     Grant Number\n                  -------------------------------------------\n\n     Date of Grant                 [ \n                                   D\n                                   a\n                                   t\n                                   e\n\n                                   o\n                                   f\n\n                                   t\n                                   h\n                                   e\n\n                                   f\n                                   i\n                                   r\n                                   s\n                                   t\n\n                                   B\n\n\n \n                                   o\n                                   a\n                                   r\n                                   d\n\n                                   m \n                                   e \n                                   e \n                                   t \n                                   i \n                                   n \n                                   g\n                                       \n                                   f \n                                   o\n                                   l \n                                   l \n                                   o \n                                   w \n                                   i \n                                   n \n                                   g\n                                     \n                                   t \n                                   h \n                                   e\n  \n                                   C\n                                   l\n                                   o\n                                   s\n                                   i\n                                   n\n                                   g\n                                   ]\n\n     Vesting Commencement Date      [Closing Date]\n                                    --------------\n\n     Exercise Price per Share       $\n                                     ------------------\n\n     Total Number of Shares Granted\n                                     ------------------\n\n\n \n     Total Exercise Price           $\n                                     ------------------\n\n     Type of Option:                _____________  Incentive Stock Option\n\n                                    _____________  Nonstatutory Stock Option\n\nTerm\/Expiration Date:              \n                                          [\n                                          t\n                                          h\n                                          e\n                                           \n                                          f\n                                          i\n                                          f\n                                          t\n                                          h\n                                           \n                                          a\n                                          n\n                                          n\n                                          i\n                                          v\n                                          e\n                                          r\n                                          s\n                                          a\n                                          r\n                                          y\n                                           \n                                          o\n                                          f\n                                           \n                                          t\n                                          h\n                                          e\n                                           \n                                          D\n                                          a\n                                          t\n\n\n \n                                          e\n                                           \n                                          o\n                                          f\n                                           \n                                          G\n                                          r\n                                          a\n                                          n\n                                          t\n                                          ]\n\n\n     Vesting Schedule:\n     ---------------- \n\n     This Option may be exercised, in whole or in part, in accordance with the\nfollowing schedule:\n\n     One-thirty-sixth (1\/36th) of the Shares subject to this Option shall vest\nupon each monthly anniversary of the Vesting Commencement Date, for so long as\n[Optionee's] [Andrew Taubman's] full-time employment or consulting relationship\nwith the Company continues.\n\n     Termination Period:\n     ------------------ \n\n     This Option may be exercised for three (3) months after termination of\nemployment or consulting relationship, or such longer period as may be\napplicable upon death or Disability of Optionee as provided in the Plan, but in\nno event later than the Term\/Expiration Date as provided above.\n\n\n \n                               USWEB CORPORATION\n                       1997 ACQUISITION STOCK OPTION PLAN\n                                OPTION AGREEMENT\n\n\n     1.   Grant of Option.  USWeb Corporation (the \"Company\"), hereby grants to\n          ---------------                           -------                    \nthe Optionee (the \"Optionee\") named in the Notice of Grant, an option (the\n                   --------                                               \n\"Option\") to purchase the total number of shares of Common Stock (the \"Shares\")\n- -------                                                                ------  \nset forth in the Notice of Grant, at the exercise price per share set forth in\nthe Notice of Grant (the \"Exercise Price\") subject to the terms, definitions and\n                          --------------                                        \nprovisions of the 1997 Acquisition Stock Option Plan (the \"Plan\") adopted by the\n                                                           ----                 \nCompany, which is incorporated herein by reference.  Unless otherwise defined\nherein, the terms defined in the Plan shall have the same defined meanings in\nthis Option Agreement.\n\n          If designated in the Notice of Grant as an Incentive Stock Option\n(\"ISO\"), this Option is intended to qualify as an Incentive Stock Option as\n- -----                                                                      \ndefined in Section 422 of the Code.  However, if this Option is intended to be\nan Incentive Stock Option, to the extent that it exceeds the $100,000 rule of\nCode Section 422(d) it shall be treated as a Nonstatutory Stock Option (\"NSO\").\n                                                                         ---   \n\n     2.   Exercise of Option.  This Option shall be exercisable during its term\n          ------------------                                                   \nin accordance with the Vesting Schedule set out in the Notice of Grant and with\nthe provisions of Section 9 of the Plan as follows:\n\n          (i)  Right to Exercise.\n               ----------------- \n\n               (a) This Option may not be exercised for a fraction of a Share.\n\n               (b) In the event of Optionee's death, disability or other\ntermination of the Optionee's Continuous Status as an Employee or Consultant,\nthe exercisability of the Option is governed by Sections 6, 7 and 8 below,\nsubject to the limitation contained in subsection 2(i)(c).\n\n               (c) In no event may this Option be exercised after the date of\nexpiration of the term of this Option as set forth in the Notice of Grant.\n\n          (ii) Method of Exercise.  This Option shall be exercisable by written\n               ------------------                                              \nnotice (in the form attached as Exhibit A) which shall state the election to\nexercise the Option, the number of Shares in respect of which the Option is\nbeing exercised, and such other representations and agreements as to the\nholder's investment intent with respect to such shares of Common Stock as may be\nrequired by the Company pursuant to the provisions of the Plan.  Such written\nnotice shall be signed by the Optionee and shall be delivered in person or by\ncertified mail to the Secretary of the Company.  The written notice shall be\naccompanied by (A) payment of the Exercise Price and (B) the Investment\nRepresentation Statement attached hereto as Exhibit B completed and executed by\n                                            ---------                          \nthe Optionee.  This Option shall be deemed to be exercised upon receipt by the\nCompany of \n\n\n \nsuch written notice accompanied by the Exercise Price.\n\n          No Shares will be issued pursuant to the exercise of an Option unless\nsuch issuance and such exercise shall comply with all relevant provisions of law\nand the requirements of any stock exchange or national market system upon which\nthe Common Stock is then listed.  Assuming such compliance, for income tax\npurposes the Shares shall be considered transferred to the Optionee on the date\non which the Option is exercised with respect to such Shares.\n\n     3.   Optionee's Representations.  In the event the Shares purchasable\n          --------------------------                                      \npursuant to the exercise of this Option have not been registered under the\nSecurities Act of 1933, as amended, at the time this Option is exercised,\nOptionee shall, if required by the Company, concurrently with the exercise of\nall or any portion of this Option, deliver to the Company his or her Investment\nRepresentation Statement in the form attached hereto as Exhibit B.\n\n     4.   Method of Payment.  Payment of the Exercise Price shall be by any of\n          -----------------                                                   \nthe following, or a combination thereof, at the election of the Optionee:\n\n          (i)  cash; or\n\n          (ii) check; or\n\n          (iii)  surrender of other shares of Common Stock of the Company which\n(A) in the case of Shares acquired pursuant to the exercise of a Company option,\nhave been owned by the Optionee for more than six (6) months on the date of\nsurrender, and (B) have a Fair Market Value on the date of surrender equal to\nthe Exercise Price of the Shares as to which the Option is being exercised; or\n\n          (iv) to the extent authorized by the Company, delivery of a properly\nexecuted exercise notice together with such other documentation as the\nAdministrator and the broker, if applicable, shall require to effect an exercise\nof the Option and delivery to the Company of the sale or loan proceeds required\nto pay the Exercise Price.\n\n     5.   Restrictions on Exercise.  This Option may not be exercised if the\n          ------------------------                                          \nissuance of such Shares upon such exercise or the method of payment of\nconsideration for such shares would constitute a violation of any applicable\nfederal or state securities or other law or regulation, including any rule under\nPart 207 of Title 12 of the Code of Federal Regulations as promulgated by the\nFederal Reserve Board.  As a condition to the exercise of this Option, the\nCompany may require Optionee to make any representation and warranty to the\nCompany as may be required by any applicable law or regulation.\n\n     6.   Termination of Relationship.  In the event an Optionee's Continuous\n          ---------------------------                                        \nStatus as an Employee or Consultant terminates, Optionee may, to the extent\notherwise so entitled at the date of such termination (the \"Termination Date\"),\n                                                            ----------------   \nexercise this Option during the Termination Period \n\n\n \nset out in the Notice of Grant. To the extent that Optionee was not entitled to\nexercise this Option at the date of such termination, or if Optionee does not\nexercise this Option within the time specified herein, the Option shall\nterminate.\n\n     7.   Disability of Optionee.  Notwithstanding the provisions of Section 6\n          ----------------------                                              \nabove, in the event of termination of an Optionee's Continuous Status as an\nEmployee or Consultant as a result of his or her Disability, Optionee may, but\nonly within twelve (12) months from the date of such termination (and in no\nevent later than the expiration date of the term of such Option as set forth in\nthe Notice of Grant) exercise the Option to the extent otherwise entitled to\nexercise it at the date of such termination.  To the extent that Optionee is not\nentitled to exercise the Option at the date of termination, or if Optionee does\nnot exercise such Option to the extent so entitled within the time specified\nherein, the Option shall terminate, and the Shares covered by such Option shall\nrevert to the Plan.\n\n     8.   Death of Optionee.  In the event of termination of Optionee's\n          -----------------                                            \nContinuous Status as an Employee or Consultant as a result of the death of\nOptionee, the Option may be exercised at any time within twelve (12) months\nfollowing the date of death (but in no event later than the date of expiration\nof the term of this Option as set forth in Section 10 below), by Optionee's\nestate or by a person who acquired the right to exercise the Option by bequest\nor inheritance, but only to the extent the Optionee could exercise the Option at\nthe date of death.\n\n     9.   Non-Transferability of Option.  This Option may not be transferred in\n          -----------------------------                                        \nany manner otherwise than by will or by the laws of descent or distribution and\nmay be exercised during the lifetime of Optionee only by Optionee.  The terms of\nthis Option shall be binding upon the executors, administrators, heirs,\nsuccessors and assigns of the Optionee.\n\n     10.  Term of Option.  This Option may be exercised only within the term set\n          --------------                                                        \nout in the Notice of Grant, and may be exercised during such term only in\naccordance with the Plan and the terms of this Option.  The limitations set out\nin Section 7 of the Plan regarding Options designated as Incentive Stock Options\nand Options granted to more than ten percent (10%) shareholders shall apply to\nthis Option.\n\n     11.  Tax Consequences.  Set forth below is a brief summary as of the date\n          ----------------                                                    \nof this Option of some of the federal tax consequences of exercise of this\nOption and disposition of the Shares.  THIS SUMMARY IS NECESSARILY INCOMPLETE,\nAND THE TAX LAWS AND REGU LATIONS ARE SUBJECT TO CHANGE.  OPTIONEE SHOULD\nCONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.\n\n          (i) Exercise of an ISO.  If this Option qualifies as an ISO, there\n              ------------------                                            \nwill be no regular federal income tax liability upon the exercise of the Option,\nalthough the excess, if any, of the Fair Market Value of the Shares on the date\nof exercise over the Exercise Price will be treated as an adjustment to the\nalternative minimum tax for federal tax purposes and may subject the Optionee to\nthe alternative minimum tax in the year of exercise.\n\n                                      -3-\n\n\n \n          (ii) Exercise of an NSO.  There may be a regular federal income tax\n               ------------------                                            \nliability upon the exercise of an NSO.  The Optionee will be treated as having\nreceived compensation income (taxable at ordinary income tax rates) equal to the\nexcess, if any, of the Fair Market Value of the Shares on the date of exercise\nover the Exercise Price.  If Optionee is an Employee, the Company will be\nrequired to withhold from Optionee's compensation or collect from Optionee and\npay to the applicable taxing authorities an amount equal to a percentage of this\ncompensation income at the time of exercise.\n\n          (iii)  Disposition of Shares.  In the case of an NSO, if Shares are\n                 ---------------------                                       \nheld for at least one year, any gain realized on disposition of the Shares will\nbe treated as long-term capital gain for federal income tax purposes.  In the\ncase of an ISO, if Shares transferred pursuant to the Option are held for at\nleast one year after exercise and are disposed of at least two years after the\nDate of Grant, any gain realized on disposition of the Shares will also be\ntreated as long-term capital gain for federal income tax purposes.  If Shares\npurchased under an ISO are disposed of within such one-year period or within two\nyears after the Date of Grant, any gain realized on such disposition will be\ntreated as compensation income (taxable at ordinary income rates) to the extent\nof the difference between the Exercise Price and the lesser of (1) the Fair\nMarket Value of the Shares on the date of exercise, or (2) the sale price of the\nShares.\n\n          (iv) Notice of Disqualifying Disposition of ISO Shares.  If the Option\n               -------------------------------------------------                \ngranted to Optionee herein is an ISO, and if Optionee sells or otherwise\ndisposes of any of the Shares acquired pursuant to the ISO on or before the\nlater of (1) the date two years after the Date of Grant, or (2) the date one\nyear after the date of exercise, the Optionee shall immediately notify the\nCompany in writing of such disposition.  Optionee agrees that Optionee may be\nsubject to income tax withholding by the Company on the compensation income\nrecognized by the Optionee.\n\n                              USWeb Corporation\n\n\n                              By:\n                                 -------------------------\n\n                                      -4-\n\n\n \n     OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE\nOPTION HEREOF IS EARNED ONLY BY CONTINUING CONSUL TANCY OR EMPLOYMENT BY THE\nCOMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR\nACQUIRING SHARES HEREUNDER).  OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT\nNOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S 1997 ACQUISITION STOCK OPTION\nPLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY\nRIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY.\n\n     Optionee acknowledges receipt of a copy of the Plan and represents that he\nis familiar with the terms and provisions thereof, and hereby accepts this\nOption subject to all of the terms and provisions thereof.  Optionee has\nreviewed the Plan and this Option in their entirety, has had an opportunity to\nobtain the advice of counsel prior to executing this Option and fully\nunderstands all provisions of the Option.  Optionee hereby agrees to accept as\nbinding, conclusive and final all decisions or interpretations of the\nAdministrator upon any questions arising under the Plan or this Option.\nOptionee further agrees to notify the Company upon any change in the residence\naddress indicated below.\n\nDated:_______________________            ____________________________\n                                         Optionee                            \n\n                                         Residence Address:\n\n                                     -5- \n \n\n\n \n                               CONSENT OF SPOUSE\n                               -----------------\n\n\n     The undersigned spouse of Optionee has read and hereby approves the terms\nand conditions of the Plan and this Option Agreement.  In consideration of USWeb\nCorporation's granting his or her spouse the right to purchase Shares as set\nforth in the Plan and this Option Agreement, the under signed hereby agrees to\nbe irrevocably bound by the terms and conditions of the Plan and this Option\nAgreement and further agrees that any community property interest shall be\nsimilarly bound.  The undersigned hereby appoints the undersigned's spouse as\nattorney-in-fact for the undersigned with respect to any amendment or exercise\nof rights under the Plan or this Option Agreement.\n\n\n \n                                    Spouse of Optionee\n\n\n                                      -6-\n\n\n \n                                   EXHIBIT A\n                                   ---------\n\n                               USWEB CORPORATION\n\n                       1997 ACQUISITION STOCK OPTION PLAN\n\n                                EXERCISE NOTICE\n\n\nUSWeb Corporation\n3000 Lakeside Drive\nSanta Clara, CA  95054\nAttention:  Secretary\n\n     1.   Exercise of Option.  Effective as of today, ___________, 19__, the\n          ------------------                                                \nundersigned (\"Optionee\") hereby elects to exercise Optionee's option to purchase\n              --------                                                          \n_________ shares of the Common Stock (the \"Shares\") of USWeb Corporation (the\n\"Company\") under and pursuant to the 1997 Acquisition Stock Option Plan, as\namended (the \"Plan\") and the [  ] Incentive [  ] Nonstatutory Stock Option\nAgreement dated ________, 19___ (the \"Stock Option Agreement\").\n\n     2.   Representations of Optionee.  Optionee acknowledges that Optionee has\n          ---------------------------                                          \nreceived, read and understood the Plan and the Stock Option Agreement and agrees\nto abide by and be bound by their terms and conditions.\n\n     3.   Rights as Shareholder.  Until the stock certificate evidencing such\n          ---------------------                                              \nShares is issued (as evidenced by the appropriate entry on the books of the\nCompany or of a duly authorized transfer agent of the Company), no right to vote\nor receive dividends or any other rights as a shareholder shall exist with\nrespect to the Optioned Stock, notwithstanding the exercise of the Option.  The\nCompany shall issue (or cause to be issued) such stock certificate promptly\nafter the Option is exercised.  No adjustment will be made for a dividend or\nother right for which the record date is prior to the date the stock certificate\nis issued, except as provided in Section 11 of the Plan.\n \n     Optionee shall enjoy rights as a shareholder until such time as Optionee\ndisposes of the Shares either to a transferee or to the Company if the Company\nexercises the Right of First Refusal hereunder.  Upon such exercise, Optionee\nshall have no further rights as a holder of the Shares so purchased except the\nright to receive payment for the Shares so purchased in accordance with the\nprovisions of this Agreement, and Optionee shall forthwith cause the\ncertificate(s) evidencing the Shares so purchased to be surrendered to the\nCompany for transfer or cancellation.\n\n     4.   Company's Right of First Refusal.  Before any Shares held by Optionee\n          --------------------------------                                     \nor any transferee (either being sometimes referred to herein as the \"Holder\")\nmay be sold or otherwise transferred (including transfer by gift or operation of\nlaw), the Company or its assignee(s) shall have a right of first refusal to\npurchase the Shares on the terms and conditions set forth in this Section (the\n\"Right of First Refusal\").\n\n\n \n          (i) Notice of Proposed Transfer.  The Holder of the Shares shall\n              ---------------------------                                 \ndeliver to the Company a written notice (the \"Notice\") stating:  (i) the\nHolder's bona fide intention to sell or otherwise transfer such Shares; (ii) the\nname of each proposed purchaser or other transferee (the \"Proposed Transferee\");\n(iii) the number of Shares to be transferred to each Proposed Transferee; and\n(iv) the bona fide cash price or other consideration for which the Holder\nproposes to transfer the Shares (the \"Offered Price\"), and the Holder shall\noffer the Shares at the Offered Price to the Company or its assignee(s).\n\n          (ii) Exercise of Right of First Refusal.  At any time within thirty\n               ----------------------------------                            \n(30) days after receipt of the Notice, the Company and\/or its assignee(s) may,\nby giving written notice to the Holder, elect to purchase all, but not less than\nall, of the Shares proposed to be transferred to any one or more of the Proposed\nTransferees, at the purchase price determined in accordance with subsection\n(iii) below.\n\n          (iii)  Purchase Price.  The purchase price (the \"Purchase Price\") for\n                 --------------                                                \nthe Shares purchased by the Company or its assignee(s) under this Section shall\nbe the Offered Price.  If the Offered Price includes consideration other than\ncash, the cash equivalent value of the non-cash consideration shall be\ndetermined by the Administrator in good faith.  If the Shares are being\ntransferred by gift (other than pursuant to paragraph (vi) below), the Purchase\nPrice shall be the product of the Fair Value Per Share (as defined below)\nmultiplied by the number of Shares proposed to be gifted.  The Fair Value Per\nShare of a Share, as of any particular date, shall mean, if the Company's Common\nStock is then traded on an exchange or national quotation system, the average\nclosing price per share of Company's Common Stock as traded on such exchange or\nnational quotation system during the 10 trading day period ending three business\ndays prior to the date of determination or, if not so traded, the fair market\nvalue per share of such Company's Common Stock as most recently determined by\nthe Company's Board of Directors acting in good faith prior to the date of the\noccurrence of the event requiring such determination.\n\n          (iv) Payment.  Payment of the Purchase Price shall be made, at the\n               -------                                                      \noption of the Company or its assignee(s), in cash, by check, by cancellation of\nall or a portion of any outstanding indebtedness of the Holder to the Company\n(or, in the case of repurchase by an assignee, to the assignee), or by any\ncombination thereof within 30 days after receipt of the Notice or in the manner\nand at the times set forth in the Notice.\n\n          (v) Holder's Right to Transfer.  If all of the Shares proposed in the\n              --------------------------                                       \nNotice to be transferred to a given Proposed Transferee are not purchased by the\nCompany and\/or its assignee(s) as provided in this Section, then the Holder may\nsell or otherwise transfer such Shares to that Proposed Transferee at the\nOffered Price or at a higher price, provided that such sale or other transfer is\nconsummated within 120 days after the date of the Notice and provided further\nthat any such sale or other transfer is effected in accordance with any\napplicable securities laws and the Proposed Transferee agrees in writing that\nthe provisions of this Section shall continue to apply to the Shares in the\nhands of such Proposed Transferee.  If the Shares described in the Notice are\nnot transferred to the Proposed Transferee within such period, a new Notice\nshall be given to the Company, and the \n\n\n \nCompany and\/or its assignees shall again be offered the Right of First Refusal\nbefore any Shares held by the Holder may be sold or otherwise transferred.\n\n          (vi) Exception for Certain Family Transfers.  Anything to the contrary\n               --------------------------------------                           \ncontained in this Section notwithstanding, the transfer of any or all of the\nShares during the Optionee's lifetime or on the Optionee's death by will or\nintestacy to the Optionee's immediate family or a trust for the benefit of the\nOptionee's immediate family shall be exempt from the provisions of this Section.\n\"Immediate Family\" as used herein shall mean spouse, lineal descendant or\nantecedent, brother or sister.  In such case, the transferee or other recipient\nshall receive and hold the Shares so transferred subject to the provisions of\nthis Section, and there shall be no further transfer of such Shares except in\naccordance with the terms of this Section.\n\n          (vii)  Termination of Right of First Refusal.  The Right of First\n                 -------------------------------------                     \nRefusal shall terminate ninety (90) days after the first sale of Common Stock of\nthe Company to the general public pursuant to a registration statement filed\nwith and declared effective by the Securities and Exchange Commission under the\nSecurities Act of 1933, as amended (the \"Securities Act\").\n\n     5.   Tax Consultation.  Optionee understands that Optionee may suffer\n          ----------------                                                \nadverse tax consequences as a result of Optionee's purchase or disposition of\nthe Shares.  Optionee represents that Optionee has consulted with any tax\nconsultants Optionee deems advisable in connection with the purchase or\ndisposition of the Shares and that Optionee is not relying on the Company for\nany tax advice.\n\n     6.   Market Standoff Agreement.   Each Optionee hereby agrees that if so\n          -------------------------                                          \nrequested by the Company or any representative of the underwriters in connection\nwith any registration of the offering of any Shares of the Company under the\nSecurities Act, such Optionee shall not sell or otherwise transfer, pledge,\nhypothecate or otherwise decrease his market risk or beneficial ownership in any\nShares or other securities of the Company during the 180-day period following\nthe date of the final Prospectus contained in a registration statement of the\nCompany filed under the Securities Act; provided, however, that such restriction\nshall only apply to the first registration statement of the Company to become\neffective under the Securities Act which includes securities to be sold on\nbehalf of the Company to the general public in an underwritten public offering\nunder the Securities Act.  The Company may impose stop-transfer instructions\nwith respect to securities subject to the foregoing restrictions until the end\nof such 180-day period.\n\n     7.   Restrictive Legends and Stop-Transfer Orders.\n          -------------------------------------------- \n\n          (i) Legends.  Optionee understands and agrees that the Company shall\n              -------                                                         \ncause the legends set forth below, or legends substantially equivalent thereto,\nto be placed upon any certificate(s) evidencing ownership of the Shares together\nwith any other legends that may be required by state or federal securities laws\nat the time of the issuance of the Shares:\n\n              THE SHARES REPRESENTED HEREBY HAVE NOT BEEN \n\n                                      -3-\n\n\n \n     REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE \"ACT\"), AND\n     MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED\n     UNLESS AND UNTIL REGISTERED UNDER THE ACT OR THE ISSUER OF THE SHARES (THE\n     \"ISSUER\") HAS RECEIVED AN OPINION OF COUNSEL IN FORM AND SUBSTANCE\n     SATISFACTORY TO THE ISSUER THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR\n     HYPOTHECATION IS IN COMPLIANCE WITH THE ACT.\n\n     THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN\n     RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE ISSUER OR\n     ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND\n     THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE\n     PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF\n     FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THE SHARES REPRESENTED HEREBY.\n\n          (ii) Stop-Transfer Notices.  Optionee agrees that, in order to ensure\n               ---------------------                                           \ncompliance with the restrictions referred to herein, the Company may issue\nappropriate \"stop transfer\" instruc tions to its transfer agent, if any, and\nthat, if the Company  transfers its own securities, it may make appropriate\nnotations to the same effect in its own records.\n\n          (iii)  Refusal to Transfer.  The Company shall not be required (i) to\n                 -------------------                                           \ntransfer on its books any Shares that have been sold or otherwise transferred in\nviolation of any of the provisions of this Agreement or (ii) to treat as owner\nof such Shares or to accord the right to vote or pay dividends to any purchaser\nor other transferee to whom such Shares shall have been so transferred.\n\n     8.   Successors and Assigns.  The Company may assign any of its rights\n          ----------------------                                           \nunder this Agreement to single or multiple assignees, and this Agreement shall\ninure to the benefit of the successors and assigns of the Company.  Subject to\nthe restrictions on transfer herein set forth, this Agreement shall be binding\nupon Optionee and his or her heirs, executors, administrators, successors and\nassigns.\n\n     9.   Interpretation.  Any dispute regarding the interpretation of this\n          --------------                                                   \nAgreement shall be submitted by Optionee or by the Company forthwith to the\nAdministrator of the Plan, which shall review such dispute at its next regular\nmeeting.  The resolution of such a dispute by the Administrator shall be final\nand binding on the Company and on Optionee.\n\n     10.  Governing Law; Severability.  This Agreement shall be governed by and\n          ---------------------------                                          \nconstrued in \n\n                                      -4-\n\n\n \naccordance with the laws of the State of California excluding that\nbody of law pertaining to conflicts of law.  Should any provision of this\nAgreement be determined by a court of law to be illegal or unenforceable, the\nother provisions shall nevertheless remain effective and shall remain\nenforceable.\n\n     11.  Notices.  Any notice required or permitted hereunder shall be given in\n          -------                                                               \nwriting and shall be deemed effectively given upon personal delivery or three\n(3) days after deposit in the United States mail by certified mail, with postage\nand fees prepaid, addressed to the other party at its address as shown below\nbeneath its signature, or to such other address as such party may designate in\nwriting from time to time to the other party.\n\n     12.  Further Instruments.  The parties agree to execute such further\n          -------------------                                            \ninstruments and to take such further action as may be reasonably necessary to\ncarry out the purposes and intent of this Agreement.\n\n     13.  Delivery of Payment.  Optionee herewith delivers to the Company the\n          -------------------                                                \nfull Exercise Price for the Shares.\n\n     14.  Entire Agreement.  The Plan, the Notice of Grant, and the Stock Option\n          ----------------                                                      \nAgreement are incorporated herein by reference.  This Agreement, the Plan, the\nNotice of Grant, the Stock Option Agreement and the Investment Representation\nStatement (if applicable) constitute the entire agreement of the parties and\nsupersede in their entirety all prior undertakings and agreements of the Company\nand Optionee with respect to the subject matter hereof.\n\n\nSubmitted by:                            Accepted by:\n\nOPTIONEE:                                USWeb Corporation\n\n                                         By:___________________\n\n                                         Its:__________________\n \n(Signature)\n\n\nAddress:                                 Address:\n- -------                                  ------- \n\n                                         3000 Lakeside Drive\n                                         Santa Clara, CA  95054\n\n\n                                      -5-\n\n\n \n                                   EXHIBIT B\n                                   ---------\n\n                      INVESTMENT REPRESENTATION STATEMENT\n\n\nOPTIONEE       :\n\nCOMPANY        :    USWEB CORPORATION\n\nSECURITY       :    COMMON STOCK\n\nAMOUNT         :\n\nDATE           :\n\nIn connection with the purchase of the above-listed Securities, the undersigned\nOptionee represents to the Company the following:\n\n          (a) Optionee is aware of the Company's business affairs and financial\ncondition and has acquired sufficient information about the Company to reach an\ninformed and knowledgeable decision to acquire the Securities.  Optionee is\nacquiring these Securities for investment for Optionee's own account only and\nnot with a view to, or for resale in connection with, any \"distribution\" thereof\nwithin the meaning of the Securities Act of 1933, as amended (the \"Securities\nAct\").\n\n          (b) Optionee acknowledges and understands that the Securities\nconstitute \"restricted securities\" under the Securities Act and have not been\nregistered under the Securities Act in reliance upon a specific exemption\ntherefrom, which exemption depends upon, among other things, the bona fide\nnature of Optionee's investment intent as expressed herein.  In this connection,\nOptionee understands that, in the view of the Securities and Exchange\nCommission, the statutory basis for such exemption may be unavailable if\nOptionee's representation was predicated solely upon a present intention to hold\nthese Securities for the minimum capital gains period specified under tax\nstatutes, for a deferred sale, for or until an increase or decrease in the\nmarket price of the Securities, or for a period of one year or any other fixed\nperiod in the future.  Optionee further understands that the Securities must be\nheld indefinitely unless they are subsequently registered under the Securities\nAct or an exemption from such registration is available.  Optionee further\nacknowledges and understands that the Company is under no obligation to register\nthe Securities.  Optionee understands that the certificate evidencing the\nSecurities will be imprinted with a legend which prohibits the transfer of the\nSecurities unless they are registered or such registration is not required in\nthe opinion of counsel satisfactory to the Company and any other legend required\nunder then applicable state or federal securities laws.\n\n          (c) Optionee is familiar with the provisions of Rule 701 and Rule 144,\neach promulgated under the Securities Act, which, in substance, permit limited\npublic resale of \"restricted \n\n\n \nsecurities\" acquired, directly or indirectly from the issuer thereof, in a non-\npublic offering subject to the satisfaction of certain conditions. Rule 701\nprovides that if the issuer qualifies under Rule 701 at the time of the grant of\nthe Option to the Optionee, the exercise will be exempt from registration under\nthe Securities Act. In the event the Company becomes subject to the reporting\nrequirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as\namended (the \"Exchange Act\") ninety (90) days thereafter (or such longer period\nas any market stand-off agreement may require) the Securities exempt under Rule\n701 may be resold, subject to the satisfaction of certain of the conditions\nspecified by Rule 144, including: (1) the resale being made through a broker in\nan unsolicited \"broker's transaction\" or in transactions directly with a market\nmaker (as said term is defined under the Exchange Act); and, in the case of an\naffiliate, (2) the availability of certain public information about the Company,\n(3) the amount of Securities being sold during any three month period not\nexceeding the limitations specified in Rule 144(e), and (4) the timely filing of\na Form 144, if applicable.\n\n     In the event that the Company does not qualify under Rule 701 at the time\nof grant of the Option, then the Securities may be resold in certain limited\ncircumstances subject to the provisions of Rule 144, which requires the resale\nto occur not less than one year after the later of the date the Securities were\nsold by the Company or the date the Securities were sold by an affiliate of the\nCompany, within the meaning of Rule 144; and, in the case of acquisition of the\nSecurities by an affiliate, or by a non-affiliate who subsequently holds the\nSecurities less than two years, the satisfaction of the conditions set forth in\nsections (1), (2), (3) and (4) of the paragraph immediately above.\n\n          (d)  Optionee hereby agrees that if so requested by the Company or any\nrepresentative of the underwriters (the \"Managing Underwriter\") in connection\nwith any registration of the offering of any securities of the Company under the\nSecurities Act, Optionee shall not sell or otherwise transfer any Shares or\nother securities of the Company during the 180-day period (or such longer period\nof time as may be requested in writing by the Managing Underwriter and agreed to\nin writing by the Company) (the \"Market Standoff Period\") following the date of\nthe final Prospectus included in a registration statement of the Company filed\nunder the Securities Act; provided, however, that such restriction shall only\napply to the first registration statement of the Company to become effec tive\nunder the Securities Act which includes securities to be sold on behalf of the\nCompany to the general public in an underwritten public offering under the\nSecurities Act.  The Company may impose stop-transfer instructions with respect\nto securities subject to the foregoing restrictions until the end of such Market\nStandoff Period.\n\n\n                                      -2-\n\n\n \n          (e) Optionee further understands that in the event all of the\napplicable requirements of Rule 701 or 144 are not satisfied, registration under\nthe Securities Act, compliance with Regulation A under the Securities Act, or\nsome other registration exemption will be required; and that, notwithstanding\nthe fact that Rules 144 and 701 are not exclusive, the Staff of the Securities\nand Exchange Commission has expressed its opinion that persons proposing to sell\nprivate placement securities other than in a registered offering and otherwise\nthan pursuant to Rules 144 or 701 will have a substantial burden of proof in\nestablishing that an exemption from registration is available for such offers or\nsales, and that such persons and their respective brokers who participate in\nsuch transactions do so at their own risk.  Optionee understands that no\nassurances can be given that any such other registration exemption will be\navailable in such event.\n\n                              Signature of Optionee:\n\n \n \n                              Date:______________________\n\n                                      -3-\n\n\n \n                                   EXHIBIT E\n                                   ---------\n\n                        FORM OF SHAREHOLDER CERTIFICATE\n\n\n \n                           SHAREHOLDER'S CERTIFICATE\n\n\n     The undersigned is aware that pursuant to an Agreement and Plan of\nReorganization, dated as of March 31, 1997, as amended (the \"Agreement\"),\n                                                             ---------   \nentered into by and among USWeb Corporation, a Utah corporation (\"Parent\"),\n                                                                  ------   \nInfopreneurs Inc. a Delaware corporation (the \"Company\"), USWeb Acquisition\n                                               -------                     \nCorporation 102, a Delaware corporation and wholly owned subsidiary of Parent\n(\"Sub\"), the Company will merge (the \"Merger\") with and into Sub and all shares\n- -----                                 ------                                   \nof the Company's Common Stock will be exchanged for certain consideration set\nforth in the Agreement (the \"Merger Consideration\").  Unless otherwise\n                             --------------------                     \nindicated, capitalized terms not defined herein have the meanings set forth in\nthe Agreement.\n\n     The undersigned understands that the execution of this Certificate is a\ncondition precedent to Parent and Sub's obligation to consummate the Merger and\nto the receipt of Merger Consideration in the Merger (pursuant to the terms and\nconditions of the Agreement).\n\n     The undersigned hereby represents and warrants as follows:\n\n     B.   Investment Representations.\n          -------------------------- \n\n          (a) The Parent Common Stock issued to the undersigned will be acquired\nfor investment for the undersigned's own account, not as a nominee or agent, and\nnot with a view to the sale or distribution of any part thereof, and the\nundersigned has no present intention of selling, granting any participation in,\nor otherwise distributing the same.  The undersigned represents that the entire\nlegal and beneficial interest of the Parent Common Stock will be held for the\nundersigned's account only, and neither in whole or in part for any other\nperson.  By executing this Shareholder's Certificate, the undersigned further\nrepresents that the undersigned has no present contract, undertaking, agreement\nor arrangement with any person to sell, transfer, or grant participation to such\nperson or to any third person, with respect to any of the Parent Common Stock.\n\n          (b) The undersigned understands and acknowledges that the issuance of\nthe Parent Common Stock pursuant to the Agreement is being effected on the basis\nthat the issuance of such securities is exempt from registration pursuant to\nSection 4(2) of the Securities Act of 1933, as amended (the \"1933 Act\") and that\n                                                             --------           \nthe Parent's reliance upon such exemption is predicated upon the undersigned's\nrepresentations.\n\n          (c) The undersigned further represents that he:  (i) has such\nknowledge and experience in financial and business matters as to be capable of\nevaluating the merits and risks of the undersigned's prospective investment in\nthe shares of Parent Common Stock; (ii) has received all the information it has\nrequested from the Parent and the Company it considers necessary or appropriate\nfor deciding whether to accept the Parent Common Stock; (iii) has the ability to\nbear the economic risks of the undersigned's prospective investment; (iv) is\nable, without materially \n\n\n \nimpairing his financial condition, to hold the Parent Common Stock for an\nindefinite period of time and to suffer complete loss on his investment; \nand (v) if applicable, is an \"accredited investor\" within the meaning of\n                              -------------------            \nRule 501 of Regulation D promulgated under the 1933 Act.\n\n          (d) Each certificate representing Parent Company Stock issued pursuant\nhereto to the undersigned and any shares issued or issuable in respect of any\nsuch Parent Common Stock upon any stock split, stock dividend, recapitalization,\nor similar event, shall be stamped or otherwise imprinted with  legends in the\nfollowing form (in addition to any legend required under applicable state\nsecurities laws):\n\n     THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR\n     INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.\n     THESE SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRA\n     TION OR AN EXEMPTION THEREFROM UNDER SAID ACT.  COPIES OF THE AGREEMENT\n     COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE\n     OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS\n     CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE\n     OFFICES OF THE CORPORATION.\n\n     THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN\n     RESTRICTIONS UPON TRANSFER, AS SET FORTH IN AN AGREEMENT BETWEEN THE\n     CORPORATION AND THE REGISTERED HOLDER, A COPY OF WHICH IS ON FILE AT THE\n     PRINCIPAL OFFICE OF THE CORPORATION.  SUCH TRANSFER RESTRICTIONS ARE\n     BINDING ON TRANSFEREES OF THESE SHARES.\n\n          (e) The certificates evidencing the Parent Common Stock shall also\nbear any legend required pursuant to any state, local or foreign law governing\nsuch securities.\n\n          (f) The undersigned understands and acknowledges that the Parent\nCommon Stock has not been registered under the 1933 Act and Parent Common Stock\nmust be held indefinitely unless subsequently registered under the 1933 Act or\nan exemption from such registration is available and neither Parent nor the\nCompany is under any obligation to register the Parent Common Stock.\n\n          (g) The undersigned acknowledges that the Parent Common Stock shall\nnot be transferable except upon the conditions specified in this Certificate and\nin the Agreement.  Each Company Shareholder will cause any proposed transferee\nof the Parent Company Stock held by such Company Shareholder to agree to take\nand hold such Parent Company Stock subject to the \n\n                                      -2-\n\n\n \nprovisions and upon the conditions specified in this Certificate and in the\nAgreement.\n\n          (h) Prior to any proposed transfer of any Parent Common Stock, unless\nthere is in effect a registration statement under the Securities Act covering\nthe proposed transfer, the undersigned shall give written notice to the Company\nof his intention to effect such transfer.  Each such notice shall describe the\nmanner and circumstances of the proposed transfer in sufficient detail, and\nshall, if the Parent so requests, be accompanied (except in transactions in\ncompliance with Rule 144) by either (i) a written opinion of legal counsel\nreasonably satisfactory to Parent, addressed to Parent, to the effect that the\nproposed transfer of Parent Common Stock may be effected without registration\nunder the 1933 Act, or (ii) a \"No Action\" letter from the Commission to the\n                               ---------                                   \neffect that the transfer of such securities without registration will not result\nin a recommendation by the staff of the Commission that action be taken with\nrespect thereto, whereupon the holder of such Parent Common Stock shall be\nentitled to transfer such shares of Parent Common Stock in accordance with the\nterms of the notice delivered by the holder to Parent, subject to any right of\nfirst refusal on transfer in favor of the Parent.  Each certificate evidencing\nthe shares of Parent Common Stock transferred as above provided shall bear the\nappropriate restrictive legend set forth in Section (d) above, except that such\ncertificate shall not bear such restrictive legend if in the opinion of counsel\nfor Parent such legend is not required in order to establish compliance with any\nprovisions of the 1933 Act, which opinion will not be unreasonably withheld.\n\n          (i) The undersigned has had an opportunity to review with his own tax\nadvisors the tax consequences to the undersigned of the Merger and the\ntransactions contemplated by the Agreement.  The undersigned understands that he\nmust rely solely on his advisors and not on any statements or representations by\nParent, the Company or any of their agents.  The undersigned understands that,\nexcept as set forth in Section 7.3(c) of the Agreement, he (and not Parent or\nthe Company) shall be responsible for his own tax liability that may arise as a\nresult of the Merger or the transactions contemplated by the Agreement.\n\n          (j) The undersigned will have sufficient assets, after completion of\nthe Merger, to satisfy all of the undersigned's obligations to its creditors as\nthe same become due and payable.\n\n     C.   Acknowledgment of Escrow Setoff and Market Standoff Agreement.  The\n          -------------------------------------------------------------      \nundersigned has carefully reviewed the Agreement, and understands and agrees\nthat:\n\n          (a) Pursuant to such Agreement, 50% of the Original Purchase Price\nwhich would otherwise be payable to the undersigned at the Effective Time of the\nMerger will be deemed to have been received by the undersigned and deposited\nwith the Escrow Agent, without any act of the undersigned, and that the amounts\ndeposited with the Escrow Agent shall be available to satisfy Losses and\nadjustments to the Original Purchase Price as set forth in the Agreement.\n\n          (b) Pursuant to the Agreement, Parent may, in its sole discretion,\nseek (i) indemnification from the Principal  Shareholders for Losses incurred by\nthe Parent, and Parent may elect to seek any such amounts from the Escrow Fund\nto compensate Parent for Losses incurred, or \n\n                                      -3-\n\n\n \n(ii) Parent may seek Purchase Price Adjustments from the Escrow Fund, in each\nevent of which the Escrow Amount otherwise payable to the undersigned shall be\nreduced without any act of the undersigned.\n\n          (c) Each Company Shareholder is restricted from selling or otherwise\ntransferring, pledging, hypothecating or otherwise decreasing his or her market\nrisk or beneficial ownership in any Shares or other securities of the Parent\nduring the 180-day period following the date of the final Prospectus contained\nin a registration statement of the Parent filed under the Securities Act;\nprovided, however, that such restriction shall only apply to the first\nregistration statement of the Parent to become effective under the Securities\nAct which includes securities to be sold on behalf of the Parent to the general\npublic in an underwritten public offering under the Securities Act.  The Parent\nmay impose stop-transfer instructions with respect to securities subject to the\nforegoing restrictions until the end of such 180-day period.\n\n     D.   Election of Shareholder Representative.  The undersigned hereby\n          --------------------------------------                         \nconsents to the election and appointment of Andrew Taubman as the Shareholder\nRepresentative (as such term is defined in the Agreement) and authorizes such\nShareholder Representative to act as the undersigned's duly constituted\nattorney-in-fact in connection with the matters set forth in the Agreement,\nuntil such time as a successor of such Shareholder Representative is elected by\na majority-in-interest of the Company Shareholders.  The undersigned\nacknowledges and agrees that any decision, act, consent or instruction of the\nShareholder Representative shall constitute a decision, act, consent or\ninstruction of the undersigned and shall be final, binding and conclusive on the\nundersigned, and that Parent and the Escrow Agent may rely upon any such\ndecision, act, consent or instruction of the Shareholder Representative as being\nthe decision, act, consent or instruction of the undersigned.\n\n     IN WITNESS WHEREOF, the undersigned has executed this Certificate this\n_____ day of August, 1997.\n\n\n\n \n                                    Signature\n\n\n<\/text><\/description><\/sequence><\/type><\/document><\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[9202],"corporate_contracts_industries":[9510],"corporate_contracts_types":[9622,9626],"class_list":["post-43215","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-usweb-corp","corporate_contracts_industries-technology__programming","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\/43215","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=43215"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43215"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43215"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43215"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}