EXHIBIT 2.1

                          AGREEMENT AND PLAN OF MERGER

         THIS  AGREEMENT  AND  PLAN OF  MERGER  (the  "Agreement"),  dated as of
October  23,  2001,  is among  NetGateway,  Inc.,  a Delaware  corporation  (the
"Company"), Category 5 Technologies,  Inc., a Nevada corporation ("Parent"), and
C5T  Acquisition  Corp.,  a  Delaware  corporation  and a  direct  wholly  owned
subsidiary of Parent ("Merger  Sub").  Certain  capitalized and  non-capitalized
terms used herein are defined in Section 9.11.

                                    RECITALS

         WHEREAS, the boards of directors of the Company,  Parent and Merger Sub
each have, in light of and subject to the terms and conditions set forth herein,
approved this Agreement and the transactions  contemplated hereby, including the
Merger (as hereinafter defined),  and the boards of directors of the Company and
Merger  Sub have  declared  the  Merger  advisable  and fair to, and in the best
interests of, their respective stockholders;

         WHEREAS, pursuant to the Merger, among other things, and subject to the
terms and conditions of this Agreement, all of the issued and outstanding shares
of stock of the Company  shall be  converted  into shares of common  stock,  par
value $.001 per share, of Parent (collectively, "Parent Common Stock");

         WHEREAS, for U.S. federal income tax purposes,  it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the  Internal  Revenue  Code of 1986,  as amended  (the  "Code"),  and that this
Agreement  shall be, and is  hereby,  adopted  as a plan of  reorganization  for
purposes of Section 368(a) of the Code; and

         WHEREAS,  the  Company,  Parent and  Merger Sub desire to make  certain
representations,  warranties,  covenants and  agreements in connection  with the
Merger as set forth in this Agreement.

         NOW,   THEREFORE,   in   consideration   of  the   premises   and   the
representations,  warranties,  covenants and agreements  herein  contained,  and
intending to be legally bound hereby, the Company,  Parent and Merger Sub hereby
agree as follows:

                                   Article I
                                   THE MERGER

         SECTION 1.1 The Merger.  At the  Effective  Time and upon the terms and
subject to the conditions of this  Agreement and in accordance  with the General
Corporation  Law of the State of  Delaware  (the  "DGCL"),  Merger  Sub shall be
merged with and into the  Company  (the  "Merger").  Following  the Merger,  the
Company  shall   continue  as  the   surviving   corporation   (the   "Surviving
Corporation") and the separate corporate existence of Merger Sub shall cease.

         SECTION  1.2  Effective  Time.   Subject  to  the  provisions  of  this
Agreement,  Parent,  Merger  Sub and the  Company  shall  cause the Merger to be

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consummated by filing a Certificate of Merger (the "Certificate of Merger") with
the Secretary of State of the State of Delaware (the  "Secretary")  in such form
as required by, and executed in accordance with, the relevant  provisions of the
DGCL,  as soon as  practicable  on or after  the  Closing  Date (as  hereinafter
defined).  The Merger shall become effective upon the filing of such Certificate
of Merger  with the  Secretary  or at such  later  time as agreed in  writing by
Parent  and  the  Company  and  specified  in the  Certificate  of  Merger  (the
"Effective Time").

         SECTION  1.3  Closing of the  Merger.  The  closing of the Merger  (the
"Closing")  will take place as soon as practicable at a time and on a date to be
specified by the parties (the "Closing Date"),  which shall be no later than the
second business day after  satisfaction or waiver of the conditions set forth in
Article  VII  (other  than  those  conditions  that by  their  nature  are to be
satisfied  at the  Closing,  but subject to the  fulfillment  or waiver of those
conditions),  at the offices of Snell & Wilmer,  L.L.P.,  15 West South  Temple,
Suite 1200,  Salt Lake City, Utah 84101, or at such other time, date or place as
agreed to in writing by the parties hereto.

         SECTION 1.4 Effects of the  Merger.  The Merger  shall have the effects
set forth in the DGCL.  Without  limiting the generality of the  foregoing,  and
subject  thereto,  at  the  Effective  Time,  all  of  the  properties,  rights,
privileges,  powers and  franchises  of the Company and Merger Sub shall vest in
the Surviving Corporation,  and all debts, liabilities and duties of the Company
and Merger Sub shall become the debts,  liabilities  and duties of the Surviving
Corporation.

         SECTION  1.5  Certificate  of  Incorporation   and  Bylaws.   Effective
immediately  following the Merger,  the certificate of  incorporation  of Merger
Sub,  as in  effect  immediately  prior  to the  Effective  Time,  shall  be the
certificate  of  incorporation  of the  Surviving  Corporation  until amended in
accordance with applicable Law (as hereinafter defined); provided, however, that
at the  Effective  Time,  the  certificate  of  incorporation  of the  Surviving
Corporation  shall be  amended to provide  that the name of the  corporation  is
Category 5 Marketing,  Inc.  Effective  immediately  following  the Merger,  the
bylaws of Merger  Sub, as in effect  immediately  prior to the  Effective  Time,
shall be the bylaws of the  Surviving  Corporation  until  amended in accordance
with applicable Law.

         SECTION 1.6 Directors. The directors of Merger Sub immediately prior to
the Effective Time shall be the initial  directors of the Surviving  Corporation
and shall hold office from the Effective Time in accordance with the charter and
bylaws of the Surviving  Corporation  until their successors are duly elected or
appointed and qualified or until their earlier death, resignation or removal.

         SECTION 1.7 Officers.  The officers of the Company immediately prior to
the Effective  Time shall be the initial  officers of the Surviving  Corporation
and shall hold office from the Effective Time in accordance with the charter and
bylaws of the Surviving  Corporation  until their successors are duly elected or
appointed and qualified or until their earlier death, resignation or removal.

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                                   Article II
                            CONVERSION OF SECURITIES

         SECTION 2.1 Conversion of Shares.

         (a) At the Effective  Time,  each issued and  outstanding  share of the
common stock,  par value $.001 per share,  of Merger Sub shall, by virtue of the
Merger and without any action on the part of Parent,  Merger Sub or the Company,
be converted into one fully paid and non-assessable share of common stock of the
Surviving Corporation.

         (b) At the Effective Time, each share of common stock,  par value $.001
per share,  of the Company,  ("Company  Common  Stock"),  issued and outstanding
immediately   prior  to  the  Effective  Time   (individually,   a  "Share"  and
collectively,  the  "Shares")  (other than Shares to be cancelled in  accordance
with Section 2.1(c) hereof or  stockholders  exercising  appraisal  rights under
DGCL Section 262 (the  "Dissenting  Shares")) shall, by virtue of the Merger and
without any action on the part of Parent,  Merger Sub, the Company or any holder
thereof, be converted into the right to receive 0.181818 shares of Parent Common
Stock (referred to herein as the "Exchange Ratio," and all such shares of Parent
Common Stock issued pursuant to this Section  2.1(b),  together with any cash in
lieu of fractional  shares of Parent Common Stock to be paid pursuant to Section
2.7, being referred to herein as the "Merger  Consideration")  payable,  without
interest,  to the holder of such  Company  Common Stock upon  surrender,  in the
manner provided in this Article II, of the certificate  that formerly  evidenced
such Company Common Stock. At the Effective Time, the total number of issued and
outstanding  shares of Company Common Stock shall not exceed 49,500,000  shares.
At the Effective  Time,  all Company Common Stock shall no longer be outstanding
and shall  automatically  be cancelled and retired and shall cease to exist, and
each holder of a certificate  representing  any such Company  Common Stock shall
cease to have any rights with respect  thereto,  except the right to receive the
Merger Consideration  therefore upon surrender of such certificate in accordance
with this Article II.

         (c) At the  Effective  Time each Share of Company  Common Stock held by
the  Company,  Parent,  or any of  their  subsidiaries  shall be  cancelled  and
extinguished without any consideration therefor.

         (d) The Exchange Ratio shall be adjusted to reflect  appropriately  the
effect  of  any  stock  split,   stock  dividend   (including  any  dividend  or
distribution  of  securities  convertible  into Parent  Common  Stock or Company
Common Stock) reorganization,  recapitalization,  reclassification or other like
change with respect to Parent Common Stock or Company Common Stock  occurring on
or after the date hereof and prior to the Effective Time.

         SECTION 2.2 Stock Options and Warrants.

         (a) As soon as practicable following the date of this Agreement, Parent
and the Company (or, if appropriate,  any committee of the Board of Directors of
the Company  administering  the  Company's  stock option  plans or  arrangements
(collectively,  the "Company  Option  Plans"))  shall take such action,  and the
Company  shall  obtain  all such  agreements  and  consents,  if any,  as may be

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required to effect the following  provisions of this Section 2.2.  Except as set
forth  in  Section  7.1(d),  Parent  acknowledges  that in  connection  with the
transactions  contemplated  hereby that rights to acquire up to 3,000,000 shares
of Company Common Stock pursuant to Company Stock Options  granted to employees,
officers,  directors and  consultants  of the Company  under the Company  Option
Plans shall become  fully  vested and  exercisable  in  accordance  with Company
Option  Plans.  As of the  Effective  Time each  outstanding  option to purchase
shares of Company  Common Stock pursuant to the Company Option Plans (a "Company
Stock Option") shall be replaced by a new substitute  option to purchase  shares
of Parent Common Stock granted under the terms of Parent's stock option plan (in
each case, an "Assumed Stock Option") as follows:

              (i) In the case of any Company  Stock Option to which  Section 421
         of the Code applies by reason of its qualification under Section 422 of
         the Code,  (x) the number of shares of Parent  Common Stock  subject to
         the Assumed Stock Option shall be the product (truncated to the nearest
         whole  share) of the  number of shares of Common  Stock  subject to the
         Company  Stock Option  multiplied  by the Exchange  Ratio,  and (y) the
         exercise price per share of Parent Common Stock under the Assumed Stock
         Option  shall be the quotient  (rounded up to the nearest  $.01) of the
         exercise  price per share of Company  Common  Stock  under the  Company
         Stock Option  immediately  prior to the  Effective  Time divided by the
         Exchange Ratio.

              (ii) In the case of any other Company Stock Option, (x) the number
         of shares of Parent  Common Stock  subject to the Assumed  Stock Option
         shall be the product  (rounded up to the  nearest  whole  share) of the
         number of shares of Company  Common Stock  subject to the Company Stock
         Option multiplied by the Exchange Ratio, and (y) the exercise price per
         share under the Assumed  Stock Option shall be the quotient  (truncated
         to the nearest $.01) of the exercise  price per share of Company Common
         Stock under the Company Stock Option immediately prior to the Effective
         Time divided by the Exchange Ratio.

              (iii) Except as set forth in Section  7.1(d) and as  determined by
         the  Evaluation  Committee  (as defined in Section  5.1),  each Assumed
         Stock Option shall be subject to the same  expiration  date and vesting
         provisions  as were  applicable  to the relevant  Company  Stock Option
         immediately prior to the Effective Time.

              (iv) As of the Effective Time each outstanding warrant to purchase
         shares of Company Common Stock (a "Company  Warrant")  shall be assumed
         by Parent and the Company  Warrant shall  evidence the holders right to
         purchase  shares of Parent  Common  Stock (in each  case,  an  "Assumed
         Warrant"),  as adjusted  herein.  The number of shares of Parent Common
         Stock subject to the Assumed  Warrant shall be the product  (rounded up
         to the nearest  whole share) of the number of shares of Company  Common
         Stock subject to the Company Warrant  multiplied by the Exchange Ratio,
         and (y) the exercise price per share under the Assumed Warrant shall be
         the quotient  (rounded to the nearest  $.01) of the exercise  price per
         share of Company  Common  Stock under the Company  Warrant  immediately
         prior to the Effective Time divided by the Exchange Ratio. Each Assumed
         Warrant shall be subject to the same expiration date and other terms as

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         were applicable to the relevant  Company Warrant  immediately  prior to
         the Effective Time.

         SECTION 2.3 Exchange Fund.  Prior to the Effective  Time,  Parent shall
appoint a commercial bank or trust company reasonably  acceptable to the Company
to act as exchange agent hereunder for the purpose of exchanging  Shares for the
Merger  Consideration (the "Exchange Agent"). At or prior to the Effective Time,
Parent  shall  deposit  with the  Exchange  Agent,  in trust for the  benefit of
holders of Shares  (other than Parent,  the Company and any of their  respective
subsidiaries and the holders of Dissenting  Shares),  certificates  representing
the Parent  Common  Stock  issuable  pursuant  to Section  2.1 in  exchange  for
outstanding  Shares.  Parent agrees to make available to the Exchange Agent from
time to time as needed,  sufficient  cash amounts  payable in lieu of fractional
shares of Parent  Common  Stock  pursuant to Section 2.7 and any  dividends  and
other  distributions  payable pursuant to Section 2.5. Any cash and certificates
of Parent  Common  Stock,  together  with any  dividends or  distributions  with
respect thereto, deposited with the Exchange Agent shall hereinafter be referred
to as the "Exchange Fund."

         SECTION 2.4 Exchange Procedures. Promptly after the Effective Time, the
Surviving Corporation shall cause the Exchange Agent to mail to each holder of a
certificate  or  certificates  which  immediately  prior to the  Effective  Time
represented  outstanding Shares (the "Certificates") whose shares were converted
pursuant to Section  2.1(b) into Parent Common Stock (i) a letter of transmittal
which shall specify that delivery shall be effective, and risk of loss and title
to the  Certificates  shall pass, only upon delivery of the  Certificates to the
Exchange Agent,  and which letter shall be in customary form and have such other
provisions  as  Parent  and  the  Company  may  reasonably  specify;   and  (ii)
instructions  for effecting the surrender of such  Certificates  in exchange for
the Merger Consideration.  Upon surrender of a Certificate to the Exchange Agent
together  with such  letter of  transmittal,  duly  executed  and  completed  in
accordance  with the  instructions  thereto,  and such  other  documents  as may
reasonably  be required by the Exchange  Agent,  the holder of such  Certificate
shall  be  entitled  to  receive  in  exchange  therefor  (A) a  certificate  or
certificates   representing  that  number  of  shares  of  Parent  Common  Stock
representing,  in the aggregate, the whole number of shares that such holder has
the right to receive  pursuant  to Section  2.1 and (B) any  dividends  or other
distributions to which such holder is entitled  pursuant to Section 2.5 and cash
in lieu of fractional  shares  pursuant to Section 2.7, and the  Certificate  so
surrendered  shall  forthwith  be  cancelled.  No interest  will be paid or will
accrue on any cash payable  pursuant to Section 2.5 or Section 2.7. In the event
of a transfer of ownership of Company  Common Stock which is not  registered  in
the transfer records of the Company,  certificates evidencing, in the aggregate,
the proper number of shares of Parent Common Stock, a check in the proper amount
of cash in lieu of any  fractional  shares of Parent  Common  Stock  pursuant to
Section 2.7 and any  dividends  or other  distributions  to which such holder is
entitled  pursuant to Section  2.5, may be issued with respect to such Shares to
such a transferee if the  Certificate  representing  such Shares is presented to
the Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and to evidence that any applicable stock transfer Taxes have been
paid.

         SECTION 2.5 Distributions  with Respect to Unsurrendered  Certificates.
No dividends or other  distributions  declared or made with respect to shares of
Parent Common Stock with a record date after the Effective Time shall be paid to

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the holder of any unsurrendered Certificate with respect to the shares of Parent
Common  Stock that such holder  would be entitled to receive  upon  surrender of
such  Certificate,  and no cash payment in lieu of  fractional  shares of Parent
Common Stock shall be paid to any such holder pursuant to Section 2.7 until such
holder shall surrender such  Certificate in accordance with Section 2.4. Subject
to the effect of applicable Laws,  following  surrender of any such Certificate,
there shall be paid to such holder of shares of Parent Common Stock  issuable in
exchange  therefor,  without  interest,  (a)  promptly  after  the  time of such
surrender, the amount of any cash payable in lieu of fractional shares of Parent
Common  Stock to which such holder is  entitled  pursuant to Section 2.7 and the
amount  of  dividends  or other  distributions  with a  record  date  after  the
Effective  Time  theretofore  paid with  respect to such whole  shares of Parent
Common Stock,  and (b) at the appropriate  payment date, the amount of dividends
or other  distributions with a record date after the Effective Time but prior to
such  surrender and a payment date  subsequent to such  surrender,  payable with
respect to such shares of Parent Common Stock.

         SECTION 2.6 No Further  Ownership  Rights in Company Common Stock.  All
shares of Parent Common Stock issued and cash paid upon conversion of the Shares
in  accordance  with the terms of Article I and this Article II  (including  any
cash paid  pursuant to Sections 2.5 and 2.7) shall be deemed to have been issued
or paid in full  satisfaction  of all rights  under the DGCL  pertaining  to the
Shares.

         SECTION 2.7 No Fractional Shares of Parent Common Stock.

         (a)  No  certificates  or  scrip  of  shares  of  Parent  Common  Stock
representing  fractional  shares of Parent Common Stock or book-entry  credit of
the same shall be issued upon the  surrender  for exchange of  Certificates  and
such fractional share interests will not entitle the owner thereof to vote or to
have any  rights  of a  stockholder  of  Parent  or a holder of shares of Parent
Common Stock.

         (b) Notwithstanding any other provision of this Agreement,  each holder
of  Shares  exchanged  pursuant  to the  Merger  who would  otherwise  have been
entitled to receive a fraction of a share of Parent  Common Stock (after  taking
into account all Certificates  delivered by such holder) shall receive,  in lieu
thereof,  cash (without  interest) in an amount equal to the product of (i) such
fractional part of a share of Parent Common Stock multiplied by (ii) the closing
price on the National  Association of Securities Dealers OTC Electronic Bulletin
Board  ("OTBB") for a share of Parent  Common Stock on the date of the Effective
Time. As promptly as practicable after the determination of the aggregate amount
of cash to be paid to holders of fractional interests,  the Exchange Agent shall
notify Parent and Parent shall cause the Surviving  Corporation  to deposit such
amount with the  Exchange  Agent and shall cause the  Exchange  Agent to forward
payments to such holders of  fractional  interests  subject to and in accordance
with the terms hereof.

         SECTION 2.8  Termination  of Exchange Fund. Any portion of the Exchange
Fund which  remains  undistributed  to the  holders of  Certificates  for twelve
months after the Effective Time shall be delivered to the Surviving  Corporation
or otherwise on the instruction of the Surviving Corporation, and any holders of
the  Certificates  who have not theretofore  complied with this Article II shall


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thereafter  look only to the  Surviving  Corporation  and  Parent for the Merger
Consideration with respect to the Shares formerly  represented  thereby to which
such holders are  entitled  pursuant to Section 2.1 and Section 2.4, any cash in
lieu of  fractional  shares of Parent  Common  Stock to which such  holders  are
entitled pursuant to Section 2.7 and any dividends or distributions with respect
to shares of parent Common Stock to which such holders are entitled  pursuant to
Section 2.5.

         SECTION 2.9 No Liability.  None of Parent, Merger Sub, the Company, the
Surviving  Corporation  or  the  Exchange  Agent,  or any  directors,  officers,
employees  or agents of each of the  foregoing  shall be liable to any person in
respect of any Parent Common Stock, any dividends or distributions  with respect
thereto,  any cash in lieu of  fractional  shares of Parent  Common Stock or any
cash from the  Exchange  Fund  delivered  to a public  official  pursuant to any
applicable abandoned property, escheat or similar Law.

         SECTION 2.10  Investment of the Exchange Fund. The Exchange Agent shall
invest any cash  included in the Exchange  Fund as directed by Parent on a daily
basis. Any interest and other income  resulting from such  investments  promptly
shall be paid to Parent.

         SECTION  2.11 Lost  Certificates.  If any  Certificate  shall have been
lost,  stolen or destroyed,  upon the making of an affidavit of that fact by the
person  claiming  such  Certificate  to be lost,  stolen or  destroyed  and,  if
reasonably required by the Surviving Corporation,  the posting by such person of
a bond in such  reasonable  amount as the  Surviving  Corporation  may direct as
indemnity  against  any claim that may be made  against it with  respect to such
Certificate,  the Exchange Agent will deliver in exchange for such lost,  stolen
or destroyed Certificate the applicable Merger Consideration with respect to the
Shares formerly  represented  thereby,  any cash in lieu of fractional shares of
Parent Common Stock and unpaid  dividends and  distributions on shares of Parent
Common Stock deliverable in respect thereof, pursuant to this Agreement.

         SECTION 2.12  Withholding  Rights.  Each of the Surviving  Corporation,
Parent and the Exchange  Agent shall be entitled to deduct and withhold from the
Merger Consideration  otherwise payable pursuant to this Agreement to any holder
of Shares such amounts as it is required to deduct and withhold  with respect to
the  making  of such  payment  under  the Code  and the  rules  and  regulations
promulgated thereunder, or any applicable Law. To the extent that amounts are so
withheld by the Surviving Corporation, Parent or the Exchange Agent, as the case
may be,  such  withheld  amounts  shall  be  treated  for all  purposes  of this
Agreement  as having  been paid to the  holder of the Shares in respect to which
such deduction and withholding was made by the Surviving Corporation,  Parent or
the Exchange Agent, as the case may be.

         SECTION 2.13 Stock  Transfer  Books.  The stock  transfer  books of the
Company shall be closed  immediately  upon the Effective Time and there shall be
no further  registration of transfers of Shares thereafter on the records of the
Company.  On or after the  Effective  Time,  any  Certificates  presented to the
Surviving  Corporation,  Exchange  Agent (in its capacity as Exchange  Agent) or
Parent for any reason  shall be  converted  into the Merger  Consideration  with
respect  to the  Shares  formerly  represented  thereby,  any  cash  in  lieu of
fractional  shares  of Parent  Common  Stock to which the  holders  thereof  are


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entitled  pursuant to Section 2.7 and any  dividends or other  distributions  to
which  the  holders  thereof  are  entitled  pursuant  to  Section  2.5  and the
Certificates so presented shall be cancelled.

                                  Article III
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         Except as set forth in the disclosure schedule delivered by the Company
to Parent prior to the  execution of this  Agreement  (the  "Company  Disclosure
Schedule")  or as set forth in the  Company  SEC  Reports (as defined in Section
3.4) filed prior to the date hereof or as  permitted  under  Section 5.1 hereof,
the Company  hereby  represents and warrants to each of Parent and Merger Sub as
follows:

         SECTION 3.1 Organization and Qualification; Subsidiaries.

         (a) The Company and each of its  subsidiaries  is, or will be as of the
Effective Time, a corporation or legal entity duly organized,  validly  existing
and in good  standing  under  the  applicable  Laws of the  jurisdiction  of its
incorporation  or organization and has all requisite  corporate,  partnership or
similar  power and  authority to own,  lease and operate its  properties  and to
carry on its businesses as now being conducted.

         (b)  Exhibit  21 to the  Company's  Annual  Report on Form 10-K for the
fiscal  year ended June 30,  2001 sets forth a list of all  subsidiaries  of the
Company.  Except as listed  therein or in Section 3.1 of the Company  Disclosure
Schedule,  the Company does not own, directly or indirectly,  beneficially or of
record,  any shares of capital stock or other  securities of any other entity or
any other investment in any other entity.

         (c) The  Company is, and each of its  subsidiaries  is or will be as of
the  Effective  Time,  duly  qualified  or licensed  and in good  standing to do
business in each  jurisdiction in which the property owned,  leased, or operated
by it or the nature of the business  conducted by it makes such qualification or
licensing  necessary,  except  where  the  failure  to be so duly  qualified  or
licensed and in good standing is not reasonably  expected to have,  individually
or in  the  aggregate,  a  Material  Adverse  Effect  on  the  Company  and  its
subsidiaries taken as a whole.

         (d) The  Company  has  heretofore  delivered  to  Parent  accurate  and
complete copies of the certificate of incorporation  and bylaws, as currently in
effect, of the Company.  The Company has heretofore delivered to Parent accurate
and complete  copies of the charter or certificate of  incorporation  and bylaws
(or other  similar  organizational  and  governing  documents),  as currently in
effect, of each of its subsidiaries.

         SECTION 3.2 Capitalization of the Company and Its Subsidiaries.

         (a) The authorized  stock of the Company  consists of: (i)  240,000,000
shares of  Company  Common  Stock,  of which  41,998,565  shares  are issued and
outstanding as of the date hereof and (ii) 5,000,000  shares of Preferred Stock,
par value $.001 per share, of which, as of the date hereof, no shares are issued
and  outstanding.  All of the issued and  outstanding  Shares have been  validly


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issued, and are duly authorized, fully paid, non-assessable and no holder of any
securities of the Company has any preemptive  rights. As of the date hereof, (i)
1,468,750  Shares are  reserved  for  issuance  and  issuable  upon or otherwise
deliverable in connection with the exercise of outstanding Company Stock Options
issued  pursuant to the Company's 1998 Stock Option Plan for Senior  Executives,
(ii) 84,321  Shares are reserved  for  issuance  and issuable  upon or otherwise
deliverable in connection with the exercise of outstanding Company Stock Options
issued pursuant to the Company's 1998 Stock  Compensation  Plan, (iii) 1,434,799
Shares are reserved for issuance and issuable upon or otherwise  deliverable  in
connection  with the  exercise  of  outstanding  Company  Stock  Options  issued
pursuant to the Company's  1999 Stock Option Plan for  Non-executives,  and (iv)
730,846  Shares  are  reserved  for  issuance  and  issuable  upon or  otherwise
deliverable in connection with the exercise of outstanding Company Stock Options
issued pursuant to the Company's Galaxy Enterprises Stock Option Plan. Except as
set forth above,  as of the date hereof,  there are no outstanding (i) shares of
stock or other voting securities of the Company;  (ii) securities of the Company
or any of its subsidiaries  convertible into or exchangeable for shares of stock
or voting  securities  of the Company;  (iii) options or other rights to acquire
from the Company or any of its  subsidiaries,  and no obligations of the Company
or any of its subsidiaries to issue, any stock, voting securities, or securities
convertible into or exchangeable for stock or voting  securities of the Company;
or (iv) equity  equivalents,  interests  in the  ownership  or net income of the
Company,   or  other  similar  rights  (including  stock  appreciation   rights)
(collectively,  "Company Securities").  There are no outstanding  obligations of
the  Company  or any of its  subsidiaries  to  repurchase,  redeem or  otherwise
acquire any Company  Securities.  There are no  stockholder  agreements,  voting
trusts or other agreements or  understandings to which the Company or any of its
subsidiaries  is a party or to which it is bound  relating  to the voting of any
shares of capital stock of the Company.

         (b) All of the outstanding capital stock of the Company's  subsidiaries
is owned by the Company,  directly or indirectly,  free and clear of any Lien or
any other limitation or restriction (including,  any restriction on the right to
vote or sell the same)  except as may be provided as a matter of Law.  There are
no debt or equity securities of the Company or its subsidiaries convertible into
or  exchangeable  for, no options or other rights to acquire from the Company or
its  subsidiaries,  and  no  other  contract,  understanding,   arrangement,  or
obligation  (whether  or not  contingent)  providing  for the  issuance or sale,
directly or indirectly of, any capital stock or other ownership interests in, or
any other securities of, any subsidiary of the Company. There are no outstanding
contractual  obligations  of the  Company  or its  subsidiaries  to  repurchase,
redeem,  or otherwise  acquire any outstanding  shares of capital stock or other
ownership  interests in any  subsidiary  of the Company.  None of the  Company's
subsidiaries  owns  any  capital  stock of the  Company.  For  purposes  of this
Agreement,  "Lien" means,  in respect of any asset  (including any security) any
mortgage, lien, pledge, charge, security interest, or encumbrance of any kind in
respect of such asset.

         SECTION 3.3 Authority Relative to This Agreement.

         (a) The Company has all  necessary  corporate  power and  authority  to
execute  and  deliver  this  Agreement  and  to  consummate   the   transactions
contemplated  hereby  and no  other  corporate  proceedings  on the  part of the
Company  are  necessary  to  authorize  this  Agreement  or  to  consummate  the
transactions  contemplated  hereby and thereby  (other  than,  in respect of the
Merger and this Agreement, the Company Requisite Vote (as hereinafter defined)).


                                       9
<PAGE>

This  Agreement has been duly and validly  executed and delivered by the Company
and  constitutes  a  valid,   legal,  and  binding  agreement  of  the  Company,
enforceable  against  the  Company  in  accordance  with its  terms,  subject to
applicable  bankruptcy,   insolvency,  fraudulent  conveyance,   reorganization,
moratorium and similar Laws affecting  creditors' rights and remedies generally,
and subject,  as to enforceability,  to general principles of equity,  including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).

         (b) As of the date  hereof,  the Board of Directors of the Company (the
"Company  Board") has, by unanimous vote of those present (who  constituted 100%
of the directors then in office),  duly and validly authorized the execution and
delivery of this  Agreement and approved the  consummation  of the  transactions
contemplated  hereby and thereby,  taken all  corporate  actions  required to be
taken by the Company Board for the consummation of the  transactions,  including
the Merger,  contemplated  hereby and has  resolved (i) this  Agreement  and the
transactions  contemplated hereby,  including the Merger, taken together,  to be
advisable  and fair to,  and in the  best  interests  of,  the  Company  and its
stockholders; and (ii) to recommend that the stockholders of the Company approve
and adopt this Agreement and approve the Merger.  The Company Board has directed
that this  Agreement be submitted to the  stockholders  of the Company for their
approval  and  adoption.  The  affirmative  approval  of the  holders  of Shares
representing  a  majority  of the votes  that may be cast by the  holders of all
outstanding  Shares  (voting as a single  class) as of the  record  date for the
Company (the  "Company  Requisite  Vote") is the only vote of the holders of any
class or series of stock of the  Company  necessary  to  approve  and adopt this
Agreement and approve the Merger.

         SECTION 3.4 SEC Reports; Financial Statements.  Since June 1, 1999, the
Company has filed all forms,  reports and documents  with the SEC required to be
filed by it under the Securities Act of 1933, as amended (the "Securities Act"),
and the Securities  Exchange Act of 1934, as amended (the "Exchange Act" and the
"Company SEC  Reports",  respectively),  each of which  complied in all material
respects with all applicable requirements of the Securities Act and the Exchange
Act, each as in effect on the dates such Company SEC Reports were filed. None of
the  Company SEC  Reports  contained,  when  filed,  any untrue  statement  of a
material  fact or  omitted  to state a material  fact  required  to be stated or
incorporated  by reference  therein or necessary in order to make the statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading,  except  to the  extent  amended  prior  to  the  date  hereof  by a
subsequently filed Company SEC Report. The consolidated  financial statements of
the Company  included  in the  Company  SEC  Reports  complied as to form in all
material  respects with  applicable  accounting  requirements  and the published
rules and  regulations of the SEC in respect  thereof and fairly  presented,  in
conformity with United States generally accepted  accounting  principles applied
on a consistent  basis during the periods  involved  ("GAAP")  (except as may be
indicated in the notes  thereto),  the  consolidated  financial  position of the
Company and its consolidated subsidiaries,  in each case as of the dates thereof
and their  consolidated  results of operations and changes in financial position
for the  periods  then  ended  (subject,  in the case of the  unaudited  interim
financial  statements,  to the  absence  of  footnote  disclosure  and to normal
year-end adjustments).  For purposes of this Agreement,  "Company Balance Sheet"
means the consolidated  balance sheet of the Company as of June 30, 2001, as set
forth in the Company's Annual Report on Form 10-K for the fiscal year ended June
30,  2001,  and  "Company  Balance  Sheet Date" means June 30,  2001.  Since the
Company Balance Sheet Date, there has not been any change, or any application or


                                       10
<PAGE>

request for any change,  by the Company or any of its subsidiaries in accounting
principles,  methods or policies for financial accounting or Tax purposes, other
than as a  result  of any  changes  under  GAAP  or  other  relevant  accounting
principles or changes required by any applicable Tax rule or regulation.

         SECTION  3.5  No  Undisclosed   Liabilities.   There  are  no  material
liabilities of the Company or any of its  subsidiaries  of any kind  whatsoever,
whether accrued, contingent,  absolute,  determined,  determinable or otherwise,
which are required to be reflected in its financial  statements (or in the notes
thereto)  in  accordance  with GAAP,  other  than:  (a)  liabilities  disclosed,
provided for or reserved  against in the Company  Balance  Sheet or in the notes
thereto;  (b)  liabilities  arising in the ordinary course of business after the
date of the  Company  Balance  Sheet or which  arose in the  ordinary  course of
business prior to the date of the Company Balance Sheet but were not required to
be disclosed, provided for or reserved against in the Company Balance Sheet; (c)
liabilities  disclosed in the Company SEC Reports prior to the date hereof;  and
(d)  liabilities  arising under this Agreement and (e)  liabilities set forth in
Section 3.5 of the Company Disclosure Schedule.

         SECTION  3.6  Absence  of  Changes.  Except  as  contemplated  by  this
Agreement or as set forth in Section 3.6 of the Company Disclosure Schedule,  or
as disclosed in the Company's  SEC Reports  prior to the date hereof,  since the
Company  Balance Sheet Date,  the Company and its  subsidiaries  have  conducted
their  business in the ordinary and usual course  consistent  with past practice
and there has not been:

              (a)  any  event,   occurrence  or  development  which  had  or  is
         reasonably  expected  to  have,  individually  or in the  aggregate,  a
         Material Adverse Effect on the Company and its subsidiaries  taken as a
         whole;

              (b) any  declaration,  setting aside or payment of any dividend or
         other  distribution  in respect  of any shares of capital  stock of the
         Company  or  (except  to  the  Company  or  other   subsidiaries)   any
         subsidiary, any split, combination or reclassification of any shares of
         capital  stock of the  Company or any  subsidiary,  or any  repurchase,
         redemption  or  other   acquisition  by  the  Company  or  any  of  its
         subsidiaries of any Company or subsidiary securities;

              (c) any amendment or change to the certificate of incorporation or
         bylaws of the Company or any  amendment of any term of any  outstanding
         security  of  the  Company  or  any  of  its  subsidiaries  that  would
         materially  increase  the  obligations  of  the  Company  or  any  such
         subsidiary under such security;

              (d)  (i)  any  incurrence  or  assumption  by the  Company  or any
         subsidiary  of any  indebtedness  for  borrowed  money other than under
         existing credit facilities (or any renewals, replacements or extensions
         that do not increase the aggregate  commitments  thereunder) except (A)
         in the  ordinary  and usual  course of  business  consistent  with past
         practice or (B) as  permitted  by Section  5.1, or (ii) any  guarantee,
         endorsement,  or other  incurrence or assumption of liability  (whether
         directly,  contingently  or  otherwise)  by the  Company  or any of its


                                       11
<PAGE>

         subsidiaries  for the  obligations  of any other person (other than any
         wholly owned subsidiary of the Company), other than in the ordinary and
         usual course of business consistent with past practice;

              (e)  any  creation  or  assumption  by the  Company  or any of its
         subsidiaries of any Lien on any material asset of the Company or any of
         its  subsidiaries  other  than in the  ordinary  and  usual  course  of
         business consistent with past practice;

              (f) any making of any loan, advance or capital  contribution to or
         investment  in any  person by the  Company  or any of its  subsidiaries
         other than (i) as  permitted by Section  5.1,  (ii) loans,  advances or
         capital contributions to or investments in wholly owned subsidiaries of
         the Company, (iii) loans or advances to employees of the Company or any
         of its subsidiaries in the ordinary course of business  consistent with
         past practice or (iv) extensions of credit to customers in the ordinary
         course of business consistent with past practice;

              (g) any contract or  agreement  entered into by the Company or any
         of its  subsidiaries  on or prior to the date  hereof  relating  to any
         material  acquisition or  disposition of any assets or business,  other
         than  contracts  or  agreements  in the  ordinary  and usual  course of
         business  consistent with past practice and those  contemplated by this
         Agreement;

              (h)  any  modification,   amendment,  assignment,  termination  or
         relinquishment  by  the  Company  or any  of  its  subsidiaries  of any
         contract, license or other right (including any insurance policy naming
         it as a  beneficiary  or a  loss  payable  payee)  that  is  reasonably
         expected to have a Material  Adverse Effect,  after taking into account
         the benefit of the  consideration,  if any,  received  in exchange  for
         agreeing to such modification,  amendment,  assignment,  termination or
         relinquishment, on the Company and its subsidiaries taken as a whole;

              (i) any material  change in any method of accounting or accounting
         principles  or  practice  by the  Company  or any of its  subsidiaries,
         except for any such change required by reason of a change in GAAP;

              (j) any (i)  grant  of any  severance  or  termination  pay to any
         director, officer or employee of the Company or any of its subsidiaries
         exceeding  the amounts set forth in the  Company's  severance  plans or
         agreements listed in Sections 3.13(a) or 3.18 of the Company Disclosure
         Schedule; (ii) entering into of any employment,  deferred compensation,
         severance,  consulting,  termination or other similar agreement (or any
         amendment to any such existing agreement) with any director, officer or
         employee of the Company or any of its  subsidiaries  whose  annual cash
         compensation  exceeds $100,000 other than changes or amendments that do
         not and will not result in  increases  of more than five percent in the
         salary,  wages or other compensation of any such person; (iii) increase
         in benefits  payable under any existing  severance or  termination  pay
         policies or employment  agreements;  or (iv) increase in  compensation,
         bonus or other benefits payable to directors,  officers or employees of
         the  Company  or any of its  subsidiaries  other  than,  in the case of
         clause (iv) only,  increases prior to the date hereof in  compensation,


                                       12
<PAGE>

         bonus or other benefits payable to directors,  officers or employees of
         the Company or any of its subsidiaries in the ordinary and usual course
         of  business  consistent  with  past  practice  or merit  increases  in
         salaries of employees at regularly scheduled times in customary amounts
         consistent with past practices;

              (k) any change or amendment of the contracts,  salaries,  wages or
         other compensation of any officer,  director,  employee, agent or other
         similar  representative of the Company or any of its subsidiaries whose
         annual  cash  compensation  exceeds  $100,000  other  than  changes  or
         amendments  that do not and will not result in  increases  of more than
         five  percent in the salary,  wages or other  compensation  of any such
         person;

              (l)  any  adoption,   entering  into,  amendment,   alteration  or
         termination  of (partially or completely)  any Company  Benefit Plan or
         Company Employee  Arrangement  except as contemplated by this Agreement
         or to the extent required by applicable Law or GAAP;

              (m) any entering into of any contract  with an officer,  director,
         employee or other similar  representative  of the Company or any of its
         subsidiaries (other than a contract described in Section 3.6(j))that is
         not terminable,  without penalty or other liability, upon not more than
         60 calendar days' notice; or

              (n) any (i) making or revoking of any material  election  relating
         to Taxes, (ii) settlement or compromise of any material claim,  action,
         suit,  litigation,  proceeding,  arbitration,  investigation,  audit or
         controversy  relating to Taxes, or (iii) change to any material methods
         of reporting income or deductions for federal income tax purposes.

         SECTION 3.7 Information  Supplied.  None of the information supplied or
to be supplied by the Company  specifically  for inclusion or  incorporation  by
reference in (i) the registration statement on Form S-4 to be filed with the SEC
by Parent in connection  with the issuance of Parent Common Stock as required by
the terms of this Agreement  pursuant to the Merger (the "S-4"), at the time the
S-4 is  filed  with  the SEC and at the  time it  becomes  effective  under  the
Securities Act, will contain any untrue  statement of a material fact or omit to
state any material fact  required to be stated  therein or necessary to make the
statements therein not misleading,  and (ii) the proxy statement relating to the
Company Stockholder Meeting to be held in connection with the Merger (the "Proxy
Statement")  will,  at the date  mailed to  stockholders  and at the time of the
Company Stockholder Meeting,  contain any untrue statement of a material fact or
omit to state any material  fact  required to be stated  therein or necessary in
order to make the statements  therein, in light of the circumstances under which
they are made,  not  misleading.  If at any time prior to the Effective Time any
event in  respect of the  Company,  its  officers  and  directors  or any of its
subsidiaries  should occur which is required to be described in an amendment of,
or a supplement to, the S-4 or the Proxy  Statement,  the Company shall promptly
so advise  Parent and such event shall be so  described,  and such  amendment or
supplement (which Parent shall have a reasonable opportunity to review) shall be
promptly  filed  with the SEC  and,  as  required  by Law,  disseminated  to the


                                       13
<PAGE>

stockholders of the Company.  The Proxy Statement,  insofar as it relates to the
Company  Stockholder  Meeting,  will comply as to form in all material  respects
with  the  provisions  of  the  Exchange  Act  and  the  rules  and  regulations
thereunder.  No  representation  or warranty is made under this Section 3.7 with
respect to any statements  made or  incorporated  by reference in the S-4 or the
Proxy  Statement  based  on  information   supplied  by  Parent  or  Merger  Sub
specifically for inclusion or incorporation by reference therein.

         SECTION  3.8  Consents  and  Approvals.  Except for  filings,  permits,
authorizations,  consents  and  approvals  as may be required  under,  and other
applicable  requirements  of,  the  Securities  Act,  the  Exchange  Act,  state
securities  or blue sky  Laws,  the  filing  and  acceptance  for  record of the
Certificate of Merger as required by the DGCL, and such other filings,  permits,
consents  and  approvals  which,  if not  obtained or made,  are not  reasonably
expected to have a Material  Adverse Effect on the Company and its  subsidiaries
taken as a whole,  no filing  with or notice to,  and no permit,  authorization,
consent or approval of, any court or tribunal or administrative, governmental or
regulatory   body,   agency  or  authority,   whether  domestic  or  foreign  (a
"Governmental  Entity")  is  necessary  for the  execution  and  delivery by the
Company of this Agreement or the consummation by the Company of the transactions
contemplated hereby or thereby.

         SECTION 3.9 No Default. Neither the Company nor any of its subsidiaries
is in  violation  of any  term  of  its  charter,  certificate  or  articles  of
incorporation or bylaws (or other similar organizational or governing documents.
The execution,  delivery and performance of this Agreement and the  consummation
of the transactions  contemplated  hereby and thereby will not (A) result in any
violation of or conflict  with,  constitute a default under (with or without due
notice or lapse of time or both),  require any  consent,  waiver or notice under
any term of, or result in the  reduction  or loss of any benefit or the creation
or  acceleration of any right or obligation  (including any termination  rights)
under,  (i) the charter,  certificate or articles of incorporation or bylaws (or
other similar  organizational  or governing  documents) of the Company or any of
its subsidiaries,  (ii) any material  agreement,  material note,  material bond,
material  mortgage,  material  indenture,  material  contract,  material  lease,
material Company Permit or other material  obligation or material right to which
the Company or any of its  subsidiaries is a party or by which any of the assets
or properties of the Company or any of its  subsidiaries  is bound, or (iii) any
applicable  Law,  domestic or foreign  law,  order,  writ,  injunction,  decree,
ordinance,  award,  stipulation,  statute,  judicial or administrative doctrine,
rule or regulation entered by a Governmental Entity ("Law"),  except in the case
of clause (ii) and (iii) where any of the foregoing is not  reasonably  expected
to have,  individually  or in the  aggregate,  a Material  Adverse Effect on the
Company and its subsidiaries  taken as a whole, or (B) result in the creation of
(or impose any obligation on the Company or any of its  subsidiaries  to create)
any Lien upon any of the material  assets or properties of the Company or any of
its subsidiaries pursuant to any such term.

         SECTION 3.10 Real Property.

         (a) The Company has provided  Parent with the address,  general use of,
and period of ownership or occupancy of all of the real property the Company and
its subsidiaries use or occupy or have the right to use or occupy, now or in the
future, pursuant to any lease, sublease, or other occupancy agreement other than


                                       14
<PAGE>

daily usage  arrangements in connection with its Internet  preview  sessions and
Internet training workshops (the "Company Leased Facilities").  No real property
is owned,  leased or used by the  Company  or its  current  subsidiaries  in the
course of their respective businesses other than the Company Leased Facilities.

         (b) With respect to each Company Leased Facility:

              (i) the Company will make available to Parent a true, correct, and
         complete copy of the lease,  sublease or other occupancy  agreement for
         such Company Leased Facility (and all  modifications,  amendments,  and
         supplements thereto and all side letters to which Company or any of its
         subsidiaries  is  a  party  affecting  the  obligations  of  any  party
         thereunder)  (each such  agreement  is referred to herein as a "Company
         Real Property Lease");

              (ii) to the Company's knowledge, the Company or its subsidiary has
         a good and valid  leasehold  interest in such Company  Leased  Facility
         free and clear of all Liens,  except (x) Taxes and  general and special
         assessments  not in default and payable  without  penalty and interest,
         and  (y)  easements,  covenants  and  other  restrictions  that  do not
         materially  impair  the  current  use,   occupancy  or  value,  or  the
         marketability  of the  Company's or its  subsidiary's  interest in such
         real property;

              (iii)  to  the  Company's  knowledge,  each  Real  Property  Lease
         constitutes  the valid and legally  binding  obligation  of the parties
         thereto, enforceable in accordance with its terms, and is in full force
         and effect;

              (iv) all rent and other sums and charges payable by the Company or
         its subsidiary as tenant under the Company Real Property Lease covering
         the Company Leased Facility are current,  no event or condition  giving
         rise to a right to  terminate  or  uncured  default  on the part of the
         tenant or, to the Company's knowledge,  the landlord,  exists under the
         Company Real  Property  Lease.  No party to such Company Real  Property
         Lease  has  given  written   notice  to  the  Company  or  any  of  its
         subsidiaries  or made a claim in writing  against the Company or any of
         its subsidiaries in respect of any breach or default thereunder; and

              (v)  neither  the  Company  nor  its   subsidiary   has  assigned,
         transferred,  conveyed,  mortgaged,  deeded in trust or encumbered  its
         leasehold interest in the Company Leased Facility.

         SECTION  3.11  Litigation.  Except as  disclosed in Section 3.11 of the
Company Disclosure Schedule,  there is no other suit, claim, action,  proceeding
or, to the  Company's  knowledge,  investigation,  pending or, to the  Company's
knowledge,  threatened which is reasonably expected to have,  individually or in
the aggregate,  a Material  Adverse  Effect on the Company and its  subsidiaries
taken as a whole.  Except as disclosed in Section 3.11 of the Company Disclosure
Schedule or the Company SEC Reports,  none of the Company or its subsidiaries is

                                       15
<PAGE>

subject to any outstanding order, writ, injunction or decree which is reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company and its subsidiaries  taken as a whole. To the Company's  knowledge,
there is no action,  suit,  proceeding  or  investigation  pending or threatened
against  any  current  or former  officer,  director,  employee  or agent of the
Company or any of its  subsidiaries  (in his or her  capacity  as such) which is
reasonably  expected to give rise to a claim for contribution or indemnification
against the Company or any of its subsidiaries.  Notwithstanding  the foregoing,
any shareholder  litigation or litigation by any  Governmental  Entity,  in each
case  brought  or  threatened  against  the  Company or any  officer,  director,
employee  or  agent of the  Company  in any  respect  of this  Agreement  or the
transactions contemplated hereby, shall not be deemed to have, or contribute to,
a Material Adverse Effect on the Company and its subsidiaries taken as a whole.

         SECTION 3.12 Compliance with Applicable Law;  Permits.  The Company and
its subsidiaries hold all permits, licenses, variances,  exemptions, orders, and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "Company Permits"),  except for failures to hold such
permits,  licenses,  variances,  exemptions,  orders and approvals which are not
reasonably  expected  to have,  individually  or in the  aggregate,  a  Material
Adverse Effect on the Company and its subsidiaries taken as a whole. The Company
and its  subsidiaries  are in compliance with the terms of the Company  Permits,
except  where  the  failure  to  comply  is not  reasonably  expected  to  have,
individually or in the aggregate,  a Material  Adverse Effect on the Company and
its subsidiaries  taken as a whole. The businesses and operations of the Company
and its  subsidiaries  comply in all respects  with all Laws  applicable  to the
Company  or its  subsidiaries,  except  where  the  failure  to so comply is not
reasonably  expected  to have,  individually  or in the  aggregate,  a  Material
Adverse Effect on the Company and its subsidiaries taken as a whole.

         SECTION 3.13 Employee Plans

         (a) Section  3.13(a) of the Company  Disclosure  Schedule  sets forth a
true, correct, and complete list of:

              (i) all material  "employee  benefit plans," as defined in Section
         3(3) of the Employee Retirement Income Security Act of 1974, as amended
         ("ERISA"),  under which the Company or any of its  subsidiaries has any
         obligation or liability,  contingent or otherwise,  including,  but not
         limited  to,  (i) all  severance  plans or  arrangements;  and (ii) any
         supplemental  or U.S.  non-qualified  retirement  plans or arrangements
         (the "Company Benefit Plans"); and

              (ii)  all  employment,   consulting,   termination,  severance  or
         individual compensation agreements (other than any such agreement which
         is terminable  within 90 days without  liability or at any time without
         liability  exceeding two weeks' salary for each year of employment  or,
         in the  case  of  employees  whose  annual  cash  compensation  exceeds
         $100,000,  three months' salary,  or is legally  mandated by applicable
         non-U.S.  law); all stock award, stock option,  stock purchase or other
         equity-based  (including  phantom stock or stock  appreciation  rights)
         plans  or   arrangements;   all  material  bonus  or  other   incentive
         compensation  plans or agreements  (including,  but not limited to, any
         such plan or agreement  covering  any officer or employee  whose annual
         cash compensation  exceeds $70,000; all material salary continuation or
         deferred compensation plans or agreements  (including,  but not limited
         to, any such plan or agreement  covering any current or former  officer


                                       16
<PAGE>

         or employee whose annual cash  compensation  exceeds  $70,000;  in each
         case,  as to  which  the  Company  or any of its  subsidiaries  has any
         obligation  or  liability   (contingent  or  otherwise)  (the  "Company
         Employee Arrangements").

         (b) In respect of each  Company  Benefit  Plan,  a complete and correct
copy of each of the  following  documents (if  applicable)  has been provided to
Parent: (i) the most recent plan and related trust documents, and all amendments
thereto;  (ii)  the  most  recent  summary  plan  description,  and all  related
summaries  of material  modifications  thereto;  (iii) the most recent Form 5500
(including,  schedules and  attachments);  (iv) the most recent Internal Revenue
Service ("IRS")  determination letter; and (v) the most recent actuarial reports
(including for purposes of Financial  Accounting Standards Board report nos. 87,
106 and 112).

         (c) Except as  disclosed in Section  3.13(c) of the Company  Disclosure
Schedule,  none of the Company Benefit Plans or Company Employee Arrangements is
subject to Title IV of ERISA,  constitutes a defined benefit  retirement plan or
is a  multi-employer  plan described in Section 3(37) of ERISA,  and the Company
and  its  subsidiaries  do  not  have  any  material   obligation  or  liability
(contingent  or otherwise) in respect of any such plans to the extent such plans
constitute a defined benefit retirement plan or a multi-employer  plan described
in Section 3(37) of ERISA. The Company and its subsidiaries are not members of a
group of trades or businesses (other than that consisting of the Company and its
subsidiaries)  under common control or treated as a single employer  pursuant to
Section 414 of the Code.

         (d) The Company  Benefit  Plans and their  related  trusts  intended to
qualify under Sections 401 and 501(a) of the Code, respectively, have received a
favorable  determination  letter from the IRS and the  Company has no  knowledge
that any event has  occurred  since the date of such letter that could cause the
IRS to revoke such  determination.  Any voluntary  employee benefit  association
which  provides  benefits to current or former  employees of the Company and its
subsidiaries,  or their  beneficiaries,  is and has been qualified under Section
501(c)(9) of the Code.

         (e) All  contributions or other payments  required to have been made by
the Company and its subsidiaries to or under any Company Benefit Plan or Company
Employee Arrangement by applicable Law or the terms of such Company Benefit Plan
or Company Employee  Arrangement (or any agreement  relating  thereto) have been
timely  and  properly  made or have  been  accrued  in the  Company's  financial
statements.

         (f) The Company Benefit Plans and Company  Employee  Arrangements  have
been  maintained and  administered in accordance with their terms and applicable
Laws and all required returns, reports, and filings (including,  but not limited
to annual  reports on Form 5500) have been timely filed.  No individual  who has
performed  services  for  the  Company  or  any  of its  subsidiaries  has  been
improperly  excluded from  participation  in any Company Benefit Plan or Company
Employee  Arrangement,  except where the failure to so maintain  and  administer
such  Company  Benefit  Plans or the  exclusion of any such  individuals  is not
reasonably expected to have, individually or in the aggregate.

                                       17
<PAGE>

         (g) There are no pending  or, to the  Company's  knowledge,  threatened
actions,  claims, or proceedings against or relating to any Company Benefit Plan
or Company  Employee  Arrangement  (other than routine benefit claims by persons
claiming benefits thereunder),  and, to the knowledge of the Company,  there are
no facts or  circumstances  which could form a  reasonable  basis for any of the
foregoing,  except  for  such  actions,  claims  or  proceedings  which  are not
reasonably  expected  to have,  individually  or in the  aggregate,  a  Material
Adverse Effect on the Company and its subsidiaries taken as a whole.

         (h)  The  Company  and  its  subsidiaries  do  not  have  any  material
obligation or liability  (contingent  or  otherwise) to provide  post-retirement
life  insurance  or health  benefits  coverage  for current or former  officers,
directors,  or employees of the Company or any of its subsidiaries except (i) as
may be  required  under  Part 6 of Title I of ERISA at the sole  expense  of the
participant  or  the   participant's   beneficiary,   (ii)  a  medical   expense
reimbursement account plan pursuant to Section 125 of the Code, or (iii) through
the  last  day of  the  calendar  month  in  which  the  participant  terminates
employment with the Company or any subsidiary of the Company.

         (i) Except as set forth in Section  3.13(i) of the  Company  Disclosure
Schedule, none of the assets of any Company Benefit Plan is stock of the Company
or any of its affiliates,  or property leased to or jointly owned by the Company
or any of its affiliates.

         (j) Except as  disclosed in Section  3.13(j) of the Company  Disclosure
Schedule or in connection  with equity  compensation,  neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment  becoming  due to any  employee  (current,
former, or retired) of the Company or any of its subsidiaries, (ii) increase any
benefits  under  any  Company  Benefit  Plan  or  Company  Employee  Arrangement
(determined  without  regard  to  the  "materiality"  limits  set  forth  in the
definitions of such terms),  or (iii) result in the  acceleration of the time of
payment of, vesting of, or other rights in respect of any such benefits.

         (k) The Company has no  employees  outside of the United  States  other
than United States based  employees who have begun to travel on an  intermittent
basis outside the United States in connection with its recent global expansion.

         (l) The aggregate number of shares of Company Common Stock  purchasable
under all  outstanding  purchase  rights under the Company Option Plans does not
exceed the maximum number of shares remaining  available for issuance under such
plan.

         (m) Neither the Company,  nor, to the best  knowledge  of Company,  any
other plan  "fiduciary"  or "party in  interest"  (as such terms are  defined in
Sections  3(21) and 3(14) of ERISA) of any Company  Benefit Plans has engaged in
any  transaction in violation of Sections 404 or 406 of ERISA or any "prohibited
transaction,"  as such term is defined in Section 4975 of the Code, for which no
exemption  exists under  Section 408 of ERISA,  Section 4975 of the Code, or has
engaged in any  transaction  that may result in the imposition of any excise tax
under Sections 4971 through 4980E of the Code, or otherwise incurred a liability
for any  excise  tax,  other  than  excise  taxes  that  have  been paid or have
otherwise been disclosed in Section 3.13(n) of the Company Disclosure Schedule.

                                       18
<PAGE>

         SECTION 3.14 Labor Matters.

         (a) The  Company and its  subsidiaries  are not parties to any labor or
collective bargaining  agreement,  and no employees of the Company or any of its
subsidiaries   are  represented  by  any  labor   organization.   There  are  no
representation   or   certification   proceedings,   or   petitions   seeking  a
representation proceeding, pending or, to the Company's knowledge, threatened in
writing to be brought or filed with the National  Labor  Relations  Board or any
other labor relations  tribunal or authority.  Within the last twelve months, to
the Company's knowledge,  there have been no organizing activities involving the
Company or any of its  subsidiaries  in respect of any group of employees of the
Company or any of its subsidiaries.

         (b) There are no strikes, work stoppages, slowdowns, lockouts, material
arbitrations or material  grievances or other material labor disputes pending or
threatened  in  writing   against  or  involving  the  Company  or  any  of  its
subsidiaries.  There  are  no  unfair  labor  practice  charges,  grievances  or
complaints pending or, to the Company's  knowledge,  threatened in writing by or
on behalf of any  employee  or group of  employees  of the Company or any of its
subsidiaries which, if individually or collectively resolved against the Company
or any of its  subsidiaries,  would  reasonably  be  expected to have a Material
Adverse Effect on the Company and its subsidiaries taken as a whole.

         (c) There are no  complaints,  charges or claims against the Company or
any of its subsidiaries pending or, to the Company's knowledge, threatened to be
brought or filed with any  Governmental  Entity or arbitrator  based on, arising
out  of,  in  connection  with,  or  otherwise  relating  to the  employment  or
termination  of  employment  of  any  individual  by the  Company  or any of its
subsidiaries which, if individually or collectively resolved against the Company
or any of its  subsidiaries,  would  reasonably  be  expected to have a Material
Adverse Effect on the Company and its subsidiaries taken as a whole, and, to the
knowledge of the Company, there are no facts or circumstances which could form a
reasonable basis for any of the foregoing.

         (d) There has been no "mass  layoff" or "plant  closing"  as defined by
the Worker Adjustment and Retraining  Notification Act, as amended ("WARN"),  in
respect of the Company or any of its subsidiaries within the six months prior to
the Effective Time.

         (e) All  employees  of the  Company  and its  subsidiaries  possess all
applicable  passports,  visas, permits and other authorizations  required by all
applicable immigration or similar Laws to be employed by and to perform services
for and on behalf of the Company and its subsidiaries,  except where the failure
to possess such passports,  visas,  permits or other  authorizations  would not,
individually  or in the aggregate,  reasonably be expected to materially  affect
the conduct of business by the Company or its subsidiaries.  The Company and its
subsidiaries,  and their employees,  have complied in all material respects with
all applicable immigration and similar Laws.

                                       19
<PAGE>

         SECTION 3.15 Environmental Matters.

         (a) For purposes of this Agreement:

              (i) "Environmental Law" means all federal, state, local or foreign
         Law, or other legal requirement  regulating or prohibiting  Releases of
         Hazardous  Materials  into  the  indoor  or  outdoor  environment,   or
         pertaining  to the  protection  of natural  resources or wildlife,  the
         environment  or public and  employee  health and safety or pollution or
         the  exposure  to  Hazardous  Materials,  including  the  Comprehensive
         Environmental Response,  Compensation, and Liability Act ("CERCLA") (42
         U.S.C.  Section 9601 et seq.), the Hazardous  Materials  Transportation
         Act (49 U.S.C.  Section 1801 et seq.),  the Resource  Conservation  and
         Recovery Act (42 U.S.C.  Section 6901 et seq.), the Clean Water Act (33
         U.S.C. Section 1251 et seq.), the Clean Air Act (42 U.S.C. Section 7401
         et seq.), the Toxic Substances  Control Act (15 U.S.C.  Section 7401 et
         seq.),  the Atomic  Energy Act (42 U.S.C.  Section  2014 et seq.),  the
         Federal Insecticide,  Fungicide,  and Rodenticide Act (7 U.S.C. Section
         136 et seq.), the Communications  Act (47 U.S.C.  Section 151 et seq.),
         and the  Occupational  Safety and Health Act (29 U.S.C.  Section 651 et
         seq.) ("OSHA"),  as such laws or other legal requirements have been and
         may be amended or supplemented through the Closing Date;

              (ii) "Hazardous  Material" means any substance,  material or waste
         which is regulated  pursuant to any applicable  Environmental  Law as a
         "hazardous  waste,"  "hazardous   material,"   "hazardous   substance,"
         "contaminant,"  "toxic waste," "toxic  substance,"  "source  material,"
         "special   nuclear   material,"   "byproduct   material,"   "high-level
         radioactive  waste,"  "low-level  radioactive  waste,"  "spent  nuclear
         material"  or  "radio  frequency"  and  includes  petroleum,  petroleum
         products and petroleum by-products and waste;

              (iii)  "Release"  means any  release,  spill,  emission,  leaking,
         pumping, dumping, injection, deposit, disposal,  discharge,  dispersal,
         leaching or migration into the indoor or outdoor  environment,  or into
         or out of any property currently or formerly owned,  operated or leased
         by the applicable party or its subsidiaries; and

              (iv)  "Remedial  Action" means all actions,  including any capital
         expenditures,  required by a  Governmental  Entity or required under or
         taken  pursuant  to any  Environmental  Law,  to (A) clean up,  remove,
         treat,  remediate or address any  Hazardous  Materials in the indoor or
         outdoor  environment;  (B) prevent the Release or threat of Release, or
         minimize the further  Release of any Hazardous  Material so it does not
         endanger  or threaten  to  endanger  the public or  employee  health or
         welfare or the indoor or outdoor environment;  (C) perform pre-remedial
         studies  and  investigations  or  post-remedial   monitoring  and  care
         pertaining or relating to a Release.

         (b)  Except  as set forth in  Section  3.15 of the  Company  Disclosure
Schedule:

              (i) The  operations  of the  Company and its  subsidiaries  are in
         material compliance with all Environmental Laws, and the Company is not


                                       20
<PAGE>

         aware  of  any  facts,   circumstances  or  conditions  which,  without
         significant capital expenditures,  would prevent material compliance in
         the future;

              (ii) To the Company's knowledge,  the Company and its subsidiaries
         have  obtained  all  Company   Permits,   required   under   applicable
         Environmental  Laws for the continued  operations  of their  respective
         businesses;  the Company and its  subsidiaries  have made all  material
         filings,  reports and notices required under any  Environmental Law for
         the past and future operations of their respective businesses;

              (iii) The  Company  and its  subsidiaries  are not  subject to any
         outstanding written orders or material contracts or agreements with any
         Governmental  Entity or other person respecting (A) Environmental Laws,
         (B) any Remedial  Action,  (C) any Release or  threatened  Release of a
         Hazardous  Material,   or  (D)  an  assumption  of  responsibility  for
         environmental claims of another person or entity;

              (iv)  The  Company  and its  subsidiaries  have not  received  any
         written  communication  alleging,  in  respect of any such  party,  the
         material  violation  of or  liability  (real or  potential)  under  any
         Environmental  Law;  or  requesting,  with  respect to any such  party,
         information with respect to an investigation pursuant to CERCLA, or any
         foreign or state counterpart thereto, or any other Environmental Law;

              (v) To the Company's knowledge, neither the Company nor any of its
         subsidiaries has any material  contingent  liability in connection with
         any Remedial Action or the Release of any Hazardous  Material  (whether
         on-site or off-site)  or employee or third party  exposure to Hazardous
         Materials;

              (vi) To the Company's knowledge, the operations of the Company and
         its subsidiaries involving the generation,  transportation,  treatment,
         storage or disposal of Hazardous  Materials are in material  compliance
         with  applicable  Environmental  Laws and, to the Company's  knowledge,
         there has been no disposal by the  Company or its  subsidiaries  of any
         Hazardous Materials on or in any site listed or formally proposed to be
         listed on the National  Priorities List promulgated  pursuant to CERCLA
         or  any  foreign  or  state  remedial   priority  list  promulgated  or
         maintained  pursuant to comparable  foreign or state law,  except where
         such  disposal  would not  reasonably  be expected to create a material
         adverse liability for the Company;

              (vii) To the Company's  knowledge,  there is not now nor has there
         been in the past,  on, in or at any Company  Leased  Facility,  Company
         Former  Facility  (defined as all of the real property  formerly owned,
         leased  or  used,   other  than   those  used   solely  for  office  or
         administrative purposes, by the Company or any of its current or former
         subsidiaries  or corporate  predecessors in interest at any time in the
         past), or any other facility for which the Company or its  subsidiaries
         has  assumed  responsibility  for  environmental  claims,  any  of  the
         following:  (A) any underground storage tanks; (B) landfills,  dumps or
         surface  impoundments;  (C) any Company  planned,  ongoing or completed
         Remedial  Action;  (D) any  asbestos-containing  materials;  or (E) any
         polychlorinated biphenyls;

                                       21
<PAGE>

              (viii) There is not now, nor to the Company's knowledge, has there
         been in the past,  on, in or at any Company  Leased  Facility,  Company
         Former  Facility,  or any other  facility  for which the Company or its
         subsidiaries has assumed  responsibility for environmental  claims, any
         site on or formally proposed to be listed on the National Priority List
         promulgated  pursuant  to  CERCLA  or any  foreign  or  state  remedial
         priority  list  promulgated  or  published  pursuant to any  comparable
         foreign or state law; and

              (ix) No judicial or administrative  proceedings are pending or, to
         the  Company's  knowledge,   threatened  against  the  Company  or  its
         subsidiaries  alleging the  material  violation of or seeking to impose
         material  liability  pursuant  to any  Environmental  Law  and,  to the
         Company's knowledge,  there are no investigations pending or threatened
         against  the  Company or any of its  subsidiaries  under  Environmental
         Laws.

         (c) The Company will make  available  to Parent  copies of all material
environmentally related assessments, audits, investigations,  or similar reports
(and, upon reasonable  specific request,  sampling reports) in its possession or
control and which were  prepared in the last five years  (and,  upon  reasonable
specific  request,   earlier  information)   relating  to  the  Company  or  its
subsidiaries  or any real  property  currently  or formerly  owned,  operated or
leased by or for the Company or its  subsidiaries,  including any Company Leased
Facility, or Company Former Facility.

         SECTION 3.16 Tax Matters.

         (a) Each of the Company and its  subsidiaries  has timely filed (or has
had timely filed) all Tax Returns required to be filed by it (or on its behalf).
All such Tax Returns are  complete  and correct in all  material  respects.  The
Company and its subsidiaries  have paid all Taxes due for the periods covered by
such Tax  Returns.  The most  recent  Company  SEC  Reports  reflect an adequate
reserve  for all Taxes  payable  by the  Company  and its  subsidiaries  for all
Taxable  periods  and  portions  thereof  through  the date of such  Company SEC
Reports.  The Company has  previously  delivered (or, in the case of foreign Tax
Returns and audit  reports,  will  deliver) to Parent copies of (i) all federal,
state,  local and foreign  income and franchise Tax Returns filed by the Company
and its  subsidiaries  relating to any taxable  periods of the Company or any of
its  subsidiaries  that remains  subject to audit under  applicable  statutes of
limitations;  and (ii) any audit report  issued  within the last three years (or
otherwise  in respect of any audit or  investigation  in  progress)  relating to
Taxes due from or in respect of the Company or its subsidiaries.

         (b)  No  material  deficiencies  for  any  Taxes  have  been  proposed,
asserted, or assessed against the Company or its subsidiaries that have not been
fully paid or adequately provided for in the appropriate financial statements of
the  Company,  no  requests  for  waivers  of the time to  assess  any Taxes are
pending,  and no power of attorney in respect of any Taxes has been  executed or
filed with any taxing authority.  No material issues relating to Taxes have been
raised by the relevant taxing  authority  during any presently  pending audit or
examination.  All income and  franchise Tax Returns filed by or on behalf of the
Company  and its  subsidiaries  for the  taxable  years set forth on the Company
Disclosure  Schedule have been reviewed by the relevant taxing  authority or the

                                       22
<PAGE>

statute of limitations with respect to such Tax Returns has expired.

         (c) No  material  Liens for Taxes  exist in  respect  of any  assets or
properties of the Company or its  subsidiaries,  except for statutory  Liens for
Taxes not yet due.

         (d) Neither the Company nor any of its subsidiaries is a party to or is
bound  by any Tax  sharing  agreement,  Tax  indemnity  obligation,  or  similar
agreement, arrangement, or practice in respect of Taxes (whether or not written)
(including any advance pricing agreement,  closing agreement, or other agreement
relating to Taxes with any taxing authority).

         (e) Neither the Company nor any of its subsidiaries (i) has ever been a
member of an affiliated  group within the meaning of Section 1504(a) of the Code
(or any similar or analogous  group defined under a similar or analogous  state,
local or foreign Law) other than an affiliated  group the common parent of which
is the Company,  or (ii) has any liability  under  Treasury  Regulation  Section
1.1502-6  (or any  predecessor  or  successor  thereof or  analogous  or similar
provision under state,  local or foreign Law), as a transferee or successor,  by
contract or otherwise for Taxes of any affiliated  group of which the Company is
not the common parent.

         (f) Neither the Company nor any of its subsidiaries has taken or agreed
to  take  any  action  that  would  prevent  the  Merger  from   constituting  a
reorganization qualifying under the provisions of Section 368(a) of the Code.

         (g) Except as set forth in Section  3.16(g) of the  Company  Disclosure
Schedule, there are no employment, severance, or termination agreements or other
compensation  arrangements  currently in effect which provide for the payment of
any amount  (whether in cash or property or the vesting of property) as a result
of any of the transactions  contemplated by this Agreement that  individually or
collectively  (either  alone  or  upon  the  occurrence  of  any  additional  or
subsequent event), could give rise to a payment which is nondeductible by reason
of Section 280G of the Code.

         (h) The  Company and its  subsidiaries  have  complied in all  material
respects with all Laws  applicable to the payment and  withholding  of Taxes and
have  duly  and  timely  withheld  from  employee  salaries,   wages  and  other
compensation and have paid over to the appropriate  taxing authority all amounts
required to be so withheld  and paid over for all periods  under all  applicable
Laws.

         (i) No federal, state, local, or foreign audits or other administrative
proceedings or court  proceedings are presently  pending in respect of any Taxes
or Tax  Returns of the Company or its  subsidiaries  and neither the Company nor
its  subsidiaries  have  received  a  written  notice  of any  pending  audit or
proceeding.

         (j) Except as set forth in Section  3.16(j) of the  Company  Disclosure
Schedule,  neither the Company nor any of its  subsidiaries  has agreed to or is
required to make any adjustment  under Section 481(a) of the Code or any similar
provision  of state,  local or foreign  Law by reason of a change in  accounting
method  initiated by the Company or its subsidiaries or has any knowledge that a

                                       23
<PAGE>

taxing  authority  has  proposed  any such  adjustment  or change in  accounting
method,  or has any  application  pending with any taxing  authority  requesting
permission for any changes in accounting  methods that relate to the business or
operations of the Company or its subsidiaries.

         (k) Except as set forth in Section  3.16(k) of the  Company  Disclosure
Schedule,  neither  the Company  nor any of its  subsidiaries  is a party to any
contract,  agreement,  or other arrangement which could result in the payment of
amounts  that could be  nondeductible  by reason of Section  162(m) of the Code,
provided that no representation or warranty is made as to  performance-based  or
equity-based compensation.

         (l) Neither the Company nor any of its  subsidiaries  has  received any
private  letter  rulings  from the IRS or  comparable  rulings from other taxing
authorities.

         (m) Neither the Company  nor any of its  subsidiaries  has  constituted
either a "distributing  corporation" or a "controlled  corporation"  (within the
meaning  of  Section  355(a)(1)(A)  of the  Code)  in a  distribution  of  stock
qualifying for tax-free  treatment  under Section 355 of the Code (i) in the two
years prior to the date of this Agreement or (ii) in a distribution  which could
otherwise  constitute  part of a "plan"  or  "series  of  related  transactions"
(within  the  meaning of  Section  355(e) of the Code) in  conjunction  with the
Merger.

         (n) Neither the Company nor any of its  subsidiaries (i) engaged in any
"intercompany  transactions"  in respect of which gain was and  continues  to be
deferred pursuant to Treasury Regulation Section 1.1502-13 or any predecessor or
successor  thereof or  analogous  or similar  provision  under  state,  local or
foreign Law; or (ii) has "excess  loss  accounts" in respect of the stock of any
subsidiary pursuant to Treasury Regulation Section 1.1502-19, or any predecessor
or successor  thereof or analogous or similar  provision  under state,  local or
foreign Law.

         For  purposes of this  Agreement,  "Tax" or "Taxes"  means all federal,
state, local or foreign Taxes, charges, fees, imposts, duties, levies, gaming or
other assessments,  including,  all net income, gross receipts,  capital, sales,
use, ad valorem, value added, transfer,  franchise,  profits, inventory, capital
stock, license, withholding, payroll, employment, social security, unemployment,
excise,  severance,  stamp,  occupation,  property, and estimated Taxes, customs
duties, fees, assessments and charges of any kind whatsoever,  together with any
interest  and any  penalties,  fines,  additions  to Tax or  additional  amounts
imposed by any taxing  authority  (domestic  or foreign)  and shall  include any
transferee  liability  in respect of Taxes,  any  liability  in respect of Taxes
imposed by  contract,  Tax sharing  agreement,  Tax  indemnity  agreement or any
similar   agreement.   "Tax  Returns"  means  any  report,   return,   document,
declaration,  or any other  information or filing required to be supplied to any
taxing  authority  or  jurisdiction  (domestic  or foreign) in respect of Taxes,
including,  information  returns,  any  document  in respect of or  accompanying
payments or estimated  Taxes, or in respect of or accompanying  requests for the
extension  of  time  in  which  to  file  any  such  report,   return  document,
declaration, or other information,  including amendments thereof and attachments
thereto.

         SECTION  3.17  Absence  of  Questionable  Payments.  To  the  Company's
knowledge,  neither the Company nor any of its  subsidiaries  nor any  director,
officer,  agent, employee or other person acting on behalf of the Company or any


                                       24
<PAGE>

of its  subsidiaries,  has  used  any  corporate  or other  funds  for  unlawful
contributions,   payments,   gifts  or  entertainment,   or  made  any  unlawful
expenditures relating to political activity to government officials or others or
established or maintained  any unlawful or unrecorded  funds in violation of the
Foreign  Corrupt  Practices  Act of 1977, as amended,  or any other  domestic or
foreign  Law.  To the  Company's  knowledge,  neither the Company nor any of its
subsidiaries nor any director,  officer,  agent, employee or other person acting
on behalf of the Company or any of its subsidiaries has accepted or received any
unlawful contributions, payments, gifts or expenditures.

         SECTION 3.18 Material Contracts.

         (a) Set forth in Section 3.18(a) of the Company Disclosure  Schedule is
a list of all contracts and agreements  (and all amendments,  modifications  and
supplements  thereto  and all side  letters  to which the  Company or any of its
subsidiaries is a party  affecting the  obligations of any party  thereunder) to
which the Company or any of its  subsidiaries  is a party or by which any of its
assets or  properties  are bound that are  material to the  business,  assets or
properties  of the  Company  and its  subsidiaries  taken as a whole,  all:  (i)
executory   employment,   executory   severance,   material  product  design  or
development,   executory  personal  services,  material  consulting,   executory
non-competition or material indemnification  contracts (including,  any material
contract to which the Company or any of its  subsidiaries  is a party  involving
employees of the Company), but excluding normal indemnification provisions under
license  or  sale  contracts;  (ii)  licensing,  merchandising  or  distribution
agreements involving the payment of more than $100,000 per year; (iii) contracts
granting a right of first  refusal or first  negotiation  involving in excess of
$100,000;  (iv) partnership or joint venture agreements;  (v) any agreements for
the  acquisition,  sale or lease of material assets or properties of the Company
(by merger, purchase or sale of assets or stock or otherwise) entered into since
June 30,  2000  involving a payment in excess of  $100,000;  (vi)  contracts  or
agreements  with any  Governmental  Entity  involving  the  payment of more than
$50,000 per year;  (vii) loan or credit  agreements,  mortgages,  indentures  or
other  agreements or instruments  evidencing  indebtedness for borrowed money by
the Company or any of its  subsidiaries or any such agreement  pursuant to which
indebtedness  for  borrowed  money may be  incurred,  in each case  involving in
excess of $100,000; (viii) agreements that purport to limit, curtail or restrict
the  ability  of  the  Company  or any of its  subsidiaries  to  compete  in any
geographic  area or line of business;  (ix) assembly  (packaging),  testing,  or
supply agreements,  in each case,  involving in excess of $100,000 per year; (x)
agreements,  written or oral, with any officers, directors,  shareholders of the
Company or any  member of the  immediate  family of any  officer,  director,  or
shareholder of the Company;  and (xi)  commitments  and agreements to enter into
any of the foregoing  (collectively,  together with any such  contracts  entered
into in accordance with Section 5.1, the "Company Material Contracts").  Section
3.18 of the  Company  Disclosure  Schedule  sets  forth  a list of all  Material
Contracts and the Company has heretofore made available to Parent true, correct,
and  complete  copies  of all  such  Material  Contracts.

         (b) To the Company's knowledge,  each of the Company Material Contracts
constitutes  the valid and  legally  binding  obligation  of the  Company or its
subsidiaries, enforceable in accordance with its terms, and is in full force and
effect.  There is no material default under any Company Material Contract either
by the Company (or its  subsidiaries)  or, to the  Company's  knowledge,  by any


                                       25
<PAGE>

other party  thereto,  and no event has occurred that with the giving of notice,
the lapse of time, or both would constitute a material default thereunder by the
Company (or its subsidiaries) or, to the Company's  knowledge,  any other party.
As of the date hereof,  to the  Company's  knowledge,  no party has notified the
Company in writing  that it intends to  terminate or fail to extend any contract
between  such  person  and  the  Company  within  one  year  of the  date of the
Agreement,  except  for any such  termination  or  failure  as would  not have a
Material Adverse Effect on the Company and its subsidiaries taken as a whole.

         (c) To the Company's  knowledge,  no party to any such Company Material
Contract has given notice to the Company of or made a claim  against the Company
in respect of any  material  breach or default  thereunder  by the  Company or a
subsidiary.

         (d) Except as set forth in Section  3.18(d) of the  Company  Disclosure
Schedule,  no consent of any third party is required under any Company  Material
Contract as a result of or in connection  with,  and the  enforceability  of any
Company Material  Contract will not be affected in any manner by, the execution,
delivery,  and  performance  of  this  Agreement  or  the  consummation  of  the
transactions contemplated hereby.

         SECTION 3.19 Subsidies. Section 3.19 of the Company Disclosure Schedule
sets  forth  a list of all  material  grants,  material  subsidies  and  similar
material arrangements directly or indirectly between or among the Company or any
of its subsidiaries,  on the one hand, and any domestic or foreign  Governmental
Entity or any other  person,  on the other hand.  Except as set forth on Section
3.19 of the  Company  Disclosure  Schedule,  neither  the Company nor any of its
subsidiaries  has  requested,  sought,  applied for or entered into any material
grant,  material subsidy or similar material  arrangement directly or indirectly
from or with any domestic or foreign Governmental Entity or any other person.

         SECTION 3.20 Intellectual Property.

         (a) As used herein, the term "Intellectual Property" means domestic and
foreign letters patent, patents, patent applications,  patent licenses, know-how
licenses,  trademark registrations and applications,  service mark registrations
and  applications  and  copyright  registrations  and  applications,  databases,
software licenses,  trade names, trade secrets,  technical knowledge,  know-how,
confidential  information,  customer lists,  proprietary processes,  techniques,
formulae  and "mask  works" (as such terms are  defined in 17 U.S.C.  901),  and
related ownership,  use and other rights (including rights of renewal and rights
to sue for past, present and future infringements or misappropriations thereof).

         (b) To the  Company's  knowledge,  and  except  as are  not  reasonably
expected to have a Material  Adverse Effect on the Company and its  subsidiaries
taken as a whole: (i) each item of the Company's Intellectual Property comprised
of registered copyrights, copyright applications,  patents, patent applications,
trademarks,  and trademark  applications are in compliance with applicable legal
requirements relating to the registration or maintenance of such item (including
payment of filing,  examination  and  maintenance  fees and proofs of working or


                                       26
<PAGE>

use, as applicable) other than any requirement that if, not satisfied, would not
result in a revocation or otherwise  materially affect the enforceability of the
item of Company  Intellectual  Property in  question,  and the Company has taken
reasonable  steps to  protect  the  Company's  Intellectual  Property;  (ii) the
Company and its subsidiaries own or have the right to use, free and clear of all
Liens, all Company  Intellectual  Property and unregistered works of authorship,
common  law marks,  trademarks  and  service  marks,  and rights and  inventions
necessary  for  the  operation  of  the   businesses  of  the  Company  and  its
subsidiaries as presently  conducted and as presently  proposed to be conducted;
(iii) each material item of Company  Intellectual  Property owned or used by the
Company and its  subsidiaries  immediately  prior to the Effective  Time will be
owned or available for use by the Surviving Corporation  immediately  subsequent
to the  Effective  Time;  (iv) the Company and its  subsidiaries  have taken all
action  deemed by the Company or the  relevant  subsidiary  to be  necessary  or
reasonable,  but in no event less than all commercially  reasonable  action,  to
protect and preserve the  confidentiality of all Company  Intellectual  Property
consisting  of trade  secrets;  (v) the Company has had and  continues to have a
requirement that all employees of the Company and its subsidiaries  must execute
a non-disclosure  agreement which includes an agreement to assign to the Company
or its subsidiaries all rights to the Company's Intellectual Property originated
or invented  by such  employee  relating to the  business of the Company and its
subsidiaries;  and (vi) no trade secret or confidential know-how material to the
business of the Company or any of its  subsidiaries  as  currently  operated has
been  disclosed or  authorized  to be  disclosed to any third party,  other than
pursuant to a  non-disclosure  agreement  that  protects  the  Company's or such
subsidiary's proprietary interests in and to such trade secrets and confidential
know-how.

         (c) Except as set forth in Section  3.20(c) of the  Company  Disclosure
Schedule,  to the  Company's  knowledge,  neither  the  Company  nor  any of its
subsidiaries has interfered with,  infringed upon,  misappropriated or otherwise
come into conflict with any Intellectual  Property rights of third parties,  and
neither  the  Company  nor any of its  subsidiaries  has  received  any  charge,
complaint,  claim  or  notice  alleging  any  such  interference,  infringement,
misappropriation  or violation that remains unresolved and, if decided adversely
to the Company,  would be reasonably likely to have a Material Adverse Effect on
the  Company  and  subsidiaries  taken as a whole.  No third  party has,  to the
Company's  knowledge,   interfered  with,  infringed  upon,  misappropriated  or
otherwise come into conflict with any Company  Intellectual  Property  rights of
the Company or its  subsidiaries,  except where such actions are not  reasonably
expected to have a Material  Adverse Effect on the Company and its  subsidiaries
taken as a whole.

         (d) Section 3.20(d) of the Company Disclosure  Schedule identifies each
material item of the Company's  Intellectual  Property that any third party owns
and that the  Company  or any of its  subsidiaries  uses  pursuant  to  license,
sublicense, agreement or permission that either (i) if such license, sublicense,
agreement or  permission  were denied,  would  reasonably  be expected to have a
Material Adverse Effect on the Company or its Subsidiaries  taken as a whole, or
(ii)  includes  any  unsatisfied  obligation  to pay any  royalty  amount or any
obligation  to pay a  royalty,  whether  fixed or  determined  based  on  usage,
following the Effective Date in excess of $25,000.  To the Company's  knowledge,
in respect of each such item of used Company Intellectual Property:

              (i) the license, sublicense,  agreement or permission covering the
         item is  legal,  valid,  binding,  enforceable  and in full  force  and
         effect;

                                       27
<PAGE>

              (ii) the licenses, sublicenses,  agreements or permissions will in
         all material respects continue to be legal, valid, binding, enforceable
         and in full force and effect on identical terms following the Effective
         Time;

              (iii) no party to the license, sublicense, agreement or permission
         is in breach or default, and no event has occurred which with notice or
         lapse  of  time  would   constitute  a  breach  or  default  or  permit
         termination, modification or acceleration thereunder such as would have
         a Material Adverse Effect on the Company and its subsidiaries  taken as
         a whole; and

              (iv) no party to the license, sublicense,  agreement or permission
         has repudiated any provision thereof.

         (e) Except as set forth in Section  3.20(e) of the  Company  Disclosure
Schedule,  neither the Company nor any of its  subsidiaries  has granted (i) any
exclusive licenses (other than implied patent licenses in the ordinary course of
business) in any patents owned by the Company or any of its subsidiaries or (ii)
any exclusive licenses in any other Company  Intellectual  Property owned by the
Company or any of its subsidiaries to any third party.

         (f) Except as may have been given in  connection  with patent  licenses
set forth in Section 3.20(e) of the Company Disclosure  Schedule or given in the
ordinary course of business within the scope of the Company's standard terms and
conditions of sale,  neither the Company nor any of its subsidiaries has entered
into any material  agreement to indemnify any other person against any charge of
infringement or misappropriation of any Company Intellectual Property.

         (g) The  execution,  delivery  and  performance  by the Company of this
Agreement,  and the consummation of the transactions  contemplated  hereby, will
not (i)  result in the loss or  impairment  of, or give rise to any right of any
third  party  to  terminate  or  alter,  any  of  the  Company's  or  any of its
subsidiaries'  rights to own any of its Intellectual  Property except as are not
reasonably  expected  to have a Material  Adverse  Effect on the Company and its
Subsidiaries  taken as a whole, nor (ii) require the consent of any Governmental
Entity or third party in respect of any such Company Intellectual Property that,
if not obtained, is reasonably expected to have a Material Adverse Effect on the
Company and its subsidiaries taken as a whole.

         SECTION 3.21 Opinion of Financial  Advisor.  SBI E2-Capital  (USA) Ltd.
(the "Financial Advisor") has delivered to the Company Board its opinion,  dated
the date of this  Agreement,  to the effect that, as of such date,  the Exchange
Ratio is fair to the stockholders of the Company from a financial point of view,
and as of the date of this  Agreement  such  opinion has not been  withdrawn  or
modified.

         SECTION  3.22  Brokers.  Except  as set  forth in  Section  3.22 of the
Company  Disclosure  Schedule,  no broker,  finder,  investment  banker or other
person  (other than the  Financial  Advisor,  a true and  correct  copy of whose
engagement  letter has been  provided to Parent) is  entitled to any  brokerage,
finder's or other fee or commission or expense  reimbursement in connection with
the transactions  contemplated by this Agreement based upon arrangements made by
and on behalf of the Company or any of its affiliates.

                                       28
<PAGE>

         SECTION  3.23 DGCL ss.  203.  The  Company  Board has taken all  action
required  so  that  the  restrictions  contained  in  Section  203 of  the  DGCL
applicable  to a  "business  combination"  (as defined in DGCL ss. 203) will not
apply  to the  execution,  delivery  or  performance  of this  Agreement  or the
consummation  of the  Merger.  No  other  antitakeover  Laws  of any  state  are
applicable to this Agreement or the transactions contemplated hereby or thereby.

                                   Article IV
                         REPRESENTATIONS AND WARRANTIES
                            OF PARENT AND MERGER SUB

         Except as set forth in the disclosure  schedule  delivered by Parent to
the Company prior to the  execution of this  Agreement  (the "Parent  Disclosure
Schedule") or as set forth in the Parent SEC Reports (as defined in Section 4.4)
filed prior to the date hereof or as permitted under Section 5.1 hereof,  Parent
and Merger Sub hereby represent and warrant to the Company as follows:

         SECTION 4.1 Organization and Qualification; Subsidiaries.

         (a) Parent and Merger Sub, and each of their subsidiaries, are, or will
be as of the  Effective  Time, a  corporation  or legal  entity duly  organized,
validly  existing  and  in  good  standing  under  the  applicable  Laws  of the
jurisdiction  of their  incorporation  or  organization  and have all  requisite
corporate,  partnership or similar power and authority to own, lease and operate
their properties and to carry on their businesses as now being conducted.

         (b) In addition to Merger Sub, Exhibit 21 to Parent's Transition Report
on Form  10-KSB/T  for the fiscal  year ended June 30, 2001 sets forth a list of
all  subsidiaries  of Parent.  Except as listed therein or in Section 4.1 of the
Parent  Disclosure  Schedule,  the Company does not own, directly or indirectly,
beneficially  or of record,  any shares of capital stock or other  securities of
any other entity or any other investment in any other entity.

         (c)  Parent is,  and each of its  subsidiaries  is or will be as of the
Effective  Time,  duly qualified or licensed and in good standing to do business
in each  jurisdiction in which the property owned,  leased, or operated by it or
the nature of the business conducted by it makes such qualification or licensing
necessary,  except where the failure to be so duly  qualified or licensed and in
good  standing  is not  reasonably  expected  to  have,  individually  or in the
aggregate,  a Material Adverse Effect on Parent and its subsidiaries  taken as a
whole.

         (d)  Parent  has  heretofore  delivered  to the  Company  accurate  and
complete copies of the certificate of incorporation  and bylaws, as currently in
effect, of Parent.  Parent has heretofore  delivered to the Company accurate and
complete  copies of the charter or certificate of  incorporation  and bylaws (or
other similar  organizational and governing documents),  as currently in effect,
of each of its subsidiaries.

         SECTION 4.2  Capitalization of Parent.  The authorized capital stock of
Parent consists of: (i) 125,000,000  shares of Common Stock, par value $.001 per
share  (the  "Parent  Shares"),  of  which  12,200,000  shares  are  issued  and


                                       29
<PAGE>

outstanding and as of the date hereof,  and (ii) 25,000,000  shares of Preferred
Stock,  par value $.001 per share,  no shares of which are outstanding as of the
date hereof.  All of the issued and outstanding  Parent Shares have been validly
issued,  and  are  duly  authorized,  fully  paid,  non-assessable  and  free of
preemptive rights. As of the date hereof, 4,000,000 Parent Shares were available
for issuance  under  Parent's  option  plans.  Options to acquire  approximately
1,919,000  Parent  Shares  were  issuable  upon  or  otherwise   deliverable  in
connection with the exercise of options outstanding on such date and warrants to
acquire  600,350 shares to Parent Common Stock were  outstanding.  Except as set
forth  above,  as of the date  hereof,  there are no  outstanding  (i) shares of
capital stock or other voting  securities of Parent;  (ii)  securities of Parent
convertible  into  or  exchangeable  for  shares  of  capital  stock  or  voting
securities  of Parent;  (iii) options or other rights to acquire from Parent and
no obligations  of Parent to issue,  any capital stock,  voting  securities,  or
securities  convertible  into  or  exchangeable  for  capital  stock  or  voting
securities of Parent; or (iv) equity equivalents,  interests in the ownership or
earnings  of Parent,  or other  similar  rights  (including  stock  appreciation
rights)   (collectively,   "Parent   Securities").   There  are  no  outstanding
obligations  of  Parent  or any of its  subsidiaries  to  repurchase,  redeem or
otherwise acquire any Parent  Securities.  There are no stockholder  agreements,
voting trusts or other  agreements or  understandings  to which Parent or any of
its  subsidiaries  is a party or to which it is bound  relating to the voting of
any shares of capital stock of Parent.

         All of the outstanding capital stock of Parent's  subsidiaries is owned
by  Parent,  directly  or  indirectly,  free and  clear of any Lien or any other
limitation or restriction  (including,  any  restriction on the right to vote or
sell the same)  except as may be provided as a matter of Law.  There are no debt
or  equity  securities  of  Parent  or  its  subsidiaries  convertible  into  or
exchangeable  for,  no options or other  rights to  acquire  from  Parent or its
subsidiaries, and no other contract,  understanding,  arrangement, or obligation
(whether or not  contingent)  providing  for the  issuance or sale,  directly or
indirectly of, any capital stock or other  ownership  interests in, or any other
securities  of, any subsidiary of Parent.  There are no outstanding  contractual
obligations of Parent or its  subsidiaries to repurchase,  redeem,  or otherwise
acquire any outstanding shares of capital stock or other ownership  interests in
any subsidiary of Parent.  None of Parent's  subsidiaries owns any capital stock
of Parent.

         SECTION 4.3 Authority Relative to This Agreement.

         (a) Each of Parent and Merger Sub has all necessary corporate power and
authority  to  execute  and  deliver  this   Agreement  and  to  consummate  the
transactions  contemplated hereby and no other corporate proceedings on the part
of Parent  or  Merger  Sub are  necessary  to  authorize  this  Agreement  or to
consummate the transactions  contemplated hereby or thereby.  This Agreement has
been duly and validly  executed  and  delivered by each of Parent and Merger Sub
and  constitutes  a valid,  legal and  binding  agreement  of each of Parent and
Merger Sub, enforceable against each of Parent and Merger Sub in accordance with
its terms, subject to applicable bankruptcy,  insolvency, fraudulent conveyance,
reorganization,  moratorium  and similar Laws  affecting  creditors'  rights and
remedies generally, and subject, as to enforceability,  to general principles of
equity, including principles of commercial  reasonableness,  good faith and fair
dealing  (regardless of whether  enforcement is sought in a proceeding at law or
in equity).

                                       30
<PAGE>

         (b) The Board of Directors of Parent (the "Parent Board"), the Board of
Directors  of Merger Sub and Parent as the sole  stockholder  of Merger Sub have
duly and validly authorized the execution and delivery of this Agreement and the
consummation of the transactions  contemplated  hereby,  and taken all corporate
actions  required to be taken by such Boards of Directors and Parent as the sole
stockholder of Merger Sub for the consummation of the transactions.

         SECTION 4.4 SEC  Reports;  Financial  Statements.  Since May 29,  2001,
Parent has filed all forms,  reports and  documents  with the SEC required to be
filed by it under the  Securities  Act and the  Exchange  Act (the  "Parent  SEC
Reports"),  each of which complied in all material  respects with all applicable
requirements  of the  Securities  Act and the Exchange Act, each as in effect on
the dates such  Parent SEC Reports  were  filed.  None of the Parent SEC Reports
contained,  when filed,  any untrue  statement of a material  fact or omitted to
state a material fact required to be stated or incorporated by reference therein
or  necessary  in  order  to  make  the  statements  therein,  in  light  of the
circumstances  under which they were made, not misleading,  except to the extent
amended prior to the date hereof by a subsequently  filed Parent SEC Report. The
consolidated  financial  statements of Parent included in the Parent SEC Reports
complied  as to  form  in  all  material  respects  with  applicable  accounting
requirements  and the  published  rules and  regulations  of the SEC in  respect
thereof and fairly  presented,  in  conformity  with GAAP on a consistent  basis
(except as indicated in the notes thereto),  the consolidated financial position
of  Parent  and its  consolidated  subsidiaries,  in each  case as of the  dates
thereof  and their  consolidated  results of  operations  and cash flows for the
periods then ended  (subject,  in the case of the  unaudited  interim  financial
statements, to the absence of certain footnote disclosure and to normal year-end
adjustments).  For purposes of this Agreement  "Parent  Balance Sheet" means the
consolidated  balance sheet of Parent as of June 30, 2001,  and "Parent  Balance
Sheet Date" means June 30,  2001.  Except as and to the extent  disclosed in the
Parent SEC Reports,  since the Parent Balance Sheet Date, there has not been any
event,   occurrence  or  development  which  is  reasonably  expected  to  have,
individually  or in the aggregate,  a Material  Adverse Effect on the Parent and
its subsidiaries taken as a whole.

         SECTION  4.5  No  Undisclosed   Liabilities.   There  are  no  material
liabilities of Parent or any of its subsidiaries of any kind whatsoever, whether
accrued, contingent, absolute, determined,  determinable or otherwise, which are
required to be reflected in its financial  statements  (or in the notes thereto)
in accordance with GAAP, other than: (a) liabilities disclosed,  provided for or
reserved  against  in the  Parent  Balance  Sheet or in the notes  thereto;  (b)
liabilities  arising in the  ordinary  course of business  after the date of the
Parent Balance Sheet or which arose in the ordinary  course of business prior to
the date of the Parent  Balance  Sheet but were not  required  to be  disclosed,
provided for or reserved  against in the Company Balance Sheet;  (c) liabilities
disclosed in the Parent SEC Reports  prior to the date hereof;  (d)  liabilities
set forth in Section 4.4 of the Parent Disclosure Schedule,  and (e) liabilities
arising under this Agreement.

         SECTION  4.6  Absence  of  Changes.  Except  as  contemplated  by  this
Agreement,  as set forth in Section 4.6 of the Parent Disclosure Schedule, or as
disclosed in the Parent's SEC Reports prior to the date hereof, since the Parent
Balance  Sheet  Date,  the  Parent and its  subsidiaries  have  conducted  their
business in the  ordinary  and usual course  consistent  with past  practice and
there has not been:

                                       31
<PAGE>

         (a) any event,  occurrence  or  development  which had or is reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Parent and its subsidiaries taken as a whole;

         (b) any declaration,  setting aside or payment of any dividend or other
distribution  in respect of any shares of capital stock of the Parent or (except
to the Parent or other subsidiaries) any subsidiary,  any split,  combination or
reclassification of any shares of capital stock of the Parent or any subsidiary,
or any repurchase,  redemption or other  acquisition by the Parent or any of its
subsidiaries of any Parent or subsidiary securities;

         (c) any  amendment or change to the  certificate  of  incorporation  or
bylaws of the Parent or any amendment of any term of any outstanding security of
the  Parent  or any of its  subsidiaries  that  would  materially  increase  the
obligations of the Parent or any such subsidiary under such security;

         (d) (i) any incurrence or assumption by the Parent or any subsidiary of
any indebtedness for borrowed money other than under existing credit  facilities
(or any renewals,  replacements or extensions that do not increase the aggregate
commitments  thereunder) except (A) in the ordinary and usual course of business
consistent  with past  practice or (B) as  permitted by Section 5.1, or (ii) any
guarantee,  endorsement, or other incurrence or assumption of liability (whether
directly,  contingently  or otherwise) by the Parent or any of its  subsidiaries
for the obligations of any other person (other than any wholly owned  subsidiary
of the  Parent),  other  than in the  ordinary  and  usual  course  of  business
consistent with past practice;

         (e) any creation or assumption by the Parent or any of its subsidiaries
of any Lien on any material asset of the Parent or any of its subsidiaries other
than in the ordinary and usual course of business consistent with past practice;

         (f) any  making of any loan,  advance  or  capital  contribution  to or
investment in any person by the Parent or any of its subsidiaries other than (i)
as permitted by Section 5.1, (ii) loans, advances or capital contributions to or
investments in wholly owned subsidiaries of the Parent,  (iii) loans or advances
to employees of the Parent or any of its  subsidiaries in the ordinary course of
business consistent with past practice or (iv) extensions of credit to customers
in the ordinary course of business consistent with past practice;

         (g) any contract or agreement  entered into by the Parent or any of its
subsidiaries on or prior to the date hereof relating to any material acquisition
or disposition of any assets or business,  other than contracts or agreements in
the ordinary and usual course of business  consistent  with past  practice,  any
such transaction with Transaxis, S.A., and those contemplated by this Agreement;

         (h)   any   modification,   amendment,   assignment,   termination   or
relinquishment by the Parent or any of its subsidiaries of any contract, license
or other right  (including any insurance  policy naming it as a beneficiary or a

                                       32
<PAGE>

loss  payable  payee) that is  reasonably  expected  to have a Material  Adverse
Effect,  after  taking into  account the benefit of the  consideration,  if any,
received in exchange for agreeing to such modification,  amendment,  assignment,
termination or  relinquishment,  on the Parent and its  subsidiaries  taken as a
whole;

         (i) any  material  change in any  method of  accounting  or  accounting
principles or practice by the Parent or any of its subsidiaries,  except for any
such change required by reason of a change in GAAP;

         (j) any (i) grant of any severance or termination  pay to any director,
officer or  employee  of the  Parent or any of its  subsidiaries  exceeding  the
amounts  set  forth in the  Parent's  severance  plans or  agreements  listed in
Sections 4.13(a) or 4.18 of the Parent Disclosure  Schedule;  (ii) entering into
of any employment, deferred compensation,  severance, consulting, termination or
other similar  agreement (or any amendment to any such existing  agreement) with
any director, officer or employee of the Parent or any of its subsidiaries whose
annual cash compensation  exceeds $100,000 other than changes or amendments that
do not and will not result in increases of more than five percent in the salary,
wages or other  compensation  of any such  person;  (iii)  increase  in benefits
payable under any existing  severance or termination  pay policies or employment
agreements; or (iv) increase in compensation, bonus or other benefits payable to
directors,  officers or employees of the Parent or any of its subsidiaries other
than,  in the case of clause  (iv) only,  increases  prior to the date hereof in
compensation,  bonus  or  other  benefits  payable  to  directors,  officers  or
employees  of the Parent or any of its  subsidiaries  in the  ordinary and usual
course of business  consistent with past practice or merit increases in salaries
of employees at regularly  scheduled times in customary amounts  consistent with
past practices;

         (k) any change or amendment of the contracts,  salaries, wages or other
compensation  of  any  officer,  director,  employee,  agent  or  other  similar
representative  of the  Parent  or any of its  subsidiaries  whose  annual  cash
compensation  exceeds  $100,000 other than changes or amendments that do not and
will not result in increases  of more than five percent in the salary,  wages or
other compensation of any such person;

         (l) any adoption,  entering into, amendment,  alteration or termination
of  (partially  or  completely)  any  Parent  Benefit  Plan or  Parent  Employee
Arrangement  except as  contemplated by this Agreement or to the extent required
by applicable Law or GAAP;

         (m) any  entering  into of any  contract  with  an  officer,  director,
employee  or  other  similar   representative  of  the  Parent  or  any  of  its
subsidiaries  (other than a contract  described  in Section  4.6(j))that  is not
terminable,  without penalty or other liability,  upon not more than 60 calendar
days' notice; or

         (n) any (i) making or revoking  of any  material  election  relating to
Taxes,  (ii)  settlement  or  compromise of any material  claim,  action,  suit,


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<PAGE>

litigation,  proceeding,   arbitration,   investigation,  audit  or  controversy
relating to Taxes, or (iii) change to any material  methods of reporting  income
or deductions for federal income tax purposes.

         SECTION 4.7 Information  Supplied.  None of the information supplied or
to  be  supplied  by  Parent  or  Merger  Sub   specifically  for  inclusion  or
incorporation  by  reference  in (i) the S-4 will,  at the time the S-4 is filed
with the SEC and at the time it  becomes  effective  under the  Securities  Act,
contain any untrue  statement  of a material  fact or omit to state any material
fact required to be stated therein or necessary to make the  statements  therein
not  misleading  and (ii) the  Proxy  Statement  will,  at the  date  mailed  to
stockholders of the Company and at the time of the Company Stockholder  Meeting,
contain any untrue  statement  of a material  fact or omit to state any material
fact required to be stated  therein or necessary in order to make the statements
therein,  in  light  of  the  circumstances  under  which  they  are  made,  not
misleading.  If at any time prior to the Effective  Time any event in respect of
Parent,  its officers and  directors,  or any of its  subsidiaries  should occur
which is required to be described in an  amendment  of, or a supplement  to, the
S-4 or the Proxy Statement, Parent shall promptly so advise the Company and such
event shall be so described, and such amendment or supplement (which the Company
shall have a reasonable  opportunity to review) shall be promptly filed with the
SEC. The S-4 will comply as to form in all material respects with the provisions
of  the  Securities   Act  and  the  rules  and   regulations   thereunder.   No
representation  or warranty is made under this  Section 4.7 with  respect to any
statements  made or  incorporated by reference in the S-4 or the Proxy Statement
based on  information  supplied by the Company  specifically  for  inclusion  or
incorporation by reference therein.

         SECTION  4.8  Consents  and  Approvals.  Except for  filings,  permits,
authorizations,  consents  and  approvals  as may be required  under,  and other
applicable  requirements  of,  the  Securities  Act,  the  Exchange  Act,  state
securities  or blue sky  Laws,  the  filing  and  acceptance  for  record of the
Certificate of Merger as required by the DGCL, and such other filings,  permits,
authorizations,  consents and approvals  which, if not obtained or made, are not
reasonably  expected  to  have a  Material  Adverse  Effect  on  Parent  and its
subsidiaries  taken as a whole,  no filing  with or notice  to,  and no  permit,
authorization,  consent or approval of, any Governmental Entity is necessary for
the  execution  and  delivery by Parent or Merger Sub of this  Agreement  or the
consummation by Parent or Merger Sub of the transactions  contemplated hereby or
thereby.

         SECTION 4.9 No Default.  Neither the Parent nor any of its subsidiaries
is in  violation  of any  term  of  its  charter,  certificate  or  articles  of
incorporation or bylaws (or other similar organizational or governing documents.
The execution,  delivery and performance of this Agreement and the  consummation
of the transactions  contemplated  hereby and thereby will not (A) result in any
violation of or conflict  with,  constitute a default under (with or without due
notice or lapse of time or both),  require any  consent,  waiver or notice under
any term of, or result in the  reduction  or loss of any benefit or the creation
or  acceleration of any right or obligation  (including any termination  rights)
under,  (i) the charter,  certificate or articles of incorporation or bylaws (or
other similar organizational or governing documents) of the Parent or any of its
subsidiaries,  (ii)  any  material  agreement,  material  note,  material  bond,
material  mortgage,  material  indenture,  material  contract,  material  lease,
material  Parent Permit or other material  obligation or material right to which
the Parent or any of its  subsidiaries  is a party or by which any of the assets
or properties of the Parent or any of its  subsidiaries  is bound,  or (iii) any
applicable  Law,  except in the case of clause  (ii) and (iii)  where any of the
foregoing is not reasonably expected to have,  individually or in the aggregate,


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<PAGE>

a Material Adverse Effect on the Parent and its  subsidiaries  taken as a whole,
or (B) result in the creation of (or impose any  obligation on the Parent or any
of its  subsidiaries  to  create)  any Lien upon any of the  material  assets or
properties of the Parent or any of its subsidiaries pursuant to any such term.

         SECTION 4.10 Real Property.

         (a) The Parent has provided  the Company with the address,  general use
of, and period of ownership or occupancy of all of the real  property the Parent
and its subsidiaries use or occupy or have the right to use or occupy, now or in
the future,  pursuant to any lease, sublease, or other occupancy agreement other
than daily usage  arrangements in connection with its Internet  preview sessions
and Internet  training  workshops  (the  "Parent  Leased  Facilities").  No real
property is owned,  leased or used by the Parent or its current  subsidiaries in
the  course  of  their  respective  businesses  other  than  the  Parent  Leased
Facilities.

         (b) With respect to each Parent Leased Facility:

              (i) the Parent will make available to the Company a true, correct,
         and complete copy of the lease,  sublease or other occupancy  agreement
         for such Parent Leased Facility (and all modifications, amendments, and
         supplements  thereto and all side letters to which Parent or any of its
         subsidiaries  is  a  party  affecting  the  obligations  of  any  party
         thereunder)  (each such  agreement  is  referred to herein as a "Parent
         Real Property Lease");

              (ii) to the Parent's knowledge, the Parent or its subsidiary has a
         good and valid  leasehold  interest in such Parent Leased Facility free
         and  clear of all  Liens,  except  (x) Taxes and  general  and  special
         assessments  not in default and payable  without  penalty and interest,
         and  (y)  easements,  covenants  and  other  restrictions  that  do not
         materially  impair  the  current  use,   occupancy  or  value,  or  the
         marketability of the Parent's or its subsidiary's interest in such real
         property;

              (iii) to the Parent's  knowledge,  each Parent Real Property Lease
         constitutes  the valid and legally  binding  obligation  of the parties
         thereto, enforceable in accordance with its terms, and is in full force
         and effect;

              (iv) all rent and other sums and charges  payable by the Parent or
         its  subsidiary as tenant under the Parent Real Property Lease covering
         the Parent Leased  Facility are current,  no event or condition  giving
         rise to a right to  terminate  or  uncured  default  on the part of the
         tenant or, to the Parent's  knowledge,  the landlord,  exists under the
         Parent Real Property Lease. No party to such Parent Real Property Lease
         has given written  notice to the Parent or any of its  subsidiaries  or
         made a claim in writing  against the Parent or any of its  subsidiaries
         in respect of any breach or default thereunder; and

                                       35
<PAGE>

              (v)  neither  the  Parent  nor  its   subsidiary   has   assigned,
         transferred,  conveyed,  mortgaged,  deeded in trust or encumbered  its
         leasehold interest in the Parent Leased Facility.

         SECTION 4.11 Litigation.  Except as disclosed in the Parent SEC Reports
or in Section 4.11 of the Parent  Disclosure  Schedule,  there is no other suit,
claim, action, proceeding or, to Parent's knowledge, investigation,  pending or,
to  Parent's  knowledge,  threatened  which  is  reasonably  expected  to  have,
individually  or in the aggregate,  a Material  Adverse Effect on Parent and its
subsidiaries taken as a whole. Except as disclosed in Section 4.11 of the Parent
Disclosure Schedule or the Parent SEC Reports, none of Merger Sub, Parent or its
subsidiaries is subject to any  outstanding  order,  writ,  injunction or decree
which is  reasonably  expected  to have,  individually  or in the  aggregate,  a
Material  Adverse  Effect on Parent and its  subsidiaries  taken as a whole.  To
Parents'  knowledge,  there is no  action,  suit,  proceeding  or  investigation
pending or threatened against any current or former officer, director,  employee
or agent of Parent or any of its  subsidiaries  (in his or her capacity as such)
which  is  reasonably  expected  to give  rise to a claim  for  contribution  or
indemnification  against Parent or any of its subsidiaries.  Notwithstanding the
foregoing,  any shareholder litigation or litigation by any Governmental Entity,
in each case brought or threatened  against  Parent,  Merger Sub or any officer,
director,  employee  or agent of  Parent or Merger  Sub in any  respect  of this
Agreement or the transactions  contemplated  hereby shall not be deemed to have,
or contribute to, a Material Adverse Effect on Parent and its subsidiaries taken
as a whole.

         SECTION 4.12 Compliance with  Applicable Law;  Permits.  The Parent and
its subsidiaries hold all permits, licenses, variances,  exemptions, orders, and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective  businesses (the "Parent Permits"),  except for failures to hold such
permits,  licenses,  variances,  exemptions,  orders and approvals which are not
reasonably  expected  to have,  individually  or in the  aggregate,  a  Material
Adverse Effect on the Parent and its  subsidiaries  taken as a whole. The Parent
and its  subsidiaries  are in compliance  with the terms of the Parent  Permits,
except  where  the  failure  to  comply  is not  reasonably  expected  to  have,
individually  or in the aggregate,  a Material  Adverse Effect on the Parent and
its  subsidiaries  taken as a whole. The businesses and operations of the Parent
and its  subsidiaries  comply in all respects  with all Laws  applicable  to the
Parent  or its  subsidiaries,  except  where  the  failure  to so  comply is not
reasonably  expected  to have,  individually  or in the  aggregate,  a  Material
Adverse Effect on the Parent and its subsidiaries taken as a whole.

         SECTION 4.13 Employee Plans

         (a)  Section  4.13(a) of the Parent  Disclosure  Schedule  sets forth a
true, correct, and complete list of:

              (i) all material  "employee  benefit plans," as defined in Section
         3(3) of ERISA,  under which the Parent or any of its  subsidiaries  has
         any obligation or liability,  contingent or otherwise,  including,  but
         not limited to, (i) all severance plans or  arrangements;  and (ii) any
         supplemental  or U.S.  non-qualified  retirement  plans or arrangements
         (the "Parent Benefit Plans"); and

                                       36
<PAGE>

              (ii)  all  employment,   consulting,   termination,  severance  or
         individual compensation agreements (other than any such agreement which
         is terminable  within 90 days without  liability or at any time without
         liability  exceeding two weeks' salary for each year of employment  or,
         in the  case  of  employees  whose  annual  cash  compensation  exceeds
         $100,000,  three months' salary,  or is legally  mandated by applicable
         non-U.S.  law); all stock award, stock option,  stock purchase or other
         equity-based  (including  phantom stock or stock  appreciation  rights)
         plans  or   arrangements;   all  material  bonus  or  other   incentive
         compensation  plans or agreements  (including,  but not limited to, any
         such plan or agreement  covering  any officer or employee  whose annual
         cash compensation  exceeds $70,000; all material salary continuation or
         deferred compensation plans or agreements  (including,  but not limited
         to, any such plan or agreement  covering any current or former  officer
         or employee whose annual cash  compensation  exceeds  $70,000;  in each
         case,  as to  which  the  Parent  or any of its  subsidiaries  has  any
         obligation or liability (contingent or otherwise) (the "Parent Employee
         Arrangements").

         (b) In respect of each Parent Benefit Plan, a complete and correct copy
of each of the  following  documents  (if  applicable)  will be  provided to the
Company:  (i)  the  most  recent  plan  and  related  trust  documents,  and all
amendments  thereto;  (ii) the most recent  summary  plan  description,  and all
related summaries of material  modifications thereto; (iii) the most recent Form
5500  (including,   schedules  and  attachments);   (iv)  the  most  recent  IRS
determination  letter;  and (v) the most recent actuarial reports (including for
purposes of Financial Accounting Standards Board report nos. 87, 106 and 112).

         (c) Except as  disclosed  in Section  4.13(c) of the Parent  Disclosure
Schedule,  none of the Parent Benefit Plans or Parent  Employee  Arrangements is
subject to Title IV of ERISA,  constitutes a defined benefit  retirement plan or
is a multi-employer plan described in Section 3(37) of ERISA, and the Parent and
its subsidiaries do not have any material obligation or liability (contingent or
otherwise)  in respect of any such plans to the extent such plans  constitute  a
defined benefit  retirement plan or a  multi-employer  plan described in Section
3(37) of ERISA.  The Parent and its  subsidiaries  are not members of a group of
trades  or  businesses  (other  than  that  consisting  of the  Parent  and  its
subsidiaries)  under common control or treated as a single employer  pursuant to
Section 414 of the Code.

         (d) The Parent  Benefit  Plans and their  related  trusts  intended  to
qualify under Sections 401 and 501(a) of the Code, respectively, have received a
favorable determination letter from the IRS and the Parent has no knowledge that
any event has occurred since the date of such letter that could cause the IRS to
revoke such  determination.  Any voluntary  employee benefit  association  which
provides  benefits  to  current  or  former  employees  of the  Parent  and  its
subsidiaries,  or their  beneficiaries,  is and has been qualified under Section
501(c)(9) of the Code.

         (e) All  contributions or other payments  required to have been made by
the Parent and its  subsidiaries  to or under any Parent  Benefit Plan or Parent
Employee  Arrangement by applicable Law or the terms of such Parent Benefit Plan
or Parent  Employee  Arrangement (or any agreement  relating  thereto) have been
timely  and  properly  made or  have  been  accrued  in the  Parent's  financial
statements.

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<PAGE>

         (f) The Parent Benefit Plans and Parent Employee Arrangements have been
maintained and  administered  in accordance with their terms and applicable Laws
and all required returns,  reports,  and filings (including,  but not limited to
annual  reports on Form 5500) have been  timely  filed.  No  individual  who has
performed services for the Parent or any of its subsidiaries has been improperly
excluded  from  participation  in any  Parent  Benefit  Plan or Parent  Employee
Arrangement,  except where the failure to so maintain and administer such Parent
Benefit  Plans  or the  exclusion  of any  such  individuals  is not  reasonably
expected to have, individually or in the aggregate.

         (g) There are no  pending  or, to the  Parent's  knowledge,  threatened
actions,  claims, or proceedings  against or relating to any Parent Benefit Plan
or Parent  Employee  Arrangement  (other than routine  benefit claims by persons
claiming benefits thereunder), and, to the knowledge of the Parent, there are no
facts or  circumstances  which  could  form a  reasonable  basis  for any of the
foregoing,  except  for  such  actions,  claims  or  proceedings  which  are not
reasonably  expected  to have,  individually  or in the  aggregate,  a  Material
Adverse Effect on the Parent and its subsidiaries taken as a whole.

         (h) The Parent and its subsidiaries do not have any material obligation
or liability (contingent or otherwise) to provide post-retirement life insurance
or health  benefits  coverage  for  current or former  officers,  directors,  or
employees of the Parent or any of its subsidiaries except (i) as may be required
under Part 6 of Title I of ERISA at the sole expense of the  participant  or the
participant's  beneficiary,  (ii) a medical expense  reimbursement  account plan
pursuant  to  Section  125 of the  Code,  or (iii)  through  the last day of the
calendar month in which the participant terminates employment with the Parent or
any subsidiary of the Parent.

         (i)  Except as set forth in Section  4.13(i)  of the Parent  Disclosure
Schedule,  none of the assets of any Parent  Benefit Plan is stock of the Parent
or any of its  affiliates,  or property leased to or jointly owned by the Parent
or any of its affiliates.

         (j) Except as  disclosed  in Section  4.13(j) of the Parent  Disclosure
Schedule or in connection  with equity  compensation,  neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment  becoming  due to any  employee  (current,
former, or retired) of the Parent or any of its subsidiaries,  (ii) increase any
benefits  under  any  Parent  Benefit  Plan  or  Parent   Employee   Arrangement
(determined  without  regard  to  the  "materiality"  limits  set  forth  in the
definitions of such terms),  or (iii) result in the  acceleration of the time of
payment of, vesting of, or other rights in respect of any such benefits.

         (k) The Parent has no employees outside of the United States other than
United States based employees who have begun to travel on an intermittent  basis
outside the United States in connection with its recent global expansion.

         (l) The aggregate  number of shares of Parent Common Stock  purchasable
under all  outstanding  purchase  rights under the Parent  Option Plans does not
exceed the maximum number of shares remaining  available for issuance under such
plan.

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<PAGE>

         SECTION 4.14 Labor Matters.

         (a) The Parent  and its  subsidiaries  are not  parties to any labor or
collective  bargaining  agreement,  and no employees of the Parent or any of its
subsidiaries   are  represented  by  any  labor   organization.   There  are  no
representation   or   certification   proceedings,   or   petitions   seeking  a
representation proceeding, pending or, to the Parent's knowledge,  threatened in
writing to be brought or filed with the National  Labor  Relations  Board or any
other labor relations  tribunal or authority.  Within the last twelve months, to
the Parent's knowledge,  there have been no organizing  activities involving the
Parent or any of its  subsidiaries  in respect of any group of  employees of the
Parent or any of its subsidiaries.

         (b) There are no strikes, work stoppages, slowdowns, lockouts, material
arbitrations or material  grievances or other material labor disputes pending or
threatened   in  writing   against  or  involving  the  Parent  or  any  of  its
subsidiaries.  There  are  no  unfair  labor  practice  charges,  grievances  or
complaints pending or, to the Parent's knowledge, threatened in writing by or on
behalf  of any  employee  or  group of  employees  of the  Parent  or any of its
subsidiaries which, if individually or collectively  resolved against the Parent
or any of its  subsidiaries,  would  reasonably  be  expected to have a Material
Adverse Effect on the Parent and its subsidiaries taken as a whole.

         (c) There are no  complaints,  charges or claims  against the Parent or
any of its subsidiaries pending or, to the Parent's knowledge,  threatened to be
brought or filed with any  Governmental  Entity or arbitrator  based on, arising
out  of,  in  connection  with,  or  otherwise  relating  to the  employment  or
termination  of  employment  of  any  individual  by  the  Parent  or any of its
subsidiaries which, if individually or collectively  resolved against the Parent
or any of its  subsidiaries,  would  reasonably  be  expected to have a Material
Adverse Effect on the Parent and its subsidiaries  taken as a whole, and, to the
knowledge of the Parent,  there are no facts or circumstances which could form a
reasonable basis for any of the foregoing.

         (d) There has been no "mass  layoff" or "plant  closing"  as defined by
WARN in respect of the Parent or any of its  subsidiaries  within the six months
prior to the Effective Time.

         (e) All  employees  of the  Parent  and its  subsidiaries  possess  all
applicable  passports,  visas, permits and other authorizations  required by all
applicable immigration or similar Laws to be employed by and to perform services
for and on behalf of the Parent and its  subsidiaries,  except where the failure
to possess such passports,  visas,  permits or other  authorizations  would not,
individually  or in the aggregate,  reasonably be expected to materially  affect
the conduct of business  by the Parent or its  subsidiaries.  The Parent and its
subsidiaries,  and their employees,  have complied in all material respects with
all applicable immigration and similar Laws.

         SECTION 4.15 Environmental Matters.

         (a)  Except  as set  forth in  Section  4.15 of the  Parent  Disclosure
Schedule:

              (i) The operations of Parent and its  subsidiaries are in material
         compliance with all Environmental  Laws, and Parent is not aware of any

                                       39
<PAGE>

         facts,  circumstances or conditions which,  without significant capital
         expenditures, would prevent material compliance in the future;

              (ii) To  Parent's  knowledge,  Parent  and its  subsidiaries  have
         obtained all Parent Permits,  required under  applicable  Environmental
         Laws  for the  continued  operations  of their  respective  businesses;
         Parent and its subsidiaries have made all material filings, reports and
         notices  required under any  Environmental  Law for the past and future
         operations of their respective businesses;

              (iii)  Parent  and  its   subsidiaries  are  not  subject  to  any
         outstanding written orders or material contracts or agreements with any
         Governmental  Entity or other person respecting (A) Environmental Laws,
         (B) any Remedial  Action,  (C) any Release or  threatened  Release of a
         Hazardous  Material,   or  (D)  an  assumption  of  responsibility  for
         environmental claims of another person or entity;

              (iv) Parent and its  subsidiaries  have not  received  any written
         communication  alleging,  in respect of any such  party,  the  material
         violation of or liability (real or potential)  under any  Environmental
         Law; or requesting,  with respect to any such party,  information  with
         respect to an investigation pursuant to CERCLA, or any foreign or state
         counterpart thereto, or any other Environmental Law;

              (v)  To  Parent's  knowledge,   neither  Parent  nor  any  of  its
         subsidiaries has any material  contingent  liability in connection with
         any Remedial Action or the Release of any Hazardous  Material  (whether
         on-site or off-site)  or employee or third party  exposure to Hazardous
         Materials;

              (vi) To  Parent's  knowledge,  the  operations  of Parent  and its
         subsidiaries  involving  the  generation,  transportation,   treatment,
         storage or disposal of Hazardous  Materials are in material  compliance
         with applicable  Environmental Laws and, to Parent's  knowledge,  there
         has been no disposal  by Parent or its  subsidiaries  of any  Hazardous
         Materials on or in any site listed or formally proposed to be listed on
         the  National  Priorities  List  promulgated  pursuant to CERCLA or any
         foreign or state  remedial  priority  list  promulgated  or  maintained
         pursuant to comparable foreign or state law, except where such disposal
         would not reasonably be expected to create a material adverse liability
         for Parent;

              (vii) To Parent's  knowledge,  there is not now nor has there been
         in the past,  on, in or at any Parent  Leased  Facility,  Parent Former
         Facility (defined as all of the real property formerly owned, leased or
         used,  other  than  those  used  solely  for  office or  administrative
         purposes,  by Parent or any of its  current or former  subsidiaries  or
         corporate  predecessors  in interest  at any time in the past),  or any
         other  facility  for  which  Parent  or its  subsidiaries  has  assumed
         responsibility for environmental claims, any of the following:  (A) any
         underground   storage   tanks;   (B)   landfills,   dumps  or   surface
         impoundments;  (C) any Company planned,  ongoing or completed  Remedial
         Action;   (D)   any   asbestos-containing   materials;   or   (E)   any
         polychlorinated biphenyls;

                                       40
<PAGE>

              (viii) There is not now, nor to Parent's knowledge, has there been
         in the past,  on, in or at any Parent  Leased  Facility,  Parent Former
         Facility,  or any other  facility for which Parent or its  subsidiaries
         has assumed  responsibility  for environmental  claims,  any site on or
         formally   proposed  to  be  listed  on  the  National   Priority  List
         promulgated  pursuant  to  CERCLA  or any  foreign  or  state  remedial
         priority  list  promulgated  or  published  pursuant to any  comparable
         foreign or state law; and

              (ix) No judicial or administrative  proceedings are pending or, to
         Parent's  knowledge,  threatened  against  Parent  or its  subsidiaries
         alleging  the  material  violation  of or  seeking  to impose  material
         liability pursuant to any Environmental Law and, to Parent's knowledge,
         there are no investigations pending or threatened against the Parent or
         any of its subsidiaries under Environmental Laws.

         (b)  Parent  will  make  available  to Parent  copies  of all  material
environmentally related assessments, audits, investigations,  or similar reports
(and, upon reasonable  specific request,  sampling reports) in its possession or
control and which were  prepared in the last five years  (and,  upon  reasonable
specific request, earlier information) relating to Parent or its subsidiaries or
any real  property  currently  or formerly  owned,  operated or leased by or for
Parent or its  subsidiaries,  including  any Parent Leased  Facility,  or Parent
Former Facility.

         SECTION 4.16 Tax Matters.

         (a) Each of the Parent and its  subsidiaries  has timely  filed (or has
had timely filed) all Tax Returns required to be filed by it (or on its behalf).
All such Tax Returns are  complete  and correct in all  material  respects.  The
Parent and its  subsidiaries  have paid all Taxes due for the periods covered by
such Tax Returns. The most recent Parent SEC Reports reflect an adequate reserve
for all Taxes payable by the Parent and its subsidiaries for all Taxable periods
and portions thereof through the date of such Parent SEC Reports. The Parent has
previously  delivered (or, in the case of foreign Tax Returns and audit reports,
will  deliver) to Parent  copies of (i) all  federal,  state,  local and foreign
income and  franchise  Tax  Returns  filed by the  Parent  and its  subsidiaries
relating to any taxable  periods of the Parent or any of its  subsidiaries  that
remains subject to audit under applicable statutes of limitations;  and (ii) any
audit report  issued within the last three years (or otherwise in respect of any
audit or investigation in progress)  relating to Taxes due from or in respect of
the Parent or its subsidiaries.

         (b)  No  material  deficiencies  for  any  Taxes  have  been  proposed,
asserted,  or assessed against the Parent or its subsidiaries that have not been
fully paid or adequately provided for in the appropriate financial statements of
the Parent, no requests for waivers of the time to assess any Taxes are pending,
and no power of attorney in respect of any Taxes has been executed or filed with
any taxing  authority.  No material issues relating to Taxes have been raised by
the relevant taxing authority during any presently pending audit or examination.
All income and franchise Tax Returns filed by or on behalf of the Parent and its
subsidiaries  for the taxable years ended on or prior to June 30, 1997 have been
reviewed by the relevant  taxing  authority or the statute of  limitations  with
respect to such Tax Returns has expired.

                                       41
<PAGE>

         (c) No  material  Liens for Taxes  exist in  respect  of any  assets or
properties of the Parent or its  subsidiaries,  except for  statutory  Liens for
Taxes not yet due.

         (d) Neither the Parent nor any of its  subsidiaries is a party to or is
bound  by any Tax  sharing  agreement,  Tax  indemnity  obligation,  or  similar
agreement, arrangement, or practice in respect of Taxes (whether or not written)
(including any advance pricing agreement,  closing agreement, or other agreement
relating to Taxes with any taxing authority).

         (e) Neither the Parent nor any of its  subsidiaries (i) has ever been a
member of an affiliated  group within the meaning of Section 1504(a) of the Code
(or any similar or analogous  group defined under a similar or analogous  state,
local or foreign Law) other than an affiliated  group the common parent of which
is the Parent,  or (ii) has any  liability  under  Treasury  Regulation  Section
1.1502-6  (or any  predecessor  or  successor  thereof or  analogous  or similar
provision under state,  local or foreign Law), as a transferee or successor,  by
contract or otherwise for Taxes of any  affiliated  group of which the Parent is
not the common parent.

         (f) Neither the Parent nor any of its  subsidiaries has taken or agreed
to  take  any  action  that  would  prevent  the  Merger  from   constituting  a
reorganization qualifying under the provisions of Section 368(a) of the Code.

         (g)  Except as set forth in Section  4.13 (g) of the Parent  Disclosure
Schedule, there are no employment, severance, or termination agreements or other
compensation  arrangements  currently in effect which provide for the payment of
any amount  (whether in cash or property or the vesting of property) as a result
of any of the transactions  contemplated by this Agreement that  individually or
collectively  (either  alone  or  upon  the  occurrence  of  any  additional  or
subsequent event), could give rise to a payment which is nondeductible by reason
of Section 280G of the Code.

         (h) The Parent  and its  subsidiaries  have  complied  in all  material
respects with all Laws  applicable to the payment and  withholding  of Taxes and
have  duly  and  timely  withheld  from  employee  salaries,   wages  and  other
compensation and have paid over to the appropriate  taxing authority all amounts
required to be so withheld  and paid over for all periods  under all  applicable
Laws.

         (i) No federal, state, local, or foreign audits or other administrative
proceedings or court  proceedings are presently  pending in respect of any Taxes
or Tax Returns of the Parent or its  subsidiaries and neither the Parent nor its
subsidiaries have received a written notice of any pending audit or proceeding.

         (j)  Except as set forth in Section  4.13 (j) of the Parent  Disclosure
Schedule,  neither  the Parent nor any of its  subsidiaries  has agreed to or is
required to make any adjustment  under Section 481(a) of the Code or any similar
provision  of state,  local or foreign  Law by reason of a change in  accounting
method  initiated by the Parent or its  subsidiaries or has any knowledge that a
taxing  authority  has  proposed  any such  adjustment  or change in  accounting
method,  or has any  application  pending with any taxing  authority  requesting
permission for any changes in accounting  methods that relate to the business or
operations of the Parent or its subsidiaries.

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<PAGE>

         (k)  Except as set forth in Section  4.13 (k) of the Parent  Disclosure
Schedule,  neither  the  Parent  nor any of its  subsidiaries  is a party to any
contract,  agreement,  or other arrangement which could result in the payment of
amounts  that could be  nondeductible  by reason of Section  162(m) of the Code,
provided that no representation or warranty is made as to  performance-based  or
equity-based compensation.

         (l) Neither the Parent nor any of its  subsidiaries  has  received  any
private  letter  rulings  from the IRS or  comparable  rulings from other taxing
authorities.

         (m)  Neither  the Parent nor any of its  subsidiaries  has  constituted
either a "distributing  corporation" or a "controlled  corporation"  (within the
meaning  of  Section  355(a)(1)(A)  of the  Code)  in a  distribution  of  stock
qualifying for tax-free  treatment  under Section 355 of the Code (i) in the two
years prior to the date of this Agreement or (ii) in a distribution  which could
otherwise  constitute  part of a "plan"  or  "series  of  related  transactions"
(within  the  meaning of  Section  355(e) of the Code) in  conjunction  with the
Merger.

         (n) Neither the Parent nor any of its  subsidiaries  (i) engaged in any
"interParent  transactions"  in respect of which  gain was and  continues  to be
deferred pursuant to Treasury Regulation Section 1.1502-13 or any predecessor or
successor  thereof or  analogous  or similar  provision  under  state,  local or
foreign Law; or (ii) has "excess  loss  accounts" in respect of the stock of any
subsidiary pursuant to Treasury Regulation Section 1.1502-19, or any predecessor
or successor  thereof or analogous or similar  provision  under state,  local or
foreign Law.

         SECTION  4.17  Absence  of  Questionable   Payments.  To  the  Parent's
knowledge,  neither  the Parent nor any of its  subsidiaries  nor any  director,
officer,  agent,  employee or other person acting on behalf of the Parent or any
of its  subsidiaries,  has  used  any  corporate  or other  funds  for  unlawful
contributions,   payments,   gifts  or  entertainment,   or  made  any  unlawful
expenditures relating to political activity to government officials or others or
established or maintained  any unlawful or unrecorded  funds in violation of the
Foreign  Corrupt  Practices  Act of 1977, as amended,  or any other  domestic or
foreign  Law.  To the  Parent's  knowledge,  neither  the  Parent nor any of its
subsidiaries nor any director,  officer,  agent, employee or other person acting
on behalf of the Parent or any of its  subsidiaries has accepted or received any
unlawful contributions, payments, gifts or expenditures.

         SECTION 4.18 Material Contracts.

         (a) Set forth in Section 4.18(a) of the Parent Disclosure Schedule is a
list of all contracts and  agreements  (and all  amendments,  modifications  and
supplements  thereto  and all side  letters  to which  the  Parent or any of its
subsidiaries is a party  affecting the  obligations of any party  thereunder) to
which the  Parent or any of its  subsidiaries  is a party or by which any of its
assets or  properties  are bound that are  material to the  business,  assets or
properties  of the  Parent  and its  subsidiaries  taken  as a whole,  all:  (i)
executory   employment,   executory   severance,   material  product  design  or
development,   executory  personal  services,  material  consulting,   executory


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<PAGE>

non-competition or material indemnification  contracts (including,  any material
contract  to which the Parent or any of its  subsidiaries  is a party  involving
employees of the Parent), but excluding normal indemnification  provisions under
license  or  sale  contracts;  (ii)  licensing,  merchandising  or  distribution
agreements involving the payment of more than $100,000 per year; (iii) contracts
granting a right of first  refusal or first  negotiation  involving in excess of
$100,000;  (iv) partnership or joint venture agreements;  (v) any agreements for
the  acquisition,  sale or lease of material  assets or properties of the Parent
(by merger, purchase or sale of assets or stock or otherwise) entered into since
June 31,  2001  involving a payment in excess of  $100,000;  (vi)  contracts  or
agreements  with any  Governmental  Entity  involving  the  payment of more than
$50,000 per year;  (vii) loan or credit  agreements,  mortgages,  indentures  or
other  agreements or instruments  evidencing  indebtedness for borrowed money by
the Parent or any of its  subsidiaries  or any such agreement  pursuant to which
indebtedness  for  borrowed  money may be  incurred,  in each case  involving in
excess of $100,000; (viii) agreements that purport to limit, curtail or restrict
the  ability  of  the  Parent  or  any of its  subsidiaries  to  compete  in any
geographic  area or line of business;  (ix) assembly  (packaging),  testing,  or
supply agreements,  in each case,  involving in excess of $100,000 per year; (x)
agreements,  written or oral, with any officers, directors,  shareholders of the
Parent  or any  member of the  immediate  family of any  officer,  director,  or
shareholder of the Parent; and (xi) commitments and agreements to enter into any
of the foregoing (collectively, together with any such contracts entered into in
accordance with Section 5.1, the "Parent Material  Contracts").  Section 4.18 of
the  Parent  Disclosure  Schedule  sets  forth  a list  of all  Parent  Material
Contracts and the Parent has heretofore made available to Parent true,  correct,
and complete copies of all such Parent Material Contracts.

         (b) To the Parent's  knowledge,  each of the Parent Material  Contracts
constitutes  the valid  and  legally  binding  obligation  of the  Parent or its
subsidiaries, enforceable in accordance with its terms, and is in full force and
effect.  There is no material default under any Parent Material  Contract either
by the Parent (or its subsidiaries) or, to the Parent's knowledge,  by any other
party  thereto,  and no event has occurred  that with the giving of notice,  the
lapse of time,  or both would  constitute a material  default  thereunder by the
Parent (or its subsidiaries) or, to the Parent's knowledge,  any other party. As
of the date hereof, to the Parent's knowledge,  no party has notified the Parent
in writing that it intends to  terminate or fail to extend any contract  between
such person and the Parent within one year of the date of the Agreement,  except
for any such  termination or failure as would not have a Material Adverse Effect
on the Parent and its subsidiaries taken as a whole.

         (c) To the  Parent's  knowledge,  no party to any such Parent  Material
Contract has given notice to the Parent of or made a claim against the Parent in
respect  of any  material  breach  or  default  thereunder  by the  Parent  or a
subsidiary.

         (d)  Except as set forth in Section  4.18(d)  of the Parent  Disclosure
Schedule,  no consent of any third party is required  under any Parent  Material
Contract as a result of or in connection  with,  and the  enforceability  of any
Parent  Material  Contract will not be affected in any manner by, the execution,
delivery,  and  performance  of  this  Agreement  or  the  consummation  of  the
transactions contemplated hereby.

         SECTION 4.19 Subsidies.  Section 4.19 of the Parent Disclosure Schedule
sets  forth  a list of all  material  grants,  material  subsidies  and  similar
material  arrangements directly or indirectly between or among the Parent or any
of its subsidiaries,  on the one hand, and any domestic or foreign  Governmental


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<PAGE>

Entity or any other  person,  on the other hand.  Except as set forth on Section
4.19 of the  Parent  Disclosure  Schedule,  neither  the  Parent  nor any of its
subsidiaries  has  requested,  sought,  applied for or entered into any material
grant,  material subsidy or similar material  arrangement directly or indirectly
from or with any domestic or foreign Governmental Entity or any other person.

         SECTION 4.20 Intellectual Property.

         (a) To the  Parent's  knowledge,  and  except  as  are  not  reasonably
expected to have a Material  Adverse  Effect on the Parent and its  subsidiaries
taken as a whole: (i) each item of Parent's  Intellectual  Property comprised of
registered copyrights,  copyright  applications,  patents,  patent applications,
trademarks,  and trademark  applications are in compliance with applicable legal
requirements  relating  to  the  enforceability  or  maintenance  of  such  item
(including  payment of filing,  examination and  maintenance  fees and proofs of
working  or use,  as  applicable)  other  than  any  requirement  that  if,  not
satisfied,  would not result in a revocation or otherwise  materially affect the
enforceability of the item of Parent Intellectual Property in question,  and the
Parent has taken reasonable steps to protect such Parent Intellectual  Property;
(ii) the  Parent  and its  subsidiaries  own or have the right to use,  free and
clear of all Liens, all Parent  Intellectual  Property and unregistered works of
authorship,  common law marks,  trademarks  and  service  marks,  and rights and
inventions,  necessary for the operation of the businesses of the Parent and its
subsidiaries as presently  conducted and as presently  proposed to be conducted;
(iii) each material item of Parent  Intellectual  Property  owned or used by the
Parent and its  subsidiaries  immediately  prior to the  Effective  Time will be
owned or available  for use by Parent  immediately  subsequent  to the Effective
Time; (iv) the Parent and its  subsidiaries  have taken all action deemed by the
Parent or the relevant subsidiary to be necessary or reasonable, but in no event
less than all  commercially  reasonable  action,  to protect  and  preserve  the
confidentiality of all Parent Intellectual Property consisting of trade secrets;
(v) the Parent has had and continues to have a requirement that all employees of
the Parent and its subsidiaries  must execute a  non-disclosure  agreement which
includes an agreement to assign to the Parent or its  subsidiaries all rights to
Parent Intellectual Property originated or invented by such employee relating to
the  business of the Parent and its  subsidiaries;  and (vi) no trade  secret or
confidential  know-how  material  to the  business  of the  Parent or any of its
subsidiaries  as currently  operated  has been  disclosed  or  authorized  to be
disclosed to any third party, other than pursuant to a non-disclosure  agreement
that protects the Parent's or such subsidiary's  proprietary interests in and to
such trade secrets and confidential know-how.

         (b)  Except as set forth in Section  4.20(c)  of the Parent  Disclosure
Schedule,  to  the  Parent's  knowledge,  neither  the  Parent  nor  any  of its
subsidiaries has interfered with,  infringed upon,  misappropriated or otherwise
come  into  conflict  with any  Parent  Intellectual  Property  rights  of third
parties,  and neither the Parent nor any of its  subsidiaries  has  received any
charge, complaint, claim or notice alleging any such interference, infringement,
misappropriation  or violation that remains unresolved and, if decided adversely
to the Parent,  would be reasonably  likely to have a Material Adverse Effect on
the  Parent  and  subsidiaries  taken as a whole.  No third  party  has,  to the
Parent's  knowledge,   interfered  with,  infringed  upon,   misappropriated  or
otherwise come into conflict with any Parent Intellectual Property rights of the
Parent  or its  subsidiaries,  except  where  such  actions  are not  reasonably


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<PAGE>

expected to have a Material  Adverse  Effect on the Parent and its  subsidiaries
taken as a whole.

         (c) Section 4.20(d) of the Parent Disclosure  Schedule  identifies each
material item of Parent Intellectual Property that any third party owns and that
the Parent or any of its  subsidiaries  uses  pursuant to  license,  sublicense,
agreement or permission that either (i) if such license,  sublicense,  agreement
or  permission  were  denied,  would  reasonably  be expected to have a Material
Adverse  Effect on the  Parent  or its  Subsidiaries  taken as a whole,  or (ii)
includes any unsatisfied  obligation to pay any royalty amount or any obligation
to pay a royalty,  whether  fixed or  determined  based on usage,  following the
Effective Date in excess of $25,000.  To the Parent's  knowledge,  in respect of
each such item of used Parent Intellectual Property:

              (i) the license, sublicense,  agreement or permission covering the
         item is  legal,  valid,  binding,  enforceable  and in full  force  and
         effect;

              (ii) the licenses, sublicenses,  agreements or permissions will in
         all material respects continue to be legal, valid, binding, enforceable
         and in full force and effect on identical terms following the Effective
         Time;

              (iii) no party to the license, sublicense, agreement or permission
         is in breach or default, and no event has occurred which with notice or
         lapse  of  time  would   constitute  a  breach  or  default  or  permit
         termination, modification or acceleration thereunder such as would have
         a Material Adverse Effect on the Parent and its subsidiaries taken as a
         whole; and

              (iv) no party to the license, sublicense,  agreement or permission
         has repudiated any provision thereof.

         (d)  Except as set forth in Section  4.20(e)  of the Parent  Disclosure
Schedule,  neither  the Parent nor any of its  subsidiaries  has granted (i) any
exclusive licenses (other than implied patent licenses in the ordinary course of
business) in any patents owned by the Parent or any of its  subsidiaries or (ii)
any exclusive licenses in any other Intellectual Property owned by the Parent or
any of its subsidiaries to any third party.

         (e) Except as may have been given in  connection  with patent  licenses
set forth in Section 4.20(e) of the Parent  Disclosure  Schedule or given in the
ordinary course of business within the scope of the Parent's  standard terms and
conditions of sale,  neither the Parent nor any of its  subsidiaries has entered
into any material  agreement to indemnify any other person against any charge of
infringement or misappropriation of any Parent Intellectual Property.

         (f) The  execution,  delivery  and  performance  by the  Parent of this
Agreement,  and the consummation of the transactions  contemplated  hereby, will
not (i)  result in the loss or  impairment  of, or give rise to any right of any
third  party  to  terminate  or  alter,  any  of  the  Parent's  or  any  of its
subsidiaries'  rights to own any of its Intellectual  Property except as are not
reasonably  expected  to have a  Material  Adverse  Effect on the Parent and its
Subsidiaries  taken as a whole, nor (ii) require the consent of any Governmental
Entity or third party in respect of any such Parent Intellectual  Property that,


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<PAGE>

if not obtained, is reasonably expected to have a Material Adverse Effect on the
Parent and its subsidiaries taken as a whole.

         SECTION 4.21 No Prior  Activities.  Except for obligations  incurred in
connection  with  its  incorporation  or  organization  or the  negotiation  and
consummation of this Agreement and the transactions  contemplated hereby, Merger
Sub has neither incurred any obligation or liability nor engaged in any business
or activity of any type or kind  whatsoever  or entered  into any  agreement  or
arrangement with any person.

         SECTION 4.22 Brokers.  No broker,  finder,  investment  banker or other
person is entitled to any  brokerage,  finder's  or other fee or  commission  in
connection  with the  transactions  contemplated  by this  Agreement  based upon
arrangements  made  by and on  behalf  of  Parent,  Merger  Sub or any of  their
affiliates.

                                   Article V
                    COVENANTS RELATED TO CONDUCT OF BUSINESS

         SECTION 5.1 Conduct of Business of the Company and ePenzio, Inc. On the
date of this Agreement, Parent and the Company shall form a committee comprising
of two designees of Parent and two  designees of the Company,  all of whom shall
be acceptable to Parent and the Company (the "Evaluation Committee"). Parent and
the Company may replace its designees with notice to the other party.  Except as
consented to by  seventy-five  percent (75%) of the designees on the  Evaluation
Committee, or as contemplated by this Agreement, during the period from the date
hereof to the  Effective  Time,  the Company and ePenzio,  Inc. (a  wholly-owned
subsidiary of Parent),  and each of their subsidiaries,  will each conduct their
operations  in the ordinary and usual  course of business  consistent  with past
practice  and use  reasonable  best  efforts to preserve  intact  their  current
business  organizations,  keep available the service of its current officers and
key employees and preserve their  relationships  with  customers,  suppliers and
others  having  business  dealings  with it to the end that goodwill and ongoing
businesses  shall be  unimpaired  at the Effective  Time.  Without  limiting the
generality of the foregoing,  and except as otherwise expressly provided in this
Agreement,  prior to the Effective Time, neither the Company, ePenzio, Inc., nor
any of their  subsidiaries  will,  without  the  prior  written  consent  of the
Evaluation Committee:

         (a) amend their charter or bylaws (or other similar  organizational  or
governing instruments);

         (b) authorize for issuance,  issue, sell, deliver or agree or commit to
issue,  sell or deliver  (whether  through the  issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other  securities  convertible  into or exchangeable for any
stock  or  any  equity  equivalents  (including,  any  stock  options  or  stock
appreciation rights), except for (x) the issuance of Shares upon the exercise of
outstanding  Company  Stock  Options,  and the  grant to newly  hired  officers,
employees or agents (in the  ordinary  course of business  consistent  with past
practice) of additional  Company Stock Options after the date hereof to purchase
up to 50,000  additional  Shares  and the  issuance  of  shares on the  exercise
thereof;

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<PAGE>

         (c) (i) split,  combine or reclassify  any shares of its capital stock;
(ii) declare,  set aside or pay any dividend or other  distribution  (whether in
cash,  stock or property or any  combination  thereof) in respect of its capital
stock (other than any dividends or  distributions  payable to the Company or its
subsidiaries);  (iii) make any other actual, constructive or deemed distribution
in respect of any shares of its capital stock or otherwise  make any payments to
stockholders in their capacity as such (other than any distributions or payments
to the Company or its  subsidiaries);  or (iv) redeem,  repurchase  or otherwise
acquire any of its securities or any securities of any of its subsidiaries;

         (d)  adopt a plan of  complete  or  partial  liquidation,  dissolution,
merger, consolidation,  restructuring,  recapitalization or other reorganization
of the Company or any of its subsidiaries (other than the Merger);

         (e) alter through merger, liquidation, reorganization, restructuring or
in any other fashion the corporate  structure or ownership of any  subsidiary of
Company;

         (f) (i) incur or assume any  indebtedness for borrowed money other than
under existing  credit  facilities (or any renewals,  replacements or extensions
that do not increase the  aggregate  commitments  thereunder)  except (A) in the
ordinary and usual course of business  consistent  with past  practice or (B) in
connection with any acquisition or capital expenditure permitted by this Section
5.1; (ii) assume,  guarantee,  endorse or otherwise become liable or responsible
(whether  directly,  contingently or otherwise) for the obligations of any other
person, except in the ordinary and usual course of business consistent with past
practice,  and except for  obligations of the wholly owned  subsidiaries  of the
Company;  (iii)  make any  loans,  advances  or  capital  contributions  to,  or
investments  in, any other person (other than (A) any  acquisition  permitted by
this Section 5.1, (B) loans, advances or capital contributions to or investments
in wholly owned subsidiaries of the Company,  (C) loans or advances to employees
of the Company or any of its  subsidiaries  in the  ordinary  course of business
consistent  with past  practice or (D)  extensions of credit to customers in the
ordinary  course of  business  consistent  with past  practice);  (iv) pledge or
otherwise  encumber shares of capital stock of the Company or its  subsidiaries;
or (v) create or assume any Lien on any material assets of the Company or any of
its  subsidiaries  other  than in the  ordinary  and usual  course  of  business
consistent with past practice;

         (g) (i) except as set forth in Section 5.1(g) of the Company Disclosure
Schedule,  increase  in any manner the  compensation  or fringe  benefits of any
director,  officer  or  employee  except  in the  ordinary  course  of  business
consistent  with past  practice or pay any benefit not  required by any plan and
arrangement as in effect as of the date hereof or grant any  completion  bonuses
or change of control  payments in respect of the Merger or that will be affected
thereby;  (ii) except in the ordinary  course of business  consistent  with past
practice,  promote or change the  classification or status in respect of or hire
any employee or individual; or (iii) make any contributions or other deposits to
any trust that is not qualified under Section 501(a) of the Code;

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<PAGE>

         (h) acquire,  sell, lease or dispose of any material assets outside the
ordinary  and usual  course of  business  consistent  with past  practice or any
assets which in the aggregate  are material to the Company and its  subsidiaries
taken as a whole,  other than  extensions or renewals in the ordinary  course of
business consistent with past practice;

         (i)  except  as may be  required  as a result  of a change in Law or in
GAAP, make any material change in any of the accounting  principles or practices
used by it;

         (j)  revalue in any  material  respect  any of its  assets,  including,
writing down the value of inventory or writing-off notes or accounts  receivable
other than in the  ordinary and usual  course of business  consistent  with past
practice or as required by GAAP;

         (k) (i) acquire (by merger,  consolidation  or  acquisition of stock or
assets) any corporation,  partnership or other business organization or division
thereof or any equity  interest  therein;  (ii) other than in the  ordinary  and
usual course of business consistent with past practice,  enter into any material
contract or  agreement  or amend in any  material  respect  any of the  Material
Contracts or the agreements referred to in Section 3.18; (iii) authorize any new
capital  expenditure or expenditures which are not provided for in the Company's
current  capital  expenditure  plan and  which,  individually,  is in  excess of
$25,000 or, in the  aggregate,  are in excess of $50,000;  or (iv) enter into or
amend any  contract,  agreement,  commitment  or  arrangement  providing for the
taking of any action that would be prohibited hereunder;

         (l) make or  revoke  any Tax  election,  or settle  or  compromise  any
material Tax liability,  or change (or make a request to any taxing authority to
change) any aspect of its method of accounting for Tax purposes;

         (m) pay,  discharge  or satisfy any  material  claims,  liabilities  or
obligations   (absolute,   accrued,   asserted  or  unasserted,   contingent  or
otherwise),  other than the payment,  discharge or  satisfaction in the ordinary
and usual course of business consistent with past practice or in accordance with
their terms of liabilities  reflected,  or reserved against in, the consolidated
financial   statements,   including  notes  thereto,  of  the  Company  and  its
subsidiaries  or incurred since the date of such  financial  statements or waive
the  benefits  of,  or agree  to  modify  in any  manner,  any  confidentiality,
standstill or similar agreement related to a business combination  involving the
Company to which the Company or any of its subsidiaries is a party;

         (n) settle or  compromise  any pending or  threatened  suit,  action or
claim relating to the transactions contemplated hereby;

         (o) enter into any  agreement or  arrangement  that limits or otherwise
restricts the Company or any of its  subsidiaries  or any  successor  thereto or
that  could,   after  the  Effective  Time,  limit  or  restrict  the  Surviving
Corporation and its affiliates (including Parent) or any successor thereto, from
engaging or competing in any line of business or in any geographic area;

                                       49
<PAGE>

         (p) fail to comply in any material  respect with any Law  applicable to
the Company, its subsidiaries, or their respective assets;

         (q)  enter  into any  direct or  indirect  arrangements  for  financial
subsidies from a Governmental Entity;

         (r)  adopt,  enter  into,  amend,  alter  or  terminate  (partially  or
completely) any Company Benefit Plan or Company Employee  Arrangement  except as
contemplated  by this  Agreement  or to the extent  required by  applicable  Law
except  the grant of  Company  Stock  Options  as  otherwise  permitted  by this
Agreement;

         (s) enter into any contract with an officer, director,  employee, agent
or other similar  representative  of the Company or any of its subsidiaries that
is not  terminable,  without penalty or other  liability,  upon not more than 60
calendar days' notice; or

         (t) take,  propose  (except as permitted  by Sections  6.5, 8.3 and 8.5
hereof) to take,  or agree in writing or otherwise  to take,  any of the actions
described in Sections  5.1(a) through 5.1(s) or any action which would cause the
condition set forth in Section 7.2(a) not to be satisfied.

         SECTION 5.2 Conduct of Business of Parent.  Except as  consented  to by
the Company or as  contemplated  by this  Agreement,  during the period from the
date hereof to the Effective  Time,  neither Parent nor any of its  subsidiaries
will:

         (a) amend Parent's articles of incorporation or bylaws;

         (b) take any  action  that would or would  reasonably  be  expected  to
prevent,  impair or  materially  delay the  ability of the  Company or Parent to
consummate the transactions contemplated by this Agreement; or

         (c) take,  propose to take,  or agree in writing or  otherwise to take,
any of the actions  described  in Section  5.2(a)  through  5.2(b) or any action
which would cause the condition set forth in Section 7.3(a) not to be satisfied.

         SECTION 5.3 Access to Information.

         (a)  Between  the date  hereof and the  Effective  Time and  subject to
applicable Law, the Company will give Parent and Merger Sub and their authorized
representatives   (including   counsel,   financial   advisors,    environmental
consultants and auditors) reasonable access to all employees,  plants,  offices,
warehouses and other  facilities and to all books and records of the Company and
its subsidiaries,  will permit Parent and Merger Sub to make such inspections as
Parent and  Merger  Sub may  reasonably  require,  and will cause the  Company's
officers  and those of its  subsidiaries  to furnish  Parent and Merger Sub with
such  financial  and  operating  data and other  information  in  respect of the
business, properties and personnel of the Company and its subsidiaries as Parent
or  Merger  Sub may  from  time to time  reasonably  request,  provided  that no
investigation  pursuant  to this  Section  5.3(a)  shall  affect or be deemed to
modify any of the  representations or warranties made by the Company;  provided,


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<PAGE>

however,  that nothing  contained in this  Section 5.3 shall be  interpreted  to
require the Company to disclose any source code or any  information  which it is
prohibited  from  disclosing   pursuant  to  the  terms  of  a   confidentiality
undertaking to a third party.

         (b)  Between  the date  hereof and the  Effective  Time and  subject to
applicable Law, Parent will give the Company and its authorized  representatives
(including counsel, financial advisors,  environmental consultants and auditors)
reasonable  access  to all  employees,  plants,  offices,  warehouses  and other
facilities  and to all books and  records of Parent and its  subsidiaries,  will
permit the  Company  to make such  inspections  as the  Company  may  reasonably
require,  and will cause  Parent's  officers  and those of its  subsidiaries  to
furnish the Company with such financial and operating data and other information
in  respect  of the  business,  properties  and  personnel  of  Parent  and  its
subsidiaries as the Company may from time to time reasonably  request,  provided
that no investigation  pursuant to this Section 5.3(b) shall affect or be deemed
to modify any of the  representations  or warranties  made by Parent;  provided,
however,  that nothing  contained in this  Section 5.3 shall be  interpreted  to
require  Parent to  disclose  any  source  code or any  information  which it is
prohibited  from  disclosing   pursuant  to  the  terms  of  a   confidentiality
undertaking to a third party.

         (c) Between the date hereof and the Effective  Time,  the Company shall
furnish  to Parent  and  Merger  Sub (i)  within  five  business  days after the
delivery thereof to management,  such monthly  financial  statements and data as
are regularly  prepared for  distribution to Company  management and (ii) at the
earliest time they are available, such quarterly and annual financial statements
as are prepared for the Company  Board,  which (in the case of this clause (ii))
shall be in accordance with the books and records of the Company.

         (d) Each of  Parent  and the  Company  will  hold and  will  cause  its
authorized  representatives  to hold in confidence all documents and information
furnished to the other in connection with the transactions  contemplated by this
Agreement  pursuant  to the  terms  of that  certain  Confidentiality  Agreement
entered  into  between  the  Company  and Parent  dated  October  11,  2001 (the
"Confidentiality  Agreement"),  which  shall  survive  any  termination  of this
Agreement in all respects.

                                   Article VI
                              ADDITIONAL AGREEMENTS

         SECTION 6.1 Preparation of S-4 and the Proxy Statement.  Parent and the
Company will, as promptly as  practicable,  jointly  prepare and (i) the Company
will file with the SEC the Proxy  Statement in  connection  with the vote of the
stockholders  of the  Company in respect of the Merger and (ii) Parent will file
with the SEC the S-4 in connection  with the  registration  under the Securities
Act of the shares of Parent Common Stock issuable upon  conversion of the Shares
and the other transactions contemplated hereby. Parent and the Company will, and
will cause their  accountants and lawyers to, use their  reasonable best efforts
to have or cause the S-4 to be declared  effective  as  promptly as  practicable
after filing with the SEC and to maintain the  effectiveness of the Registration
Statement  through the Effective Time,  including  causing their  accountants to

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<PAGE>

deliver  necessary  or  required  instruments  such as  opinions,  consents  and
certificates,  and will take any other action  required or necessary to be taken
under  federal or state  securities  Laws or  otherwise in  connection  with the
registration  process (other than qualifying to do business in any  jurisdiction
which it is not now so  qualified  or filing a general  consent  to  service  of
process in any  jurisdiction).  The  Company  and Parent  shall,  as promptly as
practicable after the receipt thereof,  provide to the other party copies of any
written  comments and advise the other party of any oral  comments in respect of
the Proxy  Statement or the S-4 received  from the staff of the SEC. The Company
will provide  Parent with a reasonable  opportunity to review and comment on any
amendment or supplement to the Proxy  Statement prior to filing with the SEC and
will provide  Parent with a copy of all such  filings with the SEC.  Parent will
provide the Company with a reasonable  opportunity  to review and comment on any
amendment or supplement on the S-4 prior to filing with SEC and will provide the
Company  with a copy of all such  filings  with the SEC.  Parent will advise the
Company,  promptly after it receives notice  thereof,  of the time when the Form
S-4 has become  effective or any  supplement  or amendment  has been filed,  the
issuance of any stop order,  the suspension of the  qualification  of the Parent
Common Stock issuable in connection  with the Merger for offering or sale in any
jurisdiction,  or any  request  by the  SEC for  amendment  of the  Form  S-4 or
comments  thereon and  responses  thereto or requests by the SEC for  additional
information. The Company will use its reasonable best efforts to cause the Proxy
Statement to be mailed to its stockholders at the earliest practicable date.

         SECTION 6.2 Letter of Accountants.

         (a) The Company  shall use all  reasonable  best efforts to cause to be
delivered to Parent a letter of Richard A. Eisner & Company,  LLP, the Company's
independent  auditors,  dated  as of the  date on  which  the S-4  shall  become
effective and addressed to Parent, in form and substance reasonably satisfactory
to Parent  and  customary  in scope  and  substance  for  letters  delivered  by
independent  public  accountants  in  connection  with  registration  statements
similar to the S-4.

         (b)  Parent  shall  use all  reasonable  best  efforts  to  cause to be
delivered  to the  Company a letter of Tanner + Co.,  the  Parent's  independent
auditors,  dated as of the date on which  the S-4  shall  become  effective  and
addressed to the Company, in form and substance  reasonably  satisfactory to the
Company  and  customary  in  scope  and  substance  for  letters   delivered  by
independent  public  accountants  in  connection  with  registration  statements
similar to the S-4.

         SECTION 6.3 Meeting.  The Company  shall take all lawful  action to (i)
cause a special meeting of its stockholders (the "Company Stockholder  Meeting")
to be duly called and held as soon as  practicable  after the effective  date of
the Form S-4 for the  purpose of voting on the  approval  and  adoption  of this
Agreement  and  approval of the Merger and related  matters and (ii)  subject to
applicable  Law,  solicit  proxies from its  stockholders  to obtain the Company
Requisite  Vote for the approval and adoption of this  Agreement and approval of
the Merger. Subject to the provisions of Section 6.5(b), the Company Board shall
recommend  approval and adoption of this Agreement and approval of the Merger by
the Company's  stockholders  and the Company Board shall not withdraw,  amend or
modify in a manner adverse to Parent such  recommendation  (or announce publicly
its intention to do so).

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<PAGE>

         SECTION 6.4 Reasonable Best Efforts.

         (a)  Subject  to  the  terms  and  conditions  of  this  Agreement  and
applicable  Law,  each party will use its  reasonable  best efforts to take,  or
cause to be  taken,  all  actions  and to do,  or cause to be done,  all  things
necessary,  proper or advisable  under  applicable Laws to consummate the Merger
and the other  transactions  contemplated by this Agreement.  In furtherance and
not in limitation  of the  foregoing,  each party hereto shall make  appropriate
filings  required  under  any other  applicable  Antitrust  Law (as  hereinafter
defined)  in respect of the  transactions  contemplated  hereby as  promptly  as
practicable and to supply as promptly as practicable any additional  information
and  documentary  material that may be requested by the applicable  Governmental
Entities administering such Laws and use its reasonable best efforts to take, or
cause to be taken,  all other action  consistent with this Section 6.4 necessary
to secure the  applicable  clearances  or  approvals  under such Laws as soon as
practicable.  For purposes of this Agreement,  "Antitrust Law" means the Sherman
Act, as amended,  the Clayton Act, as amended, the Federal Trade Commission Act,
as  amended,  and all other Laws that are  designed  or  intended  to  prohibit,
restrict or regulate actions having the purpose or effect of  monopolization  or
restraint of trade or lessening of competition through merger or acquisition.

         (b) Each of  Parent  and the  Company  shall,  in  connection  with the
efforts  referenced  in Section  6.4(a) to obtain all  requisite  approvals  and
authorizations  for the  transactions  contemplated  by this Agreement under any
Antitrust Law, use its reasonable  best efforts subject to applicable Law to (i)
cooperate  in all  respects  with each  other in  connection  with any filing or
submission and in connection with any investigation or other inquiry,  including
any proceeding  initiated by a private party; (ii) keep the other party informed
in all material  respects of any material  communication  received by such party
from,  or given by such party to, any  Governmental  Entity and of any  material
communication  received or given in connection  with any proceeding by a private
party, in each case regarding any of the transactions  contemplated  hereby; and
(iii)  permit the other party to review any material  communication  given by it
to, and consult  with each other in advance of any meeting or  conference  with,
any  domestic  or foreign  Governmental  Entity in  connection  herewith  or, in
connection with any proceeding by a private party, with any other person, and to
the extent permitted by such applicable domestic or foreign  Governmental Entity
or other person,  give the other party the opportunity to attend and participate
in such meetings and conferences.

         (c) In  furtherance  and  not in  limitation  of the  covenants  of the
parties  contained  in Sections  6.4(a) and (b),  each of Parent and the Company
shall,  subject to applicable  Law, use its  reasonable  best efforts to resolve
such  objections  if any, as may be asserted by a  Governmental  Entity or other
person in respect of the  transactions  contemplated  hereby under any Antitrust
Law. In connection with the foregoing,  if any administrative or judicial action
or proceeding,  including any  proceeding by a private party,  is instituted (or
threatened to be instituted)  challenging any  transaction  contemplated by this
Agreement  as  violative of any  Antitrust  Law,  each of Parent and the Company
shall  cooperate  in all  respects  with  each  other  and  use  its  respective
reasonable  best efforts to contest and resist any such action or proceeding and
to have vacated, lifted, reversed or overturned any decree, judgment, injunction
or other order, whether temporary,  preliminary or permanent,  that is in effect
and that  prohibits,  prevents or  restricts  consummation  of the  transactions
contemplated  by this  Agreement.  Notwithstanding  the  foregoing  or any other
provision  of this  Agreement,  nothing  in this  Section  6.4 shall (i) limit a
party's  right to terminate  this  Agreement  pursuant to Section 8.2 so long as
such party has up to then complied in all material respects with its obligations
under this Section 6.4, (ii) require Parent to dispose or hold separate any part


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<PAGE>

of its business or operations or agree not to compete in any geographic  area or
line of business or (iii) require Parent to dispose or hold separate any part of
the  Company's  business  or  operations  or agree to cause the  Company  not to
compete in any geographic  area or line of business which would in any such case
impair in any  material  respect any of the  benefits  intended to be derived by
Parent after the Effective Time as a result of the Merger.

         (d) The Company agrees that in connection with any litigation which may
be brought  against the Company or its  directors  relating to the  transactions
contemplated  hereby, the Company will keep Parent, and any counsel which Parent
may retain at its own expense, informed of the course of such litigation, to the
extent Parent is not otherwise a party thereto.  The Company agrees that it will
consult with Parent prior to entering  into any  settlement or compromise of any
such litigation,  and that no such settlement or compromise will be entered into
without Parent's prior written consent,  which consent shall not be unreasonably
withheld.

         SECTION 6.5 Acquisition Proposals.

         (a) From the date of this  Agreement  until the Effective  Time, or, if
earlier,  the  termination of this Agreement in accordance  with its terms,  the
Company  will not,  nor will it permit any of its  subsidiaries  to, nor will it
authorize  or permit any  officer,  director or  employee  of or any  investment
banker, attorney,  accountant or other advisor or representative of, the Company
or any of its subsidiaries to, directly or indirectly,  (i) solicit, initiate or
knowingly  encourage  the  submission  of  any  Acquisition   Proposal  or  (ii)
participate in any  discussions  or  negotiations  regarding,  or furnish to any
person any  non-public  information  in respect of, or knowingly  take any other
action to facilitate, any Acquisition Proposal or any inquiries or the making of
any proposal  that  constitutes,  or may  reasonably be expected to lead to, any
Acquisition Proposal,  provided, however, that nothing contained in this Section
6.5(a) shall prohibit the Company Board from  furnishing any  information to, or
entering  into  discussions  or  negotiations  with,  any  person  that makes an
unsolicited bona fide  Acquisition  Proposal if, and only to the extent that (A)
the Company Stockholder Meeting shall not have occurred,  (B) the Company Board,
after consultation with outside legal counsel, determines in good faith that the
failure to take such action would be inconsistent  with its fiduciary  duties to
the Company's  stockholders  under applicable Law, as such duties would exist in
the  absence  of any  limitation  in  this  Agreement,  (C)  the  Company  Board
determines in good faith that such Acquisition  Proposal is reasonably likely to
lead to a transaction that, if accepted,  is reasonably likely to be consummated
taking into account all legal,  financial,  regulatory  and other aspects of the
proposal and the person making the proposal,  and believes in good faith,  after
consultation with its Financial Advisor,  based on the information  available to
the  Company  Board at the  time,  that  such  Acquisition  Proposal  would,  if
consummated,   result  in  a  transaction   more   favorable  to  the  Company's
stockholders than the Merger (any such more favorable Acquisition Proposal being
referred to herein as a "Superior  Proposal"),  and (D) prior to furnishing  any
information  to, or entering into  discussions or  negotiations  with any person
that makes an  unsolicited  bona fide  Acquisition  Proposal,  the  Company  (x)


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<PAGE>

provides reasonable notice to Parent to the effect that it is taking such action
and (y)  receives  from the  person  submitting  such  Acquisition  Proposal  an
executed  confidentiality/standstill  agreement in reasonably customary form and
in any event  containing  terms at least as stringent as those  contained in the
Confidentiality  Agreement  between  Parent and the Company.  The Company  shall
notify Parent of any  Acquisition  Proposal  (including,  the material terms and
conditions  thereof  and the  identity  of the person  making it) as promptly as
practicable (but in no case later than 24 hours) after its receipt thereof,  and
shall  thereafter  inform  Parent  on a  prompt  basis  of  the  status  of  any
discussions or negotiations  with such third party,  and any material changes to
the terms and conditions of such Acquisition  Proposal,  and shall promptly give
Parent  a copy  of any  information  delivered  to  such  person  which  has not
previously been reviewed by Parent.  The Company has ceased and terminated,  and
has caused its  subsidiaries  and  affiliates,  and their  respective  officers,
directors,  employees,  investment  bankers,  attorneys,  accountants  and other
agents and  representatives  to cease and  terminate,  any existing  activities,
discussions or negotiations with any parties conducted  heretofore in respect of
any possible Acquisition Proposal. The Company shall take all necessary steps to
promptly inform the individuals or entities referred to in the first sentence of
this Section 6.5 of the obligations undertaken in this Section 6.5. "Acquisition
Proposal"  means any inquiry,  offer or proposal  regarding any of the following
(other than the  transactions  contemplated  by this  Agreement)  involving  the
Company  or  any of its  subsidiaries:  (w)  any  merger,  consolidation,  share
exchange,  recapitalization,  business combination or other similar transaction;
(x) any sale, lease, exchange,  mortgage,  pledge, transfer or other disposition
of all or  substantially  all the assets of the  Company  and its  subsidiaries,
taken as a whole, in a single transaction or series of related transactions; (y)
any tender offer or exchange offer for 20% or more of the outstanding  Shares or
the filing of a  registration  statement  under the Securities Act in connection
therewith; or (z) any public announcement of a proposal, plan or intention to do
any of the foregoing or any agreement to engage in any of the foregoing.

         (b) The  Company  Board  will not  withdraw  or  modify,  or propose to
withdraw  or  modify,   in  a  manner   adverse  to  Parent,   its  approval  or
recommendation  of the Merger unless the Company Board after  consultation  with
outside  legal  counsel,  determines in good faith that the failure to take such
action  would  be  inconsistent  with  its  fiduciary  duties  to the  Company's
stockholders under applicable Law; provided, however, that the Company Board may
not approve or recommend an Acquisition  Proposal (and in connection  therewith,
withdraw or modify its approval or  recommendation of the Merger) unless such an
Acquisition  Proposal is a Superior  Proposal  (and the Company shall have first
complied with its  obligations set forth in Section 8.3(a) and the time referred
to in the last sentence of Section  8.3(a) has expired) and unless it shall have
first consulted with outside legal counsel, and have determined that the failure
to take such  action  would be  inconsistent  with its  fiduciary  duties to the
Company's stockholders.  Nothing contained in this Section 6.5(b) shall prohibit
the  Company  from  taking  and  disclosing  to  its   stockholders  a  position
contemplated by Rule 14d-9 or Rule 14e-2(a)  promulgated under the Exchange Act.
Nothing  contained in this Section 6.5(b) shall prohibit the Company from making
any disclosure to the Company's stockholders which, in the good faith reasonable
judgment of the Company Board, after consultation with outside legal counsel, is
required  under  applicable  Law;  provided,  however,  that except as otherwise
permitted in this Section  6.5(b),  the Company does not withdraw or modify,  or
propose to withdraw or modify,  its position in respect of the Merger or approve
or  recommend,  or propose to approve or  recommend,  an  Acquisition  Proposal.
Notwithstanding anything contained in this Agreement to the contrary, any action


                                       55
<PAGE>

by the Company Board  permitted by, and taken in accordance  with,  this Section
6.5(b) shall not constitute a breach of this  Agreement by the Company.  Nothing
in this Section  6.5(b) shall (i) permit the Company to terminate this Agreement
(except as provided in Article VIII hereof) or (ii) affect any other obligations
of the Company under this Agreement.

         SECTION 6.6 Public  Announcements.  Each of Parent,  Merger Sub and the
Company  will  consult  with one another  before  issuing  any press  release or
otherwise   making  any  public   statements  in  respect  of  the  transactions
contemplated by this Agreement,  including,  the Merger, and shall not issue any
such press release or make any such public statement prior to such consultation,
except as may be required by applicable Law, as determined by Parent, Merger Sub
or the Company, as the case may be.

         SECTION 6.7 Directors' and Officers' Indemnification and Insurance.

         (a) From and after the Effective Time, the Surviving Corporation shall,
and Parent shall cause the Surviving Corporation to the fullest extent permitted
by applicable Law to,  indemnify,  defend,  and hold harmless each person who is
now, or has been at any time prior to the date hereof,  or who becomes  prior to
the  Effective  Time,  a  director,  officer or  employee  of the Company or any
subsidiary  thereof,  (each  an  "Indemnified  Party"  and,  collectively,   the
"Indemnified  Parties")  against all  losses,  expenses  (including,  reasonable
attorneys' fees and expenses), claims, damages, costs or liabilities or, subject
to the proviso of the next succeeding sentence,  amounts paid in settlement,  in
connection with any claim,  action, suit,  proceeding or investigation,  whether
civil,  administrative  or  investigative,  arising out of actions or  omissions
occurring at or prior to the Effective Time and whether asserted,  instituted or
claimed  prior to, at or after the  Effective  Time that are in whole or in part
based on, or  arising  out of the fact  that such  person is or was a  director,
officer,  or employee of the Company.  Without  limiting the  foregoing,  in the
event of any such loss,  expense,  claim,  damage, cost or liability (whether or
not arising before the Effective Time), (A) the Surviving  Corporation shall pay
the reasonable fees and expenses of counsel selected by the Indemnified Parties,
which  counsel shall be reasonably  satisfactory  to the Surviving  Corporation,
promptly after  statements  therefor are received and otherwise  advance to such
Indemnified   Party,  upon  request  for  reimbursement,   documented   expenses
reasonably incurred, in either case to the extent not prohibited by the DGCL and
upon receipt of any affirmation  and  undertaking  required by the DGCL, (B) the
Surviving  Corporation will cooperate in the vigorous defense of any such matter
and  (C)  any  determination  required  to be  made in  respect  of  whether  an
Indemnified Party's conduct complies with the standards set forth under the DGCL
and the Surviving  Corporation's  charter or bylaws shall be made as provided by
applicable  Law,  subject  to the rights of the  Indemnified  Party to have such
determination made in a court proceeding;  provided, however, that the Surviving
Corporation  shall not be liable for any settlement  effected  without its prior
written  consent  (which  consent  shall  not  be  unreasonably  withheld).  The
Indemnified  Parties as a group may retain  only one law firm in respect of each
related  matter  except to the extent  there is, in the opinion of counsel to an
Indemnified  Party,  under  applicable  standards  of  professional  conduct,  a
conflict  on  any  significant  issue  between  positions  of any  two  or  more
Indemnified Parties.

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<PAGE>

         (b) For a period of six years after the Effective  Time,  the Surviving
Corporation  shall cause to be  maintained  in effect the policies of directors'
and officers' liability  insurance  maintained by the Company for the benefit of
those  persons who are covered by such  policies at the  Effective  Time (or the
Surviving  Corporation  may  substitute  therefor  policies of at least the same
coverage and amounts containing terms that are in all material respects not less
advantageous to the insured parties in respect of matters occurring prior to the
Effective  Time), to the extent that such liability  insurance can be maintained
annually at a cost to the  Surviving  Corporation  not greater  than 125% of the
premium for the current Company  directors' and officers'  liability  insurance;
provided, however, that if such insurance cannot be so maintained or obtained at
such costs, the Surviving  Corporation  shall maintain or obtain as much of such
insurance  as can be so  maintained  or  obtained at a cost equal to 125% of the
current annual premiums of the Company for such insurance.

         (c) In the event the Surviving  Corporation or any of its successors or
assigns (i)  consolidates  with or merges into any other person and shall not be
the  continuing  or surviving  corporation  or entity or such  consolidation  or
merger or (ii) transfers all or  substantially  all of its properties and assets
to any person,  or otherwise  dissolves or  liquidates,  then and in either such
case,  proper  provision shall be made so that the successors and assigns of the
Surviving  Corporation (or Parent,  in the case of a dissolution or liquidation)
shall assume the obligations set for in this Section 6.7.

         (d) To the  fullest  extent  permitted  by  Law,  from  and  after  the
Effective   Time,   all  rights  to   liability   limitation,   exculpation   or
indemnification now existing in favor of the employees, directors or officers of
the Company and its  subsidiaries in respect of their activities or omissions as
such prior to the Effective Time, as provided in the Company's charter or bylaws
or in any  applicable  agreement,  in effect on the date thereof or otherwise in
effect on the date hereof,  shall survive the Merger and shall  continue in full
force and effect thereafter.

         (e) The  provisions  of this  Section  6.7 are  intended  to be for the
benefit of, and shall be  enforceable  by, each  Indemnified  Party,  his or her
heirs, and his or her representatives.

         SECTION 6.8  Notification  of Certain  Matters.  The Company shall give
prompt  notice to Parent  and Merger  Sub,  and Parent and Merger Sub shall give
prompt  notice to the Company,  of (i) the  occurrence or  nonoccurrence  of any
event the  occurrence  or  nonoccurrence  of which  would be likely to cause any
representation  or  warranty  contained  in  this  Agreement  to  be  untrue  or
inaccurate at or prior to the Effective  Time so as to cause the  conditions set
forth in  Article  VII  hereof  to fail to be  satisfied,  or (ii) any  material
failure of the Company, Parent or Merger Sub, as the case may be, to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder so as to cause the conditions set forth in Article VII hereof to
fail to be  satisfied;  provided,  however,  that  the  delivery  of any  notice
pursuant to this  Section 6.8 shall not cure such  breach or  non-compliance  or
limit  or  otherwise  affect  the  remedies  available  hereunder  to the  party
receiving such notice.

         SECTION 6.9  Tax-Free  Reorganization  Treatment.  The  parties  hereto
intend that the Merger will  qualify as a  reorganization  within the meaning of
Section 368(a) of the Code.  Each of the parties  hereto shall,  and shall cause
its respective  subsidiaries  to, use its  reasonable  best efforts to cause the


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Merger to so qualify.  The parties  will use their  reasonable  best  efforts to
cause the opinions of counsel  contemplated  by Sections 7.2(d) and 7.3(d) to be
timely delivered,  including providing all supporting representations reasonably
requested by such counsel and customary in scope and substance.

         SECTION 6.10 Employee Matters.

         (a) The Company  shall,  at  Parent's  request,  terminate  the Company
Option Plans prior to the Closing Date.

         (b) Except as  contemplated  by this  Agreement,  Parent  will and will
cause the Surviving  Corporation to honor the  obligations of the Company or any
of its  subsidiaries  under the  provisions  of each  Company  Benefit  Plan and
Company Employee Arrangement;  provided that the Company shall have the right at
any time to amend or terminate any such Company Benefit Plan or Company Employee
Arrangement in accordance  with its terms.  The employees of the Company will be
eligible to participate in Parent's  applicable  employee benefit plans, as such
plans may be in effect from time to time, as soon as administratively convenient
(as  determined at Parent's sole  discretion)  after the Effective  Time and, at
Parent's  sole  discretion,  will  become  employees  of  Parent  or  any of its
subsidiaries.  Until  such  time  as  employees  of the  Company  (the  "Company
Employees")  become  eligible to  participate  in Parent's  applicable  employee
benefit  plans  (the  "Benefits  Integration  Date"),  Parent  shall  cause such
employee  benefits to be maintained for such Company  Employees that are, in the
aggregate,  no less  favorable  than those  provided to such  Company  Employees
immediately  prior to the Effective  Time.  Following  the Benefits  Integration
Date,  with  respect  to each plan  maintained  by  Parent in which any  Company
Employee participates (each, a "Parent Plan") that is an "employee benefit plan"
as defined in Section 3(3) of ERISA, for purposes of eligibility to participate,
vesting and,  solely with respect to severance  and  vacation,  level of benefit
entitlement  (including for purposes of benefits  accrual during the last actual
twelve  months),  service with the Company and its  affiliates  (or  predecessor
employers  to the extent the Company and its  affiliates  provided  past service
credit)  shall be treated as service with Parent to the same extent such service
was counted under the  corresponding  Company  Benefit  Plan, if any;  provided,
however,  that such  service  shall not be  recognized  to the extent  that such
recognition  would result in a duplication of benefits.  Such service also shall
apply for purposes of satisfying any waiting  periods,  evidence of insurability
requirements,  or the application of any preexisting condition limitations. Each
Parent Plan shall waive  preexisting  condition  limitations  to the same extent
waived under the corresponding  Company Benefit Plan. Company Employees shall be
given  credit  under  the  applicable  Parent  Plan  for  amounts  paid  under a
corresponding Company Benefit Plan during the same period as though such amounts
had been paid in accordance with the terms and conditions of the Parent Plan.

         (c) Upon the request of Parent,  the Company's Board of Directors shall
adopt a resolution  terminating  the  Company's  401(k) plan and 100% vesting of
participants'  accounts in the plan as of the Effective time. In addition,  upon
the request of Parent,  the Company shall take  appropriate  action to terminate
its  401(k)  plan and shall seek a  determination  of  termination  from the IRS
regarding the qualified status of such 401(k) plan.

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         SECTION 6.11 Company Affiliate Agreements.  Section 6.11 of the Company
Disclosure  Schedule  sets forth a list of all persons who are,  and all persons
who to the Company's knowledge will be at the Closing Date,  "affiliates" of the
Company for  purposes of Rule 145 under the  Securities  Act.  The Company  will
cause such list to be updated  promptly through the Closing Date. Not later than
10 days prior to the date of the Company Stockholder  Meeting, the Company shall
cause its "affiliates" to deliver to Parent a Company  Affiliate  Agreement (the
"Company Affiliate Agreement") substantially in the form attached as Exhibit A.

         SECTION  6.12 SEC and Other  Filings.  Each of Parent  and the  Company
shall  promptly  provide  the other  party (or its  counsel)  with copies of all
filings made by the other party or any of its  subsidiaries  with the SEC or any
other state,  federal or foreign  Governmental  Entity in  connection  with this
Agreement and the transactions contemplated hereby.

         SECTION  6.13  Fees  and  Expenses.   Whether  or  not  the  Merger  is
consummated,  all Expenses  incurred in connection  with this  Agreement and the
transactions  contemplated  hereby  and  thereby  shall  be  paid  by the  party
incurring such  Expenses,  except (a) Expenses  incurred in connection  with the
filing,  printing and mailing of the Proxy Statement and the S-4, which shall be
shared equally by the Company and Parent, and (b) if applicable,  as provided in
Section 8.5. As used in this Agreement,  "Expenses"  includes all  out-of-pocket
expenses  (including all fees and expenses of counsel,  accountants,  investment
bankers,  experts and consultants to a party hereto and its affiliates) incurred
by  a  party  or  on  its  behalf  in  connection   with,  or  related  to,  the
authorization,  preparation,  negotiation,  execution  and  performance  of this
Agreement and the transactions  contemplated hereby,  including the preparation,
filing,  printing  and  mailing  of the  Proxy  Statement  and  the  S-4 and the
solicitation  of  stockholder  approvals  and all other  matters  related to the
transactions contemplated hereby.

         SECTION  6.14  Obligations  of Merger Sub.  Parent will take all action
necessary to cause Merger Sub to perform its  obligations  under this  Agreement
and to  consummate  the  Merger on the terms  and  conditions  set forth in this
Agreement.

         SECTION 6.15 Antitakeover  Statutes.  If any Takeover Statute is or may
become applicable to the Merger,  each of Parent and the Company shall use their
reasonable  best  efforts  to  permit  the  transactions  contemplated  by  this
Agreement,  as  applicable,  to be consummated as promptly as practicable on the
terms contemplated hereby and otherwise act to eliminate or minimize the effects
of any Takeover Statute on the Merger.

         SECTION 6.16 Parent Board Seats.  At the Effective  Time,  Parent shall
have taken all action necessary as allowed under applicable Law, its Certificate
of Incorporation and Bylaws to amend its bylaws to increase the size of Parent's
board of  directors  to seven  (7)  members.  For the  period of three (3) years
following the Effective Time,  Donald L. Danks, as representative of the holders
of Company Common Stock, shall have the right to designate three (3) individuals
to serve on Parent's  board of  directors,  all of whom shall be  acceptable  to
Parent in its  reasonably  discretion.  Assuming  such  designees are willing to
serve on Parent's board of directors, Parent's board of directors shall take all
reasonable  actions  necessary  to  nominate  such  designees  to be approved by


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Parent's  stockholders.  On or before  the  Effective  Time,  Parent  shall have
obtained customary  director and officer  insurance,  which shall provide claims
coverage of a minimum of $5,000,000 per claim.

         SECTION 6.17  Delivery of Disclosure  Schedules.  On or before five (5)
business days from the date hereof,  (a) the Company shall deliver to Parent the
Company  Disclosure  Schedule  and  all  contracts,  agreements,  and  documents
referred to therein, all in the form and substance satisfactory to Parent in its
sole  discretion,  and (b)  Parent  shall  deliver  to the  Company  the  Parent
Disclosure Schedule,  and all contracts,  agreements,  and documents referred to
therein,  all in the form  and  substance  satisfactory  to  Parent  in its sole
discretion.  Any  provision  in this  Agreement  indicating  that  documents  or
information has previously  been provided to Parent,  Merger Sub, or the Company
or will be  provided  to such  parties  hereafter  shall be  deemed  to  require
delivery of such information within five (5) business days from the date of this
Agreement.

                                  Article VII
                    CONDITIONS TO CONSUMMATION OF THE MERGER

         SECTION  7.1  Conditions  to Each  Party's  Obligations  to Effect  the
Merger. The respective  obligations of each party to consummate the transactions
contemplated by this Agreement are subject to the fulfillment at or prior to the
Effective Time of each of the following  conditions,  any or all of which may be
waived in whole or in part by the party being benefited  thereby,  to the extent
permitted by applicable Law:

         (a) The Merger  shall have been  approved  and  adopted by the  Company
Requisite Vote.

         (b) There shall not be in effect any Law of any Governmental  Entity of
competent   jurisdiction   restraining,   enjoining  or   otherwise   preventing
consummation  of  the  transactions   contemplated  by  this  Agreement  and  no
Governmental  Entity shall have instituted any proceeding  which continues to be
pending seeking any such Law.

         (c) The S-4 shall have been declared  effective by the SEC and shall be
effective at the  Effective  Time,  and no stop order  suspending  effectiveness
shall have been issued and no action,  suit,  proceeding or investigation by the
SEC or any state securities  administrator to suspend the effectiveness  thereof
shall have been threatened, initiated and be continuing.

         (d) By the  approval of seventy five  percent  (75%) of the  Evaluation
Committee,  the  Evaluation  Committee  shall have (i) identified the holders of
Company  Stock  Options that will be required to re-vest under the Assumed Stock
Options;  (ii)  determined  the re-vesting  schedule for the applicable  Assumed
Stock Options;  and (iii) obtained all required  consents to lawfully  implement
the re-vesting of such Assumed Stock Options.

         SECTION 7.2 Conditions to the Obligations of Parent and Merger Sub. The
respective  obligations of Parent and Merger Sub to consummate the  transactions
contemplated by this Agreement are subject to the fulfillment at or prior to the
Effective  Time of each of the following  additional  conditions,  any or all of


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which may be waived in whole or part by Parent and Merger  Sub,  as the case may
be, to the extent permitted by applicable Law:

         (a) The  representations and warranties of the Company contained herein
shall have been true in all respects when made and on and as of the Closing Date
as though made on and as of the Closing  Date  (except for  representations  and
warranties  made  as of a  specified  date,  which  shall  speak  only as of the
specified  date),  except where the failure to be true,  individually  or in the
aggregate,  has not had or is not reasonably expected to have a Material Adverse
Effect on the Company and its subsidiaries taken as a whole.

         (b) The  Company  shall have  performed  or  complied  in all  material
respects with all  agreements  and conditions  contained  herein  required to be
performed or complied with by it prior to or at the time of the Closing.

         (c) The Company shall have delivered to Parent a certificate, dated the
date of the  Closing,  signed  by the  President  or any Vice  President  of the
Company  (but  without  personal  liability  thereto),   certifying  as  to  the
fulfillment of the conditions specified in Sections 7.2(a) and 7.2(b).

         (d) Parent shall have  received an opinion of its tax counsel,  Snell &
Wilmer L.L.P.,  dated the Effective Time, to the effect that (i) the Merger will
qualify as a  reorganization  within the meaning of Section  368(a) of the Code;
and (ii)  each of  Parent,  Merger  Sub and the  Company  will be a party to the
reorganization within the meaning of Section 368(b) of the Code. The issuance of
such  opinion  shall  be  conditioned  on the  receipt  by such tax  counsel  of
representation  letters  from each of the  Parent,  Merger Sub and the  Company,
substantially  in the forms attached hereto as Exhibits C and D in each case, in
form and substance  reasonably  satisfactory to Snell & Wilmer L.L.P.  Each such
representation  letter  shall be dated on or before the date of such opinion and
shall not have been withdrawn or modified in any material respect.

         (e) All authorizations,  consents or approvals of a Governmental Entity
(other than those specified in Section  7.1(b))  required in connection with the
execution and delivery of this Agreement and the  performance of the obligations
hereunder shall have been made or obtained, without any limitation,  restriction
or condition  that is reasonably  expected to have a Material  Adverse Effect on
the  Company and its  subsidiaries  taken as a whole (or an effect on Parent and
its  subsidiaries  that,  were  such  effect  applied  to the  Company  and  its
subsidiaries,  is reasonably  expected to have a Material  Adverse Effect on the
Company), except for such authorizations,  consents or approvals, the failure of
which  to have  been  made or  obtained  is not  reasonably  expected  to have a
Material Adverse Effect on the Company and its subsidiaries taken as a whole (or
an effect on Parent and its  subsidiaries  that, were such effect applied to the
Company and its subsidiaries,  is reasonably expected to have a Material Adverse
Effect on the Company).

         (f) Parent  shall  have  received  from the  Company's  "affiliates"  a
Company Affiliate Agreement substantially in the form attached as Exhibit A.

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<PAGE>

         (g) Excluding William C. Gibbs and Mitchell Edwards,  Parent shall have
received  from its  officers,  directors,  and five  percent  (5%)  stockholders
(calculated on a post-closing  basis) an executed Lock-Up  Agreement in the form
attached as Exhibit B.

         (h) Stockholders of the Company holding no more than 20% of the Company
Common  Stock shall have elected any  appraisal  rights or  associated  payments
under Section 262 of the DCGL.

         (i) All convertible debentures,  convertible promissory notes, Canadian
shares,  and any other equity or debt securities  shall have been converted into
Company Common Stock.

         (j) The Company's disputes with Keith Freadhoff,  Donald Corliss, David
Bassett-Parkins,  and Hahn Ngo shall have been  settled on terms  acceptable  to
Parent, and Keith Freadhoff, Donald Corliss, David Bassett-Parkins, and Hahn Ngo
shall  have  provided  a release  of any known or  unknown  claims  against  the
Company.

         (k) Parent shall have received an opinion,  dated the  Effective  Time,
from Parsons  Behle & Latimer,  counsel to the Company,  in the form  reasonably
acceptable to Parent and its legal counsel  regarding the due  authorization  of
the  Company   entering  and   performing   this   Agreement   and  the  Merger,
enforceability  of this  Agreement  and the Merger,  and no  conflicts  with the
charter or bylaws of the Company.

         SECTION  7.3  Conditions  to  the  Obligations  of  the  Company.   The
obligations of the Company to consummate the  transactions  contemplated by this
Agreement are subject to the  fulfillment  at or prior to the Effective  Time of
each of the following conditions,  any or all of which may be waived in whole or
in part by the Company to the extent permitted by applicable Law:

         (a) The  representations  and  warranties  of  Parent  and  Merger  Sub
contained  herein shall be true in all  respects  when made and on and as of the
Closing  Date  as  though  made  on and  as of  the  Closing  Date  (except  for
representations  and warranties made as of a specified  date,  which shall speak
only  as  of  the  specified  date),  except  where  the  failure  to  be  true,
individually or in the aggregate,  has not had or is not reasonably  expected to
have a Material Adverse Effect on Parent and its subsidiaries taken as a whole.

         (b) Parent shall have  performed  or complied in all material  respects
with all agreements and conditions  contained herein required to be performed or
complied with by it prior to or at the time of the Closing.

         (c) Parent shall have delivered to the Company a certificate, dated the
date of the Closing,  signed by the  President  or any Vice  President of Parent
(but without personal  liability  thereto),  certifying as to the fulfillment of
the conditions specified in Sections 7.3(a) and 7.3(b).

         (d) (i) The  Company  shall have  received an opinion of Snell & Wilmer
L.L.P.,  dated the Effective Time, to the effect that the Merger will qualify as
a reorganization within the meaning of Section 368(a) of the Code; and (ii) each


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<PAGE>

of Parent,  Merger  Sub and the  Company  will be a party to the  reorganization
within the meaning of Section  368(b) of the Code.  The issuance of such opinion
shall be  conditioned  on the  receipt  by such tax  counsel  of  representation
letters from each of the Parent,  Merger Sub and the Company,  in each case,  in
form and substance  reasonably  satisfactory to Snell & Wilmer L.L.P.  Each such
representation  letter  shall be dated on or before the date of such opinion and
shall not have been withdrawn or modified in any material respect.

         (e) The Company  shall have  received an opinion,  dated the  Effective
Time,  from Snell & Wilmer,  L.L.P.,  counsel to Parent,  in the form reasonably
acceptable to the Company and its legal counsel  regarding the due authorization
of the Parent and Merger Sub  entering and  performing  this  Agreement  and the
Merger,  enforceability of this Agreement and the Merger,  and no conflicts with
the charter or bylaws of Parent or Merger Sub.

         (f) Excluding William C. Gibbs and Mitchell Edwards,  Parent shall have
received  from its  officers,  directors,  and five  percent  (5%)  stockholders
(calculated on a post-closing  basis) an executed Lock-Up  Agreement in the form
attached as Exhibit B.

                                  Article VIII
                         TERMINATION; AMENDMENT; WAIVER

         SECTION 8.1  Termination  by Mutual  Agreement.  This  Agreement may be
terminated  and the Merger may be abandoned  at any time prior to the  Effective
Time,  whether  before  or after  the  approval  of the  Merger  by the  Company
Requisite Vote referred to in Section  7.1(a),  by mutual written consent of the
Company and Parent by action of their respective boards of directors.

         SECTION 8.2 Termination by Either Parent or the Company. This Agreement
may be  terminated  and the  Merger  may be  abandoned  at any time prior to the
Effective  Time by  action  of the board of  directors  of either  Parent or the
Company if:

         (a) the Merger  shall not have been  consummated  by February 22, 2002,
whether  such date is before or after the date of  approval of the Merger by the
Company  Requisite Vote (the "Termination  Date");  provided,  however,  that if
either Parent or the Company reasonably determines in good faith that additional
time is necessary  in  connection  with  obtaining  any  consent,  registration,
approval,  permit or authorization required to be obtained from any Governmental
Entity,  the Termination Date may be extended by Parent or the Company from time
to time by  written  notice to the other  party to a date not  beyond  March 29,
2002;

         (b) the  Company  Requisite  Vote shall not have been  obtained  at the
Company Stockholder Meeting or at any adjournment or postponement thereof;

         (c) any Law permanently restraining, enjoining or otherwise prohibiting
consummation of the Merger shall become final and non-appealable (whether before
or after the approval of the Merger by the Company Requisite Vote); or

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<PAGE>

         (d) any Governmental Entity shall have failed to issue an order, decree
or  ruling  or to take any  other  action  which is  necessary  to  fulfill  the
conditions  set forth in Sections  7.1(b) and 7.2(e),  as  applicable,  and such
denial of a request  to issue  such  order,  decree or ruling or take such other
action  shall have been final and  nonappealable;  provided,  however,  that the
right to  terminate  this  Agreement  pursuant to this  Section 8.2 shall not be
available to any party that has breached in any material respect its obligations
under this  Agreement in any manner that shall have  proximately  contributed to
the occurrence of the failure of the Merger to be consummated.

         SECTION  8.3  Termination  by  the  Company.   This  Agreement  may  be
terminated  and the Merger may be abandoned  at any time prior to the  Effective
Time by action of the Company Board:

         (a) if (i) the Company Stockholder Meeting shall not have been held and
completed,  (ii) the Company Board authorizes the Company,  subject to complying
with the terms of this  Agreement,  to enter  into a binding  written  agreement
concerning a transaction  that  constitutes a Superior  Proposal and the Company
notifies  Parent in writing  that it  intends  to enter into such an  agreement,
attaching the most current  version of such agreement to such notice,  and (iii)
during the three business day period after the Company's notice, (A) the Company
shall have negotiated  with, and shall have caused its respective  financial and
legal advisors to negotiate with,  Parent to attempt to make such adjustments in
the terms and  conditions  of this  Agreement  as would  enable  the  Company to
proceed  with the  transactions  contemplated  hereby and (B) the Company  Board
shall have concluded,  after considering the results of such negotiations,  that
any Superior  Proposal  giving rise to the  Company's  notice  continues to be a
Superior   Proposal.   The  Company  may  not  effect  such  termination  unless
contemporaneously  therewith the Company pays to Parent in immediately available
funds the fees required to be paid  pursuant to Section 8.5. The Company  agrees
(x) that it will not enter into a binding  agreement  referred to in clause (ii)
above  until at least  the day  following  the third  business  day after it has
provided the notice to Parent required thereby and (y) to notify Parent promptly
if  its  intention  to  enter  into  a  written  agreement  referred  to in  its
notification shall change at any time after giving such notification;

         (b) if there is a breach by Parent or Merger Sub of any representation,
warranty, covenant or agreement contained in this Agreement that cannot be cured
and  would  cause a  condition  set  forth in  Section  7.3(a)  or  7.3(b) to be
incapable of being satisfied as of the Termination Date;

         (c) if the Parent Disclosure  Schedule is not delivered to the Company,
and accepted by the Company,  as provided in Section  6.17;  provided  that this
termination  right  must be  exercised  on or  before  the  fifth  business  day
following  actual receipt of the Parent  Disclosure  Schedule and the contracts,
agreements,  and  documents  referred  to therein as  required  to be  delivered
pursuant to Section 6.17; or

         (d) if Parent's representations and warranties set forth in Section 4.4
are not correct in any material respect.

         SECTION 8.4 Termination by Parent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the  Effective  Time by Parent,
if:

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         (a)  either  (i) the  Company  enters  into a binding  agreement  for a
Superior  Proposal,  or (ii) the Company Board shall have withdrawn or adversely
modified its approval or recommendation of the Merger; or

         (b) there is a breach by the Company of any  representation,  warranty,
covenant or agreement contained in this Agreement that cannot be cured and would
cause a condition set forth in Section 7.2(a) or 7.2(b) to be incapable of being
satisfied as of the Termination Date.

         (c) if the Company Disclosure  Schedule is not delivered to Parent, and
accepted  by the  Parent,  as  provided  in  Section  6.17;  provided  that this
termination  right  must be  exercised  on or  before  the  fifth  business  day
following actual receipt of the Company  Disclosure  Schedule and the contracts,
agreements,  and  documents  referred  to therein as  required  to be  delivered
pursuant to Section 6.17.

         SECTION 8.5 Effect of Termination and Abandonment.

         (a) In the event of termination  of this Agreement and the  abandonment
of the Merger  pursuant to this Article VIII,  this  Agreement  (other than this
Section 8.5,  Sections 5.3(c) and 6.13, and Article IX) shall become void and of
no effect with no  liability  on the part of any party  hereto (or of any of its
directors,  officers,  employees, agents, legal and financial advisors, or other
representatives);  provided,  however, that except as otherwise provided herein,
no such  termination  shall relieve any party hereto of any liability or damages
resulting from any willful breach of this Agreement.

         (b) In the event that (i) a bona fide  Acquisition  Proposal shall have
been made or any person shall have publicly  announced an intention  (whether or
not  conditional)  to make a bona fide  Acquisition  Proposal  in respect of the
Company or any of its  subsidiaries  and thereafter this Agreement is terminated
by either  Parent or the  Company  pursuant  to Section  8.2(b) or by the Parent
pursuant  to Section  8.4(b) as a result of a material  breach by the Company of
any of the  covenants  set forth in Section 6.5 hereof  (provided  that within 9
months of the termination of this Agreement any Acquisition  Proposal by a third
party is entered into,  agreed to, or  consummated  by the Company) or (ii) this
Agreement is terminated by the Company pursuant to Section 8.3(a), or (iii) this
Agreement is terminated by Parent  pursuant to Section  8.4(a)(i),  or (iv) this
Agreement is terminated by Parent  pursuant to Section  8.4(a)(ii) and, within 9
months of such  termination,  any  Acquisition  Proposal  by any third  party is
entered into,  agreed to or consummated  by the Company,  then the Company shall
pay Parent a termination  fee of $1,500,000  in same-day  funds,  on the date of
such termination,  in the case of clause (ii) or (iii), or on the earlier of the
date an agreement is entered  into in respect of an  Acquisition  Proposal or an
Acquisition Proposal is consummated in the case of clause (i) or (iv).

         (c) The Company  acknowledges that the agreements  contained in Section
8.5(b) are an integral part of the transactions  contemplated by this Agreement,
and that, without these agreements, Parent and Merger Sub would not have entered
into this  Agreement;  accordingly,  if the Company  fails to  promptly  pay the
amount due  pursuant to Section  8.5(b),  and, in order to obtain such  payment,
Parent  commences a suit which results in a judgment against the Company for the
fee set forth in this Section 8.5, the Company shall pay to Parent its costs and
expenses  (including,  attorneys'  fees) in connection with such suit,  together
with interest from the date of termination of this Agreement on the amounts owed
at the prime rate of Bank of America,  N.A.,  in effect from time to time during
such period.

         SECTION 8.6 Amendment. This Agreement may be amended by action taken by
the Company,  Parent and Merger Sub at any time before or after  approval of the


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Merger by the Company Requisite Vote but, after any such approval,  no amendment
shall be made which requires the approval of such stockholders  under applicable
Law  without  such  approval.  This  Agreement  may not be amended  except by an
instrument in writing signed on behalf of the parties hereto.

         SECTION 8.7 Extension; Waiver. At any time prior to the Effective Time,
each party hereto (for these  purposes,  Parent and Merger Sub shall together be
deemed one party and the Company shall be deemed the other party) may (i) extend
the time for the  performance  of any of the  obligations  or other  acts of the
other party, (ii) waive any inaccuracies in the  representations  and warranties
of the other party contained  herein or in any document,  certificate or writing
delivered pursuant hereto, or (iii) waive compliance by the other party with any
of the agreements or conditions  contained herein.  Any agreement on the part of
either party  hereto to any such  extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. The failure of
any party hereto to assert any of its rights  hereunder  shall not  constitute a
waiver of such rights.

                                   Article IX
                                  MISCELLANEOUS

         SECTION 9.1 Entire Agreement; Assignment.

         (a) This Agreement (including the documents and instruments referred to
herein)  constitutes the entire agreement  between the parties hereto in respect
of the subject  matter  hereof and  supersedes  all other prior  agreements  and
understandings,  both  written  and oral,  between the parties in respect of the
subject matter hereof,  other than the  Confidentiality  Agreement  (which shall
remain in effect).

         (b)  Neither  this  Agreement  nor  any of  the  rights,  interests  or
obligations hereunder shall be assigned by operation of Law (including by merger
or  consolidation)  or otherwise  without the prior written consent of the other
parties. Any assignment in violation of the preceding sentence shall be null and
void.  Subject to the preceding  sentence,  this Agreement will be binding upon,
inure to the benefit of, and be enforceable by the parties and their  respective
successors and permitted assigns.

         SECTION 9.2 Nonsurvival of Representations and Warranties.

         The  representations  and warranties  made herein by the parties hereto
shall not  survive  the  Effective  Time.  This  Section 9.2 shall not limit any
covenant or  agreement  of the parties  hereto  which by its terms  contemplates
performance after the Effective Time or after termination of this Agreement.

         SECTION 9.3  Notices.  All  notices,  requests,  instructions  or other
documents  to be given  under this  Agreement  shall be in writing  and shall be



                                       66
<PAGE>

deemed given (i) five business days following sending by registered or certified
mail, postage prepaid, (ii) when sent if sent by facsimile;  provided,  however,
that the  facsimile is promptly  confirmed by  telephone  confirmation  thereof,
(iii) when delivered,  if delivered  personally to the intended  recipient,  and
(iv) one business  day  following  sending by overnight  delivery via a national
courier service, and in each case, addressed to a party at the following address
for such party:

         if to Merger Sub or to
         Parent, to:                     Category 5 Technologies, Inc.
                                         4505 South Wasatch Boulevard, Suite 370
                                         Salt Lake City, UT 84124
                                         Attention:  Chief Executive Officer
                                         Facsimile No.: (801) 424-2992
                                         Telephone No.: (801) 424-2999

         with copies to:                 Snell & Wilmer, L.L.P.
                                         15 West South Temple, Suite 1200
                                         Salt Lake City, Utah 84101
                                         Attention: David F. Evans
                                         Facsimile: (801) 257-1800
                                         Telephone No.: (801) 257-1900


         if to the Company, to:          NetGateway, Inc.
                                         754 East Technology Avenue
                                         Orem, Utah 84097
                                         Attention: John J. Poelman
                                         Facsimile: (801) 228-9761
                                         Telephone No.: (801) 227-0004


         with a copy to:                 Parsons Behle & Latimer
                                         201 S. Main Street, Suite #1800
                                         Salt Lake City, Utah 84111
                                         Attention: George M. Flint III
                                         Facsimile: (801) 536-6111
                                         Telephone No.: (801) 532-1234

         or to such  other  address  or  facsimile  number as the person to whom
notice is given may have  previously  furnished  to the other in  writing in the
manner set forth above.

         SECTION 9.4  Governing  Law.  This  Agreement  shall be governed by and
construed  in  accordance  with the Laws of the  State of Utah,  without  giving
effect to the choice of Law principles thereof.

         SECTION 9.5 Descriptive  Headings.  The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.

         SECTION 9.6 Parties in Interest.  This Agreement  shall be binding upon
and inure  solely to the  benefit of each party  hereto and its  successors  and
permitted  assigns,  and,  except as  provided in Section  6.7,  nothing in this



                                       67
<PAGE>
Agreement,  express or implied,  is  intended to or shall  confer upon any other
person any rights,  benefits or  remedies of any nature  whatsoever  under or by
reason of this Agreement.

         SECTION 9.7  Severability.  The provisions of this  Agreement  shall be
deemed severable and the invalidity or  unenforceability  of any provision shall
not affect the validity or enforceability of the other provisions hereof. If any
provision of this  Agreement,  or the  application  thereof to any person or any
circumstance,  is  invalid  or  unenforceable,  (a)  a  suitable  and  equitable
provision shall be substituted  therefor in order to carry out, so far as may be
valid and  enforceable,  the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this  Agreement and the  application  of such
provision  to other  persons  or  circumstances  shall not be  affected  by such
invalidity or  unenforceability,  nor shall such invalidity or  unenforceability
affect the validity or  enforceability  of such  provision,  or the  application
thereof, in any other jurisdiction.

         SECTION 9.8 Specific  Performance.  The parties agree that  irreparable
damage  would occur in the event that any of the  provisions  of this  Agreement
were not performed in accordance  with their  specific  terms or were  otherwise
breached.  It is  accordingly  agreed that the  parties  shall be entitled to an
injunction or injunctions  to prevent  breaches of this Agreement and to enforce
specifically  the terms and  provisions  of this  Agreement  in any court of the
United States located in the State of Utah or in Utah state court, this being in
addition to any other remedy to which they are entitled at Law or in equity.  In
addition,  each of the  parties  hereto  (a)  consents  to submit  itself to the
personal  jurisdiction  of any federal court located in the State of Utah or any
Utah state court in the event any dispute arises out of this Agreement or any of
the  transactions  contemplated  hereby,  (b) agrees that it will not attempt to
deny or defeat such personal  jurisdiction  by motion or other request for leave
from any such court,  and (c) agrees that it will not bring any action  relating
to this Agreement or any of the  transactions  contemplated  hereby in any court
other than a federal or state court sitting in the State of Utah.

         SECTION 9.9 Counterparts. This Agreement may be executed in two or more
counterparts,  all of which shall be considered  one and the same  agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.

         SECTION 9.10 Interpretation.

         (a) The words  "hereof,"  "herein,"  "herewith"  and  words of  similar
import shall,  unless otherwise  stated, be construed to refer to this Agreement


                                       68
<PAGE>

as a whole and not to any particular  provision of this Agreement,  and article,
section,  paragraph,  exhibit,  and  schedule  references  are to the  articles,
sections, paragraphs, exhibits, and schedules of this Agreement unless otherwise
specified.  Whenever the words "include," "includes," or "including" are used in
this  Agreement,  they  shall be deemed  to be  followed  by the words  "without
limitation,"  the word "or"  shall  mean  "and/or."  All terms  defined  in this
Agreement  shall have the  defined  meanings  contained  herein when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein.  The definitions  contained in this Agreement are applicable to
the singular as well as the plural  forms of such terms and to the  masculine as
well as to the  feminine  and  neuter  genders  of such  terms.  Any  agreement,
instrument  or statute  defined or  referred  to herein or in any  agreement  or
instrument  that is  referred  to herein  means such  agreement,  instrument  or
statute as from time to time amended,  qualified or supplemented,  including (in
the case of agreements and instruments) by waiver or consent and (in the case of
statutes) by  succession of comparable  successor  statutes and all  attachments
thereto and instruments incorporated therein. References to a person are also to
its permitted successors and assigns.

         (b) The phrases "the date of this  Agreement,"  "the date  hereof," and
terms of similar import, unless the context otherwise requires,  shall be deemed
to refer to October 23, 2001.  The phrase  "made  available"  in this  Agreement
shall mean that the information  referred to has been actually  delivered to the
party to whom such information is to be made available.

         (c) The  parties  have  participated  jointly  in the  negotiation  and
drafting of this  Agreement.  In the event an ambiguity or question of intent or
interpretation  arises,  this Agreement shall be construed as if drafted jointly
by the parties  and no  presumption  or burden of proof shall arise  favoring or
disfavoring  any party by virtue of the  authorship  of any  provisions  of this
Agreement.

         SECTION 9.11 Definitions. As used herein,

         (a)  "beneficial  ownership"  or  "beneficially  own"  has the  meaning
provided  in Section  13(d) of the  Exchange  Act and the rules and  regulations
thereunder.

         (b) "business  day" shall mean any day other than  Saturday,  Sunday or
any day on which banks in Salt Lake City, Utah are required or authorized by Law
to be closed for business.

         (c) "know" or "knowledge"  means,  in respect of any party,  the actual
knowledge of the officers and employees of such party actively  participating in
the negotiation of this agreement and related due diligence activities,  without
any requirement to undertake an independent investigation, provided that, (i) in
the case of the Company,  such officers and employees  shall be limited to those
persons named in Section 9.11(c) of the Company Disclosure  Schedule and (ii) in
the case of  Parent,  such  officers  and  employees  shall be  limited to those
persons named in Section 9.11(c) of the Parent Disclosure Schedule

                                       69
<PAGE>

         (d)  "Material  Adverse  Effect"  means in respect of any  entity,  any
material adverse effect on (i) the assets,  properties,  financial  condition or
results of  operations  of such  entity and its  subsidiaries  taken as a whole,
other than any change,  circumstance,  effect or development (A) relating to the
small business services industry (it being understood that this clause (A) shall
not exclude,  in the case of any Material  Adverse Effect with respect to either
party,  any change,  circumstance,  effect or development  relating to the small
business  services  industry or economy in general in any location in which such
entity operates or owns assets that materially  disproportionately  impacts such
party), (B) arising out of or resulting from actions contemplated by the parties
in  connection  with,  or which is  attributable  to, the  announcement  of this
Agreement and the transactions contemplated hereby (including loss of customers,
suppliers or employees or the delay or cancellation of orders for products),  or
(C) any shareholder litigation or litigation by any Governmental Entity, in each
case  brought or  threatened  against  such entity or any member of its board of
directors in respect of this Agreement or the transactions  contemplated hereby;
provided  that any change in the market  price or trading  volume of the Company
Common Stock or Parent  Common  Stock shall not, in and of itself,  constitute a
Material  Adverse  Effect,  or (ii) the ability of such party to consummate  the
transactions contemplated by this Agreement.

         (e)  "person"  means  an  individual,  corporation,  limited  liability
company,  partnership,  association,  trust, unincorporated organization,  other
entity or group (as defined in the Exchange Act).

         (f)  "subsidiary"  means,  in respect of any  party,  any  corporation,
partnership  or  other  entity  or   organization,   whether   incorporated   or
unincorporated,  of which (i) such other party or any other  subsidiary  of such
party is a general partner  (excluding such partnerships where such party or any
subsidiary of such party does not have a majority of the voting interest in such
partnership)  or (ii) at least a majority of the  securities or other  interests
having by their terms ordinary  voting power to elect a majority of the board of
directors or others performing  similar functions in respect of such corporation
or other  organization  is directly or  indirectly  owned or  controlled by such
party or by any one or more of its  subsidiaries,  or by such  party  and one or
more of its subsidiaries.


                [THE REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       70
<PAGE>


         IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the date first above written.

                                         NETGATEWAY, INC.


                                         By:  /s/ Donald Danks
                                            ------------------------------------
                                         Name:   Donald Danks
                                         Title:  Chairman, President and CEO



                                         CATEGORY 5 TECHNOLOGIES, INC.


                                         By:  /s/ William C. Gibbs
                                            ------------------------------------
                                         Name:   William C. Gibbs
                                         Title:  Chief Executive Officer



                                         C5T ACQUISITION CORP.


                                         By:  /s/ William C. Gibbs
                                            ------------------------------------
                                         Name:   William C. Gibbs
                                         Title:  President


                                       71
<PAGE>

                                                                       Exhibit A
                                                                       ---------

                 [FORM OF COMPANY AFFILIATE AGREEMENT TO PARENT]

                              ___________ ___, 2001

Category 5 Technologies, Inc.
4505 South Wasatch Boulevard, Suite 370
Salt Lake City, Utah 84124

Dear Sir/Madam:

         Reference  is made  to the  provisions  of the  Agreement  and  Plan of
Merger,  dated as of October 23, 2001 (together with any amendments thereto, the
"Merger  Agreement"),  among  NetGateway,  Inc.,  a  Delaware  corporation  (the
"Company"), Category 5 Technologies,  Inc., a Nevada corporation ("Parent"), and
C5T  Acquisition  Corp.,  a  Delaware  corporation  and a  direct  wholly  owned
subsidiary of Parent ("Merger Sub"), pursuant to which Merger Sub will be merged
with  and  into  the  Company,  with the  Company  continuing  as the  surviving
corporation  (the "Merger").  This letter  constitutes  the  undertakings of the
undersigned contemplated by the Merger Agreement, as is being furnished pursuant
to Section 6.11 thereto.

         I understand  that I may be deemed to be an "affiliate" of the Company,
as such term is  defined  for  purposes  of  paragraphs  (c) and (d) of Rule 145
("Rule  145")  promulgated  under the  Securities  Act of 1933,  as amended (the
"Securities  Act").  Execution  of this  letter  shall  not be  construed  as an
admission of "affiliate" status nor as a waiver of any rights that I may have to
object  to any  claim  that I am an  "affiliate"  on or  after  the date of this
letter.

         If in fact I were to be  deemed an  "affiliate"  of the  Company  under
paragraphs  (c) and (d) of Rule 145, my ability to sell,  transfer or  otherwise
dispose of any shares of the common stock, par value $0.001 per share, of Parent
(the  "Parent  Shares")  received  by me in  exchange  for any shares of Company
Capital Stock (as defined in the Merger Agreement) pursuant to the Merger may be
restricted.

         I hereby  represent,  warrant  and  covenant  to Parent that I will not
sell, pledge,  transfer, or otherwise dispose of any of the Parent Shares except
(i) pursuant to an effective registration statement under the Securities Act, or
(ii) as permitted by, and in  accordance  with,  Rule 145 or another  applicable
exemption  under the  Securities Act and the rules and  regulations  promulgated
thereunder; and

         I hereby  acknowledge that, except as otherwise  provided in the Merger
Agreement, Parent is under no obligation to register the sale, transfer, pledge,
or other  disposition of the Parent Shares or to take any other action necessary
for the purpose of making an exemption from registration available.

         I understand  that Parent will issue stop transfer  instructions to its
transfer agents with respect to the Parent Shares and that a restrictive  legend
will be placed on  certificates  delivered to me evidencing the Parent Shares in
substantially the following form:

                                      A-1
<PAGE>

         "This  certificate and the shares  represented  hereby have been issued
pursuant to a transaction  governed by Rule 145 ("Rule 145")  promulgated  under
the Securities Act of 1933, as amended (the  "Securities  Act"),  and may not be
sold or  otherwise  disposed  of  unless  registered  under the  Securities  Act
pursuant  to a  Registration  Statement  in  effect  at the time or  unless  the
proposed sale or disposition  can be made in compliance with Rule 145 or without
registration in reliance on another exemption therefrom."

         The term Parent  Shares as used in this  letter  shall mean and include
not only the common stock of Parent as presently constituted, but also any other
stock which may be issued in exchange for, in lieu of, or in addition to, all or
any part of such Parent Shares.

         I hereby acknowledge that Parent and its independent public accountants
will be relying upon this letter and that I understand the  requirements of this
letter and the limitations imposed upon the transfer,  sale or other disposition
of the Company Shares and the Parent Shares.

                                         Very truly yours,


                                         -----------------------------------
                                         Name:

                                      A-2
<PAGE>
                                                                       Exhibit B
                                                                       ---------

                                LOCK-UP AGREEMENT

Category 5 Technologies, Inc.
4505 South Wasatch Boulevard, Suite 370
Salt Lake City, Utah 84124

         1. In  consideration  of Category 5  Technologies,  Inc. (the "Parent")
entering into the Agreement and Plan of Merger (the "Merger  Agreement"),  dated
October  23,  2001,  among  NetGateway,   Inc.,  a  Delaware   corporation  (the
"Company"),  Parent,  and C5T  Acquisition  Corp., a Delaware  corporation and a
direct  wholly owned  subsidiary  of Parent  ("Merger  Sub"),  pursuant to which
Merger Sub will be merged with and into the Company, with the Company continuing
as the surviving  corporation  (the  "Merger"),  and for other good and valuable
consideration,  the  receipt of which is hereby  acknowledged,  the  undersigned
agrees that the  undersigned  will not, for a period of 12 months  subsequent to
the Effective  Time of the Merger,  offer,  sell,  contract to sell or otherwise
dispose of (other  than  pursuant  to bona fide  gifts to  persons  who agree in
writing  to be  bound  by the  provisions  of  this  Agreement  ) any of (1) the
undersigned's  options to purchase shares of Common Stock of the Company, or (2)
any shares of Common Stock of the Company,  without prior written consent of the
Company; except in accordance with Rule 144(e) of the Securities Act of 1933, as
amended.

         2. The undersigned  hereby  acknowledges that this Lock-Up Agreement is
valid and binding  notwithstanding  any prior agreements relating to this matter
and  further  agrees and  consents  to the entry of  stop-transfer  of shares of
Common Stock of the Company held by the  undersigned  except in compliance  with
this Agreement.  The undersigned  also understands that the Company will proceed
in executing the Merger Agreement in reliance on this Lock-Up Agreement.

                                         Signature:___________________________

                                         Print Name: _________________________

                                         Date: _______________________________

                                      B-1
<PAGE>
                                                                       Exhibit C
                                                                       ---------

                               COMPANY CERTIFICATE


         In connection with the merger (the "Merger") of C5T  Acquisition  Corp.
("Merger Sub"), a Delaware  corporation and a direct wholly owned  subsidiary of
Category 5 Technologies,  Inc., a Nevada corporation  ("Parent"),  with and into
NetGateway,  Inc.,  a Delaware  corporation  (the  "Company"),  pursuant  to the
Agreement  and  Plan of  Merger  dated  as of  October  23,  2001  (the  "Merger
Agreement"),  among the  Company,  Parent and Merger  Sub,  the  Company  hereby
certifies  the  following  (any  capitalized  terms used but not defined  herein
having  the  meaning  given  to such  term  in the  Merger  Agreement):

         (a) The  consideration to be received in the Merger by the shareholders
of the Company was the result of arm's length bargaining between the managements
of Parent and the  Company.  The fair market value of the common stock of Parent
("Parent Common Stock") and any cash received in lieu of fractional shares to be
received by each shareholder of the Company will be  approximately  equal to the
fair  market  value of the common  stock of  Company  ("Company  Common  Stock")
surrendered in the Merger.

         (b) The payment of cash in lieu of  fractional  shares of Parent Common
Stock in the  Merger is solely for the  purpose  of  avoiding  the  expense  and
inconvenience  to Parent of  issuing  fractional  shares,  if any,  and does not
represent separately bargained-for  consideration.  The total cash consideration
that will be paid in the Merger to holders of Company  Common  Stock  instead of
issuing fractions of Parent Common Stock will not exceed one percent (1%) of the
total  consideration  that will be issued in the  Merger to  holders  of Company
Common Stock in exchange for their Company Common Stock.

         (c) Prior to and in  connection  with the Merger,  no shares of Company
Common Stock have been or will be (i) redeemed by the Company,  (ii) acquired by
a person  related to the Company  (within  the  meaning of  Treasury  Regulation
Section  1.368-1(e)(3)  determined without regard to Treasury Regulation Section
1.368-1(e)(3)(i)(A)) for consideration other than Parent Common Stock or Company
Common  Stock,  or (iii) the subject of any  extraordinary  distribution  by the
Company.

         (d) There is no plan or intention on the part of any shareholder of the
Company who owns five percent or more of the Company  Common  Stock,  and to the
best  knowledge of the Company  there is no plan or intention on the part of any
of the remaining  shareholders  of the Company,  to sell,  exchange or otherwise
dispose of any Parent  Common  Stock to be received in the Merger by such holder
directly or  indirectly to Parent or to a person  related to Parent  (within the


                                      C-1
<PAGE>

meaning of Treasury  Regulation Section  1.368-1(e)(3)) for consideration  other
than Parent Common Stock.

         (e) The  Company  has no  outstanding  equity  interests  other than as
described in Section 3.2 of the Merger  Agreement.  At the Effective  Time,  and
following  the  Merger,  the Company  will not have  outstanding  any  warrants,
options,  convertible  securities,  or any other type of right pursuant to which
any person could acquire stock in the Company.

         (f) The Company has no plan or intention to issue additional  shares of
its stock.

         (g) Except as set forth in Section  6.13 of the Merger  Agreement,  the
Company  and its  shareholders  will  pay  their  respective  expenses,  if any,
incurred in connection with the Merger.

         (h) The  Company  is not an  investment  company  as defined in Section
368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code of 1986, as amended (the
"Code").

         (i) The Company is not under the  jurisdiction of a court in a Title 11
or similar case within the meaning of Section 368(a)(3)(A) of the Code.

         (j) There is no intercorporate indebtedness existing between Parent and
the Company or between  Merger Sub and the Company that was issued,  acquired or
will be settled at a discount.

         (k) None of the compensation to be received by any shareholder-employee
of the Company in the Merger will be separate  consideration  for, or  allocable
to, any of such  person's  shares of Company  Common  Stock;  none of the Parent
Common Stock to be received by any  shareholder-employee  of the Company will be
separate  consideration  for, or allocable to, any past or future services,  and
the compensation to be paid to any shareholder-employee after the Merger will be
for services  actually  rendered and will be  commensurate  with amounts paid to
third parties bargaining at arm's length for similar services.

         (l) In the Merger,  shares of Company Common Stock representing control
of the  Company  within  the  meaning  of  Section  368(c)  of the Code  will be
exchanged solely for Parent Common Stock.  For purposes of this  representation,
any  shares  of  Company  Common  Stock  exchanged  for cash or  other  property
originating  with Parent or any person  related to Parent (within the meaning of
Treasury  Regulation  Section  1.368-1(e)(3))  will be  treated  as  outstanding
Company Common Stock on the date of the Merger.

         (m)  In  connection  with  the  Merger,   the  Company  has  not  sold,
transferred  or otherwise  disposed of any of its assets as would prevent Parent
or members of its  qualified  group  (within the meaning of Treasury  Regulation
1.368-1(d)(4)(ii))  from  causing the Company  after the Merger to continue  the
historic  business  of  the  Company  or to  use a  significant  portion  of the
Company's historic business assets in a business.


                                      C-2

<PAGE>

         (n) On the date of the Merger,  the fair market  value of the assets of
the  Company  will  exceed  the  sum of its  liabilities,  plus  the  amount  of
liabilities, if any, to which the assets are subject.

         (o)  Following  the Merger,  the Company  will hold at least 90% of the
fair market value of its net assets and at least 70% of the fair market value of
its gross  assets held  immediately  prior to the Merger and at least 90% of the
fair market value of the net assets and at least 70% of the fair market value of
the  gross  assets of  Merger  Sub held  immediately  prior to the  Merger.  For
purposes  of  this  representation,  amounts  paid  by the  Company  to  Company
shareholders  who receive cash or other property in the Merger,  amounts used by
the Company to pay its  reorganization  expenses and those of its  shareholders,
and all redemptions and  distributions  (except for regular,  normal  dividends)
made by the Company will be included as assets of the Company  immediately prior
to the Merger.

         (p) All options, warrants or rights to acquire shares of Company Common
Stock were issued with an exercise  price no less than fair market  value at the
time of issue.

         (q) The Merger is being  affected for bona fide  business  reasons,  as
described in the Proxy Statement.

         (r) The  Merger  Agreement  (including  all  exhibits  and  attachments
thereto)  represents  the full and  complete  agreement  between  Parent and the
Company regarding the Merger,  and there are no other written or oral agreements
regarding the Merger.

         (s) None of the Company's preferred stock is issued and outstanding.


                                       C-3
<PAGE>

         IN WITNESS  WHEREOF,  the Company has executed this Certificate on this
_____ day of ___________, 2001.



                                                 NETGATEWAY, INC.

                                                 By:_____________________
                                                 Name:
                                                 Title:

                                      C-4
<PAGE>
                                                                       Exhibit D
                                                                       ---------

                               PARENT CERTIFICATE

         In connection with the merger (the "Merger") of C5T  Acquisition  Corp.
("Merger Sub"), a Delaware  corporation and a direct wholly owned  subsidiary of
Category 5 Technologies,  Inc., a Nevada corporation  ("Parent"),  with and into
NetGateway,  Inc.,  a Delaware  corporation  (the  "Company"),  pursuant  to the
Agreement  and  Plan of  Merger  dated  as of  October  23,  2001  (the  "Merger
Agreement"),  among Company,  Parent and Merger Sub, Parent hereby certifies, on
behalf of Parent and Merger Sub, the following (any  capitalized  terms used but
not  defined  herein  having  the  meaning  given  to such  term  in the  Merger
Agreement):

         (a) The consideration to be issued in the Merger to the shareholders of
the Company was the result of arm's length  negotiation  between the managements
of Parent and the  Company.  The fair market value of the common stock of Parent
("Parent Common Stock") and any cash in lieu of fractional shares to be received
by each  shareholder  of the  Company  will be  approximately  equal to the fair
market value of the common stock of Company ("Company Common Stock") surrendered
in the Merger.

         (b) The payment of cash in lieu of  fractional  shares of Parent Common
Stock in the  Merger is solely for the  purpose  of  avoiding  the  expense  and
inconvenience  to Parent of  issuing  fractional  shares,  if any,  and does not
represent separately bargained-for consideration.

         (c) In connection  with the Merger,  no shares of Company  Common Stock
will be acquired by Parent or any person  related to Parent  (within the meaning
of Treasury  Regulation  Section  1.368-1(e)(3))  for  consideration  other than
Parent Common Stock and cash in lieu of fractional share interests therein.

         (d) In the Merger,  shares of Company Common Stock representing control
of the Company,  as defined in Section  368(c) of the  Internal  Revenue Code of
1986, as amended (the "Code"), will be exchanged solely for Parent Common Stock.
For  purposes  of this  representation,  any  shares  of  Company  Common  Stock
exchanged  for cash or other  property  originating  with  Parent or any  person
related  to  Parent   (within  the  meaning  of  Treasury   Regulation   Section
1.368-1(e)(3))  will be treated as outstanding  Company Common Stock on the date
of the Merger.

         (e)  Following  the  Merger,  Parent  will cause the Company to hold at
least 90% of the fair  market  value of its net  assets  and at least 70% of the
fair market value of its gross assets held  immediately  prior to the Merger and
at least 90% of the fair market  value of the net assets and at least 70% of the

                                      D-1
<PAGE>

fair market value of the gross assets of Merger Sub held immediately  before the
Merger. For purposes of this  representation,  assets transferred from Parent to
Merger  Sub are not  included  as assets of Merger  Sub  immediately  before the
Merger  where  such  assets  are  used to pay  reorganization  expenses,  to pay
creditors  of the  Company  or to enable  Merger Sub to  satisfy  state  minimum
capitalization  requirements  (where the money is  returned to Parent as part of
the transaction).

         (f) Following the Merger,  the historic business of the Company will be
continued by, or a significant portion of the Company's historic business assets
will be used in a business of, Parent or a corporation  within Parents qualified
group (within the meaning of Treasury Regulation Section 1.368-1(d)(4)(ii)).

         (g) Parent has no plan or intention to liquidate the Company;  to merge
the Company with or into another corporation;  to sell,  distribute or otherwise
dispose of Company  Common Stock  acquired in the Merger except for transfers or
successive  transfers  of  Company  Common  Stock  to one or  more  corporations
controlled  (within the  meaning of Section  368(c) of the Code) in each case by
the transferor;  or to cause the Company to sell or otherwise  dispose of any of
its  assets  or of any of the  assets  acquired  from  Merger  Sub,  except  for
dispositions  made in the ordinary course of business or transfers or successive
transfers  of assets  either (i) to a  corporation  within  Parent's  "qualified
group", as defined in Treasury Regulation Section 1.368-1(d)(4)(ii) or (ii) to a
partnership described in Treasury Regulation Section 1.368-1(d)(4)(iii).

         (h) In  connection  with the  Merger,  neither  Parent  nor any  person
related  to  Parent   (within  the  meaning  of  Treasury   Regulation   Section
1.368-1(e)(3)) will purchase, exchange, redeem or otherwise acquire (directly or
indirectly) any Parent Common Stock issued to holders of Company Common Stock in
the Merger.

         (i) Except as set forth in Section 6.13 of the Merger Agreement, Parent
and  Merger  Sub  will  pay  their  respective  expenses,  if any,  incurred  in
connection  with  the  Merger,  and  will  not  pay any of the  expenses  of the
shareholders of the Company incurred in connection with the Merger.

         (j) Neither Parent nor any person related to Parent (within the meaning
of Treasury Regulation Section 1.368-1(e)(3)) has owned during the past five (5)
years any shares of stock of the Company.

         (k) Neither  Parent nor Merger Sub is an investment  company as defined
in Section 368(a)(2)(F)(iii) and (iv) of the Code.

         (l) Before the Merger,  Parent will own one hundred  percent  (100%) of
Merger Sub.

         (m)  Parent  has no plan or  intention  to cause the  Company  to issue
additional  shares of stock of the Company  that would  result in Parent  losing
control of the Company within the meaning of Section 368(c) of the Code.

                                      D-2
<PAGE>

         (n) There is no intercorporate indebtedness existing between Parent and
the Company or between  Merger Sub and the Company that was issued,  acquired or
will be settled at a discount.

         (o) Merger Sub will have no  liabilities  assumed by the  Company,  and
will not  transfer  to the  Company any assets  subject to  liabilities,  in the
Merger.

         (p) None of the compensation to be received by any shareholder-employee
of the Company in the Merger will be separate  consideration  for, or  allocable
to, any of such person's  shares of Company Common Stock;  none of the shares of
Parent  Common Stock to be received by any  shareholder-employee  of the Company
will be  separate  consideration  for,  or  allocable  to,  any  past or  future
services; and the compensation to be paid to any shareholder-employee  after the
Merger will be for  services  actually  rendered and will be  commensurate  with
amounts paid to third parties bargaining at arm's length for similar services.

         (q) The Merger is being  affected for bona fide  business  reasons,  as
described in the Proxy Statement.

         (r) The  Merger  Agreement  (including  all  exhibits  and  attachments
thereto)  represents the full and complete agreement between Parent,  Merger Sub
and the Company  regarding  the Merger,  and there are no other  written or oral
agreements regarding the Merger.

                                      D-3
<PAGE>


         IN WITNESS  WHEREOF,  Parent has executed this Certificate on this ____
day of ____________________, 2001.


                                                 CATEGORY 5 TECHNOLOGIES, INC.


                                                 By:____________________________
                                                 Name:
                                                 Title:
                                      D-4
<PAGE>


================================================================================


                          AGREEMENT AND PLAN OF MERGER


                          dated as of October 23, 2001


                                      among


                                NETGATEWAY, INC.


                          CATEGORY 5 TECHNOLOGIES, INC.


                                       and


                              C5T ACQUISITION CORP.


================================================================================

<PAGE>
                                TABLE OF CONTENTS

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                                                                                                             Page


                                                     Article I
                                                    THE MERGER

<S>     <C>           <C>                                                                                       <C>
SECTION 1.1           The Merger.................................................................................1

SECTION 1.2           Effective Time.............................................................................1

SECTION 1.3           Closing of the Merger......................................................................2

SECTION 1.4           Effects of the Merger......................................................................2

SECTION 1.5           Certificate of Incorporation and Bylaws....................................................2

SECTION 1.6           Directors..................................................................................2

SECTION 1.7           Officers...................................................................................2

                                                    Article II
                                             CONVERSION OF SECURITIES

SECTION 2.1           Conversion of Shares.......................................................................3

SECTION 2.2           Stock Options and Warrants.................................................................3

SECTION 2.3           Exchange Fund..............................................................................5

SECTION 2.4           Exchange Procedures........................................................................5

SECTION 2.5           Distributions with Respect to Unsurrendered Certificates...................................5

SECTION 2.6           No Further Ownership Rights in Company Common Stock........................................6

SECTION 2.7           No Fractional Shares of Parent Common Stock................................................6

SECTION 2.8           Termination of Exchange Fund...............................................................6

SECTION 2.9           No Liability...............................................................................7

SECTION 2.10          Investment of the Exchange Fund............................................................7

SECTION 2.11          Lost Certificates..........................................................................7

SECTION 2.12          Withholding Rights.........................................................................7

SECTION 2.13          Stock Transfer Books.......................................................................7

                                                    Article III
                                   REPRESENTATIONS AND WARRANTIES OF THE COMPANY

SECTION 3.1           Organization and Qualification; Subsidiaries...............................................8

SECTION 3.2           Capitalization of the Company and Its Subsidiaries.........................................8

SECTION 3.3           Authority Relative to This Agreement.......................................................9

SECTION 3.4           SEC Reports; Financial Statements.........................................................10

SECTION 3.5           No Undisclosed Liabilities................................................................11

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SECTION 3.6           Absence of Changes........................................................................11

SECTION 3.7           Information Supplied......................................................................13

SECTION 3.8           Consents and Approvals....................................................................14

SECTION 3.9           No Default................................................................................14

SECTION 3.10          Real Property.............................................................................14

SECTION 3.11          Litigation................................................................................15

SECTION 3.12          Compliance with Applicable Law; Permits...................................................16

SECTION 3.13          Employee Plans............................................................................16

SECTION 3.14          Labor Matters.............................................................................19

SECTION 3.15          Environmental Matters.....................................................................20

SECTION 3.16          Tax Matters...............................................................................22

SECTION 3.17          Absence of Questionable Payments..........................................................24

SECTION 3.18          Material Contracts........................................................................25

SECTION 3.19          Subsidies.................................................................................26

SECTION 3.20          Intellectual Property.....................................................................26

SECTION 3.21          Opinion of Financial Advisor..............................................................28

SECTION 3.22          Brokers...................................................................................28

SECTION 3.23          DGCLss. 203...............................................................................29

                                                    Article IV
                              REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

SECTION 4.1           Organization and Qualification; Subsidiaries..............................................29

SECTION 4.2           Capitalization of Parent..................................................................29

SECTION 4.3           Authority Relative to This Agreement......................................................30

SECTION 4.4           SEC Reports; Financial Statements.........................................................31

SECTION 4.5           No Undisclosed Liabilities................................................................31

SECTION 4.6           Absence of Changes........................................................................31

SECTION 4.7           Information Supplied......................................................................34

SECTION 4.8           Consents and Approvals....................................................................34

SECTION 4.9           No Default................................................................................34

SECTION 4.10          Real Property.............................................................................35

SECTION 4.11          Litigation................................................................................36
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                                       ii
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<S>     <C>           <C>                                                                                       <C>

SECTION 4.12          Compliance with Applicable Law; Permits...................................................36

SECTION 4.13          Employee Plans............................................................................36

SECTION 4.14          Labor Matters.............................................................................39

SECTION 4.15          Environmental Matters.....................................................................39

SECTION 4.16          Tax Matters...............................................................................41

SECTION 4.17          Absence of Questionable Payments..........................................................43

SECTION 4.18          Material Contracts........................................................................43

SECTION 4.19          Subsidies.................................................................................44

SECTION 4.20          Intellectual Property.....................................................................45

SECTION 4.21          No Prior Activities.......................................................................47

SECTION 4.22          Brokers...................................................................................47

                                                     Article V
                                     COVENANTS RELATED TO CONDUCT OF BUSINESS

SECTION 5.1           Conduct of Business of the Company and ePenzio, Inc.......................................47

SECTION 5.2           Conduct of Business of Parent.............................................................50

SECTION 5.3           Access to Information.....................................................................50

                                                    Article VI
                                               ADDITIONAL AGREEMENTS

SECTION 6.1           Preparation of S-4 and the Proxy Statement................................................51

SECTION 6.2           Letter of Accountants.....................................................................52

SECTION 6.3           Meeting...................................................................................52

SECTION 6.4           Reasonable Best Efforts...................................................................53

SECTION 6.5           Acquisition Proposals.....................................................................54

SECTION 6.6           Public Announcements......................................................................56

SECTION 6.7           Directors' and Officers' Indemnification and Insurance....................................56

SECTION 6.8           Notification of Certain Matters...........................................................57

SECTION 6.9           Tax-Free Reorganization Treatment.........................................................57

SECTION 6.10          Employee Matters..........................................................................58

SECTION 6.11          Company Affiliate Agreements..............................................................59

SECTION 6.12          SEC and Other Filings.....................................................................59

SECTION 6.13          Fees and Expenses.........................................................................59
</TABLE>

                                      iii
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                                   (continued)
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<S>     <C>           <C>                                                                                       <C>

SECTION 6.14          Obligations of Merger Sub.................................................................59

SECTION 6.15          Antitakeover Statutes.....................................................................59

SECTION 6.16          Parent Board Seats........................................................................59

SECTION 6.17          Delivery of Disclosure Schedules..........................................................60

                                                    Article VII
                                     CONDITIONS TO CONSUMMATION OF THE MERGER

SECTION 7.1           Conditions to Each Party's Obligations to Effect the Merger...............................60

SECTION 7.2           Conditions to the Obligations of Parent and Merger Sub....................................60

SECTION 7.3           Conditions to the Obligations of the Company..............................................62

                                                   Article VIII
                                          TERMINATION; AMENDMENT; WAIVER

SECTION 8.1           Termination by Mutual Agreement...........................................................63

SECTION 8.2           Termination by Either Parent or the Company...............................................63

SECTION 8.3           Termination by the Company................................................................64

SECTION 8.4           Termination by Parent.....................................................................64

SECTION 8.5           Effect of Termination and Abandonment.....................................................65

SECTION 8.6           Amendment.................................................................................65

SECTION 8.7           Extension; Waiver.........................................................................66

                                                    Article IX
                                                   MISCELLANEOUS

SECTION 9.1           Entire Agreement; Assignment..............................................................66

SECTION 9.2           Nonsurvival of Representations and Warranties.............................................66

SECTION 9.3           Notices...................................................................................66

SECTION 9.4           Governing Law.............................................................................67

SECTION 9.5           Descriptive Headings......................................................................67

SECTION 9.6           Parties in Interest.......................................................................67

SECTION 9.7           Severability..............................................................................68

SECTION 9.8           Specific Performance......................................................................68

SECTION 9.9           Counterparts..............................................................................68

SECTION 9.10          Interpretation............................................................................68

SECTION 9.11          Definitions...............................................................................69
</TABLE>
                                       iv
<PAGE>

EXHIBITS
--------

Company Affiliate Agreement                 A
Lock-Up Agreement.                          B
Company Certificate                         C
Parent Certificate                          D


                                       v

<PAGE>