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                          AGREEMENT AND PLAN OF MERGER

                                  BY AND AMONG

                                NETGATEWAY, INC.,

                            GALAXY ACQUISITION CORP.

                                       AND

                            GALAXY ENTERPRISES, INC.



                            Dated as of March 10, 2000



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






<PAGE>


                                 TABLE OF CONTENTS

<TABLE>
<S>                                                                           <C>
ARTICLE I    THE MERGER........................................................2

   1.01     THE MERGER.........................................................2
   1.02     EFFECTIVE TIME, CLOSING............................................2
   1.03     EFFECT OF THE MERGER...............................................2
   1.04     ARTICLES OF INCORPORATION; BYLAWS..................................2
   1.05     DIRECTORS AND OFFICERS.............................................3
   1.06     EFFECT ON CAPITAL STOCK............................................3
   1.07     SURRENDER OF CERTIFICATES..........................................5
   1.08     NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK................7
   1.09     LOST, STOLEN OR DESTROYED CERTIFICATES.............................7
   1.10     TAX AND ACCOUNTING CONSEQUENCES....................................7
   1.11     DISSENTING SHARES..................................................7

ARTICLE II      REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................8

   2.01     AUTHORITY..........................................................8
   2.02     DUE ORGANIZATION...................................................8
   2.03     CAPITAL STOCK......................................................9
   2.04     SUBSIDIARIES.......................................................10
   2.05     NO CONFLICTS.......................................................10
   2.06     BOOKS AND RECORDS..................................................11
   2.07     SEC FILINGS........................................................11
   2.08     ABSENCE OF CHANGES.................................................12
   2.09     NO UNDISCLOSED LIABILITIES.........................................13
   2.10     LEGAL PROCEEDINGS..................................................13
   2.11     COMPLIANCE WITH LAWS AND ORDERS....................................14
   2.12     EMPLOYEE BENEFIT AND COMPENSATION PLANS............................14
   2.13     REAL PROPERTY......................................................16
   2.14     TANGIBLE PERSONAL PROPERTY; INVESTMENT ASSETS......................17
   2.15     INTELLECTUAL PROPERTY RIGHTS.......................................17
   2.16     CONTRACTS..........................................................20
   2.17     LICENSES...........................................................22
   2.18     INSURANCE..........................................................22
   2.19     TRANSACTIONS WITH AFFILIATES.......................................23
   2.20     EMPLOYEES; LABOR RELATIONS.........................................23
   2.21     BANK AND BROKERAGE ACCOUNTS; INVESTMENT ASSETS.....................24
   2.22     NO POWERS OF ATTORNEY..............................................24
   2.23     ACCOUNTS RECEIVABLE................................................24
   2.24     INVENTORY..........................................................25
   2.25     BROKERS OR FINDERS.................................................25
   2.26     DISCLOSURE.........................................................25
   2.27     Y2K................................................................26
   2.28     CHANGE OF CONTROL PAYMENTS.........................................26
   2.29     OPINION OF FINANCIAL ADVISOR.......................................26
   2.30     BOARD APPROVAL.....................................................26
   2.31     POOLING OF INTERESTS...............................................26

ARTICLE III     REPRESENTATIONS AND WARRANTIES OF PARENT.......................27

   3.01     AUTHORITY..........................................................27
   3.02     ORGANIZATION.......................................................27
   3.03     CAPITAL STOCK......................................................27
   3.04     SUBSIDIARIES.......................................................27
   3.05     NO CONFLICTS.......................................................27
   3.06     BOOKS AND RECORDS..................................................28
   3.07     SEC FILINGS........................................................28
</TABLE>

<PAGE>
<TABLE>
<S>                                                                           <C>
   3.08     ABSENCE OF CHANGES.................................................29
   3.09     NO UNDISCLOSED LIABILITIES.........................................29
   3.10     LEGAL PROCEEDINGS..................................................30
   3.11     COMPLIANCE WITH LAWS AND ORDERS....................................30
   3.12     NO POWERS OF ATTORNEY..............................................30
   3.13     BROKERS OR FINDERS.................................................30
   3.14     TAXES..............................................................30
   3.15     DISCLOSURE.........................................................31

ARTICLE IV      COVENANTS OF COMPANY...........................................31

   4.01     REGULATORY AND OTHER APPROVALS.....................................31
   4.02     INVESTIGATION BY PURCHASER.........................................32
   4.03     NO SOLICITATIONS...................................................32
   4.04     CONDUCT OF BUSINESS................................................33
   4.05     CERTAIN RESTRICTIONS...............................................33
   4.06     AFFILIATE TRANSACTIONS.............................................34
   4.07     NOTICE OF CERTAIN MATTERS..........................................34
   4.08     FULFILLMENT OF CONDITIONS; OTHER ACTIONS...........................34

ARTICLE V       COVENANTS OF PARENT............................................35

   5.01     REGULATORY AND OTHER APPROVALS.....................................35
   5.02     INVESTIGATION BY COMPANY...........................................35
   5.03     CONDUCT OF BUSINESS................................................35
   5.04     CERTAIN RESTRICTIONS...............................................35
   5.05     NOTICE OF CERTAIN MATTERS..........................................35
   5.06     FULFILLMENT OF CONDITIONS; OTHER ACTIONS...........................36
   5.07     DIRECTORS' AND OFFICERS' INSURANCE AND INDEMNIFICATION.............36

ARTICLE VI      ADDITIONAL AGREEMENT...........................................38

   6.01     PROSPECTUS/PROXY STATEMENT; REGISTRATION STATEMENT; OTHER FILINGS..38
   6.02     MEETING OF COMPANY STOCKHOLDERS....................................39
   6.03     MEETING OF PARENT STOCKHOLDERS.....................................41
   6.04     STATE STATUTES.....................................................42

ARTICLE VII     CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB...42

   7.01     REPRESENTATIONS  AND WARRANTIES....................................42
   7.02     PERFORMANCE........................................................42
   7.03     ORDERS AND LAWS....................................................42
   7.04     REGULATORY CONSENTS AND APPROVALS..................................43
   7.05     THIRD PARTY CONSENTS...............................................43
   7.06     STOCKHOLDER APPROVAL...............................................43
   7.07     OPINION OF COUNSEL.................................................43
   7.08     ANCILLARY AGREEMENTS...............................................43
   7.09     REGISTRATION STATEMENT EFFECTIVE; PROXY STATEMENT..................43
   7.10     NASDAQ LISTING.....................................................44
   7.11     OFFICERS' CERTIFICATES.............................................44
   7.12     FAIRNESS OPINION...................................................44
   7.13     DISSENTING SHARES..................................................44

ARTICLE VIII    CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPANY.................44

   8.01     REPRESENTATIONS  AND WARRANTIES....................................44
   8.02     PERFORMANCE........................................................44
   8.03     OPINION OF COUNSEL.................................................44
   8.04     REGULATORY CONSENTS AND APPROVALS..................................45
   8.05     ORDERS AND LAWS....................................................45
</TABLE>

                                       ii
<PAGE>
<TABLE>
    <S>                                                                       <C>
   8.06     STOCKHOLDER APPROVAL...............................................45
   8.07     REGISTRATION STATEMENT EFFECTIVE; PROXY STATEMENT..................45
   8.08     NASDAQ LISTING.....................................................45
   8.09     OFFICERS' CERTIFICATES.............................................45
   8.10     FAIRNESS OPINION...................................................45

ARTICLE IX      TAX MATTERS....................................................46

   9.01     REPRESENTATIONS AND OBLIGATIONS REGARDING TAXES....................46

ARTICLE X       SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS
                    AND AGREEMENTS.............................................47

   10.01    SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS..47

ARTICLE XI      TERMINATION....................................................47

   11.01    TERMINATION........................................................47
   11.02    EFFECT OF TERMINATION..............................................48

ARTICLE XII     DEFINITIONS....................................................49

   12.01    DEFINITIONS........................................................49

ARTICLE XIII    MISCELLANEOUS..................................................56

   13.01    NOTICES............................................................56
   13.02    ENTIRE AGREEMENT...................................................57
   13.03    PUBLIC ANNOUNCEMENTS...............................................57
   13.04    CONFIDENTIALITY....................................................58
   13.05    EXPENSES...........................................................58
   13.06    WAIVER.............................................................59
   13.07    AMENDMENT..........................................................59
   13.08    NO THIRD PARTY BENEFICIARY.........................................59
   13.09    NO ASSIGNMENT; BINDING EFFECT......................................59
   13.10    HEADINGS...........................................................59
   13.11    CONSENT TO JURISDICTION AND SERVICE OF PROCESS.....................59
   13.12    INVALID PROVISIONS.................................................59
   13.13    GOVERNING LAW......................................................60
   13.14    COUNTERPARTS.......................................................60
</TABLE>

EXHIBITS

EXHIBIT   A    ARTICLES   OF   INCORPORATION   OF   THE   COMPANY
EXHIBIT   B    BYLAWS OF THE COMPANY
EXHIBIT   C    FORM OF OPINION OF COUNSEL OF THE   COMPANY
EXHIBIT   D    FORM   OF   EMPLOYMENT   AGREEMENT
EXHIBIT   E    FORM OF AFFILIATE LOCK-UP AGREEMENT
EXHIBIT   F    FORM OF OPINION OF  COUNSEL  OF  PARENT
EXHIBIT   G    FORM  OF  VOTING  AGREEMENT
EXHIBIT   H    FORM OF OPTION AGREEMENT

DISCLOSURE SCHEDULE

                                      iii
<PAGE>



<PAGE>


                          AGREEMENT AND PLAN OF MERGER

     This  AGREEMENT AND PLAN OF MERGER is made and entered into as of March 10,
2000,  among  NETGATEWAY,  INC.,  a  Delaware  corporation  ("Parent"),   GALAXY
ACQUISITION  CORP.,  a Delaware  corporation  and a  wholly-owned  Subsidiary of
Parent ("Merger Sub"), and GALAXY  ENTERPRISES,  INC., a Nevada corporation (the
"Company"). All terms not otherwise defined herein shall have the meanings given
such terms in Article XII.

                                  -----------

                                    RECITALS

     A. Upon the terms and subject to the  conditions  of this  Agreement and in
accordance with the Delaware  General  Corporation Law ("Delaware  Law") and the
Nevada  Revised  Statutes  ("Nevada  Law"),  Parent,  Merger Sub and the Company
intend to enter into a business combination transaction.

     B. The Board of Directors of the Company (i) has determined that the Merger
is fair to, and in the best interests of, the Company and its stockholders, (ii)
has approved this Agreement, the Merger and the other transactions  contemplated
by this  Agreement and the Ancillary  Agreements  and (iii) subject to the terms
and  conditions  of  this  Agreement,  has  determined  to  recommend  that  the
stockholders  of the Company  adopt and approve this  Agreement  and approve the
Merger.

     C. The Board of Directors of Parent (i) has  determined  that the Merger is
fair to, and in the best  interests  of, Parent and its  stockholders,  (ii) has
approved this Agreement,  the Merger and the other transactions  contemplated by
this Agreement and (iii) has determined to recommend  that the  stockholders  of
Parent  approve the issuance of shares of Parent  Common  Stock  pursuant to the
Merger, subject to and upon consummation of the Merger.

     D. The parties intend, (i) by executing this Agreement,  to adopt a plan of
reorganization  within the  meaning of Section 368 of the Code and (ii) that the
Merger shall qualify for accounting treatment as a pooling of interests.

     E. As a condition and  inducement to Parent's and Merger Sub's  willingness
to enter  into  this  Agreement  and  incur the  obligations  set forth  herein,
concurrently  with the execution and delivery of this Agreement,  (i) Parent and
John J. Poelman  ("Poelman") have entered into a Voting Agreement in the form of
Exhibit G-1 hereto,  pursuant to which, among other things,  such stockholder of
the Company agrees to vote in favor of approval and adoption of this  Agreement,
(ii) Parent and Sue Ann Cochran have entered into a Voting Agreement in the form
of Exhibit G-2 hereto pursuant to which, among other things, such stockholder of
the Company  agrees to vote in favor of approval and adoption of this  Agreement
(collectively,  the "Voting Agreements"),  (iii) Parent and Poelman have entered
into  an  Option  Agreement  in the  form  of  Exhibit  H  hereto  (the  "Option
Agreement"),  pursuant to which, among other things, Poelman grants to Parent an
option to purchase his shares of Company  Common Stock  representing  16% of the
total outstanding  shares of Company Common Stock,  (iv) each director,  officer
and ten percent (10%) or greater  shareholder of the Company shall have executed
the Affiliate Lock-Up  Agreement,  substantially in the form of Exhibit E hereto
(the "Lock-Up Agreements" and together with the Voting Agreements and the Option
Agreement,   sometimes   collectively  referred  to  herein  as  the  "Ancillary
<PAGE>

Agreements"),  and (v) the Company and Poelman,  Brandon Lewis, Frank C. Heyman,
Robert  Green,  David Wise and Benjamin  Roberts  have  entered into  employment
agreements in the form of Exhibit D hereto (the  "Employment  Agreements") , the
effectiveness of which are conditioned upon the consummation of the transactions
contemplated hereby.

     NOW,   THEREFORE,   in  consideration   of  the  covenants,   promises  and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged,  the parties agree
as follows:

                                    ARTICLE I

                                   THE MERGER

     1.01 The Merger.  At the  Effective  Time (as defined in Section  1.02) and
subject  to and  upon  the  terms  and  conditions  of  this  Agreement  and the
applicable provisions of Delaware Law and Nevada Law, Merger Sub shall be merged
with and into the Company (the "Merger"),  the separate  corporate  existence of
Merger  Sub  shall  cease  and  the  Company  shall  continue  as the  surviving
corporation.  The  Company  as the  surviving  corporation  after the  Merger is
hereinafter sometimes referred to as the "Surviving Corporation."

     1.02 Effective Time; Closing. Subject to the provisions of this Agreement,
the  parties  hereto  shall  cause  the  Merger  to be  consummated  by filing a
Certificate  of Merger with the  Secretary of State of the State of Delaware and
Articles  of  Merger  with the  Secretary  of State of the  State of  Nevada  in
accordance  with the  relevant  provisions  of Delaware  Law and Nevada Law (the
"Certificate of Merger") (the time of such filing with the Secretary of State of
the State of Nevada  (or such  later  time as may be  agreed in  writing  by the
Company  and Parent  and  specified  in the  Certificate  of  Merger)  being the
"Effective Time") as soon as practicable on or after the Closing Date (as herein
defined).  The  closing of the Merger  (the  "Closing")  shall take place at the
offices of Parent,  at a time and date to be  specified  by the  parties,  which
shall be no later than the second Business Day after the  satisfaction or waiver
of the  conditions  set forth in Articles  VII and VIII,  or at such other time,
date and location as the parties hereto agree in writing (the
"Closing Date").

     1.03 Effect of the Merger.  At the Effective Time, the effect of the Merger
shall be as provided in this Agreement and the applicable provisions of Delaware
Law and Nevada Law.  Without  limiting  the  generality  of the  foregoing,  and
subject  thereto,  at the Effective Time all the property,  rights,  privileges,
powers and  franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.

     1.04  Articles of  Incorporation;  ByLaws.  Unless  otherwise  agreed to in
writing by the Company and Parent prior to the Effective Time:

     (a) the Articles of  Incorporation  of the Surviving  Corporation  shall be
amended and restated as of the Effective Time to conform to Exhibit A; and



                                       2
<PAGE>

     (b) the By-Laws of the Surviving  Corporation shall be amended and restated
as of the Effective Time to conform to Exhibit B.

     1.05  Directors  and  Officers.  The  initial  directors  of the  Surviving
Corporation  shall be the  directors  of  Merger  Sub  immediately  prior to the
Effective Time, until their respective  successors are duly elected or appointed
and qualified.  The initial officers of the Surviving  Corporation  shall be the
officers of Merger Sub  immediately  prior to the  Effective  Time,  until their
respective successors are duly appointed.

     1.06 Effect on Capital  Stock.  Subject to Section 1.11 and the other terms
and conditions of this Agreement, at the Effective Time, by virtue of the Merger
and without any action on the part of Merger Sub,  the Company or the holders of
any of the following securities, the following shall occur:

     (a) Conversion of the Company Common Stock.  Subject to Section 1.06(d) and
except for Dissenting  Shares,  each share of Common Stock, par value $0.007 per
share,  of  the  Company   ("Company   Common  Stock")  issued  and  outstanding
immediately prior to the Effective Time will be canceled and extinguished and is
automatically  converted  (subject to Section 1.06(d)) into the right to receive
that number of shares of the Common Stock, par value $0.001 per share, of Parent
("Parent  Common  Stock")  equal to (i) [(x)  5,000,000  less (y) (a) the  total
number of Company Plan Options  outstanding at the Effective Time  multiplied by
(b) (I)  5,000,000  divided by (II) the sum of (A) the total number of shares of
Company Common Stock and (B) the total number of Company Plan Options issued and
outstanding at the Effective Time] divided by (ii) the total number of shares of
Company  Common Stock issued and  outstanding  at the Effective Time (rounded to
the nearest five decimal places) (the "Exchange  Ratio"),  upon surrender of the
certificate  representing  such share of the Company  Common Stock in the manner
provided  in  Section  1.07  (or in the  case of a  lost,  stolen  or  destroyed
certificate, upon delivery of an affidavit (and bond, if required) in the manner
provided in Section 1.09). If any shares of the Company Common Stock outstanding
immediately  prior  to the  Effective  Time are  unvested  or are  subject  to a
repurchase  option,  risk of forfeiture or other  condition under any applicable
restricted  stock purchase  agreement or other agreement with the Company,  then
the shares of Parent  Common  Stock  issued in  exchange  for such shares of the
Company  Common Stock will also be unvested  and subject to the same  repurchase
option, risk of forfeiture or other condition, and the certificates representing
such shares of Parent Common Stock may  accordingly  be marked with  appropriate
legends. The Company shall take all action that may be necessary to ensure that,
from and after the  Effective  Time,  Parent is entitled  to  exercise  any such
repurchase option or other right set forth in any such restricted stock purchase
agreement or other agreement.

     (b) Stock Options and Warrants.

     (i) At the Effective  Time, all Company  Options issued under the Company's
1997  Employee  Stock  Option Plan (the  "Company  Plan") and the Special  Grant
disclosed in Section  2.03(b) of the  Disclosure  Schedule  (the  "Company  Plan
Options"),  whether or not vested and  exercisable,  shall be assumed by Parent.
Each Company Plan Option assumed by Parent shall be subject to, and  exercisable
upon, the same terms and conditions as under the applicable  Company Plan Option
and  the  applicable  option  agreement  issued  thereunder  (including  without
limitation any vesting,  expiration or termination provisions),  except that (a)


                                       3
<PAGE>

each assumed  Company Plan Option shall be  exercisable  for, and  represent the
right to acquire,  that number of shares of Parent Common Stock (rounded down to
the nearest  whole  share)  equal to (i) the number of shares of Company  Common
Stock  subject to such Company Plan Option  immediately  prior to the  Effective
Time multiplied by (ii) the Exchange  Ratio;  and (b) the option price per share
of Parent Common Stock  subject to each assumed  Company Plan Option shall be an
amount equal to (i) the option price per share of Company  Common Stock  subject
to such Company Plan Option in effect  immediately  prior to the Effective  Time
divided by (ii) the Exchange Ratio  (rounded up to the nearest whole cent).  The
Company  represents  and warrants  that as of the Closing each of the  foregoing
actions  may be taken and  effected  by the  Company  without the consent of any
holder of any Company Plan Option.

     (ii) At the Effective Time, all Company Options then  outstanding,  whether
or not vested and  exercisable,  under the Invest  Linc  Emerging  Growth Fund I
Warrant, dated March 18, 1999, and the Bridgewater Corporation Warrant, dated as
of  January  11,  1999,  in each case as  amended  (collectively,  the  "Company
Warrant"),  shall be assumed by Parent.  Each Company  Warrant assumed by Parent
shall be subject to, and  exercisable  upon,  the same terms and  conditions  as
under the applicable Company Warrant and the applicable warrant agreement issued
thereunder (including without limitation any vesting,  expiration or termination
provisions),  except that (a) each assumed  Company Warrant shall be exercisable
for, and represent the right to acquire,  that number of shares of Parent Common
Stock  (rounded  down to the  nearest  whole  share)  equal to (i) the number of
shares of Company Common Stock subject to such Company Warrant immediately prior
to the Effective Time multiplied by (ii) the Exchange Ratio;  and (b) the option
price per share of Parent Common Stock subject to each assumed  Company  Warrant
shall be an amount  equal to (i) the option  price per share of  Company  Common
Stock  subject  to such  Company  Warrant  in  effect  immediately  prior to the
Effective  Time  divided by (ii) the Exchange  Ratio  (rounded up to the nearest
whole cent). The Company  represents and warrants that as of the Closing each of
the  foregoing  actions may be taken and  effected  by the  Company  without the
consent of any holder of any Company Warrant.

     (c) Capital  Stock of Merger Sub.  Each share of Common Stock of Merger Sub
(the "Merger Sub Common Stock") issued and outstanding  immediately prior to the
Effective  Time  shall be  converted  into one  validly  issued,  fully paid and
nonassessable  share  of  Common  Stock  of  the  Surviving  Corporation.   Each
certificate  evidencing  ownership  of shares of Merger Sub Common  Stock  shall
evidence ownership of such shares of capital stock of the Surviving Corporation.

     (d) Fractional  Shares.  No fraction of a share of Parent Common Stock will
be issued by virtue of the Merger, but in lieu thereof, each holder of shares of
the  Company  Common  Stock who would  otherwise  be entitled to a fraction of a
share of Parent Common Stock (after  aggregating all fractional shares of Parent
Common  Stock that  otherwise  would be received  by such  holder)  shall,  upon
surrender  of such  holder's  Certificate(s)  (as  defined in Section  1.07(c)),
receive  from  Parent an amount of cash  (rounded to the  nearest  whole  cent),
without interest, equal to the product of (i) such fraction,  multiplied by (ii)
the average  closing  price of one share of Parent  Common  Stock for the twenty
(20) most recent days that Parent  Common Stock has traded ending on the trading
day ending one day prior to the Effective Time (the "Closing Price").

                                       4
<PAGE>

     (e) Adjustments to Exchange Ratio.  The Exchange Ratio shall be adjusted to
reflect fully the  appropriate  effect of any stock split,  reverse stock split,
stock dividend (including any dividend or distribution to Parent securityholders
of securities convertible into or exercisable for Parent Common Stock or Company
Common  Stock),   extraordinary  dividend,   reorganization,   recapitalization,
reclassification  or other like change with  respect to Parent  Common  Stock or
Company  Common  Stock  occurring  (or with a record  date) on or after the date
hereof and prior to the Effective Time.

     (f) Cancellation of Treasury Stock and Parent-Owned Stock.  Notwithstanding
any other  provision of this Section  1.06,  each share of Company  Common Stock
that is owned by the  Company  and each  share of Company  Common  Stock that is
owned by Parent or Merger Sub shall  automatically  be cancelled and retired and
shall cease to exist, and no Parent Common Stock or other consideration shall be
delivered in exchange therefor.

     1.07 Surrender of Certificates.

     (a)  Exchange  Agent.   Parent  shall  select  an  institution   reasonably
satisfactory to the Company to act as the exchange agent (the "Exchange  Agent")
in the Merger.

     (b) Parent to Provide Common Stock. Within ten (10) Business Days after the
Effective  Time,  Parent shall make available to the Exchange Agent for exchange
in accordance  with this Article I, the shares of Parent  Common Stock  issuable
pursuant  to Section  1.06 in  exchange  for  outstanding  shares of the Company
Common Stock, and cash in an amount sufficient for payment in lieu of fractional
shares  pursuant to Section  1.06(d) and any  dividends or  distributions  which
holders  of shares of the  Company  Common  Stock may be  entitled  pursuant  to
Section 1.07(d).

     (c) Exchange  Procedures.  Promptly after the Effective Time,  Parent shall
cause the Exchange  Agent to mail to each holder of record (as of the  Effective
Time) of a certificate or certificates  (the  "Certificates")  which immediately
prior to the Effective Time represented outstanding shares of the Company Common
Stock whose  shares were  converted  into the right to receive  shares of Parent
Common Stock pursuant to Section 1.06(a),  cash in lieu of any fractional shares
pursuant to Section 1.06(d) and any dividends or other distributions pursuant to
Section 1.07(d),  (i) a letter of transmittal (which shall specify that delivery
shall be effected,  and risk of loss and title to the  Certificates  shall pass,
only upon  delivery of the  Certificates  to the Exchange  Agent and shall be in
such form and have such other  provisions as Parent may reasonably  specify) and
(ii)  instructions  for use in effecting  the surrender of the  Certificates  in
exchange for certificates representing shares of Parent Common Stock pursuant to
Section  1.06(a),  cash in lieu of any  fractional  shares  pursuant  to Section
1.06(d) and any dividends or other  distributions  pursuant to Section  1.07(d).
Upon surrender of Certificates for cancellation to the Exchange Agent or to such
other agent or agents as may be appointed by Parent,  together  with such letter
of  transmittal,  duly  completed and validly  executed in  accordance  with the
instructions  thereto,  the  holders of such  Certificates  shall be entitled to
receive  in  exchange  therefor  certificates  representing  the number of whole
shares of Parent Common Stock  pursuant to Section  1.06(a),  payment in lieu of
fractional  shares  which such  holders  have the right to receive  pursuant  to
Section 1.06(d) and any dividends or  distributions  payable pursuant to Section
1.07(d), and the Certificates so surrendered shall forthwith be canceled.  Until


                                       5
<PAGE>

so  surrendered,  outstanding  Certificates  will be  deemed  from and after the
Effective Time, for all corporate purposes, subject to Section 1.07(d) as to the
payment of dividends,  to evidence the ownership of the number of full shares of
Parent  Common  Stock into which such shares of the Company  Common  Stock shall
have been so  converted  pursuant  to Section  1.06(a),  the right to receive an
amount in cash in lieu of the issuance of any  fractional  shares in  accordance
with Section  1.06(d) and any  dividends or  distributions  payable  pursuant to
Section 1.07(d).

     (d) Distributions With Respect to Unexchanged Shares. No dividends or other
distributions  declared or made after the date of this Agreement with respect to
Parent Common Stock with a record date after the Effective  Time or cash in lieu
of  fractional  shares  will  be  paid  to  the  holders  of  any  unsurrendered
Certificates  with  respect to the  shares of Parent  Common  Stock  represented
thereby until the holders of record of such  Certificates  shall  surrender such
Certificates.  Subject  to  applicable  Law,  following  surrender  of any  such
Certificates,  the Exchange Agent shall deliver to the record  holders  thereof,
without interest,  certificates representing whole shares of Parent Common Stock
issued in exchange  therefor  along with  payment in lieu of  fractional  shares
pursuant to Section 1.06(d) hereof and the amount of any such dividends or other
distributions  with a record date after the Effective  Time payable with respect
to such whole shares of Parent Common Stock.

     (e) Transfers of  Ownership.  If  certificates  for shares of Parent Common
Stock  are to be  issued in a name  other  than  that in which the  Certificates
surrendered in exchange  therefor are registered,  it will be a condition of the
issuance thereof that the Certificates so surrendered will be properly  endorsed
and otherwise in proper form for transfer and that the persons  requesting  such
exchange will have paid to Parent or any agent  designated by it any transfer or
other taxes  required by reason of the  issuance of  certificates  for shares of
Parent Common Stock in any name other than that of the registered  holder of the
Certificates  surrendered,  or established to the  satisfaction of Parent or any
agent designated by it that such tax has been paid or is not payable.

     (f)  Required  Withholding.  Each of the  Exchange  Agent,  Parent  and the
Surviving  Corporation  shall  be  entitled  to  deduct  and  withhold  from any
consideration payable or otherwise deliverable pursuant to this Agreement to any
holder or former  holder of the  Company  Common  Stock  such  amounts as may be
required  to be  deducted  or  withheld  therefrom  under  the Code or under any
provision of state, local or foreign tax Law or under any other applicable Laws.
To the extent such  amounts are so deducted or withheld,  such amounts  shall be
treated for all purposes  under this Agreement as having been paid to the person
to whom such amounts would otherwise have been paid.

     (g) No Liability.  Notwithstanding anything to the contrary in this Section
1.07,  neither the Exchange  Agent,  Parent,  the Surviving  Corporation nor any
party  hereto  shall be liable to a holder of shares of Parent  Common  Stock or
Company Common Stock for any amount properly paid to a public official  pursuant
to any applicable abandoned property, escheat or similar Law. If any Certificate
shall not have been surrendered  prior to the date immediately prior to the date
on which such property would otherwise  escheat to or become the property of any
Governmental or Regulatory Authority, any such property, to the extent permitted
by applicable Law, shall become the property of the Surviving Corporation,  free
and clear of all claims or interest of any person previously entitled thereto.

                                       6
<PAGE>

     (h) Termination.  Any property provided to the Exchange Agent which remains
undistributed  to holders of the  Certificates  for twelve (12) months after the
Effective Time shall be delivered to Parent, upon demand, and any holders of the
Certificates  who  have not  theretofore  complied  with  this  Article  I shall
thereafter  look only to Parent or the  Surviving  Corporation  for,  and Parent
shall remain liable for,  payment of their claim for Parent  Common  Stock,  any
cash in lieu of  fractional  shares of Parent  Common Stock and any dividends or
distributions with respect to Parent Common Stock, without interest thereon.

     1.08 No Further  Ownership  Rights in Company  Common Stock.  All shares of
Parent  Common  Stock  issued upon the  surrender  for exchange of shares of the
Company  Common Stock in accordance  with the terms hereof  (including  any cash
paid in respect thereof pursuant to Section 1.06(d) and 1.07(d)) shall be deemed
to have been issued in full satisfaction of all rights pertaining to such shares
of the  Company  Common  Stock,  and there shall be no further  registration  of
transfers on the records of the Surviving  Corporation  of shares of the Company
Common Stock which were outstanding immediately prior to the Effective Time. If,
after  the  Effective  Time,   Certificates   are  presented  to  the  Surviving
Corporation for any reason,  they shall be canceled and exchanged as provided in
this Article I.

     1.09 Lost, Stolen or Destroyed Certificates.  In the event any Certificates
shall have been lost,  stolen or  destroyed,  the Exchange  Agent shall issue in
exchange for such lost, stolen or destroyed Certificates,  upon the making of an
affidavit  of that fact by the  holder  thereof,  such  shares of Parent  Common
Stock,  cash for  fractional  shares,  if any,  as may be  required  pursuant to
Section 1.06(d) and any dividends or  distributions  payable pursuant to Section
1.07(d);  provided,  however,  that  Parent  may,  in  its  discretion  and as a
condition  precedent  to the issuance  thereof,  require the owner of such lost,
stolen  or  destroyed  Certificates  to  deliver  a bond in  such  sum as it may
reasonably  direct  as  indemnity  against  any claim  that may be made  against
Parent,  the  Company or the  Exchange  Agent with  respect to the  Certificates
alleged to have been lost, stolen or destroyed.

     1.10 Tax and Accounting Consequences.  It is intended by the parties hereto
that the Merger shall constitute a reorganization  within the meaning of Section
368(a)(1)(a)  and  368(a)(2)(E)  of the Code.  The  parties  hereto  adopt  this
Agreement  as  a  "plan  of  reorganization"  within  the  meaning  of  Sections
1.368-2(g)  and  1.368-3(a)  of the United States  Income Tax  Regulations.  The
parties shall consistently treat the Merger as such a reorganization for all Tax
reporting  purposes.  The  parties  also  intend that the Merger be treated as a
pooling of interests for accounting purposes.

     1.11 Dissenting Shares.  Notwithstanding anything to the contrary contained
in  this  Agreement,   any  shares  of  the  Company  Common  Stock  outstanding
immediately  prior to the  Effective  Time  that  were not voted in favor of the
Merger and which are held by stockholders  who have complied with the applicable
provisions of Nevada Law (the  "Dissenting  Shares") shall not be converted into
or represent the right to receive Parent Common Stock in accordance with Section
1.06(a) (or cash in lieu of fractional shares in accordance with Section 1.06(d)
and any dividends or other distributions  pursuant to Section 1.07(d)), and each
holder of  Dissenting  Shares  shall be  entitled  only to such rights as may be
granted to such holder under Nevada Law.  From and after the  Effective  Time, a
holder of Dissenting Shares shall not have and shall not be entitled to exercise


                                       7
<PAGE>

any of the  voting  rights or other  rights of a  stockholder  of the  Surviving
Corporation. If any holder of Dissenting Shares shall fail to assert or perfect,
or shall waive,  rescind,  withdraw or otherwise  lose,  such holder's  right to
dissent  and obtain  payment  under  Nevada  Law,  then,  as of the later of the
Effective Time or the occurrence of such event, such shares shall  automatically
be  converted  into and  shall  represent  only the right to  receive  (upon the
surrender of Certificate(s)  previously  representing such Company Common Stock)
Parent Common Stock in accordance  with Section 1.06(a) (and cash in lieu of any
fractional  share in accordance  with Section 1.06(d) and any dividends or other
deductions   pursuant  to  Section  1.07(d));   provided  that  if  such  holder
effectively  withdraws  or loses his right to receive  payment  for such  shares
after the  Effective  Time,  then, at such time Parent will comply with Sections
1.06(a),  1.06(d) and 1.07(d) with respect to such shares and deliver additional
certificates  representing the appropriate  number of shares.  The Company shall
give Parent (x) prompt notice of any written demands for appraisal,  withdrawals
of demands  for  appraisal  and any other  instruments  served  pursuant  to the
applicable  provisions of Nevada Law relating to the appraisal  process received
by the Company and (y) the  opportunity to participate in all  negotiations  and
proceedings  with respect to demands for appraisal under Nevada Law. The Company
will not voluntarily  make any payment with respect to any demands for appraisal
and will not, except with the prior written  consent of Parent,  settle or offer
to settle any such demands.

                                   ARTICLE II

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company represents and warrants to Parent as follows:

     2.01  Authority.  This  Agreement  has been duly and validly  executed  and
delivered by the Company,  constitutes a legal,  valid and binding obligation of
the  Company,  and is  enforceable  against the Company in  accordance  with its
terms,  except as  enforcement  thereof  may be  limited  by (i) Laws of general
application  relating to bankruptcy,  insolvency  moratorium,  reorganization or
other  similar  Laws,  both state and  federal,  affecting  the  enforcement  of
creditors'  rights or  remedies  in  general,  and (ii)  rules of Law  governing
specific performance, injunctive relief and other equitable remedies.

     2.02  Due  Organization.  Each of the  Company,  and its two  wholly  owned
Subsidiaries, Galaxy Mall, Inc., a Wyoming corporation ("Galaxy Mall"), and IMI,
Inc.,  a Utah  corporation  ("IMI") is a  corporation  duly  organized,  validly
existing  and in  good  standing  under  the  Laws  of the  jurisdiction  of its
incorporation  and  is  duly  authorized,   qualified  and  licensed  under  all
applicable  Laws,  regulations,  ordinances and orders of public  authorities to
own, operate and lease its Assets and Properties and to carry on its business in
the  places  and in the  manner  as  presently  conducted.  Section  2.02 of the
Disclosure  Schedule  lists the  principal  lines of business in which  Company,
Galaxy Mall and IMI is  participating or engaged (the  "Business").  Each of the
Company,  Galaxy  Mall,  and IMI is duly  qualified,  licensed or admitted to do
business  and is in good  standing in those  jurisdictions  specified in Section
2.02 of the Disclosure  Schedule,  which are the only jurisdictions in which the
ownership, use or leasing of its Assets and Properties, or the conduct or nature
of its business,  makes such  qualification,  licensing or admission  necessary,
except for those jurisdictions in which the adverse effects of all such failures
by Company,  Galaxy Mall and IMI to be  qualified,  licensed or admitted  and in
good  standing  can in the  aggregate be  eliminated  without  material  cost or
expense by Company,  Galaxy Mall and IMI, as the case may be, becoming qualified


                                       8
<PAGE>

or admitted and in good  standing.  The name of each director and officer of the
Company,  Galaxy Mall and IMI on the date hereof, and the position with Company,
Galaxy Mall and IMI held by each,  are listed in Section 2.02 of the  Disclosure
Schedule. Each of the Company, Galaxy Mall and IMI has prior to the execution of
this Agreement delivered to Parent true and complete copies of their articles of
incorporation,  bylaws,  and other  charter  documents  as in effect on the date
hereof.

     2.03 Capital Stock.

     (a) The  authorized  capital stock of the Company  consists of:  25,000,000
shares of the Company Common Stock,  of which  6,206,514  shares had been issued
and were  outstanding as of the date hereof.  As of the date of this  Agreement,
there are no shares of the Company Common Stock held in treasury by the Company.

     (b) As of the date of this Agreement:  (i) 1,702,750  shares of the Company
Common Stock are subject to issuance pursuant to outstanding  Company Options to
purchase  Company  Common  Stock  under the  Company  Plan or  otherwise  for an
aggregate  exercise price of $1,985,445;  and (ii) 307,250 shares of the Company
Common Stock are reserved for future  issuance  under the Company  Plan.  (Stock
options or other securities convertible into the Company Common Stock granted by
the Company  pursuant to the Company Plan or  otherwise  are referred to in this
Agreement as "Company Options"). Section 2.03(b) of the Disclosure Schedule sets
forth the following  information with respect to each Company Option outstanding
as of the  date of this  Agreement:  (i) the  name  of the  optionee;  (ii)  the
particular  plan  pursuant to which such Company  Option was granted;  (iii) the
number of shares of the Company  Common Stock  subject to such  Company  Option;
(iv) the  exercise  price of such  Company  Option;  (v) the date on which  such
Company  Option was granted or assumed;  and (vi) the date on which such Company
Option  expires.  The Company has made available to Parent accurate and complete
copies of all stock option plans pursuant to which the Company has granted stock
options that are currently outstanding,  the form of all stock option agreements
evidencing  such  options  and the  applicable  vesting  schedule  for each such
option. All shares of the Company Common Stock subject to issuance as aforesaid,
upon issuance on the terms and conditions  specified in the instruments pursuant
to which they are issuable, would be duly authorized, validly issued, fully paid
and  nonassessable.  Except as set forth in Section 2.03(b)(i) of the Disclosure
Schedule,  there are no  commitments or agreements of any character to which the
Company is bound obligating the Company to accelerate the vesting of any Company
Option as a result of the Merger.

     (c) Except as set forth in Section 2.03(c) of the Disclosure Schedule,  all
outstanding shares of the Company Common Stock, all outstanding Company Options,
and all  outstanding  shares of capital stock of each  Subsidiary of the Company
have been issued and granted in substantial  compliance  with (i) all applicable
securities Laws and, to the knowledge of the Company,  all other applicable Laws
and (ii) all material requirements set forth in applicable Contracts.

     (d) Except as set forth in Section  2.03(d) of the  Disclosure  Schedule or
except for securities the Company owns free and clear of all material claims and
Liens,  directly or indirectly through one or more Subsidiaries,  and except for
shares  of  capital  stock or  other  similar  ownership  interests  of  certain


                                       9
<PAGE>

Subsidiaries  of the Company that are owned by certain nominee equity holders as
required by the  applicable  Law of the  jurisdiction  of  organization  of such
Subsidiaries  (which  shares or other  interests  do not  materially  affect the
Company's control of such Subsidiaries), as of the date of this Agreement, there
are no equity securities,  partnership  interests or similar ownership interests
of any  class of  equity  security  of any  Subsidiary  of the  Company,  or any
security  exchangeable  or  convertible  into or  exercisable  for  such  equity
securities,  partnership  interests  or  similar  ownership  interests,  issued,
reserved for issuance or  outstanding.  Except as set forth in Sections  2.03(b)
and 2.03(d) of the Disclosure  Schedule,  there are no  subscriptions,  options,
warrants,   equity  securities,   partnership  interests  or  similar  ownership
interests,   calls,  rights  (including   preemptive  rights),   commitments  or
agreements of any character to which the Company or any of its Subsidiaries is a
party or by which it is bound  obligating the Company or any of its Subsidiaries
to  issue,  deliver  or sell,  or  cause to be  issued,  delivered  or sold,  or
repurchase, redeem or otherwise acquire, or cause the repurchase,  redemption or
acquisition  of, any shares of capital stock,  partnership  interests or similar
ownership  interests of the Company or any of its Subsidiaries or obligating the
Company or any of its Subsidiaries to grant,  extend,  accelerate the vesting of
or enter into any such subscription,  option,  warrant,  equity security,  call,
right,  commitment or  agreement.  As of the date of this  Agreement,  except as
contemplated by this Agreement, there are no registration rights and there is no
voting  trust,  proxy,  rights  plan,  antitakeover  plan or other  agreement or
understanding  to which  the  Company  is a party  or by which it is bound  with
respect to any equity  security of any class of the  Company or with  respect to
any equity security,  partnership  interest or similar ownership interest of any
class of any of its Subsidiaries.

     2.04 Subsidiaries. The Company's only Subsidiaries are Galaxy Mall and IMI.
Galaxy Mall and IMI do not have, nor have they ever had, any Subsidiaries.

     2.05 No  Conflicts.  Subject to the Company  obtaining  the approval of and
adoption of this agreement by the affirmative  vote of the holders of a majority
of the  outstanding  shares of Company  Common Stock (the  "Company  Stockholder
Approval"),  the  execution and delivery by the Company of this  Agreement  does
not, and the performance by it of each of its  obligations  under this Agreement
and the consummation of the transactions contemplated hereby will not:

     (a)  Conflict  with or result in a violation or breach of any of the terms,
conditions  or  provisions  of any  articles of  incorporation  or bylaws of the
Company, Galaxy Mall, or IMI;

     (b)  Conflict  with or  result  in a  violation  or  breach  of any term or
provision of any Law or Order  applicable to the Company,  Galaxy Mall or IMI or
any of their respective Assets and Properties; or

     (c) Except as set forth in Section 2.05(c) of the Disclosure Schedule,  (i)
conflict  with or result in a violation or breach of, (ii)  constitute  (with or
without  notice or lapse of time or both) a default  under,  (iii)  require  the
Company, Galaxy Mall, or IMI to obtain any consent,  approval or action of, make
any filing  with or give any notice to any Person as a result or under the terms
of, (iv) result in or give to any Person any right of termination, cancellation,
acceleration or modification in or with respect to, (v) result in or give to any
Person  any  additional   rights  or   entitlement  to  increased,   additional,
accelerated  or  guaranteed  payments  under,  or (vi) result in the creation or
imposition  of any Lien upon any of the Company,  Galaxy Mall,  or IMI or any of


                                       10
<PAGE>

their respective  Assets and Properties under, any material Contract or material
License to which any of the Company, Galaxy Mall, or IMI are a party or by which
any of their respective Assets and Properties is bound.

     2.06 Books and Records.  The minute books and other similar  records of the
Company,  Galaxy Mall,  and IMI have been made  available to Parent prior to the
execution  of this  Agreement,  and contain a true and complete  record,  in all
material  respects,  of all  action  taken at all  meetings  and by all  written
consents in lieu of meetings of the  stockholders,  the boards of directors  and
committees  of the board of directors of each of the Company,  Galaxy Mall,  and
IMI. The stock transfer ledgers and other similar records of the Company, Galaxy
Mall,  and IMI as made  available  to  Parent  prior  to the  execution  of this
Agreement accurately reflect all record transfers prior to the execution of this
Agreement in the capital stock of each of the Company, Galaxy Mall, and IMI. The
Company,  Galaxy  Mall,  and IMI do not  have  any of their  Books  and  Records
recorded, stored,  maintained,  operated or otherwise wholly or partly dependent
upon or held by any means (including any electronic,  mechanical or photographic
process,  whether  computerized  or not)  which  (including  all means of access
thereto  and  therefrom)  are not under  their  exclusive  ownership  and direct
control or the control of the Company's transfer agent.

     2.07 SEC Filings.

     Except as set forth on Section 2.07 of the Disclosure Schedule:

     (a) The Company has filed all forms,  reports and documents  required to be
filed by Company  with the SEC since  January 1, 1998 and has made  available to
Parent such forms,  reports and  documents  in the form filed with the SEC.  All
such required  forms,  reports and documents  (including  those that Company may
file subsequent to the date hereof),  as amended,  are referred to herein as the
"Company SEC Reports." As of their respective  dates (or, if amended,  as of the
date of the last such  amendment),  the Company SEC Reports (i) were prepared in
accordance  and complied (or, with respect to those Company SEC Reports that may
be filed subsequent to the date hereof,  will be prepared in accordance and will
comply) in all material  respects with the requirements of the Securities Act of
1933, as amended (the "Securities Act"), or the Exchange Act of 1934, as amended
(the "Exchange  Act"),  as the case may be, and the rules and regulations of the
SEC  thereunder  applicable  to such Company SEC Reports and (ii) did not at the
time they were filed (or,  with respect to those Company SEC Reports that may be
filed subsequent to the date hereof, will not) contain any untrue statement of a
material fact or omit to state a material fact required to be stated  therein or
necessary  in  order  to  make  the  statements  therein,  in the  light  of the
circumstances  under which they were made, not misleading,  except to the extent
corrected or superseded prior to the date hereof by a subsequently filed Company
SEC Report.  None of the Company's  Subsidiaries are required to file any forms,
reports or other documents with the SEC.

     (b) Each of the consolidated financial statements (including, in each case,
any related  notes  thereto)  contained in the Company SEC Reports (the "Company
Financials"),  including  each  Company  SEC Report  filed after the date hereof
until the Closing,  (i) complied  (or, with respect to those Company SEC Reports
that may be filed subsequent to the date hereof,  will comply) as to form in all
material  respects  with the  published  rules and  regulations  of the SEC with
respect  thereto,  (ii) was  prepared  (or,  with  respect to those  Company SEC
Reports that may be filed  subsequent  to the date hereof,  will be prepared) in


                                       11
<PAGE>

accordance  with GAAP  applied on a  consistent  basis  throughout  the  periods
involved  (except as may be  indicated  in the notes  thereto or, in the case of
unaudited interim financial  statements,  as may be permitted by the SEC on Form
10-QSB,  10-KSB or any  successor  form under the Exchange Act) and (iii) fairly
presented  (or,  with  respect to those  Company SEC  Reports  that may be filed
subsequent to the date hereof, will fairly present) in all material respects the
consolidated financial position of the Company and its consolidated Subsidiaries
as of the respective dates thereof and the consolidated results of the Company's
operations and cash flows for the periods  indicated,  except that the unaudited
interim  financial  statements may not contain footnotes and were or are subject
to normal and recurring year-end  adjustments.  The balance sheet of the Company
as of September 30, 1999 contained in the Form 10-QSB filed November 15, 1999 is
hereinafter  referred to as the "Company  Balance Sheet." Except as disclosed in
the Company Financials,  since the date of the Company Balance Sheet neither the
Company nor any of its Subsidiaries  has any liabilities  required under GAAP to
be set forth on a consolidated balance sheet (absolute,  accrued,  contingent or
otherwise)  which  are,  individually  or in  the  aggregate,  material  to  the
business,  results of operations  or financial  condition of the Company and its
Subsidiaries,  taken as a whole, except for liabilities  incurred since the date
of the Company Balance Sheet in the ordinary course of business  consistent with
past practices and liabilities incurred pursuant to this Agreement.

     (c) The Company has heretofore  furnished (or, with respect to copies which
are not yet  available,  will  furnish) to Parent a complete and correct copy of
any amendments or modifications,  which have not yet been filed with the SEC but
which are required to be filed,  to agreements,  documents or other  instruments
which  previously  had been filed by the  Company  with the SEC  pursuant to the
Securities Act or the Exchange Act.

     2.08  Absence of Changes.  Except for the  execution  and  delivery of this
Agreement and the  transactions to take place pursuant hereto on or prior to the
Closing Date or as disclosed in Section 2.08 of the Disclosure  Schedule,  since
December 31, 1998,  there has not been (i) any  Material  Adverse  Effect on the
Company, Galaxy Mall, or IMI, (ii) any declaration,  setting aside or payment of
any dividend on, or other  distribution  (whether in cash, stock or property) in
respect of any of the Company's,  Galaxy Mall's or IMI's capital  stock,  or any
purchase, redemption or other acquisition by the Company, Galaxy Mall, or IMI of
any of Galaxy  Mall's or IMI's  capital  stock,  any  other  securities,  or any
options,  warrants,  calls  or  rights  to  acquire  any  such  shares  or other
securities  except for repurchases  from employees  following their  termination
pursuant to the terms of their pre-existing stock option or purchase agreements,
(iii) any split, combination or reclassification of any of the Company's, Galaxy
Mall or IMI's capital  stock,  (iv) any granting by the Company,  Galaxy Mall or
IMI of any  increase  in  compensation  or fringe  benefits,  except  for normal
increases of cash  compensation  in the ordinary  course of business  consistent
with past  practice,  or any payment by the  Company,  Galaxy Mall or IMI of any
bonus,  except for bonuses  made in the ordinary  course of business  consistent
with past  practice,  or any granting by the Company,  Galaxy Mall or IMI of any
increase in severance  or  termination  pay or any entry by the Company,  Galaxy
Mall or IMI into any currently effective employment,  severance,  termination or
indemnification  agreement or any agreement the benefits of which are contingent
or  the  terms  of  which  are  materially  altered  upon  the  occurrence  of a
transaction involving the Company, Galaxy Mall or IMI of the nature contemplated
hereby, (v) entry by the Company, Galaxy Mall or IMI into any licensing or other
agreement  with  regard  to the  acquisition  or  disposition  of  any  material


                                       12
<PAGE>

Intellectual Property other than licenses, distribution agreements,  advertising
agreements,  sponsorship  agreements or merchant program agreements entered into
in the  ordinary  course of business  consistent  with past  practice,  (vi) any
amendment or consent with respect to any licensing  agreement  filed or required
to be filed with the SEC, (vii) any material change by the Company, Galaxy Mall,
or IMI in its accounting methods, principles or practices, except as required by
concurrent  changes in GAAP,  or (viii) any material  revaluation  by any of the
Company,  Galaxy  Mall,  or  IMI  of  any  of  its  assets,  including,  without
limitation, writing down the value of capitalized inventory or writing off notes
or accounts receivable other than in the ordinary course of business.

     2.09 No Undisclosed Liabilities. Except as reflected or reserved against in
the balance sheet and accompanying notes included in the Financial Statements or
as  set  forth  on  Section  2.09  of  the  Disclosure  Schedule,  there  are no
Liabilities against,  relating to or affecting each of the Company, Galaxy Mall,
and IMI or any of their respective Assets and Properties, other than Liabilities
incurred  since  September 30 1999 in the ordinary  course of business,  none of
which,  individually or in the aggregate,  would  constitute a Material  Adverse
Effect on the Company, Galaxy Mall or IMI, taken as a whole.

     2.10  Legal  Proceedings.  Except  as set  forth  in  Section  2.10  of the
Disclosure Schedule:

     (a) There are no Actions or Proceedings pending or, to the Knowledge of the
Company,  threatened  against,  relating to or  affecting  each of the  Company,
Galaxy  Mall,  or IMI or any of their  Assets  and  Properties  which  (i) could
reasonably  be  expected  to result  in the  issuance  of an Order  restraining,
enjoining or otherwise  prohibiting or making illegal the consummation of any of
the  transactions  contemplated  by this  Agreement  or  otherwise  result  in a
material diminution of the benefits contemplated by this Agreement to Parent, or
(ii) if determined  adversely  against the Company,  Galaxy Mall, or IMI,  could
reasonably be expected to result in (x) any injunction or other equitable relief
against the  Company,  Galaxy Mall or IMI that would  interfere  in any material
respect with their  business or operations or (y) Losses by the Company,  Galaxy
Mall or IMI, individually or in the aggregate, exceeding $100,000.00;

     (b) There are no facts or circumstances Known to any of the Company, Galaxy
Mall,  and IMI that could  reasonably  be expected to give rise to any Action or
Proceeding that would be required to be disclosed  pursuant to clause (a) above;
and

     (c) There are no Orders  outstanding  against  any of the  Company,  Galaxy
Mall, and IMI.

     2.11 Compliance  With Laws and Orders.  Except as set forth in Section 2.11
of the Disclosure  Schedule,  each of the Company,  Galaxy Mall, and IMI is not,
nor has at any time been,  nor has it received  any notice that it is nor has at
any time been, in violation of or in default under, in any material respect, any
Law or Order applicable to each of the Company,  Galaxy Mall , and IMI or any of
its  Assets  and  Properties,  the  consequences  of which  will have a Material
Adverse Effect on the Company, Galaxy Mall or IMI.

     2.12 Employee Benefit and Compensation Plans.

     (a) Section  2.12(a) of the Disclosure  Schedule  provides a description of
each of the following, if any, which is sponsored,  maintained or contributed to


                                       13
<PAGE>

by the Company or its Subsidiaries for the benefit of the employees or agents of
the  Company  or its  Subsidiaries,  or has  been so  sponsored,  maintained  or
contributed to at any time during the Company's or its Subsidiaries' existence:

          (i) each  "Employee  Plan," as such term is defined in Section 3(3) of
     the Employee  Retirement Income Security Act of 1974 ("ERISA")  (including,
     but not limited to,  employee plans,  such as foreign plans,  which are not
     subject to the provisions of ERISA) ("Plan"); and,

          (ii)  each  personnel   policy,   employee  manual  or  other  written
     statements of rules or policies concerning  employment,  stock option plan,
     collective bargaining agreement, bonus plan or arrangement, incentive award
     plan or arrangement,  vacation and sick leave policy,  severance pay policy
     or agreement,  deferred compensation  agreement or arrangement,  consulting
     agreement,  employment  contract and each other employee  plan,  agreement,
     arrangement,  program,  practice or understanding which is not described in
     Section 2.12(a)(i) ("Benefit Program or Agreement").

     (b) True,  correct  and  complete  copies of each of the Plans and  Benefit
Programs or Agreements (if any), and related  trusts,  if applicable,  including
all  amendments  thereto,  have been  furnished  to Parent.  There has also been
furnished to Parent,  with respect to each Plan required to file such report and
description,  the three most recent  reports on Form 5500 and the  summary  plan
description.  True,  correct and complete  copies or descriptions of all Benefit
Programs or Agreements have also been furnished to Parent.

     (c)  The  Company  and its  Subsidiaries  do not  contribute  to or have an
obligation to contribute  to, and the Company and its  Subsidiaries  have not at
any time  contributed to or had an obligation to contribute to, a  multiemployer
plan within the meaning of Section  3(37) of ERISA or a multiple  employer  plan
within the meaning of Section 413(b) and (c) of the Code.

     (d)  Except as  otherwise  set forth in Section  2.12(d) of the  Disclosure
Schedule:

          (i) The Company and its Subsidiaries have substantially  performed all
     obligations,  whether arising by operation of Law or by contract,  required
     to be performed by it in connection with the Plans and the Benefit Programs
     and  Agreements,  and, to the Knowledge of the Company,  there have been no
     defaults or violations by any other party to the Plans or Benefit  Programs
     or Agreements;

          (ii) All reports and disclosures  relating to the Plans required to be
     filed with or furnished to governmental agencies, Plan participants or Plan
     beneficiaries  have been filed or furnished in accordance  with  applicable
     Law in a timely manner, and each Plan and each Benefit Program or Agreement
     has  been  administered  in  substantial   compliance  with  its  governing
     documents;

                                       14
<PAGE>

          (iii)  There are no  actions,  suits or  claims  pending  (other  than
     routine  claims  for  benefits)  or,  to  the  Knowledge  of  the  Company,
     threatened  against,  or with  respect  to,  any of the  Plans  or  Benefit
     Programs or Agreements or their assets;

          (iv) All  contributions  required  to be made to the Plans and Benefit
     Programs  or  Agreements   pursuant  to  their  terms  and  provisions  and
     applicable Law have been made timely;

          (v) The Company and its  Subsidiaries  do not have, nor have they ever
     had, a Plan or Benefit Program or Agreement  intended to be qualified under
     Section 401 of the Code or subject to Title IV of ERISA;

          (vi)  None of the  Plans  nor any  trust  created  thereunder  or with
     respect   thereto  has   engaged  in  any   "prohibited   transaction"   or
     "party-in-interest  transaction"  as such terms are defined in Section 4975
     of the Code and  Section 406 of ERISA  which  could  subject any Plan,  the
     Company or any officer, director or employee thereof to a tax or penalty on
     prohibited  transactions  or  party-in-interest  transactions  pursuant  to
     Section 4975 of the Code or Section 502(i) of ERISA;

          (vii) There is no matter  pending  (other than  routine  qualification
     determination filings) with respect to any of the Plans or Benefit Programs
     or Agreements before the Internal Revenue Service,  the Department of Labor
     or the PBGC;

          (viii) The Company  and its  Subsidiaries  do not have,  nor have they
     ever had, a trust funding a Plan.

          (ix)  The  Company  does not have any  obligation  to  provide  health
     benefits to former employees, except as specifically required by Law;

          (x) Neither the  execution  and  delivery  of this  Agreement  nor the
     consummation of any or all of the  transactions  contemplated  hereby will:
     (A) entitle any current or former employee of the Company to severance pay,
     unemployment  compensation or any similar payment,  (B) accelerate the time
     of payment or vesting or increase the amount of any compensation due to any
     such employee or former employee,  or (C) directly or indirectly  result in
     any payment  made to or on behalf of any person to  constitute a "parachute
     payment" within the meaning of Section 280G of the Code;

          (xi)  Since  January  1,  1997,  there  have  not  been  any (i)  work
     stoppages,  labor  disputes  or  other  significant  controversies  between
     Company and its employees,  (ii) labor union  grievances or  organizational
     efforts,  or (iii) unfair labor practice or labor  arbitration  proceedings
     pending or threatened.

     (e) Except as set forth in Section 2.12(e) of the Disclosure Schedule,  the
Company is not a party to any agreement,  and has not  established any policy or
practice,  requiring the Company to make a material payment or provide any other
material form of compensation or benefit to any person  performing  services for
the Company  upon  termination  of such  services  which would not be payable or


                                       15
<PAGE>

provided in the absence of the consummation of the transactions  contemplated by
this Agreement.

     (f) Section  2.12(f) of the  Disclosure  Schedule  sets forth by number and
employment  classification  the  approximate  numbers of  employees  employed by
Company as of the date of this Agreement, and, except as set forth therein, none
of said employees are subject to union or collective  bargaining agreements with
Company.

     (g) Neither the Parent nor any of its  Affiliates  shall have any liability
or  obligations  under or with  respect  to the  Workers  Adjustment  Retraining
Notification  Act in connection  with any of the  transactions  contemplated  in
connection herewith.

     2.13 Real Property.

     (a) Section  2.13 of the  Disclosure  Schedule  contains a true and correct
list of each parcel of real property  leased by the Company,  Galaxy Mall or IMI
(as lessor or  lessee).  The  Company,  Galaxy  Mall and IMI do not own any real
property.

     (b) The Company,  Galaxy Mall and IMI have a valid and subsisting leasehold
estate in and the right to quiet enjoyment of the real  properties  leased by it
for the full term of the lease thereof.  Each lease referred to in paragraph (a)
above is a legal,  valid and binding  agreement,  enforceable in accordance with
its terms,  except as enforcement  thereof may be limited by (i) Laws of general
application  relating to bankruptcy,  insolvency  moratorium,  reorganization or
other  similar  Laws,  both state and  federal,  affecting  the  enforcement  of
creditors'  rights or  remedies  in  general,  and (ii)  rules of Law  governing
specific  performance,  injunctive relief and other equitable  remedies,  of the
Company,  Galaxy Mall and IMI and of each other Person that is a party  thereto,
and except as set forth in Section 2.13 of the Disclosure Schedule, there is no,
and the Company,  Galaxy Mall or IMI have not received any notice of default (or
any  condition  or event  which,  after  notice or lapse of time or both,  would
constitute a default)  thereunder.  The Company,  Galaxy Mall and IMI do not owe
any brokerage commissions with respect to any such leased space.

     (c) The Company has  delivered  to Parent  prior to the  execution  of this
Agreement true and complete copies of all such leases  (including any amendments
and renewal letters).

     (d) The improvements on the real property identified in Section 2.13 of the
Disclosure Schedule are in good operating  condition,  are adequate and suitable
for the purposes for which they are  presently  being used and, to the Knowledge
of the Company,  there are no condemnation or appropriation  proceedings pending
or threatened against any of such real property or the improvements thereon.

     2.14 Tangible Personal Property; Investment Assets.

     (a) Each of the Company,  Galaxy Mall and IMI is in  possession  of and has
good  title  to, or has  valid  leasehold  interests  in or valid  rights  under
Contract to use, all tangible personal property used in or reasonably  necessary
for the conduct of their  business,  including  all tangible  personal  property
reflected on the balance sheet included in the Financial Statements and tangible


                                       16
<PAGE>

personal property acquired since September 30, 1999 other than property disposed
of since  such date in the  ordinary  course of  business  consistent  with past
practice.  All such tangible  personal  property is free and clear of all Liens,
other than Permitted Liens, and is in good working order and condition, ordinary
wear and tear excepted,  and its use complies in all material  respects with all
applicable Laws.

     (b) Section 2.14 of the Disclosure Schedule describes each Investment Asset
owned by the Company, Galaxy Mall or IMI on the date hereof. All such Investment
Assets are owned by the Company,  Galaxy Mall or IMI free and clear of all Liens
other than Permitted Liens.

     2.15 Intellectual  Property Rights. The only Intellectual Property owned or
exclusively licensed by the Company, Galaxy Mall and IMI, as the case may be, is
the Company Intellectual Property, the Company Registered Intellectual Property,
Galaxy Mall Intellectual Property, Galaxy Mall Registered Intellectual Property,
IMI Intellectual  Property, and IMI Registered  Intellectual  Property.  Section
2.15 of the  Disclosure  Schedule sets forth a complete and accurate list of all
Company Registered  Intellectual Property,  Galaxy Mall Registered  Intellectual
Property  and  IMI   Registered   Intellectual   Property.   No  other  material
Intellectual Property or material Registered  Intellectual Property,  claimed by
the  Company,  Galaxy Mall or IMI, is used in the conduct of the business of the
Company, Galaxy Mall or IMI as it is presently conducted.

      Except as set forth on Section 2.15 of the Disclosure Schedule:

     (a) No Company Intellectual Property,  Galaxy Mall Intellectual Property or
IMI Intellectual  Property or product or service of the Company,  Galaxy Mall or
IMI is  subject  to any  proceeding  or  outstanding  decree,  order,  judgment,
agreement,  or  stipulation  restricting  in any  manner the use,  transfer,  or
licensing  thereof by the  Company,  Galaxy Mall or IMI, or which may affect the
validity,  use or enforceability of such Company Intellectual  Property,  Galaxy
Mall Intellectual Property or IMI Intellectual Property,  which in any such case
would be  reasonably  likely to have a Material  Adverse  Effect on the Company,
Galaxy Mall or IMI.

     (b) Each material  item of the Company  Registered  Intellectual  Property,
Galaxy Mall  Registered  Intellectual  Property and IMI Registered  Intellectual
Property is valid and subsisting.  All necessary  registration,  maintenance and
renewal fees  currently  due in  connection  with such  Registered  Intellectual
Property  have  been  made  and  all  necessary   documents,   recordations  and
certificates in connection with such Registered  Intellectual Property have been
filed with the relevant patent, copyright, trademark or other authorities in the
United States or foreign jurisdictions,  as the case may be, for the purposes of
maintaining such Registered  Intellectual Property,  except where the failure to
do so would not be reasonably  likely to have a Material  Adverse  Effect on the
Company, Galaxy Mall or IMI.

     (c)  Each of the  Company,  Galaxy  Mall  and IMI  owns  and has  good  and
exclusive  title to, or has license  (sufficient for the conduct of its business
as currently  conducted  and as proposed to be  conducted)  to, each item of the
Company  Intellectual  Property,  Galaxy  Mall  Intellectual  Property  and  IMI
Intellectual Property,  respectively, used in connection with the conduct of its
business as currently  conducted and as proposed to be conducted  free and clear
of any Liens  (excluding  licenses  and related  restrictions);  and,  except as


                                       17
<PAGE>

disclosed in Section  2.15(c) of the Disclosure  Schedule,  each of the Company,
Galaxy Mall and IMI is the  exclusive  owner of all  trademarks  and trade names
used in connection with and material to the operation or conduct of the business
of the Company,  Galaxy Mall and IMI,  respectively,  including  the sale of any
products or the provision of any services by the Company, Galaxy Mall and IMI.

     (d) Each of the Company, Galaxy Mall and IMI owns exclusively, and has good
title to,  all  copyrighted  works  that are  Galaxy  Mall's  products  or IMI's
products or which the Company,  Galaxy Mall or IMI otherwise  expressly purports
in writing to own.

     (e) To the extent that any  Intellectual  Property  has been  developed  or
created by a third  party for the  Company,  Galaxy  Mall or IMI,  the  Company,
Galaxy Mall or IMI, as the case may be, has a written  agreement with such third
party with respect  thereto and the Company,  Galaxy Mall or IMI thereby  either
(i) has  obtained  ownership  of and is the  exclusive  owner  of,  or (ii)  has
obtained a license  (sufficient  for the conduct of its  business  as  currently
conducted   and  as  proposed  to  be  conducted)  to  all  such  third  party's
Intellectual Property in such work, material or invention by operation of Law or
by valid assignment.

     (f) Section 2.15 of the Disclosure  Schedule lists all material  contracts,
licenses and  agreements to which each of the Company,  Galaxy Mall and IMI is a
party  (i) with  respect  to the  Company  Intellectual  Property,  Galaxy  Mall
Intellectual  Property or IMI Intellectual  Property  licensed or transferred to
any third party (other than end-user licenses in the ordinary  course);  or (ii)
pursuant  to which a third  party  has  licensed  or  transferred  any  material
Intellectual   Property  to  the   Company,   Galaxy  Mall  or  IMI  other  than
non-exclusive licenses to use commercially available software products.

     (g) All material contracts, licenses and agreements relating to the Company
Intellectual   Property,   the  Galaxy  Mall   Intellectual   Property  and  IMI
Intellectual  Property  are in full force and effect.  The  consummation  of the
transactions  contemplated  by this Agreement will neither violate nor result in
the breach,  modification,  cancellation,  termination,  or  suspension  of such
contracts,  licenses and agreements in accordance with its terms,  the effect of
which would have a Material  Adverse Effect on the Company,  Galaxy Mall or IMI.
Each of the Company, Galaxy Mall and IMI is in material compliance with, and has
not  materially  breached  any  term  of any of  such  contracts,  licenses  and
agreements  and, to the  knowledge of each of the Company,  Galaxy Mall and IMI,
all  other  parties  (other  than end users or  customers  under  standard  form
agreements) to such contracts,  licenses and agreements are in compliance in all
material  respects  with,  and have not  materially  breached  any term of, such
contracts,  licenses and agreements.  Following the Closing Date, Parent will be
permitted to exercise all of the Company's, Galaxy Mall's and IMI's rights under
such contracts,  licenses and agreements to the same extent the Company,  Galaxy
Mall and IMI would have been able to had the  transactions  contemplated by this
Agreement  not  occurred  and without the payment of any  additional  amounts or
consideration other than ongoing fees,  royalties or payments which the Company,
Galaxy Mall and IMI would otherwise be required to pay.

     (h) The  operation of the business of each of the Company,  Galaxy Mall and
IMI as such business  currently is conducted,  including  each of the Company's,
Galaxy Mall's and IMI's design, development,  marketing and sale of the products


                                       18
<PAGE>

or  services of the  Company,  Galaxy Mall and IMI  (including  with  respect to
products currently under development), to the Knowledge of the Company, has not,
does not and will not infringe or  misappropriate  the Intellectual  Property of
any third  party or,  to the  Knowledge  of the  Company,  Galaxy  Mall and IMI,
constitute  unfair  competition  or  trade  practices  under  the  Laws  of  any
jurisdiction.

     (i)  Each of the  Company,  Galaxy  Mall and IMI has not  received  written
notice from any third party,  and to the  Knowledge of the Company,  Galaxy Mall
and IMI, no other pending overt threat from any third party,  that the operation
of the  business  of the  Company,  Galaxy  Mall or IMI or any act,  product  or
service of the Company,  Galaxy Mall or IMI,  infringes or  misappropriates  the
Intellectual  Property of any third party or constitutes  unfair  competition or
trade practices under the Laws of any jurisdiction.

     (j) To the  Knowledge  of the  Company,  Galaxy Mall and IMI, no person has
been or is infringing or  misappropriating  any Company  Intellectual  Property,
Galaxy Mall Intellectual Property or IMI Intellectual Property.

     (k) Each of the Company,  Galaxy Mall and IMI has taken reasonable steps to
protect its confidential information and trade secrets that they wish to protect
or any trade secrets or  confidential  information of third parties  provided to
the  Company,  Galaxy Mall or IMI,  and,  without  limiting the  foregoing,  the
Company,  Galaxy Mall and IMI have and enforce a policy  requiring each employee
and contractor to execute a proprietary information/confidentiality agreement in
substantially  the form  provided to Parent,  and except  under  confidentiality
obligations, there has been not disclosure by the Company, Galaxy Mall or IMI of
any such trade secrets or confidential information.

     (l) Each of the Company,  Galaxy Mall and IMI has delivered to Parent prior
to the execution of this Agreement  documentation in its possession with respect
to any material invention,  process,  design, computer program or other know how
or  trade  secret   included  in  the   Intellectual   Property  and  Registered
Intellectual Property,  which documentation is accurate in all material respects
and  reasonably  sufficient  in detail and content to identify  and explain such
invention,  process,  design, computer program or other know how or trade secret
and to  facilitate  its full and  proper use  without  reliance  on the  special
knowledge  or memory of any Person.  Nothing is this  Section  2.15(l)  shall be
construed to require the Company or any Subsidiary to prepare any  documentation
which they do not already have in their possession.

     (m)  Notwithstanding  anything to the contrary in this Agreement,  the only
representations  and warranties being furnished by the Company,  Galaxy Mall and
IMI  with  respect  to  Company   Intellectual   Property,   Company  Registered
Intellectual Property, Galaxy Mall Intellectual Property, Galaxy Mall Registered
Intellectual Property, IMI Intellectual Property and IMI Registered Intellectual
Property  are those set forth in this  Section  2.15 or as may be  necessary  in
connection with the  representations  and warranties set forth in Sections 2.07,
2.08, 2.09, 2.11, 2.26 or 2.27.

                                       19
<PAGE>

     2.16 Contracts.

     (a) Section 2.16(a) of the Disclosure  Schedule (with paragraph  references
corresponding  to those set forth below)  contains a true and  complete  list of
each of the following  Contracts or other arrangements (true and complete copies
or, if none,  reasonably  complete and accurate  written  descriptions of which,
together  with all  amendments  and  supplements  thereto and all waivers of any
terms  thereof,  have been  delivered to Parent  prior to the  execution of this
Agreement)  to which the Company,  Galaxy Mall or IMI is a party or by which any
of their Assets and Properties are bound:

          (i) (A)  all  Contracts  (excluding  Plans  and  Benefit  Programs  or
     Agreements)  providing  for a  commitment  of  employment  or  consultation
     services for a specified or unspecified  term to, or otherwise  relating to
     employment or the  termination  of employment  of, any Employee,  the name,
     position and rate of compensation of each Employee party to such a Contract
     and the expiration date of each such Contract  exceeding  $50,000;  and (B)
     any   written  or   unwritten   representations,   commitments,   promises,
     communications or courses of conduct  (excluding Plans and Benefit Programs
     or Agreements and any such  Contracts  referred to in clause (A)) involving
     an  obligation  of the Company,  Galaxy Mall or IMI to make payments in any
     year, other than with respect to salary or incentive  compensation payments
     in the ordinary course of business,  to any Employee  exceeding $100,000 or
     any group of Employees exceeding $100,000 in the aggregate;

          (ii) all  Contracts  with  any  Person  containing  any  provision  or
     covenant prohibiting or limiting the ability of the Company, Galaxy Mall or
     IMI to  engage in any  business  activity  or  compete  with any  Person in
     connection  with the Business or prohibiting or limiting the ability of any
     Person to compete with the Company,  Galaxy Mall or IMI in connection  with
     the Business;

          (iii) all partnership,  joint venture,  shareholders' or other similar
     Contracts with any Person in connection with the Business;

          (iv)  all  Contracts  with   distributors,   dealers,   manufacturer's
     representatives, sales agencies or franchises with whom the Company, Galaxy
     Mall or IMI deals in connection with the Business;

          (v) all Contracts relating to the future disposition or acquisition of
     any Assets and  Properties,  other than  dispositions  or  acquisitions  of
     inventory in the ordinary course of business consistent with past practice;

          (vi) all collective bargaining or similar labor Contracts covering any
     Employee;

          (vii) all other  Contracts  (other than Plans and Benefit  Programs or
     Agreements,  the Real  Property  Leases and  insurance  policies  listed in
     Section  2.18 of the  Disclosure  Schedule  and those  Contracts  listed on
     Section  2.15 or 2.17  of the  Disclosure  Schedule)  with  respect  to the


                                       20
<PAGE>

     Business that (A) involve the payment or potential payment, pursuant to the
     terms  of any  such  Contract,  by or to  Galaxy  Mall or IMI of more  than
     $25,000 annually and (B) cannot be terminated within thirty (30) days after
     giving  notice of  termination  without  resulting in any material  cost or
     penalty to the Company, Galaxy Mall or IMI; and

          (viii) without limiting any of the foregoing,  all Contracts  relating
     to  any  strategic  alliance  with  another  Person,   including,   without
     limitation,   Earthlink,   Professional  Marketing  International,   United
     Marketing Solutions, and International Television Products.

     Notwithstanding the foregoing,  the Company represents and warrants that it
or its Subsidiaries have entered into approximately 40,000 Contracts with online
merchants  and,  with the  consent of Parent,  will not be required to list each
such Contract on the Disclosure Schedule unless any such Contract, individually,
is material to the Business or Condition of the Company.  The Company has hereto
furnished  to  Parent  representative  examples  of all of the  types of  online
merchant  Contracts  presently  used by the  Company  or its  Subsidiaries.  The
Company further  represents and warrants that IMI has entered into approximately
100 customer Contracts and, with the consent of Parent,  will not be required to
list each such Contract on the  Disclosure  Schedule  unless any such  Contract,
individually, exceeds $10,000.

     (b) Each  Contract  required  to be  disclosed  in  Section  2.16(a) of the
Disclosure  Schedule is in full force and effect and constitutes a legal,  valid
and binding  agreement,  enforceable in accordance with its terms, of each party
thereto,  except as  enforcement  thereof  may be limited by (i) Laws of general
application  relating to bankruptcy,  insolvency  moratorium,  reorganization or
other  similar  Laws,  both state and  federal,  affecting  the  enforcement  of
creditors'  rights or  remedies  in  general,  and (ii)  rules of Law  governing
specific performance, injunctive relief and other equitable remedies; and except
as disclosed in Section 2.16(b) of the Disclosure Schedule, neither the Company,
Galaxy Mall nor IMI nor, to the  Knowledge of the  Company,  Galaxy Mall or IMI,
any other  party to such  Contract  is, or has  received  notice  that it is, in
violation  or breach of or default  under any such  Contract  (or with notice or
lapse of time or both,  would be in violation or breach of or default  under any
such Contract) in any material respect.

     (c) Except as disclosed in Section 2.16(c) of the Disclosure Schedule,  (i)
the execution,  delivery and performance by the Company of this  Agreement,  and
the consummation of the transactions contemplated hereby, will not (A) result in
or give to any Person any right of  termination,  cancellation,  acceleration or
modification  in or with  respect  to,  (B)  result in or give to any Person any
additional  rights or  entitlement  to  increased,  additional,  accelerated  or
guaranteed  payments  under,  or (C) result in the creation or imposition of any
Lien upon the Company,  Galaxy Mall or IMI or any of their Assets and Properties
under, any Contract,  and (ii) Company,  Galaxy Mall, and IMI are not parties to
or bound by any Contract  that has been or could  reasonably  be expected to be,
individually or in the aggregate with any other Contracts, materially adverse to
the Business or Condition of the Company, Galaxy Mall, or IMI.



                                       21
<PAGE>

     2.17 Licenses.  Section 2.17 of the Disclosure Schedule contains a true and
complete  list of all  Licenses  used in and  material,  individually  or in the
aggregate,  to the business or  operations  of the Company,  Galaxy Mall and IMI
(and all pending applications for any such Licenses), setting forth the grantor,
the grantee and the function. Prior to the execution of this Agreement,  each of
the Company, Galaxy Mall or IMI has delivered to Parent true and complete copies
of all such  Licenses.  Except as disclosed  in Section  2.17 of the  Disclosure
Schedule:

          (i) Each of the Company, Galaxy Mall and IMI owns or validly holds all
     Licenses  that  are  material,  individually  or in the  aggregate,  to its
     business or operations;

          (ii) Each License listed in Section 2.17 of the Disclosure Schedule is
     valid, binding and in full force and effect; and

          (iii)  Neither the  Company,  Galaxy  Mall nor IMI is not,  nor has it
     received any notice that it is, in default (or with the giving of notice or
     lapse of time or both, would be in default) under any such License.

     2.18 Insurance. Section 2.18 of the Disclosure Schedule contains a true and
complete list  (including the names and addresses of the insurers,  the names of
the  Persons  to whom such  Policies  have been  issued,  the  expiration  dates
thereof, the annual premiums and payment terms thereof,  whether it is a "claims
made" or an "occurrence" policy and a brief description of the interests insured
thereby) of all liability,  property,  workers' compensation and other insurance
policies  currently  in effect that insure the  Business,  the  employees or the
Assets and  Properties.  Each such insurance  policy is valid and binding and in
full force and effect,  all premiums due  thereunder  have been paid and neither
the Company nor its  Subsidiaries  have received any notice of  cancellation  or
termination  in respect of any such  policy or is in  default  thereunder.  Such
insurance policies are placed with financially sound and reputable insurers and,
in light of the nature of the  business  and the Assets and  Properties,  are in
amounts and have coverages that are reasonable and customary for Persons engaged
in such business and having such Assets and Properties. Neither the Company, its
Subsidiaries  nor any other Person to whom such  policies  have been issued have
received notice that any insurer under any policy referred to in this Section is
denying  liability  with  respect to a claim  thereunder  or  defending  under a
reservation of rights clause.

     2.19 Transactions  with Affiliates.  Except as set forth in the Company SEC
Reports,  no event has  occurred  that would be  required  to be reported by the
Company  pursuant to Item 404 of Regulation S-K promulgated by the SEC.  Section
2.19 of the Disclosure Schedule identifies each person who is an "affiliate" (as
that  term is used in Rule 145  promulgated  under  the  Securities  Act) of the
Company as of the date of this Agreement.

2.20     Employees; Labor Relations.

     (a) Section 2.20(a) of the Disclosure  Schedule contains a list of the name
of each officer and employee of Galaxy Mall and IMI at the date hereof, together
with each such  person's  position or function,  annual base salary or wages and
any incentive or bonus arrangement with respect to such person in effect on such
date.

                                       22
<PAGE>

     Except as set forth on Schedule 2.20(b) of the Disclosure Schedule:

     (b) Neither the Company,  Galaxy Mall, nor IMI has received any information
that would lead it to believe that a material number of such persons will or may
cease to be employees,  or will refuse offers of employment from Parent, because
of the  consummation of the  transactions  contemplated  by this Agreement.  All
employees,  consultants,  officers and directors of the Company, Galaxy Mall and
IMI that have had access to the  Business  are  parties to a written  agreement,
under which each such person or entity (i) is obligated to disclose and transfer
to the  Company  without  the  receipt by such  person of any  additional  value
therefor  (other  than  normal  salary  or fees for  consulting  services),  all
inventions,  developments and discoveries which, during the period of employment
with or performance  of services for the Company,  Galaxy Mall or IMI, he or she
makes or conceives of either  solely or jointly with others,  that relate to any
subject matter with which his or her work for the Company, Galaxy Mall or IMI in
the  Business  may  be  concerned,   and  (ii)  is  obligated  to  maintain  the
confidentiality  of  proprietary  information  of the  Business.  To each of the
Company's,  Galaxy Mall's and IMI's  Knowledge,  none of the  Company's,  Galaxy
Mall's or IMI's employees, consultants, officers or directors is obligated under
any contract  (including  licenses,  covenants or  commitments of any nature) or
other  agreement,  or subject to any  judgment,  decree or order of any court or
administrative  agency, that would conflict with their obligation to promote the
interests of the Company,  Galaxy Mall or IMI with regard to the Business or the
Assets and Properties or that would conflict with the Business or the Assets and
Properties.  Neither the execution nor the delivery of this  Agreement,  nor the
carrying on of the Business by the employees and  consultants of the Company and
its  Subsidiaries,  will  conflict  with or  result  in a breach  of the  terms,
conditions  or  provisions  of, or  constitute a default  under,  any  contract,
covenant  or  instrument  under which any of such  persons or  entities  are now
obligated.  To the  Knowledge of the Company,  it is currently not necessary nor
will it be  necessary  for the  Company,  Galaxy  Mall or IMI to  utilize in the
Business  any  inventions  of any of such  persons  or  entities  (or  people it
currently  intends  to hire)  made or owned  prior  to  their  employment  by or
affiliation  with the Company,  Galaxy Mall or IMI, nor, to the Knowledge of the
Company,  is it or will it be necessary to utilize any other assets or rights of
any such persons or entities  (or people it  currently  intends to hire) made or
owned prior to their  employment with or engagement by the Company,  Galaxy Mall
or IMI, in violation of any  registered  patents,  trade  names,  trademarks  or
copyrights or any other limitations or restrictions to which any such persons or
entity is a party or to which any of such  assets or rights may be  subject.  To
the  Company's  Knowledge,  none  of  the  Company's,  Galaxy  Mall's  or  IMI's
employees,  consultants,  officers,  directors  or  shareholders  that  has  had
knowledge or access to  information  relating to their Assets and Properties has
taken, removed or made use of any proprietary documentation,  manuals, products,
materials, or any other tangible item from his or her previous employer relating
to their Assets and  Properties by such previous  employer which has resulted in
the Company's, Galaxy Mall's or IMI's access to or use of such proprietary items
included in the Assets and Properties, and the Company, Galaxy Mall and IMI will
not gain access to or make use of any such proprietary items in the business.

     2.21 Bank and Brokerage  Accounts;  Investment Assets.  Section 2.21 of the
Disclosure  Schedule  sets forth (a) a true and  complete  list of the names and
locations of all banks, trust companies,  securities brokers and other financial
institutions  at which the  Company,  Galaxy  Mall or IMI has an account or safe
deposit  box or  maintains  a  banking,  custodial,  trading  or  other  similar
relationship; (b) a true and complete list and description of each such account,
box and  relationship,  indicating in each case the account number and the names
of the respective officers,  employees,  agents or other similar representatives
of the Company,  Galaxy Mall or IMI having signatory power with respect thereto;


                                       23
<PAGE>

and (c) a list of each Investment  Asset,  the name of the record and beneficial
owner thereof, the location of the certificates,  if any, therefor, the maturity
date,  if any,  and any stock or bond  powers or other  authority  for  transfer
granted with respect thereto.

     2.22 No  Powers of  Attorney.  Except in the  ordinary  course of  business
consistent with past practice, neither the Company, Galaxy Mall nor IMI have any
powers of attorney or comparable delegations of authority outstanding.

     2.23 Accounts Receivable.  Except as otherwise set forth on Section 2.23 of
the  Disclosure  Schedule,  the  accounts and notes  receivable  of the Company,
Galaxy Mall and IMI  reflected on the balance  sheets  included in the Financial
Statements, and all accounts and notes receivable arising subsequent to December
31, 1998, (i) arose from bona fide sales  transactions in the ordinary course of
business and are payable on ordinary trade terms,  except as enforcement thereof
may be  limited  by (x) Laws of  general  application  relating  to  bankruptcy,
insolvency  moratorium,  reorganization  or other similar  Laws,  both state and
federal,  affecting the enforcement of creditors' rights or remedies in general,
and (y) rules of Law governing specific performance, injunctive relief and other
equitable  remedies,  (ii) are  legal,  valid  and  binding  obligations  of the
respective  debtors  enforceable  in  accordance  with  their  terms,  except as
enforcement thereof may be limited by (x) Laws of general  application  relating
to bankruptcy, insolvency moratorium, reorganization or other similar Laws, both
state and federal, affecting the enforcement of creditors' rights or remedies in
general, and (y) rules of Law governing specific performance,  injunctive relief
and other  equitable  remedies,  (iii) are not  subject to any valid  set-off or
counterclaim,  (iv) do not represent  obligations for goods sold on consignment,
on approval or on a  sale-or-return  basis or subject to any other repurchase or
return  arrangement,  (v) are  collectible  in the  ordinary  course of business
consistent with past practice in the aggregate recorded amounts thereof,  net of
any applicable  reserve reflected in the balance sheet included in the Financial
Statements,  and (vi) are not the subject of any Actions or Proceedings  brought
by or on  behalf  of the  Company,  Galaxy  Mall  or  IMI.  Section  2.23 of the
Disclosure  Schedule sets forth a description of any security  arrangements  and
collateral  securing the repayment or other  satisfaction  of receivables of the
Company,  Galaxy Mall or IMI. All steps reasonably  necessary to render all such
security  arrangements  legal, valid,  binding and enforceable,  and to give and
maintain for the Company,  Galaxy Mall or IMI a security interest in the related
collateral, have been taken.

     2.24 Inventory. All inventory of the Company, Galaxy Mall and IMI reflected
on the balance sheet  included in the Financial  Statements  consisted,  and all
such  inventory  acquired since  September 30, 1999  consists,  of a quality and
quantity usable and salable in the ordinary  course of business  consistent with
past  practice,  subject to normal and customary  allowances in the industry for
spoilage,  damage and outdated items. Except as disclosed in Section 2.24 of the
Disclosure Schedule or the notes to the Financial Statements, all items included
in the  inventory  of the  Company,  Galaxy Mall or IMI are the  property of the
Company, Galaxy Mall or IMI, respectively, free and clear of any Lien other than
Permitted  Liens,  have  not been  pledged  as  collateral,  are not held by the
Company,  Galaxy  Mall or IMI on  consignment  from  others  and  conform in all
material  respects to all standards  applicable to such  inventory or its use or
sale imposed by Governmental or Regulatory Authorities.

                                       24
<PAGE>

     2.25  Brokers  or  Finders.  The  Company  represents,  as to  itself,  its
Subsidiaries  and its  Affiliates,  that no agent,  broker,  investment  banker,
financial  advisor or other  firm or person,  other than as set forth on Section
2.25 of the  Disclosure  Schedule,  is or will be  entitled  to any  brokers' or
finder's fee or any other  commission or similar fee in  connection  with any of
the  transactions  contemplated  by this  Agreement,  and the Company  agrees to
indemnify  and hold Parent and Merger Sub harmless  from and against any and all
claims,  liabilities  or  obligations  with respect to any other  commissions or
similar fees in connection  with any of the  transactions  contemplated  by this
Agreement  which are asserted by any person on the basis of any act or statement
alleged  to have  been  made by or on behalf of the  Company.  The  Company  has
heretofore  furnished to Parent a complete  and correct  copy of all  agreements
between the Company and the parties set forth on Section 2.25 of the  Disclosure
Schedule  pursuant to which such party would be entitled to any payment relating
to the transactions contemplated hereby.

     2.26  Disclosure.  All material facts relating to the Business or Condition
of the  Company,  Galaxy  Mall and IMI have  been  disclosed  to Parent in or in
connection with this Agreement.  No representation or warranty contained in this
Agreement,  and no  statement  contained  in the  Disclosure  Schedule or in any
certificate, list or other writing furnished to Parent pursuant to any provision
of this  Agreement  (including  without  limitation  the Financial  Statements),
contains any untrue  statement  of a material  fact or omits to state a material
fact necessary in order to make the statements  herein or therein,  in the light
of the  circumstances  under which they were made, not  misleading.  None of the
information  supplied  or to be  supplied  by or on  behalf of the  Company  for
inclusion or incorporation  by reference in the  registration  statement on Form
S-4 (or similar successor form) to be filed with the SEC by Parent in connection
with the issuance of Parent Common Stock in the Merger (including  amendments or
supplements  thereto)  (the  "Registration  Statement")  will,  at the  time the
Registration  Statement  becomes effective under the Securities Act, contain any
untrue  statement of a material fact or omit to state any material fact required
to be stated  therein or necessary in order to make the statements  therein,  in
the light of the circumstances under which they are made, not misleading, except
that no  representation  or  warranty  is made by the  Company  with  respect to
statements made or incorporated by reference  therein about Parent or Merger Sub
supplied  by  Parent  for  inclusion  or   incorporation  by  reference  in  the
Registration Statement. None of the information supplied or to be supplied by or
on behalf of the Company for  inclusion  or  incorporation  by  reference in the
Prospectus/Proxy  Statement to be filed with the SEC as part of the Registration
Statement   (the   "Prospectus/Proxy   Statement"),   will,   at  the  time  the
Prospectus/Proxy Statement is first mailed to the stockholders of the Company or
Parent, at the time of the Company Stockholders' Meeting or Parent Stockholders'
Meeting or as of the Effective Time,  contain any untrue statement of a material
fact or omit to state  any  material  fact  required  to be  stated  therein  or
necessary  in  order  to  make  the  statements  therein,  in the  light  of the
circumstances  under which they are made, not misleading.  The  Prospectus/Proxy
Statement will comply as to form in all material respects with the provisions of
the  Exchange  Act  and  the  rules  and  regulations  promulgated  by  the  SEC
thereunder,  except  that no  representation  or warranty is made by the Company
with respect to  statements  made or  incorporated  by reference  therein  about
Parent or Merger  Sub  supplied  by Parent for  inclusion  or  incorporation  by
reference in the Prospectus/Proxy Statement.

     2.27 Y2K. To the Knowledge of the Company,  all  Intellectual  Property and
Registered  Intellectual  Property  in the  form of  computer  software  that is
utilized by the Company,  Galaxy Mall,  or IMI in the operation of each of their


                                       25
<PAGE>

respective Businesses is capable of processing date data between and within 1999
and 2000.

     2.28 Change of Control  Payments.  Section 2.28 of the Disclosure  Schedule
sets forth  each plan or  agreement  pursuant  to which any  amounts  may become
payable (whether  currently or in the future) to current or former employees and
directors  of  the  Company  or any of its  Subsidiaries  as a  result  of or in
connection with the Merger.

     2.29 Opinion of Financial Advisor.  The Company has been advised in writing
by its financial advisor, Houlihan Lokey Howard & Zukin, that in its opinion, as
of the date of this  Agreement,  the  Exchange  Ratio is fair to the  holders of
shares of the Company Common Stock from a financial point of view.

     2.30 Board  Approval.  The Board of Directors of the Company has, as of the
date of  this  Agreement,  unanimously  (i)  approved,  subject  to  shareholder
approval,   this  Agreement  and  the  transaction   contemplated  hereby,  (ii)
determined  that the Merger is in the best interests of the  shareholders of the
Company  and is on the  terms  that  are  fair to such  shareholders  and  (iii)
recommended  that the shareholders of the Company approve this Agreement and the
Merger.

     2.31 Pooling of Interests. To its Knowledge, based on consultation with its
independent accountants,  neither the Company nor any of its directors, officers
or affiliates has taken any action which would  interfere with Parent's  ability
to account for the Merger as a pooling of interests.

                                   ARTICLE III

                    REPRESENTATIONS AND WARRANTIES OF PARENT

     Parent represents and warrants to the Company as follows:

     3.01  Authority.  This  Agreement  has been duly and validly  executed  and
delivered  by Parent and  Merger  Sub  constitutes  a legal,  valid and  binding
obligation  of Parent and Merger  Sub,  and is  enforceable  against  Parent and
Merger Sub in accordance  with its terms,  except as enforcement  thereof may be
limited by (i) Laws of general  application  relating to bankruptcy,  insolvency
moratorium,  reorganization  or other  similar  Laws,  both  state and  federal,
affecting the enforcement of creditors' rights or remedies in general,  and (ii)
rules  of Law  governing  specific  performance,  injunctive  relief  and  other
equitable remedies.

     3.02  Organization.  Parent and Merger Sub are corporations duly organized,
validly  existing and in good standing under the Laws of the State of Delaware .
Parent has full corporate  power and authority to conduct its business as and to
the extent now  conducted  and to own, use and lease its Assets and  Properties.
Parent has prior to the  execution  of this  Agreement  delivered to the Company
true and complete  copies of Parent's and Merger Sub's  charter  documents as in
effect on the date hereof.

                                       26
<PAGE>

     3.03 Capital  Stock.  The  authorized  capital stock of Parent  consists of
40,000,000  shares  of  common  stock.  As of  March  7,  2000,  the  number  of
outstanding  shares of common stock was  17,333,217  shares.  The Parent  Common
Stock,  when issued by Parent to the Company's  Stockholders  in accordance with
the terms of this Agreement, will be duly authorized, validly issued, fully paid
and  nonassessable,  and will be free and  clear of any  preemptive  or  similar
rights with respect thereto.

     3.04  Subsidiaries.  In addition to Merger Sub, Parent has the Subsidiaries
listed on Section 3.04 of the Disclosure Schedule.

     3.05 No Conflicts. Subject to Parent obtaining the approval and adoption of
this  Agreement  by the  affirmative  vote of the  holders of a majority  of the
outstanding shares of Parent Common Stock (the "Parent  Stockholder  Approval"),
the  execution  and  delivery  by Parent  of this  Agreement  does not,  and the
performance of its obligations  under this Agreement and the consummation of the
transactions contemplated hereby will not:

     (a)  Conflict  with or result in a violation or breach of any of the terms,
conditions or provisions  of the articles of  incorporation  or bylaws (or other
comparable corporate charter documents) of Parent;

     (b)  Conflict  with or  result  in a  violation  or  breach  of any term or
provision  of any Law or Order  applicable  to Parent  or any of its  respective
Assets and Properties; or

     (c) (i)  Conflict  with  or  result  in a  violation  or  breach  of,  (ii)
constitute  (with or without  notice or lapse of time or both) a default  under,
(iii)  require  Parent to obtain any  consent,  approval  or action of, make any
filing  with or give any notice to any Person as a result or under the terms of,
(iv)  result in or give to any  Person any right of  termination,  cancellation,
acceleration or modification in or with respect to, (v) result in or give to any
Person  any  additional   rights  or   entitlement  to  increased,   additional,
accelerated  or  guaranteed  payments  under,  or (vi) result in the creation or
imposition  of  any  Lien  upon  Parent  or any of  its  respective  Assets  and
Properties under, any Contract or License to which Parent is a party or by which
any of its respective Assets and Properties is bound.

     3.06 Books and  Records.  The  minute  books and other  similar  records of
Parent  were  made  available  to the  Company  prior to the  execution  of this
Agreement,  and contain a true and complete record, in all material respects, of
all action taken at all meetings and by all written consents in lieu of meetings
of the  stockholders,  the boards of directors  and  committees  of the board of
directors of Parent.

     3.07 SEC Filings.

     (a) Parent has filed all forms,  reports and documents required to be filed
by Parent with the SEC since June 30, 1999 and has made available to the Company
such  forms,  reports  and  documents  in the form filed with the SEC.  All such
required  forms,  reports and  documents  (including  those that Parent may file
subsequent  to the date  hereof),  as  amended,  are  referred  to herein as the
"Parent SEC Reports." As of their  respective  dates (or, if amended,  as of the
date of the last such  amendment),  Parent  SEC  Reports  (i) were  prepared  in
accordance  and complied  (or, with respect to those Parent SEC Reports that may
be filed subsequent to the date hereof,  will be prepared in accordance and will
comply) in all material respects with the requirements of the Securities Act, or
the Exchange Act, as the case may be, and the rules and  regulations  of the SEC
thereunder  applicable  to such  Parent SEC Reports and (ii) did not at the time
they were filed (or,  with respect to those Parent SEC Reports that may be filed
subsequent  to the date  hereof,  will not)  contain any untrue  statement  of a
material fact or omit to state a material fact required to be stated  therein or
necessary  in  order  to  make  the  statements  therein,  in the  light  of the
circumstances  under which they were made, not misleading,  except to the extent
corrected or superseded prior to the date hereof by a subsequently  filed Parent
SEC  Report.  None of  Parent's  Subsidiaries  are  required  to file any forms,
reports or other documents with the SEC.

     (b) Each of the consolidated financial statements (including, in each case,
any related  notes  thereto)  contained  in the Parent SEC Reports  (the "Parent
Financials"), including each Parent SEC Report filed after the date hereof until
the Closing, (i) complied (or, with respect to those Parent SEC Reports that may
be filed subsequent to the date hereof,  will comply) as to form in all material
respects  with the  published  rules  and  regulations  of the SEC with  respect
thereto,  (ii) was prepared  (or,  with respect to those Parent SEC Reports that


                                       27
<PAGE>

may be filed subsequent to the date hereof, will be prepared) in accordance with
GAAP applied on a consistent  basis  throughout the periods  involved (except as
may be  indicated  in the notes  thereto  or, in the case of  unaudited  interim
financial  statements,  as may be permitted by the SEC on Form 10-QSB, 10-KSB or
any successor form under the Exchange Act) and (iii) fairly  presented (or, with
respect to those  Parent SEC Reports  that may be filed  subsequent  to the date
hereof, will fairly present) in all material respects the consolidated financial
position of Parent and its consolidated  Subsidiaries as at the respective dates
thereof and the consolidated  results of Parent's  operations and cash flows for
the periods  indicated,  except that the unaudited interim financial  statements
may not  contain  footnotes  and were or are  subject  to normal  and  recurring
year-end adjustments. The balance sheet of Parent contained in Parent SEC Report
as of September  30, 1999 is  hereinafter  referred to as (the  "Parent  Balance
Sheet").  Except as  disclosed in the Parent  Financials,  since the date of the
Parent  Balance  Sheet  neither  Parent  nor  any of its  Subsidiaries  has  any
liabilities  required under GAAP to be set forth on a consolidated balance sheet
(absolute,  accrued,  contingent or otherwise) which are, individually or in the
aggregate,  material  to  the  business,  results  of  operations  or  financial
condition  of  Parent  and  its  Subsidiaries  taken  as  a  whole,  except  for
liabilities  incurred since the date of the Parent Balance Sheet in the ordinary
course of business  consistent  with past  practices  and  liabilities  incurred
pursuant to this Agreement.

     (c) Parent has  heretofore  furnished (or, with respect to copies which are
not yet  available,  will furnish) to the Company a complete and correct copy of
any amendments or modifications,  which have not yet been filed with the SEC but
which are required to be filed,  to agreements,  documents or other  instruments
which  previously  had  been  filed  by  Parent  with  the SEC  pursuant  to the
Securities Act or the Exchange Act.

     3.08  Absence of Changes.  Except for the  execution  and  delivery of this
Agreement and the  transactions to take place pursuant hereto on or prior to the
Closing Date, or as disclosed on Section 3.08 of the Disclosure Schedule,  since
September  30,  1999,  there  has not been (i) any  Material  Adverse  Effect on
Parent,  (ii) any  declaration,  setting aside or payment of any dividend on, or


                                       28
<PAGE>

other  distribution  (whether in cash,  stock or  property) in respect of any of
Parent's  capital  stock,  or any purchase,  redemption or other  acquisition by
Parent of any of Parent's capital stock, any other  securities,  or any options,
warrants,  calls or rights to acquire any such shares or other securities except
for repurchases from employees following their termination pursuant to the terms
of their  pre-existing  stock  option or purchase  agreements,  (iii) any split,
combination or  reclassification  of any of the Parent's capital stock, (iv) any
material  change by Parent in its accounting  methods,  principles or practices,
except  as  required  by  concurrent  changes  in  GAAP,  or  (v)  any  material
revaluation  by  Parent of any of its  assets,  including,  without  limitation,
writing down the value of capitalized inventory or writing off notes or accounts
receivable other than in the ordinary course of business.

     3.09 No Undisclosed Liabilities. Except as reflected or reserved against in
the balance sheet  included in the Parent  Financials,  there are no Liabilities
against,  relating to or affecting  Parent or any of its  respective  Assets and
Properties,  other than  Liabilities  incurred  since  September 30, 1999 in the
ordinary  course of business,  none of which,  individually or in the aggregate,
are material to the Business or Condition of Parent.

     3.10 Legal Proceedings.

     (a) Except as disclosed in Section 3.10 of the Disclosure  Schedule,  there
are no Actions or Proceedings pending or, to the Knowledge of Parent, threatened
against,  relating to or  affecting  Parent or any of its Assets and  Properties
which (i) could  reasonably  be expected  to result in the  issuance of an Order
restraining,   enjoining  or  otherwise   prohibiting   or  making  illegal  the
consummation  of any of the  transactions  contemplated  by  this  Agreement  or
otherwise result in a material  diminution of the benefits  contemplated by this
Agreement to the Company,  or (ii) if determined  adversely  against the Parent,
could  reasonably be expected to result in (x) any injunction or other equitable
relief  against  Parent that would  interfere in any  material  respect with its
business or operations or (y) Losses by Parent, individually or in the aggregate
with  Losses  in  respect  of  other  such  Actions  or  Proceedings,  exceeding
$100,000.00;

     (b)  There  are no  facts  or  circumstances  Known to  Parent  that  could
reasonably  be expected to give rise to any Action or  Proceeding  that would be
required to be disclosed pursuant to clause (a) above; and

     (c) There are no Orders outstanding against Parent.

     3.11  Compliance  With Laws and Orders.  Parent is not, nor has at any time
been,  nor has it received  any notice  that it is nor has at any time been,  in
violation  of or in default  under,  in any material  respect,  any Law or Order
applicable to any or any of its Assets and Properties, the consequences of which
could have a Material Adverse Effect on Parent.

     3.12 No Powers of Attorney.  Parent does not have any powers of attorney or
comparable delegations of authority outstanding.



                                       29
<PAGE>

     3.13 Brokers or Finders. Parent represents,  as to itself, its Subsidiaries
and its Affiliates,  that no agent, broker, investment banker, financial advisor
or  other  firm or  person,  other  than as set  forth  on  Section  3.13 of the
Disclosure  Schedule,  is or will be entitled to any brokers' or finder's fee or
any other  commission or similar fee in connection with any of the  transactions
contemplated  by this  Agreement,  and Parent  agrees to indemnify  and hold the
Company harmless from and against any and all claims, liabilities or obligations
with respect to any other  commissions or similar fees in connection with any of
the transactions contemplated by this Agreement which are asserted by any person
on the basis of any act or  statement  alleged to have been made by or on behalf
of Parent. Parent has heretofore furnished to the Company a complete and correct
copy of all agreements  between Parent and the parties set forth on Section 3.13
of the Disclosure Schedule pursuant to which such party would be entitled to any
payment relating to the transactions contemplated hereby.

     3.14 Taxes. Except as otherwise disclosed in the Parent SEC Reports, Parent
has  filed  all Tax  Returns  which  are  required  to have  been  filed  in any
jurisdiction, and has paid all Taxes shown to be due and payable on such returns
and all other Taxes payable by Parent to the extent the same have become due and
payable  and before  they have become  delinquent.  Parent  knows of no proposed
material  assessment for Taxes against Parent and in the opinion of Parent,  all
liabilities for Taxes are adequately provided for on the books of Parent.

     3.15  Disclosure.  All material facts relating to the Business or Condition
of Parent  have been  disclosed  to the  Company in or in  connection  with this
Agreement.  No  representation or warranty  contained in this Agreement,  and no
statement  contained in the Disclosure  Schedule or in any certificate,  list or
other  writing  furnished  to the  Company  pursuant  to any  provision  of this
Agreement  (including  without limitation the Parent  Financials),  contains any
untrue  statement of a material fact or omits to state a material fact necessary
in  order  to make  the  statements  herein  or  therein,  in the  light  of the
circumstances  under  which  they  were  made,  not  misleading.   None  of  the
information  supplied or to be supplied by or on behalf of Parent for  inclusion
or incorporation  by reference in the  Registration  Statement will, at the time
the Registration  Statement  becomes effective under the Securities Act, contain
any untrue  statement  of a  material  fact or omit to state any  material  fact
required  to be stated  therein  or  necessary  in order to make the  statements
therein,  in the light of the  circumstances  under  which  they are  made,  not
misleading,  except  that no  representation  or warranty is made by Parent with
respect to  statements  made or  incorporated  by  reference  therein  about the
Company  supplied by the Company for inclusion or  incorporation by reference in
the Registration  Statement.  None of the information supplied or to be supplied
by or on behalf of Parent for  inclusion  or  incorporation  by reference in the
Prospectus/Proxy  Statement, will, at the time the Prospectus/Proxy Statement is
first mailed to the  stockholders  of the Company or Parent,  at the time of the
Company  Stockholders'  Meeting  or Parent  Stockholders'  Meeting  or as of the
Effective Time, contain any untrue statement of a material fact or omit to state
any material  fact  required to be stated  therein or necessary in order to make
the statements  therein,  in the light of the circumstances under which they are
made, not misleading.  The Prospectus/Proxy  Statement will comply as to form in
all material  respects with the provisions of the Exchange Act and the rules and
regulations promulgated by the SEC thereunder,  except that no representation or
warranty is made by Parent with respect to statements  made or  incorporated  by
reference  therein  about the Company  supplied by the Company for  inclusion or
incorporation by reference in the Prospectus/Proxy Statement.

                                       30
<PAGE>

                                   ARTICLE IV

                            COVENANTS OF THE COMPANY

     The Company  covenants  and agrees with Parent that,  at all times from and
after the date hereof until the Effective  Time (unless and until this Agreement
is earlier  terminated in  accordance  with Article XI), the Company will comply
with all  covenants  and  provisions  of this  Article IV,  except to the extent
Parent may otherwise consent in writing.

     4.01  Regulatory  and Other  Approvals.  The  Company  will as  promptly as
practicable (a) take all commercially reasonable steps necessary or desirable to
obtain all consents, approvals or actions of, make all filings with and give all
notices to Governmental  or Regulatory  Authorities or any other Person required
of the Company to consummate the transactions  contemplated  hereby, (b) provide
such other  information and  communications  to such  Governmental or Regulatory
Authorities  or other  Persons  as Parent  or such  Governmental  or  Regulatory
Authorities or other Persons may reasonably request in connection therewith, and
(c) cooperate with Parent in connection  with the performance of its obligations
hereunder.

     4.02  Investigation  by Purchaser.  The Company will, and will cause Galaxy
Mall and IMI to (a)  provide  Parent  and its  officers,  directors,  employees,
agents,  counsel,  accountants,   financial  advisors,   consultants  and  other
representatives  (together  "Representatives") with full access, upon reasonable
prior notice and during  normal  business  hours,  to all  officers,  employees,
agents and accountants of the Company, Galaxy Mall, and IMI and their Assets and
Properties   and  Books  and   Records,   and  (b)   furnish   Parent  and  such
Representatives with all such information and data (including without limitation
copies of contracts,  Benefit Plans and other Books and Records)  concerning the
business and operations of the Company, Galaxy Mall, and IMI as Parent or any of
such   Representatives   reasonably   may  request  in   connection   with  such
investigation.

     4.03 No Solicitations.

     (a) Except for discussions,  negotiations and due diligence with DJ Limited
("DJL")  and  with  investors  with  whom it  works  related  to a $2.5  million
convertible  debt  offering,  provided,  however,  that the  Company  shall  not
consummate such offering  without Parent's  consent,  from and after the date of
this  Agreement  until  the  Effective  Time or  termination  of this  Agreement
pursuant to Article  XII,  the Company and its  Subsidiaries  will not, nor will
they authorize or permit any of their respective officers, directors, affiliates
or  employees  or  any   investment   banker,   attorney  or  other  advisor  or
representative retained by any of them to, directly or indirectly,  (i) solicit,
initiate,  encourage or induce the making,  submission  or  announcement  of any
Acquisition  Proposal,  (ii)  participate  in any  discussions  or  negotiations
regarding,  or furnish to any person any non-public information with respect to,
or take any other  action  to  facilitate  any  inquiries  or the  making of any
proposal  that  constitutes  or may  reasonably  be  expected  to lead  to,  any
Acquisition  Proposal,  (iii) engage in discussions with any person with respect
to any  Acquisition  Proposal,  except as to the existence of these  provisions,
(iv) approve,  endorse or recommend any  Acquisition  Proposal or (v) enter into
any letter of intent or similar document or any contract agreement or commitment
contemplating  or  otherwise  relating to any  Acquisition  Proposal;  provided,
however, that nothing contained in this Agreement shall prohibit or restrict the
Board of  Directors of the Company from  furnishing  information  to or entering


                                       31
<PAGE>

into  discussions  or  negotiations  with,  any  person or entity  that makes an
unsolicited  (from and after the date of this  Agreement)  Superior  Offer.  The
Company shall provide Parent with a copy of any  correspondence  to be delivered
by the Company in  connection  with such  Superior  Offer prior to sending  such
correspondence  to any third party (but not any attachments  thereto  previously
provided  by  the  Company  to  Parent  in  connection  herewith).   Except  for
discussions,  negotiations  and due diligence  with DJL and with  investors with
whom it works related to a $2.5 million  convertible  debt  offering,  provided,
however,  that the Company shall not consummate such offering  without  Parent's
consent,  the Company and its Subsidiaries  will  immediately  cease any and all
existing  activities,  discussions or  negotiations  with any parties  conducted
heretofore  with  respect to any  Acquisition  Proposal.  Without  limiting  the
foregoing,  it is understood that any violation of the restrictions set forth in
the preceding two sentences by any officer,  director or employee of the Company
or any of its Subsidiaries or any investment  banker,  attorney or other advisor
or representative  of the Company or any of its Subsidiaries  shall be deemed to
be a breach of this Section 4.03 by the Company.

     (b) In addition to the  obligations  of the Company set forth in  paragraph
(a) of this Section 4.03,  the Company as promptly as  practicable  shall advise
Parent  orally and in writing of any  Acquisition  Proposal  or any  request for
non-public  information or inquiry which the Company  reasonably  believes would
lead to an  Acquisition  Proposal,  the material  terms and  conditions  of such
Acquisition  Proposal,  request or  inquiry,  and the  identity of the person or
group making any such Acquisition Proposal, request or inquiry. The Company will
keep Parent informed as promptly as practicable in all material  respects of the
status of any such Acquisition Proposal, request or inquiry.

     4.04 Conduct of Business. The Company will, and will cause its Subsidiaries
to, conduct business only in the ordinary course consistent with past practice.

     4.05  Certain  Restrictions.  Except as  disclosed  in Section  4.05 of the
Disclosure  Schedule,  the Company  will,  and will cause its  Subsidiaries  to,
refrain from:

     (a) Amending their articles of incorporation or bylaws (or other comparable
corporate  charter  documents)  or taking  any action  with  respect to any such
amendment or any recapitalization, reorganization, liquidation or dissolution of
any such corporation;

     (b) Except with respect to the issuance of shares upon exercise of existing
Options,  authorizing,  issuing, selling or otherwise disposing of any shares of
capital stock of or any Option with respect to the Company or its  Subsidiaries,
or  modifying  or  amending  any right of any  holder of  outstanding  shares of
capital stock of or Option with respect to the Company or its Subsidiaries;

     (c) Declaring,  setting aside or paying any dividend or other  distribution
in respect of the capital stock of the Company or its Subsidiaries,  or directly
or indirectly redeeming,  purchasing or otherwise acquiring any capital stock of
or any Option with respect to the Company or its Subsidiaries;

                                       32
<PAGE>

     (d)  Acquiring  or  disposing  of,  or  incurring  any Lien  (other  than a
Permitted Lien) on, any Assets and Properties, other than in the ordinary course
of business consistent with past practice;

     (e) (i) Entering  into,  amending,  modifying,  terminating  (partially  or
completely), granting any waiver under or giving any consent with respect to (A)
any  material  Contract  or (B)  any  material  License  or  (ii)  granting  any
irrevocable powers of attorney;

     (f) Violating,  breaching or defaulting under in any material  respect,  or
taking or failing to take any  action  that (with or without  notice or lapse of
time or both) would  constitute  a material  violation  or breach of, or default
under,  any  term  or  provision  of any  material  License  held or used by the
Company,  Galaxy Mall and IMI or any Contract to which the Company,  Galaxy Mall
or IMI is a party or by which any of its Assets and Properties is bound;

     (g) Incurring Indebtedness in excess of $50,000;

     (h) Engaging with any Person in any merger or other  Acquisition  Proposal,
except as otherwise permitted by and subject to this Agreement ;

     (i) Making capital expenditures in excess of $100,000;

     (j) Writing off or writing  down any of the  Company's,  Galaxy  Mall's and
IMI's' Assets and Properties;

     (k) entering into any Contract to do or engage in any of the foregoing; or

     (l) engaging in any action that could  reasonably  be expected to (i) cause
the Merger to fail to qualify as a "reorganization"  under Section 368(a) of the
Code or (ii)  interfere  with  Parent's  ability to account  for the Merger as a
pooling of interests,  whether or not (in each case) otherwise  permitted by the
provisions of this Agreement.

     4.06 Affiliate Transactions. Prior to the Closing, the Company, Galaxy Mall
and IMI will not  enter  into any  Contract  or  amend or  modify  any  existing
Contract and will not engage in any transaction,  outside the ordinary course of
business consistent with past practice or not on an arm's-length basis, with any
officer, director or Affiliate thereof.

     4.07 Notice of Certain  Matters.  The Company will notify Parent in writing
of, and  contemporaneously  will provide Parent with true and complete copies of
any  and  all   information   or  documents   relating  to,  the  occurrence  or
non-occurrence of any event, transaction or circumstance, as soon as practicable
after it becomes  known to the Company,  after the date of this  Agreement,  the
occurrence or  non-occurrence of which causes or will cause any material failure
of the  Company to comply  with or satisfy  any  covenant  or  agreement  of the
Company  that  renders  or will  render  untrue or  inaccurate  in any  material
respect,  at or prior to the Effective Time, any  representation  or warranty of
the Company under this Agreement. No notice given pursuant to this Section shall
have any effect on the  representations,  warranties,  covenants  or  agreements
contained in this  Agreement  for purposes of  determining  satisfaction  of any
condition contained herein.

     4.08  Fulfillment  of  Conditions;  Other  Actions.  Company  will take all
commercially  reasonable steps necessary or desirable and proceed diligently and
in good  faith to (i)  satisfy  each  condition  to the  obligations  of  Parent
contained in this  Agreement  and will not,  and will not permit  Company or any
Subsidiary to, take or fail to take any action that could reasonably be expected
to result in the  nonfulfillment of any such condition,  (ii) permit the parties
to realize  their  intentions  as set forth in Section 1.10 and (iii) subject to
the  terms  and  conditions  herein  provided,  the  Company  agrees  to use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable,  whether under applicable
Laws or otherwise,  or to remove any injunctions or other impediments or delays,
legal or otherwise,  to consummate  and make  effective the Merger and the other
transactions contemplated by this Agreement and the Ancillary Agreements.

                                       33
<PAGE>

                                    ARTICLE V

                               COVENANTS OF PARENT

     Parent  covenants and agrees with Company that, at all times from and after
the date hereof until the  Effective  Time  (unless and until this  Agreement is
earlier  terminated in accordance  with Article XI), Parent will comply with all
covenants and provisions of this Article V, except to the extent the Company may
otherwise consent in writing.

     5.01 Regulatory and Other Approvals. Parent will as promptly as practicable
(a) take all commercially  reasonable steps necessary or desirable to obtain all
consents, approvals or actions of, make all filings with and give all notices to
Governmental or Regulatory Authorities or any other Person required of Parent to
consummate  the  transactions   contemplated  hereby,  (b)  provide  such  other
information and communications to such Governmental or Regulatory Authorities or
other Persons as the Company or such  Governmental or Regulatory  Authorities or
other Persons may reasonably request in connection therewith,  and (c) cooperate
with  the  Company  in  connection  with  the  performance  of  its  obligations
hereunder.

     5.02 Investigation by Company.  Parent will (a) provide the Company and its
Representatives with full access, upon reasonable prior notice and during normal
business hours, to all officers, employees, agents and accountants of the Parent
and its Assets and Properties and Books and Records, and (b) furnish Company and
such  Representatives  with all such  information  and data  (including  without
limitation  copies of  contracts,  Benefit  Plans and other  Books and  Records)
concerning  the  business  and  operations  of Parent as  Company or any of such
Representatives reasonably may request in connection with such investigation.

     5.03 Conduct of Business. Parent will conduct business only in the ordinary
course consistent with past practice.

     5.04 Certain Restrictions. Parent will refrain from:

     (a) Declaring,  setting aside or paying any dividend or other  distribution
in respect of the capital stock of Parent;

                                       34
<PAGE>

     (b) Engaging in any action that could  reasonably  be expected to cause the
Merger to fail to  qualify as a  "reorganization"  under  Section  368(a) of the
Code.

     5.05 Notice of Certain  Matters.  Parent will notify the Company in writing
of, and contemporaneously will provide the Company with true and complete copies
of any  and  all  information  or  documents  relating  to,  the  occurrence  or
non-occurrence of any event, transaction or circumstance, as soon as practicable
after it  becomes  known  to  Parent,  after  the  date of this  Agreement,  the
occurrence or  non-occurrence of which causes or will cause any material failure
of the  Company to comply with or satisfy any  covenant or  agreement  of Parent
that renders or will render untrue or inaccurate in any material respect,  at or
prior to the Effective Time, any representation or warranty of Parent under this
Agreement. No notice given pursuant to this Section shall have any effect on the
representations, warranties, covenants or agreements contained in this Agreement
for purposes of determining  satisfaction of any condition  contained herein but
shall not give rise to any other rights of the Company hereunder.

     5.06 Fulfillment of Conditions; Other Actions. Parent will
take all  commercially  reasonable  steps  necessary  or  desirable  and proceed
diligently and in good faith to (i) satisfy each condition to the obligations of
the Company  contained in this Agreement,  and will not take or fail to take any
action that could reasonably be expected to result in the  nonfulfillment of any
such condition, (ii) permit the parties to realize their intentions as set forth
in Section 1.10 and (iii) subject to the terms and conditions  herein  provided,
Parent agrees to use all reasonable  efforts to take, or cause to be taken,  all
action  and to do,  or  cause  to be  done,  all  things  necessary,  proper  or
advisable,  whether  under  applicable  Laws  or  otherwise,  or to  remove  any
injunctions or other  impediments or delays,  legal or otherwise,  to consummate
and make effective the Merger and the other  transactions  contemplated  by this
Agreement and the Ancillary Agreements.

     5.07 Directors' and Officers' Insurance and Indemnification.

     (a)  Parent  agrees  that at all times  after  the  Effective  Time,  shall
indemnify, or shall cause the Company (or the Surviving Corporation if after the
Effective Time) and its  Subsidiaries  to indemnify,  each person who is now, or
has been at any time  prior to the date  hereof,  a  director  or officer of the
Company  or of  any  of  the  Company's  Subsidiaries,  successors  and  assigns
(individually   an  "Indemnified   Party"  and   collectively  the  "Indemnified
Parties"),  to the same extent and in the same manner as is now  provided in the
respective  certificates  of  incorporation  or  by-laws  or  in  the  indemnity
agreements,  copies of which agreements have been previously provided to Parent,
of the Company and such  Subsidiaries or otherwise in effect on the date hereof,
with respect to any claim,  liability,  loss, damage,  cost or expense (whenever
asserted or claimed) ("Indemnified  Liability") based in whole or in part on, or
arising in whole or in part out of, any matter existing or occurring at or prior
to the  Effective  Time.  Parent  shall,  and shall  cause the  Company  (or the
Surviving  Corporation if after the Effective  Time) to,  maintain in effect for
not less than six  years  after  the  Effective  Time the  current  policies  of
directors' and officers' liability  insurance  maintained by the Company and its
Subsidiaries  on the date hereof  (provided that Parent may substitute  therefor
policies  having at least the same coverage and containing  terms and conditions
which are no less advantageous to the persons currently covered by such policies
as insured)  with  respect to matters  existing or  occurring at or prior to the
Effective Time;  provided,  however,  that if the aggregate  annual premiums for


                                       35
<PAGE>

such insurance at any time during such period shall exceed 150% of the per annum
rate of premium  currently  paid by the  Company and its  Subsidiaries  for such
insurance  on the date of this  Agreement,  which amount is set forth in Section
5.07 of the  Disclosure  Schedule,  then Parent  shall cause the Company (or the
Surviving  Corporation if after the Effective  Time) to, and the Company (or the
Surviving  Corporation if after the Effective  Time) shall,  provide the maximum
coverage that shall then be available at an annual premium equal to 150% of such
rate. Without limiting the foregoing, in the event any Indemnified Party becomes
involved in any capacity in any action,  proceeding  or  investigation  based in
whole or in part  on,  or  arising  in  whole  or in part  out of,  any  matter,
including,  without  limitation,  the  transactions  contemplated  hereby or any
personal guarantee they may have given with respect to any liability, obligation
or contract of the Company or any of its Subsidiaries,  existing or occurring at
or prior to the  Effective  Time,  then to the  extent  permitted  by law Parent
shall,  or shall cause the Company (or the  Surviving  Corporation  if after the
Effective Time) to, periodically advance to such Indemnified Party its legal and
other expenses (including the cost of any investigation and preparation incurred
in connection therewith),  subject to the provision by such Indemnified Party of
an  undertaking  to  reimburse  the  amounts so advanced in the event of a final
determination by a court of competent  jurisdiction  that such Indemnified Party
is not entitled  thereto.  Promptly  after  receipt by an  Indemnified  Party of
notice of the assertion (an "Assertion") of any claim or the commencement of any
action against him in respect to which indemnity or reimbursement  may be sought
against Parent,  the Company,  the Surviving  Corporation or a Subsidiary of the
Company or the Surviving Corporation ("Indemnitors") hereunder, such Indemnified
Party shall notify any Indemnitor in writing of the  Assertion,  but the failure
to so notify any Indemnitor shall not relieve any Indemnitor of any liability it
may have to such  Indemnified  Party  hereunder  except where such failure shall
have  materially  prejudiced  Indemnitor  in defending  against such  Assertion.
Indemnitors  shall be entitled to participate in and, to the extent  Indemnitors
elect by written notice to such  Indemnified  Party within 30 days after receipt
by any Indemnitor of notice of such  Assertion,  to assume,  the defense of such
Assertion,  at their  own  expense,  with  counsel  chosen  by  Indemnitors  and
reasonably   satisfactory  to  such  Indemnified  Party.   Notwithstanding  that
Indemnitors  shall have elected by such written  notice to assume the defense of
any Assertion, such Indemnified Party shall have the right to participate in the
investigation  and  defense  thereof,  with  separate  counsel  chosen  by  such
Indemnified  Party,  but, until there is a conflict between the positions of the
Indemnified  Party and the  Indemnitors,  the fees and  expenses of such counsel
shall be paid by such Indemnified  Party. No Indemnified  Party shall settle any
Assertion without the prior written consent of Parent,  which consent may not be
unreasonably  withheld, nor shall Parent settle any Assertion without either (i)
the written consent of all  Indemnified  Parties against whom such Assertion was
made,  or (ii)  obtaining a general  release from the party making the Assertion
for all Indemnified Parties as a condition of such settlement. The provisions of
this Section 5.07 are intended for the benefit of, and shall be enforceable  by,
the respective Indemnified Parties.

     (b)  The  articles  of  incorporation  and  the  bylaws  of  the  Surviving
Corporation  shall  contain  the  provisions  with  respect to  indemnification,
payment of fees and expenses and  exculpation  from  liability  set forth in the
Company's  articles of  incorporation  and bylaws on the date of this Agreement,
which  provisions  shall not be amended,  repealed or  otherwise  modified for a
period of six years from the Effective  Time in any manner that would  adversely
affect the rights  thereunder of individuals  who on or at any time prior to the
Effective  Time were  directors,  officers,  employees or agents of the Company,
unless  such  modification  is  required  by law.  Parent  shall  guarantee  the


                                       36
<PAGE>

obligations of the Surviving Corporation with respect to the indemnification and
payment of fees and expenses provisions contained in the Surviving Corporation's
articles of incorporation and bylaws with respect to acts occurring at or before
the Effective Time (including the transactions contemplated by this Agreement).

     (c) In  the  event  Parent,  the  Surviving  Corporation  or  any of  their
successors or assigns (i) consolidates  with or merges into any other person and
shall  not  be the  continuing  or  surviving  corporation  or  entity  of  such
consolidation  or  merger  or (ii)  transfers  all or  substantially  all of its
properties  and  assets  to any  person,  then  and in each  such  case,  proper
provisions  shall be made so that the  successors  and  assigns of Parent of the
Surviving  Corporation,  as the case may be,  shall assume the  obligations  set
forth in this Section 5.07.

     (d) Parent shall use  reasonable  efforts from and after the Effective Time
to obtain the release of any personal  guarantee made by any officer or director
of the Company with respect to any obligations,  liabilities or contracts of the
Company or any of its Subsidiaries.

     (e) Retirement of Intercompany  Debt. Parent shall cause, and the Surviving
Corporation  shall,  promptly  after  the  Effective  Time,  pay to  Parent  any
outstanding  balance  remaining  with  regard to any loan from Parent to Company
made prior to the Effective Time.

                                   ARTICLE VI

                              ADDITIONAL AGREEMENTS

     6.01 Prospectus/Proxy Statement;  Registration Statement; Other Filings. As
promptly as practicable  after the execution of this Agreement,  the Company and
Parent will prepare and file with the SEC, the Prospectus/Proxy  Statement,  and
Parent will  prepare and file with the SEC the  Registration  Statement in which
the  Prospectus/Proxy  Statement  will be included as a prospectus.  Each of the
Company  and  Parent  will  respond  to any  comments  of the SEC,  will use its
respective  commercially  reasonable efforts to have the Registration  Statement
declared  effective  under the Securities  Act as promptly as practicable  after
such filing and each of the  Company and Parent will cause the  Prospectus/Proxy
Statement  to  be  mailed  to  its  respective   stockholders  at  the  earliest
practicable time after the Registration  Statement is declared  effective by the
SEC. As promptly as practicable  after the date of this Agreement,  if required,
each of the  Company  and  Parent  will  prepare  and  file  (i) any  pre-merger
notification  forms  required  by the merger  notification  or control  Laws and
regulations  of any  applicable  jurisdiction,  as agreed to by the parties (the
"Antitrust Filings") and (ii) any other filings required to be filed by it under
the Exchange Act, the Securities Act or any other Federal, state or foreign Laws
relating to the Merger and the transactions  contemplated by this Agreement (the
"Other  Filings").  The Company and Parent each shall promptly  supply the other
with any  information  which may be required in order to effectuate  any filings
pursuant to this  Section  6.01.  Each of the Company and Parent will notify the
other promptly upon the receipt of any comments from the SEC or its staff or any
other  government  officials in connection  with any filing made pursuant hereto
and of any request by the SEC or its staff or any other government officials for
amendments or supplements to the Registration  Statement,  the Prospectus/ Proxy
Statement or any Antitrust Filings or Other Filing or for additional information


                                       37
<PAGE>

and will supply the other with copies of all  correspondence  between such party
or any of its representatives, on the one hand, and the SEC, or its staff or any
other government officials,  on the other hand, with respect to the Registration
Statement,  the Prospectus/ Proxy Statement,  the Merger or any Antitrust Filing
or Other Filing.  Whenever any event occurs which is required to be set forth in
an amendment or supplement to the Prospectus/Proxy  Statement,  the Registration
Statement or any Antitrust Filing or Other Filing, the Company or Parent, as the
case may be, will promptly  inform the other of such occurrence and cooperate in
filing  with the SEC or its  staff or any  other  government  officials,  and/or
mailing  to  stockholders  of the  Company  and/or  Parent,  such  amendment  or
supplement.  No  amendment  shall  be  made  to the  Registration  Statement  or
Prospectus/Proxy  Statement  without  consultation  with the other  party and no
filing shall be made on a successor form to form S-4 not permitted under current
Law without the prior approval of both parties.

     6.02 Meeting of the Company Stockholders.

     (a)  Promptly  after the date  hereof,  the  Company  will take all  action
necessary in accordance  with Nevada Law and its Articles of  Incorporation  and
ByLaws to convene a meeting of the Company's  stockholders to consider  adoption
and  approval  of this  Agreement  and  approval  of the  Merger  (the  "Company
Stockholders' Meeting") to be held as promptly as practicable,  and in any event
(to the  extent  permissible  under  applicable  Law)  within 45 days  after the
declaration of effectiveness of the Registration  Statement.  Subject to Section
6.02(c)  hereof,  the Company will use its  commercially  reasonable  efforts to
solicit from its  stockholders  proxies in favor of the adoption and approval of
this  Agreement  and the  approval of the Merger and will take all other  action
necessary  or  advisable  to  secure  the vote or  consent  of its  stockholders
required by Nevada Law to obtain such approvals. Notwithstanding anything to the
contrary  contained in this  Agreement,  the Company may adjourn or postpone the
Company  Stockholders'  Meeting  to the  extent  necessary  to  ensure  that any
necessary supplement or amendment to the Prospectus/Proxy  Statement is provided
to the  Company's  stockholders  in  advance  of a vote on the  Merger  and this
Agreement or, if as of the time for which the Company  Stockholders'  Meeting is
originally scheduled (as set forth in the Prospectus/Proxy  Statement) there are
insufficient shares of the Company Common Stock represented (either in person or
by proxy) to  constitute  a quorum  necessary  to conduct  the  business  of the
Company's  Stockholders'  Meeting.  The  Company  shall  ensure that the Company
Stockholders' Meeting is called, noticed, convened, held and conducted, and that
all  proxies   solicited  by  the  Company  in   connection   with  the  Company
Stockholders'  Meeting  are  solicited,  in  compliance  with  Nevada  Law,  the
Company's Articles of Incorporation and By-Laws,  and all other applicable Laws.
The Company's  obligation to call,  give notice of, convene and hold the Company
Stockholders'  Meeting in  accordance  with this  Section  6.02(a)  shall not be
limited to or otherwise affected by the commencement,  disclosure,  announcement
or submission to the Company of any Acquisition  Proposal, or by any withdrawal,
amendment or modification of the recommendation of the Board of Directors of the
Company with respect to the Merger and/or this Agreement.

     (b) Subject to Section  6.02(c):  (i) the Board of Directors of the Company
shall unanimously recommend that the Company's stockholders vote in favor of and
adopt  and  approve  this  Agreement  and  approve  the  Merger  at the  Company
Stockholders'  Meeting;  (ii) the  Prospectus/Proxy  Statement  shall  include a
statement  to the  effect  that  the  Board  of  Directors  of the  Company  has
unanimously  recommended  that the Company's  stockholders  vote in favor of and


                                       38
<PAGE>

adopt and approve  this  Agreement  and the Merger at the Company  Stockholders'
Meeting;  and  (iii)  neither  the Board of  Directors  of the  Company  nor any
committee  thereof  shall  withdraw,  amend or modify,  or propose or resolve to
withdraw,  amend  or  modify  in a  manner  adverse  to  Parent,  the  unanimous
recommendation  of the Board of  Directors  of the  Company  that the  Company's
stockholders  vote in favor of and  adopt and  approve  this  Agreement  and the
Merger.  For purposes of this  Agreement,  said  recommendation  of the Board of
Directors shall be deemed to have been modified in a manner adverse to Parent if
said  recommendation  shall no  longer  be  unanimous,  provided  that,  for all
purposes of this  Agreement,  an action by any Board of  Directors  or committee
thereof  shall  be  unanimous  if each  member  of such  Board of  Directors  or
committee  has  approved  such  action  other  than (i) any such  member who has
appropriately  abstained  from  voting on such  matter  because  of an actual or
potential conflict of interest and (ii) any such member who is unable to vote in
connection with such action as a result of death or disability.

     (c) Nothing in this  Agreement  shall prevent the Board of Directors of the
Company  from  withholding,  withdrawing,  amending or modifying  its  unanimous
recommendation in favor of the Merger if (i) a Superior Offer (as defined below)
is made to the  Company  and is not  withdrawn,  (ii)  the  Company  shall  have
provided written notice to Parent (a "Notice of Superior Offer") advising Parent
that the Company has received a Superior  Offer,  specifying  the material terms
and  conditions  of such  Superior  Offer and  identifying  the person or entity
making such  Superior  Offer,  (iii)  Parent  shall not have,  within  three (3)
Business Days of Parent's receipt of the Notice of Superior Offer, made an offer
that the Company Board by a majority vote  determines in its good faith judgment
to be at least as favorable to the Company's Stockholders as such Superior Offer
(it being agreed that the Company  Board shall convene a meeting to consider any
such offer by Parent promptly following the receipt thereof),  (iv) the Board of
Directors of the Company  concludes in good faith,  after  consultation with its
outside  counsel,  that,  in  light of such  Superior  Offer,  the  withholding,
withdrawal,  amendment or  modification  of such  recommendation  is required in
order for the Board of  Directors  of the  Company  to  properly  discharge  its
fiduciary obligations to the Company's Stockholders under applicable Law and (v)
the Company shall not have violated any of the restrictions set forth in Section
4.03 or this Section 6.02.  The Company shall provide Parent with at least three
(3)  Business  Days prior notice (or such lesser prior notice as provided to the
members  of  the  Company's  Board  of  Directors  but  in no  event  less  than
twenty-four  hours) of any meeting of the Company's  Board of Directors at which
the  Company's  Board of  Directors  is  reasonably  expected  to  consider  any
Acquisition  Proposal.  For purposes of this Agreement,  "Superior  Offer" shall
mean an unsolicited, bona fide written offer made by a third party to consummate
any of the following  transactions:  (i) a merger or consolidation involving the
Company pursuant to which the stockholders of the Company immediately  preceding
such  transaction  hold less than 50% of the equity interest in the surviving or
resulting  entity of such  transaction,  (ii) the  acquisition  by any person or
group  (including  by way of a tender  offer or an exchange  offer or a two step
transaction  involving a tender offer or exchange offer followed with reasonable
promptness by a cash-out merger involving the Company),  directly or indirectly,
of  ownership  of 100% of the then  outstanding  shares of capital  stock of the
Company, or (iii) the sale or disposition of all or substantially all the assets
of the  Company  to a third  party,  in each  case on terms  that  the  Board of
Directors of the Company  determines,  in its  reasonable  judgment,  to be more
favorable to the Company  stockholders  than the terms of the Merger;  provided,
however, that any such offer shall not be deemed to be a "Superior Offer" if any
financing  required to consummate the transaction  contemplated by such offer is


                                       39
<PAGE>

not  committed  and is not likely in the  reasonable  judgment of the  Company's
Board of Directors to be obtained by such third party on a timely basis.

     (d) Nothing  contained in this Agreement  shall prohibit the Company or its
Board of Directors  from taking and  disclosing to its  stockholders  a position
contemplated by Rules 14d-9 and 14e-2(a)  promulgated  under the Exchange Act or
making any other disclosure to its stockholders as required by Law.

     6.03 Meeting of Parent Stockholders.

     (a) Promptly after the date hereof,  Parent will take all action  necessary
in accordance  with the Delaware Law and its  Certificate of  Incorporation  and
ByLaws to convene a meeting of Parent's stockholders to consider the issuance of
the shares of Parent  Common  Stock  pursuant to the Merger and an  amendment to
Parent's  Certificate  of  Incorporation  to increase the  authorized  number of
shares of Parent  Common  Stock so as to permit  the  transactions  contemplated
hereby,   subject  to  and  upon  consummation  of  the  Merger,   (the  "Parent
Stockholders' Meeting") to be held as promptly as practicable,  and in any event
(to the  extent  permissible  under  applicable  Law)  within 45 days  after the
declaration of effectiveness of the Registration Statement.  Parent will use its
commercially  reasonable  efforts to solicit  from its  stockholders  proxies in
favor of the  issuance  of the shares of Parent  Common  Stock  pursuant  to the
Merger and an amendment to Parent's Certificate of Incorporation to increase the
authorized  number  of  shares  of  Parent  Common  Stock  so as to  permit  the
transactions  contemplated  hereby,  subject  to and  upon  consummation  of the
Merger, and will take all other action necessary or advisable to secure the vote
or consent of its  stockholders  required by the rules of Nasdaq or Delaware Law
to obtain such approvals.  Notwithstanding anything to the contrary contained in
this Agreement,  Parent may adjourn or postpone the Parent Stockholders' Meeting
to the extent necessary to ensure that any necessary  supplement or amendment to
the Prospectus/Proxy  Statement is provided to Parent's  stockholders in advance
of a vote on the issuance of the shares of Parent  Common Stock  pursuant to the
Merger or a vote on the  approval of an  amendment  to Parent's  Certificate  of
Incorporation to increase the authorized number of shares of Parent Common Stock
so as to  permit  the  transactions  contemplated  hereby,  subject  to and upon
consummation of the Merger, or, if as of the time for which Parent Stockholders'
Meeting is originally scheduled (as set forth in the Prospectus/Proxy Statement)
there are  insufficient  shares of Parent  Common Stock  represented  (either in
person or by proxy) to constitute a quorum  necessary to conduct the business of
the  Parent's  Stockholders'  Meeting.  Parent  shall  ensure  that  the  Parent
Stockholders' Meeting is called, noticed, convened, held and conducted, that all
proxies  solicited by the Company in  connection  with the Parent  Stockholders'
Meeting are solicited in compliance  with the Delaware Law, its  Certificate  of
Incorporation and ByLaws, the rules of Nasdaq and all other applicable Laws.

     (b) The Board of  Directors  of Parent  shall  unanimously  recommend  that
Parent's  stockholders  vote in favor of the  issuance  of the  shares of Parent
Common Stock pursuant to the Merger and an amendment to Parent's  Certificate of
Incorporation to increase the authorized number of shares of Parent Common Stock
so as to  permit  the  transactions  contemplated  hereby,  subject  to and upon
consummation  of the Merger.  The  Prospectus/  Proxy  Statement shall include a
statement to the effect that the Board of  Directors  of Parent has  unanimously
recommended  that  Parent's  stockholders  vote in favor of such  matters at the
Parent Stockholders'  Meeting.  Neither the Board of Directors of Parent nor any


                                       40
<PAGE>

committee  thereof  shall  withdraw,  amend or modify,  or propose or resolve to
withdraw,  amend or modify in a manner  adverse to the  Company,  the  unanimous
recommendation  of the Board of Directors of Parent that  Parent's  stockholders
vote  in  favor  of  such  matters.   For  purposes  of  this  Agreement,   said
recommendation  of the Board of Directors  shall be deemed to have been modified
in a manner  adverse to the  Company if said  recommendation  shall no longer be
unanimous.

     (c) Nothing  contained in this Agreement shall prohibit Parent or its Board
of  Directors  from  taking  and  disclosing  to  its  stockholders  a  position
contemplated by Rules 14d-9 and 14e-2(a)  promulgated  under the Exchange Act or
making any other  disclosure to its  stockholders as required by Law.

     6.04 State Statutes.  The Company and its Board of Directors  shall, if any
state  takeover  statute or similar Law is or becomes  applicable to the Merger,
this Agreement or any of the  transactions  contemplated by this Agreement,  use
all  reasonable  efforts to ensure  that the  Merger and the other  transactions
contemplated  by this Agreement may be consummated as promptly as practicable on
the terms contemplated by this Agreement and otherwise to minimize the effect of
such statute or regulation on the Merger,  this  Agreement and the  transactions
contemplated hereby. Notwithstanding anything herein to the contrary, nothing in
this  Agreement  shall  be  deemed  to  require  Parent  or the  Company  or any
Subsidiary or Affiliate  thereof to agree to any divestiture by itself or any of
its  affiliates  of  shares  of  capital  stock or of any  business,  assets  or
property,  or the imposition of any material limitation on the ability of any of
them to conduct their  businesses or to own or exercise  control of such assets,
properties and stock.

                                   ARTICLE VII

          CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB

     The obligations of Parent and Merger Sub hereunder to consummate the Merger
are  subject  to the  fulfillment,  at or  before  the  Closing,  of each of the
following  conditions  (all or any of which may be waived in whole or in part by
Parent in its sole discretion):

     7.01 Representations and Warranties.  The representations and warranties of
the  Company  shall have been true and  accurate  both when made and (except for
those  representations  and  warranties  that  address  matters  only  as  of  a
particular  date which need only be true and accurate as of such date) as of the
Effective  Time as if made at and as of such time,  except  where the failure of
such  representations  and warranties to be so true and correct  (without giving
effect to any limitation as to  "materiality"  or "Material  Adverse Effect" set
forth therein), does not have, and is not likely to have, individually or in the
aggregate,  a Material Adverse Effect on the Company and its Subsidiaries  taken
as a whole;  provided,  that the  representations  and  warranties  set forth in
Sections  2.01,  2.02,  2.03 and 2.04 shall be true and correct in all respects.

     7.02  Performance.  The Company shall have  performed and complied with, in
all material respects, each agreement,  covenant and obligation required by this
Agreement to be so performed or complied with by it at or before the Closing.

                                       41
<PAGE>

     7.03 Orders and Laws.  There shall not be in effect on the Closing Date any
Order or Law restraining,  enjoining or otherwise  prohibiting or making illegal
the  consummation  of the  Merger  or which  could  reasonably  be  expected  to
otherwise  result in a  material  diminution  of the  benefits  of the Merger to
Parent,  and there  shall  not be  pending  on the  Closing  Date any  Action or
Proceeding in, before or by any Governmental or Regulatory Authority which could
reasonably  be  expected  to result  in the  issuance  of any such  Order or the
enactment,  promulgation or deemed  applicability  to Parent,  the Company,  any
Subsidiary or the Merger of any such Law.

     7.04 Regulatory Consents and Approvals. All consents, approvals and actions
of,  filings  with and  notices  to any  Governmental  or  Regulatory  Authority
necessary to permit  Parent and the Company to perform their  obligations  under
this Agreement and to consummate the  transactions  contemplated  hereby (as set
forth in  Section  7.04 of the  Disclosure  Schedule)  (a) shall  have been duly
obtained,  made  or  given,  (b)  shall  be in  form  and  substance  reasonably
satisfactory  to Parent,  (c) shall not be subject  to the  satisfaction  of any
condition  that has not been  satisfied or waived and (d) shall be in full force
and effect,  and all  terminations  or expirations of waiting periods imposed by
any Governmental or Regulatory  Authority  necessary for the consummation of the
transactions contemplated by this Agreement shall have occurred.

     7.05 Third Party Consents. All consents (or in lieu thereof waivers) to the
performance by Parent and Company of their  obligations  under this Agreement or
to the  consummation  of the  transactions  contemplated  hereby as are required
under any Contract to which Parent,  the Company or any Subsidiary is a party or
by which any of their  respective  Assets and Properties are bound (as set forth
in Section 7.05 of the Disclosure  Schedule) (a) shall have been  obtained,  (b)
shall be in form and substance reasonably  satisfactory to Parent, (c) shall not
be subject to the  satisfaction  of any condition that has not been satisfied or
waived and (d) shall be in full force and  effect,  except  where the failure to
obtain any such  consent (or in lieu thereof  waiver)  could not  reasonably  be
expected,  individually  or in  the  aggregate  with  other  such  failures,  to
materially  adversely affect Parent or the Business or Condition of the Company,
Galaxy Mall and IMI or otherwise result in a material diminution of the benefits
of the transactions contemplated by this Agreement to Parent.

     7.06 Stockholder Approval.  The Company Stockholder Approval and the Parent
Stockholder  Approval  shall have been  obtained.  The issuance of the shares of
Parent Common Stock  pursuant to the Merger shall have been duly approved by the
stockholders of Parent under applicable Nasdaq rules.

     7.07 Opinion of Counsel.  Parent shall have received the opinion of Parsons
Behle  &  Latimer,  P.C.,  counsel  to the  Company,  dated  the  Closing  Date,
substantially in the form and to the effect of Exhibit C hereto.

     7.08 Ancillary Agreements.  The Ancillary Agreements shall be in full force
and effect and shall have been complied with in all material respects.

     7.09 Registration Statement Effective;  Proxy Statement. The SEC shall have
declared the  Registration  Statement  effective.  No stop order  suspending the
effectiveness  of the  Registration  Statement or part  thereof  shall have been
issued and no proceeding for that purpose,  and no similar proceeding in respect


                                       42
<PAGE>

of the  Prospectus/Proxy  Statement,  shall have been initiated or threatened in
writing by the SEC.

     7.10 Nasdaq Listing.  The shares of Parent Common Stock to be issued in the
Merger shall have been  authorized  for listing on Nasdaq,  subject to notice of
issuance.

     7.11  Officers'  Certificates.  The Company shall have  delivered to Parent
certificates,  dated the Closing Date and executed by the Chairman of the Board,
the  President  or  any  Vice  President  of the  Company,  in  form  reasonably
acceptable to Parent, and a certificate,  dated the Closing Date and executed by
the  Secretary or any  Assistant  Secretary of the Company,  in form  reasonably
acceptable to Parent.

     7.12 Fairness Opinion.  Parent shall have received, in a form acceptable to
Parent,  its legal  counsel and  Parent's  independent  accountants,  a fairness
opinion issued by Cruttenden Roth Incorporated.

     7.13  Dissenting  Shares.  Holders of no more than two percent  (2%) of the
outstanding  shares of the Company  Common Stock shall have  exercised  (and not
subsequently  waived their rights or allowed them to lapse), nor shall they have
any continued right to exercise, appraisal,  dissenters' or similar rights under
applicable Law with respect to their shares by virtue of the Merger.

                                  ARTICLE VIII

               CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY

     The  obligations  of the Company  hereunder  to  consummate  the Merger are
subject to the fulfillment,  at or before the Closing,  of each of the following
conditions  (all or any of which may be waived in whole or in part by Company in
its sole discretion):

     8.01 Representations and Warranties.  The representations and warranties of
Parent  shall have been true and  accurate  both when made and (except for those
representations and warranties that address matters only as of a particular date
which need only be true and accurate as of such date) as of the  Effective  Time
as  if  made  at  and  as of  such  time,  except  where  the  failure  of  such
representations  and warranties to be so true and correct (without giving effect
to any limitation as to  "materiality"  or "Material  Adverse  Effect" set forth
therein),  does not  have,  and is not  likely to have,  individually  or in the
aggregate,  a Material Adverse Effect on Parent and its Subsidiaries  taken as a
whole;  provided,  that the  representations and warranties set forth in Section
3.01 shall be true and correct in all respects.

     8.02  Performance.  Parent shall have  performed and complied  with, in all
material  respects,  each  agreement,  covenant and obligation  required by this
Agreement  to be so  performed  or  complied  with by Parent  at or  before  the
Closing.

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<PAGE>

     8.03 Opinion of Counsel.  Company shall have received the opinion of Nida &
Maloney,  LLP, counsel to Parent,  dated the Closing Date,  substantially in the
form of Exhibit F hereto.

     8.04 Regulatory Consents and Approvals. All consents, approvals and actions
of,  filings  with and  notices  to any  Governmental  or  Regulatory  Authority
necessary to permit  Parent and the Company to perform their  obligations  under
this Agreement and to consummate the  transactions  contemplated  hereby (as set
forth in  Section  7.04 of the  Disclosure  Schedule)  (a) shall  have been duly
obtained,  made  or  given,  (b)  shall  be in  form  and  substance  reasonably
satisfactory to the Company, (c) shall not be subject to the satisfaction of any
condition  that has not been  satisfied or waived and (d) shall be in full force
and effect,  and all  terminations  or expirations of waiting periods imposed by
any Governmental or Regulatory  Authority  necessary for the consummation of the
transactions contemplated by this Agreement shall have occurred.

     8.05 Orders and Laws.  There shall not be in effect on the Closing Date any
Order or Law restraining,  enjoining or otherwise  prohibiting or making illegal
the  consummation  of the  Merger  or which  could  reasonably  be  expected  to
otherwise  result in a material  diminution of the benefits of the Merger to the
Company,  and there  shall not be  pending  on the  Closing  Date any  Action or
Proceeding in, before or by any Governmental or Regulatory Authority which could
reasonably  be  expected  to result  in the  issuance  of any such  Order or the
enactment,  promulgation or deemed  applicability  to Parent,  the Company,  any
Subsidiary or the Merger of any such Law.

     8.06 Stockholder Approval.  The Company Stockholder Approval and the Parent
Stockholder  Approval  shall have been  obtained.  The issuance of the shares of
Parent Common Stock  pursuant to the Merger shall have been duly approved by the
stockholders of Parent under applicable Nasdaq rules.

     8.07 Registration Statement Effective;  Proxy Statement. The SEC shall have
declared the  Registration  Statement  effective.  No stop order  suspending the
effectiveness  of the  Registration  Statement or part  thereof  shall have been
issued and no proceeding for that purpose,  and no similar proceeding in respect
of the  Prospectus/Proxy  Statement,  shall have been initiated or threatened in
writing by the SEC.

     8.08 Nasdaq Listing. The shares of the Company Common Stock to be issued in
the Merger shall have been  authorized for listing on the Nasdaq National Market
System, subject to notice of issuance.

     8.09  Officers'  Certificates.  Parent shall have  delivered to the Company
certificates,  dated the Closing Date and executed by the Chairman of the Board,
the President or any Vice President of the Parent, in form reasonably acceptable
to the Company,  and a  certificate,  dated the Closing Date and executed by the
Secretary  or  any  Assistant  Secretary  of  the  Parent,  in  form  reasonably
acceptable to the Company.

     8.10 Fairness Opinion. The Company shall have received in a form acceptable
to the Company, its legal counsel and the Company's independent  accountants,  a
fairness opinion issued by Houlihan Lokey Howard & Zukin.

                                       44
<PAGE>

                                   ARTICLE IX

                                   TAX MATTERS

     9.01   Representations   and  Obligations   Regarding  Taxes.  The  Company
represents and warrants to Parent as follows:

     (a) Except as set forth in Section  9.01 of the  Disclosure  Schedule,  the
Company and each of its  Subsidiaries  has timely filed (or has had timely filed
on its behalf) with the appropriate Tax Authorities all Tax Returns  required to
be filed by the Company and each of its  Subsidiaries,  and such Tax Returns are
true, correct, and complete in all material respects.

     (b) The Company and each of its  Subsidiaries has paid, or where payment is
not yet due, has established an adequate accrual in accordance with GAAP for the
payment of, all Taxes for all periods ending through the date hereof.

     (c) There are no Liens for Taxes upon any property or assets of the Company
or any of its Subsidiaries, except for liens for Taxes not yet due and for which
adequate reserves have been established in accordance with GAAP.

     (d) No federal,  state,  local or foreign Audits are presently pending with
regard to any Taxes or Tax Returns of the Company  and its  Subsidiaries  and to
the knowledge of the Company, no such Audit is threatened.

     (e) Except as set forth in Section 9.01(e) of the Disclosure Schedule,  the
Tax Returns of the Company and each of its  Subsidiaries  have not been examined
by the applicable  Tax Authority (or the  applicable  statutes of limitation for
the assessment of Taxes for such periods have expired),  and for any year that a
Tax Return was examined,  no material  adjustments  were asserted as a result of
such  examination  which have not been resolved and fully paid, and no issue has
been  raised  by any Tax  Authority  in any Audit of the  Company  or any of its
Subsidiaries  that,  if raised with  respect to any other period not so audited,
could be expected to result in a proposed  deficiency for any such period not so
audited.

     (f) There are no outstanding requests,  agreements,  consents or waivers to
extend the statutory  period of limitations  applicable to the assessment of any
Taxes or  deficiencies  against the Company or any of its  Subsidiaries,  and no
power of attorney granted by the Company or any of its Subsidiaries with respect
to any Taxes is currently in force.

     (g)  Neither  the  Company  nor any of its  Subsidiaries  is a party to any
agreement providing for the allocation, indemnification, or sharing of Taxes.

     (h) Neither the  Company nor any of its  Subsidiaries  has been a member of
any  "affiliated  group" (as defined in section  1504(a) of the Code) and is not
subject to Treas. Reg. 1.1502-6 for any period.

                                       45
<PAGE>

     (i) Neither the Company nor any of its  Subsidiaries  is or has been a U.S.
real  property  holding  company (as defined in Section  897(c)(2)  of the Code)
during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

                                    ARTICLE X

               SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS
                                 AND AGREEMENTS

     10.01  Survival of  Representations,  Warranties,  Covenants and Agreements
Notwithstanding  any right of Parent  (whether or not  exercised) to investigate
the Business or any right of any party (whether or not exercised) to investigate
the accuracy of the  representations and warranties of the other party contained
in this Agreement,  the Company and Parent have the right to rely fully upon the
representations,  warranties, covenants and agreements of the other contained in
this Agreement.  The representations  and warranties of the Company,  Parent and
Merger Sub contained in this Agreement  shall  terminate at the Effective  Time,
and only the covenants and  agreements set forth in this Agreement that by their
terms survive the Effective Time shall survive the Effective Time.

                                   ARTICLE XI

                                   TERMINATION

     11.01 Termination.  This Agreement may be terminated,  and the transactions
contemplated  hereby may be abandoned,  at any time prior to the Effective Time,
whether  prior to or after  the  Company  Stockholder  Approval  and the  Parent
Stockholder Approval:

     (a) by mutual  written  agreement  of Parent and the  Company  hereto  duly
authorized  by  action  taken by or on  behalf  of their  respective  Boards  of
Directors;

     (b)  by  either  the   Company   or  Parent   upon   notification   to  the
non-terminating party by the terminating
party:

          (i) at any time after July 31, 2000 if the Merger  shall not have been
     consummated  on or prior to such date and such  failure to  consummate  the
     Merger  is not  caused  by a  material  breach  of  this  Agreement  by the
     terminating party;

          (ii) if the Company  Stockholder  Approval  or the Parent  Stockholder
     Approval  shall not be  obtained  by reason of the  failure  to obtain  the
     requisite vote upon a vote held at a meeting of such  stockholders,  or any
     adjournment thereof, called therefor;

          (iii) if any  Governmental  or  Regulatory  Authority,  the  taking of
     action by which is a condition to the  obligations of either the Company or
     Parent to  consummate  the  transactions  contemplated  hereby,  shall have


                                       46
<PAGE>

     determined  not to take such action and all  appeals of such  determination
     shall have been taken and have been unsuccessful;

          (iv)  if  the  terminating  party  is not in  material  breach  of its
     obligations  under this  Agreement and there has been a material  breach of
     any  representation,  warranty,  covenant or  agreement  on the part of the
     non-terminating  party set forth in this Agreement such that the conditions
     in  Sections  7.01,  7.02,  8.01 or 8.02 will not be  satisfied;  provided,
     however,  that if such breach is curable by the  non-terminating  party and
     such cure is reasonably  likely to be completed prior to the date specified
     in Section  11.01(b)(i),  then,  for so long as the  non-terminating  party
     continues to use its reasonable efforts to effect and cure, the terminating
     party may not terminate pursuant to this Section 11.01(b)(iv);

          (v)  if  any  court  of  competent  jurisdiction  or  other  competent
     Governmental  or  Regulatory  Authority  shall have issued an Order  making
     illegal or  otherwise  permanently  restricting,  preventing  or  otherwise
     prohibiting  the  Merger  and  such  Order  shall  have  become  final  and
     nonappealable;

     (c) by Parent or the Company if the Company or its  stockholders  receive a
Superior  Offer in  connection  with which the Board of Directors of the Company
exercises the rights specified in Section 6.02(c) to withhold,  withdraw,  amend
or modify its recommendation of the Merger; or

     (d) by Parent if the Company  breaches  Section 4.03 of this  Agreement and
Parent is in substantial compliance with its obligations under this Agreement.

     11.02 Effect of Termination.

     (a) If this Agreement is validly terminated by either the Company or Parent
pursuant to Section 11.01,  this  Agreement will forthwith  become null and void
and there will be no liability or  obligation  on the part of either the Company
or Parent (or any of their respective Representatives or affiliates), except (i)
that nothing,  other than Section  11.02(d),  contained herein shall relieve any
party  hereto  from  liability  for  willful  breach  of  its   representations,
warranties,  covenants  or  agreements  contained  in  this  Agreement,  (ii) as
provided in paragraph (b) below and (iii) Section 13.04 of this Agreement  shall
survive and continue in full force and effect.

     (b) In the event that Parent (and at the time of termination  Parent was in
substantial  compliance  with its  obligations  under this Agreement) or Company
terminates this Agreement  pursuant to Sections  11.01(c),  or Parent terminates
this Agreement pursuant to Section 11.01(d),  then the Company shall, within one
(1) Business Day after  receipt of a request from Parent,  pay to Parent in cash
(x) a termination  fee of $1,500,000  and (y) an amount equal to all  documented
out-of-pocket  expenses  and fees  incurred  by Parent in  connection  with this
Agreement  and  the  transactions   contemplated   hereby  (including,   without
limitation, fees and expenses payable to all banks, investment banking firms and
other financial institutions and persons and their respective agents and counsel
for acting as  Parent's  financial  advisor  with  respect to, or  arranging  or
committing to provide or providing any financing for, the Merger, Parent's legal


                                       47
<PAGE>

counsel and Parent's independent accountants),  provided, that in no event shall
the  amount  of such  reimbursable  fees and  expenses  exceed  $500,000  in the
aggregate (collectively, (x) and (y), the "Termination Fee").

     (c) If (A) this  Agreement  is  terminated  by Parent  pursuant  to Section
11.01(b)(ii),  (B) prior to such  termination  a third party shall have publicly
announced  and not withdrawn a proposal or offer for a Company  Acquisition  (as
defined  below) and (C) within twelve (12) months  following the  termination of
this Agreement a Company Acquisition is consummated or the Company enters into a
definitive agreement providing for a Company Acquisition, then the Company shall
pay  Parent in  immediately  available  funds at or prior to  consummating  such
Company Acquisition an amount equal to the Termination Fee.

     (d) The Company  acknowledges that the agreements contained in this Section
11.02 are an integral part of the  transactions  contemplated by this Agreement,
and that, without these agreements,  Parent would not enter into this Agreement;
accordingly,  if the  Company  fails to pay in a timely  manner the  amounts due
pursuant to this  Section  11.02 and, in order to obtain  such  payment,  Parent
makes a claim that results in a judgment against the Company for the amounts set
forth in this  Section  11.02,  the Company  shall pay to Parent its  reasonable
costs and  expenses  (including  reasonable  attorneys'  fees and  expenses)  in
connection  with such suit,  together  with interest on the amounts set forth in
this Section 11.02 at the prime rate of Bank of America N.T. & S.A. in effect on
the date such payment was required to be made.  Payment of the  Termination  Fee
described in this Section 11.02 shall be in lieu of Losses incurred in the event
of  breach of this  Agreement.  For the  purposes  of this  Agreement,  "Company
Acquisition"  shall  mean  any of the  following  transactions  (other  than the
transactions  contemplated  by this  Agreement):  (i) a  merger,  consolidation,
business  combination,  recapitalization,  liquidation,  dissolution  or similar
transaction  involving  the Company  pursuant to which the  shareholders  of the
Company  immediately  preceding  such  transaction  hold  less  then  50% of the
aggregate  equity  interests  in the  surviving  or  resulting  entity  of  such
transaction,  (ii)  a  sale  or  other  disposition  by the  Company  of  assets
representing  in  excess  of 50% of  the  aggregate  fair  market  value  of the
Company's  business  immediately  prior to such sale or (iii) the acquisition by
any person or group  (including by way of a tender offer or an exchange offer or
issuance by the Company),  directly or indirectly,  of beneficial ownership or a
right to acquire beneficial ownership of shares representing in excess of 50% of
the voting power of the then outstanding shares of capital stock of the Company.

                                   ARTICLE XII

                                   DEFINITIONS

     12.01 Definitions.


     (a) Defined Terms. As used in this Agreement,  the following  defined terms
have the meanings indicated below:

     "Acquisition  Proposal"  means any proposal for a merger or other  business
combination to which the Company, Galaxy Mall or IMI is a party or the direct or
indirect  acquisition of any  substantial  equity  interest in, or a substantial


                                       48
<PAGE>

portion  of the  assets  of the  Company,  Galaxy  Mall or IMI,  other  than the
transactions contemplated by this Agreement.

     "Actions or Proceedings" means any action, suit, proceeding, arbitration or
Governmental or Regulatory Authority investigation or audit.

     "Affiliate"  means any Person that directly,  or indirectly  through one of
more  intermediaries,  controls or is controlled  by or is under common  control
with the Person specified. For purposes of this definition,  control of a Person
means the power,  direct or  indirect,  to direct or cause the  direction of the
management  and policies of such Person whether by Contract or otherwise and, in
any event and without limitation of the previous sentence, any Person owning ten
percent (10%) or more of the voting securities of another Person shall be deemed
to control that Person.

     "Agreement" unless the context otherwise requires, means this Agreement and
Plan of Merger,  the  exhibits  and the  schedules  hereto and the  certificates
delivered in accordance  herewith,  and the  Certificate of Merger,  as the same
shall be amended from time to time.

     "Ancillary Agreements" has the meaning given in Recital E.

     "Assets and  Properties"  of any Person means all assets and  properties of
every kind, nature,  character and description (whether real, personal or mixed,
whether tangible or intangible,  whether absolute, accrued, contingent, fixed or
otherwise  and  wherever  situated),  including  the goodwill  related  thereto,
operated,  owned or leased by such Person,  including  without  limitation cash,
cash equivalents,  Investment  Assets,  accounts and notes  receivable,  chattel
paper,  documents,  instruments,  general intangibles,  real estate,  equipment,
inventory, goods and Intellectual Property.

     "Audit" means any audit, assessment, or other examination relating to Taxes
by any Tax Authority or any judicial or administrative  proceedings  relating to
Taxes.

     "Benefit  Plan"  means  any  Plan  established  by  the  Company,   or  any
predecessor or Affiliate of any of the  foregoing,  existing at the Closing Date
or prior thereto,  to which the Company,  Galaxy Mall, or IMI contributes or has
contributed,  or under which any  employee,  former  employee or director of the
Company,  Galaxy Mall, or IMI or any beneficiary thereof is covered, is eligible
for coverage or has benefit rights.

     "Books and Records" means all files, documents,  instruments, papers, books
and records  relating to the Business or  Condition  of the Person  referred to,
including without limitation financial statements,  tax returns and related work
papers and letters  from  accountants,  budgets,  pricing  guidelines,  ledgers,
journals,  deeds,  title policies,  minute books,  stock certificates and books,
stock transfer ledgers, contracts,  licenses, customer lists, computer files and
programs, retrieval programs, operating data and plans and environmental studies
and plans.

     "Business" has the meaning given such term in Section 2.02.

     "Business Day" means a day other than Saturday,  Sunday or any day on which
banks located in the States of California  and Utah are  authorized or obligated
to close.

                                       49
<PAGE>

     "Business  or  Condition"  means  the  business,  condition  (financial  or
otherwise),  results of  operations,  Assets and Properties and prospects of the
referenced party taken as a whole.

     "Certificate of Merger" has the meaning given in Section 1.02.

     "Certificates" has the meaning given in Section 1.07(c).

     "Closing" has the meaning given in Section 1.02.

     "Closing Date" has the meaning given in Section 1.02.

     "Closing Price" has the meaning given in Section 1.06(d).

     "Code" means the Internal  Revenue Code of 1986, as amended,  and the rules
and regulations promulgated thereunder.

     "Company" has the meaning ascribed to it in the forepart of this Agreement.

     "Company Acquisition" has the meaning given in Section 11.02.

     "Company Common Stock" has the meaning given in Section 1.06(a).

     "Company Financials" has the meaning given in Section 2.07(b).

     "Company  Intellectual  Property" shall mean any Intellectual Property that
is owned by, or exclusively licensed to, the Company.

     "Company Option" has the meaning given in Section 2.03(b).

     "Company Plan" has the meaning given in Section 1.06(b).

     "Company Plan Options" has the meaning given in Section 1.06(b).

     "Company  Registered  Intellectual  Property"  means all of the  Registered
Intellectual Property owned by, or filed in the name of, the Company.

     "Company SEC Reports" has the meaning given in Section 2.07(a).

     "Company Stockholder Approval" has the meaning given in Section 2.05.

     "Company  Stockholders" means all holders of the Company Common Stock as of
the Effective Time.

     "Company Stockholders' Meeting" has the meaning given in Section 6.02.

                                       50
<PAGE>

     "Contract" means any agreement,  lease, license,  evidence of Indebtedness,
mortgage,  indenture,  security  agreement or other contract (whether written or
oral).

     "Delaware Law" has the meaning given in Recital A.

     "Disclosure  Schedule" means the record delivered by Parent and the Company
herewith and dated as of the date hereof,  containing  all lists,  descriptions,
exceptions  and other  information  and materials as are required to be included
therein by Company or Parent pursuant to this Agreement.

     "Dissenting Shares" has the meaning given in Section 1.11.

     "Employment Agreements" has the meaning given in Recital E.

     "Exchange Act" has the meaning given in Section 2.07(a).

     "Exchange Agent" has the meaning given in Section 1.07(a).

     "Exchange Ratio" has the meaning given in Section 1.06(a).

     "GAAP" means the United States generally  accepted  accounting  principles,
consistently  applied  throughout  the specified  period and in the  immediately
prior comparable period.

     "Galaxy Mall" has the meaning given in Section 2.02.

     "Galaxy Mall  Intellectual  Property" shall mean any Intellectual  Property
that is owned by, or exclusively licensed to, Galaxy Mall.

     "Galaxy Mall Registered  Intellectual Property" means all of the Registered
Intellectual Property owned by, or filed in the name of Galaxy Mall.

     "Governmental  or  Regulatory   Authority"   means  any  court,   tribunal,
arbitrator,  authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.

     "IMI" has the meaning given in Section 2.02.

     "IMI  Intellectual  Property" shall mean any Intellectual  Property that is
owned by, or exclusively licensed to IMI.

     "IMI Registered Intellectual Property" means all of the Registered Property
owned by, or filed in the name of IMI.

     "Indebtedness"  of any Person means all  obligations of such Person (i) for
borrowed  money,  (ii)  evidenced  by  notes,   bonds,   debentures  or  similar
instruments,  (iii) for the deferred  purchase price of goods or services (other
than trade  payables or accruals  incurred in the ordinary  course of business),


                                       51
<PAGE>

(iv) under capital leases and (v) in the nature of guarantees of the obligations
described in clauses (i) through (iv) above of any other Person.

     "Intellectual  Property"  shall  mean any or all of the  following  and all
rights in,  arising  out of or  associated  therewith:  (i) all  United  States,
international  and foreign patents and  applications  therefor and all reissues,
divisions,    renewals,    extensions,    provisionals,     continuations    and
continuations-in-part  thereof; (ii) all inventions (whether patentable or not),
invention disclosures,  improvements,  trade secrets,  proprietary  information,
know how,  technology,  technical data and customer lists, and all documentation
relating to any of the foregoing; (iii) all copyrights, copyrights registrations
and applications therefor, and all other rights corresponding thereto throughout
the world;  (iv) all industrial  designs and any  registrations and applications
therefor throughout the world; (v) all trade names, logos, common law trademarks
and service marks,  trademark and service mark  registrations  and  applications
therefor  throughout the world;  (vi) all databases and data collections and all
rights  therein  throughout  the  world;  and (vii) any  similar  or  equivalent
intellectual property rights to any of the foregoing anywhere in the world.

     "Investment  Assets"  means all  debentures,  notes and other  evidences of
Indebtedness,  stocks,  securities  (including rights to purchase and securities
convertible  into or  exchangeable  for other  securities),  interests  in joint
ventures  and  general  and  limited  partnerships,  mortgage  loans  and  other
investment or portfolio assets owned of record or beneficially by the Company or
any  Subsidiary  and  issued  by  any  Person  other  than  the  Company  or any
Subsidiary(other  than trade  receivables  generated in the  ordinary  course of
business of the Company or any Subsidiary).

     "IRS" means the United States Internal Revenue Service.

     "Knowledge" or "Known" means the actual knowledge of any officer,  director
or employee of the referenced party hereto or any Subsidiary of such party.

     "Laws" means all laws, statutes, rules,  regulations,  ordinances and other
pronouncements  having  the  effect of law of the  United  States,  any  foreign
country  or any  domestic  or foreign  state,  county,  city or other  political
subdivision or of any Governmental or Regulatory Authority.

     "Liabilities" means all Indebtedness,  obligations and other liabilities of
a Person (whether absolute, accrued,  contingent, fixed or otherwise, or whether
due or to become due).

     "Licenses"  means  all  licenses,   permits,   certificates  of  authority,
authorizations,   approvals,  registrations,  franchises  and  similar  consents
granted or issued by any Governmental or Regulatory Authority.

     "Liens" means any mortgage, pledge,  assessment,  security interest, lease,
lien,  adverse  claim,  levy,  charge or other  encumbrance  of any kind, or any
conditional  sale contract,  title retention  contract or other contract to give
any of the foregoing.

     "Lock-Up Agreements" has the meaning given in Recital E.

                                       52
<PAGE>

     "Loss" means any and all losses, fines, fees,  penalties,  deficiencies and
expenses (including without limitation interest, court costs, fees of attorneys,
accountants  and  other  experts  or  other  expenses  of  litigation  or  other
proceedings or of any claim, default or assessment).

     "Material Adverse Effect" means any materially  adverse change in or effect
(i) that is or will be materially adverse to the business, results of operations
or financial condition, of any party hereto, taken as a whole, or (ii) that will
prevent or  materially  impair any  party's  ability to  consummate  the Merger,
including  without  limitation,  a determination  by Parent's  auditors that the
Company's revenues for fiscal year 1999 did not exceed $13 million dollars and a
determination  by Parent,  in its sole  discretion,  that the threatened  patent
infringement action by AVO Media involving certain IMI Intellectual  Property or
the U.S.  design  patent for a shaped CD product  issued on January  18, 2000 to
SHAPE CD, Inc., may result in a significant  patent  infringement  claim against
IMI,  Parent  or any of their  affiliates,  provided  that a  "Material  Adverse
Effect" shall not include changes or effects (i) relating to economic conditions
or financial  markets in general or the internet or high  technology  industries
generally,  (ii)  resulting  from the  voluntary  termination  of  employment by
employees  or any party and its  Subsidiaries  between  the date  hereof and the
Closing Date or (iii)  resulting from actions  required to be taken by the terms
of this  Agreement.  A decline in the stock market price of the shares of Parent
or Company in and of itself shall not be deemed a "Material Adverse Effect."

     "Merger" has the meaning given in Section 1.01.

     "Merger Sub Common Stock" has the meaning given in Section 1.06(c).

     "Nevada Law" has the meaning given in Recital A.

     "Nasdaq"  means  the  National  Association  of  Securities  Dealers,  Inc.
National Market System.

     "Option"   with   respect  to  any  Person  means  any   security,   right,
subscription,  warrant,  option,  "phantom"  stock right or other  Contract that
gives the right to (i) purchase or otherwise  receive or be issued any shares of
capital  stock of such Person or any  security of any kind  convertible  into or
exchangeable  or  exercisable  for any shares of capital stock of such Person or
(ii) receive or exercise any benefits or rights similar to any rights enjoyed by
or accruing to the holder of shares of capital  stock of such Person,  including
any  rights  to  participate  in the  equity  or  income  of such  Person  or to
participate  in or direct the  election  of any  directors  or  officers of such
Person or the  manner in which any shares of  capital  stock of such  Person are
voted.

     "Option Agreement" has the meaning given in Recital E.

     "Order" means any writ,  judgment,  decree,  injunction or similar order of
any Governmental or Regulatory  Authority (in each such case whether preliminary
or final).

     "Parent" has the meaning ascribed to it in the forepart of this Agreement.

                                       53
<PAGE>

     "Parent Common Stock" has the meaning given in Section 1.06(a).

     "Parent Stockholder Approval" has the meaning given in Section 3.05.

     "Parent Stockholders' Meeting" has the meaning given in Section 6.03.

     "Permitted  Lien" means (i) any Lien for Taxes not yet due or delinquent or
being  contested in good faith by  appropriate  proceedings  for which  adequate
reserves have been  established in accordance with GAAP, (ii) any statutory Lien
arising in the ordinary course of business by operation of Law with respect to a
Liability that is not yet due or delinquent and (iii) any minor  imperfection of
title or similar Lien which  individually  or in the  aggregate  with other such
Liens does not materially  impair the value of the property subject to such Lien
or the use of such property in the conduct of the business of the Company or any
Subsidiary.

     "Person"  means  any  natural  person,  corporation,  general  partnership,
limited partnership,  proprietorship, other business organization, trust, union,
association or Governmental or Regulatory Authority.

     "Representatives" has the meaning ascribed to it in Section 4.02.

     "Registered  Intellectual Property" means all United States,  international
and  foreign:  (i)  patents  and  patent  applications   (including  provisional
applications); (ii) registered trademarks,  applications to register trademarks,
intent-to-use  applications,  or other registrations or applications  related to
trademarks;   (iii)   registered   copyrights  and  applications  for  copyright
registration; and (iv) any other Intellectual Property that is the subject of an
application,  certificate,  filing, registration or other document issued, filed
with, or recorded by any state, government or other public legal authority.

     "SEC" means the United Stated Securities and Exchange Commission.

     "Subsidiary"  means,  with respect to any party,  any  corporation or other
organization,  whether incorporated or unincorporated,  of which more than fifty
percent (50%) of either the equity  interests in, or the voting control of, such
corporation  or  other   organization   is,   directly  or  indirectly   through
Subsidiaries or otherwise, beneficially owned by such party.

     "Superior Offer" has the meaning given in Section 6.02(c).

     "Surviving Corporation" has the meaning given in Section 1.01.

     "Tax   Authority"   means  the  IRS  and  any  other  domestic  or  foreign
governmental authority responsible for the administration of any Taxes.

     "Taxes" means any tax, fee, levy,  charge,  or other amount  assessed by or
payable  to  any  Governmental  or  Regulatory   Authority,   including  without
limitation any interest, penalty, or other amount related thereto.

                                       54
<PAGE>

     "Tax  Returns"  means all  federal,  state,  local and foreign Tax returns,
declarations,  statements, reports, schedules, forms and information returns and
any amendments thereto.

     "Termination Fee" has the meaning given in Section 11.02(b).

     "Voting Agreements" has the meaning given in Recital E.

     (b)  Construction of Certain Terms and Phrases.  Unless the context of this
Agreement otherwise requires, (i) words of any gender include each other gender;
(ii) words  using the  singular  or plural  number  also  include  the plural or
singular number, respectively;  (iii) the terms "hereof," "herein," "hereby" and
derivative  or similar  words  refer to this  entire  Agreement;  (iv) the terms
"Article"  or  "Section"  refer to the  specified  Article  or  Section  of this
Agreement;  and (v) the phrases  "ordinary  course of  business"  and  "ordinary
course of business  consistent  with past  practice"  refer to the  business and
practice of the Company or Parent or a Subsidiary,  as the case may be. Whenever
this Agreement  refers to a number of days,  such number shall refer to calendar
days unless  Business Days are specified.  All accounting  terms used herein and
not expressly  defined  herein shall have the meanings given to them under GAAP,
if applicable.

                                  ARTICLE XIII

                                  MISCELLANEOUS

     13.01 Notices.  All notices,  requests and other  communications  hereunder
must be in writing and will be deemed to have been duly given only if  delivered
personally or by facsimile  transmission or mailed (first class postage prepaid)
to the parties at the following addresses or facsimile numbers:

         If to the Company, addressed to:

                           Galaxy Enterprises, Inc
                           754 East Technology Avenue
                           Orem, Utah  84907
                           Attn:  John J. Poelman
                           Fax: (801) 228-9762
         With a copy to:

                           Parsons Behle & Latimer, P.C.
                           One Utah Center
                           201 South Main Street, Suite 1800
                           P.O. Box 45898
                           Salt Lake City, UT  84145-0898
                           Attn: Brent Christensen, Esq.
                           Fax: (801) 536-6111

                                       55
<PAGE>

         If to Parent and Merger Sub, addressed to:

                           Netgateway, Inc.
                           300 Oceangate, 5th Floor
                           Long Beach, CA 90802
                           Attn: Craig Gatarz, Esq.
                           Fax:  (562) 308-0021

         With a copy to:

                           Nida & Maloney, LLP
                           800 Anacapa Street
                           Santa Barbara, CA  93101
                           Attn: C. Thomas Hopkins, Esq.
                           Fax:  (805) 568-1955

All such  notices,  requests  and  other  communications  will (i) if  delivered
personally  to the  address as provided in this  Section,  be deemed  given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section,  be deemed given upon receipt,  and (iii) if delivered
by mail in the  manner  described  above  to the  address  as  provided  in this
Section,  be deemed given upon receipt (in each case  regardless of whether such
notice, request or other communication is received by any other Person to whom a
copy of such notice,  request or other communication is to be delivered pursuant
to this Section). Any party from time to time may change its address,  facsimile
number or other  information  for the purpose of notices to that party by giving
notice specifying such change to the other party hereto.

     13.02 Entire Agreement. This Agreement supersedes all prior discussions and
agreements  between  the parties  with  respect to the  subject  matter  hereof,
including  without  limitation that certain letter agreement between the parties
dated December 12, 1999 and contains the sole and entire  agreement  between the
parties hereto with respect to the subject matter hereof.

     13.03  Public  Announcements.  At all times at or before the  Closing,  the
Company and Parent will not issue or make any reports, statements or releases to
the public or generally to the employees,  customers, suppliers or other Persons
to whom the Company,  Galaxy Mall and IMI sell goods or provide services or with
whom the  Company,  Galaxy  Mall and IMI  otherwise  have  significant  business
relationships,  with respect to this Agreement or the transactions  contemplated
hereby without the consent of the other, which consent shall not be unreasonably
withheld. If either party is unable to obtain the approval of its public report,
statement or release from the other party and such report,  statement or release
is, in the opinion of legal  counsel to such party,  required by Law in order to
discharge such party's disclosure obligations, then such party may make or issue
the legally required report, statement or release and promptly furnish the other
party with a copy thereof.  Notwithstanding  the  foregoing,  Parent and Company
will attempt to consult with each other, and to the extent  practicable,  agree,
before issuing any press release or otherwise  making any public  statement with
respect  to the  Parent or this  Agreement  and will not  issue  any such  press
release or make any such public statement prior to such consultation,  except as
may be  required  by Law or any  listing  agreement  with a national  securities
exchange  or Nasdaq.  The  parties  have  agreed to the text of the joint  press


                                       56
<PAGE>

release  announcing the signing of this Agreement.  Parent may without obtaining
Company's  approval,  issue one or more press  releases  following  the  Closing
announcing the consummation of the transactions contemplated by this Agreement.

     13.04  Confidentiality.  Each party hereto will hold, and will use its best
efforts to cause its Affiliates,  and their respective  Representatives to hold,
in  strict  confidence  from  any  Person  (other  than any  such  Affiliate  or
Representative),  unless (i) compelled to disclose by judicial or administrative
process (including without limitation in connection with obtaining the necessary
approvals  of  this  Agreement  and  the  transactions  contemplated  hereby  of
Governmental or Regulatory  Authorities) or by other requirements of Law or (ii)
disclosed in an Action or Proceeding brought by a party hereto in pursuit of its
rights  or in  the  exercise  of  its  remedies  hereunder,  all  documents  and
information  concerning the other party or any of its Affiliates furnished to it
by the other party or such other party's Representatives in connection with this
Agreement or the  transactions  contemplated  hereby,  except to the extent that
such documents or information can be shown to have been (a) previously  known by
the party  receiving  such  documents or  information,  (b) in the public domain
(either  prior to or after  the  furnishing  of such  documents  or  information
hereunder) through no fault of such receiving party or (c) later acquired by the
receiving  party from another  source if the  receiving  party is not aware that
such  source  is under an  obligation  to  another  party  hereto  to keep  such
documents and information confidential;  provided that following the Closing the
foregoing  restrictions  will  not  apply  to  Parent's  use  of  documents  and
information concerning the Company furnished by Company hereunder.  In the event
the transactions  contemplated  hereby are not consummated,  upon the request of
the other party, each party hereto will, and will cause its Affiliates and their
respective Representatives to, promptly redeliver or cause to be redelivered all
copies of documents and  information  furnished by the other party in connection
with this Agreement or the transactions contemplated hereby and destroy or cause
to be destroyed all notes,  memoranda,  summaries,  analyses,  compilations  and
other writings  related thereto or based thereon prepared by the party furnished
such documents and information or its Representatives.

     13.05 Expenses.  Except as otherwise  expressly provided in this Agreement,
whether or not the transactions contemplated hereby are consummated,  each party
will pay its own costs and expenses incurred in connection with the negotiation,
execution  and  closing  of this  Agreement  and the  transactions  contemplated
hereby.

     13.06 Waiver.  Any term or condition of this Agreement may be waived at any
time by the party that is entitled to the  benefit  thereof,  but no such waiver
shall be effective unless set forth in a written  instrument duly executed by or
on behalf of the party waiving such term or condition. No waiver by any party of
any term or condition of this Agreement, in any one or more instances,  shall be
deemed to be or construed as a waiver of the same or any other term or condition
of this  Agreement  on any future  occasion.  All  remedies,  either  under this
Agreement  or  by  Law  or  otherwise  afforded,  will  be  cumulative  and  not
alternative.

     13.07  Amendment.  This Agreement may be amended,  supplemented or modified
only by a written instrument duly executed by or on behalf of each party hereto.

     13.08  No  Third  Party  Beneficiary.  The  terms  and  provisions  of this
Agreement  are  intended  solely for the benefit of each party  hereto and their
respective  successors or permitted assigns,  and it is not the intention of the


                                       57
<PAGE>

parties to confer third-party  beneficiary rights upon any other Person,  except
as set forth in Section 5.07.

     13.09 No Assignment;  Binding Effect. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned by any party hereto without the
prior written consent of the other party hereto and any attempt to do so will be
void,  except for assignments and transfers by operation of Law.  Subject to the
preceding sentence, this Agreement is binding upon, inures to the benefit of and
is  enforceable  by the  parties  hereto  and their  respective  successors  and
assigns.

     13.10 Headings.  The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.

     13.11 Consent to Jurisdiction and Service of Process.  Subject to any other
provision  of this  Agreement,  each  party  hereby  irrevocably  submits to the
non-exclusive  jurisdiction  of the  federal  and state  courts  located  in Los
Angeles,  California in any such action,  suit or  proceeding  arising out of or
relating  to this  Agreement  or any of the  transactions  contemplated  hereby,
provided,  however,  that such consent to jurisdiction is solely for the purpose
referred to in this  Section and shall not be deemed to be a general  submission
to the  jurisdiction of said courts or in the State of California other than for
such  purpose.  Each party  hereby  irrevocably  waives,  to the fullest  extent
permitted by Law, any objection  that it may now or hereafter have to the laying
of the venue of any such action,  suit or proceeding brought in such a court and
any claim that any such action,  suit or proceeding  brought in such a court has
been brought in an inconvenient forum.  Nothing herein shall affect the right of
any party to serve  process in any other manner  permitted by Law or to commence
legal   proceedings  or  otherwise  proceed  against  the  other  in  any  other
jurisdiction.

     13.12 Invalid Provisions.  If any provision of this Agreement is held to be
illegal,  invalid or  unenforceable  under any present or future Law, and if the
rights or  obligations  of any party  hereto  under this  Agreement  will not be
materially  and adversely  affected  thereby,  (a) such  provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or  unenforceable  provision had never comprised a part hereof,  and (c)
the remaining  provisions of this Agreement will remain in full force and effect
and will not be affected by the illegal,  invalid or unenforceable  provision or
by its severance herefrom.

     13.13  Governing Law. This Agreement  shall be governed by and construed in
accordance  with the Laws of the State of  California  applicable  to a Contract
executed and performed in such State,  without giving effect to the conflicts of
Laws  principles  thereof,  except to the extent  that the Laws of the States of
Delaware and Nevada shall apply where mandatorily applicable.

     13.14  Counterparts.  This  Agreement  may  be  executed  in  two  or  more
counterparts,  each of  which  shall  be  deemed  an  original  but all of which
together  shall  constitute  one  and the  same  instrument.  Signatures  may be
exchanged by telecopy,  with original  signatures to follow. Each of the parties
hereto agrees that it will be bound by its own telecopied  signature and that it
accepts the telecopied  signatures of the other parties to this  Agreement.  The
original signature pages shall be forwarded to the Parent or its counsel and the
Parent or its counsel will provide all of the parties  hereto with a copy of the
entire Agreement.


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<PAGE>

     IN WITNESS WHEREOF,  this Agreement has been duly executed and delivered by
the duly  authorized  officer  of each party  hereto as of the date first  above
written.

PARENT:                  NETGATEWAY, INC.,
                         a Delaware corporation


                         By:______________________________
                               Name:
                               Title:



MERGER SUB:              GALAXY ACQUISITION CORP.,
                         a Delaware corporation


                         By:_____________________________
                                Name:
                                Title:


COMPANY:                 GALAXY ENTERPRISES, INC.,
                         a Nevada corporation


                         By:_____________________________
                                 John J. Poelman
                                 President and Chief Executive Officer
<PAGE>

                EXHIBITS OMITTED TO AGREEMENT AND PLAN OF MERGER

EXHIBIT   A    ARTICLES   OF   INCORPORATION   OF   THE   COMPANY
EXHIBIT   B    BYLAWS OF THE COMPANY
EXHIBIT   C    FORM OF OPINION OF COUNSEL OF THE   COMPANY
EXHIBIT   D    FORM   OF   EMPLOYMENT   AGREEMENT
EXHIBIT   E    FORM OF AFFILIATE LOCK-UP AGREEMENT
EXHIBIT   F    FORM OF OPINION OF  COUNSEL  OF  PARENT
EXHIBIT   G    FORM  OF  VOTING  AGREEMENT
EXHIBIT   H    FORM OF OPTION AGREEMENT