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                                                                  Exhibit 4.(A)3

                          AGREEMENT AND PLAN OF MERGER

                  AGREEMENT AND PLAN OF MERGER (together will all Exhibits
hereto, the "Agreement"), dated as of February 25, 2002 among iMedeon Inc., a
Georgia corporation (the "Company"), the stockholders of the Company ("Company
Stockholders"), ViryaNet Ltd., an Israeli company ("Parent"), and ViyraNet
Acquisition, Inc. ("Merger Sub"), a Georgia corporation and a subsidiary of
ViryaNet, Inc., the US subsidiary of Parent. Capitalized terms not otherwise
defined herein shall have the meanings ascribed to such terms in Annex I
attached hereto.

                                    RECITALS

                  WHEREAS, the respective boards of directors of each of Parent
and Merger Sub have approved the merger of Merger Sub with and into the Company
(the "Merger") and approved the Merger upon the terms and subject to the
conditions set forth in this Agreement; and

                  WHEREAS, the board of directors of the Company has submitted
this Agreement to the Company Stockholders in accordance with the requirements
of the Georgia Business Corporation Code (the "GCL"); and

                  WHEREAS, all of the Company Stockholders have approved the
Merger and all other transactions contemplated under this Agreement; and

                  WHEREAS, the Company, Company Stockholders, Parent and Merger
Sub desire to make certain representations, warranties, covenants and agreements
in connection with the Merger.

                  NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:

1.       The Merger; Closing; Effective Time; Deliveries Upon Signing

         1.1.      The Merger. Upon the terms and subject to the conditions set
                   forth in this Agreement, at the Effective Time (as defined in
                   Section 1.3) Merger Sub shall be merged with and into the
                   Company and the separate corporate existence of Merger Sub
                   shall thereupon cease. The Company shall be the surviving
                   corporation in the Merger (sometimes hereinafter referred to
                   as the "Surviving Corporation"), and the separate corporate
                   existence of the Company with all its rights, privileges,
                   immunities, powers and franchises shall continue unaffected
                   by the Merger, except as set forth herein. The Merger shall
                   have the effects specified in the GCL.

         1.2.      Closing. The closing of the Merger (the "Closing") shall take
                   place concurrently with the signature of this Agreement at
                   the offices of Parent (the "Closing Date").


         1.3.      Effective Time.  Concurrently with the Closing, the Company
                   and Merger Sub will cause a Certificate of Merger (the
                   "Georgia Certificate of Merger") to be executed, acknowledged
                   and filed with the Secretary of State of Georgia as provided
                   in Section 14-2-1105 of the GCL. The Merger shall become
                   effective when the





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                    Georgia Certificate of Merger has been duly filed with the
                    Secretary of State of Georgia (the "Effective Time").

          1.4.      Deliveries Upon Signing. Prior to signing the Agreement the
                    parties shall deliver each other the deliverables set forth
                    in Section 9 below.

2.        Articles of Incorporation and By-Laws of the Surviving Corporation


          2.1.      Articles of Incorporation.  The Articles of Incorporation of
                    Merger Sub, as in effect immediately prior to the Effective
                    Time, shall be at the Effective Time, the Articles of
                    Incorporation of the Surviving Corporation until thereafter
                    amended as provided by law.


          2.2.      The By-Laws. The Bylaws of Merger Sub, as in effect
                    immediately prior to the Effective Time, shall be, at the
                    Effective Time, the Bylaws of the Surviving Corporation
                    until thereafter amended as provided therein or by
                    applicable law.

3.        Officers and Directors of the Surviving Corporation

          3.1.      Directors. The directors of Merger Sub at the Effective Time
                    shall, from and after the Effective Time, be the directors
                    of the Surviving Corporation until their successors have
                    been duly elected or appointed and qualified or until their
                    earlier death, resignation or removal in accordance with the
                    Charter and the By-Laws.

          3.2.      Officers. The officers of Merger Sub at the Effective Time
                    shall, from and after the Effective Time, be the officers of
                    the Surviving Corporation until their successors have been
                    duly elected or appointed and qualified or until their
                    earlier death, resignation or removal in accordance with the
                    Charter and the By-Laws.

4.        Effect of the Merger on Capital Stock; Exchange of Certificates

          4.1       Conversion of Outstanding Shares. At the Effective Time, as
                    a result of the Merger and without any action on the part of
                    the holder of any capital stock of the Company, the shares
                    of Common Stock, Series A Preferred Stock and Series B
                    Preferred Stock of the Company (each as defined in Section
                    5.3) issued and outstanding immediately prior to the
                    Effective Time (each a "Share" or, collectively, the
                    "Shares") which are held by the Company Stockholders shall
                    be converted into, and become exchangeable for, (A) such
                    number of Ordinary Shares, par value NIS 0.1 per share, of
                    Parent ("Parent Ordinary Shares") set forth next to such
                    Company Stockholder's name and below the column "First
                    Closing" on Schedule 4.1 attached hereto (the "Initial
                    Consideration") (B) such amount of cash or other immediately
                    available funds set forth next to the Company Stockholder's
                    name and below the column "First Closing" on Schedule 4.1
                    attached hereto (the "Cash Consideration") and (C) the right
                    to receive additional consideration ("Additional
                    Consideration"). The Additional Consideration shall be
                    delivered in accordance with Section 4.7 (the "Additional
                    Consideration Payment") and shall be either (i) an amount of
                    cash equal to $462,474, or (ii) subject to the requisite
                    approval of the shareholders of Parent, 905,037 Parent
                    Ordinary Shares (the "Additional Consideration Shares"). The
                    Initial Consideration, the Cash Consideration and the
                    Additional Consideration shall hereinafter be referred to
                    collectively as the "Merger

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                   Consideration."  At the Effective Time, all Shares shall no
                   longer be outstanding and shall be canceled and retired and
                   shall cease to exist, and each certificate (a "Certificate")
                   formerly representing any of such Shares  shall thereafter
                   represent only the right to the Merger Consideration.

                   4.1.1     Parent agrees that at the Effective Time, it shall
                             issue to each of the persons listed on Schedule 4.1
                             attached hereto the ("Management Stockholders") the
                             number of Parent Ordinary Shares set forth next to
                             each person named as a Management Stockholder on
                             Schedule 4.1. In addition, Parent acknowledges and
                             agrees that at the Effective Time, it shall issue
                             to the "Company Optionholders" identified on
                             Schedule 4.1, options exercisable for such number
                             of Parent Ordinary Shares set forth next to each
                             Company Optionholder's name, such options to have
                             an exercise price per share equal to the closing
                             price per share of Parent Ordinary Shares on The
                             NASDAQ National Market ("NASDAQ") on the date
                             immediately preceding the Closing Date and no
                             requirement of vesting.

                   4.1.2     The Management Stockholders and Company
                             Optionholders shall be entitled to receive
                             Additional Consideration pursuant to the terms set
                             forth in Section 4.7.

         4.2.      Non-Transferability. Additional Consideration Payments or
                   delivery of Additional Consideration Shares, as the case may
                   be, will be delivered only to Company Stockholders who were
                   stockholders of record of the Company as of the Closing Date
                   (or, in the event of the death of any Company Stockholder, to
                   any of their spouses or lineal descendants or other estate
                   planning devices created or implemented for the purposes of
                   providing the economic benefits of the Shares to such spouses
                   or lineal descendants upon the death of the Company
                   Stockholder), the persons listed as Management Stockholders
                   on Schedule 4.1 (or, in the event of the death of any
                   Management Stockholder, to any of their spouses or lineal
                   descendants or other estate planning devices created or
                   implemented for the purposes of providing the economic
                   benefits of the Shares to such spouses or lineal descendants
                   upon the death of the Management Stockholder) and persons
                   listed as Company Optionholders on Schedule 4.1 (or, in the
                   event of the death of any Company Optionholder, to any of
                   their spouses or lineal descendants or other estate planning
                   devices created or implemented for the purposes of providing
                   the economic benefits of the Shares to such spouses or lineal
                   descendants upon the death of the Company Optionholder). The
                   right to receive any such Additional Consideration Payments
                   or Additional Consideration Shares, as the case may be, shall
                   be non-transferable and any purported transfer of such right
                   shall be void and of no force and effect, except the right to
                   receive any such Additional Consideration Payments or
                   Additional Consideration Shares, as the case may be, may be
                   transferable in the event of the death of any Company
                   Stockholder, Management Stockholder or Company Optionholder
                   to any of their spouses or lineal descendants or other estate
                   planning devices created or implemented for the purposes of
                   providing the economic benefits





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                   of the Shares to such spouses or lineal descendants upon the
                   death of the Company Stockholder, Management Stockholder or
                   Company Optionholder.

         4.3.      Deleted.

         4.4.      Merger Sub.  At the Effective Time, each share of Common
                   Stock, par value $1.00 per share, of Merger Sub that is
                   issued and outstanding immediately prior to the Effective
                   Time shall be converted into one share of common stock of the
                   Surviving Corporation.

         4.5.      Cancellation of Stock Options and Warrants and Stock Plans.
                   At the Effective Time, each outstanding option to purchase
                   Shares (a "Company Option") under the Stock Plans, whether
                   vested or unvested, shall be canceled without further action
                   and each outstanding warrant or similar security or right
                   exercisable or exchangeable for Shares (a "Company Warrant")
                   shall be canceled without further action. On or prior to the
                   Effective Time, the Company shall take all corporate action
                   necessary to cancel, concurrent with the Merger, the Stock
                   Plans and any agreements between any holders of Company
                   Options or Company Warrants and the Company; provided,
                   however, the effectiveness of such actions by the Company may
                   be conditioned upon the Closing.

         4.6.      Delivery of Certificates. As of the Closing Date, the Company
                   shall cause all Certificates to be delivered to the location
                   where the Closing will occur. Each Certificate shall be
                   delivered with its stock power executed in favor of Parent.
                   Parent shall cancel the Certificates, and, on or immediately
                   after the Effective Time, Parent shall mail or cause to be
                   mailed to the previous holders of the Certificates, at the
                   addresses designated by such holders, certificates
                   representing that number of whole Parent Ordinary Shares that
                   such holders are entitled to receive pursuant to payment of
                   the Initial Consideration.

         4.7.      Delivery of Additional Consideration. Subject to satisfaction
                   or waiver of the relevant provisions of Section 10 below, the
                   Additional Consideration shall be delivered to the Company
                   Stockholders, Management Stockholders and Company
                   Optionholders pursuant to a second closing (the "Second
                   Closing") to be held no later than 90 days after the Closing
                   Date. Unless Parent is unable to obtain any required approval
                   of its shareholders for the issuance of the Additional
                   Consideration Shares, Parent shall deliver the Additional
                   Consideration Shares as the Additional Consideration,
                   provided that if Parent delivers Additional Consideration
                   Shares as the Additional Consideration, the Additional
                   Consideration Shares which would otherwise be deliverable to
                   a Company Optionholder pursuant to this Section 4.7 shall be
                   delivered in the form of options exercisable for such number
                   of Parent Ordinary Shares which have an exercise price equal
                   to the closing price per share of Parent Ordinary Shares on
                   NASDAQ on the date immediately preceding the Second Closing
                   and no requirement of vesting. Parent covenants and agrees
                   that following the Closing, it will submit to its
                   shareholders, as quickly as possible, the matter of the
                   issuance of the Additional Consideration Shares for approval
                   and will use its best efforts to obtain such approval. The
                   delivery of the Additional Consideration at the Second
                   Closing shall be made by Parent to the





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                   Company Stockholders, the Management Stockholders and the
                   Company Optionholders. Any cash payments made by Parent to
                   the Company Stockholders, Management Stockholders and Company
                   Optionholders at the Second Closing shall be made by wire
                   transfer to a previously designated account of such Company
                   Stockholder, Management Stockholder or Company Optionholder.
                   The Additional Consideration to be delivered to each Company
                   Stockholder, Management Stockholder and Company Optionholder
                   shall equal (subject to any reduction by reason of Section
                   5.24) the amount of cash or number of Parent Ordinary Shares
                   set beside each Person's name and below the column Second
                   Closing on Scheulde 4.1.

         4.8.      Legends. It is understood that the certificates evidencing
                   the Parent Ordinary Shares issued to the holders of Shares in
                   return for the surrender of their Certificates shall bear one
                   or all of the following legends:


                   4.8.1.    "These securities have not been registered under
                             the Securities Act of 1933. They may not be sold,
                             offered for sale, pledged or hypothecated in the
                             absence of a registration statement in effect with
                             respect to the securities under such Act or an
                             opinion of counsel satisfactory to the Company that
                             such registration is not required."

                   4.8.2.    "The holder of this security registered with the
                             Company is that which is noted on the face of this
                             security. Such holder has entered into an agreement
                             with the Company in which such holder has agreed
                             not to sell, offer to sell, pledge, hypothecate or
                             otherwise transfer the shares represented by this
                             security for a limited period of time."

                   4.8.3.    Any legend required by the "blue sky" or securities
                             laws of any state.

         4.9.      Dissenters' Rights. Pursuant to Section 8.6, each Company
                   Stockholder shall agree that it waives any rights or claims
                   relating to any dissenters' or similar rights in connection
                   with the Merger and that it will not have a right to exercise
                   any dissenters' or similar rights in connection with such
                   Merger.

         4.10.     Tax Treatment. The parties acknowledge and agree that they
                   intend for the Merger to be a taxable transaction for U.S.
                   federal income tax purposes. The parties note that the use of
                   a second tier subsidiary by Parent for purposes of
                   effectuating the transaction, and the payment of a portion of
                   the consideration in cash were done with the intention that
                   such actions would cause the transaction to become taxable
                   for US income tax purposes and cause the transaction not to
                   qualify as a "reorganization" within the meaning to Sec. 368
                   of the Internal Revenue Code of 1986 (the "Code"). The
                   parties also acknowledge that each "five-percent transferee
                   shareholder" within the meaning of Treasury Regulations
                   section 1.367(a)-3(c)(5)(ii) does not intend to file a gain
                   recognition agreement (as described in Treasury Regulations
                   section 1.367(a)-8) and that such failure to file such gain
                   recognition agreement was intentional on the part of each
                   such five-percent transferee shareholder and with the
                   expectation that the transaction would be taxable to each
                   such five-percent transferee shareholder. The parties agree
                   to file U.S. federal income tax returns in a manner
                   consistent with the treatment of the Merger as a taxable
                   transaction for U.S. federal income tax purposes, unless
                   otherwise advised in writing by (i) a Governmental Authority,
                   or (ii) such party's tax and/or legal advisors, that

<PAGE>

                   under applicable law, such returns should be filed in a
                   manner inconsistent with such treatment. Each party agrees to
                   use reasonable efforts to notify the other parties to the
                   Agreement in writing promptly if such party is notified in
                   writing by a Governmental Authority or by its tax and/or
                   legal advisor that the Governmental Authority or such tax
                   and/or legal advisor is asserting or concluding that the
                   Merger is a reorganization under the Code and is, therefore,
                   not currently taxable and will take reasonable efforts to
                   consult with the other parties to this Agreement as to
                   whether and how to respond to such advice prior to filing any
                   such return or amending any previously filed returns. Each of
                   the Company and the Company Stockholders (i) acknowledges and
                   agrees that it is not relying upon Parent, Merger Sub, the
                   Company or any Representative thereof as to any opinion
                   regarding the tax treatment or tax consequences of the
                   Merger, and (ii) for good and valuable consideration the
                   receipt and sufficiency of which is hereby acknowledged, on
                   behalf of itself and each of its Representatives, releases
                   and forever discharges the Parent, Merger Sub, the Company or
                   any Representative thereof from any and all claims, demands,
                   proceedings or causes of action relating to any actions by
                   the Parent, Merger Sub, the Company or any Representative
                   taken in accordance with this Section 4.10


5.       Representations and Warranties of the Company

         The Company hereby represents and warrants, to and for the benefit of
         Parent and Merger Sub, (any reference to the Company shall be also
         deemed to include the Subsidiaries, as defined in Section 5.1.5 below)
         that the statements contained in this Section 5 are correct and
         complete as of the date of this Agreement, except as set forth in the
         disclosure schedule attached hereto as Schedule 5 (the "Disclosure
         Schedule"). The Disclosure Schedule shall be deemed adequate to
         disclose an exception to a representation or warranty made only to the
         extent that the Disclosure Schedule identifies the exception with
         particularity and describes the relevant facts in reasonable detail,
         provided that an item adequately described on a Schedule shall be
         adequately described by any cross-reference to such Schedule.

         5.1.      Due Organization; Subsidiaries; Etc.

                   5.1.1.    The Company is duly organized, validly existing and
                             in good standing under the laws of the State of
                             Georgia. The Company has all requisite corporate
                             power and authority to conduct its business in the
                             manner in which its business is currently being
                             conducted and to own and use its assets in the
                             manner in which its assets are currently owned and
                             used.

                   5.1.2.    The Company has not conducted any business under or
                             otherwise used, for any purpose or in any
                             jurisdiction, any fictitious name, assumed name,
                             trade name or other name, other than the name
                             "iMedeon" or "Future Horizons".

                   5.1.3.    The Company is not and has not been required to be
                             qualified, authorized, registered or licensed to do
                             business as a foreign corporation in any
                             jurisdiction, except where the failure to be so
                             qualified, authorized, registered or licensed has
                             not had and will not have a Material Adverse Effect
                             on the Company.

<PAGE>

                   5.1.4.    Part 5.1.4 of the Disclosure Schedule accurately
                             sets forth (i) the names of the members of the
                             Company's board of directors, (ii) the names of the
                             members of each committee of the Company's board of
                             directors, and (iii) the names and titles of the
                             Company's officers.

                   5.1.5.    The Company does not own, directly or indirectly,
                             any controlling interest in any entity and the
                             Company has never owned, beneficially or otherwise,
                             any shares or other securities of, or any direct or
                             indirect equity interest in, any entity (a
                             "Subsidiary"). Each of the Subsidiaries is duly
                             organized, validly existing and in good standing
                             under the laws of the state of its incorporation
                             and has all requisite corporate power and authority
                             to conduct its business in the manner in which its
                             business is currently being conducted and to own
                             and use its assets in the manner in which its
                             assets are currently owned and used. The Company
                             owns, beneficially and of record, all of the issued
                             and outstanding share capital of each Subsidiary
                             and all rights thereto free and clear of liens,
                             claims, charges and other encumbrances and all
                             rights, options to purchase, proxies, voting
                             agreements, calls or commitments of every kind. The
                             Company has not agreed and is not obligated to make
                             any future investment in or capital contribution to
                             the Subsidiaries or any entity. The Company has not
                             guaranteed and is not responsible or liable for any
                             obligation of the Subsidiaries or any of the
                             entities in which it owns or has owned any equity
                             interest. All issued and outstanding share capital
                             of each Subsidiary was duly authorized and is
                             validly issued and outstanding, fully paid and
                             non-assessable.


         5.2.      Charter Documents; Records. The Company has delivered to
                   Parent accurate and complete copies of: (A) Charter documents
                   of the Company, including all amendments thereto; (B) the
                   stock records of the Company; and (C) the minutes and other
                   records of the meetings and other proceedings (including any
                   actions taken by written consent or otherwise without a
                   meeting) of the stockholders of the Company, the board of
                   directors of the Company and all committees of the board of
                   directors of the Company. There have been no formal meetings
                   or other proceedings of the stockholders of the Company, the
                   board of directors of the Company or any committee of the
                   board of directors of the Company that are not fully
                   reflected in such minutes or other records. Except as set
                   forth in Part 5.2 of the Disclosure Schedule, there has not
                   been any violation of any of the provisions of the Company's
                   Charter documents, nor has the Company taken any action that
                   is inconsistent with any resolution adopted by the Company's
                   stockholders, the Company's board of directors or any
                   committee of the Company's board of directors, which would
                   have a Material Adverse Effect on the Company. Except as set
                   forth in Part 5.2 of the Disclosure Schedule, the books of
                   account, stock records, minute books and other records of the
                   Company are accurate, up-to-date and complete in all material
                   respects, and have been maintained in accordance with prudent
                   business practices.

<PAGE>

         5.3.      Capitalization. The authorized share capital of the Company
                   immediately prior to the Closing shall be 28,112,968
                   consisting of (i) 20,588,186 shares of Common Stock no par
                   value per share, of which 5,918,730 shares are issued and
                   outstanding (the "Common Stock"), (ii) 577,186 share of
                   Series A Convertible Participating Preferred Stock, no par
                   value per share, of which 448,552 are issued and outstanding
                   (the "Series A Preferred Stock"), and (iii) 6,197,596 shares
                   of Series B Redeemable Convertible Participating Preferred
                   Stock, no par value per share, of which 5,084,524 are issued
                   and outstanding (the "Series B Preferred Stock" and,
                   collectively with the Common Stock and the Series A Preferred
                   Shares, the "Company Shares"). All issued and outstanding
                   Company Shares were duly authorized and are validly issued
                   and outstanding, fully paid and non-assessable. The issued
                   and outstanding share capital of the Company, on a fully
                   diluted and as-converted basis taking into consideration all
                   convertible or exchangeable securities and other interests in
                   the Company is set forth in Part 5.3 of the Disclosure
                   Schedule. Except as set forth in Part 5.3 of the Disclosure
                   Schedule, at the Closing Date, there are not any outstanding
                   or authorized subscriptions, options, warrants, calls,
                   rights, commitments, convertible securities, or any other
                   agreements of any character directly or indirectly obligating
                   the Company to issue any of its shares or any securities
                   convertible into, or exchangeable for, or evidencing the
                   right to subscribe for, any shares of the Company.


         5.4.      Financial Statements.

                   5.4.1.    The Company has delivered to Parent the following
                             financial statements and notes (collectively, the
                             "Company Financial Statements"):

                             5.4.1.1.  The consolidated audited balance sheets
                                       of the Company as of December 31, 1999,
                                       and 2000, and the related audited
                                       statements of operations and statements
                                       of stockholders' equity of the Company
                                       for the years then ended, together with
                                       the notes thereto and the unqualified
                                       report and opinion of a recognized firm
                                       of independent certified accountants
                                       relating thereto;

                             5.4.1.2.  the unaudited balance sheet of the
                                       Company as of December 31, 2001 (the
                                       "Unaudited Balance Sheet"), and the
                                       related unaudited statement of operations
                                       of the Company for the twelve months then
                                       ended; and


                             5.4.1.3.  A trial balance sheet dated as of
                                       January 31, 2002 (the "Trial Balance
                                       Sheet").

                   5.4.2.    The Company Financial Statements are accurate and
                             complete in all material respects and present
                             fairly the financial position of the Company as of
                             the respective dates thereof and the results of
                             operations of the Company for the periods covered
                             thereby. The Company Financial Statements have been
                             prepared in accordance with US generally accepted
                             accounting principles consistently applied
                             throughout the periods covered and comply with the
                             requirements of all applicable US regulations,
                             except

<PAGE>

                             that the Unaudited Balance Sheet and the Trial
                             Balance Sheet may not contain all footnotes
                             required by generally accepted accounting
                             principles or normal year-end adjustments.

                   5.4.3.    All proper and necessary books of account, minute
                             books, registers and records have been maintained
                             by the Company, are in its possession and contain
                             accurate information relating to all material
                             transactions to which the Company has been a party,
                             except where the failure to maintain such books of
                             account, minute books, registers and records would
                             not have a Material Adverse Effect on the Company.

                   5.4.4.    A complete list of the Company's debts and loan
                             facilities as of the date of the Balance Sheet, is
                             set forth in Part 5.4.4 of the Disclosure Schedule.


         5.5.      Absence of Changes.  Except as set forth in Part 5.5 of the
                   Disclosure Schedule, since December 31, 2001:

                   5.5.1.    there has not been any material adverse change in
                             the Company's business, prospects, operations,
                             assets, liabilities, debts, work force or its
                             condition (financial or otherwise) and no event has
                             occurred that will, or could reasonably be expected
                             to, have a Material Adverse Effect on the Company;

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


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


                   5.5.4.    except as set forth in Part 5.3 of the Disclosure
                             Schedule, the Company has not sold, issued or
                             authorized the issuance of (i) any capital stock or
                             other security, (ii) any option or right to acquire
                             any capital stock or any other security or (iii)
                             any instrument convertible into or exchangeable for
                             any capital stock or other security;

                   5.5.5.    the Company has not amended or waived any of its
                             rights under, or permitted the acceleration of
                             vesting under, (i) any provision of employee
                             options plans (written or oral), (ii) any provision
                             of any agreement evidencing any outstanding Option,
                             or (iii) any restricted stock purchase agreement;

                   5.5.6.    except as required by this Agreement, there has
                             been no amendment to the Company's charter
                             documents, and the Company has not effected or been
                             a party to any recapitalization, reclassification
                             of shares, stock split, reverse stock split or
                             similar transaction;


                   5.5.7.    the Company has not formed any subsidiary or
                             acquired any equity interest or other interest in
                             any other Entity;

<PAGE>

                   5.5.8.    the Company has not made any capital expenditure
                             which, when added to all other capital expenditures
                             made on behalf of the Company since such date,
                             exceeds $10,000;


                   5.5.9.    the Company has not (i) entered into or permitted
                             any of the assets owned or used by it to become
                             bound by any Contract that is or would constitute a
                             Material Agreement (as defined in Section 5.10), or
                             (ii) amended or prematurely terminated, or waived
                             any material right or remedy under, any such
                             Contract;

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

                   5.5.11.   the Company has not written off as uncollectible,
                             or established any extraordinary reserve with
                             respect to, any account receivable or other
                             indebtedness;

                   5.5.12.   the Company has not made any pledge of any of its
                             assets or otherwise permitted any of its assets to
                             become subject to any Encumbrance, except for
                             pledges of immaterial assets made in the ordinary
                             course of business and consistent with the
                             Company's past practices;

                   5.5.13.   the Company has not (i) lent money to any Person,
                             or (ii) incurred or guaranteed any indebtedness for
                             borrowed money;

                   5.5.14.   the Company has not (i) established or adopted any
                             employee benefit plan, (ii) paid any bonus or made
                             any profit-sharing or similar payment to, or
                             increased the amount of the wages, salary,
                             commissions, fringe benefits or other compensation
                             or remuneration payable to, any of its directors,
                             officers or employees, or (iii) hired any new
                             employees;

                   5.5.15.   there has been no resignation or termination of
                             employment of any officer or key employee of the
                             Company;

                   5.5.16.   the Company has not changed any of its methods of
                             accounting or accounting practices in any respect;

                   5.5.17.   the Company has not made any Tax election;

                   5.5.18.   the Company has not commenced or settled any Legal
                             Proceeding;


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


                   5.5.20.   the Company has not agreed or committed to take any
                             of the actions referred to in clauses 5.5.3 through
                             5.5.19 above.







<PAGE>

         5.6.      Properties and Assets. Full and accurate details of the
                   Company's material properties and assets are contained in
                   Part 5.6 of the Disclosure Schedule. Except as disclosed in
                   Part 5.6 of the Disclosure Schedule or in the notes to the
                   Company Financial Statements, the Company has good title to
                   its assets, including without limitation those reflected in
                   the Company Financial Statements, free and clear of any
                   right, interest or equity of any individual or entity
                   (including any right to acquire, option, or right of
                   preemption) or any mortgage, charge, pledge, Lien, or
                   assignment, or any other encumbrance or security interest or
                   arrangement of whatsoever nature over or in the relevant
                   property ("Security Interests"). With respect to the assets
                   that are leased, the Company is in compliance with all
                   material provisions of such leases, such leases are valid and
                   binding, and, to the best of its knowledge, the Company holds
                   leasehold interests in such assets free and clear of all
                   Security Interests, except for Security Interests that, both
                   individually and in the aggregate, would not have a material
                   adverse effect on the Company.

         5.7.      Bank Accounts; Receivables.

                   5.7.1.    Part 5.7.1 of the Disclosure Schedule provides
                             accurate information with respect to each account
                             maintained by or for the benefit of the Company at
                             any bank or other financial institution.

                   5.7.2.    Part 5.7.2 of the Disclosure Schedule provides an
                             accurate and complete breakdown of all accounts
                             receivable, notes receivable and other receivables
                             of the Company as of February 7, 2002. Except as
                             set forth in Part 5.7.2 of the Disclosure Schedule,
                             all existing accounts receivable of the Company
                             (including those accounts receivable reflected on
                             the Unaudited Balance Sheet that have not yet been
                             collected and those accounts receivable that have
                             arisen since February 7, 2002 and have not yet been
                             collected) (i) represent valid obligations of
                             customers of the Company arising from bona fide
                             transactions entered into in the ordinary course of
                             business, (ii) are current and, to the Company's
                             best knowledge, will be collected in full when due,
                             without any counterclaim or set off.

         5.8.      Equipment; Leasehold.

                   5.8.1.    All material items of equipment and other tangible
                             assets owned by or leased to the Company are
                             adequate for the uses to which they are being put,
                             are in good condition and repair (ordinary wear and
                             tear excepted) and are adequate for the conduct of
                             the Company's business in the manner in which such
                             business is currently being conducted.

                   5.8.2.    The Company does not own any real property or any
                             interest in real property, except for the leasehold
                             created under the real property lease identified in
                             Part 5.10 of the Disclosure Schedule.

         5.9.      Intellectual Property and Other Intangible Assets.

                   5.9.1.    As used herein, the term "Company Intellectual
                             Property" shall mean all registered patents,
                             designs, copyrights and trademarks, all
                             applications for registration thereof, and all
                             computer programs including, but not

<PAGE>

                             limited to, computer programs embodied in
                             semiconductor chips, and related flow-charts,
                             programmer notes, updates and data, whether in
                             object or source code form, developed, or used in
                             connection with the business of the Company, and
                             all hardware, algorithms, utilities flowcharts,
                             logic, documentation, processes, formulations,
                             data, experimental methods, or results,
                             descriptions, business or scientific plans,
                             depictions, customer lists and any other written,
                             printed or electronically stored materials or
                             information, including specifications, pricing
                             plans, market research or data, potential marketing
                             strategies, prospective users and distribution
                             channels, engineering drawings, information
                             concerning specialized suppliers, specifications
                             for products and/ or processes and/or software,
                             test protocols, and all other materials relating
                             thereto, and copies thereof in any storage media,
                             and all other works of authorship, inventions,
                             concepts, ideas, and discoveries developed,
                             discovered, conceived, created, made, reduced to
                             practice, or used by the Company and all
                             intellectual property rights therein, including,
                             without limitation, all copyrights in the United
                             States and elsewhere, including all rights of
                             registration and publication, rights to create
                             derivative works, and all other rights incident to
                             copyright ownership, for the residue now unexpired
                             of the present term of any and all such copyrights
                             and any term thereafter granted during which such
                             information is entitled to copyright, and all
                             inventions (patentable or unpatentable), trade
                             secrets, know-how, ideas and confidential
                             information embodied or reflected in such
                             information, including any shop rights, for the
                             longest period of protection accorded to such
                             interests under applicable law.

                   5.9.2.    Except as specifically set forth in Part 5.9.2 of
                             the Disclosure Schedule, (i) the Company owns or
                             has the right to use, free and clear of all Liens,
                             claims and restrictions the Company Intellectual
                             Property used in the conduct of its business or
                             deemed by the Company necessary for use in the
                             conduct of its business as presently conducted,
                             (ii) to the best of the Company's knowledge, such
                             Company Intellectual Property does not infringe
                             upon or violate any right, lien, or claim of
                             others, including without limitation, its present
                             or former employees or the former employers of all
                             such persons. Except as set forth in Part 5.9.2 of
                             the Disclosure Schedule, the Company is not
                             currently obligated or under any liability
                             whatsoever to make any payments by way of
                             royalties, fees or otherwise to any owner or
                             licensee of, or other claimant to, any patent,
                             trademark, service mark, trade name, copyright or
                             other intangible asset, with respect to the use
                             thereof or in connection with the conduct of its
                             business or otherwise.


                   5.9.3.    Any and all Company Intellectual Property of any
                             kind which has been developed or is currently being
                             developed by any of the Company or any employees of
                             the Company (but as to employees including only
                             Company Intellectual Property which is developed by
                             such employees while such

<PAGE>

                             employees are employed by the Company and which is
                             developed by such employees within the scope of
                             their employment with the Company) shall be the
                             property solely of the Company. The Company has
                             taken security measures to protect the secrecy and
                             confidentiality of all the Company Intellectual
                             Property, which measures are reasonable and
                             customary in the industry in which the Company
                             operates. Each person who, either alone or in
                             concert with others, developed, invented,
                             discovered, derived, programmed or designed the
                             Company Intellectual Property, or who has knowledge
                             of or access to information about the Company
                             Intellectual Property, has entered into a written
                             non-disclosure agreement with the Company regarding
                             ownership and treatment of the Company Intellectual
                             Property, in a form reasonably satisfactory to the
                             Company.

                   5.9.4.    Neither the Company nor any of its directors,
                             officers or employees has received any
                             communications alleging that the Company has
                             violated or by conducting its business as currently
                             conducted, would violate, any of the patents,
                             trademarks, service marks, trade names, copyrights
                             or trade secrets or other proprietary rights of any
                             other person or entity. Neither the Company nor any
                             of its directors, officers or employees has
                             received notice nor is it otherwise aware of any
                             infringement of or conflict with asserted rights of
                             others, with respect to any of the Company
                             Intellectual Property, or of any facts, or
                             assertion of any facts, which would render any of
                             the Company Intellectual Property invalid or
                             unenforceable.

                    5.9.5.   To the best knowledge of the Company, none of the
                             Company's employees, officers or directors are
                             obligated under any contract (including licenses,
                             covenants or commitments of any nature) or other
                             agreement, or subject to any judgment, decree or
                             order of any court or administrative agency, that
                             would interfere with the use of such persons' best
                             efforts to promote the interests of the Company or
                             that would conflict with the Company's business as
                             conducted and as proposed to be conducted. To the
                             best knowledge of the Company, neither the
                             execution nor delivery of the Agreement, nor the
                             carrying on of the Company's business by employees
                             of the Company, nor the conduct of the Company's
                             business as proposed to be conducted, will
                             materially conflict with or result in a material
                             breach of the terms, conditions or provisions of,
                             or constitute a material default under, any
                             contract, covenant or instrument under which any of
                             the Company's employees, officers or directors is
                             now obligated. It is not currently anticipated to
                             become, necessary to utilize any inventions, and
                             specifically, patent applications, of any of the
                             Company's employees (or people the Company
                             currently intends to hire) made prior to their
                             employment by the Company other than those that
                             have been assigned to the Company pursuant to valid
                             and legally binding instruments of assignment.

                   5.9.6.    The Company Intellectual Property owned by the
                             Company constitutes all of the Company Intellectual
                             Property necessary to enable the Company to





<PAGE>

                             conduct its business in the manner in which such
                             business has been and is being conducted. Except as
                             set forth in Part 5.9.6 of the Disclosure Schedule,
                             the Company has not licensed any of the Company
                             Intellectual Property to any Person on an exclusive
                             basis, nor has the Company entered into any
                             covenant not to compete or Contract limiting its
                             ability to exploit fully any of its Company
                             Intellectual Property or to transact business in
                             any market or geographical area or with any Person.

         5.10.     Agreements and Trading.

                   5.10.1    All the material agreements to which the Company is
                             a party (including instruments, leases, licenses,
                             arrangements, or undertakings of any nature,
                             written or oral) (the "Material Agreements") are
                             listed in Part 5.10.1 of the Disclosure Schedule.

                   5.10.2    To the best of the Company's knowledge, and except
                             as set forth in Part 5.10.2 of the Disclosure
                             Schedule, all the Material Agreements are in full
                             force and effect and the Company has no knowledge
                             of the invalidity of or grounds for rescission,
                             avoidance or repudiation of any of the Material
                             Agreements and, except as set forth in Part 5.10.2
                             of the Disclosure Schedule, the Company has not
                             received any notice of any intention to terminate
                             any such agreement.

                   5.10.3    To the best of the Company's knowledge and other
                             than as set forth in Part 5.10.3 of the Disclosure
                             Schedule, the Company and all third parties with
                             whom it has transacted business have performed in
                             all respects all of their material obligations
                             under the Material Agreements, except for such
                             non-performance that, both individually and in the
                             aggregate, would not have a Material Adverse Effect
                             on the Company. To the best of the Company's
                             knowledge, and except as set forth in Part 5.10.3
                             of the Disclosure Schedule, no party to any of the
                             Material Agreements is in breach or in default in
                             any respect of its material obligations thereunder.
                             Except as set forth in Part 5.10.3 of the
                             Disclosure Schedule, no party to any of the
                             material Agreements has made a claim of which the
                             Company is aware to the effect that the Company has
                             failed to perform a material obligation thereunder.

                   5.10.4.   Except as set forth in Part 5.10.4 of the
                             Disclosure Schedule, there are no agreements,
                             promises or understandings in force restricting the
                             competitive freedom of the Company to provide and
                             take goods and services by such means and from and
                             to such individuals or entities as it may from time
                             to time think fit.

                   5.10.5.   The Company has delivered to Parent accurate and
                             complete copies of all written Material Agreements
                             identified in Part 5.10.5 of the Disclosure
                             Schedule, including all amendments thereto. Part
                             5.10.5 of the Disclosure Schedule provides an
                             accurate description of the terms of each Material
                             Agreement that is not in written form. Each
                             Material Agreement identified in Part 5.10.1 of the
                             Disclosure Schedule is valid and in full

<PAGE>

                             force and effect, and, to the Company's best
                             knowledge, is enforceable by the Company in
                             accordance with its terms, subject to (i) laws of
                             general application relating to bankruptcy,
                             insolvency and the relief of debtors, and (ii)
                             rules of law governing specific performance,
                             injunctive relief and other equitable remedies.

                   5.10.6.   Except as set forth in Part 5.10.6 of the
                             Disclosure Schedule:


                             5.10.6.1. the Company has not violated or breached,
                                       or committed any material default under,
                                       any Material Agreement, and, to the
                                       Company's best knowledge, no other Person
                                       has violated or breached, or committed
                                       any material default under, any Material
                                       Agreement;

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

                             5.10.6.3. the Company has not received any notice
                                       or other communication regarding any
                                       actual or possible material violation or
                                       breach of, or material default under, any
                                       Material Agreement; and


                             5.10.6.4. the Company has not waived any of its
                                       rights under any Material Agreement.


                   5.10.7.   No Person is renegotiating, or has a right pursuant
                             to the terms of any Material Agreement to
                             re-negotiate, any amount paid or payable to the
                             Company under any Material Agreement or any other
                             material term or provision of any Material
                             Agreement.

                   5.10.8.   The Material Agreements identified in Part 5.10.1
                             of the Disclosure Schedule collectively constitute
                             all of the Contracts necessary to enable the
                             Company to conduct its business in the manner in
                             which its business is currently being conducted.

                   5.10.9.   Part 5.10.9 of the Disclosure Schedule identifies
                             and provides a brief description of each material
                             proposed Contract as to which any bid, offer,
                             award, written proposal, term sheet or similar
                             document has been submitted or received by the
                             Company regarding the business of the Company since
                             June 30, 2001, or which is otherwise still pending.

                   5.10.10.  Part 5.10.10 of the Disclosure Schedule provides an
                             accurate description and breakdown of the Company's
                             backlog under Material Agreements.







<PAGE>

         5.11.     Capital Expenditure and Commitments.  Except as disclosed in
                   Part 5.11 of the Disclosure Schedule or in the Company
                   Financial Statements:

                   5.11.1.     The Company has not undertaken to make any
                               material capital commitment, expenditure or
                               purchase in excess of $10,000.

                   5.11.2.     The Company is not a party to any material hire,
                               hire purchase, credit sale or conditional sale
                               agreement or any contract providing for payment
                               on deferred terms in respect of assets purchased
                               by the Company.

                   5.11.3.     The Company is not in breach of any material
                               obligation under any material deed, agreement or
                               transaction to which it is a party, and to the
                               best of its knowledge, no third party that has
                               transacted business with the Company is in
                               breach of any of its material obligations under
                               any material deed, agreement, or transaction
                               with the Company to which it is a party.

                   5.11.4.     The Company is not aware of any Security Interest
                               on, over or affecting the issued or unissued
                               share capital of the Company and there is no
                               agreement or commitment to give or create any
                               such Security Interest and no claim has been
                               made by any Person to be entitled to any such
                               Security Interest.

                   5.11.5.     The Company has not given any guarantee,
                               indemnity or security for, or otherwise agreed to
                               become directly or contingently liable for, any
                               obligation of any other individual or entity,
                               except in its ordinary course of business, and to
                               the best of its knowledge, no individual or
                               entity has given any guaranty of or security for
                               any of the Company's obligations.

                   5.11.6.     There are in force no powers of attorney given by
                               the Company with respect to any asset or business
                               of the Company, and no individual or entity, as
                               agent, representative, distributor or otherwise,
                               is entitled or authorized to bind or commit the
                               Company to any obligation not in the ordinary
                               course of the Company's business.

                   5.11.7.     The Company has not applied for or received any
                               grant or allowance from any governmental
                               authority.

         5.12.     Compliance with Legal Requirements.

                   5.12.1.     To the best of its knowledge, information and
                               belief, the Company has carried on its business
                               and affairs in all material respects in
                               accordance with all applicable laws and
                               regulations, to the extent material to the
                               Company's business or assets, including, inter
                               alia, in accordance with the provisions of the
                               GCL, and in accordance with the Company's charter
                               documents, and, the Company is not aware of any
                               material violation or default with respect to any
                               statute, regulation, order, decree, or judgment
                               of any court or any governmental agency which
                               could have a material adverse effect upon the
                               Company's assets or business, and the Company has
                               been granted and there are now in force all
                               material approvals, consents, and licenses
                               necessary for the carrying on of its business in
                               the places and in the manner in which it is now
                               carried on, and, the Company





<PAGE>

                                is not aware of any circumstances which evidence
                                or indicate that any such approvals, consents or
                                licenses, to the extent material to the
                                Company's business or assets, are likely to be
                                suspended, canceled, revoked or not renewed.

                   5.12.2.      The copy of each of the charter documents of the
                                Company provided to Parent, is complete, true
                                and accurate and has not been amended or
                                repealed.

                   5.12.3.      All documents required to be filed with or
                                delivered to the applicable Georgia or federal
                                authorities in respect of the Company have been
                                properly filed or delivered in a timely manner,
                                except for such non compliance that, both
                                individually and in the aggregate, would not
                                have a Material Adverse Effect on the Company.

         5.13.     Governmental Authorizations. Part 5.13 of the Disclosure
                   Schedule identifies each material Governmental Authorization
                   held by the Company, and the Company has delivered to Parent
                   accurate and complete copies of all Governmental
                   Authorizations identified in Part 5.13 of the Disclosure
                   Schedule. The Governmental Authorizations identified in Part
                   5.13 of the Disclosure Schedule are valid and in full force
                   and effect, and collectively constitute all Governmental
                   Authorizations necessary to enable the Company to conduct its
                   business in the manner in which its business is currently
                   being conducted. Except as set forth in Part 5.13 of the
                   Disclosure Schedule, the Company is and has been in
                   substantial compliance with the terms and requirements of the
                   respective Governmental Authorizations identified in Part
                   5.13 of the Disclosure Schedule. The Company has not received
                   any notice or other communication from any Governmental Body
                   regarding (a) any actual or possible violation of or failure
                   to comply with any term or requirement of any Governmental
                   Authorization, or (b) any actual or possible revocation,
                   withdrawal, suspension, cancellation, termination or
                   modification of any Governmental Authorization.

         5.14.     Tax Matters.

                   5.14.1.      To the best of the Company's knowledge, the
                                Company Financial Statements make full
                                provisions for all Taxes for which the Company
                                was then or thereafter became or may hereafter
                                become liable or accountable in respect of or by
                                reference to any income, profit, receipt, gain,
                                transaction, agreement, distribution or event
                                which was earned, accrued, received, or
                                realized, entered into, and the Company promptly
                                paid or fully provided in its books of account
                                for all Taxes for which it has or may hereafter
                                become liable or accountable in the period from
                                the date of its incorporation to the Closing
                                Date.

                   5.14.2.      To the best of the Company's knowledge, the
                                Company has at all times and within the
                                requisite time limits promptly, fully and
                                accurately observed, performed and complied with
                                all material obligations or conditions imposed
                                on it, or to which any claim, deduction,
                                allowance or relief made, claimed by or afforded
                                to it was made subject, under any

<PAGE>

                                legislation relating to Taxes, except for such
                                non-compliance that, both individually and in
                                the aggregate, would not have a Material Adverse
                                Effect on the Company.

                   5.14.3.      The Company is not aware of any circumstances
                                which will or may, whether by lapse of time or
                                the issue of any notice of assessment or
                                otherwise, give rise to any dispute with any
                                relevant Government Body in relation to its
                                liability or accountability for Taxes, any claim
                                made by it, any relief, deduction, or allowance
                                afforded to it, or in relation to the status or
                                character of the Company or any of its
                                enterprises under or for the purpose of any
                                provision of any legislation relating to Taxes,
                                except for such dispute or claim that, both
                                individually and in the aggregate, would not
                                have a Material Adverse Effect on the Company.

         5.15.     Employees.

                   5.15.1.      Full particulars of all the officers, employees
                                and consultants of the Company (each, an
                                "Employee"), including their present
                                compensation packages, are disclosed in Part
                                5.15.1 of the Disclosure Schedule, which
                                particulars show all material benefits
                                including, without limitation, salaries,
                                directors' fees, social benefits, bonuses,
                                commissions, profit shares, automobile,
                                reimbursement of expenses and benefits in kind
                                ("Benefits") payable or which the Company is
                                bound to provide (whether now or in the future)
                                to each officer, employee and consultant of the
                                Company and are true, accurate and complete.
                                None of the Employees is entitled to any bonuses
                                (whether in cash or otherwise) in connection
                                with his/her employment during 2001 and the
                                Company did not undertake, whether in writing or
                                otherwise, to grant any of the Employees bonuses
                                in connection with 2001.

                   5.15.2.      Except as set forth in Part 5.15.2 of the
                                Disclosure Schedule, no key employee of the
                                Company has been dismissed in the last six
                                months or has given notice of termination of his
                                employment.

                   5.15.3.      Subject to the provisions of any applicable
                                Georgia law and binding custom and except as set
                                forth in Part 5.15.1 of the Disclosure Schedule,
                                there are no agreements or arrangements (whether
                                legally enforceable or not) for the payment of
                                any pensions, allowances, lump sums, or other
                                like benefits on retirement or on death or
                                termination or during periods of sickness or
                                disablement for the benefit of any officer or
                                former officer or employee or former employee of
                                the Company or for the benefit of the dependents
                                of any such individual in operation at the date
                                hereof.

                   5.15.4.      Except as set forth in Part 5.15.3, all the
                                Benefits to which any officer or former officer
                                or employee or former employee of the Company is
                                or may be entitled including, inter alia,
                                severance pay, leave and health, have been paid
                                or adequately provided for in the Company
                                Financial Statements.

<PAGE>

                   5.15.5.      A complete list of all of the options granted to
                                employees, directors, officers or consultants of
                                the Company, and their respective vesting
                                schedules, is set forth in Part 5.15.5 of the
                                Disclosure Schedule. Except as set forth
                                therein, the Company does not operate any share
                                incentive scheme, share option scheme or profit
                                sharing scheme for the benefit of any of its
                                directors, officers, employees or consultants.

                   5.15.6.      Except as set forth in Part 5.15.3 of the
                                Disclosure Schedule, neither the execution,
                                delivery or performance of this Agreement, nor
                                the consummation of any of the other
                                transactions contemplated by this Agreement,
                                will result in any payment (including any bonus,
                                golden parachute or severance payment) to any
                                current or former Employee or director of the
                                Company (whether or not under any option plan
                                (written or oral), or materially increase the
                                benefits payable under any option plan (written
                                or oral) or result in any acceleration of the
                                time of payment or vesting of any such benefits,
                                except as provided therein.

                   5.15.7.      Part 5.15.1 of the Disclosure Schedule contains
                                a list of all salaried employees of the Company
                                as of the date of this Agreement, and correctly
                                reflects, in all material respects, their
                                salaries, any other compensation payable to them
                                (including compensation payable pursuant to
                                bonus, deferred compensation or commission
                                arrangements), their dates of employment and
                                their positions.

                   5.15.8.      No Employee is not fully available to perform
                                work because of disability or other leave.

                   5.15.9.      The Company is in compliance in all material
                                respects with all applicable Legal Requirements
                                and Contracts relating to employment, employment
                                practices, wages, bonuses and terms and
                                conditions of employment, including employee
                                compensation matters.

                   5.15.10.     The Company is not aware of any organizational
                                campaigns, petitions or other unionization
                                activities seeking recognition of a collective
                                bargaining unit which could affect the Company;
                                nor is the Company aware of any controversies,
                                strikes, slowdowns or work stoppages pending or
                                threatened between the Company and any of its
                                employees. To the Company's best knowledge, the
                                consummation of any of the transactions
                                contemplated by this Agreement will not have a
                                material adverse effect on the Company's labor
                                relations, and none of the Company's key
                                employees has notified the Company of any
                                intention to terminate his or her employment
                                with the Company.

         5.16.     Insurance.

                   5.16.1.      Full and accurate details of the Company's
                                insurance policies are contained in Part 5.16.1
                                of the Disclosure Schedule, including such
                                policies as are required under the Company's
                                agreements with its customers.

<PAGE>

                   5.16.2.      The Company has the benefit of adequate
                                insurance against all risks and losses usually
                                insured against by companies carrying on the
                                same or a similar business and (without
                                prejudice to the generality of the foregoing)
                                for the full replacement or reinstatement value
                                of all its assets of an insurable nature and
                                against accident, damage, injury, third party
                                loss (including product liability) and loss of
                                profits with a well established and reputable
                                insurer.

                   5.16.3.      The Company has not done anything or suffered
                                any damage which has rendered or might render
                                any policies of insurance taken out by it void
                                or voidable or which might result in an increase
                                in premiums and the Company has complied with
                                all conditions attached to such policies.

                   5.16.4.      There is no claim outstanding under any of such
                                policies nor, to the best of the Company's
                                knowledge, are there any circumstances likely to
                                give rise to such a claim.

         5.17.     Related Party Transactions. Except as set forth in Part 5.17
                   of the Disclosure Schedule: (a) no Related Party has, and no
                   Related Party has at any time since December 31, 1998 had,
                   any direct or indirect interest in any material asset used in
                   or otherwise relating to the business of the Company; (b) no
                   Related Party is, or has at any time since December 31, 1998
                   been, indebted to the Company; (c) since December 31, 1998,
                   no Related Party has entered into, or has had any direct or
                   indirect financial interest in, any Material Agreement,
                   transaction or business dealing involving the Company; (d) no
                   Related Party is competing, or has at any time since December
                   31, 1998 competed, directly or indirectly, with the Company;
                   and (e) no Related Party has any claim or right against the
                   Company (other than rights under Options and rights to
                   receive compensation for services performed as an employee of
                   the Company). For purposes of this Section 5.17 each of the
                   following shall be deemed to be a "Related Party": (i) each
                   of the Company Stockholders if such person owns, or has at
                   any time in the past owned, an aggregate of five percent (5%)
                   or more of the capital stock of the Company; (ii) each
                   individual who is, or who has at any time since December 31,
                   1998 been, an officer of the Company; (iii) each member of
                   the immediate family of each of the individuals referred to
                   in clauses `(i)' and `(ii)' above; and (iv) any trust or
                   other Entity (other than the Company) in which any one of the
                   individuals referred to in clauses `(i)' `(ii)' and `(iii)'
                   above holds (or in which more than one of such individuals
                   collectively hold), beneficially or otherwise, a material
                   voting, proprietary or equity interest, provided, however,
                   that the Parent and Merger Sub acknowledge that the Company
                   Stockholders that are not natural Persons have made and shall
                   continue to make investments and participate in the
                   businesses, in the ordinary course of their business, in
                   Persons/Entities that may compete, directly or indirectly,
                   with the Company and the Parent, and the Parent and Merger
                   Sub agree that such activities shall not constitute a breach
                   of the representations and warranties contained in this
                   Section 5.17.


         5.18.     Legal Proceedings; Orders.

<PAGE>

                    5.18.1.   The Company is not involved in pending Legal
                              Proceeding, and, to the Company's best knowledge,
                              no Person has threatened to commence any Legal
                              Proceeding: (i) that involves the Company or any
                              of the assets owned or used by the Company or any
                              Person whose liability the Company has or may have
                              retained or assumed, either contractually or by
                              operation of law; or (ii) that challenges, or that
                              may have the effect of preventing, delaying,
                              making illegal or otherwise interfering with, any
                              of the transactions contemplated by this
                              Agreement. To the Company's best knowledge, no
                              event has occurred, and no claim, dispute or other
                              condition or circumstance exists, that will, or
                              that could reasonably be expected to, give rise to
                              or serve as a basis for the commencement of any
                              such Legal Proceeding.


                    5.18.2.   Except as set forth in Part 5.18.2 of the
                              Disclosure Schedule, no Legal Proceeding has ever
                              been commenced by or has ever been pending against
                              the Company.

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

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

         5.20.     Non-Contravention; Consents. Neither (1) the execution,
         -------------------------------------
                   delivery or performance of this Agreement, nor (2) the
                   consummation of any of the transactions contemplated by this
                   Agreement, will directly or indirectly (with or without
                   notice or lapse of time):

                    5.20.1.   contravene, conflict with or result in a violation
                              of (i) any of the provisions of the Company's
                              charter documents, or (ii) any resolution adopted
                              by the Company's stockholders, the Company's board
                              of directors or any committee of the Company's
                              board of directors;


                    5.20.2.   contravene, conflict with or result in a violation
                              of, or give any Governmental Body or other Person
                              the right to challenge any of the transactions
                              contemplated by this Agreement or to exercise any
                              remedy or obtain any relief under, any Legal
                              Requirement or any order, writ,





<PAGE>

                              injunction, judgment or decree to which the
                              Company, or any of the assets owned or used by
                              the Company, is subject;


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

                    5.20.4.   contravene, conflict with or result in a material
                              violation or breach of, or result in a material
                              default under, any provision of any Material
                              Agreement that is or would constitute a Material
                              Agreement, or give any Person the right to (i)
                              declare a default or exercise any remedy under any
                              such Material Agreement, (ii) accelerate the
                              maturity or performance of any such Material
                              Agreement, or (iii) cancel, terminate or modify
                              any such Material Agreement; or

                    5.20.5.   result in the imposition or creation of any Lien
                              or Encumbrance upon or with respect to any asset
                              owned or used by the Company (except for minor
                              liens that will not, in any case or in the
                              aggregate, materially detract from the value of
                              the assets subject thereto or materially impair
                              the operations of the Company).

                    Except for the Georgia Certificate of Merger, the Company is
                    not and will not be required to make any filing with or give
                    any notice to, or to obtain any Consent from, any Person in
                    connection with (x) the execution, delivery or performance
                    of this Agreement or any of the other agreements referred to
                    in this Agreement, or (y) the consummation of any of the
                    transactions contemplated by this Agreement, other than such
                    filings or Consents that the lack of which can not be
                    reasonably expected to have a Material Adverse Effect on the
                    Company and the Merger.

          5.21.     No Conflicting Interest. Except as set forth in Part 5.21 of
          ---------------------------------
                    the Disclosure Schedule, the Company is not aware that any
                    director, officer, key employee or Related Party of the
                    Company has any interest in any corporation, partnership, or
                    other entity that is engaged in a business which is in
                    competition with that of the Company, is a supplier or
                    customer of the Company, or is a party to any contract which
                    may have any effect on the business of the Company;
                    provided, however, that the Parent and Merger Sub
                    acknowledge that the Company Stockholders that are not
                    natural Persons have made and shall continue to make
                    investments and participate in the businesses, in the
                    ordinary course of their business, in Persons/Entities that
                    may compete, directly or indirectly, with the Company and
                    the Parent, and the Parent and Merger Sub agree that such
                    activities shall not constitute a breach of the
                    representations and warranties contained in this Section
                    5.21.


          5.22.     Brokers. No broker, finder or investment banker, for which
          -----------------
                    the Company or Parent may be liable, is entitled to any
                    brokerage, finder's or other fee or commission in connection
                    with the transactions contemplated by this Agreement based
                    upon





<PAGE>

                    arrangements made by or on behalf of the Company or any of
                    its directors, officers, employees or agents or any of the
                    Company Stockholders.

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

          5.24.     Survival/Remedies. The representations and warranties
          ---------------------------
                    contained in this Section 5 shall survive the Closing Date
                    and shall continue in full force and effect until the
                    consummation of the Second Closing. Except for cases of
                    fraud, the sole and exclusive remedy of Parent after the
                    Closing with respect to any claim, loss, liability, damage,
                    deficiency, cost or expense (a "Loss") resulting from the
                    breach of representation or warranty by the Company pursuant
                    to this Agreement shall be to offset the amount of such Loss
                    against any Additional Consideration otherwise deliverable
                    to the Company Stockholders, Management Stockholders and
                    Company Optionholders; provided that such offset shall not
                    exceed an amount (either in cash or Parent Ordinary Shares,
                    as may be applicable to the Second Closing) equal to 50% of
                    the Additional Consideration (deducted from each Company
                    Stockholder, Management Stockholder and Company Optionholder
                    pro rata, provided that each Person's obligation hereunder
                    shall be limited to 50% of the Additional Consideration set
                    forth opposite such Person's name on Schedule 4.1). In
                    furtherance of the foregoing, Parent hereby waives, from and
                    after the Second Closing, any and all rights, claims and
                    causes of action it may have against the Company, or the
                    Company Stockholders, or any of their respective affiliates,
                    directors, officers or employees with respect to all Losses
                    arising under or based upon any law, common law, equity or
                    otherwise.


                   In the event that the Parent shall have the right to offset a
                   Loss in accordance with the above paragraph, and such Loss
                   shall be offset from the Additional Consideration Shares, the
                   price per each of the Additional Consideration Shares to be
                   offset shall be measured in accordance with a value of $0.511
                   per share (the "Average Closing Price").

6.        Representations and Warranties of the Company Stockholders.

          Each of the Company Stockholders, severally and not jointly,
          represents and warrants as to itself and not as to any other Company
          Stockholder, to and for the benefit of Parent and Merger Sub, that the
          statements contained in this Section 6 are correct and complete as of
          the date of this Agreement

          6.1.      Authority; Binding Nature of Agreement. Such Company
          ------------------------------------------------
                    Stockholder has the absolute and unrestricted right, power
                    and authority to enter into and to perform its obligations
                    under this Agreement; and the execution, delivery and
                    performance by





<PAGE>

                    the Company of this Agreement have been duly authorized by
                    all necessary action on the part of the Stockholder. This
                    Agreement constitutes the legal, valid and binding
                    obligation of the Company Stockholder enforceable against it
                    in accordance with its terms, subject to (i) laws of general
                    application relating to bankruptcy, insolvency and the
                    relief of debtors, and (ii) rules of law governing specific
                    performance, injunctive relief and other equitable remedies.

          6.2.      Title to Stock. Such Company Stockholder has good title to
          ------------------------
                    its Shares and such Shares are not subject to any Security
                    Interests or Lien of any kind.


          6.3.      Investment. Such Company Stockholder (A) understands that
          --------------------
                    the Parent Ordinary Shares have not been, and may not be in
                    the near future, registered under the Securities Act, or
                    under any state securities laws, and are being offered and
                    sold in reliance upon federal and state exemptions for
                    transactions not involving any public offering, (B) is
                    acquiring Parent Ordinary Shares solely for his or its own
                    account for investment purposes, and not with a view to the
                    distribution thereof, (C) is a sophisticated investor with
                    knowledge and experience in business and financial matters,
                    (D) has received certain information concerning Parent and
                    has had the opportunity to obtain additional information as
                    desired in order to evaluate the merits and the risks
                    inherent in holding Parent Ordinary Shares, (E) is able to
                    bear the economic risk and lack of liquidity inherent in
                    holding Parent Ordinary Shares, and (F) is an Accredited
                    Investor within the meaning of Regulation D promulgated
                    under the Securities Act.


          6.4.      Risk Factors. Such Company Stockholder has reviewed all of
          ----------------------
                    the risk factors detailed in the Parent SEC Documents (as
                    such a term is defined in Section 7.2.1 below).


          6.5.      No Other Representations. Except for the representations and
          ----------------------------------
                    warranties made in this Section 6, no CompanyStockholder
                    makes any representation or warranty as to itself or the
                    Company.


          6.6.      Survival. Except for the representations contained in
          ------------------
                    Sections 6.1 and 6.2, the representations and warranties
                    contained in this Section 6 shall expire on and be
                    terminated as of the Closing Date. Notwithstanding the
                    above, in the event of a fraud by a Company Stockholder
                    relating to the matters specified in Sections 6.1 and 6.2
                    above, the remedy of the Parent shall be limited to the
                    Parent Ordinary Shares received by the Company Stockholder
                    responsible for such fraud. In addition, the Parent
                    acknowledges that no Company Stockholder shall be liable to
                    any act of fraud by another Company Stockholder.

                    In determining the number of Ordinary Shares recoverable
                    from a Company Stockholder by Parent pursuant to this
                    Section 6.6, the value per share of each Ordinary Share
                    received by such Company Stockholder shall be measured in
                    accordance with the Average Closing Price.

7.        Representations and Warranties of Parent

<PAGE>

          Parent represents and warrants to the Company that the statements
          contained in this Section 7 are correct and complete as of the date of
          this Agreement.

          7.1.      Due Organization; Subsidiaries; Etc.
          ---------------------------------------------

                    7.1.1.    Parent is duly organized and validly existing
                              under the laws of the State of Israel. Parent has
                              all requisite corporate power and authority to
                              conduct its business in the manner in which its
                              business is currently being conducted and to own
                              and use its assets in the manner in which its
                              assets are currently owned and used. Merger Sub is
                              duly organized, validly existing and in good
                              standing under the laws of the State of Georgia.
                              Merger Sub has all requisite corporate power and
                              authority to conduct its business in the manner in
                              which its business is currently being conducted
                              and to own and use its assets in the manner in
                              which its assets are currently owned and used.

                    7.1.2.    Except as set forth in Part 7.1.2 of the Parent
                              Disclosure Schedule, Parent has not conducted any
                              business under or otherwise used, for any purpose
                              or in any jurisdiction, any fictitious name,
                              assumed name, trade name or other name, other than
                              the name "ViryaNet" and "RTS".

                    7.1.3.    Parent is not and has not been required to be
                              qualified, authorized, registered or licensed to
                              do business as a foreign corporation in any
                              jurisdiction, except where the failure to be so
                              qualified, authorized, registered or licensed has
                              not had and will not have a Material Adverse
                              Effect on Parent.

                    7.1.4.    Part 7.1.4 of the Parent Disclosure Schedule
                              accurately sets forth (i) the names of the members
                              of Parent's board of directors, (ii) the names of
                              the members of each committee of the Company's
                              board of directors, and (iii) the names and titles
                              of Parent's officers.

                    7.1.5.    Except for Merger Sub and Parent's subsidiary(ies)
                              set forth in Part 7.1.5 of the Parent Disclosure
                              Schedule (collectively, the "Parent
                              Subsidiaries"), Parent does not own, directly or
                              indirectly, any controlling interest in any entity
                              and Parent has never owned, beneficially or
                              otherwise, any shares or other securities of, or
                              any direct or indirect equity interest in, any
                              entity. Each of the Parent Subsidiaries is duly
                              organized, validly existing and in good standing
                              under the laws of the state of its incorporation
                              and has all requisite corporate power and
                              authority to conduct its business in the manner in
                              which its business is currently being conducted
                              and to own and use its assets in the manner in
                              which its assets are currently owned and used.
                              Parent owns, beneficially and of record, all of
                              the issued and outstanding share capital of each
                              Parent Subsidiary and all rights thereto free and
                              clear of liens, claims, charges and other
                              encumbrances and all rights, options to purchase,
                              proxies, voting agreements, calls or commitments
                              of every kind. Parent has not agreed and is not
                              obligated to make any future investment in or
                              capital contribution to the Parent Subsidiaries or
                              any entity. The Parent





<PAGE>

                              has not guaranteed and is not responsible or
                              liable for any obligation of the Parent
                              Subsidiaries or any of the entities in which it
                              owns or has owned any equity interest. All issued
                              and outstanding share capital of each Parent
                              Subsidiary was duly authorized and is validly
                              issued and outstanding, fully paid and
                              non-assessable.

          7.2.      SEC Filings; Financial Statements.
          -------------------------------------------
                    7.2.1.    Parent has timely filed all required forms,
                              reports and documents with the SEC since becoming
                              a SEC reporting company on September 19, 2000,
                              each of which has complied in all material
                              respects with all applicable requirements of the
                              Securities Act and the Exchange Act and the rules
                              and regulations promulgated thereunder, each as in
                              effect on the dates such forms, reports, and
                              documents were filed. Parent has made available to
                              the Company and each of the Company Stockholders
                              accurate and complete copies (excluding copies of
                              exhibits) of each report, registration statement
                              and definitive proxy statement filed by Parent
                              with the SEC between such date and the date of
                              this Agreement (the "Parent SEC Documents"). As of
                              the time it was filed with the SEC (or, if amended
                              or superseded by a filing prior to the date of
                              this Agreement, then on the date of such filing)
                              each of the Parent SEC Documents, including any
                              financial statements or schedules included or
                              incorporated by reference therein, complied in all
                              material respects with the applicable requirements
                              of the Securities Act or the Exchange Act and the
                              rules and regulations promulgated thereunder (as
                              the case may be).


                    7.2.2.    The consolidated financial statements contained in
                              the Parent SEC Documents: (i) complied as to form
                              in all material respects with the published rules
                              and regulations of the SEC applicable thereto;
                              (ii) were prepared in accordance with US generally
                              accepted accounting principles applied on a
                              consistent basis throughout the periods covered;
                              and (iii) fairly present the consolidated
                              financial position of Parent and its subsidiaries
                              as of the respective dates thereof and the
                              consolidated results of operations of Parent and
                              its subsidiaries for the periods covered thereby.

          7.3.      Authority; Binding Nature of Agreement. Each of Parent and
          ------------------------------------------------
                    Merger Sub has the absolute and unrestricted right, power
                    and authority to perform its obligations under this
                    Agreement. The execution, delivery and performance by each
                    of Parent and Merger Sub of this Agreement (including, in
                    relation to Parent, the contemplated issuance of Parent
                    Ordinary Shares as part of the Merger Consideration in
                    accordance with this Agreement) have been duly authorized by
                    all necessary action on the part of Parent and its board of
                    directors and by Merger Sub and its board of directors and
                    stockholders. Other than the issuance of the Additional
                    Consideration Shares pursuant to Section 4.1 above, no vote
                    of Parent's shareholders is needed to approve any of the
                    transactions contemplated by this Agreement. This Agreement
                    constitutes the legal, valid and binding obligation of
                    Parent, enforceable against it in accordance with its terms,
                    subject to (i) laws of general application relating to





<PAGE>

                    bankruptcy, insolvency and the relief of debtors, and (ii)
                    rules of law governing specific performance, injunctive
                    relief and other equitable remedies.

          7.4.      Valid Issuance. The Parent Ordinary Shares to be issued in
          ------------------------
                    the transactions contemplated by this Agreement as part of
                    the Merger Consideration will, when and if issued in
                    accordance with the provisions of this Agreement, be validly
                    issued, fully paid and nonassessable.


          7.5.      Consents and Approvals. Except as set forth on Part 7.5 of
          --------------------------------
                   the Parent Disclosure Schedule, no filing or registration
                   with, no notice to and no permit, authorization, consent or
                   approval of any third party or any Governmental Body is
                   necessary for the consummation by Parent of the transactions
                   contemplated by this Agreement.

          7.6.      No Violation. Neither the execution and delivery of this
          ----------------------
                    Agreement by Parent, the performance by Parent of its
                    obligations hereunder nor the consummation by Parent of the
                    transactions contemplated hereby will (a) violate, conflict
                    with or result in any breach of any provision of the
                    Articles or Memorandum of Association of Parent, (b) violate
                    any order, writ, judgment, injunction, decree, statute, rule
                    or regulation of any court or domestic or foreign
                    Governmental Body applicable to Parent, or (c) violate,
                    conflict with or result in any breach of any provisions of
                    any material Contract of Parent, which such violation can be
                    reasonably expected to have a Material Adverse Effect on the
                    Parent.

          7.7.      Legal Proceedings. Except as set forth in the Parent SEC
          ---------------------------
                    Documents or in Part 7.7 of the Parent Disclosure Schedule,
                    Parent is not aware of any pending Legal Proceeding, and, to
                    Parent's best knowledge, no Person has threatened to
                    commence any Legal Proceeding: (i) that involves Parent or
                    any of the assets owned or used by Parent or any Person
                    whose liability Parent has or may have retained or assumed,
                    either contractually or by operation of law; or (ii) that
                    challenges, or that may have the effect of preventing,
                    delaying, making illegal or otherwise interfering with, any
                    of the transactions contemplated by this Agreement. To
                    Parent's best knowledge, no event has occurred, and no
                    claim, dispute or other condition or circumstance exists,
                    that will, or that could reasonably be expected to, give
                    rise to or serve as a basis for the commencement of any such
                    Legal Proceeding.


          7.8.      Receipt of Information. Parent has been afforded the
          --------------------------------
                    opportunity to ask questions of and receive answers from
                    duly authorized officers or other representatives of the
                    Company concerning the Company's business, assets and
                    financial position. The provisions of this Section 7.8 shall
                    not be deemed to derogate in any manner from the Company's
                    and the Company Stockholders' representations and warranties
                    set forth in Sections 5 and 6 above.

          7.9.      Non-Contravention; Consents. Except as set forth in Part 7.9
          -------------------------------------
                    execution, delivery or performance of this Agreement, nor
                    (2) the consummation of any of the transactions contemplated
                    by this Agreement, will directly or indirectly (with or
                    without notice or lapse of time):

                    7.9.1.    contravene, conflict with or result in a violation
                              of (i) any of the provisions of Parent's or Merger
                              Sub's charter documents, or (ii) any





<PAGE>

                              resolution adopted by Parent's or Merger Sub's
                              stockholders, Parent's or Merger Sub's board of
                              directors or any committee of Parent's or Merger
                              Sub's board of directors;

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

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

                    7.9.4.    contravene, conflict with or result in a material
                              violation or breach of, or result in a material
                              default under, any provision of any Contract of
                              Parent that is or would constitute a material
                              Contract of Parent, or give any Person the right
                              to (i) declare a default or exercise any remedy
                              under any such Contract, (ii) accelerate the
                              maturity or performance of any such Contract, or
                              (iii) cancel, terminate or modify any such
                              Contract; or

                    7.9.5.    result in the imposition or creation of any Lien
                              or Encumbrance upon or with respect to any asset
                              owned or used by Parent (except for minor liens
                              that will not, in any case or in the aggregate,
                              materially detract from the value of the assets
                              subject thereto or materially impair the
                              operations of Parent).

                    Except as set forth in Part 7.9 of the Parent Disclosure
                    Schedule, the Company is not and will not be required to
                    make any filing with or give any notice to, or to obtain any
                    material Consent from, any Person in connection with (x) the
                    execution, delivery or performance of this Agreement or any
                    of the other agreements referred to in this Agreement, or
                    (y) the consummation of any of the transactions contemplated
                    by this Agreement.

          7.10.     Absence of Changes. Except as provided in the Parent SEC
          ----------------------------
                    Documents or as set forth in Part 7.13 of the Parent
                    Disclosure Schedule, since December 31, 2001:


                    7.10.1.   there has not been any material adverse change in
                              Parent's business, prospects, operations, assets,
                              liabilities, debts, work force or its condition
                              (financial or otherwise) and no event has occurred
                              that will, or could reasonably be expected to,
                              have a Material Adverse Effect on Parent;

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







<PAGE>

                    7.10.3.   Parent has not declared, accrued, set aside or
                              paid any dividend or made any other distribution
                              in respect of any shares of capital stock, and has
                              not repurchased, redeemed or otherwise reacquired
                              any shares of capital stock or other securities;


                    7.10.4.   except as set forth in the Parent SEC Documents or
                              any issuance of incentives under Parent's stock
                              incentive plan, Parent has not sold, issued or
                              authorized the issuance of (i) any capital stock
                              or other security, (ii) any option or right to
                              acquire any capital stock or any other security or
                              (iii) any instrument convertible into or
                              exchangeable for any capital stock or other
                              security;

                    7.10.5.   Parent has not amended or waived any of its rights
                              under, or permitted the acceleration of vesting
                              under, (i) any provision of employee options plans
                              (written or oral), (ii) any provision of any
                              agreement evidencing any outstanding option
                              exercisable into Parent Ordinary Shares, or (iii)
                              any restricted stock purchase agreement;

                    7.10.6.   except as required by this Agreement, there has
                              been no amendment to Parent's charter documents,
                              and Parent has not effected or been a party to any
                              recapitalization, reclassification of shares,
                              stock split, reverse stock split or similar
                              transaction;


                    7.10.7.   Parent has not changed any of its methods of
                              accounting or accounting practices in any respect;

                    7.10.8.   Parent has not made any Tax election;

                    7.10.9.   Parent has not amended or prematurely terminated,
                              or waived any material right or remedy under any
                              material Contract of Parent.

                    7.10.10.  Parent has not made any pledge of any of its
                              assets or otherwise permitted any of its assets to
                              become subject to any Encumbrance, except for
                              pledges of assets made in the ordinary course of
                              business consistent with Parent's past practices;
                              and

                    7.10.11.  Parent has not agreed or committed to take any of
                              the actions referred to in clauses 7.10.3 through
                              7.10.10 above.


          7.11.     Properties and Assets. Except as disclosed in Part 7.11 of
          -------------------------------
                    the Parent Disclosure Schedule or in Parent's SEC Documents,
                    Parent has good title to its assets, including without
                    limitation those reflected in Parent SEC Documents, free and
                    clear of any Security Interests.

          7.12.     NASDAQ Listing. Parent Ordinary Shares are listed and trade
          ------------------------
                    on NASDAQ under the symbol "VRYA." Other than as set forth
                    in the Parent SEC Documents, Parent has not received notice
                    from Nasdaq (1) that it has or will suspend trading of
                    Parent Ordinary Shares for any reason or (2) that Parent is
                    not in compliance with any applicable Nasdaq Marketplace
                    Rules and is subject to delisting if it does not comply with
                    such NASDAQ Marketplace Rules.

<PAGE>

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

          7.14      Brokers. Except as disclosed in Part 7.14 of the Parent
          -----------------
                    Disclosure Schedule, no broker, finder or investment banker,
                    for which the Company or Parent may be liable, is entitled
                    to any brokerage, finder's or other fee or commission in
                    connection with the transactions contemplated by this
                    Agreement based upon arrangements made by or on behalf of
                    Parent, Merger Sub or any of their respective directors,
                    officers, employees or agents.

          7.15      Intellectual Property. Parent owns all right, title and
          -------------------------------
                    interest to, or has the right to use pursuant to a valid and
                    enforceable written license, all industrial and intellectual
                    property rights, in any jurisdiction throughout the world,
                    including patents, patent applications and patent
                    disclosures; trademarks, trade names, service marks and
                    Internet domain names, and registrations and applications;
                    copyrights, copyright registrations and copyright
                    applications; know-how, trade secrets, proprietary processes
                    and formulae, specifications, flow charts, inventions,
                    instructions, marketing materials and all documentation and
                    media constituting, describing or relating to the foregoing,
                    including manuals, memoranda and records; and, computer
                    software (including source code and object code, data,
                    databases and documentation) ("Intellectual Property
                    Rights") necessary for its business as currently conducted
                    (the "Parent Intellectual Property Rights"). Parent has not
                    received any written notice (including any cease and desist
                    letters or offers to license) of infringement of or conflict
                    with asserted rights of others with respect to the use of
                    Intellectual Property Rights. To the knowledge of Parent,
                    all patents and other registrations for Parent Intellectual
                    Property Rights are valid and enforceable and none of the
                    Parent Intellectual Property Rights has been misused, and
                    except as set forth in Part 7.15 of the Disclosure Schedule,
                    no claim by any third party contesting the validity,
                    enforceability, use or ownership of the Parent Intellectual
                    Property Rights has been made or is currently pending or to
                    the knowledge of Parent threatened and there are no grounds
                    for same. No loss or expiration of any patents or
                    registrations included in the Parent Intellectual Property
                    Rights is pending or threatened (except for patents expiring
                    at the end of their statutory terms and not due to Parent's
                    failure to pay maintenance fees). Parent has performed all
                    acts and has paid all required fees and taxes to maintain
                    all patents, registrations and applications of such Parent
                    Intellectual Property Rights in full force and effect,
                    except for such non-performance which can not be reasonably
                    expected to have a Material Adverse Effect on the Parent. To
                    its knowledge, Parent does not and shall not in the conduct
                    of its business as now conducted infringe or conflict with
                    any right of any third party where such infringement or
                    conflict would reasonably be expected to result in any
                    Material Adverse Effect. Parent is not, and will not be as a
                    result of the execution and delivery of this Agreement or
                    the performance of any obligations hereunder, in breach of
                    any license or other agreement relating to any Intellectual
                    Property Rights. To the knowledge of Parent, no

<PAGE>

                    third party is infringing or has infringed any Parent
                    Intellectual Property Rights and Parent is not aware of any
                    facts indicating a likelihood of the foregoing.

          7.16      Compliance With Legal Requirements. Parent holds all
          --------------------------------------------
                    material licenses, certificates, permits, franchises and
                    rights from all appropriate foreign, federal, state or other
                    public authorities necessary for the conduct of its business
                    and the use of its assets, other than such licenses,
                    certificates, permits or franchises that the lack of which
                    can not be reasonably expected to have a Material Adverse
                    Effect on the Parent. Parent is presently conducting its
                    business so as to comply in all material respects with all
                    applicable statutes, ordinances, rules, regulations and
                    orders of any governmental authority other than such
                    non-compliances which can not be reasonably expected to have
                    a Material Adverse Effect on the Parent. Further, except as
                    set forth in the Parent SEC Documents, Parent is not
                    presently charged with or, to the knowledge of Parent, under
                    governmental investigation with respect to, any actual or
                    alleged violation of any statute, ordinance, rule or
                    regulation. Parent is presently not the subject of any
                    pending or, to its knowledge, threatened adverse proceeding
                    by any regulatory authority having jurisdiction over its
                    business, properties or operations. None of the execution
                    and delivery of this Agreement and the consummation of the
                    transactions contemplated hereby will result in the
                    termination of any such license, certificate, permit,
                    franchise or right held by Parent.

          7.17      Survival. The representations and warranties contained in
          ------------------
                    this Section 7 shall survive until the expiration of the one
                    hundred twenty (120) day period immediately following the
                    Closing Date.

8.        Further Actions.

          8.1.      Public Announcements. The Company and Company Stockholders
          ------------------------------
                    shall not (and the Company shall not permit any of its
                    Representatives to) issue any press release or make any
                    public statement regarding this Agreement, or regarding any
                    of the transactions contemplated by this Agreement, without
                    Parent's prior written consent, and Parent shall not (and
                    shall not permit any of its Representatives to) issue any
                    press release or make any public statement regarding this
                    Agreement, or regarding any of the transactions contemplated
                    by this Agreement, without the Company's prior written
                    consent. Notwithstanding the provisions of the preceding
                    sentence, each party shall be permitted to issue any press
                    release or make any public statement as such party is
                    advised by counsel is legally required to be issued or made
                    under any applicable laws. Except as is legally required
                    under applicable law, no party shall make a public
                    announcement or press release referencing or mentioning GE
                    Capital Equity Investments, Inc. ("GE") or any affiliate of
                    GE without the express prior written consent of GE.


          8.2.      Lock-Up. Concurrently with the execution and delivery of
          -----------------
                    this Agreement, the Company Stockholders, Management
                    Stockholders and Company Optionholders shall execute a
                    Lock-up Agreement in form attached hereto as Exhibit 8.2
                    (the "Lock-Up Agreement"). "Locked-Up" shall mean the
                    commitment and obligation of the Company Stockholders not to
                    sell, transfer, offer for sale, pledge, dispose of, encumber
                    or undertake to do any of the foregoing with respect to any
                    applicable

<PAGE>

                    Initial Consideration and the Additional Consideration
                    Shares (if issued). Notwithstanding the foregoing, in the
                    event that within six (6) months following the Closing Date,
                    Parent issues any of its securities as part of a private
                    placement, and the Lock-Up obligations agreed with the
                    purchasers of such securities are more favorable to such
                    purchasers (compared to the Lock-Up obligations set forth
                    above) then the Lock-Up obligations imposed on the Company
                    Stockholders, Management Stockholders and Company
                    Optionholders shall be automatically amended to be equal to
                    those agreed with such new purchasers.

          8.3.      Registration of Shares. Parent and the Company Stockholders
          --------------------------------
                    shall, as of the Closing Date, enter into a Registration
                    Rights Agreement (the "Registration Rights Agreement")
                    relating to the registration of the Parent Ordinary Shares,
                    in the form attached as Exhibit 8.3 of this Agreement.

          8.4.      Employees. As soon as practicable after the Closing Date,
          -------------------
                    Parent shall provide to all employees of the Company who
                    shall remain in the employ of the Company (the "Continuing
                    Employees") such employee benefits plans, programs and
                    arrangements as are generally made available to employees of
                    Parent's US subsidiary (the "US Subsidiary"), provided,
                    however, that (a) nothing in this Section 8.4 or elsewhere
                    in this Agreement shall limit the right of Parent or the
                    Surviving Corporation to amend or terminate any such health
                    and/or welfare benefit plan at any time, and (b) if Parent
                    or the Surviving Corporation terminates any such health
                    and/or welfare benefit plan, then, subject to any
                    appropriate transition period, the Continuing Employees
                    shall be eligible to participate in US Subsidiary's health,
                    vacation and other non-equity based employee benefit plans,
                    to substantially the same extent as similarly situated
                    employees of the US Subsidiary. The Continuing Employees
                    shall be given, to the extent consistent with US
                    Subsidiary's benefit plans and with applicable Legal
                    Requirements, service credit under US Subsidiary's benefit
                    plans, for purposes of eligibility and vesting, equal to the
                    service credit currently provided to such Continuing
                    Employees under comparable US Subsidiary Employee Plans.
                    Nothing in this Section 8.4 or elsewhere in this Agreement
                    shall be construed to create a right in any employee to
                    employment with Parent, the US Subsidiary, the Surviving
                    Corporation or any Subsidiary of the Surviving Corporation
                    and, subject to any other binding agreement between an
                    employee and Parent, the US Subsidiary, the Surviving
                    Corporation or any Subsidiary of the Surviving Corporation,
                    the employment of each Continuing Employee shall be "at
                    will" employment.


          8.5.      Tax Liability. Each party shall be responsible for all its
          -----------------------
                    respective tax obligations deriving from the transactions
                    contemplated in this Agreement.


          8.6.      Waiver of Dissenters' Rights. Each of the Company
          --------------------------------------
                    Stockholders, by its execution of this Agreement, agrees
                    that it will not exercise any dissenters' or similar rights
                    in connection with the Merger and acknowledges that such
                    Company Stockholder hereby waives any and all dissenting or
                    similar rights, under any and all applicable laws, in
                    connection with the transactions contemplated under this
                    Agreement.

<PAGE>

          8.7.      Right to appoint a Board member and observer to Parent's
          ------------------------------------------------------------------
                    Board. GE shall have the right, starting from the annual
                    ------
                    meeting of Parent's shareholders in 2002 and until the
                    annual meeting of Parent's shareholder in 2003, to nominate
                    one director (the "GE Designee"), who shall be Michael
                    Donnelly. In addition, upon the election of the GE Designee
                    and so long as such GE Designee serves as a member of
                    Parent's board of directors, GE shall have the right to
                    appoint a non-voting observer to the Board of Directors (or
                    to nominate one person for election to Parent's Board of
                    Directors, if and when agreed with Parent). The Board of
                    Directors of Parent shall recommend to the shareholders of
                    Parent to vote for the election of such director and Parent
                    will use its best efforts to cause such election.


          8.8.      Further Assurances. If, at any time after the Closing Date,
          ----------------------------
                    Parent shall consider or be advised that any deeds, bills of
                    sale, assignments or assurances or any other acts or things
                    are reasonably necessary, desirable or proper to carry out
                    the purposes of this Agreement, Parent shall so advise the
                    Company Stockholders in writing, and the Company
                    Stockholders thereupon shall execute and deliver all such
                    deeds, bills of sale, assignments and assurances and do all
                    such other acts and things reasonably necessary, desirable
                    or proper to vest, perfect or confirm its right, title or
                    interest in, to or under the Shares, and otherwise to carry
                    out the purposes of this Agreement.

          8.9.      Approval of Parent Shareholders. Parent agrees that it will
          -----------------------------------------
                    submit to its shareholders for a vote or approval prior to
                    the date of the Second Closing, the issuance of the
                    Additional Consideration Shares to the Company Stockholder,
                    Management Stockholders and Company Optionholders as the
                    Additional Consideration Payment.

9.        Deliverables: Prior to the signature of this Agreement, each of the
----------------------
          parties shall have delivered to the other party the following
          deliverables:


                    9.1       The Company and the Company Stockholders shall
                              have delivered to the Parent:


                    9.1.1.    A legal opinion of Morris, Manning & Martin,
                              L.L.P., counsel for the Company, in the form
                              attached as Exhibit 9.1.1 hereto, addressed to
                              Parent and dated as of the Closing Date;


                    9.1.2.    A certificate, in the form attached as Exhibit
                              9.1.2, executed by two Officers of the Company
                              certifying that each of the representations and
                              warranties set forth in Section 5 is accurate in
                              all material respects as of the Closing Date, and
                              that the conditions set forth in such certificate
                              have been duly satisfied (the "Company Closing
                              Certificate");

                    9.1.3.    A certificate of good standing of the Company from
                              the Secretary of State of Georgia dated no earlier
                              than one day prior to the date of the Agreement;


                    9.1.4.    The executed Lock-Up Agreements, signed by all of
                              the Company Stockholders;

                    9.1.5.    Duly executed written resolutions of the Company's
                              Stockholders approving and adopting the Merger, in
                              the form attached as Exhibit 9.1.5.







<PAGE>

                    9.1.6.    Written resignations of all directors of the
                              Company and all members of the Audit Committee and
                              Compensation Committee of the Company, effective
                              as of the Closing Date;


                    9.1.7.    Certificates representing all the Shares,
                              accompanied by share transfer deeds duly executed.


                    9.1.8     The executed consent of the landlord of the
                              Company's premises in Atlanta to the sub-lease of
                              such premises to any third party who shall sign
                              the sub-lease agreement in the form attached to
                              such consent.

                    9.1.9     A executed release, in the form of Exhibit 9.1.10,
                              signed by each of the Company Stockholders.


                    9.1.10    Duly executed written resolutions of the Company's
                              Board of Directors approving and adopting the
                              Merger and the other transactions under this
                              Agreement, in the form attached as Exhibit 9.1.10.

                    9.1.11    Duly executed undertaking letters by the Company
                              Stockholders in the form attached as Exhibit
                              9.1.11.

                    9.1.12    Executed copy of the Georgia Certificate of
                              Merger.





          9.2       The Parent shall have delivered to the Company:


                    9.2.1     A legal opinion of Meitar, Liquornik, Geva & Co.,
                              Israeli attorneys to the Parent, in form attached
                              as Exhibit 9.2.1 hereto, addressed to the Company
                              and dated as of the Closing Date;


                    9.2.2     A legal opinion of Testa, Hurwitz & Thibeault,
                              LLP, U.S. attorneys to the Parent, in form
                              attached as Exhibit 9.2.2 hereto, addressed to the
                              Company and dated as of the Closing Date;


                    9.2.3     a certificate in the form attached as Exhibit
                              9.2.3 hereto executed by an Officer of Parent
                              certifying that each of the representations and
                              warranties set forth in Section 7 is accurate in
                              all material respects as of the Closing Date and
                              that the conditions set forth in such certificate
                              have been duly satisfied.

                    9.2.4     Executed Registration Rights Agreement.


          9.2.5     A Voting Agreement signed by Samuel HaCohen, in the form
          ---------
                    attached as Exhibit 9.2.5 hereto.


10.       The Second Closing:

          The consummation of the Second Closing shall be subject to the
          satisfaction, at or prior to the Second Closing, of each of the
          following conditions, any or all of which may be waived in writing by
          Parent:

<PAGE>

          10.1      No Restraints. No temporary restraining order, preliminary
          ----------------------- or permanent injunction or other
                    order preventing the consummation of the transactions
                    contemplated by this Agreement shall have been issued by any
                    court of competent jurisdiction and remain in effect, and
                    there shall not be any Legal Requirement enacted or deemed
                    applicable to the transactions contemplated by this
                    Agreement that makes consummation of the transactions
                    contemplated by this Agreement illegal, which Legal
                    Requirement shall not have been removed within thirty (30)
                    days of enactment.

          10.2      No Legal Proceedings. No Person (excluding Parent and its
          ------------------------------
                    affiliates) shall have commenced or taken substantial steps
                    towards any Legal Proceeding seeking to enjoin the
                    consummation of the Merger or the Second Closing.


11.       Miscellaneous Provisions

          11.1.     Each of Parent and the Company shall bear and pay all fees,
          ----------
                    costs and expenses (including legal fees and
                    accounting fees) that have been incurred or that are
                    incurred by such party (and, in the case of the Company
                    Stockholders, also by the Company) in connection with the
                    transactions contemplated by this Agreement, including all
                    fees, costs and expenses incurred by such party in
                    connection with or by virtue of (a) the investigation and
                    review conducted by Parent and its Representatives with
                    respect to the Company's business (and the furnishing of
                    information to Parent and its Representatives in connection
                    with such investigation and review), provided, that any
                    audit of the Company's financial statements for 2001 shall
                    be a cost of Parent and not the Company (b) the negotiation,
                    preparation and review of this Agreement (including the
                    Disclosure Schedule) and all agreements, certificates,
                    opinions and other instruments and documents delivered or to
                    be delivered in connection with the transactions
                    contemplated by this Agreement, and (c) the preparation and
                    submission of any filing or notice required to be made or
                    given in connection with any of the transactions
                    contemplated by this Agreement, and the obtaining of any
                    Consent required to be obtained in connection with any of
                    such transactions; provided, however, that the Company's
                    legal and all other expenses with respect to the
                    transactions contemplated under this Agreement shall not
                    exceed an aggregate amount of $100,000. For the avoidance of
                    doubt, each of Parent on the one hand, and the Company on
                    the other hand, shall bear and pay for all such fees, costs
                    and expenses incurred by such party in connection with the
                    transactions contemplated by this Agreement. In addition, it
                    is agreed and understood that each of the Company
                    Stockholders shall pay its own expenses in connection with
                    the transactions contemplated by this Agreement.


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

          11.3.     Notices. Any notice or other communication required or
          -----------------
                    permitted to be delivered to any party under this Agreement
                    shall be in writing and shall be deemed properly





<PAGE>

                    delivered,given and received when delivered (by hand, by
                    registered mail, by courier or express delivery service or
                    by facsimile) to the address or facsimile telephone number
                    set forth beneath the name of such party below (or to such
                    other address or facsimile telephone number as such party
                    shall have specified in a written notice given to the other
                    parties hereto):

                              if to Parent or Merger Sub:

                              ViryaNet Limited
                              2 Willow Street
                              Southborough, MA, 01745
                              Attention:  Win Burke, Chief Executive Officer

                              Meitar, Liquornik, Geva & Co.
                              16 Abba Hillel Silver Rd.
                              Ramat Gan, 52506
                              Israel
                              Attention: Dan Geva, Adv.

                              if to the Company:

                              11605 Haynes Bridge Road
                              Alpharetta, Georgia 30004
                              Attention: Lawrence Duckworth

                              with a copy to:

                              Morris, Manning & Martin, L.L.P.
                              1600 Atlanta Financial Center
                              3343 Peachtree Road, N.E.
                              Atlanta, Georgia 30326
                              Attention: Charles R. Beaudrot, Jr.

                              If   to the Company Stockholders:

                              at such address listed on Exhibit 11.3 attached
                              hereto                    ------------



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


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







<PAGE>

          11.6.     Governing Law. This Agreement shall be construed in
          -----------------------
                    accordance with, and governed in all respects by, the
                    internal laws of the State of New York (without giving
                    effect to principles of conflicts of laws). Each party to
                    this Agreement consents to the exclusive jurisdiction and
                    venue of the courts of the State of New York.


          11.7.     Successors and Assigns. This Agreement shall be binding upon
          --------------------------------
                    the Company, each of the Company Stockholders and their
                    respective successors and assigns (if any), Parent, Merger
                    Sub and their successors and assigns (if any). Neither party
                    may assign any of its rights under this Agreement to any
                    other Person without obtaining the consent or approval of
                    the other parties hereto.

          11.8.     Specific Performance. The parties to this Agreement agree
          ------------------------------
                    that, in the event of any breach or threatened breach by any
                    party to this Agreement of any covenant, obligation or other
                    provision set forth in this Agreement for the benefit of any
                    other party to this Agreement, such other party shall be
                    entitled to (a) a decree or order of specific performance or
                    mandamus to enforce the observance and performance of such
                    covenant, obligation or other provision, and (b) an
                    injunction restraining such breach or threatened breach.

          11.9.     Amendments. This Agreement may not be amended, modified,
          --------------------
                    altered or supplemented other than by means of a written
                    instrument duly executed and delivered on behalf of all of
                    the parties hereto.


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

          11.11.    Entire Agreement. This Agreement sets forth the entire
          --------------------------
                    understanding of the parties hereto relating to the subject
                    matter hereof and thereof and supersedes all prior
                    agreements and understandings among or between any of the
                    parties relating to the subject matter hereof and thereof,
                    including the Non-Binding Term Sheet between the Company and
                    the Parent dated January 18, 2002.

          11.12.    Construction.
          ----------------------


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

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

<PAGE>

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

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

          11.13     Consent to Jurisdiction. EACH PARTY TO THIS AGREEMENT HEREBY
          ----------------------------------
                    IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS
                    PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF NEW
                    YORK STATE SITTING IN THE COUNTY OF NEW YORK OR ANY FEDERAL
                    COURT OF THE UNITED STATES OF AMERICA SITTING IN THE
                    SOUTHERN DISTRICT OF NEW YORK IN ANY SUIT, ACTION OR
                    PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR
                    IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS
                    CONTEMPLATED THEREBY. NO PARTY TO THIS AGREEMENT MAY MOVE TO
                    (I) TRANSFER ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
                    SUCH NEW YORK COURT OR FEDERAL COURT TO ANOTHER
                    JURISDICTION, (II) CONSOLIDATE ANY SUCH SUIT, ACTION OR
                    PROCEEDING BROUGHT IN SUCH NEW YORK COURT OR FEDERAL COURT
                    WITH A SUIT, ACTION OR PROCEEDING IN ANOTHER JURISDICTION OR
                    (III) DISMISS ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
                    SUCH NEW YORK COURT OR FEDERAL COURT FOR THE PURPOSE OF
                    BRINGING THE SAME IN ANOTHER JURISDICTION. EACH PARTY AGREES
                    THAT A FINAL JUDGMENT IN ANY SUCH SUIT, ACTION OR PROCEEDING
                    SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER
                    JURISDICTION BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
                    PROVIDED BY LAW. EACH PARTY HEREBY IRREVOCABLY AND
                    UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY
                    AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR
                    HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR
                    PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN
                    ANY NEW YORK COURT SITTING IN THE COUNTY OF NEW YORK OR ANY
                    FEDERAL COURT SITTING IN THE SOUTHERN DISTRICT OF NEW YORK.
                    EACH PARTY CONSENTS TO THE SERVICE OF PROCESS IN ANY SUCH
                    SUIT, ACTION OR PROCEEDING BY NOTICE IN THE MANNER SPECIFIED
                    IN SECTION 11.3.

          11.14     WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
          -------------------------------
                    THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT
                    MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION
                    OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
                    OR IN CONNECTION WITH THIS AGREEMENT.

                    [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

                [SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]









                  IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date set forth above.

                                        VIRYANET LTD.



                                        By:
                                           -------------------------------
                                        Name:
                                             -----------------------------
                                        Title:
                                              ----------------------------











<PAGE>

                [SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]









                                       VIRYANET ACQUISITION, INC.


                                       By:
                                          --------------------------------
                                       Name:
                                            ------------------------------
                                       Title:
                                             -----------------------------







<PAGE>

                [SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]









                                       IMEDEON, INC.


                                       By:
                                          --------------------------------
                                       Name:
                                            ------------------------------
                                       Title:
                                             -----------------------------






<PAGE>

                [SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]








                                       GE CAPITAL EQUITY INVESTMENTS, INC.


                                       By:
                                          --------------------------------
                                       Name:
                                            ------------------------------
                                       Title:
                                             -----------------------------

<PAGE>

                [SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]









                            ECTMI TRUTTA HOLDINGS LP

                                       By:
                                          --------------------------------
                                       Name:
                                            ------------------------------
                                       Title:
                                             -----------------------------








<PAGE>

                [SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]









                                       AETHER SYSTEMS INC.


                                       By:
                                          --------------------------------
                                       Name:
                                            ------------------------------
                                       Title:
                                             -----------------------------

<PAGE>

                [SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]









                                       VALENTIS INVESTORS LLC

                                       By:
                                          --------------------------------
                                       Name:
                                            ------------------------------
                                       Title:
                                             -----------------------------








<PAGE>

                [SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]









                                       IMPRIMIS SB, L.P.


                                       By: Imprimis SB G.P. LLC
                                           Its General Partner


                                           By:
                                              ----------------------------
                                             Name:
                                                  ------------------------
                                             Title:
                                                   -----------------------










<PAGE>

                [SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]









                                       INSIGHT CAPITAL PARTNERS II, L.P.


                                       By: InSight Venture Associates II, L.L.C.
                                           Its General Partner


                                       By:
                                          --------------------------------
                                       Name:
                                            ------------------------------
                                       Title:  Its Managing Member
                                             -----------------------------






<PAGE>

                [SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]









                                       INSIGHT CAPITAL PARTNERS
                                       (CAYMAN) II, L.P.


                                       By:  InSight Venture Associates II, LLC
                                            Its General Partner


                                       By:
                                          ---------------------------------
                                       Name:
                                            -------------------------------
                                       Title:
                                             ------------------------------

<PAGE>

                [SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]










                                       ---------------------------------
                                       JOSEPH MEDIATE








<PAGE>

                [SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]









                                       MEDIATE INVESTMENTS, LLLP

                                       By:
                                          --------------------------------
                                       Name:
                                            ------------------------------
                                       Title:
                                             -----------------------------

<PAGE>

                                     ANNEX I

                               CERTAIN DEFINITIONS

     For purposes of the Agreement (including this Annex I):

     "Consent" shall mean any approval, consent, ratification, permission,
waiver or authorization (including any Governmental Authorization).

     "Contract" shall mean any written, oral or other agreement, contract,
subcontract, lease, understanding, instrument, note, warranty, insurance policy,
benefit plan or legally binding commitment or undertaking of any nature.

     "Disclosure Schedule" shall mean the schedule (dated as of the date of the
Agreement) delivered to Parent on behalf of the Company.

     "Encumbrance" shall mean any lien, pledge, hypothecation, charge, mortgage,
security interest, encumbrance, claim, infringement, interference, option, right
of first refusal, preemptive right, community property interest or restriction
of any nature (including any restriction on the voting of any security, any
restriction on the transfer of any security or other asset, any restriction on
the receipt of any income derived from any asset, any restriction on the use of
any asset and any restriction on the possession, exercise or transfer of any
other attribute of ownership of any asset).

     "Entity" shall mean any corporation (including any non-profit corporation),
general partnership, limited partnership, limited liability partnership, joint
venture, estate, trust, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization or
entity.

     "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

     "Governmental Authorization" shall mean any: (a) permit, license,
certificate, franchise, permission, clearance, registration, qualification or
authorization issued, granted, given or otherwise made available by or under the
authority of any Governmental Body or pursuant to any Legal Requirement; or (b)
right under any Contract with any Governmental Body.

     "Governmental Body" or "Governmental Authority" shall mean any: (a) nation,
state, commonwealth, province, territory, county, municipality, district or
other jurisdiction of any nature; (b) federal, state, local, municipal, foreign
or other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any court or
other tribunal).


<PAGE>

     "Liens" shall mean all mortgages, pledges, liens, security interests,
conditional and installment sale agreements, encumbrances, charges or other
claims of third parties of any kind.

     "Legal Proceeding" shall mean any action, suit, litigation, arbitration,
proceeding (including any civil, criminal, administrative, investigative or
appellate proceeding), hearing, inquiry, audit, examination or investigation
commenced, brought, conducted or heard by or before, or otherwise involving, any
court or other Governmental Body or any arbitrator or arbitration panel.

     "Legal Requirement" shall mean any federal, state, local, municipal,
foreign or other law, statute, constitution, principle of common law,
resolution, ordinance, code, edict, decree, rule, regulation, ruling or
requirement issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Body.

     "Material Adverse Effect" A violation or other matter will be deemed to
have a "Material Adverse Effect" if such violation or other matter can be
reasonably expected to have a material adverse effect on the business,
condition, assets, liabilities, operations or financial performance or
prospects.

     "Person" shall mean any individual, Entity or Governmental Body.

     "Representatives" shall mean officers, directors, employees, agents,
attorneys, accountants, advisors and representatives.

     "SEC" shall mean the United States Securities and Exchange Commission.

     "Securities Act" shall mean the Securities Act of 1933, as amended.

     "Stock Plans" shall mean the iMedeon Stock Incentive Plan, as amended, or
any other plan or program used by Company to grant Company Options.

     "Tax" shall mean any tax (including any income tax, franchise tax, capital
gains tax, gross receipts tax, value-added tax, surtax, excise tax, transfer
tax, stamp tax, sales tax, use tax, property tax, business tax, withholding tax
or payroll tax), levy, assessment, tariff, duty (including any customs duty),
deficiency or fee, and any related charge or amount (including any fine, penalty
or interest), imposed, assessed or collected by or under the authority of any
Governmental Body.

     "Tax Returns" shall mean returns, reports and information statements with
respect to Tax required to be filed by or on behalf of the Company with any
taxing authority, domestic or foreign.