AGREEMENT AND PLAN OF MERGER
                                     AMONG
                               CONCORD EFS, INC.,
                            ORION ACQUISITION CORP.
                                      AND
                               STAR SYSTEMS, INC.
                          Dated as of October 6, 2000

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                               TABLE OF CONTENTS
                                                                            Page
ARTICLE I  THE MERGER                                                         2
Section 1.1  The Merger.                                                      2
Section 1.2  Effective Time.                                                  2
Section 1.3  Effects of the Merger.                                           2
Section 1.4  Charter and Bylaws; Directors and Officers.                      2
Section 1.5  Conversion of Securities.                                        3
Section 1.6  Delivery of Certificates and Payment of Cash.                    4
Section 1.7  Dividends; Transfer Taxes; Withholding.                          5
Section 1.8  No Fractional Securities.                                        6
Section 1.9  Return of Exchange Fund.                                         6
Section 1.10  Adjustment of Exchange Ratio.                                   7
Section 1.11  No Further Ownership Rights in Company Common Stock.            7
Section 1.12  Closing of Company Transfer Books.                              7
Section 1.13  Lost Certificates.                                              7
Section 1.14  Further Assurances.                                             7
Section 1.15  Closing; Closing Deliveries.                                    8
ARTICLE II  REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB                  9
Section 2.1  Organization, Standing and Power.                               10
Section 2.2  Capital Structure.                                              10
Section 2.3  Authority.                                                      11
Section 2.4  Consents and Approvals; No Violation.                           12
Section 2.5  SEC Documents and Other Reports.                                13
Section 2.6  Actions and Proceedings.                                        13
Section 2.7  Required Vote of Parent Stockholders.                           14
Section 2.8  Pooling of Interests; Reorganization.                           14
Section 2.9  Tax Matters.                                                    14
Section 2.10  Brokers.                                                       15
Section 2.11  Operations of Sub.                                             15
Section 2.12  Permits and Compliance; Defaults.                              15
Section 2.13  Certain Agreements.                                            15
Section 2.14  ERISA.                                                         16
ARTICLE III  REPRESENTATIONS AND WARRANTIES OF THE COMPANY                   17
Section 3.1  Organization, Standing and Power.                               17
Section 3.2  Capital Structure.                                              17
Section 3.3  Authority.                                                      19
Section 3.4  Consents and Approvals; No Violation.                           19
Section 3.5  Financial Statements.                                           20

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Section 3.6  No Dividends; Absence of Certain Changes or Events.             21
Section 3.7  Governmental Permits.                                           23
Section 3.8  Tax Matters.                                                    24
Section 3.9  Actions and Proceedings.                                        25
Section 3.10  Certain Agreements.                                            25
Section 3.11  ERISA.                                                         25
Section 3.12  Worker Safety and Environmental Laws.                          27
Section 3.13  Labor Matters.                                                 27
Section 3.14  Intellectual Property; Software.                               27
Section 3.15  Availability of Assets and Legality of Use.                    30
Section 3.16  Real Property.                                                 31
Section 3.17  Real Property Leases.                                          31
Section 3.18  Personal Property Leases.                                      31
Section 3.19  Title to Assets.                                               31
Section 3.20  Contracts.                                                     32
Section 3.21  Status of Contracts.                                           33
Section 3.22  Insurance.                                                     33
Section 3.23  Budgets.                                                       33
Section 3.24  Takeover Statutes and Charter Provisions.                      34
Section 3.25  Required Vote of Company Stockholders.                         34
Section 3.26  Opinion of Financial Advisor.                                  34
Section 3.27  Pooling of Interests; Reorganization.                          34
Section 3.28  Brokers.                                                       34
Section 3.29  Hart-Scott-Rodino                                              34
Section 3.30  Stockholder Information.                                       34
Section 3.31  Investor Qualifications.                                       35
ARTICLE IV  COVENANTS RELATING TO CONDUCT OF BUSINESS                        36
Section 4.1  Conduct of Business Pending the Merger.                         36
Section 4.2  No Solicitation.                                                38
Section 4.3  Third Party Standstill Agreements.                              39
Section 4.4  Pooling of Interests; Reorganization.                           40
ARTICLE V  ADDITIONAL AGREEMENTS                                             40
Section 5.1  Stockholder Consent.                                            40
Section 5.2  Access to Information.                                          41
Section 5.3  Fees and Expenses.                                              41
Section 5.4  Company Stock Plan.                                             41
Section 5.5  Commercially Reasonable Efforts; Pooling of Interests.          42
Section 5.6  Public Announcements.                                           44
Section 5.7  Real Estate Transfer and Gains Tax.                             44
Section 5.8  Transfer Tax Filings.                                           44
Section 5.9  Other Transfer Taxes.                                           44

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Section 5.10  State Takeover Laws.                                           44
Section 5.11  Indemnification; Directors and Officers Insurance.             45
Section 5.12  Notification of Certain Matters.                               45
Section 5.13  Compliance with the Securities Act.                            46
Section 5.14  Registration Rights Agreement.                                 46
Section 5.15  Employee Matters.                                              46
Section 5.16  Advisory Committee.                                            47
Section 5.17  Directorship                                                   48
ARTICLE VI  CONDITIONS PRECEDENT TO THE MERGER                               48
Section 6.1  Conditions to Each Party's Obligation to Effect the Merger.     48
Section 6.2  Condition to Obligation of the Company to Effect the Merger.    49
Section 6.3  Conditions to Obligations of Parent and Sub to Effect the
             Merger.                                                         49
ARTICLE VII  TERMINATION, AMENDMENT AND WAIVER                               51
Section 7.1  Termination.                                                    51
Section 7.2  Effect of Termination.                                          55
Section 7.3  Amendment.                                                      55
Section 7.4  Waiver.                                                         55
ARTICLE VIII  GENERAL PROVISIONS                                             55
Section 8.1  Non-Survival of Representations and Warranties.                 55
Section 8.2  Notices.                                                        56
Section 8.3  Interpretation.                                                 57
Section 8.4  Counterparts.                                                   57
Section 8.5  Entire Agreement; No Third-Party Beneficiaries.                 57
Section 8.6  Governing Law.                                                  58
Section 8.7  Assignment.                                                     58
Section 8.8  Severability.                                                   58
Section 8.9  Enforcement of this Agreement.                                  58

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EXHIBITS
Exhibit A
Form of Stockholder Agreement
Exhibit B
Form of Company Affiliate Letter
Exhibit C
Form of Parent Affiliate Letter
Exhibit D
Form of Registration Rights Agreement
Exhibit E
Form of Employment Agreement Amendment


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TABLE OF DEFINED TERMS
Defined Term                                            Section
--------------------------------------------------------------------------------
Advisory Board                                          Section 5.16(a)
Affiliate                                               Section 3.15
Agreement                                               First paragraph
Audited Financial Statements                            Section 3.5
Balance Sheet                                           Section 3.5
Balance Sheet Date                                      Section 3.5
Bank Act                                                Section 2.4
Blue Sky Laws                                           Section 2.4
Calculation Period                                      Section 7.1(g)
Certificates                                            Section 1.6(a)
Certificate of Merger                                   Section 1.2
Class A Shares                                          Recital
Class B Shares                                          Recital
Closing                                                 Section 1.15(a)
Closing Date                                            Section 1.15(a)
Code                                                    Recitals
Company                                                 First paragraph
Company Affiliate Letter                                Section 5.13(a)
Company Agreements                                      Section 3.21
Company Ancillary Agreements                            Section 3.3
Company Business Personnel                              Section 3.13
Company Bylaws                                          Section 1.15(d)
Company Charter                                         Section 1.4(a)
Company Common Stock                                    Recitals
Company Diluted Share Number                            Section 1.5(c)
Company Letter                                          Section 3.2(c)
Company Multiemployer Plan                              Section 3.11(c)
Company Permits                                         Section 3.7
Company Plan                                            Section 3.11(c)

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Company Stockholders                                    Section 1.6(a)
Company Stock Options                                   Section 3.2(a)
Company Stock Plan                                      Section 3.2(a)
Confidentiality Agreement                               Section 5.2
Constituent Corporations                                First paragraph
Copyrights                                              Section 3.14(a)(iii)
D&O Insurance                                           Section 5.11(a)
DGCL                                                    Section 1.1
Determination Date                                      Section 7.1(g)
Dissenting Shares                                       Section 1.5(d)
Domain Names                                            Section 3.14(a)(iv)
Effective Time                                          Section 1.2
Employment Agreements                                   Section 6.3(j)
Employment Agreement Amendments                         Section 6.3(j)
Encumbrance                                             Section 3.6(c)(vii)
Environmental Laws                                      Section 3.12
ERISA                                                   Section 2.14(a)
ERISA Affiliate                                         Section 2.14(c)
Exchange Act                                            Section 2.5
Exchange Agent                                          Section 1.6(a)
Exchange Fund                                           Section 1.6(a)
Exchange Ratio                                          Section 1.5(c)
Financial Statements                                    Section 3.5
GAAP                                                    Section 2.5
Gains Taxes                                             Section 5.7
Governmental Entity                                     Section 2.4
HSR Act                                                 Section 2.4
Indemnified Party                                       Section 5.11(a)
Index Company Price                                     Section 7.1(g)
Index Company Ratios                                    Section 7.1(g)
Index Group                                             Section 7.1(g)
Intellectual Property                                   Section 3.14(a)
IRS                                                     Section 3.8(a)
Joint Venture                                           Section 3.2(d)
Knowledge of Parent                                     Section 2.6
Knowledge of the Company                                Section 3.6(e)
Leased Real Property                                    Section 3.17

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Material Adverse Change                                 Section 2.1
Material Adverse Effect                                 Section 2.1
Member Agreements                                       Section 3.20(xiii)
Merger                                                  Recitals
Nasdaq                                                  Section 1.8
Network                                                 Section 5.16(a)
Owned Software                                          Section 3.14(j)
Parent                                                  First paragraph
Parent Affiliate Letter                                 Section 5.13(b)
Parent Ancillary Agreements                             Section 2.3
Parent Annual Report                                    Section 2.2(c)
Parent Average Price                                    Section 7.1(g)
Parent Bylaws                                           Section 2.4
Parent Charter                                          Section 1.15(b)
Parent Common Stock                                     Recitals
Parent Letter                                           Section 2.2(a)
Parent Multiemployer Plan                               Section 2.14(c)
Parent Permits                                          Section 2.12
Parent Plan                                             Section 2.14(c)
Parent SEC Documents                                    Section 2.5
Parent Stock Options                                    Section 2.2(a)
Parent Stock Plans                                      Section 2.2(a)
Parent Transactions                                     Section 2.2(a)
Patent Rights                                           Section 3.14(a)(i)
PBGC                                                    Section 2.14(a)
Permitted Encumbrance                                   Section 3.6(c)(vii)
Person                                                  Section 3.15
Real Property Leases                                    Section 3.17
Registered Intellectual Property                        Section 3.14(f)
Registration Rights Agreement                           Section 5.14
Requirements of Laws                                    Section 3.9
Rule 145 Affiliates                                     Section 5.13(a)

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SEC                                                     Section 2.2(c)
Securities Act                                          Section 2.5
Share Issuance                                          Section 2.3
Software                                                Section 3.14(b)
Starting Date                                           Section 7.1(g)
State Takeover Approvals                                Section 2.4
Stockholder Agreements                                  Recitals
Stockholder Consent                                     Section 5.1
Stockholder Information                                 Section 3.30
Sub                                                     First paragraph
Subsidiary                                              Section 2.2(d)
Substitute Option                                       Section 5.4(a)
Superior Proposal                                       Section 4.2(a)
Surviving Corporation                                   Section 1.1
Takeover Proposal                                       Section 4.2(a)
Taxes                                                   Section 2.9
Tax Return                                              Section 2.9
Trademarks                                              Section 3.14(a)(ii)
Trade Secrets                                           Section 3.14(a)(v)
Transfer Taxes                                          Section 5.8
Transmittal Letter                                      Section 1.6(a)
Unaudited Financial Statements                          Section 3.5
Worker Safety Laws                                      Section 3.12
<PAGE>

                          AGREEMENT AND PLAN OF MERGER
     AGREEMENT  AND  PLAN  OF  MERGER,   dated  as  of  October  6,  2000  (this
"Agreement"), among Concord EFS, Inc ., a Delaware corporation ("Parent"), Orion
Acquisition Corp., a Delaware  corporation and a direct wholly-owned  subsidiary
of  Parent  ("Sub"),  and  Star  Systems,  Inc.,  a  Delaware  corporation  (the
"Company") (Sub and the Company being  hereinafter  collectively  referred to as
the "Constituent Corporations").

                              W I T N E S S E T H:

     WHEREAS,  the respective Boards of Directors of Parent, Sub and the Company
have approved and declared advisable the merger of Sub with and into the Company
with the Company  surviving  (the  "Merger"),  upon the terms and subject to the
conditions set forth herein,  whereby each issued and outstanding  Class A Share
of Common Stock,  par value $0.01 per share  ("Class A Shares"),  of the Company
and each issued and outstanding  Class B Share of Common Stock,  par value $0.01
per share of the Company (the "Class B Shares" and collectively with the Class A
Shares,  the "Company  Common  Stock"),  not owned directly or indirectly by the
Company,  will be converted into shares of Common Stock, par value $0.33 1/3 per
share, of Parent ("Parent Common Stock");

     WHEREAS,  the respective Boards of Directors of Parent and the Company have
determined  that the  Merger is in  furtherance  of and  consistent  with  their
respective  long-term  business  strategies and is in the best interest of their
respective stockholders;

     WHEREAS,  in order to induce  Parent and Sub to enter into this  Agreement,
concurrently  herewith  certain  stockholders  of the Company are entering  into
agreements   with  Parent  dated  as  of  the  date  hereof  (the   "Stockholder
Agreements"),  in the form of the attached  Exhibit A, pursuant to which,  among
other  things,  each  such  stockholder  has  agreed  to vote in  favor  of this
Agreement and the Merger;

     WHEREAS,  it is intended  that the Merger will qualify as a  reorganization
within the meaning of section  368(a) of the Internal  Revenue Code of 1986,  as
amended (the "Code"); and

     WHEREAS,  it is intended  that the Merger shall be recorded for  accounting
purposes as a pooling of interests.
<PAGE>

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

                                   ARTICLE I

                                   THE MERGER
                            Section 1.1 The Merger.
     Upon the terms and subject to the conditions  set forth in this  Agreement,
and in accordance with the Delaware  General  Corporation Law (the "DGCL"),  Sub
shall be merged with and into the Company at the Effective Time (as  hereinafter
defined).  Following the Merger, the separate  corporate  existence of Sub shall
cease  and  the  Company  shall  continue  as  the  surviving  corporation  (the
"Surviving  Corporation")  and shall  succeed  to and  assume all the rights and
obligations of Sub in accordance with the DGCL.  Notwithstanding anything to the
contrary herein, at the election of Parent, any direct  wholly-owned  Subsidiary
(as  hereinafter  defined) of Parent may be substituted for Sub as a Constituent
Corporation  in the Merger;  provided  that such  substituted  corporation  is a
Delaware  corporation  which is formed solely for the purpose of engaging in the
transactions contemplated by this Agreement and has engaged in no other business
activities. In such event, the parties agree to execute an appropriate amendment
to this Agreement,  in form and substance reasonably  satisfactory to Parent and
the Company, in order to reflect such substitution.

     Section 1.2  Effective  Time.  The Merger  shall  become  effective  when a
Certificate of Merger (the "Certificate of Merger"), executed in accordance with
the relevant provisions of the DGCL, is filed with the Secretary of State of the
State of Delaware;  provided,  however, that, upon mutual written consent of the
Constituent Corporations, the Certificate of Merger may provide for a later date
of  effectiveness  of the  Merger  not  more  than 30 days  after  the  date the
Certificate of Merger is filed. When used in this Agreement, the term "Effective
Time"  shall  mean  the date and time at which  the  Certificate  of  Merger  is
accepted for  recording or such later time  established  by the  Certificate  of
Merger. The filing of the Certificate of Merger shall be made on the date of the
Closing (as hereinafter defined).
     Section 1.3 Effects of the  Merger.  The Merger  shall have the effects set
forth in Sections 259 through 261 of the DGCL.
     Section  1.4  Charter  and  Bylaws;  Directors  and  Officers.  (a)  At the
Effective Time, the  Certificate of  Incorporation,  as amended,  of the Company

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(the "Company  Charter"),  as in effect immediately prior to the Effective Time,
shall be amended so that (i) Article  FOURTH  reads in its  entirety as follows:
"The  total  number  of  shares  of all  classes  of  capital  stock  which  the
Corporation  shall have authority to issue is 1,000 shares of Common Stock,  par
value $.01 per share" (ii) subsection (7) of Article SIXTH reads in its entirety
as follows:  "Intentionally  deleted"  and (iii)  Article  SEVENTH  reads in its
entirety as follows: "Intentionally deleted". As so amended, the Company Charter
shall be the Certificate of  Incorporation  of the Surviving  Corporation  until
thereafter  changed or amended as provided  therein or by applicable law. At the
Effective  Time,  the  Bylaws  of Sub,  as in  effect  immediately  prior to the
Effective  Time,  shall  be  the  Bylaws  of  the  Surviving  Corporation  until
thereafter  changed or  amended as  provided  therein or in the  Certificate  of
Incorporation  of the  Surviving  Corporation.  (b) The directors of Sub and the
employee  officers of the Company at the  Effective  Time shall be the directors
and  officers  of  the  Surviving  Corporation,   until  the  earlier  of  their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
     Section 1.5 Conversion of Securities.  As of the Effective  Time, by virtue
of the Merger and  without  any  action on the part of Sub,  the  Company or the
holders of any securities of the Constituent  Corporations:  (a) Each issued and
outstanding  share of common stock,  par value $0.01 per share,  of Sub shall be
converted into one validly issued,  fully paid and nonassessable share of common
stock of the Surviving Corporation.  (b) All shares of Company Common Stock that
are held in the treasury of the Company or by any wholly owned Subsidiary of the
Company shall be canceled and no capital stock of Parent or other  consideration
shall be paid or delivered in exchange  therefor.  (c) Subject to the provisions
of Sections  1.8,  1.10 and 7.1(g)  hereof,  each share of Company  Common Stock
issued and  outstanding  immediately  prior to the  Effective  Time  (other than
Dissenting  Shares  (as  hereinafter  defined)  and  shares  to be  canceled  in
accordance  with Section  1.5(b))  shall be converted  into the right to receive
4.6452 (such number being the "Exchange  Ratio") validly issued,  fully paid and
nonassessable shares of Parent Common Stock (the Exchange Ratio being determined
by dividing (i)  24,750,000  by (ii) the  aggregate  number of shares of Company
Common  Stock  outstanding  determined  on a fully  diluted  basis  assuming all
options are fully exercised (the "Company  Diluted Share Number") as of the date
hereof).  In the event the Company Diluted Share Number immediately prior to the
Effective  Time shall be greater than  5,328,036,  the  Exchange  Ratio shall be
proportionately  reduced  and  all  references  to the  Exchange  Ratio  in this
Agreement shall be deemed to be to the Exchange Ratio, as so reduced. All shares
of Company Stock  outstanding  immediately  prior to the Effective Time, when so

<PAGE>

converted,  shall no longer be outstanding and shall  automatically  be canceled
and retired and each holder of a certificate  representing any such shares shall
cease to have any rights with respect  thereto,  except the right to receive (i)
subject to Section 1.6,  certificates  representing  the shares of Parent Common
Stock  into  which  such  shares  are   converted,   (ii)  dividends  and  other
distributions  in  accordance  with  Section  1.7,  and (iii) any cash,  without
interest,  in lieu of  fractional  shares to be issued or paid in  consideration
therefor in accordance  with Section 1.8. (d)  Notwithstanding  anything in this
Agreement to the contrary, shares of Company Common Stock issued and outstanding
immediately prior to the Effective Time which are held of record by stockholders
who shall not have voted  such  shares in favor of the Merger and who shall have
demanded properly in writing appraisal of such shares in accordance with Section
262 of the DGCL  ("Dissenting  Shares") shall not be converted into the right to
receive  Parent  Common Stock and cash as set forth in Section  1.5(c),  but the
holders  thereof  instead shall be entitled to, and the Dissenting  Shares shall
only represent the right to receive, payment of the fair value of such shares in
accordance  with the provisions of Section 262 of the DGCL;  provided,  however,
that (i) if such a holder fails to demand properly in writing from the Surviving
Corporation the appraisal of his or its shares in accordance with Section 262(d)
of the DGCL or,  after making such  demand,  subsequently  delivers an effective
written  withdrawal of such demand, or fails to establish his or its entitlement
to appraisal  rights as provided in Section 262 of the DGCL, if so required,  or
(ii) if a court  shall  determine  that such  holder is not  entitled to receive
payment for his or its shares or such  holder  shall  otherwise  lose his or its
appraisal  rights,  then, in any such case,  each share of Company  Common Stock
held of record by such holder or holders shall  automatically  be converted into
and  represent  only the right to receive  Parent  Common  Stock and cash as set
forth in Section  1.5(c),  upon  surrender of the  certificate  or  certificates
representing  such  Dissenting  Shares.  Any cash paid in respect of  Dissenting
Shares shall be paid by the Company  solely with its own funds,  and the Company
shall not be  reimbursed  therefor by Parent or any of its  Subsidiaries  either
directly or indirectly.  (e) In calculating the consideration payable under this
Section  1.5,  Parent  shall  be  entitled  to rely on the  representations  and
warranties contained in Section 3.2(a) and the certificate delivered pursuant to
Section  6.3(f).  If such  representations,  warranties and  certificate are not
correct,  Parent shall have the right to adjust the Exchange  Ratio  accordingly
and,  notwithstanding anything else to the contrary contained in this Agreement,
in no event shall the aggregate merger  consideration  payable by Parent, Sub or
the  Surviving  Corporation  to the holders of equity  interests  in the Company
(including,  without  limitation,  holders of  options) in  connection  with the

<PAGE>

Merger or the transactions contemplated hereby exceed such consideration payable
assuming such representations,  warranties and certificate are correct.  Section
1.6 Delivery of Certificates  and Payment of Cash. (a) At or after the Effective
Time, each holder of record of a certificate or certificates (collectively,  the
"Certificates")   representing   shares  of  Company  Common  Stock  issued  and
outstanding immediately prior to the Effective Time (collectively,  the "Company
Stockholders"),  may surrender  such  Certificate  or  Certificates  to Parent's
designee as the exchange agent (the "Exchange Agent"), together with a letter of
transmittal  in the form  prepared by Parent  (which shall specify that delivery
shall be effected,  and risk of loss and title to the  Certificates  shall pass,
only upon actual  delivery of the  Certificates  to the Exchange Agent and shall
contain  instructions  for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Parent Common Stock and cash in
lieu of  fractional  shares)  (the  "Transmittal  Letter").  Promptly  after the
Effective  Time,  Parent  shall  deposit with the  Exchange  Agent  certificates
representing  the shares of Parent  Common  Stock  issuable  pursuant to Section
1.5(c) for exchange with outstanding shares of Company Common Stock, and cash as
required to make payments in lieu of any fractional  shares  pursuant to Section
1.8 (such cash and shares of Parent Common Stock, together with any dividends or
distributions  with  respect  hereto,  being  hereinafter  referred  to  as  the
"Exchange  Fund").  The  Exchange  Agent shall  deliver the Parent  Common Stock
contemplated  to be issued  pursuant to Section 1.5(c) out of the Exchange Fund.
Upon surrender for cancellation to the Exchange Agent of all  Certificates  held
by any Company Stockholder, together with the Transmittal Letter, duly executed,
such  Company  Stockholder  shall be entitled to receive in exchange  therefor a
certificate representing that number of whole shares of Parent Common Stock into
which the shares  represented by the  Certificate or Certificates so surrendered
shall have been converted at the Effective Time pursuant to Section 1.5(c), cash
in lieu of any  fractional  share in  accordance  with  Section  1.8 and certain
dividends  and other  distributions  in  accordance  with  Section  1.7, and any
Certificate so surrendered  shall  forthwith be canceled.  (b) Each  Transmittal
Letter  shall  contain   representations   and  warranties  by  the  Person  (as
hereinafter defined) surrendering any Certificates similar to those contained in
Section 3.31. Each certificate  delivered pursuant to Section 1.6 evidencing any
Parent  Common  Stock  shall  bear  a  legend  substantially  as  follows:  "THE
SECURITIES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES  ACT  OF  1933,  AS  AMENDED,  OR ANY  STATE  SECURITIES  LAWS.  SUCH
SECURITIES  HAVE BEEN  ACQUIRED BY THE HOLDER  HEREOF NOT WITH A VIEW TO, OR FOR
RESALE IN CONNECTION  WITH, ANY  DISTRIBUTION  THEREOF WITHIN THE MEANING OF THE
SECURITIES ACT OF 1933, AS AMENDED.  SUCH SECURITIES MAY NOT BE OFFERED, SOLD OR

<PAGE>

OTHERWISE  TRANSFERRED,  PLEDGED OR HYPOTHECATED  UNLESS (A) THE SECURITIES HAVE
BEEN REGISTERED  UNDER SUCH ACT AND ANY AND ALL SUCH OTHER  APPLICABLE  LAWS, OR
(B) PARENT  RECEIVES AN OPINION OF  COUNSEL,  IN FORM AND  SUBSTANCE  REASONABLY
SATISFACTORY  TO PARENT,  TO THE EFFECT THAT  REGISTRATION OF SUCH SECURITIES IS
NOT REQUIRED."

     Section 1.7 Dividends;  Transfer Taxes; Withholding.  No dividends or other
distributions  that are declared on or after the Effective Time on Parent Common
Stock,  or are payable to the  Company  Stockholders  on or after the  Effective
Time,  will be paid to any Person  entitled by reason of the Merger to receive a
certificate  representing  Parent Common Stock until such Person  surrenders the
related  Certificate  or  Certificates,  as provided in Section 1.6, and no cash
payment in lieu of fractional shares will be paid to any such Person pursuant to
Section 1.8 until such Person  shall so  surrender  the related  Certificate  or
Certificates.  Subject to the effect of applicable  law,  there shall be paid to
each record holder of a new certificate  representing  such Parent Common Stock:
(i) at the time of such surrender or as promptly as practicable thereafter,  the
amount of any dividends or other distributions  theretofore paid with respect to
the shares of Parent Common Stock represented by such new certificate and having
a record date on or after the  Effective  Time and a payment  date prior to such
surrender;  (ii) at the  appropriate  payment date or as promptly as practicable
thereafter,  the amount of any  dividends  or other  distributions  payable with
respect to such  shares of Parent  Common  Stock and having a record  date on or
after the  Effective  Time but prior to such  surrender and a payment date on or
subsequent  to such  surrender;  and (iii) at the time of such  surrender  or as
promptly as practicable thereafter,  the amount of any cash payable with respect
to a  fractional  share of Parent  Common Stock to which such holder is entitled
pursuant to Section  1.8. In no event shall the Person  entitled to receive such
dividends  or  other  distributions  or cash in lieu  of  fractional  shares  be
entitled to receive interest on such dividends or other distributions or cash in
lieu of fractional  shares.  If any cash or certificate  representing  shares of
Parent  Common  Stock is to be paid to or  issued in a name  other  than that in
which the Certificate  surrendered in exchange therefor is registered,  it shall
be a condition of such exchange that the  Certificate  so  surrendered  shall be
properly  endorsed and otherwise in proper form for transfer and that the Person
requesting  such  exchange  shall  pay to Parent  any  transfer  or other  taxes
required  by reason of the  issuance of  certificates  for such shares of Parent
Common  Stock  in a name  other  than  that  of  the  registered  holder  of the
Certificate  surrendered,  or shall establish to the satisfaction of Parent that
such tax has been paid or is not applicable.  Parent shall be entitled to deduct

<PAGE>

and withhold from the consideration otherwise payable pursuant to this Agreement
to any Person such  amounts as Parent is required  to deduct and  withhold  with
respect to the making of such payment  under the Code or under any  provision of
state,  local or foreign tax law. To the extent that  amounts are so withheld by
Parent,  such  withheld  amounts  shall  be  treated  for all  purposes  of this
Agreement as having been paid to the Person who  otherwise  would have  received
the  payment  in respect of which such  deduction  and  withholding  was made by
Parent.

     Section 1.8 No Fractional Securities. No certificates or scrip representing
fractional  shares of Parent Common Stock shall be issued upon the surrender for
exchange of  Certificates  pursuant to this Article I, and no Parent dividend or
other  distribution or stock split shall relate to any fractional  share, and no
fractional  share shall entitle the owner thereof to vote or to any other rights
of a securityholder of Parent. In lieu of any such fractional share, each holder
of Company Common Stock who would  otherwise have been entitled to a fraction of
a share of Parent  Common  Stock upon  surrender  of  Certificates  for exchange
pursuant to this  Article I will be paid an amount in cash  (without  interest),
rounded  down to the  nearest  cent,  determined  by  multiplying  (i) the  last
reported  sale price per share of Parent  Common  Stock on the  Nasdaq  National
Market System ("Nasdaq") on the Closing Date (or, if the shares of Parent Common
Stock do not trade on Nasdaq on such date, the trading day immediately preceding
the Closing  Date) by (ii) the  fractional  interest to which such holder  would
otherwise be entitled. As promptly as practicable after the determination of the
amount of cash, if any, to be paid to holders of fractional share interests, the
Exchange Agent shall so notify Parent, and Parent shall deposit such amount with
the  Exchange  Agent and shall cause the Exchange  Agent to forward  payments to
such holders of fractional share interests subject to and in accordance with the
terms of Section 1.7 and this Section 1.8.

     Section  1.9 Return of Exchange  Fund.  Any  portion of the  Exchange  Fund
deposited  with the Exchange  Agent which remains  undistributed  to the Company
Stockholders  for 60 days after the Effective Time shall be delivered to Parent,
upon  demand  of  Parent,  and  any  such  Company  Stockholders  who  have  not
theretofore  complied with this Article I shall  thereafter  look only to Parent
for  payment  of  their  claim  for  Parent  Common  Stock,  any cash in lieu of
fractional shares of Parent Common Stock and any dividends or distributions with
respect to Parent Common  Stock.  Neither  Parent nor the Surviving  Corporation
shall  be  liable  to  any  former  holder  of  Company  Common  Stock  for  any
consideration  payable in accordance with this Article I which is delivered to a

<PAGE>

public  official  pursuant  to any  applicable  abandoned  property,  escheat or
similar law.

     Section  1.10   Adjustment  of  Exchange   Ratio.   In  the  event  of  any
reclassification,  stock split or stock  dividend  with respect to Parent Common
Stock or any change or conversion  of Parent Common Stock into other  securities
(or if a record date with respect to any of the foregoing should occur) prior to
the Effective Time, appropriate and proportionate adjustments,  if any, shall be
made to the Exchange  Ratio,  and all  references to the Exchange  Ratio in this
Agreement shall be deemed to be to the Exchange  Ratio, as so adjusted.

     Section  1.11 No Further  Ownership  Rights in Company  Common  Stock.  All
shares  of Parent  Common  Stock  issued  upon the  surrender  for  exchange  of
Certificates  in  accordance  with the  terms  hereof  (including  any cash paid
pursuant  to  Section  1.8)  shall  be  deemed  to  have  been  issued  in  full
satisfaction  of all rights  pertaining  to the shares of Company  Common  Stock
represented by such Certificates.

     Section 1.12 Closing of Company  Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed and no transfer of shares of
Company Common Stock shall thereafter be made on the records of the Company. If,
after  the  Effective  Time,   Certificates   are  presented  to  the  Surviving
Corporation  or Parent,  such  Certificates  shall be canceled and  exchanged as
provided in this Article I.

     Section 1.13 Lost  Certificates.  If any Certificate  shall have been lost,
stolen or destroyed,  upon the making of an affidavit of that fact by the Person
claiming such  Certificate  to be lost,  stolen or destroyed and, if required by
Parent or the  Exchange  Agent,  the posting by such  Person of a bond,  in such
amount as Parent or the  Exchange  Agent may direct,  as  indemnity  against any
claim that may be made against Parent, the Surviving Corporation or the Exchange
Agent  with  respect  to such  Certificate,  the  Exchange  Agent  will issue in
exchange for such lost,  stolen or destroyed  Certificate,  the shares of Parent
Common  Stock to which the holder  thereof is entitled  pursuant to Section 1.5,
any cash in lieu of fractional shares of Parent Common Stock to which the holder
thereof  is  entitled  pursuant  to  Section  1.8 and  any  dividends  or  other
distributions to which the holder thereof is entitled pursuant to Section 1.7.

     Section 1.14 Further  Assurances.  If at any time after the Effective  Time
the Surviving  Corporation shall consider or be advised that any deeds, bills of

<PAGE>

sale,  assignments  or  assurances  or any other acts or things  are  necessary,
desirable or proper (a) to vest, perfect or confirm, of record or otherwise,  in
the Surviving  Corporation  its right,  title or interest in, to or under any of
the rights, privileges,  powers,  franchises,  properties or assets of either of
the Constituent Corporations, or (b) otherwise to carry out the purposes of this
Agreement,  the Surviving  Corporation  and its proper officers and directors or
their designees  shall be authorized to execute and deliver,  in the name and on
behalf of either of the Constituent Corporations, all such deeds, bills of sale,
assignments  and  assurances  and to do,  in the name and on  behalf  of  either
Constituent  Corporation,  all such other  acts and things as may be  necessary,
desirable  or proper to vest,  perfect or confirm  the  Surviving  Corporation's
right, title or interest in, to or under any of the rights, privileges,  powers,
franchises,  properties or assets of such Constituent  Corporation and otherwise
to carry out the purposes of this Agreement.

     Section  1.15  Closing;   Closing  Deliveries.   (a)  The  closing  of  the
transactions  contemplated  by this  Agreement  (the  "Closing") and all actions
specified  in this  Agreement  to occur at the  Closing  shall take place at the
offices of Sidley & Austin,  Bank One Plaza, 10 South Dearborn Street,  Chicago,
Illinois,  at 10:00  a.m.,  local  time,  no later than the fifth  business  day
following  the day on which the last of the  conditions  set forth in Article VI
shall have been fulfilled or waived (if  permissible)  or at such other time and
place as Parent and the Company shall agree (the date of the Closing is referred
to herein as the "Closing  Date").  (b) Subject to  fulfillment or waiver of the
conditions  set forth in Article VI, at the Closing  Parent shall deliver to the
Company  all of  the  following:  (i) a copy  of  the  Restated  Certificate  of
Incorporation,  as amended, of Parent (the "Parent Charter"),  certified as of a
recent  date  by the  Secretary  of  State  of the  State  of  Delaware;  (ii) a
certificate  of good  standing  of  Parent,  issued  as of a recent  date by the
Secretary  of  State  of the  State  of  Delaware;  (iii) a  certificate  of the
Secretary or an Assistant  Secretary of Parent,  dated the Closing Date, in form
and substance reasonably satisfactory to the Company, as to (a) no amendments to
the Parent  Charter since a specified  date,  (b) the Bylaws of Parent,  (c) the
resolutions  of the Board of Directors of Parent  authorizing  the execution and
performance of this Agreement and the transactions  contemplated herein, and (d)
the incumbency and signatures of the officers of Parent executing this Agreement
and any other agreement or certificate executed by Parent in connection with the
Closing;  (iv) the  certificate  contemplated  by  Section  6.2(a);  and (v) all
consents,   waivers  or  approvals  obtained  by  Parent  with  respect  to  the
consummation of the transactions  contemplated by this Agreement. (c) Subject to

<PAGE>

fulfillment  or waiver of the conditions set forth in Article VI, at the Closing
Sub  shall  deliver  to the  Company  all of the  following:  (i) a copy  of the
Certificate  of  Incorporation  of Sub  certified  as of a  recent  date  by the
Secretary of the State of Delaware;  (ii) a certificate of good standing of Sub,
issued as of a recent date by the  Secretary  of State of the State of Delaware;
and (iii) a certificate of the Secretary or an Assistant Secretary of Sub, dated
the Closing Date, in form and substance reasonably  satisfactory to the Company,
as to (a) no  amendments  to the  Certificate  of  Incorporation  of Sub since a
specified  date,  (b) the  Bylaws of Sub,  (c) the  resolutions  of the Board of
Directors of Sub authorizing the execution and performance of this Agreement and
the  transactions  contemplated  herein and the written consent of Parent in its
capacity as sole  stockholder of Sub adopting this Agreement in accordance  with
Section 251 of the DGCL,  and (d) the  incumbency and signatures of the officers
of Sub executing this Agreement and any other agreement or certificate  executed
by Sub in connection  with the Closing.  (d) Subject to fulfillment or waiver of
the conditions set forth in Article VI, at the Closing the Company shall deliver
to Parent all of the following: (i) a copy of the Company Charter,  certified as
of a recent  date by the  Secretary  of State of the State of  Delaware;  (ii) a
certificate  of good standing of the Company,  issued as of a recent date by the
Secretary  of  State  of the  State  of  Delaware;  (iii) a  certificate  of the
Secretary or an Assistant  Secretary of the Company,  dated the Closing Date, in
form and substance reasonably satisfactory to Parent, as to (i) no amendments to
the Company Charter since a specified  date, (ii) the Bylaws of the Company,  as
amended (the "Company Bylaws"),  (iii) the resolutions of the Board of Directors
of the Company  authorizing  the execution and performance of this Agreement and
the transactions  contemplated herein and the resolutions of the stockholders of
the Company approving and adopting this Agreement in accordance with Section 251
of the DGCL,  and (iv) the  incumbency  and  signatures  of the  officers of the
Company executing this Agreement and any other agreement or certificate executed
by the Company in connection  with the Closing;  (iv) all  consents,  waivers or
approvals  obtained  by the  Company  with  respect to the  consummation  of the
transactions  contemplated by this Agreement; (v) the certificates  contemplated
by Sections 6.3(a),  6.3(c),  6.3(f),  6.3(g),  6.3(h) and 6.3(j);  and (vi) the
written confirmations contemplated by Section 6.3(k).

                                   ARTICLE II

                REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
     Parent and Sub represent and warrant, jointly and severally, to the Company
as follows:
<PAGE>

     Section 2.1  Organization,  Standing and Power. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite  corporate power and authority to
carry on its  business  as now being  conducted.  Each of Parent and Sub is duly
qualified to do business and is in good standing in each jurisdiction  where the
character  of its  properties  owned or held  under  lease or the  nature of its
activities makes such qualification or good standing necessary, except where the
failure to be so qualified or in good standing would not, individually or in the
aggregate,  have a Material  Adverse  Effect on  Parent.  For  purposes  of this
Agreement,  "Material  Adverse Change" or "Material  Adverse Effect" means, when
used with  respect  to Parent or the  Company,  as the case may be,  any  event,
change or effect that  individually  or when taken  together with all other such
events,  changes or effects is or could  reasonably be expected to be materially
adverse to the business, prospects, assets, liabilities,  financial condition or
results of operations of Parent and its  Subsidiaries,  taken as a whole, or the
Company and its Subsidiaries,  taken as a whole, as the case may be. None of the
following  shall be deemed by itself or by themselves,  to constitute a Material
Adverse Change or Material Adverse Effect: (i) conditions affecting the industry
in which the Company and its Subsidiaries or Parent and its Subsidiaries, as the
case may be, operates or the U.S. economy as a whole, or (ii) any effect arising
from the public announcement of this Agreement.

     Section 2.2 Capital  Structure.  (a) As of the date hereof,  the authorized
capital stock of Parent  consists of 500,000,000  shares of Parent Common Stock.
At the close of business on September 29, 2000, (i) 215,364,106 shares of Parent
Common  Stock were issued and  outstanding,  all of which were  validly  issued,
fully paid and  nonassessable and free of preemptive  rights,  (ii) no shares of
Parent  Common Stock were held in the treasury of Parent or by  Subsidiaries  of
Parent,  and (iii)  24,220,513  shares of Parent  Common Stock were reserved for
issuance pursuant to outstanding options,  warrants,  convertible securities and
rights  ("Parent  Stock  Options"),  to purchase or otherwise  acquire shares of
Parent  Common  Stock under  Parent's  benefit  plans or other  arrangements  or
pursuant to any plans or  arrangements  assumed by Parent in connection with any
acquisition,  business  combination or similar  transaction  (collectively,  the
"Parent Stock Plans"). As of the date of this Agreement,  except as set forth in
Section  2.2(a) of the letter  dated as of the date  hereof  from  Parent to the
Company, which letter relates to this Agreement and is designated therein as the
Parent Letter (the "Parent Letter"),  except as set forth above,  except for the
issuance of shares of Parent Common Stock pursuant to the Parent Stock Plans and

<PAGE>

except in connection with acquisitions,  mergers or other business  combinations
involving Parent or its Subsidiaries (the "Parent  Transactions"),  no shares of
capital  stock or other voting  securities  of Parent were issued,  reserved for
issuance or  outstanding.  All of the shares of Parent Common Stock  issuable in
exchange for Company Common Stock at the Effective Time in accordance  with this
Agreement will be, when so issued, duly authorized,  validly issued,  fully paid
and  nonassessable  and  free  of  preemptive  rights.  As of the  date  of this
Agreement,  except for (i) this Agreement and (ii) as set forth above, there are
no options,  warrants,  calls, rights, puts or agreements to which Parent or any
of its  Subsidiaries  is a party  or by which  any of them is  bound  obligating
Parent or any of its Subsidiaries to issue, deliver, sell or redeem, or cause to
be issued,  delivered,  sold or redeemed, any additional shares of capital stock
(or  other  voting  securities  or equity  equivalents)  of Parent or any of its
Subsidiaries or obligating Parent or any of its Subsidiaries to grant, extent or
enter into any such option,  warrant,  call, right, put or agreement.  (b) As of
the date of this Agreement,  each  outstanding  share of capital stock (or other
voting  security  or equity  equivalent)  of each  Subsidiary  of Parent is duly
authorized, validly issued, fully paid and nonassessable and each such share (or
other  voting  security  or equity  equivalent)  is owned by  Parent or  another
Subsidiary of Parent, free and clear of all security interests,  liens,  claims,
pledges,  options,  rights of first refusal,  agreements,  limitations on voting
rights,  charges and other encumbrances of any nature  whatsoever,  except where
any failure(s) be so duly authorized, valid issued, fully paid and nonassessable
or owned would not have,  individually or in the aggregate,  a Material  Adverse
Effect  on  Parent.  (c)  Except as set forth in  Section  2.2(c) of the  Parent
Letter,  Exhibit 21 to  Parent's  Annual  Report on Form 10-K for the year ended
December 31, 1999, as filed with the  Securities  and Exchange  Commission  (the
"SEC") (the  "Parent  Annual  Report"),  contained a true,  accurate and correct
statement in all material respects of all of the information  required to be set
forth therein by the regulations of the SEC. (d) For purposes of this Agreement,
"Subsidiary"  means any corporation,  partnership,  limited  liability  company,
joint  venture,  trust,  association  or other  entity  of which  Parent  or the
Company,  as the case may be (either alone or through or together with any other
Subsidiary),  owns,  directly or  indirectly,  50% or more of the stock or other
equity  interests  the holders of which are  generally  entitled to vote for the
election of the board of directors or other governing body of such  corporation,
partnership, limited liability company, joint venture or other entity.

     Section 2.3  Authority.  On or prior to the date of this  Agreement (i) the
Board of Directors of Sub approved this  Agreement  and declared this  Agreement

<PAGE>

and the Merger  advisable  and fair to and in the best  interest  of Sub and its
sole stockholder, and (ii) the Board of Directors of Parent approved and adopted
this  Agreement  and approved the issuance of Parent  Common Stock in connection
with the Merger (the "Share  Issuance"),  both in accordance  with the DGCL. The
Board of Directors of Parent has  approved  the other  agreements  to be entered
into by it as contemplated hereby (such other agreements,  the "Parent Ancillary
Agreements").  Parent has the requisite  corporate  power and authority to enter
into this  Agreement and the Parent  Ancillary  Agreements,  to  consummate  the
transactions  contemplated  hereby and thereby and to effect the Share Issuance.
Sub has all corporate  power and  authority to enter into this  Agreement and to
consummate the transactions  contemplated  hereby. The execution and delivery of
this Agreement by Parent and Sub and the Parent Ancillary  Agreements by Parent,
and the consummation by Parent and Sub of the transactions  contemplated  hereby
and thereby,  have been duly authorized by all necessary corporate action on the
part of Parent and Sub, subject to the filing of appropriate Merger documents as
required by the DGCL. This Agreement and the  consummation  of the  transactions
contemplated  hereby have been  approved by the sole  stockholder  of Sub.  This
Agreement  has been duly executed and delivered by Parent and Sub and the Parent
Ancillary  Agreements executed as of the date hereof have been duly executed and
delivered by Parent. Assuming the valid authorization, execution and delivery by
the other parties thereto and the validity and binding effect hereof and thereof
on the other parties thereto,  this Agreement  constitutes the valid and binding
obligation of Parent and Sub enforceable against each of them in accordance with
its terms,  and each of the Parent  Ancillary  Agreements,  upon  execution  and
delivery thereof by Parent,  will constitute the valid and binding obligation of
Parent  enforceable   against  it  in  accordance  with  its  terms,  except  as
enforceability   may  be   limited   by   applicable   bankruptcy,   insolvency,
reorganization,   moratorium  or  similar  laws  affecting  the  enforcement  of
creditors'  rights  generally and by the effect of general  principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).

     Section  2.4  Consents  and  Approvals;  No  Violation.  Assuming  that all
consents, approvals,  authorizations and other actions described in this Section
2.4 have been obtained and all filings and obligations described in this Section
2.4 have been made, except as set forth in Section 2.4 of the Parent Letter, the
execution  and  delivery  of this  Agreement  by Parent and Sub,  and the Parent
Ancillary Agreements by Parent, do not, and the consummation of the transactions
contemplated  hereby and thereby and compliance  with the provisions  hereof and
thereof will not, result in any violation of, or default (with or without notice

<PAGE>

or lapse of time,  or both)  under,  or give to  others a right of  termination,
cancellation or acceleration of any obligation or the loss of a material benefit
under,  or result in the  creation  of any lien,  security  interest,  charge or
encumbrance  upon  any of the  properties  or  assets  of  Parent  or any of its
Subsidiaries  under,  any  provision of (i) the Parent  Charter or the Bylaws of
Parent (the "Parent  Bylaws") or the Certificate of  Incorporation  or Bylaws of
Sub, (ii) the comparable  charter or  organization  documents of any of Parent's
Subsidiaries,  (iii)  any  loan  or  credit  agreement,  note,  bond,  mortgage,
indenture, lease or other agreement,  instrument, permit, concession,  franchise
or  license  applicable  to  Parent or any of its  Subsidiaries  or any of their
respective properties or assets, or (iv) any judgment,  order, decree,  statute,
law,  ordinance,  rule  or  regulation  applicable  to  Parent  or  any  of  its
Subsidiaries or any of their respective properties or assets, other than, in the
case of clauses (ii),  (iii) and (iv), any such  violations,  defaults,  rights,
liens, security interests,  charges or encumbrances that, individually or in the
aggregate, would not have a Material Adverse Effect on Parent, materially impair
the ability of Parent or Sub to perform their respective  obligations  hereunder
or, in the case of Parent, under the Parent Ancillary Agreements, or prevent the
consummation of any of the transactions contemplated hereby or thereby by Parent
or Sub.  Except as set forth in Section 2.4 of the Parent  Letter,  no filing or
registration  with,  or  authorization,  consent or  approval  of, any  domestic
(federal and state),  foreign or supranational court,  commission,  governmental
body,  regulatory  agency,  authority or tribunal (a  "Governmental  Entity") is
required by or with respect to Parent or any of its  Subsidiaries  in connection
with the execution and delivery of this Agreement by Parent or Sub or the Parent
Ancillary Agreements by Parent or is necessary for the consummation by Parent or
Sub of the Merger and the other  transactions  contemplated by this Agreement or
the Parent Ancillary Agreements,  except for (i) in connection, or in compliance
with the  provisions  of the  Bank  Holding  Company  Act of  1956,  as  amended
(together  with the  rules and  regulations  promulgated  thereunder,  the "Bank
Act"), and the Hart-Scott-Rodino  Antitrust Improvements Act of 1976, as amended
(together with the rules and regulations promulgated thereunder, the "HSR Act"),
(ii) the filing of the  Certificate of Merger with the Secretary of State of the
State of Delaware and  appropriate  documents  with the relevant  authorities of
other states in which the Company or any of its  Subsidiaries is qualified to do
business,  (iii) such  filings,  authorizations,  orders and approvals as may be
required by state  takeover  laws (the "State  Takeover  Approvals"),  (iv) such
filings as may be required in  connection  with the taxes  described in Sections
5.7, 5.8 and 5.9, (v) applicable  requirements,  if any, of state  securities or
"blue sky" laws ("Blue Sky Laws") and Nasdaq, (vi) applicable  requirements,  if

<PAGE>

any, under foreign laws and (vii) such other consents,  orders,  authorizations,
registrations,  declarations  and filings the failure of which to be obtained or
made would not, individually or in the aggregate, have a Material Adverse Effect
on  Parent,  materially  impair  the  ability  of Parent or Sub to  perform  its
obligations  hereunder  or, in the case of Parent,  under the  Parent  Ancillary
Agreements,  or prevent the consummation of any of the transactions contemplated
hereby or thereby by Parent or Sub.

     Section 2.5 SEC Documents and Other Reports.  Parent has filed all required
documents with the SEC between  January 1, 2000 and the date hereof (the "Parent
SEC Documents").  As of their respective dates or, if amended, as of the date of
the last amendment,  the Parent SEC Documents  complied in all material respects
with the  requirements of the Securities Act of 1933, as amended  (together with
the rules and regulations promulgated  thereunder,  the "Securities Act") or the
Securities  Exchange  Act of 1934,  as  amended  (together  with the  rules  and
regulations promulgated thereunder, to "Exchange Act"), as the case may be, and,
at the  respective  times they were  filed,  none of the  Parent  SEC  Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements  therein,
in light of the  circumstances  under which they were made, not misleading.  The
consolidated financial statements  (including,  in each case, any notes thereto)
of Parent  included  in the  Parent  SEC  Documents  complied  as to form in all
material  respects with  applicable  accounting  requirements  and the published
rules  and  regulations  of the SEC  with  respect  thereto,  were  prepared  in
accordance with generally accepted  accounting  principles  ("GAAP") (except, in
the case of the  unaudited  statements,  as  permitted  by Form 10-Q of the SEC)
applied on a  consistent  basis  during the periods  involved  (except as may be
indicated  therein or in the notes thereto) and fairly presented in all material
respects  the  consolidated  financial  position of Parent and its  consolidated
Subsidiaries as at the respective dates thereof and the consolidated  results of
their  operations and their  consolidated  cash flows for the periods then ended
(subject,  in the  case  of  unaudited  statements,  to  normal  year-end  audit
adjustments and to any other adjustments described therein). Except as disclosed
in the  Parent SEC  Documents  or as  required  by GAAP,  Parent has not,  since
December  31,  1999,  made any material  change in the  accounting  practices or
policies  applied in the  preparation  of financial  statements  included in the
Parent SEC Documents.

     Section 2.6 Actions and Proceedings.  Except as set forth in the Parent SEC
Documents  filed prior to the date of this  Agreement and except as set forth in

<PAGE>

Section 2.6 of the Parent Letter,  as of the date hereof,  there are no actions,
suits, labor disputes or other litigation,  legal or administrative  proceedings
or  governmental   investigations  pending  or,  to  the  Knowledge  of  Parent,
threatened  against  Parent or any of its  Subsidiaries  or, to the Knowledge of
Parent,  any of its or their present or former officers,  directors,  employees,
consultants, agents or stockholders, as such, or any of its or their properties,
assets or business  relating to the transactions  contemplated by this Agreement
and the  Parent  Ancillary  Agreements.  Except as set forth in the  Parent  SEC
Documents filed prior to the date of this Agreement,  and except as set forth in
Section  2.6  of  the  Parent  Letter,  as of  the  date  hereof,  there  are no
outstanding   orders,   judgments,   injunctions,   awards  or  decrees  of  any
Governmental  Entity  against  Parent  or any of its  Subsidiaries,  or,  to the
Knowledge  of Parent (as  hereinafter  defined),  against  any of the present or
former directors or officers of Parent or any of its  Subsidiaries,  as such, or
any of its or their  properties,  assets or businesses that,  individually or in
the aggregate,  would have a Material Adverse Effect on Parent.  For purposes of
this  Agreement,  "Knowledge  of  Parent"  means  the  actual  knowledge  of the
individuals identified in Section 2.6 of the Parent Letter.

     Section  2.7  Required  Vote  of  Parent  Stockholders.   No  vote  of  the
securityholders  of Parent is required by law, the Parent  Charter or the Parent
Bylaws  or  otherwise  in order for  Parent to  consummate  the  Merger  and the
transactions contemplated hereby.

     Section 2.8  Pooling of  Interests;  Reorganization.  To the  Knowledge  of
Parent,  neither Parent nor any of its  Subsidiaries has (i) taken any action or
failed to take any action which action or failure would jeopardize the treatment
of the Merger as a pooling of interests  for  accounting  purposes or (ii) taken
any action or failed to take any action  which action or failure  would  prevent
the Merger from  qualifying  as a  reorganization  within the meaning of Section
368(a) of the Code.

     Section 2.9 Tax Matters.  Except as  otherwise  set forth in Section 2.9 of
the  Parent  Letter,  as of  the  date  hereof,  (i)  Parent  and  each  of  its
Subsidiaries have filed all federal,  and all material state, local and foreign,
Tax Returns (as hereinafter  defined) required to have been filed or appropriate
extensions  therefor  have been  properly  obtained,  and such Tax  Returns  are
correct  and  complete,  except to the extent that any failure to so file or any
failure to be correct and complete would not,  individually or in the aggregate,
have a  Material  Adverse  Effect on  Parent;  (ii) all  Taxes  (as  hereinafter

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defined) shown to be due on such Tax Returns have been timely paid or extensions
for payment have been properly  obtained,  except to the extent that any failure
to so pay or so obtain  such an  extension  would  not,  individually  or in the
aggregate,  have a Material  Adverse Effect on Parent;  (iii) Parent and each of
its  Subsidiaries  have  complied in all  material  respects  with all rules and
regulations  relating to the  withholding of Taxes except to the extent that any
failure to comply with such rules and regulations would not,  individually or in
the  aggregate,  have  a  Material  Adverse  Effect  on  Parent;  and  (iv)  all
deficiencies asserted or assessments made as a result of any examination of such
Tax Returns by any taxing  authority  have been paid in full or are being timely
and properly  contested other than any  deficiencies  or assessments  that would
not, individually or in the aggregate, have a Material Adverse Effect on Parent.
For purposes of this  Agreement:  (i) "Taxes" means any federal,  state,  local,
foreign or provincial  income,  gross receipts,  property,  sales, use, license,
excise,  franchise,  employment,  payroll,  withholding,  alternative  or  added
minimum, ad valorem, value-added,  transfer or excise tax, or other tax, custom,
duty,  governmental  fee  or  other  like  assessment  or  charge  of  any  kind
whatsoever,  together with any interest or penalty  imposed by any  Governmental
Entity with respect thereto,  and (ii) "Tax Return" means any return,  report or
similar statement  (including the attached  schedules) required to be filed with
respect to any Tax, including, without limitation, any information return, claim
for refund, amended return or declaration of estimated Tax.

     Section 2.10 Brokers. No broker,  investment banker or other Person,  other
than  William  Blair & Company,  L.L.C.,  the fees and expenses of which will be
paid by Parent,  is entitled to any  broker's,  finder's or other similar fee or
commission in connection  with the  transactions  contemplated by this Agreement
based upon arrangements made by or on behalf of Parent or Sub.

     Section 2.11 Operations of Sub. Sub is a direct, wholly-owned subsidiary of
Parent,  was formed  solely  for the  purpose of  engaging  in the  transactions
contemplated  hereby,  has  engaged  in no  other  business  activities  and has
conducted its operations only as contemplated hereby.

     Section  2.12  Permits  and  Compliance;  Defaults.  Each of Parent and its
Subsidiaries is in possession of all licenses, franchises,  permits, privileges,
immunities,  approvals and other authorizations from Governmental Entities which
are  necessary to entitle  Parent or any of its  Subsidiaries  to own,  lease or
possess,  and  operate  and  use  its  assets  and  to  carry  on  its  business
substantially as currently  conducted  (herein  collectively  called the "Parent

<PAGE>

Permits"),  and each of the material  Parent Permits are valid and in full force
and effect,  except where the failure to be in  possession  of any of the Parent
Permits or the failure of any such Parent  Permit to be in full force and effect
would not,  individually or in the aggregate,  have a Material Adverse Effect on
Parent.  Parent and its Subsidiaries are in compliance in all material  respects
with  their  respective  obligations  under the Parent  Permits,  with only such
exceptions  as,  individually  or in the  aggregate,  would not have a  Material
Adverse Effect on Parent.

     Section 2.13 Certain Agreements. Except as set forth in Section 2.13 of the
Parent Letter,  as of the date of this Agreement,  neither Parent nor any of its
Subsidiaries  is a party to any contract,  agreement or  arrangement  which is a
"material  contract"  (as such term is defined in Item  601(b)(10) of Regulation
S-K under the Securities  Act) to be performed  after the date of this Agreement
that  has not  been  filed  or  incorporated  by  reference  in the  Parent  SEC
Documents.  As of the  date of  this  Agreement,  each  contract,  agreement  or
arrangement  of Parent or its  Subsidiaries  which is a "material  contract" (as
such term is defined in Item  601(b)(10) of Regulation  S-K under the Securities
Act) is valid and binding on Parent or its respective Subsidiary, as applicable,
and in full force and effect and Parent and each Subsidiary has performed in all
material  respects  its  obligations  required to be performed by it to the date
hereof  under each such  contract,  agreement or  arrangement,  except where the
failure of any such contract to be valid and binding or in full force and effect
or the  failure  of any  such  obligation  to have  been  performed  would  not,
individually or in the aggregate, have a Material Adverse Effect on Parent.

     Section  2.14  ERISA.  (a)  Except  as would  not,  individually  or in the
aggregate,  have a Material  Adverse  Effect on  Parent,  each  Parent  Plan (as
hereinafter  defined)  complies in all  material  respects  with Title IV of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),  the Code
and all other applicable  statutes and governmental  rules and regulations,  and
(ii) to the Knowledge of Parent,  no  "reportable  event" (within the meaning of
Section 4043 of ERISA) for which the 30-day  notice  requirement  to the Pension
Benefit Guaranty Corporation ("PBGC") has occurred prior to the date hereof with
respect  to any  Parent  Plan.  Except  as  would  not,  individually  or in the
aggregate,  have a Material Adverse Effect on Parent,  neither Parent nor any of
its ERISA  Affiliates  (as  hereinafter  defined)  has,  within  the five  years
preceding   the  date  hereof,   withdrawn   from  any  Parent  Plan  or  Parent
Multiemployer  Plan (as  hereinafter  defined) or  instituted,  or is  currently
considering taking, any action to do so. Except as would not, individually or in

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the aggregate, have a Material Adverse Effect on Parent, no Parent Plan, nor any
trust created thereunder,  has incurred any "accumulated funding deficiency" (as
defined in Section 301 of ERISA), whether or not waived. (b) Except as listed in
Section 2.14 of the Parent  Letter,  with respect to the Parent Plans,  no event
has occurred and, to the  Knowledge of Parent,  there exists no condition or set
of  circumstances in connection with which Parent or any of its ERISA Affiliates
would be subject to any material liability under the terms of such Parent Plans,
ERISA, the Code or any other applicable law, other than liabilities for benefits
payable  in the  normal  course  or  premiums  to the  PBGC and  other  than any
liability  that would not,  individually  or in the  aggregate,  have a Material
Adverse Effect on Parent. (c) As used herein, (i) "Parent Plan" means a "pension
plan" (as defined in Section  3(2) of ERISA  (other than a Parent  Multiemployer
Plan)),  a "welfare  plan" (as defined in Section 3(1) of ERISA),  or any bonus,
profit sharing, deferred compensation,  incentive compensation, stock ownership,
stock purchase,  stock option, phantom stock, holiday pay, vacation,  severance,
death  benefit,  sick  leave,  fringe  benefit,  insurance  or  other  plan,  or
arrangement,  in each case  established  or  maintained  by Parent or any of its
ERISA  Affiliates  or as to which  Parent  or any of its  ERISA  Affiliates  has
contributed or otherwise has any material liability,  (ii) "Parent Multiemployer
Plan" means a "multiemployer  plan" (as defined in Section  4001(a)(3) of ERISA)
to which  Parent  or any of its ERISA  Affiliates  is or has been  obligated  to
contribute  within the five years  preceding  the date hereof,  or otherwise has
material  liability,  and (iii)  "ERISA  Affiliate"  means any trade or business
(whether  or not  incorporated)  which  is  under  common  control  or  would be
considered  a single  employer  with such  Person in either  case,  pursuant  to
Section  414(b),  (c),  (m) or (o) of the Code and the  regulations  promulgated
under those sections or pursuant to Section 4001(b) of ERISA and the regulations
promulgated thereunder.

                                  ARTICLE III

                 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
       The Company represents and warrants to Parent and Sub as follows:

     Section 3.1 Organization,  Standing and Power. The Company is a corporation
duly  organized,  validly  existing and in good  standing  under the laws of the
State of Delaware and has the requisite  corporate  power and authority to carry
on its business as now being  conducted.  Each Subsidiary of the Company is duly
organized,  validly  existing  and  in  good  standing  under  the  laws  of the
jurisdiction  in which it is organized and has the  requisite  corporate (in the

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case of a  Subsidiary  that is a  corporation)  or other power and  authority to
carry on its  business  as now  being  conducted.  The  Company  and each of its
Subsidiaries  are duly qualified to do business,  and are in good  standing,  in
each  jurisdiction  where the character of their  properties owned or held under
lease or the  nature  of  their  activities  makes  such  qualification  or good
standing necessary, except where any such failure to be so qualified or licensed
and in  good  standing  would  not,  individually  or in the  aggregate,  have a
Material Adverse Effect on the Company.

     Section 3.2 Capital  Structure.  (a) The  authorized  capital  stock of the
Company consists of 8,000,000 shares of Company Common Stock, 6,000,000 of which
are  designated as Class A Shares and 2,000,000 of which are designated as Class
B Nonvoting  Shares.  At the close of business on October 4, 2000, (i) 5,160,333
shares of Company  Common Stock were issued and  outstanding,  all of which were
validly issued,  fully paid and  nonassessable and none of which has been issued
in violation of, or is subject to any preemptive or subscription rights, (ii) no
shares of Company  Common  Stock were held in the  treasury of the Company or by
Subsidiaries  of the Company,  (iii) 258,000 shares of Company Common Stock were
reserved for issuance  pursuant to the Star Systems,  Inc. 2000 Equity Incentive
Plan (the "Company  Stock Plan"),  and (iv) 167,703  options (the "Company Stock
Options") to purchase  shares of Company  Common  Stock  pursuant to the Company
Stock Plan were outstanding.  The Company Stock Plan is the only benefit plan of
the Company or its Subsidiaries under which any securities of the Company or any
of its  Subsidiaries  are issuable.  Since October 4, 2000,  except as set forth
above, no shares of capital stock or other voting securities of the Company were
issued,  reserved  for issuance or  outstanding.  Except as set forth in Section
3.2(a)(i)  of the  Company  Letter (as  hereinafter  defined),  there will be no
acceleration  in the  vesting of the  Company  Stock  Options as a result of the
execution of this Agreement or  consummation  of the  transactions  contemplated
hereby.  Except as set forth in Section  3.2(a)(ii)  of the  Company  Letter and
except for the Company  Stock  Options  there are no  agreements,  arrangements,
options,  warrants, calls, rights, puts or commitments of any character relating
to the issuance,  sale, purchase or redemption of any shares of capital stock or
other  equity  interests  or equity  equivalents  of the  Company  or any of its
Subsidiaries,  whether  on  conversion  of other  securities  or  otherwise,  or
obligating the Company or any of its Subsidiaries to grant, extend or enter into
any  such  agreement,   arrangement,   option,  warrant,  call,  right,  put  or
commitment.  Except as set forth in Section  3.2(a)(iii) of the Company  Letter,
the Company is not a party to, and does not otherwise  have any Knowledge of the
current existence of, any stockholder  agreement,  voting trust agreement or any

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other   similar   contract,   agreement,   arrangement,   commitment,   plan  or
understanding  restricting  or  otherwise  relating  to  the  voting,  dividend,
ownership or transfer rights of any shares of capital stock of the Company. True
and complete copies of the Company Charter,  Company Bylaws,  and the agreements
and other  instruments  referred to in Section 3.2(a) of the Company Letter have
been delivered to Parent.  (b) Each outstanding share of capital stock (or other
equity interest or equity equivalent,  as the case may be) of each Subsidiary of
the Company is duly authorized,  validly issued,  fully paid and  nonassessable,
and each such share (or other equity interest or equity equivalent,  as the case
may be) is owned by the Company or another  Subsidiary of the Company,  free and
clear of all security interests,  liens,  claims,  pledges,  options,  rights of
first  refusal,  agreements,  limitations  on voting  rights,  charges and other
encumbrances of any nature whatsoever. The Company does not have any outstanding
bonds,  debentures,  notes or other  obligations  the  holders of which have the
right to vote (or  convertible  into or exercisable  for  securities  having the
right to vote) with the  stockholders of the Company on any matter.  (c) Section
3.2(c)(i) of the letter  dated the date hereof and  delivered on the date hereof
by the  Company  to  Parent,  which  letter  relates  to this  Agreement  and is
designated  the Company  Letter (the  "Company  Letter") sets forth the name and
address  of each  holder of record of  shares of  capital  stock of the  Company
outstanding  on the date  hereof,  together,  in each  case,  with the number of
shares of Company  Common Stock held by such holder.  Section  3.2(c)(ii) of the
Company  Letter sets forth each  Company  Stock  Option  issued by the  Company,
together,  in each  case,  with the  number of  shares  issuable  upon  exercise
thereof,  the grant date, the exercise price,  the expiration  date, the vesting
schedule and any early vesting provisions and the name and address of the record
owner thereof.  Other than Ronald V. Congemi who holds the Company Stock Options
set forth in Section 3.2(c)(ii) of the Company Letter,  none of the directors of
the Company holds, is eligible to hold or will hold, between the date hereof and
the  Effective  Time,  any shares of Company  Common Stock or any Company  Stock
Options.  True and complete  copies of (i) the Company Stock Plan, and (ii) each
instrument  governing any Company Stock Option has been delivered by the Company
to Parent.  (d) Section  3.2(d) of the  Company  Letter sets forth a list of all
Subsidiaries  and Joint  Ventures of the Company and the  jurisdiction  in which
such  Subsidiary or Joint Venture is  organized.  Section  3.2(d) of the Company
Letter  also sets  forth the  nature  and  extent of the  ownership  and  voting
interests  held by the  Company in each such Joint  Venture.  The Company has no
obligation to make any capital  contributions,  or otherwise  provide  assets or
cash, to any Joint Venture. Except as set forth in Section 3.2(d) of the Company
Letter,  the Company  does not,  directly or  indirectly,  (i) own, of record or

<PAGE>

beneficially, any outstanding voting securities or other equity interests in any
corporation,  partnership,  joint  venture or other  entity or (ii)  control any
corporation,  partnership,  joint venture or other entity.  For purposes of this
Agreement,  "Joint Venture" means any corporation,  limited  liability  company,
partnership,  joint venture,  trust,  association or other entity which is not a
Subsidiary  of the  Company,  as the case may be, and in which (a) the  Company,
directly  or  indirectly,  owns or  controls  any  shares  of any  class  of the
outstanding  voting securities or other equity interests,  or (b) the Company or
one of its  Subsidiaries  is a general  partner.  (e) All issued and outstanding
shares  of  Company  Common  Stock  have  been  issued  in  compliance  with all
appropriate  securities laws and are subject to all appropriate  restrictions on
transfer in connection with such laws.

     Section 3.3 Authority. On or prior to the date of this Agreement, the Board
of Directors of the Company approved this Agreement, declared this Agreement and
the Merger advisable and fair to and in the best interest of the Company and its
stockholders,  resolved to recommend the approval and adoption of this Agreement
by the Company's stockholders,  directed that this Agreement be submitted to the
Company's  stockholders  for approval and adoption,  all in accordance  with the
DGCL,  approved the Stockholder  Agreements and approved the other agreements to
be  entered  into by it as  contemplated  hereby  (such  other  agreements,  the
"Company Ancillary  Agreements").  The Company has the requisite corporate power
and authority to enter into this Agreement and the Company Ancillary Agreements,
to consummate the transactions  contemplated by the Company Ancillary Agreements
and,  subject to approval by the  stockholders of the Company of this Agreement,
to consummate the transactions  contemplated  hereby and thereby.  The execution
and  delivery of this  Agreement  and the Company  Ancillary  Agreements  by the
Company and the  consummation  by the Company of the  transactions  contemplated
hereby and thereby have been duly authorized by all necessary  corporate  action
on the  part of the  Company,  subject,  in the case of this  Agreement,  to (x)
approval and adoption of this Agreement by the  stockholders  of the Company and
(y) the filing of  appropriate  Merger  documents as required by the DGCL.  This
Agreement  has been duly  executed and  delivered  by the  Company.  The Company
Ancillary Agreements executed as of the date hereof have each been duly executed
and  delivered by the Company and no other  corporate  action on the part of the
Company is necessary in connection therewith.  Assuming the valid authorization,
execution and delivery by the other parties thereto and the validity and binding
effect  hereof  and  thereof  on  the  other  parties  thereto,  this  Agreement
constitutes the valid and binding obligation of the Company  enforceable against
it in  accordance  with its terms and each of the Company  Ancillary  Agreements

<PAGE>

upon execution and delivery thereof by the Company will constitute the valid and
binding obligation of the Company  enforceable against it in accordance with its
terms,  except  as  enforceability  may be  limited  by  applicable  bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by the effect of general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).

     Section  3.4  Consents  and  Approvals;  No  Violation.  Assuming  that all
consents, approvals,  authorizations and other actions described in this Section
3.4 have been obtained and all filings and obligations described in this Section
3.4 have been made,  except as set forth in Section 3.4 of the  Company  Letter,
the  execution  and  delivery  of  this  Agreement  and  the  Company  Ancillary
Agreements  by the  Company do not,  and the  consummation  of the  transactions
contemplated  hereby and thereby and compliance  with the provisions  hereof and
thereof will not, result in any violation of, or default (with or without notice
or lapse of time,  or both)  under,  or give to  others a right of  termination,
cancellation or acceleration of any obligation or the loss of a material benefit
under,  or result in the  creation  of any lien,  security  interest,  charge or
encumbrance  upon any of the  properties  or assets of the Company or any of its
Subsidiaries  under,  any  provision  of (i) the Company  Charter or the Company
Bylaws,  (ii) the comparable  charter or organizational  documents of any of the
Company's  Subsidiaries,  (iii)  any  loan  or  credit  agreement,  note,  bond,
mortgage,  indenture,  guaranty, lease or other agreement,  instrument,  permit,
concession,  franchise  or  license  applicable  to  the  Company  or any of its
Subsidiaries  or any of  their  respective  properties  or  assets,  or (iv) any
judgment,  order, decree, statute, law, ordinance, rule or regulation applicable
to the Company or any of its Subsidiaries or any of their respective  properties
or assets  except,  in the case of clauses (iii) or (iv),  any such  violations,
defaults,  rights,  liens,  security  interests,  charges or encumbrances  that,
individually  or in the aggregate,  would not have a Material  Adverse Effect on
the  Company,  materially  impair  the  ability of the  Company  to perform  its
obligations  hereunder or under the Company Ancillary  Agreements or prevent the
consummation of the transactions  contemplated hereby or thereby by the Company.
No filing or registration  with, or  authorization,  consent or approval of, any
Governmental  Entity is required by or with respect to the Company or any of its
Subsidiaries  in connection with the execution and delivery of this Agreement or
the  Company  Ancillary  Agreements  by the  Company  or is  necessary  for  the
consummation   by  the  Company  of  the  Merger  and  the  other   transactions
contemplated by this Agreement or the Company Ancillary  Agreements,  except for

<PAGE>

(i) in connection, or in compliance with, the provisions of the Bank Act and the
HSR Act,  (ii) the filing of the  Certificate  of Merger with the  Secretary  of
State of the State of  Delaware  and  appropriate  documents  with the  relevant
authorities of other states in which the Company or any of its  Subsidiaries  is
qualified to do business,  (iii) State Takeover Approvals,  (iv) such filings as
may be required in connection  with the taxes described in Sections 5.7, 5.8 and
5.9, (v)  applicable  requirements,  if any,  under foreign laws,  and (vi) such
other consents, orders, authorizations,  registrations, declarations and filings
the failure of which to be obtained  or made would not,  individually  or in the
aggregate, have a Material Adverse Effect on the Company,  materially impair the
ability of the Company to perform its obligations hereunder or under the Company
Ancillary  Agreements,  or prevent the  consummation of any of the  transactions
contemplated hereby or thereby by the Company.

     Section  3.5  Financial  Statements.  Section  3.5  of the  Company  Letter
contains  (i) the  balance  sheet (the  "Balance  Sheet") of the Company and its
subsidiaries  as of December 31, 1999 (the "Balance Sheet Date") and the related
statements  of  income,  stockholders'  equity  and cash flows for the year then
ended,  together  with  the  appropriate  notes  to such  financial  statements,
accompanied by the report thereon of Deloitte & Touche, LLP,  independent public
accountants (the "Audited Financial Statements"), and (ii) the unaudited balance
sheet of the  Company and its  Subsidiaries  as of July 31, 2000 and the related
unaudited  statements  of  income,  stockholders'  equity and cash flows for the
seven months then ended (the "Unaudited Financial  Statements" and together with
the  Audited  Financial  Statements,  the  "Financial  Statements").  Except  as
disclosed in the notes thereto,  the Financial  Statements have been prepared in
conformity  with GAAP  consistently  applied and fairly  present in all material
respects the financial position of the Company and its Subsidiaries at the dates
of such balance  sheets and the results of its operations and cash flows for the
respective periods indicated (except that the Unaudited Financial Statements are
subject to normal year-end audit adjustments and do not contain footnotes).

     Section 3.6 No Dividends;  Absence of Certain Changes or Events. (a) Except
as set forth in Section 3.6(a) of the Company  Letter,  since December 31, 1999,
the Company has not declared or made, or agreed to declare or make,  any payment
of  dividends  or  distributions  to its  stockholders  (and no record date with
respect to any of the  foregoing  has  occurred) or  purchased  or redeemed,  or
agreed to purchase or redeem, any of its capital stock or other equity interest.
(b)  Except as set forth in  Section  3.6(b) of the  Company  Letter,  since the
Balance Sheet Date there has been:  (i) no Material  Adverse Change with respect

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to the Company; and (ii) no material damage, destruction, loss or claim, whether
or not covered by insurance, or condemnation or other taking adversely affecting
any material assets or business of the Company or any of its  Subsidiaries.  (c)
Except as set forth in Section 3.6(c) of the Company  Letter,  since the Balance
Sheet Date, the Company and its  Subsidiaries  have conducted  their  respective
businesses  in  all  material  respects  only  in  the  ordinary  course  and in
conformity with past practice. Without limiting the generality of the foregoing,
since the  Balance  Sheet  Date,  except as set forth in  Section  3.6(c) of the
Company Letter, neither the Company nor any of its Subsidiaries has: (i) issued,
delivered or agreed  (conditionally or  unconditionally) to issue or deliver, or
granted any option, warrant or other right to purchase, any of its capital stock
or other equity interest or any security  convertible  into its capital stock or
other equity  interest;  (ii)  issued,  delivered  or agreed  (conditionally  or
unconditionally)  to issue or  deliver  any of its  bonds,  notes or other  debt
securities or borrowed or agreed to borrow any funds, other than in the ordinary
course of business  consistent with past practice;  (iii) paid any obligation or
liability (absolute or contingent) other than current  liabilities  reflected on
the Balance Sheet and current liabilities  incurred since the Balance Sheet Date
in the ordinary course of business  consistent with past practice or liabilities
and  obligations  not  exceeding  $50,000 in the  aggregate;  (iv) except in the
ordinary course of business consistent with past practice, made or permitted any
material  amendment or  termination  of any Company  Agreement  (as  hereinafter
defined);   (v)  undertaken  or  committed  to  undertake  capital  expenditures
exceeding  $50,000  for any  single  project or related  series of  projects  or
$200,000 in the aggregate;  (vi) made charitable  donations in excess of $10,000
in the  aggregate;  (vii) sold,  leased (as  lessor),  transferred  or otherwise
disposed of (including any transfers from the Company or any of its Subsidiaries
to any of the stockholders of the Company or any of their respective  Affiliates
(as hereinafter defined)), or mortgaged or pledged, or imposed or suffered to be
imposed any lien, claim, charge, security interest,  mortgage, pledge, easement,
conditional sale or other title retention agreement,  defect in title,  covenant
or  other  restriction  of any  kind (an  "Encumbrance"),  on any of the  assets
reflected on the Balance  Sheet or any assets  acquired by the Company or any of
its  Subsidiaries  after the  Balance  Sheet  Date,  except  for  inventory  and
immaterial  amounts of personal property sold or otherwise  disposed of for fair
value in the ordinary  course of its business  consistent with past practice and
except for (A) liens for taxes and other  governmental  charges and  assessments
which are not yet due and payable, (B) liens of landlords and liens of carriers,
warehousemen,  mechanics  and  materialmen  and other like liens  arising in the
ordinary course of business for sums not yet due and payable and (C) other liens

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or imperfections on property which are not material in amount,  do not interfere
with, and are not violated by the consummation of the transactions  contemplated
by,  this  Agreement,   and  do  not  materially   detract  from  the  value  or
marketability  of, or  materially  impair  the  existing  use of,  the  property
affected by such lien or imperfection (each, a "Permitted Encumbrance");  (viii)
canceled  any  debts  owed  to or  claims  held  by  the  Company  or any of its
Subsidiaries  (including the settlement of any claims or litigation)  other than
in the ordinary course of its business consistent with past practice or debts or
claims not  exceeding  $50,000  in the  aggregate;  (ix)  created,  incurred  or
assumed,  or agreed to create,  incur or assume,  any  indebtedness for borrowed
money or entered into, as lessee,  any capitalized lease obligations (as defined
in Statement of  Financial  Accounting  Standards  No. 13); (x)  accelerated  or
delayed collection of notes or accounts receivable in advance of or beyond their
regular  due dates or the dates when the same would have been  collected  in the
ordinary course of its business  consistent with past practice;  (xi) delayed or
accelerated  payment  of any  account  payable or other  liability  beyond or in
advance of its due date or the date when such liability  would have been paid in
the  ordinary  course  of its  business  consistent  with past  practice;  (xii)
instituted any increase in any compensation payable to any employee, director or
consultant of the Company or any of its  Subsidiaries or in any  profit-sharing,
bonus,  incentive,   deferred  compensation,   insurance,  pension,  retirement,
medical,  hospital,  disability,  welfare or other  benefits  made  available to
employees of the Company or any of its Subsidiaries except, in case of employees
other than directors or officers,  salary increases in connection with annual or
periodic compensation reviews in the ordinary course of business consistent with
the Company's past practice; (xiii) settled or compromised any material federal,
state,  local or foreign income tax  liability;  (xiv) prepared or filed any Tax
Return  inconsistent  with past  practice  or, on any such Tax Return,  took any
position,  made any election,  or adopted any method that is  inconsistent  with
positions  taken,  elections made or methods used in preparing or filing similar
Tax Returns in prior periods;  (xv) made any change in the accounting principles
and practices  used by the Company from those applied in the  preparation of the
Financial  Statements;  or (xvi) entered into or become  committed to enter into
any other  material  transaction  except  in the  ordinary  course  of  business
consistent with past practice.  (d) Except as set forth in Section 3.6(d) of the
Company  Letter,  neither the Company nor any of its  Subsidiaries is subject to
any  liability  (including,  without  limitation,  unasserted  claims),  whether
absolute,  contingent,  accrued or otherwise,  which is not shown or which is in
excess of  amounts  shown or  reserved  for in the  Balance  Sheet,  other  than
liabilities  of the same nature as those set forth in the Balance  Sheet and the

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notes  thereto and  reasonably  incurred in the ordinary  course of its business
consistent   with  past  practice   after  the  Balance  Sheet  Date  or  which,
individually  or in the aggregate,  would not have a Material  Adverse Effect on
the Company.  (e) For  purposes of this  Agreement,  "Knowledge  of the Company"
means the actual  knowledge of the  individuals  identified in Section 3.6(e) of
the Company Letter.

     Section 3.7 Governmental  Permits. Each of the Company and its Subsidiaries
owns,  holds  or  possesses  all  licenses,  franchises,   permits,  privileges,
immunities,  approvals and other authorizations from Governmental Entities which
are necessary to entitle the Company or any of its Subsidiaries to own, lease or
possess, and operate and use its assets and to carry on and conduct its business
substantially as currently  conducted (herein  collectively  called the "Company
Permits"),  except where the failure to be in  possession  of any of the Company
Permits would not,  individually  or in the aggregate,  have a Material  Adverse
Effect on the  Company.  Complete  and  correct  copies  of all of the  material
Company Permits have been made available to Parent.  Each of the Company and its
Subsidiaries  has  substantially  fulfilled and performed its obligations  under
each  of the  Company  Permits  as of the  date  hereof  and  no  suspension  or
cancellation  of any of the Company  Permits is pending or, to the  Knowledge of
the  Company,  threatened  and each of the  material  Company  Permits is valid,
subsisting  and in full force and effect,  except  where the failure of any such
Company Permit to be in full force and effect would not,  individually or in the
aggregate,  have a Material  Adverse  Effect on the Company and will continue in
full force and effect  after the  Effective  Time,  in each case without (x) the
occurrence of any breach, default or forfeiture of rights thereunder, or (y) the
consent, approval, or act of, or the making of any filing with, any Governmental
Entity.

     Section  3.8 Tax  Matters.  (a)  Except as  otherwise  set forth in Section
3.8(a) of the Company Letter,  (i) the Company and each of its Subsidiaries have
filed all  federal,  and all  material  state,  local and  foreign,  Tax Returns
required  to have  been  filed or  appropriate  extensions  therefor  have  been
properly obtained, and such Tax Returns are correct and complete,  except to the
extent that any  failure to so file or any  failure to be correct  and  complete
would not,  individually or in the aggregate,  have a Material Adverse Effect on
the Company; (ii) all Taxes shown to be due on such Tax Returns have been timely
paid or extensions for payment have been properly obtained, except to the extent
that  any  failure  to  so  pay  or so  obtain  such  an  extension  would  not,
individually or in the aggregate, have a Material Adverse Effect on the Company;

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(iii) the Company and each of its  Subsidiaries  have  complied in all  respects
with all rules and  regulations  relating to the  withholding of Taxes except to
the extent that any failure to comply with such rules and regulations would not,
individually or in the aggregate, have a Material Adverse Effect on the Company;
(iv) all Tax  Returns  referred  to in  clause  (i) have  been  examined  by the
Internal  Revenue  Service  ("IRS") or the period for assessment of the Taxes in
respect of which such Tax Returns were required to be filed has expired;  (v) no
material  issues  that  have been  raised  in  writing  by the  relevant  taxing
authority in connection with the  examination of the Tax Returns  referred to in
clause (i) are currently pending;  (vi) all deficiencies asserted or assessments
made as a result of any examination of such Tax Returns by any taxing  authority
have been paid in full or are being  timely  and  properly  contested;  (vii) no
withholding  is required  under Section 1445 of the Code in connection  with the
Merger; (viii) neither the Company nor any of its Subsidiaries is a party to any
tax  allocation  or sharing  agreement  and  neither  the Company nor any of its
Subsidiaries  has been a member of an  affiliated  group  filing a  consolidated
federal income tax return (other than a group the common parent of which was the
Company) or has any material  liability  for Taxes of any Person (other than the
Company and its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any
similar  provision of state,  local or foreign law) as a transferee or successor
or by contract or  otherwise;  (ix) there are no liens for Taxes upon the assets
of the Company or any of its Subsidiaries except liens relating to current Taxes
not yet due; and (x) none of the Company or any of its  Subsidiaries  has waived
or been requested to waive any statute of limitations in respect of Taxes, which
waiver or request is currently in effect.  (b) Except as otherwise  set forth in
Section  3.8(b)  of  the  Company  Letter,  as  a  result  of  the  transactions
contemplated  by this  Agreement,  none of the Company,  any  Subsidiary  of the
Company,  or Parent  has made,  or will be  obligated  to make,  a payment to an
individual  that  would be an  "excess  parachute  payment"  to a  "disqualified
individual"  as those  terms are  defined in Section  280G of the Code,  without
regard to whether such payment is reasonable  compensation for personal services
performed  or to be  performed  in the  future.  (c)  None of the  Company,  any
predecessor of the Company or any Subsidiary of the Company is (and none thereof
has ever been),  a member of (i) any  "affiliated  group" (as defined in Section
1504(a)  of the Code  without  regard to the  limitations  contained  in Section
1504(b) of the Code) or (ii) any other group of  corporations  or entities which
files or has filed Tax Returns on a combined, consolidated or unitary basis.

     Section 3.9 Actions and Proceedings.  Except as set forth in Section 3.9 of
the Company Letter,  there are no outstanding  orders,  judgments,  injunctions,

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awards or decrees of any Governmental  Entity or actions,  suits, labor disputes
or  other  litigation  or  claims  or  legal,   administrative   or  arbitration
proceedings  or  investigations  pending or, to the  Knowledge  of the  Company,
threatened  against or  involving  the  Company or any of its  Subsidiaries,  or
against or involving any of the present or former directors, officers, employees
or, to the Knowledge of the Company, consultants,  agents or stockholders of the
Company or any of its Subsidiaries,  as such, or any of its or their properties,
assets or business or any Company Plan (as hereinafter defined). The Company and
each  of its  Subsidiaries  has  complied  in all  material  respects  with  all
Requirements  of Laws which are applicable to the Company's  assets or business.
There are no  actions,  suits,  labor  disputes  or other  litigation,  legal or
administrative  proceedings or  governmental  investigations  pending or, to the
Knowledge of the Company,  threatened against or affecting the Company or any of
its Subsidiaries or any of its or their present or former  officers,  directors,
employees,  or,  to  the  Knowledge  of  the  Company,  consultants,  agents  or
stockholders,  as such,  or any of its or their  properties,  assets or business
relating to the  transactions  contemplated  by this  Agreement  and the Company
Ancillary  Agreements.  For purposes of this Agreement,  "Requirements  of Laws"
means any foreign, federal, state and local laws, statutes,  regulations, rules,
codes or ordinances enacted,  adopted, issued or promulgated by any Governmental
Entity (including, without limitation, those pertaining to electrical, building,
zoning, environmental and occupational safety and health requirements) or common
law.

     Section 3.10 Certain Agreements. Except as set forth in Section 3.10 of the
Company  Letter,  neither the Company nor any of its  Subsidiaries is a party to
any oral or written  agreement  or plan,  including  any  employment  agreement,
severance  agreement,   stock  option  plan,  stock  appreciation  rights  plan,
restricted  stock plan or stock purchase plan, any of the benefits of which will
be increased,  or the vesting of the benefits of which will be  accelerated,  by
the occurrence of any of the transactions  contemplated by this Agreement or the
value of any of the benefits of which will be  calculated on the basis of any of
the transactions contemplated by this Agreement.  Except as set forth in Section
3.10 of the  Company  Letter,  no holder of any option or  warrant  to  purchase
shares of Company  Common  Stock,  or shares of Company  Common Stock granted in
connection with the performance of services for the Company or its Subsidiaries,
is or will be entitled to receive  cash from the  Company or any  Subsidiary  in
lieu of or in exchange for such option, warrant or shares.

     Section  3.11 ERISA.  (a) Each  Company  Plan (as  hereinafter  defined) is

<PAGE>

listed in Section  3.11(a) of the Company  Letter,  true and complete  copies of
which have heretofore  been delivered to Parent.  Except as set forth in Section
3.11(a) of the Company  Letter,  (i) each Company Plan  complies in all material
respects with Title IV of ERISA, the Code and all other applicable  statutes and
governmental  rules and regulations,  and (ii) no "reportable event" (within the
meaning of Section 4043 of ERISA) has occurred  with respect to any Company Plan
for which the 30-day notice requirement to the PBGC has not been waived. Neither
the Company nor any of its ERISA  Affiliates has within the five years preceding
the date hereof  withdrawn from any Company Plan that is a defined  benefit plan
qualified under Section 401(a) of the Code or any Company Multiemployer Plan (as
hereinafter  defined) or instituted,  or is currently  considering  taking,  any
action to do so. No action has been taken, or is currently being considered,  to
terminate any Company Plan subject to Title IV of ERISA.  No Company  Plan,  nor
any trust created thereunder,  has incurred any "accumulated funding deficiency"
(as  defined in  Section  302 of ERISA),  whether or not  waived.  (b) Except as
listed in Section  3.11(b) of the Company  Letter,  with  respect to the Company
Plans, no event has occurred and, to the Knowledge of the Company,  there exists
no condition or set of circumstances in connection with which the Company or its
ERISA  Affiliates  or Company  Plan  fiduciary  could be subject to any material
liability  under the terms of such Company Plans,  ERISA,  the Code or any other
applicable law, other than liabilities for benefits payable in the normal course
or  premiums  to the PBGC  that  are not yet due.  All  Company  Plans  that are
intended to be qualified  under Section 401(a) of the Code have been  determined
by the IRS to be so qualified or, if no such  determination  has been made,  all
such  Company  Plans  qualify in form with Section  401(a) of the Code,  and the
Company is not aware of any reason why any such Company Plan is not so qualified
in  operation.  Neither  the Company  nor any of its ERISA  Affiliates  has been
notified by any Company  Multiemployer Plan that such Company Multiemployer Plan
is currently in  reorganization  or  insolvency  under and within the meaning of
Section 4241 or 4245 of ERISA or that such Company Multiemployer Plan intends to
terminate  or has been  terminated  under  Section  4041A of  ERISA.  Except  as
disclosed in Section 3.11(b) of the Company Letter,  neither the Company nor any
of its ERISA  Affiliates has any liability or obligation  under any welfare plan
to provide benefits after termination of employment to any employee or dependent
other than as required by Section  4980B of the Code.  (c) As used  herein,  (i)
"Company  Plan"  means a "pension  plan" (as  defined  in Section  3(2) of ERISA
(other  than a Company  Multiemployer  Plan)),  a "welfare  plan" (as defined in
Section 3(1) of ERISA),  or any bonus,  profit sharing,  deferred  compensation,
incentive compensation,  stock ownership,  stock purchase, stock option, phantom
stock,  holiday pay,  vacation,  severance,  death benefit,  sick leave,  fringe

<PAGE>

benefit,  insurance or other plan,  arrangement or  understanding,  in each case
established or maintained by the Company or any of its ERISA Affiliates or as to
which the Company or any of its ERISA  Affiliates  has  contributed or otherwise
may  have  any  liability,   and  (ii)  "Company  Multiemployer  Plan"  means  a
"multiemployer  plan" (as defined in Section  4001(a)(3)  of ERISA) to which the
Company or any of its ERISA  Affiliates  is or has been  obligated to contribute
within  the five  years  preceding  the date  hereof or  otherwise  may have any
liability.  (d) Section  3.11(d) of the Company Letter  contains a list, and the
Company has  heretofore  provided to Parent a true and complete copy, of all (i)
severance,  employment and consulting  agreements with employees and consultants
of the Company and each of its ERISA Affiliates and (ii) severance  programs and
policies of the Company and each of its ERISA Affiliates with or relating to its
employees.

     Section 3.12 Worker Safety and Environmental  Laws. The properties,  assets
and past and present  operations of the Company and its  Subsidiaries  have been
and are in all material  respects in  compliance  with all  applicable  federal,
state,  local  and  foreign  laws,  rules  and  regulations,   orders,  decrees,
judgments,  permits and licenses relating to public and worker health and safety
(collectively,  "Worker  Safety  Laws") and the  protection  and clean-up of the
environment and activities or conditions  related  thereto,  including,  without
limitation, those relating to the generation, handling, disposal, transportation
or release of hazardous materials  (collectively,  "Environmental Laws"), except
as would not,  individually or in the aggregate,  have a Material Adverse Effect
on the Company.

     Section  3.13 Labor  Matters.  The  Company has  complied  in all  material
respects with all applicable laws, rules and regulations which relate to prices,
wages, hours,  discrimination in employment and collective bargaining and to the
operation  of its  business  and is not liable  for any  arrears of wages or any
withholding  taxes or penalties for failure to comply with any of the foregoing,
except as would not,  individually or in the aggregate,  have a Material Adverse
Effect on the  Company.  Neither the Company  nor any of its  Subsidiaries  is a
party to any  collective  bargaining  agreement or labor  contract.  Neither the
Company nor any of its  Subsidiaries  has engaged in any unfair  labor  practice
with  respect  to any  Persons  employed  by or  otherwise  performing  services
primarily  for the Company or any of its  Subsidiaries  (the  "Company  Business
Personnel"),  and there is no  unfair  labor  practice  complaint  or  grievance
against the Company or any of its  Subsidiaries  by the National Labor Relations
Board or any  comparable  state  agency  pending or  threatened  in writing with

<PAGE>

respect to the Company Business  Personnel.  There is no labor strike,  dispute,
slowdown or stoppage  pending or, to the  Knowledge of the  Company,  threatened
against or affecting the Company or any of its Subsidiaries  which may interfere
with  the  respective   business  activities  of  the  Company  or  any  of  its
Subsidiaries.

     Section  3.14  Intellectual  Property;  Software.  (a) For purposes of this
Agreement,  the term  "Intellectual  Property" means the  intellectual  property
owned by,  licensed to, or used by the Company or any  Subsidiary of the Company
that relate to either the  Company's or such  Subsidiary's  business,  including
without  limitation:   (i)  all  United  States  and  foreign  patents,   patent
applications, continuations, continuations-in-part,  divisions, reissues, patent
disclosures,  inventions  (whether or not  patentable) or  improvements  thereto
("Patent Rights"); (ii) all United States, state and foreign trademarks, service
marks,  logos,  trade dress and trade names (including all assumed or fictitious
names under which the Company or any Subsidiary of the Company is conducting its
business or has within the previous five years conducted its business),  and any
other source-identifying designations or devices, including any combinations and
variations thereof, and associated goodwill, whether registered or unregistered,
and pending  applications  to register the foregoing  ("Trademarks");  (iii) all
United States and foreign  copyrights,  whether registered or unregistered,  and
pending  applications  to register  the same  ("Copyrights");  (iv) all Internet
domain  names  and  registrations   thereof  ("Domain   Names");   and  (v)  all
confidential  ideas, trade secrets,  computer  software,  including source code,
know-how, works-in-progress, concepts, methods, processes, inventions, invention
disclosures,  formulae,  reports,  data, customer lists, mailing lists, business
plans, or other proprietary  information  ("Trade Secrets").  Section 3.14(a) of
the Company  Letter sets forth all Patent  Rights,  Trademarks,  Copyrights  and
Domain Names owned by,  licensed to, or used by the Company or any Subsidiary of
the  Company  that  are  material  to the  conduct  of  the  Company's  or  such
Subsidiary's  business  as  presently  conducted.   (b)  For  purposes  of  this
Agreement,  the term "Software"  means computer  software  programs and software
systems, including, without limitation, all databases,  compilations, tool sets,
compilers,  higher level or proprietary  languages,  related  documentation  and
materials, whether in source code, object code or human readable form, owned by,
licensed  to, or used by the Company or any  Subsidiary  of the Company that are
material  to the  conduct of the  Company's  or such  Subsidiary's  business  as
presently  conducted.  Section  3.14(b) of the  Company  Letter  sets forth such
Software.  (c)  Section  3.14(c)  of the  Company  Letter  contains  a list  and
description of all agreements, commitments, contracts, understandings, licenses,

<PAGE>

sublicenses,  assignments  and  indemnities  which  relate  or  pertain  to  any
Intellectual Property or Software and are material to the conduct of the Company
or any Subsidiary's business as currently conducted, to which the Company or any
Subsidiary is a party,  showing in each case the parties thereto.  (d) Except as
disclosed in Section 3.14(d) of the Company  Letter,  and except with respect to
software  licensed  to the  Company  that is  subject to  "shrink-wrap"  license
agreements,  either the  Company or a  Subsidiary  of the Company  has,  through
ownership or licensing,  all perpetual,  unrestricted and royalty-free rights to
use the Intellectual  Property as are material to the conduct of the business of
the Company and its  Subsidiaries,  taken as a whole. (e) Except as disclosed in
Section 3.14(e) of the Company Letter, neither the Company nor any Subsidiary of
the Company is in breach of or is aware of any allegation  (communicated  orally
or in writing) that the Company or any Subsidiary of the Company is in breach of
any  material  provision  of  any  material  agreement,   commitment,  contract,
understanding, license, sublicense, assignment or indemnity which relates to any
of the  Intellectual  Property  or  Software  and the  Company has not taken any
action which would impair or otherwise materially adversely affect its rights in
any of the Intellectual Property or Software.  The transactions  contemplated by
this  Agreement  and the  Company  Ancillary  Agreements  shall have no material
adverse  effect on the validity and  enforceability  of any of the  Intellectual
Property,  Software or materials  identified in Sections  3.14(a) and (b) of the
Company  Letter,  and,  except as  disclosed  in Section  3.14(e) of the Company
Letter,  the right,  title and interest thereto of the Company or any Subsidiary
of the Company  immediately  after the Effective Time shall be identical to that
of the Company or such Subsidiary  immediately  prior to the Effective Time. (f)
Section  3.14(a) of the Company  Letter  includes a complete  list of all issued
patents, pending patent applications, trademark registrations, pending trademark
registration   applications,   registered   copyrights  and  pending   copyright
registration  applications owned by the Company or any Subsidiary (collectively,
the "Registered Intellectual Property").  Except as disclosed in Section 3.14(a)
of the Company  Letter:  (i) the Registered  Intellectual  Property has not been
sold,  assigned or  transferred  to a third party,  or abandoned or permitted to
lapse,  and is not the subject of any  pending  opposition  proceedings,  office
actions,  pending cancellation  proceedings,  pending interference  proceedings,
pending  lawsuit  naming the  Company  or any  Subsidiary  as a party,  or other
pending  challenges or  proceedings  of which the Company or any  Subsidiary has
knowledge;  (ii) all registrations for Intellectual Property identified as being
owned by the Company are valid and in force,  and all  applications  to register
any  unregistered  Intellectual  Property are pending and in good standing,  all
without  challenge of any kind;  (iii) the  Intellectual  Property  owned by the

<PAGE>

Company  is  valid  and  enforceable;  and  (iv)  each  of the  Company  and its
Subsidiaries  has the sole and exclusive right to bring actions for infringement
or  unauthorized  use of the  Intellectual  Property and  Software  owned by the
Company and such Subsidiaries,  and to the Knowledge of the Company, there is no
basis for any such action.  (g) Except as  disclosed  in Section  3.14(g) of the
Company  Letter,  each of the  employees,  agents,  consultants,  contractors or
others who have  contributed to or  participated  in the discovery,  creation or
development  of any  Intellectual  Property  on  behalf  of the  Company  or its
Subsidiaries:  (i) has executed an  assignment  or an agreement to assign to the
Company of all right, title and interest in such Intellectual Property;  (ii) is
a party to a valid  "work-for-hire"  agreement  under  which the  Company or any
Subsidiary  is  deemed  to be the  original  owner/author  of all  copyrightable
subject matter  included in such  Intellectual  Property;  or (iii) is otherwise
deemed by operation of law to have vested in the Company or any  Subsidiary  all
right,  title  and  interest  in such  Intellectual  Property  by  virtue of his
employment  relationship with the Company or any such Subsidiary.  (h) Except as
disclosed  in Section  3.14(h) of the Company  Letter,  to the  Knowledge of the
Company, no infringement of any copyright,  trademark, service mark, trade name,
patent,  patent  right,  or trade  secret or other  property  right of any third
Person has occurred or results in any way, no claim of any such infringement has
been made or asserted against the Company or any Subsidiary of the Company,  and
neither the Company nor any  Subsidiary  has had notice of, nor to the Knowledge
of the Company,  does any basis for such a claim exist,  in connection  with the
operations,   products  (including  software,  equipment,   machinery  or  other
devices), processes, methods or activities of the business of the Company or any
Subsidiary  of the Company as  presently  conducted.  (i) Except as disclosed in
Section 3.14(i) of the Company Letter, neither the Company nor any Subsidiary of
the Company,  nor their  respective  employees or agents,  have taken any of the
following  actions  such that a  Material  Adverse  Effect on its  rights in the
Intellectual  Property or Software would result:  disclosing or providing access
to source  code for the  Software  except to  employees  of the  Company  or its
Subsidiaries  bound  by  confidentiality  obligations  to  the  Company  or  its
Subsidiaries, or to third party consultants bound by confidentiality agreements;
disclosing any Trade Secrets  without an appropriate  non-disclosure  agreement;
providing access to the Software without  restrictions on use (including against
copying, sale, transfer, decompilation, disassembly or reverse-engineering);  or
embedding,  incorporating  or modifying  third-party  software or other material
without adequate  permission.  (j) Except as disclosed in Section 3.14(j) of the
Company  Letter:  (i) the Software is not subject to any  transfer,  assignment,
site,  equipment,  or  other  operational  limitations;  (ii)  the  Company  has

<PAGE>

maintained and protected the Software it owns (the "Owned Software") (including,
without limitation,  all source code and system specifications) with appropriate
proprietary notices (including,  without limitation,  the notice of copyright in
accordance with the  requirements of 17 U.S.C.  Sec. 401),  confidentiality  and
non-disclosure  agreements  and such other  measures as are necessary to protect
the proprietary,  trade secret or confidential  information  contained  therein;
(iii) the Owned  Software has been  registered or is eligible for protection and
registration  under  applicable  copyright law and has not been forfeited to the
public domain;  (iv) the Company has copies of all releases or separate versions
of the Owned  Software  so that the same may be subject to  registration  in the
United  States  Copyright  Office;  (v) the Company has complete  and  exclusive
right, title and interest in and to the Owned Software; (vi) to the Knowledge of
the Company,  the Owned  Software  does not infringe any  copyright,  trademark,
service mark, trade name,  patent,  patent right, trade secret or other property
right of any other Person;  (vii) any Owned  Software  includes the source code,
system documentation,  statements of principles of operation and schematics,  as
well as any pertinent commentary,  explanation,  program (including  compilers),
workbenches,  tools,  and  higher  level or  proprietary  language  used for the
development,  maintenance,  implementation  and use  thereof,  so that a trained
computer  programmer  could  develop,  maintain,  support,  compile  and use all
releases  or  separate  versions  of the same  that  are  currently  subject  to
maintenance  obligations  by the  Company;  (viii)  there are no  agreements  or
arrangements in effect with respect to the marketing, distribution, licensing or
promotion of the Owned  Software by any other  Person;  (ix) the Owned  Software
complies  with all  applicable  Requirements  of Laws  relating to the export or
reexport  of the  same;  and (x) to the  Knowledge  of the  Company,  the  Owned
Software  licensed  to third  parties in the  ordinary  course of the  Company's
business may be exported or reexported to all countries without the necessity of
any license, other than to those countries specified as prohibited  destinations
pursuant to applicable regulations of the U.S. Department of Commerce and/or the
United States State Department.

     Section  3.15  Availability  of Assets and  Legality of Use.  Except as set
forth in Section 3.15 of the Company  Letter,  the assets owned or leased by the
Company and its  Subsidiaries  constitute  all the assets  used in its  business
(including,  but not  limited to, all books,  records,  computers  and  computer
programs  and data  processing  systems) and are in good  condition  (subject to
normal  wear and tear and  immaterial  impairments  of  value  and  damage)  and
serviceable  condition  and are  generally  suitable  for  the  uses  for  which
intended.  Except as set forth in Section 3.15 of the Company Letter,  there are

<PAGE>

no material  services  provided by any of the stockholders of the Company or any
of their  Affiliates to the Company or any  Subsidiary of the Company  utilizing
either  (i)  assets  not  owned by the  Company  or its  Subsidiaries  as of the
Effective Time or (ii) Persons not employed by the Company or its  Subsidiaries.
For purposes of this Agreement,  "Affiliate"  means, with respect to any Person,
any other Person which directly or indirectly  controls,  is controlled by or is
under common control with such Person. For purposes of this Agreement,  "Person"
means any  individual,  corporation,  partnership,  joint venture,  association,
joint-stock company, trust or unincorporated organization.

     Section 3.16 Real Property. Neither the Company nor any of its Subsidiaries
owns any real property or holds any option to acquire any real property.

     Section 3.17 Real Property Leases.  Section 3.17 of the Company Letter sets
forth a list of each lease or similar  agreement  (the "Real  Property  Leases")
under which the Company or any  Subsidiary of the Company is lessee of, or holds
or  operates,  any real  property  owned by any third  Person (the  "Leased Real
Property")  as of the date  hereof.  Except as set forth in Section  3.17 of the
Company Letter each of the Company and its  Subsidiaries  has the right to quiet
enjoyment of all the real property described in such Schedule of which it is the
lessee  for the full  term of each  such  lease or  similar  agreement  (and any
related renewal option) relating thereto, and the leasehold or other interest of
the  Company  or  any  Subsidiary  in  such  real  property  is not  subject  or
subordinate to any Encumbrance except for Permitted  Encumbrances and except for
such  Encumbrances  as  would  not,  individually  or in the  aggregate,  have a
Material Adverse Effect on the Company.  Complete and correct copies of the Real
Property Leases have been made available by the Company to Parent.

     Section 3.18 Personal  Property Leases.  Section 3.18 of the Company Letter
sets forth a list of each lease or other agreement or right,  whether written or
oral,  under which the Company or any Subsidiary of the Company is lessee of, or
holds or operates, any machinery,  equipment, vehicle or other tangible personal
property owned by a third Person, except for any such lease,  agreement or right
that is  terminable  by the Company or any  Subsidiary  of the  Company  without
penalty or payment on notice of 30 days or less,  or which  involves the payment
by the Company or any Subsidiary of the Company of rentals of less than $100,000
per year.

     Section 3.19 Title to Assets.  Each of the Company and its Subsidiaries has
good title to all of its assets reflected on the Balance Sheet as being owned by

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it and all of the assets  thereafter  acquired  by it (except to the extent that
such assets have been  disposed of after the Balance  Sheet Date in the ordinary
course  of  business  consistent  with  past  practice),  free and  clear of all
Encumbrances,  except  for  Permitted  Encumbrances  and  except as set forth in
Section 3.19 of the Company Letter.

     Section 3.20 Contracts.  Except as set forth in Section 3.20 of the Company
Letter, and except for those contracts  expressly permitted by Section 4.1 which
are entered into after the date of this  Agreement,  neither the Company nor any
Subsidiary  of the Company is a party to or bound by: (i) any  contract  for the
purchase,  sale or lease of real property  other than the Real Property  Leases;
(ii) any contract for the purchase of raw materials,  other than in the ordinary
course of business;  (iii) any contract for the sale of goods or services, other
than in the ordinary  course of  business;  (iv) any  contracts  relating to the
marketing,  distribution or  manufacturing of products,  services,  processes or
technology  individually  involving more than $50,000;  (v) any contract for the
purchase,  licensing or development of software to be used by the Company or any
Subsidiary of the Company individually  involving more than $50,000,  other than
software  licensed  to the  Company  that is  subject to  "shrink-wrap"  license
agreements;  (vi) any guarantee of the  obligations or liabilities of customers,
suppliers,  officers,  directors,  employees,  Affiliates  of the Company or its
Subsidiaries,  or any other Persons other than guarantees that are immaterial in
amount; (vii) any agreement which provides for, or relates to, the incurrence by
the Company or any  Subsidiary of the Company of debt for borrowed  money or the
extension of credit by the Company or any Subsidiary of the Company to any other
Person other than routine  extensions of trade credit in the ordinary  course of
business;  (viii)  any  agreement  or  understanding  with a third  Person  that
restricts the Company or any Subsidiary  from carrying on its business  anywhere
in the  world;  (ix) any  contract  which  provides  for,  or  relates  to,  any
non-competition  arrangement  with any Person,  including  any current or former
officer or employee of the Company or any Subsidiary;  (x) any contract or group
of related  contracts  for capital  expenditures  in excess of $250,000  for any
single  project or  related  series of  projects;  (xi) any  partnership,  joint
venture or other similar arrangement or agreement involving a sharing of profits
or losses;  (xii) any contract which involves future payments or receipts by the
Company  or any  Subsidiary  of the  Company of more than  $250,000,  other than
contracts the subject  matter of which is described in clauses (i) through (xi),
inclusive,   above;  (xiii)  any  contract  with  any  stockholder  relating  to
processing or network participation services (the "Member Agreements"); or (xiv)
any contract for any purpose  (whether or not made in the ordinary course of the

<PAGE>

business or otherwise  not required to be listed or described in Section 3.20 of
the Company  Letter)  which is material to the Company,  any  Subsidiary  of the
Company or their respective businesses.

     Section  3.21 Status of  Contracts.  Except as set forth in Section 3.21 of
the Company Letter, each of the leases, contracts and other agreements listed in
Sections 3.11,  3.14,  3.17, 3.18 and 3.20 of the Company Letter  (collectively,
the "Company  Agreements")  constitutes  a valid and binding  obligation  of the
Company and, to the Knowledge of the Company,  the other parties thereto, and is
in full force and effect and  (except as set forth in Section 3.4 of the Company
Letter and except for those Company  Agreements which by their terms will expire
prior to the Effective Time or are otherwise  terminated  prior to the Effective
Time in accordance  with the provisions  hereof) will continue in full force and
effect  after the  Effective  Time,  in each case  without  breaching  the terms
thereof or resulting in the  forfeiture or  impairment of any rights  thereunder
and without the  consent,  approval or act of, or the making of any filing with,
any other party.  Each of the Company and its  Subsidiaries  has  fulfilled  and
performed in all material  respects  its  obligations  under each of the Company
Agreements,  and neither the Company nor any Subsidiary of the Company is in, or
alleged  in  writing  to be in,  breach  or  default  under  any of the  Company
Agreements  and, to the  Knowledge of the Company,  no other party to any of the
Company  Agreements  has  breached  or  defaulted  thereunder,  and no event has
occurred and no condition  or state of facts exists  which,  with the passage of
time or the giving of notice or both,  would constitute such a default or breach
by the  Company  or any  Subsidiary  of the  Company,  to the  Knowledge  of the
Company,  by any such other party.  Complete  and correct  copies of each of the
Company Agreements have heretofore been made available to Parent.

     Section 3.22  Insurance.  Section  3.22 of the Company  Letter sets forth a
list of insurance  maintained,  owned or held by the Company or any  Subsidiary.
The  Company  and  its  Subsidiaries  shall  keep or  cause  such  insurance  or
comparable  insurance in full force and effect through the Effective  Time. Each
of the Company and its  Subsidiaries  has complied  with each of such  insurance
policies  and has not failed to give any notice or present any claim  thereunder
in a due and timely manner except for any  non-compliance  or failure that would
not,  individually  or in the aggregate,  have a Material  Adverse Effect on the
Company.

     Section 3.23 Budgets.  Section 3.23 of the Company letter sets forth (a) as
of the date hereof the budgets of capital, payroll and other expenditures of the

<PAGE>

Company and its Subsidiaries prepared in the ordinary course of its business for
the fiscal year ending December 31, 2000 and (b) the total capital  expenditures
through July 31, 2000,  if any, for each capital  expenditure  project for which
funds are proposed to be expended during 2000.

     Section 3.24 Takeover Statutes and Charter Provisions.  To the Knowledge of
the  Company,  no state  takeover  statutes or charter or bylaw  provisions  are
applicable to the Merger, this Agreement, the Stockholder Agreements, the Parent
Ancillary Agreements and the Company Ancillary Agreements,  and the transactions
contemplated hereby and thereby.

     Section 3.25 Required Vote of Company Stockholders. The affirmative vote of
the holders of a majority of the  outstanding  shares of Company Common Stock is
required to adopt this Agreement.  No other vote of the  securityholders  of the
Company  is  required  by law,  the  Company  Charter or the  Company  Bylaws or
otherwise in order for the Company to consummate the Merger and the transactions
contemplated  hereby  and by the Parent  Ancillary  Agreements  and the  Company
Ancillary Agreements.

     Section  3.26 Opinion of  Financial  Advisor.  The Company has received the
written  opinion of Merrill  Lynch & Co.,  dated the date hereof,  to the effect
that,  as of the date  hereof,  the  Exchange  Ratio is fair to the  holders  of
Company  Common Stock,  from a financial  point of view, a copy of which opinion
has been delivered to Parent.

     Section 3.27 Pooling of Interests;  Reorganization. To the Knowledge of the
Company,  neither  it nor any of its  Subsidiaries  has (i) taken any  action or
failed to take any action which action or failure would jeopardize the treatment
of the Merger as a pooling of interests  for  accounting  purposes or (ii) taken
any action or failed to take any action  which action or failure  would  prevent
the Merger from  qualifying  as a  reorganization  within the meaning of Section
368(a) of the Code.

     Section 3.28 Brokers. No broker,  investment banker or other Person,  other
than  Merrill  Lynch & Co.,  the fees and  expenses of which will be paid by the
Company  (as  reflected  in an  agreement  between  Merrill  Lynch & Co. and the
Company,  a copy of which has been  furnished  to  Parent),  is  entitled to any
broker's,  finder's or other similar fee or  commission  in connection  with the
transactions  contemplated by this Agreement based upon  arrangements made by or
on behalf of the Company or any of its Subsidiaries.
<PAGE>

     Section  3.29  Hart-Scott-Rodino.  The  Company  is its own sole  "ultimate
parent entity" (as defined in 16 C.F.R. Section 801.1(a)(3) (1995)).

     Section 3.30 Stockholder Information.  None of the information presented to
the  Company's   stockholders  in  connection  with  the   solicitation  of  the
Stockholder  Consent (the  "Stockholder  Information")  will, at the time of the
mailing or  presentation  of such  information  or at the effective  time of the
Stockholder Consent,  contain any untrue statement of a material fact or omit to
state any material fact  required to be stated  therein or necessary in order to
make the statements  therein, in light of the circumstances under which they are
made,  not  misleading.  If at any  time  prior  to the  effective  time  of the
Stockholder  Consent any event with  respect to the  Company,  its  officers and
directors or any of its Subsidiaries  shall occur which is required at that time
to be described in the Stockholder  Information in order for this representation
to be true and correct,  the Company  shall  advise  Parent and, if requested by
Parent,  promptly  notify the  stockholders  of the Company of such  event.  The
Company will comply with the  provisions of the DGCL in seeking the  Stockholder
Consent and notifying its stockholders of the taking of such action by consent.

     Section 3.31 Investor  Qualifications.  (a) Each Company  Stockholder is an
"accredited"  investor  as such term is  defined  in  Regulation  D  promulgated
pursuant to the  Securities  Act.  Each Company  Stockholder,  by reason of such
Company Stockholder's  knowledge in business or financial matters,  either alone
or with a Company  Stockholder  representative,  is  capable of  evaluating  the
merits and risks of Company Stockholder's investment in Parent Common Stock, and
will  be  making  an  informed   investment  decision  in  connection  with  its
acquisition  of the Parent Common Stock and the  Stockholder  Consent.  (b) Each
Company  Stockholder  is acquiring or will be acquiring  the Parent Common Stock
for investment for such Company  Stockholder's own account,  not as a nominee or
agent,  for investment  purposes only and not with the view to, or for resale in
connection with, any distribution thereof. Each Company Stockholder  understands
that any offer and sale of the Parent Common Stock pursuant hereto has not been,
and will not be,  registered  under the  Securities  Act by  reason of  Parent's
reliance  on a  specific  exemption  from  the  registration  provisions  of the
Securities  Act that depends upon,  among other things,  the bona fide nature of
the  investment  intent of the  Company  Stockholders  and the  accuracy  of the
representations as expressed herein. Each Company  Stockholder,  if other than a
natural  person,  has not been formed for the specific  purpose of acquiring the
Parent   Common  Stock.   (c)  There  are   substantial   restrictions   on  the

<PAGE>

transferability  of the Parent Common Stock. The Parent Common Stock is not, and
Company  Stockholders have no right (other than as set forth in the Registration
Rights  Agreement) to require that the Parent  Common Stock be registered  under
the  Securities  Act.  Accordingly,  Company  Stockholders  may have to hold the
Parent  Common  Stock  indefinitely  and it  may  not be  possible  for  Company
Stockholders to liquidate their Parent Common Stock. (d) No Company  Stockholder
will be acquiring  the Parent  Common Stock as a result of or  subsequent to any
advertisement,   article,   notice  or  other  communication  published  in  any
newspaper,  magazine or similar media or broadcast over  television or radio, or
presented at any seminar or meeting, or any solicitation of purchase by a person
not previously known to the Company  Stockholders in connection with investments
in securities generally.  (e) The Parent Common Stock acquired hereunder may not
be offered, sold, or otherwise  transferred,  pledged or hypothecated unless (i)
such Parent Common Stock shall have been registered under the Securities Act and
any and all such other  applicable  laws or (ii)  Parent  receives an opinion of
counsel,  in form and  substance  satisfactory  to Parent,  to the  effect  that
registration of such securities is not required.

                                   ARTICLE IV

                   COVENANTS RELATING TO CONDUCT OF BUSINESS

     Section 4.1 Conduct of Business Pending the Merger. (a) Except as expressly
permitted by clauses (i) through  (xvii) of this Section 4.1,  during the period
from the date of this Agreement  through the Effective  Time, the Company shall,
and shall cause each of its Subsidiaries  to, in all material  respects carry on
its business in the ordinary course of its business as currently  conducted and,
to the extent  consistent  therewith,  use  commercially  reasonable  efforts to
preserve intact its current business organizations,  keep available the services
of its current  officers  and  employees  and preserve  its  relationships  with
customers, suppliers and others having business dealings with it to the end that
its goodwill and ongoing  business  shall be unimpaired  at the Effective  Time.
Without  limiting  the  generality  of the  foregoing,  and except as  otherwise
expressly  contemplated by this Agreement,  the Company shall not, and shall not
permit any of its  Subsidiaries to, without the prior written consent of Parent:
(i) (A) declare,  set aside or pay any  dividends  on, or make any other actual,
constructive or deemed distributions in respect of, any of its capital stock, or
otherwise make any payments to its stockholders in their capacity as such (other
than dividends by the Company's Subsidiaries to the Company), (B) split, combine
or reclassify any of its capital stock or issue or authorize the issuance of any

<PAGE>

other  securities in respect of, in lieu of or in substitution for shares of its
capital stock or (C) purchase, redeem or otherwise acquire any shares of capital
stock of the Company or any other securities thereof or any rights,  warrants or
options to acquire any such  shares or other  securities;  (ii) issue,  deliver,
sell, pledge,  dispose of or otherwise encumber any shares of its capital stock,
any other equity  interests or equity  equivalent or any securities  convertible
into,  or any rights,  warrants or options to acquire  any such  shares,  equity
interests, equity equivalent or convertible securities,  other than the issuance
of  shares of  Company  Common  Stock  pursuant  to the  Company  Stock  Options
outstanding as of the date of this  Agreement,  in each case, in accordance with
its current  terms;  (iii) amend the Company  Charter or Company Bylaws or other
comparable charter or organizational documents of any of its Subsidiaries;  (iv)
acquire or agree to acquire by merging or consolidating with, or by purchasing a
substantial  portion of the assets of or equity in, or by any other manner,  any
business or any corporation, limited liability company, partnership, association
or other business organization or division thereof or otherwise acquire or agree
to acquire any  assets,  other than assets  acquired in the  ordinary  course of
business  consistent  with past practice and not material to the Company and its
Subsidiaries taken as a whole; (v) sell,  transfer,  lease,  license,  mortgage,
pledge,  encumber or otherwise dispose of any of its properties or assets, other
than sales, leases or licenses of products or services in the ordinary course of
business  consistent with past practice and other than sales, leases or licenses
of products or services involving less than $50,000 in the aggregate; (vi) incur
any indebtedness for borrowed money, guarantee any such indebtedness or make any
loans,  advances or capital contributions to, or other investments in, any other
Person,  other  than (A)  indebtedness  for  borrowed  money  under  its  Credit
Agreement,  dated as of March 24,  1998,  between the Company and certain of its
Subsidiaries  and First  Union  National  Bank,  as amended,  provided  that the
aggregate  principal  amount  outstanding at any time under such agreement would
not exceed $15.9 million, (B) indebtedness, guarantees, loans, advances, capital
contributions  and investments  between the Company and any of its  wholly-owned
Subsidiaries  or  between  any  of  such  wholly-owned  Subsidiaries,  (C)  cash
management  activities carried on in the ordinary course of business  consistent
with past  practice,  and (D)  advances  to  employees  for travel  and  related
business  expenses  consistent with Company  policies and past practices;  (vii)
alter (through  merger,  liquidation,  reorganization,  restructuring  or in any
other  fashion)  the  corporate  structure  or  ownership  of the Company or any
Subsidiary;  (viii) enter into, adopt or amend any severance plan,  agreement or
arrangement,  Company Plan or  employment or  consulting  agreement,  including,
without  limitation,  the  Company  Stock  Options;  (ix) except as set forth in

<PAGE>

Section 4.1(a)(ix) of the Company Letter,  increase the compensation or benefits
payable or to become  payable to its  directors,  officers or employees or grant
any severance or  termination  pay to, or enter into or amend any  employment or
severance  agreement  with,  any  current or former  director  or officer of the
Company or any of its  Subsidiaries,  except,  in case of  employees  other than
directors or officers,  in the ordinary  course of business  consistent with the
Company's past practice in connection with annual compensation reviews but in no
event to exceed a 5% increase in the aggregate, or establish, adopt, enter into,
or,  except as may be  required  to comply with  applicable  law,  amend or take
action to enhance or accelerate any rights or benefits under, any labor,  bonus,
profit sharing, thrift,  compensation,  stock option, restricted stock, pension,
retirement, deferred compensation,  employment,  termination, severance or other
plan, agreement, trust, fund, policy or arrangement, including the Company Stock
Plan,  for the benefit of any current or former  director,  officer or employee;
(x)  knowingly  violate or  knowingly  fail to perform  any  obligation  or duty
imposed upon it or any Subsidiary by any applicable  material federal,  state or
local law,  rule,  regulation,  guideline or ordinance;  (xi) make any change to
accounting  policies or procedures  (other than actions  required to be taken by
GAAP);  (xii) except as set forth in Section  4.1(a)(xii) of the Company Letter,
prepare or file any Tax Return  inconsistent  with past practice or, on any such
Tax Return,  take any position,  make any election,  or adopt any method that is
inconsistent  with positions taken,  elections made or methods used in preparing
or filing similar Tax Returns in prior periods;  (xiii) settle or compromise any
material  federal,  state,  local or foreign income Tax  liability;  (xiv) enter
into,  amend,  waive any rights under or terminate (a) any agreement or contract
material to the Company and its  Subsidiaries,  taken as a whole, (b) any Member
Agreement,  (c) any noncompetition  agreement,  or (d) any agreement pursuant to
which any third party is granted marketing,  distribution,  manufacturing or any
other related rights with respect to any Company product, services, processes or
technology;  or,  except  as set forth in  Section  4.1(a)(xiv)  of the  Company
Letter, incur, make or agree to make any new capital expenditure or expenditures
which, individually, is in excess of $50,000 or, in the aggregate, are in excess
of  $200,000;  (xv)  waive or  release  any  material  right or  claim,  or pay,
discharge or satisfy any material  claims,  liabilities or obligations  (whether
absolute, accrued, asserted or unasserted,  contingent or otherwise), other than
the payment,  discharge  or  satisfaction,  in the  ordinary  course of business
consistent  with past practice or in accordance with their terms, of liabilities
reflected or reserved  against in the Balance  Sheet or incurred in the ordinary
course of business  consistent  with past practice;  (xvi)  initiate,  settle or
compromise any litigation or arbitration proceeding;  (xvii) permit any director

<PAGE>

of the  Company to hold any shares of Company  Common  Stock or,  other than the
Company Stock  Options owned by Ronald V. Congemi as of the date hereof,  permit
any director of the Company to be granted or to hold any Company Stock  Options;
or (xviii) authorize,  recommend,  propose or announce an intention to do any of
the foregoing, or enter into any contract, agreement,  commitment or arrangement
to do any of the foregoing.

     Section 4.2 No Solicitation.  (a) From the date hereof until the earlier of
the  Effective  Time or the  date on  which  this  Agreement  is  terminated  in
accordance with the terms hereof,  the Company shall not, nor shall it authorize
or permit  any of its  Subsidiaries  to,  nor shall it  authorize  or permit any
officer,  director or employee of, or any financial  advisor,  attorney or other
advisor or  representative  of, the  Company or any of its  Subsidiaries  to (i)
solicit,  initiate or encourage  the  submission  of, any Takeover  Proposal (as
hereafter  defined),  (ii) enter into any agreement with respect to any Takeover
Proposal or (iii) participate in any discussions or negotiations  regarding,  or
furnish to any Person any information  with respect to, or take any other action
to facilitate any inquiries or the making of any proposal that  constitutes,  or
may reasonably be expected to lead to, any Takeover Proposal; provided, however,
that prior to the effective date of the Stockholder  Consent,  nothing contained
in this  Agreement  shall  prevent  the Company or its Board of  Directors  from
furnishing   non-public   information  to,  or  entering  into   discussions  or
negotiations  with,  any  Person in  connection  with an  unsolicited  bona fide
written  Takeover  Proposal by such  Person,  if and only to the extent that (w)
such Takeover  Proposal  would,  if  consummated,  result in a transaction  that
would,  in the reasonable  good-faith  judgment of the Board of Directors of the
Company, after consultation with its financial advisors, result in a transaction
more favorable to the Company's stockholders from a financial point of view than
the Merger (any such more favorable  Takeover Proposal being referred to in this
Agreement as a "Superior  Proposal") and, in the reasonable  good-faith judgment
of the Board of Directors of the Company,  after consultation with its financial
advisors,  the Person making such Superior  Proposal has the financial  means to
conclude  such  transaction,  (x) the failure to take such  action  would in the
reasonable  good-faith judgment of the Board of Directors of the Company, on the
basis of the advice of the outside corporate counsel of the Company, violate the
fiduciary  duties of the Board of  Directors  of the  Company  to the  Company's
stockholders  under  applicable  law, (y) prior to  furnishing  such  non-public
information to, or entering into discussions or negotiations  with, such Person,
such Board of Directors  receives  from such Person an executed  confidentiality
agreement with provisions not less favorable to the Company than those contained

<PAGE>

in the  Confidentiality  Agreement (as defined  below) and (z) the Company shall
have fully  complied  with this Section  4.2.  For  purposes of this  Agreement,
"Takeover  Proposal" means any proposal or offer, or any expression of interest,
by any Person other than Parent or Sub relating to the Company's  willingness or
ability to receive or discuss a proposal or offer for a merger, consolidation or
other business  combination  involving the Company or any of its Subsidiaries or
any  proposal  or offer to acquire in any  manner,  directly  or  indirectly,  a
substantial  equity interest in, a substantial  portion of the voting securities
of,  or a  substantial  portion  of  the  assets  of the  Company  or any of its
Subsidiaries,  other than the transactions  contemplated by this Agreement.  (b)
The Company shall advise Parent orally  (within one business day) and in writing
(as promptly as  practicable)  of (i) any Takeover  Proposal or any inquiry with
respect to or which could lead to any Takeover Proposal, (ii) the material terms
of such  Takeover  Proposal and (iii) the identity of the Person making any such
Takeover  Proposal or  inquiry.  The  Company  will keep Parent  informed of the
status and details of any such Takeover Proposal or inquiry.

     Section 4.3 Third Party Standstill  Agreements.  During the period from the
date of this  Agreement  through  the  Effective  Time,  the  Company  shall not
terminate, amend, modify or waive any provision of any confidentiality agreement
relating to a Takeover Proposal or standstill  agreement to which the Company or
any of its  Subsidiaries  is a party (other than any involving  Parent).  During
such period,  the Company  agrees to enforce,  to the fullest  extent  permitted
under applicable law, the provisions of any such agreements,  including, but not
limited to, obtaining injunctions to prevent any breaches of such agreements and
to enforce  specifically  the terms and  provisions  thereof in any court of the
United States or any state thereof having jurisdiction.

     Section 4.4 Pooling of  Interests;  Reorganization.  During the period from
the date of this Agreement  through the Effective  Time,  unless the other party
shall  otherwise agree in writing,  none of Parent,  the Company or any of their
respective  Subsidiaries  shall (a)  knowingly  take or fail to take any action,
which  action or  failure  would  jeopardize  the  treatment  of the Merger as a
pooling of interests for  accounting  purposes or (b) knowingly  take or fail to
take any  action,  which  action  or  failure  would  prevent  the  Merger  from
qualifying as a reorganization within the meaning of Section 368(a) of the Code.
Between  the date of this  Agreement  and the  Effective  Time,  Parent  and the
Company each shall take, or cause to be taken, all actions reasonably  necessary
in order for the Merger to be treated as a pooling of interests  for  accounting
purposes.
<PAGE>

                                   ARTICLE V

                             ADDITIONAL AGREEMENTS

     Section  5.1  Stockholder  Consent.  (a)  The  Company  will,  as  soon  as
practicable   following  the  date  of  this  Agreement,   duly  submit  to  its
stockholders  this Agreement for the purpose of considering the approval of this
Agreement and the Merger,  all in accordance  with the DGCL, the Company Charter
and the Company  Bylaws.  The  Company  will,  through  its Board of  Directors,
recommend to its  stockholders  the approval and adoption of this  Agreement and
shall use all  commercially  reasonable  efforts  (including  direction from the
Company's Board of Directors that the  stockholders  take such action by written
consent in accordance with the Company  Charter) to solicit such approval by its
stockholders in the form of a written  consent in form and substance  reasonably
acceptable to Parent (the "Stockholder  Consent"). In connection with soliciting
such  consent,  the Company and Parent  shall  promptly  prepare an  information
statement.  Parent and the  Company  shall  furnish all  information  concerning
Parent or the  Company,  as the case may be, as may be  reasonably  requested in
connection  with  such  information  statement.  If at  any  time  prior  to the
effective  time of the  Stockholder  Consent,  any  information  relating to the
Company or Parent, or any of their respective affiliates, officers or directors,
should be  discovered  by the Company or Parent  which should be set forth in an
amendment or supplement  to such  information  statement,  so that such document
would not  include  any  misstatement  of a  material  fact or omit to state any
material  fact  necessary  to make  the  statements  therein,  in  light  of the
circumstances  under  which  they were made,  not  misleading,  the party  which
discovers  such  information  shall  promptly  notify  the  other  party  and an
appropriate   amendment  or  supplement  prepared  by  Parent  and  the  Company
describing  such   information   shall  be,  to  the  extent  required  by  law,
disseminated by the Company to the  stockholders  of the Company.  The Company's
Board of  Directors  shall not  withdraw  or modify,  or propose to  withdraw or
modify in a manner adverse to Parent, such recommendation. The Company agrees to
submit this Agreement and such  information  statement to its  stockholders  for
approval whether or not the Board of Directors of the Company  determines at any
time  subsequent to the date hereof that this  Agreement is no longer  advisable
and recommends that the stockholders of the Company reject it. The Company shall
use commercially  reasonable efforts to obtain the Stockholder  Consent no later
than 45 days  after  the date  hereof.  (b) As  promptly  as  practicable  after
obtaining the Stockholder  Consent,  but in no event later than 20 business days

<PAGE>

prior to the Closing Date, the Company shall notify each of its stockholders who
is entitled to appraisal rights of the approval of the Merger and that appraisal
rights are available,  pursuant to Section 262 of the DGCL. Such notice shall be
in a form  reasonably  acceptable to Parent.  The Company shall advise Parent as
promptly as  practicable  of any notice  received  from any  stockholder  of the
Company  purporting  to demand the  appraisal  of such  stockholder's  shares of
Company Common Stock.

     Section  5.2  Access  to  Information.  Subject  to  contractual  and legal
restrictions  applicable to the Company or any of its Subsidiaries,  the Company
shall,  and shall cause each of its  Subsidiaries to, afford to the accountants,
counsel,  financial  advisors  and other  representatives  of Parent  reasonable
access to,  and  permit  them to make such  inspections  as they may  reasonably
require of, during normal business hours during the period from the date of this
Agreement  through  the  Effective  Time,  all  of  its  employees,   customers,
properties,  assets,  books,  contracts,  commitments  and  records  (including,
without limitation, the work papers of independent accountants, if available and
subject to the consent of such independent accountants) and, during such period,
the Company shall, and shall cause each of its Subsidiaries to, furnish promptly
to Parent  all  information  concerning  its  business,  properties,  assets and
personnel  as  Parent  may  reasonably  request.  Parent  shall  afford  to  the
accountants,  counsel,  financial  advisors  and  other  representatives  of the
Company  reasonable  access to the  executive  officers of Parent  during normal
business  hours  during the period from the date of this  Agreement  through the
Effective Time. No  investigation  pursuant to this Section 5.2 shall affect any
representation  or  warranty  in  this  Agreement  of any  party  hereto  or any
condition to the  obligations of the parties hereto.  All  information  obtained
pursuant to this Section 5.2 shall be kept  confidential  in accordance with the
Confidentiality  Agreement,  dated July 12, 2000 between  Parent and the Company
(the "Confidentiality Agreement").

     Section 5.3 Fees and  Expenses.  Except as provided in this Section 5.3 and
Section 5.7,  whether or not the Merger is  consummated,  all costs and expenses
incurred in connection  with this  Agreement and the  transactions  contemplated
hereby  including,  without  limitation,  the fees and disbursements of counsel,
financial  advisors and  accountants,  shall be paid by the party incurring such
costs and  expenses,  provided  that all  printing  expenses and all filing fees
(including,  without limitation, filing fees under the Bank Act and the HSR Act)
shall be divided equally between Parent and the Company.


<PAGE>

     Section 5.4 Company  Stock Plan.  (a) At the Effective  Time,  each Company
Stock  Option  which is  outstanding  immediately  prior to the  Effective  Time
pursuant  to the  Company  Stock Plan shall  become and  represent  an option to
purchase  the number of shares of Parent  Common Stock (a  "Substitute  Option")
(decreased to the nearest full share)  determined by multiplying  (i) the number
of  shares  of  Company  Common  Stock  subject  to such  Company  Stock  Option
immediately  prior  to the  Effective  Time by (ii)  the  Exchange  Ratio  at an
exercise price per share of Parent Common Stock (rounded up to the nearest tenth
of a cent)  equal to the  exercise  price  per  share of  Company  Common  Stock
immediately  prior to the  Effective  Time divided by the Exchange  Ratio.  With
respect to Company  Stock  Options  that are not  Incentive  Stock  Options  (as
defined in Section 422 of the Code), Parent shall pay cash to holders of Company
Stock Options in lieu of issuing  fractional  shares of Parent Common Stock upon
the exercise of Substitute  Options for shares of Parent Common Stock. After the
Effective  Time,  except as provided above in this Section 5.4, each  Substitute
Option  shall  be  exercisable  upon  the  same  terms  and  conditions  as were
applicable  under  the  related  Company  Stock  Option at the  Effective  Time.
Notwithstanding  anything  in  Section  5.4 to  the  contrary,  the  adjustments
provided  therein with respect to any Company  Stock  Options that are Incentive
Stock Options shall be effected in a manner  consistent with the requirements of
Section  424(a) of the Code.  The  Company  shall take all  necessary  action to
implement the provisions of this Section 5.4(a) including,  without  limitation,
any action  necessary or advisable to be taken by the Committee (as such term is
defined in the  Company  Stock  Plan).  (b) Any shares of Company  Common  Stock
issued upon exercise of options under the Company Stock Plan have been issued in
compliance  with  all  appropriate  securities  laws  and  are  subject  to  all
appropriate  restrictions  on transfer in connection with such laws. (c) As soon
as reasonably  practicable  after the Effective  Time but in any event within 30
days after the Effective  Time,  Parent shall file a  registration  statement on
Form S-8 (or any  successor  or other  appropriate  form) with respect to Parent
Common  Stock  subject to  Substitute  Options,  or shall cause such  Substitute
Options  to be deemed to be issued  pursuant  to a Parent  Stock  Plan for which
shares of Parent  Common Stock have been  previously  registered  pursuant to an
appropriate  registration  form. In addition to any  requirement  of the Company
Stock Plan,  any Parent  Common  Stock issued upon  exercise of a Company  Stock
Option prior to  effectiveness  of such  registration  statement  shall bear the
legend set forth in Section 1.6(b).

     Section 5.5 Commercially Reasonable Efforts; Pooling of Interests. (a) Upon
the terms and subject to the conditions set forth in this Agreement, each of the

<PAGE>

parties agrees to use  commercially  reasonable  efforts to take, or cause to be
taken, all actions,  and to do, or cause to be done, and to assist and cooperate
with the other parties in doing,  all things  necessary,  proper or advisable to
consummate and make effective,  in the most expeditious manner practicable,  the
Merger and the other transactions contemplated by this Agreement, including, but
not  limited to using  commercially  reasonable  efforts for the purpose of: (i)
obtaining all necessary actions or non-actions,  waivers, consents and approvals
from all  Governmental  Entities  and making  all  necessary  registrations  and
filings (including filings with Governmental Entities) and taking all reasonable
steps as may be necessary  to obtain an approval or waiver from,  or to avoid an
action or proceeding by, any Governmental  Entity (including those in connection
with the HSR Act, the Bank Act and State Takeover  Approvals),  (iii)  obtaining
all necessary  consents,  approvals or waivers from third parties,  (iv) taking,
together with their respective accountants,  all actions reasonably necessary in
order to obtain a favorable  determination  (if required)  from the SEC that the
Merger may be accounted for as a pooling of interests in  accordance  with GAAP,
and (v)  executing  and  delivering  any  additional  instruments  necessary  to
consummate the transactions contemplated by this Agreement. (b) Each party shall
use all commercially  reasonable  efforts to not take any action,  or enter into
any  transaction,  which would cause any of its  representations  or  warranties
contained  in this  Agreement to be untrue or result in a breach of any covenant
made by it in this  Agreement.  (c)  Notwithstanding  anything  to the  contrary
contained in this Agreement  (including  without  limitation  this Section 5.5),
Parent shall have no obligation to oppose,  challenge or appeal any suit, action
or  proceeding  by any  Governmental  Entity  before  any court or  governmental
authority,  agency or  tribunal,  domestic or foreign (i) seeking to restrain or
prohibit or restraining or prohibiting the  consummation of the Merger or any of
the other transactions  contemplated by this Agreement, (ii) seeking to prohibit
or limit or seeking to apply conditions on or prohibiting,  limiting or imposing
conditions on the ownership,  operation or control by the Company, Parent or any
of their  respective  Subsidiaries  of any  portion  of the  business  or assets
(including  without  limitation any agreement) of the Company,  Parent or any of
their respective  Subsidiaries or that otherwise would have,  individually or in
the  aggregate,  an  adverse  effect  on  Parent,  the  Company  or any of their
respective  Subsidiaries,  or (iii) seeking to compel or compelling the Company,
Parent or any of their  respective  Subsidiaries  to dispose of, grant rights in
respect of, or hold  separate any portion of the  business or assets  (including
without  limitation  any  agreement)  of the  Company,  Parent  or any of  their
respective  Subsidiaries.  Parent shall have no obligation to commence any suit,
action or proceeding in any court or before any governmental  authority,  agency

<PAGE>

or  tribunal,   domestic  or  foreign,   in  connection  with  the  transactions
contemplated  by  this  Agreement.  Further,  notwithstanding  anything  to  the
contrary contained in this Agreement, (including without limitation this Section
5.5),  Parent shall have no obligation (i) to dispose of, hold separate or grant
any rights in respect  of, any  portion  of the  business  or assets  (including
without  limitation  any  agreement)  of the  Company,  Parent  or any of  their
respective Subsidiaries,  or (ii) to agree to any limitations or conditions with
respect to any portion of the business or assets (including  without  limitation
any agreement) of the Company, Parent or any of their respective Subsidiaries if
such limitations or conditions, either alone or together with any other factors,
in the good faith opinion of Parent, would have a Material Adverse Effect on the
Company,  Parent or any of their  respective  Subsidiaries or would detract from
the value of the Merger to Parent in any  material  manner.  Neither the Company
nor any of its Subsidiaries shall take any of the actions described in preceding
sentences of this Section  5.5(c)  without the prior written  consent of Parent.
(d) Nothing contained in this Section 5.5, shall limit or restrict Parent or any
of its  Subsidiaries  from entering into or effecting any agreement  relating to
any other  business  combination,  acquisition  or merger  and no such  business
combination,  acquisition or merger shall be deemed to violate this Section 5.5;
provided,  however, that this Section 5.5(d) is not intended to permit Parent to
make any acquisition,  by means of merger or otherwise, of assets or securities,
in each case,  which could reasonably be expected to prevent or materially delay
obtaining the consents or approvals of any  Governmental  Entity  required under
this Agreement.

     Section 5.6 Public Announcements. Parent and the Company will not issue any
press release with respect to the transactions contemplated by this Agreement or
otherwise issue any written public  statements with respect to such transactions
without prior  consultation  with the other party,  except as may be required by
applicable  law or by  obligations  pursuant to any listing  agreement  with any
national securities exchange or the rules of Nasdaq.

     Section  5.7 Real  Estate  Transfer  and Gains Tax.  Parent and the Company
agree that either the Company or the Surviving Corporation will pay any state or
local tax which is attributable  to the transfer of the beneficial  ownership of
the Company's or its  Subsidiaries'  real property,  if any  (collectively,  the
"Gains  Taxes"),  and any penalties or interest with respect to the Gains Taxes,
payable in  connection  with the  consummation  of the  Merger.  The Company and
Parent  agree to  cooperate  with the other in the  filing of any  returns  with
respect to the Gains Taxes,  including  supplying in a timely  manner a complete

<PAGE>

list of all real property interests held by the Company and its Subsidiaries and
any  information  with respect to such property that is reasonably  necessary to
complete such returns.  The portion of the  consideration  allocable to the real
property of the Company and its  Subsidiaries  shall be  determined by Parent in
its reasonable discretion.

     Section 5.8 Transfer Tax Filings. Parent and the Company shall cooperate in
the   preparation,   execution  and  filing  of  all  returns,   questionnaires,
applications or other documents  regarding any real property  transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording,  registration and other fees or any similar taxes ("Transfer  Taxes")
which become payable in connection  with the  transactions  contemplated  by the
Agreement  that are required or permitted to be filed on or before the Effective
Time.

     Section  5.9 Other  Transfer  Taxes.  Parent  and  Company  agree  that all
Transfer  Taxes  incurred by Parent,  Sub or the Company in connection  with the
Merger  arising on or after the  Effective  Time shall be borne by the Surviving
Corporation and shall not be reimbursed directly or indirectly by Parent.

     Section  5.10  State  Takeover   Laws.  If  any  "fair  price,"   "business
combination" or "control share acquisition"  statute or other similar statute or
regulation shall become applicable to the transactions contemplated hereby or in
the Company  Ancillary  Agreements,  Parent and the Company and their respective
Boards of Directors  shall use their  commercially  reasonable  efforts to grant
such  approvals and take such actions as are necessary so that the  transactions
contemplated hereby and thereby may be consummated as promptly as practicable on
the terms  contemplated  hereby and thereby and  otherwise  act to minimize  the
effects  of any such  statute or  regulation  on the  transactions  contemplated
hereby and thereby.

     Section 5.11 Indemnification; Directors and Officers Insurance. (a) For six
years after the  Effective  Time,  Parent  shall,  and shall cause the Surviving
Corporation  to,  indemnify  and hold  harmless all past and present  directors,
officers,  employees or agents of the Company and of its  Subsidiaries  (each an
"Indemnified  Party")  to the full  extent  permitted  by law,  any  outstanding
indemnification  agreements listed in Section 5.11 of the Company Letter and the
Company  Charter or the Company Bylaws as in effect on the date hereof,  in each
case for all acts or omissions  occurring at or prior to the Effective Time, and
shall periodically  advance litigation expenses reasonably incurred by each such

<PAGE>

person in connection with defending any claim,  action or investigation  arising
out  of  such  acts  or  omissions   (including  the  reasonable   cost  of  any
investigation and preparation incurred in connection therewith), subject to such
person  providing an  undertaking  to  reimburse  all amounts so advanced in the
event  of  a  final  non-appealable   determination  by  a  court  of  competent
jurisdiction that such person is not entitled thereto.  Parent shall provide, or
shall cause the Surviving Corporation to provide, for an aggregate period of not
less than six years from the Effective  Time,  the Company's  current and former
directors  and officers an insurance  and  indemnification  policy that provides
coverage for events  existing or occurring prior to the Effective Time (the "D&O
Insurance") that is no less favorable with respect to its limits and deductibles
than the Company's  existing policy or, if  substantially  equivalent  insurance
coverage is unavailable,  the best available coverage;  provided,  however, that
the Parent and  Surviving  Corporation  shall not be  required  to pay an annual
premium for the D&O Insurance in excess of 150% of the last annual  premium paid
by the Company prior to the date hereof, but in such case shall purchase as much
coverage  as possible  for such  amount.  (b) In the event  Parent or any of its
successors or assigns (i) consolidates  with or merges into any other Person and
is not the continuing or surviving  corporation or entity of such  consolidation
or merger or (ii) conveys all or substantially  all of its properties and assets
to any Person then, and in each case, proper provision shall be made so that the
successors  and  assigns  of Parent  assume  the  obligations  set forth in this
Section 5.11.

     Section  5.12  Notification  of  Certain  Matters.  Parent  shall  use  its
commercially  reasonable  efforts to give prompt notice to the Company,  and the
Company shall use its commercially  reasonable  efforts to give prompt notice to
Parent, of: (i) the occurrence, or non-occurrence,  of any event the occurrence,
or non-occurrence,  of which it is aware and which would be reasonably likely to
cause (x) any  representation  or warranty  contained  in this  Agreement  to be
untrue or inaccurate in any material  respect or (y) any covenant,  condition or
agreement  contained in this  Agreement  not to be complied with or satisfied in
all material  respects,  (ii) any failure of Parent or the Company,  as the case
may be, to comply in a timely manner with or satisfy any covenant,  condition or
agreement to be complied  with or satisfied by it  hereunder.  The Company shall
use its reasonable best efforts to give prompt notice to Parent of any change or
event which would be reasonably  likely to have a Material Adverse Effect on the
Company.  The  delivery of any notice  pursuant to this  Section  5.12 shall not
limit  or  otherwise  affect  the  remedies  available  hereunder  to the  party
receiving such notice.
<PAGE>

     Section 5.13  Compliance  with the Securities  Act. (a) Section 5.13 of the
Company  Letter  contains a list  identifying  all Persons who, at the effective
time of the Stockholder Consent, may be deemed to be "affiliates" of the Company
as that term is used in paragraphs  (c) and (d) of Rule 145 under the Securities
Act, other than directors of the Company who do not own any Company Common Stock
or Company Stock Options (the "Rule 145 Affiliates").  The Company shall use its
commercially reasonable efforts to cause each Person who is identified as a Rule
145  Affiliate  in such list to execute and deliver to Parent  within 30 days of
the date  hereof a written  agreement  in  substantially  the form of  Exhibit B
hereto  (the  "Company  Affiliate  Letter").  Prior to the  Effective  Time,  if
required,  the Company  shall amend and  supplement  Section 5.13 of the Company
Letter and use its  commercially  reasonable  efforts  to cause each  additional
Person who is  identified  as a Rule 145  Affiliate  of the Company to execute a
Company Affiliate Letter.  Parent shall be entitled to place appropriate legends
on the  certificates  evidencing  any  Parent  Common  Stock to be  received  by
affiliates of the Company  pursuant to this  Agreement and to issue  appropriate
stop transfer  instructions  to the transfer  agent for the Parent Common Stock,
consistent with the terms of the Company Affiliate  Letter.  (b) Section 5.13 of
the Parent Letter contains a list  identifying  those Persons who may be, at the
effective time of the Stockholder Consent, affiliates of Parent under applicable
SEC  accounting  releases  with  respect  to  pooling  of  interests  accounting
treatment.  Parent shall use its commercially reasonable efforts to enter into a
written  agreement  in  substantially  the form of Exhibit C hereto (the "Parent
Affiliate  Letter")  within 30 days of the date hereof with each of such Persons
identified in the  foregoing  list.  Prior to the  Effective  Time, if required,
Parent shall amend and supplement  Section 5.13 of the Parent Letter and use its
reasonable  best  efforts to cause  each  additional  Person  who is  identified
therein as an affiliate of Parent to execute the Parent Affiliate Letter.

     Section 5.14 Registration  Rights Agreement.  Parent agrees to enter into a
Registration Rights Agreement (the "Registration Rights Agreement"), in the form
of the attached  Exhibit D, with each of the  stockholders of the Company who or
which elects to become a party thereto by giving Parent  written  notice to such
effect no later than 60 days after the date hereof.

     Section 5.15 Employee  Matters.  To the extent any Parent Plan (or any plan
of the Surviving Corporation) shall be made applicable to any employee or former
employee of the Company,  Parent shall, or shall cause the Surviving Corporation
to, grant to employees  and former  employees of the Company  credit for service

<PAGE>

with the Company and its  Subsidiaries  (or service  credited by the Company and
its Subsidiaries) for the purposes of determining  eligibility to participate in
such plan and the employee's  nonforfeitable interest in benefits thereunder and
for purposes of  calculating  benefits  thereunder  (but  subject to offset,  if
necessary,  to avoid duplication of benefits).  Parent shall (i) waive (or cause
to be waived) any pre-existing  condition limitations that might otherwise apply
to employees or former employees of the Company and its Subsidiaries  unless not
waived under the Company's  equivalent  plan and (ii)  recognize (or cause to be
recognized)  the dollar  amount of all expenses  incurred by employees or former
employees of the Company and its Subsidiaries  during the calendar year in which
the  Effective  Time  occurs  for  purposes  of  satisfying  the  calendar  year
deductions and co-payment  limitations for such year, under the relevant welfare
benefit plans of Parent or the Surviving Corporation.  Nothing in this Agreement
shall be interpreted as limiting the power of the Surviving Corporation to amend
or  terminate  any Company Plan or any other  employee  benefit  plan,  program,
agreement or policy in  accordance  with its terms or as requiring the Surviving
Corporation  or Parent to offer or to  continue  (other  than as required by its
terms) any written employment contract.

     Section 5.16  Advisory  Committee.  (a) Except as otherwise  limited by any
applicable  law,  regulation,  rule,  ordinance,  judgment,  order or  decree or
otherwise  required by any Government Entity,  Parent will establish,  following
the  Closing,  a  Network  Advisory  Board  (the  "Advisory  Board")  of  senior
executives  of financial  institution  members of the MAC(r) and Star  System(r)
Networks  (collectively,  the "Network").  The selection and terms of service of
the members of the  Advisory  Board shall be at Parent's  sole  discretion.  The
Advisory  Board shall expire on December  31, 2010.  (b) Parent shall give prior
written  notice to the Advisory  Board of changes  proposed by Parent to (i) the
operating rules governing the Network from any combination of the MAC(r) Network
Rules and Regulations and the Star Systems, Inc. Operating Rules existing on the
Closing  Date or (ii) the  external  interchange  rates  and fees  (ATM and POS)
payable between, or passed through to, Network participants. The Advisory Board,
by a majority  vote of the entire  Advisory  Board,  may veto any such  proposed
change prior to the effective date of such proposed  change.  The Advisory Board
also may propose changes to Network operating rules and pricing,  which shall be
considered by Parent in its sole discretion. (c) If, after the Closing Date, the
Network offers new products or services  under the Network  brand,  Parent shall
give  prior  written  notice  to the  Advisory  Board  of the  establishment  or
modification  of the  pricing of  transactions  for such  products  or  services
between  Network  participants.  The Advisory  Board,  by a majority vote of the

<PAGE>

entire Advisory Board, may veto any such proposed pricing prior to the effective
date of such proposed change. (d) Parent shall retain sole authority to set fees
payable  to any  legal  entity  operating  the  Network.  (e)  Parent  considers
point-to-point transfers,  electronic check services and Internet debit services
to be significant strategic initiatives for the Network and will make reasonable
efforts to develop and support such transactions.

     Section 5.17  Directorship.  At the first meeting of the Board of Directors
of Parent following the Effective Time,  Parent's Board of Directors shall elect
Ronald V. Congemi to be a director of Parent so that immediately thereafter, the
Board of Directors of Parent shall consist of ten directors.

                                   ARTICLE VI

                       CONDITIONS PRECEDENT TO THE MERGER

     Section 6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective  obligations  of each party to effect the Merger  shall be subject to
the  fulfillment at or prior to the Effective Time of the following  conditions:
(a)  Stockholder  Approval.  This Agreement shall have been duly approved by the
requisite vote of  stockholders of the Company in accordance with applicable law
and the Company Charter and Company Bylaws. (b) Certain Approvals. All approvals
to be obtained by Parent,  Sub or the Company  required under the Bank Act shall
have been received and the waiting period (and any extension thereof) applicable
to the  consummation  of the Merger under the HSR Act shall have expired or been
terminated.  (c) No Order.  Neither any court nor any other Governmental  Entity
having  jurisdiction  over the  Company  or Parent,  or any of their  respective
Subsidiaries,  shall have enacted, issued, promulgated,  enforced or entered any
law,  rule,  regulation,  executive  order,  decree,  injunction  or other order
(whether  temporary,  preliminary or permanent)  which is then in effect and has
the effect of making the Merger or any of the transactions  contemplated  hereby
illegal.  (d) Accounting.  The Company shall have received the written  opinion,
dated as of the  Effective  Time,  of  Deloitte & Touche LLP that the Company is
eligible to be a party to a business  combination  accounted for as a pooling of
interests in accordance with GAAP and applicable published rules and regulations
of the SEC.  Parent  shall have  received the written  opinion,  dated as of the
Effective  Time, of Ernst & Young LLP that Parent is eligible to be a party to a
business combination  accounted for as a pooling of interests in accordance with
GAAP and  applicable  published  rules and  regulations of the SEC, and that the
Merger will  qualify for pooling of interests  accounting.  Each of such written

<PAGE>

opinions will be in form and substance  reasonably  satisfactory  to the Parent.
(e)  Certain  Governmental  Consents.  All  authorizations,   consents,  orders,
declarations or approvals of, or filings with, or terminations or expirations of
waiting  periods  imposed  by, any  Governmental  Entity,  which the  failure to
obtain,  make or occur  would have the effect of making the Merger or any of the
transactions  contemplated  hereby  or by  any of the  agreements  delivered  in
connection  herewith a violation of law by Parent, Sub or the Company shall have
been obtained, shall have been made or shall have occurred.

     Section 6.2  Condition to  Obligation  of the Company to Effect the Merger.
The  obligation  of the  Company to effect  the  Merger  shall be subject to the
fulfillment  at or  prior  to the  Effective  Time of the  following  additional
conditions: (a) Performance of Obligations; Representations and Warranties. Each
of Parent and Sub shall have  performed  in all  material  respects  each of its
agreements  contained in this Agreement  required to be performed on or prior to
the Effective Time, each of the representations and warranties of Parent and Sub
contained in this Agreement  that is qualified by materiality  shall be true and
correct on and as of the Effective Time as if made on and as of such date (other
than  representations  and warranties which address matters only as of a certain
date which  shall be true and correct as of such  certain  date) and each of the
representations  and  warranties  that is not so  qualified  shall  be true  and
correct in all material  respects on and as of the Effective  Time as if made on
and as of such date (other than  representations  and  warranties  which address
matters  only as of a  certain  date  which  shall  be true and  correct  in all
material  respects as of such certain date), in each case except as contemplated
or  permitted  by  this  Agreement,  and  the  Company  shall  have  received  a
certificate  signed on behalf of Parent by its Chief  Executive  Officer and its
Chief Financial Officer to such effect. (b) Tax Opinion.  The Company shall have
received an opinion of  Skadden,  Arps,  Slate,  Meagher & Flom LLP, in form and
substance  reasonably  satisfactory  to the Company,  dated the Effective  Time,
substantially  to the  effect  that on the basis of facts,  representations  and
assumptions  set forth in such opinion  which are  consistent  with the state of
facts  existing as of the Effective  Time,  for United States federal income tax
purposes,  the Merger will constitute a  "reorganization"  within the meaning of
Section 368(a) of the Code. In rendering  such opinion,  Skadden,  Arps,  Slate,
Meagher & Flom LLP may rely upon the  representations  contained  herein and may
receive  and rely upon  representations  from Parent and its  Subsidiaries,  the
Company and its Subsidiaries, and others.

     Section  6.3  Conditions  to  Obligations  of Parent  and Sub to Effect the

<PAGE>

Merger.  The obligations of Parent and Sub to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following additional
conditions: (a) Performance of Obligations;  Representations and Warranties. The
Company shall have  performed in all material  respects  each of its  agreements
contained  in  this  Agreement  required  to be  performed  on or  prior  to the
Effective  Time,  each of the  representations  and  warranties  of the  Company
contained in this Agreement  that is qualified by materiality  shall be true and
correct on and as of the Effective Time as if made on and as of such date (other
than  representations  and warranties which address matters only as of a certain
date which  shall be true and correct as of such  certain  date) and each of the
representations  and  warranties  that is not so  qualified  shall  be true  and
correct in all material  respects on and as of the Effective  Time as if made on
and as of such date (other than  representations  and  warranties  which address
matters  only as of a  certain  date  which  shall  be true and  correct  in all
material  respects as of such certain date), in each case except as contemplated
or permitted by this  Agreement,  and Parent shall have  received a  certificate
signed on behalf of the  Company by its Chief  Executive  Officer  and its Chief
Financial Officer to such effect. (b) Tax Opinion. Parent shall have received an
opinion of Sidley & Austin,  in form and substance  reasonably  satisfactory  to
Parent, dated the Effective Time,  substantially to the effect that on the basis
of facts,  representations  and  assumptions set forth in such opinion which are
consistent with the state of facts existing as of the Effective Time, for United
States   federal   income  tax   purposes,   the  Merger   will   constitute   a
"reorganization"  within the meaning of Section 368(a) of the Code. In rendering
such opinion, Sidley & Austin may rely upon representations contained herein and
may receive and rely upon representations from Parent and its Subsidiaries,  the
Company and its  Subsidiaries,  and others.  (c) No Changes or Material  Adverse
Effect. Since the Balance Sheet Date through the Effective Time, there shall not
have been (i) any Material  Adverse Change in the Company,  or (ii) any material
adverse federal or state legislative or regulatory event affecting the Company's
business or its products or services.  Parent shall have  received a certificate
signed on behalf of the  Company by its Chief  Executive  Officer  and its Chief
Financial Officer to such effect. (d) Consents.  All  authorizations,  consents,
orders,  declarations  or approvals  of, or filings  with,  or  terminations  or
expirations of waiting periods imposed by, any  Governmental  Entity,  which the
failure to obtain, make or occur would have, individually or in the aggregate, a
significant  adverse effect on Parent or any of its  Subsidiaries  (assuming the
Merger had taken  place) or a Material  Adverse  Effect on the Company or any of
its Subsidiaries,  shall have been obtained,  shall have been made or shall have
occurred.  Further,  the Company  shall have obtained the consent or approval of

<PAGE>

each Person that is not a Governmental Entity whose consent or approval shall be
required in connection with the transactions  contemplated hereby under any loan
or  credit  agreement,  note,  mortgage,  indenture,  lease  or  other  material
agreement  or  instrument  by which the  Company or any of its  Subsidiaries  is
bound,  including  without  limitation,  each  consent or approval  described in
Section 3.4 of the Company Letter. (e) No Litigation or Injunction.  There shall
not be instituted or pending any suit,  action or proceeding by any Governmental
Entity relating to this Agreement,  any of the Company  Ancillary  Agreements or
Parent Ancillary  Agreements or any of the transactions  contemplated  herein or
therein. No action or proceeding shall have been commenced seeking any temporary
restraining order,  preliminary or permanent  injunction or other order from any
court of  competent  jurisdiction  or  seeking  any  other  legal  restraint  or
prohibition  preventing  the  consummation  of the  Merger  or any of the  other
transactions  contemplated  by this  Agreement  other than any of the  foregoing
which  shall  have  been  dismissed  with  prejudice.   (f)  Capital   Structure
Certificate.  The  Company  shall  have  delivered  a  certificate  of its Chief
Executive  Officer  and its Chief  Financial  Officer  setting  forth all of the
information  that  would have been  required  to have been  included  in Section
3.2(c) of the Company  Letter if the  Agreement  were dated as of the  Effective
Time. (g) Dissenting  Stockholders.  The Dissenting Shares shall include no more
than  five  percent  (5%) of the  shares of  Company  Common  Stock  outstanding
immediately   prior  to  the  Effective  Time.  Parent  shall  have  received  a
certificate  signed on behalf of the Company by its Chief Executive  Officer and
its Chief Financial Officer to such effect.  Payments with respect to Dissenting
Shares,  if any, shall be made by the Company solely with its own funds, and the
Company  shall not be reimbursed  therefor by Parent or any of its  Subsidiaries
either directly or indirectly.  (h) Stockholder  Approval.  This Agreement shall
have been duly  approved  by holders  of 94.99% of the  issued  and  outstanding
shares of Company Common Stock.  Parent shall have received a certificate signed
on behalf of the Company by its Chief  Executive  Officer and its  Secretary  to
such effect.  (i)  Processing  Agreement.  At or prior to November 1, 2000,  the
Company and/or Star Networks,  Inc., as appropriate,  shall have entered into an
agreement with eFunds to terminate the ATM Processing Agreement,  dated June 21,
2000,  between  Star  Networks,  Inc. and eFunds  Corporation,  effective at the
Closing,  on terms reasonably  acceptable to Parent. (j) Employment  Agreements.
(i) Each of the  executives  listed on  Schedule  6.3(j)  who are  parties to an
Amendment to  Employment  Agreement  (collectively,  the  "Employment  Agreement
Amendments"),  in the form of the  attached  Exhibit E, entered into between the
Company and each such  executive  on the date hereof  shall still be employed by
the Company,  unless their  employment  has been  terminated  as a result of the

<PAGE>

death or  disability  of any such  executive,  (ii)  the  employment  agreements
existing  between such executives and the Company,  as amended by the Employment
Agreement   Amendments   (collectively  and  as  so  amended,   the  "Employment
Agreements") shall not have been amended,  (iii) the Employment Agreements shall
be in full  force and effect and the  Company  shall not have  waived any of its
rights  thereunder  and (iv) there  shall have been no  assertion  by any of the
executives  listed  in  clause  (i)  hereof  or by the  Company  that any of the
Employment  Agreements,  in whole or in part,  is not effective or is in breach.
Parent shall have received a certificate  signed on behalf of the Company by its
Chief Executive Officer and its Secretary to such effect.

                                  ARTICLE VII

                       TERMINATION, AMENDMENT AND WAIVER

     Section 7.1 Termination. This Agreement may be terminated at any time prior
to the  Effective  Time,  whether  before or after any  approval  of the matters
presented in connection with the Merger by the stockholders of the Company:  (a)
by mutual written consent of Parent and the Company; (b) by either Parent or the
Company if the other party shall have failed to comply in any  material  respect
with any of its covenants or agreements  contained in this Agreement required to
be complied with prior to the date of such termination,  which failure to comply
has not been cured  within 30 days  following  receipt  by such  other  party of
written notice from the  non-breaching  party of such failure to comply;  (c) by
either  Parent or the  Company if there has been (i) a breach by the other party
(in the case of Parent,  including any breach by Sub) of any  representation  or
warranty that is not qualified as to materiality  which has the effect of making
such representation or warranty not true and correct in all material respects or
(ii) a breach by the other party (in the case of Parent, including any breach by
Sub) of any  representation or warranty that is qualified as to materiality,  in
each case which  breach has not been cured within 30 days  following  receipt by
the  breaching  party  from the  non-breaching  party of  written  notice of the
breach; (d) by Parent or the Company if: (i) the Merger has not been effected on
or prior to the close of  business on June 30,  2001;  provided,  however,  that
either party may by written  notice to the other party  delivered on or prior to
June 30,  2001 extend such date until the day  immediately  preceding  the first
anniversary  hereof if the  failure of the Merger to be  effected on or prior to
June 30, 2001 shall have resulted from the failure of the condition set forth in
Section 6.1(b);  provided,  further,  that the right to terminate this Agreement
pursuant to this  Section  7.1(d)(i)  shall not be  available to any party whose

<PAGE>

failure to fulfill any of its  obligations  contained in this Agreement has been
the cause of, or resulted  in, the failure of the Merger to have  occurred on or
prior to the  aforesaid  date;  or (ii) any court or other  Governmental  Entity
having  jurisdiction  over a party hereto shall have issued an order,  decree or
ruling or taken any other action permanently enjoining, restraining or otherwise
prohibiting  the  transactions  contemplated  by this  Agreement and such order,
decree, ruling or other action shall have become final and nonappealable; (e) by
Parent  if the  stockholders  of the  Company  do not  approve  and  adopt  this
Agreement  in an action by written  consent no later than 45 days after the date
hereof;  (f) by Parent if (i) the Board of  Directors  of the Company  shall not
have  recommended,  or shall  have  resolved  not to  recommend,  or shall  have
qualified, modified or withdrawn its recommendation of the Merger or declaration
that the Merger is advisable and fair to and in the best interest of the Company
and its  stockholders,  or shall have  resolved to do so, (ii) any Person (other
than Parent or its Affiliates)  acquires or becomes the beneficial  owner of 10%
or more of the  outstanding  shares of Company  Common  Stock  (other  than as a
result of a bona fide change of control of existing stockholders of the Company,
all of whom  are  parties  to a  Stockholder  Agreement),  (iii)  the  Board  of
Directors  of the Company  shall have  recommended  to the  stockholders  of the
Company any Takeover  Proposal or shall have  resolved to do so or (iv) a tender
offer or  exchange  offer for 10% or more of the  outstanding  shares of capital
stock of the Company is  commenced,  and the Board of  Directors  of the Company
fails to recommend against  acceptance of such tender offer or exchange offer by
its stockholders (including by taking no position with respect to the acceptance
of such tender offer or exchange offer by its stockholders); (g) by the Company,
upon  written  notice to Parent,  at any time during the five trading day period
after the Determination Date, if both of the following conditions are satisfied:
(1) the  Parent  Average  Price on the  Determination  Date  shall be less  than
$24.25;  and (2) (i) the number obtained by dividing the Parent Average Price on
the  Determination  Date by 30.3125 (such number being referred to herein as the
"Parent  Ratio") shall be less than (ii) the average of the Index Company Ratios
less 0.15 (such number being referred to herein as the "Index Ratio");  subject,
however,  to the following  provisions.  The Company may withdraw such notice of
termination  at any time  within the  aforementioned  five  trading  day period.
During the five trading day period  commencing  with its receipt of such notice,
Parent shall have the option to elect to increase  the  Exchange  Ratio to equal
the lesser of (i) the number  obtained by dividing (1) 24.25  multiplied  by the
Exchange  Ratio  (as then in  effect)  by (2) the  Parent  Average  Price on the
Determination  Date, and (ii) the number obtained by dividing (1) the product of
the Index  Ratio and the  Exchange  Ratio (as then in  effect) by (2) the Parent

<PAGE>

Ratio.  Any election by Parent pursuant to the preceding  sentence shall be made
by delivery  of a written  notice to the  Company  within such five  trading day
period and shall  specify  the revised  Exchange  Ratio.  Upon  delivery of such
notice by Parent,  no termination  shall be deemed to have occurred  pursuant to
this Section 7.1(g) and this Agreement shall remain in effect in accordance with
its terms (except as the Exchange  Ratio shall have been so  modified),  and any
references in this Agreement to "Exchange  Ratio" shall  thereafter be deemed to
refer to the  Exchange  Ratio  as  adjusted  pursuant  to this  Section  7.1(g).
Promptly  after Parent gives notice of its election to adjust the Exchange Ratio
hereunder,  Parent and the Company  shall agree on a date to be the Closing Date
under this Agreement, which date shall be not more than five business days after
the date of  delivery  of such notice by Parent.  For  purposes of this  Section
7.1(g),  the  following  terms shall have the meanings  indicated:  "Calculation
Period" shall mean the 20 consecutive full trading days ending at the end of the
date in question. "Determination Date" shall mean the tenth trading day prior to
the Closing Date.  "Index Company Price" on a given date shall mean the quotient
(calculated  to the nearest  hundredth)  for each company  included in the Index
Group of (i) the sum for all trading days during the  Calculation  Period of (x)
the average of the high and the low sales price as reported in the  consolidated
transaction  reporting  system for the market or  exchange  on which such common
stock  is  principally  traded  (the  "Reporting  System")  of a  share  of such
company's common stock on each such day, multiplied by (y) the trading volume as
reported on such Reporting  System of shares of such  company's  common stock on
each such day,  divided by (ii) the sum of the  trading  volumes as  reported on
such Reporting System of shares of such company's common stock for all such days
during the  Calculation  Period.  "Index  Company  Ratios" shall mean,  for each
company  included in the Index Group,  the number obtained by dividing the Index
Company  Price  on the  Determination  Date by the  Index  Company  Price on the
Starting Date.  "Index Group" shall mean, of the six companies listed in Section
7.1 of the Parent  Letter,  those  companies  the common stock of which shall be
publicly traded since the Starting Date and until the Determination  Date and as
to which  there  shall not have  been,  since the  Starting  Date and before the
Determination Date, any public announcement of a proposal for such company to be
acquired  or for such  company  to  acquire  another  company  or  companies  in
transactions with a value exceeding 25% of the acquiror's market  capitalization
as of the Starting Date.  "Parent Average Price" on a given date shall equal the
quotient  (calculated  to the nearest  hundredth) of (i) the sum for all trading
days  during the  Calculation  Period of (x) the average of the high and the low
sales price as reported on Nasdaq of a share of Parent Common Stock on each such
day,  multiplied  by (y) the  trading  volume as reported on Nasdaq of shares of

<PAGE>

Parent  Common  Stock on each such day,  divided by (ii) the sum of the  trading
volumes as reported on Nasdaq of shares of Parent Common Stock for all such days
during the Calculation Period.  "Starting Date" shall mean the tenth trading day
prior to the date of this Agreement.  If Parent or any company  belonging to the
Index   Group   declares   or  effects  a  stock   dividend,   reclassification,
recapitalization,   split-up,  combination,   exchange  of  shares,  or  similar
transaction between the 11th trading day prior to the date of this Agreement and
the  Determination  Date,  the prices for the  common  stock of such  company or
Parent and the other  numbers set forth above in this  Section  7.1(g)  shall be
appropriately adjusted for the purposes of applying this Section 7.1(g); and (h)
by Parent if any  Governmental  Entity  (i) seeks to  restrain  or  prohibit  or
restrains  or  prohibits  the  consummation  of the  Merger  or any of the other
transactions contemplated by this Agreement, (ii) seeks to prohibit or prohibits
the  ownership,  operation  or  control by the  Company,  Parent or any of their
respective  Subsidiaries  of any portion of the  business  or assets  (including
without  limitation  any  agreement)  of the  Company,  Parent  or any of  their
respective  Subsidiaries,  (iii) seeks to limit or impose any  conditions  on or
limits or imposes any conditions on the  ownership,  operation or control by the
Company,  Parent or any of their  respective  Subsidiaries of any portion of the
business or assets (including  without limitation any agreement) of the Company,
Parent or any of their  respective  Subsidiaries or that otherwise,  in the good
faith opinion of Parent, individually or in the aggregate, would have a Material
Adverse Effect on Parent, the Company or any of their respective Subsidiaries or
would detract from the value of the Merger to Parent in any material manner,  or
(iv) seeks to compel or compels the Company,  Parent or any of their  respective
Subsidiaries  to dispose of,  grant  rights in respect of, or hold  separate any
portion of the business or assets (including  without  limitation any agreement)
of the Company, Parent or any of their respective Subsidiaries. The right of any
party  hereto to  terminate  this  Agreement  pursuant to this Section 7.1 shall
remain  operative and in full force and effect  regardless of any  investigation
made by or on behalf of any party hereto,  any Person controlling any such party
or any of their respective officers or directors,  whether prior to or after the
execution of this Agreement.

     Section  7.2 Effect of  Termination.  In the event of  termination  of this
Agreement  by either  Parent or the Company,  as provided in Section  7.1,  this
Agreement shall forthwith become void and there shall be no liability  hereunder
on the  part  of the  Company,  Parent,  Sub or  their  respective  officers  or
directors  (except  for the last  sentence  of Section  5.2 and the  entirety of
Section 5.3,  which shall  survive the  termination);  provided,  however,  that

<PAGE>

nothing  contained in this  Section 7.2 shall  relieve any party hereto from any
liability for any willful breach of a  representation  or warranty  contained in
this Agreement or the breach of any covenant contained in this Agreement.

     Section 7.3 Amendment. This Agreement may be amended by the parties hereto,
by or pursuant to action taken by their respective  Boards of Directors,  at any
time before or after  approval of the matters  presented in connection  with the
Merger by the  stockholders  of the Company,  but, after any such  approval,  no
amendment  shall  be  made  which  by law  requires  further  approval  by  such
stockholders  without such further  approval.  This Agreement may not be amended
except by an  instrument  in  writing  signed  on behalf of each of the  parties
hereto.

     Section 7.4 Waiver.  At any time prior to the Effective  Time,  the parties
hereto may (i) extend the time for the  performance of any of the obligations or
other  acts of the other  parties  hereto,  (ii) waive any  inaccuracies  in the
representations  and warranties  contained  herein or in any document  delivered
pursuant  hereto  and/or (iii) waive  compliance  with any of the  agreements or
conditions  contained  herein which may legally be waived.  Any agreement on the
part of a party  hereto to any such  extension  or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party.

                                  ARTICLE VIII

                               GENERAL PROVISIONS

     Section  8.1   Non-Survival  of   Representations   and   Warranties.   The
representations  and warranties and the covenants required to be performed prior
to the Effective Time in this Agreement or in any instrument  delivered pursuant
to this Agreement shall terminate at the Effective Time.

     Section 8.2 Notices. All notices and other  communications  hereunder shall
be in writing and shall be deemed given when delivered personally, one day after
being delivered to an overnight  courier or on the business day received (or the
next business day if received  after 5 p.m. local time or on a weekend or day on
which banks are closed) when sent via facsimile  (with a confirmatory  copy sent
by  overnight  courier) to the parties at the  following  addresses  (or at such
other address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to


<PAGE>

Concord EFS, Inc.
Electronic Payment Services, Inc.
1100 Carr Road
Wilmington, Delaware 19809
Attention: General Counsel
Facsimile No.:  (302) 791-8762

with a copy to:

Sidley & Austin
Bank One Plaza
10 South Dearborn Street
Chicago, Illinois  60603
Attention:  Imad I. Qasim
Facsimile No.:  (312) 853-7036


(b) if to the Company, to

Star Systems, Inc.
P.O. Box 948154 (32794)
2301 Lucien Way, Suite 260
Attention: Chief Financial Officer
Facsimile No.:  (407) 659-6767

with a copy to:

Skadden, Arps, Slate, Meagher & Flom, LLP
525 University Avenue
Suite 220
Palo Alto, California 94301
Attention:  Kenton J. King
Facsimile No.:  (650) 470-4570

     Section 8.3 Interpretation. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless otherwise
indicated.  The table of contents, table of defined terms and headings contained
in this  Agreement are for  reference  purposes only and shall not affect in any
way  the  meaning  or  interpretation  of this  Agreement.  Whenever  the  words
"include,"  "includes" or "including" are used in this Agreement,  they shall be

<PAGE>

deemed to be followed by the words "without limitation."

     Section 8.4  Counterparts.  This Agreement may be executed in counterparts,
all of which shall be considered  one and the same  agreement,  and shall become
effective when one or more  counterparts have been signed by each of the parties
and delivered to the other parties.

     Section 8.5 Entire Agreement; No Third-Party Beneficiaries.  This Agreement
and the Confidentiality  Agreement constitute the entire agreement and supersede
all prior  agreements  and  understandings,  both  written  and oral,  among the
parties with respect to the subject matter hereof.  This  Agreement,  except for
the  provisions of Section 5.11, is not intended to confer upon any Person other
than the parties hereto any rights or remedies hereunder.

     Section  8.6  Governing  Law.  This  Agreement  shall be  governed  by, and
construed in accordance  with, the laws of the State of Delaware,  regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.

     Section 8.7 Assignment.  Subject to Section 1.1, neither this Agreement nor
any of the rights,  interests or obligations  hereunder shall be assigned by any
of the parties  hereto  (whether by operation of law or  otherwise)  without the
prior written consent of the other parties.

     Section 8.8 Severability.  If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy,  all other terms,  conditions  and  provisions of this  Agreement  shall
nevertheless  remain in full force and effect so long as the  economic and legal
substance of the transactions contemplated hereby are not affected in any manner
materially  adverse to any party. Upon such determination that any term or other
provision is invalid,  illegal or incapable of being enforced, the parties shall
negotiate  in good faith to modify this  Agreement  so as to effect the original
intent of the parties as closely as possible in a mutually  acceptable manner in
order that the transactions contemplated by this Agreement may be consummated as
originally contemplated to the fullest extent possible.

     Section 8.9  Enforcement of this  Agreement.  The parties hereto agree that
irreparable  damage would occur in the event that any of the  provisions of this
Agreement were not performed in accordance  with their specific  wording or were
otherwise  breached.  It is accordingly  agreed that the parties hereto shall be

<PAGE>

entitled to an injunction or injunctions  to prevent  breaches of this Agreement
and to enforce  specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, such remedy being in addition to
any other remedy to which any party is entitled at law or in equity.

     IN WITNESS WHEREOF,  Parent, Sub and the Company have caused this Agreement
to be signed by their  respective  officers  thereunto duly authorized all as of
the date first written above.

CONCORD EFS, INC.




By:
Name:
Title:





ORION ACQUISITION CORP.




By:
Name:
Title:






<PAGE>

STAR SYSTEMS, INC.



By:
Name:
Title:

Exhibit A
STOCKHOLDER AGREEMENT
     STOCKHOLDER AGREEMENT, dated as of October ___, 2000 (this "Agreement"), by
the  undersigned  stockholder  (the  "Stockholder")  of Star  Systems,  Inc.,  a
Delaware  corporation (the  "Company"),  for the benefit of Concord EFS, Inc., a
Delaware corporation ("Parent").
RECITALS
     WHEREAS,  Parent,  Orion  Acquisition  Corp., a Delaware  corporation and a
direct wholly owned  subsidiary of Parent ("Sub"),  and the Company are entering
into an Agreement and Plan of Merger, dated as of October ___, 2000 (the "Merger
Agreement"),  whereby, upon the terms and subject to the conditions set forth in
the Merger  Agreement,  each issued and outstanding  share of Common Stock,  par
value  $0.01 per share,  of the  Company  ("Company  Common  Stock"),  not owned
directly or indirectly by the Company,  will be converted  into shares of Common
Stock, par value $0.33 1/3 per share, of Parent ("Parent Common Stock");

     WHEREAS,  the  Stockholder  owns of record  and/or  holds stock  options to
acquire  (whether or not vested)  that number of shares of Company  Common Stock
appearing on the  signature  page hereof (such shares of Company  Common  Stock,
together with any other shares of capital stock of the Company  acquired by such
Stockholder  after the date hereof and during the term of this Agreement,  being
collectively referred to herein as the "Subject Shares"); and

     WHEREAS,  as a  condition  to its  willingness  to enter  into  the  Merger
Agreement,  Parent has  required  that the  Stockholder  agree,  and in order to
induce Parent to enter into the Merger Agreement the Stockholder has agreed,  to
enter into this Agreement.  NOW, THEREFORE, in consideration of the promises and
the mutual covenants and agreements set forth herein,  the Stockholder agrees as
follows: 1. Covenants of Stockholder. Until the termination of the Stockholder's
obligations in accordance  with Section 4,  Stockholder  agrees as follows:  (a)
Stockholder  will execute and deliver to the Company the Stockholder  Consent no
later than  forty-five  days  following the date hereof.  Further,  in any other

<PAGE>

circumstances  upon which a vote,  consent or other approval with respect to the
Merger or the Merger Agreement is sought,  the Stockholder  shall vote (or cause
to be  voted)  the  Subject  Shares in favor of the  Merger,  the  approval  and
adoption  of  the  Merger  Agreement  and  the  approval  of the  terms  thereof
(including the Merger) and each of the other  transactions  contemplated  by the
Merger  Agreement.  (b) The  Stockholder  shall not,  nor shall the  Stockholder
permit any affiliate, director, officer, employee or other representative of the
Stockholder  to (i)  directly  or  indirectly  solicit,  initiate  or  knowingly
encourage  the  submission  of,  any  Takeover  Proposal  or  (ii)  directly  or
indirectly participate in any discussions or negotiations  regarding, or furnish
to any person  any  information  with  respect  to, or take any other  action to
facilitate any inquiries or the making of any proposal that constitutes,  or may
reasonably be expected to lead to, any Takeover  Proposal.  (c) The  Stockholder
shall cooperate with Parent to support and to consummate and make effective,  in
the most reasonably  expeditious  manner  practicable,  the Merger and the other
transactions  contemplated by the Merger  Agreement.  2. Proxy.  (a) Stockholder
hereby  irrevocably  grants to, and appoints,  Edward A. Labry and Dan Palmer or
either of them in their  respective  capacities  as  officers  of Parent and any
individual who shall hereafter  succeed to any such office of Parent and each of
them individually,  such  Stockholder's  proxy and  attorney-in-fact  (with full
power of substitution), for and in the name, place, and stead of Stockholder, to
vote the Subject Shares or grant a consent or approval in respect of the Subject
Shares in  connection  with any  meeting  or action by  written  consent  of the
stockholders of the Company as specified in Section 1(a) hereof. (b) Stockholder
represents  that any proxies  heretofore  given in respect of the Subject Shares
are revocable and that such proxies are hereby revoked.  (c) Stockholder  hereby
affirms  that the  irrevocable  proxy  set  forth in this  Section 2 is given in
connection with the execution of the Merger Agreement, and that such irrevocable
proxy is given to secure the performance of the duties of Stockholder under this
Agreement.  Stockholder  hereby further  affirms that the  irrevocable  proxy is
coupled with an interest and may under no circumstances be revoked.  Stockholder
hereby ratifies and confirms all that such irrevocable  proxy may lawfully do or
cause to be done by  virtue  hereof.  Such  irrevocable  proxy is  executed  and
intended to be  irrevocable  in accordance  with Section  212(e) of the Delaware
General  Corporation  Law. 3.  Representations  and Warranties.  The Stockholder
represents and warrants to Parent as follows:  (a) The Stockholder is the record
and  beneficial  owner  of,  and has good  title to,  the  Subject  Shares.  The
Stockholder does not own, of record or beneficially, any shares of capital stock
of the Company other than the Subject Shares. The Stockholder has the sole right
to vote, and the sole power of disposition  with respect to, the Subject Shares,

<PAGE>

and none of the Subject  Shares is subject to any voting  trust,  proxy or other
agreement,  arrangement or restriction with respect to the voting or disposition
of such Subject  Shares,  except as  contemplated  by this  Agreement.  (b) This
Agreement has been duly executed and delivered by the Stockholder.  Assuming the
due  authorization,  execution  and delivery of this  Agreement by Parent,  this
Agreement  constitutes  the  valid  and  binding  agreement  of the  Stockholder
enforceable  against the Stockholder in accordance with its terms, except as may
be limited by applicable bankruptcy, insolvency, reorganization,  moratorium and
other similar laws of general  application  which may affect the  enforcement of
creditors' rights generally and by general equitable  principles.  The execution
and delivery of this Agreement by the Stockholder does not and will not conflict
with any agreement, order or other instrument binding upon the Stockholder,  nor
require the Stockholder to make or obtain any regulatory filing or approval. (c)
Each of the representations and warrants contained in Section 3.31 of the Merger
Agreement  is true and correct  with respect to the  Stockholder.  4.  Affiliate
Letter.  The  Stockholder  agrees to execute  and  deliver on a timely  basis an
Affiliate Letter in the form of Exhibit B to the Merger  Agreement,  when and if
requested  by  Parent.  5.  Termination.  The  obligations  of  the  Stockholder
hereunder  shall  terminate  upon the earlier of the  termination  of the Merger
Agreement  pursuant to Section 7.1 thereof or the Effective Time;  provided that
in the event the Merger  Agreement is terminated  pursuant to Section  7.1(e) or
7.1(f) thereof, the obligations of the Stockholder hereunder shall terminate six
months after the termination of the Merger Agreement.  No such termination shall
relieve the  Stockholder  from any liability in connection  with this  Agreement
incurred prior to such termination. 6. Further Assurances. The Stockholder will,
from time to time,  execute and deliver,  or cause to be executed and delivered,
such additional or further  consents,  documents and other instruments as Parent
may  reasonably  request  for  the  purpose  of  effectively  carrying  out  the
transactions  contemplated  by  this  Agreement.  7.  Successors,   Assigns  and
Transferees Bound. Any successor, assignee or transferee (including a successor,
assignee or transferee as a result of the death of the  Stockholder,  such as an
executor or heir) shall be bound by the terms hereof,  and the Stockholder shall
take any and all actions reasonably necessary to obtain the written confirmation
from  such  successor,  assignee  or  transferee  that it is bound by the  terms
hereof.  8. Remedies.  The Stockholder  acknowledges that money damages would be
both incalculable and an insufficient remedy for any breach of this Agreement by
it, and that any such breach would cause Parent  irreparable harm.  Accordingly,
the Stockholder  agrees that in the event of any breach or threatened  breach of
this Agreement, Parent, in addition to any other remedies at law or in equity it
may have, shall be entitled,  without the requirement of posting a bond or other

<PAGE>

security,  to  equitable  relief,   including  injunctive  relief  and  specific
performance.  9.  Severability.   The  invalidity  or  unenforceability  of  any
provision of this Agreement in any jurisdiction shall not affect the validity or
enforceability of any other provision of this Agreement in such jurisdiction, or
the validity or  enforceability  of any provision of this Agreement in any other
jurisdiction.  If in the good-faith opinion of Parent's independent accountants,
any  provision  hereof would cause the Merger to be  ineligible  for "pooling of
interest"  accounting  treatment,  it  shall be  deemed  to be  ineffective  and
inapplicable.  10.  Amendment.  This Agreement may be amended only by means of a
written  instrument  executed and delivered by both the  Stockholder and Parent.
11.  Governing  Law.  This  Agreement  shall be governed  by, and  construed  in
accordance with, the laws of the State of Delaware,  regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
12. Submission to Jurisdiction.  Each party hereto hereby irrevocably submits in
any suit,  action or proceeding  arising out of or related to this  Agreement or
any of the transactions contemplated hereby to the exclusive jurisdiction of the
courts of the United  States in Delaware and the  jurisdiction  of the courts of
the State of Delaware and waives any and all objections to jurisdiction  that it
may have under the laws of the State of  Delaware  or the United  States and any
claim or objection that any such court is an inconvenient forum. 13. Capitalized
Terms.  Capitalized  terms used in this  Agreement  that are not defined  herein
shall have such meanings as set forth in the Merger Agreement. 14. Counterparts.
For  the  convenience  of  the  parties,  this  Agreement  may  be  executed  in
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together  shall  constitute  one and the same  instrument.  15. No Limitation on
Actions of the  Stockholder  as Director.  In the event the  Stockholder  or its
designee is a director of the Company,  notwithstanding anything to the contrary
in this  Agreement,  nothing in this Agreement is intended or shall be construed
to require  the  Stockholder  or such  designee  to take or in any way limit any
action  that  the  Stockholder  or  such  designee  may  take to  discharge  the
Stockholder's or such designee's fiduciary duties as a director of the Company.




Name:




Number of shares of Company
Common Stock owned on the
date hereof:








Accepted and Agreed to as of the date set forth above:
CONCORD EFS, INC.
By:
        Name:
        Title:






<PAGE>





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