<PAGE>

                                                    EXHIBIT  2.2


                 AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

                                     AMONG:

                               HOME DIRECTOR, INC.
                             A DELAWARE CORPORATION

                              DI ACQUISITION, INC.
                             A DELAWARE CORPORATION

                             DIGITAL INTERIORS, INC.
                            A CALIFORNIA CORPORATION

                                       AND

                                DONALD B. WITMER
                             AS STOCKHOLDERS' AGENT

                          DATED AS OF OCTOBER 24, 2000



<PAGE>
                               AGREEMENT AND PLAN
                          OF MERGER AND REORGANIZATION

          THIS  AGREEMENT AND PLAN OF MERGER AND REORGANIZATION ("AGREEMENT") is
made  and entered into as of October 24, 2000, by and among: HOME DIRECTOR, INC.
a  Delaware corporation ("PARENT"); DI ACQUISITION, INC., a Delaware corporation
("MERGER  SUB"); DIGITAL INTERIORS, INC. a California corporation (together with
all  predecessor  Entities  (as  defined below) and predecessor individuals, the
"COMPANY");  and  DONALD  B.  WITMER  AS STOCKHOLDERS' AGENT (as defined below).
Certain other capitalized terms used in this Agreement are defined in EXHIBIT A.

                                    RECITALS

     A.     Parent,  Merger  Sub  and  the  Company intend to effect a merger of
Merger  Sub  into  the  Company  in accordance with this Agreement, the Delaware
General  Corporation  Law  and  the California Corporations Code (the "MERGER").
Upon  the  consummation  of  the Merger, Merger Sub will cease to exist, and the
Company  will  become  a  wholly  owned  subsidiary  of  Parent.
B.     It  is  intended  that  the  Merger  qualify as a tax-free reorganization
within  the  meaning  of Section 368(a) of the Internal Revenue Code of 1986, as
amended  (the  "CODE").

C.     This Agreement and the Merger have been approved by the respective boards
of  directors  of  Parent,  Merger  Sub  and  the  Company.

D.     Within  5  days after the execution of this Agreement, and as a condition
and inducement to Parent's willingness to enter into this Agreement, each of the
KEY  STOCKHOLDERS  (as defined in EXHIBIT A) shall enter into a Voting Agreement
and  Irrevocable  Proxy  substantially in the form attached hereto as EXHIBIT B.

                                    AGREEMENT

     The  parties  to  this  Agreement  agree  as  follows:

1.     DESCRIPTION  OF  TRANSACTION

     1.1     MERGER  OF  MERGER SUB INTO THE COMPANY. Upon the terms and subject
to the conditions set forth in this Agreement, at the Effective Time (as defined
in  Section  1.3), Merger Sub shall be merged with and into the Company, and the
separate  existence  of Merger Sub shall cease. The Company will continue as the
surviving  corporation  in  the  Merger  (the  "SURVIVING  CORPORATION").

1.2     EFFECT  OF  THE  MERGER.  The Merger shall have the effects set forth in
this  Agreement  and  in  the  applicable  provisions  of  the  Delaware General
Corporation  Law  (the  "DGCL")  and  the  California  Corporations  Code  (the
"CALIFORNIA  CODE").
<PAGE>

1.3     CLOSING;  EFFECTIVE  TIME.  The  consummation  of  the  transactions
contemplated  by  this Agreement (the "CLOSING") shall take place at the offices
of  Gray,  Cary,  Ware  &  Freidenrich,  LLP,  400  Hamilton  Avenue, Palo Alto,
California  94301 at 10:00 a.m. on the first business day after the stockholders
of  the Company approve the Merger. The date on which the Closing actually takes
place  is referred to in this Agreement as the "CLOSING DATE." Contemporaneously
with  the  Closing,  properly  executed Certificates of Merger conforming to the
requirements  of  the  DGCL  and  the  California  Code  shall be filed with the
Secretary  of  State  of the State of Delaware and the Secretary of State of the
State  of  California.  The  Merger  shall  become  effective  at  the time such
Certificates  of Merger are filed with and accepted by the Secretary of State of
the State of Delaware and the Secretary of State of the State of California (the
"EFFECTIVE  TIME").

1.4     CERTIFICATE  OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS. Unless
otherwise  determined  by  Parent  prior  to  the  Effective  Time:

(A)          the Certificate of Incorporation of the Surviving Corporation shall
be amended and restated as of the Effective Time in a form acceptable to Parent;

(B)     the Bylaws of the Surviving Corporation shall be amended and restated as
of  the  Effective  Time  to  conform  to  the Bylaws of Merger Sub as in effect
immediately  prior  to  the  Effective  Time;  and

(C)     the  directors  and  officers  of  the Surviving Corporation immediately
after  the  Effective  Time  shall  be  the individuals identified on EXHIBIT C.

     1.5     INDEBTEDNESS.  At the Closing, Parent shall pay the indebtedness of
the  Company  listed  on  Exhibit  D.

     1.6     CONVERSION  OF  SHARES.

     (A)     Subject  to Section 1.9(c), at the Effective Time, by virtue of the
Merger  and  without  any  further action on the part of Parent, Merger Sub, the
Company  or  any  stockholder of the Company each share of the Company Stock (as
defined  below)  outstanding  immediately  prior  to the Effective Time shall be
converted into the right to receive shares of the Common Stock (par value $0.001
per  share)  of  Parent ("Parent Common Stock") valued at $1 per share; provided
that,  the  number of shares of Parent Common Stock issued under Section 1.6(a),
when  added to the shares of Parent Common Stock issuable to: (x) the holders of
Company  Options  (as defined below) pursuant to Section 1.7; (y) the holders of
the  Company  Warrants  (as  defined below) pursuant to Section 3.9; and (z) the
holders  of  the Company Promissory Notes (as defined below) pursuant to Section
3.9;  shall  equal 14,000,000 shares, less on a dollar for dollar basis: (i) the
amount  of  the indebtedness listed on EXHIBIT D; (ii) the outstanding principal
amount  and  accrued  interest  as of the Effective Time of the Promissory Note,
dated  September  14,  2000,  made and delivered by the Company to Parent in the
original  principal  amount  of $500,000; (iii) the outstanding principal amount
and  accrued interest as of the Effective Time of any additional working capital
loans  made  by Parent or any other individual or Entity to the Company prior to
the  Closing;  (iv)  the  amount of any payments made with respect to Dissenting
Shares  pursuant to section 1.11; (v) the amount of legal fees and expenses owed

                                        2
<PAGE>
by  the  Company to Gray, Cary, Ware & Friedenrich, LLP through the Closing; and
(vii)  the  amount  of  any payments, fees or expenses (including legal fees and
expenses)  made  or  owed  by  the  Company with respect to Druml Litigation (as
defined  below);  as  follows:

     (I)     the holders of shares of the Series A Preferred Stock (no par value
per share) of the Company (the "COMPANY SERIES A STOCK") outstanding immediately
prior  to the Effective Time, pari pasu with the holders of the Company Series B
Stock  (as  defined  below)  and  the Company Series C Stock (as defined below),
shall be converted into the right to receive a pro rata portion of the shares of
Parent  Common  Stock  that  are  issuable  at the Closing pursuant to the first
paragraph  of  this  Section 1.6(a) based upon a liquidation preference of $1.00
per  share  and shall participate in the distribution of shares of Parent Common
Stock  to  the  holders  of  Company Common Stock (as defined below) pursuant to
Section  1.6(a)(iv);

(II)     the holders of shares of the Series B Preferred Stock (no par value per
share)  of  the  Company  (the "COMPANY SERIES B STOCK") outstanding immediately
prior  to the Effective Time, pari pasu with the holders of the Company Series A
Stock  and  the  Company  Series  C  Stock, shall be converted into the right to
receive  a  pro-rata  portion  of  the  shares  of  Parent Common Stock that are
issuable  at  the Closing pursuant to the first paragraph of this Section 1.6(a)
based  upon a liquidation preference of $1.00 per share and shall participate in
the  distribution  of  shares  of  Parent Common Stock to the holders of Company
Common  Stock  (as  defined  below)  pursuant  to  Section  1  .6(a)(iv);

(III)     the  holders  of  shares of the Series C Preferred Stock (no par value
per share) of the Company (the "COMPANY SERIES C STOCK") outstanding immediately
prior  to the Effective Time, pari pasu with the holders of the Company Series A
Stock  and  the  Company  Series  C  Stock, shall be converted into the right to
receive  a  pro-rata  portion  of  the  shares  of  Parent Common Stock that are
issuable  at  the Closing pursuant to the first paragraph of this Section 1.6(a)
based  upon a liquidation preference of $2.00 per share and shall participate in
the  distribution  of  shares  of  Parent Common Stock to the holders of Company
Common  Stock  pursuant  to  Section  1  .6(a)(iv);

(IV)     after the distributions of shares of Parent Common Stock to the holders
of  Company  Series  A Stock, Company Series B Stock, and Company Series C Stock
pursuant  to  Sections  l.6(a)(i),  l.6(a)(ii),  and 1.6(a)(iii), the holders of
shares of the Common Stock (no par value per share) of the Company (the "COMPANY
COMMON  STOCK")  outstanding immediately prior to the Effective Time, along with
(on  a  pari  pasu basis) the holders of the Company Series A Stock, the Company
Series  B  Stock,  and  the  Company Series C Stock, shall be converted into the
right  to  receive  a  pro rata portion of the remaining shares of Parent Common
Stock  that  are issuable at the Closing pursuant to the first paragraph of this
Section  1.6  (a);

(V)     each  share  of the Common Stock (par value $0.00 1 per share) of Merger
Sub  outstanding immediately prior to the Effective Time shall be converted into
one  share  of  Common  Stock  of  the  Surviving  Corporation;  and

(VI)     all calculations under this Section 1.6(a) shall be rounded up or down,
as  the  case  may  be,  to  the  nearest  whole  share of Company Common Stock.

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<PAGE>
     (B)     If Parent at any time or from time to time between the date of this
Agreement  and the Effective Time declares or pays any dividend on Parent Common
Stock  payable  in  Parent Common Stock or in any right to acquire Parent Common
Stock, or effects a subdivision of the outstanding shares of Parent Common Stock
into  a  greater  number  of  shares of Parent Common Stock (by stock dividends,
combinations,  splits,  recapitalizations  and  the  like),  or in the event the
outstanding  shares of Parent Common Stock shall be combined or consolidated, by
reclassification  or  otherwise, into a lesser number of shares of Parent Common
Stock,  then  the  number  of shares of Parent Common Stock issuable pursuant to
Sections  16(a)(i),  1.6(a)(ii),  1.6(a)(iii),  and  1.6(a)(iv)  shall  be
appropriately  adjusted.

(C)     If  any  shares of Company Common Stock, Company Series A Stock, Company
Series  B  Stock, or Company Series C 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 as listed on Part 2.10 of the
Company  Disclosure  Schedule,  then the shares of Parent Common Stock issued in
exchange  for  such  shares  of  Company  Common  Stock, Company Series A Stock,
Company  Series  B Stock, or Company Series C Stock will also be unvested and/or
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.

(D)     A  portion  of  the  shares  of Parent Common Stock issued in the Merger
shall  be  delivered  into  escrow  and held as specified in Section 1.9 hereof.

     1.7     EMPLOYEE  STOCK  OPTIONS.  Prior to the Effective Time, the Company
shall permit the exercise of vested Company Options (as defined below) by either
the  payment  of  the exercise price in cash or through a cashless net exercise,
and  in no event shall the Company permit the exercise of vested Company Options
by  a  promissory  note.  At  the Effective Time, each stock option that is then
outstanding  under  the  Company's  1998  Stock  Option  Plan, whether vested or
unvested  (a  "COMPANY  OPTION"),  shall be converted into an option to purchase
shares  of  Parent Common Stock. All rights with respect to Company Common Stock
under  outstanding  Company  Options  shall  thereupon  be  converted into stock
options  with  respect  to  Parent Common Stock. Accordingly, from and after the
Effective  Time,  (a)  each Company Option may be exercised solely for shares of
Parent  Common Stock, (b) the number of shares of Parent Common Stock subject to
each  such  converted  Company  Option shall be equal to the number of shares of
Parent Stock that the holder of such Company Option would have received pursuant
to  Section  1.6(a)(i)  hereof  if such Company Option had been fully vested and
exercised  immediately  prior  to the Effective Time, rounded up or down, as the
case  may  be, to the nearest whole number of shares of Parent Common Stock, (c)
the  per share exercise price for the Parent Common Stock issuable upon exercise
of  each such converted Company Option shall be $1 per share, (d) each converted
Company  Option designated an "incentive stock option" as defined in Section 422
of the Code ("ISO") immediately prior to the Effective Time shall remain an ISO,
(e)  each  converted Company Option shall be subject to the terms and conditions
of, and the restrictions on transfer set forth in, Parent's 1999 Stock Incentive
Plan,  and  (f)  all restrictions on the exercise of each such converted Company
Option as set forth in each option holder's employment agreement or stock option
agreement or pursuant to the Company's 1998 Stock Option Plan, shall continue in
full  force and effect, and the term, exercisability, vesting schedule and other
provisions  of  such  Company Option shall otherwise remain unchanged; provided,
however,  that  each such converted Company Option shall, in accordance with its
terms,  be  subject  to  further  adjustment as appropriate to reflect any stock

                                        4
<PAGE>
split,  reverse  stock  split, stock dividend, recapitalization or other similar
transaction  effected by Parent after the Effective Time. The Company and Parent
shall  take  all  action  that  may be necessary (under the Company's 1998 Stock
Option  Plan  and  otherwise)  to effectuate the provisions of this Section 1.7.
Each  holder  of  a  Company  Option  will  receive credit for time served as an
employee of the Company for the purposes of the vesting schedule of such Company
Option  converted by the Parent. Following the Closing, Parent will send to each
holder  of  a  converted  Company  Option a written notice setting forth (i) the
number of shares of Parent Common Stock issuable upon exercise of such converted
Company  Option  and  (ii)  the  exercise price per share of Parent Common Stock
issuable  upon  the  exercise  of  such  converted  Company  Option.

1.8     CLOSING  OF THE COMPANY'S TRANSFER BOOKS. At the Effective Time, holders
of  certificates  representing  shares of the Company's Stock (as defined below)
that  were  outstanding  immediately  prior to the Effective Time shall cease to
have  any rights as stockholders of the Company, and the stock transfer books of
the  Company  shall  be  closed with respect to all shares of such Company Stock
outstanding  immediately prior to the Effective Time. No further transfer of any
such  shares  of  the Company's Stock shall be made on such stock transfer books
after  the  Effective  Time.  If,  after the Effective Time, a valid certificate
previously  representing  any  of such shares of the Company's Stock (a "COMPANY
STOCK  CERTIFICATE")  is  presented to the Surviving Corporation or Parent, such
Company  Stock  Certificate shall be canceled and shall be exchanged as provided
in  Section  1.9.

     1.9     EXCHANGE  OF  CERTIFICATES;  ESCROW  SHARES.

     (A)  (I)     American  Stock and Transfer & Trust Co. shall act as exchange
agent  in  the Merger (the "EXCHANGE AGENT"). Promptly after the Effective Time,
Parent  shall  deposit  with  the  Exchange  Agent certificates representing the
shares of Parent Common Stock issuable pursuant to this Section 1. The shares of
Parent  Common  Stock  so  deposited  with the Exchange Agent, together with any
dividends  or  distributions received by the Exchange Agent with respect to such
shares,  are  referred  to  collectively  as  the  "EXCHANGE  FUND."

     (II)     As  soon  as  reasonably practicable after the Effective Time, the
Exchange  Agent will mail to the Merger Stockholders (x) a letter of transmittal
in  customary  form  and  containing  such  provisions  as Parent may reasonably
specify  (including  a  provision  confirming  that  delivery  of  Company Stock
Certificates  shall  be  effected,  and  risk of loss and title to Company Stock
Certificates  shall  pass, only upon delivery of such Company Stock Certificates
to  the Exchange Agent), and (y) instructions for use in effecting the surrender
of  Company  Stock Certificates in exchange for certificates representing Parent
Common  Stock.  Upon  surrender  of  a Company Stock Certificate to the Exchange
Agent for exchange, together with a duly executed letter of transmittal and such
other  documents  as may be reasonably required by the Exchange Agent or Parent,
(1)  the  Merger  Stockholder  holding  such  Company Stock Certificate shall be
entitled  to receive in exchange therefore a certificate representing 70% of the
number  of  whole shares of Parent Common Stock that such Merger Stockholder has
the  right  to  receive  pursuant  to the provisions of Section 1.6, and (2) the
Company  Stock  Certificate so surrendered shall be canceled. The Exchange Agent

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<PAGE>
shall  thereupon  also deliver to the escrow agent under the Escrow Agreement in
the form of EXHIBIT E hereto (the "ESCROW AGREEMENT") a certificate representing
30%  of  the  number  of  whole  shares  of Parent Common Stock that such Merger
Stockholder  has the right to receive pursuant to the provisions of Section 1.6.
Until  surrendered  as  contemplated  by  this  Section  1.9, each Company Stock
Certificate  shall  be  deemed,  from and after the Effective Time, to represent
only  the  right  to  receive  shares  of Parent Common Stock as contemplated by
Section  1.  II  any  Company  Stock Certificate shall have been lost, stolen or
destroyed,  Parent  may,  in  its discretion and as a condition precedent to the
issuance  of any certificate representing Parent Common Stock, require the owner
of  such  lost,  stolen  or  destroyed  Company  Stock Certificate to provide an
appropriate  affidavit  and  to  deliver  a  bond  (in  such  sum  as Parent may
reasonably  direct)  as indemnity against any claim that may be made against the
Exchange Agent, Parent or the Surviving Corporation with respect to such Company
Stock  Certificate.

     (B)     No  dividends  or other distributions declared or made with respect
to Parent Common Stock with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Company Stock Certificate with respect to the
shares  of  Parent Common Stock represented thereby, and no cash payment in lieu
of  any  fractional  share  shall  be paid to any such holder, until such holder
surrenders  such  Company  Stock Certificate in accordance with this Section 1.9
(at  which  time such holder shall be entitled to receive all such dividends and
distributions  and  such  cash  payment).

(C)     No  fractional  shares  of  Parent  Common  Stock  shall  be  issued  in
connection  with  the Merger, and no certificates for any such fractional shares
shall  be  issued.

(D)     Any  portion  of the Exchange Fund that remains undistributed to holders
of  Company  Stock  Certificates as of the date 180 days after the date on which
the  Merger  becomes effective shall be delivered to Parent upon demand, and any
holders of Company Stock Certificates who have not theretofore surrendered their
Company  Stock Certificates in accordance with this Section 1.9 shall thereafter
look only to Parent for satisfaction of their claims for Parent Common Stock and
any  dividends  or  distributions  with  respect  to  Parent  Common  Stock.

(E)     Each  of  the Exchange Agent, Parent and the Surviving Corporation shall
be  entitled  to deduct and withhold from any consideration payable or otherwise
deliverable  to  any  holder  or  former  holder of capital stock of the Company
pursuant  to  this Agreement such amounts as Parent or the Surviving Corporation
is  required  to  deduct  or  withhold  therefrom  under  the  Code or under any
provision  of state, local or foreign tax law. 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.

(F)     Neither  Parent  nor  the  Surviving  Corporation shall be liable to any
holder or former holder of capital stock of the Company for any shares of Parent
Common  Stock  (or  dividends or distributions with respect thereto), or for any
cash  amounts,  delivered  to  any  public  official  pursuant to any applicable
abandoned  property,  escheat  or  similar  law.

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<PAGE>
     1.10     EARN  OUT.  In  addition to the shares of Parent Common Stock that
are  issuable  to  the  Merger  Stockholders pursuant to Section 1.6, the Parent
shall  issue to the Merger Stockholders additional shares of Parent Common Stock
having  an  aggregate  Fair  Market  Value  (as  defined  below)  not  to exceed
$15,000,000,  in  accordance  with  the  following  provisions:

     (A)     If  the  Gross  Revenue  (as  defined  below)  of  the  Surviving
Corporation  is  equal to at least 50% of the Gross Revenue Milestones set forth
on  the table below for the applicable Measurement Period set forth on the table
below,  then  the  Parent  shall issue to the Merger Stockholders, in accordance
with  each  Merger  Stockholder's  Pro-Rata  Allocation (as defined below), such
number  of  shares of Parent Common Stock having an aggregate Fair Market Value,
that  is  equal  to  such  percentage  (which  may  be greater than 100%) of the
applicable  Gross  Revenue  Milestones  times the Earn Out Value associated with
such  Measurement  Period as set forth on the table below; provided that: (i) if
the  Gross  Revenue  of  the Surviving Corporation is less than 50% of the Gross
Revenue  Milestone  for a Measurement Period, the Earn Out Value as set forth on
the  table  below for such Measurement Period is not carried forward or added to
the  Earn Out Value for any subsequent Measurement Period; (ii) if the foregoing
calculation  results  in  the issuance of shares of Parent Common Stock having a
Fair  Market  Value greater than the Earn Out Value for such Measurement Period,
then  the  difference  will  reduce  the Earn Out Value for the last Measurement
Period  set  forth on the table below; and (iii) the aggregate Fair Market Value
of  the shares of Parent Common Stock issued pursuant to this Section 1.10 shall
not  exceed  000.

<TABLE>
<CAPTION>



<S>                 <C>                 <C>
                         GROSS
MEASUREMENT PERIOD  REVENUE MILESTONE   EARNOUT VALUE
------------------  ------------------  --------------
10/1/00 - 12/31/00  $        2,700,000  $    1,600,000
1/1/01 - 12/31/01.  $       50,000,000  $    6,700,000
1/1/02 - 12/31/02.  $      164,000,000  $    6,700,000
</TABLE>



     (B)     The  gross  revenue  of  the  Surviving  Corporation  (the  "Gross
Revenue")  shall  be  all  revenue  derived  by  the  Surviving Corporation from
installation  services,  product  sales,  consulting  services,  program/project
management  and  reoccurring  revenue  that  are  undertaken  separately  by the
Surviving  Corporation  or  managed  by  the  Surviving Corporation on behalf of
Parent  that  is collected with 120 days of the Applicable Measurement Period as
set  forth  on  the  table  above.  Notwithstanding  the foregoing, if a Company
contract  provides  for  payment  upon  the  achievement  of certain performance
milestones,  then revenue receivable pursuant to such contract shall be included
in  Gross  Revenue  as  such  revenue is recognized in accordance with generally
accepted  accounting principles, less appropriate reserves for doubtful accounts
and  without  regard to the 120 day collection requirement of the first sentence
of  this  Section 1.10(b). All books, records, accounts and financial statements
of the Surviving Corporation shall be maintained and prepared in accordance with
generally  accepted  accounting  principles  applied  on a consistent basis. The
Gross  Revenue  of  the Surviving Corporation shall be audited annually by Ernst
&Young, LLP ("E&Y") and such audit shall be completed within 120 days of the end
of each Measurement Period as set forth on the table above. On or before each of
December 1, 2000 and December 1, 2001, the Surviving Corporation shall submit to
Parent  a  Business  Plan  (including  a  plan for capital expenditures) for the

                                        7
<PAGE>
Surviving  Corporation for the subsequent fiscal year. On or before December 31,
2000 and December 31, 2001, as the case may be, the Board of Directors of Parent
shall  approve  each  such  Business  Plan  with  such  changes  as the Board of
Directors of Parent may determine within its sole discretion taking into account
the  overall  strategic  business  plan  of  Parent.

(C)     Within  130 days after each Measurement Period as set forth on the table
above,  Parent shall cause E&Y to deliver to Parent its calculation of the Gross
Revenue  of  the  Surviving  Corporation for such Measurement Period. Within 150
days  after  each  Measurement Period, the Parent shall deliver to Stockholders'
Agent  a  statement  (the "EARN-OUT STATEMENT") of: (i) E&Y's calculation of the
Gross Revenue of the Surviving Corporation for such Measurement Period; (ii) the
then  current Fair Market Value of the Parent Common Stock; and (iii) the number
of  additional  shares  of Parent Common Stock, if any, that are issuable to the
Merger  Stockholders.

     If  the  Merger  Stockholders  dispute  the  Earn-Out  Statement,  the
Stockholders' Agent shall notify Parent in writing (the "NOTICE OF DISPUTE") not
more  than  30  days  after  the  date that the Stockholders' Agent received the
Earn-Out  Statement,  specifying  in reasonable detail the points of dispute. If
the  Stockholders'  Agent  fails to deliver a Notice of Dispute to Parent within
such 30-day period, the Stockholders' Agent shall be deemed to have accepted the
Earn-Out Statement. Upon receipt of the Notice of Dispute, Parent shall promptly
consult with the Stockholders' Agent with respect to such points of disagreement
in  an  effort to resolve the dispute. If any such dispute cannot be resolved by
Parent  and  the  Stockholders'  Agent  within 10 days after Parent receives the
Notice of Dispute, they shall refer the dispute to a mutually acceptable "Big 5"
accounting  firm  (the  "ACCOUNTANT")  as an arbitrator to finally determine, as
soon  as  practicable, and in any event within 30 days after such reference, all
points  of  disagreement  regarding  the  Earn-Out  Statement. If Parent and the
Stockholders'  Agent are unable to agree on a firm to serve as the Accountant, a
firm  (other  than  E&Y)  shall  be  selected by lot from the "Big 5" accounting
firms.  For  purposes  of such arbitration, the Stockholders' Agent shall submit
proposed  changes  to  the  Earn-Out Statement to the Accountant. The Accountant
shall conduct the arbitration under such procedures as the parties may agree or,
failing  such agreement, under the rules of the Judicial Arbitration & Mediation
Services,  Inc.  ("JAMS").  The  fees and expenses of the arbitration and of the
Accountant incurred in connection with the arbitration of the Earn-Out Statement
shall  be allocated between Parent and the Merger Stockholders by the Accountant
in  proportion  to  the  extent  that either of them did not prevail on items in
dispute  on  the  Earn-Out Statement; provided, that such fees and expenses will
not  include,  so  long as a party complies with the procedures of this Section,
the other party's outside counsel and accounting fees. All determinations by the
Accountant  shall be final, conclusive, and binding with respect to the Earn-Out
Statement  and  the  allocation  of  arbitration  fees  and  expenses.

     (D)     Upon the consummation of an Acquisition Transaction with respect to
Parent or an underwritten initial public offering of shares of the Parent Common
Stock  pursuant  to  the  Securities  Act,  the Parent shall issue to the Merger
Stockholders  such number of shares of Common Stock as is equal to the remaining
Revenue  Milestones divided by the per share value paid for the shares of parent
Common Stock in such Acquisition Transaction or the price per share at which the
shares  of  Parent  Common Stock were issued in such initial public offering, as
the  case  may  be.

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<PAGE>
(E)     Promptly after each final determination that additional shares of Parent
Common  Stock  are  issuable to the Merger Stockholders pursuant to this Section
1.10,  Parent  shall  deposit  with the Exchange Agent certificates representing
such  shares  of  Parent  Common Stock. The Exchange Agent shall distribute such
shares  of Parent Common Stock to the Merger Stockholders in accordance with the
written  instructions  of  the  Stockholders  Agent.

     1.11     DISSENTING  SHARES.  Notwithstanding  anything  to  the  contrary
contained  in this Agreement, any shares ("DISSENTING SHARES") of Company Common
Stock  that are outstanding immediately prior to the Effective Time and that are
held by any Person who is entitled to demand and properly demands payment of the
fair  value  of  such  Dissenting  Shares  pursuant  to, and who complies in all
respects  with,  Section  1300  et. seq. of the California Code ("Section 1300")
shall  not  be converted into or be exchangeable for the right to receive Parent
Common  Stock  in  accordance  with  Section  1.6,  but  rather  the  holders of
Dissenting  Shares  shall  be  entitled  to  payment  of  the fair value of such
Dissenting  Shares  in  accordance with Section 1300; provided, however, that if
any such holder shall fail to perfect or otherwise shall waive, withdraw or lose
the  right  to  receive  payment  of  the fair value of such holder's Dissenting
Shares  under  Section  1300,  then the right of such holder to be paid the fair
value  of such holder's Dissenting Shares shall cease and such Dissenting Shares
shall  be  deemed  to  have been converted as of the Effective Time into, and to
have  become exchangeable solely for the right to receive Parent Common Stock in
accordance  with Section 1.6. The Company shall give prompt notice to Parent and
Merger  Sub  of any demands received by the Company for payment of fair value of
any shares of Company Common Stock (including a copy of each demand), and Parent
and  Merger  Sub  shall  have  the  right  to  participate  in  and  direct  all
negotiations  and  proceedings  with  respect  to  such  demands.  Prior  to the
Effective  Time,  the  Company  shall  not, without the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any such
demands  or agree to do any of the foregoing. From and after the Effective Time,
Parent  shall be responsible for all payments with respect to Dissenting Shares,
including  without  limitation,  all  expense  associated  with negotiations and
proceedings  with  respect  to  demands  for  appraisal  required under Delaware
General  Corporation  Law.

1.12     TAX  CONSEQUENCES.  For  federal  income  tax  purposes,  the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Code.  The  parties  to this Agreement hereby 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  Treasury  Regulations.

1.13     FURTHER  ACTION.  If, at any time after the Effective Time, any further
action  is  determined  by  Parent to be necessary or desirable to carry out the
purposes  of  this Agreement or to vest the Surviving Corporation or Parent with
full right, title and possession of and to all rights and property of Merger Sub
and  the  Company,  the  officers and directors of the Surviving Corporation and
Parent  shall be fully authorized (in the name of Merger Sub, in the name of the
Company  and  otherwise)  to  take  such  action.

2.     REPRESENTATIONS  AND  WARRANTIES  OF  THE  COMPANY

     The  Company  represents  and  warrants,  to  and  for  the  benefit of the
Indemnitees,  subject  to  such  exceptions as are specifically disclosed in the
Company  Disclosure  Schedule (referencing the appropriate section and paragraph

                                        9
<PAGE>
numbers)  supplied  by the Company to Parent (the "Company Disclosure Schedule")
and  dated the date hereof, that on the date hereof and as of the Effective Time
as  though  made  at  the  Effective  Time  as  follows  (provided,  that  the
representations  and  warranties  made  as  of a specified date will be true and
correct  as  of  such  date):

     2.1     DUE  ORGANIZATION;  SUBSIDIARIES;  ETC.

     (A)     The Company has been duly organized, and is validly existing and in
good  standing  under  the  laws  of  the  State  of  California, has full power
(corporate  and  other) and authority: (i) to conduct its business in the manner
in  which  its  business  is  currently being conducted; (ii) to own and use its
assets in the manner in which its assets are currently owned and used; and (iii)
to  perform  its  obligations under all Material Contracts (as defined below) by
which  it  is  bound.

     (B)     Except  as  set  forth  in Part 2.1(b)(i) of the Company Disclosure
Schedule,  the  Company  has  not conducted, and is not conducting, any business
under  or  otherwise  used,  or  is  otherwise  using, for any purpose or in any
jurisdiction,  any fictitious name, assumed name, trade name or other name. Part
2.1(b)(ii) of the Company Disclosure Schedule lists all predecessor Entities and
predecessor  individuals  of  the  Company.

     (C)     The  Company  is qualified to do business as a foreign corporation,
and  is in good standing, under the laws of all jurisdictions where the property
owned,  leased  or  operated  by  it or the nature of its business requires such
qualification  and  where  the  failure to be so qualified would have a Material
Adverse  Effect on the Company. The Company is in possession of and operating in
compliance with all Governmental Authorizations that are material to the conduct
of  its  business,  all  of  which  are  valid  and  in  full  force and effect.

     (D)     Part  2.1(d)  of  the  Company  Disclosure Schedule accurately sets
forth (i) the names of the members of the Company's board of directors, (ii) the
names  of the members of each committee of the Company's board of directors, and
(iii)  the  names  and  titles  of  the  Company's  officers.

     (E)     The Company has no subsidiaries (as defined below). The Company has
no  equity  or other interest in any Entity. As used in this Agreement, the word
"SUBSIDIARY"  means  any Entity of which the Company directly or indirectly owns
50%  or  more of the equity or that the Company directly or indirectly controls.
The Company has not agreed and is not obligated to make any future investment in
or capital contribution to any Entity. Except as set forth in Part 2.1(e) of the
Company  Disclosure  Schedule,  the  Company  has  not  guaranteed  and  is  not
responsible  or  liable  for  any  obligation  of  any  Entity.

     2.2     CERTIFICATE  OF  INCORPORATION  AND  BYLAWS; RECORDS. Except as set
forth  on  Part  2.2(a)  of  the  Company  Disclosure  Schedule, the Company has
delivered  to  Parent  accurate  and  complete  copies  of:  (1) its Articles of
Incorporation  and  Bylaws, including all amendments thereto (the "INCORPORATION
DOCUMENTS"); (2) the stock records of the Company; and (3) the minutes and other
records  of  the  meetings and other proceedings (including any actions taken by
written  consent  or otherwise without a meeting) of the stockholders, the board
of  directors and all committees of the board of directors of the Company. There
have  been no formal meetings or other proceedings of the stockholders, board of
directors,  or  any  committee of the board of directors of the Company that are

                                       10
<PAGE>
not  fully  reflected  in  such  minutes  or  other  records.  There has been no
violation  of  any  of  the  provisions  of  the  Incorporation Documents of the
Company,  and  the  Company has not taken any action that is inconsistent in any
material  respect  with  any  resolution  adopted by the Company's stockholders,
board  of  directors  or  any committee of the Company's board of directors. The
books  of  account, stock records, minute books and other records of the Company
are  complete  and  have  been  maintained  in  accordance with prudent business
practices.

     2.3     CAPITALIZATION,  ETC.

     (A)     The  authorized capital stock of the Company consists of 33,000,000
shares of Common Stock (no par value per share), of which 12,861,496 shares have
been  issued  and  are  outstanding  as of the date of this Agreement, 1,142,295
shares  of  Series  A Preferred Stock (no par value per share), of which 767,295
shares  have  been  issued and are outstanding as of the date of this Agreement,
912,500  shares  of  Series B Preferred Stock (no par value per share), of which
855,000  shares  have  been  issued  and  are outstanding as of the date of this
Agreement  and  10,025,000  shares of Series C Preferred Stock (no par value per
share), of which 1,373,750 shares have been issued and are outstanding as of the
date  of  this  Agreement  (the  Company's  Series  A  Preferred Stock, Series B
Preferred  Stock  and Series C Preferred Stock shall be collectively referred to
herein  as  the  "COMPANY PREFERRED STOCK" and, together with the Company Common
Stock,  shall  be referred to as the "COMPANY STOCK"). Each outstanding share of
Company  Preferred  Stock is convertible into one share of Company Common Stock.
All  of  the  outstanding  shares of Company Stock have been duly authorized and
validly  issued,  and  are fully paid and non-assessable. As of the date of this
Agreement, the outstanding shares of Company Stock are held by the Persons, with
the  addresses  of  record  and  in  the amounts set forth in Part 2.3(a) of the
Company Disclosure Schedule. Part 2.3(a) of the Company Disclosure Schedule also
provides  an  accurate  and complete description of the terms of each repurchase
option  which is held by the Company and to which any of such shares is subject.

     (B)     The  Company  has reserved 6,137,499 shares of Company Common Stock
for  issuance  under  its  1998  Stock Option Plan, of which options to purchase
3,239,894  shares  are outstanding as of the date of this Agreement. Part 2.3(b)
of  the  Company Disclosure Schedule accurately sets forth, with respect to each
Company  Option  that  is  outstanding as of the date of this Agreement: (i) the
name  of  the  holder of such Company Option; (ii) the total number of shares of
Company  Common  Stock that are subject to such Company Option and the number of
shares  of  Company  Common  Stock  with respect to which such Company Option is
immediately exercisable; (iii) the date on which such Company Option was granted
and  the term of such Company Option; (iv) the vesting schedule for such Company
Option;  (v)  the  exercise  price per share of Company Common Stock purchasable
under  such  Company  Option;  and  (vi)  whether  such  Company Option has been
designated  an  ISO.

     (C)          Part  2.3(c)(i)  of the Company Disclosure Schedule accurately
sets forth, with respect to each convertible debenture issued to any Person: (A)
the  name  of  the holder of such convertible debenture; (B) the total number of
shares  of Company Stock that are subject to such convertible debenture; (C) the
number  of  shares  of  Company  Stock  with  respect  to which such convertible

                                       11
<PAGE>
debenture  is  immediately  exercisable  and  (D)  the  term of such convertible
debenture.

     (II)     Part 2.3(c)(ii) of the Company Disclosure Schedule accurately sets
forth,  with  respect  to each warrant issued to any Person: (A) the name of the
holder of such warrant; (B) the total number of shares of Company Stock that are
subject  to such warrant; (C) the number of shares of Company Stock with respect
to  which  such  warrant  is  immediately  exercisable; and (D) the term of such
warrant.

     (D)     Except  as  set  forth  in  Parts 2.3(b), 2.3(c), and 2.3(d) of the
Company  Disclosure Schedule, there is no: (i) outstanding subscription, option,
call,  warrant  or  right  (whether or not currently exercisable) to acquire any
shares  of the capital stock or other securities of the Company; (ii) except for
the Company Preferred Stock, outstanding security, instrument or obligation that
is  or may become convertible into or exchangeable for any shares of the capital
stock or other securities of the Company; (iii) Contract under which the Company
is  or may become obligated to sell or otherwise issue any shares of its capital
stock  or  any other securities; or (iv) condition or circumstance that may give
rise  to  or  provide  a basis for the assertion of a claim by any Person to the
effect  that such Person is entitled to acquire or receive any shares of capital
stock  or  other  securities  of  the  Company.

     (E)     All outstanding shares of Company Stock and all outstanding Company
Options,  have  been  issued  and  granted in compliance with (i) all applicable
securities  laws  and  other  applicable  Legal  Requirements,  and  (ii)  all
requirements  set  forth  in  applicable  Contracts.

       (I)   Except  as  set  forth  in  Part  2.3(f)  of the Company Disclosure
Schedule,  the  Company  has never repurchased, redeemed or otherwise reacquired
any  shares  of  capital  stock  or  other  securities  of the Company. All such
repurchases,  redemptions,  and requisitions of shares of capital stock or other
securities  of  the Company have been in compliance with all Legal Requirements.

     2.4     FINANCIAL  STATEMENTS.

     (A)     Except  as  set  forth  in  Part  2.4(a)  of the Company Disclosure
Schedule, the Company has delivered to Parent the following financial statements
and  notes  (collectively,  the  "COMPANY  FINANCIAL  STATEMENTS"):

     (I)     the unaudited combined balance sheets of the Company as of June 30,
1998,  June  30,  1999,  and  June  30, 2000, and the related unaudited combined
statement  of  income,  combined  statement of shareholders' equity and combined
statement  of  cash  flows for the three (3) years ended June 30, 2000, together
with  the  notes  thereto;  and

     (II)     the  unaudited balance sheet of the Company, as of August 31, 2000
(the  "UNAUDITED  INTERIM  BALANCE  SHEET"),  and  the  related unaudited income
statement  of  the  Company  for  the  2  months  then  ended.

     (B)     Except  as  disclosed  in  Part 2.4(b)(i) of the Company Disclosure
Schedule,  the  Company  Financial  Statements  are accurate and complete in all
material respects and present fairly the financial position of the Company as of

                                       12
<PAGE>
the respective dates thereof and the results of operations and (in the case of
the  financial  statements  referred  to in Section 2.4(a)(i)) cash flows of the
Company  for the periods covered thereby. Except as set forth in Part 2.4(b)(ii)
of  the  Company Disclosure Schedule, the Company Financial Statements have been
prepared  in accordance with generally accepted accounting principles applied on
a  consistent  basis  throughout  the  periods  covered.

     (C)     The  books,  records  and  accounts  of  the Company accurately and
fairly  reflect,  in  reasonable detail, the transactions in and dispositions of
the  assets  of  the  Company.

     2.5     ABSENCE  OF CHANGES. Except as set forth in Part 2.5 of the Company
Disclosure  Schedule,  since  June  30,  2000:

     (A)     there  has  not  been  any material adverse change in the Company's
business,  condition  (financial or otherwise), assets, liabilities, operations,
financial performance or overall prospects, and no event has occurred that could
reasonably  be  expected  to,  have  a  Material  Adverse  Effect on the Company

     (B)     there  has not been any material loss, damage or destruction to, or
any  material interruption in the use of, the Company's material assets (whether
or  not  covered  by  insurance);

     (C)     the  Company  has  not  declared,  accrued,  set  aside or paid any
dividend  or made any other distribution in respect of any shares of its capital
stock,  and have not repurchased, redeemed or otherwise reacquired any shares of
its  capital  stock  or  other  securities;

     (D)     the  Company has not sold, issued or authorized the issuance of (i)
any capital stock or other security (except for Company Common Stock issued upon
the  exercise  of  outstanding  Company  Options),  (ii)  any option or right to
acquire  any  capital  stock  or  any  other  security,  or (iii) any instrument
convertible  into  or  exchangeable  for  any  capital  stock or other security;

     (E)     the  Company  has not amended or waived any of its rights under, or
permitted the acceleration of vesting under, (i) any provision of its 1998 Stock
Option  Plan,  (ii)  any  provision  of any agreement evidencing any outstanding
Company  Option,  or  (iii)  any  restricted  stock  purchase  agreement;

     (F)     there  has  been no amendment to any of the Company's Incorporation
Documents,  and  the Company has not effected or been a party to any Acquisition
Transaction,  recapitalization, reclassification of shares, stock split, reverse
stock  split  or  similar  transaction;

     (G)     the  Company  has  not formed any subsidiary or acquired any equity
interest  or  other  interest  in  any  other  Entity;

     (H)     the  Company  has  not  made  any  capital  expenditure;

     (I)     the Company has not (i) entered into or permitted any of the assets
owned  or used by it to become bound by any Contract that is or would constitute

                                       13
<PAGE>
a  Material  Contract,  or (ii) amended or prematurely terminated, or waived any
material  right  or  remedy  under,  any  such  Contract;

     (J)     the  Company  has not (i) acquired, leased or licensed any right or
other asset from any other Person, (ii) sold or otherwise disposed of, or leased
or  licensed,  any  right or other asset to any other Person, or (iii) waived or
relinquished  any right, except for immaterial rights or other immaterial assets
acquired, leased, licensed or disposed of in the ordinary course of business and
consistent  with  the  Company's  past  practices;

     (K)     the  Company  has  not written off as uncollectible, or established
any  extraordinary  reserve  with  respect  to,  any account receivable or other
indebtedness  in excess of $10,000 with respect to a single matter, or in excess
of  $75,000  in  the  aggregate;

     (L)     the  Company  has  not  made  any  pledge  of  any of its assets or
otherwise  permitted  any  of  its  assets to become subject to any Encumbrance;

     (M)     the  Company  has  not  (i)  lent  money  to any Person (other than
pursuant  to routine travel advances made to employees in the ordinary course of
business),  or  (ii) incurred or guaranteed any indebtedness for borrowed money;

     (N)     the Company has not (i) established or adopted any Employee Benefit
Plan,  (ii)  paid any bonus or made any profit-sharing or similar payment to, or
increased the amount of the wages, salary, commissions, fringe benefits or other
compensation  or  remuneration  payable  to,  any  of its directors, officers or
employees,  (iii)  other  than in the ordinary course of business and consistent
with  past practices, hired any new employee, or (iv) received any notice of any
resignation of any employee or received any indication that any employee intends
to  resign;

     (O)     the  Company  has  not  changed any of its methods of accounting or
material  accounting  practices  in  any  respect;

     (P)     the  Company  has  not  made  any  Tax  election;

     (Q)     the Company has not commenced  or  settled  any  Legal  Proceeding;

     (R)     the  Company has not entered into any material transaction or taken
any  other  material  action  outside  the  ordinary  course  of  business  or
inconsistent  with  its  past  practices;  and

     (S)     the  Company has not agreed or legally committed to take any of the
actions  referred  to  in  clauses  "(c)"  through  "(r)"  above".

     2.6     TITLE  TO  ASSETS.

     (A)     The  Company owns, and has good, valid and marketable title to, all
assets  purported  to be owned by it, including: (i) all tangible and intangible
assets  reflected  on  the  Unaudited Interim Balance Sheet; (ii) all intangible
assets  referred  to in Parts 2.9(a)(i) and 2.9(a)(ii) of the Company Disclosure

                                       14
<PAGE>
Schedule  and all of the Company's rights under the Contracts identified in Part
2.10  of  the  Company  Disclosure  Schedule;  and  (iii) all other tangible and
intangible assets reflected in the Company's books and records as being owned by
the  Company.  Except  as  set  forth  in  Part 2.6(a) of the Company Disclosure
Schedule,  all  of  said  assets  are owned by the Company free and clear of any
liens  or  other Encumbrances, except for any lien for current taxes not yet due
and  payable.

     (B)     Part  2.6(b)  of  the  Company  Disclosure  Schedule identifies all
assets  that  are  material  to  the  business of the Company and that are being
leased  or  licensed to the Company for which the annual rental payment for each
such  asset  exceeds  $25,000.

     2.7     BANK  ACCOUNTS;  RECEIVABLES.

     (A)     Part  2.7(a)  of  the  Company  Disclosure  Schedule describes each
account  maintained  by  or  for the benefit of the Company at any bank or other
financial  institution.

     (B)     Part 2.7(b) of the Company Disclosure Schedule provides an accurate
and  complete  breakdown  and aging of all accounts receivable, notes receivable
and  other  receivables  of  the Company as of September 30, 2000. Other than as
described  in  Part  2.7(b)  of  the  Company  Disclosure Schedule, all existing
accounts  receivable  of  the  Company  (including  those  accounts  receivable
reflected  on  the  Unaudited  Interim  Balance  Sheet  that  have  not yet been
collected  and  those accounts receivable that have arisen since August 31, 2000
and have not yet been collected) (i) represent valid obligations of customers of
the  Company  arising  from  bona fide transactions entered into in the ordinary
course  of  business,  (ii)  are current and will be collected in full when due,
without  any  counterclaim or set off (net of an allowance for doubtful accounts
not  to  exceed  $100,000  in  the  aggregate).

     2.8     EQUIPMENT;  LEASEHOLD.

     (A)     All  material items of equipment and other tangible assets owned by
or  leased to the Company are reasonably adequate for the uses to which they are
being  put,  are in good condition and repair (ordinary wear and tear excepted).

     (B)     The  Company does not own any real property or any interest in real
property,  except  for  the  leasehold  created  under  the real property leases
identified  in  Part  2.10  of  the  Company  Disclosure  Schedule.

     2.9     PROPRIETARY  ASSETS.

     (A)     Part  2.9(a)(i) of the Company Disclosure Schedule sets forth, with
respect  to each Company Proprietary Asset registered with any Governmental Body
or  for  which  an  application has been filed with any Governmental Body, (i) a
brief  description  of  such  Proprietary  Asset,  and  (ii)  the  names  of the
jurisdictions  covered by the applicable registration or application. Other than
unregistered  trademarks,  trade  names  and  service  marks  (collectively, the
"UNREGISTERED  TRADEMARKS"),  Part 2.9(a)(ii) of the Company Disclosure Schedule
identifies  and  provides  a  brief description of all other Company Proprietary

                                       15
<PAGE>
Assets  owned by the Company. Part 2.9(a)(ii) of the Company Disclosure Schedule
also  discloses  all  Unregistered  Trademarks  that have been and are currently
being  used  by  the Company in the ordinary course of business. The Company has
not  received any notice or other communication (in writing or otherwise) of any
actual,  alleged,  possible  or  potential  infringement  or unlawful use of any
Unregistered  Trademark  and the Company is entitled to use and will continue to
use  such  Unregistered Trademarks on and after the Closing. Part 2.9(a)(iii) of
the  Company  Disclosure Schedule identifies and provides a brief description of
each  Proprietary  Asset  licensed  to the Company by any Person (except for any
Proprietary Asset that is licensed to the Company under any third party software
license  generally  available  to the public at a cost of less than $5,000), and
identifies  the  license  agreement  under which such Proprietary Asset is being
licensed  to  the  Company. Other than the Unregistered Trademarks identified in
Part  2.9(a)(ii) of the Company Disclosure Schedule, the Company has good, valid
and  marketable  title  to  all  of the Company Proprietary Assets identified in
Parts  2.9(a)(i)  and 2.9(a)(ii) of the Company Disclosure Schedule owned by it,
free and clear of all liens and other Encumbrances, and has a valid right to use
all  Proprietary Assets identified in Part 2.9(a)(iii) of the Company Disclosure
Schedule not owned by it. Except as set forth in Part 2.9(a)(iv), the Company is
not  obligated  to  make  any  payment  to any Person for the use of any Company
Proprietary  Asset.  Except  as  set  forth  in  Part  2.9(a)(v)  of the Company
Disclosure Schedule, the Company has not developed jointly with any other Person
any  Company  Proprietary  Asset with respect to which such other Person has any
rights.

     (B)     Except  as  to  the  absence  of  registrations  referenced in Part
2.9(a)(ii)  of  the  Company  Disclosure  Schedule,  the  Company  has taken all
measures  and  precautions  reasonably  necessary  to  protect  and maintain the
confidentiality  and  secrecy  of all Company Proprietary Assets (except Company
Proprietary  Assets  whose  value  would be unimpaired by public disclosure) and
otherwise  to  maintain and protect the value of all Company Proprietary Assets.
The  Company  has  taken  all  measures and precautions necessary to protect and
maintain  the confidentiality and secrecy of all Company Proprietary Assets that
are  trade  secrets  (the "TRADE SECRETS") and otherwise to maintain and protect
the  value  of  all  Trade  Secrets.  Except  as set forth in Part 2.9(b) of the
Company  Disclosure  Schedule, the Company has not disclosed or delivered to any
Person, or permitted the disclosure or delivery to any Person of, (i) the source
code,  or  any  portion or aspect of the source code, of any Company Proprietary
Asset,  or (ii) the object code, or any portion or aspect of the object code, of
any  Company  Proprietary  Asset.

     (C)     None  of the Company Proprietary Assets infringes or conflicts with
any  Proprietary  Asset  owned  or  used by any other Person. The Company is not
infringing,  misappropriating or making any unlawful use of, and the Company has
not  at  any  time  infringed,  misappropriated or made any unlawful use of, or,
except  as set forth in Part 2.9(c) of the Company Disclosure Schedule, received
any  notice  or  other  communication  (in  writing or otherwise) of any actual,
alleged,  possible  or  potential infringement, misappropriation or unlawful use
of,  any  Proprietary  Asset  owned  or  used  by  any other Person. To the best
knowledge  of  the  Company,  except  as set forth in Part 2.9(c) of the Company
Disclosure  Schedule,  no other Person is infringing, misappropriating or making
any  unlawful use of, and no Proprietary Asset owned or used by any other Person
infringes  or  conflicts  with,  any  Company  Proprietary  Asset.

     (D)     Each  Company  Proprietary  Asset conforms in all material respects
with  any  enforceable  specification,  documentation,  performance  standard,
representation  or  statement  made  or  provided  with respect thereto by or on
behalf of the Company; and there has not been any claim by any customer or other
Person  alleging  that  any  Company  Proprietary  Asset (including each version
thereof  that  has ever been licensed or otherwise made available by the Company
to any Person) does not conform in all material respects with any specification,

                                       16
<PAGE>
documentation,  performance  standard,  representation  or  statement  made  or
provided  by  or  on behalf of the Company, and, to the best of the knowledge of
the  Company,  there  is  no  basis  for  any  such  claim.

     (E)     The  Company  Proprietary  Assets  constitute  all  the Proprietary
Assets  necessary to enable the Company to conduct its business in the manner in
which such business is being conducted. Except as set forth in Part 2.9(e)(i) of
the Company Disclosure Schedule, the Company has not licensed any of the Company
Proprietary  Assets to any Person on an exclusive basis, and except as set forth
in Part 2.9(e)(ii), the company has not entered into any covenant not to compete
or  Contract limiting its ability to exploit fully any of its Proprietary Assets
or  to  transact business in any market or geographical area or with any Person.

     (F)     Except  as  set  forth  in  Part  2.9(f)  of the Company Disclosure
Schedule,  all  current  and  former  employees of the Company have executed and
delivered to the Company an agreement (containing no exceptions to or exclusions
from  the  scope of its coverage) that is substantially the same in all material
respects  as  to the form of the Employee Confidentiality and Proprietary Rights
Agreement previously delivered to Parent, and all current and former consultants
and  independent  contractors  to the Company have executed and delivered to the
Company  an  agreement (containing no exceptions to or exclusions from the scope
of  its  coverage) that is substantially the same in all material respects as to
the form of the Company Independent Consultant Agreement previously delivered to
Parent.

     (G)     The  Company Proprietary Assets and all computer software programs,
including  operating systems, application programs, software tools, firmware and
software  imbedded  in  equipment of the Company, including both object code and
source  code versions thereof, are Year 2000 Compliant (as defined below) in all
material  respects  and will not cease to be Year 2000 Compliant in all material
respects  at  any  time  prior  to,  during  or after the calendar year 2000 AD;
provided,  however,  that no representation or warranty is made pursuant to this
section  with  respect  to any failure of the Company Proprietary Assets or such
software programs to perform in accordance with the foregoing arising out of any
error,  failure,  malfunction  or incorrect result due to third party equipment,
operating  system software, third party tools, application or database software,
or other third party products or materials (in each case, whether or not sold or
licensed  by  Company). Part 2.9(g) of the Company Disclosure Schedule describes
the  steps  that  the Company has taken, and plans to take, in the review of its
computer  equipment  and  software  applications  used  in its internal business
operations  (but  not  the  operations of any other Person), with respect to the
inability  of  its  computerized  systems  to  recognize  and  properly  perform
date-sensitive  functions  (the  "YEAR  2000  PROBLEM").  The Company has and is
continuing  to  address  the  impact  of  the  Year  2000 Problem on the Company
Proprietary  Assets  and  its  internal  business  computer systems and software
applications.

     As  used  herein,  the  term  "YEAR  2000 COMPLIANT" means that neither the
performance  nor  the  functionality  of  any  applicable  product is or will be
affected  by  dates  prior  to, during or after the calendar year 2000 AD and in
particular  (but  without  limitation):

     (i)     such  product accurately receives, provides and processes, and will
accurately  receive, provide and process, date/time data (including calculating,

                                       17
<PAGE>
comparing  and sequencing) from, into and between the twentieth and twenty-first
centuries  and  including  calendar  years  1999  and  2000;

(II)  such  product  will not malfunction, cease to function, provide invalid or
incorrect  results or cause any interruption in the operation of the business of
Target  or  its  Subsidiaries  as  a  result  of  any  date/time  data;

     (ii)     date-based functionality of such product behaves and will continue
to  behave  consistently  for  dates  prior  to, during and after the year 2000;

     (iii)     in  all  interfaces and data storage of such product, the century
in  any  date  is  and  will  be  specified  either explicitly or by unambiguous
algorithms  or  inferencing  rules;  and

     (iv)     the  year  2000  is  and will be recognized as a leap year of such
product.

     (H)     Except  with  respect to demonstration or trial copies, no product,
system,  program  or  software  module  designed,  developed,  sold, licensed or
otherwise  made available by the Company to any Person contains any "back door,"
"time  bomb,"  "Trojan  horse,"  "worm,"  "drop  dead  device," "virus" or other
software  routines or hardware components designed to permit unauthorized access
or  to  disable  or  erase software, hardware or data without the consent of the
user.

     2.10     CONTRACTS.

     (A)     Part  2.10  of  the  Company  Disclosure  Schedule  identifies:

     (I)     each  Company  Contract  relating  to  the  employment  of,  or the
performance  of services by, any employee, consultant or independent contractor;
any Company Contract pursuant to which the Company is or may become obligated to
make  any  severance,  termination  or  similar payment to any current or former
employee  or director; and any Company Contract pursuant to which the Company is
or may become obligated to make any bonus or similar payment (other than payment
in  respect  of salary) in excess of $2,000 to any current or former employee or
director;

     (II)     each  Company  Contract  relating to the voting, registration, and
any  other  rights  or  obligations  of  a  stockholder  of  the  Company;

     (III)     each  Company  Contract  relating  to  the merger, consolidation,
reorganization  or  any  similar  transaction  with  respect  to  the  Company;

     (IV)     each  Company Contract relating to the acquisition, transfer, use,
development,  sharing  or  license of any technology or any material Proprietary
Asset;

     (V)     each  Company  Contract  creating or relating to any partnership or
joint venture or any sharing of revenues, profits, losses, costs or liabilities;

                                       18
<PAGE>
     (VI)     each  Company  Contract  relating  to  the  license of any patent,
copyright,  trade  secret  or  other  Proprietary  Asset to or from the Company;

     (VII)     each Company Contract imposing any restriction on the Company (A)
to  compete  with any other Person, (B) to acquire any product or other asset or
any  services  from  any  other Person, to sell any product or other asset to or
perform any services for any other Person or to transact business or deal in any
other  manner  with  any  other  Person,  or  (C)  to  develop or distribute any
technology

     (VIII)     each  Company  Contract  creating  or  involving  any  agency
relationship,  distribution  arrangement  or  franchise  relationship;

     (IX)     each  Company  Contract  regarding  the  acquisition,  issuance or
transfer  of  any securities and each Company Contract affecting or dealing with
any  securities  of  the  Company  including, without limitation, any restricted
stock  agreements  or  escrow  agreements;

     (X)     each  Company  Contract  which  provides for indemnification of any
officer,  director,  employee  or  agent;

     (XI)     each  Company Contract relating to the creation of any Encumbrance
with  respect  to  any  material  asset  of  the  Company;

     (XII)     each  Company  Contract  involving  or  incorporating  any  loan,
guaranty,  any  pledge, any performance or completion bond, any indemnity or any
surety  arrangement;

     (XIII)     each Company Contract related to or regarding the performance of
consulting,  advisory  or other services or work of any type to any third party;

     (XIV)     each  Company  Contract  relating  to the purchase or sale of any
product  or  other asset by or to, or the performance of any services by or for,
any  Related  Party  (as  defined  in  Section  2.18);

     (XV)     each  Company  Contract  constituting  or relating to a Government
Contract  or  Government  Bid;

     (XVI)     any  other  Company  Contract  that  was entered into outside the
ordinary  course  of  business  or  was  inconsistent  with  the  Company's past
practices;

     (XVII)     any  other Company Contract that has a term of more than 60 days
and  that  may not be terminated by the Company (without penalty) within 60 days
after  the  delivery  of  a  termination  notice  by  the  Company;  and

     (XVIII)     any  other  Company  Contract that contemplates or involves (A)
the  payment or delivery of cash or other consideration in an amount or having a
value  in excess of $25,000 in the aggregate, or (B) the performance of services
having  a  value  in  excess  of  $25,000  in  the  aggregate.

                                       19
<PAGE>
(Contracts  in  the  respective  categories  described  in clauses "(i)" through
"(xviii)"  above  are  referred  to  in this Agreement as "Material Contracts.")

     (B)     The Company has delivered to Parent accurate and complete copies of
all  Material  Contracts  identified  in  Part  2.10  of  the Company Disclosure
Schedule,  including all amendments thereto. Part 2.10 of the Company Disclosure
Schedule provides an accurate description of the terms of each Material Contract
that  is  not in written form. Each Material Contract identified in Part 2.10 of
the  Company  Disclosure Schedule is valid and in full force and effect, and, to
the  best  of  the  knowledge  of  the Company, is enforceable by the Company in
accordance  with  its terms, subject to (i) laws of general application relating
to  bankruptcy,  insolvency  and  the  relief  of debtors, and (ii) rules of law
governing  specific performance, injunctive relief and other equitable remedies.

(C)     Except  as  set  forth  in Part 2.10 of the Company Disclosure Schedule:

     (I)     The  Company  has not violated or breached in any material respect,
or  committed  any  material  default  which remains uncured under, any Material
Contract  to  which  it  is  a  party,  and, to the best of the knowledge of the
Company,  no  other  Person  has  violated or breached, or committed any default
under,  any  Material  Contract  which  remains  uncured;

     (II)     to  the  best  of  the  knowledge  of  the  Company,  no event has
occurred,  and no circumstance or condition exists, that (with or without notice
or  lapse  of  time)  will,  or could reasonably be expected to, (A) result in a
violation  or breach of any of the provisions of any Material Contract, (B) give
any  Person  the  right  to  declare  a default or exercise any remedy under any
Material  Contract,  (C) give any Person the right to accelerate the maturity or
performance  of  any  Material  Contract,  or  (D)  give any Person the right to
cancel,  terminate  or  modify  any  Material  Contract;

     (III)     the  Company  has  not received any notice or other communication
regarding  any  actual or possible violation or breach of, or default under, any
Material  Contract;  and

     (IV)     The  Company  has not waived any of its respective material rights
under  any  Material  Contract.

     (D)     No  Person  is  actively  renegotiating, or has a contractual right
pursuant to the terms of any Company Contract to renegotiate, any amount paid or
payable  in excess of $50,000, to the Company under any Material Contract or any
other  material  term  or  provision  of  any  Material  Contract.

     (E)     The  Material  Contracts  identified  in  Part  2.10 of the Company
Disclosure  Schedule  collectively  constitute all of the Contracts necessary to
enable  the  Company to conduct its business in the manner in which its business
is  currently  being  conducted.

     2.11     LIABILITIES.  The Company does not have any accrued, contingent or
other  liabilities  of  any  nature, either matured or unmatured (whether or not
required  to  be  reflected in financial statements in accordance with generally
accepted  accounting  principles, and whether due or to become due), except for:
(a)  liabilities identified as such in the "liabilities" column of the Unaudited

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<PAGE>
Interim Balance Sheet; (b) liabilities under the Company Contracts identified in
Part  2.10  of  the Company Disclosure Schedule that are expressly set forth and
identifiable  by  reference  to  the text of such Company Contracts; and (c) the
liabilities  identified  in  Part  2.11  of  the  Company  Disclosure  Schedule.

     2.12     COMPLIANCE  WITH  LEGAL  REQUIREMENTS. To the Company's knowledge,
the  Company  is,  and  has at all times been, in compliance with all applicable
Legal  Requirements,  except  where  the  failure  to  comply  with  such  Legal
Requirements has not had and could not reasonably be expected to have a Material
Adverse  Effect  on  the  Company.  Except  as  set forth in Part 2.12(b) of the
Company  Disclosure Schedule, the Company has not received any written notice or
written  communication  from  any  Governmental  Body  regarding  any  actual or
possible  violation  of,  or  failure  to  comply  with,  any Legal Requirement.

     2.13     GOVERNMENTAL  AUTHORIZATIONS.  Part 2.13 of the Company Disclosure
Schedule  identifies  each  material  Governmental  Authorization  held  by  the
Company,  and the Company has delivered or made available to Parent accurate and
complete  copies  of  all Governmental Authorizations identified in Part 2.13 of
the  Company  Disclosure Schedule. The Governmental Authorizations identified in
Part  2.13  of  the  Company Disclosure Schedule are valid and in full force and
effect, and collectively constitute all Governmental Authorizations necessary to
enable  the  Company to conduct its business in the manner in which its business
is currently being conducted. To the Company's knowledge, the Company is, and at
all  times  has  been,  in  compliance  with  the  terms and requirements of the
respective  Governmental  Authorizations  identified in Part 2.13 of the Company
Disclosure  Schedule.  The  Company  has  not  received  any  notice  or  other
communication  from  any  Governmental Body regarding (a) any actual or possible
violation  of  or  failure  to  comply  with  any  term  or  requirement  of any
Governmental  Authorization,  or  (b)  any  actual  or  possible  revocation,
withdrawal,  suspension,  cancellation,  termination  or  modification  of  any
Governmental  Authorization.

2.14     TAX  MATTERS.

     (A)     Except  as  set  forth  in  Part  2.14(a) of the Company Disclosure
Schedule,  all  Tax  Returns required to be filed by or on behalf of the Company
with  any  Governmental  Body  with  respect  to any taxable period ending on or
before  the  Closing Date (the "COMPANY RETURNS") (i) have been or will be filed
on  or  before  the  applicable  due  date (including any extensions of such due
date),  and  (ii)  have  been,  or will be when filed, accurately and completely
prepared in compliance with all applicable Legal Requirements. All amounts shown
on the Company Returns to be due on or before the Closing Date have been or will
be  paid  on  or  before  the  Closing Date. The Company has delivered to Parent
accurate  and  complete  copies of the Company Returns listed on Part 2.14(a) of
the  Company  Disclosure  Schedule.

     (B)     The  Company  Financial  Statements  fully  accrue  all  actual and
contingent  liabilities  for Taxes with respect to all periods through the dates
thereof in accordance with generally accepted accounting principles. The Company
will  establish, in the ordinary course of business and consistent with its past
practices,  reserves  adequate  for the payment of all Taxes for the period from
January  1,  2000  through  the  Closing Date, and the Company will disclose the
dollar  amount  of  such reserves to Parent on or prior to the Closing Date. All

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<PAGE>
Taxes  incurred  since the date of the Unaudited Interim Balance Sheet have been
incurred  in  the  ordinary  course  of  business.

     (C)     Except  as  set  forth  in  Part  2.14(c) of the Company Disclosure
Schedule,  no Company Return relating to Taxes has ever been examined or audited
by  any  Governmental  Body.  There  have  been no examinations or audits of any
Company  Return.  No  extension or waiver of the limitation period applicable to
any  of  the  Company  Returns  has  been  granted  (by the Company or any other
Person),  and  no  such extension or waiver has been requested from the Company.

     (D)     No  claim  or Proceeding is pending or to the best of the knowledge
of  the  Company,  has been threatened against or with respect to the Company in
respect  of  any  Tax. There are no unsatisfied liabilities for Taxes (including
liabilities  for  interest,  additions  to tax and penalties thereon and related
expenses)  with respect to any notice of deficiency or similar document received
by  the  Company  with  respect  to  any  Tax  (other than liabilities for Taxes
asserted under any such notice of deficiency or similar document which are being
contested  in  good  faith  by  the  Company  and with respect to which adequate
reserves  for  payment have been established). There are no liens for Taxes upon
any  of the assets of the Company except liens for current Taxes not yet due and
payable.  The  Company  has not entered into or become bound by any agreement or
consent  pursuant  to  Section  341(f)  of the Code. Except as set forth in Part
2.14(d)  of  the  Company  Disclosure  Schedule,  the  Company has been, and the
Company  will  not  be, required to include any adjustment in taxable income for
any  tax period (or portion thereof) pursuant to Section 481 or 263A of the Code
or  any  comparable  provision  under  state  or foreign Tax laws as a result of
transactions  or  events occurring, or accounting methods employed, prior to the
Closing.

     (E)     There is no agreement, plan, arrangement or other Contract covering
any  employee  or  independent  contractor  or  former  employee  or independent
contractor  of  the  Company  that,  considered  individually  or  considered
collectively  with  any  other  such  Contracts,  will,  or  could reasonably be
expected  to, give rise directly or indirectly to the payment of any amount that
would not be deductible pursuant to Section 280G or Section 162 of the Code. The
Company  is  not  and  has  not  been,  a party to or bound by any tax indemnity
agreement, tax- sharing agreement, tax allocation agreement or similar Contract.

     (F)     The  Company  has  no  liability  for  any Tax pursuant to Treasury
Regulations  Section  1.1502-6  or  any analogous state, local or foreign law or
regulation or by reason of having been a member of any consolidated, combined or
unitary  group  on  or  before  the  Closing  Date.

     2.15     EMPLOYEE  AND  LABOR  MATTERS;  BENEFIT  PLANS.

     (A)     Part  2.15(a)  of  the  Company Disclosure Schedule identifies each
salary,  bonus,  deferred  compensation, incentive compensation, stock purchase,
stock  option, severance pay, termination pay, hospitalization, medical, life or
other  insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement  plan,  program  or  agreement (collectively, the "PLANS") sponsored,
maintained,  contributed  to or required to be contributed to by the Company for
the  benefit of any employee of the Company ("EMPLOYEE"), except for Plans which

                                       22
<PAGE>

would  not  require  the  Company  to make payments or provide benefits having a
value  in  excess  of  $2,000  in  the  aggregate.

     (B)     Except  as  set  forth  in  Part  2.15(b) of the Company Disclosure
Schedule,  the Company does not maintain, sponsor or contribute to, and, has not
at  any  time  in the past maintained, sponsored or contributed to, any employee
pension  benefit  plan  (as  defined  in Section 3(2) of the Employee Retirement
Income  Security Act of 1974, as amended ("ERISA"), whether or not excluded from
coverage  under specific Titles or Merger Subtitles of ERISA) for the benefit of
Employees  or  former  Employees  (a  "PENSION  PLAN").

     (C)     The  Company  maintains,  sponsors  or  contributes  only  to those
employee  welfare benefit plans (as defined in Section 3(1) of ERISA, whether or
not  excluded  from coverage under specific Titles or Merger Subtitles of ERISA)
for  the  benefit  of  Employees or former Employees which are described in Part
2.15(c)  of the Company Disclosure Schedule (the "WELFARE PLANS"), none of which
is  a  multiemployer  plan  (within  the  meaning  of  Section  3(37) of ERISA).

     (D)     With  respect  to  each  Plan,  the  Company  has delivered or made
available  to  Parent:

     (I)     an  accurate  and  complete  copy  of  such  Plan  (including  all
amendments  thereto);

     (II)     an  accurate  and  complete copy of the annual report, if required
under  ERISA,  with  respect  to  such  Plan  for  the  last  2  years;

     (III)     an  accurate  and  complete  copy of the most recent summary plan
description,  together  with each Summary of Material Modifications, if required
under ERISA, with respect to such Plan, and all material employee communications
relating  to  such  Plan;

     (IV)     if  such Plan is funded through a trust or any third party funding
vehicle,  an  accurate and complete copy of the trust or other funding agreement
(including  all  amendments  thereto)  and accurate and complete copies the most
recent  financial  statements  thereof;

     (V)     accurate  and complete copies of all Material Contracts relating to
such  Plan,  including service provider agreements, insurance contracts, minimum
premium  contracts,  stop-loss  agreements,  investment  management  agreements,
subscription  and  participation  agreements  and  recordkeeping agreements; and

     (VI)     an  accurate  and  complete copy of the most recent determination,
opinion,  notification,  or  advisory  letter received from the Internal Revenue
Service  with  respect  to  such  Plan (if such Plan is intended to be qualified
under  Section  401(a)  of  the  Code).

     (E)     Except  as  set  forth  in  Part  2.15(e) of the Company Disclosure
Schedule,  (i) the Company is not required to be, and, has ever been required to
be,  treated as a single employer with any other Person under Section 4001(b)(l)
of  ERISA  or  Section 414(b), (c), (m) or (o) of the Code, and (ii) the Company
has  not  been  a  member of an "affiliated service group" within the meaning of
Section  414(m)  of  the  Code.  The  Company has not made a complete or partial

                                       23
<PAGE>
withdrawal  from a multiemployer plan, as such term is defined in Section 3(3 7)
of  ERISA,  resulting  in  "withdrawal  liability,"  as  such term is defined in
Section  4201 of ERISA (without regard to subsequent reduction or waiver of such
liability  under  either  Section  4207  or  4208  of  ERISA).

     (F)     The  Company  does  not  have  any plan or commitment to create any
additional Welfare Plan or any Pension Plan, or to modify or change any existing
Welfare  Plan  or  Pension Plan (other than to comply with applicable law or for
administrative  changes)  in a manner that would materially affect any Employee.


     (G)     Except  as  set  forth  in  Part  2.15(g) of the Company Disclosure
Schedule, no Welfare Plan provides death, medical or health benefits (whether or
not  insured)  with  respect  to  any  current or former Employee after any such
Employee's  termination  of service (other than (i) benefit coverage mandated by
applicable  law,  including  coverage  provided pursuant to Section 4980B of the
Code,  (ii)  deferred  compensation  benefits  accrued  as  liabilities  on  the
Unaudited  Interim  Balance Sheet, and (iii) benefits the full cost of which are
borne  by  current  or  former  Employees  (or  the  Employees'  beneficiaries).

     (H)     With  respect  to  each  of  the Welfare Plans constituting a group
health  plan  within  the  meaning  of  Section  4980B(g)(2)  of  the  Code, the
provisions of Section 4980B of the Code ("COBRA") have been complied with in all
material  respects.

     (I)     Each  of  the  Plans  has  been  operated  and  administered in all
material  respects  in  accordance with applicable Legal Requirements, including
but  not  limited  to  ERISA  and  the  Code.

     (J)     Each  of the Plans intended to be qualified under Section 401(a) of
the  Code  has  either: (i) received a favorable determination from the Internal
Revenue  Service,  and  the  Company  is  not  aware  of any reason why any such
determination  letter  should be revoked; or (ii) has remaining a period of time
under applicable Treasury regulations or Internal Revenue Service pronouncements
in  which to apply for such letter and make any amendments necessary to obtain a
favorable  determination  as  to  the  qualification  status  of each such Plan.

     (K)     Except  as  disclosed  in  Part  2.15(k)  of the Company Disclosure
Schedule  or  as may be required pursuant to the actions contemplated by Section
3.6,  neither  the execution, delivery or performance of this Agreement, nor the
consummation of the Merger or any of the other transactions contemplated by this
Agreement,  will result in any payment (including any bonus, golden parachute or
severance  payment)  to any current or former Employee or director of any of the
Company  (whether  or  not  under any Plan), or materially increase the benefits
payable  under any Plan, or result in any acceleration of the time of payment or
vesting  of  any  such  benefits.

     (L)     The  Company  has  previously  delivered  to Parent an accurate and
complete  list  of  all salaried employees of the Company as of the date of this
Agreement, and correctly reflects, in all material respects, their salaries, any
other  compensation  payable to them (including compensation payable pursuant to

                                       24
<PAGE>
bonus,  deferred  compensation  or  commission  arrangements),  their  dates  of
employment  and  their  positions.  The Company is not a party to any collective
bargaining  Contract  or  other Contract with a labor union involving any of its
Employees.  Except  as  set  forth  in  Part  2.15(1)  of the Company Disclosure
Schedule,  all  of  the  Company's  employees  are  "at  will"  employees.

     (M)     Part  2.15(m)  of  the  Company Disclosure Schedule identifies each
Employee  who  is  not  fully available to perform work because of disability or
other  leave  and sets forth the basis of such leave and the anticipated date of
return  to  full  service.

     (N)     Except  as  set  forth  on  Part  2.15(n) of the Company Disclosure
Schedule,  the  Company  is  in  compliance  in  all  material respects with all
applicable  Legal  Requirements and Contracts relating to employment, employment
practices,  wages,  bonuses  and  terms  and conditions of employment, including
employee  compensation  matters.

     (O)     The  Company  has satisfactory labor relations and to the knowledge
of  the  Company:  (i)  the  consummation  of  the  Merger  or  any of the other
transactions  contemplated  by  this  Agreement will not have a Material Adverse
Effect  on  the  labor  relations of the Company, and (ii) none of the Company's
employees  intends to terminate his or her employment with the Company within 60
days  of  the  Closing.

     2.16     ENVIRONMENTAL  MATTERS.  The  Company  is  in  compliance  in  all
material  respects  with  all  applicable  Environmental  Laws, which compliance
includes  the  possession  by  the Company of all permits and other Governmental
Authorizations required under applicable Environmental Laws, and compliance with
the  terms  and  conditions  thereof.  The  Company has not received any written
notice  or  written  communication,  whether  from a Governmental Body, citizens
group, employee or otherwise, that alleges that the Company is not in compliance
with  any  Environmental  Law, and, to the best of the knowledge of the Company,
there  are  no  circumstances  that  could  reasonably be expected to prevent or
interfere  with  the  Company's  compliance  in  all  material respects with any
Environmental Law in the future. To the best of the knowledge of the Company, no
current  or  prior owner of any property leased or controlled by the Company has
received  any written notice or written communication, whether from a Government
Body,  citizens  group, employee or otherwise, that alleges that such current or
prior  owner or the Company is not in compliance with any Environmental Law. All
Governmental  Authorizations  currently  held  by  the  Company  pursuant  to
Environmental  Laws  are  identified  in  Part  2.16  of  the Company Disclosure
Schedule.  (For purposes of this Section 2.16: (i) "ENVIRONMENTAL LAW" means any
federal,  state,  local  or  foreign  Legal Requirement relating to pollution or
protection  of  human  health or the environment (including ambient air, surface
water,  ground  water,  land surface or subsurface strata), including any law or
regulation relating to emissions, discharges, releases or threatened releases of
Materials  of  Environmental  Concern, or otherwise relating to the manufacture,
processing,  distribution,  use,  treatment,  storage,  disposal,  transport  or
handling  of  Materials  of  Environmental  Concern.);  and  (ii)  "MATERIALS OF
ENVIRONMENTAL  CONCERN" means chemicals, pollutants, contaminants, wastes, toxic
substances, petroleum and petroleum products and any other substance that is now
or hereafter regulated by any Environmental Law or that is otherwise a danger to
health,  reproduction  or  the  environment.)

     2.17     INSURANCE.  Part  2.17(a)  of  the  Company  Disclosure  Schedule
identifies  all  insurance  policies maintained by, at the expense of or for the

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benefit  of  the Company and identifies any material claims made thereunder, and
the  Company  has  delivered  to  Parent  accurate  and  complete  copies of the
insurance  policies  identified  on  Part  2.17(a)  of  the  Company  Disclosure
Schedule.  Each  of  the  insurance  policies  identified in Part 2.17(a) of the
Company  Disclosure Schedule is in full force and effect. Except as set forth on
Part  2.17(b)  of  the Company Disclosure Schedule, the Company has not received
any  notice  or  other  communication  regarding  any  actual  or  possible  (a)
cancellation  or  invalidation  of  any  insurance  policy,  (b)  refusal of any
coverage  or  rejection of any claim under any insurance policy, or (c) material
adjustment  in  the amount of the premiums payable with respect to any insurance
policy.

     2.18     RELATED  PARTY  TRANSACTIONS.  Except as set forth in Part 2.18 of
the  Company Disclosure Schedule: (a) No Related Party has, and no Related Party
has  had,  any  direct  or  indirect  interest  in any material asset used in or
otherwise  relating  to the business of the Company; (b) no Related Party is, or
has been, indebted to the Company; (c) no Related Party has entered into, or has
had  any  direct  or  indirect  financial  interest  in,  any Material Contract,
transaction  or  business dealing or involving the Company; (d) no Related Party
is  competing,  or  has  at  any time competed, directly or indirectly, with the
Company;  and  (e)  no  Related Party has any claim or right against the Company
(other  than rights under Company Options and rights to receive compensation for
services  performed as an employee of the Company). (For purposes of the Section
2.18  each  of  the  following shall be deemed to be a "Related Party": (i) each
stockholder  of the Company; (ii) each individual who is, or who has at any time
since  inception  been,  an  officer  of  the  Company; (iii) each member of the
immediate  family  of  each  of the individuals referred to in clauses "(i)" and
"(ii)"  above;  and  (iv)  any trust or other Entity (other than the Company) in
which  any  one  of  the  individuals  referred  to in clauses "(i)", "(ii)" and
"(iii)"  above holds (or in which more than one of such individuals collectively
hold),  beneficially  or  otherwise,  a  material  voting, proprietary or equity
interest.)

     2.19     LEGAL  PROCEEDINGS;  ORDERS.

     (A)     Except  as  set  forth  in  Part 2.19(a), there is no pending Legal
Proceeding,  and no Person has threatened verbally or in writing to commence any
Legal  Proceeding:  (i)  that involves the Company or any of the assets owned or
used  by  the  Company or any Person whose liability the Company has or may have
retained  or  assumed, either contractually or by operation of law; or (ii) that
challenges,  or that may have the effect of preventing, delaying, making illegal
or  otherwise  interfering  with,  the  Merger  or any of the other transactions
contemplated  by this Agreement. To the best of the knowledge of the Company, no
event  has  occurred,  and  no claim, dispute or other condition or circumstance
exists,  that  could reasonably be expected to, give rise to or serve as a basis
for  the  commencement  of  any  such  Legal  Proceeding.

     (B)     Except  as  set  forth  in  Part  2.19(b) of the Company Disclosure
Schedule,  no  Legal  Proceeding has been commenced by or is now pending against
the  Company.

     (C)     There  is  no  order, writ, injunction, judgment or decree to which
the  Company,  or any of the assets owned or used by the Company, is subject. To
the  best  of  the knowledge of the Company, no officer or other employee of the
Company  is  subject  to  any  order,  writ, injunction, judgment or decree that
prohibits  such  officer  or  other  employee from engaging in or continuing any
conduct,  activity  or  practice  relating  to  the  Company's  business.

                                       26
<PAGE>
     2.20     AUTHORITY;  BINDING  NATURE  OF  AGREEMENT;  INAPPLICABILITY  OF
ANTI-TAKEOVER  STATUTES.

     (A)     Except  as  set  forth  on  Part  2.20(a) of the Company Disclosure
Schedule,  the  Company  has  the  absolute  and  unrestricted  right, power and
authority to enter into and to perform its obligations under this Agreement; and
the  execution,  delivery  and performance by the Company of this Agreement have
been  duly authorized by all necessary action on the part of the Company and its
board  of  directors.  This  Agreement  constitutes the legal, valid and binding
obligation  of  the  Company, enforceable against the Company in accordance with
its  terms,  subject  to (i) laws of general application relating to bankruptcy,
insolvency  and  the relief of debtors, and (ii) rules of law governing specific
performance,  injunctive  relief  and  other  equitable  remedies.

     (B)     The  Company's  board  of  directors has (i) unanimously determined
that  the  Merger is advisable and fair and in the best interests of the Company
and  its stockholders, (ii) unanimously recommended the approval and adoption of
this  Agreement by the holders of Company Stock and directed that this Agreement
and  the  Merger be submitted for consideration by the Company's stockholders in
accordance  with  Section  5.2,  and  (iii)  to  the extent necessary, adopted a
resolution  having  the  effect  of causing the Company not to be subject to any
state  takeover  law  or similar Legal Requirement that might otherwise apply to
the  Merger  or  any  of  the other transactions contemplated by this Agreement.

     (C)     No  state  takeover statute or similar Legal Requirement applies or
purports  to  apply  to  the  Merger,  this Agreement or any of the transactions
contemplated  hereby.

     2.21     NON-CONTRAVENTION;  CONSENTS.  Except as set forth in Part 2.21 of
the  Company  Disclosure  Schedule,  neither  (1)  the  execution,  delivery  or
performance of this Agreement or any of the other agreements referred to in this
Agreement,  nor  (2)  the  consummation  of  the  Merger  or  any  of  the other
transactions  contemplated  by this Agreement, will directly or indirectly (with
or  without  notice  or  lapse  of  time):

     (A)     contravene,  conflict  with  or result in a violation of (i) any of
the  Incorporation  Documents,  or  (ii) any resolution adopted by the Company's
stockholders,  board  of  directors  or  any committee of the Company's board of
directors;

     (B)     contravene,  conflict with or result in a violation of, or give any
Governmental Body or other Person the right to challenge any of the transactions
contemplated  by  this  Agreement or to exercise any remedy or obtain any relief
under,  any Legal Requirement or any order, writ, injunction, judgment or decree
to  which  the  Company,  or  any of the assets owned or used by the Company, is
subject;

     (C)     contravene,  conflict  with  or result in a violation of any of the
terms  or  requirements  of,  or give any Governmental Body the right to revoke,
withdraw,  suspend,  cancel, terminate or modify, any Governmental Authorization
that  is held by the Company or that otherwise relates to the Company's business
or  to  any  of  the  assets  owned  or  used  by  the  Company;

                                       27
<PAGE>
     (D)     contravene, conflict with or result in a violation or breach of, or
result  in  a  default  under,  any provision of any Company Contract that is or
would  constitute  a  Material  Contract,  or  give  any Person the right to (i)
declare  a  default or exercise any remedy under any such Company Contract, (ii)
accelerate  the  maturity  or performance of any such Company Contract, or (iii)
cancel,  terminate  or  modify  any  such  Company  Contract;  or

     (E)     result  in  the  imposition  or  creation  of  any  lien  or  other
Encumbrance  upon  or  with  respect  to any asset owned or used by the Company.

Except as may be required by the DGCL or the California Code, the Company is not
and or will not be required to make any filing with or give any notice to, or to
obtain  any  Consent from, any Governmental Body or any industry regulatory body
in  connection with (x) the execution, delivery or performance of this Agreement
or  any  of  the  other  agreements  referred  to  in this Agreement, or (y) the
consummation of the Merger or any of the other transactions contemplated by this
Agreement.

     2.22     VOTE  REQUIRED.  The affirmative vote of the holders of a majority
of  the Company Common Stock and the Company Preferred Stock, voting as separate
classes,  outstanding on the record date for the Company's stockholders' meeting
(or  the written consent in lieu thereof) is the only vote of the holders of any
class or series of the Company's capital stock necessary to adopt this Agreement
and  approve  the  Merger  and  the  other  transactions  contemplated  by  this
Agreement.

     2.23     FULL  DISCLOSURE. This Agreement (including the Company Disclosure
Schedule)  does  not,  and the Company Closing Certificate will not, (i) contain
any  representation,  warranty  or  information that is false or misleading with
respect  to any material fact, or (ii) omit to state any material fact necessary
in  order  to make the representations, warranties and information contained and
to  be  contained  herein  and  therein (in the light of the circumstances under
which  such  representations, warranties and information were or will be made or
provided)  not  false  or  misleading.

     2.24     BROKERS. No broker, finder or investment banker is entitled to any
brokerage,  finder's or other fee or commission in connection with the Merger or
the  transactions contemplated by this Agreement based upon arrangements made by
or  on  behalf  of  the  Company.

3.     CERTAIN  COVENANTS  OF  THE  COMPANY

     3.1     ACCESS  AND  INVESTIGATION. During the period from the date of this
Agreement  and continuing until the earlier of the termination of this Agreement
pursuant  to  Section  8  or  the Effective Time (the "Pre-Closing Period"), the
Company  shall,  and  shall cause its Representatives to: (a) provide Parent and
Parent's  Representatives  with  reasonable  access  to  the  Company's
Representatives,  personnel  and  assets and to all existing books, records, Tax
Returns,  work  papers  and  other  documents  and  information  relating to the
Company; and (b) provide Parent and Parent's Representatives with copies of such
existing  books,  records,  Tax  Returns,  work  papers  and other documents and
information  relating  to  the  Company,  and  with  such  additional financial,
operating  and  other  data and information regarding the Company, as Parent may
reasonably  request.  During  the  Pre-Closing  Period,  Parent  and  its

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<PAGE>
Representatives  will  hold  any  such  information  that is confidential to the
Company  in  accordance  with  the terms of the Confidentiality Agreement, dated
August  10,  2000,  between  the  Company  and  Parent.

     3.2     OPERATION OF THE COMPANY'S BUSINESS. Unless the Company obtains the
prior  written  consent  of  Parent  (which  consent  shall  not be unreasonably
withheld),  during  the  Pre  Closing  Period:

     (A)     the  Company  shall  conduct  its  business  and  operations in the
ordinary  course  and  in  substantially  the  same  manner as such business and
operations  have  been  conducted  prior  to  the  date  of  this  Agreement;

     (B)     the  Company  shall  use  reasonable efforts to preserve intact its
current  business  organization,  keep  available  the  services  of its current
officers  and  employees  and  maintain  its  relations  and  good will with all
suppliers,  customers,  landlords, creditors, employees and other Persons having
business  relationships  with  the  Company;

     (C)     the  Company  shall  not  cancel  any  of  its respective insurance
policies  identified  in  Part  2.17  of  the  Company  Disclosure  Schedule;

     (D)     the  Company  shall  cause  its  Chief  Executive Officer to report
regularly  (but  in  no  event  less frequently than weekly) to the President of
Parent  concerning  the  status  of  the  Company's  business;

     (E)     the  Company shall pay or remit, as the case may be, all Taxes that
are  due  and  payable  to  any  Governmental  Body;

     (F)     the  Company  shall  not  declare,  accrue,  set  aside  or pay any
dividend  or  make  any  other  distribution in respect of any shares of capital
stock, nor repurchase, redeem or otherwise reacquire any shares of capital stock
or  other  securities;

     (G)     the  Company shall not sell, issue or authorize the issuance of (i)
any  capital  stock  or  other security, (ii) any option or right to acquire any
capital  stock  or  other  security, or (iii) any instrument convertible into or
exchangeable  for  any  capital stock or other security (except that the Company
shall  be permitted to issue Company Common Stock to employees upon the exercise
of  outstanding  Company  Options);

     (H)     other  than as provided in the employment agreements listed on Part
2.10  of  the  Company Disclosure Schedule, the Company shall not amend or waive
any  of  its  rights under, or permit the acceleration of vesting under, (i) any
provision  of its 1998 Stock Option Plan, or (ii) any provision of any agreement
evidencing  any  outstanding  Company  Option;

     (I)     the Company shall not amend or permit the adoption of any amendment
to  the  Incorporation  Documents or affect or become a party to any Acquisition
Transaction,  recapitalization, reclassification of shares, stock split, reverse
stock  split  or  similar  transaction;

     (J)     (I) the Company shall not form any subsidiary or acquire any equity
interest  or  other  interest  in  any  other  Entity;

                                       29
<PAGE>
     (K)     the  Company  shall  not  make  any  capital  expenditure;

     (L)     the  Company  shall not (1) enter into, or permit any of the assets
owned or used by it to become bound by, any Contract that is or would constitute
a  Material  Contract,  or  (ii)  amend  or  prematurely terminate, or waive any
material  right  or  remedy  under,  any  such  Material  Contract;

     (M)     other  than  within  the ordinary course of business and consistent
with  past  practices,  the  Company shall not (i) acquire, lease or license any
right  or  other asset from any other Person, (ii) sell or otherwise dispose of,
or  lease  or  license,  any  right or other asset to any other Person, or (iii)
waive  or  relinquish any right, except for assets acquired, leased, licensed or
disposed  of  by  the  Company  pursuant  to  Contracts  that  are  not Material
Contracts;

     (N)     the Company shall not (i) lend money to any Person (except that the
Company  may make routine travel advances to employees in the ordinary course of
business),  or  (ii)  incur  or  guarantee  any indebtedness for borrowed money;

     (O)     the  Company  shall  not (i) establish, adopt Or amend any Employee
Benefit  Plan,  (ii)  pay  any  bonus  or  make any profit-sharing payment, cash
incentive  payment  or  similar payment to, or increase the amount of the wages,
salary,  commissions,  fringe  benefits  or  other  compensation or remuneration
payable  to,  any of its directors, officers or employees, or (iii) hire any new
employee  whose  aggregate  annual  compensation  is expected to exceed $50,000;

     (P)     the  Company  shall  not change any of its methods of accounting or
accounting  practices  (including  establishing  reserves  for  bad debt) in any
material  respect;

     (Q)     the  Company  shall  not  make  any  Tax  election;

     (R)     other than as contemplated by this Agreement, the Company shall not
commence  or  settle  any  material  Legal  Proceeding;

     (S)     the  Company  shall  not agree or commit to take any of the actions
described  in  clauses  "(f)"  through  "(r)"  above.

     3.3     Notification;  Updates  to  Company  Disclosure  Schedule.

     (A)     During  the  Pre-Closing  Period, the Company shall promptly notify
Parent  in  writing  of:

     (i)     the  discovery  by  the  Company  of  any event, condition, fact or
circumstance  that occurred or existed on or prior to the date of this Agreement
and  that caused or constitutes an inaccuracy in or breach of any representation
or  warranty  made  by  the  Company  in  this  Agreement;

     (ii)     any  event, condition, fact or circumstance that occurs, arises or
exists  after  the  date of this Agreement and that would cause or constitute an
inaccuracy in or breach of any representation or warranty made by the Company in

                                       30
<PAGE>
this  Agreement  if  (A) such representation or warranty had been made as of the
time of the occurrence, existence or discovery of such event, condition, fact or
circumstance,  or  (B) such event, condition, fact or circumstance had occurred,
arisen  or  existed  on  or  prior  to  the  date  of  this  Agreement;

     (iii)     any material breach of any covenant or obligation of the Company;
and

     (iv)     any  event,  condition,  fact  or circumstance that would make the
timely satisfaction of any of the conditions set forth in Section 6 or Section 7
impossible  or  unlikely.

     (B)     If  any  event, condition, fact or circumstance that is required to
be  disclosed  pursuant  to  Section  3.3(a)  requires any change in the Company
Disclosure Schedule, or if any such event, condition, fact or circumstance would
require  such a change assuming the Company Disclosure Schedule were dated as of
the  date  of  the  occurrence, existence or discovery of such event, condition,
fact  or  circumstance,  then  the  Company  shall promptly deliver to Parent an
update  to the Company Disclosure Schedule specifying such change. Except as set
forth  in  Sections  9.2(a)(i)  and  (ii),  no  such  update  shall be deemed to
supplement  or  amend  the  Company  Disclosure  Schedule for the purpose of (i)
determining  the  accuracy  of any of the representations and warranties made by
the Company in this Agreement, or (ii) determining whether any of the conditions
set  forth  in  Section  6 has been satisfied, unless so agreed to in writing by
Parent,  which agreement shall not be unreasonably withheld if such supplemental
or  amended  disclosure  is  not  reasonably  likely,  individually  or  in  the
aggregate,  to  result  in  a  Material  Adverse  Effect  on  the  Company.

     3.4     No  Negotiation.  During  the Pre-Closing Period, the Company shall
not,  directly  or  indirectly:

     (A)     solicit  or  encourage  the  initiation of any inquiry, proposal or
offer  from  any  Person  (other than Parent) relating to a possible Acquisition
Transaction;

     (B)     participate  in  any  discussions or negotiations or enter into any
agreement with, or provide any non-public information to, any Person (other than
Parent) relating to or in connection with a possible Acquisition Transaction; or

     (C)     consider, entertain or accept any proposal or offer from any Person
(other  than  Parent)  relating  to  a  possible  Acquisition  Transaction.

The  Company  shall  promptly  notify Parent in writing of any material inquiry,
proposal  or  offer  relating  to  a  possible  Acquisition  Transaction that is
received  by  the  Company  during  the  Pre  Closing  Period.

     3.5     RELEASE  OF  SECURITY. Prior to the Closing Date, the Company shall
take  or  shall cause to be taken all actions as shall be necessary or advisable
in  order  to  ensure  any  Encumbrances  held by any Person with respect to any
capital  stock  or  securities of the Company are fully discharged. In the event
such  Encumbrances cannot be discharged without repayment of any loan or advance
made  to  the  Company by any Person, the Company shall pay or shall cause to be
paid  in  full  any  loans,  advances  or  other  amounts  owing  to any Person.

                                       31
<PAGE>
     3.6     TERMINATION  OF 401(K) PLAN. To the extent requested by Parent, the
Company  shall  ensure  that  its Profit Sharing/401(k) Plan (the "401(k) Plan")
shall  be  terminated immediately prior to the Effective Time. The parties agree
that  a  determination  letter  shall be filed with the Internal Revenue Service
with  respect  to  the  termination  of  the 401(k) Plan after the Closing Date.

     3.7     TERMINATION  OF  OTHER  AGREEMENTS.

     (A)     To  the  extent  requested by Parent, the Company shall ensure that
the  Employment  Agreements,  the  Compensation  Agreements,  the  Consulting
Agreements,  and the Special Advisory Board Agreements listed on Part 2.10(a)(i)
of  the Company Disclosure Schedule shall be terminated immediately prior to the
Effective  Time.

     3.8     LITIGATION.  Prior  to  the Closing Date, the Company shall use its
best  efforts  to  enter  into a settlement agreement or obtain a dismissal with
prejudice  with  respect  to  the  litigation listed on Part 2.11 of the Company
Disclosure Schedule (the "Druml Litigation") upon such terms and conditions that
are  satisfactory  to  Parent  with  Parent's  sole  discretion.

     3.9     WARRANTS  AND  CONVERTIBLE  NOTES.  The  Company shall use its best
efforts  to  cause  all  Warrants  listed  on  Part  2.3  (c)(ii) of the Company
Disclosure  Schedule (the "Company Warrants") and all promissory notes listed on
Part  2.3  (c)(i) of the Company Disclosure Schedule to be converted into shares
of  the Company Common Stock or Company Preferred Stock, as the case may be (the
"Company  Promissory  Notes"), prior to the Effective Time. Any Company Warrants
that  are  not  converted  into  shares  of  the Company Common Stock or Company
Preferred  Stock  prior  to  the Effective Time shall, at the Effective Time, be
converted  into  warrants to acquire shares of Parent Common Stock in accordance
with  the  terms and conditions of such Company Warrants. Any Company Notes that
are  not  converted into shares of the Company Common Stock or Company Preferred
Stock  prior  to  the  Effective  Time shall, at the Effective Time, be added to
EXHIBIT  D and shall be paid by Parent at the Closing in accordance with Section
1.5. The Company shall cause the following promissory notes to be converted into
shares  of  the  Company  Common  Stock  or Company Preferred Stock prior to the
Effective  Time:

Promissory  Note,  dated  October  20, 2000, payable to Donald B. Witmer, in the
original  principal amount of $140,000; Promissory Note, dated October 20, 2000,
payable  to  Daryl  Stemm,  in  the  original  principal  amount of $25,000; and
Promissory Note, dated October 20, 2000, payable to the Angel's Forum Vifi, LLC,
in  the  original  principal  amount  of  $210,000.

4.     REPRESENTATIONS  AND  WARRANTIES  OF  PARENT  AND  MERGER  SUB

     Parent  and  Merger  Sub jointly and severally represent and warrant to the
Company,  subject  to  such  exceptions  as  are  specifically  disclosed in the
disclosure  schedule (referencing the appropriate section and paragraph numbers)
supplied  by  Parent to the Company (the "PARENT DISCLOSURE SCHEDULE") and dated
the  date hereof, that on the date hereof and as of the Effective Time as though
made  at  the  Effective Time as follows (provided, that the representations and
warranties  made  as  of  a  specified  date will be true and correct as of such
date):

     4.1     DUE  ORGANIZATION.

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<PAGE>
     (A)     Each  of  Parent  and  Merger  Sub is a corporation duly organized,
validly  existing  and  in good standing under the laws of the State of Delaware
and  has  full power (corporate and other) and authority to conduct its business
in  the manner in which its business is currently being conducted and to own and
use  its  assets in the manner in which its assets are currently owned and used.

     (B)     Parent is qualified to do business as a foreign corporation, and is
in  good  standing, in each jurisdiction in which the nature of its business and
of  its  properties makes such qualification necessary, except where the failure
to  be  so  qualified  would  not  have  a  material  adverse effect on Parent's
business, condition (financial or otherwise), assets, liabilities or operations.

     4.2     CAPITALIZATION.  As  of the date hereof and as of the Closing Date,
the authorized capital stock of the Parent consists (and will consist) solely of
150,000,000 shares of Common Stock and 150,000,000 shares of Preferred Stock, of
which 35,000,000 shares are designated as "Series A Convertible Preferred Stock"
("Series  A  Preferred  Stock"),  100,000,000  are  designated  as  "Series  B
Convertible  Preferred Stock" ("Series B Preferred Stock") and 12,000,000 shares
are  designated  as  "Series C Convertible Preferred Stock" ("Series C Preferred
Stock").  There are 200,000 shares of Common Stock issued and outstanding. There
are  33,333,334  shares  of  Series  A  Preferred  Stock issued and outstanding,
44,959,249 shares of Series B Preferred Stock issued and outstanding, 10,000,000
shares  of  Series  C  Preferred  Stock issued and outstanding, and there are no
other  shares  of capital stock of the Parent outstanding. All of the issued and
outstanding  shares  of the Parent's capital stock have been duly authorized and
are  validly  issued,  fully paid and nonassessable. Except as set forth on Part
4.2  of  the  Parent  Disclosure  Schedule  hereto,  there  are  no  outstanding
obligations,  options, warrants, convertible securities, subscriptions, or other
commitments  or rights (matured or contingent) of any nature to which the Parent
is  a  party to acquire or subscribe for any securities of the Parent. There are
no bonds, debentures, notes or other indebtedness of the Parent having the right
to  vote  (or convertible into, or exchangeable for, securities having the right
to  vote)  on any matter on which stockholders of the Parent may vote. Except as
set forth on Part 4.2 of the Parent Disclosure Schedule, there are no preemptive
rights,  rights  of  first  refusal, voting rights, change of control or similar
rights,  anti-dilution  protections or other rights by which the Parent is bound
that  any  stockholder, officer, employee or director of the Parent or any other
Person is entitled to exercise or invoke as a result of the issuance and sale by
the  Parent  of  the  Shares.

     4.3     NON-CONTRAVENTION; CONSENTS. Neither (1) the execution, delivery or
performance of this Agreement or any of the other agreements referred to in this
Agreement,  nor  (2)  the  consummation  of  the  Merger  or  any  of  the other
transactions  contemplated  by this Agreement, will directly or indirectly (with
or  without  notice  or  lapse of time) contravene, conflict with or result in a
violation  of  (i)  any of the provisions of the certificate of incorporation or
bylaws  of  Parent  or  Merger  Sub,  or  (ii)  any  resolution  adopted  by the
stockholders,  the board of directors or any committee of the board of directors
of  Parent  or  Merger  Sub.  Except  as  set  forth  on  Part 4.3 of the Parent
Disclosure  Schedule, neither Parent nor Merger Sub will be required to make any
filing  with or give any notice to, or to obtain any Consent from, any Person in
connection  with (x) the execution, delivery or performance of this Agreement or
any  of  the  other  agreements  referred  to  in  this  Agreement,  or  (y) the
consummation of the Merger or any of the other transactions contemplated by this
Agreement,  except  for  (i)  the  filing of the Certificates of Merger with the

                                       33
<PAGE>
Secretary  of  State of the State of Delaware and with the California Department
of  Corporations  and  (ii)  the  fairness  hearing  described  in Section 5.11.

     4.4     AUTHORITY;  BINDING NATURE OF AGREEMENT. Parent and Merger Sub have
the  absolute  and  unrestricted  right,  power  and authority to enter into and
perform  their obligations under this Agreement; and the execution, delivery and
performance  by  Parent  and  Merger  Sub  of  this  Agreement  (including  the
contemplated  issuance  of  Parent Common Stock in the Merger in accordance with
this Agreement) have been duly authorized by all necessary action on the part of
Parent  and  Merger  Sub  and  their  respective boards of directors. No vote of
Parent's  stockholders  is  needed  to  approve  the  Merger.  This  Agreement
constitutes  the  legal,  valid and binding obligation of Parent and Merger Sub,
enforceable  against  them  in accordance with its terms, subject to (i) laws of
general  application  relating  to  bankruptcy,  insolvency  and  the  relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and  other  equitable  remedies.

     4.5     VALID  ISSUANCE. The Parent Common Stock to be issued in the Merger
will,  when  issued  in  accordance  with  the  provisions of this Agreement, be
validly  issued,  fully  paid  and  nonassessable.

4.6     FINANCIAL  STATEMENTS.

     (A)     The  Private Placement Memorandum related to the offering of shares
of  Parent's  Series  B  Convertible  Preferred  Stock  (the  "Private Placement
Memorandum")  delivered  by  Parent  to  the  Company contains certain financial
statements  of  Parent (the "Parent Financial Statements"), which are subject to
the  qualifications  and  disclaimers  contained  in  the  Private  Placement
Memorandum.  The  financial  information  contained  in  the  Private  Placement
Memorandum for the years ended 1998 and 1999 was compiled from available records
of  IBM  Corporation  ( including budgets, estimates of operational expenses and
other  sources.  Neither  Parent  nor  Merger  Sub  makes  any representation or
warranty as to the complete accuracy of information compiled from these sources,
but  believes  that  the  financial  data  contained  in  the  Private Placement
Memorandum  is  a  fair  representation  of  the  financial  results of the Home
Director  business unit of IBM for the periods shown. Except as provided in this
Section  4.6  (a),  Parent  is not making any representation and warranty to the
Company  with  respect  to  the  Private  Placement  Memorandum.

     (B)     Parent  has delivered to the Company the unaudited balance sheet of
Parent,  as of September 30, 2000, and the related unaudited income statement of
Parent  for  the 9 months then ended (the "Parent's September 30, 2000 Financial
Statements").  The Parent's September 30, 2000 Financial Statements are accurate
and  complete in all material respects and present fairly the Parent's financial
position  of  Parent  as  of  the  date thereof. The Parent's September 30, 2000
Financial  Statements  have  been prepared in accordance with generally accepted
accounting  principals  applied  on  a  consistent  basis.

     4.7     ABSENCE  OF  CHANGES.  From  December  31, 1999 to the date of this
Agreement,  there has not been any material adverse change in Parent's business,
condition  (financial  or  otherwise),  assets,  liabilities  or  operations.

                                       34
<PAGE>
     4.8     LEGAL PROCEEDINGS; ORDERS. There is no pending Legal Proceeding and
to  the  best  knowledge  of  Parent and Merger Sub, no Person has threatened to
commence  any  Legal  Proceeding:  (i)  against  Parent that could reasonably be
expected  to  have  a  material  adverse  effect on Parent's business, condition
(financial  or  otherwise),  assets,  liabilities  or  operations;  or (ii) that
challenges,  or that may have the effect of preventing, delaying, making illegal
or  otherwise  interfering  with,  the  Merger  or any of the other transactions
contemplated  by  this  Agreement. Except as set forth on Part 4.8 of the Parent
Disclosure  Schedule,  to the best of the knowledge of Parent and Merger Sub, no
event  has  occurred,  and  no claim, dispute or other condition or circumstance
exists,  that  will,  or  that  could reasonably be expected to, give rise to or
serve  as  a  basis  for  the  commencement  of  any  such  Legal  Proceeding.

     4.9     BROKERS.  Except  as set forth on Part 4.9 of the Parent Disclosure
Schedule,  no  broker, finder or investment banker is entitled to any brokerage,
finder's  or  other  fee  or  commission  in  connection  with the Merger or the
transactions  contemplated  by this Agreement based upon arrangements made by or
on  behalf  of  Parent.

     4.10     CERTIFICATE  OF  INCORPORATION  AND  BYLAWS;  RECORDS.  Parent has
delivered to the Company accurate and complete copies of: (1) its Certificate of
Incorporation  and  Bylaws, including all amendments thereto (the "Incorporation
Documents"); (2) a detailed listing of the capitalization of Parent; and (3) the
minutes  and  other records of the meetings and other proceedings (including any
actions  taken  by  written  consent  or  otherwise  without  a  meeting) of the
stockholders,  the  board  of  directors  and  all  committees  of  the board of
directors  of  Parent.

4.11     PROPRIETARY  ASSETS.

     (A)     Part 4.11 (a)(i) of the Parent Disclosure Schedule sets forth, with
respect  to  each Parent Proprietary Asset registered with any Governmental Body
or  for  which  an  application has been filed with any Governmental Body, (i) a
brief  description  of  such  Proprietary  Asset,  and  (ii)  the  names  of the
jurisdictions  covered by the applicable registration or application. Other than
unregistered  trademarks,  trade  names  and  service  marks  (collectively, the
"Parent  Unregistered  Trademarks"),  Part 4.11 (a)(ii) of the Parent Disclosure
Schedule  identifies  and  provides  a  brief  description  of  all other Parent
Proprietary  Assets  owned  by  the  Parent.  Part  4.11  (a)(ii)  of the Parent
Disclosure  Schedule also discloses all Parent Unregistered Trademarks that have
been  and  are  currently  being  used  by  the Parent in the ordinary course of
business.  Parent has not received any notice or other communication (in writing
or  otherwise)  of  any  actual,  alleged, possible or potential infringement or
unlawful  use  of  any  Parent Unregistered Trademark. Part 4.11 (a)(iii) of the
Parent  Disclosure  Schedule identifies and provides a brief description of each
Proprietary  Asset  licensed to Parent by any Person (except for any Proprietary
Asset  that  is  licensed  to  Parent  under  any  third  party software license
generally available to the public at a cost of less than $5,000), and identifies
the  license  agreement  under which such Proprietary Asset is being licensed to
Parent.  Other  than  the  Parent Unregistered Trademarks identified in Part 4.1
l(a)(ii)  of  the  Parent  Disclosure  Schedule,  Parent  has  good,  valid  and
marketable  title  to  all  of the Parent Proprietary Assets identified in Parts
4.11 (a)(i) and 4.1 1(a)(ii) of the Parent Disclosure Schedule owned by it, free
and  clear of all liens and other Encumbrances, and has a valid right to use all
Proprietary  Assets  identified  in  Part 4.1 1(a)(iii) of the Parent Disclosure
Schedule  not  owned  by it. Except as set forth in Part 4.1 1(a)(iv), Parent is
not  obligated  to  make  any  payment  to  any Person for the use of any Parent

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<PAGE>
Proprietary  Asset.  Except  as  set  forth  in  Part  4.11 (a)(v) of the Parent
Disclosure  Schedule, Parent has not developed jointly with any other Person any
Parent Proprietary Asset with respect to which such other Person has any rights.

     (B)     Except  as  to the absence of registrations referenced in Part 4.11
(a)(ii)  of  the  Parent  Disclosure Schedule, Parent has taken all measures and
precautions reasonably necessary to protect and maintain the confidentiality and
secrecy of all Parent Proprietary Assets (except Parent Proprietary Assets whose
value  would  be  unimpaired by public disclosure) and otherwise to maintain and
protect  the  value  of  all  Parent  Proprietary  Assets.  Parent has taken all
measures  and  precautions necessary to protect and maintain the confidentiality
and secrecy of all Parent Proprietary Assets that are trade secrets (the "Parent
Trade  Secrets")  and  otherwise to maintain and protect the value of all Parent
Trade  Secrets.  Except  in the ordinary course of Parent's business, Parent has
not  disclosed  or  delivered  to  any  Person,  or  permitted the disclosure or
delivery  to any Person of, (i) the source code, or any portion or aspect of the
source  code,  of  any Parent Proprietary Asset, or (ii) the object code, or any
portion  or  aspect  of  the  object  code,  of  any  Parent  Proprietary Asset.

     (C)     Except  for  the  potential issues described in Part 4.11(c) of the
Parent  Disclosure  Schedule, which are expressly understood as not constituting
admissions,  (i)  Parent  is  not  infringing,  misappropriating  or  making any
unlawful  use  of,  and Parent has not at any time infringed, misappropriated or
made  any  unlawful  use  of  any  Proprietary  Asset owned by any other Person,
provided  that  the  representation  as  to Patents, trademarks or service marks
shall  be  limited to the best knowledge of Parent, or, (ii) except as set forth
in  Part  4.11(c) of the Parent Disclosure Schedule, Parent has not received any
notice  or other communication (in writing or otherwise) of any actual, alleged,
possible  or  potential  infringement,  misappropriation or unlawful use of, any
Proprietary  Asset  owned  or used by any other Person. To the best knowledge of
the  Parent,  except  as  set  forth  in  Part  4.11(c) of the Parent Disclosure
Schedule, no other Person is infringing, misappropriating or making any unlawful
use  of, and no Proprietary Asset owned or used by any other Person infringes or
conflicts  with,  any  Parent  Proprietary  Asset.

     (D)     To  the  best  knowledge  of  Parent, each Parent Proprietary Asset
conforms  in  all  material  respects  with  any  enforceable  specification,
documentation,  performance  standard,  representation  or  statement  made  or
provided  with respect thereto by or on behalf of Parent; and there has not been
any  claim  by any customer or other Person alleging that any Parent Proprietary
Asset  (including  each version thereof that has ever been licensed or otherwise
made  available  by  Parent  to  any  Person)  does  not conform in all material
respects  with  any  specification,  documentation,  performance  standard,
representation  or statement made or provided by or on behalf of Parent, and, to
the  best  of  the  knowledge  of  Parent, there is no basis for any such claim.

     4.12     GOVERNMENTAL  AUTHORIZATION.  To  the  Knowledge  of  Parent, each
consent,  license,  permit,  grant  or other authorization (i) pursuant to which
Parent  currently  operates  or  holds any interest in any of its properties, or
(ii)  which  is  required  for  the  operation of Parent's business as currently
conducted  or  currently contemplated to be conducted or the holding of any such
interest  (collectively,  "Parent Authorizations") has been issued or granted to
Parent.  The  Parent  Authorizations are in full force and effect and constitute

                                       36
<PAGE>
all  Parent  Authorizations  required to permit Parent to operate or conduct its
business  or  hold  any  interest  in  its  properties  or  assets.

     4.13     FULL  DISCLOSURE.  This Agreement (including the Parent Disclosure
Schedule) does not, and the Parent Closing Certificate will not, (i) contain any
representation, warranty or information that is false or misleading with respect
to any material fact, or (ii) omit to state any material fact necessary in order
to  make  the  representations,  warranties  and information contained and to be
contained herein and therein (in the light of the circumstances under which such
representations,  warranties  and  information were or will be made or provided)
not  false  or  misleading.

5.     CERTAIN  COVENANTS  OF  THE  PARTIES

     5.1     REGULATORY APPROVALS. The Company, Merger Sub, and Parent shall use
all  reasonable  efforts  to file, as soon as practicable after the date of this
Agreement,  all  notices,  reports and other documents required to be filed with
any  Governmental  Body  with  respect  to the Merger and the other transactions
contemplated  by  this  Agreement,  and  to  submit  promptly  any  additional
information  requested  by  any  such  Governmental  Body.

     5.2     STOCKHOLDERS'  CONSENT.  The  Company shall, in accordance with its
Incorporation  Documents and the applicable requirements of the California Code,
solicit  the  consent,  either  in  writing  or  by  a  special  meeting, of the
stockholders  of  the  Company  as  promptly  as  practicable for the purpose of
permitting  them  to consider and to vote upon, approve and adopt the Merger and
this  Agreement.  Without  limiting  the  generality  or  the effect of anything
contained  in  the  Voting  Agreements  and  Irrevocable  Proxies in the form of
Exhibit  B being executed and delivered by the Key Stockholders to Parent within
5 days after the execution and delivery of this Agreement, the Company shall use
its best efforts to cause each Key Stockholder to vote all shares of the capital
stock  of  the  Company  that  are owned, beneficially or of record, by such Key
Stockholder  on  the  record  date  for  the  solicitation of the consent of the
stockholders  of  the  Company,  either  in writing or by special meeting, to be
voted  in favor of the Merger and this Agreement. For greater certainty, in lieu
of  calling and holding a special stockholders' meeting, the Company may solicit
the  approval  of  the  stockholders  of the Company of the Merger and the other
transactions  contemplated  by  this Agreement by written consent. In any event,
the  Company  shall  solicit  by  written  consent, or hold a special meeting of
stockholders,  for  the  purpose of voting upon the approval and adoption of the
Merger  and  this  Agreement no later 5 days after the Company receives an order
from  the  California  Department  of Corporations approving the fairness of the
Merger  to  the  Merger  Stockholders  pursuant  to  Section  5.11.

     5.3     PUBLIC  ANNOUNCEMENTS.  During  the  Pre-Closing  Period,  (a)  the
Company  shall not (and shall not permit any of their respective Representatives
to)  issue  any  press  release  or  make  any  public  statement regarding this
Agreement or the Merger, or regarding any of the other transactions contemplated
by  this  Agreement, without Parent's prior written consent, and (b) Parent will
use  reasonable  efforts  to consult with the Company prior to issuing any press
release  or  making any public statement regarding this Agreement or the Merger,
or  regarding  any  of  the  other  transactions contemplated by this Agreement.

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<PAGE>
     5.4     BEST  EFFORTS. Prior to Closing, (a) the Company shall use its best
efforts  to  cause  the  conditions  set forth in Section 6 to be satisfied on a
timely  basis  (including  without  limitation  to  cure  any  inaccuracy in any
representation  or  warranty that would exist as of the Scheduled Closing Time),
and  (b)  Parent  and  Merger  Sub  shall  use  their  best efforts to cause the
conditions  set  forth  in  Section  7  to  be  satisfied  on  a  timely  basis.

     5.5     EMPLOYMENT  AGREEMENTS.  At  or  prior  to the Closing, the Company
shall  cause  each  of  Don  Witmer  and William Marsh to execute and deliver an
Employment  Agreement  in  the form of Exhibit F with the Surviving Corporation.

     5.6     EMPLOYEE  RELATED MATTERS. The Surviving Corporation shall offer to
employees  of the Company as of the Effective Time who are also employees of the
Company  immediately  prior  to  the  Effective Time employment by the Surviving
Corporation,  after the Effective Time, and each such offer shall be in the form
of  an  individual  offer  letter prepared in accordance with Parent's customary
form  (such  letter  to  confirm such employee's initial position, compensation,
location  and  reporting  relationship).  Those  employees  of  the Company that
continue  to be employees of the Surviving Corporation or any of its affiliates,
including the Surviving Corporation, following the Closing shall, subject to any
necessary transition period and the terms of such plans, be immediately eligible
to participate in Parent's health, vacation, employee stock purchase, 401(k) and
other plans, to the same extent as comparably situated employees of Parent. As a
condition  to  employment,  each  such  employee  shall  execute  and  deliver a
Non-Disclosure  Agreement  in  a  form  acceptable  to  Parent  within  its sole
discretion.

     5.7     FIRPTA  MATTERS.  At  the Closing, (a) the Company shall deliver to
Parent  a  statement  (in such form as may be reasonably requested by counsel to
Parent)  conforming  to  the  requirements  of Section 1.897 - 2(h)(l)(i) of the
United  States  Treasury  Regulations,  and (b) the Company shall deliver to the
Internal Revenue Service the notification required under Section 1.897 - 2(h)(2)
of  the  United  States  Treasury  Regulations.

     5.8     RELEASE.  At  the  Closing,  the  Company  shall  cause  each  Key
Stockholder  to  execute  and deliver to the Company and Parent a Release in the
form  of  Exhibit  G.

     5.9     TERMINATION  OF  EMPLOYEE  PLANS. At the Closing, the Company shall
terminate  its  1998 Stock Option Plan and 401(k) Plan, and shall ensure that no
employee  or  former employee of the Company has any rights under such Plans and
that  any  liabilities  of  the  Company  under  such  Plans (including any such
liabilities  relating  to  services  performed  prior  to the Closing) are fully
extinguished  at no cost to the Company, except as otherwise provided in Section
1.7.

     5.10     TAX-FREE  REORGANIZATION.  No  party  shall take any action either
prior  to or after the Effective Time that could reasonably be expected to cause
the  Merger  to  fail  to qualify as a "reorganization" under Section 368 of the
Code.

     5.11     FAIRNESS  HEARING.  The Company and the Stockholders' Agent hereby
acknowledge  and  agree  that  the shares of Parent Common Stock to be issued in
connection  with  the  Merger will not be registered under the Securities Act or
any state securities law. Therefore, such shares of Parent Common Stock shall be

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<PAGE>
subject  to  restrictions on transfer pursuant to the Securities Act, applicable
State  securities  laws,  and  the  Parent's Stockholders' Agreement (as defined
below).The  parties  hereto  expect that the shares of Parent Common Stock to be
issued in connection with the Merger will be issued in a transaction exempt from
registration under the Securities Act by reason of Section 3(a)(1O) thereof, and
that  the  Parent  Common  Stock  and Parent's conversion of the Company's Stock
Options  hereunder  will  be  qualified  under  the  California Code pursuant to
Section  25121  thereof  after  a fairness hearing has been held pursuant to the
authority granted by Section 25142 of the California Code (the "Fairness Hearing
Law").  Promptly  after  the execution of this Agreement, the Company and Parent
shall  prepare  and  cause  to  be  filed  with  the  California  Department  of
Corporations  an  application  under  the  Fairness  Hearing  Law, and a related
information  statement  or  other  disclosure  document  (the  "Information
Statement"),  and  shall  request  a  hearing  on  the fairness of the terms and
conditions  of  the  Merger pursuant to the Fairness Hearing Law. The parties to
this  Agreement  shall  use  all  commercially  reasonable  efforts to cause the
California  Department  of Corporations to approve the fairness of the terms and
conditions of the Merger at such a hearing; provided, however, that Parent shall
not  be  required to modify any of the terms of the Merger in order to cause the
California  Department of Corporations to approve the fairness of such terms and
conditions.  The  Company shall provide and include in the Information Statement
such  information  relating  to  the  Company as may be required pursuant to the
Fairness Hearing Law. The Information Statement shall include the recommendation
of  the  board  of directors of the Company in favor of the Merger. Parent shall
prepare and file with appropriate state securities or "Blue Sky" authorities all
applications  for  qualification  or  approval  (or  notices required to perfect
exemptions  from  such  compliance)  as  may  be required in connection with the
Merger.  The  Company  shall  use  its  best  efforts to assist Parent as may be
necessary to comply with all appropriate state securities or Blue Sky laws which
may  be  applicable  in  connection  with  the  Merger.

     5.12     EXCHANGE  ACT.  The  parties  acknowledge and agree that they have
entered  into  this Agreement with the expectation and understanding that Parent
will  not  become  a  reporting company under Section 12 (g) of the Exchange Act
unless  and  until Parent completes an initial public offering. Accordingly, the
parties  agree  to  enter  into an amendment or supplement to this Agreement, if
proposed  by  Parent  at  any time prior to the Closing, that alters the form or
structure of the transaction and thereby enables the parties to move effectively
provide  for  resolution  of  indemnification  claims, earn-out issues and other
matters  arising  in  connection  with  the  transactions  contemplated  by this
Agreement  and assists Parent in avoiding or minimizing the likelihood of Parent
becoming obligated under Section 12 (g) of the Exchange Act prior to its initial
public offering, if any; provided that any such supplement or amendment does not
change  the form or amount of consideration to be issued by Parent or the timing
of  the  payment thereof, change or alter the tax free nature of the transaction
or  otherwise  impair or diminish the economic benefits of the transaction to be
realized  by  the  Merger  Stockholders.

6.     CONDITIONS  PRECEDENT  TO  OBLIGATIONS  OF  PARENT  AND  MERGER  SUB

     The obligations of Parent and Merger Sub to effect the Merger and otherwise
consummate  the  transactions  contemplated by this Agreement are subject to the
satisfaction  (or  waiver by the Parent), at or prior to the Closing, of each of
the  following  conditions:

     6.1     ACCURACY  OF  REPRESENTATIONS.

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<PAGE>
     (A)     Each  of  the representations and warranties made by the Company in
this  Agreement and in each of the other agreements and instruments delivered to
Parent  in connection with the transactions contemplated by this Agreement shall
have  been  accurate  as  of  the  date  of  this  Agreement.

     (B)     Each  of  the representations and warranties made by the Company in
this  Agreement and in each of the other agreements and instruments delivered to
Parent  in connection with the transactions contemplated by this Agreement shall
be  accurate  in  all material respects as of the Closing Date as if made at the
Closing  Date  (without  giving  effect  to any update to the Company Disclosure
Schedule).

     6.2     PERFORMANCE OF COVENANTS. All of the covenants and obligations that
the  Company is required to comply with or to perform at or prior to the Closing
shall  have  been  complied  with  and  performed.

     6.3     STOCKHOLDER APPROVAL. The Merger and this Agreement shall have been
duly  approved  by  the  affirmative  vote of 90% of the shares of Company Stock
entitled  to vote with respect thereto. The number of Dissenting Shares shall be
less  than 10% of the Company Stock outstanding immediately prior to the Closing
Date.

     6.4     CONSENTS.  All  Consents  (a)  required  to  be  obtained  from any
Governmental Entity, and (b) otherwise required to be obtained, in each case, in
connection  with  the  Merger  and  the  other transactions contemplated by this
Agreement  (including  the  Consents  identified  in  Part  2.21  of the Company
Disclosure  Schedule)  shall  have  been obtained and shall be in full force and
effect.

     6.5     AGREEMENTS  AND DOCUMENTS. Parent shall have received the following
agreements  and  documents,  each  of  which  shall be in full force and effect:

     (A)     Employment  Agreements in the form of Exhibit F executed by each of
Don  Witmer  and  William  Marsh;

     (B)     a  Release  in  the  form of Exhibit G, executed by each of the Key
Stockholders  of  the  Company;

     (C)     a  legal  opinion  of Gray, Cary, Ware & Freidenrich, LLP as of the
Closing  Date,  in  a  form  reasonably  acceptable  to  Parent;

     (D)     a  certificate  executed  by  the  Company  and  containing  the
representation  and warranty of the Company that each of the representations and
warranties  set forth in Section 2 is accurate in all respects as of the Closing
Date  as  if  made  as  of  the  Closing Date (subject to such exceptions as are
necessary  for accuracy) and that the conditions set forth in Sections 6.1, 6.2,
6.3  and  6.4  have  been  duly  satisfied  (the "Company Closing Certificate");

     (E)     a  certificate  executed  by the Secretary of the Company attaching
and  certifying  as  to  the  Company's current Certificate of Incorporation and
Bylaws  and the resolutions of the Company's Board of Directors and stockholders
approving  this  Agreement  and  the  transactions  relating  thereto;

                                       40
<PAGE>
     (F)     written  resignations of all officers and directors of the Company,
effective  as  of  the  Effective  Time;

     (G)     the  Escrow  Agreement  substantially  in  the  form  of Exhibit E,
executed  by  the  Stockholders'  Agent  and  the other parties thereto, and the
Escrow  Shares  shall  have  been  deposited  thereunder;

     6.6     FIRPTA  COMPLIANCE.  The Company shall have filed with the Internal
Revenue  Service  the  notification  referred  to  in  Section  5.7.

     6.7     NO  RESTRAINTS.  No  temporary  restraining  order,  preliminary or
permanent  injunction  or  other order preventing the consummation of the Merger
shall  have  been  issued  by  any court of competent jurisdiction and remain in
effect,  and  there  shall  not  be  any  Legal  Requirement  enacted  or deemed
applicable  to  the  Merger  that  makes  consummation  of  the  Merger illegal.

     6.8     NO  LEGAL  PROCEEDINGS.  No Governmental Body or other Person shall
have commenced or threatened to commence any Legal Proceeding (a) challenging or
seeking  the  recovery  of damages in connection with the Merger; (b) seeking to
prohibit or limit the exercise by Parent of any material right pertaining to its
ownership  of  stock  of  Merger  Sub or the Company; or (c) claiming to own any
capital  stock of the Company, or the option or other right to the capital stock
of  the  Company,  or  right to receive consideration as a result of the Merger.

     6.9     TERMINATION  OF  EMPLOYEE  PLANS.  The  Company shall have provided
Parent  with  evidence, reasonably satisfactory to Parent, as to the termination
of  the  benefit  plans  referred  to  in  Section  5.9.

     6.10     TERMINATION  OF  AGREEMENTS. Immediately prior to the Closing, the
following  agreements  and/or  provisions  of  the following agreements shall be
terminated  and  shall  no  longer  be  in  effect:

     (A)     the  Employment  Agreements,  the  Consulting  Agreements,  and the
Special  Advisory  Board  Agreements  listed  on  Part 2.1O(a)(i) of the Company
Disclosure  Schedule.

     6.11     NO  MATERIAL  ADVERSE  CHANGE.  There  shall have been no material
adverse  change  or  decline  in  value  in  the business, properties, condition
(financial or otherwise), results of operations, or prospects of the Company (or
in  any  aspect  or  portion  thereof)  since  the  date  of  this  Agreement.

     6.12     RELEASE  OF SECURITY. Prior to the Closing Date, the Company shall
have  provided to Parent evidence reasonably satisfactory to Parent that any and
all  Encumbrances  held  by  any  Person  with  respect  to any capital stock or
securities of the Company have been fully discharged and that all of the capital
stock  of  the  Company is free and clear of all Encumbrances. In the event such
Encumbrances  cannot be discharged without repayment of any loan or advance made
to the Company by any Person, on or prior to the Closing Date, the Company shall
have  provided  to Parent evidence satisfactory to Parent that any and all loans
or  other  advances  made by any Person in favor of the Company has been paid in
full  and  any Encumbrances held by any Person with respect to any assets of the
Company  has  been  fully  discharged.

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     6.13     COMPLIANCE WITH SEC.3(A)(10) OF THE SECURITIES ACT. The California
Department  of  Corporations  shall  have  issued an approval under the Fairness
Hearing  Law  (following a hearing upon the fairness of the terms and conditions
of  the Merger, conducted pursuant to the Fairness Hearing Law) for the issuance
of  the  Parent  Common  Stock  to  be  issued in the Merger, and all applicable
requirements  of  Section  3(a)(10)  of  the  Securities  Act  shall  have  been
satisfied.

     6.14     DUE  DILIGENCE. The results of the Parent's accounting, financial,
and  legal  due diligence review of the Company shall be satisfactory to Parent,
within  its  sole discretion. In the event that the Parent does not give written
notice  to  the Company of the failure of this contingency by the earlier of (i)
the  Closing  Date  or  (ii)  December  31,  2000;  then  this contingency shall
conclusively  be  considered  satisfied or waived by Parent. If Parent elects to
give  a  notice  pursuant  to this Section 6.14, then such notice must include a
detailed  list  of  items  that  require further review by Parent and dates when
Parent  expects  to  complete  its review. Notwithstanding the foregoing, Parent
must  complete its due diligence review of the Company and raise and resolve any
objections  arising  from such due diligence no later than 10 calendar days from
the date of Parent's notice, if Parent's objections are not resolved within such
10  calendar  days then the transactions contemplated by this Agreement shall be
terminated  unless  such  termination  is  waived  in  writing  by  the Company.

     6.15     STOCKHOLDERS  AGREEMENT.  Stockholders'  Agent shall have executed
and  delivered  to  Parent  an  Agreement  to  Join  as a Party to Stockholders'
Agreement in the form attached as Exhibit H on behalf of the Merger Stockholders
(the  "Parent's  Stockholders'  Agreement").

     6.16     LITIGATION.  The  Company  shall  have  entered  into a settlement
agreement  or  obtained  a  dismissal  with  prejudice with respect to the Druml
litigation upon such terms and conditions that are satisfactory to Parent within
Parent's  sole  discretion.  if the Company has not entered into such settlement
agreement  or  obtained such dismissal, Parent shall hold back 480,000 shares of
Parent  Common  Stock  that  are  otherwise issuable to the Merger Stockholders'
pursuant to Section 1.6 (a). Parent may issue such shares of Parent Common Stock
to settle the Druml Litigation, within Parent's sole discretion. Any such shares
of  Parent  Common  Stock  that  are  not  issued  by Parent to settle the Druml
litigation  shall  be  issued  by  Parent to the Merger Stockholders immediately
after  the  effectiveness  of  such settlement agreement in accordance with each
Merger  Stockholders'  ProRata Allocations. In addition, Parent shall deduct all
costs,  expenses,  and  fees  (including  Attorneys' fees) incurred by Parent in
connection  with  the  Druml  litigation  on a dollar for dollar basis, from any
amounts  payable  to  the  Merger  Stockholders  pursuant  to  Section  1.10.

     6.17     EXCHANGE  ACT. Nothing shall have occurred to cause the Company to
conclude,  in  the  exercise of its good faith judgment, that (i) as a result of
closing  of  the  Merger, and (ii) after giving effect to any other financing or
transaction  that the Company may reasonably foresee completing within 24 months
of the Closing Date, the Company will become, or reasonably could be expected to
become,  subject  to  periodic  reporting obligation under Section 12 (g) of the
Exchange  Act  prior  to  December  31,  2003.

                                       42
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7.     CONDITIONS  PRECEDENT  TO  OBLIGATIONS  OF  THE  COMPANY

     The  obligations  of  the  Company  to  effect  the  Merger  and  otherwise
consummate  the  transactions  contemplated by this Agreement are subject to the
satisfaction  (or  waiver),  at  or  prior  to  the  Closing,  of  the following
conditions:

     7.1     ACCURACY  OF  REPRESENTATIONS.  Each  of  the  representations  and
warranties  made  by  Parent  and  Merger  Sub in this Agreement shall have been
accurate  as of the date of this Agreement and shall be accurate in all material
respects  as  of  the  Closing  Date  as  if  made  at  the  Closing  Date.

     7.2     PERFORMANCE OF COVENANTS. All of the covenants and obligations that
Parent  and  Merger Sub are required to comply with or to perform at or prior to
the  Closing  shall  have  been  complied  with  and  performed  in all material
respects.

     7.3     DOCUMENTS. The Company shall have received the following documents:

     (A)     a  legal opinion of Hutchison & Mason PLLC, dated as of the Closing
Date,  in  a  form  reasonably  acceptable  to  the  Company;

     (B)     a  certificate executed by Parent and containing the representation
and warranty of Parent that each of the representations and warranties set forth
in Section 4 is accurate in all respects as of the Closing Date (subject to such
exceptions  as  are necessary for accuracy) as if ma as of the Closing Date; and

     (C)     a  certificate executed by the Secretaries of Parent and Merger Sub
attaching  and  certifying  as  to the current Certificates of Incorporation and
Bylaws  of  Parent and Merger Sub and the resolutions of the Boards of Directors
and  stockholders  of  Parent  and  Merger  Sub approving this Agreement and the
transactions  relating  thereto.

     7.4     NO  RESTRAINTS.  No  temporary  restraining  order,  preliminary or
permanent  injunction  or  other order preventing the consummation of the Merger
shall  have  been  issued  by  any court of competent jurisdiction and remain in
effect,  and  there  shall  not  be  any  Legal  Requirement  enacted  or deemed
applicable  to  the  Merger  that  makes  consummation  of  the  Merger illegal.

     7.5     COMPLIANCE  WITH SEC.3(A)(10) OF THE SECURITIES ACT. The California
Department  of  Corporations  shall  have  issued an approval under the Fairness
Hearing  Law  (following a hearing upon the fairness of the terms and conditions
of  the Merger, conducted pursuant to the Fairness Hearing Law) for the issuance
of  the  Parent  Common  Stock  to  be  issued in the Merger, and all applicable
requirements  of  Section  3(a)(10)  of  the  Securities  Act  shall  have  been
satisfied.

     7.6     NO  MATERIAL  ADVERSE  CHANGE.  There  shall  have been no material
adverse  change  or  decline  in  value  in  the business, properties, condition
(financial  or  otherwise), results of operations, or prospects of Parent (or in
any  aspect  or  portion  thereof)  since  the  date  of  this  Agreement.

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<PAGE>
     7.7     PARENT  BOARD OF DIRECTORS. Parent shall have taken all such action
necessary  to elect Don Witmer and Bob Wise to the Board of Directors of Parent.

8.     TERMINATION

     8.1     TERMINATION  EVENTS.  This Agreement may be terminated prior to the
Closing:

     (A)     by  Parent  if  Parent  reasonably  determines  that  the  timely
satisfaction  of  any condition set forth in Section 6 has become not reasonably
likely  (other  than  as a result of any failure on the part of Parent or Merger
Sub to comply with or perform any covenant or obligation of Parent or Merger Sub
set  forth  in  this  Agreement);

     (B)     by the Company if the Company reasonably determines that the timely
satisfaction  of  any condition set forth in Section 7 has become not reasonably
likely  (other than as a result of any failure on the part of the Company or any
of  the  stockholders  of  the Company to comply with or perform any covenant or
obligation  set  forth in this Agreement or in any other agreement or instrument
delivered  to  Parent);

     (C)     by  Parent if the Closing has not taken place on or before December
31,  2000 (other than as a result of any failure on the part of Parent to comply
with  or  perform  any  covenant  or  obligation  of  Parent  set  forth in this
Agreement);

     (D)     by  the  Company  if  the  Closing has not taken place on or before
December  31,  2000  (other  than  as a result of any failure on the part of the
Company  to  comply with or perform any covenant or obligation of the Company as
set  forth  in  this  Agreement);  or

     (E)     by  the  mutual  written  consent  of  Parent  and  the  Company.

     8.2     TERMINATION    PROCEDURES.  If  Parent  wishes  to  terminate  this
Agreement  pursuant to Section 8.1(a) or Section 8.1(c), Parent shall deliver to
the  Company  a written notice stating that Parent is terminating this Agreement
and  setting  forth  a  brief  description  of  the  basis  on  which  Parent is
terminating  this  Agreement.  If the Company wishes to terminate this Agreement
pursuant  to  Section  8.1(b)  or  Section  8.1(d), the Company shall deliver to
Parent  a  written notice stating that the Company is terminating this Agreement
and  setting  forth  a  brief  description  of the basis on which the Company is
terminating  this  Agreement.

     8.3     EFFECT  OF TERMINATION. If this Agreement is terminated pursuant to
Section  8.1,  all further obligations of the parties under this Agreement shall
terminate;  provided, however, that: (a) neither the Company nor Parent shall be
relieved  of  any  obligation or liability arising from any prior breach by such
party  of  any provision of this Agreement; (b)the parties shall, in all events,
remain  bound  by  and  continue  to  be  subject to the provisions set forth in
Section  10;  and  (c) each of the parties shall, in all events, remain bound by
and  continue  to  be  subject  to  Section  5.3.

9.     INDEMNIFICATION,  ETC

     9.1     SURVIVAL  OF  REPRESENTATIONS,  ETC.

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     (A)     The  representations  and warranties made by the Company (including
the  representations  and  warranties  set  forth  in  Section  2  and  the
representations  and  warranties  set  forth in the Company Closing Certificate)
shall  survive  the  Closing  and  shall expire on the second anniversary of the
Closing  Date; provided, however, that this provision shall not limit any rights
or  claims  based  upon  fraudulent  or  intentional  misrepresentation.
Notwithstanding  the  foregoing, if, at any time prior to the second anniversary
of  the  Closing  Date,  any  Indemnitee  (acting in good faith) delivers to the
Stockholders'  Agent a written notice alleging the existence of an inaccuracy in
or  a  breach  of  any of the representations and warranties made by the Company
(and  setting  forth in reasonable detail the basis for such Indemnitee's belief
that  such an inaccuracy or breach may exist) and asserting a claim for recovery
under  Section  9.2  based  on such alleged inaccuracy or breach, then the claim
asserted  in  such  notice  shall  survive the second anniversary of the Closing
until such time as such claim is fully and finally resolved. The representations
and  warranties  made  by  Parent  and  Merger Sub in Sections 4.4 and 4.5 shall
survive  the  Closing  and shall expire on the second anniversary of the Closing
Date.  All other representations and warranties made by Parent and Merger Sub in
this  Agreement  shall  terminate  and  expire as of the Effective Time, and any
liability  of  Parent  or  Merger  Sub  with respect to such representations and
warranties  shall  thereupon cease; provided, however, that this provision shall
not  limit  any  rights  or  claims  based  on  fraudulent  or  intentional
misrepresentation.

     (B)     Notwithstanding  any  provision  of this Agreement to the contrary,
after  the  Effective  Time  no party shall be entitled to indemnification or to
obtain  any  proceeds  from the Escrow Shares or to otherwise recover any amount
unless  and  until  one  or more written notices (pursuant to Section 9.2 below)
identifying Damages in excess of $100,000 in the aggregate (the "Basket Amount")
has  or  have  been  delivered  to  the  Stockholders' Agent as provided in this
Section  9.1,  in  which case Parent shall be entitled to recover all Damages so
identified  including  the  damages  that  had  previously been below the Basket
Amount. In the event the Indemnitor shall have any liability for indemnification
to  any Indemnitee under this Agreement, the sole satisfaction of such liability
shall  be  from  the Escrow Shares; provided, however, that this provision shall
not  limit  any  rights  or  claims  based  on  fraudulent  or  intentional
misrepresentation.

     (C)     Except  for  information  expressly  set  forth in an update to the
Company  Disclosure  Schedule  (identified  as  such),  the  representations and
warranties  made  by  the Company, the covenants and obligations of the Company,
and  the rights and remedies that may be exercised by the Indemnitees, shall not
be  limited or otherwise affected by or as a result of any information furnished
to,  or any investigation made by or knowledge of, any of the Indemnitees or any
of  their  Representatives.

     (D)     For  purposes  of  this  Agreement, each statement or other item of
information set forth in the Company Disclosure Schedule or in any update to the
Company  Disclosure Schedule shall be deemed to be a representation and warranty
made  by  the  Company  in  this  Agreement.

     9.2     INDEMNIFICATION  BY  STOCKHOLDERS.

     (A)     From  and after the Effective Time (but subject to Section 9.1(a)),
the stockholders of the Company who shall have received, or shall be entitled to

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receive,  Parent  Common  Stock  pursuant  to  Section  1.6 (the "Indemnitors"),
severally  but  not  jointly,  shall  hold  harmless  and  indemnify each of the
Indemnitees  from  and  against, and shall compensate and reimburse (through the
Escrow  Shares)  each  of the Indemnitees for, any Damages which are directly or
indirectly suffered or incurred by any of the Indemnitees or to which any of the
Indemnitees  may  otherwise  become  subject  (regardless of whether or not such
Damages relate to any third-party claim) and which arise from or as a result of,
or are directly or indirectly connected with: (i) any inaccuracy in or breach of
any  representation  or  warranty  set forth in Section 2 made as of the date of
this  Agreement;  (ii)  any  inaccuracy  in  or  breach of any representation or
warranty  set  forth in the Company Closing Certificate; (iii) any breach of any
covenant  or  obligation  of  the  Company (including the covenants set forth in
Sections  3  and 5); (iv) the matters listed on Part 2.12, Part 2.14(a) and Part
2.15(n) of the Company Disclosure Schedule; or (v) any Legal Proceeding relating
to  any  inaccuracy or breach of the type referred to in clause "(1)", "(ii)" or
"(iii)"  above  or  related  to  the  matters  described  in clause "(iv)" above
(including  any  Legal Proceeding commenced by any Indemnitee for the purpose of
enforcing  any  of  its  rights  under  this  Section  9).

     (B)     Any  obligation  on  the  part of an Indemnitor pursuant to Section
9.2(a)  shall  be  satisfied by the delivery of a sufficient number of shares of
Parent  Common  Stock  valued  at the then current Fair Market Value (the "Stock
Delivery  Obligation")  to  satisfy  Indemnitors'  obligations.  Under the Stock
Delivery Obligation, the Indemnitors shall deliver shares of Parent Common Stock
and the Indemnitees shall be required to accept shares of Parent Common Stock in
all  cases  valued  at  the  then current Fair Market Value of the Parent Common
Stock.

     (C)     The  Indemnitors  acknowledge  and  agree  that,  if  the Surviving
Corporation  suffers,  incurs  or  otherwise becomes subject to any Damages as a
result  of  or  in  connection  with  any  inaccuracy  in  or  breach  of  any
representation,  warranty, covenant or obligation, then (without limiting any of
the  rights  of the Surviving Corporation as an Indemnitee) Parent shall also be
deemed, by virtue of its ownership of the stock of the Surviving Corporation, to
have  incurred  Damages as a result of and in connection with such inaccuracy or
breach.

     9.3     NO  CONTRIBUTION.  Each  Indemnitor  waives,  and  acknowledges and
agrees  that  he  shall not have and shall not exercise or assert (or attempt to
exercise  or  assert),  any  right  of contribution, right of indemnity or other
right  or  remedy  against  Merger  Sub  or  the  Company in connection with any
indemnification obligation or any other liability to which he may become subject
under  or  in connection with this Agreement or the Company Closing Certificate.

     9.4     INTEREST.  Any  Indemnitor  who  is  required  to  hold  harmless,
indemnify,  compensate  or  reimburse  any Indenmitee pursuant to this Section 9
with respect to any Damages shall also be liable to such Indemnitee for interest
on the amount of such Damages (for the period commencing as of the date on which
such Indemnitor first received notice of a claim for recovery by such Indemnitee
and  ending  on  the  date  on  which  the  liability of such Indemnitor to such
Indemnitee  is  fully  satisfied by such Indemnitor) at a floating rate equal to
the rate of interest publicly announced by Wachovia Bank, N.A. from time to time
as  its  prime,  base  or  reference  rate.

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<PAGE>
     9.5     MITIGATION  OF LOSS. Indemnitees shall use their reasonable efforts
to  mitigate  any Damages in connection with an indemnity claim made pursuant to
Section 9.2(a) with the scope to be as required by applicable law, if the amount
of  Damages,  at  any  time  prior to or subsequent to the payment thereof by an
Indemnitor  to  an  Indemnitee pursuant to this Section 9 is reduced pursuant to
any  insurance  coverage,  the  amount  of  such  reduction (net of (i) any out-
of-pocket  expenses, (ii) increases in premiums or (iii) any deductible incurred
in  obtaining  such reduction) shall promptly be repaid by the Indemnitee to the
Indemnitor. Notwithstanding any other provision in this Agreement including this
Section  9.5,  there  shall  be no affirmative obligation or duty on the part of
either  Parent  or  Merger Sub to obtain insurance with respect to any aspect of
their  respective  business,  operations  or  assets.

     9.6     DEFENSE  OF  THIRD  PARTY  CLAIMS. In the event of the assertion or
commencement  by  any  Person  of any claim or Legal Proceeding (whether against
Merger  Sub  or  the  Company,  against Parent or against any other Person) with
respect  to  which  any  Indemnitor  may  become  obligated  to  hold  harmless,
indemnify,  compensate  or  reimburse any Indemnitee pursuant to this Section 9,
Parent  shall  have  the  right, at its election, to proceed with the defense of
such  claim  or Legal Proceeding on its own with counsel reasonably satisfactory
to  the  Stockholders' Agent. If Parent so proceeds with the defense of any such
claim  or  Legal  Proceeding:

     (A)     all  reasonable  expenses  relating to the defense of such claim or
Legal  Proceeding  shall  be  borne  and  paid  exclusively  by the Indemnitors;

     (B)     each  Indemnitor  shall  make available to Parent any documents and
materials  in  his possession or control that may be necessary to the defense of
such  claim  or  Legal  Proceeding;  and

     (C)     Parent  shall  have  the right to settle, adjust or compromise such
claim  or  Legal  Proceeding  with  the  consent  of the Stockholders' Agent (as
defined  in  Section  10.1);  provided,  however, that such consent shall not be
unreasonably  withheld.

     Parent shall give the Stockholders' Agent prompt notice of the commencement
of any such Legal Proceeding against Parent, Merger Sub or the Company and shall
keep  the Stockholders' Agent informed at all stages thereof; provided, however,
that  any failure on the part of Parent to so notify or inform the Stockholders'
Agent  shall  not  limit  any  of  the obligations of the Indemnitors under this
Section  9  (except to the extent such failure materially prejudices the defense
of  such Legal Proceeding). If Parent does not elect to proceed with the defense
of  any such claim or Legal Proceeding, the Stockholders' Agent may proceed with
the  defense  of  such  claim  or  Legal  Proceeding  with  counsel  reasonably
satisfactory  to Parent; provided, however, that the Stockholders' Agent may not
settle,  adjust  or  compromise  any  such claim or Legal Proceeding without the
prior  written  consent  of  Parent  (which  consent  may  not  be  unreasonably
withheld).

     9.7     SETOFF. In addition to any rights of setoff or other similar rights
that Parent or any of the other Indemnitees may have at common law or otherwise,
Parent  shall  have the right to withhold and deduct any sum that may be owed to
any  Indemnitee  under this Section 9 or pursuant to any other provision of this
Agreement  from  any  amount  otherwise  payable  by  any  Indemnitor  to  the
Stockholders'  Agent  or  any  stockholder  of  the  Company.

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<PAGE>
     9.8     EXERCISE  OF  REMEDIES  BY  INDEMNITEES  OTHER  THAN  PARENT.  No
Indemnitee  (other than Parent or any successor thereto or assign thereof) shall
be  permitted  to  assert any indemnification claim or exercise any other remedy
under  this Agreement unless Parent (or any successor thereto or assign thereof)
shall  have  consented  to  the  assertion  of such indemnification claim or the
exercise  of  such  other  remedy.

10.     MISCELLANEOUS  PROVISIONS

     10.1     STOCKHOLDERS' AGENT. By virtue of their approval of the Merger and
this  Agreement, the Merger Stockholders shall have approved the indemnification
and  escrow  terms  set  forth  in  this  Agreement  and  shall  have  agreed to
irrevocably  appoint  Donald  B.  Witmer as their agent and attorney-in-fact, as
Stockholders' Agent coupled with an interest, to: (i) modify, amend or otherwise
change  this  Agreement  or  any  of  the  terms  or provisions included therein
(including  modifications,  amendments  or  changes subsequent to Closing); (ii)
take  all  actions  and  execute all documents under this Agreement necessary or
desirable  to  consummate  the  Merger and the transactions contemplated by this
Agreement,  and  to  take  all actions and to execute all documents which may be
necessary  or desirable in connection therewith; (iii) give and receive consents
and all notices hereunder; (iv) to authorize delivery to Parent of Parent Common
Stock,  cash  or  other  property  from  the  Escrow  Fund,  to  object  to such
deliveries,  to  agree to, negotiate, enter into settlements and compromises of,
and demand dispute resolution pursuant to Section 9 of this Agreement and comply
with orders of courts and awards of arbitrators with respect to such claims, and
to  take  all  actions  necessary  or  appropriate  in  the  judgment  of  the
Stockholders'  Agent  for the accomplishment of the foregoing; and (v) deal with
Parent  exclusively  on all matters relating to any provision of this Agreement.
Parent shall be entitled to deal exclusively with the Stockholders' Agent on all
matters  set  forth  in  this  Section

     10.2     (a)  and  shall  be  entitled to rely exclusively (without further
evidence  of  any  kind  whatsoever) on any document executed or purported to be
executed  on behalf of any Merger Stockholder by the Stockholders' Agent, and on
any  other  action  taken  or  purported  to  be  taken  on behalf of any Merger
Stockholder  by  the  Stockholders'  Agent,  as  fully  binding  on  such Merger
Stockholder,  without any obligation to notify or make inquiries with respect to
any  Merger  Stockholder. THE MERGER STOCKHOLDERS AND EACH OF THEM INDIVIDUALLY,
AGREE  THAT  SERVICE  OF  PROCESS  UPON THE STOCKHOLDERS' AGENT IN ANY ACTION OR
PROCEEDINGS  ARISING UNDER OR PERTAINING TO THIS AGREEMENT SHALL BE DEEMED TO BE
VALID  SERVICE  OF PROCESS UPON EACH OF THE MERGER STOCKHOLDERS AND ANY CLAIM BY
PARENT  AGAINST  THE  MERGER  STOCKHOLDERS,  OR  ANY OF THEM, IN RESPECT OF THIS
AGREEMENT  MAY  BE ASSERTED AGAINST AND SETTLED ON BEHALF OF ANY OF THEM BY, THE
STOCKHOLDERS'  AGENT.  The  Stockholders' Agent shall be deemed to have accepted
his  appointment  herein  upon  his  execution  of  this  Agreement.

     10.3     LIABILITY  OF  STOCKHOLDERS' AGENT. Nothing contained herein shall
be  deemed  to  make  the  Stockholders' Agent liable to the Merger Stockholders
because  of service in his capacity as Stockholders' Agent and attorney-in-fact.
In  performing  any  of  his duties hereunder, the Stockholders' Agent shall not
incur  any liability to the Merger Stockholders for losses, damages, liabilities
or  expenses,  except  for  fraud  and his own willful misconduct, and shall not

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receive  any  remuneration  for acting in such capacity. The Merger Stockholders
shall  jointly  and  severally  indemnify  the  Stockholders' Agent and hold the
Stockholders'  Agent  harmless  against  any loss, liability or expense incurred
without  gross  negligence,  bad  faith or willful misconduct on the part of the
Stockholders'  Agent  and arising out of or in connection with the acceptance or
administration  of the Stockholders' Agent's duties hereunder or pursuant to the
Merger  Agreement,  including  the  reasonable  fees  and  expenses of any legal
counsel  or other professional retained by the Stockholders' Agent. By virtue of
their  approval of the Merger and this Agreement, the Merger Stockholders hereby
agree  to  pay  all  costs and expenses, including those of any legal counsel or
other  professional  retained  by  the  Stockholders' Agent, and all fees of any
Stockholders'  Agent  appointed  by  Parent,  in  each  case connection with the
acceptance  and  administration  of  the Stockholders' Agent's duties hereunder.

     10.4     SUCCESSION  OF  STOCKHOLDERS'  AGENT.  The parties acknowledge and
agree that, on or before November 15, 2000, Donald B. Witmer shall resign as the
Stockholders'  Agent.  In  the  event  of the death, disability, incompetency or
resignation  of  the  Stockholders' Agent, the Merger Stockholders shall, within
thirty  (30) days after notice from Parent, by a majority-in- interest designate
another  successor  stockholders' agent or agents, as the case may be, who shall
have  all  of  the  rights,  powers and authority conferred to the Stockholders'
Agent  pursuant  to this Agreement and the power of attorney set forth hereunder
who  shall  be  approved  by  Parent  which  approval  shall not be unreasonably
withheld.  Notwithstanding  the  foregoing,  if  the Merger Stockholders fail to
designate  such  successor  stockholders'  agent(s)  within  such 30-day period,
Parent  shall be entitled to designate the successor stockholders' agent for and
on  behalf  of all of the Merger Stockholders, which Person shall be independent
of Parent or its Affiliates or subsidiaries (except that Parent may pay the fees
charged  and  expenses  incurred  by  such  Person  in  the  event  the  Merger
Stockholders  fail to perform the obligations set forth in Section 10(b) of this
Agreement).  Unless  and  until the Escrow Agent shall receive written notice of
the  appointment of a successor Stockholders' Agent, the Escrow Agent may assume
without inquiry that the last Stockholders' Agent of which it has notice remains
in  that  capacity.

     10.5     IRREVOCABLE;  BINDING  ON  SUCCESSORS,  ETC.  It  is  expressly
understood and agreed that the power of attorney set forth in this Agreement and
the  agency created hereby is coupled with an interest of the respective parties
hereto  and  shall  be  binding  and  enforceable  on and against the respective
successors,  heirs,  personal  representatives,  and  assigns  of  the  Merger
Stockholders  and  this  power of attorney shall not be revoked or terminated by
death, disability, incompetency or bankruptcy of any of the Merger Stockholders,
or  any  of  them,  but  shall  continue  to  be  binding and enforceable by the
Stockholders'  Agent,  Parent and their respective successors and assigns and on
and  against  the heirs, personal representatives, successors and assigns of the
Merger  Stockholders  in  the  manner  provided  herein.

     10.6     FURTHER  ASSURANCES.  Each party hereto shall execute and cause to
be  delivered  to  each other party hereto such instruments and other documents,
and  shall  take  such other actions, as such other party may reasonably request
(prior  to,  at  or  after  the  Closing)  for  the  purpose  of carrying out or
evidencing  any  of  the  transactions  contemplated  by  this  Agreement.

     10.7     FEES  AND  EXPENSES.  Subject to the provisions of Section 1.6(a),
each  party  to  this  Agreement shall bear and pay all fees, costs and expenses
(including  legal  fees and accounting fees) that have been incurred or that are
incurred  by such party in connection with the transactions contemplated by this

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Agreement,  including  all  fees,  costs  and expenses incurred by such party in
connection  with  or  by virtue of (a) the investigation and review conducted by
Parent  and  its Representatives with respect to the Company's business (and the
furnishing  of  information to Parent and its Representatives in connection with
such  investigation  and review), (b) the negotiation, preparation and review of
this  Agreement  (including the Company Disclosure Schedule) and all agreements,
certificates,  opinions  and  other instruments and documents delivered or to be
delivered  in  connection  with the transactions contemplated by this Agreement,
(c)  the  preparation and submission of any filing or notice required to be made
or  given  in  connection  with  any  of  the  transactions contemplated by this
Agreement,  and  the  obtaining  of  any  Consent  required  to  be  obtained in
connection  with  any  of such transactions, (d) the consummation of the Merger.

     10.8     ATTORNEYS'  FEES.  If  any  action  or proceeding relating to this
Agreement  or  the  enforcement  of  any  provision of this Agreement is brought
against  any  party  hereto,  the  prevailing party shall be entitled to recover
reasonable  attorneys'  fees,  costs and disbursements (in addition to any other
relief  to  which  the  prevailing  party  may  be  entitled).

     10.9     NOTICES.  Any  notice or other communication required or permitted
to  be delivered to any party under this Agreement shall be in writing and shall
be  deemed  properly  delivered,  given and received when delivered (by hand, by
registered  mail, by courier or express delivery service or by facsimile) to the
address  or  facsimile telephone number set forth beneath the name of such party
below  (or  to  such  other  address or facsimile telephone number as such party
shall  have  specified  in  a written notice given to the other parties hereto):

IF  TO  PARENT  OR  MERGER  SUB:

Home  Director,  Inc.
1015  Aviation  Parkway,  Suite  100
Morrisville,  NC  27500
Attention:  Mary  E.  Walker
Fax:  (919)760-5054

WITH  A  COPY  TO:

Hutchison  &  Mason  PLLC
3110  Edwards  Mill  Road,  Suite  100
Raleigh,  NC  27612
Attention:  J.  Robert  Tyler,  III
Fax:  (919)829-9696

IF  TO  THE  COMPANY:

Digital  Interiors,  Inc.
7132  Santa  Teresa  Boulevard
San  Jose,CA  95139
Attention:  Donald  B.  Witmer

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WITH  A  COPY  TO:

Gray,  Cary,  Ware  &  Freidenrich  LLP
400  Hamilton  Avenue
Palo  Alto,  CA  94301
Attention:  Marilyn  M.  Munoz
Fax:  (650)327-3699

IF  TO  THE  STOCKHOLDERS'  AGENT  OR  ANY  OF  THE  INDEMNITORS:

Digital  Interiors,  Inc.
7132  Santa  Teresa  Boulevard
San  Jose,CA  95139
Attention:  Donald  B.  Witmer

WITH  A  COPY  TO:

Gray,  Cary,  Ware  &  Freidenrich  LLP
400  Hamilton  Avenue
Palo  Alto,  CA  94301
Attention:  Marilyn  M.  Munoz
Fax:  (650)  327-3699

     10.10     CONFIDENTIALITY.  Without  limiting  the  generality  of anything
contained  in  Section  5.3,  on  and  at  all times after the Closing Date, the
Company  shall  keep  confidential, and not use or disclose to any other Person,
any  non-public  document  or  other  non-public  information  in  the Company's
possession  that  relates  to  the  business  of  the  Company  or  Parent.

     10.11     TIME  OF  THE ESSENCE. For the purposes of this Agreement and the
transactions  contemplated  by  this  Agreement,  time  is  of  the  essence.

     10.12     HEADINGS. The underlined headings contained in this Agreement are
for  convenience  of  reference  only,  shall not be deemed to be a part of this
Agreement  and  shall  not be referred to in connection with the construction or
interpretation  of  this  Agreement.

     10.13     COUNTERPARTS.  This  Agreement  may  be  executed  in  several
counterparts,  each of which shall constitute an original and all of which, when
taken  together,  shall  constitute  one  agreement.

     10.14     GOVERNING  LAW.  This  Agreement shall be construed in accordance
with,  and  governed  in  all  respects  by,  the  internal laws of the State of
Delaware  (without  giving  effect  to  principles  of  conflicts  of  laws).

     10.15     SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon: the
Company  and  its successors and assigns (if any); Parent and its successors and
assigns  (if  any); and Merger Sub and its successors and assigns (if any). This
Agreement shall inure to the benefit of: the Company, the Company's stockholders
(to  the  extent  set  forth  in  Section  1.6);  Parent;  Merger Sub; the other

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Indemnities  (subject to Section 9.8); and the respective successors and assigns
(if  any) of the foregoing. After the Closing Date, Parent may freely assign any
or  all of its rights under this Agreement (including its indemnification rights
(but  not  its  obligations hereunder) under Section 9), in whole or in part, to
any  other  Person  without obtaining the consent or approval of any other party
hereto  or  of  any  other  Person.

     10.16     REMEDIES  CUMULATIVE;  SPECIFIC  PERFORMANCE.  The  rights  and
remedies  of  the  parties hereto shall be cumulative (and not alternative). The
parties  to  this Agreement agree that, in the event of any breach or threatened
breach  by  any  party  to  this  Agreement of any covenant, obligation or other
provision set forth in this Agreement for the benefit of any other party to this
Agreement,  such  other party shall be entitled (in addition to any other remedy
that may be available to it) to (a) a decree or order of specific performance or
mandamus  to enforce the observance and performance of such covenant, obligation
or  other provision, and (b) an injunction restraining such breach or threatened
breach.

10.17     WAIVER.

     (A)     No  failure on the part of any Person to exercise any power, right,
privilege or remedy under this Agreement, and no delay on the part of any Person
in  exercising any power, right, privilege or remedy under this Agreement, shall
operate  as a waiver of such power, right, privilege or remedy; and no single or
partial  exercise  of  any such power, right, privilege or remedy shall preclude
any other or further exercise thereof or of any other power, right, privilege or
remedy.

     (B)     No  Person  shall be deemed to have waived any claim arising out of
this  Agreement,  or any power, right, privilege or remedy under this Agreement,
unless  the waiver of such claim, power, right, privilege or remedy is expressly
set  forth in a written instrument duly executed and delivered on behalf of such
Person; and any such waiver shall not be applicable or have any effect except in
the  specific  instance  in  which  it  is  given.

     10.18     WAIVER  OF  JURY  TRIAL.  EACH  OF  THE  PARTIES  HERETO  HEREBY
IRREVOCABLY  WAIVES  ANY  AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING  OUT  OF  OR  RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

     10.19     AMENDMENTS.  This Agreement may not be amended, modified, altered
or  supplemented  other  than by means of a written instrument duly executed and
delivered:  (a)  prior to the Closing Date, on behalf of Parent, Merger Sub, the
Company and the Stockholders' Agent (acting exclusively for and on behalf of all
of the Merger Stockholders); and (b) after the Closing Date, on behalf of Parent
and  the Stockholders' Agent (acting exclusively for and on behalf of all of the
Merger  Stockholders).

     10.20     SEVERABILITY.  In the event that any provision of this Agreement,
or  the application of any such provision to any Person or set of circumstances,
shall  be  determined  to  be  invalid,  unlawful,  void or unenforceable to any
extent,  the  remainder of this Agreement, and the application of such provision
to  Persons or circumstances other than those as to which it is determined to be
invalid,  unlawful,  void  or  unenforceable, shall not be impaired or otherwise
affected  and  shall  continue to be valid and enforceable to the fullest extent
permitted  by  law.

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<PAGE>
     10.21     PARTIES  IN  INTEREST. Except for the provisions of Sections 1.6,
1.7,  9,  and  10.20,  none  of  the provisions of this Agreement is intended to
provide  any  rights or remedies to any Person other than the parties hereto and
their  respective  successors  and  assigns  (if  any).

     10.22     ENTIRE  AGREEMENT.  This  Agreement  and  the  other  agreements
referred  to  herein  set  forth  the entire understanding of the parties hereto
relating  to  the  subject  matter  hereof  and  thereof and supersede all prior
agreements  and  understandings  among or between any of the parties relating to
the  subject  matter  hereof  and  thereof;  provided,  however,  that  the  [
Confidentiality  Agreement]  shall not be superseded by this Agreement and shall
remain  in  effect  in  accordance  with  its terms until the earlier of (a) the
Effective Time, or (b) the date on which such Mutual Non-Disclosure Agreement is
terminated  in  accordance  with  its  terms.

10.23     CONSTRUCTION.

     (A)     For  purposes of this Agreement, whenever the context requires: the
singular  number  shall include the plural, and vice versa; the masculine gender
shall include the feminine and neuter genders; the feminine gender shall include
the  masculine  and  neuter  genders;  and  the  neuter gender shall include the
masculine  and  feminine  genders.

     (B)     The  parties  hereto  agree  that  any  rule of construction to the
effect  that ambiguities are to be resolved against the drafting party shall not
be  applied  in  the  construction  or  interpretation  of  this  Agreement.

     (C)     As used in this Agreement, the words "include" and "including," and
variations  thereof,  shall  not be deemed to be terms of limitation, but rather
shall  be  deemed  to  be  followed  by  the  words  "without  limitation."

     (D)     Except  as otherwise indicated, all references in this Agreement to
"Sections", "Schedules" and "Exhibits" are intended to refer to Sections of this
Agreement  and  Schedules  and  Exhibits  to  this  Agreement.

                           SEPARATE SIGNATURE PAGE TO
                 AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
            AMONG: HOME DIRECTOR, INC., DIACQUISITION, INC., DIGITAL
                      INTERIORS, INC., AND DONALD B. WITMER

                                   BY  THE  PARENT:
                                   HOME  DIRECTOR,  INC.,
                                   a  Delaware  corporation

                                   By:_________________________________________
                                        Mary  E.  Wa1ker
                                        President  &  Chief  Executive  Officer

                                       53
<PAGE>
                                   BY  THE  MERGER  SUB:

                                   DI  ACQUISITION,  INC.,
                                   a  Delaware  corporation


                                   By:_________________________________________
                                        Mary  E.  Walker
                                        President  &  Chief  Executive  Officer

                                       54
<PAGE>
                           SEPARATE SIGNATURE PAGE TO
                   AGREEMENT PLAN OFMERGER AND REORGANIZATION
             AMONG: HOME DIRECTOR, INC, DL ACQUISITION, INC, DIGITAL
                      INTERIORS, INC., AND DONALD & WITMER

                                   BY  THE  COMPANY:

                                   DIGITAL  INTERIORS,  INC.,
                                   a  California  corporation


                                   By:________________________________________

                                   Printed  Name:_____________________________

                                   Title:_____________________________________


                                   STOCKHOLDERS'  AGENT

                                   ___________________________________________
                                   DONALD  B.  WITMER


<PAGE>

                         LIST OF EXHIBITS AND SCHEDULES

Exhibit  A     -     Certain  Definitions
Exhibit  B     -     Form  of  Voting  Agreement  and  Irrevocable  Proxy
Exhibit  C     -     Directors  and  Officers  of  Surviving  Corporation
Exhibit  D     -     Indebtedness  of  Company
Exhibit  E     -     Form  of  Escrow  Agreement
Exhibit  F     -     Form  of  Employment  Agreement
Exhibit  G     -     Form  of  Key  Stockholder  Release
Exhibit  H     -     Form  of  Agreement  to  Join  as  a Party to Stockholders'
                     Agreement
Exhibit  I     -     Pro  Rata  Allocation
Parent  Disclosure  Schedule
Company  Disclosure  Schedule

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