PLAN AND AGREEMENT OF MERGER

     THIS PLAN AND AGREEMENT OF MERGER (this  "Agreement") is entered into as of
the  15th  day of  June,  2001,  by  and  among  HealthStar  Corp.,  a  Delaware
corporation  ("HealthStar"),  BS Acquisition Corp., a New York corporation which
is a wholly owned subsidiary of HealthStar ("Merger Sub") (HealthStar and Merger
Sub collectively, the "HealthStar Parties"), BlueStone Capital Corp., a New York
corporation  ("BlueStone"),   which  is  the  successor  in  interest  to  Whale
Securities Co., L.P. (the "Predecessor"), and William G. Walters ("Walters") and
Matthew A. Gohd  ("Gohd")  (each of Walters and Gohd are  sometimes  referred to
individually  as a "Principal  Shareholder"  and  collectively as the "Principal
Shareholders").  Capitalized  terms  used in this  Agreement  have the  meanings
ascribed to them in Annex 1 hereto.

                                    RECITALS

     WHEREAS, BlueStone is a full service broker dealer which is a member of the
National Association of Securities Dealers, Inc.; and

     WHEREAS,  a majority  of the  BlueStone  Shares are owned by the  Principal
Shareholders; and

     WHEREAS, the HealthStar Parties,  BlueStone and the Principal  Shareholders
are desirous of effecting a merger,  all upon the terms and conditions set forth
herein.

         NOW,  THEREFORE,  the HealthStar  Parties,  BlueStone and the Principal
Shareholders,   intending   to  be  legally   bound,   for  good  and   valuable
consideration,  the receipt  and  sufficiency  of which is hereby  acknowledged,
hereby represent, warrant, covenant, and agree as follows:

                                   SECTION 1:
                                   THE MERGER

     1.1. Merger. Subject to the terms and conditions of this Agreement,  Merger
Sub shall be merged with and into BlueStone in a transaction intended to qualify
as a tax free  reorganization  in accordance  with Section  368(a)(2)(E)  of the
Code.

                                   SECTION 2:
                                 TERMS OF MERGER

     2.1.  Terms of Merger;  Effective  Time. The terms of merger (the "Merger")
are:

          (a) Merger Sub shall be merged with and into  BlueStone in  accordance
     with the statutory provisions of New York law.

          (b) BlueStone  shall be the surviving  corporation,  and the corporate
     identity, existence,  purposes, powers, franchises,  rights, and immunities
     of BlueStone  shall continue  unaffected and unimpaired by the Merger.  The
     Certificate of Incorporation and By-Laws,  each as heretofore  amended,  of
     BlueStone  shall  remain in effect  and  unaltered  as the  Certificate  of
     Incorporation  and  By-Laws  of the  surviving  corporation,  and the  duly
     qualified and acting

<PAGE>

     directors  and  officers  of  BlueStone  immediately  prior to the time the
     Merger  becomes  effective,  shall be the  directors  and  officers  of the
     surviving corporation. The corporate identity, existence, purposes, powers,
     franchises,  rights, liabilities,  obligations and immunities of Merger Sub
     shall be  merged  into  BlueStone,  and  BlueStone  shall  be fully  vested
     therewith.

          (c) Simultaneously  with the Closing,  the Merger shall be effected by
     filing  with the New York  Secretary  of  State's  Office  ("NY  SOS")  the
     Certificate  of Merger and the time at which the  Certificate  of Merger is
     accepted by NY SOS shall be the "Effective Time" of the Merger.  HealthStar
     shall cause the  Certificate  of Merger to be so filed and  recorded on the
     Closing Date.

          (d)  The  separate   existence  of  Merger  Sub,   except  insofar  as
     specifically  otherwise provided by law, shall cease at the Effective Time,
     whereupon BlueStone and Merger Sub shall become a single corporation.

          (e) At the Effective  Time,  without any action by the holder thereof,
     (i) all of the issued and  outstanding  shares of any designation of Merger
     Sub shall be deemed  cancelled  and void,  and shall be converted  into and
     shall   represent   the  right  to  receive  one  share  of  the  surviving
     corporation,  and (ii) as  consideration  for the  Merger,  the  shares  of
     capital stock of BlueStone issued and outstanding  immediately prior to the
     Effective  Time shall by virtue of the Merger be deemed  cancelled and void
     and converted  into and, when added to the shares to be issued  pursuant to
     Section  3.20(b),  shall  represent the right to receive  215,000 shares of
     Class A Convertible  Preferred Stock of HealthStar (the "Preferred Stock"),
     the rights and  designation  of which are  attached  hereto as Exhibit  2.1
     (which  rights  shall  include (x) that each share of the  Preferred  Stock
     shall be convertible  automatically,  upon the amendment of the Certificate
     of Incorporation of HealthStar to provide  sufficient  authorized shares of
     Common Stock  therefor,  into One Hundred  (100) shares of Common Stock and
     (y) the right to vote with  Common  Stock on an as  converted  basis)  (the
     shares of  Preferred  Stock to be so issued and the shares of Common  Stock
     into  which  they  are  converted  to be  collectively  referred  to as the
     "Consideration Shares"). Based on the representations and warranties of the
     Principal Shareholders,  the number of Consideration Shares to be issued to
     each shareholder of BlueStone is as set forth in Schedule 3.19 hereto.  The
     numbers of shares set forth herein  shall be adjusted for stock  dividends,
     stock splits, reverse stock splits or similar events.  HealthStar shall not
     be   obligated   to   register   for  resale  any   Consideration   Shares.
     Notwithstanding  anything  contained in this Section 2.1(e), if the private
     placement of shares of Common Stock of BlueStone described in Schedule 3.19
     hereto is  consummated,  the  Consideration  Shares  shall be  increased by
     .06458192  shares  of  Preferred  Stock for each  share of Common  Stock of
     BlueStone issued in such private placement.

     2.2.   Resignations.   At  the   Closing,   HealthStar   will  receive  the
resignations, effective as of the Effective Time, of each director of HealthStar
other than Zirk  Engelbrecht  and Edward Chism.  As of the Effective  Time, Zirk
Engelbrecht  and Edward  Chism,  as the  remaining  directors,  shall  elect the
following  Persons as directors of HealthStar  to fill the vacancies  created by
the foregoing resignations,  each to serve in the class set forth opposite their
respective  names below and to hold office until the next  election of the class
for which such directors shall have been chosen and until their successors shall
be elected and qualified:



                                      -2-
<PAGE>

                                            Class whose term expires at the
     Name                                   annual meeting of stockholders in:
     ----                                   ----------------------------------
     William G. Walters                                     2003
     Matthew A. Gohd                                        2003
     Joseph McSherry                                        2002
     (Nominee to be designated by
     Messrs. Walters, Gohd and McSherry)                    2001
     (Nominee to be designated by
     Messrs. Engelbrecht and Chism)                         2001

provided,  however, that the to-be-designated nominees mentioned above shall not
be  disqualified  from serving on the Board of Directors  under the rules of the
NASD or render  HealthStar  ineligible for listing on the Nasdaq Stock Market or
any National Securities Exchange.

     2.3. Closing. The closing (the "Closing") of the transactions  contemplated
by this Agreement shall take place within one (1) business day after the receipt
of such  approvals by the NASD of the Merger as is required,  provided  that the
parties will proceed with the Closing  after the date hereof if they  reasonably
believe that no impediment to such Closing exists.  The Closing shall take place
at the offices of Blank Rome Tenzer Greenblatt LLP, The Chrysler  Building,  405
Lexington  Avenue,  New York, New York 10174. The day on which the Closing shall
take place shall be sometimes referred to herein as the "Closing Date."

                                   SECTION 3:
                         REPRESENTATIONS AND WARRANTIES
                            OF PRINCIPAL SHAREHOLDERS

     The  Principal  Shareholders,  severally  and not  jointly,  represent  and
warrant the following to the HealthStar  Parties as of the date hereof and as of
the Closing Date (except for  representations  and warranties that speak as of a
specific date or time, in which case, such  representations and warranties shall
be true  and  complete  as of such  date  or  time)  it  being  understood  that
representations  with respect to the  Principal  Shareholders  are being made by
each Principal Shareholder only with respect to himself:

     3.1.   Organization   of  BlueStone.   BlueStone  is  a  corporation   duly
incorporated, validly existing, and in good standing under the laws of the State
of New York.  BlueStone has the requisite  corporate power and authority to own,
lease,  and  operate  its  properties,  to  carry  on its  business  where  such
properties  are  now  owned,  leased,  or  operated  and  such  business  is now
conducted.  BlueStone is qualified  to do business as a foreign  corporation  in
each  jurisdiction  where the  failure  to so  qualify  would  have a  BlueStone
Material  Adverse Effect.  Schedule 3.1 is a list of all  jurisdictions in which
BlueStone currently is registered and is doing business.  Except as set forth on
Schedule 3.1, BlueStone is not a participant in any joint venture or partnership
with any other Person with respect to any part of the operation of its business.

     3.2. Books and Records.  The books of account,  minute books,  stock record
books, and other records of BlueStone,  all of which have been made available to
HealthStar,  are  complete  and correct in all  material  respects and have been
maintained  in accordance  with sound


                                      -3-
<PAGE>

business  practices.   The  minute  books  of  BlueStone  contain  accurate  and
substantially  complete  records of all meetings held of, and  corporate  action
taken by, the stockholders,  the Board of Directors, and committees of the Board
of Directors of BlueStone.  At the Closing,  all of those books and records will
be in the possession of BlueStone.

     3.3. Absence of Conflicting  Agreements.  As to BlueStone and the Principal
Shareholders,  subject to obtaining the necessary NASD approvals,  the execution
and  delivery  of  this  Agreement  and  the  consummation  of the  transactions
contemplated by this Agreement (with or without the giving of notice,  the lapse
of time, or both): (a) do not require the Consent of any third party the failure
of which to obtain would have a BlueStone  Material Adverse Effect; (b) will not
conflict with any provision of the  Certificate of  Incorporation,  By-Laws,  or
other organizational  documents of BlueStone or any Principal  Shareholder which
conflict would have a BlueStone  Material Adverse Effect;  (c) will not conflict
with, result in a material breach of, or constitute a material default under any
applicable Order, Legal Requirement, or ruling of any court or Governmental Body
to which  BlueStone or any  Principal  Shareholder  is subject  which  conflict,
breach or default would have a BlueStone  Material Adverse Effect;  (d) will not
conflict with,  constitute  grounds for  termination  of, result in a breach of,
constitute a default  under,  or  accelerate or permit the  acceleration  of any
performance  required  by the  terms of,  any  material  agreement,  instrument,
license, or permit to which BlueStone or any Principal Shareholder is a party or
by which  BlueStone or its assets or any Principal  Shareholder or any Principal
Shareholder's assets may be bound, which conflict, breach, termination,  default
or acceleration would have a BlueStone Material Adverse Effect; and (e) will not
create any claim,  liability,  mortgage,  lien,  pledge,  condition,  charge, or
encumbrance of any nature whatsoever upon any of the assets of BlueStone,  which
would have a BlueStone  Material  Adverse  Effect,  or upon any of the BlueStone
Shares.  To the Knowledge of the Principal  Shareholders,  except for filings in
connection  with obtaining NASD approvals as set forth above,  and the filing of
the  Certificate of Merger,  no filing with any  Governmental  Body or any other
third  party is  required  to  consummate  this  Agreement  or the  transactions
contemplated hereby.

     3.4. Governmental Authorizations. BlueStone possesses and is in substantial
compliance with all SEC, NASD and applicable state  Governmental  Authorizations
that are required to conduct the broker-dealer  business of BlueStone including,
without limitation, the Employee Licenses, except where the failure to obtain or
comply with such Governmental  Authorization would not have a BlueStone Material
Adverse Effect.  Each of such Governmental  Authorizations is listed on Schedule
3.4.  Each of such  Governmental  Authorizations  is valid and in full force and
effect and neither  BlueStone nor any of its Employees  received in writing,  at
any time since January 1, 1998,  other than as set forth on BlueStone's Form BD,
any notice or other  communication  from any Governmental Body regarding (i) any
actual or alleged  violation of or failure to comply with any  material  term or
requirement of any  Governmental  Authorization,  or (ii) any actual or proposed
revocation,   withdrawal,   suspension,   cancellation,   termination   of,   or
modification  to any  Governmental  Authorization,  except as may be required to
consummate the transaction contemplated hereby.

     3.5. Real  Property.  Schedule 3.5 contains a complete  description  of all
Real Property owned or leased by BlueStone (including street address, owner, and
BlueStone's use thereof).  The Real Property listed on Schedule 3.5 comprise all
interests  in real  property  necessary  to  conduct  BlueStone's  business  and
operations as now  conducted,  and each  leasehold or


                                      -4-
<PAGE>

subleasehold interest on Schedule 3.5 is legal, valid, binding, enforceable, and
in full force and effect  except where the failure to have such valid  leasehold
interest would not have a BlueStone Material Adverse Effect. To the Knowledge of
the  Principal  Shareholders,  no other party  thereto is in  material  default,
violation,  or breach under any lease or sublease, and no event has occurred and
is  continuing  that  constitutes  (with  notice or  passage  of time or both) a
material  default,  violation,  or breach  thereunder.  To the  Knowledge of the
Principal Shareholders,  (i) BlueStone has not received any notice of a default,
offset,  or counterclaim  under any lease or sublease with respect to any of the
Real  Property;  (ii) as of the  date  hereof,  BlueStone  enjoys  peaceful  and
undisturbed  possession  of the leased Real  Property;  and so long as BlueStone
fulfills its obligations under the lease(s) therefor,  BlueStone has enforceable
rights to non-disturbance  and quiet enjoyment against its lessor or sub-lessor;
and (iii) no third party  holds any  interest  in the leased  premises  with the
right  to  foreclose  upon  BlueStone's  leasehold  or  subleasehold   interest.
BlueStone has legal and practical access to all of the Leased Real Property.

     3.6. Tangible Personal  Property.  Schedule 3.6 lists the Tangible Personal
Property comprising all material items of tangible personal property (which, for
purposes of this  Section  3.6,  shall mean such items which have an  individual
value  greater  than  $25,000)  necessary  to conduct  BlueStone's  business and
operations as now  conducted.  To the  Knowledge of the Principal  Shareholders,
BlueStone  owns and has good title to each item of  Tangible  Personal  Property
described in Schedule 3.6 and none of such Tangible  Personal  Property owned by
BlueStone is subject to any security  interest,  mortgage,  pledge,  conditional
sales   agreement,   or  other  lien  or   encumbrance,   except  for  Permitted
Encumbrances. To the Knowledge of the Principal Shareholders, with allowance for
normal  repairs,  maintenance,  wear,  and  obsolescence,  each material item of
Tangible  Personal  Property  described  in  Schedule  3.6 is in good  operating
condition and repair and is available for immediate use in BlueStone's  business
and operations.

     3.7. Contracts. Schedule 3.7 lists all material written BlueStone Contracts
and true and complete  descriptions  of all material  oral  BlueStone  Contracts
(including any amendments and other modifications to such Contracts) ("BlueStone
Material  Contracts")  (which,  for  purposes of this  Section,  shall mean such
Contracts that provide for annual payments or receipts in excess of $50,000). To
the  Knowledge of the  Principal  Shareholders,  all of the  BlueStone  Material
Contracts are in full force and effect and are valid,  binding,  and enforceable
in accordance  with their terms except as the  enforceability  of such Contracts
may be affected by bankruptcy,  insolvency, or similar laws affecting creditors'
rights  generally  and by judicial  discretion in the  enforcement  of equitable
remedies.  BlueStone is not and to the Knowledge of Principal  Shareholders,  no
other party  thereto is in default,  violation,  or breach  under any  BlueStone
Material Contract,  and no event has occurred and is continuing that constitutes
(with  notice  or  passage  of time or both) a  default,  violation,  or  breach
thereunder  other than  defaults,  violations or breaches which would not have a
BlueStone   Material   Adverse  Effect.   To  the  Knowledge  of  the  Principal
Shareholders,  other than in the Ordinary  Course of  Business,  no party to any
BlueStone  Material  Contract has given notice to BlueStone of its intention (a)
to terminate  such Contract or amend the terms  thereof;  (b) to refuse to renew
such  Contract  upon  expiration of its term; or (c) to renew such Contract upon
expiration  only on terms and  conditions  that are more  onerous than those now
existing.  The  Principal  Shareholders  are not,  and, to the  Knowledge of the
Principal Shareholders, no officer, director, agent or Employee is, in breach of
any  enforceable  Contract  with any third party that limits the ability of such
officer, director, agent or Employee to act as such on behalf of BlueStone.



                                      -5-
<PAGE>

     3.8.  Intangibles.  Schedule  3.8  is a  true  and  complete  list  of  all
Intangibles  (exclusive  of  Governmental  Authorizations)  that are required to
conduct  BlueStone's  business and operations as now  conducted,  the absence of
which would have a BlueStone  Material  Adverse Effect,  all of which are to the
Knowledge of the Principal  Shareholders  valid and  uncontested.  BlueStone has
provided or made available to HealthStar copies of all documents establishing or
evidencing  the  Intangibles  listed on Schedule  3.8. To the  Knowledge  of the
Principal  Shareholders  BlueStone owns or has a valid license to use all of the
Intangibles  listed on Schedule 3.8. Except as set forth on Schedule 3.8, to the
Knowledge of the Principal Shareholders BlueStone has not received any notice or
demand alleging that BlueStone is infringing upon or otherwise  acting adversely
to any  trademarks,  service  marks,  trade names,  service  names,  copyrights,
patents, patent applications, know-how, methods, processes or other intellectual
property of any other Person, and to the Knowledge of the Principal Shareholders
there is no claim,  proceeding  or action  pending or  threatened  with  respect
thereto.

     3.9.  Title to  Properties.  Except as disclosed in Schedule 3.5 or 3.6, to
the Knowledge of the Principal  Shareholders,  BlueStone has good and marketable
title to its assets and  properties,  except  where the  failure to obtain  such
marketable  title would not have a  BlueStone  Material  Adverse  Effect and its
assets and properties are not subject to any mortgages, pledges, liens, security
interests,  encumbrances,  or other  charges  or rights of others of any kind or
nature except for Permitted Encumbrances.

     3.10.  Financial  Statements.  BlueStone has  delivered to  HealthStar  the
following  with  respect to  BlueStone  or the  Predecessor,  as the case may be
(collectively, the "Financial Statements"): (a) the audited financial statements
for the period ended  December 31, 2000, and (b) the Focus report for the period
ended March 31, 2001. Each of the Financial Statements  (including,  in the case
of the audited  Financial  Statements,  the notes thereto):  (i) is accurate and
complete in all material  respects,  (ii) is consistent in all material respects
with the books and records of BlueStone,  (iii) fairly  presents in all material
respects  the  financial  condition  and  results of  operations  of  BlueStone,
consistently  applied,  as of the dates and for the periods  set forth  therein,
except that the unaudited  interim  financial  statements were or are subject to
normal and recurring year-end  adjustments which were not or are not expected to
be material in amount,  and (iv) except as set forth in Schedule 3.10, have been
prepared in accordance  with GAAP.  Each of the Additional  BlueStone  Financial
Statements (as defined in Section 5.5): (i) will be accurate and complete in all
material  respects,  (ii) will be consistent  in all material  respects with the
books and records of  BlueStone  and (iii) will fairly  present in all  material
respects  the  financial  condition  and  results of  operations  of  BlueStone,
consistently  applied, as of the dates and for the periods set forth therein. No
financial  statements of any Person other than BlueStone are required by GAAP to
be included in the financial  statements  of  BlueStone.  Except as set forth in
Schedule 3.10,  BlueStone has no liabilities or obligations of any nature except
for  liabilities or obligations  reflected or reserved  against in the Financial
Statements and current  liabilities  incurred in the Ordinary Course of Business
since the dates thereof.

     3.11. Tax Matters.

          (a)  Since  January  1,  1998,  to  the  Knowledge  of  the  Principal
     Shareholders,  except as set forth on Schedule 3.11(a) hereto and except as
     would not have a BlueStone  Material  Adverse  Effect:



                                      -6-
<PAGE>

               (i) All Tax Returns  required to be filed by BlueStone  have been
          filed when due in a timely  fashion and all such Tax Returns are true,
          correct and complete.

               (ii)  BlueStone has paid in full on a timely basis all Taxes owed
          by it that were payable on or prior to the date hereof, whether or not
          shown on any Tax Return.

               (iii) The amount of  BlueStone's  liability  for unpaid Taxes did
          not,  as of  December  31,  2000  exceed  the  amount  of the  current
          liability  accruals  for such Taxes  (excluding  reserves for deferred
          Taxes) reflected on the Financial Statements.

               (iv)  BlueStone  has  withheld  and paid over to the  proper  Tax
          Authority all Taxes  required to have been withheld and paid over (and
          complied  with  all  information   reporting  and  backup  withholding
          requirements,  including  maintenance of required records with respect
          thereto) in connection with amounts paid to any employee,  independent
          contractor, creditor, or other third party.

               (v)  BlueStone  has  received  no  notice  of any Tax  Proceeding
          currently  pending with respect to it and  BlueStone  has not received
          notice  from any Tax  Authority  that it  intends  to  commence  a Tax
          Proceeding.

               (vi) No  waiver or  extension  by  BlueStone  of any  statute  of
          limitations  is currently  in effect with  respect to the  assessment,
          collection, or payment of Taxes of BlueStone or for which BlueStone is
          liable.

               (vii)  BlueStone  has not  requested  any  extension  of the time
          within which to file any Tax Return of BlueStone  that is currently in
          effect.

               (viii) There are no liens on the assets of BlueStone  relating or
          attributable to Taxes (except liens for Taxes not yet due).

               (ix)  BlueStone  is not and has not been at any time  during  the
          preceding   five  years  a  "United   States  real  property   holding
          corporation" within the meaning of Section 897(c)(2) of the Code.

               (x)  BlueStone  has not entered into an agreement or consent made
          under Section 341(f) of the Code.

               (xi) BlueStone has not agreed to, nor is it required to, make any
          adjustments  under Section  481(a) of the Code as a result of a change
          in accounting methods.

               (xii)  BlueStone is not and has not at any time been a party to a
          tax sharing, tax indemnity or tax allocation agreement,  and BlueStone
          has not  assumed  the Tax  Liability  of any  other  Person  under any
          Contract.

               (xiii)  BlueStone is not and has not at any time been a member of
          an affiliated  group filing a  consolidated  federal income tax return
          and does not have any  liability  for the Taxes of  another  entity or
          person  under  Section  1.1502-6 of the Treasury  Regulations  (or any
          similar provision of state,  local or foreign law), as a transferee or
          successor, or otherwise.



                                      -7-
<PAGE>

               (xiv) BlueStone is not a party to any joint venture,  partnership
          or other arrangement that is treated as a partnership for U.S. federal
          income tax purposes.

               (xv) None of  BlueStone's  assets are  treated as "tax exempt use
          property" within the meaning of Section 168(h) of the Code.

               (xvi) Until April 23, 2001,  BlueStone  had in effect an election
          under  Section  1362 of the Code to be treated as an "S"  Corporation,
          but is not currently  treated as an "S" Corporation for federal income
          tax purposes.

          (b) BlueStone has furnished or otherwise  made available to HealthStar
     correct and complete copies of (i) all income, franchise and other material
     Tax  Returns  filed  by  BlueStone  since  January  1,  1998;  and (ii) all
     examination  reports,  statements of  deficiencies  and closing  agreements
     received by BlueStone relating to Taxes.

          (c) The Tax Return of the  Predecessor for the year ended December 31,
     2000  accurately  reflects (i)  BlueStone's  basis in its assets,  (ii) the
     amount  of any net  operating  loss,  net  capital  loss and any  other Tax
     carryovers of BlueStone  (including losses and other carryovers  subject to
     any  limitations),  and (iii) material Tax elections made by BlueStone.  To
     the Knowledge of the Principal  Shareholders,  except as stated in Schedule
     3.11(c),  BlueStone  has no net  operating  losses or other Tax  attributes
     presently subject to limitation under Code Sections 382, 383 or 384, or the
     federal consolidated return regulations.

     3.12.  Insurance.  As of the date of this  Agreement,  BlueStone  maintains
insurance  policies  covering all of its assets and  properties  and the various
occurrences  which may arise in  connection  with the operation of its business,
including  director and officer and errors and omissions  policies  covering its
officers and directors,  except where the failure to carry such insurance  would
not have a BlueStone  Material Adverse Effect. To the Knowledge of the Principal
Shareholders,  such  policies  are in full force and effect,  all  premiums  due
thereon have been paid, and BlueStone has complied in all material respects with
the  provisions  of such  policies.  Such  insurance  policies are of comparable
amounts and coverage as that which companies engaged in similar businesses would
maintain in accordance with good business  practice.  BlueStone has not received
(a) any notices of any pending or  threatened  terminations,  (b) any refusal of
coverage,  (c) any notice that a defense will be afforded  with  reservation  of
rights or (d) any notice of  significant  premium  increases with respect to any
such  policies,  and such  policies  will  not be  modified  as a  result  of or
terminate or lapse by reason of the transactions contemplated by this Agreement.
BlueStone  has given  timely  notice to the  insurer of all  claims  that may be
insured by the policies described above.

     3.13. Reports. To the Knowledge of the Principal Shareholders, all material
returns,  reports,  and statements that BlueStone is currently  required to file
with the SEC,  the NASD or any  other  Governmental  Body  have  been  filed and
satisfy all applicable Legal Requirements  except where the failure to make such
filings would have a BlueStone Material Adverse Effect. To the extent any notice
of noncompliance  has been received by BlueStone from a Governmental  Body, such
noncompliance,  if material, was corrected by BlueStone and, to the Knowledge of
the Principal Shareholders, as a result of such correction there is no BlueStone
Material Adverse Effect therefrom.



                                      -8-
<PAGE>

     3.14. Personnel and Employee Benefits.

          (a)  Employees  and  Compensation.  Schedule  3.14 contains a true and
     complete list of all Employees  employed by BlueStone as of April 30, 2001.
     Schedule  3.14  also  contains  a true and  complete  list of all  employee
     benefit  plans as such  term is  defined  in  Section  3.3 of the  Employee
     Retirement Income Security Act of 1974, as amended ("ERISA") (collectively,
     "Benefit  Plans") or arrangements  (collectively,  "Benefit  Arrangements")
     covering the officers and employees employed by BlueStone.

          (b) BlueStone Benefit Plans. BlueStone does not sponsor,  maintain, or
     contribute to any Benefit  Plans other than as listed on Schedule  3.14. To
     the  Knowledge of the  Principal  Shareholders,  each Benefit Plan complies
     currently and has been maintained in substantial  compliance with its terms
     and,  both as to form  and in  operation,  with all  material  requirements
     prescribed by any and all material statutes,  orders, rules and regulations
     that are  applicable to such plans,  including  ERISA and the Code,  except
     where the failure to comply would have a BlueStone Material Adverse Effect.

          (c)  BlueStone  Benefit  Arrangements.  To the  Knowledge of Principal
     Shareholders,  each Benefit  Arrangement has been maintained in substantial
     compliance with its terms and with the material requirements  prescribed by
     all statutes,  orders,  rules and  regulations  that are applicable to such
     Benefit Arrangement. Except as set forth on Schedule 3.14, BlueStone has no
     written contract prohibiting the termination of any Employee.

          (d)  Labor  Relations.  Except  as  set  forth  in  Schedule  3.14(d),
     BlueStone  is  not a  party  to or  subject  to any  collective  bargaining
     agreement. Since January 1, 1998, with respect to the Employees,  BlueStone
     has not  received  written  notice  of an  alleged  failure  to comply in a
     material way with any laws, rules or regulations relating to the employment
     of labor,  including those related to wages,  hours,  occupational  safety,
     discrimination,  and the  payment  of social  security  and  other  payroll
     related  taxes.  No  proceedings  are pending or, to the  Knowledge  of the
     Principal  Shareholders,  threatened  between  BlueStone  and any  Employee
     (singly or  collectively).  No labor union or other  collective  bargaining
     unit represents or, to the Knowledge of the Principal Shareholders,  claims
     to represent any of the Employees.

     3.15. Legal Actions and Orders.

          (a) BlueStone has  delivered to the  HealthStar  Parties a copy of its
     Form BD and a log of all written  complaints  received by  BlueStone  since
     January 1, 2000, and has made available to the HealthStar  Parties the file
     of  complaints   described  in  such  log,  which  file  is  maintained  by
     BlueStone's Chief Compliance Officer. Except as disclosed on Schedule 3.15,
     on BlueStone's  Form BD, or in such file of complaints,  there is no claim,
     legal  action,   counterclaim,   suit,  arbitration,   or  other  legal  or
     administrative  proceeding,  or Tax Proceeding pending or, to the Knowledge
     of the Principal Shareholders,  threatened against BlueStone or relating to
     the assets used by  BlueStone,  or the business or operations of BlueStone,
     which, if decided adversely to BlueStone,  would have a BlueStone  Material
     Adverse Effect.

          (b) To the  Knowledge  of the  Principal  Shareholders,  except as set
     forth in Schedule 3.15 or on BlueStone's Form BD:



                                      -9-
<PAGE>

               (i) there is no Order to which  BlueStone  or the assets owned or
          used by BlueStone, or to which BlueStone's business or operations,  is
          subject;

               (ii) neither  Principal  Shareholder is subject to any Order that
          relates to the  business of, or any of the assets owned or used by, or
          to the business or operations of, BlueStone; and

               (iii) to the Knowledge of the Principal Shareholder,  no officer,
          director, agent, or employee of BlueStone is subject to any Order that
          prohibits such officer,  director, agent, or employee from engaging in
          or  continuing  any  conduct,  activity,  or practice  relating to the
          business of BlueStone.

          (c) To the  Knowledge  of the  Principal  Shareholders,  except as set
     forth in BlueStone's Form BD,

               (i)  BlueStone  is,  and at all times  since  January 1, 1998 has
          been, in substantial compliance with all of the terms and requirements
          of each Order to which it, or any of the  assets  owned or used by it,
          or its business or operations, is or has been subject;

               (ii) no  event  has  occurred  or  circumstance  exists  that may
          constitute  or result in (with or  without  notice or lapse of time) a
          material   violation  of  or  failure  to  comply  with  any  term  or
          requirement  of any  Order to which  BlueStone,  or any of the  assets
          owned or used by BlueStone, or its business or operations, is subject;
          and

               (iii)  BlueStone  has not received in writing,  at any time since
          January   1,  2000  any  notice  or  other   communication   from  any
          Governmental  Body  regarding  any actual or alleged  violation of, or
          failure to comply with,  any term or requirement of any Order to which
          BlueStone,  or any of the assets  owned or used by  BlueStone,  or its
          business or operations, is or has been subject.

     3.16.  Compliance with Legal Requirements.  Except as set forth in Schedule
3.15 or 3.16 or on BlueStone's Form BD:

          (a) To the Knowledge of the Principal Shareholders,  BlueStone is, and
     at all times since January 1, 1998 has been, in substantial compliance with
     each Legal Requirement that is or was applicable to it or to the conduct or
     operation  of its  business or the  ownership  or use of any of its assets,
     except  where the failure to comply with such Legal  Requirement  would not
     have a BlueStone Material Adverse Effect;

          (b) BlueStone is, and at all times since January 1, 1998,  has been in
     compliance  with SEC Rule  15c-3(1) and Rule  15c-3(3)  and in  substantial
     compliance with the other provisions of Rule 15c-3.

          (c) To the  Knowledge  of the  Principal  Shareholders,  except as set
     forth in the log referred to in Section  3.15(a),  no event has occurred or
     circumstance  exists that (with or without notice or lapse of time) (A) may
     constitute  or result in a violation by  BlueStone  of, or a failure on the
     part of BlueStone to comply with,  any Legal  Requirement,  or (B) may give
     rise to any  obligation on the part of BlueStone to  undertake,  or to bear
     all or any  portion  of the cost of,


                                      -10-
<PAGE>

     any  remedial  action  of any  nature,  except,  in each  case  where  such
     violation  or failure was cured or such  remedial  action was taken and, to
     the Knowledge of the Principal  Shareholders,  as a result of such remedial
     action there is no BlueStone Material Adverse Effect therefrom; and

          (d) BlueStone has not received, at any time since January 1, 1998, any
     notice or other  communication from any Governmental Body regarding (A) any
     actual or  alleged  violation  of, or  failure  to comply  with,  any Legal
     Requirement,  or (B)  any  actual  or  alleged  obligation  on the  part of
     BlueStone to  undertake,  or to bear all or any portion of the cost of, any
     remedial  action of any  nature,  (i)  except,  in each  case,  where  such
     violation  or failure was cured or such  remedial  action was taken and, to
     the Knowledge of the Principal  Shareholders,  as a result of such remedial
     action there is no BlueStone  Material  Adverse  Effect  therefrom and (ii)
     except  for  notices  which  would not have a  BlueStone  Material  Adverse
     Effect.

     3.17.  Conduct of  Business in  Ordinary  Course.  Since March 31, 2001 and
through the date hereof,  BlueStone has conducted its business and operations in
the Ordinary  Course of Business and,  except as disclosed in Schedule 3.17, has
not:

          (a) made any material  increase in  compensation  payable or to become
     payable  to any of its  employees  other than those in the normal and usual
     course of  business or in  connection  with any change in an  officer's  or
     employee's  responsibilities,  or any bonus payment made or promised to any
     of its Employees,  or any material change in personnel  policies,  employee
     benefits,  or other  compensation  arrangements  affecting  its officers or
     employees;

          (b) made any sale,  assignment,  lease,  or other  transfer  of assets
     other  than in the  normal  and usual  course  of  business  with  suitable
     replacements being obtained therefor;

          (c) canceled any debts owed to or claims held by BlueStone outside the
     Ordinary Course of Business;

          (d) made any changes in BlueStone's accounting practices;

          (e) suffered any material write-down of the value of any assets or any
     material write-off as uncollectable of any accounts receivable;

          (f)  transferred  or granted  any right  under,  or  entered  into any
     settlement  regarding the breach or infringement  of, any license,  patent,
     copyright,  trademark, trade name, franchise, or similar right, or modified
     any existing right;

          (g) imposed any security interest upon any of its assets,  tangible or
     intangible;

          (h) made any material capital expenditures outside the Ordinary Course
     of Business;

          (i) made any material  capital  investment in or any loan to any other
     Person outside the Ordinary Course of Business;



                                      -11-
<PAGE>

          (j) created,  incurred,  assumed, or guaranteed more than Ten Thousand
     Dollars  ($10,000.00)  in  aggregate  indebtedness  for  borrowed  money in
     capitalized lease obligations;

          (k) made any or authorized  any change to  BlueStone's  Certificate of
     Incorporation or Bylaws;

          (l) issued,  sold, or otherwise  disposed of any of its capital stock,
     or granted any  options,  warrants,  or other  rights to purchase or obtain
     (including  upon  conversion,  exchange,  or  exercise)  any of its capital
     stock;

          (m) declared, set aside, or paid any dividend or made any distribution
     with respect to its capital stock (whether in cash or in kind) or redeemed,
     purchased, or otherwise acquired any of its capital stock;

          (n) experienced any material damage,  destruction, or loss (whether or
     not covered by insurance) to its property;

          (o) made any loan to, or entered into any other  transaction with, any
     of its directors,  officers,  and employees  outside the Ordinary Course of
     Business;

          (p)  granted  any  increase  in the  base  compensation  of any of its
     directors, officers, and employees outside the Ordinary Course of Business;

          (q) made any other material change of employment  terms for any of its
     directors, officers, and employees outside the Ordinary Course of Business;

          (r) made or  changed  any  material  Tax  election  or taken any other
     action with  respect to Taxes not in the  Ordinary  Course of Business  and
     consistent with past practices; or

          (s) committed to do any of the foregoing.

     3.18.  Insolvency  Proceedings.  (i)  BlueStone  is not and its  assets and
properties  are not the  subject  of any  pending  or, to the  Knowledge  of the
Principal  Shareholders,  threatened  insolvency  proceedings  of any character,
including,  without  limitation,   bankruptcy,   receivership,   reorganization,
composition  or  arrangement  with  creditors,  voluntary or  involuntary;  (ii)
BlueStone has not made an  assignment  for the benefit of creditors or taken any
action in  contemplation  of or which  would  constitute  a valid  basis for the
institution  of any such  insolvency  proceedings;  and (iii)  BlueStone  is not
insolvent nor will it become  insolvent as a result of the  consummation  of the
transactions contemplated by this Agreement.

     3.19. Capitalization. The authorized capital stock of BlueStone consists of
two classes of stock  consisting of (a) 25,000,000  shares of common stock,  par
value of $.01 per share,  and (b) 1,000,000 shares of preferred stock, par value
of $.01 per share, of which 1,942,000 shares of Common Stock,  200,000 shares of
Series A  Preferred  Stock and 300,000  shares of Series B  Preferred  Stock are
issued and outstanding and held by the Persons whose names and addresses as they
appear in the records of BlueStone  are set forth on Schedule  3.19.  All of the
outstanding  shares of BlueStone  capital stock have been validly issued and are
fully paid and  nonassessable.


                                      -12-
<PAGE>

Except  as  described  on  Schedule  3.19,  (a) no shares  of  capital  stock of
BlueStone  are held in treasury;  (b) there are no other  issued or  outstanding
equity securities of BlueStone;  (c) there are no outstanding stock appreciation
rights,  phantom stock rights,  profit  participation  rights,  or other similar
rights with respect to any capital  stock of  BlueStone;  (d) there are no other
issued or outstanding securities of BlueStone convertible or exchangeable at any
time into equity  securities of  BlueStone;  and (e) BlueStone is not subject to
any  commitment  or  obligation  that  would  require  the  issuance  or sale of
additional  shares of capital  stock of  BlueStone  at any time  under  options,
subscriptions,  warrants,  rights, or other obligations.  Except as set forth on
Schedule 3.19,  BlueStone does not have any  subsidiaries  and does not have any
equity interest in any  corporation,  partnership,  limited  liability  company,
joint venture, or other entity.

     3.20. Representations as to Principal Shareholders.

          (a) Principal  Shareholders  hereby  represent  and warrant that:  (i)
     BlueStone  has full power and authority to enter into this  Agreement,  and
     the  consummation of the  transactions  contemplated  hereby have been duly
     authorized  by all  necessary  action on the part of  BlueStone;  (ii) this
     Agreement and the  consummation  of the  transactions  contemplated by this
     Agreement have been duly authorized by all required  actions on the part of
     BlueStone; and (iii) this Agreement has been duly executed and delivered by
     each Principal Shareholder and BlueStone and constitutes a legal, valid and
     binding obligation of each Principal Shareholder and BlueStone, enforceable
     against each  Principal  Shareholder  and BlueStone in accordance  with its
     terms,  subject  to  applicable  bankruptcy,  insolvency,   reorganization,
     moratorium,  and other laws affecting the rights of creditors generally and
     to  the  exercise  of  judicial   discretion  in  accordance  with  general
     principles of equity, whether applied by a court of law or equity.

          (b) No  Principal  Shareholder  nor  anyone  acting  on  behalf of any
     Principal  Shareholder  has  employed  any broker or finder or incurred any
     liability for any brokerage fees, commissions or finders fees in connection
     with  the  Merger  and the  transactions  contemplated  by this  Agreement.
     However,  BlueStone is  responsible  for a finders fee payable in shares in
     connection with the Merger, which it will direct HealthStar to issue out of
     the Consideration Shares.

     3.21. No Material Adverse Change. There has not been any BlueStone Material
Adverse Change, except as set forth on Schedule 3.21.

     3.22.   Relationships  with  Related  Persons.  Neither  of  the  Principal
Shareholders nor any Related Person of any of the Principal  Shareholders or, to
the Knowledge of the Principal Shareholders,  of BlueStone has, or since January
1, 1999 has had, any interest in any property (whether real, personal,  or mixed
and whether  tangible  or  intangible),  used in or  pertaining  to  BlueStone's
business.  Except  as  set  forth  in  Schedule  3.22,  none  of  the  Principal
Shareholders,  nor any Related Person of the Principal  Shareholders  or, to the
Knowledge of the Principal Shareholders,  of BlueStone owns, or since January 1,
1999 has owned (of record or as a  beneficial  owner) an equity  interest or any
other  financial  or  profit  interest  in, a Person  that has (i) had  business
dealings or a material  financial  interest in any  transaction  with  BlueStone
other than business dealings or transactions conducted in the Ordinary Course of
Business  with  BlueStone  at  substantially  prevailing  market  prices  and on
substantially  prevailing market terms (other than the purchase of securities of
BlueStone by such  Persons) or (ii)  engaged in


                                      -13-
<PAGE>

competition  with  BlueStone (a "Competing  Business")  except for less than one
percent of the  outstanding  capital  stock of any  Competing  Business  that is
publicly traded on any recognized  exchange or in the  over-the-counter  market.
Except as set forth in Schedule 3.22, none of the Principal  Shareholders or any
Related  Person  of the  Principal  Shareholders  or,  to the  Knowledge  of the
Principal  Shareholders,  of BlueStone (with respect to Contracts) is a party to
any Contract with, or has any claim or right against, BlueStone.

     3.23. Investment Representations.  Each Principal Shareholder hereby makes,
with respect to himself, for the benefit of HealthStar,  and with respect to the
Consideration  Shares, the investment  representations  set forth in Section 5.2
hereof,  provided  that the  representation  set forth in Section  5.2(a)(ii) is
being made with  respect  to  HealthStar's  business  and  affairs.  Each of the
Principal  Shareholders  has received  and  reviewed  copies of the latest Forms
10-KSB and 10-QSB and all Forms 8-K and Proxy Statements since March 31, 2000 of
HealthStar and the financial statements contained therein.

     3.24.  Disclosure.  To the  Knowledge  of  the  Principal  Shareholders  no
representation  or warranty in this  Agreement and no statement in the Schedules
omit to state a  material  fact  necessary  to make  the  statements  herein  or
therein, in light of the circumstances in which they were made, not misleading.

     3.25. Aggregate Effect of BlueStone Material Adverse Effect Qualifiers.  To
the extent there would be a breach of any of the foregoing  representations  and
warranties set forth in this Section 3 but for the fact that such representation
or  warranty  contains  a  BlueStone  Material  Adverse  Effect  qualifier,  the
aggregate  of all such  breaches  would not have a  BlueStone  Material  Adverse
Effect.

                                   SECTION 4:
                         REPRESENTATIONS AND WARRANTIES
                            OF THE HEALTHSTAR PARTIES

     The HealthStar Parties, jointly and severally, represent and warrant to the
BlueStone  Shareholders,  as defined in Section  9.3, and to BlueStone as of the
date  hereof  and  as of  the  Closing  Date  (except  for  representations  and
warranties  that  speak as of a  specific  date or time,  in  which  case,  such
representations  and  warranties  shall be true and  complete as of such date or
time) as follows:

     4.1.  Corporate  Existence and Power.  Each of  HealthStar,  M(2),  Ltd., a
Maryland  corporation and wholly-owned  subsidiary of HealthStar  ("M(2)"),  and
Merger Sub is a  corporation  duly  incorporated,  validly  existing and in good
standing under the laws of the jurisdiction of their  respective  incorporation,
and are duly qualified to do business as a foreign  corporation  and are in good
standing  in each  jurisdiction  where the  failure to so  qualify  would have a
HealthStar  Material  Adverse  Effect,  and each of them has all corporate power
required to own, lease and operate its  respective  properties and assets and to
carry on its respective business.

     4.2.  Corporate  Authorization.  The  execution  and  delivery  by  each of
HealthStar and Merger Sub of this Agreement and the ancillary agreements hereto,
the consummation of the transactions  contemplated  hereby and thereby,  and the
performance  by  HealthStar  and  Merger


                                      -14-
<PAGE>

Sub of their  respective  obligations  hereunder and thereunder,  are within the
corporate  powers of HealthStar and Merger Sub and have been duly  authorized by
all necessary  corporate  action on the part of HealthStar  and Merger Sub. This
Agreement constitutes,  and each ancillary agreement when executed and delivered
by HealthStar  and/or Merger Sub pursuant to this Agreement will  constitute,  a
legal, valid and binding obligation of HealthStar and/or Merger Sub (as the case
may  be) in  accordance  with  its  terms,  subject  to  applicable  bankruptcy,
insolvency,  reorganization,  moratorium, and other laws affecting the rights of
creditors  generally  and to the exercise of judicial  discretion  in accordance
with general principles of equity, whether applied by a court of law or equity.

     4.3. Absence of Conflicting  Agreements.  As to the HealthStar  Parties and
M(2),  subject to obtaining  the  necessary  NASD  approvals,  the execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement  (with or without the giving of notice,  the lapse of time, or
both): (a) do not require the Consent of any third party the failure of which to
obtain would have a HealthStar  Material  Adverse Effect;  (b) will not conflict
with any  provision  of the  Certificate  of  Incorporation,  By-Laws,  or other
organizational  documents of the HealthStar  Parties which conflict would have a
HealthStar  Material  Adverse  Effect;  (c) will not conflict with,  result in a
material breach of, or constitute a material default under any applicable Order,
Legal  Requirement,  or ruling of any court or Governmental Body to which any of
the HealthStar Parties is subject which conflict, breach or default would have a
HealthStar  Material  Adverse  Effect;  (d) will not conflict  with,  constitute
grounds for termination  of, result in a breach of,  constitute a default under,
or  accelerate or permit the  acceleration  of any  performance  required by the
terms of, any material agreement, instrument, license, or permit to which either
of the  HealthStar  Parties  is a party or by  which  either  of the  HealthStar
Parties  or  either  of  their  assets  may be  bound  which  conflict,  breach,
termination,  default or acceleration  would have a HealthStar  Material Adverse
Effect; and (e) will not create any claim,  liability,  mortgage,  lien, pledge,
condition,  charge,  or  encumbrance  of any nature  whatsoever  upon any of the
assets  of  either of the  HealthStar  Parties  which  would  have a  HealthStar
Material Adverse Effect.  To the Knowledge of HealthStar,  except for filings in
connection with obtaining NASD approvals,  as set forth above, and the filing of
the  Certificate of Merger,  no filing with any  Governmental  Body or any other
third  party is  required  to  consummate  this  Agreement  or the  transactions
contemplated hereby, other than filings HealthStar is required to make by virtue
of being a public company.

     4.4. Capitalization. The authorized capital stock of HealthStar consists of
15,000,000  shares of Common Stock,  $.001 par value, of which 8,345,872  shares
are issued and outstanding on the date hereof and 1,000,000  shares of Preferred
Stock,  $.001 par value per share of which no shares are issued and  outstanding
on the date  hereof.  The shares of  Preferred  Stock to be issued to holders of
BlueStone  common  stock in the Merger and the shares of Common  Stock  issuable
upon  conversion of such shares will,  upon issuance of such shares of Preferred
Stock and upon conversion with respect to the Common Stock, be duly  authorized,
validly issued and fully paid and  non-assessable,  issued without  violation of
the  preemptive  rights of any Person.  There are no warrants,  options,  calls,
commitments  by or  agreements  to which  HealthStar is bound on the date hereof
relating to the issuance,  conversion or purchase of any shares of Common Stock,
or any other  capital stock of  HealthStar,  except as set forth on Schedule 4.4
attached hereto or except for options  granted by HealthStar  pursuant to option
plans in effect on the date hereof.



                                      -15-
<PAGE>

     4.5.  Interests in Other  Entities.  Other than National  Health Benefits &
Casualty  Corp., a Nevada  corporation  which is inactive,  Merger Sub and M(2),
HealthStar does not: (a) own, directly or indirectly, of record or beneficially,
any shares of voting stock or other equity securities of any other  corporation,
(b) have any ownership interest,  direct or indirect, of record or beneficially,
in any  unincorporated  entity, or (c) have any obligation,  direct or indirect,
present or contingent, (i) to purchase or subscribe for any interest in, advance
or loan  money to, or in any way make  investments  in, any  person,  or (ii) to
share any profits or capital investments or both.

     4.6. SEC Filings; Financial Statements.

          (a) Except as set forth on Schedule 4.6,  HealthStar  has timely filed
     all forms,  reports and documents  required to be filed by HealthStar  with
     the SEC,  including any amendments thereto  (collectively,  the "HealthStar
     SEC Reports").  The HealthStar SEC Reports (a) at the time filed,  complied
     in all material respects with the applicable requirements of the Securities
     Act and the  Securities  Exchange Act of 1934, as amended,  as the case may
     be,  and (b)  did  not at the  time  they  were  filed  (or if  amended  or
     superseded by a subsequent filing, then on the date of such filing) contain
     any untrue  statement of a material  fact or omit to state a material  fact
     required to be stated in such  HealthStar SEC Reports or necessary in order
     to make the statements in such HealthStar SEC Reports,  in the light of the
     circumstances under which they were made, not misleading.  To the Knowledge
     of the HealthStar Parties, there is no material adverse information omitted
     from  the  HealthStar  SEC  Reports  with  respect  to  HealthStar  which a
     reasonable  investor  would  consider  material  in  making  an  investment
     decision in a similar situation.

          (b) Each of the consolidated financial statements (including,  in each
     case,  any related  notes)  contained in the  HealthStar  SEC Reports,  the
     "HealthStar  Financial  Statements"),  (i) is  accurate  and  complete  and
     complied as to form in all material respects with the applicable  published
     rules and regulations of the SEC with respect  thereto,  (ii) is consistent
     in all material  respects with the books and records of  HealthStar,  (iii)
     was  prepared  in  accordance  with  GAAP  applied  on a  consistent  basis
     throughout the periods involved (except as may be indicated in the notes to
     such  financial  statements  or, in the case of  unaudited  statements,  as
     permitted by Form 10-QSB or 8-K  promulgated  by the SEC),  and (iv) fairly
     presented in all material respects the consolidated  financial  position of
     HealthStar  and  its  subsidiaries  as at  the  respective  dates  and  the
     consolidated  results  of its  operations  and cash  flows for the  periods
     indicated,  except that the unaudited interim financial  statements were or
     are subject to normal and recurring year-end  adjustments which were not or
     are  not  expected  to be  material  in  amount.  Each  of  the  Additional
     HealthStar  Financial  Statements  (as defined in Section 5.6): (i) will be
     accurate and complete in all material respects,  (ii) will be consistent in
     all material  respects with the books and records of  HealthStar  and (iii)
     will fairly  present in all material  respects the financial  condition and
     results of operations of HealthStar,  consistently applied, as of the dates
     and for the periods set forth therein. No financial statements of any other
     Person other than the  HealthStar  Parties and M(2) are required by GAAP to
     be included in the financial statements of HealthStar.

          (c) The  certificate of deposit issued by First  International  Bank &
     Trust  Ltd.  in the  amount of  $500,000  (the "CD") and the funds held for
     HealthStar  at  American  Equity  Management  Group,  Inc. in the amount of
     $2,524,201  (the  "American  Equity  Funds"),  all as


                                      -16-
<PAGE>

     described in Section  6.2(f),  represent  valid and binding  obligations of
     such entities to HealthStar  and can be liquidated by HealthStar on October
     11, 2001 in the case of the CD and  immediately in the case of the American
     Equity Funds.

     4.7. Absence of Certain  Changes.  Since March 31, 2001, there has not been
any Material Adverse Change with respect to HealthStar, M(2) or Merger Sub.

     4.8. Absence of Undisclosed  Liabilities.  Except for liabilities disclosed
in the HealthStar SEC Reports and liabilities  and  obligations  which would not
have a HealthStar Material Adverse Effect,  neither HealthStar,  M(2) nor Merger
Sub has  any  liabilities  or  obligations  of any  nature  whatsoever,  whether
accrued,  absolute,  contingent or otherwise  (including  but not limited to any
retained  liabilities or obligations  of any former or current  subsidiary,  the
assets or capital  stock of which was sold by  HealthStar),  which have not been
(i) in the case of liabilities and obligations of a type  customarily  reflected
on a  balance  sheet,  or (ii) in the case of other  types  of  liabilities  and
obligations,  described in Schedule 4.8 or any of the other Schedules  delivered
by HealthStar and Merger Sub pursuant hereto, or (iii) incurred, consistent with
past practice,  in the Ordinary Course of business since March 31, 2001.  Except
as described in Schedule 4.8, with respect to any current or former  Subsidiary,
the assets or stock of which have been sold,  HealthStar  has not  received  any
notice or claim from the  purchaser  or an affiliate  of the  purchaser  for any
indemnification obligations of HealthStar or its affiliates.

     4.9. Tax Matters.

          (a) To the  Knowledge of  HealthStar,  except as set forth on Schedule
     4.9(a)  hereto  and  except as would  have a  HealthStar  Material  Adverse
     Effect:

               (i) All Tax Returns  required to be filed by HealthStar have been
          filed when due in a timely  fashion and all such Tax Returns are true,
          correct and complete.

               (ii) HealthStar has paid in full on a timely basis all Taxes owed
          by it that were payable on or prior to the date hereof, whether or not
          shown on any Tax Return.

               (iii) The amount of  HealthStar  liability  for unpaid  Taxes did
          not, as of March 31,  2000 exceed the amount of the current  liability
          accruals  for such  Taxes  (excluding  reserves  for  deferred  Taxes)
          reflected on the Financial Statements.

               (iv)  HealthStar  has  withheld  and paid over to the  proper Tax
          Authority all Taxes  required to have been withheld and paid over (and
          complied  with  all  information   reporting  and  backup  withholding
          requirements,  including  maintenance of required records with respect
          thereto) in connection with amounts paid to any employee,  independent
          contractor, creditor, or other third party.

               (v)  HealthStar  has  received  no notice  of any Tax  Proceeding
          currently  pending with respect to it and  HealthStar has not received
          notice  from any Tax  Authority  that it  intends  to  commence  a Tax
          Proceeding.



                                      -17-
<PAGE>

               (vi) No waiver or  extension  by  HealthStar  of any  statute  of
          limitations  is currently  in effect with  respect to the  assessment,
          collection,  or payment of Taxes of HealthStar or for which HealthStar
          is liable.

               (vii)  HealthStar  has not  requested  any  extension of the time
          within which to file any Tax Return of HealthStar that is currently in
          effect.

               (viii) There are no liens on the assets of HealthStar relating or
          attributable to Taxes (except liens for Taxes not yet due).

               (ix)  HealthStar  is not and has not been at any time  during the
          preceding   five  years  a  "United   States  real  property   holding
          corporation" within the meaning of Section 897(c)(2) of the Code.

               (x)  HealthStar has not entered into an agreement or consent made
          under Section 341(f) of the Code.

               (xi)  HealthStar  has not agreed to, nor is it required  to, make
          any  adjustments  under  Section  481(a)  of the Code as a result of a
          change in accounting methods.

               (xii) HealthStar is not and has not at any time been a party to a
          tax sharing, tax indemnity or tax allocation agreement, and HealthStar
          has not  assumed  the Tax  Liability  of any  other  Person  under any
          Contract.

               (xiii) HealthStar is not and has not at any time been a member of
          an affiliated  group filing a  consolidated  federal income tax return
          and does not have any  liability  for the Taxes of  another  entity or
          person  under  Section  1.1502-6 of the Treasury  Regulations  (or any
          similar provision of state,  local or foreign law), as a transferee or
          successor, or otherwise.

               (xiv) None of HealthStar's  assets are treated as "tax exempt use
          property" within the meaning of Section 168(h) of the Code.

               (xv) HealthStar is not a party to any joint venture,  partnership
          or other arrangement that is treated as a partnership for U.S. federal
          income tax purposes.

          (b)  HealthStar has furnished or otherwise made available to BlueStone
     correct and complete copies of (i) all income, franchise and other material
     Tax Returns filed by HealthStar since January 1, 1998; and (ii) all pending
     examination  reports,  statements of  deficiencies  and closing  agreements
     received by HealthStar relating to Taxes.

          (c)  HealthStar's  tax  return  for the  year  ended  March  31,  2000
     accurately  reflects (i) HealthStar's basis in its assets,  (ii) the amount
     of any net operating loss, net capital loss and any other Tax carryovers of
     HealthStar   (including   losses  and  other  carryovers   subject  to  any
     limitations),  and (iii) material Tax elections made by HealthStar.  To the
     Knowledge of HealthStar,  except as stated in Schedule  4.9(c),  HealthStar
     has no net operating  losses or other Tax attributes  presently  subject to
     limitation under Code Sections 382, 383 or 384, or the federal consolidated
     return regulations.



                                      -18-
<PAGE>

     4.10.  Certain  Contracts.  Set  forth  on  Schedule  4.10 is a list of all
material Contracts of HealthStar,  M(2) and Merger Sub (the "HealthStar Material
Contracts")  (which for purposes of this Section shall mean such  Contracts that
provide for annual  payments or  receipts in excess of  $50,000).  Except as set
forth on Schedule 4.10,  each of the HealthStar  Material  Contracts are in full
force and effect and are legal, valid and binding obligation of HealthStar, M(2)
or Merger Sub, as the case may be, and is  enforceable  against each other party
thereto  in  accordance   with  its  terms  (except  as  limited  by  applicable
bankruptcy, insolvency, reorganization,  moratorium or other similar laws now or
hereafter in effect relating to or affecting  creditors' rights  generally,  and
subject to the limitations imposed by general equitable principles regardless of
whether such  enforceability is considered in a proceeding at law or in equity),
and neither  HealthStar,  M(2),  Merger Sub, nor, to the Knowledge of HealthStar
and Merger Sub,  any other party  thereto is in default or has failed to perform
any material  obligation  thereunder other than defaults  violations or breaches
which would not have a HealthStar Material Adverse Effect.  Complete and correct
copies of each of such  contracts  listed on Schedule 4.10 have been  previously
made available to BlueStone.  To the Knowledge of HealthStar,  other than in the
Ordinary Course of Business,  no party to any HealthStar  Material  Contract has
given notice to HealthStar  of its  intention (a) to terminate  such Contract or
amend the terms thereof; (b) to refuse to renew such Contract upon expiration of
its  term;  or (c) to renew  such  Contract  upon  expiration  only on terms and
conditions that are more onerous than those now existing.

     4.11. Governmental Authorizations.  HealthStar, M(2) and Merger Sub possess
and are in substantial compliance with all Governmental  Authorizations that are
required to conduct  their  respective  businesses  and the use and ownership of
their  respective  assets except where the failure to obtain or comply with such
Governmental  Authorization would not have a HealthStar Material Adverse Effect.
Each of such Governmental  Authorizations is set forth on Schedule 4.11. Each of
such  Governmental  Authorizations  is valid and in full  force and  effect  and
neither  HealthStar  nor any of its Employees  received in writing,  at any time
since January 1, 1998 any notice or other  communication  from any  Governmental
Body or any other  Person  regarding  (i) any actual or alleged  violation of or
failure to comply with any  material  term or  requirement  of any  Governmental
Authorization,   or  (ii)  any  actual  or  proposed   withdrawal,   suspension,
cancellation, termination of, or modification to any Governmental Authorization.

     4.12.  Disputes and  Litigation.  Except as described in the HealthStar SEC
Reports or as set forth in Schedule 4.12, there is no action,  suit,  proceeding
or claim, pending or, to the Knowledge of the HealthStar Parties,  threatened by
any  Person  or  Governmental  Body,  and  no  investigation  by any  court,  or
Governmental Body pending or threatened, against HealthStar, M(2) or Merger Sub,
before  any  court or  Governmental  Body,  nor is there any  outstanding  Order
against  HealthStar,  M(2)  or  Merger  Sub,  which,  if  decided  adversely  to
HealthStar or Merger Sub would have a HealthStar Material Adverse Effect.

     4.13. Brokers or Finders. Neither HealthStar,  M(2) nor Merger Sub, nor any
director,  officer, agent or employee thereof, has employed any broker or finder
or  has  incurred  or  will  incur  any  broker's,  finder's  or  similar  fees,
commissions  or  expenses,  in each  case in  connection  with the  transactions
contemplated by this Agreement.

     4.14.  Insurance.  As of the date of this Agreement,  HealthStar,  M(2) and
Merger Sub maintain  insurance  policies covering all of their respective assets
and properties and the various


                                      -19-
<PAGE>

occurrences  which may arise in connection with the operation of their business,
including, as applicable,  director and officer policies covering their officers
and directors  except where the failure to carry such insurance would not have a
HealthStar Material Adverse Effect. All such insurance policies are set forth on
Schedule  4.14.  Such  policies  are in full force and effect,  all premiums due
thereon  have been paid,  and each of  HealthStar  and M(2) has  complied in all
material respects with the provisions of such policies.  Such insurance policies
are of  comparable  amounts  and  coverage  as that which  companies  engaged in
similar  businesses  would maintain in accordance  with good business  practice.
Neither  HealthStar  nor M(2) has  received  (a) any  notices of any  pending or
threatened  terminations,  (b) any  refusal of  coverage,  (c) any notice that a
defense  will be afforded  with  reservation  of rights or (d) any notice of any
significant  premium  increases  with  respect  to any such  policies,  and such
policies  will not be modified as a result of or terminate or lapse by reason of
the transactions contemplated by this Agreement.  HealthStar has given notice to
the insurer of all claims that may be insured by the policies described above.

     4.15.  Insolvency  Proceedings.  (i) Neither HealthStar nor M(2) is nor are
their assets and  properties  the subject of any pending or, to the Knowledge of
the  HealthStar  Parties,  threatened  insolvency  proceedings of any character,
including,  without  limitation,   bankruptcy,   receivership,   reorganization,
composition  or  arrangement  with  creditors,  voluntary or  involuntary;  (ii)
neither  HealthStar nor M(2) has made an assignment for the benefit of creditors
or taken any action in  contemplation of or which would constitute a valid basis
for the  institution  of any such  insolvency  proceedings;  and  (iii)  neither
HealthStar nor M(2) is insolvent nor will it become insolvent as a result of the
consummation of the transactions contemplated by this Agreement.

     4.16. Personnel and Employee Benefits.

          (a)  Employees  and  Compensation.  Schedule  4.16 contains a true and
     complete list of all employees  employed by HealthStar and M(2) as of April
     30,  2001.  Schedule  4.16 also  contains a true and  complete  list of all
     employee  benefit  plans as such  term is  defined  in  Section  3.3 of the
     Employee  Retirement  Income  Security  Act of 1974,  as amended  ("ERISA")
     (collectively,  "HealthStar Benefit Plans") or arrangements  (collectively,
     "HealthStar  Benefit  Arrangements")  covering the  officers and  employees
     employed by HealthStar and M(2).

          (b) HealthStar Benefit Plans.  HealthStar does not sponsor,  maintain,
     or contribute  to any Benefit Plans other than as listed on Schedule  4.16.
     To the  Knowledge of the  HealthStar  Parties,  each Benefit Plan  complies
     currently and has been maintained in substantial  compliance with its terms
     and,  both as to form  and in  operation,  with all  material  requirements
     prescribed by any and all material statutes,  orders, rules and regulations
     that are  applicable to such plans,  including  ERISA and the Code,  except
     where the  failure  to comply  would  have a  HealthStar  Material  Adverse
     Effect.

          (c)  HealthStar  Benefit   Arrangements.   To  the  Knowledge  of  the
     HealthStar  Parties,  each  Benefit  Arrangement  has  been  maintained  in
     substantial  compliance  with its terms and with the material  requirements
     prescribed  by  all  statutes,  orders,  rules  and  regulations  that  are
     applicable  to such  Benefit  Arrangement.  Except as set forth on Schedule
     4.16, HealthStar has no written contract prohibiting the termination of any
     Employee.



                                      -20-
<PAGE>

          (d) Labor Relations.  Except as set forth in Schedule 4.16(d), neither
     HealthStar nor M(2) is a party to or subject to any  collective  bargaining
     agreement. Since January 1, 1998, with respect to the employees, HealthStar
     and M(2) have not received  written notice of an alleged  failure to comply
     in a  material  way with any laws,  rules or  regulations  relating  to the
     employment of labor, including those related to wages, hours,  occupational
     safety,  discrimination,  and the  payment  of  social  security  and other
     payroll  related taxes.  No proceedings are pending or, to the Knowledge of
     the HealthStar  Parties,  threatened  between HealthStar or M(2) and any of
     their  respective  employees  (singly or  collectively).  No labor union or
     other  collective  bargaining  unit  represents or, to the Knowledge of the
     HealthStar Parties,  claims to represent any of the employees of HealthStar
     or M(2).

     4.17.  Relationships  with Related  Persons.  Neither of HealthStar nor any
Related  Person of  HealthStar,  M(2) or of Merger Sub has, or since  January 1,
1999 has had, any interest in any property (whether real, personal, or mixed and
whether tangible or intangible), used in or pertaining to HealthStar's business.
Except as set forth in Schedule  4.17,  none of HealthStar or any Related Person
of HealthStar  or of Merger Sub owns,  or since  January 1, 1999 has owned,  (of
record or as a beneficial  owner) an equity  interest or any other  financial or
profit  interest in, a Person that has (i) had  business  dealings or a material
financial  interest  in any  transaction  with  HealthStar  other than  business
dealings or  transactions  conducted  in the  Ordinary  Course of Business  with
HealthStar  at  substantially  prevailing  market  prices  and on  substantially
prevailing  market  terms,  or (ii) engaged in  competition  with  HealthStar (a
"Competing  Business")  except  for less  than one  percent  of the  outstanding
capital  stock  of  any  Competing  Business  that  is  publicly  traded  on any
recognized exchange or in the  over-the-counter  market.  Except as set forth in
Schedule  4.17,  none of  HealthStar  or any Related  Person of HealthStar or of
Merger Sub (with respect to  Contracts) is a party to any Contract  with, or has
any claim or right against, HealthStar.

     4.18.  Title to  Properties.  Except as disclosed in Schedule  4.18, to the
Knowledge of  HealthStar,  each of HealthStar  and M(2) has good and  marketable
title to its assets and  properties,  except  where the  failure to obtain  such
marketable title would not have a HealthStar  Material  Adverse Effect,  and its
assets and properties are not subject to any mortgages, pledges, liens, security
interests,  encumbrances,  or other  charges  or rights of others of any kind or
nature except for Permitted Encumbrances.

     4.19.  Disclosure.  To the  Knowledge of HealthStar  no  representation  or
warranty in this  Agreement  and no statement in the  Schedules  omit to state a
material fact  necessary to make the statements  herein or therein,  in light of
the circumstances in which they were made, not misleading.

     4.20. Aggregate Effect of HealthStar Material Adverse Effect Qualifiers. To
the extent there would be a breach of any of the foregoing  representations  and
warranties set forth in this Section 4 but for the fact that such representation
or  warranty  contains a  HealthStar  Material  Adverse  Effect  qualifier,  the
aggregate  of all such  breaches  would not have a HealthStar  Material  Adverse
Effect.



                                      -21-
<PAGE>

                                   SECTION 5:
                                    COVENANTS

     5.1.  Procedure  for  Exchange.   Immediately  after  the  Effective  Time,
HealthStar  shall  make  appropriate  provision  for  issuance  of  certificates
representing the Consideration  Shares against surrender of the BlueStone Shares
or otherwise at the direction of BlueStone.

     5.2.  Qualifications and Representations of Future Shareholders.  BlueStone
will require each Future  Shareholder to represent and warrant upon his purchase
of capital stock of BlueStone prior to the Closing Date as follows:

          (a)  (i) Each Future Shareholder (x) has prior investment  experience,
          including investment in restricted securities, (y) has the capacity to
          evaluate the merits and risks of the acquisition of the  Consideration
          Shares,  and  (z)  understands  the  nature  of an  investment  in the
          Consideration Shares and is able to bear the economic risks of such an
          investment; and

               (ii)  Future   Shareholders   have  been  afforded  a  reasonable
          opportunity  to ask questions and receive  answers from  BlueStone and
          its management about  BlueStone's  business and financial  affairs and
          condition,  prospects,  strategic  plans,  and resources and about the
          terms of the Merger.

          (b)  Investment  Intent.  Each  Future  Shareholder  will  acquire the
     Consideration  Shares  pursuant to this  Agreement for investment for their
     own account and not with a view to the  distribution  (as such term is used
     in Section 2(11) of the Securities Act) thereof.

          (c) Resale  Restrictions.  Each  Future  Shareholder  understands  and
     acknowledges that the Consideration Shares will not be registered under the
     Securities Act or applicable  state "Blue Sky" laws at or after the Closing
     Date  and  must  be  held  indefinitely   unless  or  until  (i)  they  are
     subsequently registered under the Securities Act and applicable state "Blue
     Sky" laws, or (ii) an exemption from such registration is available for any
     subsequent sale or distribution.

          (d) Exempt Sale. Each Future Shareholder  understands and acknowledges
     that the transfer and delivery of the  Consideration  Shares by  HealthStar
     under this  Agreement has not been  registered (i) under the Securities Act
     and is intended to be exempt from the registration and prospectus  delivery
     requirements  of the  Securities  Act by  virtue  of  Section  4(2)  of the
     Securities Act and/or Regulation D thereunder,  (ii) under applicable state
     securities laws and  regulations in reliance upon  exemptions  contained in
     such laws and  regulations,  and (iii) that the reliance by  HealthStar  on
     such  exemption  is  predicated  in  part  on  each  Future   Shareholder's
     representations  set  forth  in  this  Section  5.2.  None  of  the  Future
     Shareholders  has offered the  Consideration  Shares to any Person or taken
     any other  action  that of itself  would  cause  the  aforesaid  non-public
     offering  exemption not to be available to  HealthStar  with respect to the
     issuance of the Consideration Shares.

          (e) Legends on Certificates.  Each Future Shareholder  understands and
     acknowledges that any certificate or other instrument evidencing any of the
     Consideration Shares


                                      -22-
<PAGE>

     delivered at the Closing shall be stamped or otherwise  imprinted  with the
     legends substantially in the form set forth below.

               (i) The following legend under the Securities Act:

                  "THE SECURITIES  REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
               REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED  (THE
               "SECURITIES  ACT") OR UNDER THE SECURITIES LAW OF ANY STATE. SUCH
               SECURITIES  MAY NOT BE  SOLD OR  OFFERED  FOR  SALE OR  OTHERWISE
               HYPOTHECATED  OR  DISTRIBUTED,  EXCEPT  (A)  (i)  PURSUANT  TO AN
               EFFECTIVE  REGISTRATION  STATEMENT FOR SUCH SECURITIES  UNDER THE
               SECURITIES  ACT, OR (ii) PURSUANT TO A VALID  EXEMPTION FROM SUCH
               REGISTRATION  UNDER THE  SECURITIES  ACT AND UNDER THE SECURITIES
               LAW OF ANY  STATE,  AND (B) UPON  RECEIPT  BY THE  COMPANY  OF AN
               OPINION  OF  COUNSEL  FOR THE  HOLDER,  WHICH  OPINION  SHALL  BE
               SATISFACTORY  IN FORM AND SUBSTANCE TO THE COMPANY THAT SUCH SALE
               IS  IN  COMPLIANCE   WITH  THE  SECURITIES  ACT  AND  SUCH  STATE
               SECURITIES   LAW."

               (ii) Any legend imposed or required by  HealthStar's  certificate
          of  incorporation  or bylaws or applicable  state  securities laws and
          state corporate laws.

Each Future Shareholder  understands and acknowledges that HealthStar will make,
or cause to be made, a notation in its stock  transfer  registry with respect to
the restrictions on offer and sale of the Consideration Shares.

     5.3. Conduct of BlueStone's Business Prior to Closing.  Except as otherwise
contemplated  by this  Agreement  from the date hereof through the Closing Date,
the Principal Shareholders shall cause BlueStone to conduct, and BlueStone shall
conduct,  its business in the Ordinary Course of Business.  Without limiting the
generality of the  foregoing,  except as  contemplated  by this  Agreement or as
consented to by HealthStar  (which consent may not be  unreasonably  withheld by
HealthStar)  from and after the date hereof,  the Principal  Shareholders  shall
act, shall cause BlueStone to act, and BlueStone shall act as follows:

          (a)  BlueStone  shall not adopt any  material  change in any method of
     accounting or accounting  practice,  except as  contemplated or required by
     GAAP;

          (b) BlueStone shall not amend its charter or bylaws;

          (c) except for the  disposition of obsolete  equipment in the Ordinary
     Course of Business, BlueStone will not sell, mortgage, pledge, or otherwise
     dispose of any material assets or properties owned,  leased, or used in the
     operation of its business;



                                      -23-
<PAGE>

          (d) BlueStone  shall not merge or consolidate  with, or agree to merge
     or consolidate  with, or purchase or agree to purchase all or substantially
     all of the assets of, or otherwise acquire, any other business entity;

          (e) other than as  described  in Schedule  3.19,  BlueStone  shall not
     authorize for issuance, issue, or sell any additional shares of its capital
     stock or issue any  securities or obligations  convertible or  exchangeable
     into shares of its capital stock or issue or grant any option,  warrant, or
     other right to purchase any shares of its capital stock;

          (f)  BlueStone  shall  not  incur,  or  agree to  incur,  any debt for
     borrowed money;

          (g) BlueStone shall not change its historic  practices  concerning the
     payment of accounts payable;

          (h)  BlueStone  shall not declare,  issue,  or  otherwise  approve the
     payment  of  dividends  of any  kind in  respect  of the  capital  stock of
     BlueStone or redeem, purchase, or acquire any of its capital stock;

          (i) BlueStone  shall maintain the existing  insurance  policies on the
     assets of its business or other policies  providing  substantially  similar
     coverages;

          (j) except in the  Ordinary  Course of Business or except as otherwise
     contemplated by this Agreement,  BlueStone will not permit any increases in
     the  compensation  of any of its  Employees  except as  required  by law or
     existing contract or agreement or enter into or amend any BlueStone Benefit
     Plan or BlueStone Benefit Arrangement;

          (k) except in the  Ordinary  Course of Business,  BlueStone  shall not
     enter into or renew, extend or terminate,  or waive any Contract,  or incur
     any obligation that will be binding on BlueStone after Closing;

          (l) BlueStone shall not enter into any transactions with any Affiliate
     that will be binding upon BlueStone following the Closing Date;

          (m) BlueStone  shall  maintain its assets or  replacements  thereof in
     good  operating  condition  and  adequate  repair,  normal  wear  and  tear
     excepted;

          (n) BlueStone shall not make or change any Tax election, amend any Tax
     Return, or take or omit to take any other action not in the Ordinary Course
     of  Business  that  would  have  the  effect  of  increasing  any  Taxes of
     BlueStone;

          (o) BlueStone shall file all Tax Returns when due;

          (p) BlueStone shall use its commercially reasonable efforts consistent
     with  past  practice  to  preserve  its  business  and  assets  and to keep
     available its present employees and to preserve present  relationships with
     its customers, employees, and others having business relations with it; and


                                      -24-
<PAGE>


          (q) BlueStone shall not take any action that would adversely effect in
     any material respect the applicable  Governmental  Authorizations  or cause
     BlueStone  to not be in  substantial  compliance  with all SEC,  NASD,  and
     applicable State  Governmental  Authorizations  that relate to its business
     and assets.

     5.4. Conduct of HealthStar's  and M(2)'s Business Prior to Closing.  Except
as otherwise  contemplated  by this  Agreement  from the date hereof through the
Closing  Date,  HealthStar  shall cause M(2) to conduct,  and  HealthStar  shall
conduct,  its business in the Ordinary Course of Business.  Without limiting the
generality of the  foregoing,  except as  contemplated  by this  Agreement or as
consented to by BlueStone  (which  consent may not be  unreasonably  withheld by
BlueStone) from and after the date hereof,  HealthStar shall act and shall cause
M(2) to act as follows:

          (a) Neither HealthStar nor M(2) shall adopt any material change in any
     method of accounting  or accounting  practice,  except as  contemplated  or
     required by GAAP;

          (b) Neither HealthStar nor M(2) shall amend its charter or bylaws;

          (c) except for the  disposition of obsolete  equipment in the Ordinary
     Course of  Business,  neither  HealthStar  nor M(2) shall  sell,  mortgage,
     pledge,  or otherwise  dispose of any material assets or properties  owned,
     leased, or used in the operation of its business;

          (d) Neither  HealthStar nor M(2) shall merge or  consolidate  with, or
     agree to merge or consolidate with, or purchase or agree to purchase all or
     substantially  all of the  assets  of,  or  otherwise  acquire,  any  other
     business entity;

          (e) Neither  HealthStar nor M(2) shall authorize for issuance,  issue,
     or sell any additional  shares of its capital stock or issue any securities
     or obligations convertible or exchangeable into shares of its capital stock
     or issue or grant any  option,  warrant,  or other  right to  purchase  any
     shares of its capital stock;

          (f) Neither  HealthStar nor M(2) shall incur,  or agree to incur,  any
     debt for borrowed money;

          (g) Neither  HealthStar  nor M(2) shall change its historic  practices
     concerning the payment of accounts payable;

          (h) Neither  HealthStar  nor M(2) shall declare,  issue,  or otherwise
     approve  the  payment of  dividends  of any kind in respect of the  capital
     stock of  HealthStar  or M(2) or redeem,  purchase,  or acquire  any of its
     capital stock;

          (i) Each of Healthstar and M(2) shall maintain the existing  insurance
     policies  on the  assets  of  its  business  or  other  policies  providing
     substantially similar coverages;

          (j) except in the  Ordinary  Course of Business or except as otherwise
     contemplated by this Agreement, neither HealthStar nor M(2) will permit any
     increases in the compensation of any of its employees except as required by
     law or existing contract or


                                      -25-
<PAGE>

     agreement or enter into or amend any HealthStar  Benefit Plan or HealthStar
     Benefit Arrangement;

          (k) except in the Ordinary Course of Business,  neither HealthStar nor
     M(2) shall enter into or renew, extend or terminate, or waive any Contract,
     or incur any  obligation  that will be binding on  HealthStar or M(2) after
     Closing;

          (l) Neither HealthStar nor M(2) shall enter into any transactions with
     any Affiliate  that will be binding upon  HealthStar or M(2)  following the
     Closing Date;

          (m)  Each  of  HealthStar  and  M(2)  shall  maintain  its  assets  or
     replacements  thereof in good  operating  condition  and  adequate  repair,
     normal wear and tear excepted;

          (n) Neither HealthStar nor M(2) shall make or change any Tax election,
     amend any Tax Return,  or take or omit to take any other  action not in the
     Ordinary  Course of Business that would have the effect of  increasing  any
     Taxes of HealthStar or M(2);

          (o) Each of HealthStar and M(2) shall file all Tax Returns when due;

          (p) Each of HealthStar and M(2) shall use its commercially  reasonable
     efforts  consistent  with past practice to preserve its business and assets
     and to  keep  available  its  present  employees  and to  preserve  present
     relationships  with its customers,  employees,  and others having  business
     relations with it; and

          (q)  Neither  HealthStar  nor M(2) shall  take any  action  that would
     adversely  effect  in any  material  respect  the  applicable  Governmental
     Authorizations  or  cause  HealthStar  or  M(2)  to not  be in  substantial
     compliance   with  all  SEC,  NASD,  and  applicable   State   Governmental
     Authorizations that relate to its business and assets.

     5.5.  Access  to  BlueStone  Information.  From and  after the date of this
Agreement  until the  Closing  Date,  BlueStone  shall  (a) give the  HealthStar
Parties and the HealthStar Parties' employees,  accountants and counsel full and
complete  access upon  reasonable  notice during normal  business  hours, to all
officers,  employees,  offices, properties,  agreements,  records and affairs of
BlueStone;  (b) provide the HealthStar Parties with all financial information of
BlueStone  that is  distributed  to the  officers and  directors  of  BlueStone,
including,  but not  limited  to,  the  monthly  internal  financial  statements
prepared by BlueStone and the monthly FOCUS Reports of BlueStone,  promptly upon
distribution of such information to the officers and directors of BlueStone (all
of the foregoing financial  information,  financial statements and FOCUS Reports
collectively, the "Additional BlueStone Financials Statements"); and (c) provide
copies of such information  concerning  BlueStone as the HealthStar  Parties may
reasonably request.

     5.6.  Access  to  HealthStar  Information.  From and after the date of this
Agreement  until the  Closing  Date,  HealthStar  shall (a) give  BlueStone  and
BlueStone's  employees,  accountants  and counsel full and complete  access upon
reasonable  notice during normal  business  hours,  to all officers,  employees,
offices, properties,  agreements,  records and affairs of the HealthStar Parties
and M(2); (b) provide BlueStone with all financial information of HealthStar and
M(2) that is distributed to the officers and directors of HealthStar, including,
but not limited to,


                                      -26-
<PAGE>

the monthly  internal  financial  statements  prepared by  HealthStar  and M(2),
promptly upon  distribution of such information to the officers and directors of
HealthStar (all of the foregoing financial  information and financial statements
collectively,  the  "Additional  HealthStar  Financials  Statements");  and  (c)
provide copies of such information  concerning  HealthStar and M(2) as BlueStone
may reasonably request.

                                   SECTION 6:
                    CONDITIONS TO OBLIGATIONS OF THE PARTIES

     6.1. Conditions to Obligations of the HealthStar  Parties.  All obligations
of the HealthStar  Parties to consummate  the Merger and the other  transactions
contemplated by this Agreement are subject,  at the HealthStar  Parties' option,
to the  fulfillment  prior to or at the  Closing  Date of each of the  following
conditions:

          (a) Representations and Warranties. All representations and warranties
     of the Principal Shareholders contained in this Agreement shall be true and
     complete  at and as of the  Closing  as though  made at and as of that time
     (except for representations and warranties that speak as of a specific date
     or time  which  need  only be true and  complete  as of such date or time),
     except where the failure to be true and complete  does not have a BlueStone
     Material Adverse Effect.

          (b) Covenants and Conditions. The Principal Shareholders and BlueStone
     shall have  performed  and  complied  with all  covenants,  agreements  and
     conditions  required by this  Agreement to be performed or complied with by
     them prior to or on the  Closing  Date,  except  where the  failure to have
     performed and complied does not have a BlueStone Material Adverse Effect.

          (c) NASD  Approvals.  The required  approvals from the NASD shall have
     been  received or the parties  determine to proceed with the Closing as set
     forth in Section 2.3.

          (d) No Litigation.  No action,  suit or proceeding  against any of the
     Principal  Shareholders or BlueStone relating to the consummation of any of
     the transactions  contemplated by this Agreement or any governmental action
     seeking  to delay or  enjoin  any such  transactions  shall be  pending  or
     threatened.

          (e) Deliveries.  The Principal  Shareholders  and BlueStone shall have
     made or stand willing to make all the deliveries to the HealthStar  Parties
     described in Section 7.1.

     6.2. Conditions to Obligations of Principal Shareholders and BlueStone. All
obligations of Principal Shareholders and BlueStone to consummate the Merger and
the other  transactions  contemplated  by this  Agreement,  are subject,  at the
Principal  Shareholders' and BlueStone's  option, to the fulfillment prior to or
at the Closing Date of each of the following conditions:

          (a) Representations and Warranties. All representations and warranties
     of the HealthStar  Parties  contained in this  Agreement  shall be true and
     complete in all  material  respects at and as of the Closing Date as though
     made at and as of that time (except for representations and warranties that
     speak as of a specific date or time which need only be true


                                      -27-
<PAGE>

     and  complete as of such date or time)  except where the failure to be true
     and complete does not have a HealthStar Material Adverse Effect.

          (b)  Covenants  and  Conditions.  The  HealthStar  Parties  shall have
     performed  and  complied  in all  material  respects  with  all  covenants,
     agreements  and  conditions  required by this  Agreement to be performed or
     complied  with by them prior to or on the Closing  Date,  except  where the
     failure to have performed and complied does not have a HealthStar  Material
     Adverse Effect.

          (c) NASD  Approvals.  The required  approvals from the NASD shall have
     been  received or the parties  determine to proceed with the Closing as set
     forth in Section 2.3.

          (d) No Litigation.  No action,  suit or proceeding  against HealthStar
     relating to the  consummation  of any of the  transactions  contemplated by
     this  Agreement or any  governmental  action seeking to delay or enjoin any
     such transactions shall be pending or threatened.

          (e)  Deliveries.  The  HealthStar  Parties  shall  have  made or stand
     willing to make all the deliveries described in Section 7.2.

          (f)  HealthStar  Cash.  Immediately  prior to the Closing,  HealthStar
     shall have not less than  $3,500,000 in cash and shall have no  liabilities
     for borrowed money other than those that appear on the consolidated balance
     sheet of HealthStar as of May 31, 2001. Of such $3,500,000,  $500,000 shall
     be in the form of a certificate  of deposit  issued by First  International
     Bank & Trust Ltd.,  Roseau,  Commonwealth  of  Dominica,  which  matures on
     October  11,  2001,  and the  remainder  shall  be cash in the  account  of
     HealthStar at Provident Bank of Maryland.  In that  connection,  HealthStar
     shall  have   liquidated  its  funds  currently  held  at  American  Equity
     Management,  Inc. in the amount of $2,524,201  and deposited  such funds in
     the account of HealthStar at Provident Bank of Maryland.

                                   SECTION 7:
                         CLOSING AND CLOSING DELIVERIES

     7.1.  Deliveries by Principal  Shareholders  and BlueStone.  On the Closing
Date, the Principal  Shareholders  and BlueStone shall deliver to the HealthStar
Parties the  following,  in form and substance  reasonably  satisfactory  to the
HealthStar Parties and its counsel:

          (a) Certificate of Merger.  A Certificate of Merger  substantially  in
     the form attached  hereto as Exhibit 7.1(a) dated the Closing Date and duly
     executed by the  appropriate  officers of BlueStone  (the  "Certificate  of
     Merger");

          (b) Certificate. A certificate, dated as of the Closing Date, executed
     by the Principal Shareholders, certifying severally to HealthStar: (i) that
     the representations and warranties of Principal  Shareholders  contained in
     this  Agreement are true and complete as of the Closing Date as though made
     on and as of that date  (except for  representations  and  warranties  that
     speak as of a specific  date or time,  which need only be true and complete
     as of such date or  time),  and (ii) that the  Principal  Shareholders  and
     BlueStone  have in all respects  performed  and


                                      -28-
<PAGE>

     complied with all of their respective obligations, covenants and agreements
     in this  Agreement  to be performed  and  complied  with on or prior to the
     Closing Date.

          (c) Secretary's  Certificate.  A certificate,  dated as of the Closing
     Date, executed by BlueStone' Secretary (i) certifying that the resolutions,
     as attached to such  certificate,  were duly adopted by each of  BlueStone'
     Board  of  Directors  and  shareholders,   authorizing  and  approving  the
     execution  of  this  Agreement  and  the  consummation  of the  transaction
     contemplated  hereby  and that such  resolutions  remain in full  force and
     effect,  and (ii)  providing,  as attachments  thereto,  the Certificate of
     Incorporation and Bylaws of BlueStone, with all amendments;

          (d)  Good  Standing  Certificates.  Certificates  as to the  formation
     and/or good  standing of BlueStone  issued by the NY SOS to be dated a date
     not more than a reasonable number of days prior to the Closing Date;

          (e)  Opinion of Counsel.  An opinion of Blank Rome Tenzer  Greenblatt,
     LLP dated as of the Closing Date,  addressed to the HealthStar  Parties and
     to Roth Capital  Partners  LLC,  which is acting as  Qualified  Independent
     Underwriter  for the  Merger  pursuant  to the  rules  of the  NASD  ("Roth
     Capital") substantially in the form of Exhibit 7.1(e) attached hereto; and

          (f) Other Documents.  Such other documents reasonably requested by the
     HealthStar  Parties or their  counsel for complete  implementation  of this
     Agreement and consummation of the transaction contemplated hereby.

     7.2. Deliveries by the HealthStar Parties. Prior to or on the Closing Date,
the HealthStar Parties shall deliver to BlueStone and the Principal Shareholders
the  following,  in form and  substance  reasonably  satisfactory  to  Principal
Shareholders, BlueStone and their counsel:

          (a) Certificate of Merger.  The Certificate of Merger duly executed by
     the appropriate officers of Merger Sub;

          (b)  Officer's  Certificate.  A  certificate,  dated as of the Closing
     Date,  executed on behalf of an officer of each of the HealthStar  Parties,
     certifying  (i)  that the  representations  and  warranties  of each of the
     HealthStar Parties contained in this Agreement are true and complete in all
     material  respects as of the Closing  Date as though made on and as of that
     date,  and (ii) that each of the  HealthStar  Parties  have in all material
     respects performed and complied with all of its obligations,  covenants and
     agreements in this  Agreement to be performed and complied with on or prior
     to the Closing Date;

          (c) Secretary's  Certificate.  A certificate,  dated as of the Closing
     Date, executed by each of the HealthStar Parties' Secretary: (i) certifying
     that the resolutions, as attached to such certificate, were duly adopted by
     each  of  the  HealthStar  Parties'  Board  of  Directors  authorizing  and
     approving  the  execution of this  Agreement  and the  consummation  of the
     transaction  contemplated  hereby and that such resolutions  remain in full
     force and effect; and (ii) providing, as an attachment thereto, each of the
     HealthStar Parties' Certificates of Incorporation and Bylaws;



                                      -29-
<PAGE>

          (d)  Good  Standing  Certificates.  Certificates  as to the  formation
     and/or good standing of the  HealthStar  Parties issued by the Secretary of
     State of Delaware (in the case of  HealthStar)  and the NY SOS (in the case
     of Merger Sub) to be dated a date not more than a reasonable number of days
     prior to the Closing Date;

          (e) Opinion of Counsel. An opinion of Thomas & Libowitz, P.A. dated as
     of the Closing Date, addressed to BlueStone, the Principal Shareholders and
     Roth Capital substantially in the form of Exhibit 7.2(e) hereto; and

          (f) Other  Documents.  Such other  documents  reasonably  requested by
     Principal   Shareholders,   BlueStone   or  their   counsel  for   complete
     implementation  of this  Agreement  and  consummation  of the  transactions
     contemplated hereby.

                                   SECTION 8:
                                   TERMINATION

     8.1. Termination by Mutual Consent. This Agreement may be terminated at any
time prior to Closing by the mutual consent of the parties.

     8.2.  Other  Termination.  This Agreement may be terminated by BlueStone or
HealthStar  and the Merger  abandoned  if the  terminating  party is not then in
default hereunder and Closing has not occurred by September 15, 2001.

     8.3.  Specific  Performance.  The parties  recognize  that, if either party
hereto  breaches this  Agreement and refuses to perform under the  provisions of
this Agreement,  monetary  damages alone would not be adequate to compensate the
other party for its injury. Such party shall therefore be entitled,  in addition
to any other remedies that may be available,  to obtain specific  performance of
the terms of this  Agreement.  If any action is brought by such party to enforce
this  Agreement,  the  breaching  party shall waive the defense that there is an
adequate remedy at law.

     8.4. Survival.  Notwithstanding  the termination of this Agreement pursuant
to this  Section 8, the  obligations  of the  HealthStar  Parties and  Principal
Shareholders  set forth in  Sections  10.1,  10.2 and 10.11 shall  survive  such
termination,  and the parties  hereto shall have any and all rights and remedies
to enforce such obligations provided at law or in equity or otherwise (including
without limitation, specific performance).

                                   SECTION 9:
                   SURVIVAL; INDEMNIFICATION; CERTAIN REMEDIES

     9.1. Survival. All representations and warranties, covenants and agreements
of the  HealthStar  Parties  and  Principal  Shareholders  contained  in or made
pursuant to this Agreement or in any certificate furnished pursuant hereto shall
survive the  Closing  Date and the  Effective  Time and remain in full force and
effect for a period of one  hundred  twenty  days  (120) days after the  Closing
Date;  provided that the  representations,  warranties  and covenants in Section
3.11,  3.19,  4.4,  4.9,  10.1,10.2,  10.11 and  10.14,  shall  survive  for the
applicable  period of time under the  statute  of  limitations  for the  matters
described  therein;  and provided  further that anything to the contrary in this
Section  9.1  notwithstanding,  any claim for  indemnification  under  Section 9

                                      -30-
<PAGE>

hereof  which  is  asserted  in a  reasonably  detailed  writing  prior  to  the
expiration of the one hundred twenty (120) day survival  period provided in this
Section  9.1 shall  survive  with  respect to such claim or dispute  until final
resolution  thereof.  For purposes of clarification,  the Indemnifying Party, as
defined in Section 9.4, shall be responsible for all reasonable  attorney's fees
of the  non-breaching  party which arise after expiration of the survival period
in connection  with a claim for  indemnification  hereunder,  provided that such
claim is asserted in writing prior to the  expiration of the survival  period as
set forth above.

     9.2. Indemnification by Principal Shareholders and BlueStone.

          (a) Principal  Shareholders  shall severally and not jointly indemnify
     and hold the HealthStar  Parties  harmless  against and with respect to and
     shall  reimburse the HealthStar  Parties for any and all Losses arising out
     of or  resulting  from  any  untrue  representation  or any  breach  of any
     warranty,  covenant or agreement of the indemnifying  Principal Shareholder
     or BlueStone  contained in this Agreement or in any certificate,  document,
     or  instrument  delivered  to the  HealthStar  Parties by the  indemnifying
     Principal  Shareholder  or  BlueStone  under  or in  connection  with  this
     Agreement,  provided, however, after the Effective Time, but subject to the
     proviso in the last  sentence  of Section  9.2(c),  that the sole  recourse
     against  the  Principal  Shareholders  under this  Section  9.2 shall be to
     require the  forfeiture,  return,  assignment or transfer to the HealthStar
     Parties of the  appropriate  number of  Consideration  Shares  equal to the
     amount of the  indemnification  obligation of such Principal  Shareholders,
     free and clear of all security interests, liens or encumbrances. Before the
     Effective Time, the sole recourse against the Principal  Shareholders shall
     be for specific  performance,  to the extent available.  In calculating the
     amount of  Consideration  Shares to be  forfeited,  returned,  assigned  or
     transferred  by the  Principal  Shareholders  pursuant to this Section 9.2,
     each  Consideration  Share  shall be  valued at the  value  thereof  on the
     Closing Date.

          (b)  Principal  Shareholders  shall have no liability  with respect to
     claims for indemnification  pursuant to this Section 9.2 or otherwise under
     or in connection with this Agreement  unless  HealthStar  and/or Merger Sub
     have paid, suffered and/or incurred Losses which, in the aggregate,  exceed
     $350,000.00  (the  "HealthStar  Basket"),  after  which time the  Principal
     Shareholders  shall indemnify  HealthStar and Merger Sub for all amounts in
     excess of the HealthStar Basket, subject, however, to the Cap. No Principal
     Shareholder  shall have any liability to the HealthStar  Parties for Losses
     in excess  of the value of Two  Million  (2,000,000)  Consideration  Shares
     (based on 20,000  shares of  Preferred  Stock) and  therefore,  in no event
     shall more than 2,000,000 Consideration Shares be required to be forfeited,
     returned,   assigned  or  transferred  by  either   Principal   Shareholder
     (4,000,000 Consideration Shares (based on 40,000 shares of Preferred Stock)
     in the aggregate), as such number of Consideration Shares shall be adjusted
     for stock dividends, stock splits, reverse stock splits and similar events,
     (the "Cap") in the aggregate as to both  HealthStar  Parties as indemnified
     parties with respect to claims for indemnification pursuant to this Section
     9.2 and/or otherwise at law or in equity, in connection with this Agreement
     and the transactions contemplated hereby.

          (c) Notwithstanding  anything to the contrary in Section 9.2(b), under
     no circumstances shall the HealthStar Basket or the Cap apply to any Losses
     resulting  from  Fraud  which  shall  be  defined  to be  the  knowing  and
     intentional  misrepresentation  or omission of facts in connection with the
     transactions  contemplated by this Agreement.  In addition,  the HealthStar

                                      -31-
<PAGE>

     Parties  shall  have all rights  and  remedies  at law or in equity for any
     Losses described in the preceding sentence,  including, without limitation,
     money damages and/or the forfeiture, return, assignment and transfer of the
     Consideration  Shares,  and without regard to the HealthStar  Basket or the
     Cap,  the  parties  having  agreed that all such  rights and  remedies  are
     cumulative  and  supplementary.  Subject to this Section  9.2(c),  the sole
     remedy the HealthStar Parties shall have against the Principal Shareholders
     for all Losses  incurred by the  HealthStar  Parties under or in connection
     with this Agreement shall be limited to the forfeiture,  return, assignment
     and  transfer  to the  HealthStar  Parties  of the  appropriate  number  of
     Consideration Shares as contemplated by Section 9.2(a); provided,  however,
     that (i) if and to the extent a Principal  Shareholder  no longer owns such
     number of Consideration Shares that such Principal  Shareholder received in
     connection with the Merger and HealthStar and/or Merger Sub would otherwise
     be entitled to the  forfeiture,  return,  assignment and transfer  thereof,
     then, the  HealthStar  Parties shall be entitled to obtain money damages in
     lieu of such  Consideration  Shares,  up to the value thereof valued as set
     forth in Section 9.2(a),  and (ii) if the Principal  Shareholder  owns such
     number of  Consideration  Shares  but fails to or  refuses  for any  reason
     whatsoever to forfeit, return, assign or transfer them, then the HealthStar
     Parties  shall  be  entitled  at  their  option  (a)  to  obtain   specific
     performance  of the  forfeiture,  return,  assignment  or  transfer of such
     Consideration  Shares,  or (b) to  obtain  money  damages  in  lieu of such
     Consideration Shares up to the value thereof valued as set forth in Section
     9.2(a).

     9.3. Indemnification by the HealthStar Parties.

          (a) The HealthStar  Parties shall jointly and severally  indemnify and
     hold all of the holders of capital  stock of  BlueStone on the Closing Date
     (the  "BlueStone  Shareholders")  harmless  against and with respect to and
     shall reimburse the BlueStone  Shareholders  for any and all Losses arising
     out of or resulting from any untrue representation, breach of any warranty,
     covenant or agreement by the HealthStar Parties contained in this Agreement
     or in any certificate,  document,  or instrument  delivered to BlueStone or
     the  Principal  Shareholders  by either or both of the  HealthStar  Parties
     under or in connection with this Agreement.

          (b)  Neither  one or both of the  HealthStar  Parties  shall  have any
     liability to the BlueStone  Shareholders  pursuant to Section  9.3(d)(i) in
     excess of the Cap (as defined in Section 9.2(b) and calculated  pursuant to
     the last  sentence of Section  9.2(a)) in the aggregate as to all BlueStone
     Shareholders  with respect to claims for  indemnification  pursuant to this
     Section 9.3 and/or  otherwise at law or in equity,  in connection with this
     Agreement and the transactions contemplated hereby.

          (c) Notwithstanding  anything to the contrary in Section 9.3(b), under
     no circumstances  shall the Cap apply to any Losses resulting from Fraud as
     defined in Section 9.2(c).

          (d) In the event that  HealthStar  is required to indemnify any of the
     BlueStone  Shareholders  under this Section 9.3, such  obligation  shall be
     satisfied  by (i) the  payment to such  BlueStone  Shareholder(s)  in cash,
     subject  to the  provisions  of Section  9.3(b),  (as  modified  by Section
     9.3(c)),  of  the  direct  Losses,  if  any,  suffered  by  such  BlueStone
     Shareholder(s), plus (ii) the issuance to such BlueStone Shareholder(s), of
     such number of additional  shares of HealthStar  Common Stock determined by
     (a)  multiplying  the  dollar  amount  of  the  indemnified


                                      -32-
<PAGE>

     claim by the  percentage  of the  issued and  outstanding  shares of Common
     Stock (treating the Preferred Stock of HealthStar on an as converted basis)
     owned by such BlueStone  Shareholder(s) on the Closing Date (the "Ownership
     Percentage"),   (b)  dividing  such  result  by  one  minus  the  Ownership
     Percentage and (c) further  dividing such result by the value of a share of
     HealthStar Common Stock on the Closing Date.

     9.4. Procedure for Indemnification. The procedure for indemnification shall
be as follows:

          (a) The party claiming indemnification (the "Claimant") shall promptly
     give  notice  to the party  from  which  indemnification  is  claimed  (the
     "Indemnifying  Party") of any claim, whether between the parties or brought
     by a third party, specifying in reasonable detail the factual basis for the
     claim.  If the claim relates to an action,  suit, or proceeding  filed by a
     third party against Claimant, such notice shall be given by Claimant within
     five (5)  business  days after  written  notice of such  action,  suit,  or
     proceeding was given to Claimant.

          (b) With  respect to claims  solely  between  the  parties,  following
     receipt of notice from the  Claimant  of a claim,  the  Indemnifying  Party
     shall have thirty (30) days to make such  investigation of the claim as the
     Indemnifying  Party deems necessary or desirable.  For the purposes of such
     investigation,  the Claimant  agrees to make available to the  Indemnifying
     Party and its authorized representatives the information relied upon by the
     Claimant  to  substantiate  the claim  pursuant  to the  provision  of this
     Section 9. If the Claimant and the Indemnifying  Party agree at or prior to
     the  expiration of the thirty (30) day period (or any mutually  agreed upon
     extension   thereof)  to  the  validity  and  amount  of  such  claim,  the
     Indemnifying Party shall immediately pay to the Claimant the full amount of
     the claim. If the Claimant and the  Indemnifying  Party do not agree within
     the thirty (30) day period (or any mutually agreed upon extension thereof),
     the Claimant may seek appropriate remedy at law or equity.

          (c)  With  respect  to any  claim by a third  party  as to  which  the
     Claimant  is  entitled  to  indemnification   under  this  Agreement,   the
     Indemnifying Party shall have the right at its own expense,  to participate
     in or assume  control of the defense of such claim,  and the Claimant shall
     cooperate fully with the Indemnifying  Party,  subject to reimbursement for
     actual  out-of-pocket  expenses incurred by the Claimant as the result of a
     request by the  Indemnifying  Party.  If the  Indemnifying  Party elects to
     assume control of the defense of any third-party  claim, the Claimant shall
     have the  right to  participate  in the  defense  of such  claim at its own
     expense.  If the  Indemnifying  Party  does not elect to assume  control or
     otherwise  participate in the defense of any third-party claim, it shall be
     bound by the results obtained in good faith by the Claimant with respect to
     such claim.

          (d) If a claim,  whether  between  the  parties  or by a third  party,
     requires  immediate  action,  the parties will make every effort to reach a
     decision with respect thereto as expeditiously as possible.

          (e) Principal  Shareholders hereby release BlueStone and its officers,
     directors,  employees  and  agents  from any and all  claims,  damages  and
     liabilities (including,  without limitation, claims, liabilities or damages
     for  contribution,  indemnification  and/or other rights of  recourse),  in
     connection with any claims or counterclaims  brought  hereafter against any
     of the


                                      -33-
<PAGE>

     Principal Shareholders by any of the HealthStar Parties arising under or in
     connection with this Agreement.

     9.5.  Certain  Limitations.  The  amount  of  the  Losses  suffered  by  an
Indemnified  Party shall be net of any insurance  payment or recovery which such
party or its  representatives  realizes  in  respect  of or as a result  of such
Losses or the facts or circumstances  relating thereto.  If any Losses for which
indemnification  is  provided  hereunder  is  subsequently  reduced  by any such
insurance  payment  or other  recovery  from a third  party,  the amount of such
reduction shall be remitted to the  Indemnifying  Party.  If, after the Closing,
either party  realizes any Losses for which it is indemnified by the other party
hereunder,  such Claimant shall use its reasonable efforts to obtain the maximum
recovery or other benefit reasonably  believed by it to be available to it under
any applicable  insurance  policy.  A Claimant shall furnish to the indemnifying
party,  on demand,  a certificate of its chief financial  officer  verifying the
amount of any such  insurance  recovery or other  benefit.  Notwithstanding  any
other provision of this Agreement to the contrary,  in no event shall a party be
entitled to indemnification for such party's  consequential or punitive damages,
regardless of the theory of recovery. Each party hereto agrees to use reasonable
efforts  to  mitigate  any  Losses  which  form  the  basis  for any  claim  for
indemnification hereunder.

                                   SECTION 10:
                                  MISCELLANEOUS

     10.1.  Fees and Expenses.  Except as otherwise  provided in this Agreement,
each  party  shall  pay  its  own  expenses  incurred  in  connection  with  the
authorization,   preparation,  execution  and  performance  of  this  Agreement,
including   all  fees  and   expenses  of  counsel,   accountants,   agents  and
representatives, and each party shall be responsible for all fees or commissions
payable to any finder,  broker,  advisor,  or similar  Person  retained by or on
behalf  of  such  party.  In no  event  shall  BlueStone  pay  for  any  of  the
aforementioned  fees, expenses or commissions of Principal  Shareholders without
the consent of HealthStar, which consent HealthStar may withhold in its sole and
absolute discretion.

     10.2. Notices.  All notices,  requests,  consents,  payments,  demands, and
other  communications  required or contemplated under this Agreement shall be in
writing and (a) personally delivered or sent via telecopy (receipt confirmed and
followed  promptly by delivery of the original),  or (b) sent by Federal Express
or other reputable  overnight delivery service (for next business day delivery),
shipping prepaid, as follows:

           If to the HealthStar Parties to:

           HealthStar Corp.                           HealthStar Corp.
           2875 N.E. 191st Street, Suite 601          19 Hillsyde Court
           Aventura, Florida 33180                    Baltimore, Maryland 21030
           Attn:   President
           Telephone:  (305) 933-8779                 Telephone: (410) 628-0050
           Fax:        (305) 933-8755                 Fax: (410) 628-1112



                                      -34-
<PAGE>

           With a copy to:

           Clinton R. Black, IV, Esquire
           Thomas & Libowitz, P.A.
           100 Light Street, Suite 1100
           Baltimore, MD 21202
           Telephone:  (410) 752-2468
           Fax:        (410) 752-2046

           If to BlueStone to:

           BlueStone Capital Corp.
           650 Fifth Avenue
           New York, New York 10019
           Attn: Chief Operating Officer
           Telephone: (212) 484-2019
           Fax: (212) 484-2047

           with a copy to:

           Robert J. Mittman, Esquire
           Blank Rome Tenzer Greenblatt LLP
           The Chrysler Building
           405 Lexington Avenue
           New York, New York 10174
           Telephone:  (212) 885-5555
           Fax:        (212) 885-5557

           If to Principal Shareholders to:

           William G. Walters                         Matthew A. Gohd
           650 Fifth Avenue                           650 Fifth Avenue
           New York, New York 10019                   New York, New York 10019
           Telephone: (212) 753-6287                  Telephone: (212) 484-3672
           Fax: (212) 765-6976                        Fax: (212) 484-3675

           With a copy to:

           Robert J. Mittman, Esquire
           Blank Rome Tenzer Greenblatt LLP
           The Chrysler Building
           405 Lexington Avenue
           New York, New York 10174
           Telephone: (212) 885-5555
           Fax: (212) 885-5557

                                      -35-
<PAGE>

or to such other  Persons or addresses as any Person may request by notice given
as aforesaid. Notices shall be deemed given and received at the time of personal
delivery or completed telecopying,  or, if sent by Federal Express or such other
overnight delivery service one Business Day after such sending.

     10.3. Binding Effect. This Agreement shall be binding upon and inure to the
benefit  of  the  parties  hereto  and  their  respective  successors,  assigns,
executors and personal and legal representatives.

     10.4.  Further  Assurances.  The parties shall take any actions and execute
any other  documents  that may be necessary  or  desirable  (before or after the
Closing) to the implementation and consummation of this Agreement.

     10.5.  Governing  Law.  This  Agreement  shall be governed,  construed  and
enforced in accordance with the laws of the State of Delaware (without regard to
the choice of law provisions thereof).

     10.6. Entire Agreement. Any confidentiality  agreement entered into between
or among the parties,  this Agreement and the Annexes and the Schedules  hereto,
each of which Annexes and Schedules are hereby incorporated herein by reference,
and all  documents,  certificates  and other  documents  to be  delivered by the
parties pursuant hereto,  collectively,  represent the entire  understanding and
agreement between HealthStar, Merger Sub and Principal Shareholders with respect
to  the  subject  matter  of  this  Agreement.  Except  for  the  aforementioned
confidentiality  agreement,  this Agreement  supersedes  all prior  negotiations
between the parties and cannot be amended, supplemented, or changed except by an
agreement in writing duly executed by each of the parties hereto.

     10.7. Waiver of Compliance;  Consents. Except as otherwise provided in this
Agreement,  any  failure of any of the  parties to comply  with any  obligation,
representation, warranty, covenant, agreement, or condition herein may be waived
by the party  entitled  to the  benefits  thereof  only by a written  instrument
signed by the party  granting such waiver,  but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty, covenant,
agreement,  or  condition  shall not  operate as a waiver of, or  estoppel  with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in  writing  in a manner  consistent  with  the  requirements  for a  waiver  of
compliance as set forth in this Section 10.7.

     10.8. Headings.  The headings of the sections and subsections  contained in
this  Agreement  are  inserted  for  convenience  only and do not form a part or
affect the meaning, construction or scope thereof.

     10.9.   Counterparts.   This  Agreement  may  be  signed  in  two  or  more
counterparts  with the same effect as if the signature on each  counterpart were
upon the same instrument.

     10.10. Cooperation. The parties hereto shall reasonably cooperate with each
other and their  respective  counsel  and  accountants  in  connection  with any
actions required to be taken as part of their respective  obligations under this
Agreement,  and in connection with any litigation after the  implementation  and
consummation of this Agreement,  and otherwise use their


                                      -36-
<PAGE>

commercially  reasonable  efforts to  consummate  the  transaction  contemplated
hereby and to fulfill their obligations under this Agreement.

     10.11.  Public  Announcements.  The parties  hereto shall consult with each
other  before  issuing  any  press  releases  or  otherwise  making  any  public
statements  with  respect to this  Agreement  or the  transactions  contemplated
herein  and  shall  not issue any such  press  release  or make any such  public
statement without the prior written consent of the other party,  which shall not
be unreasonably withheld; provided, however, that a party may, without the prior
written consent of the other party, issue such press release or make such public
statement  as may be required by law or any  listing  agreement  with a national
securities  exchange to which the HealthStar  Parties are a party if it has used
all  reasonable  efforts  to  consult  with the other  party and to obtain  such
party's consent but has been unable to do so in a timely manner.

     10.12.  Knowledge.  References in this Agreement to "Knowledge of Principal
Shareholders" and words of similar import shall mean the actual knowledge of the
Principal  Shareholder making the  representation,  provided that upon notice of
circumstances  that  could  reasonably  make  the  representation  untrue,  such
Principal  Shareholder  shall have inquired as to whether such  circumstances in
fact make such circumstances untrue.  References in this Agreement to "Knowledge
of the  HealthStar  Parties"  and words of similar  import shall mean the actual
knowledge of either or both of HealthStar and Merger Sub's  executive  officers,
provided  that upon  notice of  circumstances  that  could  reasonably  make the
representation  untrue, such executive officer shall have inquired as to whether
such circumstances in fact make such circumstances untrue.

     10.13.  Schedules.  The  Disclosure  Schedules  delivered  pursuant to this
Agreement  (collectively,  "Disclosure  Schedules") are an integral part hereof,
and are  considered to be part of the  representations  and  warranties to which
they  relate.  Each  such  Disclosure  Schedule  shall be in  writing  and shall
indicate the subparagraph pursuant to which it is being delivered.  For purposes
of this  Agreement,  information  which is necessary to make a given  Disclosure
Schedule complete and accurate, but is omitted therefrom,  shall nevertheless be
deemed to be  contained  therein  if it is  contained  on any  other  Disclosure
Schedule; but only if such information appears on such other Disclosure Schedule
in such form and detail that it is responsive to the  requirements of such given
Disclosure Schedule. The parties may, at their option, include in one or more of
the  Disclosure  Schedules  delivered by it pursuant  hereto items which are not
"material" or otherwise required to be disclosed;  and the inclusion of any such
item  shall not be  deemed to be an  acknowledgement  by such  party  that it is
"material" or that it is required to be disclosed.

     10.14.  Consent  of  Auditors.   Each  party  shall  use  its  commercially
reasonable  efforts  before and after the  Closing to obtain the consent of such
party's auditors to permit inclusion of the audited financial statements of such
party in the applicable securities filings of HealthStar.

                      [Signatures Begin on Following Page]


                                      -37-
<PAGE>

         IN  WITNESS  WHEREOF,  this  Agreement  has been  executed  by the duly
authorized  officers of the BlueStone and the HealthStar  Parties as of the date
first written above.

                                         The HealthStar Parties:

                                         HealthStar Corp.

                                         By: /s/ Zirk Engelbrecht
                                             -----------------------------------
                                             Name: Zirk Engelbrecht
                                             Title: President


                                         BS Acquisition Corp.

                                         By: /s/ Zirk Engelbrecht
                                             -----------------------------------
                                             Name: Zirk Engelbrecht
                                             Title: President


                                         Principal Shareholders:

                                              /s/ William G. Walters
                                              ----------------------------------
                                              Name:  William G. Walters

                                              /s/ Matthew A. Gohd
                                              ----------------------------------
                                              Name:  Matthew A. Gohd


                                         BlueStone:

                                         BlueStone Capital Corp.

                                         By:  /s/ William G. Walters
                                              ----------------------------------
                                              Name:
                                              Title:




                                      -38-
<PAGE>



                                                                         Annex 1

                               CERTAIN DEFINITIONS

     The following terms, as used in this Agreement, have the meanings set forth
in this Annex 1 (terms defined in the singular to have the  correlative  meaning
in the plural and vice versa):

     "Affiliate"  means,  with respect to any Person,  (a) any other Person that
directly  or  indirectly  through  one  or  more  intermediaries   controls,  is
controlled by, or is under common control with such Person, or (b) an officer or
director of such Person or of an Affiliate of such Person  within the meaning of
clause (a) of this  definition.  For purposes of clause (a) of this  definition,
(i) a Person  shall be deemed to control  another  Person if such Person (A) has
sufficient  power to  enable  such  Person to elect a  majority  of the board of
directors of such Person, or (B) owns a majority of the beneficial  interests in
income and capital of such Person;  and (ii) a Person shall be deemed to control
any partnership of which such Person is a general partner.

     "BlueStone  Material  Adverse  Change"  means  since  March 31,  2001,  any
material  adverse  change in the  business,  operations,  properties,  financial
condition,  assets,  liabilities  or results of operations of BlueStone,  or the
occurrence of any event or the existence of any circumstance  that may result in
such a material adverse change,  provided that it is stipulated that any changes
effected by the reorganization of the Predecessor into BlueStone or the purchase
by the Predecessor of certain assets of Trade.com  Global  Markets,  Inc. do not
constitute a BlueStone Material Adverse Change.

     "BlueStone Material Adverse Effect" shall mean a material adverse effect on
the business, operations,  properties,  financial condition, assets, liabilities
or  results of  operations  of  BlueStone  taken as a whole,  or the  ability of
BlueStone  to  consummate  the  transactions  contemplated  by  this  Agreement.
However,  a BlueStone  Material Adverse Effect does not include material adverse
effects on the business,  operations,  properties,  financial condition, assets,
liabilities or results of operations of BlueStone  which occur after the date of
this  Agreement and are caused by downturns in the economy or in the industry in
which BlueStone  operates.

     "BlueStone  Shares" means the shares of capital stock of BlueStone that are
currently issued and outstanding.

     "Closing"  means  the  closing  of the  transactions  contemplated  by this
Agreement on the Closing Date.

     "Closing  Date" means the date on which the Closing  occurs,  as determined
pursuant to Section 2.3.

     "Code" means the Internal Revenue Code of 1986, as amended.

     "Consents"  means the  consents,  permits,  declarations,  or  approvals of
Government  Bodies and other Persons necessary to effect the Merger or otherwise
to consummate the transactions contemplated by this Agreement.



                                 Annex 1 Page 1
<PAGE>

     "Contracts"   means   all   contracts,   consulting   agreements,   leases,
non-governmental licenses and other agreements (including leases for personal or
real  property  and  employment  agreements),  written  or oral  (including  any
amendments and other modifications thereto) that either (a) are in effect on the
date of this  Agreement,  or (b)  are  entered  into  between  the  date of this
Agreement and the Closing Date,  other than such Contracts  which are terminable
by BlueStone or HealthStar, as the case may be, on notice of 120 days or less.

     "Employees"  means the  principals,  officers and employees of BlueStone or
HealthStar, as the case may be.

     "Employee  Licenses" means all  Governmental  Authorizations  issued to any
principal,  officer or employee  of  BlueStone  currently  in effect and used in
connection with the conduct or operations of BlueStone's business, together with
all amendments thereto.

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
amended.

     "Future  Shareholder" means any Person who acquires stock of BlueStone from
and after the date of this Agreement but prior to the Effective Time.

     "GAAP"  means  generally  accepted  United  States  accounting  principles,
applied on a consistent basis.

     "Governmental  Authorization" means any approval, consent, license, permit,
waiver,  or other  authorization  issued,  granted,  given,  or  otherwise  made
available by or under the authority of any Governmental  Body or pursuant to any
Legal Requirement.

     "Governmental Body" means any:

          (a) nation,  state,  county, city, town, village,  district,  or other
     jurisdiction of any nature;

          (b) federal, state, local, municipal, foreign, or other government;

          (c)  governmental  or  quasi-governmental   authority  of  any  nature
     (including any governmental agency, branch, department, official, or entity
     and any court or other tribunal);

          (d) multi-national organization or body;

          (e)  self-regulatory  organization  (including,   without  limitation,
     NASD); or

          (f) body  exercising,  or entitled to  exercise,  any  administrative,
     executive, judicial,  legislative,  police, regulatory, or taxing authority
     or power of any nature.

     "HealthStar  Material  Adverse  Change"  means  since March 31,  2001,  any
material  adverse  change in the  business,  operations,  properties,  financial
conditions,  assets,  liabilities or results of operations of HealthStar, or the
occurrence of any event or the existence of any circumstance  that may result in
such a material adverse change.



                                 Annex 1 Page 2
<PAGE>

     "HealthStar  Material  Adverse Effect" shall mean a material adverse effect
on  the  business,   operations,   properties,   financial  condition,   assets,
liabilities  or results of  operations of  HealthStar  taken as a whole,  or the
ability of  HealthStar  to  consummate  the  transactions  contemplated  by this
Agreement.  However,  a  HealthStar  Material  Adverse  Effect  does not include
material  adverse  effects on the business,  operations,  properties,  financial
condition,  assets,  liabilities  or results of operations  of HealthStar  which
occur  after  the date of this  Agreement  and are  caused by  downturns  in the
economy or in the industry in which HealthStar operates.

     "Intangibles" means all copyrights, trademarks, trade names, service marks,
service names, licenses,  patents, permits,  proprietary information,  technical
information  and data,  machinery  and equipment  warranties,  and other similar
intangible  property rights and interests (and any goodwill  associated with any
of the foregoing)  applied for,  issued to, or owned by BlueStone or under which
BlueStone  is  licensed  or  franchised  and that are used in the  business  and
operations of BlueStone, together with any additions thereto between the date of
this Agreement and the Closing Date.

     "Leased Real Property"  means all real property and all buildings and other
improvements thereon and appurtenant thereto leased or held by BlueStone.

     "Legal Requirement" means any federal,  state, local,  municipal,  foreign,
international,    multinational,   self   regulatory   organization   or   other
administrative  order,  constitution,  law, ordinance,  principle of common law,
rule, regulation, statute, treaty, by-law, or the like.

     "Losses" means any loss,  liability,  damage, cost, or expense,  including,
without limitation, reasonable attorneys' fees and expenses.

     "NASD" means  National  Association  of  Securities  Dealers,  Inc. and its
subsidiaries.

     "Order" means any award,  decision,  injunction,  judgment,  decree, order,
ruling,  writ,  determination,  subpoena,  or verdict entered,  issued, made, or
rendered by any court,  administrative  agency, or other Governmental Body or by
any arbitrator.

     "Ordinary Course of  Business"--an  action taken by a Person will be deemed
to have been taken in the "Ordinary Course of Business" only if:

          (a) such action is consistent  with the past  practices of such Person
     and is taken in the ordinary course of the normal day-to-day  operations of
     such Person;

          (b) such  action  is not  required  to be  authorized  by the board of
     directors  of such Person (or by any Person or group of Persons  exercising
     similar authority); and

          (c) such  action  is  similar  in  nature  and  magnitude  to  actions
     customarily taken,  without any authorization by the board of directors (or
     by any Person or group of Persons  exercising  similar  authority),  in the
     ordinary course of the normal  day-to-day  operations of other Persons that
     are in the same line of business as such Person.



                                 Annex 1 Page 3
<PAGE>

     "Permitted  Encumbrances"  means (a)  encumbrances of a landlord,  or other
statutory  lien not yet due and  payable,  or  landlord's  liens  arising in the
Ordinary  Course of  Business,  (b)  encumbrances  arising  in  connection  with
equipment or maintenance financing or leasing under, in the case BlueStone,  the
terms of the Contracts set forth on the  Schedules,  which  Contracts  have been
made  available  to the  HealthStar  Parties,  or, in the case of  BlueStone  or
HealthStar,  with  respect  to items of  equipment  that are valued at less than
$25,000 each, (c)  encumbrances  for Taxes not yet delinquent or which are being
contested in good faith and by appropriate proceedings if adequate reserves with
respect thereto are maintained on BlueStone's or  HealthStar's,  as the case may
be, books in accordance with generally accepted  accounting  principles,  or (d)
encumbrances that do not materially  detract from the value of any of the assets
of BlueStone or HealthStar, as the case may be, or materially interfere with the
use thereof as currently used.

     "Person"  means  an  individual,  corporation,   association,  partnership,
limited partnership,  joint venture,  trust, estate,  limited liability company,
limited  liability  partnership,  organization  or other entity or  Governmental
Body.

     "Real  Property"  means  all real  property  and all  buildings  and  other
improvements  thereon and  appurtenant  thereto  leased by BlueStone used in the
business or operations of BlueStone.

     "Related Person" means with respect to a particular individual:

          (a) each other member of such individual's Family;

          (b) any Person  that is  directly  or  indirectly  controlled  by such
     individual  or one or more  members of such  individual's  Family;

          (c)  any  Person  in  which  such   individual   or  members  of  such
     individual's  Family hold  (individually  or in the  aggregate)  a Material
     Interest; and

          (d) any Person with  respect to which such  individual  or one or more
     members of such individual's Family serves as a director, officer, partner,
     executor, or trustee (or in a similar capacity).

     With respect to a specified Person other than an individual:

          (a) any Person that  directly or indirectly  controls,  is directly or
     indirectly controlled by, or is directly or indirectly under common control
     with such specified Person;

          (b) any  Person  that  holds a  Material  Interest  in such  specified
     Person;

          (c) each Person that serves as a director, officer, partner, executor,
     or trustee of such specified Person (or in a similar capacity);

          (d) any  Person  in  which  such  specified  Person  holds a  Material
     Interest;


                                 Annex 1 Page 4
<PAGE>

          (e) any Person with respect to which such specified Person serves as a
     general partner or a trustee (or in a similar capacity); and

          (f) any Related  Person of any  individual  described in clause (b) or
     (c).

     For purposes of this definition, (a) the "Family" of an individual includes
(i) the individual, (ii) the individual's spouse, (iii) any other natural person
who is related to the  individual or the  individual's  spouse within the second
degree, and (iv) any other natural person who resides with such individual,  and
(b)  "Material  Interest"  means  direct or indirect  beneficial  ownership  (as
defined  in Rule  13d-3  under the  Securities  Exchange  Act of 1934) of voting
securities or other voting interests representing at least 5% of the outstanding
voting  power  of a Person  or  equity  securities  or  other  equity  interests
representing  at  least  5% of  the  outstanding  equity  securities  or  equity
interests in a Person.

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

     "Securities Act" means the Securities Act of 1933, as amended.

     "Tangible  Personal  Property"  means  all  machinery,   equipment,  tools,
vehicles, furniture, leasehold improvements, office equipment, plant, inventory,
spare parts and other tangible personal property owned or held by BlueStone that
is used or useful in the conduct of the  business or  operations  of  BlueStone,
together with any additions,  substitutions and replacements thereof and thereto
between the date of this Agreement and the Closing Date.

     "Tax" or "Taxes" means any federal,  state, local, or foreign income, gross
receipts,  windfall  profits,  severance,   property,  production,  sales,  use,
license, excise, franchise, capital, transfer, employment, withholding, or other
tax or similar governmental assessment,  together with any interest,  additions,
or penalties with respect  thereto and any interest in respect of such additions
or penalties.

     "Tax Authority" means any Governmental  Body or other authority  exercising
any taxing or tax regulatory authority.

     "Tax Liability" means any liability for Taxes.

     "Taxable Period" means any taxable year or any other period that is treated
as a taxable  year with  respect  to which  any Taxes may be  imposed  under any
applicable statute, rule, or regulation.

     "Tax   Proceeding"   means  any  audit,   examination,   claim,   or  other
administrative or judicial proceeding involving Taxes.

     "Tax Return" means any tax return, declaration of estimated tax, tax report
or other tax statement (including supporting information),  or any other similar
filing  required to be  submitted to any  Governmental  Body with respect to any
Taxes.


                                 Annex 1 Page 5