SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-K

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                For the fiscal year ended Commission file number
                            DECEMBER 31, 1996 0-3296

                               ETHIKA CORPORATION
             (Exact Name Of Registrant As Specified In Its Charter)

                             MISSISSIPPI 64-0440887
                   (State or other jurisdiction (IRS employer
              of incorporation or organization) identification no.)

                            107 The Executive Center
                    Hilton Head Island, South Carolina 29928
                     (Address of Principal Executive Office)

        Registrant's telephone number, including area code: 803-785-7850

           Securities registered pursuant to section 12(g) of the Act:
                   Common Capital Stock par value $1 per share
                                (Title Of Class)

INDICATE  BY CHECK  MARK  WHETHER  THE  REGISTRANT:  (1) HAS FILED  ALL  REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE  SECURITIES  EXCHANGE  ACT OF
1934  DURING  THE  PRECEDING  12 MONTHS  (OR FOR SUCH  SHORTER  PERIOD  THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS),  AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES [ X ]   NO [   ]

INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT  FILERS  PURSUANT TO ITEM 405
OF REGULATION  S-K IS NOT CONTAINED  HEREIN,  AND WILL NOT BE CONTAINED,  TO THE
BEST OF REGISTRANT'S  KNOWLEDGE,  IN DEFINITIVE PROXY OR INFORMATION  STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. [  ]

AS OF MARCH  14,  1997,  14,031,585  COMMON  SHARES  WERE  OUTSTANDING,  AND THE
AGGREGATE  MARKET VALUE OF THE COMMON SHARES (BASED UPON THE CLOSING  AVERAGE OF
THE BID AND ASKED PRICES ON THE  OVER-THE-COUNTER  MARKET) OF ETHIKA CORPORATION
HELD BY NON-AFFILIATES WAS APPROXIMATELY $5,088,255.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      NONE

<PAGE>
                                     PART I

ITEM 1 - BUSINESS

General

Ethika  Corporation  ("Ethika" or the  "Corporation"),  through its wholly-owned
subsidiaries,  Text  Retrieval  Systems,  Inc.  ("TRS"),  a Florida  corporation
acquired  on April  2,  1996 and  Compass  Data  Systems,  Inc.  ("CDS")  a Utah
corporation  acquired on August 17,  1996,  is primarily  engaged in  publishing
electronic  reference  libraries  that link related data sources for  convenient
access  by  personal   computers.   The   Corporation's   future  business  plan
contemplates the acquisition,  ownership,  and operation of companies  primarily
engaged  in  applied  technology.   The  Corporation  proposes  to  finance  its
acquisitions  with its own funds,  issuances  of its common  stock,  and, to the
extent feasible and appropriate, borrowings and public or private financing. For
further information,  see "Recent Developments" below. The term "Corporation" as
used  herein  includes  the  Corporation  and its  subsidiaries  as the  context
indicates.

Recent Developments

The discussion in this report includes  forward-looking  statements that involve
risks  and  uncertainties.   The  Corporation's   actual  results  could  differ
materially from those discussed  herein.  Factors that could cause or contribute
to such  differences  include,  but are not limited to those  discussed  in this
section and elsewhere in this report.

Sale of Life Insurance Company

The  Corporation  was organized in 1966 as a Mississippi  corporation  under the
name "Dixie National Corporation." Until the sale on October 2, 1995 to Standard
Life Insurance  Company of Indiana  ("Standard") of its 99.3% owned  subsidiary,
Dixie National Life Insurance Company ("Dixie Life"), a Mississippi  corporation
organized in 1965, the  Corporation was an insurance  holding company  primarily
engaged  in the life  insurance  business.  Prior  to the  sale of  Dixie  Life,
virtually all of the  Corporation's  consolidated  revenues were  represented by
premium income and net  investment  income  generated in Dixie Life's  insurance
operations.  Dixie Life represented virtually all of the Corporation's principal
assets  and  operations.  The sale of Dixie  Life  has been  accounted  for as a
discontinued operation.  (For further information,  see "Management's Discussion
and Analysis of Financial Condition and Results of Operations" below).

Acquisition Of TRS

On April 2, 1996 the  Corporation  completed the  acquisition  of Text Retrieval
Systems, Inc. ("TRS"), a privately-held  corporation based in Ponte Vedra Beach,
Florida.  The  transaction  has been accounted for as a purchase and accordingly
the results of  operations  of TRS since April 2, 1996 have been included in the
Corporation's   Results  of  Operations.   TRS  publishes  electronic  reference
libraries  that link  related  data  sources for  convenient  access by personal
computers.  The  Corporation  had  previously  acquired a 35% initial  ownership
interest in TRS through the  issuance of 100,000  shares of its stock to the TRS
shareholders  and the extension of a line of credit during 1995.  The completion
of the purchase transaction included cash paid through prior advances to TRS and
the issuance of 2,500,000  shares of contingently  returnable  common stock. The
shares are returnable to the Corporation if certain 1997 earning targets are not
<PAGE>
achieved.  Management  originally  believed it was probable that the established
targets would be met in total; accordingly,  as of April 2, 1996, the fair value
of the 2,500,000  contingent  returnable shares ($1,991,250) was included in the
purchase price resulting in a total  estimated  purchase price at acquisition of
$2,659,482.  In the fourth quarter,  Management determined that earnings targets
would  not be met in  total  and  accordingly,  recorded  an  adjustment  to the
purchase price reducing  intangible assets by the remaining  unamortized balance
related to the contingent shares of $1,792,125.  The Corporation has amended the
agreement  with TRS whereby the earnings  targets have been revised and extended
through December 31, 1997. The Corporation will adjust  intangible assets as the
contingencies  are  resolved.  If the earnings  targets are not totally met, the
former  shareholders  will  return all or part of the  contingent  shares to the
Corporation.

Effective October 1, 1996, the Corporation revised estimates used in determining
the lives of intangible  assets acquired  through its acquisition of TRS and CDS
from five years to three years.

During 1995 and the first  quarter of 1996,  the  Corporation  accounted for its
initial  investment  in TRS by the equity  method under which the  Corporation's
share of the net  loss of the  affiliate  was  recognized  in the  Corporation's
operations and included as an adjustment to the investment  balance.  The losses
recorded by the  Corporation  were  $265,643  and $48,687 for the quarter  ended
March 31, 1996 and the year ended December 31, 1995, respectively.

Amortization  expense of approximately  $503,000  recorded during the year ended
December  31, 1996  relating to TRS  intangible  assets  include a write-off  of
$171,000  for one of the two  products  being  developed  by TRS at the  time of
acquisition (a real estate library product).  During the fourth quarter of 1996,
the Corporation elected to abandon this product because Management  subsequently
determined the product had limited marketability.

Acquisition of CDS

On August 17, 1996 Ethika  purchased  100% of Compass  Data Systems  ("CDS"),  a
privately-held  corporation  based in Salt Lake City,  Utah for a total purchase
price of $500,000.  CDS publishes electronic information reference services to a
wide  variety of  industries  and  organizations.  Among its  principal  product
offerings are state tax law reference  libraries which keep subscribers  current
on tax law  changes.  The  transaction  has been  accounted  for as a  purchase.
Accordingly,  the results of  operations  of CDS since August 17, 1996 have been
included in the Corporation's  results. The transaction was completed through an
exchange of stock. The Corporation  issued 726,612 shares of common stock with a
fair value of $400,000 to Eric R. Fredrickson and Sherry  Fredrickson,  the sole
shareholders  of CDS.  In  addition,  Mr.  Fredrickson  entered  into a two-year
employment contract. He also entered into a three-year non-compete contract. CDS
began operation in May 1991 and currently employs eight full-time employees.

Acquisition of Publishing, Distribution, and Development Rights of CodeManager

On November 22, 1996 the Corporation entered into an agreement with the American
Medical   Association   ("AMA")  to  cooperatively   publish  and  distribute  a
newly-developed  electronic reference library for medical service providers. The
new PC-based  product,  known as  CodeManager,  simplifies and speeds the coding
process of  procedures  and  diagnoses  for health  insurance  claim forms.  The
<PAGE>
publishing,  distribution,  and  future  development  rights of the  CodeManager
Reference Library were purchased from American Practice Management, Inc. ("APM")
and  Consulting  Concepts,  Inc. in a transaction  closed on January 31, 1997 in
exchange for 180,000 shares of Ethika common stock having a fair market value of
approximately $101,250.

Acquisition And Write-Down Of PMM

As previously reported, the Corporation entered into an agreement with Universal
Management Services ("UMS"), a Nevada corporation,  as of October 27, 1994 ("UMS
Agreement")  which agreement was amended and restated  effective as of March 24,
1995 ("Second Amended and Restated UMS Agreement").  The Agreement provided that
UMS had certain  rights,  since  expired,  to assist the  Corporation in placing
shares of the Corporation's  common stock. In connection with the Second Amended
and Restated UMS Agreement,  on June 29, 1995, the Corporation  issued 2,000,000
shares of its common stock in exchange for 16% of the outstanding  common shares
of PMM, a privately-owned company, and 100,000 shares of its common stock for an
option to acquire the remaining  84% of the common shares of PMM for  10,400,000
additional  shares  of the  Corporation's  common  stock.  The  84%  option  was
relinquished by the Corporation in July 1995.

Due to the  negative  equity  recorded on the PMM  December  31, 1995  unaudited
financial statements,  the Corporation has written its investment in PMM down to
zero. As reported in this Form 10-K Annual Report,  this resulted in a charge to
December 31, 1995 earnings of $1,051,217.  The Corporation is currently involved
in litigation to recover its investment in PMM. (See "Legal Proceedings" below).

Sale Of Investment In Alanco Stock

The UMS  Agreement  provided,  among  other  things,  that UMS would  assist the
Corporation in locating  potential  investors for its common stock.  On November
29,  1994,  the  Corporation  received  common  stock  of  Alanco  Environmental
Resources,  Inc. ("Alanco") having a market value of $2,000,000 in consideration
for the sale, with UMS'  assistance,  of 2,000,000  shares of the  Corporation's
common stock.  This  transaction has been previously  reported and is more fully
discussed  in the annual  and  quarterly  reports  and the  Corporation's  Proxy
Statement dated September 5, 1995.

Alanco is a  publicly-traded  company  that  files  periodic  reports  under the
Securities Exchange Act of 1934. In December 1995 the Corporation sold 75,000 of
its shares of Alanco stock in the open market and realized a $10,020 profit.  In
addition,  during the year ended December 31, 1995, the Corporation  recorded an
unrealized  gain on its  remaining  Alanco stock of  $347,859.  During the first
quarter of 1996, the Corporation sold the remaining Alanco shares in open market
transactions  resulting  in the  recognition  of a gain of $671,160 for the year
ended  December  31,  1996.  (See  "Legal   Proceedings"  below  for  additional
information).

Future Business Plans

The  acquisitions of TRS, CDS, and CodeManager mark the entry of the Corporation
into the applied technology area which, in Management's  opinion,  offers strong
growth  potential.  The Corporation is also considering other lines of business,
but does not expect to reenter the life insurance  business.  The Corporation is
<PAGE>
exploring  several  potential  business  opportunities,  principally  in applied
technology,  and  is  engaged  in  discussions  concerning  companies  that  the
Corporation may have an interest in acquiring.  However,  these  discussions are
essentially in their  preliminary  stages and no agreements have been reached as
to any further  acquisitions.  The Corporation's  business plan contemplates the
operation as well as the ownership of businesses it may acquire in the future.

Employees

At  December  31,  1996,  the  Corporation  had  (in all  locations)  thirty-two
employees including Officers.  (See "Recent  Developments" above for acquisition
and divestiture information).

ITEM 2 - PROPERTIES

Vanguard,  a wholly-owned  subsidiary of the  Corporation,  continues to own the
previous  home  office of the  Corporation,  a  two-story  building  located  in
Jackson,  Mississippi.  Under the terms of the sale of Dixie  Life,  Standard is
obligated  to pay  $15,000  per month plus  certain  expenses  to Vanguard on an
existing lease that expired December 31, 1996.  Standard is currently in default
of this  agreement  by not paying  rent and  certain  other  charges due for the
months of October,  November,  and December,  1996. 

ITEM 3 - LEGAL PROCEEDINGS

As previously reported,  on September 16, 1996 a lawsuit was filed in the United
States  District  Court  for  the  Southern  District  of  Mississippi,  Jackson
Division,  styled EURAM B.V.,  Peeper,  et al. vs. Ethika by certain  plaintiffs
against  Ethika and its Chairman,  S.L.  Reed,  Jr. This suit alleges  breach of
fiduciary  duties,  fraud,  conspiracy to breach  fiduciary  duty of loyalty and
care, breach of contract,  misrepresentation,  and conversion. These allegations
arise from the transactions  surrounding the Corporation's issuance of 2,000,000
shares  of its stock in  exchange  for 16%  interest  in PMM and the sale by the
Corporation  of  $2,000,000  of its stock in exchange for shares of Alanco stock
with an aggregate  market value of $2,000,000.  On October  30,1996 Ethika filed
answers to the suit and instituted a counterclaim  against the individuals named
in the above  suit and other  defendants  not named in the  original  suit.  The
Corporation  believes  , on the  advice  of  outside  legal  counsel,  that  the
plaintiffs'  suit is  without  merit,  and that its  resolution  will not have a
material effect on the Corporation,  however, it is too early in the proceedings
to assure the outcome.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable
<PAGE>
                                     PART II

ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Corporation's common stock is traded in the  over-the-counter  market and is
quoted on the  NASDAQ  Small  Cap  market  system  under the  symbol  ETKA.  The
following  table sets forth the reported high and low sales price as reported by
the National Quotation Bureau, Inc. for the quarters indicated. This information
does not include retail markups, markdowns, or commissions.
<TABLE>
<CAPTION>
                            1996                               1995
          ----------------------------------------------------------------------
                    High            Low               High              Low
                  -------          ------            ------            -----
<S>                <C>             <C>               <C>               <C>  
Quarter
First                1              1/8              1 1/32            13/16
Second              7/8             3/8              1 1/32            13/16
Third              11/16            3/8                 1               1/2
Fourth               1             13/32             1 5/16             3/8
</TABLE>

No  dividends  were paid on the  Corporation's  common stock during the last two
years,  and the Corporation  does not intend to pay dividends in the foreseeable
future.  The number of holders of record of common stock of the  Corporation  on
March 14, 1997 was 2,412.

The  Corporation  issued  shares  of  common  stock  in  connection  with  three
acquisition  transactions in 1996. These include the issuance of: 726,612 shares
issued  in  August  1996  in  consideration  for  CDS  (363,306  shares  to Eric
Fredrickson and 363,306 shares to Sherry Fredrickson);  180,000 shares issued in
February 1997 in consideration  for the CodeManager  Reference  Library (135,000
shares to Consulting  Concepts,  Inc. and 45,000  shares to APM);  and 2,500,000
shares  issued  in  April  1996  in  consideration  for  the  completion  of the
acquisition of TRS. The securities were issued in private transactions  pursuant
to  negotiated   purchase  agreements  and  in  reliance  upon  exemptions  from
registration  pursuant to Regulation D and Section 4(2) of the Securities Act of
1933. See "Business - Recent Developments."
<PAGE>
ITEM 6 - SELECTED FINANCIAL DATA

Selected consolidated financial data for the Corporation and its subsidiaries is
set forth in the following  table.  (For additional  information,  see "Notes to
Consolidated Financial Statements").
<TABLE>
<CAPTION>
                                  1996              1995              1994              1993             1992
                             ------------      ------------      ------------      ------------      ------------
<S>                          <C>               <C>               <C>               <C>               <C>
FOR THE YEAR ENDED
DECEMBER 31:

  Net software sales ...     $    287,164
Loss from continuing
operations .............        2,941,852      $  1,439,976      $    119,564      $    117,910      $    115,840
Other income (expense) .          658,461        (1,013,430)           29,929               --                --
Loss from discontinuing
operations .............             --           4,570,683         2,465,144           839,228          (964,824)
                             ------------      ------------      ------------      ------------      ------------
NET LOSS ...............     $ (2,283,391)     $ (6,849,572)     $ (2,554,779)     $   (957,138)     $    848,984
                             ============      ============      ============      ============      ============

PER COMMON SHARE AMOUNTS
  Primary and fully
diluted
    Net income (loss) ..     $      (.209)     $      (.723)     $       (.39)     $       (.15)     $        .13
                                               ============      ============      ============      ============

AT YEAR-END:
  TOTAL ASSETS .........     $  3,917,048      $  5,103,923      $ 44,577,452      $ 56,255,734      $ 55,540,644
                             ============      ============      ============      ============      ============
Total Debt .............     $    321,293      $    470,507      $  6,103,839      $  6,253,670      $  7,003,517
                             ============      ============      ============      ============      ============
</TABLE>


ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
         RESULTS OF OPERATIONS

The following should be read in conjunction with the Selected Financial Data and
the Consolidated  Financial  Statements and notes thereto appearing elsewhere in
this report.

RESULTS OF OPERATIONS

During 1995 the Corporation sold its insurance company  operations which was its
only business in prior years and,  therefore,  there are no comparative  revenue
amounts.

The  Corporation  began its transition to an applied  technology  company during
1996 through the acquisition of TRS and CDS (See "Recent  Developments"  above).
TRS and CDS are engaged in publishing  electronic  reference libraries that link
related data sources for convenient access by personal computers.
<PAGE>
These companies enter into software subscription agreements with their customers
to  provide  periodic  updates  to the  information  contained  in  the  various
products. Revenue is recognized ratably over the term beginning with the sale of
the product and ending on the  subscription  renewal  date.  Revenue  recognized
during 1996 under this method was $287,164 giving rise also to deferred  revenue
of approximately  $243,399 which will be recognized  during 1997.  Approximately
48% of the 1996  revenues  were  derived  from the  HR/Comply  product,  a human
resource library marketed to Human Resource professionals throughout the country
by TRS. Selling, general, and administrative expenses increased by approximately
$1,010,261  resulting  primarily from increased legal fees due to the litigation
as  discussed  in Item 3 - Legal  Proceedings,  acquisition  search and  related
costs,  and  developmental  costs  associated  with completing and marketing the
HR/Comply product.  Amortization expense increased by approximately $571,836 due
to the  amortization  of intangible  assets acquired  through the  Corporation's
acquisition  program.  Included in the  amortization  expense is a write-off  of
$171,000  for one of the two  products  being  developed  by TRS at the  time of
acquisition  that will no longer be  marketed.  Other  income and expense  items
generated  $658,461 in income  compared to a  $1,013,430  loss in 1995.  This is
primarily  due to  the  increase  in  rental  income  on  the  former  corporate
headquarters  located in  Jackson,  Mississippi;  interest  income  increase  of
approximately  $70,000  due to more cash  investments;  a decrease  in  interest
expense of $396,080 due to the lower average debt level; the gain on the sale of
the Alanco stock in 1996 of $671,000;  the write-off of the Corporation's equity
interest  in PMM of  $1,051,000;  and the  unrealized  gain in  Alanco  stock of
$358,000 in 1995.

There were no  provisions  or benefits  from income taxes in 1996 due to taxable
net  operating  loss  carry-forwards   generated  by  current  operations.   The
realization of future tax benefits from these items is uncertain at this time.

On October 2, 1995, the Corporation  completed the sale of Dixie Life, which was
99.3% owned by the  Corporation,  to  Standard.  The sale  resulted in a loss of
$4,174,535  ($.441 per share).  In accordance with Accounting  Principles  Board
Opinion No. 30 (APB 30) which calls for reporting the operations of discontinued
operations  as  a  single  net  amount  in  the  statement  of  operations,  the
Corporation's  prior year's  financial  statements have been restated to reflect
discontinued operations.  The Company incurred a net loss of $ 6,849,572 in 1995
compared to a net loss of $2,554,779 in 1994. On a per-share  basis the net loss
for 1995 was $.72 compared to a net loss of $.39 in 1994.

Liquidity And Capital Resources

The  Corporation  accomplished  the  acquisitions  of TRS  and CDS  through  the
issuance of its common  stock.  Management  anticipates  to  continue  using its
common stock to acquire additional companies in the technology field. Management
believes that its current working  capital and anticipated  levels of internally
generated funds will be sufficient to fund its operating,  product  development,
and capital expenditure requirements.  This belief is based on the Corporation's
current and planned level of operations.  During 1996 the Corporation  generated
approximately   $2,900,000  of  cash  flow  from  the  sale  of  its  marketable
securities.  This was a  non-recurring  transaction.  At December 31, 1996,  the
Corporation had approximately $1,906,000 in cash.
<PAGE>
Recent Accounting Pronouncements

In March 1997 the  Financial  Accounting  Standards  Board  issued  Statement of
Financial  Accounting  Standards  No.  128  -  Earnings  Per  Share,  which  the
Corporation is required to adopt next year. Basic earnings per share, as defined
by the new standard, will represent only the weighted-average shares outstanding
and will exclude common share equivalents from the calculation. Diluted earnings
per  share,  as  defined  by  the  new  standard,  would  include  common  share
equivalents.   The   Corporation   does  not  expect  that  this  standard  will
significantly affect the reporting of the results of operations.

Limited  Operating  History,  New  Business  Strategy and  Potential  Changes to
Business Strategies

The Corporation has had a limited  operating  history since the sale of its life
insurance  subsidiary.  The Corporation reported a net loss of $2,283,391 and an
accumulated  deficit of $7,421,470  for its fiscal year ended December 31, 1996.
No  assurance  can be given  that the  Corporation  will be able to  achieve  or
sustain profitable operations.

The Corporation's  current business strategy is to pursue the acquisition of new
business  opportunities,  initially  focusing on  businesses  utilizing  applied
technology.  The Corporation began  implementing this new strategy in early 1996
based on Management's analysis of the potential markets, products, opportunities
and  difficulties  that face the  Corporation.  There can be no  assurance  that
underlying  assumptions  accurately reflect trends in the industry or market and
industry and customer  acceptance of the target products.  Competitive forces on
marketing, distribution, and price of the Corporation's products, coupled with a
need to generate new and  innovative  developments  on a continual  basis,  make
estimates of customer acceptance,  sales, revenues and costs extremely difficult
and unpredictable.  There is no assurance that factors may not arise,  presently
known and unknown,  that could  dramatically alter or diminish the Corporation's
market opportunities or the value of its products.

The Corporation  continues to focus on acquiring companies and products in areas
complementary to its current business, but no assurance can be given that it can
identify and acquire such  companies  and  products on terms  acceptable  to the
Corporation  or  that,   once  acquired,   such  businesses  and  products  will
successfully  contribute to the growth of the Corporation.  The Corporation may,
from time to time,  undertake  acquisitions  or  transactions  in businesses and
industries  different from those currently  engaged in by the  Corporation.  The
effectiveness  of the  Corporation's  strategies will not be measurable for some
period of time.

Product Development and Technological Change

The Corporation  must  continually  update the content of its products and adapt
its products to emerging and changing personal computer systems. The Corporation
presently  delivers its software  products in CD-ROM  format for use on personal
computers. No assurance can be given that CD-ROM technology will not be replaced
by other information distribution and access technologies, such as the Internet,
or that the  Corporation  could  adapt  its  products  to any  such  alternative
technologies  on a timely  basis.  Furthermore,  the  Corporation  may choose to
invest significant  resources to explore the feasibility of adopting alternative
technologies.
<PAGE>
From time to time,  operating system and text retrieval  system  developers will
announce  substantially  modified  versions  of their  systems.  Following  such
proposed  announcements,  the Corporation may be required to expend  substantial
financial   and   personnel   resources  to  achieve   compatibility   with  the
Corporation's  products,  the costs of which will  increase  as the  Corporation
offers a greater number of products.  Should  modifications  of computer  system
requirements  occur without the  Corporation  having the  opportunity to develop
products compatible with such modifications, the resulting decline in demand for
the  Corporation's  products  could  have  a  material  adverse  effect  on  the
Corporation's results of operations and financial condition.

The electronic information  distribution market is characterized by continuously
evolving  standards  and  technology.  The  Corporation's  ability to anticipate
industry  standards,  to continue to apply  advances in  electronic  information
distribution  technology and to develop new complementary  products and services
will be a  significant  factor in the  Corporation's  ability to grow and remain
competitive.  The  Corporation's  business  and results of  operations  could be
materially  and  adversely  affected  if new  technologies  were  introduced  or
alternative  technology  developed  to  displace  widespread  use of the current
systems.  There can be no assurance that the Corporation will be able to respond
in a timely manner to  technological  changes or that the ability of competitors
to  successfully  incorporate  evolving  standards  and  technologies  into  new
products will not render the Corporation's products noncompetitive.  The failure
by the Corporation to adapt to or incorporate new standards or technology  could
have a material  adverse  effect on the  Corporation's  business  and results of
operations.

Dependence on Relationship with Folio Corp.

The software  products  currently  distributed by the  Corporation,  and certain
products which the  Corporation  is negotiating to acquire,  utilize text search
software  developed  by Folio Corp.  ("Folio").  The  Corporation  relies on its
relationship  with  Folio,   which  includes   licensing  of  Folio  technology,
collaborative   product   development   and  product   support.   Folio  is  not
contractually  obligated to continue such  collaborative  development or support
activities and could discontinue such activities at any time. In addition, Folio
is not contractually obligated to renew its licenses with the Corporation. Folio
is  collaborating   with  other  vendors  of  products  that  compete  with  the
Corporation's  products,  and Folio may elect not to renew its licenses with the
Corporation in the future. There can be no assurance that Folio will continue to
cooperate with the Corporation, and the inability of the Corporation to maintain
and further develop its  relationship  with Folio would have a material  adverse
effect on the Corporation's results of operations.

Early State of Development of Industry; Unpredictable Market Acceptance

While the  Corporation  believes  that the  market  and  demand  for  electronic
information  retrieval  systems will continue to grow, there can be no assurance
as to the extent of any such  growth.  In  addition,  even if there is continued
growth in the use of such systems,  there can be no assurance that an increasing
number of customers  will elect to use products  such as the  Corporation's,  to
fulfill  their needs,  in lieu of obtaining  and using  alternative  systems and
equipment  to  fulfill  such  needs.  The  Corporation's   estimates  of  future
performance are based on Management's current analysis of the potential markets,
products, opportunities and difficulties that face the Corporation. There can be
no  assurance  that  underlying  assumptions  accurately  reflect  trends in the
industry or market and industry and consumer reactions to the products.
<PAGE>
Competition

The  Corporation  competes in the  marketplace  primarily  with other  companies
offering software products on federal and state tax regulations,  legal resource
materials and related matters,  and with larger  publishers of traditional print
compilations  of such  materials.  Existing  competitors may continue to broaden
their  product  lines  and  potential  competitors,   including  large  software
manufacturers  and publishers,  may enter or increase their focus on the market,
resulting  in  greater   competition  for  the  Corporation.   New  or  existing
competitors may also utilize new technologies,  such as the Internet, to develop
alternative  systems for delivering these types of information.  There can be no
assurance  that  any of the  Corporation's  products  will  compete  effectively
against other products in general or legal, tax and related information products
in particular.  The Corporation's  competitors  include many companies,  most of
which have substantially greater financial, development, marketing and personnel
resources than those of the Corporation.

Dependence on Key Personnel; Integration of New Management

The Corporation's  future success depends to a significant  extent on its senior
management and other key employees,  including key  development  personnel.  The
loss of the services of any of these  individuals or group of individuals  could
have a material adverse effect on the Corporation's  results of operations.  The
Corporation  also believes that its future  success will depend in large part on
its ability to attract and retain additional key employees. Competition for such
personnel  in the  computer  industry is intense,  and there can be no assurance
that the  Corporation  will be  successful  in  attracting  and  retaining  such
personnel.

Intellectual Property and Proprietary Rights

The  Corporation  relies  primarily on a combination  of copyright and trademark
laws, trade secrets,  confidentiality  procedures and contractual  provisions to
protect its  proprietary  rights.  The  Corporation  currently has no registered
trademarks,  copyrights, patents or patent applications pending. The Corporation
seeks to protect its software,  documentation  and other written materials under
trade secret and copyright laws, which afford only limited protection.

The  Corporation  seeks to protect its brand names  under  trademark  and unfair
competition laws.  Despite the Corporation's  efforts to protect its proprietary
rights,  unauthorized  parties may attempt to copy aspects of the  Corporation's
products  or to obtain  and use  information  that the  Corporation  regards  as
proprietary.   Policing  unauthorized  use  of  the  Corporation's  products  is
difficult,  and while the Corporation is unable to determine the extent to which
piracy of its software products exists,  software piracy can be expected to be a
persistent  problem.  There can be no assurance that the Corporation's  means of
protecting  its  proprietary  rights will be adequate or that the  Corporation's
competitors will not independently develop similar technology.

Potential Volatility of Trading in the Corporation's Common Stock

Trading  volumes of the  Corporation's  common stock have been  relatively  low.
Factors such as variations in the Corporation's revenue,  earnings and cash flow
and  announcements  of  technological  innovations  or price  reductions  by the
Corporation, its competitors,  Folio, or providers of alternative products could
cause  the  market  price  of  the  Corporation's   common  stock  to  fluctuate
<PAGE>
substantially.   In  addition,  the  stock  markets  recently  have  experienced
significant  price and  volume  fluctuations  that  particularly  have  affected
technology-based  companies  and resulted in changes in the market prices of the
stocks of many  companies  that have not been directly  related to the operating
performance of those companies.

NASDAQ Qualification Standards; "Penny Stock" Regulations

The  Corporation's  securities  are  currently  traded on the NASDAQ  "Small-Cap
Market"  system.  Under  the rules of the  National  Association  of  Securities
Dealers,  Inc.  ("NASD"),  in order  to  maintain  listing  in the  system,  the
Corporation  must,  among  other  things,  have at least  $2,000,000  in assets,
$1,000,000  in capital,  a minimum  bid price for its common  stock of $1.00 per
share,  and at least  two  market  makers.  The  Corporation's  common  stock is
currently  trading  below $1.00 per share,  but the  Corporation  is entitled to
continue its listing pursuant to a provision providing  exceptions for companies
with a market float in excess of $1,000,000  and at least  $2,000,000 in capital
and surplus.  The NASD has commenced the  elimination of this  exception,  which
will  require  that the  Corporation's  share  price be at least  $1.00  for the
Corporation  to continue its listing on NASDAQ.  This  amendment will permit the
Corporation to maintain the standards for NASDAQ  Small-Cap  Market listing with
respect to its common  stock only if the minimum bid price of the  Corporation's
common stock rises to, and remains at or above, $1.00. No assurance can be given
that  this will be  achieved  and  sustained.  If the  Corporation  is unable to
continue to satisfy the listing maintenance criteria, its listed securities will
be  subject to  delisting.  Trading,  if any,  in the  listed  securities  would
thereafter  cease to be quoted in the NASDAQ  system,  and would be conducted in
the over-the-counter market with inter-dealer bid and ask price quotes published
in what are commonly referred to as the "pink sheets."

In  addition,  if the  Corporation  fails to maintain  NASDAQ  Small-Cap  Market
listing for its  securities,  and no other  exclusion  from the  definition of a
"penny stock" under the Securities  Exchange Act of 1934 (the "Exchange Act") is
available,  then any  broker  engaging  in a  transaction  in the  Corporation's
securities  would be  required to provide any  customer  with a risk  disclosure
document,   disclosure  of  market  quotations,   if  any,   disclosure  of  the
compensation  of the  broker-dealer  and its  salesperson in the transaction and
monthly  account  statements  showing  the  market  values of the  Corporation's
securities  held in the  customer's  accounts.  The bid and offer  quotation and
compensation information must be provided prior to effecting the transaction and
must be contained on the customer's  confirmation.  If brokers become subject to
the "penny  stock"  rules when  engaging in  transactions  in the  Corporation's
securities, they would become less willing to engage in such transactions.
<PAGE>


ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES




    Report of independent accountants 

    Report of independent accountants          

    Consolidated balance sheet as of December 31, 1996 and 1995 

         Consolidated statement of operations for the three years ended
      December 31, 1996, 1995, and 1994

    Consolidated statement of cash flows for the three years ended
      December 31, 1996, 1995, and 1994

    Consolidated statement of changes in stockholders' equity for the three
      years ended December 31, 1996, 1995, and 1994

    Notes to Consolidated Financial Statements


<PAGE>




                        Report of Independent Accountants 


To the Board of Directors and Shareholders
of Ethika Corporation

In our opinion, the consolidated financial statements listed in the accompanying
index present fairly, in all material respects, the financial position of Ethika
Corporation and its  subsidiaries at December 31, 1996, and the results of their
operations  and their  cash  flows for the year  ended  December  31,  1996,  in
conformity  with  generally  accepted  accounting  principles.  These  financial
statements   are  the   responsibility   of  the   Company's   management;   our
responsibility  is to express an opinion on these financial  statements based on
our audits.  We  conducted  our audit of these  statements  in  accordance  with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable  assurance about whether the financial statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and  disclosures  in the financial  statements,
assessing the  accounting  principles  used and  significant  estimates  made by
management,  and evaluating the overall  financial  statement  presentation.  We
believe  that our audit  provides a reasonable  basis for the opinion  expressed
above.



/s/Price Waterhouse, LLP
------------------------
PRICE WATERHOUSE, LLP
Atlanta, Georgia
March 27, 1997

<PAGE>


INDEPENDENT AUDITOR'S REPORT


To The Shareholders
Ethika Corporation (formerly Dixie National Corporation)
Hilton Head Island, SC



We  have  audited  the  accompanying   consolidated   balance  sheet  of  Ethika
Corporation  (formerly  Dixie  National  Corporation)  and  subsidiaries  as  of
December  31,  1995  and the  related  consolidated  statements  of  operations,
stockholders'  equity  and cash  flows for each of the two  years in the  period
ended December 31, 1995. These financial  statements are the  responsibility  of
the Company's  management.  Our  responsibility  is to report on these financial
statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements, as restated,  referred to
above present fairly, in all material respects, the financial position of Ethika
Corporation  and  subsidiaries  as of December 31, 1995 and the results of their
operations  and their cash  flows for each of the two years in the period  ended
December 31, 1995, in conformity with generally accepted accounting principles.


/s/Horne CPA Group
------------------
HORNE CPA GROUP


Jackson, Mississippi
March 7, 1996,  except as to
the restatement as described in
Note 1 which is as of March 27, 1997.
<PAGE>
<TABLE>
<CAPTION>
       Ethika Corporation and Subsidiaries
       Consolidated Balance Sheet December 31,  1996 and 1995


                                                                     1996              1995
                                                                ------------      ------------
<S>                                                             <C>               <C>
Current Assets:
  Cash and cash equivalents ...............................     $  1,906,085      $  1,377,869
  Accounts receivable, net of allowance for doubtful
    accounts of $8,258 and $0 .............................           86,235            14,027
  Federal income tax refund receivable ....................          135,817           302,000
  Leases receivable .......................................          105,705            98,097
  Investment securities- Trading ..........................        2,227,904
  Inventory ...............................................           21,672              --
                                                                ------------      ------------

Total Current Assets ......................................        2,255,514         4,019,897

Property and equipment, net of accumulated depreciation ...          499,892           410,935
Leases  receivable ........................................          277,430           373,175
Intangible and other assets, net of accumulated
    amortization of $567,233 and $0 .......................          884,212           299,916
                                                                ------------      ------------

Total Assets ..............................................     $  3,917,048      $  5,103,923
                                                                ============      ============

LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities:

  Accounts payable and accrued expenses ...................     $    527,762      $     42,578
  Current portion of notes payable ........................          116,201           107,862
  Deferred revenue ........................................          243,399              --
                                                                ------------      ------------

Total Current Liabilities .................................          887,362           150,440

Notes payable .............................................          205,092           362,640
Deferred income taxes .....................................           45,500           127,483
                                                                ------------      ------------

Total Liabilities .........................................        1,137,954           640,563
                                                                ------------      ------------
<PAGE>
<CAPTION>
       Ethika Corporation and Subsidiaries
       Consolidated Balance Sheet December 31,  1996 and 1995
       (continued)

                                                                     1996              1995
                                                                ------------      ------------
<S>                                                             <C>               <C>

Stockholders' Equity
Common Stock, $1 par value authorized 50,000,000 shares;
    issued 13,851,585 shares and 10,624,973; outstanding ..       11,324,273        10,597,661
 13,824,273 shares and 10,597,661 shares; December 31, 1996
include 2,500,000 contingently returnable shares
Discount on Common Stock ..................................       (1,123,709)         (996,222)
Accumulated Deficit .......................................       (7,421,470)       (5,138,079)
                                                                ------------      ------------
Total Stockholders' Equity ................................        2,779,094         4,463,360
                                                                ------------      ------------
Contingencies
                                                                ------------      ------------
Total Liabilities and Stockholders' Equity ................     $  3,917,048      $  5,103,923
                                                                ============      ============

    The Accompanying notes are an integral part of these Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Ethika Corporation and Subsidiaries
Consolidated Statement of Operations
For the years ended December 31, 1996, 1995 and 1994

                                                                       1996            1995             1994
                                                                  -----------      -----------      -----------
<S>                                                               <C>              <C>              <C>
Software sales ..............................................     $   287,164
Costs and expenses
  Cost of Sales .............................................         193,869
  Selling ,general and administrative and product development       2,394,455      $ 1,384,194
  Depreciation and Amortization .............................         640,692           55,782      $   119,564
                                                                  -----------      -----------      -----------

Loss from operations ........................................      (2,941,852)      (1,439,976)        (119,564)
                                                                  -----------      -----------      -----------

Other income ( expense)
  Rental Income .............................................         138,775           46,400
  Interest income ...........................................         174,945          101,565
  Gain (Loss) on Disposal of Fixed Assets ...................         (23,415)          16,835
  Gain (Loss) from investment securities ....................         671,160         (693,339)
  Interest expense ..........................................         (37,361)        (436,204)
  Equity in net loss of affiliate ...........................        (265,643)         (48,687)            --
                                                                                   -----------      -----------

                                                                      658,461       (1,013,430)            --


Loss from continuing operations .............................      (2,283,391)      (2,453,406)        (119,564)

Income tax benefit ..........................................            --            174,517           29,929
                                                                  -----------      -----------      -----------

Loss from continuing operations .............................      (2,283,391)      (2,278,889)         (89,635)

Discontinued operations:
  Loss  from operations of Dixie Life Insurance Company .....               0         (396,148)      (1,268,333)

  Loss on disposal of Dixie Life Insurance Company ..........               0       (4,174,535)      (1,196,811)
                                                                  -----------      -----------      -----------

Net loss ....................................................     ($2,283,391)     ($6,849,572)     ($2,554,779)
                                                                  ===========      ===========      ===========

Earnings per share primary and fully diluted:
Loss from continuing operations .............................     ($    0.209)     $    (0.240)     ($    0.011)
                                                                  ===========      ===========      ===========

Loss from discontinued operations ...........................                      $    (0.440)     ($    0.151)
                                                                                   ===========      ===========

Primary and fully diluted net loss per share ................     ($    0.209)     $    (0.720)     ($    0.390)
                                                                  ===========      ===========      ===========

The Accompanying notes are an integral part of these Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Ethika Corporation and Subsidiaries
Consolidated Statement of Cash Flows
For the years ended December 31, 1996, 1995 and 1994
                                                                           1996             1995             1994
                                                                       -----------      -----------      -----------
<S>                                                                    <C>              <C>              <C>
Cash Flows from Operating Activities:
Net loss .........................................................     ($2,283,391)     ($6,849,572)     ($2,554,779)
Adjustments to reconcile net income (loss)
  to net cash provided by operating activities:
Depreciation and Amortization ....................................         640,692           55,782        1,540,507
Net loss in earnings of affiliate ................................         265,643
Loss on disposal of fixed assets .................................          23,415
Realized and unrealized gain (loss) on investment securities .....        (672,785)         755,919
Provision for deferred taxes .....................................         (81,983)
Net loss on disposal of discontinued operations ..................       4,174,535        1,196,811
Changes in balance sheet accounts:
(Increase) decrease in  accounts receivable ......................         (33,178)        (137,826)       1,623,993
(Increase) decrease in  income taxes .............................         166,183          123,884         (748,597)
(Increase) in  inventory .........................................            (584)
Decrease in accrued investment income ............................         412,705
Increase ( decrease) in accounts payable and other liabilities ...         142,533         (872,488)       1,967,449
Increase ( decrease) in deferred revenue .........................         188,792
Deferred policy acquisition costs ................................        (307,364)      (1,285,902)
Value of insurance purchased, net ................................         699,285
Sales of investment securities - trading .........................       2,900,689
                                                                       -----------      -----------      -----------
Net cash provided by (used from) operating activities ............       1,256,026       (1,945,140)       1,739,482
                                                                       -----------      -----------      -----------

Cash flows from investing activities:
Purchases of equipment ...........................................         (45,640)               0          (96,046)
Payments received from leases ....................................          88,137
Payments for acquisitions ........................................        (621,098)
Proceeds from investments sold or matured ........................       4,858,753        5,541,253
Costs of investments acquired ....................................      (2,314,683)      (9,411,308)
Temporary investments, net .......................................       4,192,867       (1,819,899)
Proceeds from sales of equipment and other assets ................         410,771
Proceeds from sale of discontinued operations, net ...............       1,350,640
                                                                       -----------      -----------      -----------
Net cash (used from) provided by investing activities ............        (578,601)       8,498,348       (5,786,000)
                                                                       -----------      -----------      -----------
<PAGE>
<CAPTION>
Ethika Corporation and Subsidiaries
Consolidated Statement of Cash Flows (continued)
For the years ended December 31, 1996, 1995 and 1994
                                                                           1996             1995             1994
                                                                       -----------      -----------      -----------
<S>                                                                    <C>              <C>              <C>
Cash flows from financing activities:
Net borrowing (payments) on debt .................................        (149,209)      (5,633,336)        (149,831)
Purchase of treasury stock .......................................          (1,112)
                                                                       -----------      -----------      -----------
Net cash used from financing activities ..........................        (149,209)      (5,634,448)        (149,831)
                                                                       -----------      -----------      -----------
Net increase (decrease) in cash and cash equivalents .............         528,216          918,760       (4,196,349)
Cash and cash equivalents - beginning of period ..................       1,377,869          459,109        4,655,458
                                                                       ===========      ===========      ===========
Cash and cash equivalents - end of period ........................     $ 1,906,085      $ 1,377,869      $   459,109
                                                                       ===========      ===========      ===========
Supplemental Cash Flow Information:
Cash payments for income taxes ...................................     $         0      $   129,429      $   718,668
                                                                       ===========      ===========      ===========
Cash payments for interest .......................................     $    39,866      $   492,797      $   505,318
                                                                       ===========      ===========      ===========
Supplemental Schedule of Non-Cash
Investing and Financing Activities:
Notes issued in exchange for debentures ..........................                                       $   485,000
                                                                                                         ===========
Common stock issued for equity securities of nonaffiliated company                      $ 2,000,000
                                                                                        ===========





The Accompanying notes are an integral part of these Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Ethika Corporation
Statement of Changes in Shareholders' Equity
For the years ending December 31, 1996, 1995 and 1994




                                         Common                        Discount on       Unrealized                       Total
                                         Stock                           Common           Holding       Retained       Shareholders'
                                         Shares          Amount          Stock             Losses       Earnings          Equity
                                         ------          ------          -----             ------       --------          ------
<S>                                  <C>             <C>              <C>             <C>              <C>             <C>
Balance at December 31, 1993 ...       6,394,973     $  6,394,973                                      $  4,266,272    $ 10,661,245

Net loss .......................                                                                         (2,554,779)     (2,554,779)

Unrealized holding losses on ...                                                      ($   925,011)                        (925,011)
  investments available for sale

Common stock issued ............       2,000,000        2,000,000                                                         2,000,000
                                     -----------     ------------     ------------    ------------     ------------    ------------

Balance at December 31, 1994 ...       8,394,973        8,394,973                         (925,011)       1,711,493       9,181,455


Net loss .......................                                                                         (6,849,572)     (6,849,572)

Common stock issued ............       2,202,688        2,202,688                                                         2,202,688

Recovery of holding losses in
  investments available for sale                                                           925,011                          925,011

Discount on common Stock .......                                      ($   996,222)                                        (996,222)
                                     -----------     ------------     ------------    ------------     ------------    ------------

Balance at December 31, 1995 ...      10,597,661       10,597,661         (996,222)              0       (5,138,079)      4,463,360


Net loss .......................      (2,283,391)      (2,283,391)

Acquisitions ...................         726,612          726,612         (127,487)                                         599,125

Balance at December 31, 1996 ...      11,324,273     $ 11,324,273     $ (1,123,709)    $         0     $ (7,421,470)   $  2,779,094
                                     ===========     ============     ============    ============     ============    ============

The accompanying notes are an integral part of the consolidated financial statements
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ETHIKA CORPORATION
DECEMBER 31, 1996

NOTE 1--BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Nature of  operations:  Ethika  corporation  (the  Corporation)  operates  as an
applied  technology company through two of its wholly-owned  subsidiaries,  Text
Retrieval  Systems,  Inc.  (TRS) and Compass  Data Systems  (CDS).  See business
combination  information  in Note 4.  TRS and  CDS  are  engaged  in  publishing
electronic  libraries  that link related data sources for  convenient  access by
personal computers.  Certain products of TRS and CDS are sold nationally,  while
others are specific to states such as Florida, Missouri, and Kansas.

Basis of  Presentation:  As of October 2, 1995,  the  Corporation  sold its life
insurance subsidiary,  Dixie Life Insurance Company (Dixie Life). The operations
of  this  segment  have  been  presented  as  discontinued   operations  in  the
accompanying financial statements.

Principles of Consolidation:  The consolidated  financial statements include the
financial statements of the Corporation and its wholly-owned  subsidiaries.  All
significant inter-company accounts and transactions have been eliminated.

Cash and Cash Equivalents:  Cash and cash equivalents  include cash in banks and
money-market investments which carry no withdrawal restrictions.

Investments:  At December  31,  1996,  the  Corporation  had no  investments  in
marketable  securities.   At  December  31,  1995,  marketable  securities  were
classified  as trading,  which,  under the  provisions of Statement of Financial
Accounting  Standards No. 115  Accounting  for Certain  Investments  in Debt and
Equity Securities, were reported at market value with unrealized market gains or
losses being reflected in operations.

Revenue  Recognition:  The  Corporation  recognizes  revenue for software  sales
ratably over the period of each product's  subscription  life. The Corporation's
various  products are updated  annually,  quarterly and monthly based on content
availability  and/or  specific  customer  agreements.  Revenue  associated  with
certain sales of TRS' primary product are not recognized until cash is collected
due to the  customers'  right of return and  limited  history of returns for the
product.

Property  and  Equipment:  Property  and  equipment  are  stated  at  cost  less
accumulated  depreciation.  Depreciation  is  computed  using the  straight-line
method over the  estimated  useful  lives of these assets which are thirty years
for the building;  three years for computer  hardware and software;  and five to
seven years for furniture and fixtures.

Inventory:   Inventory  consists  primarily  of  software  product  manuals  and
promotional materials. Inventory is valued based on an average cost method.

Intangible  assets:  Intangible  assets  consist  primarily  of assets  acquired
through the acquisitions of TRS and CDS. Acquired goodwill and software products
are amortized  over three years.  Non-compete  agreements are amortized over the
life of the related agreement (2-3 years). The Corporation regularly reviews its
ability to realize future economic  benefit from software  products and goodwill
based upon the expected future cash flows of the related subsidiary or product.
<PAGE>
Use of estimates:  The  preparation of financial  statements in accordance  with
generally accepted accounting  principles requires the use of certain estimates.
Actual results may differ from those estimates.

Income Taxes: Deferred taxes are provided on a liability method whereby deferred
tax assets are  recognized for deductible  temporary  differences  and operating
loss and tax credit  carry-forwards  and deferred tax liabilities are recognized
for taxable  temporary  differences.  Temporary  differences are the differences
between the  reported  amounts of assets and  liabilities  and their  income tax
bases.  Deferred tax assets are reduced by a valuation  allowance  when,  in the
opinion of  management,  it is more likely than not that some  portion or all of
the  deferred  tax  assets  will  not  be  realized.  Deferred  tax  assets  and
liabilities  are  adjusted  for  changes  in tax laws  and  rates on the date of
enactment.

Earnings Per Share:  Primary and fully  diluted  earnings per share are based on
the weighted  average  number of common  shares of  10,900,000;  9,471,000;  and
6,551,000  outstanding  for the years ended  December 31, 1996,  1995,  and 1994
respectively.  Earnings per share calculations include  contingently  returnable
shares only if their impact is dilutive.  Previously reported earnings per share
of ($.65) have been restated to ($0.72) in the accompanying financial statements
due to an error in the prior calculations.

Reclassifications:  Certain  amounts in the prior  years'  statements  have been
reclassified to conform with the current year financial statements.

NOTE 2--PROPERTY AND EQUIPMENT

A summary of property and equipment at December 31 follows:
<TABLE>
<CAPTION>
                                                      1996               1995
                                                 -----------        -----------
<S>                                              <C>                <C>
Land .....................................       $   140,436        $   140,436
Building .................................           654,602            654,602
Furniture, Equipment and Vehicles ........            82,358            380,341
Computer Hardware and Software ...........           155,164             50,066
                                                 -----------        -----------
                                                   1,032,560          1,225,445
Less:  Accumulated depreciation ..........          (532,668)          (814,510)
                                                 -----------        -----------
                                                 $   499,892        $   410,935
                                                 ===========        ===========
</TABLE>
Certain of the assets above are being held for  disposal.  These assets  consist
primarily of the Corporation's former home office in Jackson, Miss., which has a
net book value of  approximately  $381,000.  The Corporation has operating lease
agreements for office space, and certain office  equipment.  Ethika's  corporate
office  space is leased from a member of the Board of  Directors  at the rate of
approximately $1,400 per month. For the year ended December 31, 1996 payments on
all  operating  leases  were  $107,000. 
<PAGE>
NOTE 3 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

A summary of accounts payable and accrued expenses at December 31 follows:
<TABLE>
<CAPTION>
                                                        1996              1995
                                                      --------          --------
<S>                                                   <C>               <C>
                    
Accrued professional fees ..................          $247,088
Trade accounts .............................           150,253          $ 42,578
Non-compete ................................            50,000
Other ......................................            47,805
Accrued payroll and related
withholdings ...............................            32,616              --   
                                                      --------          --------
                                                      $527,762          $ 42,578
                                                      ========          ========
</TABLE>
NOTE 4 - NOTES PAYABLE AND OTHER DEBT

The Company has the following notes payable at December 31:
<TABLE>
<CAPTION>
                                                                          1996             1995
                                                                        --------         --------
<S>                                                                     <C>              <C>                
      Note payable to a bank bearing  interest at prime 
      plus 3/4% (at December  31, 1996 and 1995,  the
      rate was  9.25%),  payable in monthly installments
      of $11,846; secured by the land and building                      $311,952         $428,835
      Other                                                                --              41,667
                                                                        --------         --------
                                                                        $311,952         $470,502
                                                                        ========         ========
</TABLE>
Aggregate maturities of notes payable at December 31, 1996 are as follows:
<TABLE>
<CAPTION>
<S>                                               <C>
                             1997                 $116,201
                             1998                  114,000
                             1999                   81,751
                                                  --------
                                                  $311,952
                                                  ========
</TABLE>
NOTE 5 - BUSINESS COMBINATIONS

On April 2, 1996 the  Corporation  completed the  acquisition  of Text Retrieval
Systems, Inc. ("TRS"), a privately-held  corporation based in Ponte Vedra Beach,
Florida.  The  transaction  has been accounted for as a purchase and accordingly
the results of  operations  of TRS since April 2, 1996 have been included in the
Corporation's   Results  of  Operations.   TRS  publishes  electronic  reference
libraries  that link  related  data  sources for  convenient  access by personal
computers.  The  Corporation  had  previously  acquired a 35% initial  ownership
interest in TRS through the  issuance of 100,000  shares of its stock to the TRS
<PAGE>
shareholders  and the extension of a line of credit during 1995.  The completion
of the purchase transaction included cash paid through prior advances to TRS and
the issuance of 2,500,000  shares of contingently  returnable  common stock. The
shares are returnable to the Corporation if certain 1997 earning targets are not
achieved.   Management  originally  believed  that  it  was  probable  that  the
established targets would be met in total; accordingly, as of April 2, 1996, the
fair  value of the  2,500,000  contingent  returnable  shares  ($1,991,250)  was
included in the purchase price resulting in a total estimated  purchase price at
acquisition of $2,659,482. In the fourth quarter, Management determined that the
earnings  targets  would  not be met  in  total  and  accordingly,  recorded  an
adjustment to the purchase  price  reducing  intangible  assets by the remaining
unamortized  balance  related  to  the  contingent  shares  of  $1,792,125.  The
Corporation has amended the agreement with TRS whereby the earnings targets have
been revised and extended through December 31, 1997. The Corporation will adjust
intangible assets as the contingencies are resolved. If the earnings targets are
not  totally  met,  the  former  shareholders  will  return  all or  part of the
contingent shares to the Corporation.

During 1995 and the first  quarter of 1996,  the  Corporation  accounted for its
initial  investment  in TRS by the equity  method under which the  Corporation's
share of the net  loss of the  affiliate  was  recognized  in the  Corporation's
operations and included as an adjustment to the investment  balance.  The losses
recorded by the  Corporation  were  $265,643  and $48,687 for the quarter  ended
March 31, 1996 and the year ended December 31, 1995, respectively.

Amortization  expense of  approximately  $567,000 related to the TRS acquisition
includes a write-off of $171,000 for one of the two products being  developed by
TRS at the time of  acquisition  (a real  estate  library  product).  During the
fourth quarter of 1996, the  Corporation  elected to abandon the product because
Management subsequently determined it had limited marketability.

Effective  August 17, 1996, the  Corporation  purchased 100% of the  outstanding
common stock of CDS, a privately-held  corporation based in Salt Lake City, Utah
for a total  purchase  price of $500,000  which included the issuance of 726,612
shares of the  Corporation's  common stock with a fair market value of $400,000.
CDS publishes  electronic  information  reference  services to a wide variety of
industries and  organizations.  Among its principal  product offerings are state
tax law reference  libraries which keep subscribers  current on tax law changes.
The transaction has been accounted for as a purchase, accordingly the results of
operations of CDS since August 17, 1996 have been  included in the  accompanying
statement of operations.  Intangible assets of $460,765 are being amortized over
a three year period. Amortization of $63,806 was recorded during 1996.

Effective October 1, 1996, the Corporation revised estimates used in determining
the lives of intangible  assets acquired  through its acquisition of TRS and CDS
from five years to three years.
<PAGE>
The  information  below  summarizes  the  unaudited   proforma  results  of  the
Corporation  assuming  that the  acquisitions  of TRS and CDS had taken place at
January 1, 1995:
<TABLE>
<CAPTION>

                                                     Year Ended December 31
                                                   -----------------------------                 
                                                      1996             1995
                                                    Unaudited        Unaudited
                                                    ---------        ---------
<S>                                                <C>              <C>       
Revenues from continuing operations ..........     $   511,804      $   368,195
Loss from continuing operations ..............     $(3,679,257)     $(1,710,673)
Loss per share from continuing operations ....     $     (.325)     $     (.151)
</TABLE>

NOTE 6 - INCOME TAXES

The Corporation files a consolidated  federal income tax return and state income
returns in various states as required by the applicable state income tax laws.

Net deferred tax liabilities (assets) from continuing  operations consist of the
following components as of December 31:
<TABLE>
<CAPTION>

                                                         1996             1995
                                                      ---------       ---------
<S>                                                   <C>             <C>
Deferred tax liabilities:
    Investment securities ......................      $ 118,300
    Depreciation ...............................      $  45,500           9,183
                                                      ---------       ---------
                                                         45,500         127,483
                                                      ---------       ---------
Deferred tax assets:
    Amortization of non-compete ................          5,432
    Deferred revenue ...........................         82,756
    Unrealized loss on equity investment .......        357,410         357,410
    Allowance for bad debts ....................          2,808
    Net operating loss carry-forward ...........        524,744         100,715
    Other ......................................           --            16,556
                                                      ---------       ---------
                                                        973,150         474,681
Valuation allowance ............................       (973,150)       (474,681)
                                                      ---------       ---------
Deferred tax asset
Net deferred tax liability .....................      $  45,500       $ 127,483
                                                      =========       =========
</TABLE>
The  Corporation  recorded a valuation  allowance of $474,681 as of December 31,
1995 and increased the allowance by $498,469  during 1996 due to the uncertainty
of the  Corporation's  ability to realize future  benefits of net operating loss
carry-forwards or other future tax deductions.
<PAGE>
The (provision) for benefit from income taxes for the years ended December 31 is
summarized as follows:
<TABLE>
<CAPTION>

                                    1996              1995              1994
                                ---------          ---------          ---------
<S>                             <C>                <C>                <C>
Current ...............         $ (81,983)         $ 302,000          $(381,900)
Deferred ..............            81,983           (127,483)           411,849
                                ---------          ---------          ---------
                                $    --            $ 174,517          $  29,929
                                =========          =========          =========
</TABLE>


The  Corporation has net operating loss  carry-forwards  at December 31, 1996 of
approximately $1,543,000 which expire in 2010 and 2011.

The  Corporation's  effective  income tax  (provision)  benefit from  continuing
operations  differs from amounts applying the statutory  federal income tax rate
of 34% as follows:
<TABLE>
<CAPTION>
                                                 1996            1995            1994
                                             -----------     -----------     -----------
<S>                                          <C>             <C>             <C>
Expected tax benefit ....................    $   776,527     $ 2,388,200     $   878,800
Non-deductible goodwill .................       (184,383)
Alternative Minimum Tax .................                         78,000          97,000
Loss on sale of life insurance subsidiary     (1,904,700)       (583,085)
Valuation allowance .....................       (498,469)      (474, 681)
Other ...................................        (93,675)         87,698        (362,786)
                                             -----------     -----------     -----------
  Total income tax benefit ..............    $      --       $   174,517     $    29,929
                                             ===========     ===========     ===========
</TABLE>

NOTE 7 - DISCONTINUED OPERATIONS

On October 2, 1995, the Corporation  completed the sale of Dixie Life, which was
99.3% owned by the  Corporation,  to Standard Life Insurance  Company of Indiana
("Standard").  Dixie Life represented  virtually all of the Corporation's assets
and operations. The selling price of the Corporation's interest in Dixie Life to
Standard was $7,389,086,  of which  $3,646,468 was in cash. The Corporation used
$1,720,000 of the cash proceeds to repay  Subordinated  Convertible Notes and to
purchase  from Dixie Life lease  receivables  of $503,258.  Standard  canceled a
$3,688,746 term loan due from the Corporation  held by a subsidiary of Standard.
The Corporation also received accounts receivable of $53,872,  all of which were
written off as uncollectible at December 31, 1995.
<PAGE>
In addition,  Standard was  obligated to pay $15,000 per month rent to Vanguard,
Inc., a wholly-owned  subsidiary of the Corporation  through  December 31, 1996,
the  expiration  date of an  existing  lease on the office  building  previously
occupied by the Corporation and Dixie Life.  Standard is currently in default of
this  agreement by not paying rent and certain  other charges due for the months
of  October,  November,  and  December,  1996.  The sale  resulted  in a loss of
$4,174,536 ($.44 per share).  The sale of Dixie Life constitutes  discontinuance
of the  life  insurance  business  by the  Corporation,  and,  as such  has been
accounted  for  as  discontinued   operations  in  the  accompanying   financial
statements.  Accordingly,  the financial  statements for the year ended December
31, 1995 and 1994 have been restated for this transaction.

NOTE 8 - STOCK OPTIONS AND STOCK-BASED COMPENSATION

On May 26, 1995, the  Corporation  created the 1995 Stock Option Plan (the Plan)
with a maximum  amount of 500,000  common  stock  shares  reserved  for  options
eligible to be granted under the Plan during its ten-year life. The  Corporation
granted  various stock options to Employees and Directors  during 1996 and 1995.
As of  December  31,  1996,  there are 230,000  remaining  common  stock  shares
reserved for granting and there are 250,000 options  outstanding  from the Plan.
Employees  vest in stock  options  granted  at the  rate of 20%  each  year on a
cumulative basis commencing one year after the date of grant.

As  permitted  by SFAS  123,  "Accounting  for  Stock-Based  Compensation",  the
Corporation has elected not to record compensation cost for stock options in the
accompanying   statement  of   operations.   The   compensation   cost  for  the
Corporation's  stock options have been determined based on the fair value at the
grant  dates  consistent  with  the  methodology  prescribed  by SFAS  123.  The
Corporation's net income and income per share would have been reduced to the pro
forma  amounts  indicated  below  if these  amounts  had  been  recorded  in the
financial statements:
<TABLE>
<CAPTION>
                                                  1996                  1995
                                                  ----                  ----
<S>                       <C>                 <C>                   <C>
Net loss                  As reported         $(2,283,391)          $(6,849,572)
                          Proforma            $(2,337,292)          $(6,917,653)

Loss per share            As reported           $(0.210)              $(0.723)
                          Proforma              $(0.214)              $(0.730)
</TABLE>

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes   option-pricing   model  with  the   following   weighted-average
assumptions used for grants in 1996 and 1995:
<TABLE>
<CAPTION>
<S>                                                      <C>
                      Dividend yields                       0%
                      Expected volatility                 137%
                      Risk-free interest rate            6.26%
                      Expected life of option            4 years
</TABLE>
The fair value of options  granted  during 1996 and 1995 was $53,901 and $68,081
respectively.
<PAGE>
The following  table  summarized  the changes in the number of options  included
under the Plan:
<TABLE>
<CAPTION>

                                                            Exercise         Weighted-Average
                                            Shares         Price Range        Exercise Price
                                            ------         -----------        --------------
<S>                                        <C>             <C>                     <C>
Outstanding at December 31, 1994                 0
Granted                                    140,000         $.50 - $.91             $.80
                                           -------                                     
Outstanding at December 31, 1995           140,000         $.50 - $.91
Granted                                    130,000         $.59 - $.68             $.62
Canceled                                   (20,000)               $.91             $.91
                                           -------                                     
Outstanding at December 31, 1996           250,000         $.50 - $.91             $.70
                                           =======                                          
</TABLE>

As of  December  31,  1996 the total  number of  exercisable  stock  options was
40,000.

NOTE 9 - LEASING ACTIVITIES

During 1995, the Company  entered into leasing  activities  which consist of the
leasing of fry cook units to be placed in various  locations and operated by the
lessee.  All of the Company's leases are classified as direct financing  leases.
Under the  direct  financing  method of  accounting  for  leases,  the total net
rentals receivable under the lease contracts are recorded as a net investment in
direct  financing  leases,  and the unearned  income on each lease is recognized
each month at a constant periodic rate of return on the unrecovered investment.

The composition of the net investment in direct  financing leases at December 31
as follows:
<TABLE>
<CAPTION>
                                                             1996          1995
                                                           --------     --------
<S>                                                        <C>          <C>
Total minimum lease payments to be received ..........     $454,929     $595,170
Unearned lease income ................................       71,794      123,898
                                                           --------     --------

         Net investment in direct financing leases ...     $383,135     $471,272
                                                           ========     ========
</TABLE>
    The minimum  future lease  payments  receivable  under the direct  financing
leases are as follows:
<TABLE>
<CAPTION>
<S>                                                    <C>
                        1997                           $148,239
                        1998                            148,239
                        1999                            137,514
                        2000                             20,937
                                                       --------
                        Total minimum future
                         lease payments                $454,929
                                                       ========
</TABLE>
<PAGE>
NOTE 10 - CONTINGENCIES

A lawsuit  was  filed in the  United  States  District  Court  for the  Southern
District of Mississippi, Jackson Division, styled EURAM B.V., Peeper, et al. vs.
Ethika by certain  plaintiffs  against  Ethika and its Chairman,  S.L. Reed, Jr.
This suit  alleges  breach of  fiduciary  duties,  fraud,  conspiracy  to breach
fiduciary duty of loyalty and care, breach of contract,  misrepresentation,  and
conversion.  These  allegations  arise  from the  transactions  surrounding  the
Corporation's  issuance of  2,000,000  shares of its stock in  exchange  for 16%
interest  in PMM  (See  Note 12 for  further  information),  and the sale by the
Corporation  of  $2,000,000  of its stock in exchange for shares of Alanco stock
valued  at  $2,000,000  (See Note 11 for  additional  information).  On  October
30,1996 Ethika filed answers to the suit and  instituted a counterclaim  against
the  individuals  named in the above suit and other  defendants not named in the
original suit. The Corporation, on advice of outside legal counsel, believes the
plaintiffs'  suit is  without  merit,  and that its  resolution  will not have a
material effect on the Corporation,  however, it is too early in the proceedings
to assure the outcome.

NOTE 11 - SALE OF COMMON STOCK

The Corporation entered into an agreement with Universal  Management Services, a
Nevada  corporation  (UMS),  as of October  27,  1994 (UMS  Agreement).  The UMS
Agreement provided that UMS would use its best efforts to assist the Corporation
in locating  potential  investors for its common stock. On November 29, 1994 the
Corporation  sold  2,000,000  shares of its common  stock for which it  received
shares of Alanco Environmental Resources, Inc. ("Alanco") common stock (November
transaction),  with an aggregate market value of $2,000,000.  Under the terms of
the UMS  Agreement as amended (See Note 12),  any market  appreciation  prior to
closing of the sale of Dixie Life to Standard could not be realized  because the
purchasers of the  Corporation's  common stock had the right to  repurchase  the
Alanco  shares for cash  equal to the  $2,000,000  fair value of such  shares on
November  29,  1994.  The  purchasers  had the  obligation  to cover any  market
depreciation,  as defined which might have occurred prior to closing of the sale
of Dixie Life to  Standard.  Therefore,  the Alanco  shares were carried at cost
until October 2, 1995,  the closing date of the Dixie Life sale to Standard.  At
December 31, 1995, market value of the Alanco shares based on the average of the
closing bid and asked price was $2,227,904.

In December 1995 the Corporation  sold 75,000 shares of Alanco stock on the open
market  generating  a $10,020  profit.  The  Corporation  also  recorded  on its
December 31, 1995  Financial  Statements  an  unrealized  gain on its  remaining
Alanco stock of $347,859. During the first quarter of 1996, the Corporation sold
the remaining Alanco shares resulting in the recognition of a $672,785 gain.

NOTE 12 - INVESTMENT IN PHOENIX MEDICAL MANAGEMENT, INC. ("PMM")

On April 20, 1995, the  Corporation and UMS entered into an amended and restated
agreement  effective  as of March 24, 1995  ("Second  Amended and  Restated  UMS
Agreement") which provided that UMS had certain rights, since expired, to assist
the  Corporation  in  placing  shares  of the  Corporation's  common  stock.  In
connection with the Second Amended and Restated UMS Agreement, on June 29, 1995,
the Corporation  issued 2,000,000 shares of its common stock in exchange for 16%
of the outstanding common shares of PMM, a privately-owned  company, and 100,000
shares of its common  stock for an option to acquire  the  remaining  84% of the
common  shares of PMM for  10,400,000  additional  shares  of the  Corporation's
common stock. The 84% option was relinquished by the Corporation in July 1995.
<PAGE>
As a result of the unaudited stockholders deficit of PMM as of December 31, 1995
and other factors,  the Corporation wrote off its entire remaining investment in
PMM which  resulted in a loss of $1,051,217  during the year ended  December 31,
1995.

NOTE 13 - SUBSEQUENT EVENTS

The publishing,  distribution,  and future development rights of the CodeManager
Reference Library were purchased from American Practice Management, Inc. ("APM")
and Consulting Concepts, Inc. on January 31, 1997 in exchange for 180,000 shares
of Ethika common stock having a fair market value of  approximately  $101,250 at
January 31, 1997.

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

Not applicable.

PART III

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The directors of the Corporation are:
<TABLE>
<CAPTION>
                                                                Director
                Name                              Age            Since
                ----                              ---            -----
<S>                                               <C>             <C>        
        Cohen, Marcia C.                          47              1995
        Neal, Robert B.                           59              1970
        Pegram, Joseph D.                         57              1991
        Reed, S.L.,  Jr.                          61              1980
        Rogers, Herbert R., III                   54              1992
        Spuria, Anthony J.                        60              1996
        Stubblefield, William D.                  52              1996
</TABLE>
Each  director  holds office until the next annual  meeting of  shareholders  or
until a successor shall be duly elected and qualified. The executive officers of
the Corporation are:
<TABLE>
<CAPTION>
                                                           Executive Officer
                Name                              Age            Since
                ----                              ---            -----
<S>                                               <C>             <C>
        S. L. Reed, Jr.                           61              1995
          Chairman
          Chief Executive Officer

        G. Thomas Reed                            47              1995
          President
          Chief Operating Officer

        David E. Williams                         47              1996
          Secretary, Vice President
          Finance, and Chief Financial
          Officer
</TABLE>
<PAGE>
The Corporation's officers serve at the pleasure of the Board of Directors.

BUSINESS EXPERIENCE

The principal  occupations  and business  experience  for the last five years or
more of the directors and executive officers of the Corporation are as follows:

Marcia C. Cohen - Senior Vice  President,  Corporate  Development  of Montgomery
General  Hospital,  Olney,  Maryland.   Formerly  co-owner  and  Executive  Vice
President of Imaging and Surgery Centers of America, Boston, Massachusetts which
was sold in 1992.  Ms. Cohen was retired  thereafter  until 1994 when she joined
Montgomery  General  Hospital.  Ms.  Cohen  serves  as a member  of the Board of
Trustees of Baltimore  Medical Systems,  Inc. She is Chairwoman of the Personnel
and Compensation  Committee,  serves as a member of the Executive  Committee and
the Nominating and Stockholder Relations Committee.

Robert B. Neal - Chief Executive  Officer of the Corporation from September 1970
until  February 1995 and President  from  September 1970 until October 1995. Mr.
Neal was Chairman of the Board and  President of Dixie Life until  October 1995,
and since then has served as Vice  Chairman of Dixie Life. He is a member of the
Audit Committee.

Joseph D. Pegram - Attorney in Oxford,  Mississippi.  Mr.  Pegram is Chairman of
the  Audit  and  Compliance  Committee  and  a  member  of  the  Nominating  and
Stockholder Relations Committee.

G. Thomas Reed - President and Chief Operating  Officer of the Corporation since
October 1995.  Previously had a management  consultant  practice,  was a Private
Banking Manager for First Union National Bank, and Administrative Vice President
and Chief Operating Officer of Compudata Services,  Inc., a software development
and service company. No relation to the Chairman of the Corporation.

S.L. Reed, Jr. - From January 1995, Chairman of the Board of Directors and Chief
Executive Officer of the Corporation.  President of Reed  Enterprises,  Inc. (an
aquaculture and investment company) of Belzoni,  Mississippi;  Director of Delta
Industries,  Inc.,  Producers Feed Co., and HillFisher  Farms, Inc. He serves as
Chairman of the Executive Committee.

Herbert G.  Rogers,  III -  President  of Rogers  Agency,  Inc.,  Rogers  LP-Gas
Company,  Rogers  Investments,  Inc.,  Mississippi Realty, Inc. and Roell Realty
Corp. of New Albany,  Mississippi;  Director of the Nashoba Bank and Chairman of
the Board of the Gentry  Furniture  Corporation.  He serves as  Chairman  of the
Personnel and Compensation Committee and as a member of the Finance and Business
Strategy Committee.

Anthony J. Spuria - Chief  Executive  Officer  since 1987 of A la Cart,  Inc., a
Charlotte,  NC  based  producer  of meal  delivery  systems  for the  healthcare
industry. In 1989 Mr. Spuria founded Advanced Foam Products, Inc., headquartered
in Ponte Vedra Beach,  Florida which sub-licenses a patented  technology for the
production  and  sale  of  fire-retardant  polyurethane  seating  foams  for the
aviation and other  transport  industries.  He began his career as an industrial
engineer at Raytheon Company in the Electronics  Systems Division and thereafter
at Sylvania in Data Systems  Operations.  Mr. Spuria served as a cost analyst at
RCA in the Aerospace Systems Division and as Senior Vice President of Commercial
Aviation  with  Fairchild  Industries.  Mr.  Spuria is a member of the Audit and
Compliance Committee and the Finance and Business Strategy Committee.
<PAGE>
William D. Stubblefield - Past Chairman and CEO of Medical Graphics Corporation,
St.  Paul,  Minnesota.  Served  two years as a faculty  member at the  School of
Business  and  Industry,  Florida  A&M  University.  Mr.  Stubblefield  has been
actively  involved with Volunteers in Medicine and IMAGES of Hilton Head Island.
Mr.  Stubblefield  is a member  of the  Executive  Committee,  the  Finance  and
Business Strategy Committee, and the Personnel and Compensation Committee.

David E.  Williams - Vice  President  Finance,  Secretary,  and Chief  Financial
Officer of the  Corporation  since April 1, 1996.  Previously  engaged as a sole
practitioner  of a Certified  Public  Accounting  practice.  Prior to that,  Mr.
Williams served as Chief Financial Officer of Immunomedics, Inc. and Psychiatric
Bio Sciences,  Inc. He also served as Group Operations  Controller for Johnson &
Johnson and Pfizer  Pharmaceutical  Corporation.  He was Senior Auditor at Price
Waterhouse.  He  is a  Certified  Public  Accountant  as  well  as  a  Certified
Management Accountant and holds an MBA in Finance from Seton Hall University. He
is a member of the American Institute of Certified Public  Accountants,  the New
Jersey State Society of Certified  Public  Accounts,  the South  Carolina  State
Society  of  Certified  Public  Accountants,  and the  Institute  of  Management
Accountants.

In 1992 the  Corporation was the subject of an  investigation  by the Securities
and Exchange  Commission  (SEC),  which was  resolved by means of a  settlement.
Pursuant to the  settlement,  on March 9, 1994, the United States District Court
for the District of Columbia  entered  final  judgments of permanent  injunction
against the Corporation  and Robert B. Neal, a Director and former  President of
the Corporation. The judgments were entered on the basis of a complaint filed by
the SEC.  The  Corporation  and Mr.  Neal each  consented  to the entry of final
judgments of permanent  injunction  without admitting or denying the allegations
contained in the SEC's  complaint.  The final judgments to which the Corporation
and Mr. Neal consented  enjoin them from violating or aiding and abetting future
violations of sections of the Securities Act of 1933 and the Securities Exchange
Act of 1934 and certain rules thereunder.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities  Exchange Act of 1934 requires the Corporation's
Executive Officers and Directors and persons who own more than 10% of its common
stock to file reports of ownership  and changes in ownership  with the SEC. Such
persons are required by SEC regulations to furnish the  Corporation  with copies
of all Section 16(a) forms filed by such person.

Based  solely  upon the  Corporation's  review of such  forms  furnished  to the
Corporation and written  representations  from certain  reporting  persons,  the
Corporation   believes   that  all  filing   requirements   applicable   to  the
Corporation's Executive Officers, Directors, and more than 10% stockholders were
in compliance.
<PAGE>
ITEM 11 - EXECUTIVE COMPENSATION

                           Summary Compensation Table 

The following Summary  Compensation  Table sets forth for each of the last three
years ended December 31, 1996,  information  concerning  the total  compensation
paid or awarded to the  Corporation's  Chief  Executive  Officers  for  services
rendered in all capacities to the  Corporation and its  subsidiaries.  The total
compensation of none of the Corporation's Officers exceeded $100,000 in 1996.
<TABLE>
<CAPTION>

                                                                           Long Term 
                                                                         Compensation/
                                                                           Number of
                                                      Annual               Securities              
         Name and                                  Compensation            Underlying         All Other
    Principal Position          Year            Salary     Bonus             Options         Compensation
    ------------------          ----            ------     -----             -------         ------------
<S>                             <C>           <C>            <C>             <C>                 <C>
S.L. Reed, Jr.
Chairman and CEO                1996          $  36,000      $0              50,000              $0
                                1995          $  25,346      $0              50,000              $0
                                1994 (1)      $       0      $0                                  $0
 

(1) Commenced employment January 1995
</TABLE>

Option Grants in Last Fiscal Year

The following table sets forth information concerning options to purchase shares
of common stock which were granted during 1996 to the  individuals  named in the
Summary Compensation Table.
<TABLE>
<CAPTION>
                                                                                                Potential Realizable   
                                                                                                  Value at Assumed
                                                                                               Annual Rates of Stock
                                                                                                Price Appreciation 
                                                                                                  for Option Term
                                  Individual Grants                                                 10 Years
                          -------------------------------------------------------------------------------------------- 
                              Number of          % of Total
                             Securities       Options Granted
                             Underlying       to Employees in         Exercise                     Expiration
        Name               Options Granted       Fiscal Year       Price     Date               5%          10%
        ----               ---------------       -----------       -----     ----               --          ---
<S>                           <C>                    <C>          <C>       <C>              <C>          <C>
S.L. Reed, Jr.                50,000 (1)             71.4         $0.59     06/30/02         $39,532      $76,515

(1) The options  begin  vesting on July 10, 1997 at the rate of 20% per year for
    five  years.  The  options  are  subject  to  acceleration  if  employee  is
    terminated without cause.
</TABLE>
<PAGE>
Fiscal Year End Option Value Table

The following  table sets forth  information as of December 31, 1996  concerning
the  unexercised  options  held by Officers  named in the  Summary  Compensation
Table, none of whom exercised options in 1996. Options are  "in-the-money"  when
the fair market value of the underlying  common stock exceeds the exercise price
of the option.  The closing price of the Corporation's  common stock on December
31, 1996 was $0.56 per share.
<TABLE>
<CAPTION>
                                                                               
                                         Number of Securities Underlying         Value of Unexercised In-the-Money 
                Name                 Unexercised Options at December 31, 1996       Options at December 31, 1996     
                ----                 ----------------------------------------       ----------------------------     
                                     Exercisable          Unexercisable          Exercisable     Unexercisable
<S>                                      <C>                  <C>                    <C>             <C>
           S.L. Reed, Jr.                10,000               90,000                 None            None
</TABLE>

COMPENSATION OF DIRECTORS

Directors who are not employees of the  Corporation  are paid a monthly base fee
of $400 and  receive  $250 per day per  meeting  attended.  As a group,  the six
non-employee  Directors of the  Corporation  were paid  $46,650  during the year
1996. As Chief Executive Officer of the Corporation,  S.L. Reed, Jr. received no
additional compensation for his services as Chairman of the Board or Chairman of
the Executive Committee.

At a meeting  held on November 14, 1996,  the  Corporation's  Board of Directors
approved  granting  two new  non-employee  Directors  (Spuria and  Stubblefield)
options to purchase 5,000 shares each of the Corporation's common stock at $.68,
the average bid and ask price as quoted by NASDAQ on November  14,  1996.  These
options were  exercisable  immediately upon granting and expire on May 25, 2005.
If a person ceases being a Director of the  Corporation,  his/her option will be
canceled thirty days thereafter.
<PAGE>
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    (a)  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The  following  table  sets forth  pertinent  information  as to the  beneficial
ownership of the  Corporation's  common  stock as of March 14, 1997,  of persons
known  by the  Company  to be  holders  of 5% or  more  of  such  common  stock.
Information as to the number of shares  beneficially owned has been furnished by
the persons named in the table.
<TABLE>
<CAPTION>

        Name and Address                            Shares
        of Beneficial                          Beneficially         Percent
        Owner                                      Owned            of Class
        -----                                      -----            --------
<S>                                            <C>                    <C>
        Constance Gamble Grewell                2,064,770(1)          14.7%
        100 Executive Way
        Ponte Vedra Beach, FL  32080

        Eric and Sherry Fredrickson               726,612(2)          5.2%
        1512 Braintree Court
        Salt Lake City, UT  84124

        S. L. Reed, Jr.                        706,286(3)(4)          5.0%
        107 The Executive Center
        Hilton Head Island, SC  29928

    (1)  Constance  Gamble Grewell acquired her shares in the acquisition of TRS
         by the Corporation.  She was the owner of 616 shares of TRS outstanding
         common stock.  The stock issued pursuant to this transaction may not be
         sold or transferred until two years after the issue date.

    (2)  Eric and Sherry Fredrickson acquired their shares in the acquisition of
         CDS by the  Corporation.  They were the sole owners of CDS' outstanding
         common stock.  The stock issued pursuant to this transaction may not be
         sold or transferred until two years after the issue date.

    (3)  Includes shares issuable upon exercise of stock options. (See "Security
         Ownership of Management").

    (4)  Includes shares held in name of spouse, minor child, or other relatives
         or  persons as to some of which  shares the owner has shared  voting or
         investment power, but to which beneficial ownership is disclaimed. Also
         includes 10,000 shares of options currently exercisable. (See "Security
         Ownership of Management").
</TABLE>

    (b)  SECURITY OWNERSHIP OF MANAGEMENT
<PAGE>
The following table sets forth information as to the beneficial ownership of the
Corporation's common stock as of March 14, 1997 by each Director, each Executive
Officer  named in the  Summary  Compensation  Table,  and by all  Directors  and
Executive Officers as a group.
<TABLE>
<CAPTION>

                                                      Shares
                      Name of                     Beneficially              Percent
                  Beneficial Owner                    Owned                 of Class
                  ----------------                    -----                 --------
<S>                                                 <C>                      <C>
                Marcia C. Cohen                       5,000(2)                  *

                Robert B. Neal                      411,072(1)(2)             3.0%

                Joe D. Pegram                        28,043(2)                  *

                S. L. Reed, Jr.                     706,286(1)(2)             5.0%

                Herbert G. Rogers, III              107,128(1)(2)               *

                Anthony J. Spuria                   157,991(2)(3)             1.1%

                William D. Stubblefield               5,000(2)                  *

                Directors and
                Executive Officers as
                a group (9 persons)               1,570,517                  11.2%

    * Less than 1%

    (1)  Includes  shares  held in the  name of  spouse,  minor  child  or other
         relatives  or persons,  as to some of which  shares the owner named has
         shared voting or investment power, but as to which beneficial ownership
         is disclaimed,  as follows:  Robert B. Neal - 1,368 shares; S. L. Reed,
         Jr. - 582,422 shares; and Herbert G. Rogers, III - 27,479 shares.

    (2)  Includes   shares   issuable  upon  exercise  of  stock  options:   All
         Non-Employee  Directors  have been  issued  options to  purchase  5,000
         shares of Ethika  stock.  G. Thomas Reed,  President,  has been granted
         options to purchase  50,000 shares of Ethika stock.  David E. Williams,
         Senior Vice  President,  has been  granted  options to purchase  10,000
         shares of Ethika stock. S.L. Reed, Jr., Chairman of the Board and Chief
         Executive  Officer,  was granted options to purchase  100,000 shares of
         Ethika  stock,  10,000 of such options are  currently  exercisable  and
         included above.

    (3)  Mr. Spuria  acquired  130,391 shares of his stock in the acquisition of
         TRS by the Corporation. He was an owner of 43 shares of TRS outstanding
         common stock.
</TABLE>

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Corporation's Subordinated Convertible Notes which were due May 1, 1995 were
extended in connection  with the sale of Dixie Life. The  Corporation  satisfied
the Subordinated Convertible Notes upon the sale of Dixie Life.
Robert B. Neal, a Director of the Corporation, held $100,000 of the Notes.
<PAGE>
On July 10, 1996 S.L. Reed, Jr., Chief Executive Officer of the Corporation, was
granted  options to purchase an additional  50,000  shares of the  Corporation's
common  stock  at $.59  per  share,  exercisable  at the  rate  of 20% per  year
beginning on July 10,1997 until June 30, 2002.

On April 2,  1996  the  Corporation  completed  the  acquisition  of 100% of the
outstanding stock of Text Retrieval Systems,  Inc. ("TRS").  The Corporation had
previously  acquired a 35% initial ownership  interest in TRS in October 1995 as
part of a financing  agreement  entered into with the prior owners of TRS. Under
the terms of its agreement,  the Corporation issued 100,000 shares of its common
stock to the prior owners and granted TRS a $750,000  line of credit for working
capital  purposes.  To complete the acquisition of TRS, the  Corporation  issued
2,500,000   contingently   returnable   shares  of  its  stock.   (See   "Recent
Developments" above for further information).

Constance G. Grewell,  who owns 2,064,770  shares, or 14.7% of the Corporation's
outstanding common stock, was the principal shareholder of the outstanding stock
of TRS at the time of its acquisition by the Corporation.  Mrs. Grewell acquired
her shares of common  stock of the  Corporation  in the TRS  transaction.  Also,
Anthony J. Spuria was a minority  stockholder in TRS and received 130,391 shares
of common stock of the Corporation in the transaction. On April 2, 1996 the high
and low sales price for the  Corporation's  common stock,  as reported by NASDAQ
was $.72. (See "Recent Developments" above for additional information).

On August 17, 1996 the Corporation  acquired 100% of the  outstanding  shares of
Compass Data Systems, Inc. ("CDS"), a privately-held corporation. CDS is located
in Salt Lake City,  Utah. The transaction  was completed  through an exchange of
stock.  The  Corporation  issued  363,306  shares of its common stock to Eric R.
Fredrickson  and 363,306 shares of its common stock to Sherry  Fredrickson,  the
sole shareholders of CDS. Immediately following the closing, the combined shares
owned by the Fredrickson's  constituted 5.4% of the total outstanding  shares of
common stock of the Corporation.  In addition,  Mr.  Fredrickson  entered into a
two-year employment contract and a two-year non-compete contract.
<PAGE>

                                     PART IV

ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
               FORM 8-K

The following documents are filed as part of this report under Part II, Item 8:

Financial Statements

Reference  is made to the Index to  Financial  Statements  included in Item 8 of
Part II hereof, where such documents are listed.

(a) Exhibits as Required by Item 601 of Regulation S-K:
<TABLE>
<CAPTION>
              Exhibit
               Number                  Description                               Incorporation by Reference to
               ------                  -----------                               -----------------------------
<S>                        <C>                                                <C>
             (2)(a)        Restated Agreement dated as of October             Registrant's Quarterly Report on
                           27, 1994 between Dixie National                    Form 10-Q for the nine months
                           Corporation and Universal Management               ended September 30, 1994.
                           Services

             (2)(a)(1)     Seconded Amended and Restated                      Registrant's Quarterly Report on
                           Agreement dated as of March 24, 1995               Form 10-Q for the three months
                           between Dixie National Corporation and             ended March 31, 1995.
                           Universal Management Services

             (2)(b)        Second restated stock purchase                     Proxy Statement relating to the
                           1995, effective as of April 18, 1995,              Annual Meeting of Shareholders on
                           among Standard Life Insurance Co.                  September 19, 1995.
                           of Indiana, Dixie Life Insurance Co.,
                           and Dixie National Corporation.

             (2)(c)        Accounts receivable financing agreement
                           dated as of February 26, 1996 between
                           Dixie National Corporation and Text
                           Retrieval Systems, Inc. including
                           amended restated option agreement.

             (2)(d)        Acquisition of Compass Data Systems, Inc.

             (2)(e)        Asset Purchase Agreement between Ethika
                           Corporation and American Practice Management,
                           Inc. and Consulting Concepts, Inc.

             (3)(a)(1)     Articles of Incorporation as                       Registrant's Annual Report on
                           amended and restated                               Form 10-K for the year ended
                                                                              December 31, 1985.  Exhibit
                                                                              (3a)

             (3)(a)(2)     Articles of Amendment to the                       Registrant's Annual Report of
                           Articles of  Incorporation  of                     Form 10-K for the year ended
                           Dixie National  Corporation  dated                 December 31, 1994. Exhibit 
                           May 23, 1986.                                      (3)(a)(2).
<PAGE>
             (3)(a)(3)     Articles of Amendment to the                       Registrant's Annual Report on
                           Articles of  Incorporation  of                     Form 10-K for the year ended
                           Dixie National  Corporation dated                  December 31, 1994. Exhibit
                           January 24, 1995                                   (3)(a)(2).

             (3)(b)        Bylaws, as amended                                 Registrant's Annual Report on
                                                                              Form 10-K for the year ended
                                                                              December 31, 1990. Exhibit
                                                                              (3(b).

             (3)(b)(1)     Amendment to Article III of Bylaws
                           effective January 24, 1996

             (3)(b)(2)     Amendment to Article IV of Bylaws
                           effective March 24, 1996

             (3)(b)(3)     Amended Bylaws at Article III
                           effective September 26, 1996

             (4)(a)(1)     Form of Dixie National Corporation                 Registrant's Current Report on
                           Subordinated Convertible Callable                  Form 8-K dated April 30, 1993.
                           Fixed Interest Rate Note Due May
                           1, 1995

             (10)(a)*      Incentive Stock Option Plan                        Registrant's Annual Report on
                           of 1982                                            Form 10-K for the year ended
                                                                              December 31, 1990.  Exhibit

             (10)(b)*      Incentive Stock Option Plan                        Proxy Statement relating to
                           of 1988                                            the Annual Meeting of
                                                                              Stockholders held on April 1,1988.

             (10)(c)*      1995 Stock Option Plan                             Proxy Statement relating to the
                                                                              Annual Meeting of Stockholders
                                                                              held on September 19, 1995.

             (21)          Subsidiaries of the Registrant

             (27)          Financial Data Schedule

*Management contract or compensatory plan.
</TABLE>

Registrant  agrees to file with the  Securities  and Exchange  Commission,  upon
request,  copies of any  instrument  defining  the rights of the  holders of its
consolidated long-term debt.

Schedules  other than those  referred  to above are  omitted for the reason that
they are not required, are not applicable,  or the required information is shown
in the financial statements or notes thereto, or is incorporated by reference.
<PAGE>
    (b)  Reports on Form 8-K

The Corporation  filed the following reports on Form 8-K during the last quarter
of the year ended December 31, 1996:
<TABLE>
<CAPTION>


              Date of Current Report
                (or Amendment)                        Items Reported
                --------------                        --------------
<S>                                           <C>            

             November 1, 1996                 Acquisition of 100% of outstanding stock of
                                              Compass Data Systems, Inc.
</TABLE>

    (c)  Exhibits required by Item 601 of Regulation S-K

        The exhibits listed in Item 14(a)3 of this report,  and not incorporated
        by reference, follow "SIGNATURES." See "Exhibit Index."

    (d)  Financial statement schedules required by Regulation S-X

        The financial  statement  schedules  required by Regulation  S-X,  filed
        herewith,  are  identified  in the  Index to  Financial  Statements  and
        Financial Statement Schedules on page 13.
<PAGE>
                                                                  EXHIBIT (2)(d)


                               ACQUISITION OF 100%
                              OF OUTSTANDING STOCK
                          OF COMPASS DATA SYSTEMS, INC.

                            SHARE EXCHANGE AGREEMENT


         THIS SHARE EXCHANGE  AGREEMENT  (this  "Agreement") is made and entered
into this ____ day of ______,  1996 by and between ETHIKA CORPORATION  (formerly
known as Dixie National Corporation), a corporation organized and existing under
the laws of the State of  Mississippi  ("Purchaser"),  ERIC R.  FREDRICKSON,  an
individual  resident of Salt Lake County,  Utah ("E.  Fredrickson"),  and SHERRY
FREDRICKSON, an individual resident of Salt Lake County, Utah ("S. Fredrickson")
(E.  Fredrickson and S.  Fredrickson may be referred to hereinafter from time to
time collectively as "Sellers" and individually as a "Seller").

                                R E C I T A L S: 


         A. Sellers are the owners of all of the issued and outstanding  capital
stock of Compass Data Systems,  Inc., a corporation organized and existing under
the laws of the  State of Utah  (the  "Company"),  which  owns  and  operates  a
business  which  develops,  owns,  sells or  licenses  Folio  infobase  software
products and other related assets.

         B.  Sellers  desire to sell to  Purchaser,  and  Purchaser  desires  to
acquire  from  Sellers,  Sellers'  stock in the Company in exchange  for certain
shares of  Purchaser  to be issued to Sellers  upon the terms and subject to the
conditions contained herein.

         NOW THEREFORE,  for and in  consideration  of the mutual  covenants and
agreements contained herein, and for other good and valuable consideration,  the
receipt and  sufficiency  of which are hereby  acknowledged,  the parties hereto
agree as follows:

                                    ARTICLE I
                               Exchange of Shares 

         1.01  Basic   Transaction.   In  reliance  upon  the   representations,
warranties,  covenants and agreements of the parties set forth in this Agreement
and upon the terms and subject to the conditions contained in this Agreement, at
the  Closing (as  defined in Section  1.02),  Sellers  shall  grant,  convey and
transfer to  Purchaser  2,000  shares of the $1.00 par value common stock of the
Company,  representing  all of the issued and  outstanding  shares of the common
capital stock of the Company (the "Compass  Shares"),  and Purchaser shall issue
and deliver to Sellers,  in the amounts shown on Schedule 1.01 attached  hereto,
726,612  shares of the One Dollar  ($1.00) par value  common  stock of Purchaser
(the "Ethika Shares").  In addition,  at the Closing,  E. Fredrickson will enter
into an  employment  agreement  substantially  in the form of Exhibit A attached
hereto.
<PAGE>
         1.02  Closing.  Upon the terms and  subject to the  conditions  of this
Agreement,  including without  limitation the conditions to closing set forth in
Articles II and III hereof, the transactions  described and provided for in this
Agreement  shall be consummated  at a closing (the  "Closing") at the offices of
Seller at 5:00 p.m.  on or prior to August 12, 1996 (the  "Closing  Date") or at
such other date, time and place as the parties hereto shall mutually agree.

         1.03  Documents.  On the Closing  Date,  Purchaser  and  Sellers  shall
execute and deliver all  appropriate  documents  and  instruments  necessary  to
effect the transactions contemplated hereby.

         1.04   Reorganization.   This   Agreement   is   intended  to  be  a  B
reorganization under Section 3.68(a)(i)(B) of the Internal Revenue Code of 1986,
as amended.


                                   ARTICLE II
                     Conditions to Obligations of Purchaser

         The  obligation  of  Purchaser  to exchange  the Ethika  Shares for the
Compass Shares shall be subject to the  satisfaction  at or prior to the Closing
Date of each of the following conditions:

         2.01 Due  Diligence  Review.  Prior  to  execution  of this  Agreement,
Purchaser has had the  opportunity  to conduct only limited  examination  of the
assets, liabilities, business and affairs of the Company. Commencing on the date
hereof,  Purchaser  shall  diligently  pursue its review of the books,  records,
business  and affairs of the  Company,  which review shall be completed no later
than July 31, 1996. As provided in Section 7.03,  Seller shall make available to
Purchaser any and all  information  which  Purchaser may  reasonably  request in
order to complete its review.

         2.02 Accuracy of  Representations  and Warranties  and Compliance  with
Obligations.  The  representations  and warranties of Sellers  contained in this
Agreement  shall have been true and  correct at and as of the date hereof in all
material  respects,  and they shall be true and correct at and as of the Closing
Date in all material  respects  with the same force and effect as though made at
and as of that time. Sellers shall have performed and complied with all of their
obligations  required by this  Agreement to be performed or complied  with at or
prior to the Closing Date.  Each of Sellers shall have  delivered to Purchaser a
certificate,  dated as of the Closing Date and signed by such Seller, certifying
that such  representations and warranties are true and correct and that all such
obligations have been performed and complied with.

         2.03 Opinion of Counsel.  Purchaser  shall have  received an opinion or
opinions, dated the Closing Date, from counsel for Sellers in form and substance
acceptable to Purchaser.

         2.04 Receipt of Necessary Consents. All necessary consents or approvals
of third parties to any of the transactions  contemplated hereby, the absence of
which would materially affect Purchaser's  rights hereunder,  if any, shall have
been  obtained  and  shown  by  written  evidence  reasonably   satisfactory  to
Purchaser.
<PAGE>
         2.05 No Adverse  Litigation.  There shall not be pending or  threatened
any action or proceeding by or before any court or other governmental body which
shall seek to  restrain,  prohibit  or  invalidate  the  exchange of the Compass
Shares  for the  Ethika  Shares as  provided  herein  or any  other  transaction
contemplated  hereby,  or which might  affect the right of  Purchaser to own the
Compass Shares, to operate the Company, or to issue the Ethika Shares to Sellers
and which,  in the judgment of Purchaser,  makes it  inadvisable to proceed with
the transactions contemplated herein.

         2.06 Closing  Documents.  Sellers shall have delivered to Purchaser all
certificates  evidencing  the Compass Shares free and clear of any and liens and
encumbrances  whatsoever,  duly  endorsed  for  transfer  or with  stock  powers
transferring  title to the Compass Shares,  in form and substance  acceptable to
Purchaser,  and E.  Fredrickson  shall have executed the  Employment  Agreement,
together  with  any and all  other  documents  deemed  reasonably  necessary  by
Purchaser to consummate  the  transactions  contemplated  herein or to otherwise
effect the intent of this Agreement.

         2.07 Material Adverse Change. There shall have been no material adverse
change in the Company, its assets, liabilities, business, financial condition or
prospects prior to the Closing.

         2.08 Securities Compliance.  The parties hereto shall have executed and
delivered  any and all documents and taken all such actions as may be reasonably
necessary to comply with federal and applicable state securities laws.

                                   ARTICLE III
                      Conditions to Obligations of Sellers

         The obligation of Sellers to exchange the Compass Shares for the Ethika
Shares shall be subject to the  satisfaction  at or prior to the Closing Date of
each of the following conditions:

         3.01 Accuracy of  Representations  and Warranties  and Compliance  with
Obligations.  The  representations and warranties of Purchaser contained in this
Agreement  shall have been true and  correct at and as of the date hereof in all
material  respects,  and they shall be true and correct at and as of the Closing
Date in all material  respects  with the same force and effect as though made at
and as of that time. Purchaser shall have performed and complied with all of its
obligations  required by this  Agreement to be performed or complied  with at or
prior  to the  Closing  Date.  Purchaser  shall  have  delivered  to  Sellers  a
certificate,  dated as of the  Closing  Date and  signed by its Vice  President,
certifying  that such  representations  and  warranties are true and correct and
that all such obligations have been performed and complied with.

         3.02  Opinion of  Counsel.  Sellers  shall have  received an opinion or
opinions,  dated the  Closing  Date,  from  counsel  for  Purchaser  in form and
substance acceptable to Sellers.

         3.03 Receipt of Necessary Consents. All necessary consents or approvals
of third parties to any of the transactions  contemplated hereby, the absence of
which would materially affect Seller's rights hereunder, if any, shall have been
obtained and shown by written evidence reasonably satisfactory to Seller.
<PAGE>
         3.04 No Adverse  Litigation.  There shall not be pending or  threatened
any action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit or invalidate the exchange of the Ethika Shares
for the Compass Shares as provided herein or any other transaction  contemplated
hereby or which,  in the judgment of Sellers,  makes it  inadvisable  to proceed
with the transactions contemplated herein.

         3.05 Closing Documents.  Purchaser shall have executed and delivered to
Sellers  certificates  representing  the Ethika  Shares in the amounts  shown on
Schedule 1.01,  free and clear of all liens and  encumbrances  whatsoever,  each
such certificate  bearing a legend as provided in Section 5.30,  Purchaser shall
have executed and delivered to E. Fredrickson the Employment Agreement, together
with any and all such other documents deemed reasonably  necessary by Sellers to
consummate  the  transactions  contemplated  herein or to  otherwise  effect the
intent of this Agreement.

         3.06 Material Adverse Change. There shall have been no material adverse
change in the financial  condition,  business or prospects of Purchaser prior to
the Closing.


                                   ARTICLE IV
                              Additional Agreements

         4.01 Further Assurances.  At and after the Closing,  the parties hereto
shall  execute,  acknowledge  and deliver  all such  further  documents,  deeds,
assignments,  transfers,  conveyances,  powers of attorney and  assurances,  and
shall take and perform any and all such further  actions,  as may be  reasonably
necessary or  appropriate by either party to exchange the Compass Shares for the
Ethika  Shares and to otherwise  effect the  transactions  contemplated  by this
Agreement.

         4.02 Audit.  The parties hereto  acknowledge and agree that under rules
promulgated  by the  Securities  and  Exchange  Commission  (the  "Commission"),
Purchaser  will be required to make  filings  with  respect to the  transactions
contemplated  herein which are required to include  financial  statements of the
Company which are audited by an independent  certified public accounting firm in
accordance with generally accepted accounting principles,  consistently applied.
At the time of execution of this Agreement, no such audited financial statements
have been prepared for the Company. The parties agree that such an audit will be
commenced immediately upon the execution of this Agreement,  at the sole expense
of Purchaser,  with an independent public accounting firm selected by Purchaser.
Seller shall make  available  to  Purchaser  and such firm any and all books and
records which they may reasonably  require in order to promptly and  efficiently
complete and conduct such audit,  shall  personally  be available  to, and shall
make other members of management of the Company  available to, answer  questions
and provide  information which may be necessary in order to complete such audit,
and shall otherwise provide their full, prompt and efficient cooperation so that
such audit may be completed as soon as reasonably possible.

         4.03     Registration of Ethika Shares.

                  (a)  Notice of  Registration.  If, at any time or from time to
time,  Purchaser  shall  determine to register any of its securities for its own
account or for the  account of any other  person  other than (i) a  registration
relating solely to employee benefit plans,  (ii) a registration  relating solely
to a Commission Rule 145 transaction,  or (iii) a registration on any form (such
as Form S-4) that does not permit secondary sales, Purchaser will:
<PAGE>

                  (i) Promptly give to each Seller written notice thereof; and

                  (ii)   Include   in  such   registration   (and  any   related
qualification under blue sky laws or other compliance),  and in any underwriting
involved  therein,  all the  Ethika  Shares  specified  in a written  request or
requests, made within thirty (30) days after receipt of such written notice from
Purchaser,  by any Seller,  but only to the extent that such  inclusion will not
diminish  the number of  securities  included by  Purchaser or such other person
(subject,  however,  to the  rights  of the  Sellers  as set  forth  in  Section
4.03(b)).

                  (b) Underwriting. If the registration of which Purchaser gives
notice is for a registered public offering involving an underwriting,  Purchaser
shall so advise the Sellers as a part of the written  notice  given  pursuant to
Section  4.03(a)(i).  In such  event  the right of any  Seller  to  registration
pursuant  to  this  Section  4.03  shall  be  conditioned   upon  such  Seller's
participation in such underwriting and the inclusion of the Ethika Shares in the
underwriting to the extent provided  herein.  Any Seller proposing to distribute
its securities  through such underwriting shall (together with Purchaser and the
other holders  distributing their securities  through such  underwriting)  enter
into an underwriting  agreement in customary form with the managing  underwriter
selected for such underwriting by Purchaser. Notwithstanding any other provision
of this Section  4.03, if the managing  underwriter  determines  that  marketing
factors  require a limitation  of the number of shares to be  underwritten,  the
managing  underwriter  may  limit  the  Ethika  Shares  to be  included  in such
registration.  Purchaser  shall so advise  such  Sellers  and the other  holders
distributing  their securities  through such underwriting  pursuant to piggyback
registration  rights  similar to this Section 4.03,  and the number of shares of
the Ethika Shares and other  securities that may be included in the registration
and  underwriting  (other than shares issuable by Purchaser)  shall be allocated
among such Sellers and other holders in proportion, as nearly as practicable, to
the respective amounts of the Ethika Shares which such Sellers and other holders
originally proposed to distribute  pursuant to such underwriting.  If any Seller
or other holder disapproves of the terms of any such underwriting,  he may elect
to  withdraw   therefrom  by  written  notice  to  Purchaser  and  the  managing
underwriter.  Any securities  excluded or withdrawn from such underwriting shall
be withdrawn from such  registration,  and, if Section  4.03(i)  applies to such
registration,  shall not be  transferred in a public  distribution  prior to one
hundred eighty (180) days after the effective date of the registration statement
relating thereto.

                  (c) Right to Terminate Registration.  Purchaser shall have the
right to  terminate  or withdraw  any  registration  initiated  by it under this
Section 4.03 prior to the effectiveness of such registration  whether or not any
Seller has elected to include securities in such registration.

                  (d) Registration Procedures.  In the case of each registration
effected by Purchaser  pursuant to this Section 4.03,  Purchaser  will keep each
Seller  advised in writing as to the initiation of each  registration  and as to
the completion thereof. At its expense, Purchaser will use its best efforts to:

                  (i) Keep such  registration  effective  for a period of ninety
(90) days or until  the  Seller  or  Sellers  have  completed  the  distribution
described  in the  registration  statement  relating  thereto,  whichever  first
occurs;  provided,  however, that (A) such 90-day period shall be extended for a
period  of time  equal to the  period  the  Seller  refrains  from  selling  any
securities  included in such  registration  at the request of an  underwriter of
<PAGE>
common  stock (or other  securities)  of  Purchaser;  and (B) in the case of any
registration  of the Ethika  Shares on Form S-3 which are intended to be offered
on a continuous  or delayed  basis,  such 90-day  period  shall be extended,  if
necessary,  to keep the registration  statement  effective until all such Ethika
Shares  are sold,  provided  that  Rule 415,  or any  successor  rule  under the
Securities  Act of  1933  (the  "Securities  Act"),  permits  an  offering  on a
continuous or delayed basis,  and provided  further that applicable  rules under
the Securities Act governing the obligation to file a  post-effective  amendment
permit,  in lieu of filing a  post-effective  amendment  that (1)  includes  any
prospectus  required by Section  10(a)(3) of the  Securities Act or (2) reflects
facts or events representing a material or fundamental change in the information
set forth in the  registration  statement,  the  incorporation  by  reference of
information  required  to be included  in (A) and (B) above to be  contained  in
periodic  reports  filed  pursuant to Section 13 or 15(d) of the Exchange Act of
1934 (the "Exchange Act") in the registration statement;

                  (ii) Prepare and file with the Commission  such amendments and
supplements to such registration statement and the prospectus used in connection
with  such  registration  statement  as may be  necessary  to  comply  with  the
provisions  of  the  Securities  Act  with  respect  to the  disposition  of all
securities covered by such registration statement;

                  (iii) Furnish such number of prospectuses  and other documents
incident thereto, including any amendment of or supplement to the prospectus, as
a Seller from time to time may reasonably request;

                  (iv)  Cause  all  such  Ethika  Shares   registered   pursuant
hereunder to be listed on each securities  exchange on which similar  securities
issued by Purchaser are then listed; and

                  (v)  Provide a  transfer  agent and  registrar  for all Ethika
Shares registered pursuant to such registration statement and a CUSIP number for
all such Ethika  Shares,  in each case not later than the effective date of such
registration.

                  (e)  Expenses  of  Registration.   All  expenses  incurred  in
connection  with any  registration  pursuant to this  Section  4.03,  including,
without  limitation,  all registration,  qualification and filing fees, printing
expenses,  escrow fees, fees and disbursements of counsel for Purchaser and blue
sky fees and expenses (the "Registration Expenses") shall be borne by Purchaser.
Sellers shall be required to pay any and all expenses directly relating to their
participation  in such  registration,  including but not limited to Sellers' own
counsel fees and expenses and all selling  expenses,  including all underwriting
discounts,  selling commissions,  and stock and transfer taxes directly relating
to Ethika Shares sold by them pursuant to such registration.

                  (f)      Indemnification.

                  (i) Purchaser will indemnify each Seller,  with respect to any
registration, qualification or compliance effected pursuant to this Section 4.03
(the "Purchaser Indemnitees"),  against all expenses, claims, losses, damages or
liabilities  (or actions in respect  thereof),  including  any of the  foregoing
incurred in settlement of any litigation,  commenced or threatened,  arising out
of or based on any untrue statement (or alleged untrue  statement) of a material
fact contained in any registration statement,  prospectus,  offering circular or
<PAGE>
other  document,  or any amendment or supplement  thereto,  incident to any such
registration,  qualification or compliance; or based on any omission (or alleged
omission)  to state  therein a material  fact  required to be stated  therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading; or based on any violation (or alleged violation)
by Purchaser of any provision of the  Securities  Act, or any rule or regulation
promulgated under the Securities Act, applicable to Purchaser in connection with
any such  registration,  qualification or compliance;  provided,  that Purchaser
will not be liable in any such case to the extent that any such expense,  claim,
loss,  damage,  liability  or  action  arises  out of or is based on any  untrue
statement or omission or alleged untrue statement or omission,  made in reliance
upon and in conformity with information furnished to Purchaser by such Purchaser
Indemnitee.

                  (ii) Each  Seller  will,  if the  Ethika  Shares  held by such
Seller  are  included  in  the   securities  as  to  which  such   registration,
qualification or compliance is being effected,  indemnify Purchaser, each of its
directors and officers,  each  underwriter,  if any, of  Purchaser's  securities
covered by such a registration statement, and each person who controls Purchaser
or such underwriter  within the meaning of Section 15 of the Securities Act (the
"Seller  Indemnitees"),  against  all  expenses,  claims,  losses,  damages  and
liabilities  (or  actions in  respect  thereof)  arising  out of or based on any
untrue  statement (or alleged untrue  statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other document
or any  amendment or  supplement  thereto;  or based on any omission (or alleged
omission)  to state  therein a material  fact  required to be stated  therein or
necessary to make the  statements  therein not  misleading,  provided  that such
untrue statement (or alleged untrue statement) or omission (or alleged omission)
is made in such registration statement,  prospectus,  offering circular or other
document  in reliance  upon and in  conformity  with  information  furnished  to
Purchaser by such Seller.

                  (g) Information by Seller; Copies of Prospectus. It shall be a
condition  precedent to the obligations of Purchaser to take any action pursuant
to this Section 4.03 with respect to the Ethika  Shares of any Sellers that such
Sellers of the Ethika  Shares  included  in any  registration  shall  furnish to
Purchaser such  information  regarding  such Sellers,  the Ethika Shares held by
them and the  distribution  proposed by such Sellers as Purchaser may request in
writing  and  as  shall  be  required  in  connection  with  any   registration,
qualification or compliance referred to in this Section 4.03. In connection with
any such  registration,  Purchaser  shall furnish to such Seller or Sellers such
numbers of copies as it or they may reasonably  request,  in order to facilitate
the  disposition  of the  Ethika  Shares  owned by them,  of any  prospectus  or
preliminary prospectus prepared in conformity with the Securities Act.

                  (h)  Transfer  of  Registration  Rights.  The  right  to cause
Purchaser to register  securities granted Sellers under this Section 4.03 may be
assigned only with the prior written consent of Purchaser.

                  (i) Market Standoff  Agreement.  In connection with the public
offering of  Purchaser's  securities  and upon the request of  Purchaser  or the
underwriters managing any underwritten offering of Purchaser's securities,  each
Seller agrees not to directly or  indirectly  sell,  offer to sell,  contract to
sell (including without limitation,  any short sale), loan, grant any option for
the purchase of, or otherwise  dispose of or transfer any Ethika  Shares  (other
than those included in the  registration)  without the prior written  consent of
Purchaser or such underwriters, as the case may be, for such period of time (not
<PAGE>
to exceed  one  hundred  eighty  (180)  days)  from the  effective  date of such
registration as may be requested by Purchaser or such managing underwriters.  In
order to enforce the  foregoing  covenant,  Purchaser  may impose  stop-transfer
instructions with respect to the Ethika Shares of each Seller (and the shares or
securities of every other person subject to the foregoing restriction) until the
end of such period.

                  (j)  Notice  to  Purchaser  of  Proposed  Sale  and  Right  of
Purchaser to Suspend Use of Registration  Statement. If any Seller shall propose
to sell any Ethika Shares  pursuant to a Registration  Statement  hereunder,  it
shall notify  Purchaser of its intent to do so at least three (3) full  business
days  prior  to  such  sale.  Such  notice  shall  be  deemed  to  constitute  a
representation   that  any  information   previously  supplied  by  such  Seller
(including  without  limitation the  information  referred to in Section 4.03(g)
hereof) is accurate as of the date of such notice. At any time within such three
(3) business-day period, Purchaser may refuse to permit the Seller to resell any
Ethika Shares pursuant to the Registration Statement; provided, however, that in
order to exercise this right, Purchaser must deliver a certificate in writing to
the Seller to the effect that a delay in such sale is  necessary  because a sale
pursuant to such Registration Statement in its then-current form would not be in
the best  interests of Purchaser  and its  shareholders.  In no event shall such
delay exceed thirty (30) calendar days, and provided further,  however,  that in
no event shall  Purchaser be permitted to exercise this right more than twice in
any single calendar year.

                  (k)  Termination of  Registration  Rights.  No Seller shall be
entitled to exercise any right provided in this Section 4.03 after the date such
Seller beneficially owns less than 1% of the Company's outstanding capital stock
and is  able  to  sell  all of the  Ethika  Shares  held  by  such  Seller  in a
three-month period pursuant to Rule 144, or a successor rule.

         4.04  Payment to E.  Fredrickson.  In  consideration  of the  covenants
contained in Sections  10.01 and 10.02,  Purchaser  shall pay to E.  Fredrickson
Fifty Thousand Dollars ($50,000) per year for a period of two (2) years from the
Closing Date for a total of One Hundred Thousand Dollars  ($100,000)  payable in
two  installments  of $50,000  each,  one  payable at Closing and one payable on
January 1, 1997.


                                    ARTICLE V
                    Representations and Warranties of Sellers

         In order to  induce  Purchaser  to enter  into  this  Agreement  and to
consummate  the  transactions   contemplated  hereunder,   Sellers  jointly  and
severally make the following representations and warranties:

         5.01 Capacity and Consents. Each Seller has full right, power and legal
capacity and authority to enter into and perform Seller's obligations under this
Agreement  and to  consummate  the  transactions  contemplated  hereby,  and has
obtained all requisite consents or approvals applicable to Seller to do so. This
Agreement and each of the other  documents to be executed  pursuant  hereto have
been or will be duly executed and delivered by Sellers and  constitute the valid
and binding obligations of Sellers enforceable in accordance with its terms.
<PAGE>
         5.02 Title to Compass  Shares.  Each of Sellers has, and at the time of
Closing such Seller will have,  good and marketable  title to the Compass Shares
as set  forth on  Schedule  5.02,  free and  clear of all  liens,  encumbrances,
security interests,  equities,  preemptive rights, community property rights and
adverse  claims  whatsoever;  and,  upon  delivery of such shares of the Compass
Shares and payment  therefor  pursuant to this  Agreement,  good and  marketable
title  to such  shares  of the  Compass  Shares,  free and  clear of all  liens,
encumbrances,   security  interests,   equities,  preemptive  rights,  community
property rights and adverse claims whatsoever, will be transferred to Purchaser.

         5.03 Organization. The Company is a corporation duly organized, validly
existing and in good  standing  under the laws of the State of Utah and has full
corporate  power  and  authority  to  conduct  its  business  as it is now being
conducted and to own,  operate or lease the  properties  and assets it currently
purports to own,  operate or hold.  The Company is duly qualified or licensed to
do business and is in good standing in each jurisdiction  where the character of
its  business  or the  nature of its  properties  makes  such  qualification  or
licensing  necessary.  The Company  does not own,  directly or  indirectly,  any
interest  or  investment  in  any  corporation,   association,   joint  venture,
partnership or other business organization,  firm or enterprise of any character
whatsoever.

         5.04  Capitalization.  The  authorized  capital  stock  of the  Company
consists  of 500,000  shares of $1.00 par value  common  stock,  of which  2,000
shares are issued and  outstanding as of the date hereof and are owned of record
and  beneficially  by  Sellers  as set  forth  on  Schedule  5.02.  All of  such
outstanding  shares are validly issued,  fully paid and  non-assessable and were
issued in compliance  with  applicable  law. Other than as set forth on Schedule
5.04, there are no outstanding options, warrants, convertible securities, calls,
rights,   commitments,   preemptive   rights  or   agreements,   instruments  or
understandings of any character, to which the Company is a party or by which the
Company is bound,  obligating the Company to issue, deliver or sell, or cause to
be issued,  delivered or sold, additional shares of capital stock of the Company
or any  securities or  obligations  convertible  into or  exchangeable  for such
shares or to grant, extend or enter into any such option,  warrant,  convertible
security, call, right, commitment,  preemptive right or agreement.  There are no
outstanding  obligations  of the Company to purchase  or  otherwise  acquire any
capital  stock  of the  Company.  The  Company  has  never  redeemed  any of its
outstanding shares of capital stock.

         5.05 No Violation.  Except as set forth on Schedule 5.05, the execution
and delivery of this Agreement by Sellers does not, and the  consummation by the
Company and Sellers of the  agreements  and  transactions  contemplated  by this
Agreement  will not, (a) conflict with, or result in any violation of or default
or loss of any benefit under,  any provision of the articles of incorporation or
bylaws of the Company;  (b) violate any permit,  concession,  grant,  franchise,
law,  rule or  regulation,  or any  judgment,  decree  or  order  of any  court,
administrative   agency  or  commission  or  other  governmental   authority  or
instrumentality  ("Governmental  Entity")  to which the Company is a party or to
which the Company or any of its property is subject;  or (c) conflict  with,  or
result in a breach or violation of, or accelerate the  performance  required by,
the terms of any agreement, contract, indenture or other instrument to which the
Company is a party or to which any of its property is subject,  or  constitute a
default or loss of any right  thereunder  or an event  which,  with the lapse of
<PAGE>
time or  notice  or  both,  might  result  in a  default  or  loss of any  right
thereunder or the creation of any lien,  charge or  encumbrance  upon any of the
assets or  properties  of the Company.  Sellers  shall use their best efforts to
cause the Company to take all such  actions as shall be  necessary  so that,  at
Closing, all of the conflicts, violations or other matters described on Schedule
5.05 shall have been cured, waived or removed.

         5.06 Approvals. Except as set forth on Schedule 5.06, the execution and
delivery  of  this  Agreement  and  the   consummation  of  the  agreements  and
transactions  contemplated  by this  Agreement will not, to the best of Sellers'
knowledge after reasonable investigation,  require the consent,  approval, order
or authorization of any Governmental Entity or regulatory authority or any other
person under any permit,  license,  agreement,  indenture or other instrument to
which the Company is a party or to which any of its properties are subject, and,
to  the  best  of  Sellers'   knowledge  after  reasonable   investigation,   no
declaration,  filing or registration with any Governmental  Entity or regulatory
authority  is  required  or  advisable  by the  Company in  connection  with the
execution and delivery of this Agreement and the consummation of such agreements
and  transactions.  Sellers  shall use their  best  efforts  to cause all of the
consents,  approvals or other matters described on Schedule 5.06 to be obtained,
waived or otherwise satisfied prior to Closing.

         5.07  Corporate  Action,  Charter and Bylaws.  Sellers have  heretofore
delivered  to  Purchaser  true and  complete  copies  of the  incorporation  and
organizational documents of the Company as in effect on the date hereof. Sellers
have  heretofore  delivered to Purchaser true and complete  copies of the minute
books and stock  records of the  Company.  Such minute  books and stock  records
correctly  reflect all corporate actions taken at all meetings of, or by written
consents of, directors of the Company (including  committees  thereof) including
but not limited to actions taken at such meetings  relating to the  organization
of the Company and the issuance of shares of capital stock of the Company.

         5.08  Financial  Statements.  Attached  hereto as Schedule 5.08 are the
following  financial  statements   (collectively  the  "Financial  Statements"):
unaudited  balance  sheets and  statements of income,  changes in  stockholders'
equity,  and cash flow as of and for the fiscal  years  ended April 30, 1995 and
April 30,  1996,  and for the month and year to date  ended July 31,  1996.  The
Financial  Statements  (including  the  notes  thereto)  have been  prepared  in
accordance with generally accepted accounting principles applied on a consistent
basis  throughout  the periods  covered  thereby,  present  fairly the financial
condition of the Company for such  periods,  are correct and  complete,  and are
consistent  with the books and records of the Company  (which  books and records
are correct and complete). Since the date of the Financial Statements, there has
not been any  material  adverse  change in the  business,  financial  condition,
operations, results of operations, or future prospects of the Company.

         5.09  Litigation.  Except as set forth on Schedule 5.09, the Company is
not subject, and during the two years immediately preceding the date hereof, the
Company was not subject, to any judicial,  governmental or administrative order,
judgment,  injunction  or decree,  other than those of general  application.  No
suits,  actions,  audits or proceedings of any character whatsoever are pending,
or to the knowledge of any Seller,  threatened  against or affecting the Company
or any of its properties, assets or businesses, nor has the Company received any
other claims or demands of any nature whatsoever.
<PAGE>
         5.10     Compliance with Laws; Environmental Matters.

                  (a) The business of the Company is not currently  conducted in
violation of any law or any ordinance or regulation of any Governmental  Entity.
Except as set forth on  Schedule  5.10,  the Company has not during the past two
years  conducted  its  business  in  violation  of any law or any  ordinance  or
regulation  of any  Governmental  Entity.  No  investigation  or  review  by any
Governmental Entity (including without limitation any audit or similar review by
any  federal,  state or local taxing  authority)  with respect to the Company is
pending or, to the knowledge of any Seller, threatened, nor has any Governmental
Entity indicated to any Seller or, to the knowledge of any Seller,  an intention
to conduct the same.

                  (b) The Company has all licenses,  permits and  certifications
(federal,  state,  foreign and local) required by law to conduct its business in
the cities,  states and  countries in which it conducts its  business,  and such
licenses,  permits and certifications  are in full force and effect.  During the
past  five  years,  the  Company  has not  had any  such  licenses,  permits  or
certifications  suspended or revoked,  other than as described on Schedule 5.10.
No proceeding is pending or, to the knowledge of any Seller, threatened, seeking
the   revocation   or  limitation   of  any  of  such   licenses,   permits  and
certifications.

                  (c)   Specifically,   without  limiting  the   representations
contained  in Section  5.10(a)  hereof,  the Company and its  properties  are in
compliance with all applicable  published rules and regulations  (and applicable
standards and requirements) of the  Environmental  Protection Agency ("EPA") and
of all similar  national,  state and local  agencies  in which the Company  owns
assets or conducts business.  There is no suit, claim,  action or proceeding now
pending before any court,  governmental  agency or board or, to the knowledge of
any Seller,  threatened by any person or entity for noncompliance by the Company
(or by any  other  person  with  respect  to any  of its  properties)  with  any
environmental  law,  rule or  regulation.  The  Company  does not have,  and its
properties are not subject to, any liability,  contingent or otherwise,  arising
out of or resulting from the release,  discharge,  spillage, storage, burying or
other  disposal,  whether on its own premises or through other  persons,  of any
pollutant,  toxic or  hazardous  material  or waste of any  kind.  There  are no
citations,  fines or penalties  heretofore  assessed against the Company or with
respect to any of its  properties  under any  national,  state or local law that
remain  unpaid,   nor  has  the  Company  received  any  notices  or  any  other
communications  expressly  addressed to it from the EPA, the Occupational Safety
and Health Administration or any other national,  state or local agency or other
Governmental  Entity with respect to any violations or alleged violations of any
national, state or local law or regulation.

         5.11 Real  Property.  The Company  owns no real  property.  The Company
leases  the real  property  subject  to the  leases or  subleases  described  in
Schedule 5.11 hereto. Each such lease or sublease is legal,  valid,  binding and
enforceable and is in full force and effect; no party to the leases or subleases
is in breach or default and no event has occurred which, with notice or lapse of
time would constitute a breach of default, or permit  termination,  modification
or  acceleration   thereunder.   There  are  no  disputes,  oral  agreements  or
forbearance  programs  in effect;  the Company  has not  assigned,  transferred,
conveyed,   mortgaged,   deeded,  entrusted,  or  encumbered  the  leasehold  or
subleasehold  estate.  All  facilities  leased or  subleased  have  received all
<PAGE>
approvals of governmental  authorities (including licenses and permits) required
in connection therewith and have been operated and maintained in accordance with
all applicable laws, rules and regulations; and the real property and facilities
leased or subleased are adequate and suitable for the  operations of the Company
conducted therein.

         5.12     Intellectual Property.

                  (a) Subject to the rights and licenses granted by the Licenses
and the  Marketing  Agreements  (as  defined in Sections  5.14(a)  and  5.14(b),
respectively),  the Company is the sole and exclusive owner of all right,  title
and  interest  in, and has good,  valid and  marketable  title to, the  software
programs developed, authored and/or licensed by the Company prior to the Closing
including  without  limitation  those software  programs listed on Schedule 5.12
(the "Software  Programs") and the  Documentation  (as defined in Section 5.13),
free and clear of all mortgages, pledges, liens, security interests, conditional
sales agreements, encumbrances or charges of any kind. Subject to the rights and
licenses  granted by the Licenses and the Marketing  Agreements,  the Company is
the sole and exclusive  owner of all right,  title and interest in, and has good
valid and marketable  title to, all patents,  trade secrets,  copyrights,  trade
dress,  and any and  all  other  proprietary  rights  (including  registrations,
licenses and applications  pertaining  thereto) (the  "Intellectual  Property"),
free and clear of all mortgages, pledges, liens, security interests, conditional
sales agreements,  encumbrances or charges of any kind. Schedule 5.12 contains a
complete list of all registered trademarks and service marks, all reserved trade
names,  all registered  copyrights and all filed patent  applications and issued
patents used in, or otherwise  necessary for the conduct of, the business of the
Company as heretofore conducted.

                  (b)  Schedule  5.12 sets forth the form and  placement  of the
proprietary  legends  and  copyright  notices  displayed  in or on the  Software
Programs.  In no instance  has the  eligibility  of the  Software  Programs  for
protection under applicable copyright law been forfeited to the public domain by
omission of any required notice or any other action.

                  (c) The  Company  has taken  reasonable  security  measures to
protect the confidentiality of its trade secrets, including, without limitation,
technical data, know-how,  research, product plans and services, customer lists,
software,  inventions,  processes,  formulas,  technology,  designs, engineering
specifications,  testing,  processes,  marketing,  finances  and other  business
information  and  other  proprietary  information.   All  personnel,   including
employees, agents, consultants,  and contractors, who have conceived,  developed
and/or  authored,   in  whole  or  in  part,  any  of  the  Software   Programs,
Documentation,   and/or  Intellectual   Property  have  executed   nondisclosure
agreements  and  either  (1) have  been  party to a written  agreement  with the
Company that has accorded the Company  full,  effective,  exclusive and original
ownership of all the Software Programs, Documentation and Intellectual Property,
or (2) have  executed  appropriate  instruments  of  assignment  in favor of the
Company as  assignee  that have  conveyed to the Company  full,  effective,  and
exclusive ownership of all the Software Programs, Documentation and Intellectual
Property.  The source code and Documentation  (except end-user manuals) relating
to the  Software  Programs  (i) have at all  times  been  maintained  in  strict
confidence,  (ii) have been disclosed by the Company only to employees  having a
"need to know" the contents  thereof in connection with the performance of their
duties to the Company and (iii) have not been disclosed to any third party.
<PAGE>
                  (d)  Schedule  5.12  contains  a  complete  list  of  software
libraries,  compilers and other third-party  software used in the development of
the Software Programs. Schedule 5.12 lists all license agreements for the use of
all such software  and, if any such  software is not licensed,  the basis of the
use of such software by the Company.  All use of each of such Software  Programs
by the Company has been in full compliance with the respective license agreement
or other right of use listed on Schedule 5.12.

                  (e) The Software  Programs will perform in accordance with the
warranties  set forth in the  standard  end-user  agreements  listed on Schedule
5.12.

                  (f)  Neither  the  Software  Programs  nor  the  Documentation
infringe, nor will they infringe, any copyright or trade secret of any person or
entity,  and,  to the  knowledge  of any of  Sellers,  no part  of the  Software
Programs  nor the use  thereof for their  intended  purposes  infringes  or will
infringe any patent or other  exclusionary  right of any third party.  No claims
have  been  asserted  by  any  person  or  entity  as to  the  use of any of the
Intellectual  Property.  To the  knowledge  of  Sellers,  there  is no  material
unauthorized  use,  infringement  or  misappropriation  of any  of the  Software
Programs,  Documentation or Intellectual Property by any third party,  including
any employee or former employee of the Company. The Company has not been sued or
charged as a defendant in any claim, suit, action or proceeding which involves a
claim of infringement of any patents,  trademarks,  service marks, copyrights or
violation of any trade secret or other  proprietary right of any third party and
which has not been  finally  terminated  without  continuing  obligation  by the
Company prior to the date hereof,  nor do Sellers have any knowledge of any such
potential  charge or claim,  and there is not any  infringement  liability  with
respect  to, or  infringement  or  violation  by,  the  Company  of any  patent,
trademark,  service mark, copyright,  trade secret or other proprietary right of
another.  The Company has not entered into any  agreement to indemnify any other
person   against  any  charge  of   infringement   of  any  Software   Programs,
Documentation or Intellectual Property.

                  (g) The Company has observed all material  provisions  of, and
performed all of their material obligations under, the Licenses,  including, but
not limited to, the  performance  of its product  maintenance  obligations.  The
Company  has  not,  to  the  best  of  Sellers'   knowledge   after   reasonable
investigation,  taken any action that could cause, or failed to take any action,
the failure of which could cause,  (i) the  unprotected  disclosure of any trade
secret or source code of any of the Software Programs,  (ii) the release from an
escrow or other similar arrangement of any source code or trade secret of any of
the Software  Programs,  or (iii) any other adverse  effect to the protection of
the  Software   Programs  under  trade  secret,   copyright,   patent  or  other
intellectual property laws.

                  (h) No  portion  of the  Software  Products  contains  or will
contain  any "back  door,"  "time  bomb,"  "Trojan  horse,"  "worm,"  "drop dead
device," "virus" or other software routines or hardware  components  designed to
permit unauthorized access; to disable or erase software,  hardware, or data; or
to perform any other such actions.
<PAGE>
         5.13  Adequacy of  Documentation.  The  documentation  of the  Software
Programs  includes  without  limitation the source code for each of the Software
Programs,  as  well as any  pertinent  commentary  or  explanation  that  may be
necessary  to  render  such  materials  understandable  and  usable by a trained
computer programmer,  any programs (including  compilers),  "workbenches," tools
and higher level (or  "proprietary")  language  necessary  for the  development,
maintenance and  implementation  of the Software  Programs and any and all other
materials  relating to the Software Programs  including  without  limitation all
notes, flow charts, and programmer's or user's manuals (the "Documentation").

         5.14     Software Contracts.

                  (a) Schedule  5.14 sets forth a complete  list of all licenses
and  sublicenses of the Software  Programs and of all customer trial  agreements
for  the  Software  Programs  granted  by the  Company  to  other  parties  (the
"Licenses").  All contracts identified in Schedule 5.14 constitute only end-user
agreements,  each of  which  grants  the end  user  thereunder  principally  the
nonexclusive right and license to use an identified Software Program and related
user  documentation,  for internal purposes only, at the sites specified in each
agreement.

                  (b) Schedule 5.14 sets forth a complete list of all contracts,
agreements,  licenses,  or other  commitments  or  arrangements  in effect  with
respect to the marketing, remarketing,  distribution,  licensing or promotion of
(i) the Software Programs or any  Documentation or the Intellectual  Property by
any independent  salesperson,  distributor,  sublicensor or other  remarketer or
sales organization or (ii) of any third party's software products by the Company
(the "Marketing Agreements").

                  (c) Other than the Licenses and the Marketing Agreements,  the
Company has not  granted,  transferred  or assigned any right or interest in the
Software Programs,  the Documentation or the Intellectual Property to any person
or entity.

         5.15 Title to Tangible Property.  Other than the Software Programs, the
Intellectual Property and the Documentation,  all of the property, both tangible
and  intangible,  owned by the Company is shown and  described on Schedule  5.15
(the "Other Assets") (the Software  Programs,  the  Intellectual  Property,  the
Documentation and the Other Assets may be collectively referred to herein as the
"Assets").  Except as  disclosed  on Schedule  5.15,  the Company owns the Other
Assets  free and  clear of any and all liens and  encumbrances  whatsoever.  The
Other Assets are in good operating condition and repair and are suitable for the
purposes for which they are  presently  used.  The Assets are  sufficient in all
respects for the conduct of the business of the Company as presently conducted.

         5.16  Inventory.  The  inventory of the Company  shown and described on
Schedule 5.16 consists of raw materials and supplies, manufactured and purchased
parts,  goods in process,  and finished goods,  all of which is merchantable and
fit for the purpose for which it was procured or manufactured, and none of which
is obsolete, damaged, or defective.

         5.17 Notes and Accounts  Receivable.  All notes and accounts receivable
of the Company are shown and described on Schedule 5.17, are reflected  properly
on its books and  records,  are  valid  receivables  subject  to no  setoffs  or
counterclaims,  are current and collectible, and will be collected in accordance
with their terms at their recorded amounts,  subject only to the reserve for bad
debts set forth on the Financial  Statements  (rather than in any notes thereto)
or as set forth on Schedule 5.17.
<PAGE>
         5.18 Contracts.  Attached hereto as Schedule 5.18 is a complete list of
all (a)  employment  contracts  of the  Company  which  may  not be  immediately
terminated  without  penalty (or any  augmentation or acceleration of benefits);
(b) leases,  sales  contracts and other  agreements with respect to any personal
property of the Company;  (c) contracts or commitments for capital  expenditures
or acquisitions in excess of $5,000 for one project or set of related  projects;
(d)  agreements,  contracts,  indentures  or other  instruments  relating to the
borrowing of money,  or the  guarantee of any  obligation  for the  borrowing of
money; (e) contracts or agreements  providing for any covenant not to compete by
or otherwise  restricting in any way its engaging in any business activity;  (f)
contracts or agreements  relating to  franchisees,  consultancies,  professional
retentions,  agencies,  sales or distributorship  arrangements relating to their
products or activities; (g) contracts relating to the disposal of any pollutant,
toxic or hazardous  material or waste generated by or relating to the Company or
any of its properties; (h) contracts, agreements,  arrangements,  understandings
or commitments between the Company and any employee, officer, director or Seller
of the Company; (i) contracts between the Company and any of its customers;  and
(j)  contracts,   agreements,   arrangements  or  commitments,  other  than  the
foregoing,  which are material to the business,  Assets,  earnings,  properties,
operations  or  condition,  financial or  otherwise,  of the  Company.  True and
complete  copies  of all the  instruments  listed  in  Schedule  5.18  have been
furnished to Purchaser.  All such  agreements,  arrangements  or commitments are
valid  and  subsisting  and the  Company  has  duly  performed  its  obligations
thereunder in all material respects to the extent such obligations have accrued,
and no breach or default  thereunder  by the Company or, to the knowledge of any
of Sellers, any other party thereto has occurred that impairs the ability of the
Company to enforce any material rights thereunder.

                  Except as set forth in Schedule  5.18, to the knowledge of any
of Sellers,  no customers or suppliers of the Company with which the Company has
an ongoing  relationship  intend to cease purchasing  from,  selling to, renting
from,  or dealing with the  Company,  and, to the  knowledge of any Sellers,  no
customer or supplier with which the Company has an ongoing  relationship intends
to alter in any  respect  the amount of such  purchases,  sales,  rentals or the
extent of dealings  with the Company or to alter in any respect such  purchases,
sales,  rentals or dealings in the event of the consummation of the transactions
contemplated hereby.

         5.19     Employee and Labor Matters and Plans.

                  (a) Neither the Company nor any corporation,  trade,  business
or entity under common  control with the Company,  within the meaning of Section
414(b), (c) or (m) of the Internal Revenue Code of 1986, as amended (the "Code")
or  Section  4001 of  ERISA,  sponsors,  maintains  or  contributes  to,  or has
sponsored,  maintained or  contributed  to within six years prior to the Closing
Date:

                  (i) any  "employee  benefit  plan" as such term is  defined in
Section 3(3) of ERISA; or

                  (ii) any  personnel  policy,  stock  option  plan,  collective
bargaining  agreement,  bonus  plan  or  arrangement,  incentive  award  plan or
arrangement,  vacation policy, severance pay plan, policy or agreement, deferred
compensation  agreement or arrangement,  executive  compensation or supplemental
income  arrangement,  consulting  agreement,  employment  agreement or any other
employee   benefit   plan,   agreement,   arrangement,   program,   practice  or
understanding.
<PAGE>
                  (b) There are no labor  disputes or  disruptions  to which the
Company  is a party.  The  Company  is not a party to or bound by any  contract,
agreement or  understanding  with any labor union.  The Company has not received
and has no  reasonable  basis from which to expect to  receive  notice  from any
union or employees  setting forth demands for  representation,  elections or for
present or future changes in wages, terms of employment or working conditions.

                  (c) There are no claims,  pending or threatened,  by a current
or former  employee  of the  Company  that,  individually  or in the  aggregate,
adversely  affect or will adversely affect the business,  prospects,  results of
operations,  financial  condition  or assets of the Company,  including  but not
limited to any claims of equity ownership in any such company or of an ownership
interest in any Software Program.

         5.20  Insurance  Policies.  Schedule  5.20 contains a true and complete
description of all insurance policies of the Company covering or relating to the
Company  and its  business,  Assets  or any  employees  or other  agents  of the
Company.  Each such policy is in full force and effect, and is in an amount, and
insures against such losses and risks, as is generally maintained for comparable
businesses and properties.

         5.21 Undisclosed Liabilities.  There are no liabilities of the Company,
including  contingent  liabilities,  other  than  liabilities  reflected  in the
Schedules  to this  Agreement,  including  Schedule  5.21.  There are no pending
claims for  indemnification  by any person  against the Company under any law or
agreement  or  pursuant  to their  constituent  incorporation  and  organization
documents  and, no Seller has knowledge of any existing  facts or  circumstances
that will give rise to such a claim against the Company thereunder.

         5.22 Brokerage  Fees.  None of the Company,  any Seller or any of their
respective  affiliates  has retained any  financial  advisor,  broker,  agent or
finder or paid or agreed to pay any financial advisor,  broker,  agent or finder
on account of this Agreement or any transaction contemplated hereby.

         5.23  Miscellaneous  Other  Information.  Schedule  5.23 sets forth the
following information:

                  (a) the name and current  annual  salary and  benefits of each
officer,  employee and agent of the Company,  and any employment  agreement with
respect to each such  person,  and the name and  compensation  of each person to
whom the Company paid consulting fees; and

                  (b) the name of each bank in which the  Company has an account
or safe  deposit  box,  the number of any such  accounts,  the name in which the
account or box is held and the names of all persons  authorized  to draw thereon
or to have access thereto.

         5.24 No Misleading  Statements.  This  Agreement,  the  information and
schedules  referred to herein and the  information  contained  in the  Financial
Statements  that  have  been  furnished  to  Purchaser  in  connection  with the
transactions  contemplated by this Agreement,  when taken together,  do not, and
will not as of the Closing,  include any untrue statement of a material fact and
do not and will  not  omit to state  any  material  fact  necessary  to make the
statements  contained  herein or therein,  in light of the  circumstances  under
which they were made, not misleading.
<PAGE>
         5.25  Product  Liability.  The  Company  has  not  given  or  made  any
warranties to third  parties with respect to any products  rented or sold by it,
except  for  the  warranties  imposed  by the  provisions  of the  Licenses  and
applicable commercial codes. There is no state of facts or the occurrence of any
event  forming  the basis of any  present  claim  against  the Company not fully
covered by insurance for product  liability on account of any express or implied
warranty.

         5.26 Taxes. Except as set forth on Schedule 5.26:

                  (a) All tax returns,  declarations  of  estimated  tax and tax
reports (collectively,  "Tax Returns") relating to any income,  franchise,  sale
and use, unemployment compensation, excise, severance, property, gross proceeds,
payroll and withholding taxes, together with any interest,  penalties, fines and
other similar amounts imposed by any Governmental Entity (collectively, "Taxes")
that are  required to be filed with  respect to periods  ending on or before the
Closing for, by, on behalf of or with respect to the Company, including, but not
limited  to,  those  relating to the income,  business,  operations,  payroll or
property of the Company and those which  include or should  include the Company,
have been or will be timely filed with the appropriate foreign,  national, state
and local  authorities  on or before the Closing,  and all Taxes shown to be due
and payable for tax periods  ending on or before the Closing on such Tax Returns
or  related to such Tax  Returns  have been or will be  satisfied  in full on or
before the Closing;

                  (b)  All  such  Tax  Returns  and  the  information  and  data
contained  therein  have been or will be properly  and  accurately  compiled and
completed, fairly present or will fairly present the information purported to be
shown  therein,  and reflect or will reflect all  liabilities  for Taxes for the
periods covered by such Tax Returns;

                  (c)  None  of  such  Tax   Returns  are  now  under  audit  or
examination by any foreign,  national, state or local authority and there are no
agreements,  waivers or other  arrangements  providing  for an extension of time
with respect to the  assessment  or collection of any Taxes or deficiency of any
nature against the Company or with respect to any such Tax Return,  or any suits
or  other  actions,  proceedings,   investigations  or  claims  now  pending  or
threatened  against the Company with respect to any Taxes,  or any matters under
discussion with any foreign,  national, state or local authority relating to any
Taxes, or any claims for any additional Tax asserted by any such authority;

                  (d) All Taxes due and owing from the Company or  assessed  and
due and owing  against the Company on or before the Closing have been or will be
timely paid in full on or before the  Closing and the Company  does not have any
unpaid liability for any Taxes for any period prior to the date hereof; and
                  (e) All withholding tax and tax deposit  requirements  imposed
on the Company for any and all periods ending on or before the Closing have been
or will be timely satisfied in full on or before the Closing.
<PAGE>
         5.27 Acquisition  Entirely for Own Account.  Each Seller represents and
warrants  that such  Seller is  acquiring  the  Ethika  Shares  solely  for such
Seller's own account,  for  investment  purposes only and not with a view toward
the resale or  distribution  of the Ethika  Shares or any  portion or  component
thereof, and such Seller will not sell, offer to sell or otherwise dispose of or
distribute  the  Ethika  Shares  or any  portion  or  component  thereof  in any
transaction   other  than  a  transaction   complying   with  the   registration
requirements of the Securities Act and applicable state securities or "Blue Sky"
laws, or pursuant to an exemption  therefrom.  Each Seller also  represents that
the entire legal and  beneficial  interest of the Ethika Shares that such Seller
is acquiring is being acquired for, and will be held for, such Seller's  account
only, and neither in whole nor in part for any other person or entity.

         5.28  Information  Concerning  Purchaser.  Each Seller  represents  and
warrants  that such Seller has been  provided  with a copy of  Purchaser's  most
recent Form 10-K, Form 10-Q, preliminary proxy statement and annual report filed
with the Commission,  a private  placement  memorandum dated August 14, 1996 and
such other information concerning Purchaser that such Seller deems necessary and
appropriate  to enable such Seller to evaluate the financial  risks  inherent in
making an investment in the Ethika Shares. Each Seller further acknowledges that
such Seller has received  satisfactory and complete  information  concerning the
business and  financial  condition of Purchaser in response to all  inquiries in
respect thereof.

         5.29 Economic Risk and Suitability. Each Seller represents and warrants
as follows:

                  (a) Each Seller realizes that such Seller's acquisition of the
Ethika  Shares  involves a high degree of risk and will be a highly  speculative
investment  and that  such  Seller  is able,  without  impairing  such  Seller's
financial condition,  to hold the Ethika Shares for an indefinite period of time
and to suffer a complete loss of such Seller's investment.

                  (b) Each  Seller  has  carefully  considered  and has,  to the
extent such Seller  believes such  discussions  necessary,  discussed  with such
Seller's  professional,  legal, tax and financial advisors the suitability of an
investment  in the Ethika  Shares for the  particular  legal,  tax and financial
situation of such Seller and that such Seller and/or such Seller's advisors have
determined that the Ethika Shares are a suitable investment for such Seller.

                  (c) Seller has such  knowledge and  experience in business and
financial matters as will enable such Seller to evaluate the merits and risks of
an investment in the Ethika Shares and to make an informed investment decision.

                  (d)  Each  Seller  has  carefully   read  this  Agreement  and
Purchaser has made available to such Seller or Seller's advisors all information
and documents  requested by such Seller  relating to an investment in the Ethika
Shares,  and has provided  answers,  to such  Seller's  satisfaction,  to all of
Seller's questions concerning Purchaser and the Ethika Shares to be acquired.

                  (e) Each Seller  understands that neither Purchaser nor any of
its officers or directors has any obligation to register the Ethika Shares under
any  federal or state  securities  laws  except  and to the extent  specifically
provided in Section 4.03.
<PAGE>
                  (f) All  information  that each Seller has provided  Purchaser
concerning such Seller's  financial position is true, correct and complete as of
the date hereof, and if there should be any material change in such information,
such Seller will provide such  information  to Purchaser as soon as  practicable
thereafter.

                  (g) Each Seller  understands  that Purchaser is relying on the
truth  and  accuracy  of  the  declarations,   representations,  warranties  and
agreements made by such Seller to Purchaser  herein in  transferring  the Ethika
Shares to such Seller.

                            (i) Seller confirms that such Seller has received no
general  solicitation  or general  advertisement  and has attended no seminar or
meeting  (whose  attendees  have been  invited by any  general  solicitation  or
general  advertisement)  and has received no advertisement,  article,  notice or
other communication  published in any newspaper,  magazine,  or similar media or
broadcast or television or radio regarding the offering of the Ethika Shares.

         5.30 Registration; Restrictions; Legend. The Ethika Shares that Sellers
are acquiring  have not been  registered  under the  Securities Act or under the
securities laws of any state,  and such Ethika Shares must be held  indefinitely
unless a transfer of them is  subsequently  registered  under the Securities Act
and  under   applicable   state  securities  laws  or  an  exemption  from  such
registration is available. Each Seller agrees not to make any sale of any Ethika
Shares  except  either  (i)  in  accordance  with  a duly  filed  and  effective
registration  statement  under federal and  applicable  state law, in which case
Seller must comply with the requirement of delivering a current  prospectus,  or
(ii) in accordance  with an exemption from such  registration  under the federal
securities laws and all applicable  state securities laws. The Ethika Shares are
not transferable on the books of Purchaser  unless the certificate  submitted to
Purchaser's  transfer  agent  evidencing  such Ethika Shares is accompanied by a
separate  certificate  executed by a Seller or such Seller's  officer,  or other
person duly authorized by Seller,  for purposes of establishing  compliance with
this Agreement.  Such certificate  shall be in such form as shall be supplied by
Purchaser.

                  "THE SECURITIES  REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                  REGISTERED  UNDER THE FEDERAL  SECURITIES  ACT OF 1933 NOR THE
                  APPLICABLE SECURITIES ACT OF ANY STATE BUT HAVE BEEN ISSUED IN
                  COMPLIANCE UPON EXEMPTIONS FROM REGISTRATION CONTAINED IN SAID
                  ACTS.  NO  SALE,  OFFER  TO SELL,  OR  OTHER  TRANSFER  OF THE
                  SECURITIES  REPRESENTED BY THIS CERTIFICATE MAY BE MADE UNLESS
                  A REGISTRATION  PROVISIONS OF SUCH ACTS IS THEN  APPLICABLE AS
                  EVIDENCED BY A LEGAL OPINION  OBTAINED BY THE  STOCKHOLDER AND
                  APPROVED BY THE COMPANY PRIOR TO TRANSFER."

         5.31 Accredited Investor. Sellers are "accredited investors" as defined
in Rule 501 of Regulation D promulgated pursuant to the Securities Act for they,
individually,  or jointly with their  spouse,  have a net worth of $1,000,000 or
individually  had income in excess of  $200,000  in each of the two most  recent
calendar  years and  reasonably  expect an income and excess of  $200,000 in the
current year.
<PAGE>
                                   ARTICLE VI
             Representations, Warranties and Covenants of Purchaser


         Purchaser represents and warrants to the Seller as follows:

         6.01  Organization,  Etc..  Purchaser is a corporation  duly organized,
validly existing and in good standing under the laws of the State of Mississippi
and has full corporate  power and authority to conduct its business as it is now
being  conducted  and to own,  operate  or lease the  properties  and  assets it
currently owns, operates or holds under lease.

         6.02 Authorization. Purchaser has full corporate power and authority to
enter  into this  Agreement  and to carry  out its  obligations  hereunder.  The
execution and delivery of this Agreement and the  consummation of the agreements
and  transactions  contemplated  hereby have been duly  approved by the Board of
Directors  of  Purchaser,  and no other  corporate  proceedings  on its part are
necessary to authorize this Agreement and the transactions  contemplated hereby,
and this  Agreement  constitutes  the valid and binding  obligation of Purchaser
enforceable in accordance with its terms.

         6.03 Brokerage Fees.  Purchaser has not retained any financial advisor,
broker, agent or finder or paid or agreed to pay any financial advisor,  broker,
agent or finder on account of this  Agreement  or any  transaction  contemplated
hereby or any  transaction  of like  nature that would be required to be paid by
the Seller.

         6.04 No  Violation.  The  execution  and delivery of this  Agreement by
Purchaser does not, and the  consummation  of the  agreements  and  transactions
contemplated  by this  Agreement  will not, (a) conflict  with, or result in any
violation  of or  default  or  loss  of any  benefit  under,  any  provision  of
Purchaser's  articles  of  incorporation  or bylaws;  (b)  violate  any  permit,
concession,  grant, franchise,  law, rule or regulation, or any judgment, decree
or order of any  Governmental  Entity to which  Purchaser is a party or to which
any of its property is subject;  or (c) conflict  with, or result in a breach or
violation  of, or  accelerate  the  performance  required  by,  the terms of any
agreement, contract, indenture or other instrument to which Purchaser is a party
or to which any of its property is subject,  or  constitute a default or loss of
any  right  thereunder  or an event  which,  with the lapse of time or notice or
both,  might result in a default or loss of any right thereunder or the creation
of any lien,  charge or  encumbrance  upon any of the  assets or  properties  of
Purchaser.

         6.05 Approvals. Except as set forth on Schedule 6.05, the execution and
delivery  of  this  Agreement  and  the   consummation  of  the  agreements  and
transactions contemplated by this Agreement will not, to the best of Purchaser's
knowledge after reasonable investigation,  require the consent,  approval, order
or authorization of any Governmental Entity or regulatory authority or any other
person under any permit,  license,  agreement,  indenture or other instrument to
which  Purchaser is a party or to which any of its properties are subject,  and,
to  the  best  of  Purchaser's  knowledge  after  reasonable  investigation,  no
declaration,  filing or registration with any Governmental  Entity or regulatory
authority is required or advisable by Purchaser in connection with the execution
and delivery of this  Agreement  and the  consummation  of such  agreements  and
transactions. Purchaser shall use its best efforts to cause all of the consents,
approvals or other matters described on Schedule 6.05 to be obtained,  waived or
otherwise satisfied prior to Closing.
<PAGE>
         6.06  Articles  of  Incorporation;  Bylaws.  Purchaser  has  heretofore
delivered to Sellers true and complete  copies of its articles of  incorporation
and bylaws as in effect on the date hereof.

         6.07  Exchange  Act  Filings.  Purchaser  has made all of its  required
filings under the Exchange Act for the current  fiscal year and the prior fiscal
year and such filings contain no material  representations  of material facts or
omit to  state  material  facts  which,  as of the  date of such  filings,  were
necessary  to  make  the  statements   contained   therein,   in  light  of  the
circumstances  under  which  they  were  made,  not  misleading.  The  financial
statements  contained in such filings  comply in all material  respects with the
Exchange Act and the regulations promulgated thereunder.

         6.08  Litigation.  Except  as set  forth in  Schedule  6.08,  no suits,
actions, audits or proceedings of any character whatsoever are pending or to the
knowledge of Purchaser,  threatened against or affecting Purchaser or any of its
properties, assets or businesses, nor has Purchaser received any other claims or
demands of any nature  whatsoever,  except as  otherwise  disclosed  in its most
recent reports filed upon Form 10-K or Form 10-Q since January 1, 1996.

         6.09 Common Stock. Purchaser's common stock is quoted and traded on the
NASDAQ "Small-cap Market" system under the rules of the National  Association of
Securities  Dealers,  Inc. and, except as set forth on Schedule 6.09,  Purchaser
meets all  requirements  for continued  quotation and trading on such market and
has no  knowledge of any reason why its common stock would not continue to be so
quoted and traded.

         6.10 No Misleading  Statements.  This  Agreement,  the  information and
schedules  referred to herein and the  information  referred to in Section  5.28
that  has  been  furnished  to  Sellers  in  connection  with  the  transactions
contemplated by this Agreement,  when taken together, do not, and will not as of
the Closing, include any untrue statement of a material fact and do not and will
not omit to state any material fact necessary to make the  statements  contained
herein or therein, in light of the circumstances under which they were made, not
misleading.

                                   ARTICLE VII
                         Additional Covenants of Sellers

         7.01 Best  Efforts.  Sellers will use their best efforts to cause to be
satisfied  as soon as  practicable  and  prior  to the  Closing  Date all of the
conditions  set forth in Article II to the  obligations of Purchaser to exchange
the Ethika Shares for the Compass Shares..

         7.02  Conduct  of  Business  Pending  the  Closing.  From and after the
execution and delivery of this  Agreement and until the Closing Date,  except as
otherwise provided by the prior written consent of Purchaser:

                  (a) Sellers  will  conduct the  business of the Company in the
ordinary  course  and in the  manner  in  which  the same  has  heretofore  been
conducted  and will (i)  preserve its business  organization  intact,  (ii) keep
available the services of its officers, employees, agents and distributors,  and
(iii) preserve its relationships with customers, suppliers and others.

                  (b) Sellers  will  maintain  the Assets in  customary  repair,
order and condition,  reasonable wear and use and damage by unavoidable casualty
excepted, and will maintain insurance of such types and in such amounts upon all
of the Assets and  business  of the Company as are in effect on the date of this
Agreement.
<PAGE>
                  (c) Sellers will not without Purchaser's prior written consent
(i) sell or transfer any of the Assets  outside the ordinary  course of business
or (ii) incur any material obligations or liabilities or enter into any material
transaction, contract, arrangement or agreement.

                  (d) Shall cause the Company not to declare or pay any dividend
on or make any other  distribution in respect of any of its capital stock, split
or combine,  or reclassify any of its capital stock or authorize the issuance of
any securities with respect thereto,  purchase or redeem,  or otherwise  acquire
any shares of the capital stock.

                  (e)  Seller  shall  not  amend  the   Company's   articles  of
incorporation  and shall  cause the  Company not to amend its bylaws or to enter
into any obligation or agreement which would be violated by the  consummation of
this Agreement or the transactions  contemplated herein or would cause a default
under this Agreement.

                  (f)  Seller   shall   cause  the  Company  not  to  incur  any
indebtedness for borrowed money or guarantee any such indebtedness except in the
ordinary course of business or as otherwise agreed to in writing by Purchaser.

                  (g) Seller shall immediately  notify Purchaser of any event or
condition which  constitutes or is likely to result in a material adverse change
in the Assets or the  financial  condition  or prospects of the Company or which
would cause any  representation or warranty made by Sellers herein to be untrue,
or would cause  Sellers to breach any  covenant to be  performed by it contained
herein.

         7.03 Access to Sellers's Plants, Properties and Records. From and after
the  execution  and  delivery  of this  Agreement,  Sellers  will  afford to the
representatives  of Purchaser  access,  during  normal  business  hours and upon
reasonable notice, to the Company's  premises  sufficient to enable Purchaser to
inspect the Assets and obtain any  information  relating to the  business of the
Company and its financial  condition and prospects,  and Sellers will furnish to
such representatives during such period any and all such information relating to
the foregoing  investigation  as Purchaser  may  reasonably  request;  provided,
however,   that  any  furnishing  of  such  information  to  Purchaser  and  any
investigation  by  Purchaser  shall not affect the right of Purchaser to rely on
the  representations  and  warranties  made by  Sellers in or  pursuant  to this
Agreement,  and,  provided  further that  Purchaser  will hold in confidence all
documents and information  concerning Sellers so furnished,  and, if the sale of
the Assets pursuant hereto shall not be  consummated,  such confidence  shall be
maintained.

         7.04 No Other Discussions.  Commencing on the date hereof and extending
through and  including  the earlier of the Closing Date or  termination  of this
Agreement pursuant to Section 11.01, Sellers will discontinue  negotiations with
others and will not  continue or enter into  discussions  or  negotiate  with or
entertain  or accept the  unsolicited  offer of any other party  concerning  the
potential  sale of all or any part of the  Compass  Shares or the  Assets or the
merger,  consolidation  or other  business  combination  of the Company with any
person  other than  Purchaser.  Sellers  will notify  Purchaser of any offers or
inquiries  with respect  thereto and provide to Purchaser  copies of any written
offers or proposals.
<PAGE>
                                  ARTICLE VIII
                        Additional Covenants of Purchaser

         8.01 Best Efforts.  Purchaser  will use its best efforts to cause to be
satisfied  as soon as  practicable  and  prior  to the  Closing  Date all of the
conditions  set forth in Article III to the  obligations  of Sellers to exchange
the Compass Shares for the Ethika Shares.


                                   ARTICLE IX
                                 Indemnification

         9.01  Agreement by Sellers to  Indemnify.  Each of Sellers  jointly and
severally (the "Seller Indemnifying Parties") shall indemnify and hold Purchaser
harmless in respect of the aggregate of all indemnifiable  damages of Purchaser.
For this purpose,  "indemnifiable  damages" of Purchaser  means the aggregate of
all expenses,  losses, costs,  deficiencies,  liabilities and damages (including
related  counsel  fees and  expenses)  incurred  or suffered  by  Purchaser  (a)
resulting from any inaccurate  representation  or warranty made by Sellers in or
pursuant to Article V hereof,  (b) resulting from any default in the performance
of any of the covenants or  agreements  made by Sellers in this  Agreement,  (c)
resulting  from the failure of any of Sellers to pay,  discharge  or perform any
liability or obligation  of Sellers which is not expressly  assumed by Purchaser
pursuant to this  Agreement or resulting  from any dispute  concerning  any such
liability  or  obligation,  or (d) the  ownership  of the Compass  Shares or the
operation  of the Assets or the  business  of the  Company  prior to the Closing
Date.

         9.02 Agreement by Purchaser to Indemnify. Purchaser agrees to indemnify
and hold Sellers (the "Sellers Indemnified  Parties") harmless in respect of the
aggregate of all indemnifiable  damages of any of Sellers  Indemnified  Parties.
For this purpose,  "indemnifiable damages" of any of Sellers Indemnified Parties
means the aggregate of all expenses,  losses, costs,  deficiencies,  liabilities
and damages  (including  related counsel fees and expenses) incurred or suffered
by  any of  Sellers  Indemnified  Parties  resulting  from  (a)  any  inaccurate
representation  or  warranty  made by  Purchaser  in or  pursuant  to Article VI
hereof, (b) any default in the performance of any of the covenants or agreements
made by Purchaser in this Agreement,  or (c) the ownership of the Compass Shares
or the  operation of the Assets or the business of the Company after the Closing
Date.

         9.03     Notice and Defense Procedures.

                  (a) Whenever any claim shall arise or any proceeding  shall be
instituted  involving  any person in respect  of which  indemnity  may be sought
pursuant  to this  Article  IX, such  person  (the  "Indemnified  Party")  shall
promptly  notify (in no event later than ten business days after receipt of such
notice) the person against whom such indemnity may be sought (the  "Indemnifying
Party") thereof in writing,  including,  when known, the facts  constituting the
basis for such claim or  proceeding  and the amount or an estimate of the amount
of the indemnified  liability  arising  therefrom (such  notification  being the
"Claims Notice"). In addition, each party hereto hereby agrees to provide to the
other party written  notification and copies of communication from third parties
received  or  made  by  such  parties  relating  to any  matter  subject  to any
indemnification hereunder. The failure by an Indemnified Party to timely furnish
to the Indemnifying Party any notice or copy required to be furnished under this
Section 9.03(a) shall not relieve the Indemnifying Party from any responsibility
for the matters relating to such notice or copy,  unless such failure  adversely
prejudices the ability of the Indemnifying Party to defend such matter.
<PAGE>
                  (b) In  connection  with any claim  giving  rise to  indemnity
hereunder  arising out of any claim or legal proceeding by any person who is not
an Indemnified  Party, the Indemnifying  Party at its sole cost and expense may,
upon written notice to the Indemnified Party, elect to assume the defense of any
such  claim or legal  proceeding.  If the  Indemnifying  Party has so elected to
assume the defense of any such claim or legal proceeding,  such defense shall be
conducted  by  counsel  chosen by the  Indemnifying  Party,  provided  that such
counsel is reasonably  satisfactory  to the Indemnified  Party.  The Indemnified
Party shall be entitled to  participate  in (but not control) the defense of any
such action,  with its counsel and at its own expense. If the Indemnifying Party
has elected to assume the defense of any claim or legal  proceeding  as provided
herein,  the Indemnified  Party shall not be entitled to  indemnification  as to
fees and  expenses of any counsel  retained by the  Indemnified  Party after the
time at which the Indemnifying Party has so elected. The Indemnified Party shall
not settle or compromise  any  indemnified  liability  without the prior written
consent of the Indemnifying Party, which shall not be unreasonably  withheld. In
the event that the Indemnifying Party shall so assume such defense, it shall not
compromise or settle any such claim,  action, or suit unless (i) the Indemnified
Party gives its prior written consent, which shall not be unreasonably withheld,
or (ii) the terms of the compromise or settlement of such claim, action, or suit
provide  that  the  Indemnified  Party  shall  have  no  responsibility  for the
discharge of any settlement  amount and impose no other obligations or duties on
the Indemnified  Party,  and the compromise or settlement  discharges all rights
against the Indemnified  Party with respect to such claim,  action,  or suit and
the settlement will not affect the assets, rights, business or operations of the
Indemnified  Party.  If a firm offer is made to settle a pending  or  threatened
claim,  action or proceeding for which the Indemnified  Party may be entitled to
indemnification hereunder and the Indemnifying Party desires to accept and agree
to such offer,  Indemnifying  Party will give written notice to the  Indemnified
Party to that  effect.  If the  Indemnified  Party fails to consent to such firm
offer  within  ten  calendar  days  after  its  receipt  of  such  notice,   the
Indemnifying  Party may  continue  to contest or defend  such claim and, in such
event, the maximum liability of the Indemnifying Party as to such claim will not
exceed the amount of such settlement offer. The Indemnified Party will cooperate
with the  defense  of any such  claim,  action,  or suit and will  provide  such
personnel,  technical  support,  and access to  information as may be reasonably
requested by the Indemnifying Party in connection with such defense.

         9.04 Nature and Survival of Representations  and Warranties.  Except as
set forth herein, all  representations and warranties made by the parties hereto
in this Agreement or pursuant hereto shall survive the Closing hereunder and any
investigation at any time made by or on behalf of Sellers or Purchaser until the
first  anniversary  of the Closing Date.  The  representations,  warranties  and
covenants  contained in Sections 4.01, 4.02, 4.03, 4.04, 5.01, 5.02, 5.03, 5.04,
5.12,  5.15,  5.21,  6.01,  6.02 and this  Article IX shall  survive the Closing
indefinitely.  The  representations  and  warranties  relating to liabilities of
Sellers  for which  Sellers  are  required to  indemnify  Purchaser  pursuant to
Section  9.01(c) or (d) shall  survive the Closing  until the  expiration of the
applicable  statute of  limitations  with  respect to each such  liability.  The
representations,  warranties,  and  covenants  contained  in  Article  X of this
Agreement  shall survive the Closing until the expiration of the Covenant Period
(the date upon which the survival of the  respective  representation,  warranty,
covenant  or  agreement  terminates  shall be  referred  to as the  "Termination
Date"). After the Termination Date, no Indemnified Party may commence any action
<PAGE>
against  any   Indemnifying   Party  in  respect  of  the   inaccuracy   of  any
representation or warranty contained in this Agreement. All statements contained
in any  certificate  or other  instrument  executed and  delivered by Sellers or
Purchaser  pursuant to this  Agreement or in  connection  with the  transactions
contemplated hereby shall be deemed representations and warranties by Sellers or
Purchaser, respectively, hereunder.

         9.05 Limitations on Indemnification. Purchaser and Sellers shall not be
entitled to recover from the other party any indemnifiable damages in respect of
a breach of a representation or warranty of Sellers or Purchaser,  respectively,
under this  Agreement in excess of the fair market value of the Ethika Shares as
of the Closing Date.  Section 9.05, the "fair market value" of the Ethika Shares
shall be based on the average daily closing share price of the Ethika Shares for
the four week  period  immediately  prior to the Closing  Date on the  principal
securities market on which the Ethika Shares are traded in the United States.


                                    ARTICLE X
                              Restrictive Covenants

         10.01    Non-Competition.

                  (a)      Definitions.

                            (i) Area.  "Area"  shall mean the  United  States of
America.

                            (ii) Competing Business.  "Competing Business" shall
mean any business engaged in the Computer Software Industry.

                            (iii) Computer Software Industry. "Computer Software
Industry"  shall mean any  person,  partnership,  corporation,  or other  entity
engaged in the business of manufacturing, processing, programming, marketing, or
selling Folio infobase software products providing or providing access to, state
or federal laws, rules or regulations.

                            (iv) Covenant Period.  "Covenant  Period" shall mean
the period  beginning on the Closing  Date and ending three (3) years  following
the Closing Date.

                  (b)  Covenant  Not to  Compete.  During the  Covenant  Period,
Sellers  shall not  directly or  indirectly  own,  manage,  operate,  represent,
promote,  consult  for,  control or  participate  in the  ownership,  operation,
acquisition  or  management  of any  Competing  Business in the Area.  A passive
investment, consisting of the purchase of not more than five percent (5%) of the
voting or equity interest, in a Competing Business alone shall not be considered
a breach of this Agreement.

         10.02  Confidentiality.  The parties hereto  acknowledge and agree that
all  Trade  Secrets  (as  hereinafter  defined),  and all  physical  embodiments
thereof,  are  confidential  to and shall be and remain  the sole and  exclusive
property of Purchaser.  In addition,  all Intellectual  Property is the sole and
exclusive  property of Purchaser.  The parties  further  agree that,  during the
Covenant  Period  and in the Area,  (a) all Trade  Secrets  shall be held in the
strictest  confidence;  (b) they shall not, without the prior written consent of
Purchaser,  disclose, reproduce,  distribute or otherwise disseminate such Trade
Secrets, and shall protect such Trade Secrets from disclosure by others; and (c)
they shall make no use of such Trade Secrets  without the prior written  consent
<PAGE>
of  Purchaser.  "Trade  Secrets"  shall  mean any and all  data and  information
relating to the Company, the Assets or the Business which (i) derive independent
economic value, actual or potential,  from not being generally known to, and not
being  readily  ascertainable  by proper  means by other  persons who can obtain
economic value from their disclosure or use; and (ii) are the subject of efforts
that are reasonable under the circumstances to maintain their secrecy, including
but not limited to  technical  or  nontechnical  data,  formulas,  compilations,
programs,  devices,  methods,  techniques,  drawings,  financial data and plans,
pricing data, and lists of current or potential customers.

         10.03  Acknowledgment of Harm;  Remedies.  Each of Sellers acknowledges
that his covenants pursuant to this Article X are of a special,  unique, unusual
and extraordinary character,  which give them particular value the loss of which
cannot be reasonably or adequately compensated in an action at law, and that, in
the event  there is a breach  hereof by any of  Sellers,  Purchaser  will suffer
irreparable  harm,  the  amount of which  will be  difficult  or  impossible  to
ascertain.  Accordingly,  Purchaser shall be entitled to institute and prosecute
proceedings in any court of competent jurisdiction,  either at law or in equity,
to obtain  damages  for any breach or to  enforce  specific  performance  of the
provisions or to enjoin any of Sellers from committing any act in breach of this
Article X. The remedies  granted to  Purchaser in this Article X are  cumulative
and are in addition to remedies  otherwise  available  to Purchaser at law or in
equity.  If any of Sellers  violate any of the  restrictions  contained  in this
Agreement, the restrictive period shall not run in favor of such Seller from the
time of the commencement of any such violation until such time as such violation
shall be cured by such Seller to the satisfaction of Purchasers.


                                   ARTICLE XI
                                   Termination


         11.01  Termination.  Anything to the contrary  herein  notwithstanding,
this Agreement may be terminated and the transactions contemplated hereby may be
abandoned:

                  (a) by the mutual written consent of all of the parties hereto
at any time prior to the Closing Date;

                  (b) by  Purchaser  in its sole  discretion  if for any  reason
Purchaser  is  unsatisfied  following  its due  diligence  review as provided in
Section 2.01;

                  (c) by either  party if the  Closing  has not  occurred  on or
prior to the Closing Date;

                  (d) unless terminated pursuant to Sections (a), (b) or (c), by
any  party  in the  event  of the  material  breach  by any  other  party of any
provision of this Agreement, which breach is not remedied by the breaching party
within 30 days after receipt or notice thereof from the terminating party; or

                  (e) unless terminated pursuant to Sections (a), (b) or (c), by
any party hereto if the Closing has not taken place by the ninetieth  (90th) day
after the date of this Agreement.
<PAGE>
                  If this Agreement is terminated pursuant to clause (a), (b) or
(c) of this  Section  11.01,  no party shall have any  liability  for any costs,
expenses,  loss of  anticipated  profit or any further  obligation for breach of
warranty or otherwise to any other party to this  Agreement.  Any termination of
this  Agreement  other than  pursuant to clauses (a), (b) or (c) of this Section
11.01  shall be  without  prejudice  to any  other  rights  or  remedies  of the
respective parties.

         11.02 Risk of Loss.  The risk of any loss to the  Compass  Shares,  the
Company and the Assets and all liability with respect  thereto shall be the sole
responsibility  of Sellers until the completion of the Closing.  If any material
part of the Assets  shall be  damaged  or  destroyed  by  casualty  prior to the
completion of the Closing hereunder, Purchaser shall have the right and option:

                            (i) to terminate this Agreement,  without  liability
to any party thereto; or

                            (ii) to proceed with the Closing hereunder, in which
event  such   casualty   shall  not   constitute  a  breach  by  Seller  of  any
representation,  warranty or covenant in this Agreement,  and Purchaser shall be
entitled  to  receive  and  retain  the  insurance  proceeds  arising  from such
casualty, if any.

                                   ARTICLE XII
                                  Miscellaneous

         12.01  Severability.  If any term or provision of this Agreement or the
application  thereof to any person or circumstance shall, to any extent, be held
invalid or unenforceable by a court of competent jurisdiction,  the remainder of
this  Agreement or the  application  of any such term or provision to persons or
circumstances  other than those as to which it is held invalid or unenforceable,
shall not be affected  thereby,  and each term and  provision of this  Agreement
shall be valid and enforceable to the fullest extent permitted by law. If any of
the provisions  contained in this  Agreement  shall for any reason be held to be
excessively  broad as to duration,  scope,  activity or subject,  such provision
shall  be  construed  by  limiting  and  reducing  it,  so as to  be  valid  and
enforceable   to  the  extent   compatible   with  the  applicable  law  or  the
determination by a court of competent jurisdiction.

         12.02 Brokers'  Commission.  Purchaser will indemnify and hold harmless
Sellers from the  commission,  fee or claim of any person,  firm or  corporation
employed or retained  or  claiming  to be employed or retained by  Purchaser  to
bring  about,  or to  represent  it in, the  transactions  contemplated  hereby.
Sellers will indemnify and hold harmless  Purchaser from the commission,  fee or
claim of any person, firm or corporation  employed or retained or claiming to be
employed or retained by Sellers to bring  about,  or to  represent  them in, the
transactions contemplated hereby.

         12.03 Amendment and Modification.  The parties hereto may amend, modify
and  supplement  this  Agreement in such manner as may be agreed upon by them in
writing.

         12.04  Survival.   The  representations,   warranties,   covenants  and
agreements  of the parties  contained in Articles IV, V, VI, IX, X and XII shall
survive the Closing and shall not terminate at the Closing.
<PAGE>
         12.05 Binding Effect. This Agreement shall be binding upon and inure to
the  benefit of the parties  hereto and their  respective  successors,  assigns,
heirs and legal representatives. This Agreement may not be assigned by Purchaser
except  to  another  corporation  controlled  by or under  common  control  with
Purchaser.  In any such event,  Purchaser  shall remain  directly liable for all
undertakings and obligations hereunder.

         12.06 Entire  Agreement.  This Agreement and the exhibits and schedules
attached hereto contain the entire  agreement of the parties hereto with respect
to the purchase of the Assets and the other  transactions  contemplated  herein,
and  supersede  all prior  understandings  and  agreements  of the parties  with
respect to the subject  matter  hereof.  Any reference  herein to this Agreement
shall be deemed to include the schedules and exhibits attached hereto.

         12.07  Headings;  Etc. The  descriptive  headings in this Agreement are
inserted for  convenience  only and do not constitute a part of this  Agreement.
References to "Sections" and  "subsections",  unless otherwise stated,  refer to
sections  and  subsections  of  this  Agreement.   Unless  otherwise  specified,
references to "Exhibits" and  "Schedules"  refer to exhibits and schedules which
are attached hereto and are hereby made a part hereof.

         12.08 Execution in Counterparts.  This Agreement may be executed in any
number of  counterparts,  each of which shall be deemed an original,  and all of
which together will constitute one and the same instrument.

         12.09  Schedules.  To the extent  any  disclosure  in a  schedule  puts
Purchaser on actual notice of the facts reflected therein, such disclosure shall
be deemed to be a disclosure in all other  schedules  under this Agreement as to
such facts. References on any schedule to any document, instrument,  contract or
agreement  shall  not be  deemed  for  any  purpose  of this  Agreement  to be a
disclosure of any term,  provision or statement of fact of, or relating to, such
document, instrument, contract or agreement, (a) unless and until a copy of such
document, instrument,  contract or agreement has been provided to Purchaser, and
(b) until the expiration of the Due Diligence Period.

         12.10  Governing Law. This Agreement shall be governed by and construed
in  accordance  with the  laws of the  State of  South  Carolina  applicable  to
contracts made and to be performed herein.
<PAGE>

         12.11 Notices. All notices required to be given in accordance with this
Agreement shall be deemed to have been received three days after being sent U.S.
Mail,  certified  or  registered,  return  receipt  requested,  or,  if  sent by
telecopier, when successfully transmitted,  or, if sent by any other means, when
delivered, to the following addresses:

                   If to Purchaser:

                   Ethika Corporation
                   107 Executive Center
                   Hilton Head Island, SC  29928
                   Attn:  G. Thomas Reed, President and Chief Operating Officer
                   Telecopier No.:  (803) 785-3315

                   If to Sellers:

                   Eric and Sherry Fredrickson
                   Compass Data Systems, Inc.
                   967 East Murray-Holladay Road
                   Salt Lake City, Utah 84117
                   Telecopier No.: (801) 262-4199

         The  parties  hereto may change the above  shown  notice  addresses  by
giving notice in the manner acquired hereunder of such new address.


                  IN WITNESS  WHEREOF,  The  parties  hereto  have  caused  this
Agreement to be duly  executed and  delivered as of the day and year first above
written.


                                                   PURCHASER:

                                                   ETHIKA CORPORATION

                                                   By:  ________________________
                                                Title:  ________________________


                                                   SELLERS:

                                                   /s/Eric R. Fredrickson
                                                   ---------------------- 
                                                   ERIC R. FREDRICKSON
                                                  
                                                   /s/Sherry Frederickson
                                                   ---------------------- 
                                                   SHERRY FREDRICKSON
<PAGE>

                                  Schedule 6.05

                                    Approvals



         None


<PAGE>

                                  Schedule 6.08

                                   Litigation

       See attached letter of Purchaser to its shareholders dated July 25, 1996.


<PAGE>
                                  Schedule 6.09

                                  Common Stock

              Purchaser's   securities  are  currently   traded  on  the  NASDAQ
       "Small-Cap Market" system. Under the rules of the National Association of
       Securities  Dealers,  Inc. ("NASD"),  in order to maintain listing in the
       system,  Purchaser must, among other things,  have at least $2,000,000 in
       assets,  $1,000,000 in capital,  a minimum bid price for its common stock
       of $1.00 per share,  and at least two market makers.  Purchaser's  common
       stock is  currently  trading  below  $1.00 per share,  but  Purchaser  is
       entitled to  continue  its  listing  pursuant  to a  provision  providing
       exceptions  for companies with a market float in excess of $1,000,000 and
       at least  $2,000,000  in capital and  surplus.  The NASD has proposed the
       elimination of this exception,  which would then require that Purchaser's
       share price be at least $1.00 for  Purchaser  to continue  its listing on
       NASDAQ. If enacted, this amendment would permit Purchaser to maintain the
       standards for NASDAQ  Small-Cap Market listing with respect to its Common
       Stock only if the minimum bid price of Purchaser's common stock rises to,
       and remains at or above,  $1.00. No assurance can be given that this will
       be achieved and sustained.  If Purchaser is unable to continue to satisfy
       the listing maintenance  criteria,  its listed securities will be subject
       to delisting.  Trading, if any, in the listed securities would thereafter
       cease to be quoted in the NASDAQ  system,  and would be  conducted in the
       over-the-counter  market  with  inter-dealer  bid  and ask  price  quotes
       published  in what are  commonly  referred to as the "pink  sheets." As a
       result,  an investor  could find it more  difficult  to dispose of, or to
       obtain accurate quotations as to the price of, Purchaser's securities. If
       Purchaser fails to maintain NASDAQ Small-Cap  Market listing,  the market
       value of  Purchaser's  securities  likely would decline and purchasers in
       this  offering  likely would find it more  difficult to dispose of, or to
       obtain accurate quotations as to the price of, Purchaser's securities.

              In  addition,  if  Purchaser  fails to maintain  NASDAQ  Small-Cap
       Market  listing  for its  securities,  and no  other  exclusion  from the
       definition of a "penny stock" under the  Securities  Exchange Act of 1934
       (the  "Exchange  Act")  is  available,  then  any  broker  engaging  in a
       transaction  in Purchaser's  securities  would be required to provide any
       customer  with  a  risk   disclosure   document,   disclosure  of  market
       quotations,  if any,  disclosure of the compensation of the broker-dealer
       and its salesperson in the  transaction  and monthly  account  statements
       showing  the  market  values  of  Purchaser's   securities  held  in  the
       customer's  accounts.  The  bid  and  offer  quotation  and  compensation
       information  must be provided prior to effecting the transaction and must
       be contained on the customer's confirmation. If brokers become subject to
       the "penny  stock" rules when  engaging in  transactions  in  Purchaser's
       securities,   they  would   become   less   willing  to  engage  in  such
       transactions,  thereby  making it more  difficult for  purchasers in this
       offering to dispose of their shares.
<PAGE>
                                  Schedule 1.01

                                  Ethika Stock


         363,306  shares will be issued to each of Eric  Fredrickson  and Sherry
Fredrickson.

<PAGE>
                                                                  EXHIBIT (2)(e)



                            ASSET PURCHASE AGREEMENT
                         BETWEEN ETHIKA CORPORATION AND
                       AMERICAN PRACTICE MANAGEMENT, INC.
                          AND CONSULTING CONCEPTS, INC.

                            ASSET PURCHASE AGREEMENT

                  THIS ASSET PURCHASE AGREEMENT  (hereinafter is "Agreement") is
made and entered into this 24th day of September,  1996,  by and between  ETHIKA
CORPORATION,   a  Mississippi  corporation   ("Purchaser"),   AMERICAN  PRACTICE
MANAGEMENT,  INC. a Delaware corporation ("APM"), and CONSULTING CONCEPTS, INC.,
a Utah  corporation  ("CCI") (APM and CCI may from time to time  hereinafter  be
referred to collectively as the "Sellers" or individually as a "Seller").

                                    RECITALS:

         A. CCI is the owner of certain  Folio  infobase  software  products and
other related assets.

         B. APM has an exclusive  license to use the software  products pursuant
to a License  Agreement,  dated as of May 25,  1995 (the  "License  Agreement"),
between CCI and APM, and pursuant to said license,  has exploited the commercial
benefits of the license and  provided  financial  assistance  in the  commercial
development of such software products.

         C.  Sellers  desire to sell to  Purchaser,  and  Purchaser  desires  to
acquire from Sellers,  the assets of Sellers described herein upon the terms and
subject to the conditions contained herein.

         NOW THEREFORE,  for and in  consideration  of the mutual  covenants and
agreements  contained  herein,  and for other good and  valuable  consideration,
parties hereto agree as follows:

                                   ARTICLE I:
                         Purchase and Sale of the Assets

         1.01  Purchase of Assets.  On the terms and  subject to the  conditions
contained in this  Agreement,  on the Closing Date (as defined in Section 2.01),
Purchaser shall purchase from Sellers,  and Sellers shall sell, convey,  assign,
transfer  and  deliver  to  Purchaser,  free and  clear of all  liens,  security
interests and encumbrances  whatsoever,  by appropriate  warranty bills of sale,
assignments  and  other  instruments  satisfactory  to  Purchaser,  all  of  the
following assets, properties,  rights, titles and interests, whether tangible or
intangible,  and  wherever  located,  of Sellers on the date  hereof,  with such
changes  therein  after the date  hereof as shall be  permitted  pursuant to the
terms hereof (the "Assets"):

                  (a) The Folio infobase  software products known as 1Source and
         1Source  HCFA,  containing  coding and health care  reimbursement  data
         (including  primarily CPT codes, ICD-9 codes, HCFA program regulations,
         Medicare fee schedules, CHAMPUS fee schedules, Federal Register matters
         related to RBRVS and RBRVS unit values (the "Program Data")), developed
         for the American Medical  Association (AMA) and/or the American Academy
         of Ophthalmology (AAO) (collectively, the "Products").
<PAGE>
                  (b) All custom codes which  Sellers have  developed  and as to
         which they retain title and all modifications,  enhancements, revisions
         or versions of or to any of the foregoing and relating to the Products,
         all prior releases of any of the foregoing  applicable to any operating
         environment.

                  (c) All lists and  records  pertaining  to  customer  accounts
         (whether  past or  current),  suppliers,  distributors,  personnel  and
         agents and all other books, ledgers,  files,  documents  correspondence
         and business records relating specifically to the Products.

                  (d) All claims,  deposits,  warranties,  guarantees,  refunds,
         causes of action,  rights of recovery,  rights of set-off and rights of
         recoupment of every kind and nature relating to the Products.

                  (e)  Except as set  forth on  Schedule  1.01  (e),  all of the
         following rights relating specifically to the Products:

                          (i) trademarks,  service marks, trade dress, logos and
                  trade   names   and   registrations   and   applications   for
                  registration thereof;

                          (ii) copyrights and registrations and applications for
                  registration thereof;

                          (iii) maskworks and registrations and applications for
                  registrations thereof;

                          (iv)  right,   title  and  interest  in  all  computer
                  software, data and documentation;

                          (v)   trade   secrets   and   confidential    business
                  information   (including   ideas,   formulas,    compositions,
                  inventions  (whether patentable or unpatentable and whether or
                  not  reduced  to  practice),   know-how,   manufacturing   and
                  production processes and techniques,  research and development
                  information, software products in development,  drawings, flow
                  charts,  processes,  ideas,  specifications,  designs,  plans,
                  proposals,  technical data,  copy-rightable works,  financial,
                  marketing,  and business data,  pricing and cost  information,
                  business and marketing  plans, and customer and supplier lists
                  and information);

                          (vi) other proprietary rights; and

                          (vii) copies and tangible embodiments of the foregoing
                  (in whatever form or medium and including  without  limitation
                  all copies of all or any part of the  Products in object code,
                  source code or other format, and in all magnetic media);

         (items (i) through  (vii) may be referred  to herein  collectively  the
         "Intellectual  Property")  and  all  income,  royalties,   damages  and
         payments due at Closing or thereafter with respect to the  Intellectual
         Property and all other rights thereunder including, without limitation,
         damages  and  payments  for past,  present or future  infringements  or
         misappropriations  thereof,  the  right to sue and  recover  for  past,
         present  or future  infringements  or  misappropriations  thereof,  all
         rights to use all of the foregoing  forever and all other rights in, to
         and under the foregoing in all countries.
<PAGE>
                  (f) All permits, licenses (including,  but not limited to, the
         License Agreement),  franchises,  orders, registrations,  certificates,
         variances,  approvals and similar rights obtained from  governments and
         governmental agencies relating to the Products and all data and records
         pertaining thereto.

                  (g)   All   books,   records,   ledgers,   files,   documents,
         correspondence, lists, studies and reports and other printed or written
         materials relating specifically to the Products.

                  (h) All  contracts  and  agreements  relating to the Products,
         whether oral or written,  involving the license,  use, sale, production
         or  protection  the  Products,  including  but  not  limited  to  those
         contracts shown and described on Exhibit A (collectively,  the "Assumed
         Contracts").

                  (i) All Net Sales (as hereinafter  defined) arising out of any
         license,  sale or other use of the Products  occurring on or after June
         1, 1996, and all receivables  associated with such license, sale or use
         of the Products, through the Closing Date, including but not limited to
         those shown and described on Exhibit B.

                  (j)  All  inventory,   including   finished  goods  inventory,
         work-in-process, and all raw materials relating to or used, licensed or
         sold  specifically in connection  with the Products,  including but not
         limited to the inventory shown and described on Exhibit C.

         1.02 Purchase Price. In consideration  of the transfer,  assignment and
conveyance  of the  Assets to  Purchaser,  Purchaser  shall pay and  deliver  to
Sellers the following:

                  (a) At the  Closing (as  defined in Section  2.01),  Purchaser
         shall  issue to Sellers  180,000  shares of its $1.00 par value  common
         stock (the "Shares") to the persons and in the amounts shown on Exhibit
         D. The Shares will be issued in a transaction  exempt from registration
         under federal and applicable  state law and will not be issued pursuant
         to any  registration  statement  filed  with  the  Securities  Exchange
         Commission or any state agency or commission.

                  (b)  Purchaser  will pay to APM  percentages  of Net  Sales as
         follows (the "Percentage Amounts"):

                            (i) 5% of Net  Sales  up to  $3,000,000  during  the
                  period  beginning  June 1, 1996 and ending  May 31,  1998 (the
                  "Initial Period"); plus

                            (ii)  7.5%  of  Net  Sales  between  $3,000,001  and
                  $4,500,000 during the Initial Period; plus

                            (iii) 10% of Net Sales  over  $4,500,000  during the
                  Initial Period; plus ----

                            (iv) 5% of Net  Sales up to  $3,000,000  during  the
                  period  beginning  June 1, 1998 and ending  May 31,  1999 (the
                  "Third Year"); plus

                            (v)  7.5%  of  Net  Sales  between   $3,000,001  and
                  $4,500,000 during the Third Year; plus ----
<PAGE>
                            (vi) 10% of Net Sales  over  $4,500,000  during  the
                  ThirdYear.

         With  respect to such  Percentage  Amounts and the  Percentage  Amounts
         payable  pursuant to Section 5.04,  payments will be made on a calendar
         quarterly  basis no later than  thirty  (30) days after the end of each
         calendar  quarter,  beginning  October 31, 1996 for the quarter  ending
         September  30, 1996;  each payment of the  Percentage  Amounts shall be
         accompanied  by a report  accounting to APM for the  calculation of the
         amounts  paid;  and APM will  have the right to  inspect  the books and
         records of Purchaser  relating to the revenues and expenses  associated
         with the  license,  sale or other  use of the  Products  applicable  in
         determining the Percentage Amounts due and payable to Sellers.  As used
         herein,  "Net Sales" shall mean all revenues  with respect to the sale,
         license or other use of the Products  collected  during the  applicable
         period,  less the  applicable  manufacturing  expenses,  selling  costs
         (including  packaging and shipping costs), and royalties incurred which
         may be properly allocated to such revenues in accordance with generally
         accepted  accounting  principles.  In computing Net Sales, no deduction
         shall be made from revenues for employee wages, commissions or bonuses,
         depreciation,  amortization, general overhead or taxes. Notwithstanding
         the foregoing, for any applicable period, "Net Sales" shall include all
         revenues (less applicable expenses) from the sale, license or other use
         of the  Products  (i)  pursuant  to a  written  agreement  executed  by
         Purchaser and a customer during such period or (ii) which exceed $1,000
         in the  aggregate  in any one  transaction  if such sales are  actually
         consummated  or otherwise  properly  allocated to such period,  in each
         case,  irrespective of whether the revenues are actually collected in a
         different  period;  provided,  however,  that the  foregoing  shall not
         obligate  Purchaser to pay any Percentage  Amounts for Net Sales unless
         and until the revenues are actually collected.

                  (c) If APM  does  not  give  Purchaser  notice  within  thirty
         calendar days following  receipt of the report accounting for Net Sales
         during the prior calendar quarter, APM shall be deemed to have accepted
         the report.  If APM gives Purchaser  timely notice of its objections to
         the  report,  and if  Purchaser  and APM  are  unable,  within  fifteen
         calendar  days after  receipt by  Purchaser of the notice by APM of its
         objections,   to  resolve  the  disputed   exceptions,   such  disputed
         exceptions will be referred to a firm of independent  certified  public
         accountants  ("Independent Accounting Firm") mutually acceptable to APM
         and Purchaser. The Independent Accounting Firm shall, within sixty days
         following its selection,  deliver to APM and Purchaser a written report
         determining such disputed  exceptions,  and its determinations  will be
         conclusive  and binding upon Purchaser and APM. In the event the report
         of the Independent  Accounting Firm requires payment by Purchaser of an
         amount in excess of 5% of the Percentage  Amounts actually paid for the
         applicable  period,  the  fees  and  disbursements  of the  Independent
         Accounting  Firm shall be borne by Purchaser.  Otherwise,  the fees and
         disbursements of the Independent Accounting Firm shall be borne by APM.

         1.03  Allocation  of  Purchase  Price.  The  purchase  price  shall  be
allocated  among  each item or class of Assets in  accordance  with  Exhibit  E.
Purchaser  and Sellers  agree that they will prepare and file their  federal and
any state or local income tax returns based upon such allocations.
<PAGE>
         1.04   Assumption   of  Assumed   Contracts;   Exclusion   of  Excluded
Liabilities.  On the  Closing  Date,  Purchaser  shall  assume and agree to pay,
perform and discharge when due all of the obligations,  debts and liabilities of
Sellers  under the Assumed  Contracts  accruing  and due and  payable  after the
Closing Date. Sellers shall pay all obligations,  debts and liabilities accruing
on or prior to the Closing  Date,  whether or not due and payable on or prior to
the Closing Date. Except with respect to the Assumed Contracts,  Purchaser shall
not assume or pay,  perform or discharge,  nor shall  Purchaser be  responsible,
directly  or  indirectly,  for  any  other  debts,  obligations,   contracts  or
liabilities of the Sellers,  including,  without limitation,  those arising from
the sale of the Products  prior to the Closing  Date,  such as  liabilities  for
accounts payable,  taxes, employee wages or commissions arising from the sale of
the  Products  prior to the  Closing  Date,  all  such  debts,  liabilities  and
obligations   of  the  Sellers  being  herein   referred  to  as  the  "Excluded
Liabilities".


                                   ARTICLE II
                                     Closing

         2.01  Time and  Place  of  Closing.  The  closing  of the  transactions
contemplated  herein ("the  Closing") shall be held at 10:00 a.m. at the offices
of Hunter,  Maclean,  Exley & Dunn, P.C., 3rd Floor, 200 East St. Julian Street,
Savannah,  Georgia, on the third business day after all conditions precedent set
forth in  Articles  III and IV have been  satisfied,  or at such  other time and
place as the parties  hereto may mutually  agree (the  "Closing  Date").  If the
Closing  is not held on or prior to the  ninetieth  (90th) day after the date of
this  Agreement,  this  Agreement  shall be null and void ab initio and no party
shall have any obligation to any other party hereunder.

                                   ARTICLE III
                     Conditions to Obligations of Purchaser

         The  obligation of Purchaser to purchase the Assets shall be subject to
the  satisfaction  at or  prior  to the  Closing  Date of each of the  following
conditions:

         3.01 Due  Diligence  Review.  Prior  to  execution  of this  Agreement,
Purchaser has had the  opportunity  to conduct only limited  examination  of the
assets,  liabilities,  business  and  affairs of  Sellers as they  relate to the
Assets  and the  license,  sale  or  other  commercial  use of the  Assets  (the
"Business").  Commencing  on the date hereof,  Purchaser  shall have thirty (30)
days to diligently pursue its review of the books, records, business and affairs
of Seller as they  relate to the  Assets  and the  Business.  Seller  shall make
available to Purchaser any and all  information  which  Purchaser may reasonably
request in order to complete its review as provided in Section 8.03.  During its
due diligence review, Purchaser shall have the right to terminate this Agreement
by giving written notice to Sellers  thereof within thirty (30) days of the date
of this Agreement.
<PAGE>
         3.02 Accuracy of  Representations  and Warranties  and Compliance  with
Obligations.  The  representations  and warranties of Sellers  contained in this
Agreement  shall have been true and  correct at and as of the date hereof in all
material  respects,  and they shall be true and correct at and as of the Closing
Date in all material  respects  with the same force and effect as though made at
and as of that time. Sellers shall have performed and complied with all of their
obligations  required by this  Agreement to be performed or complied  with at or
prior to the Closing Date.  Each of Sellers shall have  delivered to Purchaser a
certificate,  dated as of the  Closing  Date  and  signed  by a duly  authorized
officer of such Seller,  certifying that such representations and warranties are
true and correct and that all such  obligations have been performed and complied
with.

         3.03  Corporate   Authorization.   Purchaser   shall  have  received  a
resolution  of the Boards of Directors of APM and CCI approving  this  Agreement
and the transactions  contemplated herein in form and in substance acceptable to
Purchaser.

         3.04 Receipt of Necessary Consents. All necessary consents or approvals
of third parties to any of the transactions  contemplated hereby, the absence of
which would materially  affect  Purchaser's  rights  hereunder,  shall have been
obtained and shown by written evidence reasonably satisfactory to Purchaser.

         3.05 No Adverse  Litigation.  There shall not be pending or  threatened
any action or proceeding by or before any court or other governmental body which
shall  seek to  restrain,  prohibit  or  invalidate  the sale of the  Assets  to
Purchaser or any other transaction contemplated hereby, or which might adversely
affect the right of  Purchaser  to own the Assets or to operate the Business and
which, in the reasonable judgment of Purchaser,  makes it inadvisable to proceed
with the purchase of the Assets.

         3.06  Employment  Arrangement  with Low.  Steven Low ("Low") shall have
entered into an employment  arrangement  with Purchaser  acceptable to Purchaser
(the "Low Employment"), and as of the Closing Date the Low Employment will be in
full force and effect.

         3.07 AMA Agreement.  Purchaser  shall have entered into a contract with
the AMA (the "AMA Contract") pursuant to which Purchaser is granted the right to
publish  electronically  the CPT code book upon such  terms and  subject to such
conditions as are reasonably acceptable to the Purchaser.

         3.08 Closing Documents. The Sellers shall have executed and delivered a
bill of sale or conveyance satisfactory to Purchaser with appropriate warranties
conveying  title  to the  Products  and  other  Assets,  an  assignment  in form
satisfactory  to Purchaser  of the  Contracts,  and any and all other  documents
deemed  reasonably   necessary  by  Purchaser  to  consummate  the  transactions
contemplated herein or to otherwise effect the intent of this Agreement.

         3.09 Material Adverse Change. There shall have been no material adverse
change in the Assets or the Business prior to the Closing.

         3.10 Non-Competition  Agreements. Lise D. Roberts, Douglas E. Pedersen,
and  David  S.  Hefner,  the  shareholders  of CCI  (each  a  "Shareholder"  and
collectively   the   "Shareholders"),   shall  have   executed   and   delivered
non-competition  agreements  to Purchaser in form and  substance  acceptable  to
Purchaser  with  covenants  similar to those as are  provided  in Section  11.01
hereof (the "Non-competition Agreements").
<PAGE>
                                   ARTICLE IV
                     Conditions to Obligation of the Sellers

         The  obligation  of Sellers to sell the Assets  shall be subject to the
satisfaction  at or  prior  to  the  Closing  Date  of  each  of  the  following
conditions:

         4.01 Accuracy of  Representations  and Warranties  and Compliance  with
Obligations.  The  representations and warranties of Purchaser contained in this
Agreement  shall have been true and  correct at and as of the date hereof in all
material  respects,  and they shall be true and correct at and as of the Closing
Date in all material  respects  with the same force and effect as though made at
and as of that time. Purchaser shall have performed and complied with all of its
obligations  required by this  Agreement to be performed or complied  with at or
prior  to the  Closing  Date.  Purchaser  shall  have  delivered  to  Sellers  a
certificate,  dated as of the  Closing  Date and  signed by its Vice  President,
certifying  that such  representations  and  warranties are true and correct and
that all such obligations have been performed and complied with.

         4.02 Corporate Authorization.  Sellers shall have received a resolution
of the  Board  of  Directors  of  Purchaser  approving  this  Agreement  and the
transactions contemplated herein in form and substance acceptable to Sellers.

         4.03 No Adverse  Litigation.  There shall not be pending or  threatened
any action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit or invalidate the sale of the Assets by Sellers
or any  other  transaction  contemplated  hereby  or  which,  in the  reasonable
judgment of the Sellers,  makes it  inadvisable  to proceed with the sale of the
Assets.

         4.04 Closing Documents.  Purchaser shall have executed and delivered to
Sellers certificates  representing the Shares in the amounts shown on Exhibit D,
free and clear of all liens and  encumbrances,  each such certificate  bearing a
legend as  provided  in Section  6.16(b),  together  with any and all such other
documents deemed reasonably  necessary by Sellers to consummate the transactions
contemplated herein or to otherwise effect the intent of this Agreement.

         4.05 Material Adverse Change. There shall have been no material adverse
change in the financial  condition,  business or prospects of Purchaser prior to
the Closing.

                                    ARTICLE V
                              Additional Agreements

         5.01 Execution of Further Documents. At and after the Closing, upon the
reasonable request of Purchaser,  Sellers shall execute, acknowledge and deliver
all such further acts, deeds,  assignments,  transfers,  conveyances,  powers of
attorney and  assurances as may be required to convey,  transfer to and vest the
Purchaser,  and to protect its rights,  title and interest in, the Assets and as
may be appropriate otherwise to carry out the transactions  contemplated by this
Agreement.

         5.02 Relationships with AMA and AAO. Prior to the Closing, Sellers will
not take any action that would  reasonably be expected to adversely affect their
relationship  or the  relationship  of  Purchaser  with the AMA and the AAO with
regard to the Products and the electronic  publication  of information  owned by
them and will not promote or support any other person in selling software to the
AMA or the AAO that competes with the Products.
<PAGE>
         5.03  Employees.  Purchaser  and  its  affiliates  shall  independently
evaluate for employment William Simms, and Ann Griffiths, but Purchaser shall be
under no obligation to employ or retain the services of any such persons.

         5.04 Editorial Services.  APM agrees to use its best efforts to provide
Editorial Services (as hereinafter  defined) of Douglas E. Pedersen to Purchaser
with  respect  to the  Assets  for  three  (3) years  after  the  Closing  Date.
"Editorial Services" means providing on a regular basis, as reasonably requested
by Purchaser,  counseling and  recommendations as to changes or modifications in
the Products  regarding  events,  regulations  or other  modifications  that are
reasonably  necessary to keep the Products  up-to-date,  any changes in content,
and the right to list  Pedersen  and/or APM in its labeling and marketing as the
"Editor" for its products.  In  consideration  for the Editorial  Services,  and
provided  that and to the extent that such  Editorial  Services  are provided to
Purchaser in a satisfactory  manner,  Purchaser shall pay to APM, in addition to
the Percentage  Amounts payable to APM pursuant to Section 1.02 (b),  Percentage
Amounts as follows:

                            (i) 5% of Net  Sales  up to  $3,000,000  during  the
                  Initial Period; plus ----

                            (ii)  7.5%  of  Net  Sales  between  $3,000,001  and
                  $4,500,000 during the Initial Period; plus

                            (iii) 10% of Net Sales  over  $4,500,000  during the
                  Initial Period; plus ----

                            (iv) 5% of the first  $3,000,000 of Net Sales during
                  the Third Year; plus ----

                            (v) 7.5% of the Net  Sales  between  $3,000,001  and
                  $4,500,000 during the Third Year; plus

                            (vi) 10% of Net Sales  over  $4,500,000  during  the
                  Third Year.

         After the Third Year,  if  Purchaser  and Sellers  agree that  Pedersen
         and/or APM shall  continue to provide  Editorial  Services to Purchaser
         for  additional  one  (1)  year  terms  (each  an  "Additional  Year"),
         Percentage Amounts will be paid as follows:

                            (i) 10% of all Net  Sales  up to  $3,000,000  during
                  each Additional Year; plus ----

                            (ii) 15% of all Net  Sales  between  $3,000,001  and
                  $4,500,000 during each Additional Year; plus

                            (iii) 20% on all Net Sales  over  $4,500,000  during
                  each Additional Year.

         Notwithstanding  the foregoing,  commencing  with the calendar  quarter
         beginning  January 1, 1997,  if the  Percentage  Amounts for  Editorial
         Services  for a prior  calendar  quarter are less than the amount which
         would normally be charged by the persons providing  Editorial  Services
         at their then existing  billing rates,  Purchaser  shall instead pay to
         Sellers  the  reasonable  amount  determined  using  the then  existing
         billing rates of such APM personnel.  Notwithstanding the foregoing, if
<PAGE>
         at any time the  Editorial  Services are not provided by APM as agreed,
         or are not provided to the  reasonable  satisfaction  of Purchaser,  no
         royalties will be paid.

         5.05 Employee Costs. APM agrees to pay Purchaser  $13,186 (the "Service
Expense Amount") which amount  represents the reasonable cash  compensation paid
by Purchaser to Low,  Simms and Griffiths as independent  contractors  providing
services to Purchaser  commencing  with the pay period  beginning  June 13, 1996
until July 31, 1996.  Purchaser  shall be entitled to deduct from any Percentage
Amounts payable pursuant to Sections 1.02 or 5.04 of this Agreement an amount up
to the aggregate  Service Expense  Amount.  In the event either the Closing does
not occur or the Percentage  Amounts payable hereunder do not exceed the Service
Expense Amount,  Sellers shall have no obligation to reimburse Purchaser for any
unreimbursed Service Expense Amount.

         5.06 Complimentary  Copies of Products.  During the period beginning on
the Closing Date and ending on May 31, 1999,  and during any period during which
APM is providing Editorial Services to the Purchaser, Purchaser shall provide to
APM annually a free copy of each of the Products promptly  following its release
for all the then existing APM offices, either in single user or network version;
provided,  however,  that no more than five copies shall be provided to APM, the
use of such copies  shall be  restricted  to the offices to which the copies are
delivered,  and APM shall be responsible  for  reimbursing the Purchaser for any
out-of-pocket  expenses,  and  including  expenses  incurred  by Text  Retrieval
Systems, Inc. for these installations.

         5.07 Distributors Agreement.  Purchaser and APM shall negotiate in good
faith an agreement pursuant to which APM, and its successors,  shall be entitled
to earn commissions or other  compensation for the sale of Products on behalf of
Purchaser.


                                   ARTICLE VI
                    Representations and Warranties of Sellers

         In order to  induce  Purchaser  to enter  into  this  Agreement  and to
consummate  the  transactions   contemplated  hereunder,   Sellers  jointly  and
severally make the following representations and warranties:

         6.01  Organization,  Power and Authority of the Seller. APM and CCI are
corporations  duly  organized,  legally  existing and in good standing under the
laws of  Delaware  and  Utah,  respectively  and have full  corporate  power and
authority to own or lease their respective properties, including the Assets, and
operate their respective  business,  including the Business,  to enter into this
Agreement and to carry out the transactions and agreements  contemplated hereby.
APM and CCI are duly  qualified to do business as a foreign  corporation  in all
jurisdictions in which such qualification is required or as to which the failure
to so  qualify  would not have a  material  adverse  effect on the Assets or the
Business.

         6.02  Books and  Records.  The  books of  account  and other  financial
records disclosed to Purchaser or to be transferred to Purchaser pursuant hereto
are in all  material  respects  complete and correct and are  maintained  in all
material respects in accordance with all applicable laws.

         6.03  Liabilities  of  the  Seller.  Sellers  have  no  liabilities  or
obligations,  either accrued, absolute, contingent or otherwise, relating to the
Assets or the Business except as shown on Schedule 6.03.
<PAGE>
         6.04  Title to and  Condition  of the  Assets.  Sellers  have  good and
marketable  title to all of the  Assets  owned by them as set forth in  Schedule
6.04, free and clear of all liens, mortgages,  pledges,  encumbrances or charges
of every kind,  nature,  and description  whatsoever,  except those set forth in
Schedule 6.04.

         6.05  Inventory  . The  inventory  and  supplies  of Sellers  shown and
described  on Exhibit C consist of items of a quality  and  quantity  usable and
saleable  in  the  normal  course  of the  Business  and  consist  of all of the
inventory of Sellers used or usable in the Business and specifically  related to
the Product.

         6.06 Receivables of Sellers. Sellers' receivables relating to the sale,
license or other use of the Assets shown on or after June 1, 1996 and  described
on Exhibit F including  accounts  receivable,  notes  receivable  and  insurance
proceeds  receivable,  if any,  constitute  all of the  receivables  of  Sellers
relating to the Assets and the Business  during such  period.  As of the Closing
Date,  all of Seller's  receivables  described  in Exhibit F are valid  accounts
receivable  which are or will be current and collectible and which have been, or
will be, paid in full within 180 days after the Closing Date.

         6.07     Proprietary Rights of Seller.

                  (a)  Sellers  own,  or have the  right to use  throughout  the
         world,  the  copyright  with  respect  to (i) the  source  code for the
         program which compiles the Program Data into a Folio infobase  product,
         (ii) the manner in which the  Product  Data is compiled in a useful and
         meaningful  format  and  (iii)  the user  manual  with  respect  to the
         Products,  free from claims for infringement or  misappropriation;  and
         after the  consummation  of the  transactions  contemplated  under this
         Agreement, Purchaser will own, or will have the right to use throughout
         the  world,  such  rights,  free  from  all  other  claims,  liens,  or
         encumbrances  except as shown and described on Schedule 6.07.  Schedule
         6.07:

                            (i) contains a complete list of each registration of
                  patents, copyrights,  trademarks,  service marks, trade names,
                  mask  works  and  other  Intellectual  Property  (collectively
                  "Registrations")  which  have  been  issued  to  Sellers  with
                  respect to the Intellectual Property;

                            (ii)  identifies  each  pending   Registration  with
                  respect to the Intellectual Property;

                            (iii)    identifies   all    applications   for   or
                  Registrations  regarding the Intellectual  Property which have
                  been withdrawn, abandoned, or have lapsed or been denied;

                            (iv)  specifies  any  advice  with  respect  to  the
                  Registration or protect ability of the  Intellectual  Property
                  summarizing such advice; and

                          (v)  identifies  all actions taken by Sellers in order
                  to  protect  the   confidentiality   of  all  trade   secrets,
                  proprietary   information   and  other  similar   Intellectual
                  Property.
<PAGE>
         Schedule  6.07 also  identifies:  (A) each  license  agreement or other
         written or oral  agreement or permission  ("License  Agreement")  which
         Sellers  have  granted to any third  party  with  respect to any of the
         Intellectual Property (together with any exceptions); and (B) each item
         of the Intellectual Property that any third party owns and the license,
         sublicense,  agreement  or  other  permission  granted  to  Sellers  in
         connection  therewith ("Third Party License  Agreement").  Sellers have
         supplied  Purchaser or its counsel with correct and complete  copies of
         all License Agreements and Third Party License  Agreements,  and except
         as specified in Schedule 6.07,  all License  Agreements and Third Party
         License Agreements may be assigned to Purchaser free of cost or expense
         without obtaining the consent or approval of any other person.  Sellers
         have  complied  with all License  Agreements  and Third  Party  License
         Agreements,  and to  Sellers'  knowledge,  all  other  parties  to such
         agreements have complied with all provisions  thereof;  and no material
         default or event of default exists under any of the License  Agreements
         or Third Party License Agreements.

                  (b) Except as set forth on Schedule  6.07, (i) Sellers own all
         right,  title and interest in and to all of the  Intellectual  Property
         and  the  Registrations,  (ii)  none of  Sellers  or the  directors  or
         officers  (or  the  employees  with   responsibility  for  Intellectual
         Property  matters or using the  Intellectual  Property) of APM has ever
         received any charge,  complaint,  claim, or notice alleging and have no
         other  knowledge   regarding  the   invalidity,   abuse,   misuse,   or
         unenforceability of any of such right, title or interest,  (iii) to the
         knowledge  of any of  Sellers  or the  directors  or  officers  (or the
         employees with  responsibility  for  Intellectual  Property  matters or
         using the Intellectual  Property) of APM, no third party has interfered
         with, infringed upon, misappropriated,  or otherwise come into conflict
         with any Intellectual  Property rights of Sellers, (iv) none of Sellers
         or the directors or officers (or the employees with  responsibility for
         Intellectual  Property matters or using the  Intellectual  Property) of
         APM has  received  a notice of  conflict  with the  asserted  rights of
         others within the last five years, and (v) to the knowledge of Sellers,
         Sellers have not infringed any such rights of others.

                  (c) Without limiting any of the foregoing, to the knowledge of
         Sellers (i) none of Sellers' respective officers, directors,  employees
         or independent contractors have disclosed to (without proper obligation
         of  confidentiality)  or  otherwise  used or  utilized on behalf of any
         person other than Sellers, any trade secrets or proprietary information
         related to the Products, including, without limitation, the source code
         for the Products,  and (ii) Sellers'  respective  officers,  directors,
         employees and independent  contractors are  contractually  obligated to
         assign, and have assigned,  all rights in the Intellectual  Property to
         Sellers and true and correct copies thereof have been provided (or will
         be provided  during the Due Diligence  Period) to  Purchaser.  Schedule
         6.07 identifies all individuals who have materially  contributed to the
         development of the Products.

                  (d) The  Products  (i)  perform in all  material  respects  in
         accordance  with  all  published  specifications  of  Sellers  for such
         Products, (ii) comply in all material respects with all other published
         documentation,  descriptions  and literature of Sellers with respect to
         such  Products,  and (iii)  comply in all  material  respects  with all
         representations,  warranties and other requirements specified in all of
         Sellers' License Agreements.
<PAGE>
         6.08     Documents of and Information with Respect to Sellers.

                  (a) Schedule  6.08(a)  accurately and completely  sets forth a
         true and complete  list of all of the  contracts  of Sellers  which are
         material  to the  Assets  (the  "Material  Contracts"),  including  the
         following:

                            (i) each policy of  insurance  in force with respect
                  to the Assets, if any;

                            (ii) any other agreement,  contract or commitment to
                  which  either or both of the Sellers is a party or by which it
                  is bound which involves a future  commitment by the Sellers in
                  excess of  $25,000  and which  cannot  be  terminated  without
                  liability on 90 days or less notice; and

                            (iii)  License  Agreements  and Third Party  License
                  Agreements (which are listed on Schedule 6.08(a).

         Sellers have  previously  furnished or will furnish  Purchaser prior to
         the  Closing  Date a true and  complete  copy of each  such  agreement,
         contract or commitment listed in Schedule  6.08(a).  There has not been
         any default in any  obligation  to be performed by Sellers,  nor to the
         best knowledge of Sellers,  any other party, under any such instrument.
         Except as set forth on Schedule 6.08(a),  Sellers are not a party to or
         bound by any other Material Contracts. All Material Contracts have been
         entered  into in the  ordinary  course of  business,  are on normal and
         customary commercial terms.

                  (b) Schedule 6.08(b) sets forth a list of substantially all of
         Sellers'  current  customers with respect to the Assets by category and
         the approximate percentage of revenue of Seller by category for certain
         periods  set forth  therein.  The  information  contained  in  Schedule
         6.08(b) is true and correct in all material respects.

         6.09  Litigation  Involving  the Seller.  There are no actions,  suits,
claims, governmental investigations or arbitration proceedings pending or to the
knowledge of the Seller  threatened  against or affecting  the Sellers or any of
its  assets or  properties  which  could  materially  affect  the  Assets or the
Business,  and, to the best of the  knowledge of Sellers,  there is no basis for
any of the foregoing.  There are no outstanding orders,  decrees or stipulations
issued by any  federal,  state,  local or  foreign  judicial  or  administrative
authority in any proceeding to which any of the Sellers is or was a party or the
transactions contemplated herein.

         6.10 No Material Adverse Change.  Except as set forth on Schedule 6.10,
since June 1, 1996,  there has been no change or changes  which in the aggregate
have had or will have a material  adverse  effect on the Business or the Assets.
There  is not,  to the best of the  knowledge  of  Sellers,  any  threatened  or
prospective  event  or  condition  of  any  character   whatsoever  which  could
materially and adversely affect the Assets or the Business.
<PAGE>
         6.11 Compliance with Laws by the Seller. Sellers are in compliance with
all laws,  regulations and orders applicable to the Assets and the Business. The
Seller has not received  notification of any asserted past or present failure to
comply with any laws relating to the Business or the Assets,  and to the best of
the knowledge of Sellers,  no proceeding  with respect to any such  violation is
contemplated.

         6.12 Due Authorization; Binding Obligation. The execution, delivery and
performance  of  this  Agreement  and  the   consummation  of  the  transactions
contemplated  hereby have been duly authorized by necessary  corporate action of
Sellers.  This Agreement has been duly executed and delivered by each of Sellers
and is a valid and binding obligation of each of them, enforceable in accordance
with its terms.  Neither the  execution  and delivery of this  Agreement nor the
consummation of the transactions contemplated hereby will:

                  (a) conflict  with or violate any provision of the articles of
         incorporation  or  bylaws  of  Sellers,  or of any  law,  ordinance  or
         regulation  or any  decree or order of any court or  administrative  or
         other  governmental body which is either applicable to, binding upon or
         enforceable against Sellers or any of them, or

                  (b)  result in any breach of or  default  under any  mortgage,
         contract,  agreement,  indenture,  trust or other  instrument  which is
         either  binding  upon or  enforceable  against  Sellers or the  Assets.
         Without  limiting the generality of the foregoing,  none of the Sellers
         is a party to any continuing agreement or understanding,  made by it or
         on its  behalf,  which  limits in any way the ability of (i) Sellers to
         enter into this  Agreement  and perform  their  respective  obligations
         hereunder,  (ii) Sellers to sell the Assets to Purchaser  and Purchaser
         to purchase the Assets,  all on the terms and subject to the conditions
         set  forth  herein,  or (iii) the  parties  hereto  to  consummate  the
         transactions  contemplated hereby, nor has the Seller breached any such
         agreement, or any prior agreement, which breach would entitle the other
         party thereto to any equitable or monetary remedies.

         6.13 Acquisition  Entirely for Own Account.  Each Seller represents and
warrants  that such Seller is  acquiring  Shares  solely for such  Seller's  own
account for investment and not with a view to sale or distribution of the Shares
or any portion or  component  thereof,  and such Seller will not sell,  offer to
sell or  otherwise  dispose  of or  distribute  the  Shares  or any  portion  or
component thereof in any transaction other than a transaction complying with the
registration requirements of the Securities Act of 1933, as amended (the "Act"),
and applicable  state securities or "Blue Sky" laws, or pursuant to an exemption
therefrom.  Each Seller also  represents  that the entire  legal and  beneficial
interest of the Shares that such Seller is acquiring is being  acquired for, and
will be held for, such Seller's  account only,  and neither in whole nor in part
for any other person or entity.

         6.14  Information  Concerning  Purchaser.  Each Seller  represents  and
warrants  that such Seller has been  provided  with a copy of  Purchaser's  most
recent  Form  10-K,  Form  10-Q,  its prior  year's  and  current  year's  proxy
statements,  a letter to shareholders dated July 25, 1996 from Chairman S. Leroy
Reed,  Jr. and an Offering  Memorandum of Purchaser  dated August 30, 1996,  and
such other information concerning Purchaser that such Seller deems necessary and
appropriate  to enable such Seller to evaluate the  financial  risk  inherent in
<PAGE>
making an investment in the Shares.  Each Seller further  acknowledges that such
Seller  has  received  satisfactory  and  complete  information  concerning  the
business and  financial  condition of Purchaser in response to all  inquiries in
respect thereof.  Purchaser will provide to Sellers a copy of its current year's
proxy statement when available.

         6.15 Economic Risk and Suitability. Each Seller represents and warrants
as follows:

                           (a)  Each   Seller   realizes   that  such   Seller's
         acquisition of the Shares  involves a high degree of risk and will be a
         highly  speculative  investment  and that such Seller is able,  without
         impairing such Seller's financial condition,  to hold the Shares for an
         indefinite  period  of  time  and to  suffer  a  complete  loss of such
         Seller's investment.

                           (b) Each Seller has carefully  considered and has, to
         the extent such Seller believes such discussions  necessary,  discussed
         with such Seller's professional,  legal, tax and financial advisors the
         suitability  of an investment in the Shares for the  particular  legal,
         tax and financial  situation of such Seller and that such Seller and/or
         such Seller's  advisors have  determined that the Shares are a suitable
         investment for such Seller.

                           (c)  Seller  has such  knowledge  and  experience  in
         business and  financial  matters as will enable such Seller to evaluate
         the  merits  and risks of an  investment  in the  Shares and to make an
         informed investment decision.

                           (d)  Seller has  carefully  read this  Agreement  and
         Purchaser  has made  available  to  Seller  or  Seller's  advisors  all
         information  and  documents  requested  by such  Seller  relating to an
         investment  in the Shares,  and has provided  answers to such  Seller's
         satisfaction to all of Seller's questions  concerning Purchaser and the
         Shares to be acquired.

                           (e)  Sellers  were not  organized  for the purpose of
         acquiring the Shares and Sellers have their principal place of business
         and principal  office located within the state set forth in its address
         shown in Section 12.05.

                           (f) Sellers understand that neither Purchaser nor any
         of its officers or directors has any  obligation to register the Shares
         under any federal or state securities act or law.

                           (g) All  information  that each  Seller has  provided
         Purchaser and such Seller's  financial position is correct and complete
         as of the date hereof,  and if there  should be any material  change in
         such  information,   such  Seller  will  provide  such  information  to
         Purchaser as soon as practicable thereafter.

                           (h) Each Seller understands that Purchaser is relying
         on  the  truth  and  accuracy  of  the  declarations,  representations,
         warranties  and agreements  made by such Seller to Purchaser  herein in
         transferring the Shares to such Seller.
<PAGE>
                           (i) Seller  confirms that such Seller has received no
         general  solicitation  or general  advertisement  and has  attended  no
         seminar or meeting  (whose  attendees  have been invited by any general
         solicitation   or   general   advertisement)   and  has   received   no
         advertisement,  article, notice or other communication published in any
         newspaper,  magazine,  or similar  media or broadcast or  television or
         radio regarding the offering of the Shares.

                           (j) APM  acknowledges and warrants that it has had an
         opportunity  to obtain from Purchaser  such  information  regarding the
         shares,  the business of the  Purchaser  and any other  information  as
         would have been  disclosed to Sellers in an M-11  securities  filing by
         Purchaser  under New York law and APM has received  from  Purchaser all
         such information it has requested.

         6.16  Registration;  Restrictions;  Legend. The Shares that Sellers are
acquiring have not been  registered  under the Act, and such Shares must be held
indefinitely unless a transfer of them is subsequently  registered under the Act
or an exemption from such registration is available.

                           (a) Each  Seller  agrees  not to make any sale of any
         Shares except either (i) in accordance  with a duly filed and effective
         registration statement under federal and applicable state law, in which
         case Seller must comply with the  requirement  of  delivering a current
         prospectus,  (ii) in accordance with Rule 144 and applicable state law,
         or (iii) in any transaction  exempt from the registration  requirements
         of the Act or any applicable state securities laws. Such Shares are not
         transferable on the books of Purchaser unless the certificate submitted
         to Purchaser's  transfer agent evidencing such shares is accompanied by
         a separate  certificate  executed by a Seller or such Seller's officer,
         or other person duly authorized by Seller, for purposes of establishing
         compliance with this Agreement.  Such certificate shall be in such form
         as shall be reasonably satisfactory to Purchaser.

                           (b) Sellers agree that all certificates  representing
         the Shares,  shall have endorsed  thereon  substantially  the following
         legend or legends:

                  "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
                  FOR  INVESTMENT  PURPOSES  ONLY AND  HAVE NOT BEEN  REGISTERED
                  UNDER  THE  SECURITIES  ACT OF  1933 OR  UNDER  THE LAW OF ANY
                  STATE.  THE  SHARES  MAY  NOT BE SOLD  OR  TRANSFERRED  IN THE
                  ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM."

         6.17  Solvency.  Each of the Sellers is now Solvent and will be Solvent
immediately  prior to and  immediately  after giving effect to the  transactions
contemplated  by this Agreement.  For the purposes of this Agreement,  "Solvent"
means with  respect to a Seller  that (a) the fair value of all of its Assets is
in excess of the total amount of its debts (including  contingent  liabilities);
(b)  it is  able  to pay  its  debts  as  they  mature;  (c) it  does  not  have
unreasonably  small  capital for the  business in which it is engaged or for any
business  or  transaction  in which it is  about  to  engage;  and (d) it is not
"insolvent" as such term is defined in Section 101 of the Bankruptcy Code.
<PAGE>

                                   ARTICLE VII
                   Representations and Warranties of Purchaser

         In order to induce  Sellers to enter into this Agreement and consummate
the  transactions   contemplated   hereunder,   Purchaser  makes  the  following
representations and warranties:

         7.01  Organization,  Power and Authority of  Purchaser.  Purchaser is a
corporation  duly organized and validly  existing under the laws of the State of
Mississippi,  with  full  corporate  power  and  authority  to enter  into  this
Agreement and to carry out the transactions and agreements contemplated hereby.

         7.02 Due Authorization; Binding Obligation. The execution, delivery and
performance  of this  Agreement,  the  issuance  and sale of the  Shares and the
consummation of the transactions  contemplated  hereby have been duly authorized
by all necessary  corporate  actions of Purchaser.  This Agreement has been duly
executed and  delivered by Purchaser  and is a valid and binding  obligation  of
Purchaser,  enforceable in accordance with its terms.  Neither the execution and
delivery  of  this  Agreement,  the  issuance  and  sale of the  Shares  nor the
consummation of the transactions  contemplated hereby will: (i) conflict with or
violate any provision of the articles of incorporation or bylaws of Purchaser or
of any decree or order of any court or administration or other governmental body
which is either applicable to, binding upon or enforceable against Purchaser; or
(ii) result in any breach of or default under any mortgage, contract, agreement,
indenture, trust or other instrument which is either binding upon or enforceable
against Purchaser.

         7.03 Accuracy of Information Furnished by Purchaser. No representation,
statement or information  made or furnished by Purchaser to Sellers contains any
untrue  statement of a material fact or omits a material fact  necessary to make
the statements  contained  herein,  in light of the  circumstances in which they
were made, not misleading.

         7.04 Preemptive Rights;  Liens;  Shares Free of Adverse Interests.  The
Shares, when issued in compliance with the provisions of this Agreement, will be
validly  issued,  fully  paid and  nonassessable.  The  issuance,  purchase  and
delivery of the shares are not subject to preemptive or any other similar rights
of the  shareholders  of the Purchaser or any liens or  encumbrances of any kind
whatsoever.  Upon their  purchase  by the  Sellers,  the Shares will be free and
clear of any lien, encumbrance, claim or other adverse interest.

         7.05   Governmental   Consents.   No   consent,   approval,   order  or
authorization of, or registration,  qualification,  designation,  declaration or
filing with,  any foreign,  federal,  state or local  governmental  authority is
required  to be  made  by  the  Purchaser  before  or  in  connection  with  the
consummation  of the  transactions  contemplated  by this  Agreement  except for
compliance with federal  securities  laws and state  securities laws in force in
the states in which Shares are offered  and/or sold,  which  compliance  will be
effected in accordance with such laws.

         7.06 No Material Adverse Change. Since the date of the most recent Form
10-K or 10-Q provided to Sellers, there has not been any material adverse change
in the financial condition,  assets,  liabilities,  business or prospects of the
Purchaser.
<PAGE>
                                  ARTICLE VIII
                         Additional Covenants of Sellers

         8.01 Best  Efforts.  Sellers will use their best efforts to cause to be
satisfied  as soon as  practicable  and  prior  to the  Closing  Date all of the
conditions  set forth in Article III to the  obligation of Purchaser to purchase
the Assets.

         8.02  Conduct  of  Business  Pending  the  Closing.  From and after the
execution and delivery of this  Agreement and until the Closing Date,  except as
otherwise provided by the prior written consent of Purchaser:

                  (a)  Sellers  will  (i)  preserve  its  Business  organization
         intact,  (ii) keep  available the services of its officers,  employees,
         agents and  distributors  with respect to the Assets and the  Business,
         and (iii)  preserve its  relationships  with  customers,  suppliers and
         others involving the Assets or the Business, in each case in the manner
         in which the same has heretofore been conducted.

                  (b) Sellers  will  maintain  the Assets in  customary  repair,
         order and condition,  reasonable wear and use and damage by unavoidable
         casualty  excepted,  and will  maintain  insurance of such types and in
         such amounts upon all of the Assets and with respect to the Business as
         are in effect on the date of this Agreement.

                  (c) Sellers will not without Purchaser's prior written consent
         (i) sell or  transfer  any of the  Assets or (ii)  incur  any  material
         obligations  or  liabilities  or enter into any  material  transaction,
         contract, arrangement or agreement with respect to the Business.

         8.03 Access to Sellers's Plants, Properties and Records. From and after
the  execution  and  delivery  of this  Agreement,  Sellers  will  afford to the
representatives of Purchaser reasonable access, during normal business hours and
upon reasonable  notice, to Sellers' premises  sufficient to enable Purchaser to
inspect  the Assets and obtain any  information  relating to the  Business,  and
Sellers  will  furnish  to such  representatives  during  such  period  all such
information relating to the foregoing  investigation as Purchaser may reasonably
request; provided, however, that any furnishing of such information to Purchaser
and any  investigation  by Purchaser  shall not affect the right of Purchaser to
rely on the  representations  and  warranties  made by Sellers in or pursuant to
this Agreement, and, provided further that Purchaser will hold in confidence all
documents and information  concerning Sellers so furnished,  and, if the sale of
the Assets pursuant hereto shall not be  consummated,  such confidence  shall be
maintained.

         8.04 No Other Discussions.  Commencing on the date hereof and extending
through and  including  the earlier of the Closing Date or  termination  of this
Agreement pursuant to Section 12.04, Sellers will discontinue  negotiations with
others and will not  continue or enter into  discussions  or  negotiate  with or
entertain  or accept the  unsolicited  offer of any other party  concerning  the
potential sale of all or any part of the Assets.  Sellers will notify  Purchaser
of any offers or  inquiries  with  respect  thereto  and  provide  copies of any
written offers or proposals.
<PAGE>
                                   ARTICLE IX
                        Additional Covenants of Purchaser

         9.01 Best Efforts.  Purchaser  will use its best efforts to cause to be
satisfied  as soon as  practicable  and  prior  to the  Closing  Date all of the
conditions  set forth in Sections 3.06 and 3.07 and Article IV to the obligation
of Sellers to sell the Assets pursuant to this Agreement.


                                    ARTICLE X
                                 Indemnification

         10.01  Agreement by Sellers to Indemnify.  Each of Sellers  jointly and
severally (the "Seller Indemnifying Parties") shall indemnify and hold Purchaser
harmless in respect of the aggregate of all indemnifiable  damages of Purchaser.
For this purpose,  "indemnifiable  damages" of Purchaser  means the aggregate of
all expenses,  losses, costs,  deficiencies,  liabilities and damages (including
related  reasonable counsel fees and expenses) incurred or suffered by Purchaser
(a) resulting from any inaccurate  representation or warranty made by Sellers in
or  pursuant  to  Article  VI  hereof,  (b)  resulting  from any  default in the
performance  of any of the  covenants  or  agreements  made by  Sellers  in this
Agreement,  (c) any claim or cause of action by any party  against the Purchaser
with respect to the  Excluded  Liabilities  (including  without  limitation  all
debts, obligations and liabilities accruing under the Assumed Contracts prior to
the Closing Date,  whether or not due and payable prior to the Closing Date); or
(d) the  ownership  of the Assets or the  operation  of the  Business by Sellers
prior to the Closing Date.

         10.02  Agreements  by  Purchaser  to  Indemnify.  Purchaser  agrees  to
indemnify  and hold  Sellers  (the  "Seller  Indemnified  Parties")  harmless in
respect  of the  aggregate  of all  indemnifiable  damages  of any of the Seller
Indemnified  Parties.  For this purpose,  "indemnifiable  damages" of any of the
Seller Indemnified Parties means the aggregate of all expenses,  losses,  costs,
deficiencies, liabilities and damages (including related reasonable counsel fees
and  expenses)  incurred  or  suffered  by any  of  Seller  Indemnified  Parties
resulting from (a) any inaccurate  representation  or warranty made by Purchaser
in  Article  VII  hereof,  (b)  any  default  in the  performance  of any of the
covenants or agreements made by Purchaser in this  Agreement,  (c) the ownership
of the Assets or the  operation of the  Business by Purchaser  after the Closing
Date,  or (d) debts,  liabilities  or  obligations  accruing  under the  Assumed
Contracts after the Closing Date and due and payable after the Closing Date.

         10.03 Matters Involving Third Parties.  If any third party shall notify
any party to this Agreement (the "Indemnified Party") with respect to any matter
which may give rise to a claim for indemnification  against any other party (the
"Indemnifying  Party")  under this  Article X then the  Indemnified  Party shall
notify each Indemnifying  Party thereof  promptly;  provided,  however,  that no
delay on the part of the Indemnified  Party in notifying any Indemnifying  Party
shall relieve the Indemnifying Party from any liability or obligation  hereunder
unless  (and then  solely to the  extent)  the  Indemnifying  Party  thereby  is
damaged.  In the event any  Indemnifying  Party notifies the  Indemnified  Party
within 15 days after the  Indemnified  Party has given notice of the matter that
the  Indemnifying  Party is assuming the defense  thereof,  (a) the Indemnifying
Party will defend the  Indemnified  Party against the matter with counsel of its
choice  reasonably  satisfactory to the Indemnified  Party,  (b) the Indemnified
Party may retain  separate  co-counsel at its sole cost and expense (except that
the Indemnifying  Party will be responsible for the reasonable fees and expenses
of the separate  co-counsel to the extent the  Indemnified  Party concludes that
<PAGE>
the counsel the Indemnifying Party has selected has a conflict of interest), (c)
the  Indemnified  Party will not  consent to the entry of any  judgment or enter
into any settlement  with respect to the matter  without the written  consent of
the Indemnifying Party (not to be withheld or delayed unreasonably), and (d) the
Indemnifying Party will not consent to the entry of any judgment with respect to
the  matter,  or enter into any  settlement  which does not  include a provision
whereby the plaintiff or claimant in the matter releases the  Indemnified  Party
from all  liability  with respect  thereto,  without the written  consent of the
Indemnified Party (not to be withheld or delayed unreasonably).  In the event no
Indemnifying  Party  notifies  the  Indemnified  Party  within 15 days after the
Indemnified Party has given notice of the matter that the Indemnifying  Party is
assuming the defense thereof, however, the Indemnified Party may defend against,
or enter into any  settlement  with  respect to, the matter in any manner it may
deem appropriate.

         10.04 Nature and Survival of Representations and Warranties.  Except as
set forth herein, all  representations and warranties made by the parties hereto
in this Agreement or pursuant hereto shall survive the Closing hereunder and any
investigation at any time made by or on behalf of the Sellers or Purchaser until
the first anniversary of the Closing Date. The  representations,  warranties and
covenants  contained in Sections 5.01, 5.02,  5.04,  5.06, 5.07, 6.04,  6.07(a),
6.07(b),   607(c),   6.12,  6.17,  7.02  and  7.04  shall  survive  the  Closing
indefinitely.  The  representations  and  warranties  relating to liabilities of
Sellers  referred to in  subsections  10.01(c)  and (d) above shall  survive the
Closing  until the  expiration of the  applicable  statute of  limitations  with
respect to each such liability. The representations,  warranties,  and covenants
contained in Section 11.01 of this Agreement shall survive the Closing until the
expiration  of the  Covenant  Period  (the date upon which the  survival  of the
respective representation,  warranty,  covenant or agreement terminates shall be
referred  to  as  the  "Termination  Date").  After  the  Termination  Date,  no
Indemnified  Party may commence  any action  against any  Indemnifying  Party in
respect of the inaccuracy of any  representation  or warranty  contained in this
Agreement.  All  statements  contained in any  certificate  or other  instrument
executed and delivered by the Sellers or Purchaser pursuant to this Agreement or
in  connection  with  the  transactions  contemplated  hereby  shall  be  deemed
representations  and  warranties  by the  Sellers  or  Purchaser,  respectively,
hereunder.

         10.05 Limitations on  Indemnification.  The Purchaser and Sellers shall
not be entitled to recover  from the other  party any  indemnifiable  damages in
respect of a breach of a  representation  or warranty  of Sellers or  Purchaser,
respectively,  under this  Agreement in excess of the sum of (i) the fair market
value of the Shares and (ii) the  aggregate  amount of  Percentage  Amounts that
have been paid to APM pursuant to Sections 1.02 and 5.04 of this  Agreement from
the Closing Date through the date on which the claim for  indemnification is due
and payable  whether by  agreement,  final  judgment or otherwise  (the "Payment
Date").  For purposes of this  Section  10.05,  the "fair  market  value" of the
Shares  shall be based on the average  last closing sale price of the Shares for
the month  immediately  prior to the Closing  Date on the  principal  securities
market on which the Shares are traded in the United States.

                                   ARTICLE XI
                              Restrictive Covenants

         11.01  Non-Competition.  For the period during which Percentage Amounts
are  being  paid or are  payable  to APM and for two (2) years  thereafter  (the
"Covenant Period"),  Sellers agrees, and Sellers agree to cause their employees,
not to directly or indirectly manage, operate,  represent,  promote, do research
for or consult for,  work for, or  participate  in the  operation,  acquisition,
<PAGE>
management  or  development  of the  commercial  sale or license of any computer
program,  product or asset involving Folio or other hypertext  infobase products
relating to the provision of coding and  reimbursement  data in the  health-care
reimbursement  industry  in the United  States of  America,  including,  without
limitation,  the  obligation  on the part of Sellers and their  employees not to
take any  action  which  would  directly  or  indirectly  adversely  affect  the
relationship  between  Purchaser and the AMA or the AAO or to promote or support
any other person in selling any such computer  program,  product or asset to the
AMA or the AAO.  "Affiliates" shall mean an entity which controls, is controlled
by, or is under common control with a Seller.  The limitations set forth in this
Section  11.01 shall not be binding upon  Computer  Sciences  Corporation  , the
parent company of APM, and its  Affiliates  other than APM;  provided,  however,
that  notwithstanding the foregoing,  neither Computer Sciences  Corporation not
its Affiliates  shall be permitted to engage the current or future employees and
independent  contractors  of APM or CCI (including but not limited to Douglas E.
Pedersen,  Steven Low, William Simms and Amy Griffiths), in a manner which would
violate the provisions of this Section 11.01.

         11.02  Confidentiality.  The parties hereto  acknowledge and agree that
following the Closing Date all Trade Secrets (as hereinafter  defined),  and all
physical  embodiments  thereof,  are confidential to and shall be and remain the
sole and  exclusive  property of Purchaser.  In addition,  following the Closing
Date, all Intellectual Property is the sole and exclusive property of Purchaser.
Sellers  further agree that (a) all Trade Secrets shall be held in the strictest
confidence;  (b) they shall not, without the prior written consent of Purchaser,
disclose, reproduce, distribute or otherwise disseminate such Trade Secrets, and
shall protect such Trade Secrets from  disclosure by others;  and (c) they shall
make  no use of  such  Trade  Secrets  without  the  prior  written  consent  of
Purchaser.  "Trade Secrets" shall mean any and all data and information relating
to the Assets or the  Business  which (i)  derive  independent  economic  value,
actual or potential,  from not being  generally  known to, and not being readily
ascertainable  by proper means by other  persons who can obtain  economic  value
from their  disclosure  or use;  and (ii) are the  subject  of efforts  that are
reasonable under the circumstances to maintain their secrecy,  including but not
limited to technical or nontechnical  data,  formulas,  compilations,  programs,
devices, methods, techniques,  drawings, financial data and plans, pricing data,
and lists of current or potential customers.

         11.03   Limitation   on   Remedies   for   Breach  of   Article  XI  or
Non-Competition  Agreements.  Notwithstanding anything to the contrary set forth
herein,  Sellers' and the Shareholders' total cumulative  liability to Purchaser
for any breach of this Article XI or any breach of a  Non-Competition  Agreement
by a  Shareholder  (either , a "Breach")  and  regardless of the form of action,
whether  in  contract  or in  tort,  shall  be (a)  payment  by the  Sellers  or
Shareholders, jointly and severally, to Purchaser upon demand an amount equal to
the sum of (i) the market  value of the Shares held by Sellers and  Shareholders
on the date of such Breach, and (ii) in the event all or a portion of the Shares
have been sold prior to such date,  the market value of such Shares on the dates
of such sale (but in any event no less than the value of such Shares on the date
of the  Closing),  and  (b)  termination  as of  the  date  of  such  Breach  of
Purchaser's  obligation to pay the Percentage Amounts set forth in Sections 1.02
and 5.04 of the Asset Purchase  Agreement.  Purchaser  agrees that the foregoing
are the sole  remedies  available to it in the event of a Breach.  The foregoing
shall constitute  liquidated damages and not a penalty, it being acknowledged by
the parties  hereto that it would be difficult or  impossible  to ascertain  the
<PAGE>
amount of any damages  resulting from a Breach and that such liquidated  damages
constitute a reasonable  estimate of the damages which  Purchaser would actually
incur upon any such  Breach.  Purchaser  hereby  waives its right to  maintain a
judicial action for specific performance of the provisions of this Article XI or
to enjoin either of Sellers from committing any act in breach of this Article XI
or any other  remedies  available to  Purchaser  at law or in equity.  Purchaser
acknowledges  and agrees that the exclusive remedy set forth herein shall not be
deemed or alleged by Purchaser to have failed of its essential purpose.

                                   ARTICLE XII
                                  Miscellaneous

         12.01  Severability.  If any term or provision of this Agreement or the
application  thereof to any person or circumstance shall, to any extent, be held
invalid or unenforceable by a court of competent jurisdiction,  the remainder of
this  Agreement or the  application  of any such term or provision to persons or
circumstances  other than those as to which it is held invalid or unenforceable,
shall not be affected  thereby,  and each term and  provision of this  Agreement
shall be valid and enforceable to the fullest extent permitted by law. If any of
the provisions  contained in this  Agreement  shall for any reason be held to be
excessively  broad as to duration,  scope,  activity or subject,  such provision
shall  be  construed  by  limiting  and  reducing  it,  so as to  be  valid  and
enforceable   to  the  extent   compatible   with  the  applicable  law  or  the
determination by a court of competent jurisdiction.

         12.02 Brokers'  Commission.  Purchaser will indemnify and hold harmless
Sellers from the  commission,  fee or claim of any person,  firm or  corporation
employed or retained  or  claiming  to be employed or retained by  Purchaser  to
bring  about,  or to  represent  it in, the  transactions  contemplated  hereby.
Sellers will indemnify and hold harmless  Purchaser from the commission,  fee or
claim of any person, firm or corporation  employed or retained or claiming to be
employed or retained by Sellers to bring  about,  or to  represent  them in, the
transactions contemplated hereby.

         12.03 Amendment and Modification.  The parties hereto may amend, modify
and  supplement  this  Agreement in such manner as may be agreed upon by them in
writing.

         12.04    Termination.

                  (a)  Anything to the  contrary  herein  notwithstanding,  this
         Agreement may be terminated and
         the transactions contemplated hereby may be abandoned:

                            (i)  by the  mutual  written  consent  of all of the
                  parties hereto at any time prior to the Closing Date;

                            (ii) by Purchaser in its sole  discretion if for any
                  reason  Purchaser is  unsatisfied  following its due diligence
                  review of the Assets and the  Business  and notice  thereof is
                  given by Purchaser to Sellers  within  thirty (30) days of the
                  date hereof;
<PAGE>
                            (iii) unless terminated  pursuant to Sections (i) or
                  (ii), by any party in the event of the material  breach by any
                  other party of any provision of this  Agreement,  which breach
                  is not  remedied by the  breaching  party within 30 days after
                  receipt or notice thereof from the terminating party; or

                            (iv) unless  terminated  pursuant  to Sections  (i),
                  (ii) or (iii),  by any party  hereto  if the  Closing  has not
                  taken place by the ninetieth (90th) day after the date of this
                  Agreement.

         If this  Agreement is terminated  pursuant to clause (i), (ii) or (iii)
of this  Section  12.04,  no party  shall  have  any  liability  for any  costs,
expenses,  loss of  anticipated  profit or any further  obligation for breach of
warranty or otherwise to any other party to this  Agreement.  Any termination of
this Agreement other than pursuant to clauses (i), (ii) or (iii) of this Section
12.04  shall be  without  prejudice  to any  other  rights  or  remedies  of the
respective parties.

                  (b) The risk of any loss to the  Assets to be sold by  Sellers
         hereunder and all liability with respect to injury and damage occurring
         in connection  therewith  shall be the sole  responsibility  of Sellers
         until the  completion  of the  Closing.  If any  material  part of said
         properties  shall be  damaged  by fire or other  casualty  prior to the
         completion of the Closing hereunder, Purchaser shall have the right and
         option:

                            (i) to terminate this Agreement,  without  liability
                  to any party thereto; or

                         (ii) to proceed  with the Closing  hereunder,  in which
                  event such casualty  shall not  constitute a breach by Sellers
                  or any representation, warranty or covenant in this Agreement,
                  and  Purchaser  shall be  entitled  to receive  and retain the
                  insurance proceeds arising from such casualty.

         12.05 Notice.  All notices required to be given in accordance with this
Agreement  shall be deemed to have been  received  upon receipt after being sent
U.S. Mail,  certified or registered,  return receipt  requested,  or, if sent by
telecopier, when successfully transmitted,  or, if sent by any other means, when
delivered, to the following addresses:

              If to Purchaser:

              Ethika Corporation
              107 Executive Center
              Hilton Head Island, SC  29928
              Attn:  G. Thomas Reed, President and Chief Operating Officer
              Telecopier No.:  (803) 785-3315

              If to APM:

              American Practice Management
              1675 Broadway, 18th Floor
              New York, NY 10019
              Attn: Arthur Spiegel III
              Telecopier No.: (212) 903-9301
<PAGE>

              If to CCI:

              Consulting Concepts, Inc.
              3548 Monza Drive
              Salt Lake City, Utah 84109
              Attn:  Douglas E. Pedersen
              Telecopier No.: (801) 288-0699

              with a copy to:

              Willkie Farr & Gallagher
              153 E. 53rd Street
              New York, NY 10022
              Attn:  Harvey L. Sperry, Esq.
              Telecopier No.: (212) 821-8111


         The  parties  hereto may change the above  shown  notice  addresses  by
giving notice in the manner acquired hereunder of such new address.

         12.06 Binding Effect. This Agreement shall be binding upon and inure to
the  benefit of the parties  hereto and their  respective  successors,  assigns,
heirs and legal representatives. This Agreement may not be assigned by Purchaser
except  to  another  corporation  controlled  by or under  common  control  with
Purchaser.  In any such event,  Purchaser  shall remain  directly liable for all
undertakings and obligations hereunder.

         12.07 Entire  Agreement.  This Agreement and the exhibits and schedules
attached hereto contain the entire  agreement of the parties hereto with respect
to the purchase of the Assets and the other  transactions  contemplated  herein,
and  supersede  all prior  understandings  and  agreements  of the parties  with
respect to the subject  matter  hereof.  Any reference  herein to this Agreement
shall be deemed to include the schedules and exhibits attached hereto.

         12.08  Headings;  Etc. The  descriptive  headings in this Agreement are
inserted for  convenience  only and do not constitute a part of this  Agreement.
References to "Sections" and  "subsections",  unless otherwise stated,  refer to
sections  and  subsections  of  this  Agreement.   Unless  otherwise  specified,
references to "Exhibits" and  "Schedules"  refer to exhibits and schedules which
are attached hereto and are hereby made a part hereof.

         12.09 Execution in Counterparts.  This Agreement may be executed in any
number of  counterparts,  each of which shall be deemed an original,  and all of
which together will constitute one and the same instrument.

         12.10  Schedules.  To the extent  any  disclosure  in a  schedule  puts
Purchaser on actual notice of the facts reflected therein, such disclosure shall
be deemed to be a disclosure in all other  schedules  under this Agreement as to
such facts. References on any schedule to any document, instrument,  contract or
agreement  shall  not be  deemed  for  any  purpose  of this  Agreement  to be a
disclosure of any term,  provision or statement of fact of, or relating to, such
document, instrument, contract or agreement, (a) unless and until a copy of such
document, instrument,  contract or agreement has been provided to Purchaser, and
(b) until the expiration of the Due Diligence Period.
<PAGE>
         12.11  Governing Law. This Agreement shall be governed by and construed
in  accordance  with the  laws of the  State of  South  Carolina  applicable  to
contracts made and to be performed herein.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.

                                                     PURCHASER:


                                              ETHIKA CORPORATION


                                                     By:    ____________________
                                                      
                                                  Title:________________________

                                                     SELLERS:

                                              AMERICAN PRACTICE MANAGEMENT, INC.


                                                     By:    ____________________

                                                  Title:    ____________________


                                                     CONSULTING CONCEPTS, INC.


                                                     By:    ____________________

                                                  Title:    ____________________
 <PAGE>

                                    EXHIBIT E

                          Allocation of Purchase Price

              100% of the value of the Shares will be allocated to the Products.
       The balance of the Purchase Price,  consisting of the Percentage  Amounts
       payable  pursuant to Section  1.02(b),  shall be  allocated  to the other
       Assets  being  transferred  by Sellers to  Purchaser  pursuant to Section
       1.01.



<PAGE>
                                                               EXHIBIT (3)(b)(3)

                                     BYLAWS

                                       OF

                               ETHIKA CORPORATION

                     (FORMERLY DIXIE NATIONAL CORPORATION)




                                    ARTICLE I
                                     OFFICES

         The principal  office of the  Corporation  in the State of  Mississippi
shall be located in the City of Jackson,  County of Hinds.  The  Corporation may
have such other offices,  either within or without the State of Mississippi,  as
the Board of Directors may designate or as the business of the  Corporation  may
require from time to time.
         The registered  office of the Corporation to be maintained in the State
of Mississippi may be, but need not be, identical to the principal office in the
State of  Mississippi,  and the address of the registered  office may be changed
from time to time by the Board of Directors.

                                   ARTICLE II
                                  SHAREHOLDERS

         Section 1. Annual Meeting. The annual meeting of the Shareholders shall
be held on the first Friday in April in each year at 1:30 p.m., or on such other
date and at such  time as the Board of  Directors,  or the  Executive  Committee
thereof, of the Corporation may by resolution  designate.  Such meeting shall be
for the  purpose of electing  Directors  and for the  transaction  as such other
business  as may  properly  come  before the  meeting.  If the day fixed for the
annual  meeting  shall be a legal  holiday  in the  State of  Mississippi,  such
meeting  shall be held on the next  succeeding  business day. If the election of
Directors  shall not be held at the annual  meeting of  Shareholders,  or at any
adjournment  thereof, the Board of Directors shall cause the election to be held
at a special meeting of the Shareholders as soon as practical following the date
of the annual meeting.
         Section 2. Special  Meetings.  Special meetings of the Shareholders may
be called by the  President or by the Board of Directors  and shall be called by
the  President  at the request of the holders of not less than 25 percent of the
outstanding shares of the Corporation entitled to vote at the meeting.
         Section 3. Place of Meeting.  The Board of Directors  may designate any
place,  either  within  or  without  the State of  Mississippi,  as the place of
meeting  for any annual or special  meeting  of the  Shareholders  called by the
Board of  Directors.  If no  designation  is made,  or if a special  meeting  be
otherwise called, the place of the meeting shall be the registered office of the
Corporation in the State of Mississippi.
         Section 4. Notice of  Meeting.  Written or printed  notice  stating the
place,  day and hour of the  meeting  and,  in case of a  special  meeting,  the
purpose or purposes for which the meeting is called, shall be delivered not less
than 10 nor more than 60 days before the date of the meeting,  either personally
or by mail, by or at the direction of the President,  or the  Secretary,  or the
<PAGE>
Officer or persons calling the meeting,  to each  shareholder of record entitled
to vote at such meeting.  If mailed, such notice shall be deemed to be delivered
when  deposited in the United States Mail,  addressed to the  shareholder at his
address as it appears on the stock  transfer books of the  Corporation,  postage
prepaid.
         Section 5. Closing of Transfer  Books or Fixing of Record Date. For the
purpose  of  determining  Shareholders  entitled  to notice of or to vote at any
meeting of  Shareholders  or any  adjournment  thereof,  or  entitled to receive
payment of any dividend, or in order to make a determination of Shareholders for
any other  proper  purpose,  the Board of  Directors  may provide that the stock
transfer  books  shall be closed for a stated  period but not to exceed,  in any
case,  60 days. If the stock  transfer  books shall be closed for the purpose of
determining  Shareholders  entitled  to  notice  of or to vote at a  meeting  of
Shareholders,  such  books  shall be  closed  for at  least 10 days  immediately
preceding such meeting.  In lieu of closing the stock transfer books,  the Board
of Directors may fix in advance a date as the record date for any  determination
of Shareholders,  such date in any case to be not more than 60 days and, in case
of a meeting of  Shareholders,  not less than 10 days prior to the date on which
the particular action,  requiring such  determination of Shareholders,  is to be
taken.  If the stock  transfer  books are not closed and no record date is fixed
for the  determination of Shareholders  entitled to receive notice of or to vote
at a meeting, or receive payment of a dividend,  the date on which notice of the
meeting is mailed or the date on which the  resolution of the Board of Directors
declaring such dividend is adopted, as the case may be, shall be the record date
for such  determination  of  Shareholders.  When a determination of Shareholders
entitled  to vote at any  meeting of  Shareholders  has been made as provided in
this section, such determination shall apply to any adjournment thereof.
         Section 6.  Voting  Lists.  The Officer or agent  having  charge of the
stock transfer books for shares of the Corporation  shall make, at least 10 days
before  each  meeting  of  Shareholders,  a  complete  list of the  Shareholders
entitled  to vote at such  meeting,  or any  adjournment  thereof,  arranged  in
alphabetical  order, with the address of, and the number of shares held by each,
which list, for a period of 10 days prior to such meeting, shall be kept on file
at the registered  office of the  Corporation and shall be subject to inspection
by any shareholder at any time during usual business hours. Such list shall also
be  produced  and kept  open at the time and place of the  meeting  and shall be
subject  to the  inspection  of any  shareholder  during  the whole  time of the
meeting.  The original  stock transfer books shall be prima facie evidence as to
who are the  stockholders  entitled to examine such list or transfer books or to
vote at any meeting of shareholder.
         Section  7.  Quorum.  A  majority  of  the  outstanding  shares  of the
Corporation  entitled  to  vote,  represented  in  person  or  by  proxy,  shall
constitute a quorum at a meeting of Shareholders. If less than a majority of the
outstanding  shares are  represented  at a meeting,  a majority of the shares so
represented at a meeting,  a majority of the shares so  represented  may adjourn
the meeting from time to time without further notice.  At such adjourned meeting
at  which a  quorum  shall  be  present  or  represented,  any  business  may be
transacted  which  might  have been  transacted  at the  meeting  as  originally
notified.  The Shareholders  present at a duly organized meeting may continue to
transact business until  adjournment,  notwithstanding  the withdrawal of enough
Shareholders to leave less than a quorum.
         Section 8. Proxies. At all meetings of Shareholders,  a shareholder may
vote by proxy executed in writing by the  shareholder or by his duly  authorized
attorney-in-fact.   Such  proxy  shall  be  filed  with  the  Secretary  of  the
Corporation before or at the time of the meeting.  No proxy shall be valid after
11 months  from the date of its  execution,  unless  otherwise  provided  in the
proxy. A proxy may be withdrawn at any time.
<PAGE>
         Section 9. Voting of Shares.  Each  outstanding  share entitled to vote
shall be entitled to one vote upon each matter  submitted to a vote at a meeting
of Shareholders,  except as to any limitations that may apply to preferred stock
of the  Corporation,  if any, and subject to the right of cumulative  voting for
Directors.
         Section 10. Voting of Shares by Certain Holders. Shares standing in the
name of another Corporation may be voted by such Officer,  agent or proxy as the
bylaws of such  Corporation may prescribe or, in the absence of such provisions,
as the Board of Directors of such Corporation may determine.
         Shares held by an administrator,  executor, guardian or conservator may
be voted by him, either in person or by proxy, without a transfer of such shares
into his name. Shares standing the name of a trustee may be voted by him, either
in person or by proxy,  but not trustee shall be entitled to vote shares held by
him without a transfer of such shares into his name.
         Shares  standing  in the  name  of a  receiver  may be  voted  by  such
receiver,  and shares held by or under the control of a receiver may be voted by
such receiver  without the transfer  thereof into his name if authority so to do
be contained  in an  appropriate  order of the court by which such  receiver was
appointed.
         A  shareholder  whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee,  and
thereafter the pledgee shall be entitled to vote the shares so transferred.

                                   ARTICLE III
                               BOARD OF DIRECTORS

         Section 1. General Powers.  The business and affairs of the Corporation
shall be managed by its Board of Directors.
         Section  2.  Chairman.  There  shall  be a  Chairman  of the  Board  of
Directors elected annually by the Directors.
         Section  3.  Executive  Committee.   There  is  hereby  established  an
Executive  Committee  of the  Board of  Directors  which  shall  consist  of the
Chairman of the Board of Directors, who shall serve as Chairman of the Executive
Committee, along with two other members of the Board of Directors,  nominated by
the Chairman,  who shall be subject to  ratification  by the Board of Directors.
The  Executive  Committee  shall have and may exercise all the  authority of the
Board of Directors,  save and except such authority as is expressly  reserved to
the full Board of Directors by the Mississippi Business Corporation Law.
         Section 4. Other  Committees.  There shall be such other  committees of
the Board of  Directors  as the  Chairman  may from time to time  designate  and
appoint.  The acts of all  committees of the Board of Directors,  other than the
Executive Committee,  shall be subject to approval of the Board of Directors, or
of its Executive Committee.
         Section 5. Secretary.  The Secretary of the Corporation  shall serve as
Secretary  to the  Board of  Directors  and all  committees  thereof  and  shall
maintain minutes of all meetings in appropriate minute books.
         Section  6.  Number,  Classification,  Tenure and  Qualifications.  The
number of Directors of the Corporation shall not be less than five nor more than
fifteen.  No person  shall be eligible to serve as a Director  unless,  when his
term commences, he is at least 21 years of age. The number of Directors shall be
fixed annually by the stockholders at the annual meeting.
         Section  7.  Regular  Meetings.  A  regular  meeting  of the  Board  of
Directors shall be held immediately  after, and at the same place as, the annual
meeting of Shareholders.  The Board of Directors may provide the time and place,
either within or without the State of Mississippi, for the holding of additional
regular  meetings  without  notice  other than the  resolution  calling for such
regular meetings.
<PAGE>
         Section 8. Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the  Chairman  of the Board of  Directors,
the President of the Corporation, or by not less than 20 percent of the Board of
Directors.  The person or persons  authorized  to call  special  meetings of the
Board of  Directors  may fix any place,  either  within or without  the State of
Mississippi,  as the place  for  holding  any  special  meeting  of the Board of
Directors called by them.
         Section 9. Notice of Special Meeting.  Special meetings of the Board of
Directors  may be called  pursuant  to Section 8 of this  Article III upon seven
days' written notice. Such notice shall be either delivered in person, by United
States Mail,  or by telegram.  Notice by mail or telegram  shall be addressed to
each  Director at his  address  shown on the  records of the  Corporation.  Mail
notice is deemed delivered upon deposit in the United States Mail,  addressed as
aforesaid,   postage  prepaid.  Telegraphic  notice  is  deemed  delivered  upon
acceptance by the telegraph company.
         Notice of a special  meeting may be waived by any Director.  Attendance
at a special  meeting  constitutes  a waiver of notice of such meeting  unless a
Director  specifically  causes the  minutes  thereof to reflect  his  attendance
solely to challenge the proper calling or convening of such meeting. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board of Directors need be specified in the notice or waiver of notice of
such meeting.
         Section  10.  Quorum.  A majority of the number of  Directors  fixed by
Section 6 of this Article III shall  constitute a quorum for the  transaction of
business  at any  meeting  of the  Board of  Directors,  but if less  than  such
majority  is present  at a meeting,  a majority  of the  Directors  present  may
adjourn the meeting from time to time without further notice.
         Section  11.  Vacancies.  Any  vacancies  occurring  in  the  Board  of
Directors  or any  Directorship  to be filled by  reason of an  increase  of the
number of  Directors  shall be filled by  election  at an annual  meeting of the
Shareholders or a special meeting of the Shareholders called for that purpose. A
Director  elected to fill a vacancy shall be elected for the  unexpired  term of
his predecessor in office.
         Section 12. Presumption of Assent. A Director of the Corporation who is
present at a meeting of the Board of Directors at which action on any  corporate
matter is taken shall be presumed to have  assented to the action  taken  unless
his  dissent  shall be entered in the  minutes of the meeting or unless he shall
file his written  dissent to such action with the person acting as the Secretary
of the meeting before the  adjournment  thereof or shall forward such dissent by
registered mail to the Secretary of the  Corporation  within three business days
after the  adjournment of the meeting Such right to dissent shall not apply to a
Director who voted in favor of such action.
         Section 13. Compensation.  By resolution of the Board of Directors, the
Directors may be paid their  expenses,  if any, of attendance at each meeting of
the Board of Directors,  or committee  thereof,  and may be paid a fixed sum for
attendance at each meeting of the Board of Directors, or committee thereof, or a
stated  salary as Director.  No such payment  shall  preclude any Director  from
serving  the  Corporation  in any  other  capacity  and  receiving  compensation
therefor.
<PAGE>
                                   ARTICLE IV
                                    OFFICERS

         Section 1. Number and  Qualifications.  The Officers of the Corporation
shall be a chief  executive  Officer,  a President,  one or more Vice Presidents
(the number thereof to be determined by the Board of Directors), a Secretary and
a Treasurer, each of whom shall be elected by the Board of Directors. Such other
Officers and  assistant  Officers as may be deemed  necessary  may be elected or
appointed by the Board of Directors.  Any two or more offices may be held by the
same  person,  except the offices of  President  and  Secretary,  and except the
offices as Chairman of the Board of Directors and President of the  Corporation.
No person  shall be  eligible to serve as an Officer of the  Corporation  unless
when his  term  commences  he is at  least 21 years of age and not more  than 65
years of age.  Any  Officer  attaining  the age of 65 during  his term of office
shall serve the unexpired portion thereof.
         Section 2. Election and Term of Office. The Officers of the Corporation
to be elected by the Board of Directors  shall be elected  annually by the Board
of  Directors  at the first  meeting of the Board of  Directors  held after each
annual  meeting of the  Shareholders.  If the election of Officers  shall not be
held at such  meeting,  such  election  shall  be  held  as soon  thereafter  as
conveniently  may be. Each Officer shall hold office until his  successor  shall
have been duly  elected and shall have  qualified or until his death or until he
shall resign or shall have been removed in the manner hereinafter provided.
         Section  3.  Vacancies.  A  vacancy  in any  office  because  of death,
resignation,  removal,  disqualification or otherwise may be filled by the Board
of Directors for the unexpired portion of the term.
         Section  4.  Chief  Executive  Officer.  The chief  executive  Officer,
subject to the control of the Board of  Directors,  shall  supervise and control
the affairs of the Corporation.
         Section 5.  President.  The President  shall perform and discharge such
duties  and  responsibilities  as may be  assigned  to that  office by the chief
executive  Officer and the Board of Directors of the Corporation.  The President
may sign,  with the  Secretary  or any other proper  Officer of the  Corporation
thereunto  authorized by the Board of Directors,  certificates for shares of the
Corporation,  and deeds, mortgages,  bonds, contracts or other instruments which
the Board of Directors has authorized to be executed,  except in cases where the
signing and  execution  thereof  shall be  expressly  delegated  by the Board of
Directors or by these bylaws to some other Officer of the Corporation,  or shall
be required by law to be otherwise signed or executed.
         Section 6. The Vice  Presidents.  The Vice  Presidents  shall have such
duties as may be from time to time prescribed by the Board of Directors.
         Section 7.  Secretary.  The  Secretary  shall:  (a) keep the minutes of
meeting of the Shareholders,  Directors and committees of the Board of Directors
in one or more books  provided  for that  purpose;  (b) see that all notices are
duly given in accordance with the provisions of these bylaws as required by law;
(c) be custodian of the corporate records and of the seal of the Corporation and
see that the seal of the Corporation is affixed to all documents,  the execution
of which on behalf of the Corporation  under its seal, is duly  authorized;  (d)
keep a register of the post office address of each  shareholder,  which shall be
furnished to the Secretary by such  shareholder;  (e) sign with other designated
Officers certificates for shares of the Corporation, the issuance of which shall
have been  authorized by resolution of the Board of Directors;  (f) have general
charge of the stock transfer books of the  Corporation;  (g) in general  perform
all duties  incident to the office of  Secretary  and such other  duties as from
time  to  time  may be  assigned  to him by the  President  or by the  Board  of
<PAGE>
Directors.
         Section 8. The  Treasurer.  The  Treasurer  shall:  (a) have charge and
custody of and be responsible  for all funds and securities of the  Corporation;
receive and give receipts for monies due and payable to the Corporation from any
source whatsoever; and deposit all such monies in the name of the Corporation in
such  banks,  trust  companies  or other  depositories  as shall be  selected in
accordance  with the provisions of these bylaws;  and (b) in general perform all
the duties  incident to the office of  Treasurer  and such other  duties as from
time  to  time  may be  assigned  to him by the  President  or by the  Board  of
Directors.
         Section  9.  Assistant  Secretaries  and  Assistant   Treasurers.   The
assistant secretaries and assistant Treasurers,  in general,  shall perform such
duties as shall be  assigned  to them by the Board of  Directors  or any Officer
designated by the Board of Directors.
         Section 10.  Compensation.  The  compensation  of the Officers shall be
fixed  from  time to time by the Board of  Directors,  and no  Officer  shall be
prevented  from  receiving  such  salary by reason of the fact that he is also a
Director of the Corporation.

                                    ARTICLE V
                      CONTRACTS, LOANS, CHECKS AND DEPOSITS

         Section 1. Contracts.  The Board of Directors may authorize any Officer
or Officers,  agent or agents, to enter into any contract or execute and deliver
any  instrument  in the  name of and on  behalf  of the  Corporation,  and  such
authority may be general or confined to specific instances.
         Section  2.  Loans.  No loans  shall be  contracted  on  behalf  of the
Corporation and no evidences of indebtedness  shall be issued in its name unless
authorized  by a resolution  of the Board of  Directors.  Such  authority may be
general or confined to specific instances.
         Section 3.  Checks,  Drafts and Evidence of  Indebtedness.  All checks,
drafts or other  orders for the payment of money,  notes or other  evidences  of
indebtedness  issued  in the name of the  Corporation  shall be  signed  by such
Officer or Officers of the  Corporation and in such manner as shall from time to
time be determined by resolution of the Board of Directors.
         Section  4.  Deposits.  All  funds  of the  Corporation  not  otherwise
employed shall be deposited  from time to time to the credit of the  Corporation
in such banks,  trust companies or other  depositories as the Board of Directors
may select.

                                   ARTICLE VI
                   CERTIFICATES FOR SHARES AND THEIR TRANSFER

         Section 1. Certificates for Shares. Certificates representing shares of
the  Corporation  shall be in such form as shall be  determined  by the Board of
Directors.  Such  certificates  shall  be  signed  by  the  President  or a Vice
President and by the Secretary or an Assistant  Secretary.  All certificates for
shares shall be  consecutively  numbered or otherwise  identified.  The name and
address of the persons to whom the shares represented  thereby are issued,  with
the number of shares and date of issue,  shall be entered on the stock  transfer
books of the Corporation.  All  certificates  surrendered to the Corporation for
transfer  shall be canceled  and no new  certificate  shall be issued  until the
former  certificate for a like number of shares shall have been  surrendered and
canceled,  except that in case of a lost,  destroyed or mutilated  certificate a
new one may be issued  therefor upon such terms and indemnity to the Corporation
as the Board of Directors may prescribe.
<PAGE>
         Section 2.  Transfer of Shares.  Transfer of shares of the  Corporation
shall be made only on the stock transfer books of the  Corporation by the holder
of record  thereof  or by his legal  representative,  who shall  furnish  proper
evidence of authority to transfer,  or by his attorney  thereunto  authorized by
power of attorney duly executed and filed with the Secretary of the Corporation,
and on surrender for cancellation of the certificate for such shares. The person
in whose name shares  stand on the books of the  Corporation  shall be deemed by
the Corporation to be the owner thereof for all purposes.

                                   ARTICLE VII
                                   FISCAL YEAR

         The  fiscal  year of the  Corporation  shall  begin on the first day of
January  and end on the 31st day of December  in each year;  provided,  however,
that the Board of Directors of the Corporation may, by resolution, establish the
beginning and ending of the fiscal year of the Corporation.

                                  ARTICLE VIII
                                    DIVIDENDS

         The  Board  of  Directors  may  from  time  to  time  declare,  and the
Corporation may pay,  dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and its Articles of Incorporation.

                                   ARTICLE IX
                                      SEAL

         The Board of Directors  shall  provide a corporate  seal which shall be
circular in form and shall have  inscribed  thereon the name of the  Corporation
and the state of incorporation and the words "Corporate Seal."

                                    ARTICLE X
                                   AMENDMENTS

         These bylaws may be altered,  amended or repealed and new bylaws may be
adopted by the Board of Directors at any regular or special meeting of the Board
of Directors.

                                   ARTICLE XI
                    INDEMNIFICATION OF OFFICERS AND DIRECTORS

         To the fullest extent permitted by the Mississippi Business Corporation
Act, (the "Act") specifically including, but not limited to ss.79-4-8.50 through
ss.79-4-8.58  inclusive,  this Corporation shall indemnify each of its Directors
and  Officers  and hold them  harmless  from and  against any loss,  damage,  or
expense; including, but not limited to, attorneys fees and expenses, incurred or
paid by an indemnified  party as a result of such parties'  service or action as
an  Officer or  Director  of this  Corporation,  or as a result of serving as an
Officer or Director of any other  Corporation at the request or instance of this
Corporation.

         As used herein,  the term  "Director"  shall have the meaning set forth
ss.79-4-8.5 of the Act. The term  "Officer"  shall mean the holder of any office
of a Corporation  called for or permitted by the Certificate of Incorporation or
Bylaws of such  Corporation  and to which the  holder  thereof is elected by the
Board of Directors of such Corporation.  The term "indemnified party" shall mean
any Officer or Director entitled to indemnity under the provision of this Bylaw.