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EXHIBIT 2.13

10795/683876/6


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                      AGREEMENT AND PLAN OF REORGANIZATION

                                      AMONG

                             MICRO FOCUS GROUP PLC,

                                XDB SYSTEMS, INC.

                                       AND

                      THE SHAREHOLDERS OF XDB SYSTEMS, INC.











                                                              DECEMBER 23, 1997
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<PAGE> 2


                                     
                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                 PAGE
     <S> <C>                                                                                      <C>

      1. PLAN OF REORGANIZATION.................................................................     2
         1.1  The Merger     ...................................................................     3
         1.2  Fractional Shares.................................................................     3
         1.3  Escrow Agreement..................................................................     3
         1.4  Stock Options  ...................................................................     4
         1.5  Effects of the Merger.............................................................     5
         1.6  Further Assurances................................................................     5
         1.7  Securities Law Issues.............................................................     5
         1.8  Tax-Free Reorganization...........................................................     5
         1.9  Pooling of Interests..............................................................     6

      2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
           THE SHAREHOLDERS.....................................................................     6
         2.1  Organization and Good Standing; Title.............................................     6
         2.2  Power, Authorization and Validity.................................................     7
         2.3  Capitalization ...................................................................     7
         2.4  Subsidiaries   ...................................................................     8
         2.5  No Conflicts   ...................................................................     8
         2.6  Litigation     ...................................................................     9
         2.7  Company Financial Statements......................................................     9
         2.8  Taxes   ..........................................................................    10
         2.9  Title to Properties...............................................................    10
         2.10 Absence of Certain Changes........................................................    11
         2.11 Agreements and Commitments........................................................    12
         2.12 Intellectual Property.............................................................    14
         2.13 Compliance with Laws..............................................................    15
         2.14 Certain Transactions and Agreements...............................................    16
         2.15 Employees.........................................................................    16
         2.16 Corporate Documents...............................................................    18
         2.17 No Brokers........................................................................    18
         2.18 Disclosure........................................................................    18
         2.19 Books and Records; Bank Accounts..................................................    18
         2.20 Insurance.........................................................................    19
         2.21 Environmental Matters.............................................................    19
         2.22 Customers.........................................................................    20
         2.23 Accounts Receivable; Accounts Payable.............................................    20

      3. REPRESENTATIONS AND WARRANTIES OF PARENT...............................................    20
         3.1  Organization and Good Standing  ..................................................    20
         3.2  Power, Authorization and Validity.................................................    21
         3.3  No Violation of Charter Documents or Laws.........................................    21
         3.4  Disclosure     ...................................................................    21
         3.5  No Brokers     ...................................................................    21
         3.6  Reporting      ...................................................................    22
         3.7  Trading Markets...................................................................    22

                                                      i

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      4. COVENANTS OF THE COMPANY   ............................................................    22
         4.1  Advice of Changes       ..........................................................    22
         4.2  Maintenance of Business ..........................................................    22
         4.3  Conduct of Business     ..........................................................    24
         4.4  Regulatory Approvals    ..........................................................    24
         4.5  Necessary Consents      ..........................................................    24
         4.6  Litigation     ...................................................................    24
         4.7  No Other Negotiations   ..........................................................    24
         4.8  Access to Information   ..........................................................    24
         4.9  Satisfaction of Conditions Precedent..............................................    25
         4.10 Securities Laws   ................................................................    25
         4.11 Notification of Employee Problems.................................................    25
         4.12 Pooling Accounting................................................................    25
         4.13 Audits            ................................................................    25

       5.COVENANTS OF PARENT        ............................................................    25
         5.1  Satisfaction of Conditions Precedent..............................................    26
         5.2  Regulatory Approvals    ..........................................................    26
         5.3  Employee Matters        ..........................................................    26
         5.4  Access to Information   ..........................................................    26
         5.5  Company Tax Refund      ..........................................................    26
         5.6  Parent Stock Listing    ..........................................................    26
         5.7  Parent Options Registration.......................................................    26
         5.8  Parent Reporting        ..........................................................    26

      6. CLOSING MATTERS            ............................................................    27
         6.1  The Closing    ...................................................................    27
         6.2  Exchange of Certificates..........................................................    27

      7. CONDITIONS TO OBLIGATIONS OF THE COMPANY...............................................    28
         7.1  Accuracy of Representations and Warranties........................................    28
         7.2  Covenants      ...................................................................    28
         7.3  Compliance with Law...............................................................    28
         7.4  Government Consents...............................................................    28
         7.5  Documents      ...................................................................    28
         7.6  No Litigation  ...................................................................    28
         7.7  Opinion of Parent's Counsel.......................................................    28
         7.8  Escrow Agreement        ..........................................................    28
         7.9  License Agreement       ..........................................................    28
         7.10 Parent Stock      ................................................................    28

      8. CONDITIONS TO OBLIGATIONS OF PARENT....................................................    29
         8.1  Accuracy of Representations and Warranties........................................    29
         8.2  Covenants; No Material Adverse Change.............................................    29
         8.3  Compliance with Law     ..........................................................    29
         8.4  Government Consents     ..........................................................    29
         8.5  Opinion of the Company's Counsel..................................................    29

                                                    ii

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         8.6  Requisite Approvals     ..........................................................    29
         8.7  No Litigation  ...................................................................    29
         8.8  Documents      ...................................................................    30
         8.9  Investment and Affiliate Letters..................................................    30
         8.10 Escrow Agreement..................................................................    30
         8.11 Non-Competition Agreements........................................................    30
         8.12 License Agreement ................................................................    30
         8.13 Employment Agreements.............................................................    30
         8.14 Due Diligence     ................................................................    30
         8.15 Pooling Opinion   ................................................................    30
         8.16 Closing Balance Sheet.............................................................    30
         8.17 Company Common Stock..............................................................    30
         8.18 Releases          ................................................................    30
         8.19 Audit Opinion     ................................................................    30

      9. TERMINATION............................................................................    31
         9.1  Termination    ...................................................................    31
         9.2  Effect of Termination   ..........................................................    31

    10.   INDEMNIFICATION.......................................................................    32
         10.1 Survival      ....................................................................    32
         10.2 Indemnification   ................................................................    32
         10.3 Procedures........................................................................    33

     11. MISCELLANEOUS     .....................................................................    34
         11.1 Governing Law ....................................................................    34
         11.2 Assignment; Successors and Assigns................................................    34
         11.3 Severability  ....................................................................    34
         11.4 Counterparts  ....................................................................    34
         11.5 Other Remedies....................................................................    34
         11.6 Amendment and Waivers.............................................................    34
         11.7 No Waiver     ....................................................................    35
         11.8 Expenses      ....................................................................    35
         11.9 Notices       ....................................................................    35
         11.10 Construction of Agreement........................................................    36
         11.11 No Joint Venture  ...............................................................    36
         11.12 Further Assurances...............................................................    36
         11.13 Absence of Third Party Beneficiary Rights........................................    37
         11.14 Public Announcement..............................................................    37
         11.15 Confidentiality   ...............................................................    37
         11.16 Time is of the Essence...........................................................    38
         11.17 Entire Agreement  ...............................................................    38
         11.18 Dispute Resolution...............................................................    38

                                                  iii

</TABLE>
                                   

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                                    EXHIBITS


     Exhibit A               Intentionally Omitted

     Exhibit B               Form of Escrow Agreement

     Exhibit C               Form of Non-Competition Agreement

     Exhibit 1.8             Form of Officer Certificates

     Exhibit 5.3             Form of Parent Affiliates Agreement

     Exhibit 7.7             Form of Opinion of Counsel to Parent

     Exhibit 7.9             Form of License Agreement

     Exhibit 8.5             Form of Opinion of Counsel to the Company

     Exhibit 8.9             Form of Investment and Affiliate Letter

     Exhibit 8.9-A           Form of Company Affiliates Agreement

     Exhibit 8.13            Persons Signing Employment Agreements

     Exhibits 8.18           Persons Signing Releases and Form of Release

     Exhibit 10.2.1(C)       Severance Agreements

                                       iv

<PAGE> 6


                      AGREEMENT AND PLAN OF REORGANIZATION


         This AGREEMENT AND PLAN OF REORGANIZATION  (the "Agreement") is entered
into as of  December  23,  1997,  by and among  Micro  Focus Group PLC, a public
limited company  organized under the laws of England and Wales  ("Parent"),  XDB
Systems,  Inc., a Maryland corporation (the "Company"),  and Dr. S. Bing Yao and
Lien Yao (collectively, the "Shareholders").

                                    RECITALS

         A. The  parties  intend  that,  subject  to the  terms  and  conditions
hereinafter  set forth, a new Delaware  corporation  that will be organized as a
wholly-owned subsidiary of Parent ("Newco") will merge with and into the Company
in a reverse  triangular  merger  (the  "Merger"),  with the  Company  to be the
surviving corporation of the Merger, all pursuant to the terms and conditions of
this Agreement,  and an Articles of Merger and a Certificate of Merger,  each in
forms to be agreed by the parties (such  Articles of Merger and  Certificate  of
Merger,  collectively,  the  "Agreement  of  Merger"),  and  the  provisions  of
applicable law. Upon the effectiveness of the Merger, all the outstanding common
stock of the Company,  par value $0.01 per share ("Company Common Stock"),  will
be  converted  into  ordinary  shares of  Parent,  10p  nominal  value per share
("Parent  Stock"),  in the  manner  and on the basis  determined  herein  and as
provided in the Agreement of Merger.

         B. The Merger is  intended  to be treated as a tax-free  reorganization
pursuant to the provisions of Section  368(a)(1)(A) of the Internal Revenue Code
of 1986,  as  amended  (the  "Code"),  by virtue of the  provisions  of  Section
368(a)(2)(E)  of the Code. The Merger is intended to be treated as a "pooling of
interests" for accounting purposes.

         C. Prior to the execution and delivery of this Agreement, (i) the Board
of Directors of the Company  approved and recommended to the  Shareholders  that
they vote in favor of, the Merger,  this Agreement,  the Agreement of Merger and
the  transactions  provided  for  herein  and  therein,  and  (ii)  each  of the
Shareholders,  who, collectively,  own all of the issued and outstanding capital
stock of the Company,  executed and delivered to the Company's  Secretary  their
written consent to the Merger,  this Agreement,  the Agreement of Merger and the
transactions provided for herein and therein.

         D. At the closing of the Merger and the transactions  contemplated  
herein (the "Closing" and, the date of the Closing, the "Closing Date"),

            1. Parent and the  Shareholders  will enter into an Escrow Agreement
in substantially the form of Exhibit B hereto (the "Escrow Agreement"); and

            2. Parent and the Shareholders will enter into Non-Competition
Agreements in substantially  the form of Exhibit C hereto (the  "Non-Competition
Agreement").

            In  consideration  of the foregoing  and the  representations,
warranties,  covenants and agreements set forth in this  Agreement,  the parties
hereto agree as follows:

<PAGE> 7

                  1.       PLAN OF REORGANIZATION

                  1.1 The Merger. The Agreement of Merger will be filed with the
Secretary of State of the State of Delaware and the State of Maryland Department
of  Assessments  and  Taxation as soon as  practicable  after the  Closing.  The
effective  time of the  Merger as  specified  in the  Agreement  of Merger  (the
"Effective  Time") will occur on or before  December 31, 1997,  or on such other
date as the parties  hereto may  mutually  agree upon.  Subject to the terms and
conditions of this Agreement and the Agreement of Merger, at the Effective Time,
Newco will be merged with and into the Company in a statutory merger pursuant to
the Agreement of Merger and in accordance with applicable provisions of Delaware
and Maryland law as follows:

                   1.1.1    Conversion  of Company  Shares.  Each share of 
Company  Common Stock that is issued and  outstanding  immediately  prior to the
Effective  Time will,  by virtue of the Merger and at the  Effective  Time,  and
without further action on the part of any holder thereof, be converted into that
number  of fully  paid and  nonassessable  shares of Parent  Stock  obtained  by
multiplying each such share of Company Common Stock by the Exchange Ratio.

                   1.1.2    Definitions.  The  "Exchange  Ratio"  equals  the  
quotient  obtained by  dividing  (A) the  quotient of (x) the Total  Acquisition
Price divided by (y) the Closing Price by (B) the sum of the aggregate number of
shares of Company Common Stock issued and  outstanding at the Effective Time and
the  aggregate  number of shares  of  Company  Common  Stock  issuable  upon the
exercise  of Company  Options  (as  defined in  Section  1.4) which are  issued,
outstanding, vested and fully exercisable at the Effective Time.

The "Total  Acquisition  Price"  equals  $13,355,000,  subject to the  following
adjustments based upon the balance sheet of the Company as of December 31, 1997,
as adjusted by the items set forth on the schedule of closing  adjustments to be
delivered  by the Company to Parent not less than three  business  days prior to
the Closing Date (such schedule,  the "Schedule of Closing Adjustments" and, the
December  31,  1997  balance  sheet,  as  adjusted  by the  Schedule  of Closing
Adjustments, the "Closing Balance Sheet"):

         (i)  plus  $2,842,950  (the  sum of "cash  and  cash  equivalents"  and
"investments" as shown on the unaudited  balance sheet of the Company as of July
31, 1997 (the  "Baseline  Balance  Sheet"),  a copy of which is attached as Item
1.1.2(i) of the Company Disclosure Letter;

         (ii) plus (if such  amount  is  positive)  or minus (if such  amount is
negative)  the  lesser  of (A)  the  sum of  "cash  and  cash  equivalents"  and
"investments"  on the  Closing  Balance  Sheet  minus  the sum of "cash and cash
equivalents" and  "investments" on the Baseline Balance Sheet, or (B) the sum of
working capital (total current assets less total current liabilities,  exclusive
of deferred  taxes and the amount of the  Company Tax Refund) and  "investments"
shown  on the  Closing  Balance  Sheet  minus  the sum of  working  capital  and
"investments"   shown  on  the  Baseline  Balance  Sheet.   Notwithstanding  the
foregoing, the amount determined pursuant to clause (A) of this subsection shall
be increased by any amounts  payable by Parent or any of its  affiliates  to the
Company which are contractually owing and overdue as of the Closing Date.

         (iii) plus the amount of the net U.S. Internal Revenue Service federal,
Maryland, New Jersey,  Virginia,  California and New Hampshire state tax refunds
due to the  Company as shown on the Closing  Balance  Sheet  (collectively,  the
"Company  Tax  Refund")  less any costs and  expenses  incurred  by the  Company

                                       2

<PAGE> 8

between July 31, 1997 and the Closing  Date in obtaining  payment of the Company
Tax Refund;

         (iv) minus the amount of any  employee  bonus  obligations  accrued but
unpaid by the Company as of the Closing  Date or which shall vest in  connection
with the Closing, as shown on the Closing Balance Sheet.

The "Closing  Price" equals the average  middle market price per share of Parent
Stock as derived from the Stock  Exchange Daily  Official List  (converted  into
United  States  dollars at the "Noon Buying Rate" as  determined  by the Federal
Reserve  Bank of New York on each trading  day) for the 30  consecutive  trading
days ending with and including the fourth trading day immediately  preceding the
Closing Date.

              1.1.3    Adjustments  for  Capital  Changes.  If  prior  to  the  
Merger, Parent recapitalizes either through a split-up of its outstanding shares
of  Parent  Stock  into a  greater  number,  or  through  a  combination  of its
outstanding  shares  into a  lesser  number,  or  reorganizes,  reclassifies  or
otherwise changes its outstanding  shares into the same or a different number of
shares of other classes  (other than through a split-up or combination of shares
provided for in the previous clause),  or declares a dividend on its outstanding
shares payable in shares or securities  convertible into shares, the calculation
of the Exchange Ratio shall be adjusted appropriately.

            1.1.4    Conversion of Newco Shares.  Each share of Newco Common 
Stock,  par value $0.01 per share  ("Newco  Common  Stock"),  that is issued and
outstanding  immediately  prior to the  Effective  Time  will,  by virtue of the
Merger and without further action on the part of the sole  stockholder of Newco,
be  converted  into and become one share of Company  Common Stock that is issued
and outstanding  immediately after the Effective Time, and the shares of Company
Common Stock into which the shares of Newco Common Stock are so converted  shall
be the only  shares of Company  Common  Stock  that are  issued and  outstanding
immediately after the Effective Time.

                  1.2 Fractional  Shares.  No fractional  shares of Parent Stock
will be issued in connection with the Merger, but in lieu thereof, the holder of
any shares of Company Common Stock who would  otherwise be entitled to receive a
fraction of a share of Parent Stock will receive from Parent, promptly after the
Effective  Time, an amount of cash equal to the Closing Price  multiplied by the
fraction of a share of Parent  Stock to which such  holder  would  otherwise  be
entitled.

                  1.3 Escrow Agreement. Pursuant to the Escrow Agreement, on the
Closing  Date,  Parent will (i)  withhold,  pro rata,  from the shares of Parent
Stock that would  otherwise be delivered to the  Shareholders a number of shares
equal to (A) 10% of the total number of shares of Parent Stock issued to them in
the Merger plus (B) a number of shares of Parent  Stock  equal to the  aggregate
amount of the potential  Company tax  liabilities set forth on Exhibit 1.3 (such
amount,  the  "Company Tax  Exposure")  divided by the Closing  Price,  and (ii)
deposit or cause to be deposited in escrow certificates  representing the shares
thus withheld.  The shares of Parent Stock withheld pursuant to this Section 1.3
(the  "Escrow  Shares")  will be held,  with  respect  to (A)  above,  solely as
collateral for the indemnification obligations of the Shareholders under Section
10.2.1  and,  with  respect  to  (B)  above,   solely  as  collateral   for  the

                                       3

<PAGE> 9

indemnification  obligations of the Shareholders with respect to the Company Tax
Exposure, in each case pursuant to the Escrow Agreement.

                  1.4 Stock Options. (a) At the Effective Time, each of the then
outstanding  Company  Options  shall by virtue of the  Merger,  and  without any
further  action on the part of any  holder  thereof,  be  assumed  by Parent and
converted  into an option to subscribe for that number of shares of Parent Stock
(a "Parent  Option")  obtained  by  multiplying  the number of shares of Company
Common Stock  underlying  each such Company Option by the Exchange Ratio. If the
foregoing  calculation  results  in a  Parent  Option  being  exercisable  for a
fraction of a share of Parent  Stock,  then the number of shares of Parent Stock
subject to such  option  shall be rounded  down to the nearest  whole  number of
shares.  The exercise price of each Parent Option shall be equal to the exercise
price of the Company Option from which such Parent Option was converted  divided
by the Exchange  Ratio,  rounded to the nearest whole cent.  Except as otherwise
set forth in this  Section  1.4,  the term and  vesting  schedule,  status as an
"incentive  stock option" under Section 422 of the Code, if applicable,  and all
other terms and conditions of Company  Options will, to the extent  permitted by
law and  otherwise  reasonably  practicable,  be  unchanged.  An  optionholder's
continuous  employment  with the Company  shall be credited as  employment  with
Parent for purposes of vesting of the Parent Options. Other than Company Options
which shall become vested and exercisable  pursuant to  acceleration  provisions
not entered into in contemplation of the Merger, no Company Options shall become
vested or exercisable  solely as a result of the Merger.  The Company will take,
or cause to be taken, all actions which are necessary, proper or advisable under
the Stock Plans to make effective the transactions  contemplated by this Section
1.4. Item 1.4(a) of the Company Disclosure Letter (as hereinafter  defined) sets
forth the name of each holder of Company  Options,  the  exercise  price of such
holder's  Company  Options,  and the  number of shares of Company  Common  Stock
underlying such holder's  Company Options which are (i) currently  vested,  (ii)
will vest upon the Closing, and (iii) will be unvested immediately following the
Closing,  and for the Company Options  described in clause (iii),  the remaining
vesting periods and  percentages  for such options.  The assumption by Parent of
the Company  Options and their  conversion  into Parent Options by virtue of the
Merger is an  obligation of Parent  pursuant to the Merger and the  transactions
contemplated by this Agreement.

"Company Options" means any option granted,  and not exercised or expired,  to a
current or former employee, director or independent contractor of the Company or
any of its  subsidiaries or any predecessor  thereof to purchase  Company Common
Stock pursuant to any stock option,  stock bonus,  stock award or stock purchase
plan,  program or arrangement of the Company or any of its  subsidiaries  or any
predecessor thereof  (collectively,  the "Stock Plans") or any other contract or
agreement entered into by the Company or any of its subsidiaries.

                  (b)  Parent  shall  take all  corporate  action  necessary  to
reserve for issuance a sufficient  number of shares of Parent Stock for delivery
pursuant to the terms set forth in this Section 1.4. Parent shall promptly cause
the shares of Parent Stock issuable upon exercise of the assumed Company Options
to be  registered,  or to be issued  pursuant to a then  effective  registration
statement on Form S-8 promulgated by the U.S. Securities and Exchange Commission
("SEC")  and shall use all  commercially  reasonable  efforts  to  maintain  the
effectiveness of such registration  statement or registration  statements for so
long as such Parent Options remain outstanding.

                                       4

<PAGE> 10

                  1.5  Effects of the Merger.  At the  Effective  Time:  (a) the
separate  existence  of Newco will cease and Newco will be merged  with and into
the Company and the Company will be the  surviving  corporation  pursuant to the
terms of the Agreement of Merger;  (b) the Articles of Incorporation  and Bylaws
of the Company will  continue  unchanged as the  Articles of  Incorporation  and
Bylaws of the  surviving  corporation;  (c) each share of Company  Common  Stock
outstanding  immediately  prior  to the  Effective  Time  will be  converted  as
provided in this  Section 1; (d) each share of Newco  Common  Stock  outstanding
immediately  prior to the  Effective  Time will be converted as provided in this
Section 1; (e) the Board of  Directors  and  executive  officers  of Parent will
remain unchanged, the directors of Newco immediately prior to the Effective Time
will become the  directors of the Company and the officers of Newco  immediately
prior to the Effective Time will become the officers of the Company; and (f) the
Merger will, at and after the Effective Time,  have all of the effects  provided
by applicable law.

                  1.6 Further  Assurances.  The  Company  agrees that if, at any
time after the Effective Time,  Parent  considers or is advised that any further
deeds,  assignments or assurances are reasonably necessary or desirable to vest,
perfect or confirm in Parent  title to any  property or rights of the Company as
provided  herein,  Parent and any of its officers are hereby  authorized  by the
Company to execute and deliver all such proper deeds, assignments and assurances
and do all other things necessary or desirable to vest, perfect or confirm title
to such  property or rights in Parent and otherwise to carry out the purposes of
this Agreement, in the name of the Company or otherwise.

                  1.7  Securities  Law  Issues.   Based  in  part  on  the  
representations  and covenants of the  Shareholders  set forth in the Investment
and  Affiliate  Letters  delivered  by the  Shareholders  to Parent  pursuant to
Section 8.9, the Parent Stock to be issued in the Merger will be issued pursuant
to an exemption  from  registration  under Section 4(2) of the Securities Act of
1933, as amended (the "Securities  Act") and/or  Regulation D promulgated  under
the Securities Act and applicable state securities laws.

                 1.8 Tax-Free Reorganization.  The parties intend to adopt this
Agreement as a tax-free plan of  reorganization  and to consummate the Merger in
accordance with the provisions of Section 368(a)(1)(A) of the Code, by virtue of
the provisions of Section  368(a)(2)(E)  of the Code. The shares of Parent Stock
issued in the  Merger  will be issued  solely in  exchange  for the  issued  and
outstanding  shares of Company Common Stock pursuant to this  Agreement,  and no
other transaction other than the Merger represents,  provides for or is intended
to be an adjustment to the consideration  paid for Company Common Stock.  Except
for  cash  paid  in lieu of  fractional  shares,  no  consideration  that  could
constitute  "other  property" within the meaning of Section 356 of the Code will
be paid by Parent for shares of Company Common Stock in the Merger. In addition,
Parent represents that it presently  intends,  and that at the Effective Time it
will intend,  to continue the Company's  historic  business or use a significant
portion of the Company's business assets in a business. At the Closing, officers
of Parent and  officers  of the  Company  will  execute  and  deliver  officers'
certificates  in the forms of Exhibits  1.8, and the  representations  and other
statements  set  forth  therein  are  incorporated  in  this  Agreement  by this
reference to the same extent as if Parent or the Company, respectively, had made
such statements herein.

                  1.9 Pooling of Interests.  The parties  intend that the Merger
be treated as a "pooling of interests" for accounting purposes.

                                       5

<PAGE> 11

     2.    REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS

                  The Company and the Shareholders  hereby represent and warrant
to Parent that, as of the date hereof and the Closing Date,  except as set forth
in the Company disclosure letter delivered by the Company to Parent prior to the
execution of this Agreement (the "Company Disclosure  Letter"),  including items
in the Company Disclosure Letter referred to as "Items" below:

                  2.1      Organization and Good Standing; Title.

                           2.1.1 The Company is a  corporation  duly  organized,
validly  existing and in good standing  under the laws of the State of Maryland,
has the requisite  corporate  power and authority to own,  operate and lease its
properties  and to carry on its business as now conducted and is duly  qualified
or licensed as a foreign  corporation (or will be so qualified or licensed as of
the  Closing  Date)  in each  jurisdiction  listed  on Item  2.1,  which is each
jurisdiction  in which the nature of its business  makes such  qualification  or
licensing necessary.  Each subsidiary of the Company is a corporation or similar
entity duly organized,  validly  existing and in good standing under the laws of
the  jurisdiction  in  which  it was  organized,  has the  requisite  power  and
authority to own,  operate and lease its properties and to carry on its business
as now conducted and is duly qualified or licensed in each  jurisdiction  listed
on Item 2.1,  which is each  jurisdiction  in which the  nature of its  business
makes such qualification or licensing necessary,  except where the failure to be
so  qualified  or  licensed  would  not have a  material  adverse  effect on the
Company. The Company has heretofore delivered to Parent true and complete copies
of its  certificate  of  incorporation  and  bylaws and the  equivalent  charter
documents of each of its subsidiaries as currently in effect.

                           2.1.2    Each  Shareholder  owns and  holds  good and
valid title to the Company Common Stock to be converted in the Merger,  free and
clear of any pledges, claims, liens, charges,  encumbrances,  security interests
of any kind or nature whatsoever and free of any other limitation or restriction
(including any  restriction on the right to vote,  sell or otherwise  dispose of
such Company Common  Stock).  Each  Shareholder  has no interest or right in the
equity or assets of the  Company  other than the Company  Common  Stock owned by
such Shareholder to be converted in the Merger.  The  Shareholders  together own
all of the issued and  outstanding  capital stock of the Company,  except for 10
shares of Company Common Stock owned by Jamie MacDonald, which is owned free and
clear of any pledges, claims, liens, charges,  encumbrances,  security interests
of any kind or nature whatsoever and free of any other limitation or restriction
(including any  restriction on the right to vote,  sell or otherwise  dispose of
such Company Common Stock).

                  2.2      Power, Authorization and Validity.

                           2.2.1    The Company has the  corporate  right, power
and authority to enter into and perform its obligations under this Agreement and
all  agreements  to which the Company is or will be a party that are required to
be executed pursuant to this Agreement (the "Company Ancillary  Agreements") and
the transactions contemplated hereby and thereby. This Agreement and the Company
Ancillary  Agreements  have been duly and validly  authorized  by all  necessary
corporate action on the part of the Company, including,  without limitation, the
requisite  approval  of  the  Company's  stockholders  in  connection  with  the
consummation of the Merger. Each Shareholder has the legal power and capacity to

                                       6

<PAGE> 12

enter into and  perform  his or her  obligations  under this  Agreement  and all
agreements to which such  Shareholder is or will be a party that are required to
be executed pursuant to this Agreement (the "Shareholder  Ancillary Agreements")
and the transactions contemplated hereby and thereby.

                           2.2.2    No filing,  authorization  or approval,  
governmental   or  otherwise,   is  necessary  to  enable  the  Company  or  the
Shareholders to enter into, and to perform their respective  obligations  under,
this Agreement,  the Company Ancillary Agreements and the Shareholder  Ancillary
Agreements,  except  for (a) the  filing of the  Agreement  of  Merger  with the
Secretary of State of the State of Delaware and the State of Maryland Department
of Assessments and Taxation, the filing of such officers' certificates and other
documents as are required to effectuate  the Merger under  Delaware and Maryland
law and the filing of appropriate documents with the relevant authorities of the
states in which the Company is qualified to do business, (b) such filings as may
be required  to comply  with  federal  and state  securities  laws,  (c) filings
required  under the  Hart-Scott-Rodino  Antitrust  Improvements  Act of 1976, as
amended,  and the  rules and  regulations  thereunder  (the  "HSR  Act") and (d)
consents  required  under  agreements set forth in Item 2.5 as exceptions to the
representation made in the last sentence of Section 2.5.

                           2.2.3    This  Agreement  and  the  Company Ancillary
Agreements  are, or when  executed  and  delivered  by the Company and the other
parties  thereto  will  be,  valid  and  binding   obligations  of  the  Company
enforceable  against  the Company in  accordance  with their  respective  terms,
except as to the effect, if any, of (a) applicable  bankruptcy and other similar
laws affecting the rights of creditors  generally and (b) rules of law governing
specific performance,  injunctive relief and other equitable remedies; provided,
however,  that the Company Ancillary  Agreements will not be effective until the
Effective Time. This Agreement and the Shareholder  Ancillary Agreements are, or
when executed and delivered by the respective Shareholders and the other parties
thereto will be, valid and binding obligations of such Shareholders  enforceable
against such Shareholders in accordance with their respective  terms,  except as
to the effect,  if any, of (a)  applicable  bankruptcy  and other  similar  laws
affecting  the  rights of  creditors  generally  and (b) rules of law  governing
specific performance,  injunctive relief and other equitable remedies; provided,
however,  that the Shareholder  Ancillary Agreements will not be effective until
the Effective Time.

                  2.3      Capitalization.

                           2.3.1    Authorized/Outstanding  Capital Stock.  The
authorized capital stock of the Company consists of 10,000,000 shares of Company
Common  Stock.   5,100,010  shares  of  Company  Common  Stock  are  issued  and
outstanding  as of this date and as of the  Closing  Date.  The  Company  has no
preferred stock  authorized,  issued or outstanding.  All issued and outstanding
shares of Company Common Stock have been duly authorized and validly issued, are
fully paid and  nonassessable,  are not subject to any right of rescission,  and
have been offered,  issued, sold and delivered by the Company in compliance with
all  registration  or  qualification   requirements  (or  applicable  exemptions
therefrom) of applicable federal and state securities laws.

                           2.3.2    Options/Rights.  Company  Options in respect
of 624,350 shares of Company Common Stock are issued and  outstanding as of this
date and as of the  Closing  Date,  of which  565,278  shall be vested and fully
exercisable at the Effective Time. There are no other stock appreciation rights,
options,  warrants,  conversion  privileges  or  preemptive  or other  rights or

                                       7

<PAGE> 13

agreements  outstanding  to purchase or otherwise  acquire any of the  Company's
authorized  but  unissued  capital  stock;  there  are  no  options,   warrants,
conversion  privileges  or preemptive or other rights or agreements to which the
Company is a party involving the purchase or other  acquisition of any shares of
the Company  capital  stock;  there is no liability  for  dividends  accrued but
unpaid; and there are no voting agreements, registration rights, rights of first
refusal or other restrictions  (other than normal restrictions on transfer under
applicable federal and state securities laws) applicable to any of the Company's
outstanding securities. Other than the Company Options which shall become vested
and  exercisable  pursuant  to  acceleration  provisions  not  entered  into  in
contemplation  of the  Merger  and which are set forth in Item 2.3,  no  Company
Options  shall become  vested or  exercisable  solely as a result of the Merger.
There are no  bonds,  debentures,  notes or other  indebtedness  of the  Company
having the right to vote (or convertible into, or exchangeable  for,  securities
having the right to vote) on any matters which  shareholders  of the Company may
vote.

                  2.4 Subsidiaries. Set forth in Item 2.4 is a true, correct and
complete list of each subsidiary of the Company and its respective  jurisdiction
of  organization.  All of the issued and outstanding  shares of capital stock of
each such  subsidiary have been duly authorized and validly issued and are fully
paid and  nonassessable  and are  owned  by the  Company  free and  clear of all
pledges, claims, liens, charges, encumbrances and security interests of any kind
or nature whatsoever and free of any other limitation or restriction  (including
any restriction on the right to vote, sell or otherwise  dispose of such capital
stock).  Except for the capital stock of its subsidiaries,  the Company does not
own,   directly  or  indirectly,   any  equity  interest  in  any   corporation,
partnership,  joint venture or other business entity.  XDB Systems Bejing,  Ltd.
has no  liabilities  or  obligations;  it is  currently  in the process of being
liquidated by the Company,  and such  liquidation  will not cause the Company or
Parent any present or future liability.

                  2.5 No  Conflicts.  Neither the execution and delivery of this
Agreement,   any  Company  Ancillary  Agreement  or  any  Shareholder  Ancillary
Agreement,  nor the  consummation  of the  transactions  provided  for herein or
therein,  will conflict  with,  or (with or without  notice or lapse of time, or
both) result in a  termination,  breach,  impairment  or  violation  of, (a) any
provision of the Articles of Incorporation,  Bylaws or similar charter documents
of the Company or any of its subsidiaries as currently in effect,  (b) any note,
bond, lease, mortgage, indenture, license, franchise, permit, agreement or other
instrument  or  obligation to which the Company,  any of its  subsidiaries  or a
Shareholder  is a party or by which the Company,  any of its  subsidiaries  or a
Shareholder is bound or affected (which conflict, termination, breach impairment
or  violation  would  have a  material  adverse  effect on the  Company  and its
subsidiaries as a whole), (c) to the Company's or a Shareholder's knowledge, any
federal, state, local or foreign judgment, writ, decree, order, statute, rule or
regulation  applicable to the Company or any of its subsidiaries or any of their
respective assets or properties. The consummation of the Merger will not require
the consent of any third party and will not adversely affect any of the material
rights, licenses,  franchises, leases or agreements of the Company or any of its
subsidiaries pursuant to their terms other than as set forth in Item 2.5.

                  2.6  Litigation.  Except as set forth in Item 2.6, there is no
action,  proceeding  or  investigation  pending  or,  to  the  Company's  or any
Shareholder's knowledge, threatened against the Company, any of its subsidiaries
or any Shareholder before any court or administrative agency that, if determined
adversely to the Company,  such subsidiary or such Shareholder,  would adversely
affect the present or future operations or financial condition of the Company or

                                       8

<PAGE> 14

such  subsidiary  or in which the  adverse  party or parties  seek to recover in
excess of  $10,000.  Except as set forth on Item 2.6,  there is no basis for any
person, firm, corporation or entity to assert a claim against the Company or any
of its  subsidiaries  or Parent as  successor  in interest to the Company  based
upon:  (a) ownership or rights to ownership of any shares of the Company  Common
Stock or the  capital  stock of any of its  subsidiaries,  (b) any  rights  as a
securities holder of the Company or any of its subsidiaries,  including, without
limitation,  any option or other right to acquire any  securities of the Company
or any of its subsidiaries,  any preemptive rights or any rights to notice or to
vote regarding such  securities,  or (c) any rights under any agreement  between
the  Company  or any of its  subsidiaries  and any  securities  holder or former
securities  holder of the Company or any of its  subsidiaries  in such  holder's
capacity as such.

                  2.7 Company Financial Statements. The Company has delivered to
Parent as Item 2.7 the Company's (i) Baseline  Balance Sheet as of July 31, 1997
(the "Balance Sheet Date") and (ii)  unaudited  balance sheets as of October 31,
1997, and income statement for the nine-month  period then ended (such financial
statements,  together with the Closing  Balance  Sheet,  the "Company  Financial
Statements").  Except as set forth in Item 2.7, the Company Financial Statements
have been prepared according to U.S. generally  accepted  accounting  principles
consistent with prior periods. The balance sheets of the Company as at the dates
set  forth  present  fairly  the  financial  position  of the  Company  and  its
subsidiaries  as at such dates,  and the related  statements  of the Company for
each of the respective  specified  periods then ended present fairly the results
of operations  of the Company and its  subsidiaries  for each of the  respective
periods then ended. For the purposes of this Agreement, all financial statements
referred  to in this  paragraph  shall  include any notes or  schedules  to such
financial  statements.  Except as set forth in Item 2.7, neither the Company nor
any of its  subsidiaries  has any material debt,  liability or obligation of any
nature, whether accrued,  absolute,  contingent or otherwise, and whether due or
to become due,  that is not  reflected,  reserved  against or  disclosed  in the
Company Financial Statements.  The Schedule of Closing Adjustments will be, upon
delivery by the Company to Parent, a true,  correct and complete list of (i) all
bonus or incentive payments,  or any other compensation in any form due, payable
or transferable to an officer, director,  employee or shareholder of the Company
or any other person or entity, the entitlement to which or the payment of which,
is  triggered  by,  or  arises  out  of,  the  Merger,  this  Agreement  or  the
transactions  contemplated  hereby,  and (ii) all fees,  costs,  commissions  or
expenses  incurred  by the  Company  or  the  Shareholders  (including,  without
limitation,  those of counsel,  accountants,  investment  bankers,  and brokers)
incurred by the Company or the Shareholders in connection with or arising out of
the Merger,  this Agreement or the  transactions  contemplated  hereby ("Company
Fees").

                  2.8 Taxes.  Except as set forth in Item 2.8,  the  Company and
each of its subsidiaries has filed all federal, state, local and foreign tax and
information  returns and reports  required to be filed prior to the date hereof,
has paid all taxes  required to be paid in respect of all  periods  prior to the
date hereof for which returns have been filed, has made all necessary  estimated
tax  payments,  and has no liability  for taxes in excess of the amount so paid,
except to the extent  adequate  reserves  have been  established  in the Company
Financial  Statements.  Except as set forth in Item 2.8,  all such  returns  and
reports are and will be true,  correct and  complete in all  material  respects.
True,  correct and complete copies of all such tax and information  returns have
been provided or made available by the Company to Parent. Except as set forth in
Item 2.8,  neither the Company nor any of its  subsidiaries is delinquent in the
payment of any tax or in the filing of any tax returns,  and no deficiencies for
any tax have been threatened,  claimed, proposed or assessed which have not been
settled or paid.  Except as set forth in Item 2.8,  no tax return of the Company

                                       9

<PAGE> 15

or any of its subsidiaries has ever been audited by the Internal Revenue Service
or any state or other national  taxing agency or authority.  For the purposes of
this Section 2.8, the terms "tax" and "taxes" include all federal,  state, local
and foreign income, gains, franchise,  excise, property, sales, use, employment,
license,  payroll,  occupation,   recording,  value  added  or  transfer  taxes,
governmental  charges,  fees, levies or assessments (whether payable directly or
by withholding),  and, with respect to such taxes,  any estimated tax,  interest
and  penalties or additions to tax and interest on such  penalties and additions
to tax.  Neither  the  Company  nor any of its  subsidiaries  has any current or
deferred  federal income tax  liabilities and will not as a result of the Merger
become liable for any income tax not adequately  reserved against on the Company
Financial Statements.  Neither the Company nor any of its subsidiaries has filed
a consent  pursuant to Section  341(f) of the Code. To the best of the Company's
and the Shareholders'  knowledge and belief,  the Company is entitled to collect
the full amount of the Company Tax Refund.

                  2.9 Title to  Properties.  The Company has good and marketable
title to, or a valid  leasehold  interest in, as  applicable,  all of the assets
reflected  on the  Company  Financial  Statements,  free and clear of all liens,
mortgages,  pledges, charges or encumbrances of any kind other than as set forth
on Item 2.9 or which are subject to  capitalized  leases.  Item 2.9 sets forth a
list and brief  description of all material personal property owned or leased by
the Company and its subsidiaries.  Except as set forth in Item 2.9, there are no
UCC or other  financing  statements  on record with the State of Maryland or any
other authority  naming the Company or any of its  subsidiaries as debtor.  Such
assets (A) are in all material respects in good operating  condition and repair,
normal  wear  and  tear  excepted,  and (B)  constitute  all of the  properties,
interests,  assets  and  rights  held  for use or used in  connection  with  the
business  of the  Company  and  constitute  all those  reasonably  necessary  to
continue  to  operate  the  business  of the  Company  consistent  with  current
practice. All leases of real or personal property to which the Company or any of
its  subsidiaries  is a party  are,  to the  Company's  and  each  Shareholder's
knowledge,  fully effective and afford the Company or such  subsidiary  peaceful
and  undisturbed  possession  of the  subject  matter of the lease.  Neither the
Company nor any of its subsidiaries owns any real property. To the Company's and
the Shareholders' knowledge,  neither the Company nor any of its subsidiaries is
in  violation  of  any  material  zoning,  building,   safety  or  environmental
ordinance,  regulation or requirement  or other law or regulation  applicable to
the operation of owned or leased properties,  and neither the Company nor any of
its subsidiaries has received any notice of such violation with which it has not
complied or had waived.

                  2.10 Absence of Certain Changes. Since the Balance Sheet Date,
the Company has carried on its business in the ordinary course  substantially in
accordance  with the  procedures  and  practices in effect on the Balance  Sheet
Date,  and except as set forth in Item 2.10,  since the Balance Sheet Date there
has not been with respect to the Company or any of its subsidiaries:

                       (a)    any  material  adverse  change in the  financial  
condition, properties, assets, liabilities, customer contracts or other customer
arrangements, business or results of operations;

                       (b     any contingent  liability incurred as guarantor or
surety with respect to the obligations of others;

                       (c)     any mortgage, encumbrance or lien placed on any 
of its properties;

                                       10

<PAGE> 16

                       (d)     any  material  obligation  or liability (whether
absolute,  accrued,  contingent or otherwise,  and whether due or to become due)
incurred other than in the ordinary  course of business  (including  obligations
under customer contracts and current obligations);

                       (e)     any  purchase or sale or other  disposition,  or 
any agreement or other arrangement for the purchase,  sale or other disposition,
of any of its properties or assets other than in the ordinary course of business
or in nonmaterial amounts;

                       (f)    any damage,  destruction  or loss,  whether or not
covered by  insurance, materially and adversely affecting its properties, assets
or business;

                       (g)     any declaration, setting  aside or payment of any
dividend on, or the making of any other  distribution in respect of, the capital
stock of the  Company or any of its  subsidiaries,  any split,  stock  dividend,
combination  or  recapitalization  of the capital stock of the Company or any of
its  subsidiaries  or any  direct  or  indirect  redemption,  purchase  or other
acquisition  by the Company or any of its  subsidiaries  of the capital stock of
the Company or any of its subsidiaries;

                       (h)     any labor  dispute  or claim of  material  unfair
labor practices,  any change in the compensation payable or to become payable to
any of the Company's or any of its subsidiaries' officers,  employees or agents,
or any  bonus  payment  or  arrangement  made to or with  any of such  officers,
employees or agents  (except as previously  disclosed in writing to and approved
in writing by Parent) other than normal  annual  raises in accordance  with past
practice  or any  bonus  payment  or  arrangement  made to or  with  any of such
officers,  employees  or  agents  other  than  normal  bonuses  or  compensation
increases noted on Item 2.10(h) hereof or other  arrangements made in accordance
with past practices;

                       (i)     any change with respect to its  management,  
supervisory,  development or other key personnel (the  management,  supervisory,
development and other key personnel of the Company and each of its  subsidiaries
are listed on Item 2.10(i) hereof);

                       (j)     any payment or discharge of a material lien or 
liability, which lien or liability was not either (i) shown on the balance sheet
as of the Balance  Sheet Date  included in the Company  Financial  Statements or
(ii) incurred in the ordinary course of business after the Balance Sheet Date;

                       (k)    any  obligation  or  liability  incurred  by  the
Company  or any of its  subsidiaries  to  any  of  its  officers,  directors  or
shareholders,  or any loans or advances made to any of its officers,  directors,
shareholders or affiliates,  except normal  compensation and expense  allowances
payable to officers;

                       (l)    any cancellation of any debts or claims or any 
amendment, termination or waiver of any rights of value to the Company or any of
its subsidiaries in excess of $10,000 in the aggregate;

                       (m)    any  payment,  discharge  or  satisfaction  of any
claim or  obligation, except in the ordinary course of business;

                                       11

<PAGE> 17

                       (n)    any  dividend,   distribution  or  other  action  
transferring  from  the  Company's  funds,  or any  reduction  of the  Company's
interest in, any of the  compensation  received by the Company in respect of the
licensing of Company Intellectual Property to Sand Technology;

                       (o)    any  agreement or action not  otherwise  referred 
to in items (a) through (n) above  entered into or taken that is material to the
Company and its subsidiaries, taken as a whole; or

                       (p)    any  agreement, whether in writing  or  otherwise,
to take any of the actions specified in the foregoing items (a) through (o).

                  2.11 Agreements and  Commitments.  Except as set forth in Item
2.11,  neither the Company nor any of its  subsidiaries is a party or subject to
any oral or written  agreement,  obligation  or  commitment,  including  but not
limited to the following:

                       (a)   Any  agreement,  commitment, letter  agreement, 
quotation or purchase order entered into on or after February 1, 1990, providing
for payments by or to the Company or its  subsidiaries in an aggregate amount of
$20,000 or more with  respect to any one party  (other  than  agreements  of the
types described in Section 2.11(b));

                      (b)(i)   Any license  agreement  entered into on or after
November  30,  1994  under  which the  Company or any of its  subsidiaries  is a
licensor,   including,   without   limitation,   any  licenses  of  the  Company
Intellectual  Property (as defined in Section  2.12),  pursuant to the Company's
standard forms of license agreement;

                         (ii)  Any license agreement (other than those disclosed
pursuant  to  Section  2.11(b)(i))  under  which  the  Company  or  any  of  its
subsidiaries is a licensor,  including,  without limitation, any licenses of the
Company  Intellectual  Property  (as  defined in Section  2.12),  providing  for
payments  by or to the Company or its  subsidiaries  in an  aggregate  amount of
$50,000 or more with respect to any one party;

                         (iii)  Any license agreement  under  which the  Company
or any of its  subsidiaries  is a licensee  (except for standard  "shrink  wrap"
licenses for off-the-shelf  software products),  including,  without limitation,
any licenses of the Company Intellectual Property (as defined in Section 2.12);

                     (c)    Any  agreement  by  the  Company  or  any  of  its  
subsidiaries to encumber,  transfer or sell rights in or with respect to any the
Company  Intellectual  Property,  other than licenses  which have been disclosed
under Section 2.11(b);

                     (d)    Any agreement  entered into on or after  February 1,
1990 for the sale or lease of real or personal property involving more than 
$10,000 per year;

                     (e)    Any  dealer,  distributor,   sales  representative,
original  equipment manufacturer,  value added remarketer or other agreement for
the distribution of the Company's products entered into on or after February 1, 
1990;

                                       12

<PAGE> 18

                     (f)    Any franchise agreement or financing statement;
                     
                     (g)    Any stock redemption or purchase agreement;

                     (h)(i)   Any joint venture  agreement or arrangement or any
other  agreement  that  involves a sharing of profits with other  persons or the
payment of royalties to any other  person,  which  agreement or  arrangement  is
currently of any force or effect;

                        (ii)    Any  joint  venture   agreement  or  arrangement
or any other  agreement  entered into or commenced on or after  February 1, 1990
that  involves  a sharing  of  profits  with  other  persons  or the  payment of
royalties to any other person,  whether or not such  agreement or arrangement is
currently  of any  force  or  effect  (other  than  agreements  or  arrangements
disclosed pursuant to Section 2.11(h)(i));

                    (i)(i)   Any  instrument  evidencing   indebtedness   for  
borrowed money by way of direct loan,  sale of debt  securities,  purchase money
obligation,  conditional sale, guarantee or otherwise, which is currently of any
force or effect, except for trade indebtedness or any advance to any employee of
the Company or any of its  subsidiaries  incurred or made in the ordinary course
of business, and except as disclosed in the Company Financial Statements;

                        (ii)    Any  instrument  evidencing  indebtedness  for 
borrowed money by way of direct loan,  sale of debt  securities,  purchase money
obligation,  conditional sale, guarantee or otherwise,  entered into on or after
February 1, 1990,  except for trade  indebtedness or any advance to any employee
of the  Company  or any of its  subsidiaries  incurred  or made in the  ordinary
course of business, and except as disclosed in the Company Financial Statements,
whether or not such  instrument  is currently of any force or effect (other than
instruments disclosed pursuant to Section 2.11(i)(i));

                   (j)  Any agreement  containing  covenants purporting to limit
the  Company's  or any of its  subsidiaries'  freedom  to compete in any line of
business in any geographic area;

                   (k)  Any agreement  which is currently of any force or effect
relating to the employment or compensation of any director,  officer,  employee,
consultant or other agent of the Company or any of its subsidiaries;

                   (l)  Any  agreement  between  the Company or any of its  
subsidiaries  and any Shareholder; or

                   (m)  Any  agreement  that it is  otherwise material to the
Company and its subsidiaries,  taken as a whole,  or entered  into  other  than
in the  ordinary course of business.

                           The  Company  has  provided  Parent  with true and  
correct  copies  of each of the  written  agreements  set forth in Item 2.11 and
true,  correct and complete  summaries of any oral  agreements set forth in Item
2.11  (collectively,  the  "Company  Agreements"),  and  each  of the  Company's
standard forms of license agreements.  All Company Agreements are valid, binding
and enforceable against the parties thereto and in full force and effect. Except
as set forth in Item

                                       13

<PAGE> 19

2.11,  neither  the  Company  nor,  to  the  knowledge  of  the  Company  or the
Shareholders, any other party is in breach of or default under any material term
of any such Company Agreement.

                  2.12     Intellectual Property.

                  2.12.1.  Except as set forth in Item 2.12.1,  the Company owns
all  right,  title  and  interest  in,  or has  the  right  to use,  all  patent
applications, patents, trademark applications,  trademarks, service marks, trade
names, copyright applications,  copyrights, trade secrets, know-how,  technology
and  other  intellectual  property  and  proprietary  rights  used in or, to the
Company's  or any  Shareholder's  knowledge,  necessary  to the  conduct  of its
business as presently conducted and the business of the development, production,
marketing,  licensing and sale of commercial  products  using such  intellectual
property and proprietary rights (the "Company  Intellectual  Property").  All of
the Company Intellectual Property is owned or held by the Company and not by the
Company's  subsidiaries  (including,  without  limitation,  XDB Systems Beijing,
Ltd.).
                  2.12.2.  Except as set forth in Item  2.12.2,  the Company has
taken all reasonable measures to protect all the Company Intellectual Property.

                  2.12.3 Except as set forth in Item 2.12.3, to the Company's or
any Shareholder's  knowledge,  no other person is infringing or violating any of
the Company Intellectual Property.

                  2.12.4.  Set forth in Item 2.12.4 is a true and complete  list
of all copyright, mask work and trademark registrations and applications and all
patents and patent applications for the Company  Intellectual  Property owned by
the  Company.  The  Company  is not aware of any  material  loss,  cancellation,
termination or expiration of any such registration or patent.

                  2.12.5.  The  business of the Company as  conducted  as of the
date hereof does not, and, to the Company's or any Shareholder's  knowledge, the
business  of the  development,  production,  marketing,  licensing  and  sale of
commercial products using the Company Intellectual  Property after the Effective
Time will not,  cause the  Company or any of its  subsidiaries  to,  infringe or
violate any of the patents, trademarks,  service marks, trade names, mask works,
copyrights,  trade secrets, proprietary rights or other intellectual property of
any other person.  Except as set forth in Item 2.12.5, none of the Company,  its
subsidiaries  nor any  Shareholder  has  received  any  written or oral claim or
notice of infringement or potential infringement of the intellectual property of
any other person.

                  2.12.6.  Except as set forth in Item  2.12.6,  the Company has
the unrestricted,  worldwide right to reproduce,  manufacture, sell, license and
distribute  all of its products,  including,  without  limitation,  ExpressLane,
JetConnect,  JetAssist,  JetStore, JetReport and Quantum Leap (all such products
being set forth in Item 2.12) (the  "Products")  and the right to use all of its
registered user lists,  and is not using any  confidential  information or trade
secrets of any former employer of any past or present employees.

                  2.12.7.  Except  as set  forth  in Item  2.12.7,  the  Company
possesses  copies of the source code for each of the  Products  and none of such
source code has been  provided to any third party other than to an escrow  agent
pursuant to source code escrow agreements, copies of which have been provided to
Parent. None of the Products contains any significant defect (including, without
limitation,  in  connection  with  processing  dates  in the  year  2000 and any

                                       14

<PAGE> 20

preceding or following years) or a material  difference between such Product and
its current end-user  documentation which results in severe inconvenience to the
end-users of such Product and which cannot be easily avoided or detoured by such
end-user.

                 2.13  Compliance  with  Laws.  The  Company  and  each  of its
subsidiaries  has complied in all material  respects and is in compliance in all
material respects with all applicable laws,  ordinances,  regulations and rules,
and all orders, writs, injunctions, awards, judgments and decrees, applicable to
the Company or such  subsidiary  or to their  assets,  properties  and business,
including,  without limitation:  (a) all applicable federal and state securities
laws  and  regulations,  (b) all  applicable  federal,  state  and  local  laws,
ordinances  and  regulations,  and  all  orders,  writs,  injunctions,   awards,
judgments and decrees, pertaining to (i) the sale, licensing, leasing, ownership
or  management  of the  Company's  owned,  leased or  licensed  real or personal
property,  Company  Intellectual  Property,  products or  technical  data,  (ii)
employment or employment practices, terms and conditions of employment, or wages
and hours or (iii) safety,  health,  fire prevention,  environmental  protection
(including  toxic waste disposal and related  matters  described in Section 2.21
hereof),  building  standards,  zoning or other similar matters,  (c) the Export
Administration  Act  and  regulations  promulgated  thereunder  or  other  laws,
regulations, rules, orders, writs, injunctions,  judgments or decrees applicable
to the export or re-export of controlled  commodities  or technical  data or (d)
the Immigration Reform and Control Act. The Company and each of its subsidiaries
has received all licenses,  permits and approvals from, and has made all filings
with, third parties, including government agencies and authorities, necessary to
conduct  its  business  as  presently  conducted,  which  licenses,  permits and
approvals are set forth in Item 2.13.

                  2.14 Certain  Transactions and Agreements.  Except as provided
in the License  Agreement (as hereinafter  defined) no person who is an officer,
director or shareholder of the Company or any of its  subsidiaries,  or a member
of any such  person's  immediate  family,  has any direct or indirect  ownership
interest  in,  or any  employment  or  consulting  agreement  with,  any firm or
corporation that competes with the Company or Parent (except with respect to any
interest in less than 1% of the  outstanding  voting  shares of any  corporation
whose stock is publicly traded). Except as set forth in Item 2.14, no person who
is an officer,  director,  employee or  shareholder of the Company or any of its
subsidiaries,  or any member of any such person's  immediate family, is directly
or  indirectly  interested  in any  agreement or informal  arrangement  with the
Company or any of its  subsidiaries,  including,  without  limitation,  any loan
arrangements,  except for compensation  for services as an officer,  director or
employee  of the Company and except for the normal  rights of a  shareholder  or
optionholder.  Except  as set  forth  in  Item  2.14,  none  of  such  officers,
directors,  employees or  shareholders or family members has any interest in any
property,  real  or  personal,  tangible  or  intangible,   including,   without
limitation,  inventions,  patents, copyrights,  trademarks, trade names or trade
secrets, used in the business of the Company,  except for the normal rights of a
shareholder   and  except  as  provided  in  the  License   Agreement   and  the
Noncompetition Agreement.

                  2.15     Employees.

                           2.15.1  Except as set forth in Item  2.15.1,  (i)  
neither the Company nor any of its subsidiaries  has any employment  contract or
consulting  agreement currently in effect that is not terminable at will without
penalty or payment of  compensation  by the Company or such  subsidiary and (ii)
each  officer,  employee,  agent or  consultant  of the  Company and each of its
subsidiaries  has  executed  the  Company's  standard  forms of  noncompetition,

                                       15

<PAGE> 21

nondisclosure  of proprietary  information and assignment of copyright and other
intellectual  property rights to the Company,  forms of which have been provided
to Parent.

                        2.15.2 Neither the Company nor any of its subsidiaries  
(a) has ever been and is not now subject to a union  organizing  effort,  (b) is
not subject to any  collective  bargaining  agreement with respect to any of its
employees,  (c) is not subject to any other contract,  written or oral, with any
trade or labor union,  employees'  association or similar organization,  and (d)
has no current labor dispute. To the Company's and the Shareholders'  knowledge,
the Company and each of its subsidiaries  has good labor relations,  and neither
the Company nor the  Shareholders has knowledge of any facts indicating that the
consummation  of the  transactions  provided  for  herein  will have a  material
adverse effect on its labor relations, or that any of its key employees (each of
whom is listed on Item  2.15.2) has notified the Company of his or her intent to
leave its employ.

                         2.15.3 Item 2.15.3 delivered  by the Company to Parent
herewith contains a list of all employment and consulting  agreements,  pension,
retirement, disability, medical, dental or other health plans, life insurance or
other death benefit plans,  profit sharing,  deferred  compensation  agreements,
stock, option, bonus or other incentive plans, vacation,  sick, holiday or other
paid leave  plans,  severance  plans or other  similar  employee  benefit  plans
maintained by the Company and each of its subsidiaries  (the "Employee  Plans"),
including,  without  limitation,  all  "employee  benefit  plans" as  defined in
Section 3(3) of the Employee  Retirement Income Security Act of 1974, as amended
("ERISA"). The Company has delivered true and complete copies or descriptions of
all the Employee  Plans to Parent and Parent's  counsel.  Except as set forth in
Item 2.15.3,  each of the Employee Plans, and its operation and  administration,
is, in all material respects, in compliance with all applicable, federal, state,
local and other governmental laws and ordinances, orders, rules and regulations,
including the  requirements  of ERISA and the Code.  Except as set forth in Item
2.15.3,  all such Employee Plans that are "employee  pension  benefit plans" (as
defined in Section 3(2) of ERISA) which are  intended to qualify  under  Section
401(a)(8) of the Code have received  favorable  determination  letters that such
plans  satisfy  the  qualification  requirements  of the Tax  Equity  and Fiscal
Responsibility Act of 1982, the Deficit Reduction Act of 1984 and the Retirement
Equity Act of 1984. In addition, neither the Company nor any of its subsidiaries
has ever been a participant in any "prohibited  transaction"  within the meaning
of Section 406 of ERISA with  respect to any employee  pension  benefit plan (as
defined in Section 3(2) of ERISA) which the Company or such subsidiary  sponsors
as  employer  or in which the  Company  or such  subsidiary  participates  as an
employer,  which was not  otherwise  exempt  pursuant  to  Section  408 of ERISA
(including any individual  exemption  granted under Section 408(a) of ERISA), or
which could result in an excise tax under the Code.  The group health plans,  as
defined in Section  4980B(g) of the Code, that benefit  employees of the Company
and its subsidiaries are in material  compliance with the continuation  coverage
requirements  of  subsection  4980B  of  the  Code.  There  are  no  outstanding
violations  of  Section  4980B of the Code with  respect to any  Employee  Plan,
covered employees or qualified beneficiaries.

                           2.15.4  To the  Company's  or any  Shareholders'  
knowledge,  no employee of the Company or any of its subsidiaries is in material
violation of any term of any employment contract, patent disclosure agreement or
noncompetition  agreement or any other contract or agreement, or any restrictive
covenant,  relating  to the right of any such  employee  to be  employed  by the
Company or such subsidiary or to use trade secrets or proprietary information of
others, and, to the Company's or any Shareholders'  knowledge, the employment of

                                       16

<PAGE> 22

any  employee  of the  Company or any of its  subsidiaries  does not subject the
Company or such subsidiary to any liability to any third party.

                           2.15.5  Except as set forth in Item 2.15.5,  neither
the Company nor any of its subsidiaries is a party to any (a) agreement with any
executive  officer  or  other  key  employee  (i)  the  benefits  of  which  are
contingent, or the terms of which are materially altered, upon the occurrence of
a  transaction  involving  the Company in the nature of any of the  transactions
contemplated  by this  Agreement or the Agreement of Merger,  (ii) providing any
term of  employment  or  compensation  guarantee  or (iii)  providing  severance
benefits or other benefits after the  termination of employment of such employee
regardless of the reason for such termination of employment, or (b) agreement or
plan, including,  without limitation,  any stock option plan, stock appreciation
rights  plan or stock  purchase  plan,  any of the  benefits  of  which  will be
materially  increased,  or the vesting of  benefits of which will be  materially
accelerated,  by the occurrence of any of the transactions  contemplated by this
Agreement  or the  Agreement  of Merger 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 or the Agreement of Merger.  The Company is not obligated to make
any excess parachute payment,  as defined in Section 280G(b)(1) of the Code, nor
will any excess  parachute  payment be deemed to have occurred as a result of or
arising out of the Merger to the extent  Section 280G of the Code is  applicable
to the Company.

                           2.15.6  A list of all  employees,  officers  and  
development  consultants  of the Company and its subsidiaries and their current
compensation and benefits as of the date of this Agreement is set forth on Item
2.15.6,  which the Company has delivered to Parent.

                           2.15.7 All  contributions  due from the Company and 
its  subsidiaries  with respect to any of the  Employee  Plans have been made or
accrued on the Company Financial  Statements,  and no further contributions will
be due or will have accrued thereunder as of the Closing Date.

                         2.15.8 Neither the Company nor any of its subsidiaries
has any employee bonus  obligations  or any other  payments  (other than regular
salary payments for the  then-current  pay period) due to its employees  accrued
but  unpaid  by the  Company  as of the  Closing  Date or  which  shall  vest in
connection  with the Closing,  in each case,  which are not shown on the Closing
Balance Sheet.

                  2.16  Corporate  Documents.  The Company has made available to
Parent for examination all documents and information listed in Items 2.1 through
2.22 or other exhibits called for by this Agreement which have been requested by
Parent's legal counsel, including, without limitation, the following: (a) copies
of the Company's and each of its  subsidiaries'  Articles of  Incorporation  and
Bylaws or similar  charter  documents as currently in effect;  (b) the Company's
and  each  of its  subsidiaries'  minute  book  containing  all  records  of all
proceedings,  consents,  actions and meetings of its directors and shareholders;
(c) the Company's and each of its subsidiaries' stock ledger,  journal and other
records  reflecting  all stock  issuances  and  transfers;  and (d) all permits,
orders and consents issued by any regulatory  agency with respect to the Company
and each of its  subsidiaries,  or any securities of the Company and each of its
subsidiaries, and all applications for such permits, orders and consents.

                                       17

<PAGE> 23

                  2.17 No Brokers.  Other than Broadview Associates,  whose fees
and expenses will be paid by the Company immediately prior to the Closing (and a
corresponding  deduction  for which shall be  reflected  on the Closing  Balance
Sheet),  the Company is not obligated for the payment of fees or expenses of any
investment banker,  broker or finder in connection with the origin,  negotiation
or execution of this Agreement or the Agreement of Merger or in connection  with
any transaction provided for herein or therein.

                  2.18 Disclosure.  This Agreement,  its exhibits and schedules,
and any of the  certificates  or  documents  to be  delivered  by the Company to
Parent under this Agreement, taken together, do not contain any untrue statement
of a material fact or omit to state a material  fact  necessary in order to make
the statements contained herein and therein, in light of the circumstances under
which such statements were made, not misleading.

                  2.19     Books and Records; Bank Accounts.

                  2.19.1 The books,  records and accounts of the Company (a) are
in all  material  respects  true and  complete,  (b)  have  been  maintained  in
accordance with reasonable  business  practices on a basis consistent with prior
years, (c) are stated in reasonable detail and accurately and fairly reflect the
transactions  and  dispositions  of the assets of the Company and (d) accurately
and fairly reflect the basis for the Company Financial Statements.

                  2.19.2  Item 2.19.2  sets forth a true,  correct and  complete
list of (i) all bank  accounts  and safe  deposit  boxes of the  Company and all
persons who are  signatories  thereunder or who have access thereto and (ii) the
names of all  persons  holding  general or special  powers-of-attorney  from the
Company and a summary of the terms thereof.

                  2.20 Insurance. Item 2.20 is a true, correct and complete list
of  all  fire  and  casualty,  automobile,  workers  compensation,   errors  and
omissions, general liability and other insurance maintained by the Company.

                  2.21     Environmental Matters.

                           2.21.1  During the period that the Company  and its  
subsidiaries  have  leased the  premises  currently  occupied  by them and those
premises  occupied  by them  since the date of their  respective  organizations,
there have been no  disposals,  releases or  threatened  releases  of  Hazardous
Materials  (as defined  below) on any such  premises  that would have a material
adverse effect upon the business or financial statements of the Company. Neither
the Company nor any  Shareholder  has any knowledge of any presence,  disposals,
releases or  threatened  releases of Hazardous  Materials on or from any of such
premises,  which  may  have  occurred  prior  to  the  Company  or  any  of  its
subsidiaries  having taken  possession of any of such premises that would have a
material  adverse  effect  upon the  business  or  financial  statements  of the
Company.  For purposes of this Agreement,  the terms "disposal,"  "release," and
"threatened  release" have the definitions assigned thereto by the Comprehensive
Environmental  Response,  Compensation  and Liability Act of 1980, 42 U.S.C. ss.
9601 et seq.,  as amended  ("CERCLA").  For the purposes of this  Section  2.21,
"Hazardous  Materials" mean any hazardous or toxic substance,  material or waste
which is or becomes prior to the Closing Date regulated  under,  or defined as a
"hazardous substance," "pollutant,"  "contaminant," "toxic chemical," "hazardous
material," "toxic substance" or "hazardous  chemical" under (i) CERCLA; (ii) the
Emergency Planning and Community  Right-to-Know Act, 42 U.S.C.  Section 11001 et

                                       18

<PAGE> 24

seq.; (iii) the Hazardous Materials  Transportation Act, 49 U.S.C. Section 1801,
et seq.; (iv) the Toxic Substances Control Act, 15 U.S.C.  Section 2601 et seq.;
(v) the  Occupational  Safety and Health Act of 1970,  29 U.S.C.  Section 651 et
seq.; (vi) regulations promulgated under any of the above statutes; or (vii) any
applicable  state or local  statute,  ordinance,  rule or regulation  that has a
scope or purpose similar to those identified above.

                          2.21.2  During  the  time   that the  Company or  its
subsidiaries have leased such premises, none of the premises currently leased by
the  Company or its  subsidiaries  or any  premises  previously  occupied by the
Company or its subsidiaries is in violation of any federal,  state or local law,
ordinance,  regulation  or  order  relating  to  industrial  hygiene  or to  the
environmental conditions in such premises.

                           2.21.3  During  the  time that the Company  and its
subsidiaries have leased the premises  currently  occupied by it or any premises
previously occupied by the Company or such subsidiary,  neither the Company, its
subsidiaries  nor,  to the  Company's  knowledge,  any  third  party,  has used,
generated,  manufactured  or stored in such premises or  transported  to or from
such premises any Hazardous  Materials that would have a material adverse effect
upon the business or financial statements of the Company.

                           2.21.4  During the time   that  the  Company and its
subsidiaries have leased the premises  currently  occupied by it or any premises
previously  occupied  by the  Company  or such  subsidiary,  there  has  been no
litigation, proceeding or administrative action brought or threatened in writing
against the Company, or any settlement reached by the Company with, any party or
parties alleging the presence,  disposal,  release or threatened  release of any
Hazardous Materials on, from or under any of such premises.

                           2.21.5  During the  time that the  Company  and its
subsidiaries have leased the premises  currently  occupied by it or any premises
previously  occupied by the Company or such subsidiary,  no Hazardous  Materials
have been  transported  from such premises to any site or facility now listed or
proposed for listing on the National  Priorities List, at 40 C.F.R. Part 300, or
any list with a similar scope or purpose published by any state authority.

                  2.22 Customers. Item 2.22 sets forth the names with the dollar
value of sales to each of the  customers  of the  Company  and its  subsidiaries
having  aggregate  annual sales of $50,000 or more during any of the three years
prior to the date hereof. The Company has no outstanding  disputes with any such
customer  and to the  knowledge  of the  Company and each  Shareholder,  no such
customer has expressed  dissatisfaction  with any of the  Company's  products or
services provided to such customer.

                  2.23     Accounts Receivable; Accounts Payable.

                  2.23.1 Item 2.23.1 sets forth a true and complete aged list of
unpaid accounts and notes receivable owing to the Company and its  subsidiaries,
all of which are, and all receivables  generated from the date of this Agreement
through  the  Closing  Date  will be,  collectible  in the  ordinary  course  of
business,  except as set forth in Item 2.23.1. No such account has been assigned
or pledged to any other person,  firm or corporation and no defense or setoff to
any such account has been asserted in writing by the account obligor.

                                       19

<PAGE> 25

                  2.23.2 Item 2.23.2 sets forth a true and complete  list of all
accounts payable of the Company and its subsidiaries as of the date hereof.

         3.       REPRESENTATIONS AND WARRANTIES OF PARENT

                  Parent hereby  represents  and warrants,  that, as of the date
hereof and the Closing Date, except as set forth on the Parent disclosure letter
delivered to the Company herewith:

                  3.1 Organization and Good Standing. Parent is a public limited
company duly organized,  validly existing and in good standing under the laws of
England and Wales and has the corporate power and authority to own,  operate and
lease  its  properties  and to carry on its  business  as now  conducted  and as
proposed to be conducted.

                  3.2      Power, Authorization and Validity.

                           3.2.1 Parent has the corporate  right,  power,  legal
capacity  and  authority  to enter into and perform its  obligations  under this
Agreement,  and all  agreements  to which  Parent is or will be a party that are
required  to be executed  pursuant  to this  Agreement  (the  "Parent  Ancillary
Agreements").  The execution, delivery and performance of this Agreement and the
Parent  Ancillary  Agreements have been duly and validly approved and authorized
by all necessary  corporate action on the part of Parent. The Parent Stock to be
issued to the  Shareholders  in the Merger  will be , upon such  issuance,  duly
authorized,  validly  issued,  fully  paid and  non-assessable,  and,  except as
provided  in this  Agreement  and the  Escrow  Agreement,  free and clear of all
pledges, claims, liens, charges, encumbrances and security interests of any kind
or nature whatsoever.

                           3.2.2  No   filing, authorization   or   approval,
governmental  or otherwise,  is necessary to enable Parent to enter into, and to
perform  its  obligations   under,  this  Agreement  and  the  Parent  Ancillary
Agreements,  except  for (a) the  filing of the  Agreement  of  Merger  with the
Secretary of State of the State of Delaware, (b) such filings as may be required
to comply with  federal  and state  securities  laws,  (c) the filing of a share
listing  with the London  Stock  Exchange  in respect of the Parent  Stock to be
issued in the Merger, and (d) filings required under the HSR Act.

                           3.2.3 This  Agreement  and the   Parent  Ancillary
Agreements  are,  or  when  executed  by  Parent  will  be,  valid  and  binding
obligations  of Parent,  enforceable  against  Parent in  accordance  with their
respective terms, except as to the effect, if any, of (a) applicable  bankruptcy
and other  similar laws  affecting  the rights of creditors  generally,  and (b)
rules  of law  governing  specific  performance,  injunctive  relief  and  other
equitable  remedies;  provided,  however,  that the  Agreement of Merger and the
Parent  Ancillary  Agreements  will not be  effective  until the  earlier of the
Effective Time or the date provided for therein.

                  3.3 No  Violation of Charter  Documents  or Laws.  Neither the
execution nor delivery of this Agreement or any Parent Ancillary Agreement,  nor
the  consummation  of the  transactions  contemplated  hereby or  thereby,  will
conflict with, or (with or without notice or lapse of time, or both) result in a
termination,  breach,  impairment  or  violation  of (a)  any  provision  of the
Memorandum of Association or Articles of Association of Parent,  as currently in
effect,  or (b) any  contract  that is material to Parent's  business or (c) any
federal,  state,  local or foreign judgment,  writ,  decree,  order,  statute or

                                       20

<PAGE> 26

regulation applicable to and that would have a material adverse effect on Parent
or its assets or properties.

                  3.4  Disclosure.  Parent has furnished the Company and each of
the Company  Shareholders  with  Parent's  1996 Annual  Report to  Shareholders,
Annual  Report on Form 20-F for the fiscal year ended  January 31, 1997,  Second
Quarterly  Report on Form 6-K for the quarter  ended July 31, 1997,  Half Yearly
Report on Form 6-K for the First  Half Year ended  July 31,  1997,  Registration
Statement on Form S-8, filed April 9, 1997,  First Quarterly  Report on Form 6-K
for the quarter ended April 30, 1997 and Proxy  Statement on Form 6-K, dated May
9, 1997 (collectively,  the "Parent Disclosure Package").  The Parent Disclosure
Package, this Agreement, the exhibits and schedules hereto, and any certificates
or documents to be delivered  to the Company  pursuant to this  Agreement,  when
taken together,  do not contain any untrue  statement of a material fact or omit
to state any material fact necessary in order to make the  statements  contained
herein and therein,  in light of the  circumstances  under which such statements
were made, not misleading.

                  3.5 No  Brokers.  Parent is not  obligated  for the payment of
fees or expenses of any investment  banker,  broker or finder in connection with
the origin,  negotiation  or  execution of this  Agreement  or the  Agreement of
Merger or in connection with any transaction provided for herein or therein.

                  3.6 Reporting. During the 12 months preceding the date hereof,
Parent  has filed all  reports  required  to be filed by (i)  Section  13 of the
Securities  Exchange  Act of 1934,  as amended  (the  "Exchange  Act"),  and the
regulations  thereunder,  as applicable to Parent,  (ii) the securities  laws of
England and Wales, and (iii) the Listing Rules of the London Stock Exchange.

                  3.7  Trading  Markets.  The  majority of all trading in Parent
Stock  currently  takes place in, on or through  the  facilities  of  securities
exchanges and inter-dealer quotation systems not in the United States.


         4.       COVENANTS OF THE COMPANY

                  During the period  from the date of this  Agreement  until the
Effective Time, the Company and  Shareholders  covenant to and agree with Parent
as follows; provided,  however, that the covenants set forth in Section 4.12 and
4.13 shall continue in effect after the Effective Time:

                  4.1 Advice of Changes.  The Company and each  Shareholder will
promptly  advise  Parent  in  writing,  to the  full  extent  of  such  person's
knowledge,  (a) of any event occurring  subsequent to the date of this Agreement
that  would  render  any  representation  or  warranty  of  the  Company  or the
Shareholders  contained in this Agreement,  if made on or as of the date of such
event or the Closing Date,  untrue or inaccurate in any material respect and (b)
of any material adverse change in the Company's financial condition, properties,
assets, liabilities, business or results of operations.

                  4.2 Maintenance of Business. The parties hereto understand and
acknowledge  that it is their intent to work closely  together during the period
from the date hereof until the Closing Date.  If the Company or any  Shareholder
becomes aware of a material deterioration in the Company's relationship with any
customer,  supplier or key employee,  it will promptly bring such information to

                                       21

<PAGE> 27

the  attention of Parent in writing and, if requested by Parent,  will exert all
reasonable efforts to restore the relationship.

                  4.3 Conduct of Business.  Except as otherwise  provided herein
or as approved or  recommended  by Parent,  the Company  will not,  and will not
permit any of its subsidiaries to, without the prior written consent of Parent:

                           (a)      borrow any money;

                           (b)      other than the conversion of investments  

into cash or cash  equivalents,  enter into any  transaction not in the ordinary
course  of  business  or enter  into  any  transaction  or make  any  commitment
involving an expense or capital expenditure in excess of $50,000;

                          (c)      except for the Merger, merge, consolidate or
reorganize with, or acquireany entity;

                          (d)      dispose of any of its material assets except 
in the ordinary  course of business consistent with past practice;

                          (e)      enter into any  material  lease or contract  
for the purchase or sale ofany property, real or personal, tangible or 
intangible, except in the ordinary course of business consistent with past 
practice or enter into any agreement of the types described in Section 2.11;

                          (f)      fail  to  maintain  its  equipment and other
assets in good working  condition in a manner consistent with past practices and
repair  according  to the  standards  it has  maintained  to the  date  of  this
Agreement, subject only to ordinary wear and tear;

                          (g)      pay any bonus, royalty,  increased salary or
special remuneration to any officer,  employee or consultant (except pursuant to
existing  arrangements  heretofore disclosed in writing to Parent) or enter into
any new employment or consulting  agreement with any such person,  or enter into
any new agreement or plan of the type described in Section 2.15.3;

                          (h)      change accounting methods;

                          (i)      declare,  set  aside  or  pay  any  cash or  
stock dividend or other  distribution  in respect of capital stock, or redeem or
otherwise acquire any of its capital stock;

                          (j)      amend or terminate  any  contract, agreement 
or license to which it is a party  except  those  amended or  terminated  in the
ordinary course of business,  consistent  with past practice,  and which are not
material in amount or effect;

                           (k)      lend any amount to any person or entity,  

other than  advances for travel and expenses  which are incurred in the ordinary
course of business consistent with past practice,  not material in amount, which
travel and expenses shall be documented by receipts for the claimed amounts;

                          (l)      guarantee  or  act  as  a  surety  for  any
obligation except for the endorsement of checks and other negotiable instruments
in the ordinary course of business, consistent with past practice;

                                       22

<PAGE> 28

                           (m)      waive or  release  any  material  right or 
claim  except in the  ordinarycourse of business, consistent with past practice;

                           (n)      issue or sell any shares of its  capital 
stock  of any  class or any  other of its  securities,  or issue or  create  any
warrants,  obligations,  subscriptions,  options,  convertible securities, stock
appreciation  rights or other  commitments to issue shares of capital stock,  or
accelerate the vesting of any outstanding option or other security;

                           (o)      split or  combine  the  outstanding  shares
of its capital stock of any class or enter into any  recapitalization  affecting
the number of outstanding  shares of its capital stock of any class or affecting
any other of its securities;

                         (p)      amend its Articles of Incorporation or Bylaws 
or other charter documents;

                           (q)      agree to any audit  assessment  by any tax 
authority  or file any federal or state income or  franchise  tax return  unless
copies of such  returns  have been  delivered  to Parent for its review prior to
filing;

                           (r)      except as  contemplated  by the  License  
Agreement,  license  any  of the  Company's  technology  or  any of the  Company
Intellectual Property, except in the ordinary course of business consistent with
past practice,  or take any action which could have the effect of placing any of
the Company Intellectual Property in the public domain;

                          (s)      change any insurance coverage or issue any
certificates of insurance;

                          (t)      terminate the employment of any key employee
listed in Item 2.10(i); or

                          (u)      agree to do any of the things  described in 
the preceding  clauses 4.3(a) through 4.3(t).

                  4.4 Regulatory  Approvals.  The Company will promptly  execute
and file,  or join in the  execution  and filing,  of any  application  or other
document that may be necessary in order to obtain the authorization, approval or
consent of any governmental body, federal, state, local or foreign, which may be
reasonably required,  or which Parent may reasonably request, in connection with
the consummation of the transactions contemplated by this Agreement. The Company
will use all reasonable efforts to obtain or assist Parent in obtaining all such
authorizations, approvals and consents.

                  4.5 Necessary Consents.  The Company will use its best efforts
to obtain such written  consents and take such other actions as may be necessary
or  appropriate  to facilitate and allow the  consummation  of the  transactions
contemplated  by this  Agreement and to facilitate  and allow Parent to carry on
the Company's business after the Closing Date.

                  4.6  Litigation.  The Company  will  notify  Parent in writing
promptly after learning of any action,  suit,  proceeding or investigation by or

                                       23

<PAGE> 29

before any court,  board or  governmental  agency,  initiated  by or against the
Company or any of its subsidiaries or threatened against it.

                  4.7 No Other  Negotiations.  From the date  hereof  until  the
termination of this Agreement (provided that such termination is not effected by
the Company or the Shareholders in breach of this Agreement) or the consummation
of the  Merger,  the  Company  will not,  and will not  authorize  any  officer,
director,  employee or  affiliate of the Company,  or any other  person,  on its
behalf, directly or indirectly, to (a) solicit,  facilitate,  discuss, encourage
or accept any offer,  inquiry or  proposal  received  from any party  other than
Parent, concerning the possible disposition of all or any substantial portion of
the Company's  business,  assets or capital  stock by merger,  sale or any other
means or any other  transaction  that  would  involve a change in control of the
Company or to  otherwise  solicit,  facilitate,  discuss or  encourage  any such
disposition (other than the Merger), or (b) provide any confidential information
to or negotiate  with any third party other than Parent in  connection  with any
offer,  inquiry or proposal  concerning any such  disposition.  The Company will
immediately notify Parent of any such offer, inquiry or proposal.

                  4.8 Access to Information. Until the Closing Date, the Company
will provide Parent and its agents with full access to the files, books, records
and  offices  of  the  Company,  including,  without  limitation,  any  and  all
information  relating to the Company's taxes,  commitments,  contracts,  leases,
licenses,  real, personal and intangible property, and financial condition,  and
specifically  including,  without limitation,  access to the Company source code
reasonably  necessary  for  Parent  to  complete  its  diligence  review  of the
Company's  products and  technology.  The Company will cause its  accountants to
cooperate  with  Parent  and  its  agents  in  making  available  all  financial
information reasonably requested,  including,  without limitation,  the right to
examine all working papers  pertaining to all financial  statements  prepared or
audited by such accountants.

                  4.9 Satisfaction of Conditions Precedent. The Company will use
its  reasonable  best  efforts  to  satisfy  or  cause to be  satisfied  all the
conditions  precedent which are set forth in Section 8, and the Company will use
its  reasonable  best  efforts to cause the  transactions  provided  for in this
Agreement  to be  consummated,  and,  without  limiting  the  generality  of the
foregoing,  to obtain all consents and  authorizations  of third  parties and to
make all  filings  with,  and give all  notices to,  third  parties  that may be
necessary or reasonably required on its part in order to effect the transactions
provided for herein.

                  4.10 Securities Laws. The Company and the  Shareholders  shall
use their  reasonable  best efforts to assist Parent to the extent  necessary to
comply with the securities and blue sky laws of all jurisdictions  applicable in
connection with the Merger.

                  4.11  Notification  of Employee  Problems.  The  Company  will
promptly notify Parent if any of the Company's  officers  becomes aware that any
of the key  employees  listed in Item 2.15.2  notifies the Company of his or her
intent to leave its employ.

                  4.12  Pooling  Accounting.  The Company  and the  Shareholders
shall use their  reasonable best efforts to cause the Merger to be accounted for
as a "pooling of interests",  including, without limitation, causing each person
who is an "affiliate" (for purposes of compliance with pooling  requirements) of
the Company not to take any action that would adversely  affect the Merger to be
accounted for as a "pooling of interests".  The Company has no "affiliates" that

                                       24

<PAGE> 30

own any of its capital  stock,  or possess  rights to acquire any of its capital
stock, other than the Shareholders.

                  4.13 Audits. If the Company or any of its subsidiaries were to
become subject to an audit by the Internal Revenue Service or any state or other
national  taxing  agency  or  authority  for tax years or  periods  prior to the
Effective Time (including, but not limited to, any short tax year resulting from
the  Merger),  the  Shareholders  will be  responsible  for such  audits and the
liabilities  arising  therefrom and shall use all reasonable  efforts to resolve
all such audits in a manner  consistent  with the  intentions of the Company and
Parent as expressed in this Agreement.

         5.       COVENANTS OF PARENT

                  During the period  from the date of this  Agreement  until the
Effective  Time,  Parent  covenants  to and  agrees  with  the  Company  and the
Shareholders  as follows;  provided,  however,  that the  covenants set forth in
Sections 5.3 and 5.5 through 5.8 shall  continue in effect  after the  Effective
Time, in accordance with their respective terms:

                  5.1 Satisfaction of Conditions Precedent.  Parent will use its
reasonable  best efforts to satisfy or cause to be satisfied all the  conditions
precedent  which are set forth in Section 7, and Parent will use its  reasonable
best  efforts to cause the  transactions  provided  for in this  Agreement to be
consummated,  and, without  limiting the generality of the foregoing,  to obtain
all consents and  authorizations  of third parties and to make all filings with,
and give all notices to,  third  parties  that may be  necessary  or  reasonably
required on its part in order to effect the transactions provided for herein.

                  5.2  Regulatory  Approvals.  Parent will execute and file,  or
join in the execution and filing,  of any application or other document that may
be  necessary in order to obtain the  authorization,  approval or consent of any
governmental body,  federal,  state,  local or foreign,  which may be reasonably
required,  or which the Company may reasonably  request,  in connection with the
consummation of the transactions provided for in this Agreement. Parent will use
all  reasonable  efforts  to  obtain  all  such  authorizations,  approvals  and
consents.

                  5.3 Pooling  Accounting.  Parent shall use its reasonable best
efforts to cause the Merger to be  accounted  for as a "pooling  of  interests."
Parent  shall use its  reasonable  best  efforts  to have each  person who is an
"affiliate" (for purposes of compliance with pooling  requirements) of Parent to
execute and deliver to Parent a Parent Affiliate Agreement, in substantially the
form of Exhibit 5.3.

                  5.4 Access to Information. Until the Closing Date, Parent will
provide the Company,  the Shareholders and their respective  agents a reasonable
opportunity to perform due diligence on Parent.

                  5.5  Company  Tax  Refund.  Parent  shall  use its  reasonable
efforts to assist the  Shareholders in obtaining full payment of the Company Tax
Refund but neither such  obligation nor Parent's  exercise  thereof shall in any
manner limit  Parent's  right to reacquire  Escrow Shares in partial or complete
payment of the value of the Company Tax Refund pursuant to the Escrow Agreement.

                                       25

<PAGE> 31

                  5.6 Parent Stock Listing. Parent shall use its reasonable best
efforts to have the Parent  Stock to be issued in the Merger  (including  Parent
Stock to be issued upon the exercise of Parent  Options  converted  from Company
Options) approved for listing on the London Stock Exchange promptly,  and in any
event, within ten business days, following the Closing.

                  5.7  Parent  Options   Registration.   Parent  shall  use  its
reasonable  best efforts to cause the Parent Stock issuable upon the exercise of
Parent Options converted from Company Options to be registered,  or to be issued
pursuant to a then effective registration  statement, on Form S-8 promulgated by
the SEC promptly, and in any event, within fourteen business days, following the
Closing.


                  5.8 Parent  Reporting.  Parent shall use its  reasonable  best
efforts  to file all  reports  required  to be filed  by (i)  Section  13 of the
Exchange Act, and the regulations thereunder,  as applicable to Parent, (ii) the
securities laws of England and Wales,  and (iii) the Listing Rules of the London
Stock Exchange.


         6.       CLOSING MATTERS

                  6.1 The Closing.  Subject to  termination of this Agreement as
provided  in Section 9 below,  the  Closing  will take  place at the  offices of
Fenwick & West, Two Palo Alto Square, Palo Alto, California 94306 at 10:00 a.m.,
Pacific Time, on or before  January 15, 1998,  or, if all  conditions to Closing
have not been satisfied or waived by such date, such other place,  time and date
as the Company and Parent may mutually select (the "Closing Date").  Prior to or
concurrently  with the  Closing,  the  Agreement  of Merger  and such  officers'
certificates or other documents as may be required to effectuate the Merger will
be filed in the office of the  Secretary  of State of the State of Delaware  and
the State of Maryland Department of Assessments and Taxation.  Accordingly,  the
Merger will become effective at the Effective Time.

                  6.2      Exchange of Certificates.

                           6.2.1    As of the  Effective  Time,  all shares of 
Company  Common Stock that are  outstanding  immediately  prior thereto will, by
virtue of the Merger and without  further action,  cease to exist,  and all such
shares  will be  converted  into the right to receive  from Parent the number of
shares of Parent Common Stock determined as set forth in Section 1.1, subject to
Sections 1.2 and 1.3.

                           6.2.2    At  and  after  the  Effective  Time,  each
certificate  representing  outstanding  shares  of  Company  Common  Stock  will
represent  the number of shares of Parent  Stock  into which such  shares of the
Company Common Stock have been  converted,  and such shares of Parent Stock will
be deemed registered in the name of the holder of such  certificate.  As soon as
practicable  after the  Effective  Time,  each  holder of shares of the  Company
Common  Stock will  surrender  the  certificates  for such shares (the  "Company
Certificates")  to  Parent  for  cancellation.  At the  Effective  Time and upon
receipt of the Company  Certificates,  Parent will cause its  transfer  agent to
issue to such surrendering holder or to such holder's designee  certificates for
the number of shares of Parent  Stock to which such holder is entitled  pursuant
to Section 1.1, subject to Sections 1.2 and 1.3, and Parent shall distribute any
cash payable under Section 1.2.

                                       26

<PAGE> 32

                           6.2.3    After the  Effective  Time,  there  will be 
no further  registration  of transfers of the shares of Company  Common Stock on
the stock transfer books of the Company.  If, after the Effective Time,  Company
Certificates  are presented  for transfer or for any other reason,  they will be
canceled and exchanged and certificates  therefor will be delivered or placed in
escrow as provided in this Section 6.2.  Notwithstanding  anything herein to the
contrary, except to the extent waived by Parent, any Company Certificate that is
not properly submitted to Parent for exchange and cancellation  within two years
after the Effective Time shall no longer  evidence  ownership of or any right to
receive  shares of Parent  Stock and all  rights of the  holder of such  Company
Certificate,  with  respect to the shares  previously  evidenced by such Company
Certificate, shall cease.

                           6.2.4    Until Company Certificates  representing 
Company Common Stock outstanding prior to the Merger are surrendered pursuant to
Section 6.2.2 above, such  certificates  shall be deemed,  for all purposes,  to
evidence  ownership  of (a) the number of shares of Parent  Stock into which the
shares of  Company  Common  Stock  shall  have been  converted,  subject  to the
provisions  of  Sections  1.2 and 1.3,  and (b) if  applicable,  cash in lieu of
fractional shares.

         7.       CONDITIONS TO OBLIGATIONS OF THE COMPANY

         The  Company's  obligations  under this  Agreement  are  subject to the
fulfillment or satisfaction,  on and as of the Closing, of each of the following
conditions (any one or more of which may be waived by the Company, but only in a
writing signed on behalf of the Company by its President):

                  7.1   Accuracy  of   Representations   and   Warranties.   The
representations  and  warranties  of Parent set forth in Section 3 shall be true
and  accurate  in all  material  respects  on and as of the date  hereof and the
Closing  Date as if made on and as of the Closing  Date,  and the Company  shall
have received a certificate  to such effect  executed on behalf of Parent by its
Chief Financial Officer.

                  7.2 Covenants. Parent shall have performed and complied in all
material respects with all of its covenants  contained in Section 5 on or before
the Closing Date,  and the Company  shall have  received a  certificate  to such
effect executed on behalf of Parent by its Chief Financial Officer.

                  7.3 Compliance with Law. There shall be no order,  decree,  or
ruling by any court or governmental  agency or threat thereof, or any other fact
or  circumstance,  which  would  prohibit  or render  illegal  the  transactions
contemplated by this Agreement.

                  7.4 Government Consents.  There shall have been obtained at or
prior to the Closing Date such permits or  authorizations,  and there shall have
been taken such other  actions,  as may be required to consummate  the Merger by
any regulatory  authority having  jurisdiction  over the parties and the actions
herein  proposed to be taken,  including but not limited to  satisfaction of all
requirements  under  applicable  federal  and  state  securities  laws  and  the
expiration or termination of the waiting period under the HSR Act.

                  7.5  Documents.  The Company  shall have  received all written
consents, assignments,  waivers, authorizations or other certificates reasonably
deemed  necessary by the Company's legal counsel to consummate the  transactions
provided for herein.

                                       27

<PAGE> 33

                  7.6 No  Litigation.  No  litigation  or  proceeding  shall  be
pending  which will have the  probable  effect of enjoining  or  preventing  the
consummation of any of the transactions provided for in this Agreement.

                  7.7  Opinion  of  Parent's  Counsel.  The  Company  shall have
received from Memery Crystal and Fenwick & West LLP, counsel to Parent, opinions
substantially in the form of Exhibit 7.7.

                  7.8      Escrow   Agreement. Parent shall have duly  executed 
and  delivered  to  the Shareholders the Escrow Agreement.

                  7.9      License  Agreement. Parent shall have  executed and 
delivered to Dr. S. Bing Yao the License Agreement, substantially in the form of
Exhibit 7.9 (the "License Agreement").

                  7.10  Parent  Stock.   Parent  shall  have  delivered  to  the
Shareholders'  designee certificates  representing the shares of Parent Stock to
be issued to the  Shareholders  pursuant to Section 1.1, subject to Sections 1.2
and 1.3.

         8.       CONDITIONS TO OBLIGATIONS OF PARENT

                  The  obligations of Parent under this Agreement are subject to
the  fulfillment  or  satisfaction  on,  and as of the  Closing,  of each of the
following conditions (any one or more of which may be waived by Parent, but only
in a writing  signed on behalf  of Parent by its  President  or Chief  Financial
Officer):

                  8.1   Accuracy  of   Representations   and   Warranties.   The
representations  and  warranties  of the Company set forth in Section 2 shall be
true and complete in all material  respects on and as of the date hereof and the
Closing  Date as if made on and as of the Closing  Date,  and Parent  shall have
received a certificate  to such effect  executed on behalf of the Company by its
Chief Executive Officer.

                  8.2 Covenants;  No Material Adverse Change.  The Company shall
have  performed and complied in all material  respects with all of its covenants
contained in Section 4 on or before the Closing and Parent shall have received a
certificate  to such  effect  signed  on  behalf  of the  Company  by its  Chief
Executive Officer.  There shall not have occurred any material adverse change in
the assets,  business or employee base of the Company  since July 31, 1997,  and
Parent shall have  received a certificate  to such effect  executed on behalf of
Parent by its Chief Executive Officer.

                  8.3 Compliance with Law. There shall be no order,  decree,  or
ruling by any court or governmental  agency or threat thereof, or any other fact
or  circumstance,  which  would  prohibit  or render  illegal  the  transactions
provided for in this Agreement.

                  8.4 Government Consents.  There shall have been obtained at or
prior to the Closing  Date such permits or  authorizations  and there shall have
been taken such other action, as may be required to consummate the Merger by any
regulatory authority having jurisdiction over the parties and the actions herein
proposed  to be  taken,  including  but  not  limited  to  satisfaction  of  all

                                       28

<PAGE> 34

requirements  under  applicable  federal  and  state  securities  laws  and  the
expiration or termination of the waiting period under the HSR Act.

                  8.5  Opinion  of the  Company's  Counsel.  Parent  shall  have
received  from  Venable,  Baetjer and Howard,  LLP,  counsel to the Company,  an
opinion substantially in the form of Exhibit 8.5.

                  8.6 Requisite  Approvals.  The terms of this Agreement and the
Agreement of Merger shall have been approved and adopted by the written  consent
or vote of Shareholders  holding not less than 98% of the outstanding  shares of
the Company Common Stock.

                  8.7 No  Litigation.  No  litigation  or  proceeding  shall  be
pending  which will have the  probable  effect of enjoining  or  preventing  the
consummation  of any of the  transactions  provided  for in this  Agreement.  No
litigation or proceeding  shall be pending which could reasonably be expected to
have a  material  adverse  effect  on the  financial  condition  or  results  of
operations  of the  Company  that has not been  previously  disclosed  to Parent
herein.

                  8.8   Documents.   Parent  shall  have  received  all  written
consents, assignments,  waivers, authorizations or other certificates reasonably
deemed  necessary by Parent's legal counsel to provide for the  continuation  in
full  force  and  effect of any and all  material  contracts  and  leases of the
Company, except as disclosed in the Company Disclosure Letter, and for Parent to
consummate the transactions contemplated hereby.

                  8.9 Investment and Affiliate  Letters;  Affiliate  Agreements.
Each Shareholder  shall have duly executed and delivered to Parent an Investment
and Affiliate Letter, substantially in the form of Exhibit 8.9. Each "affiliate"
of the  Company  who is not also a  Shareholder  shall  have duly  executed  and
delivered to Parent an Affiliate Agreement, substantially in the form of Exhibit
8.9-A.

                  8.10     Escrow  Agreement. Each of the  Shareholders  shall
have  duly  executed  and delivered to Parent the Escrow Agreement.

                  8.11     Non-Competition  Agreements. Dr. S.Bing Yao and Lien
Yao shall have executed and delivered to Parent a Non-Competition Agreement.

                  8.12     License  Agreement. Dr.S.Bing Yao shall have executed
and  delivered to Parent the License Agreement.

                  8.13 Employment  Agreements.  Each employee of the Company set
forth in Exhibit 8.13 shall have  executed and delivered to Parent an employment
agreement on terms to be mutually agreed upon between Parent and such employee.

                  8.14 Due Diligence.  Parent and its representatives shall have
completed a due diligence  review of the condition  (financial  and  otherwise),
operations, customer arrangements, intellectual property, business and prospects
of, and any other matters relating to, the Company,  and the results of such due
diligence shall be satisfactory to Parent in its sole discretion.

                                       29

<PAGE> 35

                  8.15 Pooling  Opinion.  Parent shall have received the opinion
of Ernst & Young,  Parent's independent  auditors, to the effect that the Merger
will  qualify  as a  "pooling  of  interests"  transaction  under  the  relevant
accounting rules and principles.

                  8.16 Closing  Balance  Sheet.  Parent shall have  received the
Closing Balance Sheet (including the Schedule of Closing  Adjustments)  prepared
by the Company,  certified as true,  complete and correct by the Chief Financial
Officer of the Company.

                  8.17.  Company Stock. The Shareholders shall have delivered to
Parent certificates representing all of the shares of Company Common Stock to be
converted into Parent Stock pursuant to Section 1.1.

                  8.18  Releases.  Parent shall have  received  from each of the
persons  set  forth in  Exhibit-8.18-A  a release  substantially  in the form of
Exhibit 8.18-B.

                  8.19 Audit Opinion.  Parent shall have received a true copy of
the  unqualified  audit  opinion of  Deloitte  & Touche LLP with  respect to the
Company's  January 31, 1997 financial  statements,  which  financial  statements
shall be the same  financial  statements  delivered  by the  Company  to Parent,
without any changes thereto.

         9.       TERMINATION

                  9.1 Termination.  This Agreement may be terminated at any time
prior to the Effective  Time,  whether before or after approval of the Merger by
the shareholders of the Company:

                           (a)    by the mutual written agreement of Parent and 
the Company;

                           (b)    at any time after January 31, 1998, by either
Parent or the Company if the Closing  shall not have  occurred on or before such
date and such failure to consummate is not caused by a breach of this  Agreement
by the terminating party;

                           (c)    by  the   Company,   if  there  has  been  a  
breach by Parent of any  representation,  warranty,  covenant or  agreement  set
forth in this  Agreement  on the part of  Parent,  or if any  representation  of
Parent will have become  untrue,  in either case which has or can  reasonably be
expected to have a material  adverse  effect on Parent and which Parent fails to
cure within a  reasonable  time,  not to exceed 30 days,  after  written  notice
thereof  (except  that no cure period  will be  provided  for a breach by Parent
which by its nature cannot be cured);

                           (d)    by Parent,  if there has been a breach by the 
Company or a Shareholder of any representation,  warranty, covenant or agreement
set forth in this Agreement on the part of the Company or a  Shareholder,  or if
any  representation  of the Company or a Shareholder will have become untrue, in
either case which has or can  reasonably be expected to have a material  adverse
effect on the Company and which the  Company or such  Shareholder  fails to cure
within a reasonable  time,  not to exceed 30 days,  after written notice thereof
(except  that no cure period  will be provided  for a breach by the Company or a
Shareholder which by its nature cannot be cured); or

                                       30

<PAGE> 36

                          (e)    by either party, if a permanent  injunction or
other order by any Federal or state court which would make  illegal or otherwise
restrain or prohibit  the  consummation  of the Merger will have been issued and
will have become final and nonappealable.

                  Any  termination of this Agreement under this Section 9.1 will
be effective by the delivery of written notice of the  terminating  party to the
other party hereto.

                  9.2  Effect  of  Termination.  If this  Agreement  is  validly
terminated  pursuant to Section 9.1, such termination shall be without liability
or obligation of either party (or any shareholder,  director, officer, employee,
agent,  consultant or  representative  of such party) to the other party to this
Agreement;  provided  that if such  termination  shall  result  from the willful
failure  of  either  party to  fulfill a  condition  to the  performance  of the
obligations  of the other  party or to perform a covenant of this  Agreement  or
from a willful  breach by either  party to this  Agreement,  such party shall be
fully liable for any and all Damages  incurred or suffered by the other party as
a result of such failure or breach;  provided,  further, that the failure of the
Company and Shareholders to satisfy the condition set forth in Section 8.5 shall
not  constitute  a willful  failure for the  purposes of this  Section  9.2. The
provisions  of Article 11 shall  survive  any  termination  hereof  pursuant  to
Section 9.1.

         10.      INDEMNIFICATION

                  10.1 Survival. The representations,  warranties, covenants and
agreements  of  the  parties  hereto  contained  in  this  Agreement  or in  any
certificate,  document or instrument  delivered pursuant hereto or in connection
herewith shall survive the Closing until the one year anniversary of the Closing
Date (the "Expiration Date");  provided, that the Shareholders'  indemnification
of the Parent Indemnified Persons for the Company Tax Exposure shall survive the
Closing  until  the three  year  anniversary  of the  Closing  Date (the  "Third
Anniversary")  and that  indemnification  of claims made by tax authorities with
respect to the Company Tax  Exposure  prior to the Third  Anniversary  which are
unresolved on the Third  Anniversary shall survive until such claims are finally
resolved.

                  10.2 Indemnification.

                          10.2.1  Subject  to  the  limitations  set  forth  in
this Section  10.2.1,  the  Shareholders  hereby  severally  indemnify  and hold
harmless Parent and its respective  officers,  directors,  agents and employees,
and each person,  if any, who controls or may control  Parent within the meaning
of the  Securities  Act  (collectively  "Parent  Indemnified  Persons") from and
against  any and all  claims,  demands,  actions,  causes of action,  judgments,
fines, penalties,  obligations, losses, costs, damages, liabilities and expenses
including,  without  limitation,  the reasonable fees and disbursements of legal
counsel,  investigators,   consultants,   accountants  and  other  professionals
(collectively,  "Damages") incurred or suffered by any such person arising from,
by reason of or in connection with any misrepresentation or breach of or default
in  connection  with  any  of  the  representations,  warranties,  covenants  or
agreements given or made by the Company or the Shareholders in this Agreement or
any certificate, document or instrument delivered by or on behalf of the Company
or by a Shareholder  pursuant  hereto or in connection  herewith  (collectively,
"Company Breaches");  provided, however, that (i) the Parent Indemnified Persons
shall not have any right to be indemnified  under this Section 10.2.1 unless the
aggregate  amount of all  Damages  to the  Parent  Indemnified  Persons  exceeds
$75,000,  in which case the  Parent  Indemnified  Persons  will be  entitled  to

                                       31

<PAGE> 37

indemnification to the extent to which such Damages exceed $75,000, and (ii) the
maximum  aggregate  indemnification  obligation of the  Shareholders  under this
Section 10.2.1 shall not exceed the Total Acquisition Price; provided,  further,
that claims for Damages based upon or arising out of (A) the inability of Parent
to timely  receive  payment on accounts  receivable  owing to the Company on the
Closing Date, (B) the claims asserted by the Business  Software Alliance against
the Company  disclosed in the Company  Disclosure Letter or (C) any severance or
similar  termination or settlement  payments due to the employees of the Company
set forth on Exhibit 10.2.1(C),  in each case of (A), (B) or (C), whether or not
such Damages or payments  arise in connection  with a Company  Breach,  shall be
indemnified  hereunder and shall not be subject to the  deductible  set forth in
clause  (i) of this  sentence.  The  Shareholders  shall  settle  any claims for
indemnification  by first  returning  to Parent,  pro rata,  escrowed  shares of
Parent  Stock  (valued  at the  Closing  Price) and if the  aggregate  amount of
Damages  exceeds  the value of such  escrowed  shares,  the  Shareholders  shall
severally  fulfill  such  indemnification  obligations  in cash or in  shares of
Parent  Stock  (valued at the Closing  Price).  None of the  provisions  of this
Section 10.2.1 or of the Escrow  Agreement  shall in any manner limit  liability
with respect to (i) claims of intentional  misrepresentation  or fraud, (ii) any
criminal matters,  (iii) any claim concerning the breach of the  representations
and  warranties set forth in Section 2.3 or (iv) any claim  concerning  title to
the shares of the  Company's  capital  stock.  For the  purposes of this Section
10.2.1,  except for Damages  arising out of, by reason of or in connection  with
Company Breaches with respect to Sections 2.1, 2.2, 2.3, 2.4, 2.5, 2.11 or 2.12,
Damages  indemnifiable by the Shareholders pursuant to this Section 10.2.1 shall
not include lost profits or consequential damages;  provided, that the exception
contained  in this  sentence  with  respect to Section  2.5(b) and Section  2.11
(excluding  Section 2.11(j)) shall apply only to lost profits and  consequential
damages arising out of claims for equitable  relief and not for claims for money
damages.  For the  avoidance of doubt,  Damages  indemnifiable  hereunder  shall
include lost profits and  consequential  damages arising out of Company Breaches
of  Sections  2.1,  2.2,  2.3,  2.4,  2.5(a),  2.5(c),  2.11(j)  and 2.12 in all
instances and Section  2.5(b) and Section 2.11  (excluding  Section  2.11(j)) in
connection with claims for equitable relief.

                           10.2.2  Subject  to the  limitations  set  forth in 
this Section  10.2.2,  Parent hereby  severally  indemnify and hold harmless the
Shareholders  from and against  any and all Damages  incurred or suffered by any
such  person   arising   from,   by  reason  of  or  in   connection   with  any
misrepresentation  or  breach  of or  default  in  connection  with  any  of the
representations,  warranties, covenants or agreements given or made by Parent in
this  Agreement or any  certificate,  document or instrument  delivered by or on
behalf of Parent pursuant hereto or in connection  herewith  provided,  however,
that (i) the Shareholders  shall not have any right to be indemnified under this
Section  10.2.2 unless the aggregate  amount of all Damages to the  Shareholders
exceeds  $75,000,   in  which  case  the   Shareholders   will  be  entitled  to
indemnification to the extent to which such Damages exceed $75,000, and (ii) the
maximum aggregate indemnification obligation of Parent under this Section 10.2.2
shall not exceed the Total  Acquisition  Price.  None of the  provisions of this
Section 10.2.2 shall in any manner limit liability with respect to (i) claims of
intentional misrepresentation or fraud or (ii) any criminal matters.

                           10.2.3  The  calculation  of the  amount  required 
to hold an indemnified party harmless shall be on (i) an after-tax basis, taking
into account any reduction in tax liability as a result of the facts giving rise
to the claim for indemnification and (ii) an after-insurance  basis, taking into
account any  insurance  proceeds  received  under  then-existing  policies  with
insurance companies covering the liability (it being understood that any amounts
which the indemnified party self-insures shall not be so taken into account).

                                       32

<PAGE> 38

                  10.3 Procedures.  Dr. S. Bing Yao shall act as  Representative
of  the   Shareholders  for  all  purposes  of  the  Escrow  Agreement  and  the
indemnification  provisions  of this Section 10, is duly  authorized  to be such
Representative  and may bind the  Shareholders  with respect  thereto.  Promptly
after the receipt by a Parent  Indemnified  Person or a Shareholder (as the case
may be, the "Indemnified Person") of notice or discovery of any claim, damage or
legal  action or  proceeding  giving rise to  indemnification  rights under this
Agreement, such Indemnified Person will give the indemnifying party (in the case
of a Parent Indemnified Person,  notice shall be given to the Representative and
the  Escrow  Agent)  written  notice  of such  claim,  damage,  legal  action or
proceeding (a "Claim") (in the case of a Parent Indemnified  Person, such notice
shall be  given in  accordance  with  Section  3 of the  Escrow  Agreement).  An
Indemnified  Person  may  assert a claim  in  writing  at any time  prior to the
Expiration  Date.  Within  ten days of  delivery  of such  written  notice,  the
indemnifying party may, at the expense of such indemnifying party, elect to take
all necessary  steps properly to contest any Claim involving third parties or to
prosecute  such  Claim  to  conclusion  or  settlement   satisfactory   to  such
indemnifying party. If such indemnifying party makes the foregoing election,  an
Indemnified  Person will have the right to participate at its own expense in all
proceedings.  If such  indemnifying  party  does  not  make  such  election,  an
Indemnified  Person  shall be free to handle the  prosecution  or defense of any
such Claim,  will take all necessary  steps to contest the Claim involving third
parties or to prosecute such Claim to conclusion or settlement  satisfactory  to
such Indemnified  Person, and will notify the indemnifying party of the progress
of any such Claim,  will permit the indemnifying  party, at the sole cost of the
indemnifying  party,  to  participate  in such  prosecution  or defense and will
provide  the  indemnifying   party  with  reasonable   access  to  all  relevant
information  and  documentation  relating  to the Claim and the  prosecution  or
defense  thereof.  In any  case,  the  party not in  control  of the Claim  will
cooperate  with the other party in the conduct of the  prosecution or defense of
such Claim.  Neither party will  compromise or settle any such Claim without the
written  consent of either Parent (if the  Representative  defends the Claim) or
the  Representative  (if Parent  defends  the  Claim),  such  consent  not to be
unreasonably withheld; provided, that an Indemnified Person shall have the right
to settle  any such  Claim if the terms of such  settlement  are not  materially
prejudicial to the  indemnifying  party,  and that in such event the Indemnified
Person  shall be deemed to have  waived  any right of  indemnity  for such claim
hereunder.

         11.      MISCELLANEOUS

                  11.1  Governing  Law.  The  internal  laws  of  the  State  of
California  (irrespective  of its  choice of law  principles)  will  govern  the
validity  of  this  Agreement,   the   construction   of  its  terms,   and  the
interpretation and enforcement of the rights and duties of the parties hereto.

                  11.2 Assignment;  Successors and Assigns. Neither party hereto
may assign any of its rights or obligations  hereunder without the prior written
consent of the other party  hereto.  Any purported  assignment  not permitted by
this Section shall be void. This Agreement will be binding upon and inure to the
benefit of the parties  hereto and their  respective  successors  and  permitted
assigns.

                  11.3 Severability.  If any provision of this Agreement, or the
application  thereof,  is for any  reason  held to any  extent to be  invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties  hereto.  The parties  further  agree to replace  such
unenforceable provision of this Agreement with a valid and enforceable provision

                                       33

<PAGE> 39

that will achieve,  to the extent  possible,  the  economic,  business and other
purposes of the void or unenforceable provision.

                  11.4   Counterparts.   This   Agreement  may  be  executed  in
counterparts,  each of which will be an original as regards any party whose name
appears  thereon  and all of which  together  will  constitute  one and the same
instrument.  This Agreement  will become  binding when one or more  counterparts
hereof,  individually  or taken  together,  bear the  signatures of both parties
reflected hereon as signatories.

                  11.5 Other Remedies.  Except as otherwise provided herein, any
and  all  remedies  herein  expressly  conferred  upon a party  will  be  deemed
cumulative with and not exclusive of any other remedy conferred hereby or by law
on such party, and the exercise of any one remedy will not preclude the exercise
of any other.

                  11.6  Amendment  and  Waivers.  Any term or  provision of this
Agreement  may be amended  only by a writing  signed by Parent,  the Company and
Shareholders holding at least 50% of Company Common Stock. This Agreement may be
amended  by the  parties  hereto  at any time  before or after  approval  of the
Shareholders. The observance of any term of this Agreement may be waived (either
generally   or  in  a   particular   instance   and  either   retroactively   or
prospectively),  only by a writing signed by the party to be bound thereby.  The
waiver by a party of any breach hereof or default in the performance hereof will
not be deemed to  constitute  a waiver of any other  default  or any  succeeding
breach or default.

                  11.7 No Waiver. The failure of any party to enforce any of the
provisions  hereof  will not be  construed  to be a waiver  of the right of such
party  thereafter  to enforce  such  provisions.  The waiver by any party of the
right to  enforce  any of the  provisions  hereof  on any  occasion  will not be
construed to be a waiver of the right of such party to enforce such provision on
any other occasion.

                  11.8 Expenses.  Each party will bear its  respective  expenses
and  fees  of its own  accountants,  attorneys,  investment  bankers  and  other
professionals  incurred  with  respect to this  Agreement  and the  transactions
contemplated  hereby. If the Merger is consummated,  the Company will pay at the
Closing  all  Company  Fees,  which  paid  Company  Fees shall be  reflected  by
corresponding  deductions  of like  amounts on the  Closing  Balance  Sheet.  If
payment of all Company Fees is not timely made, Parent may pay such Company Fees
or a portion thereof, in which event Parent will be entitled to be reimbursed by
the  Shareholders  for such  payment and, if not so  reimbursed,  Parent will be
entitled to treat the amount of payment as Damages  recoverable under the Escrow
Agreement.

                  11.9 Notices.  Any notice or other  communication  required or
permitted to be given under this Agreement will be in writing, will be delivered
personally, by mail or express delivery, postage prepaid, or telecopy (confirmed
in  writing)  and will be deemed  given upon  actual  delivery  or, if mailed by
registered or certified mail, on the third business day following deposit in the
mails, addressed as follows:

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<PAGE> 40

                           (i)      If to Parent:

                                    Micro Focus
                                    701 Middlefield Road
                                    Mountain View, California  94043
                                    Attention: General Counsel
                                    Fax: 650-404-7394

                                    with a copy to:

                                    Fenwick & West LLP
                                    Two Palo Alto Square
                                    Palo Alto, California  94306
                                    Attention:  Gordon K. Davidson
                                    Fax:  650-494-1417

                           (ii)     If to the Shareholders:

                                    Dr. S. Bing Yao
                                    9904 Bent Cross Drive
                                    Potomac, Maryland 20854
                                    Fax: 301-983-5860

                                    with a copy to:

                                    Venable, Baetjer and Howard, LLP
                                    1800 Mercantile Bank and Trust Building
                                    Two Hopkins Plaza
                                    Attention:  Newton B. Fowler, III
                                    Fax: 410-244-7742

                                    and a copy to:

                                    Joseph, Greenwald & Laake, P.A.
                                    6404 Ivy Lane, Suite 400
                                    Greenbelt, Maryland 20770
                                    Attention: John S. Parker

or to such other  address as the party in  question  may have  furnished  to the
other party by written notice given in accordance with this Section 11.9.

                  11.10 Construction of Agreement.  The language hereof will not
be construed for or against either party. A reference to an article,  section or
exhibit  will mean an article or section in, or an exhibit  to, this  Agreement,
unless otherwise explicitly set forth. The titles and headings in this Agreement
are  for  reference  purposes  only  and  will  not  in  any  manner  limit  the
construction  of this  Agreement.  For the purposes of such  construction,  this
Agreement will be considered as a whole.  When this Agreement makes reference to
a person's "knowledge",  such reference shall mean such person's (or a corporate
person's  directors,  officers or senior employees) actual knowledge,  after due
investigation.

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<PAGE> 41

                  11.11 No Joint  Venture.  Nothing  contained in this Agreement
will be deemed or construed as creating a joint venture or  partnership  between
the parties  hereto.  No party is by virtue of this  Agreement  authorized as an
agent,  employee or legal  representative of any other party. No party will have
the power to  control  the  activities  and  operations  of any  other,  and the
parties'  status is, and at all times,  will continue to be, that of independent
contractors  with  respect  to each  other.  No party  will  have  any  power or
authority  to bind or commit any other.  No party will hold itself out as having
any authority or relationship in contravention of this Section.

                  11.12 Further Assurances. Each party agrees to cooperate fully
with the other party and to execute  such  further  instruments,  documents  and
agreements  and to give such further  written  assurances  as may be  reasonably
requested by the other party to evidence and reflect the  transactions  provided
for herein and to carry into effect the intent of this Agreement.

                  11.13 Absence of Third Party Beneficiary Rights. No provisions
of this Agreement are intended,  nor will be  interpreted,  to provide or create
any  third  party  beneficiary  rights  or any  other  rights of any kind in any
client,  customer,  affiliate,  partner or employee  of any party  hereto or any
other person or entity,  unless  specifically  provided  otherwise herein,  and,
except as so provided, all provisions hereof will be personal solely between the
parties to this Agreement.

                  11.14 Public Announcement. Parent and the Company will issue a
press  release  approved  by  both  parties  announcing  the  Merger  as soon as
practicable  following  the execution of this  Agreement.  Parent may issue such
press  releases,  and make such other  disclosures  regarding the Merger,  as it
determines to be required or appropriate  under  applicable  securities  laws or
NASD rules after reasonable consultation,  where possible, with the Company. The
Company  will  not make any  other  public  announcement  or  disclosure  of the
transactions   contemplated  by  this  Agreement.  The  Company  will  take  all
reasonable  precautions  to prevent any trading in the  securities  of Parent by
officers, directors, employees and agents of the Company having knowledge of any
material  information  regarding Parent provided hereunder until the information
in question has been publicly disclosed.

                  11.15  Confidentiality.  Except  as  expressly  authorized  by
Parent in writing,  the Company will not directly or  indirectly  divulge to any
person or entity or use any Parent Confidential Information,  except as required
for the  performance  of its duties  under this  Agreement.  Except as expressly
authorized  by the Company in writing,  Parent will not  directly or  indirectly
divulge to any person or entity or use any the Company Confidential Information,
except as required for the  performance of its duties under this  Agreement.  As
used herein,  "Parent Confidential  Information" consists of (a) any information
designated by Parent as confidential whether developed by Parent or disclosed to
Parent by a third  party,  (b) the source  code to any Parent  software  and any
trade secrets relating to any of the foregoing,  (c) any information relating to
Parent's product plans, product designs,  product costs, product prices, product
names, finances,  marketing plans, business opportunities,  personnel,  research
development  or  know-how,  (d) any  information  contained  in Parent's HSR Act
filing  in  connection  herewith  and (e)  items  and  matters  set forth in any
disclosure  letter by Parent in connection  herewith.  As used herein,  "Company
Confidential  Information"  consists  of (v) any  information  contained  in the
Company's HSR Act filing in connection herewith, (w) items and matters set forth
in the Company Disclosure Letter, (x) any information  designated by the Company
as confidential  whether developed by the Company or disclosed to the Company by

                                       36

<PAGE> 42

a third party,  (y) the source code to any the Company  software,  and any trade
secrets related to any of the foregoing, and (z) any information relating to the
Company product plans, product designs,  product costs, product prices,  product
names, finances,  marketing plan, business opportunities,  personnel,  research,
development  or  know-how.   "Parent  Confidential   Information"  and  "Company
Confidential  Information"  also  include  the  terms  and  conditions  of  this
Agreement,  except as disclosed in  accordance  with  Section  11.14 above.  The
foregoing  restriction will apply to information about a party whether or not it
was  obtained  from such party's  employees,  acquired or developed by the other
party during such other party's  performance under this Agreement,  or otherwise
learned.  The foregoing  restrictions will not apply to information that (i) has
become publicly known through no wrongful act of the receiving  party,  (ii) has
been rightfully received from a third party authorized by the party which is the
owner,  creator or compiler to make such disclosure without  restriction,  (iii)
has been approved or released by written authorization of the party which is the
owner,  creator or compiler,  or (iv) is being or has therefore  been  disclosed
pursuant  to a valid  court order or valid  action of a  governmental  authority
after a reasonable attempt has been made to notify the party which is the owner,
creator or compiler.

                  11.16 Time is of the Essence.  The parties hereto  acknowledge
and agree that time is of the essence in connection with the execution, delivery
and  performance of this  Agreement,  and that they will each utilize their best
efforts to satisfy all the conditions to Closing on or before January 15, 1998.

                  11.17 Entire Agreement. This Agreement and the exhibits hereto
constitute  the entire  understanding  and agreement of the parties  hereto with
respect to the subject matter hereof and supersede all prior and contemporaneous
agreements or  understandings,  inducements or  conditions,  express or implied,
written or oral,  between the parties with respect to the subject matter hereof.
The express  terms hereof  control and supersede  any course of  performance  or
usage of trade inconsistent with any of the terms hereof.

                  11.18.   Dispute Resolution.

                  11.18.1   Arbitration.   Any  dispute   arising  under  or  in
connection  with  this  Agreement  and  the  transactions   contemplated  hereby
(including under each agreement or instrument  attached hereto as an exhibit) (a
"Dispute")  shall be settled by arbitration in San Francisco,  California,  and,
except  as  herein  specifically  stated,  in  accordance  with  the  commercial
arbitration rules of the American Arbitration  Association ("AAA Rules") then in
effect;  provided,  that discovery in such arbitration  shall be permitted under
the Federal Rules of Civil  Procedure  then in effect.  However,  in all events,
these  arbitration  provisions shall govern over any conflicting rules which may
now or  hereafter be  contained  in the AAA Rules.  Any judgment  upon the award
rendered by the arbitrator may be entered in any court having  jurisdiction over
the subject matter  thereof.  Arbitration  pursuant to the terms of this Section
11.18 shall be the exclusive  means of resolving  Disputes;  provided,  that any
party under this Agreement or the other agreements  contemplated hereby may seek
provisional,   injunctive  or  other  equitable  relief  in  any  court  pending
resolution of a Dispute hereunder.

                  11.18.2 Compensation of Arbitrator.  Any such arbitration will
be conducted  before a single  arbitrator who will be compensated for his or her
services at a rate to be  determined by the parties,  but based upon  reasonable

                                       37

<PAGE> 43

hourly  or  daily  consulting  rates  determined  by  the  American  Arbitration
Association  for the  arbitrator  in the event the parties are not able to agree
upon his or her rate of compensation.

                  11.18.3  Selection of  Arbitrator.  The  American  Arbitration
Association  will have the  authority  to select  an  arbitrator  from a list of
arbitrators  who are lawyers  familiar with California  contract law;  provided,
however,  that such lawyers do not work for a firm then  providing  services for
either party,  that each party will have the opportunity to make such reasonable
objection to any of the  arbitrators  listed as such party may wish and that the
American  Arbitration  Association  will select the arbitrator  from the list of
arbitrators as to whom neither party makes any such objection. In the event that
the foregoing procedure is not followed,  each party will choose one person from
the  list  of  arbitrators  provided  by the  American  Arbitration  Association
(provided  that such person does not have a conflict of  interest),  and the two
persons  so  selected  will  select  from  the  list  provided  by the  American
Arbitration Association the person who will act as the arbitrator.

                  11.18.4  Payment of Costs.  Parent and the  Shareholders  will
each pay 50% of the initial  compensation  to be paid to the  arbitrator  in any
such  arbitration  and 50% of the  costs of  transcripts  and other  normal  and
regular expenses of the arbitration  proceedings;  provided,  however,  that the
prevailing  party in any arbitration  will be entitled to an award of attorneys'
fees and costs,  and all costs of  arbitration,  including  those  provided  for
above,  will be paid by the losing party,  and the arbitrator will be authorized
to make such  determinations.  For Disputes arising under the Escrow  Agreement,
the Shareholders'  liability for such fees and expenses of arbitration initially
will be paid by Parent and, if so determined,  will be recovered pursuant to the
Escrow Agreement.

                  11.18.5  Burden  of  Proof.  For  any  Dispute   submitted  to
arbitration,  the  burden  of proof  will be as it would  be if the  claim  were
litigated in a judicial proceeding.

                  11.18.6  Award.   Upon  the  conclusion  of  any   arbitration
proceedings  hereunder,   the  arbitrator  will  render  findings  of  fact  and
conclusions of law and a written opinion setting forth the basis and reasons for
any  decision  reached and will  deliver  such  documents  to each party to this
Agreement along with a signed copy of the award.

                  11.18.7  Terms  of  Arbitration.   The  arbitrator  chosen  in
accordance  with  these  provisions  will not have the power to alter,  amend or
otherwise affect the terms of these arbitration  provisions or the provisions of
this Agreement.

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<PAGE> 44


         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the date first above written.

                                    MICRO FOCUS GROUP PLC



                                    By:/s/  Martin Waters             
                                       ------------------------------------  
                                    Name:  Martin Waters
                                    Title: President and Chief Executive Officer

`
                                    XDB SYSTEMS, INC.


                                    By:/s/ S. Bing Yao
                                       -------------------------------------   
                                    Name:  S. Bing Yao
                                    Title:  Chairman and CEO

                                  
                                   SHAREHOLDERS:



                                    /s/  S. Bing Yao
                                    ----------------------------------
                                    Dr. S. Bing Yao
     


                                     /s/  Lien Yao
                                     -----------------------------------
                                     Lien Yao



            [SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]

                                       39