EXHIBIT 10.11




                          AGREEMENT AND PLAN OF MERGER

                                  BY AND AMONG

                                 VSOURCE, INC.,

                             OTT ACQUISITION CORP.,

                     ONLINE TRANSACTION TECHNOLOGIES, INC.,

                                       AND

                       COLIN P. KRUGER AND MICHAEL SHIRMAN

                         DATED AS OF  DECEMBER 14, 2000


<PAGE>
<TABLE>
<CAPTION>
<S>                                                                             <C>
ARTICLE 1 THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1
  1.1  The Merger.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1
  1.2  Closing of the Merger. . . . . . . . . . . . . . . . . . . . . . . . . .   1
  1.3  Effective Time.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1
  1.4  Effects of the Merger. . . . . . . . . . . . . . . . . . . . . . . . . .   1
  1.5  Articles of Incorporation and Bylaws.. . . . . . . . . . . . . . . . . .   2
  1.6  Directors and Officers.. . . . . . . . . . . . . . . . . . . . . . . . .   2
ARTICLE 2 CONVERSION OF SECURITIES. . . . . . . . . . . . . . . . . . . . . . .   2
  2.1  Conversion.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2
  2.2  Escrow of Shares.. . . . . . . . . . . . . . . . . . . . . . . . . . . .   3
  2.3  Exchange of Certificates and Warrants. . . . . . . . . . . . . . . . . .   3
  2.4  No Fractional Shares.. . . . . . . . . . . . . . . . . . . . . . . . . .   4
  2.5  Return of Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . .   4
  2.6  Closing of the Company's Transfer Books. . . . . . . . . . . . . . . . .   4
  2.7  Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . .   4
ARTICLE 3 MERGER CONSIDERATION ADJUSTMENTS. . . . . . . . . . . . . . . . . . .   4
  3.1  Closing Date Adjustment. . . . . . . . . . . . . . . . . . . . . . . . .   4
  3.2  Post-Closing Adjustment. . . . . . . . . . . . . . . . . . . . . . . . .   5
  3.3  Payment of Adjusted Merger Consideration.. . . . . . . . . . . . . . . .   5
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE FOUNDERS. . . .   5
  4.1  Organization and Standing. . . . . . . . . . . . . . . . . . . . . . . .   5
  4.2  Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   5
  4.3  No Violation of Law and Agreements.. . . . . . . . . . . . . . . . . . .   6
  4.4  Capitalization; Corporate Records. . . . . . . . . . . . . . . . . . . .   6
  4.5  No Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . .   7
  4.6  Financial Statements and Records.. . . . . . . . . . . . . . . . . . . .   7
  4.7  No Undisclosed Liabilities.. . . . . . . . . . . . . . . . . . . . . . .   7
  4.8  Absence of Certain Changes.. . . . . . . . . . . . . . . . . . . . . . .   7
  4.9  Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   9
 4.10  Compliance with Laws.. . . . . . . . . . . . . . . . . . . . . . . . . .  10
 4.11  Contracts and Other Agreements.. . . . . . . . . . . . . . . . . . . . .  10
 4.12  Real Estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
 4.13  Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . .  12
 4.14  Intangible Property and Computer Software. . . . . . . . . . . . . . . .  12
 4.15  Properties.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13
 4.16  Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13
 4.17  Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14
 4.18  Labor and Employment Matters.. . . . . . . . . . . . . . . . . . . . . .  14
 4.19  Employee Benefit Plans.. . . . . . . . . . . . . . . . . . . . . . . . .  14
 4.20  Litigation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15
 4.21  Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15
 4.22  Bank Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15
 4.23  Relations with Suppliers and Customers.. . . . . . . . . . . . . . . . .  15
 4.24  Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . .  15
 4.25  Transactions with Affiliates.. . . . . . . . . . . . . . . . . . . . . .  15
 4.26  Securities Act.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16
 4.27  Brokerage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16
 4.28  Representations Complete.. . . . . . . . . . . . . . . . . . . . . . . .  16
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB . . . . . . .  17
  5.1  Organization and Standing. . . . . . . . . . . . . . . . . . . . . . . .  17


                                       -i-
<PAGE>
  5.2  Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17
  5.3  No Violation of Law and Agreements.. . . . . . . . . . . . . . . . . . .  17
  5.4  Parent Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . .  17
  5.5  Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17
  5.6  Brokerage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18
  5.7  Litigation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18
  5.8  No Material Adverse Change.. . . . . . . . . . . . . . . . . . . . . . .  18
  5.9  Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18
ARTICLE 6 PRE-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . .  19
  6.1  Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . . . . .  19
  6.2  Efforts to Close.. . . . . . . . . . . . . . . . . . . . . . . . . . . .  19
  6.3  Continued Effectiveness of Representations and Warranties. . . . . . . .  19
  6.4  Examinations and Investigations. . . . . . . . . . . . . . . . . . . . .  19
  6.5  No Solicitation of Transactions. . . . . . . . . . . . . . . . . . . . .  19
  6.6  Shareholder Approval.. . . . . . . . . . . . . . . . . . . . . . . . . .  20
  6.7  Public Announcements.. . . . . . . . . . . . . . . . . . . . . . . . . .  20
ARTICLE 7 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. . . . . . . . . . . . .  20
  7.1  Representations and Warranties.. . . . . . . . . . . . . . . . . . . . .  20
  7.2  Corporate Action and Compliance with Covenants.. . . . . . . . . . . . .  20
  7.3  Litigation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20
  7.4  Absence of Adverse Governmental Action.. . . . . . . . . . . . . . . . .  20
  7.5  Registration Rights. . . . . . . . . . . . . . . . . . . . . . . . . . .  21
  7.6  Opinion of Counsel.. . . . . . . . . . . . . . . . . . . . . . . . . . .  21
  7.7  No Material Adverse Change.. . . . . . . . . . . . . . . . . . . . . . .  21
ARTICLE 8 CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER SUB. . . . . . . .  21
  8.1  Representations and Warranties.. . . . . . . . . . . . . . . . . . . . .  21
  8.2  Compliance with Covenants. . . . . . . . . . . . . . . . . . . . . . . .  21
  8.3  Corporate Action.. . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
  8.4  Litigation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
  8.5  Opinion of Counsel.. . . . . . . . . . . . . . . . . . . . . . . . . . .  21
  8.6  Absence of Adverse Governmental Action.. . . . . . . . . . . . . . . . .  21
  8.7  Filings; Consents; Waiting Periods.. . . . . . . . . . . . . . . . . . .  21
  8.8  Shareholder Approval.. . . . . . . . . . . . . . . . . . . . . . . . . .  22
  8.9  Warrant Holder Approval. . . . . . . . . . . . . . . . . . . . . . . . .  22
 8.10  Employment Confidentiality Agreements. . . . . . . . . . . . . . . . . .  22
 8.11  Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22
 8.12  Due Diligence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22
 8.13  Employment Agreements. . . . . . . . . . . . . . . . . . . . . . . . . .  22
 8.14  Estoppels. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22
 8.15  No Material Adverse Change.. . . . . . . . . . . . . . . . . . . . . . .  22
 8.16  Non-Compete. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22
ARTICLE 9 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . .  22
  9.1  Survival of Representations. . . . . . . . . . . . . . . . . . . . . . .  22
  9.2  Company Shareholders' Obligation to Indemnify. . . . . . . . . . . . . .  23
  9.3  Notice of Asserted Liability.. . . . . . . . . . . . . . . . . . . . . .  23
  9.4  Opportunity to Defend. . . . . . . . . . . . . . . . . . . . . . . . . .  23
  9.5  Losses to Surviving Corporation. . . . . . . . . . . . . . . . . . . . .  23
  9.6  No Contribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24
  9.7  Actions by Company Shareholders. . . . . . . . . . . . . . . . . . . . .  24
ARTICLE 10 TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . .  24
 10.1  Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24


                                      -ii-
<PAGE>
 10.2  Survival.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  25
ARTICLE 11 TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  25
ARTICLE 12 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . .  25
 12.1  Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  25
 12.2  Entire Agreement.. . . . . . . . . . . . . . . . . . . . . . . . . . . .  26
 12.3  Waivers and Amendments.. . . . . . . . . . . . . . . . . . . . . . . . .  26
 12.4  Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27
 12.5  Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27
 12.6  Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27
 12.7  Binding Effect; Assignment.. . . . . . . . . . . . . . . . . . . . . . .  27
 12.8  No Third Party Beneficiaries.. . . . . . . . . . . . . . . . . . . . . .  27
 12.9  Counterparts.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27
12.10  Schedules and Exhibits.. . . . . . . . . . . . . . . . . . . . . . . . .  27
12.11  Headings.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27
12.12  Severability.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  28
12.13  Mutual Drafting. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  28
12.14  Further Assurances.. . . . . . . . . . . . . . . . . . . . . . . . . . .  28
12.15  Expenses.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  28
</TABLE>


                                      -iii-
<PAGE>
                          AGREEMENT AND PLAN OF MERGER
                          ----------------------------

     THIS  AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is entered into as of
December  14,  2000,  by  and  among  VSOURCE,  INC.,  a  Delaware  corporation
("PARENT"),  OTT  ACQUISITION CORP., a California corporation and a wholly-owned
subsidiary  of  Parent  ("MERGER SUB"), ONLINE TRANSACTION TECHNOLOGIES, INC., a
California  corporation (the "COMPANY"), and COLIN P. KRUGER and MICHAEL SHIRMAN
(the  "FOUNDERS").

                                    RECITALS
                                    --------

     A.     The  Boards  of  Directors  of  each  of  Parent, Merger Sub and the
Company  have determined that the merger of Merger Sub with and into the Company
on  the  terms and subject to the conditions hereinafter provided is in the best
interests  of  such companies and their respective shareholders and, accordingly
have  approved  such  merger.

     B.     The  Founders, who are the founders and are substantial shareholders
of the Company, believe that such merger is in the best interests of the Company
and  its  shareholders.

     C.     The  parties  intend  for  such  merger  to  qualify  as  a tax-free
reorganization within the meaning of section 368(a) of the Internal Revenue Code
of  1986,  as  amended,  and  the  regulations  thereunder.

                                    AGREEMENT
                                    ---------

     NOW  THEREFORE,  in  consideration of the premises and the mutual covenants
and  agreements  hereinafter  set  forth,  the  parties  hereby agree as follows
(capitalized  terms shall have the meanings ascribed to such terms in Schedule A
                                                                      ----------
unless  otherwise  indicated):

                                    ARTICLE 1
                                    ---------

                                   THE MERGER
                                   ----------

     1.1     The  Merger.  At  the Effective Time and upon the terms and subject
             ------------
to  the conditions of this Agreement and in accordance with the CGCL, Merger Sub
shall  be merged with and into the Company (the "MERGER"). Following the Merger,
the  Company  shall  continue  as  the  surviving  corporation  (the  "SURVIVING
CORPORATION")  and  the  separate corporate existence of Merger Sub shall cease.

     1.2     Closing  of  the Merger.  The closing of the Merger (the "CLOSING")
             ------------------------
will  take  place at the offices of Sheppard, Mullin, Richter & Hampton LLP, 333
South  Hope  Street,  Los  Angeles, California 90071, at 10:00 a.m. on the third
business  day  following  the  date on which the conditions to closing set forth
herein have been satisfied or waived or at such other place, time or date as the
parties  may mutually agree to in writing (such date being referred to herein as
the  "CLOSING  DATE").

     1.3     Effective  Time.  Subject  to the terms and conditions set forth in
             ----------------
this  Agreement,  on  the Closing Date, Parent, Merger Sub and the Company shall
duly execute and cause to be duly filed with the Secretary of State of the State
of  California  in  accordance  with  the  CGCL a merger agreement and officers'
certificates  in  form  and  substance  required  by the CGCL (the "FILED MERGER
AGREEMENT").  The  Merger  shall  be deemed effective at the time that the Filed
Merger  Agreement  is  accepted  by  the  California  Secretary  of  State  (the
"EFFECTIVE  TIME").  Parent  shall  seek  expedited  review  of the Filed Merger
Agreement by the California Secretary of State, provided that such state permits
expedited  review  and  that  the  cost  of  doing  so  does  not  exceed  $500.

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


                                      -1-
<PAGE>
     1.5     Articles  of  Incorporation  and  Bylaws.  The  Articles  of
             -----------------------------------------
Incorporation  and  the  Bylaws  of  the Company in effect at the Effective Time
shall  be the Articles of Incorporation and Bylaws of the Surviving Corporation.

     1.6     Directors  and  Officers.  The  directors of Merger Sub immediately
             -------------------------
prior  to  the  Effective  Time  shall be the initial directors of the Surviving
Corporation,  each  to  hold  office  in  accordance  with  the  Articles  of
Incorporation  and  bylaws  of  the  Surviving Corporation until such director's
successor  is  duly  elected or appointed and qualified.  The officers of Merger
Sub immediately prior to the Effective Time shall be the initial officers of the
Surviving  Corporation,  each  to hold office in accordance with the Articles of
Incorporation  and  bylaws  of  the  Surviving  Corporation until such officer's
successor  is  duly  appointed  and  qualified.

                                    ARTICLE 2
                                    ---------

                            CONVERSION OF SECURITIES
                            ------------------------

     2.1     Conversion.  At  the  Effective  Time,  by virtue of the Merger and
             -----------
without  any  action  on  the  part  of  any  person:

          (a)     Each  share  of  common  stock  of  Merger  Sub  issued  and
outstanding  immediately prior to the Effective Time shall be converted into one
validly  issued,  fully  paid  and  nonassessable  share  of common stock of the
Surviving  Corporation.

          (b)     Subject  to the provisions of Sections 2.4 and 2.7, each share
of  Company  Common  Stock  issued  and  outstanding  immediately  prior  to the
Effective  Time shall be converted into the right to receive a number of validly
issued,  fully paid and nonassessable shares of Parent Common Stock equal to the
Exchange  Ratio.

          (c)     Subject  to the provisions of Sections 2.4 and 2.7, each share
of  Company  Preferred  Stock  issued  and  outstanding immediately prior to the
Effective  Time shall be converted into the right to receive a number of validly
issued,  fully paid and nonassessable shares of Parent Common Stock equal to the
product  of  (x)  the  number  of shares of Company Common Stock into which such
share  of  Company  Preferred  Stock  is  convertible  immediately  prior to the
Effective  Time,  multiplied  by  (y)  the  Exchange  Ratio.

          (d)     Each Company Employee Option, whether or not then vested, will
be  deemed  an  option to purchase shares of Parent Common Stock as described in
this  paragraph.  Each  Company  Employee  Option  will continue to have, and be
subject to, the same terms and conditions set forth in the stock option or other
agreement  pursuant  to  which  it  was  granted,  except  that (i) each Company
Employee  Option  will  be  exercisable  (subject  to  any  applicable  vesting
provisions)  for that number of whole shares of Parent Common Stock equal to the
product  of the number of shares of Company Common Stock that were issuable upon
exercise of such Company Employee Option immediately prior to the Effective Time
(without  regard  to  the  vesting provisions) multiplied by the Exchange Ratio,
rounded down to the nearest whole number of shares of Parent Common Stock,  (ii)
the per share exercise price for the shares of Parent Common Stock issuable upon
exercise  of  such  Company  Employee  Option  will  be  equal  to  the quotient
determined  by  dividing the exercise price per share of Company Common Stock at
which  such  Company  Employee  Option  was exercisable immediately prior to the
Effective  Time  by  the  Exchange Ratio, rounded to the nearest whole cent; and
(iii)  the  period during which the optionee was employed with the Company shall
be  credited  to  the  optionee  for  purposes of the vesting schedule under the
optionee's  Company  Employee  Option.

          (e)     Each  Company  Warrant  shall  be  converted into the right to
receive  a  warrant,  in  the  form  of Exhibit J-1 or, in the case of a Company
                                        -----------
Warrant  held by any KGI Party, in the form of Exhibit J-2, exercisable (subject
                                               -----------
to any applicable vesting provisions) for that number of shares of Parent Common
Stock  set  forth  opposite  such  Company  Warrant on Schedule 2.1(e) under the
                                                       ---------------
caption  "Underlying  Parent  Common  Stock,"  and having the per share exercise
price  set  forth  opposite  such  Company  Warrant on Schedule 2.1(e) under the
                                                       ---------------
caption  "New  Exercise  Price"  (a  "REPLACEMENT  WARRANT").


                                      -2-
<PAGE>
     2.2     Escrow of Shares.  Notwithstanding anything herein to the contrary,
             -----------------
at  Closing  Parent will deposit into an escrow with Sheppard, Mullin, Richter &
Hampton  LLP (the "ESCROW AGREEMENT") twenty-five percent (25%) of the shares of
Parent Common Stock to be issued to each Company Shareholder pursuant to Section
2.1, for the purpose of providing a fund for the satisfaction of the obligations
of  the Company Shareholders under Sections 3.2, 3.3, 9.2 and 12.15.  The Escrow
Agent  shall hold and release such shares in accordance with an escrow agreement
in  the  form of Exhibit A (the "ESCROW AGREEMENT"), which shall be entered into
                 ---------
by  Parent,  the  Company,  the  Founders  and the Escrow Agent at Closing.  Any
amounts  paid  in satisfaction of such obligations shall be deemed an adjustment
to  the  merger  consideration  payable  hereunder  to the Company Shareholders.

     2.3     Exchange  of  Certificates  and  Warrants.
             -----------------------------------------

          (a)     Promptly following the Effective Time, Parent shall deliver to
its  transfer  agent  (the  "EXCHANGE  AGENT")  for  the  benefit of the Company
Shareholders  the  Total  Number  of  Shares of Parent Common Stock To Be Issued
(less  the  shares deposited under the Escrow Agreement), and cash to be paid in
lieu  of  fractional  shares  of  Parent  Common  Stock.

          (b)     Within  ten  (10)  business days after the Effective Time, the
Exchange  Agent  shall mail to each Company Shareholder a letter of transmittal,
which  shall  (i)  set  forth instructions for use in effecting the surrender of
certificates  representing  Company  Capital  Stock,  (ii) specify that delivery
shall  be  effected  and risk of loss and title to the certificates representing
shares  shall  pass only upon delivery of the certificates to the Exchange Agent
and  (iii)  otherwise  shall  be  in such form and have such other provisions as
Parent may reasonably specify.  Upon surrender of a certificate for cancellation
to  the  Exchange  Agent together with such letter of transmittal duly executed,
the  Company Shareholder shall be entitled to receive in exchange therefor (i) a
certificate  representing  seventy-five  percent  (75%)  of  the number of whole
shares  of Parent Common Stock to which the Shareholder is entitled by virtue of
the  Company Capital Stock held by him or her immediately prior to the Effective
Time,  and  (ii) a check representing the cash to which such Company Shareholder
is  entitled  to receive on account of a fractional share of Parent Common Stock
that would have been issuable to such Company Shareholder but for the provisions
of Section 2.4).  The certificate(s) so surrendered shall forthwith be canceled.
Until surrendered as contemplated by this Section 2.3, each certificate shall be
deemed  at  any  time  after  the  Effective Time to represent only the right to
receive  upon  such  surrender  the  merger  consideration  provided for herein.

          (c)     No dividends or other distributions declared or made after the
Effective  Time with respect to Parent Common Stock with a record date after the
Effective  Time  shall  be paid to a Company Shareholder who has not surrendered
his  or  her  certificate.  Subject  to the effect of applicable laws, following
surrender of any such certificate there shall be paid to the Company Shareholder
(i) at the time of such surrender the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid with respect to the
whole  shares  of  Parent  Common  Stock  into  which  the Company Capital Stock
represented  by  the  certificate  were  converted,  and (ii) at the appropriate
payment  date  the amount of dividends or other distributions with a record date
after the Effective Time but prior to surrender and a payment date subsequent to
surrender  payable  with  respect  to  such whole shares of Parent Common Stock.

          (d)     In  the  event  that any certificate for Company Capital Stock
shall  have  been  lost,  stolen or destroyed, the Exchange Agent shall issue in
exchange therefor a new certificate upon the making of an affidavit of that fact
by the Company Shareholder and the delivery of a suitable bond or indemnity in a
form  reasonably  acceptable  to  Parent.

          (e)     The  Company  Warrants  will  be exchanged for the Replacement
Warrants  as  provided  in  the  applicable  Warrant  Holder  Agreement.


                                      -3-
<PAGE>
     2.4     No  Fractional  Shares.  No  fractions  of a share of Parent Common
             ----------------------
Stock shall be issued in the Merger but in lieu thereof each Company Shareholder
otherwise  entitled  to  a  fraction  of  a  share of Parent Common Stock (after
aggregating  all  fractional  shares  of  Parent  Company Stock issuable to such
person)  shall  upon  surrender  of  his  or  her certificate or certificates be
entitled  to  receive  an  amount  of  cash  (without  interest)  determined  by
multiplying  the  fractional  share  interest  to which such Company Shareholder
would  otherwise  be  entitled  by  $6.1213  per  share.

     2.5     Return  of  Funds.  Promptly following the first anniversary of the
             -----------------
Closing  Date, the Exchange Agent shall deliver to Parent all cash, certificates
(including  any  Parent  Common  Stock)  and  other  documents in its possession
relating  to  the  transactions  described  in  this Agreement, and the Exchange
Agent's  duties  shall  terminate.  Thereafter,  each  Company  Shareholder  may
surrender  his  or  her certificate representing Company Capital Stock to Parent
and (subject to applicable abandoned property, escheat and similar laws) receive
in  exchange  therefor  the merger consideration to which he or she is entitled,
without  any  interest  thereon.  Notwithstanding  the  foregoing,  none  of the
Exchange  Agent,  Parent,  Merger  Sub, the Company or the Surviving Corporation
shall  be liable to a Company Shareholder for any merger consideration delivered
to  a  public  official  pursuant  to applicable abandoned property, escheat and
similar  laws.

     2.6     Closing  of  the  Company's Transfer Books.  At the Effective Time,
             ------------------------------------------
the  stock  transfer  records  of the Company shall be closed and no transfer of
shares  of  Company  Capital  Stock  shall  thereafter  be  made.

     2.7     Dissenting  Shares.
             ------------------

          (a)     Notwithstanding anything to the contrary contained herein, any
shares  of  Company  Capital  Stock  that,  as of the Effective Time, are or may
become "dissenting shares" within the meaning of the CGCL shall not be converted
into  or  represent  the right to receive Parent Common Stock in accordance with
Section  2.1  (or  cash  in lieu of fractional shares in accordance with Section
2.4),  and  the  holder or holders of such shares shall be entitled only to such
rights as may be granted to such holder or holders under Chapter 13 of the CGCL;
provided,  however, that if the status of any such shares as "dissenting shares"
--------   -------
shall  not  be  perfected,  or  if  any  such  shares shall lose their status as
"dissenting  shares," then, as of the later of the Effective Time or the time of
the failure to perfect such status or the loss of such status, such shares shall
automatically  be  converted  into and shall represent only the right to receive
(upon the surrender of the certificate or certificates representing such shares)
Parent  Common  Stock  in  accordance  with  Section  2.1  (and  cash in lieu of
fractional  shares  in  accordance  with  Section  2.4).

          (b)     The Company shall give Parent (i) prompt notice of any written
demand  received  by  the  Company  prior  to  the Effective Time to require the
Company  to purchase shares of Company Capital Stock pursuant to the CGCL and of
any  other  demand,  notice  or instrument delivered to the Company prior to the
Effective  Time pursuant to the CGCL, and (ii) the opportunity to participate in
all  negotiations  and  proceedings  with  respect to any such demand, notice or
instrument.  The Company shall not make any payment or settlement offer prior to
the  Effective  Time  with  respect  to any such demand unless Parent shall have
consented  in  writing  to  such  payment  or  settlement  offer.

                                    ARTICLE 3
                                    ---------

                        MERGER CONSIDERATION ADJUSTMENTS
                        --------------------------------

     3.1     Closing  Date Adjustment.  At the Closing, the Merger Consideration
             ------------------------
Dollar  Value  shall be adjusted upward or downward on a dollar-for-dollar basis
to  the  extent that the Net Book Value immediately prior to the Closing Date is
higher  or  lower  than the Net Book Value reflected on the balance sheet of the
Company  as  at  September  30, 2000. As used herein, "NET BOOK VALUE" means the
book  value of the assets of the Company minus the book value of the liabilities
of the Company, determined in accordance with GAAP as modified by the accounting
methodology  set  forth  on  Schedule 3.1 ("MODIFIED GAAP").  The Net Book Value
                             ------------
initially  shall  be  determined  by  the  Founders  and shall be set forth in a
certificate  delivered  by  the  Founders to Parent at the Closing (the "CLOSING
STATEMENT").


                                      -4-
<PAGE>
     3.2     Post-Closing Adjustment.  As soon as practicable after the Closing,
             -----------------------
but  in  no  event later than 90 days after the Closing Date, the Founders shall
furnish  to  Parent  an  unaudited  statement  (the  "POST-CLOSING  STATEMENT")
reflecting the Net Book Value immediately prior to the Closing Date, prepared in
accordance  with  Modified  GAAP.  Within  30  days  after  the  delivery of the
Post-Closing  Statement  to Parent, Parent shall either accept the determination
of  Net  Book Value set forth therein, in which case such determination shall be
final  and binding on the parties, or object to the determination, specifying in
reasonable  detail  in  writing  the  nature  of their objections (including any
supporting  schedules,  analyses,  working  papers  and  other  documentation),
provided,  however,  that Parent may object to the determination of the Founders
--------   -------
only  on  the  basis  of  mathematical  errors  or  on  the  grounds  that  the
determination was not made in accordance with Modified GAAP.  If Parent fails to
accept  or reject the determination within such 30 day period, the determination
shall  be  deemed  to have been accepted at 5:00 p.m., Pacific Standard Time, on
the  30th  day.  In  the  event  that  Parent  shall  object  to  the  Founders'
determination  of  Net  Book  Value, the parties shall endeavor in good faith to
reconcile  their  differences  for  a period of 15 days following the receipt of
such written objection.  In the event that Parent and the Founders are unable to
resolve  their  differences  within said 15 day period, the parties shall submit
the matter to Gilderman, Johnson & Co. (Encino, California), which firm shall be
directed by Parent and the Founders to resolve the dispute within 30 days.  Such
firm  shall (i) limit its review to those issues specifically disputed by Parent
in  its  notice  of  objections,  (ii)  further  limit its review to whether the
Post-Closing  Statement  contained  mathematical  errors or whether the Net Book
Value  was  calculated  in accordance with Modified GAAP, and (iii) not assign a
value  to  any  item  greater  than  the greatest value for such item claimed by
Parent  or the Founders or less that the smallest value for such item claimed by
Parent  or  the  Founders.  Such firm's determination shall be final and binding
upon the parties.  The costs and expenses of such firm shall be borne equally by
Parent  and  the  Company  Shareholders; provided that (i) Parent shall bear all
such costs and expenses if the Net Book Value as determined by such firm exceeds
the  Net  Book  Value set forth in the Closing Statement by ten percent (10%) or
more,  and  (ii) the Company Shareholders shall bear all such costs and expenses
if the Net Book Value as determined by such firm is less than the Net Book Value
set  forth  in the Closing Statement by ten percent (10%) or more.  For purposes
of  this  Section  3.2,  any  writing  or  act  of  the Founders shall be deemed
effective  only  if  jointly  signed  or  taken  by  the  Founders.

     3.3     Payment  of  Adjusted  Merger  Consideration.  If  the  final
             --------------------------------------------
determination of the Net Book Value in accordance with Section 3.2 results in an
increase  in  the  Merger  Consideration Dollar Value from that determined under
Section  3.1,  Parent shall pay such difference to the Company Shareholders (pro
rata) in shares of Parent Company Stock (which shares shall be valued at $6.1213
per  share)  within  five  (5)  days  after  such  determination.  If  the final
determination  of the Net Book Value in accordance with Section 3.2 results in a
decrease  in  the  Merger  Consideration Dollar Value from that determined under
Section  3.1,  there  shall be released immediately back to the Company from the
Escrow  to  the  Company  shares  of Parent Company Stock (which shares shall be
valued  at  $6.1213  per  share),  equal  to  such  difference.

                                    ARTICLE 4
                                    ---------

                        REPRESENTATIONS AND WARRANTIES OF
                        ---------------------------------
                          THE COMPANY AND THE FOUNDERS
                          ----------------------------

     Except  as  set  forth  in the written disclosure schedules delivered on or
prior  to  the date hereof by the Company to Parent that is arranged in Sections
corresponding  to  the Sections contained in this Article 4, the Company and the
Founders  hereby  jointly  and  severally  represent  and  warrant  to Parent as
follows:

     4.1     Organization  and  Standing.  The  Company  (i)  is duly organized,
             ---------------------------
validly existing and in good standing under the laws of the State of California;
(ii) has all necessary corporate power and authority to carry on its business as
it  is  now  being conducted and to own or use the properties and assets that it
purports  to own or use; and (iii) is duly qualified as a foreign entity in good
standing  under  the  laws  of  the  jurisdictions  where  the  character of its
properties  owned  or  leased  or  the  nature  of  its  activities  make  such
qualification  necessary (except where failure to be so qualified would not have
a  Material  Adverse  Effect).

     4.2     Authority.  The  Founders  and the Company have the requisite power
             ---------
and  authority  to  execute  and  deliver  this  Agreement  and each Transaction
Document  and  to perform their respective obligations hereunder and thereunder.
This  Agreement  has  been,  and  each Transaction Document will be prior to the
Closing,  duly  authorized,  executed  and  delivered  by  the  Founders and the
Company,  and  (assuming the due authorization, execution and delivery by Parent
and  Merger  Sub) this Agreement constitutes, and each Transaction Document when
so  executed  and  delivered  will  constitute,  the  legal,  valid  and binding
obligations  of the Founders and the Company, enforceable in accordance with its
terms.


                                      -5-
<PAGE>
     4.3     No  Violation of Law and Agreements.  The execution and delivery by
             -----------------------------------
the  Founders  and  the Company of this Agreement and each Transaction Document,
and  the  performance  by  them  of  their  respective  obligations hereunder or
thereunder,  does  not  and  will  not,  except  as  set  forth in Schedule 4.3:
                                                                   ------------

          (a)     violate  any  provision  of  the  Articles of Incorporation or
Bylaws  of  the  Company;

          (b)     (i)  violate  any  provision of Applicable Law relating to the
Founders  or  the  Company; (ii) violate any provision of any order, arbitration
award,  judgment  or  decree  to  which  the Founders or the Company is subject,
except  for  violations  that  individually  or  in  the aggregate do not have a
Material  Adverse  Effect; or (iii) require a registration, filing, application,
notice,  consent,  approval, order, qualification or waiver with, to or from any
Governmental  Authority  (other  than  securities filings required to be made by
Parent  with  respect  to  the  transactions  contemplated  hereby);

          (c)     (i)  require a consent, approval or waiver from, or notice to,
any  party  to  a  Company  Contract,  or (ii) result in a breach of, or cause a
default  under  or  result  in  the  acceleration  of any provision of a Company
Contract;  or

          (d)     result in the acceleration of, or change in, any rights of any
person,  including, without limitation, rights under Company Employee Options or
Company  Warrants.

     4.4     Capitalization;  Corporate  Records.
             -----------------------------------

          (a)     Schedule 4.4(a) sets forth (i) the number of authorized shares
                  ---------------
of  each  class  and  series  of  Company Capital Stock, (ii) the number of such
shares  issued  and  outstanding,  (iii)  the  record  holders  of  such  shares
(specifying  the  number  of shares held), and (iv) the state in which each such
record  holder  maintains  his  or  her  principal  residence (in the case of an
individual)  or maintains its executive offices (in the case of an entity).  For
each  share of Company Preferred Stock, Schedule 4.4(a) sets forth the number of
                                        ---------------
shares  of  Common  Stock that may be purchased upon conversion of such share of
Company  Preferred Stock.   All issued and outstanding shares of Company Capital
Stock  are  validly issued, fully paid and nonassessable, and are held of record
by  the persons identified on Schedule 4.4(a) of record.  All of such shares are
                              ---------------
free  and  clear  of  all  liens,  encumbrances,  charges,  adverse  claims  and
restrictions  (other  than  restrictions  of  general  applicability  imposed by
federal  or state securities laws) (it being understood that this representation
is  being  made to the knowledge of the Company and the Founders, except that to
the  extent  this  representation  relates to the shares held by a Founder, this
representation  is  being  made  by  such  Founder  without  any  "knowledge"
qualification).

          (b)     Schedule  4.4(b)  sets  forth (i) each Company Employee Option
                  ----------------
and  Company Warrant issued and outstanding, (ii) the record holder of each such
Company  Employee  Option  and  Company  Warrant,  (iii) the number of shares of
Company  Common  Stock  that  may  be  purchased  upon  exercise of such Company
Employee  Option  or  Company  Warrant,  (iv) the vesting schedule for each such
Company Employee Option or Company Warrant, (v) the exercise price per share for
each such Company Employee Option or Company Warrant, and (vi) the date on which
such  Company  Employee  Option  or  Company  Warrant  was  issued.

          (c)     Except  as set forth in Schedules 4.4(a) and (b), there are no
                                          -------------------------
outstanding  (i)  securities  convertible  into  or exchangeable for any Company
Capital  Stock;  (ii) options, warrants or other rights to purchase or subscribe
to  Company  Capital  Stock  or  securities convertible into or exchangeable for
capital  stock  of  the  Company;  or  (iii) contracts, commitments, agreements,
understandings,  arrangements,  calls  or  claims  of  any  kind relating to the
issuance  of  any  Company  Capital  Stock, any such convertible or exchangeable
securities  or any such options, warrants or rights; in each instance other than
those,  if  any,  created  by  Parent.

          (d)     The Company has delivered or made available to Parent true and
complete  copies of the Articles of Incorporation (certified by the Secretary of
State)  and  Bylaws  (certified by the corporate secretary) of the Company as in
effect  on  the date hereof.  The minute books of the Company accurately reflect
all  actions  taken  at  all  meetings  and  consents in lieu of meetings of its
shareholders  and  all  actions  taken  at  all meetings and consents in lieu of
meetings  of  its  board  of  directors  and  all  committees.


                                      -6-
<PAGE>
     4.5     No Subsidiaries.  The Company does not, directly or indirectly, own
             ---------------
any  stock  or  other equity interest in any other person.  Without limiting the
foregoing,  the  Company  has  no  subsidiaries.

     4.6     Financial  Statements  and  Records.
             -----------------------------------

          (a)     The  Company  has  delivered  to  Parent:  (i)  the  Company's
unaudited balance sheet dated December 31, 1999 (without notes), and the related
unaudited  statement of income for the fiscal year then ended (collectively, the
"COMPANY  YEAR-END  FINANCIAL  STATEMENT");  and  (ii)  the  Company's unaudited
interim  balance  sheet  (the  "INTERIM BALANCE SHEET") dated September 30, 2000
(the "INTERIM BALANCE SHEET DATE") and the related unaudited statement of income
for the nine-month period ended on the Interim Balance Sheet Date (collectively,
the  "INTERIM  FINANCIAL  STATEMENTS;"  and  together  with the Company Year-End
Financial Statement, the "COMPANY FINANCIAL STATEMENTS").  The Company Financial
Statements  (i)  have  been  prepared  on  a  cash  basis  consistently  applied
throughout  the  periods  covered  thereby,  except  that  the Interim Financial
Statements  may  be  subject to normal year-end adjustments; and (ii) accurately
reflect the financial position of the Company as of the respective dates thereof
and  the  results  of  operations  and  changes  in stockholders' equity for the
periods  then  ended.

          (b)     The Books and Records of the Company are correct, complete and
current  in  all  material  respects  and  have  been  maintained  materially in
accordance  with  sound  business practices.  Such Books and Records accurately,
completely and fairly reflect in all material respects and the income, expenses,
assets  and  liabilities  of the Company, and provide reasonable assurance that:
(i)  transactions  are  recorded  as necessary to permit preparation of reliable
financial  statements  and  to  maintain accountability for earnings and assets;
(ii)  the recorded accountability of all assets is compared with existing assets
at  reasonable  intervals; and (iii) all related party transactions, charges and
expenses  between any Company Shareholder, officer or director (or any Affiliate
thereof)  and  the Company are accurately reflected at arm's-length value in all
financial  statements.

     4.7     No  Undisclosed Liabilities.  The Company has no Liabilities, other
             ---------------------------
than  those that have been incurred in the ordinary course of business since the
Interim  Balance  Sheet  Date  and  are  consistent  with  past  practice.

     4.8     Absence  of  Certain Changes.  Except as set forth on Schedule 4.8,
             ----------------------------                          ------------
since  the  Interim  Balance  Sheet  Date,  the  Company  has  not:

          (a)     entered  into  any  transaction,  contract  or  commitment  or
incurred  any  obligation  or  liability  (fixed  or  contingent) which is not a
business  transaction,  contract,  commitment  or  obligation  entered  into  or
incurred  in the ordinary course of business or which had or could reasonably be
expected  to  have  a  Materially  Adverse  Effect;

          (b)     waived  or released any rights of material value except in the
ordinary  course  of  business;

          (c)     accelerated  receivables,  delayed  payables  or  liquidated
inventory,  except  in  accordance  with  prior  practices;


                                      -7-
<PAGE>
          (d)     transferred  or  granted  any  material  rights  under  any
concessions,  leases,  licenses,  agreements,  patents, inventions, trade names,
trademarks,  service  marks,  brand  marks,  brand  names  or  copyrights,  or
registrations  or  licenses thereof or applications therefor, or with respect to
any know-how or other proprietary or trade rights, except in the ordinary course
of  business;

          (e)     made  or  granted  any  wage  or salary increase except in the
ordinary  course  of  business,  consistent with past practices, entered into or
begun  negotiations  with respect to any employment contract with any officer or
employee  or  made any loan (excluding advances for normal reimbursable business
expenses)  to,  or  entered  into  any transaction of any other nature with, any
officer or director of the Company or any Affiliate thereof, and the Company has
no  knowledge  of  any plans of any key employee or employees to terminate their
employment,  the  absence  of  whom  could reasonably be expected to have in the
foreseeable  future  a  Material  Adverse  Effect;

          (f)     suffered  any  material  adverse  change  in  its  financial
condition  or  results  of operations or in its assets, properties, business, or
operations  considered  as  a  whole;

          (g)     issued,  sold  or otherwise disposed of any shares of stock or
other  securities  of  the Company, granted any stock options or other rights to
purchase  securities  of  the  Company,  declared any dividend or made any other
payment  in  respect  of  the  capital  stock of the Company, or issued, sold or
otherwise  disposed  of  any  evidence  of  indebtedness  of  the  Company;

          (h)     made  any  changes  in  accounting  methods  or  practices;

          (i)     incurred  any  indebtedness for borrowed money or committed to
borrow money, or guaranteed any indebtedness in connection with the operation of
the  Company  other  than  in  the  ordinary  course  of  business;

          (j)     paid,  discharged  or  satisfied any liabilities other than in
the  ordinary  course  of  business  and  consistent  with  past  practice;

          (k)     amended  any  organizational  document  of  the  Company;

          (l)     suffered any damage to or loss of any asset or property of the
Company  (whether or not covered by insurance), except where no Material Adverse
Effect  resulted;

          (m)     suffered  any  change  in  employee  relations which has or is
reasonably likely to have a Material Adverse Effect on the relationships between
the  employees  and  management;

          (n)     sold,  leased, mortgaged or pledged any capital asset having a
value  in  excess  of  $20,000;

          (o)     committed  to  any  capital expenditures in excess of $20,000;

          (p)     terminated any employees who perform functions material to the
Company;

          (q)     experienced any other event or condition which in any one case
or  in  the  aggregate  has  or  might be reasonably expected to have a Material
Adverse  Effect;  or

          (r)     entered  into  any  negotiation  or agreement to do any of the
things  described  in  this  Section  4.8.

     Since the Interim Balance Sheet Date, the Company has operated its business
in  the ordinary course consistent with its past practice so as to preserve such
business  intact,  and  has  used  its  best efforts to keep available to it the
services  of  its employees and to preserve its business and the goodwill of its
suppliers, customers, distributors and others having business relations with it.


                                      -8-
<PAGE>
     4.9     Tax  Matters.  The  Company  has  properly completed and filed on a
             ------------
timely basis and in correct form all material Returns required to be filed on or
prior  to the date hereof.  As of the time of filing, the foregoing Returns were
true  and  complete in all material respects.  An extension of time within which
to  file  any Return which has not been filed has not been requested or granted.
There  is  no  investigation or other proceeding pending, or to the knowledge of
the  Founders,  threatened  or expected to be commenced by any Tax authority for
any  jurisdiction in which the Company does not file Returns that may lead to an
assertion  that  the  Company  is  or  may be subject to a Tax liability in such
jurisdiction.

          (a)     With  respect  to all amounts in respect of Taxes imposed upon
the  Company,  or  for  which  the Company is or could be liable, whether to Tax
authorities  (as,  for example, under law) or to other persons (as, for example,
under  tax  allocation  agreements),  with  respect  to  all Taxable periods (or
portions  thereof) ending on or before the Closing Date, all applicable tax laws
and agreements have been materially complied with, and all such amounts required
to  be  paid  by  the Company to Tax authorities or others on or before the date
hereof  have been paid, or adequately reserved for on the Interim Balance Sheet.

          (b)     There  are  no  pending,  or to the knowledge of the Founders,
threatened,  audits,  judicial  proceedings,  assessments  or  deficiencies with
respect to Taxes of the Company.  The Company has not given or been requested in
writing  to give waivers or extensions of any statute of limitations relating to
the  payment  of  Taxes  by  the  Company.

          (c)     The  Company  is not a party to or bound by any Tax indemnity,
Tax  sharing  or Tax allocation agreement or arrangement.  The Company has never
been  a  member  of  an  affiliated group of corporations, within the meaning of
section  1504  of  the  Code.

          (d)     All  material  elections  with  respect to Taxes affecting the
Company  as  of  the  date hereof are set forth on its Returns , copies of which
have  been  made  available  to  Parent.

          (e)     None  of  the  assets  of  the  Company  is property which the
Company  is required to treat as being owned by any other person pursuant to the
so-called  "safe  harbor  lease"  provisions  of former section 168(f)(8) of the
Code.  None of the assets of the Company directly or indirectly secures any debt
the  interest  on which is tax exempt under section 103(a) of the Code.  None of
the  assets  of  the  Company is "tax-exempt use property" within the meaning of
section  168(h)  of  the  Code.

          (f)     The  Company  is  not  a  party  to  any  agreement, contract,
arrangement  or  plan  that  has  resulted or would result, separately or in the
aggregate,  in the payment of any "excess parachute payments" within the meaning
of  section  280G  of  the  Code  or  any  similar  provision of California law.

          (g)     The  Company  is  not,  and has not been, a United States real
property  holding  corporation  (as  defined  in  section 897(c)(2) of the Code)
during  the applicable period specified in section 897(c)(1)(A)(ii) of the Code.

          (h)     To  the knowledge of the Founders, no Company Shareholder is a
person  other  than  a  United  States  person  within  the meaning of the Code.

          (i)     The  transactions  contemplated  herein are not subject to the
tax withholding provisions of Code section 3406, or of subchapter A of Chapter 3
of  the  Code  or  any  comparable  provision  of  state  law.

          (j)     The  Company  does  not  have  and  has  not  had  a permanent
establishment in any foreign country, as defined in any applicable Tax treaty or
convention  between  the  United  States  of  America  and such foreign country.

          (k)     The  Company is not a party to any joint venture, partnership,
or  other  arrangement  or  contract which could be treated as a partnership for
federal  income  tax  purposes.


                                      -9-
<PAGE>
          (l)     The  unpaid Taxes of the Company do not exceed the reserve for
Tax  liability  (excluding any reserve for deferred Taxes established to reflect
timing  differences  between  book  and Tax income) set forth or included on the
Interim  Balance Sheet, except for Taxes incurred from the Interim Balance Sheet
Date through the Closing Date in accordance with the past custom and practice of
the  Company.

          (m)     Each  asset  with  respect  to  which  the  Company  claims
depreciation,  amortization  or similar expense for income Tax purposes is owned
for  income  Tax  purposes  by  the  Company.

          (n)     No material item of income or gain reported by the Company for
financial  accounting  purposes  in  any  pre-Closing  period  is required to be
included  in  taxable  income  for  a  post-Closing  period.

          (o)     The  Company  has  not made nor is bound by any election under
section  197(f)(9)  of the Code.  The Company has not filed a consent under Code
section  341(f)  concerning  collapsible corporations.  There are no outstanding
rulings  of,  or  requests  for rulings with, any Tax authority addressed to the
Company  that  are,  or  if  issued  would  be,  binding  on  the  Company.

     4.10     Compliance  with  Laws.  The  Company  has  not  violated, and the
              ----------------------
Company  is  in  compliance  with,  all  Applicable  Laws,  except  for  such
non-compliance  as  would  not  have  a  Material  Adverse  Effect.

     4.11     Contracts  and  Other  Agreements.  Schedule  4.11  sets forth all
              ---------------------------------   --------------
written  and oral contracts and other agreements hereinafter referred to in this
Section 4.11, to which the Company is a party or by or to which it or its assets
or  properties  are bound or subject or which impact its business (collectively,
the  "COMPANY  CONTRACTS"),  as  follows:

          (a)     contracts  and  other  written  agreements with any current or
former  officer,  director,  employee, consultant, agent or other representative
having  more  than  six  months  to run from the date hereof or providing for an
obligation  to  pay  and/or accrue compensation of $25,000 or more per annum, or
providing  for  the payment of fees or other consideration in excess of $25,000;

          (b)     contracts  and  other  agreements  with  any  labor  union  or
association  representing  any  employee;

          (c)     contracts  and  other  agreements  for the purchase or sale of
inventory,  equipment  or  services that contain an escalation, renegotiation or
redetermination clause or which cannot be canceled without liability, premium or
penalty  if  written  notice is given thirty days prior to the effective date of
the  notice;

          (d)     contracts  and  other  agreements  for  the sale of any of its
assets  or  properties  other  than in the ordinary course of business and for a
sale  price  exceeding $25,000 in any one case (or in the aggregate, in the case
of  any series of related contracts or other agreements) or for the grant to any
person  of  any  preferential  rights  to purchase any of its or their assets or
properties;

          (e)     contracts  and other agreements (including without limitation,
leases  of real property) calling for aggregate payments in any one year of more
than  $25,000 in any one case (or in the aggregate, in the case of any series of
related  contracts  and  other  agreements);

          (f)     joint  venture  agreements  and  teaming  agreements;

          (g)     contracts  or  other  agreements  under  which  it  agrees  to
indemnify  any  party  other  than  in  the  ordinary  course  of  business;


                                      -10-
<PAGE>
          (h)     contracts  and  other  agreements  containing covenants of the
Company  not  to  compete  in  any  line  of  business or with any person in any
geographical  area  or  covenants  of  any  other person not to compete with the
Company  in  any  line  of  business  or  in  any  geographical  area;

          (i)     contracts  and  other agreements relating to the making of any
loan  by  the  Company  except for advances to employees for normal reimbursable
business  expenses;

          (j)     contracts  or  other  agreements  relating to the borrowing of
money  by  the Company (including mortgages, deeds of trust, indentures or other
similar  documents),  or  the  direct or indirect guaranty by the Company of any
obligation  for,  or  an  agreement  by the Company to service, the repayment of
borrowed money, or any other contingent obligation in respect of indebtedness of
any  other  person  or  governmental  or  regulatory  body,  including,  without
limitation,  (i)  any  agreement  or  arrangement relating to the maintenance of
compensating  balances,  (ii) any agreement or arrangement with respect to lines
of  credit,  (iii)  any agreement to advance or supply funds to any other person
other  than  in  the  ordinary course of business, (iv) any agreement to pay for
property,  products  or  services  of  any  other  person even if such property,
products  or  services  are  not  conveyed,  delivered  or  rendered,  (iv)  any
keep-well,  make-whole  or maintenance of working capital or earnings or similar
agreement,  or  (vi)  any  guaranty  with  respect to any lease or other similar
periodic  payments  to  be  made  by  any  such  person;

          (k)     contracts  or  other  agreements for or relating to computers,
computer equipment, computer software or computer services in excess of $25,000;

          (l)     any other contracts requiring payments in excess of $25,000 in
any  year  or  otherwise  reasonably  material  to  the  Company;  and

          (m)     any  agreement between or among Company Shareholders involving
or  relating  to  the Company or Company debt or equity securities or interests.

     The  Company  has  delivered  or made available to Parent true and complete
copies of all of the written Company Contracts and delivered to Parent a written
summary  of  the  material  terms  of  all  oral  Company  Contracts.

     There  does  not  exist  under any Company Contract any event of default or
event or condition that, after notice or lapse of time or both, would constitute
a  violation,  breach  or  event of default thereunder by the Company or, to the
knowledge  of  the Company, by the other parties thereto.  Each Company Contract
is a legal, valid, binding and enforceable obligation of the Company and, to the
knowledge  of  the  Company,  the  other  parties  thereto.  There  are  no
renegotiations of, attempts to renegotiate, or outstanding rights to renegotiate
any  material  amounts paid or payable to the Company under any Company Contract
or any other material terms of a Company Contract.  Schedule 4.11 sets forth the
                                                    -------------
Company's  standard  product  or  service  warranty  with respect to the Company
Contracts  and  any material obligation that exists with respect thereto outside
the  ordinary  course  of  business.

     4.12     Real  Estate.  The  Company  does  not own any real property.  The
              ------------
facilities  which  the  Company  leases  are  sufficient  for the conduct of the
business  of  the  Company  (the "FACILITIES").  The Company has the right under
valid  and existing leases or other agreements to occupy and use the Facilities.
Neither  the  whole  nor  any  portion  of  the  Facilities  has been condemned,
requisitioned  or otherwise taken by any Governmental Authority, and the Company
has not received any notice that any such condemnation, requisition or taking is
threatened,  which  condemnation,  requisition  or  taking  would  preclude  or
materially  impair  the  current  use  thereof.  All  buildings,  structures and
appurtenances  comprising  part of the Facilities which are currently being used
in  the  conduct  of  the  business  are in satisfactory condition and have been
reasonably  maintained,  normal  wear  and  tear  excepted.  All  Facilities are
supplied  with  utilities (including without limitation water, sewage, disposal,
electricity,  gas  and telephone) and other services necessary for the operation
of  such  Facilities  as  currently  operated.


                                      -11-
<PAGE>
     4.13     Environmental  Matters.  The  Company  is  in  compliance  in  all
              ----------------------
material  respects  with  all  applicable  Environmental  Laws, which compliance
includes  the  possession  by  the Company of all permits and other Governmental
Authorizations required under applicable Environmental Laws, and compliance with
the  terms  and  conditions thereof.  The Company has not received any notice or
other communication (in writing or otherwise), whether from a Governmental Body,
citizens  group,  employee or otherwise, that alleges that the Company is not in
compliance  with any Environmental Law, and, to the best of the knowledge of the
Company  and  the  Founders,  there  are  no  circumstances  that may prevent or
interfere  with  the  Company's  compliance  with  any  Environmental Law in the
future.  To  the  best  of  the  knowledge  of  the Company and the Founders, no
current  or  prior owner of any property leased or controlled by the Company has
received  any  notice  or other communication (in writing or otherwise), whether
from a Government Body, citizens group, employee or otherwise, that alleges that
such  current  or  prior  owner  or  the  Company  is not in compliance with any
Environmental  Law.  All  Governmental  Authorizations  currently  held  by  the
Company  pursuant  to  Environmental  Laws are identified in Schedule 4.13:  (i)
                                                             -------------
"Environmental Law" means any federal, state, local or foreign Legal Requirement
relating  to  pollution  or  protection  of  human  health  or  the  environment
(including  ambient air, surface water, ground water, land surface or subsurface
strata),  including  any  law  or  regulation relating to emissions, discharges,
releases  or  threatened  releases  of  Materials  of  Environmental Concern, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage,  disposal, transport or handling of Materials of Environmental Concern;
and  (ii)  "Materials  of  Environmental Concern" include chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum and petroleum products and any
other  substance  that is now or hereafter regulated by any Environmental Law or
that  is  otherwise  a  danger  to  health,  reproduction  or  the environment.)

     4.14     Intangible  Property  and  Computer  Software.
              ---------------------------------------------

          (a)     Schedule  4.14:  (i)  sets forth, with respect to each Company
                  --------------
Proprietary  Asset  registered  with  any  Governmental  Body  or  for  which an
application  has  been  filed with any Governmental Body, a brief description of
such  Proprietary  Asset,  and  the  names  of  the jurisdictions covered by the
applicable  registration  or  application,  (ii) identifies and provides a brief
description  of  all  other Company Proprietary Assets owned by the Company, and
(iii)  identifies  and  provides  a  brief description of each Proprietary Asset
licensed  to the Company by any person (except for any Proprietary Asset that is
licensed  to  the  Company  under  any  third  party  software license generally
available  to  the  public  at  a  cost of less than $5,000), and identifies the
license  agreement  under  which such Proprietary Asset is being licensed to the
Company.  Except  as set forth in Schedule 4.14, the Company has good, valid and
                                  -------------
marketable title to all of the Company Proprietary Assets identified in Schedule
                                                                        --------
4.14,  free and clear of all liens and other encumbrances, and has a valid right
----
to  use all Proprietary Assets identified in Schedule 4.14.  Except as set forth
                                             -------------
in Schedule 4.14, the Company is not obligated to make any payment to any person
   -------------
for  the  use of any Company Proprietary Asset.  Except as set forth in Schedule
                                                                        --------
4.14,  the  Company  has not developed jointly with any other person any Company
---
Proprietary  Asset  with  respect  to  which  such  other person has any rights.

          (b)     The  Company has taken all measures and precautions reasonably
necessary to protect and maintain the confidentiality and secrecy of all Company
Proprietary  Assets  (except  Company  Proprietary  Assets  whose value would be
unimpaired by public disclosure) and otherwise to maintain and protect the value
of  all  Company  Proprietary Assets.  Except as set forth in Schedule 4.14, the
                                                              -------------
Company  has  not  (other  than  pursuant  to  license  agreements identified in
Schedule 4.14) disclosed or delivered to any Person, or permitted the disclosure
-------------
or  delivery  to any Person of, (i) the source code, or any portion or aspect of
the  source  code, of any Company Proprietary Asset, or (ii) the object code, or
any  portion  or  aspect  of  the object code, of any Company Proprietary Asset,
except  with respect to services provided to customers in the ordinary course of
business.

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


                                      -12-
<PAGE>
          (d)     Except  as  set  forth  in  Schedule  4.14:  (i)  each Company
                                              --------------
Proprietary  Asset  conforms  in  all  material respects with any specification,
documentation,  performance  standard,  representation  or  statement  made  or
provided with respect thereto by or on behalf of the Company; and (ii) there has
not  been  any  claim  by any customer or other person alleging that any Company
Proprietary Asset (including each version thereof that has ever been licensed or
otherwise  made  available by the Company to any Person) does not conform in all
material  respects  with any specification, documentation, performance standard,
representation  or  statement  made  or provided by or on behalf of the Company,
and,  to  the best of the knowledge of the Company and the Founders, there is no
basis  for any such claim.  The Company has established adequate reserves on the
Unaudited  Interim  Balance  Sheet  to  cover  all  costs  associated  with  any
obligations  that  the Company may have with respect to the correction or repair
of  programming  errors  or  other  defects  in  the Company Proprietary Assets.

          (e)     The  Company Proprietary Assets constitute all the Proprietary
Assets  necessary to enable the Company to conduct its business in the manner in
which  such  business  has  been and is being conducted.  Except as set forth in
Schedule  4.14,  (i) the Company has not licensed any of the Company Proprietary
--------------
Assets to any person on an exclusive basis, and (ii) the Company has not entered
into  any  covenant  not  to compete or contract limiting its ability to exploit
fully  any  of  its  Proprietary Assets or to transact business in any market or
geographical  area  or  with  any  person.

          (f)     Except  as  set  forth  in  Schedule 4.14, (i) all current and
                                              -------------
former  employees  of  the Company have executed and delivered to the Company an
agreement  (containing  no  exceptions  to  or  exclusions from the scope of its
coverage)  that  is  substantially  identical  to  the  form of the Confidential
Information  and  Invention Assignment Agreement previously delivered to Parent,
and  (ii)  all current and former consultants and independent contractors to the
Company  have  executed and delivered to the Company an agreement (containing no
exceptions  to  or  exclusions  from  the  scope  of  its  coverage)  that  is
substantially  identical  to the form of Consultant Confidential Information and
Invention  Assignment  Agreement  previously  delivered  to  Parent.

          (g)     All  of  the  computer  hardware  and  software systems of the
Company  and  all  of the computer hardware and software systems sold, delivered
and  installed  by  the  Company  have  the  ability  to  provide  the following
functions,  except  to  the  extent that the inability to provide such functions
would  not  have  a  Material  Adverse  Effect:  (i)  consistently  handle  date
information  for  all  dates  before,  on,  and after January 1, 2000, including
accepting  date  input,  providing  date  output, and performing calculations on
dates;  (ii)  function  accurately  and without interruption before, during, and
after  January  1,  2000,  without  any change in operations associated with the
advent  of  the new century; (iii) respond to two digit date input in a way that
resolves  any ambiguity as to century in a disclosed, defined, and predetermined
manner;  and  (iv) store and provide output of date information in ways that are
unambiguous  as  to  century.

     4.15     Properties.  The  Company has good and marketable title to all its
              ----------
properties  and  assets whether real, personal, tangible or intangible, free and
clear  of  all  mortgages,  liens,  pledges,  easements,  covenants, conditions,
restrictions,  claims  and  encumbrances,  other than any of the foregoing which
individually or collectively would not have a Material Adverse Effect and except
for property and assets that are leased.  All items of machinery, equipment, and
other  tangible  assets  of  the Company are in good operational condition, have
been  regularly  and properly serviced and maintained in a manner that would not
void  or  limit the coverage of any warranty thereon, other than items currently
under,  or  scheduled  for,  repair or construction, and to the knowledge of the
Company  are  adequate  and  fit  to be used for the purposes for which they are
currently  used  in  the  manner  they  are  currently  used.

     4.16     Inventory.  The  inventory  of  the  Company  consists of items of
              ---------
merchantable  quality  and quantity usable and salable in the ordinary course of
the  Company's business.  No item included in the inventory has been the subject
of recall by a government agency.  The value at which inventories are carried in
the  company financial records reflects the customary inventory valuation policy
of  the  Company (which fairly reflects the value of obsolete, spoiled or excess
inventory)  for  stating  inventory.


                                      -13-
<PAGE>
     4.17     Permits.  Schedule  4.17  sets  forth  all  Permits  held  by  the
              -------   --------------
Company.  No  other Permits are necessary for the transaction of the business of
the  Company  as  currently conducted.  All such Permits are currently in force.
No  notice  of any violation has been received in respect of any such Permit and
to  the  knowledge  of  the  Company  there is no proceeding which is pending or
threatened  that  would  suspend  or  revoke  or  limit  any  such  Permit.

     4.18     Labor  and  Employment  Matters.
              -------------------------------

          (a)     Schedule  4.18 sets forth a list of the names of all employees
                  --------------
of  the  Company  and  indicates  the  current salary or wage rates of each such
person.  The  Company  has not terminated any employees within the past 90 days.
No  director,  officer, employee or agent of the Company has filed any grievance
with  or  against  the  Company  (or  any  director,  officer, employee or agent
thereof),  nor  has  the  Company  (or  any director, officer, employee or agent
thereof)  taken  any  action which may reasonably likely result in the filing of
any  such  grievance  by  any  such  person.

          (b)     The  Company  has  withheld  and  paid  to  the  appropriate
Governmental  Authorities,  or  is  withholding  for payment not yet due to such
authorities,  all  amounts  required  to  be withheld from its employees; is not
liable  for  any arrears of wages, Taxes, penalties or other sums for failure to
comply  with  any  of  the foregoing; and  has complied in all material respects
with  all  Applicable  Laws, rules and regulations relating to the employment of
labor.

          (c)     The  Company  is  not  a  party  to  any collective bargaining
agreement  or  other  labor contract applicable to the employees of the Company;
there  has been no breach or other failure to comply with any material provision
of  such  agreement  or  contract;  and the Company is not subject to any unfair
labor  practice  complaint  pending before the National Labor Relations Board or
any  other  Governmental Authority pending or threatened labor strike, slowdown,
work stoppage, lockout, or other organized labor disturbance, or threat thereof,
pending  grievance  proceeding,  pending  representation  question  respecting,
pending arbitration proceeding arising out of or under any collective bargaining
agreement  or  attempt  by  any union to represent employees of the Company as a
collective  bargaining  agent.

          (d)     No  employee  or  director of the Company is a party to, or is
otherwise bound by, any agreement or arrangement, including any confidentiality,
noncompetition,  or  proprietary  rights  agreement,  between  such  employee or
director  and  any other person that in any way adversely affects or will affect
(i)  the performance of his duties as an employee or director of the Company, or
(ii)  the  ability  of the Company to conduct its business.  To the knowledge of
the  Company, no director, officer, or other key employee of the Company intends
to  terminate  his  employment  with  the  Company.

     4.19     Employee  Benefit  Plans.
              ------------------------

          (a)     Schedule  4.19  sets  forth  a  true  and complete list of all
                  --------------
Benefit  Plans  and  identifies  as  such each Benefit Plan that is an "employee
welfare  plan",  as  defined  in  ERISA  section  3(1)  (a "WELFARE PLAN") or an
"employee  pension  benefit  plan", as defined in ERISA section 3(2) (a "PENSION
PLAN").

          (b)     The  Company  has delivered to Parent true and complete copies
of:  all plan texts, agreements and material employee communications relating to
each  Benefit Plan; all summary plan descriptions (whether or not required to be
furnished  pursuant  to  ERISA),  the  most  recent annual report (including all
schedules  thereto)  and  the  most  recent  annual  and periodic accounting and
financial  statements  of  related plan assets with respect to each Pension Plan
and  Welfare  Plan;  the  most  recent  determination  letter  received from the
Internal  Revenue  Service  with respect to each Pension Plan; and (iv) the most
recent actuarial report with respect to each Pension Plan subject to Title IV of
ERISA.

          (c)     No event has occurred (and there exists no condition or set of
circumstances)  in  connection  with  any  Benefit  Plan  that could subject the
Company,  Parent,  or any Benefit Plan, directly or indirectly, to any liability
under  ERISA,  the  Code  or  any  other  law,  regulation or governmental order
applicable  to  any  Benefit  Plan.


                                      -14-
<PAGE>
     4.20     Litigation.  There  is  no litigation, action, suit, proceeding or
              ----------
investigation  presently  pending  or to the knowledge of the Company threatened
against the Company or affecting the assets, property or business of the Company
or  restricting or prohibiting the consummation of the transactions contemplated
by  this  Agreement  before  any  court  or governmental department, commission,
board,  bureau,  agency  or  instrumentality,  domestic  or  foreign.

     4.21     Insurance.  All  policies  or  binders of fire, liability, product
              ---------
liability,  worker's  compensation,  vehicular and other insurance held by or on
behalf of the Company are in full force and effect, and insure against risks and
liabilities  of  the kinds and in amounts customarily insured against by persons
of  established  reputation  engaged in the same or a similar business similarly
situated  as  the  Company.  All premiums on all such policies have been paid to
date  and the Company has complied with all material conditions of such policies
and  have  received  no  notice  of any failure to comply with the terms of such
policies.

     4.22     Bank  Accounts.  Schedule  4.22 sets forth the names and locations
              --------------   --------------
of all banks, trust companies, savings and loan associations and other financial
institutions  at which the Company maintains accounts of any nature, the account
numbers  of  all  such  accounts and the names of all persons authorized to draw
thereon  or  make  withdrawals  therefrom.

     4.23     Relations  with  Suppliers  and  Customers.  No  supplier  of  the
              ------------------------------------------
Company has canceled any contract or order for provisions of products, supplies,
or  services  (including utilities) to the Company within the 12 months prior to
the  date  of this Agreement.  The Company has no direct or indirect interest in
any  supplier of the Company.  To the Company's knowledge, none of the suppliers
is  unable to supply the products or services supplied by them to the Company in
order  to meet the specifications provided with respect thereto.  No customer of
the  Company has canceled any contract or order for provisions of, and there has
been  no  written  threat  by  any  customer  to cancel any order for, products,
supplies or services from the Company within 12 months prior to the date of this
Agreement.  The  Company  has  no  direct  or indirect ownership interest in any
customer  of the Company.  The Company is not aware that any customer intends to
cease  or materially diminish its purchase of goods or services from the Company
at  any  time  in  the  foreseeable  future.

     4.24     Accounts Receivable.  All amounts owing to the Company constitute,
              -------------------
valid and enforceable claims arising from bona fide transactions in the ordinary
course of business and will be collected within sixty (60) days after the day on
which  first due, and there has been no notice of any claims, refusals to pay or
other  claimed  rights of set off against any thereof.  No account debtor (i) is
delinquent  in  its  payment  by  more than sixty (60) days, (ii) has refused or
threatened  to  refuse  to  pay its obligations for any reason, (iii) is, to the
knowledge  of  the  Company,  insolvent  or bankrupt, and (iv) is pledged to any
third  party.

     4.25     Transactions with Affiliates.  No Representative of the Company or
              ----------------------------
of  any  Affiliate  thereof:

     (i)     has a material interest in any property, real or personal, tangible
             or intangible  of  the  Company;

    (ii)     is  indebted  or  otherwise  obligated  to  the  Company;

   (iii)     has  any  contractual  relationship  with  the  Company,  except as
             disclosed in  the  Schedules  hereto;

    (iv)     is  an  officer,  director,  employee,  director,  consultant  or
             significant  shareholder  of  a  person that is a competitor of the
             Company  (it  being  understood  that  this  representation,  as it
             relates  to any Representative or Affiliate other than the Founders
             is  made  only  to  the  knowledge  of  the  Company);

     (v)     is  or was at any time during the Company's past three fiscal years
             a  Representative  of  a  person that has made during the Company's
             last  three fiscal years  or  proposes to make during the Company's
             current  fiscal  year  payments  to  the  Company  for  property or
             services in excess of five percent of the Company's gross  revenues
             during  the  applicable  fiscal  year;


                                      -15-
<PAGE>
    (vi)     is  or was at any time during the Company's past three fiscal years
             a Representative  of  a  person to whom the Company has made during
             the  Company's  last  three fiscal years or proposes to make during
             the Company's current fiscal year payments for property or services
             in  excess  of  five percent of the Company's gross revenues during
             the  applicable  fiscal  year;  or

   (vii)     is  or was at any time during the Company's past three fiscal years
             a  Representative  of  a person to whom the Company was indebted at
             any time during the Company's last three fiscal years or during the
             current fiscal year in an amount exceeding five percent of the fair
             market  value  of  the  Company's  total  assets  at  such  time.

     4.26     Securities  Act.
              ---------------

          (a)     Each  Company  Shareholder  and each Company Warrant Holder is
either  (i)  an  accredited  investor  as  defined  in  Rule 501 of Regulation D
promulgated  under  the  Securities  Act  of  1933,  as  amended,  or  (ii)
"sophisticated" within the meaning of Rule 506 thereunder.  Each such person has
such knowledge and experience in financial and business matters that such person
is  capable  of evaluating the merits and risks of acquiring Parent Common Stock
in connection with the Merger (or in connection with the exercise of the Company
Warrant),  and  Parent has made available to each such person the opportunity to
ask questions of the officers and management of Parent and to acquire additional
information  about the business, assets and financial condition of Parent.  Each
such  person  (i)  will  acquire the shares of Parent Common Stock in connection
with the Merger or upon exercise of the Company Warrant for investment only, and
not  with a view toward or for sale in connection with any distribution thereof,
or with any present intention of distributing or selling any of shares of Parent
Common  Stock,  and  (ii)  understands that the transactions contemplated hereby
have  not  been,  and will not be, the subject of a registration statement filed
under  the  Securities Act, or qualified under applicable states securities law,
by  reason  of  a  specific  exemption  from  the registration provisions of the
Securities  Act  and  the  qualification  provisions  of  the  applicable  state
securities  laws, and that accordingly none of the shares of Parent Common Stock
which  such  person  may  acquire may be resold unless such resale is registered
under  the  Securities Act and qualified under applicable state securities laws,
or  an  exemption  from  such  registration  and  qualification  is  available.

          (b)     The  representations  and  warranties  contained  in  Section
4.26(a) are being made with respect to each Company Shareholder and each Company
Warrant  Holder  who has signed a Joinder Agreement or Warrant Holder Agreement,
as  applicable,  solely  based  upon  the  representations  made  therein.

     4.27     Brokerage.  Except  as  set  forth  on  Schedule  4.27, no broker,
              ---------                               --------------
finder  or investment banker has acted directly or indirectly for the Company or
any  Affiliate  thereof  in  connection  with this Agreement or the transactions
contemplated  hereby,  and no broker, finder or investment banker is entitled to
any  brokerage,  finder's or other fee or commission in respect thereof based in
any  way  on  agreements, arrangements or understandings made by or on behalf of
the  Company  or  any  Affiliate  thereof.

     4.28     Representations  Complete.  None  of  the  representations  or
              -------------------------
warranties  made  by  the  Founders  or  the  Company in this Agreement, nor any
statement  made  in any Schedule, Exhibit, certificate, report, instrument, list
or  other  document furnished or to be furnished by or on behalf of the Founders
or the Company pursuant hereto or thereto or in connection with the transactions
contemplated  hereby,  contained, contains or will contain on the date delivered
any  untrue  statement  of  a  material  fact.


                                      -16-
<PAGE>
                                    ARTICLE 5
                                    ---------

                        REPRESENTATIONS AND WARRANTIES OF
                        ---------------------------------
                              PARENT AND MERGER SUB
                              ---------------------

     Parent  and  Merger  Sub jointly and severally represent and warrant to the
Company  and  the  Founders  as  follows:

     5.1     Organization  and  Standing.  Each  of Parent and Merger Sub (i) is
             ---------------------------
duly  incorporated,  validly existing and in good standing under the laws of the
States  of  Delaware  and  California,  respectively;  (ii)  has  all  necessary
corporate  power  and  authority  to  carry  on  its business as it is now being
conducted and to own or use the properties and assets that it purports to own or
use;  and  (ii)  is  duly qualified as a foreign entity in good standing in each
jurisdiction where the character of its properties owned or leased or the nature
of its activities make such qualification necessary, except where the failure to
be  so qualified or licensed would not have a material adverse effect on Parent.

     5.2     Authority.  Each  of  Parent  and  Merger  Sub  has  all  requisite
             ---------
corporate  power  and  authority  to execute and deliver this Agreement and each
Transaction  Document  and  to perform its obligations hereunder and thereunder.
This  Agreement  has  been,  and  each Transaction Document will be prior to the
Closing,  duly  authorized,  executed and delivered by each of Parent and Merger
Sub, and (assuming the due authorization, execution and delivery by Founders and
the  Company)  this Agreement constitutes, and each Transaction Document when so
executed and delivered will constitute, the legal, valid and binding obligations
of each of Parent and Merger Sub enforceable against each in accordance with its
terms.

     5.3     No  Violation of Law and Agreements.  The execution and delivery by
             -----------------------------------
each  of  Parent and Merger Sub of this Agreement and each Transaction Document,
and the performance by each of its obligations hereunder or thereunder, does not
and  will  not,  except  as  set  forth  on  Schedule  5.3:
                                             -------------

          (a)     violate  any  provision  of  the  Articles of Incorporation or
Bylaws  of  Parent  or  Merger  Sub;

          (b)     (i) violate any provision of Applicable Law relating to Parent
or  Merger  Sub;  (ii)  violate  any  provision of any order, arbitration award,
judgment  or decree to which Parent or Merger Sub is subject; or (iii) require a
registration,  filing,  application,  notice,  consent,  approval,  order,
qualification  or waiver with, to or from any Governmental Authority (other than
securities  filings  required  to  be  made  by  Parent  with  respect  to  the
transactions  contemplated  hereby);  or

          (c)     (i)  require a consent, approval or waiver from, or notice to,
any  party to any material contract to which Parent or Merger Sub is a party; or
(ii)  result in a breach of or cause a default under any provision of a contract
to  which  Parent  or  Merger  Sub  is  a  party.

     5.4     Parent  Common  Stock.  The  shares of Parent Common Stock issuable
             ---------------------
hereunder  will be upon issuance thereof, duly authorized, validly issued, fully
paid  and  non-assessable.

     5.5     Reports.  Parent  has  filed  all  reports,  schedules,  forms,
             -------
statements  and  other  documents required to be filed by it with the Securities
and  Exchange  Commission  (the  "SEC")  since  December 15, 1999 (collectively,
including  all  exhibits  thereto,  the  "REPORTS").  None of the Reports, as of
their  respective  dates (and, if amended or superseded by a filing prior to the
date  of  this  Agreement or the Closing Date, then on the date of such filing),
contained  or will contain any untrue statement of a material fact or omitted or
will omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made,  not misleading.  All of the Reports, as of their respective dates (and as
of the date of any amendment), complied as to form in all material respects with
the  applicable  requirements  of  the  Securities  Act of 1933, as amended, the
Securities  Exchange  Act  of  1934,  as  amended, and the rules and regulations
promulgated  thereunder.


                                      -17-
<PAGE>
     5.6     Brokerage.  Except  as set forth on Schedule 5.6, no broker, finder
             ---------                           ------------
or  investment  banker  has  acted  directly  or  indirectly  for  Parent or any
Affiliate  thereof  in  connection  with  this  Agreement  or  the  transactions
contemplated  hereby,  and no broker, finder or investment banker is entitled to
any  brokerage,  finder's or other fee or commission in respect thereof based in
any  way  on  agreements, arrangements or understandings made by or on behalf of
Parent  or  any  Affiliate  thereof.

     5.7     Litigation.  Except  as  set  forth  on  Schedule  5.7, there is no
             ----------                               -------------
material litigation, action, suit, proceeding or investigation presently pending
or to the knowledge of Parent threatened against Parent or affecting the assets,
property or business of Parent or restricting or prohibiting the consummation of
the  transactions  contemplated  by  this  Agreement  before  a  court  or  any
governmental  department,  commission, board, bureau, agency or instrumentality,
domestic  or  foreign.

     5.8     No  Material  Adverse Change.  Except as set forth on Schedule 5.8,
             ----------------------------                          ------------
since the date of the last Form 10-Q filed by Parent with the SEC, there has not
been any material adverse change in the financial condition, business assets, or
results  of  operations  of  Parent (other than changes resulting from economic,
financial,  market  or other conditions or circumstances generally affecting the
businesses  or  markets  in  which  Parent  operates).

     5.9     Taxes.

          (a)     Neither Parent nor any Person related to Parent, as defined in
Treasury  Regulation  Sec.  1.368-1(e)(3),  has  a  present plan or intention to
redeem or otherwise acquire any shares of Parent Common Stock that are issued in
the  Merger  to  the  Company  Stockholders;

          (b)     Following  the Merger, the Surviving Corporation will continue
the  historic  business  of  the  Company,  or  use a significant portion of the
Company's  historic  business  assets  in  a  business,  in each case within the
meaning  of  and  to the extent required by Treasury Regulation Sec. 1.368-1(d);

          (c)     Parent  has no present plan or intention: (i) to liquidate the
Surviving  Corporation,  (ii)  to  merge the Surviving Corporation with and into
another  corporation  (including  Parent  or an affiliate of Parent) or (iii) to
sell or otherwise dispose of the stock of (or sell, dispose of or distribute any
assets,  other  than  in  the  ordinary  course  of  business, of) the Surviving
Corporation,  except  as provided for in Treasury Regulation Sec. 1.368-2(k)(2);

          (d)     Parent  will  be  in  Control (as defined below) of Merger Sub
(which  has  not conducted any business activities of any kind and has no assets
and  no  liabilities) immediately prior to the Merger, and Parent has no plan or
intention  to  cause  the  Surviving  Corporation  to issue additional shares of
capital  stock  after the Merger, or take any other action, that would result in
Parent  losing  Control  of the Surviving Corporation.  As used herein "Control"
shall  have  the  meaning  set  forth  in  Section  368(c)  of  the  Code;

          (e)     Parent  does  not  own,  nor has it owned during the past five
years,  any  shares  of  the  stock  of  the  Company;

          (f)     Parent  is  not  an  investment  company as defined in Section
368(a)(2)(F)(iii)  and  368(a)(2)(F)(iv)  of  the  Code;

          (g)     There  is  no  intercorporate  indebtedness  existing  between
Parent, any subsidiary thereof, or Merger Sub, on the one hand, and the Company,
on  the  other  hand;


                                      -18-
<PAGE>
          (h)     The  Merger  is  being undertaken by Parent and Merger Sub for
valid  business  purposes,  and  the  terms  of  the  Merger  are the product of
arm's-length  negotiations;  and

          (i)     Parent  and  Merger Sub have adopted "plans of reorganization"
in  the  time  and  manner  required  under  Code  Section  368.

                                    ARTICLE 6
                                    ---------

                              PRE-CLOSING COVENANTS
                              ---------------------

     6.1     Conduct  of  Business.  From  the  date  hereof through the Closing
             ---------------------
Date,  the  Company  shall  carry on its business substantially in the manner in
which  it  is  presently  conducted and, to the extent consistent therewith, the
Company shall preserve intact its current business organizations, keep available
the service of its current officers and employees and preserve its relationships
with customers, suppliers and others having business dealings with it to the end
that  goodwill and ongoing businesses shall be unimpaired at the Effective Time.
Without  limiting  the foregoing, from the date hereof through the Closing Date,
the  Company shall not, without the prior written consent of Parent or expect as
expressly  contemplated  herein,  undertake  or  agree  to  undertake any of the
actions  specified  in  Section  4.8.

     6.2     Efforts  to  Close.  From the date hereof through the Closing Date,
             ------------------
each  party  shall  use  its  or  his reasonable efforts to take, or cause to be
taken,  all  actions,  and  shall do, or cause to be done, all things necessary,
proper  or advisable to consummate and make effective as promptly as practicable
the  transactions contemplated hereby and shall cooperate with the other parties
in  connection  with  the  foregoing.

     6.3     Continued  Effectiveness  of  Representations and Warranties.  From
             ------------------------------------------------------------
the  date  hereof  through the Closing Date, (i) each party shall use its or his
reasonable  efforts  to  conduct  its  or  his affairs in such a manner so that,
except  as  otherwise contemplated or permitted by this Agreement, such person's
representations  and  warranties  contained herein shall continue to be true and
correct  on and as of the Closing Date as if made on and as of the Closing Date,
and (ii) each party shall promptly notify the other parties of any breach of, or
inaccuracy  in, any representation, warranty, covenant or agreement of the first
party;  provided,  however, that such disclosure shall not be deemed to cure any
         -------   -------
breach  of,  or  inaccuracy  in,  any  representation,  warranty,  covenant  or
agreement.

     6.4     Examinations and Investigations.  Prior to the Closing Date, Parent
             -------------------------------
shall  be  entitled,  through its Representatives, to make such investigation of
the assets, liabilities, properties, business and operations of the Company, and
such  examination  of the books, records and financial condition of the Company,
as  Parent  reasonably  determines  is  necessary;  provided, however, that such
                                                    --------  -------
investigation  shall  not  alter  or  diminish  the  Company's and the Founders'
representations  and warranties contained herein.  Prior to the Closing Date and
subject  to  the  Company  and  the  applicable  Representatives  executing  and
delivering  to  Parent  a  confidentiality  agreement  in  form  and  substance
reasonably  acceptable  to  Parent,  the  Company shall be entitled, through its
Representatives,  to  make  such  investigation  of  the  assets,  liabilities,
properties,  business  and  operations  of  Parent,  and such examination of the
books,  records  and  financial  condition  of  Parent,  as  Company  reasonably
determines  is  necessary;  provided, however, that such investigation shall not
                            --------  -------
alter  or  diminish  Parent's  representations  and warranties contained herein.

     6.5     No  Solicitation of Transactions.  From the date hereof through the
             --------------------------------
Closing  Date,  the  Company  and the Founders will not, directly or indirectly,
solicit,  encourage,  initiate  or  commence  discussions  or negotiations with,
provide  any  nonpublic  information  to,  or enter into any agreement with, any
person  (other  than  disclaimer  to  Parent's  Representatives)  concerning the
Company in connection with any merger, consolidation, sale of substantial assets
or  of  a  significant  amount  of  assets,  sale  of securities, acquisition of
beneficial  ownership  of  or  to  vote  securities of the Company, liquidation,
dissolution  or  similar  transaction  or  business  combination  (each  being
hereinafter  referred to as an "ACQUISITION TRANSACTION") involving the Company.
The  Company  and  the  Founders  shall  promptly  inform  Parent of any inquiry
(including  the  terms  thereof  and the identity of the Third Party making such
inquiry)  which  it may receive in respect of an Acquisition Transaction and, if
in  writing,  furnish to Parent a copy of any such inquiry.  The Company and the
Founders  hereby  represent  that  they  are  not  now engaged in discussions or
negotiations  with  any  party  other  than  Parent  with  respect to any of the
foregoing.  This  Section 6.5 shall not apply to the Company's sale of inventory
in  the  ordinary  course  of  business.


                                      -19-
<PAGE>
     6.6     Shareholder  Approval.  The  Company  shall, in accordance with its
             ---------------------
Articles  of  Incorporation  and  bylaws  and the applicable requirements of the
CGCL, solicit the approval of its shareholders of the Merger and this Agreement.
In  connection  with  such solicitation, at the request and on behalf of Parent,
the  Company  shall  deliver to the Company Shareholders and the Company Warrant
Holders  such  documentation  furnished  by  Parent as Parent shall determine is
advisable  to  be so delivered in order for Parent to comply with its disclosure
obligations  under  applicable  securities  laws.  Each  Founder shall cause all
shares  of  Company  Capital Stock that are owned, beneficially or of record, by
him  to  be  voted  in  favor  of  the  Merger  and  this  Agreement.

     6.7     Public  Announcements.  During  the pre-Closing period, neither the
             ---------------------
Company  nor  any of the Founders shall (and the Company shall not permit any of
its  Representatives  to)  issue  any press release or make any public statement
regarding  this  Agreement,  the  Merger  or  any  of  the  other  transactions
contemplated  by  this  Agreement,  without  Parent's  prior  written  consent.

                                    ARTICLE 7
                                    ---------

                          CONDITIONS TO THE OBLIGATIONS
                          -----------------------------
                                 OF THE COMPANY
                                 --------------

     The  obligation  of  the  Company to enter into and complete the Closing is
subject  to  the  fulfillment  on  or prior to the Closing Date of the following
conditions, any one or more of which may be waived by the Company, to the extent
permitted  by  law.

     7.1     Representations and Warranties.  The representations and warranties
             ------------------------------
of Parent and Merger Sub contained herein shall be true and correct on and as of
the  Closing  Date  as  though  made  at  and  as  of  that  date  (except  for
representations and warranties, if any, made as of a specified date, which shall
be  true  and correct as of the specified date), and Parent shall have delivered
to  the  Founders  a  certificate  to  such  effect.

     7.2     Corporate Action and Compliance with Covenants.  Each of Parent and
             ----------------------------------------------
Merger  Sub  shall  have  delivered  to the Founders (i) certified copies of its
Articles  of Incorporation and bylaws and resolutions of its Board of Directors,
in  form  reasonably  satisfactory  to the Founders, approving the execution and
delivery  of this Agreement and each Transaction Document and the performance of
its  obligations  hereunder  and thereunder; (ii) a certificate of good standing
issued  by  the  appropriate  Governmental  Authority  of  the  state  of  its
incorporation  showing  that  it is in good standing in such jurisdiction, dated
within  three  (3)  business  days prior to the Closing; and (iii) an incumbency
certificate,  certified  by  its  Secretary  or  Assistant  Secretary.

     7.3     Litigation.  On  the Closing Date, there shall be no Action pending
             ----------
or  threatened  in  writing  pertaining to the transactions contemplated hereby.

     7.4     Absence  of Adverse Governmental Action.  No action shall have been
             ---------------------------------------
taken,  proposed  or  threatened and no statute, rule, regulation or order shall
have  been  proposed, enacted or entered by any Governmental Authority or by any
court with jurisdiction over the transactions contemplated hereby that threatens
to  prohibit  or unduly delay consummation of such transactions on the terms and
provisions  herein  set  forth.


                                      -20-
<PAGE>
     7.5     Registration  Rights.  Parent  shall have executed and delivered to
             --------------------
the  Founders  for the benefit of the Company Shareholders a registration rights
agreement  in  the  form  of  Exhibit  B.
                              ----------

     7.6     Opinion of Counsel.  The Founders shall have received an opinion of
             ------------------
Parent's  counsel,  dated  the  Closing  Date,  in  the  form  of  Exhibit  C.
                                                                   ----------

     7.7     No  Material  Adverse Change.  Since the date of the last Form 10-Q
             ----------------------------
filed  by  Parent  with  the SEC, there shall not have been any material adverse
change  in the financial condition, business assets, or results of operations of
Parent  (other  than changes resulting from economic, financial, market or other
conditions  or  circumstances  generally  affecting the businesses or markets in
which  Parent  operates).

                                    ARTICLE 8
                                    ---------

                          CONDITIONS TO THE OBLIGATIONS
                          -----------------------------
                            OF PARENT AND MERGER SUB
                            ------------------------

     The  obligation  of  Parent  and  Merger Sub to enter into and complete the
Closing  is  subject  to  the fulfillment on or prior to the Closing Date of the
following  conditions, any one or more of which may be waived by such person, to
the  extent  permitted  by  law.

     8.1     Representations and Warranties.  The representations and warranties
             ------------------------------
of  the  Founders  and the Company contained herein shall be true and correct in
all respects on and as of the Closing Date as though made at and as of that date
(except for representations and warranties, if any, made as of a specified date,
which  shall be true and correct as of the specified date), and the Founders and
the  Company  each  shall have delivered to Parent a certificate to such effect.

     8.2     Compliance  with  Covenants.  The Founders and the Company shall in
             ---------------------------
all  respects  each  have  performed  and  complied  with all terms, agreements,
covenants  and  conditions of this Agreement to be performed or complied with by
him or it on or prior to the Closing Date, and the Founders and the Company each
shall  have  delivered  to  Parent  a  certificate  to  that  effect.

     8.3     Corporate  Action.  Parent shall have received (i) certified copies
             -----------------
of  the  Company's  Articles  of Incorporation and bylaws and resolutions of its
Board  of Directors and shareholders, in form reasonably satisfactory to Parent,
approving  the  execution  and  delivery  of this Agreement and each Transaction
Document  and  the  obligations  of the Company hereunder and thereunder; (ii) a
certificate  of  good  standing  issued  by the Secretary of State of California
showing  that the Company is in good standing in such jurisdiction, dated within
three (3) business days of the Closing Date; and (iii) an incumbency certificate
of  the  Company,  certified  by  its  Secretary  or  Assistant  Secretary.

     8.4     Litigation.  On  the Closing Date, there shall be no Action pending
             ----------
or  threatened  in writing pertaining to the transactions contemplated hereby or
to  its  consummation.

     8.5     Opinion  of  Counsel.  Parent  shall  have  received  an opinion of
             --------------------
counsel  to the Company and the Founders, dated the Closing Date, in the form of
Exhibit  D  to  the  Company  and  the  Founders.
----------

     8.6     Absence  of Adverse Governmental Action.  No action shall have been
             ---------------------------------------
taken,  proposed  or  threatened and no statute, rule, regulation or order shall
have  been  proposed, enacted or entered by any Governmental Authority or by any
court with jurisdiction over the transactions contemplated hereby that threatens
to  prohibit  or unduly delay consummation of such transactions on the terms and
provisions  herein  set  forth.

     8.7     Filings;  Consents;  Waiting Periods.  All necessary registrations,
             ------------------------------------
filings,  applications, notices, consents, approvals, orders, qualifications and
waivers, including those listed in Schedules 4.3 and 5.3, shall have been filed,
                                   ---------------------
made  or  obtained.


                                      -21-
<PAGE>
     8.8     Shareholder Approval.  Company Shareholders holding at least 98% of
             --------------------
the  outstanding  shares of Company Capital Stock shall have approved the Merger
and  this  Agreement  and  shall have executed and delivered to Parent a Joinder
Agreement  in  the  form  of  Exhibit  F  (the  "JOINDER  AGREEMENT").
                              ----------

     8.9     Warrant  Holder  Approval.  Each  Company Warrant Holder shall have
             -------------------------
executed  and  delivered  to  Parent  an  agreement  in the form of Exhibit E (a
                                                                    ---------
"WARRANT  HOLDER  AGREEMENT").

     8.10     Employment  Confidentiality  Agreements.  Each  employee  of  the
              ---------------------------------------
Company  designated by Parent shall have entered into Parent's standard employee
confidentiality  agreement.

     8.11     Releases.  Each  employee,  director and consultant of the Company
              --------
shall  have  executed  and  delivered  to  the  Company a release in the form of
Exhibit  G.
      ----

     8.12     Due  Diligence.  Parent  shall  have  completed  its due diligence
              --------------
investigation  of the Company and shall be reasonably satisfied with the results
thereof.

     8.13     Employment  Agreements.  Colin P. Kruger and Michael Shirman shall
              ----------------------
have entered into employment agreements with Parent in the form of Exhibit H and
                                                                   ---------
Exhibit  I,  respectively.
----------

     8.14     Estoppels.  The  Founders  and  Company  shall  have  delivered to
              ---------
Parent from the lessors or sublessors of all real property leased by the Company
estoppel  certificates  addressed to Parent and the Company stating (i) that the
applicable  lease  is and will continue to be in full force and effect following
the  Merger  and  has  not  been modified or amended except as indicated in such
certificate  and  neither the landlord nor the Company is in default thereunder,
(ii)  the  expiration  date  of  the  term  thereunder, (iii) the rent and other
charges  payable  thereunder  and  (iv)  the  date  through which rent and other
charges  have  been  paid  thereunder.

     8.15     No Material Adverse Change.  Since the Interim Balance Sheet Date,
              --------------------------
there  shall  not  have  been  any  material  adverse  changes  in the financial
condition, business, assets, or results of operations of the Company (other than
changes  resulting  from  economic,  financial,  market  or  other conditions or
circumstances generally affecting the businesses or markets in which the Company
operates).

     8.16     Non-Compete.  Colin  P.  Kruger  and  Michael  Shirman  shall have
              -----------
entered  into  a non-competition agreement with Parent in the form of Exhibit K.
                                                                      ---------

                                    ARTICLE 9
                                    ---------

                                 INDEMNIFICATION
                                 ---------------

     9.1     Survival  of  Representations.  All  representations and warranties
             -----------------------------
contained  in  this  Agreement  shall survive the Closing until the close of the
last  day  of  the  sixth full calendar month following the Closing Date, except
that  the representations and warranties set forth in Sections 4.2 and 4.4 shall
survive  through the second anniversary of the Closing Date, the representations
and  warranties  set  forth  in  Section 4.14(c) shall survive through the first
anniversary of the Closing Date and the representations and warranties set forth
in Section 4.9 shall survive through the expiration of the applicable statute of
limitations.  All  covenants and agreements contained in this Agreement which by
their  terms are to be performed following the Closing shall survive the Closing
until  performed.


                                      -22-
<PAGE>
     9.2     Company  Shareholders' Obligation to Indemnify.  From and after the
             ----------------------------------------------
Closing,  the  Company  Shareholders  shall,  jointly  and severally, indemnify,
defend  and  hold  harmless  Parent  (and  its  directors,  officers, employees,
Affiliates  and  assigns, collectively, Parent for purposes of this Section 9.2)
from  and  against all Losses resulting from or arising out of any inaccuracy in
or  any  breach  of  any  representation, warranty, covenant or agreement of any
Founder  or  the Company contained herein, subject to the following limitations:

          (a)     The  Company  Shareholders  shall not be liable to Parent with
respect  to any inaccuracies in representations or warranties of the Founders or
the  Company  except  to the extent that claims relating to such breaches exceed
the  aggregate  amount  of  two  hundred  thousand dollars ($200,000); provided,
                                                                       --------
however,  that  no  such  limitation shall apply to inaccuracies that constitute
-------
fraud  or  intentional  misrepresentation.

          (b)     Parent's  sole  and  exclusive  remedy  against  the  Company
Shareholders (other than the Founders) for Losses arising out of breaches of, or
inaccuracies  in,  representations,  warranties, covenants and agreements of the
Founders  and  the Company contained herein shall be to proceed directly against
the  shares  of  Parent  Common  Stock held under the Escrow Agreement; it being
agreed  that  Parent  shall  have  the  right  to  proceed  directly against the
Founders, but the maximum liability of either Founder shall not exceed the value
of  the  shares  of  Parent Common Stock which such Founder receives pursuant to
Section  2.1  (regardless of whether the Founder continues to hold such shares).
For  purposes of the preceding sentence, each share of Parent Common Stock shall
be  valued by reference to the Closing Price on the date on which the indemnitee
delivers  the  notice of indemnification; provided, however, that if the Founder
establishes  to  Parent  that  prior to the date on which the indemnification is
required  to  be  paid  the  Founder  has sold shares of the Parent Common Stock
received  pursuant  to  Section 2.1 for an average per share price less than the
reference  value  described  in  the  first part of this sentence, the reference
value  with  respect  to  the sold shares shall be the proceeds of such sale(s).

     9.3     Notice  of Asserted Liability.  Promptly after Parent becomes aware
             -----------------------------
of  any  fact,  condition  or  event  that  may  give  rise  to Losses for which
indemnification  may  be  sought  under this Article 9, Parent shall give notice
thereof  (the  "CLAIMS NOTICE") to the Company Shareholders at the addresses for
the  Company  Shareholders  on the books and records of the Company.  The Claims
Notice  shall  include  a  description  in reasonable detail of any claim or the
commencement  (or  threatened  commencement)  of  any  action,  proceeding  or
investigation  (an  "ASSERTED LIABILITY") against Parent, and shall indicate the
amount (estimated, if necessary) of the Losses that have been or may be suffered
by Parent.  Failure of Parent to promptly give notice hereunder shall not affect
rights  to  indemnification  hereunder,  except  to  the extent that the Company
Shareholders demonstrate actual damage caused by such failure.  Upon the Company
Shareholders'  request,  Parent shall provide the Company Shareholders with full
and  unrestricted  access  to  all  books  and  records relating to the Asserted
Liability,  and  to  all  employees or other persons who are knowledgeable about
such Asserted Liability, in order to allow the Company Shareholders to audit the
status  of  such Asserted Liability and the payments that have been, or will be,
made  with  respect  thereto.

     9.4     Opportunity  to  Defend.  The  Company  Shareholders  may  elect to
             -----------------------
compromise  or  defend,  at  their  own  expense  and  by their own counsel, any
Asserted  Liability;  provided,  however,  that the Company Shareholders may not
                      --------   -------
compromise  or settle any Asserted Liability without the consent of Parent, such
consent  not  to  be unreasonably withheld, unless such compromise or settlement
requires  no  more than a monetary payment for which Parent is fully indemnified
or  involves other matters not binding upon Parent.  If the Company Shareholders
elect to compromise or defend such Asserted Liability, they shall within 15 days
(or  sooner,  if the nature of the Asserted Liability so requires) notify Parent
of  their  intent  to  do so and Parent shall cooperate in the compromise of, or
defense against, such Asserted Liability.  If the Company Shareholders elect not
to  compromise  or defend any Asserted Liability, fail to notify Parent of their
election  as  herein  provided  or contest their obligation to indemnify, Parent
pay, compromise or defend such Asserted Liability without prejudice to any right
it  may have hereunder.  If any party hereto chooses to defend or participate in
the  defense  of any Asserted Liability, it shall have the right to receive from
the  other  parties  hereto  any  books,  records or other documents within such
party's  control  that  are  necessary  or  appropriate  for  such  defense.


                                      -23-
<PAGE>
     9.5     Losses to Surviving Corporation.  The parties acknowledge and agree
             -------------------------------
that  if  the Surviving Corporation suffers, incurs or otherwise becomes subject
to  any  Losses as a result of or in connection with any inaccuracy in or breach
of  any representation, warranty, covenant or obligation, then (without limiting
any  of  the  rights of the Surviving Corporation as an indemnitee) Parent shall
also  be  deemed,  by  virtue  of  its  ownership  of the stock of the Surviving
Corporation,  to have incurred Losses as a result of and in connection with such
inaccuracy  or  breach.

     9.6     No Contribution.  No Company Shareholder may exercise or assert (or
             ---------------
attempt  to exercise or assert) any right of contribution, right of indemnity or
other  right  or remedy against the Surviving Corporation in connection with any
indemnification obligation or any other liability to which he may become subject
under  or  in  connection  with  this  Agreement.

     9.7     Actions  by  Company  Shareholders.  All  actions  of  the  Company
             -----------------------------------
Shareholders  under  this Article 9 shall be exercised by a majority in interest
of the Company Shareholders (determined as of the date immediately preceding the
Closing  Date).

                                   ARTICLE 10
                                   ----------

                            TERMINATION OF AGREEMENT
                            ------------------------

     10.1     Termination.  This  Agreement  may  be  terminated  prior  to  the
              -----------
Closing  as  follows:

          (a)     at  the  election  of  the  Company, if any one or more of the
conditions  to its obligation to close has not been fulfilled by the forty-fifth
day  after  the  date  hereof;

          (b)     at  the  election  of  Parent,  if  any  one  or  more  of the
conditions  to its obligation to close has not been fulfilled by the forty-fifth
day  after  the  date  hereof;

          (c)     at  the  election  of the Company, if Parent or Merger Sub has
breached  any  representation, warranty, covenant or agreement contained herein;
provided, however, that the Company shall have no termination right hereunder if
-------  -------
the  other  conditions  to  the  obligation  of  the  Company  to consummate the
transactions  contemplated  herein  shall  have  been  satisfied,  unless  such
representation,  warranty,  covenant  or  agreement shall not have been cured by
Parent or Merger Sub by the earlier of (1) January 15, 2001, or (2) 5 days after
Parent  shall  have  received written notice from the Company that it intends to
exercise  its  right  to  terminate  under  this  paragraph  (c);

          (d)     at  the election of Parent, if the Founders or the Company has
breached  any  representation, warranty, covenant or agreement contained herein;
provided,  however, that Parent shall have no termination right hereunder if the
-------   -------
other  conditions  to  the  obligation  of Parent to consummate the transactions
contemplated  herein  shall  have  been  satisfied,  unless such representation,
warranty,  covenant or agreement shall not have been cured by the earlier of (1)
January  15,  2001,  or (2) 5 days after the Company shall have received written
notice from Parent that it intends to exercise its right to terminate under this
paragraph  (d);

          (e)     at  the election of the Company on the one hand, or Parent, on
the  other  hand,  if any action shall have been instituted and be continuing by
any Governmental Authority with proper authority to restrain, modify or prohibit
the  carrying  out  of  the transactions contemplated hereby; provided, however,
                                                              --------  -------
that  neither  the Company nor Parent shall have any termination right hereunder
if  the other conditions to the obligation of the Company or Parent, as the case
may  be,  to  consummate  the  transactions  contemplated herein shall have been
satisfied,  unless such action, suit or proceeding shall not have been stayed or
terminated  by  the  later  of  (1)  January  15, 2001, or (2) 60 days after the
commencement  of  such action, suit or proceeding becomes known to Parent or the
Company,  as  the  case  may  be;  or

          (f)     at any time on or prior to the Closing Date, by mutual written
consent  of  the  Company  and  Parent.

     If  Parent  or  the  Company,  as the case may be, elects to terminate this
Agreement  pursuant  to  Section  10.1(a), (b), (c), (d), or (e) the terminating
party shall deliver a notice to the other party hereto declaring its election to
so  terminate  this  Agreement  in  accordance  with  the  provisions of Section
10.1(a),  (b),  (c),  (d), or (e), as the case may be, and setting forth therein
the  basis  for  such  termination.


                                      -24-
<PAGE>
     10.2     Survival.  If  this  Agreement is terminated, this Agreement shall
              --------
become  void  and  of  no further force and effect, except for the provisions of
this  Sections 10.2.  None of the parties shall have any liability in respect to
a  termination  of this Agreement pursuant to this Article 10, except (i) to the
extent  that failure to satisfy the conditions of Closing as applicable, results
from  the  intentional  or  willful  breach  of the representations, warranties,
covenants or agreements of such party under this Agreement, and (ii) except that
if  Parent terminates this Agreement by reason of the Company's or the Founders'
breach  of  Section  6.1,  the  Company  shall promptly reimburse Parent for all
expenses  incurred  by Parent in connection with its due diligence investigation
of  the  Company,  the  negotiation  and  preparation  of this Agreement and the
Transactions  Documents and the performance the portion of the compensation paid
to  its  employees  which  is  allocable  to work performed by such employees in
connection  with  the  foregoing  and  the  fees  and  costs  of its counsel and
accountants).

                                   ARTICLE 11
                                   ----------

                                   TAX MATTERS
                                   -----------

     The  Founders  shall cooperate with the Surviving Corporation in connection
with  the  determination  or  any  audit  or examination of the liability of the
Company for Taxes with respect to receipts, income, sales, transactions, assets,
operations  or other business activities of the Company before the Closing Date,
or  any  Tax  Return filed before the Closing Date, and shall disclose to Parent
any  documents  and  information  within  his  possession  or control pertaining
thereto.  Any  such  audit  or  examination  and  any administrative or judicial
proceeding relating thereto shall be controlled exclusively by Parent; provided,
the  Founders  at  their  sole  expense  may  control such audit, examination or
administrative  or  judicial  proceeding  if  (i) they agree in writing with the
Company  and  Parent  that  any and all Taxes that might be or become payable in
connection  with or as a result thereof shall be paid in full by them, (ii) they
provide  reasonably  sufficient collateral to Parent to indemnify Parent against
any  liability  that  might  result to it, and (iii) resolution of the issues in
such  audit,  examination or administrative or judicial proceeding cannot affect
any  Tax  liability or Tax item of the Company for any taxable period or portion
thereof  beginning  on  or  after  the  Closing  Date.

                                   ARTICLE 12
                                   ----------

                                  MISCELLANEOUS
                                  -------------

     12.1     Notices.  All  notices, requests, demands and other communications
              -------
required  or  permitted  to be given hereunder or under any Transaction Document
shall be in writing and shall be deemed to have been duly given upon receipt, if
delivered  personally, (ii) upon confirmation of receipt, if given by electronic
facsimile  and  (iii)  on  the  third  business day following mailing, if mailed
first-class, postage prepaid, registered or certified mail addressed as follows:

                           (a)     If  to  Parent  or  Merger  Sub  to:

                                   VSource,  Inc.
                                   5740  Ralston,  Suite  110
                                   Ventura,  California  93003
                                   Facsimile:  (805)  676-1193
                                   Attention:  Sandford  T.  Waddell

                                   with  a  copy  to:

                                   Sheppard, Mullin, Richter & Hampton LLP
                                   650  Town  Center  Drive,  4th  Floor
                                   Costa  Mesa,  California  92626
                                   Attn:  John  J.  Giovannone,  Esq.
                                   Facsimile:  (714)  513-5130


                                      -25-
<PAGE>
                           (b)     If  to  the  Founders  to:

                                   Mr.  Colin  P.  Kruger
                                   Mr.  Michael  Shirman
                                   c/o  Online  Transaction  Technologies,  Inc.
                                   5777  W.  Century  Boulevard,  Suite  1400
                                   Los  Angeles,  CA  90045
                                   Attention:  Colin  P.  Kruger
                                   Facsimile:  (310)  337-9560

                                   with  a  copy  to:

                                   Kathleen  Carter,  Esquire
                                   Remer,  Divencenzo  and  Griffith
                                   2121  E  Coast  Highway
                                   Corona  Del  Mar,  CA  92625
                                   Facsimile:  (949)  759-0788


                                   Steve  Godwin,  Esquire
                                   120  N.  Almont  Drive,  #3
                                   Beverly  Hills,  CA  90211
                                   Facsimile:  (310)  276-6014

                           (c)     If  to  the  Company  to:

                                   Online  Transaction  Technologies,  Inc.
                                   5777  W.  Century  Boulevard,  Suite  1400
                                   Los  Angeles,  CA  90045
                                   Attention:  Colin  P.  Kruger
                                   Facsimile:  (310)  337-9560

                                   with  a  copy  to:

                                   Kaye, Scholer, Fierman, Hays & Handler, LLP
                                   1999  Avenue  of  the  Stars
                                   Los  Angeles,  CA  90067
                                   Attention:  Barry  L.  Dastin,  Esquire
                                   Facsimile:  (310)  788-1200

     Any  party  may by notice given in accordance with this Section 12.1 to the
other  parties  designate  another  address  or  person  for  receipt of notices
hereunder.

     12.2     Entire  Agreement.  This  Agreement  (including  the Schedules and
              -----------------
Exhibits  hereto)  and the Transaction Documents contain the entire agreement of
the  parties  with respect to the subject matter hereof, and supersede all prior
agreements,  representation  and  warranties,  written  or  oral,  with  respect
thereto.

     12.3     Waivers  and  Amendments.  This  Agreement  and  each  Transaction
              ------------------------
Document  may  be  amended,  superseded,  canceled, renewed or extended, and the
terms  hereof  or  thereof may be waived, only by a written instrument signed by
each  of the parties hereto or thereto or, in the case of a waiver, by the party
waiving  compliance.  The  failure  of  a  party  to  insist, in any one or more
instances,  upon performance of the terms or conditions of this Agreement or any
Transaction Document shall not be construed as a waiver or relinquishment of any
right  granted hereunder or of the future performance of any such term, covenant
or  condition.  No  waiver  on  the  part  of  any  party of any right, power or
privilege,  nor  any  single  or  partial  exercise  of any such right, power or
privilege,  shall  preclude  any further exercise thereof or the exercise of any
other  such  right,  power  or  privilege.


                                      -26-
<PAGE>
     12.4     Governing Law.  This Agreement and each Transaction Document shall
              -------------
be  governed  by and construed in accordance with the substantive and procedural
laws  of  the  State  of  California  applicable  to  agreements  made and to be
performed entirely within such State.  The parties hereby agree that any action,
suit,  arbitration  or  other  proceeding  arising  out  of  or  related to this
Agreement  or  any  Transaction  Document  or the relationship created hereby or
thereby  shall  be conducted only in Los Angeles County, California.  Each party
hereby  irrevocably  consents  and  submits  to the personal jurisdiction of and
venue in United States District Court for the Central District of California and
in the Superior Court for Los Angeles County in any legal action, equitable suit
or  other  proceeding  arising  out  of  or  related  to  this  Agreement or any
Transaction  Document  or the relationship between the parties created hereby or
thereby.

     12.5     Arbitration.  Notwithstanding  anything herein to the contrary, if
              -----------
there  shall be a dispute among any of the parties arising out of or relating to
this  Agreement  or  any  Transaction Document (including without limitation the
issue  of  arbitrability  or  the indemnities provided herein or therein, or the
breach  thereof), the parties agree that such dispute shall be resolved by final
and  binding  arbitration  in  Los Angeles, California, administered by Judicial
Arbitration  & Mediation Services, Inc. ("JAMS"), in accordance with JAMS' rules
of practice then in effect or such other procedures as the parties may agree to.
Each  party  hereby irrevocably consents and submits to personal jurisdiction in
the  State  of California for any arbitration contemplated by this Section 12.5.
Any  award  issued  as  a  result of such arbitration shall be final and binding
between  the  parties  thereto,  and  shall  be  enforceable by any court having
jurisdiction  over  the  party against whom enforcement is sought.  The fees and
expenses  of  such  arbitration  (including  reasonable  attorneys' fees) or any
action  to enforce an arbitration award shall be paid by the party that does not
prevail  in  such  arbitration.

     12.6     Attorneys' Fees.  If any legal action or dispute arises under this
              ---------------
Agreement,  arises by reason of any asserted breach of it, or arises between the
parties  and  is  related in any way to the subject matter of the Agreement, the
prevailing  party shall be entitled to recover all costs and expenses, including
reasonable  attorneys'  fees, arbitration costs, investigative costs, reasonable
accounting  fees  and  charges  for  experts.

     12.7     Binding  Effect;  Assignment.This  Agreement  and each Transaction
              ----------------------------
Document shall be binding upon and inure to the benefit of the parties and their
respective  permitted  successors and permitted assigns.  Neither this Agreement
or  any Transaction Document, nor any of the rights hereunder or thereunder, may
be  assigned  by any party, nor may any party delegate any obligations hereunder
or thereunder, without the written consent of the other party hereto or thereto.
Any  non-permitted  assignment  or  attempted  assignment  shall  be  void.

     12.8     No Third Party Beneficiaries.  Nothing herein is intended or shall
              ----------------------------
be  construed  to  give any person any legal or equitable right, remedy or claim
under  or in respect of this Agreement or any provision contained herein, except
as  otherwise  provided  herein.

     12.9     Counterparts.  This Agreement and each Transaction Document may be
              ------------
executed by the parties in separate counterparts, each of which when so executed
and  delivered  shall  be  an original, but all such counterparts shall together
constitute  one  and  the  same  instrument.  Each  counterpart may consist of a
number  of  copies  hereof or thereof each signed by less than all, but together
signed  by  all  of  the  parties.

     12.10     Schedules  and  Exhibits.  The Schedules and Exhibits attached to
               ------------------------
this  Agreement  or to any Transaction Document are a part hereof or thereof, as
applicable,  as  if  fully  set  forth  herein  or  therein.

     12.11     Headings.  The headings herein or in any Transaction Document are
               --------
for  reference only and shall not affect the interpretation of this Agreement or
such  Transaction  Document.  Whenever the context requires in this Agreement or
any  Transaction  Document, the masculine pronoun shall include the feminine and
the  neuter,  and  the  singular  shall  include  the  plural.


                                      -27-
<PAGE>
     12.12     Severability.  Whenever  possible,  each  provision  of  this
               ------------
Agreement and any Transaction Document shall be interpreted in such manner as to
be  effective  and  valid  under  Applicable  Law,  but if any provision of this
Agreement  or  any  Transaction  Document is held to be prohibited by or invalid
under  Applicable Law, such provision shall be ineffective only to the extent of
such  prohibition  or  invalidity  without  invalidating  the  remainder of such
provision  or  the  remaining  provisions  of this Agreement or such Transaction
Document.

     12.13     Mutual  Drafting.  The  parties hereto are sophisticated and have
               ----------------
been  represented by lawyers throughout the transactions contemplated hereto who
have  carefully negotiated the provisions hereof.  As a consequence, the parties
do  not  intend  that the presumptions of California Civil Code Section 1654 and
similar  laws  or  rules relating to the interpretation of contracts against the
drafter  of  any  particular  clause  should be applied to this Agreement or any
Transaction  Document  and  therefore  waive  their  effects.

     12.14     Further  Assurances.  Each  party  hereto  shall  execute  such
               -------------------
documents  and  other  papers and take such further actions as may be reasonably
required  or  desirable  to  carry  out  the provisions of this Agreement or any
Transaction  Document  and  the  transactions  contemplated  hereby  or thereby.

     12.15     Expenses.  Except  as  provided in Section 10.2, each party shall
               --------
bear  all  expenses  which such party incurs in connection with the preparation,
execution  and  performance  of this Agreement and the transactions contemplated
hereby,  including,  without  limitation,  all  fees and expenses of its agents,
representatives,  counsel  and accountants.  Without limiting the foregoing, the
Company  shall  pay prior to Closing all amounts owing to the brokers identified
on  Schedule  4.26 (it being agreed that such amounts shall be paid in shares of
    --------------
Company  Common  Stock)  and  Parent  shall  pay  all  amounts owing to the firm
identified  on Schedule 5.6.  Except as described in the preceding sentence, the
               ------------
Surviving  Corporation shall bear all expenses of the Company in connection with
the  Merger  up  to  and  including fifty thousand dollars ($50,000.00), and the
Company  Shareholders  shall bear all expenses of the Company in connection with
the  Merger  which  exceed  fifty  thousand  dollars  ($50,000).

                   [balance of page intentionally left blank]


                                      -28-
<PAGE>
     IN  WITNESS WHEREOF, the parties have executed and delivered this Agreement
and  Plan  of  Merger  as  of  the  first  date  above  written.


                             VSOURCE,  INC.


                             By /s/ Robert C. McShirley, Chairman, President and
                                    Chief Executive Officer



                             OTT  ACQUISITION  CORP.


                             By /s/ Robert  C.  McShirley,  Chairman,  President
                                    and  Chief Executive  Officer



                             ONLINE  TRANSACTION  TECHNOLOGIES,  INC.


                             By /s/  Colin  P.  Kruger,  President


                                /s/  Colin  P.  Kruger


                                /s/  Michael  Shirman


                                      -29-
<PAGE>
                                   SCHEDULE A

                                   DEFINITIONS
                                   -----------

     "ACTION" means any action, suit, proceeding or investigation (provided that
such  investigation  is  by  a  Governmental  Authority).

     "AFFILIATE"  of  a  person  means  a  second  person  who  (i) controls, is
controlled  by  or  is  under common control with the first person, or (ii) is a
member  of  the  immediate  family of the first person, or (iii) a trust for the
benefit  of  the  first  person  or  any  Affiliate  thereof.

     "APPLICABLE  LAW"  means,  with  respect  to  any  person,  any domestic or
foreign,  federal,  state or local statute, law, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, directive, judgment, decree
or  other  requirement  of any Governmental Authority applicable to such person.

     "BENEFIT  PLAN"  means  any  plan,  agreement,  arrangement  or  commitment
(whether  provided  by  insurance,  self-insurance  or  otherwise)  that  is  an
employment,  consulting  or  deferred  compensation  agreement;  or an executive
compensation,  incentive,  bonus,  employee  pension,  profit-sharing,  savings,
retirement,  stock  option,  stock  purchase,  or severance pay plan; or a life,
health,  post-retirement  benefit,  worker's compensation, unemployment benefit,
disability or accident plan; or a holiday, vacation, leave of absence, Christmas
or  other  bonus  practice;  or  expense  reimbursement,  automobile  or  other
transportation allowance; or other employee benefit plan, agreement, arrangement
or  commitment,  including,  without limitation, any "employee benefit plan," as
defined  in  section 3(3) of ERISA, maintained by the Company or with respect to
which  the  Company  has  or  in  the future may have, any contribution or other
liability  or  obligation with respect to any current or former employees of the
Company,  or  their  beneficiaries.

     "BOOKS  AND  RECORDS" means all books and records, including manuals, price
lists, mailing lists, lists of customers, inventory control procedures and data,
sales  and  promotional  materials,  purchasing  materials,  personnel  records,
quality  control  records  and  procedures,  accounting records, tax records and
litigation  files  (regardless  of  the  media  in  which  stored).

     "CGCL"  means  the  California  General  Corporation  Law.

     "CLOSING  PRICE"  means  the  closing  price  of Parent Common Stock (i) on
NASDAQ, as reported in The Wall Street Journal, or (ii) for periods during which
Parent  Common  Stock is not listed on NASDAQ, quoted on the NASD OTC Electronic
Bulletin  Board,  as  reported  in  the  NASD  "pink  sheets" or other reporting
service.

     "CODE"  means the Internal Revenue Code of 1986, as amended.  All citations
to  the  Code,  or  to  the  Treasury  Regulations promulgated thereunder, shall
include  any  amendments  or  any  substitute  or  successor provisions thereto.

     "COMPANY  CAPITAL  STOCK"  means  shares of Company Common Stock or Company
Preferred  Stock.

     "COMPANY  COMMON  STOCK"  means  the  common  stock  of  the  Company.

     "COMPANY  CONTRACT"  has  the  meaning  set  forth  in  Section  4.11.

     "COMPANY  EMPLOYEE  OPTION"  means  an option to purchase shares of Company
Common  Stock  issued to an employee of the Company or to Charlie Webber or Raul
Pallares.

     "COMPANY  PREFERRED  STOCK"  means  the Series A-1 and Series A-2 preferred
stock  of  the  Company.


                                      A-1
<PAGE>
     "COMPANY  PROPRIETARY  ASSET"  means  any  Proprietary  Asset  owned  by or
licensed  to  the  Company  or  otherwise  used  by  the  Company.

     "COMPANY  SHAREHOLDER" means any person who is the record holder of Company
Capital  Stock  immediately  prior  to  the  Effective  Time.

     "COMPANY  WARRANT" means a warrant or option (other than a Company Employee
Option)  to  purchase  shares  of  Company  Common  Stock.

     "COMPANY  WARRANT  HOLDER"  means  any person who is the record holder of a
Company  Warrant  immediately  prior  to  the  Effective  Time.

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

     "EXCHANGE  RATIO"  means  .25163, representing the quotient (rounded to the
5th  decimal  place) of (x) the Total Number of Shares of Parent Common Stock To
Be  Issued,  divided  by  (y)  the sum of (A) the shares of Company Common Stock
outstanding  immediately  prior  to  the  Effective  Time, and (B) the shares of
Company  Common  Stock  which  could  be acquired (irrespective of vesting) upon
conversion  of  all Company Preferred Stock outstanding immediately prior to the
Effective  Time.  The  Exchange  Ratio  shall  be  adjusted to reflect fully the
effect  of any stock split, reverse stock split, stock dividend, reorganization,
recapitalization  or  any  other like change with respect to Parent Common Stock
occurring  after  the  date  hereof  and  prior  to  the  Effective  Time.

     "GAAP"  means  generally  accepted  accounting  principles.

     "GOVERNMENTAL AUTHORITY" means any foreign, domestic, federal, territorial,
state  or  local  governmental  authority,  quasi-governmental  authority  or
instrumentality,  or  any  regulatory,  administrative  or  other agency, or any
political  or  other  subdivision, department or branch of any of the foregoing.

     "JOINDER  AGREEMENT"  has  the  meaning  set  forth  in  Section  8.8.

     "KGI PARTY" means any of Harvey Kibel, Steve Green, JMI Limited, L.P., Adam
Michelin  or  Kibel  Green  Issa,  Inc.

     "LIABILITY"  or  "LIABILITIES"  means,  with  respect  to  any  person, any
liability  or  obligation  of such person of any kind, character or description,
whether  known  or unknown, absolute or contingent, unsecured, joint or several,
due or to become due, vested or unvested, executory, determined, determinable or
otherwise and whether or not the same is required to be accrued on the financial
statements  of  such  person.

     "LOSSES"  means  all losses, costs, claims, liabilities, damages, lawsuits,
demands  and  expenses  (including attorney's fees), and all amounts paid in the
investigation,  defense  or  settlement  of  any  of  the  foregoing.

     "MATERIAL  ADVERSE EFFECT" means, with respect to the Company, any material
adverse  effect  in  the  financial  condition, business, results of operations,
assets,  liabilities,  or operations of the Company.  Any adverse effect that is
proximately  caused  by  the industry in which the Company competes shall not be
taken  into  account  in  determining  whether there has been a Material Adverse
Effect.

     "MERGER  CONSIDERATION  DOLLAR  VALUE"  means  six  million  nine  hundred
twenty-two thousand eight hundred and eight-five dollars ($6,922,885); provided,
                                                                       --------
however  that  such figure shall be subject to adjustment as provided in Article
-------
3.

     "PARENT  COMMON STOCK" means the common stock, $.01 par value per share, of
Parent.


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<PAGE>
     "PERMITS"  means  all  licenses,  permits,  franchises,  approvals,
authorizations,  consents  or  orders  of,  or  filings  with,  any governmental
authority,  whether  foreign,  federal,  state  or  local,  or any other person,
necessary  or  desirable  for  the  past,  present or anticipated conduct of, or
relating  to  the  operation  of  the  business  of  the  Company.

     "PERSON" means an individual, corporation, partnership, association, trust,
estate  or  other  entity  or  organization, including a Governmental Authority.

     "PROPRIETARY  ASSET"  means  any: (a) patent, patent application, trademark
(whether  registered  or unregistered), trademark application, trade name, brand
name,  corporate  name,  domain  name,  fictitious  business  name, service mark
(whether  registered  or  unregistered),  service  mark  application,  copyright
(whether  registered or unregistered), copyright application, maskwork, maskwork
application,  trade secret, know-how, customer list, franchise, system, computer
software,  computer  program, invention, design, blueprint, engineering drawing,
proprietary  product,  technology,  proprietary  right  or  other  intellectual
property  right  or  intangible asset; or (b) right to use or exploit any of the
foregoing.

     "REPLACEMENT  WARRANT"  has  the  meaning  set  forth  in  Section  2.1.

     "REPRESENTATIVE" means any officer, director, principal, major shareholder,
in-house  attorney,  agent,  employee  or  representative.

     "RETURN"  means  all  returns,  declarations, reports, statements and other
documents  required  to be filed in respect of Taxes, and any claims for refunds
of  Taxes,  including and any amendments or supplements to any of the foregoing.
The  term  "Return"  means  any  one  of  the  foregoing  Returns.

     "TAX"  or  "TAXES"  means any income, corporation, gross receipts, profits,
gains,  capital  stock,  capital  duty,  franchise, withholding social security,
unemployment,  disability, property, wealth, welfare, stamp, excise, occupation,
sales,  use,  value  added,  alternative minimum, estimated or other similar tax
(including  any  fee,  assessment or other charge in the nature of or in lieu of
any  tax) imposed by any governmental entity (whether national, local, municipal
or  otherwise)  or  political  subdivision thereof, and any interest, penalties,
additions  to  tax  or  additional  amounts  in  respect  of  the foregoing, and
including  any  transferee or secondary liability in respect of any tax (whether
imposed by law, contractual agreement or otherwise) and any liability in respect
of  any  tax  as  a  result  of  being  a  member.

     "TOTAL  NUMBER  OF  SHARES  OF  PARENT COMMON STOCK TO BE ISSUED" means one
million one hundred thirty thousand nine hundred and fifty (1,130,950) shares of
Parent  Common  Stock.

     "TRANSACTION  DOCUMENT"  means,  when  used  in  reference  to a particular
person,  any  agreement, document or instrument to be executed by such person in
connection  with  the  transactions  contemplated  hereby.

     "WARRANT  HOLDER  AGREEMENT"  has  the  meaning  set  forth in Section 8.9.


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<PAGE>