<PAGE>

     As filed with the Securities and Exchange Commission on March 6, 2001
                                                      Registration No. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                --------------

                                    FORM S-4
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933

                                --------------

                               Ashford.com, Inc.
             (Exact name of Registrant as specified in its charter)

                                --------------

         Delaware                    5944                   76-0617905
     (State or other          (Primary standard          (I.R.S. employer
       jurisdiction               industrial            identification no.)
   of incorporation or        classification code
      organization)                 number)

                                --------------

                        3800 Buffalo Speedway, Suite 400
                              Houston, Texas 77098
                                 (713) 369-1300
  (Address, including zip code, and telephone number, including area code, of
                   Registrant's principal executive offices)

                                --------------

                              Kenneth E. Kurtzman
                        3800 Buffalo Speedway, Suite 400
                              Houston, Texas 77098
                                 (713) 369-1300
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)

                                --------------

                                   Copies to:

      Anthony M. Allen, Esq.              Brian D. Wenger, Esq.
     Catherine L. Dawson, Esq.            Nancy C. Aiken, Esq.
       Billy J. Murphy, Esq.             Brett D. Anderson, Esq.
     Gunderson Dettmer Stough           James R. Sankovitz, Esq.
            Villeneuve                   Briggs and Morgan, P.A.
     Franklin & Hachigian, LLP               2400 IDS Center
    2700 Via Fortuna, Suite 300          80 South Eighth Street
        Austin, Texas 78746           Minneapolis, Minnesota 55402
          (512) 732-8400                     (612) 334-8400

                                --------------

   Approximate date of commencement of the proposed sale to the public: As soon
as practicable after the effective time of the merger described in this
Registration Statement.
   If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
   If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_] __________
   If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

                                --------------

                        CALCULATION OF REGISTRATION FEE

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<TABLE>
<S>                                    <C>            <C>                 <C>               <C>
                                                           Proposed           Proposed
         Title of Each Class            Amount to Be   Maximum Offering   Maximum Aggregate      Amount of
    of Securities to Be Registered     Registered (1) Price Per Share (2)  Offering Price   Registration Fee (3)
----------------------------------------------------------------------------------------------------------------
Common Stock, par value $0.001 per
 share................................   8,724,600          $0.6719         $5,862,058.74          $2.59
</TABLE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(1) The estimated maximum number of shares of Ashford.com, Inc. common stock
    issuable to stockholders of Guild.com, Inc. in connection with the merger
    of Ashford-Guild Art Corporation with and into Guild.com, Inc.
(2) Calculated based upon the average of the high and low prices for one share
    of Ashford.com, Inc. common stock reported on the Nasdaq National Market as
    of March 2, 2001.
(3) Computed pursuant to Rule 457(f)(2) and Section 6(b) under the Securities
    Act based upon one-third of the par value of the Guild.com, Inc. securities
    to be received by Ashford.com, Inc. in the transaction.

                                --------------

   The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
   The information in this prospectus may be changed. We may not sell these
securities until the Registration Statement filed with the Securities and
Exchange Commission is effective. This prospectus is not an offer to sell these
securities and we are not soliciting offers to buy these securities in any
state where the offer or sale is not permitted.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>


                               [ASHFORD.COM LOGO]

         , 2001

To the stockholders of Ashford.com, Inc.:

   Ashford and Guild.com, Inc. have entered into a merger agreement that
provides for the merger of Guild and a wholly owned subsidiary of Ashford. As a
result of the merger, Guild will become a wholly owned subsidiary of Ashford
and Ashford stockholders will continue to own their existing shares of Ashford
common stock. Based upon the assumptions described in the accompanying joint
proxy statement/prospectus, if the merger is completed and Guild's restated
certificate of incorporation is amended:

  .  each outstanding share of Guild Series A preferred stock will be
     exchanged for approximately 0.02903 of a share of Ashford common stock;

  .  each outstanding share of Guild Series B preferred stock will be
     exchanged for approximately 0.17807 of a share of Ashford common stock;

  .  each outstanding share of Guild Series C-1 preferred stock will be
     exchanged for approximately 0.36739 of a share of Ashford common stock;

  .  each outstanding share of Guild Series D preferred stock will be
     exchanged for approximately 0.48968 of a share of Ashford common stock;
     and

  .  each outstanding share of Guild common stock will be canceled without
     payment of consideration.

   Based upon the foregoing exchange ratios, we estimate that Guild
stockholders will hold, in the aggregate, approximately     % of the issued and
outstanding shares of Ashford common stock following the merger. The
outstanding options to purchase Guild common stock will be assumed by Ashford
following the merger. In the aggregate, these options will be converted into
options to purchase 1,583,200 shares of Ashford common stock.

   Ashford's common stock is quoted on the Nasdaq National Market under the
symbol "ASFD." On March    , 2001, the closing price for Ashford common stock
reported on the Nasdaq National Market was $     per share. On March    , 2001,
Ashford had            shares of common stock outstanding.

   After careful consideration, the board of directors of Ashford has
determined that the merger is in the best interests of Ashford stockholders,
and the board of directors of Ashford unanimously recommends voting FOR
approval and adoption of the merger and the merger agreement.

   This document provides you with detailed information about the proposed
merger. We encourage you to read this entire document carefully. In particular,
please see the section entitled "Risk Factors" on page 17 of this document for
a discussion of risks associated with the merger. The merger cannot be
completed unless the merger and the merger agreement are approved and adopted
by:

  .  holders of a majority of the outstanding shares of Guild common stock
     and preferred stock, voting together as a single class;

  .  holders of a majority of the outstanding shares of Guild Series B
     preferred stock, Series C-1 preferred stock and Series D preferred
     stock, voting together as a single class; and

  .  holders of a majority of the outstanding shares of Ashford common stock.
<PAGE>

   Both Ashford and Guild will hold special meetings of their stockholders to
vote on the merger and the merger agreement. The date, time and place of
Ashford's special meeting are as follows:

                                       , 2001
                               10:00 a.m. local time
                                 Renaissance Hotel
                         Greenway II Room, Concourse Level
                               6 Greenway Plaza East
                              Houston, Texas 77046

   Whether or not you plan to attend Ashford's special meeting, please take the
time to vote by completing and mailing the enclosed proxy card to us. YOUR VOTE
IS VERY IMPORTANT.

                              Kenneth E. Kurtzman
                       Chief Executive Officer and Director
                                 Ashford.com, Inc.

   Neither the United States Securities and Exchange Commission nor any state
securities commission has approved or disapproved of the Ashford common stock
to be issued in the merger or determined if this joint proxy
statement/prospectus is accurate or adequate. Any representation to the
contrary is a criminal offense.

   This joint proxy statement/prospectus is dated          , 2001, and was
first mailed to stockholders on or about          , 2001.
<PAGE>


                                [GUILD.COM LOGO]
     , 2001

To the stockholders of Guild.com, Inc.:

   Guild and Ashford.com, Inc. have entered into a merger agreement that
provides for the merger of Guild and a wholly owned subsidiary of Ashford. As a
result of the merger, Guild will become a wholly owned subsidiary of Ashford.
Based upon the assumptions described in the accompanying joint proxy
statement/prospectus, if the merger is completed and Guild's restated
certificate of incorporation is amended:

  .  each outstanding share of Guild Series A preferred stock will be
     exchanged for approximately 0.02903 of a share of Ashford common stock;

  .  each outstanding share of Guild Series B preferred stock will be
     exchanged for approximately 0.17807 of a share of Ashford common stock;

  .  each outstanding share of Guild Series C-1 preferred stock will be
     exchanged for approximately 0.36739 of a share of Ashford common stock;

  .  each outstanding share of Guild Series D preferred stock will be
     exchanged for approximately 0.48968 of a share of Ashford common stock;
     and

  .  each outstanding share of Guild common stock will be canceled without
     payment of consideration.

   Based upon the foregoing exchange ratios, which Guild considers to be the
most likely to apply, we estimate that Guild stockholders will hold, in the
aggregate, approximately     % of the issued and outstanding shares of Ashford
common stock following the merger. The outstanding options to purchase Guild
common stock will be assumed by Ashford following the merger. In the aggregate,
these options will be converted into options to purchase 1,583,200 shares of
Ashford common stock.

   Ashford's common stock is quoted on the Nasdaq National Market under the
symbol "ASFD." On March    , 2001, the closing price for Ashford common stock
reported on the Nasdaq National Market was $     per share. On March    , 2001,
Ashford had           shares of common stock outstanding.

   After careful consideration, the board of directors of Guild has determined
that the merger is in the best interests of Guild stockholders, and the board
of directors of Guild unanimously recommends voting FOR approval and adoption
of the merger and the merger agreement.

   This document provides you with detailed information about the proposed
merger and the proposed amendment to Guild's restated certificate of
incorporation. We encourage you to read this entire document carefully. In
particular, please see the section entitled "Risk Factors" on page 17 of this
document for a discussion of risks associated with the merger. The merger
cannot be completed unless the merger and the merger agreement are approved and
adopted by:

  .  holders of a majority of the outstanding shares of Guild common stock
     and preferred stock, voting together as a single class;

  .  holders of a majority of the outstanding shares of Guild Series B
     preferred stock , Series C-1 preferred stock and Series D preferred
     stock, voting together as a single class; and

  .  holders of a majority of the outstanding shares of Ashford common stock.
<PAGE>

   In addition to approval and adoption of the merger and the merger agreement,
the board of directors of Guild requests your approval of the amendment to
Guild's restated certificate of incorporation, but the completion of the merger
is not conditioned on your approval of this amendment. The amendment to the
certificate of incorporation will require the affirmative vote of:

  .  holders of a majority of the outstanding shares of Guild common stock
     and preferred stock, voting together as a single class; and

  .  holders of a majority of the outstanding shares of Guild Series A
     preferred stock, Series B preferred stock, Series C-1 preferred stock,
     and Series D preferred stock, each voting as a separate series and not
     as a single class.

   Both Ashford and Guild will hold special meetings of their stockholders to
vote on the merger and the merger agreement. As noted above, Guild stockholders
will also vote on an amendment to Guild's restated certificate of
incorporation. The date, time and place of Guild's special meeting are as
follows:

                                        , 2001
                             10:00 a.m. local time
                         931 East Main Street, Suite 3
                            Madison, Wisconsin 53703

   Whether or not you plan to attend Guild's special meeting, please take the
time to vote by completing and mailing the enclosed proxy card to us. YOUR VOTE
IS VERY IMPORTANT.

                                  Gordon Mayer
                             President and Director
                                  Guild.com, Inc.

   Neither the United States Securities and Exchange Commission nor any state
securities commission has approved or disapproved of the Ashford common stock
to be issued in the merger or determined if this joint proxy
statement/prospectus is accurate or adequate. Any representation to the
contrary is a criminal offense.

   This joint proxy statement/prospectus is dated          , 2001, and was
first mailed to stockholders on or about          , 2001.
<PAGE>

                      REFERENCES TO ADDITIONAL INFORMATION

   This joint proxy statement/prospectus incorporates important business and
financial information about Ashford from documents that are not included in or
delivered with this joint proxy statement/prospectus. This information is
available to you without charge upon your written or oral request. You can
obtain documents incorporated by reference in this joint proxy
statement/prospectus by requesting them in writing or by telephone from Ashford
at the following address and telephone number:

                               Ashford.com, Inc.
                               3800 Buffalo Speedway, Suite 400
                               Houston, Texas 77098
                               Attention: Legal Department
                               Telephone: (713) 369-1300

   If you would like to request documents, please do so by           , 2001 in
order to receive them before the special meetings.

   See "Where You Can Find More Information" on page 84.
<PAGE>

                              [ASHFORD.COM LOGO]

                               ASHFORD.COM, INC.
                       3800 Buffalo Speedway, Suite 400
                             Houston, Texas 77098

                   NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
                       TO BE HELD ON              , 2001

   A special meeting of stockholders of Ashford.com, Inc., a Delaware
corporation, will be held on           , 2001 at 10:00 a.m., local time, at
Renaissance Hotel, Greenway II Room, Concourse Level, 6 Greenway Plaza East,
Houston, Texas 77046, to consider and vote upon a proposal to approve and
adopt the merger and the merger agreement, dated as of January 3, 2001, among
Ashford, Ashford-Guild Art Corporation, a Delaware corporation and a wholly
owned subsidiary of Ashford, and Guild.com, Inc., a Delaware corporation.
Under the merger agreement, Ashford-Guild Art Corporation will be merged with
and into Guild, with Guild being the surviving corporation and a wholly owned
subsidiary of Ashford.

   We will transact such other business as may properly come before the
Ashford special meeting or any adjournment or postponement of the meeting.

   The close of business on           , 2001 has been fixed as the record date
for the determination of stockholders entitled to notice of, and to vote at,
the Ashford special meeting or any adjournment or postponement of the meeting.
Only holders of record of Ashford common stock at the close of business on the
record date may vote at the Ashford special meeting.

   We cannot complete the merger unless the merger and the merger agreement
are approved and adopted by:

  .  the holders of a majority of the outstanding shares of Ashford common
     stock;

  .  the holders of a majority of the outstanding shares of Guild common
     stock and preferred stock, voting together as a single class; and

  .  the holders of a majority of the outstanding shares of the Guild Series
     B preferred stock, Series C-1 preferred stock and Series D preferred
     stock, voting together as a single class.

   All holders of Ashford common stock are cordially invited to attend the
Ashford special meeting in person. However, to ensure your representation at
the Ashford special meeting, you are urged to complete, sign and return the
enclosed proxy card as promptly as possible in the enclosed postage-prepaid
envelope. YOUR VOTE IS VERY IMPORTANT.

                                        By Order of the Ashford Board of
                                         Directors,

                                        ---------------------------------------
                                        Ryan Maierson
                                        Secretary

Houston, Texas
       , 2001
<PAGE>

                               [GUILD.COM LOGO]

                                GUILD.COM, INC.
                         931 East Main Street, Suite 3
                           Madison, Wisconsin 53703

                   NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
                      TO BE HELD ON               , 2001

   A special meeting of stockholders of Guild.com, Inc., a Delaware
corporation, will be held on           , 2001 at 10:00 a.m., local time, at
931 East Main Street, Suite 3, Madison, Wisconsin 53703, (1) to consider and
vote upon a proposal to approve and adopt the merger and the merger agreement,
dated as of January 3, 2001, among Ashford.com, Inc., a Delaware corporation,
Ashford-Guild Art Corporation, a Delaware corporation and a wholly owned
subsidiary of Ashford, and Guild, and (2) to consider and vote upon an
amendment to Guild's restated certificate of incorporation that would allow
Guild Series A preferred stockholders to receive consideration in the merger,
with a corresponding reduction in the consideration payable to the holders of
the other series of Guild preferred stock. Under the merger agreement,
Ashford-Guild Art Corporation will be merged with and into Guild, with Guild
being the surviving corporation and a wholly owned subsidiary of Ashford.

   We will transact such other business as may properly come before the Guild
special meeting or any adjournment or postponement of the meeting.

   The close of business on              , 2001 has been fixed as the record
date for the determination of stockholders entitled to notice of, and to vote
at, the Guild special meeting or any adjournment or postponement of the
meeting. Only holders of record of Guild common stock and preferred stock at
the close of business on the record date may vote at the Guild special
meeting.

   We cannot complete the merger unless the merger and the merger agreement
are approved and adopted by:

  .  the holders of a majority of the outstanding shares of Guild common
     stock and preferred stock, voting together as a single class;

  .  the holders of a majority of the outstanding shares of the Guild Series
     B preferred stock, Series C-1 preferred stock and Series D preferred
     stock, voting together as a single class; and

  .  the holders of a majority of the outstanding shares of Ashford common
     stock.

   Approval of the amendment to Guild's restated certificate of incorporation
will require the affirmative vote of:

  .  the holders of a majority of the outstanding shares of Guild common
     stock and preferred stock, voting together as a single class; and

  .  the holders of a majority of the outstanding shares of Guild Series A
     preferred stock, Series B preferred stock, Series C-1 preferred stock,
     and Series D preferred stock, each voting as a separate series and not
     as a single class.

   Holders of Guild capital stock who properly comply with certain statutory
requirements are entitled to an appraisal of their shares under Delaware law.
All holders of Guild common stock and preferred stock are cordially invited to
attend the Guild special meeting in person. However, to ensure your
representation at the Guild special meeting, you are urged to complete, sign
and return the enclosed proxy card as promptly as possible in the enclosed
postage-prepaid envelope. YOUR VOTE IS VERY IMPORTANT.

                                        By Order of the Guild Board of
                                         Directors,

                                        ---------------------------------------
                                        Gordon Mayer
                                        President

Madison, Wisconsin
       , 2001
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
<S>                                                                        <C>
QUESTIONS AND ANSWERS ABOUT THE ASHFORD/GUILD MERGER......................   1
SUMMARY...................................................................   4
SELECTED CONSOLIDATED FINANCIAL DATA OF ASHFORD.COM, INC..................  11
SELECTED FINANCIAL DATA OF GUILD.COM, INC.................................  12
SELECTED ASHFORD.COM, INC. AND GUILD.COM, INC. UNAUDITED PRO FORMA
 CONSOLIDATED FINANCIAL DATA..............................................  13
MARKET PRICE INFORMATION..................................................  14
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS................  16
RISK FACTORS..............................................................  17
  Risks Related to the Merger.............................................  17
  Risks Related to the Business of Each of Ashford and Guild..............  20
  Risks Related Solely to Ashford.........................................  27
  Risks Related Solely to Guild...........................................  30
THE ASHFORD SPECIAL MEETING...............................................  31
  General.................................................................  31
  Purpose of Special Meeting..............................................  31
  Ashford Board of Directors' Recommendation..............................  31
  Record Date and Voting..................................................  31
  Voting and Revocation of Proxies........................................  32
THE GUILD SPECIAL MEETING.................................................  33
  General.................................................................  33
  Purpose of Special Meeting..............................................  33
  Guild Board of Directors' Recommendation................................  33
  Record Date and Voting..................................................  33
  Voting and Revocation of Proxies........................................  34
THE MERGER................................................................  36
  Background of the Merger................................................  36
  Joint Reasons for the Merger............................................  39
  Recommendation of the Board of Directors of Ashford; Ashford's Reasons
   for the Merger.........................................................  39
  Recommendation of the Board of Directors of Guild; Guild's Reasons for
   the Merger.............................................................  39
  Certain Financial Projections (Unaudited)...............................  40
  Interests of Executive Officers and Directors of Ashford and Guild in
   the Merger.............................................................  40
  Accounting Treatment of the Merger......................................  41
  Material United States Federal Income Tax Considerations................  41
  Appraisal Rights........................................................  43
  Regulatory Approvals....................................................  45
  Nasdaq National Market Quotation........................................  46
  Resales of Ashford Common Stock Issued in Connection with the Merger;
   Affiliate Agreements; Lock-up Agreements...............................  46
  Operations Following the Merger.........................................  46
THE MERGER AGREEMENT......................................................  47
  General.................................................................  47
  Exchange of Shares......................................................  47
  Treatment of Guild Stock Options........................................  48
  Exchange of Stock Certificates..........................................  48
  Appraisal Rights........................................................  49
  Representations and Warranties..........................................  49
  Covenants...............................................................  51
  Related Matters After the Merger........................................  53
</TABLE>

                                       i
<PAGE>

<TABLE>
<CAPTION>
<S>                                                                          <C>
  Conditions to Completion of the Merger...................................   53
  Termination; Expenses....................................................   54
  Amendment and Waiver.....................................................   55
OTHER AGREEMENTS...........................................................   56
  Voting Agreements........................................................   56
  Affiliate Agreements.....................................................   56
  Lock-up Agreements.......................................................   56
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA..................   57
  Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December
   31, 2000................................................................   58
  Unaudited Pro Forma Condensed Consolidated Statement of Operations for
   the Year Ended March 31, 2000...........................................   59
  Unaudited Pro Forma Condensed Consolidated Statement of Operations for
   the Nine Months
   Ended December 31, 2000.................................................   60
  Notes to Unaudited Pro Forma Condensed Consolidated Financial Data.......   61
AMENDMENT TO GUILD'S RESTATED CERTIFICATE OF INCORPORATION.................   62
  Existing Liquidation Preferences of Guild Preferred Stock................   62
  The Amendment............................................................   63
  Vote Required............................................................   63
DESCRIPTION OF ASHFORD'S BUSINESS..........................................   64
  Overview.................................................................   64
  Recent Developments......................................................   65
DESCRIPTION OF GUILD'S BUSINESS............................................   66
  Overview.................................................................   66
  Sales and Marketing......................................................   66
  Product Selection and Distribution.......................................   66
  Customers................................................................   67
  Competition..............................................................   67
  Facilities...............................................................   68
  Employees................................................................   68
GUILD MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
 RESULTS OF OPERATIONS.....................................................   69
  Overview.................................................................   69
  Results of Operations....................................................   69
  Liquidity and Capital Resources..........................................   71
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF GUILD..   72
DESCRIPTION OF ASHFORD CAPITAL STOCK.......................................   74
  Common Stock.............................................................   74
  Preferred Stock..........................................................   74
  Registration Rights......................................................   74
  Anti-Takeover Effects of Certain Provisions of Delaware Law and Ashford's
   Certificate of Incorporation and Bylaws.................................   75
  Limitation of Liability and Indemnification Matters......................   76
  Transfer Agent and Registrar.............................................   76
COMPARISON OF STOCKHOLDER RIGHTS...........................................   77
  General..................................................................   77
  Capitalization...........................................................   77
  Voting Rights............................................................   77
  Number of Directors......................................................   77
  Removal of Directors.....................................................   78
  Filling Vacancies on the Board of Directors..............................   78
  Amendments to Certificate of Incorporation...............................   79
</TABLE>

                                       ii
<PAGE>

<TABLE>
<S>                                                                          <C>
  Amendments to Bylaws......................................................  79
  Action by Written Consent.................................................  80
  Notice of Stockholder Actions.............................................  80
  Right to Call Special Meeting of Stockholders.............................  80
  Limitation of Personal Liability of Directors.............................  81
  Dividends.................................................................  81
  Conversion and Redemption.................................................  82
  Preemptive Rights.........................................................  82
  Liquidation...............................................................  82
LEGAL MATTERS...............................................................  83
EXPERTS.....................................................................  83
WHERE YOU CAN FIND MORE INFORMATION.........................................  84
INDEX TO FINANCIAL STATEMENTS............................................... F-1
ANNEX A: MERGER AGREEMENT................................................... A-1
ANNEX B: RESTATED CERTIFICATE OF INCORPORATION OF GUILD.COM, INC. .......... B-1
ANNEX C: CERTIFICATE OF AMENDMENT OF RESTATED CERTIFICATE OF
 INCORPORATION OF GUILD.COM, INC. .......................................... C-1
ANNEX D: DELAWARE GENERAL CORPORATION LAW................................... D-1
</TABLE>

                                      iii
<PAGE>

              QUESTIONS AND ANSWERS ABOUT THE ASHFORD/GUILD MERGER

Q: Why are the companies proposing the merger?

A:  We believe that Guild's strengths and capabilities complement Ashford's
    business and that the merger will enhance the combined company's ability to
    compete more effectively in the online premium products and luxury goods
    market.

Q: What will I receive in the merger?

A:  Each outstanding share of Guild common stock will be canceled without
    payment of consideration in the merger. The amount of consideration Guild
    preferred stockholders will receive in the merger depends upon whether the
    holders of Guild capital stock approve the amendment to Guild's restated
    certificate of incorporation. The proposed amendment would allow Guild
    Series A preferred stockholders to receive consideration in the merger,
    with a corresponding reduction in the consideration payable to the holders
    of the other series of Guild preferred stock.

    The exchange ratios described herein assume that the aggregate merger
    consideration is valued at less than $39.3 million. Based upon the market
    price of Ashford common stock as of the trading day immediately prior to the
    date of this joint proxy statement/prospectus, the aggregate merger
    consideration was valued at approximately $ million. Ashford and Guild
    believe that the exchange ratios described herein are the most likely to
    apply; however, for further information regarding the exchange ratios that
    would apply if the aggregate merger consideration equaled or exceeded $39.3
    million, please see "The Merger Agreement--Exchange of Shares."

Q: What will I receive in the merger if Guild's restated certificate of
   incorporation is amended?

A:  If approved, the amendment to Guild's restated certificate of incorporation
    would allow Guild Series A preferred stockholders to receive consideration
    in the merger. In this case, each Guild preferred stockholder (other than
    preferred stockholders who perfect their appraisal rights under Delaware
    law) would receive:

  . approximately 0.02903 of a share of Ashford common stock for each share
    of Guild Series A preferred stock owned;

  . approximately 0.17807 of a share of Ashford common stock for each share
    of Guild Series B preferred stock owned;

  . approximately 0.36739 of a share of Ashford common stock for each share
    of Guild Series C-1 preferred stock owned; and

  . approximately 0.48968 of a share of Ashford common stock for each share
    of Guild Series D preferred stock owned.

Q: What will I receive in the merger if Guild's restated certificate of
   incorporation is not amended?

A:  If the amendment is not approved, Guild Series A preferred stockholders
    would not be eligible to receive consideration in the merger. In this case,
    each Guild preferred stockholder (other than preferred stockholders who
    perfect their appraisal rights under Delaware law) would receive:

  . approximately 0.18166 of a share of Ashford common stock for each share
    of Guild Series B preferred stock owned;

  . approximately 0.37481 of a share of Ashford common stock for each share
    of Guild Series C-1 preferred stock owned; and

  . approximately 0.49957 of a share of Ashford common stock for each share
    of Guild Series D preferred stock owned.

                                       1
<PAGE>

Q: Will Ashford issue fractional shares?

A: No. Ashford will not issue fractional shares of common stock. Instead of
   any fractional shares, Guild stockholders will receive cash based on the
   average closing market prices of Ashford common stock as quoted on the
   Nasdaq National Market for the 20 trading days immediately preceding and
   ending on the last trading day before the effective time of the merger.
   Ashford common stock is traded on the Nasdaq National Market under the
   symbol "ASFD," and on       , 2001, Ashford common stock closed at $
   per share.

Q: Will the value of the consideration fluctuate before and after the merger?

A: Yes. Because the exchange ratios are fixed but the market price of Ashford
   common stock is subject to fluctuation, the market value of the shares of
   Ashford common stock that Guild stockholders will receive in the merger may
   increase or decrease prior to and following the merger. We urge you to
   obtain current market quotations for Ashford common stock. The current
   stockholders of Ashford will continue to own their existing shares of
   Ashford common stock following the merger.

Q: When will the merger be completed?

A: We are working to complete the merger as quickly as possible. We hope to
   complete the merger by the end of April 2001.

Q: Should Guild stockholders send in their stock certificates now?

A: No. After we complete the merger, Ashford will send you instructions
   explaining how to exchange your shares of Guild capital stock for the
   appropriate number of shares of Ashford stock.

Q: Should Ashford stockholders send in their stock certificates?

A: No. Ashford stockholders will continue to own their shares of Ashford
   common stock after the merger and should continue to hold their stock
   certificates.

Q: How do I vote?

A: If you hold Ashford shares or if you hold Guild shares, mail your signed
   proxy card in the enclosed return envelope as soon as possible. In the case
   of Ashford's stockholders, if your shares are held in "street name" by your
   broker, your broker will vote your shares only if you provide instructions
   on how to vote. You should follow the directions provided by your broker
   regarding how to instruct your broker to vote your shares. Without
   instructions, your shares will not be voted at the special meeting.

Q: How can I change my vote after I have mailed my proxy?

A: You may change your vote by delivering a signed revocation or a
   subsequently dated, signed proxy card to Ashford's or Guild's corporate
   secretary, as applicable, before the stockholder meeting, or by attending
   the stockholder meeting and voting in person.

Q: Are there risks I should consider in deciding whether to vote for the
   merger?

A: Yes. We have described under the heading "Risk Factors" beginning on page
   17 of this joint proxy statement/prospectus a number of risk factors that
   you should carefully consider prior to voting.

Q: Will I recognize a gain or loss on the transaction?

A: Guild stockholders should generally not recognize gain or loss for United
   States federal income tax purposes upon receipt of Ashford common stock in
   the merger, but Guild stockholders should recognize

                                       2
<PAGE>

   gain or loss with respect to cash received instead of fractional shares.
   However, if Guild's restated certificate of incorporation is amended, the
   Internal Revenue Service may assert that holders of the Guild Series B
   preferred stock, Series C-1 preferred stock and Series D preferred stock
   will be deemed to have transferred to the holders of the Series A preferred
   stock that portion of the Ashford common stock they would have received if
   Guild's restated certificate of incorporation had not been amended. If the
   Internal Revenue Service prevailed in such position, holders of Guild Series
   A preferred stock would recognize ordinary income for United States federal
   income tax purposes equal to the fair market value of the Ashford common
   stock they receive in the merger, and the holders of Guild Series B
   preferred stock, Series C-1 preferred stock and Series D preferred stock may
   recognize gain for United States federal income tax purposes with respect to
   the Ashford common stock they are deemed to have transferred. Guild
   stockholders are urged to consult their own tax advisor to determine their
   particular tax consequences.

   For a more complete description of tax consequences of the merger, see the
   section entitled "Material United States Federal Income Tax Considerations"
   on page 41.

Q: Am I entitled to appraisal rights?

A: Holders of Ashford common stock are not entitled to appraisal rights in the
   merger. Holders of Guild common stock and preferred stock are entitled to
   appraisal rights under Delaware law.

   For a more complete description of your appraisal rights, see the section
   entitled "Appraisal Rights" on page 43 and "Appraisal Rights" on page 49.

Q: Who can help answer my questions?

A: If you have any questions about the merger or if you need additional copies
   of this joint proxy statement/prospectus and you are an Ashford
   stockholder, you should contact:

                               Ashford.com, Inc.
                        3800 Buffalo Speedway, Suite 400
                              Houston, Texas 77098
                         Attention: Investor Relations
                                 (713) 369-1300

  If you have any questions about the merger or if you need additional copies
  of this joint proxy statement/prospectus and you are a Guild stockholder,
  you should contact:

                                Guild.com, Inc.
                         931 East Main Street, Suite 3
                            Madison, Wisconsin 53703
                         Attention: Finance Department
                                 (608) 257-2590

                                       3
<PAGE>

                                    SUMMARY

   This summary highlights selected information from this document and may not
contain all of the information that is important to you. To understand the
merger fully and for a more complete description of the legal terms of the
merger, you should read carefully this entire document and the documents to
which we have referred you. See "Where You Can Find More Information" on page
84. We have included page references parenthetically to direct you to a more
complete description of the topics in this summary.

   Ashford provided the information in this joint proxy statement/prospectus
about Ashford and Guild provided the information in this joint proxy
statement/prospectus about Guild.

The Companies (pages 64 and 66)

   Ashford.com is a Delaware corporation initially incorporated as a Texas
company in March 1998 under the name NewWatch Corporation. It changed its name
to Ashford.com and reincorporated in Delaware in July 1999. Its principal
executive offices are located at:

     Ashford.com, Inc.
     3800 Buffalo Speedway, Suite 400
     Houston, Texas 77098
     (713) 369-1300

   Ashford is a Web-based retailer focused on luxury and premium products,
including new and vintage watches, clocks, diamonds, jewelry, leather goods,
writing instruments, fragrances, sunglasses, ties, scarves and home decor and
lifestyle products, altogether offering more than 20,000 products from over 400
leading luxury brands. During the past year and a half Ashford has rapidly
expanded its primary product focus from offering only new watches to offering
11 different product categories. Ashford's strategy has been to add
complementary products to create a portfolio that combines items purchased
frequently, such as leather goods and sunglasses, with higher-priced items
purchased less frequently, such as watches and diamonds. In March 2000, Ashford
launched its corporate gifts business, which offers an additional 800 luxury
products in new categories such as crystal, silver and pewter that are targeted
to the corporate market. By combining its expertise in luxury products and its
commitment to excellent customer service with the benefits of Internet
retailing, Ashford is able to deliver a unique shopping experience to
consumers. Ashford believes that its current luxury and premium product
offerings are well suited for online commerce given brand recognition,
generally high average sales prices and relatively low average distribution and
shipping costs.

   Guild.com is a Delaware corporation initially incorporated as a Wisconsin
corporation in March 1998 and reincorporated in Delaware in March 1999. Its
principal executive offices are located at:

     Guild.com, Inc.
     931 East Main Street, Suite 3
     Madison, Wisconsin 53703
     (608) 257-2590

   Guild maintains a comprehensive online collection of 10,000 original works
of art available for retail sale, including contemporary fine art, home
furnishings, accessories and fine crafts, created by 1,500 practicing artists.
Guild also publishes art-related books for retail and wholesale distribution,
including a semi-annual Sourcebook displaying sample artwork for commission by
architects and interior designers. Besides offering a wide range of original
artwork by current artists, Guild's Web site showcases online special
exhibitions curated by artists, gallery owners and collectors, as well as fine
art books and collections from more than 50 top art galleries. All artists
featured on Guild's Web site are carefully selected and reviewed by a panel of
leading art experts to ensure the site's quality and breadth of art.

                                       4
<PAGE>


The Merger and the Merger Agreement (pages 36 and 47)

   Ashford and Guild have entered into a merger agreement that provides for the
merger of Guild and a wholly owned subsidiary of Ashford. As a result of the
merger, Guild will become a wholly owned subsidiary of Ashford.

   Each outstanding share of Guild common stock will be canceled without
payment of consideration in the merger. The amount of consideration Guild
preferred stockholders will receive in the merger depends upon whether or not
the holders of Guild capital stock approve the amendment to Guild's restated
certificate of incorporation.

   If the merger is completed and Guild's restated certificate of incorporation
is amended, each Guild preferred stockholder (other than preferred stockholders
who perfect their appraisal rights under Delaware law) would receive:

  . approximately 0.02903 of a share of Ashford common stock for each share
    of Guild Series A preferred stock owned;

  . approximately 0.17807 of a share of Ashford common stock for each share
    of Guild Series B preferred stock owned;

  . approximately 0.36739 of a share of Ashford common stock for each share
    of Guild Series C-1 preferred stock owned; and

  . approximately 0.48968 of a share of Ashford common stock for each share
    of Guild Series D preferred stock owned.

   If the merger is completed and Guild's restated certificate of incorporation
is not amended, each Guild preferred stockholder (other than preferred
stockholders who perfect their appraisal rights under Delaware law) would
receive:

  . approximately 0.18166 of a share of Ashford common stock for each share
    of Guild Series B preferred stock owned;

  . approximately 0.37481 of a share of Ashford common stock for each share
    of Guild Series C-1 preferred stock owned; and

  . approximately 0.49957 of a share of Ashford common stock for each share
    of Guild Series D preferred stock owned.

   The exchange ratios described herein assume that the aggregate merger
consideration is valued at less than $39.3 million. Based upon the market price
of Ashford common stock as of the trading day immediately prior to the date of
this joint proxy statement/prospectus, the aggregate merger consideration was
valued at approximately $       million. Ashford and Guild believe that the
exchange ratios described herein are the most likely to apply; however, for
further information regarding the exchange ratios that would apply if the
aggregate merger consideration equaled or exceeded $39.3 million, please see
"The Merger Agreement--Exchange of Shares."

   The merger agreement is attached to this joint proxy statement/prospectus as
Annex A. We encourage you to read the merger agreement, as it is the legal
document that governs the merger.

The Ashford Special Meeting (page 31)

   Ashford will hold a special meeting of its stockholders to:

  . approve and adopt the merger and the merger agreement; and

  . transact such other business as may properly come before the Ashford
    special meeting.

                                       5
<PAGE>


   Pursuant to applicable rules of the Nasdaq National Market, the merger and
the merger agreement must be approved and adopted by a majority of the holders
of Ashford common stock. The affirmative vote of a majority of the shares of
Ashford common stock present in person or represented by proxy at the Ashford
special meeting and entitled to vote is required to approve and adopt the
issuance of the shares of Ashford common stock in the merger.

   As of January 3, 2001, directors, executive officers and stockholders of
Ashford, and their affiliates, who collectively beneficially own approximately
52.5% of the outstanding voting power of Ashford, have agreed to vote their
shares in favor of the approval and adoption of the merger and the merger
agreement.

The Guild Special Meeting (page 33)

   Guild will hold a special meeting of its stockholders to:

  . approve and adopt the merger and the merger agreement;

  . approve and adopt an amendment to Guild's restated certificate of
    incorporation; and

  . transact such other business as may properly come before the Guild
    special meeting.

   Approval and adoption of the merger and the merger agreement will require
the affirmative vote of the holders of:

  . a majority of the votes represented by the outstanding shares of Guild
    common stock and preferred stock, voting together as a single class; and

  . a majority of the votes represented by the outstanding shares of Guild
    Series B preferred stock, Series C-1 preferred stock and Series D
    preferred stock, voting together as a single class.

   Approval and adoption of the amendment to Guild's restated certificate of
incorporation will require the affirmative vote of the holders of:

  . a majority of the outstanding shares of Guild common stock and preferred
    stock, voting together as a single class; and

  . a majority of the outstanding shares of Guild Series A preferred stock,
    Series B preferred stock, Series C-1 preferred stock, and Series D
    preferred stock, each voting as a separate series and not as a single
    class.

   As of January 3, 2001, directors, executive officers and stockholders of
Guild, and their affiliates, who collectively beneficially own approximately
82.7% of Guild's outstanding capital stock, have agreed to vote their shares in
favor of the merger and the merger agreement and in favor of the amendment to
Guild's restated certificate of incorporation.

   Due to existing voting agreements signed by holders of a majority of the
Guild Series B preferred stock, Series C-1 preferred stock and Series D
preferred stock, approval and adoption of the merger and the merger agreement
are assured. The affirmative vote of holders of a majority of Guild Series A
preferred stock also is required to approve and adopt the amendment to Guild's
restated certificate of incorporation. As of the date of this joint proxy
statement/prospectus, holders of 25.1% of Guild Series A preferred stock have
agreed to vote in favor of the amendment to Guild's restated certificate of
incorporation.

Our Recommendations to Stockholders (page 39)

 To Ashford stockholders:

   The Ashford board of directors believes that the terms of the merger and the
merger agreement are advisable and fair to, and in the best interests of,
Ashford and its stockholders and unanimously recommends that you vote FOR the
approval and adoption of the merger and the merger agreement.

                                       6
<PAGE>


 To Guild stockholders:

   The Guild board of directors believes that the terms of the merger and the
merger agreement are advisable and fair to, and in the best interests of Guild
and its stockholders and unanimously recommends that you vote FOR the approval
and adoption of the merger and the merger agreement. The Guild board of
directors also has approved the amendment to Guild's restated certificate of
incorporation and recommends that you vote FOR such proposal.

   To review the background and reasons for the merger in greater detail, as
well as certain risks related to the merger, see pages 36 to 40 and 17 to 19.

What Holders of Guild Stock Options Will Receive (page 48)

   The outstanding options to purchase Guild common stock, whether vested or
unvested, will be assumed by Ashford following the merger. In the aggregate,
these options will be converted into options to purchase 1,583,200 shares of
Ashford common stock. The exact number of shares of Ashford common stock into
which each assumed Guild stock option may be converted will be determined at
the effective time, but will be approximately 0.28 of a share of Ashford common
stock. The exercise price of each converted option will equal the exercise
price per share of Guild common stock under the original option, divided by the
exchange ratio determined at closing.

Lock-up Agreements (page 56)

   The merger agreement provides that at least 80% of the stockholders and
option holders of Guild, on a fully diluted basis, as well as Guild's directors
and officers will enter into lock-up agreements with Ashford prior to the
completion of the merger. The lock-up agreements provide that for a period of
180 days after the closing of the merger, the former Guild officers, directors,
stockholders and option holders will not sell, transfer or otherwise dispose of
the shares of Ashford common stock owned or later acquired by such Guild
officer, director, stockholder or option holder in the merger or otherwise. It
is within the sole discretion of Ashford whether to release any of Guild's
former stockholders, option holders, officers, or directors from the lock-up
agreement prior to the expiration of the 180-day period.

Conditions to Completion of the Merger (page 53)

   Ashford's and Guild's obligations under the merger agreement are subject to
the prior satisfaction or waiver of a number of conditions, including the
following:

  . the merger and the merger agreement must be approved and adopted by the
    requisite vote of Guild's stockholders and Ashford's stockholders;

  . no injunction or order preventing the completion of the merger may be
    pending;

  . all necessary governmental approvals must be obtained;

  . the representations and warranties of each of Ashford and Guild must be
    true and correct;

  . the obligations of each of Ashford and Guild must have been performed;

  . no material adverse change in the condition of Guild or Ashford may have
    occurred;

  . the registration statement on Form S-4 must have been declared effective
    by the SEC;

  . the shares to be issued in the merger must be listed with the Nasdaq
    National Market;

  . Guild must have received executed voting agreements from certain Ashford
    stockholders;

                                       7
<PAGE>


  . Ashford must have received executed voting agreements, affiliates
    agreements and lock-up agreements from certain Guild stockholders,
    officers, directors and option holders;

  . an opinion from counsel to each of Ashford and Guild that the transaction
    will be treated as a tax-free reorganization must have been obtained; and

  . an opinion from counsel to each of Ashford and Guild must have been
    delivered.

Termination of the Merger Agreement (page 54)

   The merger agreement may be terminated before the completion of the merger
by our mutual consent or:

  . by either Guild or Ashford if the closing has not occurred, without the
    fault of the terminating party, on or prior to May 30, 2001;

  . by Ashford, if Guild materially breaches any representation, warranty or
    obligation under the agreement, and the breach is not cured within a
    certain period after written notice of the breach;

  . by Guild, if Ashford materially breaches any representation, warranty or
    obligation under the agreement, and the breach is not cured within a
    certain period after written notice of the breach;

  . by either Guild or Ashford, if the board of directors of the other party
    has withdrawn or modified its recommendation of the agreement in a manner
    adverse to the terminating party, except when the terminating party is at
    that time in willful breach of the agreement;

  . by either Guild or Ashford, if the other party has not obtained the
    required stockholder approval within 45 days after the registration
    statement is sent to stockholders;

  . by Guild, if Ashford fails to call and hold its stockholder meeting to
    obtain the necessary consent to consummate the merger by May 30, 2001 or
    commence solicitation of stockholder consents within 10 days after the
    effectiveness of the registration statement;

  . by Ashford, if Guild fails to call and hold its stockholder meeting to
    obtain the necessary consent to consummate the merger by May 30, 2001 or
    commence solicitation of stockholder consents within 10 days after the
    effectiveness of the registration statement;

  . by either Ashford or Guild, if the other party's Board of Directors has
    approved or publicly recommended any other takeover proposal; or

  . by either Ashford or Guild if an injunction or other court order
    prohibiting the merger has become final and nonappealable.

   In the event that either Guild or Ashford terminates the merger agreement
due to a failure by its stockholders to approve and adopt the merger and the
merger agreement, then the terminating party must pay a fee to the other party
equal to $1,000,000; provided, however that if the termination occurs because
the party's board of directors has, in accordance with the merger agreement,
recommended a superior proposal, then the fee will be equal to $500,000.

No Other Takeover Negotiations Involving Guild (page 51)

   Until the merger is completed or the merger agreement is terminated, Guild
has agreed not to take, directly or indirectly, any of the following actions,
except to the extent necessary to fulfill its fiduciary obligations to its
stockholders:

  . solicit, initiate or encourage any takeover proposals;

  . engage in negotiations concerning or provide non-public information to
    any person or entity relating to any takeover proposal; or

  . agree to, approve or recommend any takeover proposal.

                                       8
<PAGE>


   Guild has agreed to provide Ashford with detailed information about any
takeover proposal it receives.

Interests of Certain Stockholders and Directors of Ashford and Guild in the
Merger (page 40)

   When considering the recommendation of the Ashford and Guild boards of
directors, you should be aware that some stockholders and directors have
interests in the merger that are different from yours. These interests include
the following:

  . as of February 28, 2001, Kevin Harvey, a director of Ashford, Bruce
    Dunlevie, a director of Guild, and affiliates of Messrs. Harvey and
    Dunlevie beneficially owned approximately 23.5% of the outstanding shares
    of Ashford common stock and approximately 26.1% of the outstanding shares
    of Guild capital stock;

  . upon closing of the merger, Guild's director and officer indemnification
    arrangements in place prior to the merger will continue or be assumed by
    Ashford; and

  . Toni Sikes, chairman of the board of directors of Guild, has an
    employment agreement with Guild that will remain in effect following the
    completion of the merger.

Regulatory Approvals (page 45)

   Neither Ashford nor Guild is aware of any material governmental or
regulatory approvals required for completion of the merger, other than the
effectiveness of the registration statement of which this joint proxy
statement/prospectus is a part, listing of the Ashford common stock issuable to
the Guild stockholders on the Nasdaq National Market, and compliance with
applicable corporate law of Delaware.

Accounting Treatment (page 41)

   Ashford expects the merger to qualify as a purchase under U.S. generally
accepted accounting principles, which means that Ashford will treat Guild as a
separate entity for periods prior to the closing and, thereafter, as a wholly
owned subsidiary of Ashford. Guild's operating results will be included with
Ashford's beginning at the closing of the merger.

Material United States Federal Income Tax Considerations (page 41)

   We have structured the merger so that, with the exception of gain or loss
upon receipt of cash in lieu of fractional shares, no gain or loss generally
would be recognized by Guild stockholders for United States federal income tax
purposes on the exchange of shares of Guild capital stock for shares of Ashford
common stock. However, if Guild's restated certificate of incorporation is
amended, the Internal Revenue Service may assert that for United States federal
income tax purposes the holders of the Guild Series B preferred stock, Series
C-1 preferred stock and Series D preferred stock will be deemed to have
transferred to the holders of the Guild Series A preferred stock that portion
of the Ashford common stock they would have received in the merger if Guild's
restated certificate of incorporation had not been amended. If the Internal
Revenue Service prevailed in this position, holders of Guild Series A preferred
stock would recognize ordinary income equal to the fair market value of the
Ashford common stock they receive, and the holders of Guild Series B preferred
stock, Series C-1 preferred stock and Series D preferred stock may recognize
gain with respect to the Ashford common stock they are deemed to have
transferred.

   Tax matters can be very complicated, and the tax consequences of the merger
to you will depend on the facts of your own situation. You should consult your
tax advisor for a full understanding of the tax consequences of the merger to
you.

                                       9
<PAGE>


Guild Stockholders' Appraisal Rights (pages 43 and 49)

   Any holder of Guild capital stock who does not wish to accept Ashford common
stock in the merger has the right under Delaware law to have the fair value of
the holder's shares determined by the Delaware Court of Chancery. This right to
appraisal is subject to a number of restrictions and technical requirements.
Generally, in order to exercise appraisal rights, each holder of Guild capital
stock seeking appraisal:

  . must send a written demand to Guild for appraisal in compliance with
    Delaware law before the vote on the merger;

  . must not vote in favor of the merger; and

  . must continuously hold the Guild capital stock, from the date of the
    holder's written demand for appraisal through the closing of the merger.

   Merely voting against the merger will not protect a holder's appraisal
rights. Annex D to the joint proxy statement/prospectus contains a copy of the
Delaware statute governing appraisal rights. A holder of Guild capital stock
that does not follow all the steps required by Delaware law may lose appraisal
rights. In addition to reading Annex D, see "Appraisal Rights" on page 43 and
"Appraisal Rights" on page 49.

How the Rights of Guild Stockholders Will Differ as Ashford Stockholders (page
77)

   When Guild stockholders become Ashford stockholders after the merger, their
rights will be governed by Ashford's certificate of incorporation and bylaws.
Those rights differ from current rights of Guild stockholders under Guild's
restated certificate of incorporation and bylaws. In general, preferential
rights of the Guild preferred stock will no longer apply and all stockholders
will have similar rights as holders of Ashford common stock.

                                       10
<PAGE>

           SELECTED CONSOLIDATED FINANCIAL DATA OF ASHFORD.COM, INC.

   The following information is being provided to assist you in analyzing the
financial aspects of the merger. The following selected consolidated financial
data should be read in conjunction with Ashford's consolidated financial
statements and the accompanying notes. See "Where You Can Find More
Information" on page 84.

   The selected financial data as of December 31, 2000 and for the nine month
periods ended December 31, 2000 and 1999 has been derived from Ashford's
unaudited consolidated financial statements incorporated by reference in this
joint proxy statement/prospectus, and include, in the opinion of management,
all adjustments necessary to present fairly the results of these periods. The
consolidated statement of operations data shown below for the year ended March
31, 2000 and the period from inception (March 6, 1998), through March 31, 1999,
and the selected consolidated balance sheet data as of March 31, 2000 and 1999
have been derived from Ashford's audited consolidated financial statements,
incorporated by reference in this joint proxy statement/prospectus. Ashford was
incorporated in March 1998, and did not commence operations or activities until
April 1998.
<TABLE>
<CAPTION>
                                                                 Period from
                               Nine Months Ended                  Inception
                                  December 31,      Year Ended (March 6, 1998)
                               -------------------  March 31,      through
                                 2000       1999       2000    March 31, 1999
                               ---------  --------  ---------- ---------------
                                   (in thousands, except per share data)
<S>                            <C>        <C>       <C>        <C>
Statement of Operations Data:
  Net sales................... $  52,868  $ 28,127   $ 39,931      $ 5,938
  Cost of sales...............    42,863    23,856     33,486        5,110
                               ---------  --------   --------      -------
  Gross profit (1)............    10,005     4,271      6,445          828
Operating expenses:
  Marketing and sales.........    20,894    23,410     33,282        1,013
  General and administrative..    18,316     8,220     14,078        1,019
  Depreciation and
   amortization...............    91,964     5,299     33,817           67
                               ---------  --------   --------      -------
    Total operating expenses..   131,174    36,929     81,177        2,099
                               ---------  --------   --------      -------
Loss from operations..........  (121,169)  (32,658)   (74,732)      (1,271)
Interest income...............     1,547     1,895      2,677           13
Interest expense..............       (58)       (7)        (7)          (6)
                               ---------  --------   --------      -------
Net loss...................... $(119,680) $(30,770)  $(72,062)     $(1,264)
                               =========  ========   ========      =======
Net loss per share, basic and
 diluted...................... $   (2.63) $  (1.45)  $  (2.65)     $ (0.12)
                               =========  ========   ========      =======
Pro forma net loss per share,
 basic and diluted (2)........ $   (2.63) $  (0.97)  $  (2.05)     $ (0.10)
                               =========  ========   ========      =======
Shares used to compute net
 loss per share:
  Basic and diluted...........    45,484    21,275     27,197       10,397
  Pro forma basic and diluted
   (2)........................    45,484    31,762     35,071       13,264
</TABLE>

<TABLE>
<CAPTION>
                                                December 31, March 31, March 31,
                                                    2000       2000      1999
                                                ------------ --------- ---------
                                                         (in thousands)
<S>                                             <C>          <C>       <C>
Balance Sheet Data:
  Cash and cash equivalents....................   $12,897    $ 46,474   $  893
  Restricted cash..............................     1,770         120      100
  Working capital..............................    36,937     148,898    2,555
  Total assets.................................    71,975     177,608    5,108
  Total stockholders' equity...................    59,242     171,270    2,808
</TABLE>
--------
(1) Includes the reclassification of certain promotional costs from marketing
    and sales to cost of sales related to the adoption of the Emerging Issues
    Task Force Issue No. 00-14, "Accounting for Certain Sales Incentives." All
    periods presented have been reclassified for consistent presentation.
(2) Includes shares associated with the conversion of preferred stock into
    common stock as if the conversion occurred on April 1, 1998, or at the date
    of original issuance, if later.

                                       11
<PAGE>

                   SELECTED FINANCIAL DATA OF GUILD.COM, INC.

   The following information is being provided to assist you in analyzing the
financial aspects of the merger. The following selected financial data should
be read in conjunction with Guild's financial statements, the accompanying
notes and "Guild Management's Discussion and Analysis of Financial Condition
and Results of Operations" included in this joint proxy statement/prospectus.

   The statement of operations data shown below for the years ended December
31, 2000 and 1999, and the selected balance sheet data as of December 31, 2000
and 1999 have been derived from Guild's audited financial statements appearing
elsewhere in this joint proxy statement/prospectus. This data should be read in
conjunction with the financial statements, related notes and other financial
information included herein.

<TABLE>
<CAPTION>
                                                        Year Ended   Year Ended
                                                       December 31, December 31,
                                                           2000         1999
                                                       ------------ ------------
                                                            (in thousands)
<S>                                                    <C>          <C>
Statement of Operations Data:
  Revenues:
    Website sales.....................................   $    900     $    216
    Non-website sales.................................      1,147          828
  Cost of goods sold:
    Website sales.....................................         57           49
    Non-website sales.................................        357          400
    Shipping costs....................................        229           66
  Gross profit........................................      1,404          529
  Operating expenses:
    Selling and marketing expense.....................      9,493        5,413
    General and administrative expense................     10,017        5,645
    Depreciation and amortization.....................      1,115          392
  Loss from operations................................    (19,221)     (10,921)
  Other income (expense):
    Investment income.................................        825          475
    Interest expense..................................        (39)         (22)
    Other expense.....................................         --           (2)
  Net loss............................................   $(18,435)    $(10,470)
<CAPTION>
                                                             December 31,
                                                       -------------------------
                                                           2000         1999
                                                       ------------ ------------
<S>                                                    <C>          <C>
Balance Sheet Data:
  Cash and cash equivalents...........................   $  8,203     $ 12,061
  Short-term investments..............................      3,450        5,907
  Total assets........................................     14,646       21,736
  Total current liabilities...........................      2,818        2,949
  Total stockholders' equity..........................     11,802       18,652
  Total liabilities and stockholders' equity..........     14,646       21,736
</TABLE>

                                       12
<PAGE>

            SELECTED ASHFORD.COM, INC. AND GUILD.COM, INC. UNAUDITED
                     PRO FORMA CONSOLIDATED FINANCIAL DATA

   The unaudited pro forma consolidated financial data is presented to reflect
the merger of Ashford and Guild. The unaudited pro forma consolidated balance
sheet data has been prepared as if the merger had taken place on December 31,
2000. The pro forma consolidated statement of operations data has been prepared
as if the merger had taken place on April 1, 1999.

   We have included this unaudited pro forma consolidated financial information
only for the purposes of illustration, and it does not necessarily indicate
what the operating results or financial position would have been if the merger
between Ashford and Guild had been completed at the dates indicated. Moreover,
this information does not necessarily indicate what the future operating
results or financial position of the combined enterprise will be. You should
read this unaudited pro forma consolidated financial information in conjunction
with the "Unaudited Pro Forma Condensed Consolidated Financial Data" included
in this joint proxy statement/prospectus at page 57.

   The acquisition has been accounted for using the purchase method of
accounting. The purchase price allocation is based on preliminary valuations of
Guild's assets and working capital and will be adjusted as of the date of
completion of the merger.

<TABLE>
<CAPTION>
                                                                    Nine Months
                                                                       Ended
                                                       Year Ended   December 31,
                                                     March 31, 2000     2000
                                                     -------------- ------------
                                                       (Amounts in thousands,
                                                       except per share data)
<S>                                                  <C>            <C>
Statement of Operations Data:
  Net sales.........................................    $ 40,975     $  54,285
  Cost of sales.....................................      34,001        43,331
                                                        --------     ---------
  Gross profit......................................       6,974        10,954
Operating expenses:
  Marketing and sales...............................      38,695        27,992
  General and administrative........................      19,723        24,293
  Depreciated and amortization......................      31,163        89,973
                                                        --------     ---------
Total operating expenses............................      89,581       142,258
                                                        --------     ---------
Loss from operations................................     (82,607)     (131,304)
Interest income, net................................       3,123         2,088
Other expense.......................................          (2)           --
                                                        --------     ---------
Net loss............................................    $(79,486)    $(129,216)
                                                        ========     =========
Net loss per share, basic and diluted...............    $  (2.31)    $   (2.46)
                                                        ========     =========
Shares used to compute net loss per share...........      34,338        52,625
                                                        ========     =========
<CAPTION>
                                                      December 31,
                                                          2000
                                                     --------------
                                                     (in thousands)
<S>                                                  <C>            <C>
Balance Sheet Data:
  Cash and cash equivalents.........................    $ 21,100
  Short term investments............................       3,450
  Restricted cash...................................       1,770
  Working capital...................................      46,049
  Total assets......................................      84,205
  Total stockholders' equity........................      62,717
</TABLE>

                                       13
<PAGE>

                            MARKET PRICE INFORMATION

 Ashford.com

   Ashford common stock trades on the Nasdaq National Market under the symbol
"ASFD".

   The table below sets forth, for the periods indicated, the reported high and
low closing sale prices of Ashford common stock on the Nasdaq National Market
since its initial public offering on September 22, 1999. The quotations
represent interdealer quotations, without adjustments for retail mark ups, mark
downs, or commissions, and may not necessarily represent actual transactions.

<TABLE>
<CAPTION>
                                                                   Common Stock
                                                                      Price
                                                                   ------------
                                                                    High   Low
                                                                   ------ -----
<S>                                                                <C>    <C>
Year ended March 31, 2000:
  Second Quarter (from September 22, 1999)........................ $13.00 $9.22
  Third Quarter...................................................  24.88  9.44
  Fourth Quarter..................................................  13.13  4.72
Year ended March 31, 2001:
  First Quarter................................................... $ 5.88 $2.50
  Second Quarter..................................................   4.06  2.56
  Third Quarter...................................................   3.13  0.30
</TABLE>

   On January 3, 2001, the last full trading day prior to the public
announcement of the proposed merger, the last reported sale price of Ashford
common stock on the Nasdaq National Market was $0.4062 per share. On
   , 2001, the most recent practicable date prior to the printing of this joint
proxy statement/prospectus, the last reported sale prices of Ashford common
stock on the Nasdaq National Market was $     per share.

   Because the market prices of Ashford common stock may fluctuate, the market
prices per share of the shares of Ashford common stock that holders of Guild
capital stock will receive in the merger, as reported on the Nasdaq National
Market, may increase or decrease prior to the merger. We urge Guild
stockholders to obtain current market quotations for Ashford common stock.

   Ashford has not paid any cash dividends on its common stock and currently
intends to retain any future earnings for use in its business. Ashford does not
anticipate that any cash dividends will be declared or paid on the common stock
in the foreseeable future. As of February 28, 2001, there were approximately
5,600 record owners of Ashford common stock.

 Guild.com

   Guild common stock is not presently traded on an established public trading
market. As of February 28, 2001, there were 461,432 shares of common stock
outstanding, held by 47 holders. In addition, as of February 28, 2001, there
were 4,870,915 shares of Series A preferred stock outstanding held by 34
holders, 3,500,178 shares of Series B preferred stock outstanding held by one
holder, 12,117,076 shares of Series C-1 preferred stock outstanding held by
nine holders, and 3,931,299 shares of Series D preferred stock outstanding held
by 18 holders. All shares of common stock and preferred stock are entitled to
one vote on the proposals submitted hereby.

   Guild has never declared or paid any cash dividends on its capital stock.
Guild currently intends to retain any future earnings to finance the growth and
development of its business and therefore does not anticipate

                                       14
<PAGE>

paying any cash dividends in the foreseeable future. Any future determination
to pay cash dividends will be at the discretion of the board of directors and
will be dependent upon Guild's financial condition, results of operations,
capital requirements, general business conditions, and other factors that the
board of directors may deem relevant.

   For restrictions that currently materially limit Guild's ability to pay
dividends or that are reasonably likely to materially limit future dividends,
other than the sufficiency of current or future earnings, see "Comparison of
Stockholder Rights--Dividends."

                                       15
<PAGE>

           CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

   Ashford and Guild believe this document contains "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements are subject to risks and uncertainties and are based
on the beliefs and assumptions of management of Ashford and Guild, based on
information currently available to each company's management. When we use words
such as "believes," "expects," "anticipates," "intends," "plans," "estimates,"
"should," "likely" or similar expressions, we are making forward-looking
statements. Forward-looking statements include the information concerning
possible or assumed future results of operations of Ashford or Guild set forth
under:

      "Summary," "Risk Factors," "The Merger--Background
      of the Merger," "The Merger--Recommendation of the
      Board of Directors of Ashford; Ashford's Reasons for
      the Merger," "The Merger--Recommendation of the Board
      of Directors of Guild; Guild's Reasons for the Merger,"
      "Description of Ashford's Business," "Description of
      Guild's Business" and "Guild Management's Discussion
      and Analysis of Financial Condition and Results of
      Operations."

   Forward-looking statements are not guarantees of performance. They involve
risks, uncertainties and assumptions. The future results and stockholder values
of Ashford or Guild may differ materially from those expressed in the forward-
looking statements. Many of the factors that will determine these results and
values are beyond our ability to control or predict. Stockholders are cautioned
not to put undue reliance on any forward-looking statements. For those
statements, we claim the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.

   For a discussion of some of the factors that may cause actual results to
differ materially from those suggested by the forward-looking statements,
please read carefully the information under "Risk Factors" beginning on page
17. In addition to the risk factors and other important factors discussed
elsewhere in the documents that are incorporated by reference into this joint
proxy statement/prospectus, you should understand that the following important
factors could affect the future results of Ashford and Guild and could cause
results to differ materially from those suggested by the forward-looking
statements:

  .  increased competitive pressures, both domestically and internationally,
     which may affect sales of Ashford's and Guild's products and impede
     Ashford's and Guild's ability to maintain market share and pricing
     goals;

  .  changes in user attitude towards the products provided by Ashford and
     Guild;

  .  Ashford's ability to integrate the operations of Guild into its
     operations;

  .  technical failures in the network, software or hardware systems of
     Ashford or Guild that cause interruptions of service or a decrease in
     responsiveness to our Web sites;

  .  changes in U.S. and global financial and equity markets, including
     significant interest rate fluctuations, which may increase the cost of
     external financing for Ashford's and Guild's operations;

  .  changes in laws or regulations, third party relations and approvals,
     decisions of courts, regulators and governmental bodies that may
     adversely affect Ashford's and Guild's business or ability to compete;
     and

  .  other risks and uncertainties as may be detailed from time to time in
     Ashford's public announcements and Securities and Exchange Commission
     filings.

   This list of factors that may affect future performance and the accuracy of
forward-looking statements is illustrative but by no means exhaustive.
Accordingly, all forward-looking statements should be evaluated with the
understanding of their inherent uncertainty.

                                       16
<PAGE>

                                 RISK FACTORS

   The merger involves a high degree of risk. By voting in favor of the
merger, Guild stockholders will be choosing to invest in Ashford common stock,
and an investment in Ashford common stock involves a high degree of risk. In
considering whether to approve and adopt the merger and the merger agreement,
you should carefully consider the following risk factors described in this
section, together with the other information contained or incorporated by
reference in this joint proxy statement/prospectus. If any of the following
risks actually occurs, the business, financial condition and results of
operations of either or both of Ashford and Guild may be seriously harmed. In
this case, the trading price of Ashford common stock may decline and you may
lose all or part of your investment.

Risks Related to the Merger

 If Ashford cannot successfully integrate Guild's business into Ashford's
 existing business operations, Ashford may not achieve the anticipated
 benefits of the merger.

   Integrating Guild into Ashford involves a number of risks, including:

  .  the diversion of management's attention away from ongoing operations;

  .  difficulties and expenses in combining the operations, technology and
     systems of the two companies;

  .  difficulties in the creation and maintenance of uniform standards,
     controls, procedures and policies;

  .  different geographic locations of the principal operations of Ashford
     and Guild; and

  .  challenges in keeping and attracting customers.

   If Ashford is to realize the anticipated benefits of the merger, the
operations of Guild must be integrated and combined efficiently and
effectively into Ashford. There can be no assurance that the integration will
be successful or that the anticipated benefits of the merger will be realized.

 The success of the combined company depends in part on its ability to retain
 key personnel and to maintain relationships with artists after the merger,
 and it may not be able to do so.

   The success of the combined company after the merger depends in part on the
continued service of key personnel and continued relationships with artists.
Despite efforts to recruit and retain quality employees and artists, the
combined company might lose some of its key employees and artists following
the merger. Although similar, Ashford and Guild have different corporate
cultures. Some Guild employees and artists may be unwilling to work for a
larger company, and some Ashford employees may be unwilling to work for the
combined company. Competitors may also recruit Guild or Ashford employees
prior to the merger and during integration, as is common in high technology
mergers. Artists may sever their relationships with the combined company due
to a perceived loss of being part of an art-focused entity or due to a
perceived increased focus on selling and marketing.

   Similarly, the future performance of the combined company depends on its
continuing ability to attract and retain highly qualified technical and
managerial personnel following the merger. Competition for qualified
management, engineering, technical, sales and marketing employees is intense.
If Guild or Ashford employees leave as a result of the merger or if the
combined company cannot attract and retain qualified personnel, the combined
company's business would be harmed.

 Ashford's stock price is volatile, and the exchange ratios for Ashford common
 stock to be received in the merger will not be adjusted in the event of any
 change in Ashford's stock price.

   Under the merger agreement, the exchange ratios used to determine the
number of shares of Ashford's common stock that Guild stockholders will
receive in the merger will not be adjusted in the event of any

                                      17
<PAGE>

increase or decrease in the price of Ashford common stock as reflected on the
Nasdaq National Market. The price of Ashford common stock at the closing of
the merger may vary from its price on the date of this joint proxy
statement/prospectus and on the date of the special meetings of Ashford and
Guild stockholders. Further, under the merger agreement, neither Ashford nor
Guild will have the right to terminate or renegotiate the merger agreement or
to resolicit proxies as a result of any increase or decrease in the value of
Ashford's common stock. The market price of Ashford's common stock, like that
of the stock of many other Internet-related companies, has been and may
continue to be volatile. Recently, the stock market in general and the shares
of Internet-related companies in particular have experienced significant price
fluctuations. The market price of Ashford's common stock may continue to
fluctuate significantly in response to various factors, including without
limitation:

  .  changes in the business, operations or prospects of Ashford;

  .  the timing of the completion of the merger;

  .  the prospects of post-merger operations; and

  .  general market and economic conditions.

 Some Guild stockholders will be prohibited from selling Ashford stock
 received in the merger for a period of 180 days.

   Some stockholders and significant optionholders of Guild have contractually
agreed, except under limited circumstances, not to sell their shares of
Ashford common stock acquired in the merger for a period of 180 days following
the merger. During this period, the price of Ashford common stock may
fluctuate significantly. These holders will be prohibited from selling their
Ashford common stock at a time they may consider appropriate, resulting in
reduced liquidity and selling opportunities for a period of 180 days following
the merger. After the expiration of this lock-up period however, these
holders' shares of Ashford common stock will be eligible for sale to the
public. The sale of a large amount of shares in the public market after the
lock-up period, or the appearance that a large number of shares are available
for sale, may cause the market price of the Ashford common stock to decline.

 Failure to complete the merger could negatively affect Ashford's and Guild's
 operating results and their ability to enter into alternative transactions.

   If the merger is not completed for any reason, Ashford and Guild may
experience a number of adverse consequences, including the following:

  .  the price of Ashford common stock may decline to the extent that the
     current market price of Ashford common stock reflected a market
     assumption that the merger will be completed;

  .  an adverse reaction from investors and potential investors of both
     companies may reduce future financing opportunities; and

  .  the parties' costs related to the merger, including legal and accounting
     fees, must be paid even if the merger is not completed.

   If the merger is terminated and Guild or Ashford determines to seek another
merger or business combination, there can be no assurance that it will be able
to find a partner at an attractive price. In addition, while the merger
agreement is in effect, Guild is prohibited from soliciting, initiating or
encouraging or entering into extraordinary transactions, such as a merger,
sale of assets or other business combination, with any party other than
Ashford. As a result of this prohibition, Guild will be precluded from
discussing potential transactions and, should the merger not occur, may lose
an opportunity for a transaction with another potential partner at a favorable
price.

                                      18
<PAGE>

 The merger could harm key third party relationships.

   The present and potential relationships of Ashford and Guild with customers
and other third parties with whom they have relationships may be harmed by the
proposed merger. Uncertainties following the merger may cause these parties to
delay decisions regarding these relationships. Any changes in these
relationships could harm the combined company's business. In addition, Guild
customers and other third parties may, in response to the announcement of the
merger, delay or defer decisions concerning Guild. Guild could experience a
decrease in expected revenue as a consequence of uncertainties associated with
the merger. Any delay or deferral in those decisions by Guild customers or
other third parties could have a material adverse effect on Guild's and
Ashford's business.

 Officers and directors of Guild and Ashford have different interests from
 yours that may influence them to approve and adopt the merger and the merger
 agreement.

   Officers and directors of Guild and Ashford have interests in the merger and
participate in arrangements that are different from, or are in addition to,
those of Guild stockholders generally. These include the following interests
that will arise if the merger occurs:

  .  as of February 28, 2001, Kevin Harvey, a director of Ashford, Bruce
     Dunlevie, a director of Guild, and affiliates of Messrs. Harvey and
     Dunlevie beneficially owned approximately 23.5% of the outstanding
     shares of Ashford common stock and approximately 26.1% of the
     outstanding shares of Guild capital stock;

  .  upon closing of the merger, Guild's director and officer indemnification
     arrangements in place prior to the merger will continue or be assumed by
     Ashford; and

  .  Toni Sikes, chairman of the board of directors of Guild, has an
     employment agreement with Guild that will remain in effect following the
     completion of the merger.

   As a result, these officers and directors could be more likely to vote to
approve and adopt the merger and the merger agreement than if they did not hold
these interests. Guild stockholders should consider whether these interests may
have influenced these officers and directors to support or recommend the
merger.

 Issuance of additional shares of Ashford common stock may reduce the Ashford
 share price.

   At the closing of the merger, Ashford estimates that approximately 7,141,400
newly issued shares of Ashford common stock will be issued to Guild
stockholders. The issuance of this additional Ashford common stock in the
merger will reduce Ashford's earnings per share, if any. This dilution could
reduce the market price of Ashford common stock unless and until the combined
company achieves revenue growth or cost savings and other business economies
sufficient to offset the effect of this issuance. There can be no assurance
that the combined company will achieve revenue growth, cost savings or other
business economies or that you will achieve greater returns as an Ashford
stockholder than as a Guild stockholder.

 Guild stockholders may exercise dissenters' rights.

   Under Delaware law regarding dissenting stockholders' appraisal rights,
holders of Guild common stock and preferred stock who do not vote in favor of
the merger may be entitled to exercise dissenting stockholders' appraisal
rights. If the merger occurs, then Guild stockholders who do not vote their
Guild shares in favor of the merger may become entitled to be paid cash for
their Guild shares instead of receiving Ashford common stock in the merger. The
amount of cash that could be paid to such dissenting Guild stockholders could
be significant, and payment of these amounts could have a material adverse
effect on the combined company's financial position. The payment to dissenting
stockholders may require Ashford to raise additional capital, which may not be
available.

                                       19
<PAGE>

Risks Related to the Business of Each of Ashford and Guild

 Ashford's and Guild's limited operating history makes forecasting future
 operating results difficult. Because most of Ashford's and Guild's expenses
 are fixed based on planned operating results, failure to accurately forecast
 revenue could cause net losses in a given quarter to be greater than expected.

   Ashford was incorporated in March 1998 and began selling products on its Web
site in April 1998. Guild originally was incorporated in March 1998 and began
selling products on its Web site in March 1999. Accordingly, Ashford and Guild
each have a limited operating history upon which to base an evaluation of its
business and prospects. Their respective business and prospects must be
considered in light of the risks, expenses and difficulties frequently
encountered by companies in their early state of development, particularly
companies in new and rapidly evolving markets such as online commerce. As a
result of their limited operating history, it is difficult to accurately
forecast net sales and each of Ashford and Guild has limited meaningful
historical financial data upon which to base planned operating expenses. Both
Ashford and Guild base their current and future expense levels on their
respective operating plans and estimates of future net sales, and their
expenses are to a large extent fixed. Sales and operating results are difficult
to forecast because they generally depend on the volume and timing of the
orders each of Ashford and Guild receives, which is uncertain. As a result,
each of Ashford and Guild may be unable to adjust its spending in a timely
manner to compensate for any unexpected revenue shortfall. This inability could
cause Ashford's or Guild's net losses in a given quarter to be greater than
expected.

 Each of Ashford and Guild anticipates future losses and negative cash flow,
 which may limit or delay its ability to become profitable.

   Since formation, each of Ashford and Guild has made significant expenditures
on its technology, Web site development, advertising, hiring of personnel and
startup costs. As a result, each of Ashford and Guild has incurred losses since
its inception and expects to experience negative cash flow during future
periods. Each of Ashford and Guild expects to incur additional costs and
expenses related to:

  .  brand development, marketing and other promotional activities;

  .  the continued maintenance and development of its Web site, the systems
     and staff that process customer orders and payments, and its computer
     network;

  .  the expansion of its product offerings and Web site content; and

  .  development of relationships with strategic business partners.

   Ashford's and Guild's ability to become profitable depends on their ability
to generate and sustain substantially higher net sales while maintaining
reasonable expense levels, both of which are uncertain. If Ashford or Guild
does achieve profitability, it cannot be certain that it would be able to
sustain or increase profitability on a quarterly or annual basis in the future.

 Each of Ashford and Guild expects to experience seasonal fluctuations in its
 net sales, which will cause its quarterly results to fluctuate and could cause
 its annual results to be below expectations.

   Each of Ashford and Guild expects to experience significant seasonal
fluctuations in its net sales that will cause quarterly fluctuations in its
operating results. In particular, Ashford realized approximately 50% and 40% of
its net sales for fiscal year 2000 and 1999, respectively, during the fourth
calendar quarter primarily due to gift purchases made during the holiday
season. This trend is likely to continue in the future.

   Due to limited operating history, it is difficult to predict the seasonal
pattern of each of Ashford's and Guild's sales and the impact of seasonality on
its business and financial results. In the future, each of Ashford's and
Guild's seasonal sales patterns may become more pronounced, may strain its
personnel and warehousing and order shipment activities and may cause a
shortfall in net sales as compared to expenses in a given period.

                                       20
<PAGE>

 Ashford or Guild may be unable to meet its future capital requirements.

   Each of Ashford and Guild cannot be certain that financing will be available
to it on favorable terms when required, or at all. If Ashford or Guild raises
funds through the issuance of equity, equity-related or debt securities, the
securities may have rights, preferences or privileges senior to those of the
rights of its common stock and its stockholders may experience dilution.
Ashford and Guild require substantial working capital to fund their business.
Since inception, each of Ashford and Guild have experienced negative cash flow
from operations and each expects to experience negative cash flow from
operations in the future.

 Sales of luxury goods and original artwork are particularly susceptible to
 general economic downturns. If general economic conditions deteriorate,
 Ashford's and Guild's sales could suffer.

   Purchases of luxury products and original artwork are typically
discretionary for consumers and may be particularly affected by negative trends
in the general economy. The success of Ashford's and Guild's operations depends
to a significant extent on a number of factors relating to discretionary
consumer spending and affecting disposable consumer income, such as employment,
wages and salaries, business conditions, interest rates, exchange rates,
availability of credit and taxation. In addition, because the purchase of
luxury products and original artwork is relatively discretionary, any reduction
in consumer confidence or disposable income in general may affect Ashford and
Guild more significantly than companies in other industries.

 To manage its growth and expansion, each of Ashford and Guild needs to improve
 and implement financial and managerial controls and improve its reporting
 systems and procedures. If either Ashford or Guild is unable to do so
 successfully, it may not be able to manage growth effectively and its
 operating results would be harmed.

   Each of Ashford's and Guild's rapid growth in personnel and operations has
placed, and will continue to place, a significant strain on its management,
information systems and resources. In order to manage this growth effectively,
each of Ashford and Guild needs to continue to improve its financial and
managerial controls and reporting systems and procedures. Any inability of
Ashford's or Guild's management to integrate additional companies, employees,
customer databases, merchandise lines, categories of merchandise, technology
advances, fulfillment systems, and customer service into operations and to
eliminate unnecessary duplication may have a materially adverse effect on its
respective business, financial condition and results of operations.

 Ashford or Guild may not be able to compete successfully against current and
 future competitors.

   Each of Ashford and Guild expects competition in the online sale of luxury
and premium products, including original artwork, to intensify in the future.
Increased competition is likely to result in price pressure, reduced gross
margins and loss of market share, any of which could seriously harm Ashford's
and Guild's net sales and operating results. In addition, the luxury goods
industry and the original artwork industry are intensely competitive. Ashford
currently or potentially competes with a variety of other companies, including:

  .  traditional retailers of luxury and premium products;

  .  brand owners of the products it sells;

  .  other online retailers of luxury and premium products; and

  .  catalog retailers.

   Guild currently or potentially competes with a variety of other companies,
including:

  .  traditional retailers of original artwork, such as galleries and auction
     houses;

  .  direct sales by artists;

  .  other online retailers of original artwork; and

  .  catalog retailers.

                                       21
<PAGE>

   Many of Ashford's and Guild's competitors have advantages over them
including longer operating histories, greater brand recognition and
significantly greater financial, sales and marketing and other resources. In
addition, traditional store-based retailers offer customers benefits that are
not obtainable over the Internet, such as enabling customers to physically
inspect a product before purchase and not incurring costs associated with
maintaining a Web site.

 If either Ashford or Guild is unable to build awareness of its respective
 brands, it may not be able to compete effectively against competitors with
 greater name recognition and its sales could be adversely affected.

   If Ashford or Guild is unable to economically achieve or maintain a leading
position in online commerce or to promote and maintain its brand, its
business, results of operations and financial condition could suffer. Each of
Ashford and Guild believes that the importance of brand recognition will
increase as more companies engage in commerce over the Internet. Development
and awareness of Ashford's and Guild's brand will depend largely on their
success in increasing their respective customer base. If the leading brand
owners do not perceive Ashford as an effective marketing and sales channel for
their merchandise, or consumers do not perceive Ashford as offering a
desirable way to purchase merchandise, Ashford may be unsuccessful in
promoting and maintaining its brand. Likewise, if artists and other suppliers
of original artwork do not perceive Guild as an effective marketing and sales
channel for their works, or consumers do not perceive Guild as offering a
desirable way to purchase those works, Guild may be unsuccessful in promoting
and maintaining its brand. Furthermore, in order to attract and retain
customers and to promote and maintain its brand in response to competitive
pressures, each of Ashford and Guild plans to maintain its marketing and
advertising budgets and otherwise to increase substantially its financial
commitment to creating and maintaining brand loyalty among vendors and
consumers.

 If Ashford or Guild enters new business categories that do not achieve market
 acceptance, its brand and reputation could be damaged and it could fail to
 attract new customers.

   If Ashford or Guild launches or acquires a new department or product
category that is not favorably received by consumers, its brand or reputation
could be damaged. This damage could impair its ability to attract new
customers, which could cause Ashford's or Guild's respective net sales to fall
below expectations. An expansion of Ashford's or Guild's respective business
to include other products would require significant additional expenses, and
strain its management, financial and operational resources. This type of
expansion would also subject Ashford to increased inventory risk and could
subject Guild to inventory risk. Ashford or Guild may choose to expand its
operations by developing other new departments or product categories,
promoting new or complementary products, expanding the breadth and depth of
products and services offered or expanding its market presence through
relationships with third parties. In addition, Ashford or Guild may pursue the
acquisition of other new or complementary businesses, products or
technologies.

   If Ashford or Guild experiences problems with its third-party shipping
services, it could lose customers.

   Each of Ashford and Guild relies upon third-party carriers, primarily
Federal Express and UPS, for product shipments, including shipments to and
from Ashford's warehouse. Each of Ashford and Guild is therefore subject to
the risks, including employee strikes and inclement weather, associated with
these carriers' ability to provide delivery services to meet its shipping
needs. In addition, failure to deliver products to Ashford's or Guild's
customers in a timely manner would damage its reputation and brand.

 Ashford's and Guild's operating results depend on their internally developed
 Web sites, network infrastructure and transaction-processing systems. If
 Ashford or Guild does not successfully maintain its Web site and the systems
 that process customer orders, it could lose customers and net sales could be
 reduced.

   The satisfactory performance, reliability and availability of Ashford's and
Guild's Web sites, transaction-processing systems and network infrastructure
are critical to their respective operating results, as well as to

                                      22
<PAGE>

their ability to attract and retain customers and maintain adequate customer
service levels. Any system interruptions that result in the unavailability of
Ashford's or Guild's Web sites or reduced performance of either of its
transaction systems would reduce the volume of sales and the attractiveness of
their respective service offerings. This would seriously harm Ashford's or
Guild's respective business, operating results and financial condition.

   Ashford and Guild use internally developed systems for their Web sites and
substantially all aspects of transaction processing, including customer
profiling and order verifications. Each of Ashford and Guild has experienced
periodic systems interruptions due to server failure, which it believes will
continue to occur from time to time. If the volume of traffic on Ashford's or
Guild's Web site significantly increases, Ashford or Guild will need to further
expand and upgrade its technology, transaction processing systems and network
infrastructure. Each of Ashford and Guild has experienced and expects to
continue to experience temporary capacity constraints due to sharply increased
traffic during sales or other promotions, which cause unanticipated system
disruptions, slower response times, degradation in levels of customer service,
impaired quality and delays in reporting accurate financial information.

   If Ashford or Guild fails to upgrade its Web site or toll-free call center
in order to accommodate increased traffic, it may lose customers, which would
reduce its net sales. Furthermore, if Ashford or Guild fails to expand the
computer systems that it uses to process and ship customer orders and process
payments, it may not be able to successfully fulfill customer orders. As a
result, Ashford or Guild could lose customers and its respective net sales
could be reduced. In addition, Ashford's or Guild's failure to maintain or
upgrade its Web site or these computer systems without system downtime would
further reduce its respective net sales. Ashford or Guild may experience
difficulty in improving and maintaining its systems if its employees or
contractors that develop or maintain its computer systems become unavailable to
Ashford or Guild. Each of Ashford and Guild has experienced periodic systems
interruptions, which it believes will continue to occur, while enhancing and
expanding these computer systems.

 Ashford's and Guild's facilities and systems are vulnerable to natural
 disasters and other unexpected problems. The occurrence of a natural disaster
 or other unexpected problem could damage Ashford's or Guild's reputation and
 brand and reduce its net sales.

   The occurrence of a natural disaster or unanticipated problems at Ashford's
or Guild's leased or offsite hosting facilities that house substantially all of
its computer and communications hardware systems could cause interruptions or
delays in its business, destroy data or render Ashford or Guild unable to
accept and fulfill customer orders. Any of these interruptions or delays at
these facilities would reduce Ashford's or Guild's respective net sales. In
addition, Ashford's and Guild's systems and operations are vulnerable to damage
or interruption from fire, flood, power loss, telecommunications failure,
break-ins, earthquake and similar events. Neither Ashford nor Guild has
established specific procedures for handling damage or interruptions caused by
these events and their business interruption insurance may not adequately
compensate them for losses that may occur. In addition, the failure by any
third-party facility to provide the data communications capacity required by
Ashford or Guild, as a result of human error, natural disaster or other
operational disruptions, could interrupt Ashford's or Guild's service. The
occurrence of any or all of these events could damage Ashford's or Guild's
reputation and brand and impair its business.

 Ashford's or Guild's net sales could decrease if its online security measures
 fail.

   Each of Ashford's and Guild's relationships with its customers may be
adversely affected if the security measures that it uses to protect their
personal information, such as credit card numbers, are ineffective. If, as a
result, Ashford or Guild loses customers, its respective net sales could
decrease. Each of Ashford and Guild relies on security and authentication
technology that it licenses from third parties. With this technology, Ashford
and Guild perform real-time credit card authorization and verification with
their respective banks. Neither Ashford nor Guild can predict whether events or
developments will result in a compromise or breach of

                                       23
<PAGE>

the technology it uses to protect a customer's personal information.
Furthermore, Ashford's or Guild's servers may be vulnerable to computer
viruses, physical or electronic break-ins and similar disruptions. Each of
Ashford and Guild may need to expend significant additional capital and other
resources to protect against a security breach or to alleviate problems caused
by any breaches. Neither Ashford nor Guild can assure that it can prevent all
security breaches.

 Ashford's and Guild's net sales and gross margins would decrease if it
 experiences significant credit card fraud.

   A failure to adequately control fraudulent credit card transactions would
reduce Ashford's or Guild's respective net sales and gross margins because
neither Ashford nor Guild carries insurance against this risk. Each of Ashford
and Guild has developed procedures to help it to detect the fraudulent use of
credit card information. Under current credit card practices, each of Ashford
and Guild may be liable for fraudulent credit card transactions because it
does not obtain a cardholder's signature.

 If Ashford or Guild does not respond to rapid technological changes, its
 services could become obsolete and it could lose customers.

   If either Ashford or Guild faces material delays in introducing new
services, products and enhancements, its customers may forego the use of its
services and use those of its competitors. To remain competitive, each of
Ashford and Guild must continue to enhance and improve the functionality and
features of its online store. The Internet and the online commerce industry
are rapidly changing. If competitors introduce new products and services, or
if new industry standards and practices emerge, Ashford's and Guild's
respective Web sites and proprietary technologies and systems may become
obsolete. To develop Ashford's and Guild's Web site and technology entails
significant technical and business risks. Ashford or Guild may use new
technologies ineffectively or may fail to adapt its technology to meet
customer requirements or emerging industry standards.

 Intellectual property claims against Ashford or Guild can be costly and could
 impair their respective businesses.

   Other parties may assert infringement or unfair competition claims against
Ashford or Guild. Neither Ashford nor Guild can predict whether they will do
so, or whether any future assertions or prosecutions will harm their
respective businesses. If Ashford or Guild is forced to defend against any
infringement claims, whether they are with or without merit or are determined
in such entity's favor, then it may face costly litigation, diversion of
technical and management personnel, or product shipment delays. Further, the
outcome of a dispute may be that Ashford or Guild would need to develop non-
infringing technology or enter into royalty or licensing agreements. Royalty
or licensing agreements, if required, may be unavailable on terms acceptable
to Ashford or Guild, or at all.

 If the protection of Ashford's or Guild's trademarks and proprietary rights
 is inadequate, its brand and reputation could be impaired and it could lose
 customers.

   The steps Ashford or Guild takes to protect its proprietary rights may be
inadequate. Each of Ashford and Guild regards its copyrights, service marks,
trademarks, trade dress, trade secrets and similar intellectual property as
critical to its success. Each of Ashford and Guild relies on trademark and
copyright law, trade secret protection and confidentiality or license
agreements with its respective employees, customers, partners and others to
protect its proprietary rights. Each of Ashford and Guild currently has
applications for registration in the United States Patent and Trademark
Office, as well as foreign trademark offices, of several of its trademarks. In
some instances, these applications span a variety of goods and services.
Effective trademark, service mark, copyright and trade secret protection may
not be available in every relationship because regulations governing domain
names and laws protecting trademarks and similar proprietary rights are
unclear. Therefore, Ashford or Guild may be unable to prevent third parties
from acquiring domain names that are similar to, infringe upon or otherwise
decrease the value of its respective trademarks and other proprietary rights.

                                      24
<PAGE>

 The loss of the services of one or more of Ashford's or Guild's key
 personnel, or Ashford's or Guild's failure to attract, assimilate and retain
 other highly qualified personnel in the future, could disrupt its respective
 operations and result in a loss of net sales.

   Ashford's and Guild's future performance will depend on the continued
services of its management and key personnel and the ability to attract
additional management and key personnel. The loss of the services of one or
more of Ashford's or Guild's key personnel could seriously interrupt its
business. Each of Ashford and Guild depends on the continued services and
performance of its senior management and other key personnel. Each of
Ashford's and Guild's future success also depends on the continued service of
its executive officers and other key sales, marketing and support personnel.
In general, each of Ashford's and Guild's relationships with executive
officers and key employees is at will and such persons are not bound by an
employment agreement for any specific term. Ashford currently maintains key
person life insurance policies covering Kenny Kurtzman and James Whitcomb.
Guild currently maintains key person life insurance covering Toni Sikes,
chairman of the board of directors of Guild. Although the proceeds of these
policies might assist Ashford or Guild in recruiting executive officers, the
proceeds would not address the potential disruption of its business of
recruiting and integrating new senior management.

 Ashford or Guild may not achieve the expected benefits of any investments or
 acquisitions that it completes.

   As each of Ashford and Guild identifies appropriate opportunities, it
intends to continue to make acquisitions of or investments in complementary
companies, products or technologies. Ashford or Guild may not correctly
identify or realize the anticipated benefits of any acquisition or investment.
For example, it may not be able to successfully assimilate the additional
personnel, operations, acquired technology and products into its respective
business. Acquisitions may further strain Ashford's or Guild's existing
financial and managerial controls and reporting systems and procedures. In
addition, key personnel of acquired companies may decide not to work for
Ashford or Guild. These difficulties could disrupt Ashford's or Guild's
ongoing business, distract its management and employees or increase its
expenses. Further, any physical expansion in facilities due to an acquisition
may result in disruptions that seriously impair Ashford's or Guild's business.
Neither Ashford nor Guild is experienced in managing facilities or operations
in geographically distant areas. Finally, in connection with any future
acquisitions, Ashford or Guild may incur debt or issue equity securities as
part or all of the consideration for the acquired company's assets or capital
stock. Ashford or Guild may be unable to obtain sufficient additional
financing on favorable terms, or at all. Furthermore, equity issuances could
be dilutive to Ashford's or Guild's existing stockholders.

 Each of Ashford and Guild depends on increasing use of the Internet and on
 the growth of online commerce.

   Each of Ashford's and Guild's future revenues substantially depend on the
increased acceptance and use of the Internet and other online services as a
medium of commerce. Rapid growth in the use of the Internet, the Web and
online services is a recent phenomenon. As a result, acceptance and use may
not continue to develop at historical rates and a sufficiently broad base of
customers may not adopt, and/or continue to use, the Internet and other online
services as a medium of commerce. Demand and market acceptance for recently
introduced services and products over the Internet are subject to a high level
of uncertainty and there exist few proven services and products.

   In addition, the Internet may not be accepted as a viable long-term
commercial marketplace for a number of reasons, including potentially
inadequate development of the necessary network infrastructure or delayed
development of enabling technologies and performance improvements. If the
Internet continues to experience significant expansion in the number of users,
frequency of use or bandwidth requirements, the infrastructure for the
Internet may be unable to support the demands placed upon it. In addition, the
Internet could lose its viability as a commercial medium due to delays in the
development or adoption of new standards and protocols required to handle
increased levels of Internet activity, or due to increased governmental
regulation. Changes in, or insufficient availability of, telecommunications
services to support the Internet also could result in slower response times
and adversely affect usage of the Internet generally.

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<PAGE>

   Each of Ashford's and Guild's business, financial condition and results of
operations would be seriously harmed if:

  .  use of the Internet, the Web and other online services does not continue
     to increase or increases more slowly than expected;

  .  the infrastructure for the Internet, the Web and other online services
     does not effectively support expansion that may occur;

  .  the Internet does not become a viable commercial marketplace; or

  .  traffic to Ashford's and Guild's Web sites decreases or fails to
     increase as expected or if either of Ashford or Guild spends more than
     it expects to attract visitors to its Web site.

If either Ashford or Guild is unable to acquire the necessary Web domain
names, its brand and reputation could be damaged and it could lose customers.

   Each of Ashford and Guild may be unable to acquire or maintain Web domain
names relating to its brand in the United States and other countries in which
it may conduct business. As a result, Ashford or Guild may be unable to
prevent third parties from acquiring and using domain names relating to its
brand, which could damage its brand and reputation and take customers away
from its Web site. Ashford currently holds, among others, the "Ashford.com,"
"newwatch.com," "sunglasses.com," "TimeZone.com," "Paris1925.com,"
"Jasmin.com" and "Ashfordcorporategifts.com" domain names and may seek to
acquire additional domain names. Guild currently holds, among others, the
"guild.com," "auction-guild.com," "guild-art.com," "guildcollector.com,"
"guild-auction.com," "guildpublications.com," "theguildcollector.com," "craft-
guild.com," "guildpublishing.com," "artist-guild.com," "fineart-guild.com,"
"guildart.com," "guildsourcebooks.com," "artists-guild.com," "gilled.com,"
"guildbooks.com," and "guildtrade.com" domain names and may seek to acquire
additional domain names. Governmental agencies and their designees generally
regulate the acquisition and maintenance of domain names. The regulation of
domain names in the United States and in foreign countries is subject to
change in the near future. Governing bodies may establish additional top-level
domains, appoint additional domain name registrars or modify the requirements
for holding domain names.

 Ashford or Guild may need to change the manner in which it conducts its
 business if government regulation increases.

   The adoption or modification of laws or regulations relating to the
Internet could adversely affect the manner in which each of Ashford and Guild
currently conduct its business. In addition, the growth and development of the
market for online commerce may lead to more stringent consumer protection
laws, both in the United States and abroad, that may impose additional burdens
on each of Ashford and Guild. Laws and regulations directly applicable to
communications or commerce over the Internet are becoming more prevalent. The
United States Congress recently enacted Internet laws regarding children's
privacy, copyrights, taxation and the transmission of sexually explicit
material. The European Union recently enacted its own privacy regulations.
Laws regulating the Internet, however, remain largely unsettled, even in areas
where there has been some legislative action. It may take years to determine
whether and how existing laws such as those governing intellectual property,
privacy, libel, and taxation apply to the Internet. In order to comply with
new or existing laws regulating online commerce, each of Ashford and Guild may
need to modify the manner in which it does business, which may result in
additional expenses. For instance, each of Ashford and Guild may need to spend
time and money revising the process by which it fulfills customer orders to
ensure that each shipment complies with applicable laws. Ashford or Guild may
need to hire additional personnel to monitor its compliance with applicable
laws or may need to modify its software to further protect its customers'
personal information.

 Ashford or Guild may be subject to liability for the Internet content that it
 publishes.

   As a publisher of online content, each of Ashford and Guild face potential
liability for defamation, negligence, copyright, patent or trademark
infringement, or other claims based on the nature and content of

                                      26
<PAGE>

materials that it publishes or distributes. If Ashford or Guild faces
liability, then its respective reputation and business may suffer. In the past,
plaintiffs have brought these types of claims and sometimes successfully
litigated them against online companies. In addition, Ashford or Guild could be
exposed to liability with respect to the unauthorized duplication of content or
unauthorized use of other parties' proprietary technology. Although each of
Ashford and Guild carries general liability insurance, its insurance currently
does not cover claims of these types. Neither Ashford nor Guild can be certain
that it will be able to obtain insurance to cover the claims on reasonable
terms or that it will be adequate to indemnify it for all liability that may be
imposed on Ashford or Guild. Any imposition of liability that is not covered by
Ashford or Guild's respective insurance or is in excess of insurance coverage
could harm its financial condition.

 Each of Ashford's and Guild's respective net sales could decrease if it
 becomes subject to sales or other taxes.

   If one or more states or any foreign country successfully asserts that
Ashford or Guild should collect sales or other taxes on the sale of its
products, its respective net sales and results of operations could be harmed.
One or more local, state or foreign jurisdictions may seek to impose sales tax
collection obligations on Ashford or Guild. In addition, any new operation
could subject each of Ashford's and Guild's shipments in other states to state
sales taxes under current or future laws. If Ashford or Guild become obligated
to collect sales taxes, it will need to update its system that processes
customer orders to calculate the appropriate sales tax for each customer order
and to remit the collected sales taxes to the appropriate authorities. These
upgrades will increase its respective operating expenses. In addition, its
customers may be discouraged from purchasing products from it because they have
to pay sales tax, causing net sales to decrease. As a result, Ashford or Guild
may need to lower prices to retain these customers.

Risks Related Solely to Ashford

 Ashford's operating results are volatile and difficult to predict. If Ashford
 fails to meet the expectations of public market analysis and investors, the
 market price of its common stock may decline significantly.

   Ashford's quarterly operating results have fluctuated in the past, and it
expects both its quarterly and annual operating results to fluctuate
significantly in the future. Because Ashford's operating results are volatile
and difficult to predict, it believes that quarter-to-quarter comparisons of
its operating results are not a good indication of its future performance. In
some future quarter Ashford's operating results may fall below the expectations
of securities analysts and investors. In this event, the trading price of its
common stock may decline significantly. The following are material factors that
may harm Ashford's business or cause its operating results to fluctuate:

  .  Ashford's inability to obtain new customers at reasonable cost, retain
     existing customers or encourage repeat purchases;

  .  Ashford's inability to respond to seasonal aspects of its business;

  .  Ashford's inability to manage inventory levels or control inventory
     theft;

  .  Ashford's inability to manage its fulfillment operations;

  .  Ashford's inability to adequately maintain, upgrade and develop its Web
     site, the systems that it uses to process customers orders and payments
     or its computer network;

  .  the ability of Ashford's competitors to offer new or enhanced Web sites,
     services or products;

  .  Ashford's inability to obtain product lines from its suppliers;

  .  the availability and pricing of merchandise from vendors; and

  .  increases in the cost of online or offline advertising.

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<PAGE>

   A number of factors will cause Ashford's gross margins to fluctuate in
future periods, including the mix of corporate sales to traditional retail
sales, the mix of products it sells, inventory management, marketing and
supply decisions, inbound and outbound shipping and handling costs, the level
of product returns and the level of discount pricing and promotional coupon
usage. Any change in one or more of these factors could reduce Ashford's gross
margins in future periods.

 If Ashford is unable to purchase or continue to purchase products directly
 from the brand owners, its net sales could decrease.

   A significant portion of Ashford's units sold is purchased directly from
the brand owners. Ashford is negotiating with some of the remaining brand
owners to purchase those brands directly, in all product categories. Ashford
believes that purchasing directly from the brand owners will provide it with a
more predictable supply of products, as well as a lower cost of goods. As a
result, Ashford believes that part of its success is contingent on attaining
or maintaining its ability to buy directly from the brand owners. If Ashford
loses or does not improve its ability to buy directly from the brand owners,
its net sales or margins may decrease.

 Ashford's ability to meet consumer demand is in part dependent upon the
 availability of products purchased indirectly from sources other than the
 brand owners. If Ashford is unable to obtain popular products through
 indirect sources, its net sales will decline.

   Ashford purchases brands indirectly from distributors and other third
parties that it does not purchase directly from the brand owners. The
availability of products purchased indirectly depends on many factors,
including consumer demand, manufacturer production and fashion trends. Since
there are no guarantees that Ashford will be able to obtain a sufficient
supply of products indirectly from third-party distributors and other
suppliers, customer demand may, at times, exceed its supply of those products.
If this occurs Ashford could lose customers and its net sales would decline.
In addition, the luxury goods brand owners could establish procedures to limit
or control Ashford's ability to purchase products indirectly and several brand
owners in the U.S. have distinctive legal rights rendering them the only legal
importer of their respective brands into the U.S. In the event Ashford
acquires such products indirectly from distributors and other third parties
who may not have complied with applicable customs laws and regulations, such
goods can be subject to seizure from its inventory by U.S. Customs, and the
importer may have a civil action for damages against Ashford. As it is often
difficult to ascertain the original circumstances of importation of certain
goods offered to Ashford by its distributors and other third parties, this
could impact its ability to obtain sufficient quantities of popular luxury
goods, such as watches, and cause customer dissatisfaction.

 If Ashford is unable to obtain sufficient quantities of popular luxury and
 premium products, its net sales could decrease.

   If Ashford is not able to offer its customers a sufficient supply and
selection of products in a timely manner, it could lose customers and its net
sales could be below expectations. Ashford's success depends on its ability to
purchase products in sufficient quantities at competitive prices, particularly
for the holiday shopping season. As is common in the industry, Ashford
generally does not have long-term or exclusive arrangements with brand owners,
distributors or brokers that guarantee the availability of products for
resale.

   In the luxury goods market, a product or fashion style periodically becomes
intensely popular. From time to time, Ashford may have trouble obtaining
sufficient product allocations of particularly popular brands. In addition,
Ashford believes that some of its suppliers may establish their own online
retailing efforts, which may impact Ashford's ability to get sufficient
product allocations from suppliers. In several cases, the brands that Ashford
wishes to carry have delayed establishing a relationship with Ashford until
they have their own Web site up and running. In other cases, the brand owners
distribute only a small amount of product and rely partially on the scarcity
of that product to provide a merchandising mystique. It is unlikely that
Ashford will obtain products for its Web site from brands who follow the
scarcity mystique, and there is no assurance that Ashford will actually obtain
relationships within all sectors that it has planned to offer. Therefore,
Ashford does not have a predictable or guaranteed supply of products.

                                      28
<PAGE>

 Because Ashford carries almost all of the products it sells in inventory, if
 it is unable to accurately predict and plan for changes in consumer demand its
 net sales and gross margins may decrease.

   At December 31, 2000, Ashford held approximately $26.9 million of products
in inventory. The rapidly changing trends in consumer tastes in the market for
luxury and premium products subjects Ashford to significant inventory risks. It
is critical to Ashford's success that it accurately predicts these trends and
does not overstock unpopular products. The demand for specific products can
change between the time the products are ordered and the date of receipt.
Ashford is particularly exposed to this risk because it derives a majority of
its net sales in the fourth calendar quarter of each year. Ashford's failure to
sufficiently stock popular products in advance of the fourth calendar quarter
would harm its operating results for the entire fiscal year. In the event that
one or more products do not achieve widespread consumer acceptance, Ashford may
be required to take significant inventory markdowns, which could reduce its net
sales and gross margins. This risk may be greatest in the first calendar
quarter of each year, after Ashford has significantly increased inventory
levels for the holiday season. Ashford believes that this risk will increase as
it begins to offer additional luxury items due to its lack of experience in
purchasing these items. In addition, to the extent that demand for its products
increases over time, Ashford may be forced to increase inventory levels. Any
increase would subject Ashford to additional inventory risks.

 If Ashford experiences significant inventory theft, its gross profit margin
 would decrease.

   Although immaterial to date, in the past Ashford has experienced theft of
merchandise shipments in route from its facility to its customers. In the
future, Ashford expects that it may also experience theft of merchandise while
it is being held in its fulfillment facility. Ashford has worked with its
shipping carriers and has taken steps aimed at preventing theft. If these steps
are inadequate or if security measures fail at its fulfillment facility,
Ashford could incur significant inventory theft, which could cause gross profit
margins and results of operations to decrease significantly.

 If Ashford is unable to successfully expand its accounting and financial
 reporting systems, its stock price could decline.

   Ashford continues to expand its financial and management information systems
to accommodate new data. If Ashford fails to successfully implement and
integrate its new financial reporting and management information systems with
its existing systems or if it is not able to expand these systems to
accommodate its growth, Ashford may not have adequate, accurate or timely
financial information. Ashford's failure to have adequate, accurate or timely
financial information would hinder its ability to manage its business and
operating results. If Ashford continues to grow rapidly, it will face
additional challenges in upgrading and maintaining its financial and reporting
systems.

 Executive officers, directors and entities affiliated with them have
 substantial control over Ashford which could delay or prevent a change in its
 corporate control favored by its other stockholders.

   Executive officers, directors and entities affiliated with them, if acting
together, would be able to significantly influence all matters requiring
approval by Ashford's stockholders, including the election of directors and the
approval of mergers or other business combination transactions.

 It may be difficult for a third party to acquire Ashford even if doing so
 would beneficial to its stockholders.

   Provisions of Ashford's certificate of incorporation, its bylaws and
Delaware law could make it more difficult for a third party to acquire it, even
if doing so would be beneficial to Ashford's stockholders. In particular,
Ashford's certificate of incorporation provides for a board of directors that
is divided into three classes which may issue preferred stock without any
stockholder action. Ashford's certificate of incorporation does not allow
stockholders to act by written consent and it does not permit cumulative voting
in the election of directors. In addition, Section 203 of the Delaware General
Corporation Law places restrictions on business combinations with interested
stockholders.

                                       29
<PAGE>

 Ashford's common stock price is volatile, which could result in substantial
 losses for individual stockholders.

   The trading price of Ashford's common stock fluctuates significantly. For
example, since its initial public offering through February 28, 2001, the
reported closing price of Ashford's common stock on the Nasdaq National Market
was as high as $24.88 and as low as $0.30. Trading prices of Ashford's common
stock may fluctuate in response to a number of events and factors, such as:

  .  actual or anticipated variations in its quarterly operating results;

  .  announcements of technological innovations or new products or services
     by Ashford or its competitors;

  .  changes in financial estimates by securities analysts;

  .  conditions or trends in the Internet and/or online commerce industries;

  .  changes in the economic performance and/or market valuations of other
     Internet, online commerce or retail companies;

  .  announcements by Ashford or its competitors of significant acquisitions,
     strategic partnerships, joint ventures or capital commitments;

  .  additions or departures of key personnel;

  .  release of transfer restrictions on Ashford's outstanding shares of
     common stock or sales of additional shares of common stock; and

  .  potential litigation.

   In addition, the stock market has from time to time experienced extreme
price and volume fluctuations. These broad market fluctuations may adversely
affect the market price of Ashford's common stock.

 Ashford may not be able to maintain its listing on the Nasdaq National
 Market.

   Ashford's common stock is presently authorized for quotation on the Nasdaq
National Market. Accordingly, Ashford is subject to all requirements of its
listing agreement with Nasdaq. Among the events that could cause Ashford to
have its status as a National Market Issuer terminated are:

  .  failure to maintain a minimum bid price for the common stock of either
     $1.00 per share or $5.00 per share, depending on, among other things,
     whether or not tangible net assets for Ashford is greater than or less
     than $4 million;

  .  failure to maintain an audit committee that comports to the independence
     and other standards of the Nasdaq and the SEC; and

  .  failure to timely hold annual meetings of stockholders and comply with
     other corporate governance requirements.

   Ashford's stock has recently had trading days below the $1.00 minimum bid.
If Ashford's stock price remains below that level, it could result in
delisting or the need to complete a reverse stock split. If Ashford loses its
Nasdaq National Market status, its common stock would trade either as a Nasdaq
Small Cap issue or in the over-the-counter market, both of which are viewed by
most investors as less desirable, and less liquid, marketplaces. Loss of
Ashford's Nasdaq National Market status would also complicate compliance with
state blue sky laws.

Risks Related Solely to Guild

 Some shares of Guild's common stock may have been offered or sold in violation
  of the Securities Act of 1933.

   In December 2000, Guild provided written materials to approximately 700
persons that had previously supplied works of art for resale on Guild's Web
site. The materials offered each of these persons, among other things, the
opportunity to receive a grant of options to purchase 100 shares of Guild
common stock, at an exercise price of $0.28 per share, in exchange for an
increase in the commission received by Guild in connection with the resale of
works of art produced the artist. These materials may have constituted an
offer of securities that did not meet the requirements of Section 5 of the
Securities Act of 1933.

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<PAGE>

                          THE ASHFORD SPECIAL MEETING

General

   This joint proxy statement/prospectus is being furnished to stockholders of
Ashford, as part of the solicitation of proxies by the Ashford board of
directors for use at a special meeting of stockholders of Ashford to be held on
       ,           , 2001, at 10:00 a.m., local time, at the Renaissance Hotel,
Greenway II Room, Concourse Level, 6 Greenway Plaza East, Houston, Texas, and
at any adjournment or postponement of such meeting. This joint proxy
statement/prospectus and the enclosed form of proxy are first being mailed to
stockholders of Ashford on or about           , 2001.

Purpose of Special Meeting

   The purpose of the Ashford special meeting is to approve and adopt the
merger and the merger agreement, dated as of January 3, 2001, by and among
Ashford, Ashford-Guild Art Corporation, a Delaware corporation and a wholly
owned subsidiary of Ashford, and Guild. Under the merger agreement, Ashford-
Guild Art Corporation will be merged with and into Guild, with Guild being the
surviving corporation and a wholly owned subsidiary of Ashford.

   We will also transact such other business as may properly come before the
Ashford special meeting or any adjournment or postponement of the meeting.

Ashford Board of Directors' Recommendation

   The Ashford board of directors, after careful consideration, has unanimously
approved and adopted the merger and the merger agreement and the related
transactions. The Ashford board believes that the merger is advisable and in
the best interests of Ashford and its stockholders and unanimously recommends
that you vote FOR the approval and adoption of the merger and the merger
agreement.

Record Date and Voting

   Holders of record of shares of Ashford common stock at the close of business
on             , 2001, referred to in this proxy statement/prospectus as the
Ashford record date, are entitled to notice of and to vote at the Ashford
special meeting. On the record date, there were outstanding           shares of
Ashford common stock, each of which will be entitled to one vote. A majority of
the shares of Ashford common stock entitled to vote must be present in person
or represented by proxy at the Ashford special meeting to constitute a quorum.

   Pursuant to applicable rules of the Nasdaq National Market, the merger
requires stockholder approval because a director of Ashford has an indirect
ownership interest in an entity that holds Guild preferred stock. The
affirmative vote of a majority of the shares of Ashford common stock present in
person or represented by proxy at the Ashford special meeting and entitled to
vote is required to approve and adopt the merger and the merger agreement.

   Shares of Ashford common stock present in person or represented by proxy at
the Ashford special meeting and entitled to vote will be counted for the
purposes of determining whether a quorum is present. Abstentions and broker
"non-votes" will be counted as present or represented and entitled to vote at
the Ashford special meeting for purposes of determining whether a quorum is
present. A broker "non-vote" occurs when a broker holding shares for a
beneficial owner does not vote on a proposal because the broker does not have
discretionary voting power and has not received instructions from the
beneficial owner with respect to the proposal. Abstentions and broker "non-
votes" will not be considered voted for the approval and adoption of the merger
and the merger and agreement and have the effect of reducing the number of
affirmative votes required to achieve a majority for such approval and adoption
by reducing the total number of shares from which the majority is calculated.

   As of January 3, 2001, directors, executive officers and stockholders of
Ashford, and their affiliates, who collectively beneficially own approximately
52.5% of the outstanding shares of Ashford common stock have agreed to vote
their shares in favor of the merger agreement.

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<PAGE>

Voting and Revocation of Proxies

   All shares of Ashford common stock that are entitled to vote and are
represented at the Ashford special meeting by properly executed proxies
received by Ashford prior to or at the meeting, and not revoked, will be voted
at the meeting or any adjournment thereof in accordance with the instructions
indicated on the proxies. If no instructions are indicated (other than broker
non-votes), the proxies will be voted FOR approval and adoption of the merger
and the merger agreement as proposed in this joint proxy statement/prospectus.

   The Ashford board of directors does not know of any matters other than those
described in the notice of the Ashford special meeting that are to be presented
for action at such meeting. If any other matters are properly presented at the
Ashford special meeting for consideration, the persons appointed as proxies
(Kenny Kurtzman and Ryan Maierson) generally will have discretion to vote on
such matters in accordance with their judgment.

   Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by:

  .  filing with the Secretary of Ashford, at or before the taking of the
     vote at the Ashford special meeting, a written notice of revocation
     bearing a later date than the proxy;

  .  duly executing a later dated proxy relating to the same shares and
     delivering it to the Secretary of Ashford before the taking of the vote
     at the Ashford special meeting; or

  .  attending the Ashford special meeting and voting in person, although
     attendance at the Ashford special meeting will not in and of itself
     constitute a revocation of a proxy.

   Any written notice of revocation or subsequent proxy should be sent to
Ashford.com, Inc., 3800 Buffalo Speedway, Suite 400, Houston, Texas 77098,
Attention: Secretary, or hand delivered to the Secretary of Ashford at or
before the taking of the vote at the Ashford special meeting.

   Ashford has retained Mellon Investor Services LLC for the purpose of
soliciting Ashford stockholders in connection with the merger. All expenses of
Ashford's solicitation of proxies for the Ashford special meeting will be borne
by Ashford. In addition to solicitation by use of the mails, proxies may be
solicited from Ashford stockholders by directors, officers and employees of
Ashford in person or by telephone, facsimile, electronic mail or other means of
communication. These directors, officers and employees will not be additionally
compensated, but may be reimbursed for reasonable out-of-pocket expenses in
connection with the solicitation. Arrangements will also be made with brokerage
houses, custodians, nominees and fiduciaries for forwarding of proxy
solicitation materials to beneficial owners of shares held of record by such
brokerage houses, custodians, nominees and fiduciaries, and Ashford will
reimburse these brokerage houses, custodians, nominees and fiduciaries for
their reasonable expenses incurred in connection with the solicitation.

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<PAGE>

                           THE GUILD SPECIAL MEETING

General

   This joint proxy statement/prospectus is being furnished to stockholders of
Guild, as part of the solicitation of proxies by the Guild board of directors
for use at a special meeting of stockholders of Guild to be held on           ,
2001, at 10:00 a.m., local time, at 931 East Main Street, Suite 3, Madison,
Wisconsin 53703, and at any adjournment or postponement of such meeting. This
joint proxy statement/prospectus and the enclosed form of proxy are first being
mailed to stockholders of Guild on or about           , 2001.

Purpose of Special Meeting

   The purpose of the Guild special meeting is (1) to consider and vote upon a
proposal to approve and adopt the merger and the merger agreement, dated as of
January 3, 2001, among Ashford, Ashford-Guild Art Corporation, a Delaware
corporation and a wholly owned subsidiary of Ashford, and Guild, and (2) to
consider and vote upon an amendment to Guild's restated certificate of
incorporation that would allow Guild Series A preferred stockholders to receive
consideration in the merger. Under the merger agreement, Ashford-Guild Art
Corporation will be merged with and into Guild, with Guild being the surviving
corporation and a wholly owned subsidiary of Ashford.

   We will also transact such other business as may properly come before the
Guild special meeting or any adjournment or postponement of the meeting.

Guild Board of Directors' Recommendation

   The Guild board of directors, after careful consideration, has unanimously
approved and adopted the merger and the merger agreement and has determined
that the merger and the merger agreement are advisable and in the best
interests of Guild and its stockholders. The Guild board of directors
unanimously recommends a vote FOR the approval and adoption of the merger and
the merger agreement. The Guild board of directors also has approved the
amendment to Guild's restated certificate of incorporation and recommends that
you vote FOR such proposal.

Record Date and Voting

   Holders of record of shares of Guild common stock, Series A preferred stock,
Series B preferred stock, Series C-1 preferred stock and Series D preferred
stock at the close of business on             , 2001, referred to in this joint
proxy statement/prospectus as the Guild record date, are entitled to notice of
and to vote at the Guild special meeting. At the Guild record date, there were
461,432 shares of Guild common stock, 4,870,915 shares of Series A preferred
stock, 3,500,178 shares of Series B preferred stock, 12,117,076 shares of
Series C-1 preferred stock and 3,931,299 shares of Series D preferred stock
issued and outstanding. Each share of Guild common stock, Series A preferred
stock, Series B preferred stock, Series C-1 preferred stock, and Series D
preferred stock will entitle the holder to one vote per share. The
representation, in person or by properly executed proxy, of the holders of a
majority in voting power of all of the outstanding shares of Guild capital
stock and, with respect to matters requiring the vote of a specific class or
series, a majority in voting power of all of the outstanding shares of such
class or series.

   Approval of the merger and the merger agreement will require the affirmative
vote of the holders of:

     . a majority of the votes represented by the outstanding shares of Guild
  common stock and preferred stock, voting together as a single class; and

     . a majority of the votes represented by the outstanding shares of Guild
  Series B preferred stock, Series C-1 preferred stock, and Series D
  preferred stock, voting together as a single class.

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<PAGE>

   Approval of the amendment to Guild's restated certificate of incorporation
will require the affirmative vote of the holders of:

  .  a majority of the outstanding shares of Guild common stock and preferred
     stock, voting together as a single class; and

  .  a majority of the outstanding shares of Guild Series A preferred stock,
     Series B preferred stock, Series C-1 preferred stock, and Series D
     preferred stock, each voting as a separate series and not as a single
     class.

   Shares of Guild common stock, Series A preferred stock, Series B preferred
stock, Series C-1 preferred stock, and Series D preferred stock represented in
person or by proxy will be counted for the purposes of determining whether a
quorum is present at the Guild special meeting. All shares with respect to
which holders abstain from voting will be treated as shares that are present
and entitled to vote at the Guild special meeting for the purposes of
determining whether a quorum exists, but abstentions will have the same effect
as votes against the proposal.

   As of January 3, 2001, directors, executive officers and stockholders of
Guild, and their affiliates, who collectively beneficially own approximately
82.7% of Guild's outstanding capital stock, have agreed to vote their shares in
favor of the merger and the merger agreement and in favor of the amendment to
Guild's restated certificate of incorporation.

   Due to existing voting agreements signed by holders of a majority of the
Guild Series B preferred stock, Series C-1 preferred stock and Series D
preferred stock, approval and adoption of the merger and the merger agreement
is assured. The affirmative vote of holders of a majority of Guild Series A
preferred stock also is required to approve and adopt the amendment to Guild's
restated certificate of incorporation. As of the date of this joint proxy
statement/prospectus, holders of 25.1% of Guild Series A preferred stock have
agreed to vote in favor of the amendment to Guild's restated certificate of
incorporation.

Voting and Revocation of Proxies

   All shares of Guild common stock, Series A preferred stock, Series B
preferred stock, Series C-1 preferred stock and Series D preferred stock that
are entitled to vote and are represented at the Guild special meeting by
properly executed proxies received prior to or at such meeting, and not
revoked, will be voted at the meeting in accordance with the instructions
indicated on such proxies. If no instructions are indicated, the proxies will
be voted FOR each proposal.

   The Guild board does not know of any matters other than those described in
the notice of the Guild special meeting that are to come before the meeting. If
any other matters are properly presented at the Guild special meeting for
consideration, including, among other things, consideration of a motion to
adjourn or postpone the meeting to another time and/or place, the persons
appointed as proxies (Toni Sikes and Gordon Mayer) generally will have
discretion to vote on such matters in accordance with their best judgment.

   Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by:

  .  filing with the Secretary of Guild, at or before the taking of the vote
     at the Guild special meeting, a written notice of revocation bearing a
     later date than the proxy;

  .  duly executing a later dated proxy relating to the same shares and
     delivering it to the Secretary of Guild before the taking of the vote at
     the Guild special meeting; or

  .  attending the Guild special meeting and voting in person, although
     attendance at the Guild special meeting will not in and of itself
     constitute a revocation of a proxy.

                                       34
<PAGE>

   Any written notice of revocation or subsequent proxy should be sent to
Guild.com, Inc., 931 East Main Street, Suite 3, Madison, Wisconsin 53703,
Attention: Secretary, or hand delivered to the Secretary of Guild at or before
the taking of the vote at the Guild special meeting.

   All expenses of Guild's solicitation of proxies for the Guild special
meeting will be borne by Guild. In addition to solicitation by use of the
mails, proxies may be solicited from Guild stockholders by directors, officers
and employees of Guild in person or by telephone, facsimile or other means of
communication. These directors, officers and employees will not be additionally
compensated, but may be reimbursed for reasonable out-of-pocket expenses in
connection with the solicitation.

                                       35
<PAGE>

                                   THE MERGER

   This section of the joint proxy statement/prospectus describes material
aspects of the proposed merger, including the merger agreement. Although we
believe that the description covers the material terms of the merger and the
related transactions, this summary may not contain all of the information that
is important to Ashford stockholders and Guild stockholders. You should
carefully read the merger agreement, and the other documents to which we refer
you, in their entirety for a more complete understanding of the merger.

Background of the Merger

   On November 28, 2000, the Chief Executive Officer of Ashford telephoned the
President of Guild to inquire as to Guild's interest in entering into a
business combination pursuant to which Ashford would acquire Guild. The
executives discussed the current business climate and the opportunities
provided by a possible combination of Ashford and Guild. In general, the
parties agreed that Ashford and Guild seemed to have a potential strategic fit.

   Over the next week, this dialogue continued and the respective companies
exchanged information regarding their respective operations. Following these
discussions, a meeting date was established to discuss a possible transaction.

   On December 8, 2000, Ashford's Chief Executive Officer and its Vice
President of Finance met with the executive officers of Guild at Guild's
offices in Madison, Wisconsin. At this meeting, Guild made a presentation to
Ashford regarding its strategy and vision and discussed its history and current
financial information. Following this presentation, the parties discussed
Ashford's vision for a combined company, including its views as to how the two
companies might be integrated if the transaction were to proceed. The
executives also explored the potential benefits of a combination of the two
companies and discussed the relative value of their businesses.

   Following the meeting on December 8, 2000, the parties continued discussions
regarding the potential synergies within a combined Ashford/Guild company and
determined to prepare combined company pro forma 2001 financial projections.

   On December 13, 2000, the President of Guild made a presentation to the
board of directors of Guild regarding the possibility of a merger with Ashford.
Following this presentation, Guild's board of directors authorized Guild's
management to continue discussions with Ashford regarding a potential merger
transaction.

   On December 13, 2000, Ashford's Chief Executive Officer made a presentation
to the board of directors of Ashford regarding a possible business combination
with Guild. Following this presentation, Ashford's board of directors
authorized Ashford's management to continue discussions with Guild regarding
the proposed transaction.

   On December 14 and 15, 2000, the parties held further discussions regarding
the consideration to be paid in the proposed transaction and the allocation of
this consideration to the existing stockholders and option holders of Guild.

   On December 18, 2000, the parties met at Ashford's offices and signed a non-
binding letter of intent that contemplated a transaction in which Ashford would
acquire all the outstanding shares of Guild capital stock in a stock-for-stock
merger. The letter of intent included a binding mutual nondisclosure provision
and a limited-duration exclusivity provision to protect the parties from
outside interference during their respective due diligence investigations and
negotiation of definitive agreements. The parties also established a schedule
for their due diligence investigations, shared preliminary due diligence
information and discussed various operational issues relating to the
combination of the companies.

                                       36
<PAGE>

   Simultaneously with these discussions, a draft merger agreement and related
transaction documents were prepared by Ashford's outside legal advisor, which
documents were delivered to the parties on December 19, 2000. During the period
from December 19, 2000 through December 28, 2000, Ashford held a series of
meetings with Guild. During this period and for the remainder of that week,
Ashford and Guild conducted their respective business, legal and financial due
diligence investigations and held extensive negotiations regarding the terms
and conditions of the merger agreement and the related transaction documents.
During this same period, representatives of Ashford and Guild discussed the
organization of the combined entity and began developing plans for integration
of the companies following the proposed merger.

   On December 28, 2000, a special meeting of Guild's board of directors was
held to review the status of the negotiations with Ashford, including a review
of the material terms and conditions of the merger agreement, the voting
agreements, the affiliate letters and the lock-up agreements that were
currently being negotiated by the parties. Upon the advice of counsel, the
Guild board established a special committee of disinterested and independent
directors of Guild to review and evaluate the proposed merger, the merger
agreement and the associated transactions. The special committee was charged
with making a recommendation to the board as to whether the transaction was in
the best interests of the stockholders of Guild. Mr. Jay Hoag and Mr. Mike
Anthony were appointed to serve as the members of the special committee. The
directors also considered the merits of obtaining a fairness opinion from an
independent financial advisor to determine whether the Ashford transaction was
fair to the shareholders from a financial point of view. Guild's counsel was
instructed to investigate the scope, cost and timing of a fairness opinion with
selected investment banks, and report his findings to the special committee at
its first meeting.

   On December 30, 2000, the first meeting of the special committee of the
board of directors of Guild was held to discuss whether the proposed
transaction with Ashford was fair to and in the best interests of the
stockholders of Guild. The committee reviewed counsel's input regarding the
fairness opinion and the substance, cost and timing of such an opinion. The
special committee concluded that the value of obtaining a fairness opinion was
outweighed by its substantial cost and other factors. The special committee
extensively reviewed the proposed transaction and its fairness to the
stockholders of Guild based upon (1) the value of the consideration to be
received as a proportion of the common stock of Ashford outstanding (a relative
value analysis) and (2) the value of Guild as determined by applying current
multiples of comparable public companies to the actual 2000 and expected 2001
revenues of Guild (an absolute value analysis). The committee also considered
various alternatives available to Guild, including a merger or other business
transaction with another suitor, a joint venture with Ashford, remaining as a
stand-alone company and a liquidation of the company. The committee decided to
address these issues further at its next meeting. Finally, the committee
discussed various alternatives as to how the merger consideration would be
allocated among the Guild stockholders.

   On January 2, 2001, a special meeting of the board of directors of Ashford
was held and the directors reviewed the proposed terms of the merger including
the results of Ashford's due diligence investigation and the expected benefits
of the transaction to Ashford and its stockholders. After discussion, the board
authorized management to continue to pursue the proposed business combination
of Ashford and Guild.

   During the period from December 29, 2000 through January 2, 2001, the
parties continued to negotiate the terms of the merger agreement and the
related transaction documents.

   The special committee of the board of directors of Guild met again on
January 2, 2001. The special committee analyzed both the liquidation value of
Guild, as well as the possibility of continuing Guild as an independent going
concern. The special committee considered other potential transactions to
determine whether the proposed transaction is in the best interest of the
stockholders of Guild. The special committee also reviewed an internal
valuation analysis that Mr. Hoag had prepared for his funds' use. Finally, the
special committee discussed various alternatives for allocating the proposed
merger consideration among Guild's

                                       37
<PAGE>

stockholders, within the constraints of Guild's restated certificate of
incorporation. After a lengthy discussion and review of these factors, the
committee determined that the proposed merger consideration was fair and
reasonable to Guild's stockholders from a financial point of view, and that the
proposed transactions with Ashford offers greater value to Guild's stockholders
than any likely alternative transaction.

   A special meeting of Guild's board of directors was held on January 2, 2001.
The board members reviewed a substantially final draft of the merger agreement
and the terms of the voting agreements and lock-up agreements. At this meeting,
the special committee reviewed its deliberations, recommended approval of the
proposed merger to the Guild board and stated the special committee's
conclusion that the merger and the merger agreement are fair and reasonable to
the stockholders of Guild from a financial point of view. The Guild directors
reviewed several matters related to the valuation and allocation of the merger
consideration, including (1) the value of the consideration to be received by
Guild's stockholders in connection with the proposed transaction with Ashford,
(2) other alternatives available to Guild, including a liquidation of Guild,
continuing Guild as an independent going concern and other potential
transactions, and (3) the allocation of the proposed merger consideration among
the stockholders of Guild in accordance with Guild's existing restated
certificate of incorporation. The board determined that the preferred
alternative for allocation of the merger consideration required amendment of
Guild's restated certificate of incorporation to allow the Guild Series A
preferred stockholders to receive a portion of the merger consideration.
Following these discussions and upon consideration of the recommendation of the
special committee, the board of directors of Guild unanimously adopted and
approved, among other things, (A) an amendment to Guild's restated certificate
of incorporation which would modify the liquidation preferences of the Series
B, C-1 and D preferred stockholders to allow the Series A preferred
stockholders to receive a portion of the merger consideration, subject to the
vote of the holders of a majority of the shares of each series of preferred
stock, as well as the vote of the holders of a majority of the outstanding
capital stock of Guild voting together as a single class, and (B) the proposed
merger with Ashford and the execution and delivery of the merger agreement, the
voting agreements and any other documents as may be necessary or appropriate.
The Guild board of directors also determined that the proposed transaction is
fair to Guild's stockholders from a financial point of view and is in the best
interests of Guild's stockholders. The Guild board also resolved to recommend
to the Guild stockholders that they approve and adopt the merger and the merger
agreement, and all transactions contemplated thereby.

   On January 3, 2001, at a special meeting of the board of directors of
Ashford, the directors reviewed the principal terms of the merger agreement and
related transaction documents as negotiated to date, the accounting treatment
of the proposed merger and the strategic benefits of the combination of the two
businesses. After discussion, the Ashford board unanimously approved and
adopted the merger agreement and related transaction documents and the issuance
of Ashford common stock in the merger, subject to satisfactory resolution of
terms that remained open to final negotiation in the agreements. The board also
determined to recommend to Ashford's stockholders that they approve and adopt
the merger agreement.

   Following the meeting of the Ashford board, Ashford and Guild negotiated all
remaining open terms and finalized the merger agreement and related transaction
documents. The definitive merger agreement and voting agreements were executed
and delivered by all parties during the evening of January 3, 2001. On January
4, 2001, Ashford and Guild issued a joint press release announcing the proposed
merger.

                                       38
<PAGE>

Joint Reasons for the Merger

   The Ashford board of directors and the Guild board of directors each believe
that the combined company will have potential for greater financial strength,
market power and growth than either Ashford or Guild would have on its own. The
Ashford board of directors and the Guild board of directors identified a number
of potential benefits to the merger that they believe could contribute to the
success of the combined company and thus benefit stockholders of both
companies, including the following:

  .  the merger may enhance the opportunity for the potential realization of
     the strategic objective of the combined company to expand its market
     share and increase the combined company's ability to compete effectively
     in the online luxury goods and premium products market;

  .  the merger may provide the combined company with the financial resources
     and expanded offerings to increase its user base and to obtain
     advantages and efficiencies in the marketing, selling and pricing of its
     products and to achieve profitability; and

  .  the combined company will have an experienced management team that has
     the breadth and depth to effectively lead and manage the combined
     company's growth.

Recommendation of the Board of Directors of Ashford; Ashford's Reasons for the
Merger

   The Ashford board has unanimously approved and adopted the merger, the
merger agreement and the transactions contemplated thereby and believes that
the terms of the merger are fair to, and in the best interests of, Ashford and
its stockholders. The Ashford board of directors recommends a vote FOR the
approval and adoption of the merger and the merger agreement.

   In reaching its conclusion to approve and adopt the merger and the merger
agreement, the Ashford board of directors considered the factors described
above under "Joint Reasons for the Merger," as well as the opportunity of the
Ashford stockholders to participate in the potential growth of the combined
company after the merger.

   The Ashford board of directors also considered and reviewed with management
the additional reasons listed below in reaching its decision to approve and
adopt the merger and the merger agreement and to recommend that Ashford
stockholders vote to approve and adopt the proposed issuance of Ashford common
stock in connection with the merger:

  .  acquiring Guild may increase Ashford's visitor traffic and enable
     Ashford to gain advantages and efficiencies in selling its products to
     its customers;

  .  acquiring Guild may enable Ashford to strengthen its industry leadership
     position and global presence by capitalizing on Guild's offerings,
     thereby enhancing the products and services available to Ashford's
     customers;

  .  in light of consolidation throughout the industry, acquiring Guild may
     strengthen Ashford's position as a dominant participant in the industry;
     and

  .  owning Guild will enhance Ashford's technical and sales staff with
     experienced Guild technical and sales personnel.

Recommendation of the Board of Directors of Guild; Guild's Reasons for the
Merger

   The Guild board has unanimously approved and adopted the merger and the
merger agreement and the transactions contemplated thereby and believes that
the terms of the merger are fair to, and in the best interests of, Guild and
its stockholders. The Guild board recommends a vote FOR the approval and
adoption of the merger and the merger agreement.

   In addition to the anticipated joint benefits described above under "Joint
Reasons for the Merger," the Guild board believes that the following are
additional reasons the merger will be beneficial to Guild and its stockholders:

  .  the merger may enable Guild to attain industry leadership, strengthen
     Guild's market presence and capitalize on Ashford's sales and marketing
     expertise and personnel resources;

                                       39
<PAGE>

  .  the combined company should be better able to accelerate its product and
     service implementation activities;

  .  the merger should provide Guild with immediate access to additional
     financial resources to accelerate its growth;

  .  the merger should provide Guild with access to Ashford's database of
     customers and prospects and its customer acquisition capabilities; and

  .  the consideration to be paid to Guild stockholders in the merger will be
     shares of Ashford common stock, securities that are traded on the Nasdaq
     National Market and are more readily marketable than shares of Guild
     stock.

Certain Financial Projections (Unaudited)

   Guild does not as a matter of course make public forecasts or projections as
to future revenues or results of operations. However, during the course of
negotiations, Guild presented certain financial information to Ashford. The
information included estimates by Guild's management of Guild's anticipated
financial performance during 2001. This information was presented to Ashford's
management on December 4, 2000.

   The estimates of Guild's future financial performance were not prepared with
a view towards public disclosure or compliance with either the published
guidelines of the SEC regarding projections or forecasts or the American
Institute of Certified Public Accountants' Guide for Prospective Financial
Statements. Also, the estimates were not prepared in accordance with generally
accepted accounting principles and were not audited or reviewed by independent
auditors nor did any independent auditors perform any services with respect to
the estimates.

   The estimates were based upon numerous estimates and other assumptions which
are inherently subject to significant business, economic and competitive
uncertainties, contingencies and risks, all of which are difficult to quantify
and many of which are beyond the control of Guild. Because of the number and
ranges of the assumptions involved in the projections, some of the assumptions
inevitably will not materialize. Moreover, unanticipated events and
circumstances are likely to occur, each of which may cause the projections to
be materially inaccurate. Guild's limited operating history makes future
operations difficult to predict. As a result, these financial projections are
based in large part on assumptions derived from management's experience rather
than actual Guild performance data. Accordingly, there can be no assurance that
the estimates will be realized, and it is likely that future results will vary
from the estimates, possibly by material amounts.

   The estimates of Guild's future financial performance show that Guild
expects to incur continued net losses for its fiscal year ending December 31,
2001.

Interests of Executive Officers and Directors of Ashford and Guild in the
Merger

   You should be aware of the interests that various executive officers and
directors of Ashford and Guild have in the merger. The boards of directors of
Ashford and Guild were aware of the material conflicts and considered them when
approving the merger and the merger agreement. These interests are different
from and in addition to your and their interests as stockholders. These
include:

 Significant Holdings

   Each of Kevin Harvey, a member of the board of directors of Ashford, and
Bruce Dunlevie, a member of the board of directors of Guild, is a general
partner of Benchmark Capital Partners II, L.P., a stockholder of Ashford, and
of Benchmark Capital Partners III, L.P. and Benchmark Capital Partners IV,
L.P., stockholders of Guild. As of February 28, 2001, Benchmark Capital
Partners II, L.P. held 10,982,177 shares of Ashford common stock. As of
February 28, 2001, Benchmark Capital Partners III, L.P. held 3,500,178 shares
of Guild Series B preferred stock and 2,423,416 shares of Guild Series C-1
preferred stock, and Benchmark Capital Partners IV, L.P. held 568,182 shares of
Guild Series D preferred stock. See "Securities Ownership of Certain Beneficial
Owners and Management of Guild" on page 72.


                                       40
<PAGE>

 Indemnification

   The merger agreement provides that all rights to indemnification and all
limitations on liability in effect for the benefit of present and former
officers and directors of Guild with respect to actions taken in such official
capacities will continue in effect after the merger.

 Employment Agreement

   Guild entered into a five-year employment agreement with Toni Sikes,
chairman of the board of directors of Guild, on August 17, 1998. The agreement
automatically renews for subsequent five-year terms unless Guild or Ms. Sikes
desires not to renew it. Guild cannot terminate the agreement without the
mutual consent of Ms. Sikes, the death of Ms. Sikes or good cause, as defined
under the agreement. The merger would not give Guild grounds to properly
terminate the employment agreement. The agreement does not contain any
provisions requiring severance or other payments to Ms. Sikes upon a change in
control or similar transaction. Unless mutually agreed to by Ms. Sikes and
Guild, the employment agreement will remain in full force and effect following
completion of the merger.

Accounting Treatment of the Merger

   The parties intend to account for the merger as a purchase for financial
reporting and accounting purposes, under generally accepted accounting
principles. After the completion of the merger, the results of operations of
Guild will be included in the consolidated financial statements of Ashford. The
purchase price will be allocated to Guild's assets and liabilities based on the
fair values of the assets acquired and the liabilities assumed. Any excess over
cost of the fair value of the net tangible assets of Guild acquired will be
recorded as a deferred credit and will be amortized under generally accepted
accounting principles. These allocations will be made based upon an analysis
that has not yet been finalized. However, Ashford's management does not expect
the impact of any subsequent changes to have a material impact on Ashford's
results of operations.

Material United States Federal Income Tax Considerations

   The following general discussion summarizes the material United States
federal income tax considerations relevant to the merger that may be applicable
to Guild stockholders.

   This discussion addresses only those stockholders who hold Guild capital
stock as a capital asset and does not deal with all United States federal
income tax considerations that may be relevant to particular Guild stockholders
who are subject to special rules or that may be important in light of such
stockholders' individual circumstances, such as stockholders who:

  .  Are dealers in securities or foreign currency;

  .  Are subject to the alternative minimum tax provisions of the Internal
     Revenue Code;

  .  Are foreign persons or entities;

  .  Are financial institutions, tax-exempt organizations, mutual funds or
     insurance companies;

  .  Hold shares of Guild capital stock which are qualified small business
     stock for purposes of Sections 1202 and 1045 of the Internal Revenue
     Code;

  .  Acquired their shares in connection with stock option or stock purchase
     plans or in other compensatory transactions; or

  .  Hold Guild capital stock as part of an integrated investment (including
     a "straddle," pledge against currency risk, "constructive" sale or
     "conversion" transaction) comprised of shares of Guild capital stock and
     one or more other positions.

   In addition, the following discussion does not address:

  .  Tax consequences of the merger under foreign, state or local tax laws;

                                       41
<PAGE>

  .  Tax consequences of transactions effectuated before, after or
     concurrently with the merger (whether or not any such transactions are
     undertaken in connection with the merger) including any transaction in
     which Guild shares are acquired or Ashford shares are disposed of; or

  .  Tax consequences to holders of options or similar rights to acquire
     Guild capital stock, including the assumption by Ashford of outstanding
     options and subscriptions to acquire Guild capital stock.

   The following discussion is based on currently existing provisions of the
Internal Revenue Code of 1986, as amended, existing treasury regulations and
current administrative rulings and court decisions, all of which are subject to
change. Any changes, which may or may not be retroactive, could alter the tax
consequences to Ashford, Guild or Guild stockholders.

   Accordingly, Guild stockholders are urged to consult their own tax advisors
as to the specific tax consequences of the merger, including the applicable
federal, state, local and foreign tax consequences of the merger.

   The merger is intended to qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code (a "reorganization"), and
completion of the merger is conditioned on receipt of tax opinions dated the
date of the merger by Guild and Ashford from their respective counsel, Briggs
and Morgan, P.A. and Gunderson Dettmer Stough Villeneuve Franklin & Hachigian,
LLP, to the effect that the merger will constitute a reorganization, which
opinions shall be substantially identical in substance; provided, however, that
if counsel to either Guild or Ashford does not render such opinion, such
condition shall nonetheless be deemed satisfied with respect to such party if
counsel to the other party renders such opinion to such party. The tax opinions
will be based on representations of officers of Ashford, Guild and the merger
subsidiary, and, as explained more fully below, are subject to certain
assumptions, limitations and qualifications. In the event that this opinion
requirement is waived as a result of a material change in the tax consequences
of the merger from those expressed here, revised disclosure will be prepared
and distributed to Guild stockholders as part of a revised joint proxy
statement/prospectus for the merger.

   Ashford and Guild will not request a ruling from the Internal Revenue
Service in connection with the merger, and neither this discussion nor the tax
opinions will be binding upon the Internal Revenue Service. The Internal
Revenue Service is therefore not precluded from successfully asserting a
contrary opinion.

   If the merger qualifies as a reorganization, the following material United
States federal income tax consequences will generally apply to holders of Guild
capital stock who exchange their Guild capital stock for Ashford common stock
in the merger:

  .  Guild stockholders should not recognize any gain or loss solely upon
     receipt in the merger of Ashford common stock in exchange for Guild
     capital stock, except to the extent of cash, if any, received in lieu of
     fractional shares of Ashford common stock.

  .  The aggregate tax basis of the Ashford common stock received by a Guild
     stockholder in the merger will be equal to the stockholder's aggregate
     tax basis in the surrendered Guild capital stock decreased by the amount
     of any cash received and increased by the amount of gain, if any,
     recognized.

  .  The holding period of the Ashford common stock received by a Guild
     stockholder in the merger should include the period for which the
     surrendered Guild capital stock was considered to be held, provided that
     the Guild capital stock so surrendered is held as a capital asset at the
     time of the merger.

  .  A Guild stockholder receiving cash in lieu of a fractional share will
     recognize gain or loss with respect to such payment measured by the
     difference (if any) between the amount of cash received and the basis in
     the Ashford common stock that is allocable to the fractional share.

  .  A Guild stockholder who exercises dissenters' rights will generally
     recognize gain or loss for federal income tax purposes, measured by the
     difference between the amount of cash received and the holder's basis in
     such shares, provided that the stockholder exercising dissenters' rights
     owns no shares of

                                       42
<PAGE>

    Ashford common stock (either actually or constructively within the
    meaning of Section 318 of the Internal Revenue Code) immediately after
    the merger. If, however, a Guild stockholder owned or was treated as
    owning Ashford common stock immediately after the merger, then such
    stockholder may recognize ordinary income for federal income tax purposes
    in an amount equal to the entire amount of cash so received.

   Notwithstanding the qualification of the merger as a reorganization, a
recipient of shares of Ashford common stock could recognize gain to the extent
that those shares were consideration to be received in exchange for services or
property other than solely Guild capital stock. All or a portion of such gain
may be taxable as ordinary income. In addition, if Guild's restated certificate
of incorporation is amended as described in "Amendment to Guild's Restated
Certificate of Incorporation," on page 62, regardless of whether the merger
qualifies as a reorganization, the Internal Revenue Service may assert that the
difference between (i) the amount of Ashford common stock that the holders of
Guild Series B preferred stock, Series C-1 preferred stock and Series D
preferred stock would have received in the merger had such amendment not been
effected and (ii) the amount of Ashford common stock that such holders actually
received in the merger should be treated as constructively received by such
holders and then transferred by them in a fully taxable transaction to the
former holders of Guild Series A preferred stock. In the event that the
Internal Revenue Service were to prevail in such position, the former holders
of Guild Series A preferred stock would recognize income in an amount equal to
the value of the Guild common stock that they are treated as having received
pursuant to such constructive transfer and the holders of Guild Series B
preferred stock, Series C-1 preferred stock and Series D preferred stock would
be treated as recognizing gain in an amount equal to the excess, if any, of the
value of the Guild common stock that they constructively transferred and the
basis that they would have had in such stock immediately following the merger
had they actually received such stock in the merger. There can be no assurance
that the Internal Revenue Service would not be successful in any such
assertion.

   If the merger does not qualify as a reorganization as a result of a failure
to meet any of the requirements of a reorganization, each holder of Guild
capital stock will recognize gain or loss equal to the difference between the
fair market value of the Ashford common stock received in the merger and his or
her tax basis in the Guild capital stock surrendered in exchange therefor. In
such event, a stockholder's basis in the Ashford common stock so received would
equal the fair market value of such stock as of the date the merger is
completed and the stockholders holding period for such stock would begin the
day after the merger.

   Backup withholding with respect to cash paid instead of fractional shares of
Ashford common stock. Certain non-corporate Guild stockholders may be subject
to backup withholding at a 31% rate on cash payments received instead of
fractional shares of Ashford common stock. Backup withholding will not apply,
however, to a Guild stockholder who (a) furnishes a correct taxpayer
identification number and certifies that he, she or it is not subject to backup
withholding on the substitute Form W-9 or successor form included in the letter
of transmittal to be delivered to Guild stockholders following the date of the
merger, (b) provides a certification of foreign status on Form W-8BEN or
successor form or (c) is otherwise exempt from backup withholding.

   You are strongly urged to consult your own tax advisor with respect to the
specific federal, state, local and foreign tax consequences of the merger to
you.

Appraisal Rights

   If the merger is consummated, a holder of record of Guild capital stock on
the date of making a demand for appraisal, as described below, who:

  .  continues to hold those shares through the time of the merger;

  .  strictly complies with the procedures set forth under Section 262 of the
     Delaware General Corporation Law; and

  .  has not voted in favor of the merger


                                       43
<PAGE>

will be entitled to have those shares appraised by the Delaware Court of
Chancery under Section 262 and to receive payment for the "fair value" of these
shares in lieu of the consideration provided for in the merger agreement. This
joint proxy statement/prospectus is being sent to all holders of record of
Guild capital stock on the record date for the Guild special meeting and
constitutes notice of the appraisal rights available to those holders under
Section 262. The statutory right of appraisal granted by Section 262 requires
strict compliance with the procedures set forth in Section 262. Failure to
follow any of such procedures may result in a termination or waiver of
appraisal rights under Section 262. The following is a summary of the principal
provisions of Section 262. The following summary is not a complete statement of
Section 262 of the Delaware General Corporation Law, and is qualified in its
entirety by reference to Section 262 which is incorporated herein by reference,
together with any amendments to the statute that may be adopted after the date
of this joint proxy statement/prospectus. A copy of Section 262 is attached as
Annex D to this joint proxy statement/prospectus.

   A holder of Guild capital stock electing to exercise appraisal rights under
Section 262 must deliver a written demand for appraisal of his or her shares
prior to the vote on the merger. The written demand must identify the holder of
record and state the holder's intention to demand appraisal of the shares. All
demands should be delivered to Guild.com, Inc., 931 East Main Street, Suite 3,
Madison, Wisconsin 53703, Attention: Secretary, telephone: (608) 257-2590.

   Only a holder of shares of Guild capital stock on the date of making a
written demand for appraisal who continuously holds those shares through the
time of the merger is entitled to seek appraisal. Demand for appraisal must be
executed by or for the holder of record, fully and correctly, as that holder's
name appears on the holder's stock certificates representing shares of Guild
capital stock. If Guild capital stock is owned of record in a fiduciary
capacity, such as by a trustee, guardian or custodian, the demand should be
made in that capacity, and if Guild capital stock is owned of record by more
than one person, as in a joint tenancy or tenancy in common, the demand must be
made by or for all owners of record. An authorized agent, including one or more
joint owners, may execute the demand for appraisal for a holder of record; that
agent, however, must identify the record owner or owners and expressly disclose
in the demand that the agent is acting as agent for the record owner or owners
of the shares.

   A record holder such as a broker who holds shares of Guild capital stock as
a nominee for beneficial owners, some of whom desire to demand appraisal, must
exercise appraisal rights on behalf of those beneficial owners with respect to
the shares of Guild capital stock held for those beneficial owners. In that
case, the written demand for appraisal should set forth the number of shares of
Guild capital stock covered by it. Unless a demand for appraisal specifies a
number of shares, the demand will be presumed to cover all shares of Guild
capital stock held in the name of the record owner.

   Beneficial owners of Guild capital stock who are not record holders of such
stock and who intend to exercise appraisal rights should instruct the record
holder to comply with the statutory requirements with respect to the exercise
of appraisal rights before the date of the Guild special meeting.

   Within 10 days after the time of the merger, the surviving corporation is
required to send notice of the effectiveness of the merger to each holder who
prior to the time of the merger has fully complied with the requirements of
Section 262.

   Within 120 days after the time of the merger, the surviving corporation or
any holder who has complied with the requirements of Section 262 may file a
petition in the Delaware Court of Chancery demanding a determination of the
fair value of the shares of Guild capital stock held by all holders seeking
appraisal. Each of these holders must serve a copy of the petition on the
surviving corporation. If no petition is filed by either the surviving
corporation or any such holder within the 120-day period, the rights of all
holders to appraisal will cease. Holders seeking to exercise appraisal rights
should not assume that the surviving corporation will file a petition with
respect to the appraisal of the fair value of their shares or that the
surviving corporation will initiate any negotiations with respect to the fair
value of those shares. The surviving corporation is under no

                                       44
<PAGE>

obligation to and has no present intention to take any action in this regard.
Accordingly, holders who wish to seek appraisal of their shares should initiate
all necessary action with respect to the perfection of their appraisal rights
within the time periods and in the manner prescribed in Section 262. Failure to
file the petition on a timely basis will cause the holder's appraisal rights to
cease.

   Any holder who has complied with subsections (a) and (d) of Section 262 is
entitled, upon written request, to receive from the surviving corporation a
statement setting forth the aggregate number of shares of Guild capital stock
not voted in favor of the merger with respect to which demands for appraisal
have been received by Guild and the number of holders of those shares. The
surviving corporation must mail the statement within 10 days after the written
request has been received by Guild or within 10 days after expiration of the
time for delivery of demands for appraisal under subsection (d) of Section 262,
whichever is later.

   If a petition for an appraisal is filed in a timely manner, at the hearing
on the petition, the Delaware Court of Chancery will determine which holders
are entitled to appraisal rights and will appraise the shares of Guild capital
stock owned by those holders, determining the fair value of those shares,
exclusive of any element of value arising from the accomplishment or
expectation of the merger, together with a fair rate of interest, to be paid,
if any, upon the amount determined to be the fair value.

   Holders considering seeking appraisal should consider that the fair value of
their shares determined under Section 262 could be more than, the same as, or
less than, the value of the consideration provided for in the merger agreement
without the exercise of appraisal rights. The cost of the appraisal proceeding
may be determined by the Court of Chancery and assessed against the parties as
the Court deems equitable in the circumstances. Upon application of a holder
seeking appraisal, the Court may order that all or a portion of the expenses
incurred by any such holder in connection with the appraisal proceeding
(including, without limitation, reasonable attorney's fees and the fees and
expenses of experts) be charged pro rata against the value of all shares of
Guild capital stock entitled to appraisal. In the absence of such a
determination or assessment, each party bears its own expenses.

   Any holder that has demanded appraisal in compliance with Section 262 will
not, after the time of the merger, be entitled to vote such stock for any
purpose or receive payment of dividends or other distributions, if any, on the
Guild capital stock, except for dividends or distributions, if any, payable to
holders of record at a date prior to the merger.

   A holder may withdraw a demand for appraisal and accept the Ashford common
stock at any time within 60 days after the time of the merger, or thereafter
may withdraw such a demand with the written approval of the surviving
corporation. If an appraisal proceeding is properly instituted, such proceeding
may not be dismissed as to any holder without the approval of the Delaware
Court of Chancery, and any such approval may be conditioned upon such terms as
the Court of Chancery deems just. If, after the merger, a holder of Guild
capital stock who had demanded appraisal for the holder's shares fails to
perfect, or loses the right to appraisal, those shares will be treated under
the merger agreement as if they had been converted as of the time of the merger
into Ashford common stock.

   In view of the complexity of these provisions of the Delaware corporate law,
any Guild capital stockholder who is considering exercising appraisal rights
should consult a legal advisor.

Regulatory Approvals

   Neither Ashford nor Guild is aware of any material governmental or
regulatory approval required for completion of the merger, other than the
effectiveness of the registration statement of which this joint proxy
statement/prospectus is a part, listing of the Ashford common stock issuable to
the Guild stockholders on the Nasdaq National Market, and compliance with
applicable corporate law of Delaware.

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<PAGE>

Nasdaq National Market Quotation

   It is a condition to the closing of the merger that the shares of Ashford
common stock to be issued pursuant to the merger agreement be listed on the
Nasdaq National Market.

Resales of Ashford Common Stock Issued in Connection with the Merger; Affiliate
Agreements; Lock-up Agreements

   At least 80% of the stockholders and optionholders of Guild, on a fully
diluted basis, as well as Guild's directors and officers are required to
execute lock-up agreements with Ashford prior to the merger. Pursuant to the
lock-up agreements, each of such persons agrees that, for 180 days following
the merger, such person will not sell, transfer, pledge or otherwise dispose of
shares of Ashford common stock owned or later acquired by such person prior to
the end of this 180-day period without the prior consent of Ashford. After this
180-day period, the Ashford common stock issued in connection with the merger
will be freely transferable, except that shares of Ashford common stock
received by persons who are deemed to be "affiliates," as such term is defined
by Rule 144 under the Securities Act of 1933, as amended, of Guild at the
effective time of the merger may be resold by them only in transactions
permitted by the resale provisions of Rule 145 under the Securities Act or as
otherwise permitted under the Securities Act. The executive officers, directors
and persons who may be affiliates of Guild have each executed a written
affiliate agreement providing, among other things, that each such person will
comply with the Securities Act in his, her or its disposition of Ashford common
stock received in connection with the merger.

Operations Following the Merger

   Following the merger, Guild will operate as a subsidiary of Ashford. The
stockholders of Guild will become stockholders of Ashford, and their rights as
stockholders will be governed by Ashford's certificate of incorporation and
Ashford's bylaws.

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<PAGE>

                              THE MERGER AGREEMENT

   The following briefly summarizes the material provisions of the merger
agreement, a copy of which is attached as Annex A to this joint proxy
statement/prospectus and is incorporated by reference into this summary. The
summary is not complete and is qualified in its entirety by reference to the
merger agreement. We urge all stockholders of Ashford and Guild to read the
merger agreement in its entirety for a more complete description of the terms
and conditions of the merger.

General

   Following the approval and adoption of the merger and the merger agreement
by the stockholders of Guild and Ashford, and the satisfaction or waiver of the
other conditions to the merger, a wholly owned subsidiary of Ashford named
Ashford-Guild Art Corporation will be merged with and into Guild. Guild will
survive the merger as a wholly owned subsidiary of Ashford. If all conditions
to the merger are satisfied or waived, the merger will become effective at the
time of the filing by the surviving corporation of a duly executed certificate
of merger with the Secretary of State of the State of Delaware, referred to as
the effective time.

Exchange of Shares

   Each share of Guild capital stock held by Guild or owned by Ashford or any
wholly owned subsidiary of Ashford will be canceled and will cease to exist.
Each share of Guild common stock will be canceled in the merger without payment
of consideration and will cease to exist. The amount of consideration Guild
preferred stockholders will receive in the merger depends upon whether or not
the holders of Guild capital stock approve the amendment to Guild's restated
certificate of incorporation.

   The exchange ratios described herein assume that the aggregate merger
consideration is valued at less than $39.3 million. Based upon the market price
of Ashford common stock as of the trading day immediately prior to the date of
this joint proxy statement/prospectus, the aggregate merger consideration was
valued at approximately $       million. Ashford and Guild believe that the
exchange ratios described herein are the most likely to apply; however, the
exchange ratios that would apply if the aggregate merger consideration equaled
or exceeded $39.3 million are discussed below. The exchange ratios will be
adjusted to fully reflect the effect of any stock split, reverse stock split,
stock dividend, extraordinary dividend, reorganization, recapitalization of or
other like change affecting the capital stock of Guild or Ashford prior to the
effective time of the merger.

   If the merger is completed and Guild's restated certificate of incorporation
is amended, each Guild preferred stockholder (other than preferred stockholders
who perfect their appraisal rights under Delaware law) would receive:

  .  approximately 0.02903 of a share of Ashford common stock for each share
     of Guild Series A preferred stock owned;

  .  approximately 0.17807 of a share of Ashford common stock for each share
     of Guild Series B preferred stock owned;

  .  approximately 0.36739 of a share of Ashford common stock for each share
     of Guild Series C-1 preferred stock owned; and

  .  approximately 0.48968 of a share of Ashford common stock for each share
     of Guild Series D preferred stock owned.

   If the merger is completed and Guild's restated certificate of incorporation
is not amended, each Guild preferred stockholder (other than preferred
stockholders who perfect their appraisal rights under Delaware law) would
receive:

  .  approximately 0.18166 of a share of Ashford common stock for each share
     of Guild Series B preferred stock owned;

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<PAGE>

  .  approximately 0.37481 of a share of Ashford common stock for each share
     of Guild Series C-1 preferred stock owned; and

  .  approximately 0.49957 of a share of Ashford common stock for each share
     of Guild Series D preferred stock owned.

   Further, if the restated certificate of incorporation is not amended, each
share of Guild Series A preferred stock will be canceled in the merger without
payment of consideration and will cease to exist. In this case, the holders of
the Guild Series B preferred stock, Series C-1 preferred stock and Series D
preferred stock would be entitled to more consideration in the merger than if
Guild's restated certificate of incorporation is amended.

   If the merger is completed and the aggregate merger consideration exceeds
approximately $39.3 million in value, independent of whether or not the
amendment to Guild's restated certificate of incorporation is approved, each
Guild preferred stockholder (other than preferred stockholders who perfect
their appraisal rights under Delaware law) would receive:

  .  shares of Ashford common stock with a value of $1.00 for each share of
     Guild Series B preferred stock owned;

  .  shares of Ashford common stock with a value of approximately $2.06 for
     each share of Guild Series C-1 preferred stock owned; and

  .  shares of Ashford common stock with a value of $2.75 for each share of
     Guild Series D preferred stock owned.

In this case, up to approximately $4.9 million of the value in excess of the
$39.3 million would be allocated to the holders of Guild Series A preferred
stock, with each Guild stockholder receiving shares of Ashford common stock
with a value of $1.00 for each share of Guild Series A preferred stock owned.
If the aggregate merger consideration exceeds approximately $44.2 million in
value, the holders of Guild common stock would be entitled to receive all
merger consideration in excess of the $44.2 million on a pro rata basis with
all other holders of Guild common stock. As noted above, based upon the market
price of Ashford common stock as of the trading day immediately prior to the
date of this joint proxy statement/prospectus, the aggregate merger
consideration was valued at approximately $    million.

   As of February 28, 2001, Guild had outstanding 461,432 shares of common
stock, 4,870,915 shares of Series A preferred stock, 3,500,178 shares of Series
B preferred stock, 12,117,076 shares of Series C-1 preferred stock, 3,931,299
shares of Series D preferred stock, and 5,529,606 shares of common stock
subject to outstanding options.

   In the transaction, Ashford will also assume all outstanding stock options
previously issued by Guild as discussed below.

Treatment of Guild Stock Options

   At the effective time of the merger, the unexpired and unexercised
outstanding options to purchase shares of Guild common stock, whether vested or
unvested, will be assumed by Ashford. In the aggregate, these options will be
converted into options to purchase 1,583,200 shares of Ashford common stock.
The exact number of shares of Ashford common stock into which each assumed
Guild stock option may be converted will be determined at the effective time,
but will be approximately 0.28 of a share of Ashford common stock, rounded down
to the nearest whole number of shares. The exercise price per share of Ashford
common stock under the Guild stock options will equal the exercise price per
share of the Guild common stock under the original stock options divided by the
applicable exchange ratio rounded to the nearest whole cent. In addition,
outstanding options originally granted by Guild as incentive stock options will
become nonqualified Ashford stock options upon conversion. This change will
occur because the optionees will receive value in the merger; whereas, each
outstanding share of Guild common stock will be canceled without payment of
consideration in the merger.

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<PAGE>

Exchange of Stock Certificates

   Fractional Shares. Ashford will not issue any fractional shares of Ashford
common stock in the merger. Instead, each holder of shares of Guild capital
stock exchanged pursuant to the merger who would otherwise have been entitled
to receive a fraction of a share of Ashford common stock will be entitled to
receive cash, rounded to the nearest whole cent, in an amount equal to the
product of the fractional part of Ashford common stock multiplied by the
average closing market prices of Ashford common stock as quoted on the Nasdaq
National Market for the 20 trading days immediately preceding and ending on the
last trading day before the effective time.

   Surrender of Shares Of Guild Capital Stock; Stock Transfer Books. Promptly
after the effective time, Ashford will mail to each record holder of
certificate(s) representing Guild capital stock a letter of transmittal
containing instructions for surrendering the certificates in exchange for
Ashford common stock and for obtaining cash payment instead of fractional
shares. Holders of certificates who properly surrender their certificates in
accordance with these instructions will receive certificates representing their
shares of Ashford common stock and cash instead of any fractional shares of
Ashford common stock. The surrendered certificates will be canceled. Until
surrendered as contemplated above, each certificate representing Guild capital
stock will be deemed, at and after the effective time of the merger, to
represent only the right to receive, upon such surrender, the merger
consideration discussed above.

   No Dividends or Distributions. No dividends or other distributions paid in
respect of Ashford common stock with a record date after the effective time of
the merger will be paid to any holder of certificates representing Guild
capital stock until the surrender of such certificates. Following surrender of
each certificate representing shares of Guild capital stock, Ashford will pay
to the record holder of the certificates representing shares of Guild capital
stock the amount of all dividends and other distributions with a record date
after the effective time of the merger which would have been previously payable
had the certificates representing shares of Guild capital stock been properly
surrendered.

   Lost Certificates. If any Guild certificate has been lost, stolen or
destroyed, the owner of the certificate must provide an appropriate affidavit
of that fact. Ashford may require the owner of such lost, stolen or destroyed
Guild certificates to deliver a bond as indemnity against any claim that may be
made against Ashford with respect to the Guild certificates alleged to have
been lost, stolen or destroyed.

Appraisal Rights

   Holders of Guild capital stock that have exercised their appraisal rights
pursuant to Section 262 of the Delaware General Corporation Law will not have
their shares of Guild capital stock converted into Ashford common stock but
instead will have their shares converted into the right to receive the
consideration determined in accordance with Section 262 of the Delaware General
Corporation Law.

Representations and Warranties

   The merger agreement contains representations and warranties of Ashford,
Guild and Ashford-Guild Art Corporation. The most significant of these relate
to:

  .  their organization, corporate existence and good standing;

  .  their capitalization;

  .  their authority to enter into the merger agreement and related
     agreements and to complete the merger;

  .  the absence of the need for any consents or approvals of or filing with
     any governmental agency to complete the merger;

  .  the absence of certain changes in their business;

  .  compliance with laws;

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<PAGE>

  .  litigation, arbitration, or judgments pending or threatened against them
     or to which they are a party;

  .  ownership of intellectual property rights;

  .  the accuracy and completeness of their financial statements;

  .  taxes;

  .  the accuracy and completeness of information provided for inclusion in
     Ashford's registration statement on Form S-4 and this joint proxy
     statement/prospectus;

  .  broker's fees; and

  .  the completeness of their representations and warranties.

   In the merger agreement, Guild made certain additional representations and
warranties, including those that relate to:

  .  its subsidiaries;

  .  the absence of undisclosed liabilities in its business;

  .  restrictions on its business activities;

  .  governmental and third-party consents required prior to consummation of
     the merger;

  .  its title to property;

  .  environmental and safety matters;

  .  absence of any breach of organizational documents, law or material
     agreements;

  .  insurance;

  .  absence of certain changes and events;

  .  its employee benefit plans;

  .  Section 83(b) elections;

  .  its employees and consultants;

  .  labor agreements and employee compensation;

  .  transactions with its affiliates;

  .  the possession of permits, licenses and authorizations necessary to
     conduct its business;

  .  its customers and suppliers;

  .  manufacturing and marketing rights;

  .  its material contracts and compliance with them;

  .  registration rights;

  .  its minute books and organizational documents;

  .  the shareholder vote required to approve the merger; and

  .  the completeness of the foregoing representations and warranties.

   Ashford has also represented and warranted as to the validity of the shares
of common stock to be issued in connection with the merger and as to the
accuracy and completeness of documents and reports filed by Ashford with the
SEC.

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<PAGE>

Covenants

 Conduct Prior To The Effective Time

   Except to the extent expressly contemplated by the merger agreement or as
consented to in writing by the other, each of Guild and Ashford has agreed to
carry on its business in the ordinary course in substantially the same manner
as conducted prior to execution of the merger agreement. Each of Guild and
Ashford has further agreed to:

  .  pay debts and taxes when due;

  .  to preserve intact its present business organizations;

  .  to keep available the services of its present officers and key
     employees; and

  .  to preserve its relationships with customers, suppliers, distributors
     and others having business dealings with it or its subsidiaries so that
     its goodwill and ongoing businesses will be unimpaired at the effective
     time.

   Each of Guild and Ashford has agreed to notify the other of any event or
occurrence not in the ordinary course of its business or which could have a
material adverse effect on such party's business.

   Except to the extent expressly contemplated by the merger agreement or as
consented to in writing by the other, Guild and Ashford have each agreed not to
take any of the following actions:

  .  amend its certificate of incorporation or bylaws;

  .  declare or pay any dividends on or make any other distributions on its
     capital stock;

  .  with certain exceptions, issue capital stock;

  .  with certain exceptions, repurchase directly or indirectly its capital
     stock; or

  .  liquidate, merge or authorize a change in control.

   The merger agreement restricts Guild's ability, without Ashford's prior
written consent, to take certain actions, including actions relating to:

  .  material contracts;

  .  insurance coverage;

  .  capital expenditures;

  .  the issuance of securities;

  .  intellectual property rights;

  .  exclusive marketing, manufacturing or other exclusive rights;

  .  the acquisition or disposition of material assets or businesses;

  .  indebtedness, loans and guaranties;

  .  the payment of liabilities and obligations exceeding certain amounts;

  .  the termination or waiver of rights of substantial value;

  .  compensation, severance and termination pay of officers and employees;

  .  the commencement of a lawsuit or arbitration proceedings;

  .  tax elections and tax returns;

                                       51
<PAGE>

  .  revaluation or write down of assets; or

  .  taking or agreeing to take any of the actions described above.

   Guild has also agreed that it will not directly or indirectly, except to the
extent Guild's board of directors determines in good faith, after consultation
with outside counsel, that such action is required to properly discharge its
fiduciary obligations to its stockholders:

  .  solicit, initiate, or encourage any takeover proposals, other than the
     transactions contemplated by the merger agreement;

  .  engage in negotiations or discussions concerning, or provide any non-
     public information to any person or entity relating to a takeover
     proposal; or

  .  agree to, approve or recommend a takeover proposal.

   Guild has agreed that it will immediately notify Ashford about inquiries,
discussions or negotiations in connection with a takeover proposal.

   Each of Ashford and Guild has agreed, except as set forth below, not to:

  .  withdraw or modify, in a manner adverse to the other party, its approval
     or recommendation of the merger agreement, the merger or the issuance of
     shares of Ashford common stock in the merger;

  .  approve or recommend a takeover proposal; or

  .  cause Ashford or Guild, as the case may be, to enter into any takeover
     proposal.

   Each of Guild and Ashford may withdraw or modify its approval or
recommendation if such party determines, in good faith based on the advice of
outside counsel, that a modification or withdrawal is required by its fiduciary
obligations to its stockholders.

   Director and Officer Indemnification. Ashford has agreed that all rights to
indemnification existing on the date of the merger agreement in favor of the
present officers and directors of Guild to the extent permitted by applicable
law and as provided for in Guild's restated certificate of incorporation or
bylaws will continue in full force and effect.

   Third-Party Approvals. Guild and Ashford have agreed to use their reasonable
best efforts to obtain all consents and make all filings with governmental
entities, which are necessary to be obtained by them to consummate the merger.
They have also agreed to notify each other regarding material events.

   Listing of Ashford Common Stock. Ashford has agreed to file with the Nasdaq
a listing application covering the shares of Ashford common stock to be issued
in the merger and upon exercise of the Guild stock options being assumed by
Ashford.

   Employee Benefits. Ashford has agreed to take such reasonable actions as are
necessary to allow eligible employees of Guild to participate in the benefit
programs of Ashford or alternative benefit programs that are, in the aggregate,
substantially comparable to the benefit programs applicable to the employees of
Ashford as soon as practicable after the effective time of the merger.

   Certain Other Covenants. The merger agreement contains certain other mutual
covenants of Ashford and Guild, the most significant of which are:

  .  to provide to the other party and its employees, officers, directors and
     representatives, access to its books and records;

  .  to maintain the confidentiality of the information obtained from the
     other party in accordance with the previously executed confidentiality
     agreement;

  .  to consult with each other prior to issuing any press release or
     otherwise making any public statement or other public disclosure
     regarding the merger or the merger agreement;

                                       52
<PAGE>

  .  to notify the other party of the occurrence or non-occurrence of any
     event which could result in any condition to effect the merger not to be
     satisfied;

  .  to take all actions reasonably necessary to comply with legal
     requirements and obtain all consents and approvals necessary to complete
     the merger; and

  .  to refrain from taking any action that would cause the merger to fail to
     constitute a reorganization within the meaning of Section 368 of the
     Internal Revenue Code.

Related Matters After the Merger

   The certificate of incorporation of Ashford-Guild Art Corporation as in
effect immediately prior to the effective time will become the certificate of
incorporation of the surviving corporation. The bylaws of Ashford-Guild Art
Corporation will become the bylaws of the surviving corporation.

Conditions to Completion of the Merger

   The respective obligations of Ashford, Ashford-Guild Art Corporation and
Guild to consummate the merger are subject to the satisfaction or waiver by
them of the following conditions before completion of the merger:

  .  the approval of the merger by the requisite vote of Guild capital stock
     and Ashford common stock;

  .  the absence of any legal restraint or prohibition preventing or seeking
     to prevent the consummation of the merger;

  .  the receipt of all necessary governmental approvals, waivers and
     consents;

  .  the filing by Ashford with Nasdaq of a listing application with respect
     to the shares of Ashford common stock issuable in the merger and upon
     exercise of the Guild stock options assumed by Ashford;

  .  the receipt of written opinions from tax counsel to the effect that the
     merger will constitute a reorganization within the meaning of Section
     368 of the Internal Revenue Code; and

  .  the effectiveness of the registration statement on Form S-4 and the
     absence of any stop order suspending such effectiveness or any action,
     suit, proceeding or investigation by the SEC to suspend such
     effectiveness.

   Guild's obligations to consummate the merger are subject to the satisfaction
or waiver by it of the following conditions before completion of the merger:

  .  the accuracy of representations and warranties of Ashford in the merger
     agreement as of the effective time;

  .  the performance by Ashford and Ashford-Guild Art Corporation of the
     covenants, obligations and conditions of the merger agreement required
     to be performed as of the effective time;

  .  the receipt of a certificate of an officer of Ashford stating that the
     two conditions set forth immediately above have been satisfied;

  .  the absence of any material adverse change in the condition of Ashford
     and its subsidiaries, except for such as are directly or indirectly
     attributable to or arise out of general market or industry conditions
     provided that a decline in the market price of the Ashford common stock
     will not by itself be deemed a material adverse change;

  .  the receipt of executed voting agreements from certain stockholders of
     Ashford; and

  .  the receipt of a mutually agreeable legal opinion from Ashford's
     counsel.

                                       53
<PAGE>

   In addition, Ashford's obligations to consummate the merger are subject to
the satisfaction or waiver by it of the following conditions before completion
of the merger:

  .  the accuracy of representations and warranties of Guild in the merger
     agreement as of the effective time;

  .  the performance by Guild of the covenants, obligations and conditions of
     the merger agreement required to be performed as of the effective time;

  .  the receipt of a certificate of an officer of Guild stating that the two
     conditions set forth immediately above have been satisfied;

  .  the receipt of satisfactory evidence of all necessary third party
     consents or approvals;

  .  the absence of any material adverse change in the condition of Guild;

  .  the receipt of executed voting agreements, affiliate agreements and
     lock-up agreements from certain Guild stockholders, officers, directors
     and option holders;

  .  the termination by Guild of its 401(k) Profit Sharing Plan;

  .  the receipt of resignations from the directors of Guild effective as of
     the effective time;

  .  the receipt of a FIRPTA certificate;

  .  the receipt of a mutually agreeable legal opinion from Guild's counsel;
     and

  .  the termination by Guild of the Amended and Restated Investors' Rights
     Agreement.

Termination; Expenses

   At any time prior to the effective time, whether before or after approval of
the matters presented in connection with the merger by the stockholders of
Guild or Ashford, the merger agreement may be terminated:

  .  by mutual consent duly authorized by the respective boards of directors
     of Ashford and Guild;

  .  by either Ashford or Guild, if, without fault of the terminating party,
     the closing of the transactions contemplated by the merger agreement do
     not occur on or before May 30, 2001 (however, the right to terminate the
     merger agreement will not be available to any party whose action or
     failure to act constitutes a breach of the merger agreement and has been
     the cause of, or resulted in, the failure of the merger to occur on or
     before such date);

  .  by either Ashford or Guild if any permanent injunction or other court
     order preventing the consummation of the merger becomes final and
     nonappealable;

  .  by Ashford (1) if Guild materially breaches any representation,
     warranty, obligation or agreement set forth in the merger agreement and
     the breach has not been cured within a certain time period, provided
     that such termination right will not be available to Ashford where
     Ashford is at that time in willful breach of the merger agreement, (2)
     if the board of directors of Guild withdraws or modifies its
     recommendation of the merger agreement or the merger in a manner adverse
     to Ashford or resolves to do any of the foregoing, provided that such
     termination right will not be available to Ashford where Ashford is at
     that time in willful breach of the merger agreement, (3) if for any
     reason Guild fails to call and hold the Guild stockholders meeting by
     May 30, 2001 or commence solicitation of stockholder consents within ten
     days after the effectiveness of the registration statement, provided
     that such termination right will not be available to Ashford where
     Ashford is at that time in willful breach of the merger agreement, (4)
     if the required approval of the stockholders of Guild is not obtained
     within 45 days after the registration statement is sent to stockholders
     or (5) the board of directors of Guild has approved or publicly
     recommended another takeover proposal; or

  .  by Guild (1) if Ashford materially breaches any representation,
     warranty, obligation or agreement set forth in the merger agreement and
     the breach has not been cured within a certain time period, provided

                                       54
<PAGE>

    that such termination right will not be available to Guild where Guild is
    at that time in material breach of the merger agreement, (2) if the board
    of directors of Ashford withdraws or modifies its recommendation of the
    merger agreement or the merger in a manner adverse to Guild or resolves
    to do any of the foregoing, provided that such termination right will not
    be available to Guild where Guild is at that time in willful breach of
    the merger agreement, (3) if for any reason Ashford fails to call and
    hold the Ashford stockholders meeting by May 30, 2001 or commence
    solicitation of stockholder consents within ten days after the
    effectiveness of the registration statement, provided that such
    termination right will not be available to Guild where Guild is at that
    time in willful breach of the merger agreement, (4) if the required
    approval of the stockholders of Ashford is not obtained within 45 days
    after the registration statement is sent to stockholders or (5) the board
    of directors of Ashford has approved or publicly recommended another
    takeover proposal.

   Except as described below, whether or not the merger is consummated, all
costs and expenses incurred in connection with the merger agreement and its
related transactions (including, the fees and expenses of its advisers,
accountants and legal counsel) will be paid by the party incurring such
expense.

   In the event that either Guild or Ashford terminates the merger agreement
due to a failure by its stockholders to approve and adopt the merger and the
merger agreement, then such terminating party must pay a fee to the other
party equal to $1,000,000; provided, however, that if such termination occurs
because the party's board of directors has, in accordance with the merger
agreement, recommended a superior proposal, then such fee will be in the
amount of $500,000.

Amendment and Waiver

   The boards of directors of Ashford and Guild may amend the merger agreement
at any time by execution of an instrument in writing signed on behalf of each
of the parties and in accordance with applicable law.

   At any time prior to the effective time, any party to the merger agreement
may:

  .  extend the time for the performance of any of the obligations or other
     acts of the other parties;

  .  waive any inaccuracies in the representations and warranties made to
     such party in the merger agreement or in any document delivered pursuant
     to the merger agreement; and

  .  waive compliance with any of the agreements or conditions for the
     benefit of such party in the merger agreement.

                                      55
<PAGE>

                                OTHER AGREEMENTS

Voting Agreements

   Prior to the execution of the merger agreement, holders of Ashford common
stock and Guild capital stock executed voting agreements pursuant to which they
agreed to vote their respective stock in Ashford and Guild in favor of the
merger and for other various matters. As of January 3, 2001, holders of 52.5%
of the outstanding Ashford common stock and holders of approximately 20.6% of
the outstanding Guild common stock, 25.1% of the outstanding Guild Series A
preferred stock, 100% of the outstanding Guild Series B Preferred Stock, 100%
of the outstanding Guild Series C-1 preferred stock and 92.5% of the
outstanding Guild Series D preferred stock have executed voting agreements.

   Under the voting agreements, the Ashford stockholders who executed these
agreements agreed to vote in favor of the merger and any matter that could
reasonably be expected to facilitate the merger and have granted an irrevocable
proxy to the board of directors of Guild to vote their shares in such manner.
Each of such holders (other than Amazon.com, Inc. and its affiliated entities)
has agreed (1) not to sell or otherwise dispose of its Ashford common stock
prior to the earlier of the termination of the merger agreement and the closing
of the merger, (2) to release Ashford, its predecessors, successors, assigns,
stockholders, officers, directors, employees and agents from any claims based
on facts and circumstances existing on the date the agreement was signed and
(3) to waive its rights of appraisal and similar rights relating to the merger.

   Under the voting agreements, the Guild stockholders who executed these
agreements agreed to vote in favor of the merger, the amendment to Guild's
restated certificate of incorporation and any matter that could reasonably be
expected to facilitate the merger and have granted an irrevocable proxy to the
board of directors of Ashford to vote their shares in such manner. Each of such
holders has agreed (1) not to sell or otherwise dispose of its Guild capital
stock prior to the earlier of the termination of the merger agreement and the
closing of the merger, (2) to release Guild, its predecessors, successors,
assigns, stockholders, officers, directors, employees and agents from any
claims based on facts and circumstances existing on the date the agreement was
signed and (3) to waive its rights of appraisal and similar rights relating to
the merger.

Affiliate Agreements

   Prior to the execution of the merger agreement, Ashford entered into
affiliate agreements with those directors, officers and stockholders of Guild
who are "affiliates" within the meaning of Rule 144 under the Securities Act.
Pursuant to these affiliate agreements, each Guild affiliate agreed not to
dispose of his, her or its shares of Ashford common stock received in the
merger unless the disposition is permitted under the rules and regulations of
the federal securities laws.

Lock-up Agreements

   Prior to the completion of the merger, at least 80% of the stockholders and
option holders of Guild, on a fully diluted basis, as well as Guild's officers
and directors, will enter into a lock-up agreement with Ashford. Pursuant to
the lock-up agreement, each of these persons will agree, for a period of 180
days following the closing of the merger, not to offer, sell, contract to sell,
pledge, grant any option to purchase, make any short sale, or otherwise dispose
of, directly or indirectly, any Ashford common stock owned or later acquired by
such person prior to the end of such 180-day period, without the prior consent
of Ashford.

                                       56
<PAGE>

           UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA

   The accompanying unaudited pro forma condensed consolidated financial data
are presented to reflect the acquisition of Guild by Ashford. The acquisition
is to be accounted for using the purchase method of accounting. The unaudited
pro forma condensed consolidated financial data are based upon the historical
financial statements of Ashford and Guild. The purchase price allocation has
been based on preliminary valuations of Guild's assets and working capital and
will be adjusted upon closing of the merger. However, management does not
expect the impact of these changes to have a material adverse effect on
Ashford's results of operations.

   The following unaudited pro forma condensed consolidated financial data have
been prepared as if the acquisition had taken place on December 31, 2000, in
the case of the unaudited pro forma condensed consolidated balance sheet, or as
of April 1, 1999, in the case of the unaudited pro forma condensed consolidated
statements of operations for the nine months ended December 31, 2000 and the
year ended March 31, 2000.

   As a result of differing year ends of Ashford and Guild, results of
operations for dissimilar year ends have been combined. Ashford's results of
operations for the year ended March 31, 2000 have been combined with Guild's
results of operations for the year ended December 31, 1999. Ashford's results
of operations for the nine months ended December 31, 2000 have been combined
with Guild's results of operations for the same period. Guild's results of
operations for the three month period January 1 through March 31, 2000 have
been excluded from the following unaudited pro forma consolidated financial
data. For the period January 1 through March 31, 2000, Guild's revenues and net
loss were $0.6 million and $6.2 million, respectively.

   The unaudited pro forma condensed consolidated financial data are based on
the estimates and assumptions set forth in the notes to such data, which are
preliminary and have been made solely for purposes of developing such pro forma
information. The unaudited pro forma condensed consolidated financial data are
not necessarily an indication of the results that would have been achieved had
the transaction been consummated as of the dates indicated or that may be
achieved in the future.

   These unaudited pro forma condensed consolidated financial data are not
necessarily indicative of the results of the future operations of Ashford. The
unaudited pro forma condensed consolidated financial data should be read in
conjunction with the notes thereto and the historical financial statements of
Guild, included in this joint proxy statement/prospectus. In addition,
reference should be made to the historical financial statements of Ashford
included in Ashford's Annual Report on Form 10-K, and included in Ashford's
Form 10-Q for the nine months ended December 31, 2000, filed with the
Securities and Exchange Commission and other financial information pertaining
to Ashford and Guild including "Guild Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Risk Factors" included
elsewhere herein.

                                       57
<PAGE>

            UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
                            AS OF DECEMBER 31, 2000
                                 (in thousands)

<TABLE>
<CAPTION>
                                       Historical
                                    -----------------    Pro Forma
                                    Ashford    Guild   Adjustments(A) Pro Forma
                                    --------  -------  -------------- ---------
<S>                                 <C>       <C>      <C>            <C>
Assets
Current assets:
  Cash and cash equivalents........ $ 12,897  $ 8,203                 $ 21,100
  Short-term investments...........       --    3,450                    3,450
  Restricted cash..................    1,770       --                    1,770
  Accounts receivable..............    4,823      180                    5,003
  Merchandise inventory............   26,893      158                   27,051
  Prepaids and other...............    3,176      239                    3,415
                                    --------  -------     -------     --------
    Total current assets...........   49,559   12,230          --       61,789
  Property and equipment...........    9,971    2,233      (2,233)       9,971
  Purchased intangibles............   10,614       --                   10,614
  Other assets.....................    1,831      183        (183)       1,831
                                    --------  -------     -------     --------
    Total assets................... $ 71,975  $14,646     $(2,416)    $ 84,205
                                    ========  =======     =======     ========
Liabilities and Stockholders'
 Equity
Current liabilities:
  Accounts payable and accrued
   liabilities..................... $ 12,622  $ 2,818     $   300     $ 15,740
Other long-term liabilities........      111       26       5,611        5,748
Commitments and contingencies......
Stockholders' equity:
Convertible preferred stock........       --   41,002     (41,002)          --
Preferred stock....................       --       --                       --
Common stock.......................       47       --           7           54
Additional paid-in capital.........  264,811      158       3,278
                                                              720
                                                             (158)     268,809
Subscription receivable............   (1,156)      --                   (1,156)
Deferred compensation..............  (11,454)      (2)       (528)     (11,984)
Accumulated other comprehensive
 gain..............................       --        2          (2)          --
Accumulated deficit................ (193,006) (29,358)     29,358     (193,006)
                                    --------  -------     -------     --------
  Total stockholders' equity.......   59,242   11,802      (8,327)      62,717
                                    --------  -------     -------     --------
  Total liabilities and
   stockholders' equity............ $ 71,975  $14,646     $(2,416)    $ 84,205
                                    ========  =======     =======     ========
</TABLE>

      See notes to unaudited pro forma condensed consolidated financial data.

                                       58
<PAGE>

       UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                       FOR THE YEAR ENDED MARCH 31, 2000
                                 (in thousands)

<TABLE>
<CAPTION>
                                     Historical
                                  -----------------   Pro Forma          Pro
                                  Ashford   Guild    Adjustments Note   Forma
                                  -------  --------  ----------- ----  --------
<S>                               <C>      <C>       <C>         <C>   <C>
Net sales.......................  $39,931  $  1,044                    $ 40,975
Cost of sales...................   33,486       515                      34,001
                                  -------  --------    ------          --------
Gross profit....................    6,445       529        --             6,974
Operating expenses:
  Marketing and sales...........   33,282     5,413                      38,695
  General and administrative....   14,078     5,645                      19,723
  Depreciation and
   amortization.................   33,817       392      (392)    (B)
                                                       (2,805)    (C)
                                                          151     (D)    31,163
                                  -------  --------    ------          --------
    Total operating expenses....   81,177    11,450    (3,046)           89,581
                                  -------  --------    ------          --------
Loss from operations............  (74,732)  (10,921)    3,046           (82,607)
Interest income (expense), net..    2,670       453                       3,123
Other income (expense)..........       --        (2)                         (2)
                                  -------  --------    ------          --------
Net loss........................  $72,062  $(10,470)   $3,046          $(79,486)
                                  =======  ========    ======          ========
Net loss per share, basic and
 diluted........................  $ (2.65)                             $  (2.31)
                                  =======                              ========
Shares used to compute net loss
 per share, basic and diluted...   27,197                                34,338
                                  =======                              ========
</TABLE>


      See notes to unaudited pro forma condensed consolidated financial data.

                                       59
<PAGE>

       UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                  FOR THE NINE MONTHS ENDED DECEMBER 31, 2000
                                 (in thousands)

<TABLE>
<CAPTION>
                                   Historical
                               -------------------   Pro Forma
                                Ashford    Guild    Adjustments Note  Pro Forma
                               ---------  --------  ----------- ----  ---------
<S>                            <C>        <C>       <C>         <C>   <C>
Net sales....................  $  52,868  $  1,417                    $  54,285
Cost of sales................     42,863       468                       43,331
                               ---------  --------    ------          ---------
Gross profit.................     10,005       949                       10,954
Operating expenses:
  Marketing and sales........     20,894     7,098                       27,992
  General and
   administrative............     18,316     5,977                       24,293
  Depreciation and
   amortization..............     91,964       879      (879)    (B)
                                                      (2,104)    (C)
                                                         113     (D)     89,973
                               ---------  --------    ------          ---------
    Total operating
     expenses................    131,174    13,954    (2,870)           142,258
                               ---------  --------    ------          ---------
Loss from operations.........   (121,169)  (13,005)    2,870           (131,304)
Interest income (expense),
 net.........................      1,489       599                        2,088
Other income.................         --        --                           --
                               ---------  --------    ------          ---------
Net loss.....................  $(119,680) $(12,406)   $2,870          $(129,216)
                               =========  ========    ======          =========
Net loss per share, basic and
 diluted.....................  $   (2.63)                             $   (2.46)
                               =========                              =========
Shares used to compute net
 loss per share, basic and
 diluted.....................     45,484                                 52,625
                               =========                              =========
</TABLE>


      See notes to unaudited pro forma condensed consolidated financial data.

                                       60
<PAGE>

                          NOTES TO UNAUDITED PRO FORMA
                     CONDENSED CONSOLIDATED FINANCIAL DATA

Pro Forma Adjustments:

   A. Reflects the consummation of the acquisition and the related purchase
accounting entries. The purchase price of Guild has been estimated at $4.3
million, consisting of $3.3 million of Ashford common stock (7,141,400 Ashford
shares, multiplied by $0.46 per share), $0.7 million of Ashford options and
warrants issued to Guild option and warrant holders and $0.3 million of
business combination costs. The purchase price was allocated as follows (in
thousands):

<TABLE>
      <S>                                                              <C>
      Net tangible assets acquired in excess of cost.................  $(5,611)
      Long-term capital lease obligation.............................      (26)
      Deferred compensation..........................................      528
      Net working capital items......................................    9,412
                                                                       -------
      Total consideration............................................  $ 4,303
                                                                       =======
</TABLE>

   The purchase price allocation has been based on preliminary valuations of
Guild's assets and working capital and will be adjusted upon closing of the
transaction. However, management does not expect the impact of these changes to
have a material adverse effect on Ashford's results of operations.
Approximately $2.4 million of long term assets reflected in Guild's historical
balance sheet have been eliminated in the purchase accounting entries. Net
tangible assets acquired in excess of cost will be recorded as a deferred
credit, included in other long-term liabilities, and amortized to depreciation
and amortization using the straight-line method over 2 years. Deferred
compensation relates to unvested employee stock options issued in connection
with the acquisition and will be amortized over the remaining vesting periods
of the related stock options.

   Common stock and additional paid-in capital have been adjusted assuming the
issuance of 7,141,400 shares of Ashford common stock at the price of $0.46 per
share. This per share price is the average market price of Ashford common stock
for the period December 27, 2000 through January 11, 2001, which is the period
immediately preceeding and following the announcement of the acquisition on
January 4, 2001. Additional paid-in capital has also been adjusted to reflect
the issuance of Ashford stock options and warrants to Guild stock option and
warrant holders. The fair market value of the stock options and warrants were
determined using the Black-Scholes pricing model. Significant assumptions used
to estimate fair value of the stock options and warrants include a risk-free
interest rate of 4.82%, expected lives of 5 years, expected volatility of 100%
and no expected dividends.

   B. Reflects the elimination of historical Guild depreciation and
amortization expense.

   C. Reflects pro forma amortization of net tangible assets acquired in excess
of cost based on the purchase price of the Guild assets by Ashford, assuming a
two year amortization period.

   D. Reflected pro forma amortization of deferred compensation.

                                       61
<PAGE>

           AMENDMENT TO GUILD'S RESTATED CERTIFICATE OF INCORPORATION

   This section of the joint proxy statement/prospectus briefly summarizes (1)
the material provisions of Guild's restated certificate of incorporation that
will be affected by the amendment to Guild's restated certificate of
incorporation and (2) the amendment itself. A copy of Guild's restated
certificate of incorporation is attached as Annex B to this joint proxy
statement/prospectus and is incorporated by reference in this summary. A copy
of the amendment to Guild's restated certificate of incorporation is attached
as Annex C to this joint proxy statement/prospectus and is incorporated by
reference in this summary. The summaries are not complete and are qualified in
their entirety by reference to the attached documents. We urge all Guild
stockholders to read the attached documents in their entirety for a more
complete description.

Existing Liquidation Preferences of Guild Preferred Stock

   Guild's restated certificate of incorporation provides that the merger will
be deemed to be a liquidation, dissolution and winding up of Guild unless the
holders of at least a majority of the Guild Series B preferred stock, Series C-
1 preferred stock and Series D preferred stock, voting as separate series and
not as a single class, determine otherwise. Neither the merger agreement nor
the voting agreements contemplate a waiver by the holders of the Guild
preferred stock of their respective liquidation preferences or any
determination by such preferred stockholders that the merger is not a
liquidation, dissolution and winding up of Guild.

   In accordance with Guild's restated certificate of incorporation, upon a
liquidation, dissolution or winding up of Guild, the holders of Guild Series B
preferred stock, Series C-1 preferred stock and Series D preferred stock will
be entitled to receive, on a pari passu basis prior and in preference to any
distribution to the holders of Guild Series A preferred stock or Guild common
stock, up to an amount equal to: (1) $1.00 for each outstanding share of Series
B preferred stock, together with all declared but unpaid dividends on such
share, (2) $2.06320475 for each outstanding share of Series C-1 preferred
stock, together with all declared but unpaid dividends on such share, and (3)
$2.75 for each outstanding share of Series D preferred stock, together with all
declared but unpaid dividends on such share.

   If the assets of Guild are insufficient to pay the liquidation preferences
of Guild Series B preferred stock, Series C-1 preferred stock and Series D
preferred stock in full, then all of the assets of Guild available for
distribution would be distributed ratably among the holders of Guild Series B
preferred stock, Series C-1 preferred stock and Series D preferred stock based
upon the total preferential amount each holder would be entitled to receive if
sufficient funds were available to pay the full preferential amounts.

   If the assets of Guild are sufficient to pay the liquidation preferences of
Guild Series B preferred stock, Series C-1 preferred stock and Series D
preferred stock in full, then the holders of Guild Series A preferred stock
would be entitled to receive, prior and in preference to any distribution to
the holders of Guild common stock, up to an amount equal to $1.00 for each
outstanding share of Series A preferred stock, together with all declared but
unpaid dividends on such share.

   If the assets of Guild are insufficient to pay the liquidation preference of
Guild Series A preferred stock in full, then all of the assets of Guild
available for distribution which remain, after payment of the liquidation
preferences of Guild Series B preferred stock, Series C-1 preferred stock and
Series D preferred stock, would be distributed ratably among the holders of
Guild Series A preferred stock in proportion to the amount of Series A
preferred stock owned by each such holder.

   If the assets of Guild are sufficient to pay the liquidation preferences of
Guild Series A preferred stock, Series B preferred stock, Series C-1 preferred
stock and Series D preferred stock in full, then all remaining assets of Guild
available for distribution would be distributed among the holders of Guild
common stock pro rata based on the number of shares of common stock held by
each such holder.

                                       62
<PAGE>

   Shares of Guild preferred stock may not be converted into shares of Guild
common stock in order to participate in any distribution to the holders of
Guild common stock without first foregoing participation in all distributions
to holders of Guild preferred stock.

The Amendment

   By action taken at the special meeting of Guild's board of directors held on
January 2, 2001, the board approved a resolution adopting an amendment to
Guild's restated certificate of incorporation which provides that, consistent
with the existing restated certificate of incorporation, the merger will be
deemed to be a liquidation, dissolution and winding up of Guild and the
liquidation preferences and the consideration to be received by each holder of
Guild Series A preferred stock, Series B preferred stock, Series C-1 preferred
stock and Series D preferred stock in connection with the merger will be as
follows:

  .  each outstanding share of Guild Series A preferred stock will be
     exchanged for approximately 0.02903 of a share of Ashford common stock;

  .  each outstanding share of Guild Series B preferred stock will be
     exchanged for approximately 0.17807 of a share of Ashford common stock;

  .  each outstanding share of Guild Series C-1 preferred stock will be
     exchanged for approximately 0.36739 of a share of Ashford common stock;
     and

  .  each outstanding share of Guild Series D preferred stock will be
     exchanged for approximately 0.48968 of a share of Ashford common stock.

   If the amendment takes effect, the holders of Guild Series A preferred stock
will become eligible to receive consideration in the merger that they would not
otherwise be entitled to receive. Absent such amendment, the holders of Guild
Series A preferred stock would be entitled to receive consideration in the
merger only in the event the aggregate merger consideration exceeds
approximately $39.3 million in value. Based on the market closing price of
Ashford common stock of $      per share as of      , 2001, it is unlikely that
the aggregate merger consideration will exceed $39.3 million in value. Guild's
board of directors believes it is in the best interest of Guild and the
stockholders to allocate a portion of the merger consideration to the holders
of Guild Series A preferred stock in recognition of the investment in Guild
made by such holders.

Vote Required

   The amendment to Guild's restated certificate of incorporation will take
effect if (1) the value of the merger consideration is less than approximately
$39.3 million and (2) the amendment is approved by the affirmative vote of the
holders of:

  .  a majority of the outstanding shares of Guild common stock and preferred
     stock, voting together as a single class; and

  .  a majority of the outstanding shares of Guild Series A preferred stock,
     Series B preferred stock, Series C-1 preferred stock and Series D
     preferred stock, each voting as a separate series and not as a single
     class.

   The Guild board of directors has approved the amendment to Guild's restated
certificate of incorporation and recommends that you vote FOR such proposal.

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<PAGE>

                       DESCRIPTION OF ASHFORD'S BUSINESS

Overview

   Ashford was incorporated on March 6, 1998 and commenced operations and began
offering products for sale on its Web site in April 1998. Ashford initially
focused exclusively on the sale of new and vintage watches. Since inception,
Ashford has focused on broadening its product offerings, establishing
relationships with luxury and premium brand owners, generating sales momentum
and expanding its operational and customer service capabilities. Ashford has
grown rapidly since launching its site in April 1998 and has experienced
significant increases in its net sales and corresponding cost of sales since
inception. Ashford currently offers more than 20,000 products from over 400
leading luxury brands. Ashford is currently focusing its efforts on continuing
to increase net sales while maintaining or decreasing current expense levels.
Ashford plans to continue the growth of its corporate gift business, which
generally generates higher margin sales and is less seasonal in nature than its
traditional retail sales, and its newer, higher margin product categories, such
as its Ashford Collection jewelry. Ashford recently added a new home and
lifestyle category to its mix of product offerings, which includes a collection
of attractive gift and specialty items such as picture frames, crystal
candlesticks and other home accessories. As part of a larger effort to improve
overall operating efficiencies and lower total operating costs as a percentage
of sales, Ashford specifically reduced its traditional print and media
marketing activities and broadened its focus on Internet and online media,
which it believes to be a more efficient and economical means of attracting new
customers.

   The market for luxury and premium products is highly seasonal, with a
disproportionate amount of net sales occurring during the fourth calendar
quarter. Therefore, Ashford increases its purchases of inventory during and in
advance of that quarter. Although less significant, seasonal sales periods
occur in February due to Valentine's Day and in May and June due to graduation
gift giving, Mother's Day and Father's Day. Ashford expects that these trends
will continue in future periods.

   Ashford's gross margin will fluctuate in future periods based on factors
such as:

  .  product sales mix;

  .  the mix of direct and indirect sources of inventory;

  .  pricing strategy;

  .  promotional activities;

  .  inventory management; and

  .  inbound and outbound shipping costs.

   Ashford has incurred net losses since inception and expects to generate
negative cash flows during future periods. Ashford's ability to become
profitable depends on its ability to generate and sustain substantially higher
net sales while maintaining reasonable expense levels, both of which are
uncertain. If Ashford does achieve profitability, it cannot be certain that it
would be able to sustain or increase profitability on a quarterly or annual
basis in the future.

   Ashford has a limited operating history upon which to base an evaluation of
its business and prospects. As a result of Ashford's limited operating history,
it is difficult to accurately forecast its net sales and Ashford has limited
meaningful historical financial data upon which to base projected operating
expenses. Ashford bases its current and future expense levels on its operating
plans and estimates of future net sales, and its expenses are fixed to a large
extent. Sales and operating results are difficult to forecast because they
generally depend on the volume and timing of the orders Ashford receives. As a
result, Ashford may be unable to adjust its spending in a timely manner to
compensate for any unexpected revenue shortfall. This inability could cause
Ashford's net losses in a given quarter to be greater than expected and could
limit or delay its ability to generate net profits in any future period.

                                       64
<PAGE>

Recent Developments

   On February 14, 2001, Ashford entered into a merger agreement and announced
that it will acquire E.S.T., Inc. (d/b/a Watch Network). Upon completing the
acquisition, Ashford will issue approximately 2 million shares of Ashford
common stock to holders of Watch Network common stock at the closing and, if
certain milestones are achieved by Watch Network during the year following the
closing, up to an additional 5.5 million shares of Ashford common stock will be
issued to holders of Watch Network common stock at designated times after the
closing. Watch Network is an on-line retailer of watches possessing
relationships with some leading watch brands. The acquisition is subject to
standard closing conditions and is expected to close in March 2001.

                                       65
<PAGE>

                        DESCRIPTION OF GUILD'S BUSINESS

Overview

   Guild maintains a comprehensive online collection of 10,000 original works
of art available for retail sale, including contemporary fine art, home
furnishings, accessories and fine crafts, created by 1,500 practicing artists.
Guild also publishes art-related books for retail and wholesale distribution,
including semi-annual Sourcebooks displaying sample artwork for commission by
architects and interior designers. Besides offering a wide range of original
artwork by current artists, Guild's Web site showcases online special
exhibitions curated by artists, gallery owners and collectors, as well as fine
art books and collections from more than 50 top art galleries. All artists
featured on Guild's Web site are carefully selected and reviewed by a panel of
leading art experts to ensure the site's quality and breadth of art.

   Guild is a Delaware corporation initially incorporated as a Wisconsin
corporation on March 20, 1998 and reincorporated in Delaware in March 1999.

Sales and Marketing

   Guild operates within the fine art and fine crafts market by offering
original works of art and fine art books to consumers around the world through
its Web site located at http://www.guild.com. The Web site permits customers
worldwide to browse Guild's product offerings by resource (such as by artist,
gallery, special exhibition or commission), by medium (such as paintings,
photography, prints and drawings, sculpture, basketry, ceramics, fiber, jewelry
and accessories, glass, metal or wood) and by price range.

   Consistent with the foregoing products and services, Guild's Web site
supplies timely information on gallery exhibits and craft fairs, and offers
educational information, a glossary of art-related terminology and other art-
related content. By making available educational resources that reinforce the
value of art, Guild hopes to turn site visitors into enthusiastic collectors.

   In addition to serving consumers through its online product offerings, Guild
serves design professionals, such as architects, interior designers, art
consultants, through its online Trade Resource Program, a professional service
for the design trade and its corporate and governmental clients. Members of
Guild's Trade Resource Program can access over 500 artists who specialize in
commissionable work. The Trade Resource Program helps design professionals
locate ideal pieces of art for their projects. Guild takes pride in the fact
that this service is officially recognized by the American Society of Interior
Designers, Inc. In addition to offering commissionable artwork, members of the
Trade Resource Program can obtain discounts to certain artwork offered on
Guild's Web site.

   Since inception, Guild has derived a majority of its revenue from non-Web
site sales. Non-Web site sales consist of advertising fees received from
artists featured in Guild's published books and wholesale book sales. In
addition to wholesale books, Guild publishes Sourcebooks of original art and
sells advertising pages within its Sourcebooks to artists. Guild then prints
and distributes such books free of charge to architects and interior designers
who can directly contact featured artists to commission similar artwork
appropriate for their projects.

Product Selection and Distribution

   Appearance on Guild's Web site is by invitation only. Guild's artist
coordinator seeks out fresh talent and exquisite works of art for review by
Guild's artistic advisors. Each piece of art must be approved by these advisors
to ensure compatibility with Guild's standards before it may appear on the Web
site. Once approved, the artist or gallery responsible for the work is given
its own exclusive display within Guild's Web site presented through vivid
photographic images. Guild strives to establish a personal bond between artists
and customers by serving as a direct, informative nexus between artists,
galleries and potential buyers.

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<PAGE>

   Guild also maintains a publishing department responsible for identifying
books for publication. All books published by Guild relate to fine art, home
furnishings, accessories or fine crafts. Guild occasionally republishes books
that were successfully received by consumers during their initial publication.
Artists displaying their works in Guild Sourcebooks must undergo scrutiny
similar to that applied to artists whose works appear on Guild's Web site.

   Guild owns and stores certain fine art books, including its Sourcebooks, and
a minimal amount of the artwork offered on its Web site. However, substantially
all of the artwork offered on the Web site is owned and stored by artists or
art galleries who contractually agree to supply Guild with the artwork.

   Once a customer places an order with Guild, the artist or gallery who owns
the artwork is contacted and informed of the sale and given the necessary
customer shipping information. The artwork is then shipped directly from the
artists' studio or participating galleries to the customer. Guild pays the
artist or art gallery after the artwork is shipped to the customer. The amount
of the payment is based on a percentage of the selling price of the artwork and
varies depending on the specific contractual agreement.

   All arrangements with artists and galleries are designed to ensure the
quality of products and the satisfaction of customers, accomplished through
Guild's return policies, experienced artistic advisors and strict product
standards. Customers dissatisfied with an order may contact Guild to return an
item (other than made-to-order items) for any reason within 14 days of receipt.

Customers

   Typically, a customer discovers Guild through catalogs, advertisements,
trade shows, affiliates or word-of-mouth. Guild's Web site also is linked
directly to other Web sites, such as eBay.com, Onview.com and the American
Society of Interior Designers' Web site. An interested shopper might visit
Guild's Web site one or more times before actually purchasing a work of art.
Customers also can request that a certain artist or art gallery fulfill a
special order or adapt a piece of art to meet the customer's individual needs.

Competition

   The online commerce market is new, rapidly evolving and fiercely
competitive. Since the introduction of online commerce, the number of art-
related Web sites vying for customer attention has increased rapidly. Guild
expects future competition to intensify given the relative ease with which Web
sites may be built, maintained and scaled.

   Guild currently competes or potentially will compete with a variety of other
artwork providers, including:

  .  Traditional brick-and-mortar gift shops, art galleries and art dealers,
     which may compete with an online presence;

  .  Online competitors who market and sell artwork online, including
     nextmonet.com, eyestorm.com, paintingsdirect.com and artgroup.com;

  .  Direct sales by artists; and

  .  Catalog retailers.

   Most communities have few retail art outlets. More successful outlets tend
to locate in larger cities and upscale suburbs where there exist high
concentrations of buyers with higher income levels. Art fairs are usually local
and offer work for sale within a limited time frame. By offering art online,
Guild hopes to overcome these impediments for consumers and attract purchasers
who might not otherwise have easy access to fine art. Guild competes in its
market by attempting to offer the largest collection of accessible art and by
establishing a well-known brand name associated with high quality, original
art. Guild's Web site is meant to be a rich and complex site that will compete
by offering education and customer satisfaction.

                                       67
<PAGE>

Facilities

   Guild currently operates from a 12,300 square foot facility in Madison,
Wisconsin, which it leases for $7,645 per month pursuant to one-year leases
covering four separate suites in one building. Guild does not intend to renew
existing leases for two suites in its facility following expiration of such
leases in April 2001, which will result in Guild occupying 8,090 square feet
leased for $4,581 per month.

Employees

   As of December 31, 2000, Guild had 76 full-time and 10 part-time employees.
None of Guild's employees is represented by a labor union, and Guild has never
experienced a work stoppage or slowdown.

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<PAGE>

                 GUILD MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

   The following discussion contains forward-looking statements which involve
risks and uncertainties. Any forward-looking statements should be considered in
light of the factors described in this joint proxy statement/prospectus. See
"Risk Factors." Actual results may vary materially from those projected,
anticipated or indicated in any forward-looking statements. In this
management's discussion and analysis of financial condition and results of
operations, the words "anticipates," "believes," "expects," "intends,"
"future," "could," and similar words or expressions (as well as other words or
expressions referencing future events, conditions, or circumstances) identify
forward-looking statements. The following discussion and analysis should be
read in conjunction with "Selected Financial Data of Guild.com, Inc." and the
financial statements, and the related notes thereto, of Guild presented in this
joint proxy statement/prospectus.

Overview

   Guild was incorporated on March 20, 1998 and began offering original works
of art and fine art books through its Web site in March 1999. On May 10, 1999,
Guild acquired Kraus Sikes Inc., an entity that publishes and sells art-related
books. Toni Sikes, Guild's chairman of the board, owned approximately 40% of
Kraus Sikes prior to the acquisition. The acquisition has been accounted for
using the purchase method of accounting. Therefore, the results of operations
of Kraus Sikes are included with those of Guild beginning with the date of
acquisition.

Results of Operations

 Year ended December 31, 2000 Compared to the Year ended December 31, 1999

 Sales

   Web site sales. Web site sales consist of sales of original works of art and
fine art books through Guild's Web site. During 2000, sales of original works
of art accounted for approximately 86% of Guild's Web site sales. Guild
recognizes the net commission earned as the sales amount for online sales of
artwork. The net commission earned is the price paid by the customer less the
amount remitted to the artist or gallery providing such artwork. During 2000,
the average net commission earned represented approximately 29% of the retail
price of the artwork sold online. Guild plans to continue its efforts to
increase the commission percentage earned on Web site sales of original works
of art through negotiations with its artists. However, there can be no
assurance that Guild will successfully increase the commission percentage
earned on Web site sales of original art.

   Guild expects its Web site sales of fine art books, which represented
approximately 14% of Guild's Web site sales during 2000, to decrease as a
percentage of Web site sales in 2001. This expectation is due to the
discontinuation of a promotion pursuant to which $25 discounts were made
available online during the first half of 2000 to attract new visitors to
Guild's Web site. Of the promotional discounts utilized during 2000, a
significant number were used to purchase fine art books which are typically
sold at a lower retail price than most of the original artwork sold through
Guild's Web site.

   Web site sales increased from $0.2 million for 1999 to $0.9 million for
2000. The increase in Web site sales was primarily due to an increase in
Guild's selling and marketing efforts and the growth in Guild's customer base.
Guild expects Web site sales to increase as a percentage of total sales in
future periods.

   Non-Web site sales. Non-Web site sales consist of advertising fees received
from artists featured in Guild's published books and wholesale book sales.
During 2000, advertising fees represented approximately 65% of Guild's non-Web
site sales. Guild published two Sourcebooks of original art during its last
fiscal year. Guild sells advertising pages within its Sourcebooks to artists.
Guild then prints and distributes such books free of

                                       69
<PAGE>

charge to architects and interior designers who can directly contact featured
artists to commission similar artwork appropriate for their projects. Although
advertising fees from Sourcebooks accounted for a majority of Guild's non-Web
site sales during 2000, Guild plans to discontinue printing Sourcebooks after
2001 to focus its efforts on Web site sales. Although the discontinuation of
advertising fees would increase wholesale book sales as a percentage of non-Web
site sales, Guild does not forecast measurable growth in the dollar amount of
its wholesale book sales in future periods due to its plans to focus on Web
site sales.

   Non-Web site sales increased from $0.8 million during 1999 to $1.1 million
during 2000. The increase in non-Web site sales was mainly due to an increase
in the advertising fees received from artists. Guild expects advertising fees
received from artists to decrease in future periods due to the discontinuation
of Sourcebook printing after 2001.

 Cost of Sales

   Web site sales. Cost of Web site sales consist of the cost of books
purchased for retail sale. Guild typically purchases the books it does not
print from third parties at a 40% discount from retail price. Cost of Web site
sales increased from $49,000 for 1999 to $57,000 for 2000. The increase in cost
of Web site sales was due to an increase in retail book sales.

   Non-Web site sales. Cost of non-Web site sales consist primarily of the cost
of wholesale books produced. Guild incurred $0.4 million in cost of non-Web
site sales in both 1999 and 2000. However, gross profit on non-Web site sales
increased from $0.4 million during 1999 to $0.8 million during 2000. Gross
margin on non-Web site sales increased from approximately 52% during 1999 to
approximately 69% during 2000. The increase in gross margin was mainly due to a
reduction in 2000 of the discounts Guild provided to wholesale book customers
during 1999. During 2000, Guild experienced a gross margin of approximately 40%
on wholesale book sales and a gross margin of approximately 90% on its
Sourcebooks. Due to the current pricing of wholesale book sales and the planned
discontinuation of Sourcebooks, Guild expects its gross margin on non-Web site
sales will decrease in future periods.

   Shipping. Shipping costs consist of the cost to ship original works of art
and fine art books. Although Guild's artists typically package and ship artwork
directly to Guild's customers, the artists use Guild's shipping accounts to pay
for such charges. Guild, in turn, charges its customers a shipping charge that
varies with the cost of the item purchased and the difficulty of packaging the
item. Guild also directly ships fine art books and a limited quantity of small-
scale art objects. Shipping costs increased from $66,000 in 1999 to $229,000 in
2000. The increase in shipping costs was due to the increase in the amount of
artwork and fine art books sold.

 Operating Expenses

   Selling and marketing. Selling and marketing expenses consist primarily of
advertising costs, fulfillment activities and related employee salary and
benefit expenses. Advertising costs include fees paid to advertising agencies,
online advertising costs, the cost of print media ads and e-mail campaigns as
well as direct mail catalog costs. During 2000, Guild paid its advertising
agency approximately $1.3 million in connection with the development of an
advertising campaign. Also during the last fiscal year, Guild spent $0.5
million for online advertising, $0.8 million for print media ads, $0.3 million
for its e-mail campaigns and $2.1 million for direct mail catalogs.

   Primarily due to the foregoing expenditures, selling and marketing expenses
increased from $5.4 million during 1999 to $9.5 million during 2000. Guild
plans to focus its future selling and marketing expenses on the use of direct
mail catalogs. Guild believes the distribution of three such catalogs during
2000, compared to only one catalog during 1999, contributed to the increase in
Web site sales Guild experienced during 2000. In an effort to reduce selling
and marketing expenses below the 2000 level, Guild has discontinued its
relationship with its advertising agency and has sharply curtailed online
advertising, print media ads and e-mail campaigns.

   The increase in selling and marketing expenses during 2000 was also
attributable to increased payroll and related costs associated with increased
headcount. Guild expects to eliminate certain redundancy in its customer

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<PAGE>

service and internal shipping functions upon completion of its merger with
Ashford, thereby further reducing Guild's selling and marketing expenses.

   General and administrative. General and administrative expenses include
executive, finance, and administrative employee salaries and benefits, Web site
design and maintenance, professional fees, and other general corporate
expenses. General and administrative expenses increased to $10.0 million in
2000 compared to $5.6 million in 1999. The increase in general and
administrative expenses was primarily due to expenses associated with increased
headcount and increased consulting fees related to Web site design and
maintenance.

   During 2000, Guild engaged a consulting firm to conduct certain long-term
planning, including an evaluation of its Web site and fulfillment processes, in
anticipation of future growth in sales at a cost of $3.4 million. Guild has
discontinued such consulting services for 2001. Guild also expects that certain
financial and technology personnel reductions upon completion of its merger
with Ashford will further reduce general and administrative expenses in 2001.

   Depreciation and amortization. Depreciation and amortization expense
includes depreciation related to property and equipment and amortization
related to goodwill and trademarks. Goodwill, which relates to the excess of
cost over net assets associated with the acquisition of Kraus Sikes, is
amortized on a straight-line basis over two years. Depreciation and
amortization expense was $1.1 million during 2000 as compared to $0.4 million
during 1999. The increase in expense was mainly due to the depreciation
associated with increased asset purchases, such as computers, office equipment
and software, and the impact of a full year's amortization of goodwill in 2000.
Since the goodwill associated with the acquisition of Kraus Sikes will be fully
amortized in May 2001, Guild expects lower depreciation and amortization
expense in 2001 than it experienced in 2000.

   Investment income. Investment income consists of earnings on cash and cash
equivalents and short-term investments. The increase in investment income for
2000 was mainly attributable to interest and dividends earned on cash balances
and short-term investments resulting from the sales of preferred stock in
August 1999 and August 2000. Guild expects investment income to decrease for
the foreseeable future due to the anticipated reductions in cash balances and
short-term investments required to offset anticipated future operating losses.

Liquidity and Capital Resources

   General. To date, Guild has funded its operations through private sales of
convertible preferred stock. In March 1999, Guild sold $3.5 million of Series B
convertible preferred stock. In August 1999, Guild sold $25.0 million of Series
C convertible preferred stock, which was converted to Series C-1 preferred
stock during 2000. In August 2000, Guild sold $10.8 million of Series D
convertible preferred stock. Guild has used the proceeds from these offerings
to fund its operating losses. Guild believes its has adequate capital resources
to fund anticipated future operating losses through the completion of its
merger with Ashford.

   Operating Activities. Net cash used in operating activities totaled $16.5
million during 2000 compared to $8.8 million during 1999. The net operating
cash outflow for both periods was primarily a result of operating losses,
exclusive of depreciation and amortization.

   Asset Purchases. During 2000, Guild made capital expenditures of $1.1
million related mainly to the purchase of computers, office equipment and
software. Capital expenditures for 1999 totaled $1.6 million and primarily
consisted of computer hardware, software and office equipment purchases. As of
December 31, 2000, Guild had no plans to make additional material capital
expenditures.

   Commitments. As of December 31, 2000, Guild's principal commitments
consisted of obligations outstanding under capital leases for computer and
office equipment and operating leases. Guild plans to renew two of its four
operating leases, covering office space in Madison, Wisconsin, upon completion
of its merger with Ashford.

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<PAGE>

               SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                            AND MANAGEMENT OF GUILD

   The following table sets forth the number and percentage of shares of Guild
capital stock beneficially owned as of February 28, 2001 by:

  .  each person who is known by Guild to beneficially own more than five
     percent (5%) of the outstanding shares of any class of Guild capital
     stock;

  .  each director of Guild; and

  .  all Guild executive officers and directors as a group.

   Except as noted below, the address of each person listed on the table is c/o
Guild.com, Inc., 931 East Main Street, Suite 3, Madison, Wisconsin 53703.

   Beneficial ownership is determined in accordance with the rules of the SEC
and generally includes voting or investment power with respect to the
securities. Except as indicated by footnote, and subject to applicable
community property laws, the persons named in the table have sole voting and
investment power with respect to all shares of common stock shown as
beneficially owned by them. Share numbers and percentages in this section
assume that each outstanding share of Guild preferred stock has been converted
into one share of Guild common stock. The number of shares of common stock
outstanding used in calculating the percentage for each listed person includes
the number of shares of common stock underlying options held by such person
that are exercisable within 60 days of February 28, 2001, but excludes the
number of shares of common stock underlying any other options held by such
person and any options held by any other person. Percentage of beneficial
ownership is based on an assumed 24,880,900 shares of common stock outstanding
as of February 28, 2001.

<TABLE>
<CAPTION>
                                                            Shares of Guild
                                                             Common Stock
                                                          Beneficially Owned
                                                         ---------------------
                                                                    Percentage
                                                         Number of  of Common
Name of Beneficial Owner                                   Shares    Stock(1)
------------------------                                 ---------- ----------
<S>                                                      <C>        <C>
Bruce Dunlevie..........................................  6,491,776    26.1%
 Entities affiliated with Benchmark Capital Partners (2)
Jay Hoag................................................  6,180,330    24.8
 Entities affiliated with TCV III (3)
ePartners (4)...........................................  5,384,876    21.6
Toni Sikes (5)..........................................  2,755,147    10.4
Gordon E. Mayer (6).....................................  2,395,340     8.8
Entities affiliated with Bowman Capital Crossover Funds
 (7)....................................................  1,196,636     4.8
Richard Rusch (8).......................................    250,000     1.0
Nathan J. Harper (9)....................................    173,750       *
Kenneth Jones (8).......................................    150,000       *
Scott Treadwell (8).....................................    150,000       *
Michael Anthony.........................................          0       0
All directors and executive officers as a group (9
 persons) (10).......................................... 18,546,343    63.1%
</TABLE>
--------
 *  Represents beneficial ownership of less than 1%.
(1)  Assumes an aggregate 24,880,900 shares of common stock outstanding, based
     upon 461,432 shares of Guild common stock currently issued and
     outstanding, 4,870,915 shares of common stock issuable upon conversion of
     Series A preferred stock, 3,500,178 shares of common stock issuable upon
     conversion of Series B preferred stock, 12,117,076 shares of common stock
     issuable upon conversion of Series C-1 preferred stock and 3,931,299
     shares of common stock issuable upon conversion of Series D preferred
     stock.

                                       72
<PAGE>

(2)  Consists of 3,500,178 shares issuable upon conversion of Series B
     preferred stock and 2,423,416 shares issuable upon conversion of Series C-
     1 preferred stock owned by Benchmark Capital Partners III, L.P. as nominee
     for Benchmark Capital Partners III, L.P., Benchmark Founders Fund III,
     L.P., Benchmark Founders Fund III-A, L.P. and Benchmark Members' Fund III,
     L.P. Also consists of 568,182 shares issuable upon conversion of Series D
     preferred stock owned by Benchmark Capital Partners IV, L.P. as nominee
     for Benchmark Capital Partners IV, L.P., Benchmark Founders Fund IV, L.P.,
     Benchmark Founders Fund IV-A, L.P., Benchmark Founders Fund IV-B, L.P. and
     related individuals. Bruce Dunlevie is a Managing Member of each of
     Benchmark Capital Management Co. III, L.L.C., the general partner of the
     Benchmark III entities, and Benchmark Capital Management Co. IV, L.L.C.,
     the general partner of the Benchmark IV entities, and is a director of
     Guild. Mr. Dunlevie disclaims beneficial ownership of the shares held by
     the Benchmark entities except to the extent of his pecuniary interest
     therein. The address for Mr. Dunlevie and the Benchmark entities is 2480
     Sand Hill Road, Suite 200, Menlo Park, California 94025.
(3)  Consists of 150,456 shares issuable upon conversion of Series C-1
     preferred stock and 62,711 shares issuable upon conversion of Series D
     preferred stock owned by TCV III, L.P., 3,998,928 shares issuable upon
     conversion of Series C-1 preferred stock and 1,666,788 shares issuable
     upon conversion of Series D preferred stock owned by TCV III (Q), L.P.,
     181,088 shares issuable upon conversion of Series C-1 preferred stock and
     75,481 shares issuable upon conversion of Series D preferred stock owned
     by TCV III Strategic Partners, L.P., and 31,676 shares issuable upon
     conversion of Series C-1 preferred stock and 13,202 shares issuable upon
     conversion of Series D preferred stock owned by TCV III (GP). Jay Hoag is
     a Managing Member of Technology Crossover Management III, L.L.C., which is
     the Managing General Partner of the TCV funds, and is a director of Guild.
     Mr. Hoag disclaims beneficial ownership of such shares except to the
     extent of his pecuniary interest therein. The address for Mr. Hoag and the
     TCV funds is Care Of Technology Crossover Ventures, 528 Ramona Street,
     Palo Alto, California 94301.
(4)  Consists of 4,362,148 shares issuable upon conversion of Series C-1
     preferred stock and 1,022,728 shares issuable upon conversion of Series D
     preferred stock. The address for ePartners is Care Of News America
     Incorporated, 1211 Avenue of the Americas, New York, New York 10036.
(5)  Consists of 1,221,587 shares issuable upon conversion of Series A
     preferred stock held jointly with Ms. Sikes' husband, William Kraus, and
     1,533,560 shares issuable upon exercise of an option to purchase shares of
     common stock owned by Ms. Sikes.
(6)  Consists of 95,000 shares of common stock and 2,300,340 shares issuable
     upon exercise of an option to purchase shares of common stock.
(7)  Consists of 907,128 shares issuable upon conversion of Series C-1
     preferred stock and 223,832 shares issuable upon conversion of Series D
     preferred stock owned by Bowman Capital Crossover Fund, L.P. (f/k/a
     Spinnaker Crossover Institutional Fund, L.P.), 31,700 shares issuable upon
     conversion of Series C-1 preferred stock and 3,440 shares issuable upon
     conversion of Series D preferred stock owned by by Bowman Capital
     Crossover Fund "A", L.P. (f/k/a Spinnaker Crossover Fund, L.P.) and 30,536
     shares issuable upon conversion of Series C-1 preferred stock owned by
     Bowman Capital Clipper Fund, L.P. (f/k/a Spinnaker Clipper Fund, L.P.).
     The address for the Bowman entities is 1875 South Grant Street, Suite 600,
     San Mateo, California 94402.
(8)  Consists of shares issuable upon exercise of an option to purchase shares
     of common stock.
(9)  Consists of 23,750 shares of common stock and 150,000 shares issuable upon
     exercise of an option to purchase shares of common stock.
(10)  Consists of 1,221,587 shares issuable upon conversion of Series A
      preferred stock, 3,500,178 shares issuable upon conversion of Series B
      preferred stock, 6,785,564 shares issuable upon conversion of Series C-1
      preferred stock, 2,386,364 shares issuable upon conversion of Series D
      preferred stock, 118,750 shares of Guild common stock and 4,533,900
      shares issuable upon exercise of options to purchase shares of common
      stock. Bruce Dunlevie and Jay Hoag disclaim beneficial ownership of the
      shares held by the Benchmark entities and the TCV funds, respectively.

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                      DESCRIPTION OF ASHFORD CAPITAL STOCK

   The following is a summary of certain matters with respect to the capital
stock of Ashford. Because it is only a summary, it does not contain all
information that may be important to you. Therefore, you should carefully read
the more detailed provisions of Ashford's amended and restated certificate of
incorporation and amended and restated bylaws attached as exhibits to our
filings with the Securities and Exchange Commission.

   Ashford's authorized capital stock currently consists of 100,000,000 shares
of common stock, par value $0.001 per share, and 10,000,000 shares of preferred
stock, par value $0.001 per share.

Common Stock

   As of        , 2001, there were            shares of Ashford common stock
outstanding held of record by approximately 5,600 holders. After giving effect
to the issuance of the shares of common stock in connection with the merger,
there will be approximately            shares of common stock outstanding.

   Holders of common stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Accordingly, holders of a majority of the shares of common stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of common stock are entitled to receive ratably
those dividends, if any, as may be declared by the board of directors out of
legally available funds, subject to any preferential dividend rights of any
outstanding preferred stock. Upon a liquidation, dissolution or winding up, the
holders of Ashford common stock are entitled to receive ratably Ashford's net
assets available after the payment of all debts and other liabilities and
subject to the prior rights of any outstanding preferred stock. Holders of
Ashford common stock have no preemptive, subscription, redemption or conversion
rights. The outstanding shares of Ashford common stock are, and the shares
offered by Ashford in the offering will be, when issued in consideration for
payment, fully paid and nonassessable. The rights, preferences and privileges
of holders of Ashford common stock are subject to, and may be adversely
affected by, the rights of holders of shares of any series of preferred stock
which Ashford may designate and issue in the future.

Preferred Stock

   The board of directors is be authorized, without further stockholder
approval, to issue from time to time up to an aggregate of 10,000,000 shares of
preferred stock in one or more series and to fix or alter the designations,
preferences, rights and any qualifications, limitations or restrictions of the
shares of each series, including the dividend rights, dividend rates,
conversion rights, voting rights, terms of redemption, including sinking fund
provisions, redemption price or prices, liquidation preferences and the number
of shares constituting any series or designations of such series. Ashford does
not presently have any plans to issue any shares of preferred stock.

Registration Rights

   As of February 28, 2001, pursuant to the Investors' Rights Agreement between
Ashford and some holders of its common stock, these holders are entitled to
have their shares registered by Ashford under the Securities Act. These
registration rights include the following:

  .  the holders of at least 50% of the then outstanding registrable
     securities may require, on two occasions beginning 180 days after the
     date of this prospectus, that Ashford use its reasonable best efforts to
     register the registrable securities for public resale;

  .  if Ashford registers any common stock, either for Ashford's own account
     or for the account of other security holders, the holders of registrable
     securities are entitled to include their shares of common stock in the
     registration, subject to the ability of the underwriters to limit the
     number of shares

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    included in the offering in view of market conditions, however, this does
    not apply to a registration statement on Form S-4; or

  .  the holders of at least 30% of the then outstanding registrable
     securities may require Ashford to register all or a portion of their
     registrable securities on Form S-3, provided that the proposed aggregate
     selling price is at least $1,000,000.

   Ashford will bear all registration expenses other than underwriting
discounts and commissions. All registration rights terminate on September 23,
2004, or, with respect to each holder of registrable securities, at the time
that the holder is entitled to sell all of its shares in any three-month period
under Rule 144 of the Securities Act.

   In November 1999, Ashford entered into an agreement with Amazon.com, Inc.
and Amazon.com Advertising Services, NV, Inc., these two entities are referred
to as Amazon, pursuant to which Ashford granted Amazon rights to register the
shares of common stock that it acquired under that agreement. This type of
registration right is known as a "demand" registration right. In addition,
during the five-year period commencing in January 2001, Amazon is entitled to
require us to register all or any portion of its shares when we register shares
of our common stock for our own account or for the account of other
stockholders. This type of registration right is known as a "piggyback"
registration right.

   These registration rights are subject to certain conditions and limitations,
including:

  .  the right of the underwriters in any underwritten offering to limit the
     number of shares of common stock held by Amazon to be included in any
     demand or piggyback registration; and

  .  Ashford's right to refuse to effect a registration pursuant to Amazon's
     demand registration rights during the twelve-month period following the
     effective date of a registration statement in connection with which
     Amazon exercised any piggyback registration rights, or at any time when
     another registration statement of ours, other than a Form S-4 or S-8, is
     reasonably foreseen by our board of directors to be filed within 30 days
     of a registration demand, has been filed and not yet become effective,
     or has been effective for less than six months prior to a registration
     demand.

   Ashford is generally required to bear all of the expenses of registering
Amazon's shares of common stock, other than underwriting discounts and
commissions. Subject to the lock-up provisions contained in the Amazon
agreement, registration of any of the shares of common stock held by Amazon
would result in those shares becoming freely tradable without restriction under
the Securities Act. Immediately after the effectiveness of the registration,
Ashford has agreed to indemnify Amazon in connection with the registration of
its shares of common stock under the terms of Ashford's agreement with Amazon.

Anti-Takeover Effects of Certain Provisions of Delaware Law and Ashford's
Certificate of Incorporation and Bylaws

   Ashford is subject to the provisions of Section 203 of the Delaware General
Corporation Law (as amended from time to time, the "DGCL"). Subject to certain
exceptions, Section 203 prohibits a publicly-held Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
became an interested stockholder, unless the interested stockholder attained
such status with the approval of the board of directors or unless the business
combination is approved in a prescribed manner. A "business combination"
includes a merger, an asset sale and any other transaction resulting in a
financial benefit to the interested stockholder. Subject to exceptions, an
"interested stockholder" is a person who, together with affiliates and
associates, owns, or within three years did own, 15% or more of the
corporation's voting stock. This statute could prohibit or delay the
accomplishment of mergers or other takeover or change in control attempts with
respect to Ashford and, accordingly, may discourage attempts to acquire
Ashford.

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<PAGE>

   In addition, provisions of the certificate of incorporation and bylaws,
which provisions will be in effect upon the closing of the merger and are
summarized in the following section, may be deemed to have an anti-takeover
effect and may delay, defer or prevent a tender offer or takeover attempt that
a stockholder might consider in its best interest, including those attempts
that might result in a premium over the market price for the shares held by
Ashford stockholders.

Limitation of Liability and Indemnification Matters

   Ashford's certificate of incorporation provides that, except to the extent
prohibited by DGCL, its directors shall not be personally liable to Ashford or
its stockholders for monetary damages for any breach of fiduciary duty as
directors of Ashford. Under the DGCL, the directors have a fiduciary duty to
Ashford which is not eliminated by this provision of the certificate and, in
appropriate circumstances, equitable remedies such as injunctive or other forms
of non-monetary relief will remain available. In addition, each director will
continue to be subject to liability under the DGCL for breach of the director's
duty of loyalty to Ashford, for acts or omissions which are found by a court of
competent jurisdiction to be not in good faith or which involve intentional
misconduct, or knowing violations of law, for actions leading to improper
personal benefit to the director, and for payment of dividends or approval of
stock repurchases or redemptions that are prohibited by the DGCL. This
provision also does not affect the directors' responsibilities under any other
laws, such as the federal securities laws or state or federal environmental
laws.

   Section 145 of the DGCL empowers a corporation to indemnify its directors
and officers and to purchase insurance with respect to liability arising out of
their capacity or status as directors and officers, provided that this
provision shall not eliminate or limit the liability of a director:

     (1) for any breach of the director's duty of loyalty to the corporation
  or its stockholders;

     (2) for acts or omissions not in good faith or which involve intentional
  misconduct or a knowing violation of law;

     (3) arising under Section 174 of the DGCL; or

     (4) for any transaction from which the director derived an improper
  personal benefit.

   The DGCL provides further that the indemnification permitted thereunder
shall not be deemed exclusive of any other rights to which the directors and
officers may be entitled under the corporation's bylaws, any agreement, a vote
of stockholders or otherwise. Ashford's certificate of incorporation eliminates
the personal liability of directors to the fullest extent permitted by Section
102(b)(7) of the DGCL and provides that Ashford shall fully indemnify any
person who was or is a party, or is threatened to be made a party, to any
threatened, pending or completed action, suit or proceeding (whether civil,
criminal, administrative or investigative) by reason of the fact that such
person is or was a director or officer of Ashford, or is or was serving at the
request of Ashford as a director or officer of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding.

   Ashford's bylaws permit it to secure insurance on behalf of any officer,
director, employee or other agent for any liability arising out of his or her
actions, regardless of whether the DGCL would permit indemnification. Ashford
has obtained liability insurance for its officers and directors.

   At present, Ashford is not the subject of any pending litigation or
proceeding involving any director, officer, employee or agent as to which
indemnification will be required or permitted under its certificate of
incorporation. Ashford is not aware of any threatened litigation or proceeding
that may result in a claim for such indemnification.

Transfer Agent and Registrar

   The transfer agent and registrar for Ashford common stock is Mellon Investor
Services LLC, Dallas, Texas.

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<PAGE>

                        COMPARISON OF STOCKHOLDER RIGHTS

General

   Both Ashford and Guild are corporations organized under the laws of Delaware
and are therefore subject to the Delaware General Corporation Law, or the DGCL.
However, there are differences between the certificate of incorporation and
bylaws of Ashford and Guild.

Capitalization

   Ashford. Ashford is authorized to issue 100,000,000 shares of common stock
and 10,000,000 shares of preferred stock. As of       , 2001,           shares
of Ashford's common stock were issued and outstanding and no shares of
preferred stock were issued and outstanding. Ashford's board has the authority,
without stockholder approval, to issue shares of authorized preferred stock
from time to time in one or more series and to fix the rights and preferences,
including voting rights, of each series of wholly unissued preferred stock.

   Guild. Guild is authorized to issue 35,000,000 shares of common stock and
25,491,093 shares of preferred stock. As of       , 2001, 461,432 shares of
Guild's common stock, 4,870,915 shares of Series A preferred stock, 3,500,178
shares of Series B preferred stock, 12,117,076 shares of Series C-1 preferred
stock, and 3,931,299 shares of Series D preferred stock were issued and
outstanding.

Voting Rights

   Ashford. Each holder of Ashford common stock is entitled to one vote for
each share and may not cumulate votes.

   Guild. Holders of Guild common stock are entitled to one vote for each share
of common stock held by them. Holders of Guild preferred stock are entitled to
one vote for each share of common stock into which such share of preferred
stock could then be converted. All shares of common stock and all shares of
preferred stock vote together as a single class, except as otherwise required
by law or provided in the certificate of incorporation. So long as at least a
majority of the shares of Series B preferred stock originally issued remain
outstanding, the holders of such shares are entitled to elect one director of
the corporation at each annual election of directors. So long as at least a
majority of the shares of Series C-1 preferred stock originally issued remain
outstanding, the holders of such shares are entitled to elect one director of
the corporation at each annual election of directors. So long as at least a
majority of the shares of Series A preferred stock originally issued remain
outstanding, the holders of common stock (excluding any shares of common stock
issued or issuable upon conversion of Series B preferred stock, Series C-1
preferred stock and Series D preferred stock) and Series A preferred stock
(voting together as a single class and not as separate series, and on an as-
converted basis) are entitled to elect two directors of the corporation at each
annual election of directors. The fifth director is unanimously approved by the
other board members.

Number of Directors

   Ashford. Ashford's certificate of incorporation provides that the number of
directors shall be such number, as shall be fixed from time to time by a bylaw
or amendment thereof duly approved and adopted by the board of directors.
Ashford's bylaws provide that the number of directors shall be fixed from time
to time exclusively by the board of directors pursuant to a resolution approved
and adopted by a vote of 75% of the total number of authorized directors
(whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the board for
approval and adoption). Ashford's bylaws further provide that the directors
shall hold office until the expiration of term for which elected, and until
their respective successors are elected and qualified, except in the case of
the death, resignation or removal of any director.

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<PAGE>

   Guild. Guild's certificate of incorporation and bylaws provide that the
number of directors which shall constitute the whole board is five members.
Guild's bylaws further provide that the directors shall be elected at the
annual meeting of the stockholders, except when vacancies are filled, and each
director shall hold office until his successor is qualified or elected or until
his or her prior death, resignation or removal. Guild's bylaws further provide
that the number of directors may be increased or decreased from time to time by
amendment to the bylaws, approved and adopted by the stockholders or board of
directors, but no decrease shall have the effect of shortening the term of an
incumbent director.

Removal of Directors

   Ashford. Ashford's bylaws provide that any director or the entire board of
directors may be removed, with or without cause, by the holders of the majority
of shares entitled to vote at an election of directors, unless otherwise
provided by the certificate of incorporation or bylaws.

   Guild. Guild's certificate of incorporation provides that any director who
shall have been elected by the holders of a class or series of stock or by any
directors so elected when there is a vacancy filled by the remaining directors
who have been elected by the holders of such class or series of stock may be
removed during the director's term of office, either with or without cause,
only by the affirmative vote of the holders of the shares of the class or
series of stock entitled to elect such director or directors, given either at a
special meeting of such stockholders duly called for that purpose or pursuant
to a written consent of stockholders. Any vacancy thereby created may be filled
by the holders of that class or series of stock represented at that meeting or
pursuant to unanimous written consent. Guild's bylaws provide that any director
or the entire board of directors may be removed, with or without cause, by the
holders of a majority of shares entitled to vote at any election of directors,
unless otherwise provided in the certificate of incorporation.

Filling Vacancies on the Board of Directors

   Ashford. Ashford's bylaws provide that vacancies and newly created
directorships resulting from any increase in the authorized number of directors
may be filled by a majority of the directors then in office, though less than a
quorum, or by a sole remaining director, and not by stockholders, and the
directors so chosen shall hold office until the next annual election and until
their successors are duly elected and shall qualify, unless sooner displaced.
If there are no directors in office, then an election of directors may be held
in the manner provided by statute.

   Guild. Guild's certificate of incorporation provides that in the case of any
vacancy (other than a vacancy caused by removal) in the office of a director
occurring among the directors elected by the holders of a class or series of
stock pursuant to the certificate of incorporation, the remaining directors so
elected by that class or series may, by affirmative vote of a majority thereof
(or the remaining director so elected if there be but one, or if there are no
such directors remaining, by the affirmative vote of the holders of a majority
of the shares of that class or series), elect a successor or successors to hold
office for the unexpired term of the director or directors whose place or
places shall be vacant. Guild's bylaws provide that vacancies and newly created
directorships resulting from any increase in the authorized number of directors
may be filled by a majority of the directors then in office, though less than a
quorum, or by a sole remaining director, and the directors so chosen shall hold
office until the next annual election and until their successors are duly
elected and shall qualify, unless sooner displaced. Guild's bylaws further
provide that if there are no directors in office, then an election of directors
may be held in the manner provided by statute. Guild's bylaws further provide
that if, at the time of filling any vacancy or any newly created directorship,
the directors then in office shall constitute less than a majority of the whole
Board (as constituted immediately prior to any such increase), the Court of
Chancery may, upon application of any stockholder or stockholders holding at
least 10% of the total number of the shares at the time outstanding having the
right to vote for such directors, summarily order an election to be held to
fill any such vacancies or newly created directorships, or to replace the
directors chosen by the directors then in office.

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Amendments to Certificate of Incorporation

   Ashford. Ashford's certificate of incorporation provides that in addition to
any vote of the holders of any class or series of stock of the corporation
required by law or the certificate of incorporation, the affirmative vote of
the holders of a majority of the voting power of all of the then outstanding
shares of capital stock of the corporation entitled to vote generally in the
election of directors, voting together as a single class, shall be required to
amend or repeal the provisions of Article I, II, III, and IV of the certificate
of incorporation. Ashford's certificate of incorporation further provides that
notwithstanding any other provision of the certificate of incorporation or any
provision of law which might otherwise permit a lesser vote or no vote, but in
addition to any vote of the holders of any class or series of the stock of the
corporation required by law or by the certificate of incorporation, the
affirmative vote of at least 75% of the voting power of all of the then
outstanding shares of the capital stock of the corporation entitled to vote
generally in the election of directors, voting together as a single class,
shall be required to amend or repeal any provision of the certificate of
incorporation, other than Article I, II, III, and IV. Ashford's certificate of
incorporation further provides that any repeal or modification of the
provisions of Article IX of the certificate of incorporation by the
stockholders of the corporation shall not adversely affect any right or
protection of a director of the corporation existing at the time of, or
increase the liability of any director of this corporation with respect to any
acts or omissions of such director occurring prior to, such repeal or
modification.

   Guild. Guild's certificate of incorporation provides that any amendment,
repeal or modification of Article IX of the certificate of incorporation, or
the adoption of any provision of the certificate of incorporation inconsistent
with Article IX, by the stockholders of the corporation shall not apply to or
adversely affect any right or protection of a director of this corporation
existing at the time of such amendment, repeal, modification or adoption.
Guild's certificate of incorporation further provides that any amendment,
repeal or modification of the provisions of Article X of the certificate of
incorporation shall not adversely affect any right or protection of a director,
officer, agent, or other person existing at the time of, or increase the
liability of any director of the corporation with respect to any acts or
omissions of such director, officer or agent occurring prior to, such
amendment, repeal or modification.

Amendments to Bylaws

   Ashford. Ashford's bylaws provide that the bylaws may be altered, amended or
repealed or new bylaws may be approved and adopted by stockholders holding at
least 75% of the corporation's outstanding capital stock ("Amending
Stockholders") or by the board of directors at any regular meeting of the
stockholders or of the board of directors or by the Amending Stockholders at
any special meeting of the stockholders or by the board of directors at any
special meeting of the board of directors if notice of such alteration,
amendment, repeal or adoption of new bylaws is contained in the notice of such
special meeting. Ashford's bylaws further provide that the power to adopt,
amend and repeal bylaws conferred upon the board of directors in the
certificate of incorporation does not divest or limit the power of the
stockholders to adopt, amend or repeal bylaws.

   Guild. Guild's certificate of incorporation expressly confers upon the board
of directors the right to make, repeal, alter, amend and rescind any or all of
Guild's bylaws. Guild's bylaws provide that the bylaws may be altered, amended
or repealed or new bylaws may be approved and adopted by the stockholders or by
the board of directors, at any regular meeting of the stockholders or of the
board of directors or at any special meeting of the stockholders or of the
board of directors if notice of such alteration, amendment, repeal or adoption
of new bylaws is contained in the notice of such special meeting. Guild's
bylaws further provide that the power to adopt, amend and repeal bylaws
conferred upon the board of directors in the certificate of incorporation does
not divest or limit the power of the stockholders to adopt, amend or repeal
bylaws.

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Action by Written Consent

   Ashford. Ashford's certificate of incorporation provides that any action
required or permitted to be taken by the stockholders of the corporation must
be effected at an annual or special meeting of the stockholders of the
corporation, and may not be effected by any consent in writing of such
stockholders.

   Guild. Guild's bylaws provide that any action required to be taken at any
annual or special meeting of stockholders of the corporation, or any action
which may be taken at any annual or special meeting of such stockholders, may
be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by the
holders of outstanding shares of stock having not less than the minimum number
of votes that would be necessary to authorize such action at a meeting at which
all shares entitled to vote thereon were present and voted. Guild's bylaws
further provide that prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to
those stockholders who have not consented in writing.

Notice of Stockholder Actions

   Ashford. Ashford's bylaws provide that to nominate directors or to properly
bring other business before an annual meeting, stockholders must deliver
written notice to the Secretary at the principal executive offices of the
corporation not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting; provided, however, that in
the event that the date of the annual meeting is advanced by more than 30 days
or delayed by more than 60 days from such anniversary date, notice by the
stockholder to be timely must be delivered not earlier than the 90th day prior
to such annual meeting and not later than the close of business on the later of
the 60th day prior to such annual meting or the 10th day following the day on
which public announcement of the date of such meeting is first made. Ashford's
bylaws further provide that in the event that the number of directors to be
elected to the board of directors of the corporation is increased and there is
no public announcement naming all of the nominees for director or specifying
the size of the increased board of directors made by the corporation at least
70 days prior to the first anniversary of the preceding year's annual meeting,
a stockholder notice shall also be considered timely, but only with respect to
nominees for any new positions created by such increase, if it shall be
delivered to the Secretary at the principal executive offices of the
corporation not later than the close of business on the 10th day following the
day on which such public announcement is first made by the corporation.

   Guild. Guild's bylaws do not contain any comparable provisions.

Right to Call Special Meeting of Stockholders

   Ashford. Ashford's bylaws provide that special meetings of the stockholders,
for any purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called at any time by the board of
directors pursuant to a resolution approved by a majority of the whole board of
directors.

   Guild. Guild's bylaws provide that special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the president and shall be
called by the president or secretary at the request in writing of a majority of
the board of directors, or at the request in writing of stockholders owning a
majority in amount of the entire capital stock of the corporation issued and
outstanding and entitled to vote. The request of such stockholders must state
the purpose or purposes of the proposed meeting. Written notice of a special
meeting shall be given not less than ten nor more than 60 days before the date
of the meeting to each stockholder entitled to vote at such meeting.

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Limitation of Personal Liability of Directors

   The DGCL provides that a corporation's certificate of incorporation may
include a provision limiting the personal liability of a director to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director. However, no such provision can eliminate or limit the
liability of a director for:

  .  any breach of the director's duty of loyalty to the corporation or its
     stockholders;

  .  acts or omissions not in good faith or which involve intentional
     misconduct or a knowing violation of the law;

  .  willful or negligent violation of the laws governing the payment of
     dividends or the purchase or redemption of stock; or

  .  any transaction from which the director devised an improper personal
     benefit.

   Ashford. Ashford's certificate of incorporation provides that no director
shall be personally liable to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, except to the extent such
exemption from liability or limitation thereof is not permitted under the DGCL,
as the same may be amended and supplemented.

   Guild. Guild's certificate of incorporation provides that no director shall
be personally liable to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, except (1) to the extent
such exemption from liability or limitation thereof is not permitted under the
DGCL, (2) for any breach of the director's duty of loyalty to Guild or its
stockholders, (3) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (4) under Section 174 of
the DGCL, or (5) for any transaction from which the director derived any
improper personal benefit.

Dividends

   Ashford. Ashford's certificate of incorporation does not restrict the
ability of the board of directors to declare and pay dividends.

   Guild. Guild's certificate of incorporation provides that the holders of
shares of Series B preferred stock, Series C-1 preferred stock and Series D
preferred stock shall be entitled to receive dividends on a pari-passu basis,
out of any assets legally available therefor, prior and in preference to any
declaration of any dividend (payable other than in common stock or other
securities and rights convertible into or entitling the holder thereof to
receive, directly or indirectly, additional shares of common stock of the
corporation) on the Series A preferred stock or the common stock of the
corporation, at the rate of $0.05 per share per annum for the Series B
preferred stock, $0.103 per share per annum for the Series C-1 preferred stock
and $0.138 per share per annum for the Series D preferred stock (as adjusted
for stock splits, stock dividends, recapitalizations or the like), payable
when, as, and if declared by the board of directors. Such dividends are
noncumulative. Guild's certificate of incorporation further provides that after
payment of any dividends to the Series B, C-1, and D preferred stockholders,
any additional dividends shall be distributed among all holders of common stock
and all holders of Series A preferred stock, Series B preferred stock, Series
C-1 preferred stock, and Series D preferred stock in proportion to the number
of shares of common stock which would be held by each such holder if all shares
of each such series of preferred stock were converted to common stock at the
then effective conversion rate. Guild's certificate of incorporation further
provides that subject to the rights of holders of all classes of stock at the
time outstanding having prior rights as to dividends and subject to the rights
of the holders of the Series B, Series C-1, and Series D preferred stockholders
as set forth in the certificate of incorporation, the holders of the common
stock shall be entitled to receive, when and as declared by the board of
directors, out of assets of the corporation legally available therefor, such
dividends as may be declared from time to time by the board of directors.

                                       81
<PAGE>

Conversion and Redemption

   Ashford. Holders of Ashford common stock have no right to convert their
shares into any other shares of capital stock of Ashford or any other
securities. Holders of Ashford common stock are not entitled to any redemption
rights.

   Guild. Holders of Guild common stock have no right to convert their shares
into any other shares of capital stock of Guild or any other securities.
Holders of Guild common stock are not entitled to any redemption rights.
Holders of Series A preferred stock, Series B preferred stock, Series C-1
preferred stock and Series D preferred stock have the right to convert each
share of preferred stock held by them into one share of common stock, subject
to customary adjustments and adjustments for diluting issuances of capital
stock, at any time after the date of issuance of such share. In addition, all
outstanding shares of Series A preferred stock, Series B preferred stock,
Series C-1 preferred stock, and Series D preferred stock will be automatically
converted into an equal number of shares of common stock upon the earlier of
(1) the corporation's sale of its common stock in a firm commitment
underwritten public offering pursuant to a registration statement on Form S-1
or Form SB-2 under the Securities Act, the public offering price of which was
not less than $10.00 per share (as adjusted for any stock splits, stock
dividends, recapitalizations or the like occurring after the filing of the
certificate of incorporation) and $25,000,000 in the aggregate or (2) the date
specified by written consent or agreement of the holders of a majority of the
then outstanding shares of Series B preferred stock, Series C-1 preferred stock
and Series D preferred stock (voting together as a single class and not as
separate series).

Preemptive Rights

   Ashford. Holders of Ashford common stock are not entitled to any preemptive
rights on issuances of securities by Ashford.

   Guild. Holders of Guild common stock are not entitled to any preemptive
rights on issuances of securities by Guild.

Liquidation

   Ashford. Subject to the settlement of claims upon the dissolution or
liquidation of Ashford, holders of Ashford common stock will be entitled to
receive all assets of Ashford available for distribution to Ashford's
stockholders.

   Guild. Guild's certificate of incorporation provides that in the event of
any liquidation, dissolution or winding up of this corporation, either
voluntary or involuntary, the holders of Series B preferred stock, Series C-1
preferred stock and Series D preferred stock shall be entitled to receive, on a
pari-passu basis, prior and in preference to any distribution of any of the
assets of the corporation to the holders of Series A preferred stock and common
stock, for each outstanding share of preferred stock held by them, an amount
equal to $1.00, $2.06320475, or $2.75, respectively, plus any declared but
unpaid dividends on such shares. Guild's certificate of incorporation further
provides that if upon the occurrence of a liquidation, dissolution or winding
up of the corporation, the assets and funds of the corporation legally
available for distribution to stockholders by reason of their ownership of
stock of the corporation is insufficient to permit the payment to such holders
of Series B preferred stock, Series C-1 preferred stock, and Series D preferred
stock, then the entire assets and funds of the corporation shall be distributed
ratably among the holders of the Series B preferred stock, Series C-1 preferred
stock, and Series D preferred stock based upon the total preferential amount
each holder would be entitled to receive if sufficient funds were distributed
to pay the preferential amounts. Guild's certificate of incorporation further
provides that upon distribution to the holders of the Series B preferred stock,
Series C-1 preferred stock and Series D preferred stock, the holders of Series
A preferred stock shall be entitled to receive, prior and in preference to any
distribution of any of the assets of this corporation to the holders of common
stock by reason of their ownership thereof, an amount per share equal to the
sum of $1.00 per share, plus any declared but unpaid dividends on such shares.
Guild's certificate of incorporation further provides that if upon the

                                       82
<PAGE>

occurrence of a liquidation, dissolution or winding up of the corporation, the
assets and funds of the corporation legally available for distribution to
stockholders by reason of their ownership of stock of the corporation is
insufficient to permit the payment to such holders of Series A preferred stock,
then the entire assets and funds of the corporation shall be distributed
ratably among the holders of the Series A preferred stock in proportion to the
amount of such stock owned by the holder. Common stockholders are entitled to
receive all remaining assets and funds pro rata based on the number of shares
of common stock held by each.

                                 LEGAL MATTERS

   The validity of the shares of Ashford common stock to be issued in
connection with the merger will be passed upon for Ashford by Gunderson Dettmer
Stough Villeneuve Franklin & Hachigian, LLP, Austin, Texas. Legal matters
pertaining to federal income tax consequences in connection with the merger
will be passed upon for Guild by Briggs and Morgan, P.A., Minneapolis,
Minnesota, and for Ashford by Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian, LLP, Austin, Texas.

                                    EXPERTS

   The financial statements of Ashford incorporated by reference in this
registration statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
giving said report.

   The financial statements of Guild at December 31, 2000 and 1999 and for the
years then ended appearing in this prospectus and registration statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon appearing elsewhere herein, and are included in reliance upon
such report given on the authority of such firm as experts in accounting and
auditing.

                                       83
<PAGE>

                      WHERE YOU CAN FIND MORE INFORMATION

   Ashford has filed a registration statement on Form S-4 with the SEC to
register the Ashford common stock to be issued in the merger. This joint proxy
statement/prospectus is a part of the Ashford registration statement and
constitutes a prospectus of Ashford in addition to being a proxy statement of
Guild for its special meeting and a proxy statement for Ashford for its special
meeting. The registration statement, including the attached annexes, exhibits
and schedules, contains additional relevant information about Ashford and
Guild. As allowed by SEC rules, this joint proxy statement/prospectus does not
contain all the information you can find in the Ashford registration statement
or the exhibits to the Ashford registration statement.

   In addition, Ashford is subject to the informational reporting requirements
of the Securities Exchange Act of 1934, as amended, and in accordance with the
Exchange Act files annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any reports, statements
or other information that Ashford files with the SEC at the SEC's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may
obtain information on the operation of the public reference room by calling the
SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC, such as Ashford, at
http://www.sec.gov.

   The SEC allows Ashford to "incorporate by reference" information into this
joint proxy statement/prospectus, which means that Ashford can disclose
important information to you by referring you to another document filed
separately with the SEC. The Ashford information incorporated by reference is
deemed to be part of this joint proxy statement/prospectus, except for any
information superseded by information in this joint proxy statement/prospectus
or by later filings with the SEC. This joint proxy statement/prospectus
incorporates by reference the documents set forth below. Ashford has previously
filed these documents with the SEC. These documents contain important
information about Ashford.

   This joint proxy statement/prospectus incorporates by reference the
following documents filed by Ashford with the SEC (File No. 000-27357):

  .  Annual Report on Form 10-K for the year ended March 31, 2000;

  .  Quarterly Report on Form 10-Q for the first quarter ended June 30, 2000;

  .  Quarterly Report on Form 10-Q for the second quarter ended September 30,
     2000;

  .  Quarterly Report on Form 10-Q for the third quarter ended December 31,
     2000;

  .  Proxy Statement on Schedule 14A for the 2000 Annual Meeting of
     Stockholders of Ashford held on July 27, 2000; and

  .  The description of Ashford's common stock contained in its registration
     statement on Form S-1 (Registration No. 333-82759) filed with the SEC on
     July 13, 1999.

   Ashford is also incorporating by reference all additional documents that it
files with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act between the date of this joint proxy statement/prospectus and the
date of Ashford's special meeting.

                                       84
<PAGE>

   You can obtain the documents incorporated by reference from Ashford or the
SEC. Documents incorporated by reference are available from Ashford, without
charge, excluding exhibits unless those exhibits are specifically incorporated
by reference as an exhibit to the registration statement of which this proxy
statement/prospectus is a part. Stockholders may obtain documents that are
referred to or that are incorporated by reference in this joint proxy
statement/prospectus by requesting them in writing or by telephone at the
following address:

  Ashford.com, Inc.
  3800 Buffalo Speedway, Suite 400
  Houston, Texas 77098
  Telephone: (713) 369-1300

   If you would like to request documents from Ashford, please do so by
  , 2001 to receive them before the Ashford special meeting. If you request any
incorporated documents from Ashford, Ashford will mail them to you by first
class mail, or other equally prompt means, within one business day after
Ashford receives your request.

   If you would like to request documents from Guild, please do so by
  , 2001 by contacting:

  Guild.com, Inc.
  931 East Main Street, Suite 3
  Madison, Wisconsin 53703
  (608) 257-2590

   Neither Ashford nor Guild has authorized anyone to give you any information
or to make any representation about the proposed merger or their companies that
differs from or adds to the information contained in this document or in the
documents Ashford has publicly filed with the SEC. Therefore, if anyone should
give you any different or additional information, you should not rely on it.

   If you live in a jurisdiction where it is unlawful to offer or exchange or
sell, or to ask for offers to exchange or buy, the securities offered by this
document, or to ask for proxies, or, if you are a person to whom it is unlawful
to direct such offers or requests, then the offer and request presented by this
document does not extend to you.

   The information contained in this document speaks only as of the date
indicated on the cover of this document unless the information specifically
indicates that another date applies.

                                       85
<PAGE>

                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
<S>                                                                        <C>
Guild.com, Inc.
Financial Statements
  Report of Independent Auditors.......................................... F-2
  Balance Sheets as of December 31, 2000 and 1999......................... F-3
  Statements of Operations for the years ended December 31, 2000 and
   1999................................................................... F-5
  Statements of Stockholders' Equity for the years ended December 31, 2000
   and 1999............................................................... F-6
  Statements of Cash Flows for the years ended December 31, 2000 and
   1999................................................................... F-8
  Notes to Financial Statements........................................... F-9
</TABLE>

                                      F-1
<PAGE>

               Report of Ernst & Young LLP, Independent Auditors

To the Board of Directors of GUILD.com, Inc.

   We have audited the accompanying balance sheets of GUILD.com, Inc. (the
Company) as of December 31, 2000 and 1999, and the related statements of
operations, stockholders' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

   In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Company at December 31,
2000 and 1999, and the results of its operations and its cash flows for the
years then ended, in conformity with accounting principles generally accepted
in the United States.

                                          /s/ ERNST & YOUNG LLP

January 31, 2001

                                      F-2
<PAGE>

                                GUILD.com, Inc.

                                 Balance Sheet
               (In Thousands, Except Par Value and Share Amounts)

<TABLE>
<CAPTION>
                                                                  December 31
                                                                ---------------
                                                                 2000    1999
                                                                ------- -------
<S>                                                             <C>     <C>
Assets
Current assets:
  Cash and cash equivalents.................................... $ 8,203 $12,061
  Short-term investments.......................................   3,450   5,907
  Accounts receivable, net of allowances of $40 and $30 in 2000
   and 1999....................................................     130     182
  Interest and dividend receivable.............................      50     176
  Inventories..................................................     158     102
  Prepaid expenses and other current assets....................     128     798
  Deferred production costs....................................     111      42
                                                                ------- -------
Total current assets...........................................  12,230  19,268
Net property and equipment.....................................   2,233   1,822
Other assets:
  Deposits.....................................................      --      56
  Trademarks, less accumulated amortization of $16 and $3 in
   2000 and 1999...............................................      19      32
  Goodwill, less accumulated amortization of $624 and $230 in
   2000 and 1999...............................................     164     558
                                                                ------- -------
Total assets................................................... $14,646 $21,736
                                                                ======= =======
</TABLE>


                            See accompanying notes.

                                      F-3
<PAGE>

                                GUILD.com, Inc.

                           Balance Sheet (continued)
               (In Thousands, Except Par Value and Share Amounts)

<TABLE>
<CAPTION>
                                                                December 31
                                                              ----------------
                                                               2000     1999
                                                              -------  -------
<S>                                                           <C>      <C>
Liabilities and stockholders' equity
Current liabilities:
  Accounts payable........................................... $ 1,472  $ 1,747
  Accrued liabilities........................................     369      210
  Customer deposits..........................................     272      272
  Current maturities of obligations under capital leases.....     117      113
  Deferred revenue...........................................     588      607
                                                              -------  -------
Total current liabilities....................................   2,818    2,949
Capital lease obligations....................................      26      135
Commitments and contingencies (Note 5)
Stockholders' equity:
  Convertible preferred stock, voting, $.001 par value,
   25,491,093 shares authorized at stated value
    Series A: 4,870,915 and 4,768,648 shares issued and
     outstanding at December 31, 2000 and 1999,
     respectively............................................   1,909    1,065
    Series B: 3,500,178 shares issued and outstanding........   3,408    3,408
    Series C-1: 12,117,076 shares issued and outstanding
     (Note 6)................................................  24,936   24,936
    Series D, 3,931,299 shares issued and outstanding........  10,749       --
    Series A, 13,889 shares, to be issued....................      --      115
  Common stock, $.001 par value, 35,000,000 shares
   authorized, 461,432 and 390,757 shares issued and
   outstanding at December 31, 2000 and 1999, respectively,
   455,208 and 390,757 shares restricted at December 31, 2000
   and 1999, respectively (Note 7)...........................      --       --
  Additional paid-in capital.................................     158      231
  Accumulated deficit........................................ (29,358) (10,923)
  Deferred stock compensation................................      (2)    (172)
  Accumulated other comprehensive gain (loss)................       2       (8)
                                                              -------  -------
Total stockholders' equity...................................  11,802   18,652
                                                              -------  -------
Total liabilities and stockholders' equity................... $14,646  $21,736
                                                              =======  =======
</TABLE>

                            See accompanying notes.

                                      F-4
<PAGE>

                                GUILD.com, Inc.

                            Statement of Operations
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                      Year ended December 31
                                                      ------------------------
                                                         2000         1999
                                                      -----------  -----------
<S>                                                   <C>          <C>
Revenues:
  Website sales...................................... $       900  $       216
  Non-website sales..................................       1,147          828
                                                      -----------  -----------
                                                            2,047        1,044
Costs of goods sold:
  Website sales......................................          57           49
  Non-website sales..................................         357          400
  Shipping costs.....................................         229           66
                                                      -----------  -----------
                                                              643          515
                                                      -----------  -----------
Gross profit.........................................       1,404          529
Operating expenses:
  Selling and marketing expense......................       9,493        5,413
  General and administrative expense.................      10,017        5,645
  Depreciation and amortization......................       1,115          392
                                                      -----------  -----------
                                                           20,625       11,450
                                                      -----------  -----------
Loss from operations.................................     (19,221)     (10,921)
Other income (expense):
  Investment income..................................         825          475
  Interest expense...................................         (39)         (22)
  Other expense......................................          --           (2)
                                                      -----------  -----------
                                                              786          451
                                                      -----------  -----------
Net loss............................................. $   (18,435) $   (10,470)
                                                      ===========  ===========
</TABLE>


                            See accompanying notes.

                                      F-5
<PAGE>

                                GUILD.com, Inc.

                       Statement of Stockholders' Equity
                      (In Thousands, Except Share Amounts)

<TABLE>
<CAPTION>
                          Preferred Stock  Preferred Stock   Preferred Stock    Preferred Stock
                              Series A         Series B         Series C-1         Series D      Preferred Stock
                          ---------------- ---------------- ------------------ -----------------    Series A
                                    Stated           Stated            Stated            Stated       To Be
                           Shares   Value   Shares   Value    Shares    Value   Shares    Value      Issued
                          --------- ------ --------- ------ ---------- ------- --------- ------- ---------------
<S>                       <C>       <C>    <C>       <C>    <C>        <C>     <C>       <C>     <C>
Balance at December 31,
 1998...................         -- $   --        -- $   --         -- $    --        -- $    --      $ --
Exchange of common stock
 for preferred stock....  4,344,000    786        --     --         --      --        --      --        --
Common stock issued upon
 option exercise........         --     --        --     --         --      --        --      --        --
Deferred stock
 compensation...........         --     --        --     --         --      --        --      --        --
Amortization of deferred
 stock compensation.....         --     --        --     --         --      --        --      --        --
Issuance of preferred
 stock:
  For cash..............         --     -- 3,500,178  3,408 12,117,076  24,936        --      --        --
  For services..........    230,775     85        --     --         --      --        --      --       115
  For acquisition.......    193,873    194        --     --         --      --        --      --        --
Net unrealized loss on
 available-for-sale
 securities.............         --     --        --     --         --      --        --      --        --
Net loss................         --     --        --     --         --      --        --      --        --
Comprehensive loss......         --     --        --     --         --      --        --      --        --
                          --------- ------ --------- ------ ---------- ------- --------- -------      ----
Balance at December 31,
 1999...................  4,768,648  1,065 3,500,178  3,408 12,117,076  24,936        --      --       115
Issuance of common
 stock:
  For cash upon option
   exercise.............         --     --        --     --         --      --        --      --        --
  For services..........         --     --        --     --         --      --        --      --        --
Shares repurchased......         --     --        --     --         --      --        --      --        --
Deferred stock
 compensation...........         --     --        --     --         --      --        --      --        --
Amortization of deferred
 stock compensation.....         --     --        --     --         --      --        --      --        --
Issuance of preferred
 stock:
  For cash..............     60,600    500        --     --         --      -- 3,931,299  10,749        --
  For services..........     41,667    344        --     --         --      --        --      --      (115)
Net unrealized gain on
 available for-sale
 securities
Net loss................         --     --        --     --         --      --        --      --        --
Comprehensive loss......         --     --        --     --         --      --        --      --        --
                          --------- ------ --------- ------ ---------- ------- --------- -------      ----
Balance at December 31,
 2000...................  4,870,915 $1,909 3,500,178 $3,408 12,117,076 $24,936 3,931,299 $10,749      $ --
                          ========= ====== ========= ====== ========== ======= ========= =======      ====
</TABLE>

                            See accompanying notes.

                                      F-6
<PAGE>

                                GUILD.com, Inc.

                 Statement of Stockholders' Equity (continued)
                     (In Thousands, Except Share Amounts)

<TABLE>
<CAPTION>
                                Common Stock
                          --------------------------               Accumulated
                                          Additional   Deferred       Other                      Total
                                     Par   Paid-In      Stock     Comprehensive (Accumulated Stockholders'
                           Shares   Value  Capital   Compensation     Loss        Deficit)      Equity
                          --------  ----- ---------- ------------ ------------- ------------ -------------
<S>                       <C>       <C>   <C>        <C>          <C>           <C>          <C>
Balance at December 31,
 1998...................     8,000   $--     $786        $ --          $--        $   (453)     $   333
Exchange of common stock
 for preferred stock....    (8,000)   --     (786)         --           --              --           --
Common stock issued upon
 option exercise........   390,757    --       39          --           --              --           39
Deferred stock
 compensation...........        --    --      192        (192)          --              --           --
Amortization of deferred
 stock compensation.....        --    --       --          20           --              --           20
Issuance of preferred
 stock:
  For cash..............        --    --       --          --           --              --       28,344
  For services..........        --    --       --          --           --              --          200
  For acquisition.......        --    --       --          --           --              --          194
  Net unrealized loss on
   available-for-sale
   securities...........        --    --       --          --           (8)             --           (8)
  Net loss..............        --    --       --          --           --         (10,470)     (10,470)
                                                                                                -------
  Comprehensive loss....        --    --       --          --           --              --      (10,478)
                          --------   ---     ----        ----          ---        --------      -------
Balance at December 31,
 1999...................   390,757    --      231        (172)          (8)        (10,923)      18,652
Issuance of common
 stock:
  For cash upon option
   exercise.............   200,164    --      111          --           --              --          111
  For services..........     6,224    --       17          --           --              --           17
Shares repurchased......  (135,713)   --      (12)         --           --              --          (12)
Deferred stock
 compensation
 (reversal).............        --    --     (189)        189           --              --           --
Amortization of deferred
 stock compensation.....        --    --       --         (19)          --              --          (19)
Issuance of preferred
 stock:
  For cash..............        --    --       --          --           --              --       11,249
  For services..........        --    --       --          --           --              --          229
Net unrealized gain on
 available-for-sale
 securities.............        --    --       --          --           10              --           10
Net loss................        --    --       --          --           --         (18,435)     (18,435)
                                                                                                -------
Comprehensive loss......        --    --       --          --           --              --      (18,425)
                          --------   ---     ----        ----          ---        --------      -------
Balance at December 31,
 2000...................   461,432   $--     $158        $ (2)         $ 2        $(29,358)     $11,802
                          ========   ===     ====        ====          ===        ========      =======
</TABLE>

                            See accompanying notes.

                                      F-7
<PAGE>

                                GUILD.com, Inc.

                            Statement of Cash Flows
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                       Year ended December 31
                                                       ------------------------
                                                          2000         1999
                                                       -----------  -----------
<S>                                                    <C>          <C>
Operating activities
Net loss.............................................  $   (18,435) $   (10,470)
Adjustments to reconcile net loss to net cash used in
 operating activities:
  Noncash stock compensation.........................          225          220
  Depreciation.......................................          708          159
  Amortization.......................................          407          233
  Loss on sale of equipment..........................            1            7
  Changes in operating assets and liabilities:
    Accounts receivable and interest receivable......          178         (206)
    Inventories and other current assets.............          614         (778)
    Deferred production costs........................          (69)          (2)
    Accounts payable, accrued liabilities and
     customer deposits...............................         (116)       1,958
    Deferred revenue.................................          (19)          62
                                                       -----------  -----------
Net cash used in operating activities................      (16,506)      (8,817)
Investing activities
Additions to property and equipment..................       (1,091)      (1,616)
Acquisition of Kraus Sikes, Inc., net of cash
 acquired............................................           --         (240)
Additions to trademarks..............................           --          (34)
Additions to (use of) deposits.......................           56          (56)
Purchases of available-for-sale securities...........      (11,033)     (45,363)
Sales of available-for-sale securities...............       13,500       39,868
                                                       -----------  -----------
Net cash provided by (used in) investing activities..        1,432       (7,441)
Financing activities
Proceeds from issuance of common stock, net..........            2           --
Proceeds from issuance of preferred stock, net.......       11,249       28,344
Proceeds from exercise of options....................          111           39
Repurchased common stock.............................          (12)          --
Principal payments on obligations under capital
 leases..............................................         (134)         (64)
                                                       -----------  -----------
Net cash provided by financing activities............       11,216       28,319
                                                       -----------  -----------
Net (decrease) increase in cash and cash
 equivalents.........................................       (3,858)      12,061
Cash and cash equivalents at beginning of period.....       12,061           --
                                                       -----------  -----------
Cash and cash equivalents at end of period...........  $     8,203  $    12,061
                                                       ===========  ===========
Supplemental cash flow information:
  Cash paid for interest.............................  $        39  $        22
Supplemental disclosure of noncash investing and
 financing activities................................
Obligations under capital leases of $29 and $255 for
 the period ended December 31, 2000 and 1999, were
 incurred when the Company entered into leases for
 equipment...........................................
</TABLE>

                            See accompanying notes.

                                      F-8
<PAGE>

                                GUILD.com, Inc.

                         Notes to Financial Statements
                               December 31, 2000
       (All Amounts Are In Thousands, Except Share And Per Share Amounts)

1. Nature of Business and Significant Accounting Policies

Business

   GUILD.com, Inc. (the Company) offers an online collection of original art.
The Company's mission is to bring greater ease and access to original art, and
breakdown the barriers that have plagued the ability to buy and sell art. The
Company also publishes and sells its own art related books. The majority of the
Internet transactions are conducted with credit card payments from customers.

Use of Estimates

   The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

Cash and Cash Equivalents

   Highly liquid investments with a maturity of three months or less at the
date of purchase are considered to be cash equivalents.

Short-Term Investments

   Short-term investments consisted of corporate and government bonds which are
considered by management to be available-for-sale, thus requiring the Company
to carry them at fair value, with unrealized gains and losses, net of tax,
reported as a separate component of stockholders' equity. The amortized cost of
debt securities is adjusted for amortization of premiums and accretion of
discounts to maturity. Interest and dividends, realized gains and losses,
accretion and amortization and declines in value judged to be other-than
temporary are included in investment income. The $10 and $(8) unrealized
holding gain (loss) on available-for-sale securities at December 31, 2000 and
1999, has been recorded as a component of stockholders' equity.

Inventory Valuation

   Inventories consist mainly of books and small art items and are valued at
the lower of cost determined using the first-in, first-out (FIFO) method or
market.

Intangible Assets

   Goodwill, which relates to the excess of cost over the net assets of the
Kraus Sikes business acquired (Note 2), is amortized on a straight-line basis
over two years. Trademarks are amortized on a straight-line basis over three
years.

Impairment of Long-Lived and Intangible Assets

   Property, equipment, trademarks and goodwill are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. If the sum of the expected undiscounted cash flows is
less than the carrying value of the related asset or group of assets, a loss is
recognized for the difference between the fair value and carrying value of the
asset or group of assets. Such analyses necessarily involve judgment.

                                      F-9
<PAGE>

                                GUILD.com, Inc.

                   Notes to Financial Statements--(continued)
       (All Amounts Are In Thousands, Except Share And Per Share Amounts)

1. Nature of Business and Significant Accounting Policies (continued)

Fair Value of Financial Instruments

   The Company's financial instruments consist primarily of cash and cash
equivalents, short-term investments, trade receivables, trade payables and
capital lease obligations. The respective book values are considered to be
representative of their respective fair values.)

Property and Equipment

   Property and equipment are recorded at cost and are depreciated using
straight-line and accelerated methods for financial reporting purposes. The
estimated useful lives used to calculate depreciation range from one to seven
years. Property and equipment consisted of the following at December 31:

<TABLE>
<CAPTION>
                                                                  2000    1999
                                                                 ------  ------
   <S>                                                           <C>     <C>
   Leasehold improvements....................................... $  138  $  114
   Furniture and fixtures.......................................     99      99
   Office equipment.............................................    160     119
   Computers....................................................  1,709     987
   Software.....................................................    984     661
                                                                 ------  ------
                                                                  3,090   1,980
   Less accumulated depreciation................................   (867)   (158)
                                                                 ------  ------
                                                                  2,223   1,822
   Construction in progress.....................................     10      --
                                                                 ------  ------
                                                                 $2,233  $1,822
                                                                 ======  ======
</TABLE>

Revenue Recognition

   Website sales are derived from art and gallery products and retail books
sold. The Company recognizes revenue from website sales when the products are
delivered to customers. Website sales consisted of the following:

<TABLE>
<CAPTION>
                                                                   Year ended
                                                                   December 31
                                                                   ------------
                                                                    2000   1999
                                                                   ------  ----
   <S>                                                             <C>     <C>
   Retail books................................................... $  128  $ 40
   Art and gallery products:
     Price paid by customer.......................................  2,283   680
     Less portion remitted to vendor.............................. (1,511) (504)
                                                                   ------  ----
       Net commission earned......................................    772   176
                                                                   ------  ----
   Website sales.................................................. $  900  $216
                                                                   ======  ====
</TABLE>

                                      F-10
<PAGE>

                                GUILD.com, Inc.

                   Notes to Financial Statements--(continued)
       (All Amounts Are In Thousands, Except Share And Per Share Amounts)

1. Nature of Business and Significant Accounting Policies (continued)

   Non-website sales are derived from wholesale book orders and advertising
fees received from artists featured in the Company's published books. Non-
website sales are recognized when the books are delivered to end users,
therefore deferred revenue exists for advertising fees received before books
are delivered.

Advertising Costs

   Advertising costs are expensed as incurred and were $5,108 and $3,851 for
the years ended December 31, 2000 and 1999, respectively.

Shipping and Handling Costs

   The Company classifies shipping and handling costs it incurs as cost of
sales in the accompanying statement of operations. Shipping and handling costs
in 2000 and 1999 were $229 and $66, respectively.

Income Taxes

   Deferred taxes are provided for temporary differences between financial
reporting and income tax bases of assets and liabilities, and are measured
using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse. Deferred income taxes also arise from the
future benefits of net operating loss carryforwards. Valuation allowances are
established when necessary to reduce deferred tax assets due to uncertainty
regarding realization of such assets.

Stock-Based Compensation

   The Company accounts for stock-based compensation for awards to employees
using the intrinsic value method prescribed in Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," and has adopted the
disclosure only alternative of Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" (FAS 123).

   Stock compensation expense for options granted to nonemployees has been
determined in accordance with FAS 123 and EITF 96-18, "Accounting for Equity
Instruments That Are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services," and represents the fair value of
the consideration received or the fair value of the equity instruments issued,
whichever may be more reliably measured. For options that vest over future
periods, the fair value of options granted to nonemployees is periodically
remeasured as the underlying options vest.

Reclassifications

   Certain prior year balances have been reclassified in order to conform to
the current year presentation.

New Accounting Pronouncements

   In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 (SFAS No. 133), "Accounting for
Derivative Instruments and Hedging Activities," which establishes accounting
and reporting standards for derivative instruments and hedging activities. SFAS
No. 133, as amended, will be effective for the Company on January 1, 2001, and
requires that an entity recognize all derivatives as either assets or
liabilities in the balance sheet and measure those instruments at fair value.
The Company does not expect the potential effect of adopting the provisions of
SFAS No. 133 to have a significant impact on its financial position, results of
operations and cash flows.

                                      F-11
<PAGE>

                                GUILD.com, Inc.

                   Notes to Financial Statements--(continued)
       (All Amounts Are In Thousands, Except Share And Per Share Amounts)

1. Nature of Business and Significant Accounting Policies (continued)

   In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" (SAB
101), which provides guidance on the recognition, presentation and disclosure
of revenues in financial statements filed with SEC. SAB 101 outlines the basic
criteria that must be met to recognize revenues and provides guidance for
disclosures related to revenues recognition policies. The Company's revenue
recognition policies for all periods are consistent with the provisions of SAB
101.

   In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions involving Stock
Compensation, an interpretation of APB Opinion No. 25," which clarifies
guidance for certain issues that arose in the application of APB Opinion No.
25, "Accounting for Stock Issued to Employees." FASB Interpretation No. 44,
effective July 1, 2000, did not have any impact on the Company's results of
operations.

2. Acquisition

   On May 10, 1999, the Company acquired Kraus Sikes, Inc., a related party,
for 193,873 shares of Preferred Series A Stock, recorded at an estimated fair
value of $1 per share, and payment of debt balances of approximately $260. The
acquisition has been accounted for using the purchase method of accounting. The
purchase price has been allocated to the estimated fair values of the
underlying assets acquired and liabilities assumed based on management's
estimates and resulted in goodwill of $788. The results of operations have been
included in the statements of operations since the date of acquisition.

3. Savings Plan

   The Company has a 401(k) savings plan (the Plan) which covers substantially
all employees. The Plan does not allow for any company contributions.

4. Income Taxes

   Deferred income taxes are provided for temporary differences (principally,
allowance for doubtful accounts, inventories, depreciation, certain accrued
liabilities and net operating loss carryforwards) between when amounts are
reported for financial reporting and income tax purposes. Deferred tax
liabilities are not material and deferred tax assets at December 31, 2000 and
1999, are $11,763 and $4,389, respectively. A valuation allowance equal to 100%
of the net deferred assets was provided at December 31, 2000 and 1999, because
of uncertainty with respect to realization of deferred tax assets based on the
Company's historical operating results.

   At December 31, 2000, the Company has approximately $29,000 of both federal
and state net operating loss carryforwards, which expire beginning in 2019
(federal) and 2014 (state).

5. Commitments and Contingencies

   The Company leases computer and office equipment under capital leases
requiring monthly payments in varying amounts through January 2003. At December
31, 2000, the gross amount of computer and office equipment recorded under
capital leases and related accumulated amortization was approximately $366 and
$100, respectively ($337 and $41, respectively, at December 31, 1999).

   The Company also leases its corporate office space under operating leases,
which expire through April 2002. The Company is required to pay real estate
taxes, maintenance, utilities and insurance on the leased building space. Rent
expense during 2000 and 1999 was $115 and $57, respectively.

                                      F-12
<PAGE>

                                GUILD.com, Inc.

                   Notes to Financial Statements--(continued)
       (All Amounts Are In Thousands, Except Share And Per Share Amounts)

5. Commitments and Contingencies (continued)

   At December 31, 2000, future payments under capital and operating leases
with remaining terms in excess of one year were as follows:

<TABLE>
<CAPTION>
                                                               Capital Operating
                                                               Leases   Leases
                                                               ------- ---------
      <S>                                                      <C>     <C>
      2001....................................................  $131     $ 90
      2002....................................................    24       25
      2003....................................................     4        2
                                                                ----     ----
      Total minimum lease obligations.........................   159     $117
                                                                         ====
      Amounts representing interest...........................   (16)
                                                                ----
      Capital lease obligation................................   143
      Less amount due within one year.........................   117
                                                                ----
      Long-term portion.......................................  $ 26
                                                                ====
</TABLE>

6. Stockholders' Equity

   During 2000, each outstanding share of Series C Preferred Stock was
converted into four shares of Series C-1 Preferred Stock. Prior year share
amounts have been restated to reflect the conversion.

   Each share of Series A, B, C-1 and D preferred stock is convertible into one
share of common stock at the option of the holder, subject to certain
antidilutive adjustments, and all preferred stock automatically converts in the
event of an initial public offering provided the offering price is at least
$10.00 per share and gross proceeds are $25 million in the aggregate. The
preferred stockholders are entitled to preference payments in the event of
liquidation or dissolution of the Company at $1 (Series A), $1 (Series B),
$2.07 (Series C-1) and $2.75 (Series D) per share plus accrued and unpaid
dividends, if any.

7. Stock Options and Restricted Stock

   The Company sponsors a stock option plan (the Plan) which allows for the
grant of options for the purchase of common stock. The exercise price of each
option granted is intended to approximate the fair value on the date of grant.
Options are 100% exercisable upon grant and have a minimum term of ten years.
However, the underlying common stock issued upon exercise of the options is
restricted and subject to the Company's right to repurchase the shares at cost
for a four-year period from the grant date. Shares repurchased by the Company
are retired and again become available for issuance within the Plan. The
restrictions lapse 25% one year from the grant date and then ratably over the
succeeding 36 months. At December 31, 2000, 455,208 shares of issued and
outstanding common stock are restricted.


                                      F-13
<PAGE>

                                GUILD.com, Inc.

                   Notes to Financial Statements--(continued)
       (All Amounts Are In Thousands, Except Share And Per Share Amounts)

7. Stock Options and Restricted Stock (continued)

   The following table summarizes information with respect to the Company's
stock option plan and options granted to non-employees.

<TABLE>
<CAPTION>
                                                          Options    Weighted-
                                              Shares    Outstanding   Average
                                            Available       and     Option Price
                                            for Grant   Exercisable  Per Share
                                            ----------  ----------- ------------
   <S>                                      <C>         <C>         <C>
   Balances at December 31, 1998...........         --          --        --
     Authorized............................  1,424,832          --        --
     Granted...............................   (954,750)    954,750      0.34
     Exercised.............................         --    (390,757)     0.10
     Canceled..............................      4,750      (4,750)     0.10
                                            ----------   ---------     -----
   Balances at December 31, 1999...........    474,832     559,243     $0.50
     Increase in authorized options........  4,974,009          --        --
     Repurchased shares....................    135,713          --        --
     Granted............................... (5,803,750)  5,803,750      0.32
     Exercised.............................         --    (200,164)     0.60
     Canceled..............................    348,254    (348,254)     0.45
                                            ----------   ---------     -----
   Balances at December 31, 2000...........    129,058   5,814,575     $0.32
                                            ==========   =========     =====
</TABLE>

   As of December 31, 2000, the range of exercise prices on outstanding options
was $0.10 to $0.83 per share, and the average remaining contractual life was
9.52 years. The weighted-average fair value of the options granted in 2000 was
$0.08.

   The Company accounts for the stock option grants to employees under APB
Opinion No. 25. The number of shares is fixed at the grant date. Accordingly,
compensation costs are recognized only when the exercise price is less than the
estimated fair value of the underlying stock on the date of each grant. The
following pro forma information regarding net loss is required by SFAS No. 123,
"Accounting for Stock-Based Compensation," and has been determined as if the
Company had accounted for its employee stock options under the minimum value
method of that Statement. The minimum value for these options was estimated at
the date of grant using a minimum value option pricing model with the following
weighted-average assumptions in 2000 and 1999: risk-free interest rate of 6%;
no expected dividends; and weighted-average expected life of the options of
five years.

<TABLE>
<CAPTION>
                                                               2000      1999
                                                             --------  --------
      <S>                                                    <C>       <C>
      Net loss:
        As reported......................................... $(18,435) $(10,470)
        Pro forma...........................................  (18,697)  (10,506)
</TABLE>

   During 2000 and 1999, 245,100 and 47,500 of the stock options granted were
to nonemployees, which have the same restriction provisions as employee options
granted. No performance commitment existed for the nonemployee options granted
at the date of grant because of the restriction provisions. At each reporting
period, the Company recorded deferred stock compensation for the fair value of
the options as calculated using the Black-Scholes method. Because the fair
value decreased significantly from December 31, 1999 to December 31, 2000, the
Company recorded a recovery in 2000. Total deferred compensation has been
recorded as a reduction of stockholders' equity and is being amortized over the
vesting period using the straight-line method.

                                      F-14
<PAGE>

                                GUILD.com, Inc.

                   Notes to Financial Statements--(continued)
       (All Amounts Are In Thousands, Except Share And Per Share Amounts)

8. Subsequent Event

   On January 3, 2001, the Company entered into an agreement to merge with a
wholly owned subsidiary of Ashford.com in exchange for approximately 7.1
million shares of Ashford.com common stock. In addition, all of the Company's
outstanding warrants and stock options would be converted to warrants and
options to acquire approximately 1.6 million shares of Ashford.com common
stock. Ashford.com is a leading internet retailer of fine personal and home
decor accessories. Final closing of the acquisition is subject to shareholder
approval and customary closing conditions.

                                      F-15
<PAGE>

                                                                         ANNEX A


                      AGREEMENT AND PLAN OF REORGANIZATION

                                  BY AND AMONG

                               ASHFORD.COM, INC.,

                         ASHFORD-GUILD ART CORPORATION

                                      AND

                                GUILD.COM, INC.

                                January 3, 2001
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
ARTICLE I THE MERGER.......................................................   2
  1.1 The Merger...........................................................   2
  1.2 Closing; Effective Time..............................................   2
  1.3 Effect of the Merger.................................................   2
  1.4 Certificate of Incorporation; Bylaws.................................   2
  1.5 Directors and Officers...............................................   2
  1.6 Effect on Capital Stock..............................................   2
  1.7 Surrender of Certificates............................................   4
  1.8 No Further Ownership Rights in Target Capital Stock..................   5
  1.9 Lost, Stolen or Destroyed Certificates...............................   5
  1.10 Tax Consequences....................................................   6
  1.11 Taking of Necessary Action; Further Action..........................   6
  1.12 Affiliates Agreements...............................................   6
  1.13 Target Voting Agreements............................................   6
  1.14 Acquiror Voting Agreements..........................................   6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF TARGET........................   6
  2.1 Organization, Good Standing and Qualification........................   6
  2.2 Capitalization and Voting Rights.....................................   6
  2.3 Subsidiaries.........................................................   7
  2.4 Authorization........................................................   7
  2.5 Governmental Consents................................................   7
  2.6 Litigation...........................................................   8
  2.7 Patents and Trademarks...............................................   8
  2.8 Compliance with Other Instruments....................................   8
  2.9 Agreements; Action...................................................   8
  2.10 Related Party Transactions..........................................   9
  2.11 Permits.............................................................   9
  2.12 Environmental and Safety Laws.......................................   9
  2.13 Manufacturing and Marketing Rights..................................  10
  2.14 Registration Rights.................................................  10
  2.15 Corporate Documents.................................................  10
  2.16 Title to Property and Assets........................................  10
  2.17 Target Financial Statements.........................................  10
  2.18 Changes.............................................................  10
  2.19 Employee Benefit Plans..............................................  11
  2.20 Tax Returns, Payments and Elections.................................  11
  2.21 Insurance...........................................................  12
  2.22 Minute Books........................................................  12
  2.23 Labor Agreements and Actions; Employee Compensation.................  12
  2.24 Registration Statement; Proxy Statement/Prospectus..................  12
  2.25 Section 83(b) Elections.............................................  12
  2.26 Significant Customers and Suppliers.................................  12
  2.27 Brokers.............................................................  13
  2.28 Employees...........................................................  13
  2.29 Affiliates Agreement................................................  13
  2.30 Vote Required.......................................................  13
  2.31 Representations Complete............................................  13
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                      <C>
ARTICLE III REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND MERGER SUB..   13
  3.1 Organization, Standing and Power.................................   13
  3.2 Capitalization...................................................   14
  3.3 Authority........................................................   14
  3.4 SEC Documents....................................................   15
  3.5 Tax Returns, Payments and Elections..............................   15
  3.6 Patents and Trademarks...........................................   16
  3.7 Registration Statement...........................................   16
  3.8 Litigation.......................................................   16
  3.9 Brokers..........................................................   17
  3.10 Compliance with Laws............................................   17
  3.11 Merger Sub......................................................   17
  3.12 Representations Complete........................................   17
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME.........................   17
  4.1 Conduct of Business of Target....................................   17
  4.2 Notices..........................................................   19
  4.3 Conduct of Business of Acquiror .................................   19
ARTICLE V ADDITIONAL AGREEMENTS........................................   20
  5.1 No Solicitation..................................................   20
  5.2 Proxy Statement/Prospectus; Registration Statement...............   21
  5.3 Access to Information............................................   21
  5.4 Confidentiality..................................................   21
  5.5 Public Disclosure................................................   21
  5.6 Consents; Cooperation............................................   22
  5.7 Update Disclosure; Breaches......................................   22
  5.8 Affiliates Agreements............................................   22
  5.9 Lock-Up Agreements...............................................   22
  5.10 Legal Requirements..............................................   22
  5.11 Tax Deferred Reorganization.....................................   22
  5.12 Blue Sky Laws...................................................   22
  5.13 Stock Options and Warrants......................................   23
  5.14 Listing of Additional Shares....................................   23
  5.15 Additional Agreements; Reasonable Efforts.......................   23
  5.16 Employee Benefits...............................................   24
  5.17 Parachute Payments..............................................   24
  5.18 Necessary Actions...............................................   24
  5.19 Target Director and Officer Indemnification.....................   24
ARTICLE VI CONDITIONS TO THE MERGER....................................   24
  6.1 Conditions to Obligations of Each Party to Effect the Merger.....   24
  6.2 Additional Conditions to Obligations of Target...................   25
  6.3 Additional Conditions to Obligations of Acquiror.................   26
ARTICLE VII TERMINATION, TERMINATION FEES, EXPENSES, AMENDMENT AND
 WAIVER................................................................   27
  7.1 Termination......................................................   27
  7.2 Effect of Termination............................................   28
  7.3 Termination Fees.................................................   28
  7.4 Expenses.........................................................   28
  7.5 Amendment........................................................   28
  7.6 Extension; Waiver................................................   29
</TABLE>

                                       ii
<PAGE>

<TABLE>
<S>                                                                          <C>
ARTICLE VIII GENERAL PROVISIONS.............................................  29
  8.1 Survival of Representations, Warranties and Covenants.................  29
  8.2 Maximum Liability and Remedies........................................  29
  8.3 Notices...............................................................  29
  8.4 Interpretation........................................................  30
  8.5 Counterparts..........................................................  30
  8.6 Entire Agreement; No Third Party Beneficiaries........................  30
  8.7 Severability..........................................................  30
  8.8 Remedies Cumulative...................................................  31
  8.9 Governing Law.........................................................  31
  8.10 Assignment...........................................................  31
  8.11 Rules of Construction................................................  31
</TABLE>

                                      iii
<PAGE>

SCHEDULES

Option Schedule

Schedule 1.12Affiliates
Schedule 1.13Stockholders of Target
Schedule 1.14Stockholders of Acquiror

EXHIBITS

Exhibit ACertificate of Merger
Exhibit BExchange Ratio
Exhibit CAffiliates Agreement
Exhibit DTarget Voting Agreement
Exhibit EFIRPTA Notice
Exhibit FLock-Up Agreement
Exhibit GAcquiror Voting Agreement
Exhibit HProprietary and Inventions Agreements

                                       iv
<PAGE>

                      AGREEMENT AND PLAN OF REORGANIZATION

   This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of January 3, 2001, by and among Ashford.com, Inc., a Delaware
corporation ("Acquiror"), Ashford-Guild Art Corporation, a Delaware corporation
("Merger Sub") and Guild.com, Inc., a Delaware corporation ("Target").

                                    RECITALS

   A. The Boards of Directors of Target, Acquiror and Merger Sub believe it is
in the best interests of their respective companies and stockholders of their
respective companies that Target and Merger Sub combine into a single Target
through the merger of Merger Sub with and into Target (the "Merger") and, in
furtherance thereof, have approved the Merger.

   B. Pursuant to the Merger, among other things, each outstanding share of
Target common stock, $0.001 par value ("Target Common Stock"), and Target
preferred stock, $0.001 par value ("Target Preferred Stock," collectively
"Target Capital Stock"), shall be converted into shares of common stock of
Acquiror, $0.001 par value ("Acquiror Common Stock"), at the rate(s) set forth
herein.

   C. Target, Acquiror and Merger Sub desire to make certain representations
and warranties and other agreements in connection with the Merger and to
prescribe various conditions to the Merger.

   D. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code
of 1986, as amended (the "Code"), and to cause the Merger to qualify as a
reorganization under the provisions of Sections 368(a)(1)(A) and 368(a)(2)(E)
of the Code.

   E. As an inducement to Acquiror to enter into this Agreement, as of the date
hereof, certain of the officers, directors and ten percent (10%) stockholders
of Target shall enter into an agreement (the "Affiliates Agreement"), which
provides, among other things, that such person shall comply with Rule 145 under
the Securities Act of 1933, as amended (the "Act").

   F. Further, as an inducement to Acquiror to enter into this Agreement, as of
the date of this Agreement certain of the stockholders of Target shall enter
into an agreement (the "Target Voting Agreement"), which provides, among other
things, that such stockholders shall vote the shares of Target's Capital Stock
owned by such person to approve the Merger and against any competing proposals.

   G. As an inducement to Target to enter into this Agreement, as of the date
of this Agreement, certain of the stockholders of Acquiror shall enter into an
agreement (the "Acquiror Voting Agreement"), which provides, among other
things, that such stockholders shall vote the shares of Acquiror's Common Stock
owned by such person to approve the Merger and against any competing proposals.

   NOW, THEREFORE, in consideration of the mutual covenants and representations
set forth herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged the parties hereto, intending
to be legally bound hereby, agree as follows:

                                      A-1
<PAGE>

                                   ARTICLE I

                                   THE MERGER

   1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement, Merger Sub
shall be merged with and into Target, in accordance with the Delaware General
Corporation Law ("DGCL" or "Delaware Law"), the separate corporate existence of
Merger Sub shall cease and Target shall continue as the surviving corporation.
Target as the surviving corporation after the Merger is hereinafter sometimes
referred to as the "Surviving Corporation."

   1.2 Closing; Effective Time. The closing of the transactions contemplated
hereby (the "Closing") shall take place as soon as practicable after the
satisfaction or waiver of each of the conditions set forth in Article VI
hereof, but in any event no later than May 30, 2001 (the date on which the
Closing shall occur, the "Closing Date"). The Closing shall take place at the
offices of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP, 2700
Via Fortuna, Suite 300, Austin, Texas 78746-7996. On the Closing Date, the
parties hereto shall cause the Merger to be consummated by filing the
Certificate of Merger, attached hereto as Exhibit A, with the Secretary of
State of the State of Delaware (the time and date of such filing being the
"Effective Time" and the "Effective Date," respectively).

   1.3 Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement, the Certificate of Merger and the
applicable provisions of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the property,
rights, privileges, powers and franchises of Target shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Target shall become the
debts, liabilities and duties of the Surviving Corporation.

   1.4 Certificate of Incorporation; Bylaws.

     (a) At the Effective Time, the Certificate of Incorporation of Merger
  Sub, as in effect immediately prior to the Effective Time, shall become the
  Certificate of Incorporation of the Surviving Corporation until thereafter
  amended as provided by Delaware Law and such Certificate of Incorporation;
  provided, however, that Article I of the Certificate of Incorporation shall
  be amended to read as follows: "The name of the corporation is Ashford-
  Guild Art Corporation."

     (b) The Bylaws of Merger Sub, as in effect immediately prior to the
  Effective Time, shall become the Bylaws of the Surviving Corporation until
  thereafter amended.

   1.5 Directors and Officers. At the Effective Time, the directors of Merger
Sub immediately prior to the Effective Time shall be the directors of the
Surviving Corporation, to hold office until such time as such directors resign,
are removed or their respective successors are duly elected or appointed and
qualified. The officers of Merger Sub immediately prior to the Effective Time
shall be the officers of the Surviving Corporation, to hold office until such
time as such officers resign, are removed or their respective successors are
duly elected or appointed and qualified.

   1.6 Effect on Capital Stock. By virtue of the Merger and without any action
on the part of Acquiror, Merger Sub, Target or the holders of any of Target's
securities:

     (a) Conversion of Target Capital Stock. The number of shares of Acquiror
  Common Stock to be issued in exchange for the acquisition by Acquiror of
  all outstanding shares of Target Capital Stock shall be 7,141,400 (the
  "Merger Consideration"). No adjustment shall be made in the number of
  shares of Acquiror Common Stock issued in the Merger for any reason, other
  than pursuant to Section 1.6(g), including without limitation, as a result
  of (x) any increase or decrease in the market price of Acquiror Common
  Stock prior to the Effective Time or (y) any cash proceeds received by
  Target from the date hereof to the Closing Date pursuant to the exercise of
  currently outstanding warrants to purchase shares of Target Common Stock
  (the "Target Warrants") or upon the exercise of currently outstanding
  options to purchase shares of Target Common Stock (the "Target Options").
  Subject to the terms and conditions of

                                      A-2
<PAGE>

  this Agreement and the Certificate of Merger as of the Effective Time, by
  virtue of the Merger and without any action on the part of the holder of
  any shares of Target Capital Stock, each share of Target Common Stock and
  Target Preferred Stock issued and outstanding immediately prior to the
  Effective Time (other than shares to be cancelled pursuant to Section
  1.6(c) and Dissenting Shares (as defined below)) shall be converted and
  exchanged for such number of shares of Acquiror Common Stock as shall be
  determined in accordance with the exchange ratios (the "Exchange Ratios")
  set forth in (i) Exhibit B-1 hereto in the event an amendment to Section
  2(d)(i) of the Restated Certificate of Incorporation of the Target (the
  "Amendment") is approved by the requisite vote(s) of the Target Capital
  Stock and the value of the Merger Consideration is less than the aggregate
  amount of the liquidation preferences of the Series B Preferred Stock, the
  Series C-1 Preferred Stock and the Series D Preferred Stock, such Amendment
  to add a new paragraph immediately following the existing Section 2(d)(i)
  to read as follows:

  "For purposes of this Section 2, and notwithstanding any contrary provision
  of this Section 2 or as set forth elsewhere herein, the merger (the
  "Merger") of the corporation with Ashford-Guild Art Corporation, a Delaware
  corporation (the "Merger Sub") pursuant to the terms and conditions of that
  certain Agreement and Plan of Reorganization by and among Ashford.com,
  Inc., a Delaware corporation ("Ashford"), the corporation and Merger Sub
  dated January 3, 2001 (the "Merger Agreement") shall be deemed to be a
  liquidation, dissolution and winding up of the corporation, and the
  liquidation preferences and the consideration to be received by each holder
  of Series A Preferred Stock, Series B Preferred Stock, Series C-1 Preferred
  Stock and Series D Preferred Stock in connection with the Merger shall be
  determined as set forth in Exhibit B-1 of the Merger Agreement if the value
  of the Merger Consideration (as defined in the Merger Agreement) is less
  than the aggregate amount of the liquidation preferences of the Series B
  Preferred Stock, the Series C-1 Preferred Stock and the Series D Preferred
  Stock as such series are entitled to pursuant to Section 2(a)."

  (ii) Exhibit B-2 hereto in the event the Amendment is not so approved and
  the value of the Merger Consideration is less than the aggregate amount of
  the liquidation preferences of the Series B Preferred Stock, the Series C-1
  Preferred Stock and the Series D Preferred Stock and (iii) Exhibit B-3
  hereto if the Merger Consideration is greater than the aggregate amount of
  the liquidation preferences of the Series B Preferred Stock, the Series C-1
  Preferred Stock and the Series D Preferred Stock.

     (b) Dissenter's Rights. If any holder of Target Capital Stock dissents
  from the consummation of this Agreement in accordance with the DGCL, and if
  such holder has complied with the requirements of Subchapter IX of the DGCL
  (a "Target Dissenting Stockholder"), then, notwithstanding anything
  contained in this Agreement to the contrary, each share of Target Capital
  Stock held by a Target Dissenting Stockholder (the "Dissenting Shares")
  shall not be converted into or represent the right to receive shares of the
  Acquiror Common Stock pursuant to Section 1.6, but such Target Dissenting
  Stockholder shall be entitled to the rights specified in the DGCL;
  provided, however, that if a Target Dissenting Stockholder withdraws his,
  her or its dissent (or if a person ceases to be a Target Dissenting
  Stockholder because such person fails to comply with the requirements of
  Subchapter IX of the DGCL), then the Target Capital Stock held by such
  person shall be deemed to be converted as of the Effective Time, into the
  Acquiror Common Stock as set forth in Section 1.6, without any interest
  thereon, and such shares of Target Capital Stock shall no longer be deemed
  to be Dissenting Shares.

     (c) Cancellation of Target Capital Stock Owned by Acquiror or Target. At
  the Effective Time, each share of Target Capital Stock that is owned by
  Target as treasury stock, each share of Target Capital Stock owned by
  Acquiror or any direct or indirect wholly owned subsidiary of Acquiror or
  of Target immediately prior to the Effective Time shall be canceled and
  extinguished without any conversion thereof.

     (d) Target Stock Option Plans. At the Effective Time, the Guild.com,
  Inc. Stock Option Plan, as amended and restated August 29, 2000 (the
  "Target Stock Option Plan"), and all options to purchase Target Common
  Stock then outstanding under the Target Stock Option Plan, shall be assumed
  by Acquiror in accordance with Section 5.13.

                                      A-3
<PAGE>

     (e) Target Warrants. At the Effective Time, all outstanding Target
  Warrants that do not terminate by their terms shall be assumed by Acquiror
  in accordance with Section 5.13.

     (f) Capital Stock of Merger Sub. At the Effective Time, each share of
  Common Stock, $.001 par value, of Merger Sub, issued and outstanding
  immediately prior to the Effective Time shall be converted into and
  exchanged for one validly issued, fully paid and nonassessable share of
  Common Stock, $.001 par value, of the Surviving Corporation. Each stock
  certificate of Merger Sub evidencing ownership of any such shares shall
  continue to evidence ownership of such shares of capital stock of the
  Surviving Corporation.

     (g) Adjustments to Exchange Ratio. The Exchange Ratios in Exhibit B-1,
  Exhibit B-2, and Exhibit B-3, as applicable, shall be adjusted to reflect
  fully the effect of any stock split, reverse split, stock dividend
  (including any dividend or distribution of securities convertible into
  Acquiror Common Stock or Target Capital Stock), any extraordinary dividend,
  reorganization, recapitalization or other like change with respect to
  Acquiror Common Stock or Target Capital Stock occurring after the date
  hereof and prior to the Effective Time.

     (h) Fractional Shares. No fraction of a share of Acquiror Common Stock
  will be issued, but in lieu thereof each holder of shares of Target Capital
  Stock who would otherwise be entitled to a fraction of a share of Acquiror
  Common Stock (after aggregating all fractional shares of Acquiror Common
  Stock to be received by such holder) shall receive from Acquiror an amount
  of cash (rounded to the nearest whole cent) equal to the product of (i)
  such fraction, multiplied by (ii) the average of the closing prices for a
  share of Acquiror Common Stock as quoted on the NASDAQ National Market for
  the twenty (20) trading days immediately preceding and ending on the last
  trading day before the Closing Date.

     (i) Dissenter's Rights. Any Dissenting Shares shall not be converted
  into Acquiror Common Stock and shall not receive any cash but shall instead
  be converted into the right to receive such consideration as may be
  determined to be due with respect to such Dissenting Shares pursuant to
  Delaware Law. Target agrees that, except with the prior written consent of
  Acquiror, or as required under Delaware Law, it will not prior to the
  Effective Time make any payment with respect to, or settle or offer to
  settle, any claim, demand, or other liability with respect to any
  Dissenting Shares. Each Target Dissenting Stockholder who, pursuant to the
  provisions of Delaware Law, becomes entitled to payment of the value for
  shares of Target Capital Stock shall receive payment therefor (but only
  after the value therefor shall have been agreed upon or finally determined
  pursuant to such provisions). If, after the Effective Time, any Dissenting
  Shares shall lose their status as Dissenting Shares, Acquiror shall issue
  and deliver, upon surrender by such stockholder of certificate or
  certificates representing shares of Target Capital Stock, the number of
  shares of Acquiror Common Stock to which such stockholder would otherwise
  be entitled under this Section 1.6 and the Certificate of Merger.

   1.7 Surrender of Certificates.

   (a) Exchange Agent. ChaseMellon Shareholder Services, L.L.C. shall act as
exchange agent (the "Exchange Agent") in the Merger.

   (b) Acquiror to Provide Common Stock and Cash. Promptly after the Effective
Time, Acquiror shall issue and make available to the Exchange Agent for
exchange in accordance with this Article I (i) the shares of Acquiror Common
Stock issuable pursuant to Section 1.6(a) in exchange for shares of Target
Capital Stock outstanding immediately prior to the Effective Time and (ii) cash
in an amount sufficient to permit payment of cash in lieu of fractional shares
pursuant to Section 1.6(h).

   (c) Exchange Procedures. Promptly after the Effective Time, Acquiror shall
cause to be mailed to each holder of record of a certificate or certificates
(the "Certificates") which immediately prior to the Effective Time represented
outstanding shares of Target Capital Stock, whose shares were converted into
the right to receive shares of Acquiror Common Stock (and cash in lieu of
fractional shares) pursuant to Section 1.6 (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to
the

                                      A-4
<PAGE>

Certificates shall pass, only upon receipt of the Certificates by the Exchange
Agent, and shall be in such form and have such other provisions as Acquiror may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for certificates representing shares of Acquiror
Common Stock (and cash in lieu of fractional shares). Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with such letter
of transmittal, duly completed and validly executed in accordance with the
instructions thereto, the holder of such Certificate shall be entitled to
receive in exchange therefor a certificate representing the number of whole
shares of Acquiror Common Stock and payment in lieu of fractional shares which
such holder has the right to receive pursuant to Section 1.6, and the
Certificate so surrendered shall forthwith be canceled. Until so surrendered,
each outstanding Certificate that, prior to the Effective Time, represented
shares of Target Capital Stock will be deemed from and after the Effective
Time, for all corporate purposes, other than the payment of dividends, to
evidence the ownership of the number of full shares of Acquiror Common Stock
into which such shares of Target Capital Stock shall have been so converted and
the right to receive an amount in cash in lieu of the issuance of any
fractional shares in accordance with Section 1.6(h).

   (d) Distributions with Respect to Unexchanged Shares. No dividends or other
distributions with respect to Acquiror Common Stock with a record date after
the Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of Acquiror Common Stock represented thereby until
the holder of record of such Certificate surrenders such Certificate. Subject
to applicable law, following surrender of any such Certificate, there shall be
paid to the record holder of the certificates representing whole shares of
Acquiror Common Stock issued in exchange therefor, without interest, at the
time of such surrender, the amount of any such dividends or other distributions
with a record date after the Effective Time which would have been previously
payable (but for the provisions of this Section 1.7(d)) with respect to such
shares of Acquiror Common Stock.

   (e) Transfers of Ownership. If any certificate for shares of Acquiror Common
Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the Certificate so surrendered is properly endorsed or
accompanied by a stock power duly endorsed and otherwise in proper form for
transfer and that the person requesting such exchange will have paid to
Acquiror or any agent designated by it any transfer or other taxes required by
reason of the issuance of a certificate for shares of Acquiror Common Stock in
any name other than that of the registered holder of the Certificate
surrendered, or established to the satisfaction of Acquiror or any agent
designated by it that such tax has been paid or is not payable.

   (f) No Liability. Notwithstanding anything to the contrary in this Section
1.7, none of the Exchange Agent, the Surviving Corporation or any party hereto
shall be liable to any person for any amount properly paid to a public official
pursuant to any applicable abandoned property, escheat or similar law.

   (g) Dissenting Shares. The provisions of this Section 1.7 shall also apply
to Dissenting Shares that lose their status as such, except that the
obligations of Acquiror under this Section 1.7 shall commence on the date of
loss of such status and the holder of such shares shall be entitled to receive
in exchange for such shares the number of shares of Acquiror Common Stock (and
cash in lieu of fractional shares) to which such holder is entitled pursuant to
Section 1.6 hereof.

   1.8 No Further Ownership Rights in Target Capital Stock. All shares of
Acquiror Common Stock issued upon the surrender for exchange of shares of
Target Capital Stock in accordance with the terms hereof (including any cash
paid in lieu of fractional shares) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Target Capital Stock,
and there shall be no further registration of transfers on the records of the
Surviving Corporation of shares of Target Capital Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article I.

   1.9 Lost, Stolen or Destroyed Certificates. In the event any Certificates
shall have been lost, stolen or destroyed, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed Certificates, upon the

                                      A-5
<PAGE>

making of an affidavit of that fact by the holder thereof, such shares of
Acquiror Common Stock (and cash in lieu of fractional shares) as may be
required pursuant to Section 1.6; provided, however, that Acquiror may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificates to indemnify Acquiror
against any claim that may be made against Acquiror, the Surviving Corporation
or the Exchange Agent with respect to the Certificates alleged to have been
lost, stolen or destroyed.
   1.10 Tax Consequences. It is intended by the parties hereto that the Merger
shall constitute a reorganization within the meaning of Section 368 of the
Code. No party shall take any action that would, to such party's knowledge,
cause the Merger to fail to qualify as a reorganization within the meaning of
Section 368 of the Code.

   1.11 Taking of Necessary Action; Further Action. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Target, the officers and directors of Target and Merger Sub
are fully authorized in the name of their respective corporations or otherwise
to take, and shall take, all such lawful and necessary action, so long as such
action is not inconsistent with this Agreement.

   1.12 Affiliates Agreements. As of the date hereof, each of the officers,
directors and ten percent (10%) stockholders of Target identified on Schedule
1.12 shall have executed an Affiliates Agreement, in the form of Exhibit C
attached hereto.

   1.13 Target Voting Agreements. As of the date hereof, each of the
stockholders of Target identified on Schedule 1.13 shall have executed a Target
Voting Agreement, in the form of Exhibit D attached hereto.

   1.14 Acquiror Voting Agreements. As of the date hereof, each of the
stockholders of Acquiror identified on Schedule 1.14 shall have executed an
Acquiror Voting Agreement, in the form of Exhibit G attached hereto.

                                   ARTICLE II

                    REPRESENTATIONS AND WARRANTIES OF TARGET

   Target hereby represents and warrants to Acquiror that, except as set forth
on the disclosure letter attached hereto (the "Target Disclosure Schedule"),
specifically identifying the relevant subparagraph hereof, which Target
Disclosure Schedule is incorporated herein by this reference:

   2.1 Organization, Good Standing and Qualification. Target is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to carry
on its business as now conducted and as proposed to be conducted. Target is
duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a Material Adverse
Effect on Target.

   2.2 Capitalization and Voting Rights.

   (a) The authorized capital of Target consists of:

     (A) Preferred Stock. 25,491,093 shares of Target Preferred Stock, par
  value $0.001, of which 4,870,915 shares have been designated Series A
  Preferred Stock (the "Series A Preferred Stock"), 4,870,915 of which are
  issued and outstanding, 3,500,178 of which have been designated as Series B
  Preferred Stock (the "Series B Preferred Stock"), 3,500,178 of which are
  issued and outstanding, 12,120,000 of which have been designated as Series
  C-1 Preferred Stock (the "Series C-1 Preferred Stock"), 12,117,076 of which
  are issued and outstanding, and 5,000,000 of which have been designated as
  Series D Preferred Stock (the "Series D Preferred Stock"), 3,931,299 of
  which are issued and outstanding.

                                      A-6
<PAGE>

  The rights, privileges and preferences of the Target Preferred Stock are as
  stated in Target's Certificate of Incorporation which has been made
  available to Acquiror.

     (B) Common Stock. 35,000,000 shares of Target Common Stock, par value
  $0.001, 461,432 of which are issued and outstanding.

   (b) The outstanding shares of Series A Preferred Stock, Series B Preferred
Stock, Series C-1 Preferred Stock and Series D Preferred Stock are all duly and
validly authorized and issued, fully paid and nonassessable, and were issued in
accordance with the registration or qualification provisions of the Act and any
relevant state securities laws, or pursuant to valid exemptions therefrom.

   (c) Except for (A) the conversion privileges of the Series A Preferred
Stock, Series B Preferred Stock, Series C-1 Preferred Stock and Series D
Preferred Stock, (B) the rights provided in Section 2.4 of the Amended and
Restated Investors' Rights Agreement, dated August 4, 2000 (the "Target
Investors' Rights Agreement"), (C) an outstanding warrant to purchase 181,818
shares of Target Common Stock, (D) the initial public offering purchase terms
set forth in that certain IPO Letter to certain holders of the Series C-1 and
Series D Preferred Stock dated as of August 4, 2000, (E) options or stock
option commitments to purchase 6,398,841 shares of Common Stock outstanding or
reserved for issuance to employees and other service providers pursuant to the
Target Stock Option Plan and (F) other such rights granted and/or commitments
made by Target regarding its capital stock as previously disclosed to Acquiror,
there are not outstanding any options, warrants, rights (including conversion
or preemptive rights) or agreements for the purchase or acquisition from Target
of any shares of its capital stock. Except for the Amended and Restated Voting
Agreement, dated August 4, 2000, Target is not a party or subject to any
agreement or understanding, and, to the best of Target's knowledge, there is no
agreement or understanding between any persons and/or entities, which affects
or relates to the voting or giving of written consents with respect to any
security or by a director of Target. The terms of the Target Stock Option Plan
permit the assumption of such Target Stock Option Plan by Acquiror as provided
in this Agreement, without the consent or approval of the holders of the
outstanding options, the Target stockholders, or otherwise and without any
acceleration of the exercise schedule or vesting provisions in effect for such
options, except as set forth in the Target Stock Option Plan.

   2.3 Subsidiaries. Target does not presently own or control, directly or
indirectly, any interest in any other corporation, association, or other
business entity. Target is not a participant in any joint venture, partnership,
or similar arrangement.

   2.4 Authorization. All corporate action on the part of Target, its officers,
directors and stockholders necessary for the authorization, execution and
delivery of this Agreement, the Affiliates Agreement, the Acquiror Voting
Agreements and all other agreements referred to herein to which Target is a
party (the "Target Transaction Documents"), the performance of all obligations
of Target hereunder and thereunder have been taken or will be taken prior to
the Effective Time, and this Agreement and the Target Transaction Documents
constitute, or will constitute upon approval of the Target stockholders, valid
and legally binding obligations of Target, enforceable in accordance with their
respective terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief, or other
equitable remedies. All amendments to the Target Restated Certificate of
Incorporation, if any, have been duly authorized and approved in accordance
with the DGCL.

   2.5 Governmental Consents. To Target's knowledge, no consent, approval,
order or authorization of, or registration, qualification, designation,
declaration or filing with, any federal, state or local governmental authority
on the part of Target is required in connection with the consummation of the
transactions contemplated by this Agreement, except (i) the filing of the
Certificate of Merger with the Secretary of State of Delaware, and (ii) the
filing pursuant to applicable state blue sky laws, rules, regulations or such
other post-closing filings as may be required.

                                      A-7
<PAGE>

   2.6 Litigation. There is no action, suit, proceeding or investigation
pending or, to Target's knowledge, currently threatened against Target that
questions the validity of this Agreement or any of the Target Transaction
Documents, or the right of Target to enter into such agreements, or to
consummate the transactions contemplated hereby or thereby, or that might
result, either individually or in the aggregate, in any Material Adverse Effect
on Target, or any change in the current equity ownership of Target, nor is
Target aware that there is any basis for the foregoing. The foregoing includes,
without limitation, actions, suits, proceedings or investigations pending or
threatened (or any basis therefor known to Target) involving the prior
employment of any of Target's employees, their use in connection with Target's
business of any information or techniques allegedly proprietary to any of their
former employers, or their obligations under any agreements with prior
employers. Target is not a party or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by
Target currently pending or that Target intends to initiate.

   2.7 Patents and Trademarks. Target has sufficient title and ownership of or
exclusive licenses to all patents, trademarks, service marks, trade names,
copyrights, trade secrets, information, proprietary rights and processes
necessary for its business as now conducted and as proposed to be conducted
without any conflict with or infringement of the rights of others, except for
such items as have yet to be conceived or developed or that are expected to be
available for licensing on reasonable terms from third parties. The Target
Disclosure Schedule contains a complete list of patents and pending patent
applications, trademarks and pending trademark applications and copyrights and
pending copyright applications of Target. There are no outstanding options,
licenses, or agreements of any kind relating to the foregoing, nor is Target
bound by or a party to any options, licenses or agreements of any kind with
respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, proprietary rights and processes of any
other person or entity, except, in either case, for standard end-user, object
code, internal-use software license and support/maintenance agreements. Target
has not received any communications alleging that Target has violated or, by
conducting its business as proposed, would violate any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights of any other person or entity. Target is not aware that any
of its employees is obligated under any contract (including licenses, covenants
or commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere
with the use of his or her best efforts to promote the interests of Target or
that would conflict with Target's business as proposed to be conducted. Neither
the execution nor delivery of this Agreement or any of the Target Transaction
Documents, nor the carrying on of Target's business by the employees of Target,
nor the conduct of Target's business as proposed, will, to the best of Target's
knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any of such employees is now obligated. Target does not
believe it is or will be necessary to utilize any inventions of any of its
employees (or people it currently intends to hire) made prior to or outside the
scope of their employment by Target.

   2.8 Compliance with Other Instruments. Target is not in violation or default
of any provision of its Certificate of Incorporation or Bylaws, or in any
material respect of any instrument, judgment, order, writ, decree or contract
to which it is a party or by which it is bound, or, to the best of its
knowledge, of any provision of any federal or state statute, rule or regulation
applicable to Target. The execution, delivery and performance of this Agreement
and the Target Transaction Documents, and the consummation of the transactions
contemplated hereby and thereby will not result in any such violation or be in
conflict with or constitute, with or without the passage of time and giving of
notice, either a default under any such provision, instrument, judgment, order,
writ, decree or contract or an event that results in the creation of any lien,
charge or encumbrance upon any assets of Target or the suspension, revocation,
impairment, forfeiture, or nonrenewal of any material permit, license,
authorization, or approval applicable to Target, its business or operations or
any of its assets or properties.

   2.9 Agreements; Action.

   (a) Except for agreements explicitly contemplated hereby and by the Target
Transaction Documents and Target's form Indemnification Agreement entered into
with certain of Target's directors, there are no

                                      A-8
<PAGE>

agreements, understandings or proposed transactions between Target and any of
its officers or directors or any affiliate of any officer or director.

   (b) There are no agreements, understandings, instruments, contracts,
proposed transactions, judgments, orders, writs or decrees to which Target is a
party or by which it is bound that may involve (i) obligations (contingent or
otherwise) of, or payments to Target in excess of $50,000 per year, except as
set forth on the Target Financial Statements or (ii) the license of any patent,
copyright, trade secret or other proprietary right to or from Target (other
than any license of Target's software and products in the ordinary course of
business), or (iii) provisions restricting or affecting the development,
manufacture or distribution of Target's products or services, or (iv)
indemnification by Target with respect to infringements of proprietary rights.

   (c) Target has not (i) declared or paid any dividends or authorized or made
any distribution upon or with respect to any class or series of its capital
stock, (ii) except as set forth on the Target Financial Statements incurred any
indebtedness for money borrowed or any other liabilities individually in excess
of $50,000 or, in the case of indebtedness and/or liabilities individually less
than $50,000, in excess of $100,000 in the aggregate, (iii) made any loans or
advances to any person, other than ordinary advances for travel and similar
expenses approved in the ordinary course of business, or (iv) sold, exchanged
or otherwise disposed of any of its assets or rights, other than the sale of
its inventory in the ordinary course of business.

   (d) For the purposes of subsections (b) and (c) above, all indebtedness,
liabilities, agreements, understandings, instruments, contracts and proposed
transactions involving the same person or entity (including persons or entities
Target has reason to believe are affiliated therewith) shall be aggregated for
the purpose of meeting the individual minimum dollar amounts of such
subsections.

   (e) Target is not a party to and is not bound by any contract, agreement or
instrument, or subject to any restriction under its Certificate of
Incorporation or Bylaws that could reasonably be expected to have a Material
Adverse Effect on Target.

   (f) Except as contemplated by this Agreement, Target has not engaged in the
past three (3) months in any discussion (i) with any representative of any
corporation or corporations regarding the consolidation or merger of Target
with or into any such corporation or corporations, (ii) with any corporation,
partnership, association or other business entity or any individual regarding
the sale, conveyance or disposition of all or substantially all of the assets
of Target or a transaction or series of related transactions in which more than
fifty percent (50%) of the voting power of Target is disposed of, or (iii)
regarding any other form of acquisition, liquidation, dissolution or winding up
of Target.

   2.10 Related Party Transactions. No employee, officer, or director of Target
or member of his or her immediate family is indebted to Target, nor is Target
indebted (or committed to make loans or extend or guarantee credit) to any of
them. To the best of Target's knowledge, none of such persons has any direct or
indirect ownership interest in any firm or corporation with which Target is
affiliated or with which Target has a business relationship, or any firm or
corporation that competes with Target, except that employees, officers, or
directors of Target and members of their immediate families may own stock in
publicly traded companies that may compete or have a business relationship with
Target. No member of the immediate family of any officer or director of Target
is directly or indirectly interested in any material contract with Target.

   2.11 Permits. Target has all franchises, permits, licenses, and any similar
authority necessary for the conduct of its business as now being conducted by
it, the lack of which could have a Material Adverse Effect on Target, and to
Target's knowledge it can obtain, without undue burden or expense, any similar
authority for the conduct of its business as planned to be conducted. Target is
not in default in any material respect under any of such franchises, permits,
licenses, or other similar authority.

   2.12 Environmental and Safety Laws. To the best of its knowledge, Target is
not in violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety, and to the

                                      A-9
<PAGE>

best of its knowledge, no material expenditures are or will be required in
order to comply with any such existing statute, law or regulation.

   2.13 Manufacturing and Marketing Rights. Target has not granted rights to
manufacture, produce, assemble, license, market, or sell its products to any
other person and is not bound by any agreement that affects Target's exclusive
right to develop, manufacture, assemble, distribute, market or sell its
products.

   2.14 Registration Rights. Except as provided in the Target Investors' Rights
Agreement, which shall be terminated pursuant to Section 6.3(l), Target has not
granted or agreed to grant any registration rights, including piggyback rights,
to any person or entity.

   2.15 Corporate Documents. The Certificate of Incorporation and Bylaws of
Target are in the form previously provided to counsel for the Acquiror.

   2.16 Title to Property and Assets. Target owns its property and assets free
and clear of all mortgages, liens, loans and encumbrances, except such
encumbrances and liens that arise in the ordinary course of business and do not
materially impair Target's ownership or use of such property or assets. With
respect to the property and assets it leases, Target is in compliance in all
material respects with such leases and, to the best of its knowledge, holds a
valid leasehold interest free of any liens, claims or encumbrances.

   2.17 Target Financial Statements. Target has delivered to Acquiror Target's
audited financial statements (balance sheet and statement of operations,
statement of changes in stockholders' equity and statement of cash flows,
including notes thereto) at December 31, 1999 and for the fiscal year of Target
then ended (the "Target Audited Financial Statements") and its unaudited
interim financial statements (balance sheet and income statement) at November
30, 2000 and for the eleven-month period then ended (the "Target Interim
Financial Statements", and together with the Target Audited Financial
Statements, the "Target Financial Statements"). The Target Audited Financial
Statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods indicated and
with each other (except as indicated in the notes thereto). The Target
Financial Statements fairly present the financial condition and operating
results of Target as of the dates, and for the periods, indicated therein
(subject, in the case of unaudited statements, to normal, recurring year-end
adjustments). Except as set forth in the Target Financial Statements, or in the
notes thereto, Target has no material liabilities, contingent or otherwise,
other than (i) liabilities incurred in the ordinary course of business
subsequent to December 31, 1999 and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in the Target
Financial Statements, which, in both cases, individually or in the aggregate,
are not material to the financial condition or operating results of Target.
Except as disclosed in the Target Financial Statements, Target is not a
guarantor or indemnitor of any indebtedness of any other person, firm or
corporation. Target maintains and will continue to maintain a standard system
of accounting established and administered in accordance with generally
accepted accounting principles.

   2.18 Changes. Since November 30, 2000 there has not been:

   (a) any change in the assets, liabilities, financial condition or operating
results of Target from that reflected in the Target Financial Statements,
except changes in the ordinary course of business that have not been, in the
aggregate, materially adverse;

   (b) any damage, destruction or loss, whether or not covered by insurance,
materially and adversely affecting the assets, properties, financial condition,
operating results, prospects or business of Target (as such business is
presently conducted and as it is proposed to be conducted);

   (c) any waiver by Target of a valuable right or of a material debt owed to
it;

   (d) any satisfaction or discharge of any lien, claim or encumbrance or
payment of any obligation by Target, except in the ordinary course of business
and that is not material to the assets, properties, financial

                                      A-10
<PAGE>

condition, operating results or business of Target (as such business is
presently conducted and as it is proposed to be conducted);

   (e) any material change or amendment to a material contract or arrangement
by which Target or any of its assets or properties is bound or subject;

   (f) any material change in any compensation arrangement or agreement with
any employee;

   (g) any sale, assignment or transfer of any patents, trademarks, copyrights,
trade secrets or other intangible assets;

   (h) any resignation or termination of employment of any key officer of
Target; and Target, to the best of its knowledge, does not know of the
impending resignation or termination of employment of any such officer;

   (i) receipt of notice that there has been a loss of, or material order
cancellation by, any major customer of Target;

   (j) any mortgage, pledge, transfer of a security interest in, or lien,
created by Target, with respect to any of its material properties or assets,
except liens for taxes not yet due or payable;

   (k) any loans or guarantees made by Target to or for the benefit of its
employees, officers or directors, or any members of their immediate families,
other than travel advances and other advances made in the ordinary course of
its business;

   (l) any declaration, setting aside or payment or other distribution in
respect of any of Target's Capital Stock, or any direct or indirect redemption,
purchase or other acquisition of any of such stock by Target;

   (m) to the best of Target's knowledge, any other event or condition of any
character that might materially and adversely affect the assets, properties,
financial condition, operating results or business of Target (as such business
is presently conducted and as it is proposed to be conducted); or

   (n) any agreement or commitment by Target to do any of the things described
in this Section 2.18.

   2.19 Employee Benefit Plans. Target does not sponsor or maintain any
Employee Benefit Plan as defined in the Employee Retirement Income Security Act
of 1974.

   2.20 Tax Returns, Payments and Elections. Target has filed all tax returns
and reports (including information returns and reports) as required by law.
These returns and reports are true and correct in all material respects. Target
has paid all taxes and other assessments due, except those contested by it in
good faith that are listed in the Target Disclosure Schedule or reserved on the
Target Financial Statements. Target has not elected pursuant to the Internal
Revenue Code of 1986, as amended (the "Code"), to be treated as a collapsible
corporation pursuant to Section 341(f) of the Code, nor has it made any other
elections pursuant to the Code (other than elections that relate solely to
methods of accounting, depreciation or amortization) that would have a Material
Adverse Effect on Target. Target has never had any tax deficiency proposed or
assessed against it and has not executed any waiver of any statute of
limitations on the assessment or collection of any tax or governmental charge.
None of Target's federal income tax returns and none of its state income or
franchise tax or sales or use tax returns have ever been audited by
governmental authorities. Since the date of the Target Financial Statements,
Target has not incurred any taxes, assessments or governmental charges other
than in the ordinary course of business and Target has made adequate provisions
on its books of account for all taxes, assessments and governmental charges
with respect to its business, properties and operations for such period. Target
has withheld or collected from each payment (whether in cash or in kind) made
or deemed made to each of its employees, the amount of all taxes (including,
but not limited to, federal income taxes, Federal Insurance Contribution Act
taxes and Federal Unemployment Tax Act taxes) required by applicable law to be
withheld or collected therefrom, and has paid the same to the proper tax
receiving officers or authorized depositories.

                                      A-11
<PAGE>

   2.21 Insurance. Target has in full force and effect fire and casualty
insurance policies, with extended coverage, sufficient in amount (subject to
reasonable deductibles) to allow it to replace any of its properties that might
be damaged or destroyed.

   2.22 Minute Books. The minute books of Target provided to Acquiror contain a
complete summary of all meetings of directors and stockholders since the time
of incorporation and reflect all transactions referred to in such minutes
accurately in all material respects.
   2.23 Labor Agreements and Actions; Employee Compensation. Target is not
bound by or subject to (and none of its assets or properties is bound by or
subject to) any written or oral, express or implied, contract, commitment or
arrangement with any labor union, and no labor union has requested or, to the
best of Target's knowledge, has sought to represent any of the employees,
representatives or agents of Target. There is no strike or other labor dispute
involving Target pending, or to the best of Target's knowledge, threatened,
that could have a Material Adverse Effect on Target, nor is Target aware of any
labor organization activity involving its employees. Target is not aware that
any officer or key employee, or that any group of key employees, intends to
terminate their employment with Target, nor does Target have a present
intention to terminate the employment of any of the foregoing prior to the
Closing. The employment of each officer and employee of Target is terminable at
the will of Target. To the best of its knowledge, Target has complied in all
material respects with all applicable state and federal equal employment
opportunity and other laws related to employment. Target is not a party to or
bound by any currently effective employment contract, deferred compensation
agreement, bonus plan, incentive plan, profit sharing plan, retirement
agreement, or other employee compensation agreement.

   2.24 Registration Statement; Proxy Statement/Prospectus. The written
information supplied by Target expressly for the purpose of inclusion in the
registration statement (the "Registration Statement") on Form S-4 (or such
other or successor form as shall be appropriate) pursuant to which the issuance
of the shares of Acquiror Common Stock to be issued in the Merger will be
registered with the Securities and Exchange Commission (the "SEC") shall not at
the time the Registration Statement (including any amendments or supplements
thereto) is declared effective by the SEC contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The written information supplied by Target expressly for the
purpose of inclusion in the proxy statement/prospectus to be sent to the
stockholders of Target and Acquiror in connection with the meetings of Target's
stockholders (the "Target Stockholders Meeting") and Acquiror's stockholders
(the "Acquiror Stockholders Meeting") to be held in connection with the Merger
(such proxy statement/prospectus as amended or supplemented is referred to
herein as the "Proxy Statement") shall not, on the date the Proxy Statement is
first mailed to Target's stockholders and Acquiror's stockholders, at the time
of the Target Stockholders Meeting and Acquiror's Stockholders Meeting and at
the Effective Time, contain any untrue statement of a material fact, or omit to
state any material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading. If at
any time prior to the Effective Time any event or information should be
discovered by Target which should be set forth in an amendment to the
Registration Statement or a supplement to the Proxy Statement, Target shall
promptly inform Acquiror. Notwithstanding the foregoing, Target makes no
representation, warranty or covenant with respect to any information supplied
by Acquiror that is contained in any of the foregoing documents.

   2.25 Section 83(b) Elections. To the best of Target's knowledge, all
individuals who have purchased unvested shares of Target's Common Stock have
filed timely elections under Section 83(b) of the Code and any analogous
provisions of applicable state tax laws.

   2.26 Significant Customers and Suppliers. No customer or supplier that was
significant to Target during the period covered by the Target Financial
Statements or that has been significant to Target thereafter, has terminated,
materially reduced or threatened to terminate or materially reduce its
purchases from or provision of products or services to Target, as the case may
be.

                                      A-12
<PAGE>

   2.27 Brokers. Target has no contract, arrangement or understanding with any
broker, finder or similar agent with respect to the transactions contemplated
by this Agreement.

   2.28 Employees. No employee of Target has any agreement or contract, written
or verbal, except as set forth herein, regarding such person's employment with
Target. To the best of Target's knowledge, no employee of Target nor any
consultant with whom Target has contracted is in violation of any term of any
employment contract, non-disclosure agreement or any other similar contract or
agreement relating to the relationship of such employee or consultant with
Target, any former employer or any other party. No employee of Target has been
granted the right to continued employment by Target or to any material
compensation following termination of employment with Target. Each employee,
officer and technical consultant of Target has executed a Proprietary
Information and Inventions Agreement substantially in the form previously
provided to counsel to the Acquiror. No current employee or officer of Target
has excluded works or inventions made prior to his or her employment with
Target from his or her assignment of inventions pursuant to such employee's or
officer's Proprietary Information and Inventions Agreement.

   2.29 Affiliates Agreement. All of the persons and/or entities deemed
"Affiliates" of Target within the meaning of Rule 145 promulgated under the Act
have signed the Affiliates Agreement attached hereto as Exhibit C.

   2.30 Vote Required. The affirmative vote of the holders of a majority of (a)
each of the Series A Preferred Stock, the Series B Preferred Stock, the Series
C-1 Preferred Stock and the Series D Preferred Stock outstanding on the record
date set for the Target Stockholders Meeting (voting as separate series and not
as a class) in favor of the Amendment to cause the Merger Consideration to be
allocated as set forth in Exhibit B-1 hereto; provided that if the vote
required in (a) above is not obtained, the Merger Consideration shall be
allocated in accordance with Exhibit B-2 hereto; (b) the Series B Preferred
Stock, the Series C-1 Preferred Stock and the Series D Preferred Stock (voting
as a single class and not as separate series) outstanding on the record date
set for the Target Stockholders Meeting in favor of the Merger, and (c) of the
Target Capital Stock outstanding on the record date set for the Target
Stockholders Meeting in favor of (i) the Amendment and (ii) the Merger, are the
votes of the holders of the Target's Capital Stock necessary to approve this
Agreement and the transactions contemplated hereby.

   2.31 Representations Complete. None of the representations or warranties
made by Target herein or in any Schedule hereto, including the Target
Disclosure Schedule, or certificate furnished by Target pursuant to this
Agreement, when all such documents are read together for their entirety,
contains or will contain at the Effective Time any untrue statement of a
material fact, or omits or will omit at the Effective Time to state any
material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which made, not misleading.

                                  ARTICLE III

           REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND MERGER SUB

   Acquiror hereby represents and warrants to Target that, except as set forth
on the disclosure letter attached hereto (the "Acquiror Disclosure Schedule"),
specifically identifying the relevant subparagraph hereof, which Acquiror
Disclosure Schedule is incorporated herein by this reference:

   3.1 Organization, Standing and Power. Each of Acquiror and its subsidiaries
is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization. Each of Acquiror and its
subsidiaries has the corporate power to own its properties and to carry on its
business as now being conducted and as proposed to be conducted and is duly
qualified to do business and is in good standing in each jurisdiction in which
the failure to be so qualified and in good standing would have a Material
Adverse Effect on Acquiror. Neither Acquiror nor Merger Sub (or any other
subsidiary) is in violation of any of the

                                      A-13
<PAGE>

provisions of its respective, Certificate of Incorporation or Bylaws. Acquiror
is the owner of all outstanding shares of capital stock of each of its
subsidiaries and all such shares are duly authorized, validly issued, fully
paid and nonassessable. All of the outstanding shares of capital stock of each
such subsidiary are owned by Acquiror free and clear of all liens, charges,
claims or encumbrances or rights of others.

   3.2 Capitalization. The authorized capital stock of the Acquiror consists of
(a) 100,000,000 shares of Acquiror Common Stock, of which 46,644,246 shares
were issued and outstanding as of the date hereof, and (b) 10,000,000 shares of
Preferred Stock, $.001 par value per share, of which no shares are issued or
outstanding. As of the date hereof, Acquiror has issued approximately 6,900,000
options to acquire shares of Acquiror's Common Stock pursuant to Acquiror's
1998 Stock Incentive Plan, 1999 Equity Incentive Plan and 2000 Non-Officer
Stock Plan (together the "Acquiror Stock Option Plans") and warrants to acquire
853,636 shares of Acquiror's Common Stock. Other than the options and warrants
identified above and as previously disclosed to Target, there are no
outstanding rights or agreements for the purchase or acquisition from Acquiror
of any shares of its capital stock. All of the issued and outstanding shares of
Acquiror Common Stock are duly authorized, validly issued, fully paid,
nonassessable and free of all preemptive rights. All of the shares of Acquiror
Common Stock to be issued in connection with the Merger, upon exercise of the
Target Options and upon exercise of the Target Warrants, will be, when issued
in accordance with this Agreement and the Target Stock Option Plan, duly
authorized, validly issued, fully paid, nonassessable and free of all
preemptive rights.

   3.3 Authority.

   (a) Each of Acquiror and Merger Sub has all requisite corporate power and
authority to enter into this Agreement, the Target Voting Agreements and all
other agreements referred to herein to which Acquiror is a party (the "Acquiror
Transaction Documents") and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the other
Acquiror Transaction Documents and the consummation of the transactions
contemplated hereby and thereby have been or will be, prior to the Effective
Time, duly authorized by all necessary corporate action on the part of each of
Acquiror and Merger Sub. This Agreement and the other Acquiror Transaction
Documents have been duly executed and delivered by each of Acquiror and Merger
Sub and constitute or will constitute, upon approval of the Acquiror's
stockholders, the valid and legally binding obligations of each of Acquiror and
Merger Sub, enforceable in accordance with their respective terms, except (i)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws of general application affecting enforcement of creditors'
rights generally and (ii) as limited by laws relating to the availability of
specific performance, injunctive relief, or other equitable remedies.

   (b) The execution and delivery of this Agreement and the other Acquiror
Transaction Documents do not, and the consummation of the transactions
contemplated hereby and thereby will not, conflict with, or result in any
violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of a benefit under (i) any provision of the Certificate
of Incorporation or Bylaws of Acquiror or any of its subsidiaries, as amended,
or (ii) any material mortgage, indenture, lease, contract or other agreement or
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Acquiror or any of
its subsidiaries or their properties or assets.

   (c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any federal, state or local governmental authority,
is required by or with respect to Acquiror or any of its subsidiaries in
connection with the execution and delivery of this Agreement or the other
Acquiror Transaction Documents by Acquiror or the consummation by Acquiror of
the transactions contemplated hereby or thereby, except for (i) the filing of
the Certificate of Merger as provided in Section 1.2, (ii) any filings as may
be required under applicable state securities laws and the securities laws of
any foreign country, (iii) the filing with the NASDAQ National Market of a
Notification Form for Listing of Additional Shares with respect to the shares
of Acquiror Common Stock issuable upon conversion of the Target Capital Stock
in the Merger, upon exercise of the Target Options and upon exercise of the
Target Warrants assumed by Acquiror, and the filing of a registration statement
on Form S-8 covering shares issued upon exercise of the Target Options and the
Target Warrants, (iv)

                                      A-14
<PAGE>

the filing with the SEC of a Registration Statement on Form S-4 with respect to
the shares of Acquiror Common Stock to be issued in the Merger, and (v) such
other consents, authorizations, filings, approvals and registrations which, if
not obtained or made, would not have a Material Adverse Effect on Acquiror and
would not prevent, materially alter or delay any of the transactions
contemplated by this Agreement or the other Acquiror Transaction Documents.

   3.4 SEC Documents. Acquiror has furnished to Target a true and complete copy
of each statement, report, registration statement (with the prospectus in the
form filed pursuant to Rule 424(b) of the Act), definitive proxy statement, and
other filings filed with the SEC by Acquiror since April 1, 2000 and, prior to
the Effective Time, Acquiror will have furnished Target with true and complete
copies of any additional documents filed with the SEC by Acquiror prior to the
Effective Time (collectively, the "Acquiror SEC Documents"). All documents
required to be filed as exhibits to the Acquiror SEC Documents have been so
filed, and all material contracts so filed as exhibits are in full force and
effect, except those which have expired in accordance with their terms, and
neither Acquiror nor any of its subsidiaries is in default thereunder, except
where default would not reasonably be expected to have a Material Adverse
Effect on Acquiror. As of their respective filing dates, the Acquiror SEC
Documents complied in all material respects with the requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and the Act, and none of
the Acquiror SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances in which they
were made, not misleading, except to the extent corrected by a subsequently
filed Acquiror SEC Document which was filed prior to the date hereof. The
financial statements of Acquiror, including the notes thereto, included in the
Acquiror SEC Documents (the "Acquiror Financial Statements") were complete and
correct in all material respects as of their respective dates, complied as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto as of their
respective dates, and have been prepared in accordance with generally accepted
accounting principles applied on a basis consistent throughout the periods
indicated and consistent with each other (except as may be indicated in the
notes thereto or, in the case of unaudited statements included in Quarterly
Reports on Form 10-Qs, as permitted by Form 10-Q of the SEC). The Acquiror
Financial Statements fairly present the consolidated financial condition and
operating results of Acquiror and its subsidiaries at the dates and during the
periods indicated therein (subject, in the case of unaudited statements, to
normal, recurring year-end adjustments). Acquiror maintains a standard system
of accounting established and administered in accordance with generally
accepted accounting principles. The unaudited interim financial statements
(balance sheet and income statement) of Acquiror at November 30, 2000 and for
the eight-month period then ended are complete and correct in all material
respects as of such date and for such period, were prepared in accordance with
generally accepted accounting principles applied on a basis consistent
throughout the period indicated therein and fairly present the financial
condition and operating results of Acquiror as of such date and for the period
covered thereby. Since the date of the most recent Quarterly Report on Form 10-
Q filed by Acquiror with the SEC, other than as previously disclosed to Target
there has been no Material Adverse Effect on Acquiror, other than fluctuations
in the market price of Acquiror's Common Stock as quoted on the NASDAQ National
Market.

   3.5 Tax Returns, Payments and Elections. Acquiror has filed all tax returns
and reports (including information returns and reports) as required by law.
These returns and reports are true and correct in all material respects.
Acquiror has paid all taxes and other assessments due, except those contested
by it in good faith that are listed in the Acquiror Disclosure Schedule or
reserved on the Acquiror Financial Statements. Acquiror has not elected
pursuant to the Code, to be treated as a collapsible corporation pursuant to
Section 341(f) of the Code, nor has it made any other elections pursuant to the
Code (other than elections that relate solely to methods of accounting,
depreciation or amortization) that would have a Adverse Material Effect on
Acquiror. Acquiror has never had any tax deficiency proposed or assessed
against it and has not executed any waiver of any statute of limitations on the
assessment or collection of any tax or governmental charge. None of Acquiror's
federal income tax returns and none of its state income or franchise tax or
sales or use tax returns have ever been audited by governmental authorities.
Since the date of the Acquiror Financial Statements, Acquiror has not incurred
any taxes, assessments or governmental charges other than in the ordinary
course of

                                      A-15
<PAGE>

business and Acquiror has made adequate provisions on its books of account for
all taxes, assessments and governmental charges with respect to its business,
properties and operations for such period. Acquiror has withheld or collected
from each payment (whether in cash or in kind) made or deemed made to each of
its employees, the amount of all taxes (including, but not limited to, federal
income taxes, Federal Insurance Contribution Act taxes and Federal Unemployment
Tax Act taxes) required by applicable law to be withheld or collected
therefrom, and has paid the same to the proper tax receiving officers or
authorized depositories.

   3.6 Patents and Trademarks. Acquiror has sufficient title and ownership of
or exclusive licenses to all patents, trademarks, service marks, trade names,
copyrights, trade secrets, information, proprietary rights and processes
necessary for its business as now conducted and as proposed to be conducted
without any conflict with or infringement of the rights of others, except for
such items as have yet to be conceived or developed or that are expected to be
available for licensing on reasonable terms from third parties. The Acquiror
Disclosure Schedule contains a complete list of patents and pending patent
applications, trademarks and pending trademark applications and copyrights and
pending copyright applications of Acquiror. There are no outstanding options,
licenses, or agreements of any kind relating to the foregoing, nor is Acquiror
bound by or a party to any options, licenses or agreements of any kind with
respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, proprietary rights and processes of any
other person or entity, except, in either case, for standard end-user, object
code, internal-use software license and support/maintenance agreements.
Acquiror has not received any communications alleging that Acquiror has
violated or, by conducting its business as proposed, would violate any of the
patents, trademarks, service marks, trade names, copyrights or trade secrets or
other proprietary rights of any other person or entity. Acquiror is not aware
that any of its employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with the use of his or her best efforts to promote the interests of
Acquiror or that would conflict with Acquiror's business as proposed to be
conducted. Neither the execution nor delivery of this Agreement or any of the
Acquiror Transaction Documents, nor the carrying on of Acquiror's business by
the employees of Acquiror, nor the conduct of Acquiror's business as proposed,
will, to the best of Acquiror's knowledge, conflict with or result in a breach
of the terms, conditions or provisions of, or constitute a default under, any
contract, covenant or instrument under which any of such employees is now
obligated. Acquiror does not believe it is or will be necessary to utilize any
inventions of any of its employees (or people it currently intends to hire)
made prior to or outside the scope of their employment by Acquiror.

   3.7 Registration Statement. The written information supplied by Acquiror and
Merger Sub expressly for the purpose of inclusion in the Registration Statement
shall not, at the time the Registration Statement (including any amendments or
supplements thereto) is declared effective by the SEC, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The written information supplied by Acquiror
expressly for the purpose of inclusion in the Proxy Statement shall not, on the
date the Proxy Statement is first mailed to Target's stockholders and
Acquiror's stockholders, at the time of the Target Stockholders Meeting and
Acquiror Stockholders Meeting and at the Effective Time, contain any untrue
statement of a material fact, or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading. If at any time prior to the Effective
Time any event or information should be discovered by Acquiror which should be
set forth in an amendment to the Registration Statement or a supplement to the
Proxy Statement, Acquiror shall promptly inform Target. Notwithstanding the
foregoing, neither Acquiror nor Merger Sub make any representation, warranty or
covenant with respect to any information supplied by Target that is contained
in any of the foregoing documents.

   3.8 Litigation. There is no private or governmental action, suit,
proceeding, claim, arbitration or investigation pending before any agency,
court or tribunal, foreign or domestic, or, to the knowledge of Acquiror,
threatened against Acquiror or any of its respective properties or any of its
respective officers or directors (in their capacities as such) that,
individually or in the aggregate, could reasonably be expected to

                                      A-16
<PAGE>

have a Material Adverse Effect on Acquiror or on the transactions contemplated
hereby. There is no judgment, decree or order against Acquiror or, to the
knowledge of Acquiror, any of its respective directors or officers (in their
capacities as such) that could prevent, enjoin, or materially alter or delay
any of the transactions contemplated by this Agreement, or that could
reasonably be expected to have a Material Adverse Effect on Acquiror.

   3.9 Brokers. Acquiror has no contract, arrangement or understanding with any
broker, finder or similar agent with respect to the transactions contemplated
by this Agreement.

   3.10 Compliance with Laws. Acquiror has complied with, is not in violation
of, and has not received any notices of violation with respect to, any federal,
state, local or foreign statute, law or regulation with respect to the conduct
of its business, or the ownership or operation of its business, except for such
violations or failures to comply as could not be reasonably expected to have a
Material Adverse Effect on Acquiror.

   3.11 Merger Sub. Merger Sub is a direct, wholly-owned subsidiary of
Acquiror, was formed solely for the purpose of engaging in the transactions
contemplated hereby, has engaged in no other business activities and has
conducted its operations only as contemplated hereby. Merger Sub has no
liabilities or obligations of any nature, contingent or otherwise, other than
those related to the transactions contemplated hereby.

   3.12 Representations Complete. None of the representations or warranties
made by Acquiror herein or in any Schedule hereto, including the Acquiror
Disclosure Schedule, or certificate furnished by Acquiror pursuant to this
Agreement, when all such documents are read together in their entirety,
contains or will contain at the Effective Time any untrue statement of a
material fact, or omits or will omit at the Effective Time to state any
material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which made, not misleading.

                                   ARTICLE IV

                      CONDUCT PRIOR TO THE EFFECTIVE TIME

   4.1 Conduct of Business of Target. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, Target agrees (except to the extent expressly
contemplated by this Agreement or as consented to in writing by Acquiror, which
consent shall not be unreasonably withheld or delayed), to carry on its
business in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted. Target further agrees to (i) pay debts and
Taxes when due subject to good faith disputes over such debts or Taxes, (ii)
pay all amounts due or other outstanding obligations owed to suppliers and
vendors when due subject to good faith disputes over such amounts or
obligations, (iii) subject to Acquiror's consent to the filing of material Tax
Returns if applicable, to pay or perform other obligations when due, and (iv)
to use all reasonable efforts consistent with past practice and policies to
preserve intact its present business organizations, keep available the services
of its present officers and key employees and preserve its relationships with
customers, suppliers, distributors, licensors, licensees, and others having
business dealings with it to the end that its goodwill and ongoing businesses
shall be unimpaired at the Effective Time. Target agrees to promptly notify
Acquiror of any event or occurrence not in the ordinary course of its business,
and of any event that would reasonably be expected to have a Material Adverse
Effect on Target. Without limiting the foregoing, except as expressly
contemplated by this Agreement, Target shall not do, cause or permit any of the
following, without the prior written consent of Acquiror, which consent shall
not be unreasonably withheld or delayed:

     (a) Charter Documents. Cause or permit any amendments to its Certificate
  of Incorporation or Bylaws;

     (b) Dividends; Changes in Capital Stock. Declare or pay any dividends on
  or make any other distributions (whether in cash, stock or property) in
  respect of any of its capital stock, or split, combine or reclassify any of
  its capital stock or issue or authorize the issuance of any other
  securities in respect of, in

                                      A-17
<PAGE>

  lieu of or in substitution for shares of its capital stock, or repurchase
  or otherwise acquire, directly or indirectly, any shares of its capital
  stock except from employees, directors and consultants in accordance with
  agreements providing for the repurchase of shares in connection with any
  termination of service to it;

     (c) Material Contracts. Other than in the ordinary course of business
  consistent with past practice, enter into any material contract, agreement,
  license or commitment, or violate, amend or otherwise modify or waive any
  of the terms of any of its material contracts, agreements or licenses;

     (d) Stock Option Plans, etc. Accelerate, except as provided in the
  Target Stock Option Plan, amend or change the period of exercisability or
  vesting of options or other rights granted under its stock plans or
  authorize cash payments in exchange for any options or other rights granted
  under any of such plans;

     (e) Issuance of Securities. Issue, deliver or sell or authorize or
  propose the issuance, delivery or sale of, or purchase or propose the
  purchase of, any shares of its capital stock or securities convertible
  into, or subscriptions, rights, warrants or options to acquire, or other
  agreements or commitments of any character obligating it to issue any such
  shares or other convertible securities, other than the issuance of shares
  of Target Common Stock pursuant to the conversion of currently outstanding
  convertible securities or the exercise of stock options, warrants or other
  rights therefor outstanding as of the date of this Agreement;

     (f) Intellectual Property. Transfer to or license any person or entity
  or otherwise extend, amend or modify any rights to its intellectual
  property other than the grant of non-exclusive licenses in the ordinary
  course of business consistent with past practice;

     (g) Exclusive Rights. Enter into or amend any agreements pursuant to
  which any other party is granted exclusive marketing, manufacturing or
  other exclusive rights of any type or scope with respect to any of its
  products or technology;

     (h) Dispositions. Sell, lease, license or otherwise dispose of or
  encumber any of its properties or assets which are material, individually
  or in the aggregate, to its business other than in the ordinary course of
  business consistent with past practice;

     (i) Indebtedness. Incur or commit to incur any indebtedness for borrowed
  money or guarantee any such indebtedness or issue or sell any debt
  securities or guarantee any debt securities of others;

     (j) Leases. Enter into any operating lease;

     (k) Payment of Obligations. Pay, discharge or satisfy in an amount in
  excess of $10,000 in any one case or $50,000 in the aggregate, any claim,
  liability or obligation (absolute, accrued, asserted or unasserted,
  contingent or otherwise) arising other than in the ordinary course of
  business, other than the payment, discharge or satisfaction of liabilities
  reflected or reserved against in the Target Financial Statements, or in
  connection with the transactions contemplated by the Target Transaction
  Documents;

     (l) Capital Expenditures. Incur or commit to incur any capital
  expenditures in excess of $10,000 in the aggregate;

     (m) Insurance. Materially reduce the amount of any material insurance
  coverage provided by existing insurance policies;

     (n) Termination or Waiver. Terminate or waive any right of substantial
  value, other than in the ordinary course of business;

     (o) Employee Benefits; Severance. Take any of the following actions: (i)
  increase or agree to increase the compensation payable or to become payable
  to its officers or employees, except for increases in salary or wages of
  non-officer employees in the ordinary course of business and in accordance
  with past practices, (ii) grant any additional severance or termination pay
  to, or enter into any employment or severance agreements with, any officer
  or employee, (iii) enter into any collective bargaining agreement, or (iv)
  establish, adopt, enter into or amend in any material respect any bonus,
  profit sharing, thrift, compensation, stock option, restricted stock,
  pension, retirement, deferred compensation, employment,

                                      A-18
<PAGE>

  termination, severance or other plan, trust, fund, policy or arrangement
  for the benefit of any directors, officers or employees;

     (p) Lawsuits. Commence a lawsuit or arbitration proceeding other than
  (i) for the routine collection of bills or (ii) for a breach of this
  Agreement;

     (q) Acquisitions. Acquire or agree to acquire by merging or
  consolidating with, or by purchasing a substantial portion of the assets
  of, or by any other manner, any business or any corporation, partnership,
  association or other business organization or division thereof, or
  otherwise acquire or agree to acquire any assets which are material,
  individually or in the aggregate, to its business, taken as a whole;

     (r) Taxes. Make any material Tax election other than in the ordinary
  course of business and consistent with past practice, change any material
  Tax election, adopt any Tax accounting method other than in the ordinary
  course of business and consistent with past practice, change any Tax
  accounting method, file any Tax return (other than any estimated tax
  returns, immaterial information returns, payroll tax returns or sales tax
  returns) or any amendment to a Tax return, enter into any closing
  agreement, settle any Tax claim or assessment or consent to any Tax claim
  or assessment provided that Acquiror shall not unreasonably withhold or
  delay approval of any of the foregoing actions;

     (s) Revaluation. Revalue any of its assets, including without limitation
  writing down the value of inventory or writing off notes or accounts
  receivable other than in the ordinary course of business; or

     (t) Other. Take or agree in writing or otherwise to take, any of the
  actions described in Sections 4.1(a) through (s) above, or any action which
  would make any of its representations or warranties contained in this
  Agreement untrue or incorrect in any material respect or prevent it from
  performing or cause it not to perform its covenants hereunder.

   4.2 Notices. Target shall give all notices and other information required to
be given by Target to the employees of Target, any collective bargaining unit
representing any group of employees of Target, and any applicable government
authority under the National Labor Relations Act, the Code, the Consolidated
Omnibus Budget Reconciliation Act, and other applicable law in connection with
the transactions provided for in this Agreement.

   4.3 Conduct of Business of Acquiror. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, Acquiror agrees (except to the extent expressly
contemplated by this Agreement or as consented to in writing by Target, which
consent shall not be unreasonably withheld or delayed), to carry on its
business in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted. Acquiror further agrees to (i) pay debts and
Taxes when due subject to good faith disputes over such debts or Taxes, (ii)
pay all amounts due or other outstanding obligations owed to suppliers and
vendors when due subject to good faith disputes over such amounts or
obligations, or (iii) pay or perform other obligations when due, and (iv) to
use all reasonable efforts consistent with past practice and policies to
preserve intact its present business organizations, keep available the services
of its present officers and key employees and preserve its relationships with
customers, suppliers, distributors, licensors, licensees, and others having
business dealings with it to the end that its goodwill and ongoing businesses
shall be unimpaired at the Effective Time. Acquiror agrees to promptly notify
Target of any event or occurrence not in the ordinary course of its business,
and of any event that would reasonably be expected to have a Material Adverse
Effect on Acquiror. Without limiting the foregoing, except, as such actions are
taken to effect a stock split or reverse stock split for purposes of remaining
listed on the NASDAQ National Market, or as expressly contemplated by this
Agreement, Acquiror shall not do, cause or permit any of the following, without
the prior written consent of Target, which consent shall not be unreasonably
withheld or delayed:

     (a) Charter Documents. Cause or permit any amendments to its Certificate
  of Incorporation or Bylaws;

     (b) Dividends and Stock Issuance. (i) Declare or pay any dividends on or
  make any other distributions (whether in cash, stock or property) in
  respect of any of its capital stock; (ii) issue or authorize the

                                      A-19
<PAGE>

  issuance of its capital stock or securities convertible into, or
  subscriptions, rights, warrants, or options to acquire or other agreements
  or commitments to issue such shares or other securities, other than the
  issuance of shares of Acquiror Common Stock or options to purchase shares
  of Acquiror Common Stock pursuant to the Acquiror Stock Option Plans and
  the 1999 Employee Stock Purchase Plan or other rights currently outstanding
  as of the date of this Agreement; (iii) repurchase or otherwise acquire,
  directly or indirectly, any shares of its capital stock, except from
  employees, directors and consultants in accordance with agreements
  providing for the repurchase of shares in connection with any termination
  of service; provided that the restriction set forth in (ii) and (iii) above
  shall apply only if such issuance is at a price below, or the repurchase is
  at a price above, the then-current market value based, in each case, on the
  average of the closing prices for a share of Acquiror's Common Stock as
  quoted on the NASDAQ National Market for the twenty (20) consecutive
  trading days immediately preceding and ending on the last trading day
  before such issuance or repurchase, as the case may be.

     (c) Liquidation or Merger; Change in Control. Adopt a plan of complete
  or partial liquidation, dissolution, merger, consolidation, restructuring,
  recapitalization or other reorganization or enter into any agreement or
  exercise any discretion providing for acceleration of payment, performance,
  vesting or exercisability as a result of a change of control of Acquiror.

                                   ARTICLE V

                             ADDITIONAL AGREEMENTS

   5.1 No Solicitation.

   (a) From and after the date of this Agreement until the earlier of the
Effective Time or the termination of this Agreement pursuant to Article VII,
Target shall not, directly or indirectly, through any officer, director,
employee, representative or agent, (i) solicit, initiate, or encourage any
inquiries or proposals that constitute, or could reasonably be expected to lead
to, a proposal or offer for a merger, consolidation, business combination, sale
of all or substantially all of the assets, sale of shares of capital stock
(including without limitation by way of a tender offer) or similar transactions
involving Target, other than the transactions contemplated by this Agreement
(any of the foregoing inquiries or proposals being referred to in this
Agreement as a "Takeover Proposal"), (ii) engage in negotiations or discussions
concerning, or provide any non-public information to any person or entity
relating to, any Takeover Proposal, or (iii) agree to, approve or recommend any
Takeover Proposal; provided, however, that if, at any time prior to the
Effective Time, the Board of Directors of the Target or Acquiror, as the case
may be, determines in good faith, after consultation with outside counsel, that
its fiduciary obligations to its respective stockholders under applicable law
so requires, Target or Acquiror, as the case may be, in response to a Takeover
Proposal which was not solicited by Target or Acquiror, as the case may be,
subsequent to the date hereof (A) may furnish to any person information with
respect to Target or Acquiror, as the case may be, pursuant to a customary
confidentiality agreement, (B) may participate in negotiations regarding such
Takeover Proposal and (C) subject to full compliance with this Section 5.1, may
recommend a proposal to its stockholders which the Board of Directors of Target
or Acquiror, as the case may be, determines in its good faith judgment to be
more favorable to Target or Acquiror, as the case may be (a "Superior
Proposal"); provided, however that such party notifies the other within 24
hours of receipt of any Takeover Proposal.

   (b) Target shall notify Acquiror immediately (in any event, no later than 24
hours) after receipt by Target (or its advisors or agents) of any Takeover
Proposal or any request for information in connection with a Takeover Proposal
or for access to the properties, books or records of Target by any person or
entity that informs Target that it is considering making, or has made, a
Takeover Proposal. Such notice by Target shall be made orally and in writing
and shall indicate in reasonable detail the identity of the offeror and the
terms and conditions of such proposal, inquiry or contact.

   (c) Except as set forth in this Section 5.1, neither the Board of Directors
of Target or Acquiror, as the case may be, nor any committee thereof shall (i)
withdraw or modify, or propose publicly to withdraw or modify, in

                                      A-20
<PAGE>

a manner adverse to the other party, the approval or recommendation by such
Board of Directors or such committee of the Merger, this Agreement or the
issuance of shares of Acquiror Common Stock in the Merger, (ii) approve or
recommend, or propose publicly to approve or recommend, any Takeover Proposal
or (iii) cause Target or Acquiror, as the case may be, to enter into any
Takeover Proposal. Notwithstanding the foregoing, in the event that the Board
of Directors of Target or Acquiror, as the case may be, has fully complied with
this Section 5.1 and determines that a Superior Proposal exists, the Board of
Directors of Target or Acquiror, as the case may be, to the extent required by
the fiduciary obligations thereof, as determined in the good faith judgment of
such Board of Directors based on the advice of outside counsel, may withdraw or
modify its approval or recommendation of the Merger and this Agreement;
provided, however, that nothing contained herein (including any such withdrawal
or modification of such approval or recommendation) shall release or otherwise
affect (A) Target's obligation to call and hold the Target Stockholders'
Meeting and submit the Merger and this Agreement to the stockholders of Target
for their approval or (B) Acquiror's obligation to call and hold the Acquiror's
Stockholders' Meeting and submit the Merger and this Agreement to the
stockholders of Acquiror for their approval.

   5.2 Proxy Statement/Prospectus; Registration Statement. As promptly as
practicable after the execution of this Agreement, Target and Acquiror shall
prepare a Registration Statement on Form S-4 (containing a prospectus and proxy
materials relating to the approval of the Merger and the transactions
contemplated hereby by the stockholders of Target and Acquiror) and, as
promptly as practicable, Acquiror shall file with the SEC a Registration
Statement on Form S-4 (or such other or successor form as shall be
appropriate), which complies in form with applicable SEC requirements and shall
use reasonable best efforts to cause the Registration Statement to become and
remain effective as soon thereafter as practicable. The Proxy Statement shall
include the recommendation of the Board of Directors of Acquiror and Target in
favor of the Merger;

   5.3 Access to Information.

   (a) Target shall afford Acquiror and its accountants, counsel and other
representatives, reasonable access during normal business hours during the
period prior to the Effective Time to (i) all of Target's properties, books,
contracts, commitments and records, and (ii) all other information concerning
the business, properties and personnel of Target as Acquiror may reasonably
request. Target agrees to provide to Acquiror and its accountants, counsel and
other representatives, subject to existing confidentiality agreements with
third parties, copies of internal financial statements promptly upon request.

   (b) Subject to compliance with applicable law, from the date hereof until
the Effective Time, each of Acquiror and Target shall confer on a regular and
frequent basis with one or more representatives of the other party to report
operational matters of materiality and the general status of ongoing
operations.

   (c) No information or knowledge obtained in any investigation pursuant to
this Section 5.3 shall affect or be deemed to modify any representation or
warranty contained herein or the conditions to the obligations of the parties
to consummate the Merger.

   5.4 Confidentiality. The parties acknowledge that Acquiror and Target have
previously executed a non-disclosure agreement dated December 18, 2000 (the
"Confidentiality Agreement"), which Confidentiality Agreement shall continue in
full force and effect in accordance with its terms.

   5.5 Public Disclosure. Unless otherwise permitted by this Agreement,
Acquiror and Target shall consult with each other before issuing any press
release or otherwise making any public statement or making any other public (or
non-confidential) disclosure (whether or not in response to an inquiry)
regarding the terms of this Agreement and the transactions contemplated hereby,
and neither shall issue any such press release or make any such statement or
disclosure without the prior approval of the other (which approval shall not be
unreasonably withheld or delayed), except as may be required by Acquiror to
comply with the rules and regulations of the SEC or any obligations pursuant to
any listing agreement with any national securities exchange or with the NASDAQ.

                                      A-21
<PAGE>

   5.6 Consents; Cooperation. Each of Acquiror and Target shall promptly apply
for or otherwise seek, and use all reasonable efforts to obtain, all consents
and approvals required to be obtained by it for the consummation of the Merger
and shall use all commercially reasonable efforts to obtain all necessary
consents, waivers and approvals under any of Target's material contracts in
connection with the Merger for the assignment thereof or otherwise.

   5.7 Update Disclosure; Breaches. From and after the date of this Agreement
until the Effective Time, each party hereto shall promptly notify the other
party, by written update to its Disclosure Schedule, of (i) the occurrence or
non-occurrence of any event which would be likely to cause any condition to the
obligations of any party to effect the Merger and the other transactions
contemplated by this Agreement not to be satisfied, or (ii) the failure of
Target or Acquiror, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it pursuant to this
Agreement which would be likely to result in any condition to the obligations
of any party to effect the Merger and the other transactions contemplated by
this Agreement not to be satisfied. The delivery of any notice pursuant to this
Section 5.7 shall not cure any breach of any representation or warranty
requiring disclosure of such matter prior to the date of this Agreement or
otherwise limit or affect the remedies available hereunder to the party
receiving such notice.

   5.8 Affiliates Agreements. Upon the execution of this Agreement, Target will
provide Acquiror with a list of those persons who are, in Target's respective
reasonable judgment, "affiliates" of Target, respectively, within the meaning
of Rule 145 under the Act ("Rule 145"). Each such person who is an "affiliate"
of Target within the meaning of Rule 145 is referred to herein as an
"Affiliate." Target shall provide Acquiror such information and documents as
Acquiror shall reasonably request for purposes of reviewing such list and shall
notify Acquiror in writing regarding any change in the identity of its
Affiliates prior to the Closing Date. Upon the execution of this Agreement,
Target shall deliver or cause to be delivered to Acquiror from each of the
Affiliates of Target, an executed Affiliates Agreement, in the form attached
hereto as Exhibit C. Acquiror shall be entitled to place appropriate legends on
the certificates evidencing any Acquiror Common Stock to be received by
Affiliates of Target pursuant to the terms of this Agreement, and to issue
appropriate stop transfer instructions to the transfer agent for the Acquiror
Common Stock, consistent with the terms of the Affiliates Agreement. The
Acquiror shall make and keep public information available, as those terms are
understood and defined in Rule 144 under the Act, for a period of three (3)
years after the Closing Date.

   5.9 Lock-Up Agreements. Prior to the Effective Time, holders of at least 80%
of the Target Capital Stock, the Target Options and the Target Warrants, on a
fully diluted basis, and each officer and director of Target shall execute and
deliver a lock-up agreement to Acquiror in the form attached hereto as Exhibit
F (the "Lock-Up Agreements").

   5.10 Legal Requirements. Each of Acquiror and Target will, and Acquiror will
cause its subsidiaries to, take all reasonable actions necessary to comply
promptly with all legal requirements which may be imposed on them with respect
to the consummation of the transactions contemplated by this Agreement and will
promptly cooperate with and furnish information to any party hereto necessary
in connection with any such requirements imposed upon such other party in
connection with the consummation of the transactions contemplated by this
Agreement and will take all reasonable actions necessary to obtain (and will
cooperate with the other parties hereto in obtaining) any consent, approval,
order or authorization of, or any registration, declaration or filing with, any
federal, state or local governmental authority or other person, required to be
obtained or made in connection with the taking of any action contemplated by
this Agreement.

   5.11 Tax-Deferred Reorganization. Neither Target, Acquiror nor Merger Sub
will, either before or after consummation of the Merger, take any action that,
to the knowledge of such party, would cause the Merger to fail to constitute a
"reorganization" within the meaning of Code Section 368. No party to this
Agreement shall take a position on any return, report or filing inconsistent
with this treatment.

   5.12 Blue Sky Laws. Acquiror shall take such steps as may be necessary to
comply with the securities and blue sky laws of all jurisdictions which are
applicable to the issuance of the Acquiror Common Stock in

                                      A-22
<PAGE>

connection with the Merger. Target shall use its best efforts to assist
Acquiror as may be necessary to comply with the securities and blue sky laws of
all jurisdictions which are applicable in connection with the issuance of
Acquiror Common Stock in connection with the Merger.

   5.13 Stock Options and Warrants.

   (a) At the Effective Time, the Target Stock Option Plan and each outstanding
Target Option and each outstanding Target Warrant, whether vested or unvested,
shall, by virtue of the Merger and without any further consideration on the
part of any holder thereof, be assumed by Acquiror and be converted into an
option (or warrant, as the case may be) to purchase shares of Acquiror Common
Stock as set forth below. Target has delivered to Acquiror a schedule (the
"Option Schedule") which sets forth a true and complete list as of the date
hereof of all Target Warrants and Target Options, including the number of
shares of Target Capital Stock subject to each such option or warrant, the
exercise or vesting schedule, the exercise price per share and the term of each
such option or warrant. On the Closing Date, Target shall deliver to Acquiror
an updated Option Schedule current as of such date. Each such Target Option or
Target Warrant so assumed by Acquiror under this Agreement shall continue to
have, and be subject to, the same terms and conditions set forth in the Target
Stock Option Plan or the Target Warrant, as the case may be, immediately prior
to the Effective Time, except that (i) such option or warrant shall be
exercisable for that number of whole shares of Acquiror Common Stock equal to
the product of the number of shares of Target Common Stock that were issuable
upon exercise of such option or warrant immediately prior to the Effective Time
multiplied by the exchange ratio as set forth on the Option Schedule and
rounded to the nearest whole number of shares of Acquiror Common Stock, and
(ii) the per share exercise price for the shares of Acquiror Common Stock
issuable upon exercise of such assumed option or warrant shall be equal to the
quotient determined by dividing the exercise price per share of Target Common
Stock at which such option or warrant was exercisable immediately prior to the
Effective Time by the exchange ratio as set forth on the Option Schedule,
rounded to the nearest whole cent. The exchange ratio set forth on the Option
Schedule shall be adjusted, as of the Effective Time, if necessary to reflect
any exercise, cancellation or expiration of any Target Options or Target
Warrants prior to the Effective Time such that the total number of Acquiror
Common Shares to be reserved for issuance upon the exercise of all Target
Options and all Target Warrants assumed by Acquiror hereunder is equal to
1,583,200. In no event, however, shall the number of Acquiror Common Shares
reserved for issuance upon the exercise of Target Options and Target Warrants
exceed 1,583,200 shares of Acquiror Common Stock.

   (b) Acquiror shall take all corporate action necessary to reserve and make
available for issuance a sufficient number of shares of Acquiror Common Stock
for delivery upon the exercise of the Target Options and Target Warrants
assumed in accordance with this Section 5.13. At or prior to the Effective
Time, Acquiror shall file a registration statement on Form S-8 (or any
successor or other appropriate forms) with respect to the shares of Acquiror
Common Stock subject to such Target Options and Target Warrants and shall use
its best efforts to maintain the effectiveness of such registration statement
or registration statements (and maintain the current status of the prospectus
or prospectuses contained therein) for so long as such Target Options and
Target Warrants remain outstanding.

   5.14 Listing of Additional Shares. Prior to issuance, Acquiror shall file
with NASDAQ a Notification Form for Listing of Additional Shares covering the
shares of Acquiror Common Stock issuable upon conversion of the Target Capital
Stock in the Merger, upon exercise of the Target Options assumed by Acquiror
and upon exercise of the Target Warrants assumed by Acquiror.

   5.15 Additional Agreements; Reasonable Efforts. Each of the parties agrees
to use all reasonable efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, subject to the appropriate vote of
stockholders of Target and Acquiror, including cooperating fully with the other
party, including by provision of information. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full title
to all properties, assets, rights, approvals, immunities and franchises of
Target, the proper officers and directors of each party to this Agreement shall
take all such necessary action.

                                      A-23
<PAGE>

   5.16 Employee Benefits. Acquiror shall take such reasonable actions, to the
extent permitted by Acquiror's benefit programs, as are necessary to allow
eligible employees of Target to participate in the benefit programs of
Acquiror, or alternative benefit programs in the aggregate substantially
comparable to those applicable to employees of Acquiror on similar terms, as
soon as practicable after the Effective Time of the Merger. For purposes of
satisfying the terms and conditions of such programs, to the extent permitted
by Acquiror's benefit programs, Acquiror shall use reasonable efforts to give
full credit for eligibility, or vesting for each participant's period of
service with Target.

   5.17 Parachute Payments. Target shall use its best efforts to have any
agreements or arrangements that may result in the payment of any amount that
would not be deductible by reason of Section 280G of the Code approved by such
percentage of Target's outstanding voting securities as is required by the
terms of Section 280G(b)(5)(B) of the Code and the proposed Treasury
Regulations thereunder, including, without limitation, Q-7 of Section 1.280G-1
of such proposed regulations.

   5.18 Necessary Actions. Acquiror and Target shall execute and deliver at the
Closing all agreements and documents contemplated by this Agreement to be
executed and delivered by them at the Closing.

   5.19 Target Director and Officer Indemnification.

   (a) After the Effective Time, Acquiror will, and will cause the Surviving
Corporation to (i) indemnify, defend and hold harmless the present and former
officers, directors, employees and agents of Target (the "Indemnified Parties")
in respect of acts or omissions occurring on or prior to the Effective Time to
the extent provided under applicable law or under Target's Certificate of
Incorporation and Bylaws, in each case as in effect on the date hereof, and
(ii) advance expenses as incurred by such officers, directors, employees and
agents of Target to the fullest extent permitted under applicable law or under
Target's Certificate of Incorporation and Bylaws, in each case as in effect on
the date hereof, provided that such indemnification and advancement of expenses
shall be subject to any limitation imposed from time to time under applicable
law.

   (b) The provisions of this Section 5.19 are intended to be for the benefit
of, and shall be enforceable by, each of the Indemnified Parties, their heirs
and personal representatives.

                                   ARTICLE VI

                            CONDITIONS TO THE MERGER

   6.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to consummate and effect
this Agreement and the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, by agreement of all the
parties hereto:

     (a) Stockholder Approval. This Agreement and the Merger shall have been
  approved and adopted by the necessary vote of the Target stockholders and
  the Acquiror stockholders and any agreements or arrangements that may
  result in the payment of any amount that would not be deductible by reason
  of Section 280G of the Code shall have been approved by such number of
  stockholders of Target as is required by the terms of Section
  280G(b)(5)(B).

     (b) No Injunctions or Restraints; Illegality. No temporary restraining
  order, preliminary or permanent injunction or other order issued by any
  court of competent jurisdiction or other legal or regulatory restraint or
  prohibition preventing the consummation of the Merger shall be in effect,
  nor shall any proceeding brought by an administrative agency or commission
  or other governmental authority or instrumentality, domestic or foreign,
  seeking any of the foregoing be pending; nor shall there be any action
  taken, or any statute, rule, regulation or order enacted, entered, enforced
  or deemed applicable to the Merger, which makes the consummation of the
  Merger illegal. In the event an injunction or other order shall have been
  issued, each party agrees to use its reasonable diligent efforts to have
  such injunction or other order lifted.

                                      A-24
<PAGE>

     (c) Governmental Approval. Acquiror and Target and their respective
  subsidiaries shall have timely obtained from each federal, state or local
  governmental authority all approvals, waivers and consents, if any,
  necessary for consummation of or in connection with the Merger and the
  several transactions contemplated hereby, including such approvals, waivers
  and consents as may be required under the Act, and under state Blue Sky
  laws.

     (d) Listing of Additional Shares. The filing with the NASDAQ National
  Market of a Notification Form for Listing of Additional Shares with respect
  to the shares of Acquiror Common Stock issuable upon conversion of the
  Target Capital Stock in the Merger, upon exercise of the Target Options
  assumed by Acquiror and upon exercise of the Target Warrants assumed by
  Acquiror shall have been made.

     (e) Tax Opinion. Each of Target and Acquiror shall have received a
  written opinion from their respective counsel to the effect that the Merger
  will constitute a reorganization within the meaning of Section 368 of the
  Code, which opinions shall be substantially identical in substance;
  provided, however, that if the counsel to either Target or Acquiror does
  not render such opinion, this condition shall nonetheless be deemed
  satisfied with respect to such party if counsel to the other party renders
  such opinion to such party. In preparing the Target and the Acquiror tax
  opinions, counsel may rely on reasonable assumptions and may also rely on
  (and to the extent reasonably required, the parties' and Target's
  shareholders shall make) reasonable representations related thereto.

     (f) Registration Statement. The Registration Statement shall have been
  declared effective and shall be effective at the Effective Time, and no
  stop order suspending effectiveness shall have been issued and no action,
  suit, proceeding or investigation by the SEC to suspend the effectiveness
  thereof shall have been initiated and be continuing and all necessary
  approvals under state securities laws and the Act or the Exchange Act
  relating to the issuance or trading of Acquiror Common Stock shall have
  been received.

   6.2 Additional Conditions to Obligations of Target. The obligations of
Target to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Effective Time of each of the following conditions, any of which may be waived,
in writing, by Target:

     (a) Representations, Warranties and Covenants. (i) Except as disclosed
  in the Acquiror Disclosure Schedule, the representations and warranties of
  Acquiror in this Agreement shall be true and correct in all respects
  (except as permitted or contemplated by the Agreement) on and as of the
  Effective Time as though such representations and warranties were made on
  and as of such time, except where such inaccuracy does not have a Material
  Adverse Effect on Acquiror, and (ii) Acquiror and Merger Sub shall have
  performed and complied in all material respects with all covenants,
  obligations and conditions of this Agreement required to be performed and
  complied with by them as of the Effective Time except where such failure to
  so perform or comply does not have a Material Adverse Effect on Acquiror.

     (b) Certificate of Acquiror. Target shall have been provided with a
  certificate executed on behalf of Acquiror by its President and its Chief
  Financial Officer to the effect that, as of the Effective Time:

       (A) all representations and warranties made by Acquiror under this
    Agreement are true and correct in all material respects; and

       (B) all covenants, obligations and conditions of this Agreement to
    be performed by Acquiror on or before such date have been so performed
    in all material respects.

     (c) Legal Opinion. Target shall have received a legal opinion from
  Acquiror's legal counsel in a form to be mutually agreed by the parties
  hereto.

     (d) No Material Adverse Changes. There shall not have occurred any
  material adverse change in the condition (financial or otherwise),
  properties, assets (including intangible assets), liabilities, business,
  operations, results of operations or prospects of Acquiror and its
  subsidiaries, taken as a whole, other than a change that is directly caused
  by the public announcement of, and the response or reaction of customers,
  vendors, licensors, investors or employees of Acquiror to this Agreement,
  the Merger or any of the

                                      A-25
<PAGE>

  transactions contemplated by this Agreement. A change in the market price
  of Acquiror Common Stock shall not constitute a material adverse change.

     (e) Acquiror Voting Agreements. Target shall have received from certain
  stockholders of Acquiror an executed Acquiror Voting Agreement in
  substantially the form attached hereto as Exhibit G.

   6.3 Additional Conditions to Obligations of Acquiror. The obligations of
Acquiror to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Effective Time of each of the following conditions, any of which may be waived,
in writing, by Acquiror:

     (a) Representations, Warranties and Covenants. Except as disclosed in
  the Target Disclosure Schedule (i) the representations and warranties of
  Target in this Agreement shall be true and correct in all respects on and
  as of the Effective Time as though such representations and warranties were
  made on and as of such time, except where such inaccuracy does not have a
  Material Adverse Effect on Target, and (ii) Target shall have performed and
  complied in all material respects with all covenants, obligations and
  conditions of this Agreement required to be performed and complied with by
  it as of the Effective Time, except where such failure to so perform or
  comply does not have a Material Adverse Effect on Target.

     (b) Certificate of Target. Acquiror shall have been provided with a
  certificate executed on behalf of Target by its President and Chief
  Financial Officer to the effect that, as of the Effective Time:

        (A) all representations and warranties made by Target under this
    Agreement are true and complete in all material respects; and

       (B) all covenants, obligations and conditions of this Agreement to
    be performed by Target on or before such date have been so performed in
    all respects.

     (c) Third Party Consents. Acquiror shall have been furnished with
  evidence satisfactory to it of the consent or approval of those persons
  whose consent or approval shall be required in connection with the Merger
  under the material contracts of Target set forth on Schedule 2.9 hereto.

     (d) Legal Opinion. Acquiror shall have received a legal opinion from
  Target's legal counsel in a form to be mutually agreed by the parties
  hereto.

     (e) No Material Adverse Changes. There shall not have occurred any
  material adverse change in the condition (financial or otherwise),
  properties, assets (including intangible assets), liabilities, business,
  operations, results of operations or prospects of Target.

     (f) Affiliates Agreements. Acquiror shall have received from the
  Affiliates of Target an executed Affiliate Agreement in substantially the
  form attached hereto as Exhibit C.

     (g) Target Voting Agreements. Acquiror shall have received from certain
  stockholders of Target an executed Target Voting Agreement in substantially
  the form attached hereto as Exhibit D.

     (h) FIRPTA Certificate. Target shall, prior to the Closing Date, provide
  Acquiror with a properly executed FIRPTA Notification Letter, substantially
  in the form of Exhibit E attached hereto, which states that shares of
  capital stock of Target do not constitute "United States real property
  interests" under Section 897(c) of the Code, for purposes of satisfying
  Acquiror's obligations under Treasury Regulation Section 1.1445-2(c)(3). In
  addition, simultaneously with delivery of such Notification Letter, Target
  shall have provided to Acquiror, as agent for Target, a form of notice to
  the Internal Revenue Service in accordance with the requirements of
  Treasury Regulation Section 1.897-2(h)(2) and substantially in the form of
  Exhibit E attached hereto along with written authorization for Acquiror to
  deliver such notice form to the Internal Revenue Service on behalf of
  Target upon the Closing of the Merger.

     (i) 401(K) Plan. Target shall terminate its 401(k) Profit Sharing Plan
  by resolution of Target's board of directors effective as of a date prior
  to the Closing and shall take all necessary steps to effect such
  termination following the Closing, in compliance with the requirements of
  ERISA.

                                      A-26
<PAGE>

     (j) Resignation of Directors. The directors of Target in office
  immediately prior to the Effective Time shall have resigned as directors of
  Target effective as of the Effective Time.

     (k) Lock-Up Agreements. The persons identified in Section 5.9 shall have
  executed and delivered Lock-Up Agreements to Acquiror as provided therein.

     (l) Investors' Rights Agreement. The Target Investors' Rights Agreement
  shall be terminated prior to the Effective Time.

                                  ARTICLE VII

         TERMINATION, TERMINATION FEES, EXPENSES, AMENDMENT AND WAIVER

   7.1 Termination. At any time prior to the Effective Time, whether before or
after approval of the matters presented in connection with the Merger by the
stockholders of Target or Acquiror, this Agreement may be terminated:

     (a) by mutual consent duly authorized by the Board of Directors of
  Acquiror and Target;

     (b) by either Acquiror or Target, if (i) without fault of the
  terminating party, the Closing shall not have occurred on or before May 30,
  2001 (provided, a later date may be agreed upon in writing by the parties
  hereto, and provided further that the right to terminate this Agreement
  under this Section 7.1(b) shall not be available to any party whose action
  or failure to act has been the cause or resulted in the failure of the
  Merger to occur on or before such date and such action or failure to act
  constitutes a breach of this Agreement), or (ii) any permanent injunction
  or other order of a court or other competent authority preventing the
  consummation of the Merger shall have become final and nonappealable;

     (c) by Acquiror, if (i) Target shall materially breach any
  representation, warranty, obligation or agreement hereunder and such breach
  shall not have been cured within ten (10) business days of receipt by
  Target of written notice of such breach, provided that the right to
  terminate this Agreement by Acquiror under this Section 7.1(c)(i) shall not
  be available to Acquiror where Acquiror is at that time in willful breach
  of this Agreement, (ii) the Board of Directors of Target shall have
  withdrawn or modified its recommendation of this Agreement or the Merger in
  a manner adverse to Acquiror or shall have resolved to do any of the
  foregoing, provided that the right to terminate this Agreement by Acquiror
  under this Section 7.1(c)(ii) shall not be available to Acquiror where
  Acquiror is at that time in willful breach of this Agreement, (iii) for any
  reason Target fails to call and hold the Target Stockholders Meeting by May
  30, 2001 or commence solicitation of stockholder consents within 10 days
  after the effectiveness of the Registration Statement, provided that the
  right to terminate this Agreement by Acquiror under this Section
  7.1(c)(iii) shall not be available to Acquiror where Acquiror is at that
  time in willful breach of this Agreement, (iv) any required approval of the
  stockholders of Target shall not have been obtained by reason of the
  failure to obtain the required stockholder consents or vote at a duly held
  meeting of stockholders or at any adjournment thereof within 45 days after
  the Registration Statement is sent to the stockholders, or (v) the Target's
  Board of Directors shall have approved or publicly recommended any other
  Takeover Proposal; or

     (d) by Target, if (i) Acquiror shall materially breach any
  representation, warranty, obligation or agreement hereunder and such breach
  shall not have been cured within ten (10) days following receipt by
  Acquiror of written notice of such breach, provided that the right to
  terminate this Agreement by Target under this Section 7.1(d)(i) shall not
  be available to Target where Target is at that time in material breach of
  this Agreement, or (ii) the Board of Directors of Acquiror shall have
  withdrawn or modified its recommendation of this Agreement or the Merger in
  a manner adverse to Target or shall have resolved to do any of the
  foregoing, provided that the right to terminate this Agreement by Target
  under this Section 7.1(d)(ii) shall not be available to Target where Target
  is at that time in willful breach of this Agreement, (iii) for any reason
  Acquiror fails to call and hold the Target Stockholders Meeting by May 30
  2001 or commence solicitation of stockholder consents within 10 days after
  the effectiveness of the Registration

                                      A-27
<PAGE>

  Statement, provided that the right to terminate this Agreement by Target
  under this Section 7.1(d)(iii) shall not be available to Target where
  Target is at that time in willful breach of this Agreement, (iv) any
  required approval of the stockholders of Acquiror shall not have been
  obtained by reason of the failure to obtain the required stockholder
  consents or vote at a duly held meeting of stockholders or at any
  adjournment thereof within 45 days after the Registration Statement is sent
  to the stockholders, or (v) the Acquiror's Board of Directors shall have
  approved or publicly recommended any other Takeover Proposal.

   7.2 Effect of Termination. In the event of termination of this Agreement as
provided in Section 7.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of Acquiror or Target or their
respective officers, directors, stockholders or affiliates, except to the
extent that such termination results from the breach by a party hereto of any
of its representations, warranties or covenants set forth in this Agreement;
provided that, the provisions of Section 5.5 (Confidentiality) and this Section
7.2 shall remain in full force and effect and survive any termination of this
Agreement.

   7.3 Termination Fees.

   (a) In the event that this Agreement is terminated due to the fact Acquiror
shall not have received the requisite stockholder and/or board of director
votes required to approve the transactions contemplated by this Agreement, then
Acquiror shall pay Target a fee in the amount of one million dollars
($1,000,000). In the event that the Board of Directors of Acquiror has fully
complied with Section 5.1, the Board of Directors of Acquiror to the extent
required by the fiduciary obligations thereof, as determined in the good faith
judgment of its Board of Directors based on the advice of outside counsel may
terminate this Agreement, and then Acquiror shall pay Target a fee in the
amount of five hundred thousand dollars ($500,000).

   (b) In the event that this Agreement is terminated due to the fact Target
shall not have received the requisite stockholder and/or board of director
votes required to approve the transactions contemplated by this Agreement, then
Target shall pay Acquiror a fee in the amount of one million dollars
($1,000,000). In the event the Board of Directors of Target has fully complied
with Section 5.1 and determines that a Superior Proposal exists, the Board of
Directors of Target to the extent required by the fiduciary obligations
thereof, as determined in the good faith judgment of its Board of Directors
based on the advice of outside counsel may terminate this Agreement, and then
Target shall pay Acquiror a fee in the amount of five hundred thousand dollars
($500,000).

   (c) If Target or Acquiror fails to pay the appropriate fees in accordance
with this Section 7.3, the non-paying party shall pay the costs and expenses
(including reasonable legal fees and expenses) in connection with any action,
including the filing of any lawsuit or legal action, together with interest on
the amount of any unpaid fee at the so-called composite "prime rate" as quoted
from time to time during the relevant period in the Wall Street Journal, plus
4% per annum from the date such fee or fees were required to be paid pursuant
to this Section 7.3.

   (d) Any payment made pursuant to this Section 7.3 shall be made by delivery
of a certified check or by wire transfer of immediately available funds to an
account designated by the recipient thereof.

   7.4 Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including, without limitation, the fees and expenses of
its advisers, accountants and legal counsel) shall be paid by the party
incurring such expense.

   7.5 Amendment. The boards of directors of the parties hereto may cause this
Agreement to be amended at any time by execution of an instrument in writing
signed on behalf of each of the parties hereto; provided that an amendment made
subsequent to adoption of the Agreement by the stockholders of Target shall not
(i) alter or change the amount or kind of consideration to be received on
conversion of the Target Capital Stock, (ii) alter or change any term of the
Certificate of Incorporation of the Surviving Corporation to be effected by the
Merger, or (iii) alter or change any of the terms and conditions of the
Agreement if such alteration or change would adversely affect the holders of
Target Capital Stock.

                                      A-28
<PAGE>

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

                                  ARTICLE VIII

                               GENERAL PROVISIONS

   8.1 Survival of Representations, Warranties and Covenants. Notwithstanding
any investigation conducted before or after the Closing Date, and
notwithstanding any actual or implied knowledge or notice of any facts or
circumstances which Acquiror or Target may have as a result of such
investigation or otherwise, Acquiror and Target will be entitled to rely upon
the other party's representations, warranties and covenants set forth in this
Agreement. The representations and warranties of Target and Acquiror will
terminate upon the Closing; provided however, that (i) the obligations of each
party with respect to any intentional or fraudulent breaches of its
representations and warranties will survive the Closing and continue in full
force and effect until the date twelve (12) months following the Closing Date
(the "Survival Period"), at which time, the representations and warranties of
each party set forth in this Agreement will terminate and (ii) the
representation made by Acquiror in the last sentence of Section 3.2 shall
survive indefinitely. The affirmative covenants and agreements of the parties
set forth in this Agreement shall survive until fulfilled and the negative
covenants and agreements of the parties set forth in this Agreement shall
survive until the statute of limitations with respect to the subject matter of
such covenant or agreements has run.

   8.2 Maximum Liability and Remedies. Nothing herein shall limit any potential
remedies or liabilities of a party hereto with respect to any claim made
pursuant to Section 8.1 hereof during the Survival Period; provided that (a)
the liability of each Target stockholder hereunder shall be limited to ten
percent (10%) of the consideration received by such stockholder in the Merger
and the liability of each Target stockholder shall be several (meaning pro rata
in proportion to the consideration received by such stockholder) and not joint,
and (b) the liability of Acquiror hereunder to the Target stockholders shall be
limited to the consideration received by such stockholder in the Merger.
Nothing in this Agreement shall limit the liability of any Target stockholder
in connection with any breach by such stockholder of the Affiliates Agreement
and/or the Target Voting Agreement.

   8.3 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with confirmation of receipt) to the parties
at the following address (or at such other address for a party as shall be
specified by like notice):

     (a) if to Acquiror or Merger Sub, to:

       Ashford.com, Inc.
       3800 Buffalo Speedway, Suite 400
       Houston, Texas 77098
       Attention: Gary Paranzino
       Telephone No.: (713) 369-1300
       Facsimile No.: (713) 623-0444

       with a copy to:

       Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP
       2700 Via Fortuna, Suite 300
       Austin, Texas 78746
       Attention: Anthony M. Allen
       Telephone No.: (512) 732-8400
       Facsimile No.: (512) 732-0081

                                      A-29
<PAGE>

     (b) if to Target, to:

       Guild.com, Inc.
       931 E. Main Street, Suite 3
       Madison, Wisconsin 53703
       Attention: Gordon Mayer
       Telephone No.: (612) 334-8573
       Facsimile No.: (612) 334-8650

       with a copy to:

       Briggs and Morgan
       2400 IDS Center, 80 South Eighth Street
       Minneapolis, Minnesota
       Attention: Brian Wenger
       Telephone No.: (612) 334-8400
       Facsimile No.: (612) 334-8650

   8.4 Interpretation. When a reference is made in this Agreement to Exhibits,
such reference shall be to an Exhibit to this Agreement unless otherwise
indicated. The words "include," "includes" and "including" when used herein
shall be deemed in each case to be followed by the words "without limitation."
In this Agreement, any reference to any event, change, condition or effect
being "material" with respect to any entity or group of entities means any
material event, change, condition or effect related to the condition (financial
or otherwise), properties, assets (including intangible assets), liabilities,
business, operations or results of operations of such entity or group of
entities. In this Agreement, any reference to a "Material Adverse Effect" with
respect to any entity or group of entities means any event, change or effect
that is materially adverse to the condition (financial or otherwise),
properties, assets (including intangible assets), liabilities, business,
operations or results of operations of such entity, taken as a whole, except
changes caused by the announcement of, or the response or reaction of
customers, vendors, licensors, investors or employees of, Target or Acquiror to
this Agreement and the transactions contemplated hereby, changes, circumstances
or conditions affecting Target's or Acquiror's industry in general or changes
in general economic, regulatory or political conditions. In this Agreement, any
reference to a party's "knowledge" means such party's actual knowledge after
due and diligent inquiry of Gordon Mayer, Toni Sikes and Lori Wetzel for Target
and Kenneth Kurtzman, Brian Bergeron and Gary Paranzino for Acquiror. The
phrase "made available" in this Agreement shall mean that the information
referred to has been made available if requested by the party to whom such
information is to be made available. The words "tax" or "taxable" shall mean
any federal, state, local, municipal or foreign net income, gross income, gross
receipts, windfall profit, severance, property, production, sales, use,
license, excise, franchise, employment, payroll, withholding, alternative or
add-on minimum, ad valorem, value-added, transfer, stamp, or environmental tax,
or any other tax, custom, duty, tariff levy, import, governmental fee or other
like assessment or charge of any kind whatsoever, together with any interest or
penalty, addition to tax or additional amount imposed by any governmental or
regulatory authority, domestic and foreign. The phrases "the date of this
Agreement", "the date hereof", and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to the Agreement Date. The table
of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.

   8.5 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.

   8.6 Entire Agreement; No Third Party Beneficiaries. This Agreement, the
Target Transaction Documents, the Acquiror Transaction Documents, and the other
documents and instruments and other agreements specifically referred to herein
or delivered pursuant hereto, including the Exhibits, the Schedules, including
the Target Disclosure Schedule and the Acquiror Disclosure Schedule (a)
constitute the entire agreement among the

                                      A-30
<PAGE>

parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, except for the Confidentiality Agreement,
which shall continue in full force and effect, and shall survive any
termination of this Agreement or the Closing, in accordance with its terms and
(b) are not intended to confer upon any other person any rights or remedies
hereunder, except for the rights of the Target stockholders to receive the
consideration set forth in Article I of this Agreement and except for the
rights of the holders of the Target Options and the Target Warrants to receive
the options or warrants, as appropriate, pursuant to Section 5.13 of this
Agreement.

   8.7 Severability. In the event that any provision of this Agreement, or the
application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the 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 void or unenforceable provision of this Agreement with a
valid and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.

   8.8 Remedies Cumulative. 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 or equity
upon such party, and the exercise by a party of any one remedy will not
preclude the exercise of any other remedy.

   8.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to applicable
principles of conflicts of law. Each of the parties hereto irrevocably consents
to the exclusive jurisdiction of any court located within the State of
Delaware, in connection with any matter based upon or arising out of this
Agreement or the matters contemplated herein, agrees that process may be served
upon them in any manner authorized by the laws of the State of Delaware for
such persons and waives and covenants not to assert or plead any objection
which they might otherwise have to such jurisdiction and such process.

   8.10 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the
other parties. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and permitted assigns.

   8.11 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation, preparation and execution of
this Agreement and, therefore, waive the application of any law, regulation,
holding or rule of construction providing that ambiguities in an agreement or
other document will be construed against the party drafting such agreement or
document.

                 [REMAINDER OF PAGE LEFT BLANK INTENTIONALLY.]

                                      A-31
<PAGE>

             SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION

   IN WITNESS WHEREOF, Target, Acquiror and Merger Sub have caused this
Agreement to be executed and delivered under seal by their respective officers
thereunto duly authorized, all as of the date first written above.

                                          Ashford.com, Inc.

                                                 /s/ Kenneth E. Kurtzman
                                          By: _________________________________
                                             Kenneth E. Kurtzman
                                             Chief Executive Officer

                                          Guild.com, Inc.

                                                    /s/ Gordon Mayer
                                          By: _________________________________
                                             Gordon Mayer
                                             President

                                          Ashford-Guild Art Corporation

                                                 /s/ Kenneth E. Kurtzman
                                          By: _________________________________
                                             Kenneth E. Kurtzman
                                             Chief Executive Officer

                                      A-32
<PAGE>

                                                                         ANNEX B

                     RESTATED CERTIFICATE OF INCORPORATION
                                       OF
                                GUILD.COM, INC.

   The undersigned officer of Guild.Com, Inc., a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "General Corporation Law") upon filing of its Certificate of
Incorporation with the Secretary of State for the State of Delaware on March
16, 1999 under the original name of New Guild.Com, Inc., does hereby certify as
follows:

   FIRST: That the Board of Directors duly adopted resolutions proposing to
amend and restate the Certificate of Incorporation of this corporation,
declaring said amendment and restatement to be advisable and in the best
interests of this corporation and its stockholders, and authorizing the
appropriate officers of this corporation to solicit the consent of the
stockholders therefor, which resolution setting forth the proposed amendment
and restatement is as follows:

   RESOLVED, that the Certificate of Incorporation of this corporation be
amended and restated in its entirety as follows:

                                   ARTICLE I

   The name of this corporation is Guild.com, Inc.

                                   ARTICLE II

   The address of the registered office of this corporation in the State of
Delaware is 1209 Orange Street, Wilmington, DE 19801. The name of its
registered agent at such address is The Corporation Trust Company.

                                  ARTICLE III

   The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law.

                                   ARTICLE IV

   Upon the effective filing hereof, each outstanding share of Series C
Preferred Stock, $.001 par value per share, of the corporation (the "Old Series
C Stock"), shall be automatically converted into four (4) shares of Series C-1
Preferred Stock, $.001 par value per share, of the corporation (the "Series C-1
Preferred Stock") without any further action by the holders of such shares of
Old Series C Stock and whether or not the certificates representing the shares
of Old Series C Stock are surrendered to the corporation; provided, however,
that the corporation shall not be obligated to issue certificates evidencing
the shares of Series C-1 Preferred Stock issuable upon such conversion unless
certificates evidencing such shares of Old Series C Stock are either delivered
to the corporation, as hereinafter provided, or the holder notifies the
corporation that such certificates have been lost, stolen or destroyed and
executes an agreement satisfactory to the corporation to indemnify the
corporation from any loss incurred by it in connection therewith.

   Upon the occurrence of the automatic conversion of the Old Series C Stock,
the holders of the Old Series C Stock shall surrender the certificates
representing such shares at the office of the corporation. Thereupon, there
shall be issued and delivered to such holder, promptly at such office and in
the name shown on such surrendered certificate or certificates, a certificate
of certificates for the number of shares of Series C-1 Preferred Stock into
which the surrendered shares of Old Series C Stock are convertible, dated as of
the date on which automatic conversion occurs.

                                      B-1
<PAGE>

   Upon the effectiveness hereof, the authorized capital stock of the
corporation shall be as follows:

   A. Classes of Stock. This corporation is authorized to issue two classes of
stock to be designated, respectively, "Common Stock" and "Preferred Stock." The
total number of shares that this corporation is authorized to issue is sixty
million four hundred ninety-one thousand ninety-three (60,491,093) shares.
Thirty-five million (35,000,000) shares shall be Common Stock and twenty-five
million four hundred ninety-one thousand ninety-three (25,491,093) shares shall
be Preferred Stock, each class with a par value of $0.001 per share. The
Preferred Stock shall be divided into four series, Series A to consist of four
million eight hundred seventy thousand nine hundred fifteen (4,870,915) shares
(the "Series A Preferred Stock"), Series B to consist of three million five
hundred thousand one hundred seventy-eight (3,500,178) shares (the "Series B
Preferred Stock"), Series C-1 to consist of twelve million one hundred twenty
thousand (12,120,000) shares and Series D to consist of five million
(5,000,000) shares (the "Series D Preferred Stock").

   B. Rights, Preferences and Restrictions of Preferred Stock. The rights,
preferences, privileges, and restrictions granted to and imposed on the Series
A Preferred Stock, the Series B Preferred Stock, the Series C-1 Preferred Stock
and the Series D Preferred Stock are as set forth in this Article IV(B).

     1. Dividend Provisions.

        (a) The holders of shares of Series B Preferred Stock, Series C-1
    Preferred Stock and Series D Preferred Stock shall be entitled to
    receive dividends on a pari passu basis, out of any assets legally
    available therefor, prior and in preference to any declaration or
    payment of any dividend (payable other than in Common Stock or other
    securities and rights convertible into or entitling the holder thereof
    to receive, directly or indirectly, additional shares of Common Stock
    of this corporation) on the Series A Preferred Stock or the Common
    Stock of this corporation, at the rate of $0.05 per share per annum for
    the Series B Preferred Stock, $0.103 per share per annum for the Series
    C-1 Preferred Stock and $0.138 per share per annum for the Series D
    Preferred Stock (as adjusted for any stock splits, stock dividends,
    recapitalizations or the like), payable when, as, and if declared by
    the Board of Directors. Such dividends shall not be cumulative. The
    holders of the outstanding Series B Preferred Stock, Series C-1
    Preferred Stock and Series D Preferred Stock, as the case may be, can
    waive any dividend preference that such holders shall be entitled to
    receive under this Section 1 upon the affirmative vote or written
    consent of the holders of at least a majority of the Series B Preferred
    Stock, Series C-1 Preferred Stock and Series D Preferred Stock,
    respectively, then outstanding.

        (b) After payment of any dividends pursuant to Section 1(a), any
    additional dividends shall be distributed among all holders of Common
    Stock and all holders of Series A Preferred Stock, Series B Preferred
    Stock, Series C-1 Preferred Stock and Series D Preferred Stock in
    proportion to the number of shares of Common Stock which would be held
    by each such holder if all shares of each such series of Preferred
    Stock were converted to Common Stock at the then effective conversion
    rate.

     2. Liquidation Preference.

        (a) In the event of any liquidation, dissolution or winding up of
    this corporation, either voluntary or involuntary, the holders of
    Series B Preferred Stock, the holders of Series C-1 Preferred Stock and
    the holders of Series D Preferred Stock shall be entitled to receive,
    on a pari passu basis prior and in preference to any distribution of
    any of the assets of this corporation to the holders of shares of
    Series A Preferred Stock or Common Stock by reason of their ownership
    thereof, (i) with respect to the holders of Series B Preferred Stock,
    an amount per share of Series B Preferred Stock equal to the sum of (A)
    $1.00 for each outstanding share of Series B Preferred Stock (the
    "Original Series B Issue Price") and (B) an amount equal to all
    declared but unpaid dividends on such share (subject to adjustment of
    such fixed dollar amounts for any stock splits, stock dividends,
    combinations, recapitalizations or the like), (ii) with respect to the
    holders of Series C-1 Preferred Stock, an amount per share of Series C-
    1 Preferred Stock equal to the sum of (A) $2.06320475 for each
    outstanding share of Series C-1 Preferred Stock (the "Original Series
    C-1 Issue Price") and

                                      B-2
<PAGE>

    (B) an amount equal to all declared but unpaid dividends on such share
    (subject to adjustment of such fixed dollar amounts for any stock
    splits, stock dividends, combinations, recapitalizations or the like),
    and (iii) with respect to the holders of Series D Preferred Stock, an
    amount per share of Series D Preferred Stock equal to the sum of (A)
    $2.75 for each outstanding share of Series D Preferred Stock (the
    "Original Series D Issue Price") and (B) an amount equal to all
    declared but unpaid dividends on such share (subject to adjustment of
    such fixed dollar amounts for any stock splits, stock dividends,
    combinations, recapitalizations or the like). If, upon the occurrence
    of a liquidation, dissolution or winding up of this corporation, the
    assets and funds of the corporation legally available for distribution
    to stockholders by reason of their ownership of stock of the
    corporation shall be insufficient to permit the payment to such holders
    of Series B Preferred Stock, Series C-1 Preferred Stock and Series D
    Preferred Stock of the full aforementioned preferential amounts, then
    the entire assets and funds of the corporation legally available for
    distribution to stockholders by reason of their ownership of stock of
    the corporation shall be distributed ratably among the holders of
    Series B Preferred Stock, Series C-1 Preferred Stock and Series D
    Preferred Stock based upon the total preferential amount each holder
    would be entitled to receive if sufficient funds were distributed to
    pay the full preferential amounts.

        (b) Upon the completion of the distribution required by subsection
    (a) of this Section 2, the holders of Series A Preferred Stock shall be
    entitled to receive, prior and in preference to any distribution of any
    of the assets of this corporation to the holders of Common Stock by
    reason of their ownership thereof, an amount per share equal to the sum
    of (i) $1.00 for each outstanding share of Series A Preferred Stock
    (the "Original Series A Issue Price") and (ii) an amount equal to all
    declared but unpaid dividends on such share (subject to adjustment of
    such fixed dollar amounts for any stock splits, stock dividends,
    combinations, recapitalizations or the like). If, upon the occurrence
    of such event, the assets and funds thus distributed among the holders
    of the Series A Preferred Stock shall be insufficient to permit the
    payment to such holders of the full aforesaid preferential amounts,
    then the entire assets and funds of this corporation which remain after
    the distribution required by subsection (a) of this Section 2 and which
    are legally available for distribution shall be distributed ratably
    among the holders of the Series A Preferred Stock in proportion to the
    amount of such stock owned by each such holder.

        (c) Upon the completion of the distributions required by
    subsections (a) and (b) of this Section 2, all of the remaining assets
    of this corporation available for distribution to stockholders shall be
    distributed among the holders of Common Stock pro rata based on the
    number of shares of Common Stock held by each. Shares of Preferred
    Stock shall not be entitled to be converted into shares of Common Stock
    in order to participate in any distribution, or series of
    distributions, as shares of Common Stock without first foregoing
    participation in the distribution, or series of distributions, as
    shares of Preferred Stock.

       (d)

          (i) For purposes of this Section 2, a liquidation, dissolution
      or winding up of this corporation shall be deemed to be occasioned
      by, or to include (unless the holders of at least a majority of the
      Series B Preferred Stock, Series C-1 Preferred Stock and Series D
      Preferred Stock then outstanding, voting as separate series and not
      as a class, shall determine otherwise), (A) the acquisition of this
      corporation by another entity by means of any transaction or series
      of related transactions (including, without limitation, any
      reorganization, merger or consolidation) that results in the
      transfer of fifty percent (50%) or more of the outstanding voting
      power of this corporation; or (B) a sale of all or substantially all
      of the assets of this corporation.

           (ii) In any of such events, if the consideration received by
      this corporation is other than cash, its value will be deemed its
      fair market value. Any securities shall be valued as follows:


                                      B-3
<PAGE>

                  (A) Securities not subject to investment letter or other
              similar restrictions on free marketability covered by (B) below:

                    (1)If traded on a securities exchange or through the
               Nasdaq National Market, the value shall be deemed to be the
               average of the closing prices of the securities on such
               exchange or system over the thirty (30) day period ending three
               (3) days prior to the closing;

                    (2)If actively traded over-the-counter, the value shall be
               deemed to be the average of the closing bid or sale prices
               (whichever is applicable) over the thirty (30) day period
               ending three (3) days prior to the closing; and

                    (3)If there is no active public market, the value shall be
               the fair market value thereof, as mutually determined by the
               Board of Directors of this corporation and the holders of at
               least a majority of the voting power of all then outstanding
               shares of Series B Preferred Stock, Series C-1 Preferred Stock
               and Series D Preferred Stock, voting as a single class and not
               as separate series.

                  (B) The method of valuation of securities subject to
              investment letter or other restrictions on free marketability
              (other than restrictions arising solely by virtue of a
              stockholder's status as an affiliate or former affiliate) shall
              be to make an appropriate discount from the market value
              determined as above in (A) (1), (2) or (3) to reflect the
              approximate fair market value thereof, as mutually determined by
              the Board of Directors of this corporation and the holders of at
              least a majority of the voting power of all then outstanding
              shares of Series B Preferred Stock, Series C-1 Preferred Stock
              and Series D Preferred Stock, voting as a single class and not
              as separate series.

            (iii) In the event the requirements of this subsection 2(d)
      are not complied with, this corporation shall forthwith either:

                  (A) cause such closing to be postponed until such time as
              the requirements of this Section 2 have been complied with; or

                  (B) such transaction, in which event the rights, preferences
              and privileges of the holders of the Series A Preferred Stock,
              the Series B Preferred Stock, the Series C-1 Preferred Stock and
              the Series D Preferred Stock shall revert to and be the same as
              such rights, preferences and privileges existing immediately
              prior to the date of the first notice referred to in subsection
              2(d)(iv) hereof.

           (iv) This corporation shall give each holder of record of
      Series A Preferred Stock, Series B Preferred Stock, Series C-1
      Preferred Stock and Series D Preferred Stock written notice of such
      impending transaction not later than twenty (20) days prior to the
      stockholders' meeting called to approve such transaction, or twenty
      (20) days prior to the closing of such transaction, whichever is
      earlier, and shall also notify such holders in writing of the final
      approval of such transaction. The first of such notices shall
      describe the material terms and conditions of the impending
      transaction and the provisions of this Section 2, and this
      corporation shall thereafter give such holders prompt notice of any
      material changes. The transaction shall in no event take place
      sooner than twenty (20) days after this corporation has given the
      first notice provided for herein or sooner than ten (10) days after
      this corporation has given notice of any material changes provided
      for herein; provided, however, that such periods may be shortened
      only upon both (A) the written consent of the holders of Series B
      Preferred Stock, Series C-1 Preferred Stock and Series D Preferred
      Stock that are entitled to such notice rights or similar notice
      rights and that represent at least a majority of the voting power of
      all then outstanding shares of such Series B Preferred Stock, Series
      C-1 Preferred Stock and Series D Preferred Stock, voting as a single
      class and not as separate series, and (B) the written consent of the
      holders of Series A Preferred Stock that are entitled to such notice
      rights or similar notice rights and that represent at least a
      majority of the voting power of all then outstanding shares of such
      Series A Preferred Stock.

                                      B-4
<PAGE>

     3. Redemption. The Preferred Stock shall not be redeemable.

     4. Conversion. The holders of the Preferred Stock shall have conversion
  rights as follows (the "Conversion Rights"):

        (a) Right to Convert. Each share of Preferred Stock shall be
    convertible, at the option of the holder thereof, at any time after the
    date of issuance of such share, at the office of this corporation or
    any transfer agent for such stock, into such number of fully paid and
    nonassessable shares of Common Stock as is determined (A) in the case
    of the Series A Preferred Stock, by dividing the Original Series A
    Issue Price by the Conversion Price applicable to such share,
    determined as hereafter provided, in effect on the date the certificate
    is surrendered for conversion, (B) in the case of the Series B
    Preferred Stock, by dividing the Original Series B Issue Price by the
    Conversion Price applicable to such share, determined as hereinafter
    provided, in effect on the date the certificate is surrendered for
    conversion, (C) in the case of the Series C-1 Preferred Stock, by
    dividing the Original Series C-1 Issue Price by the Conversion Price
    applicable to such share, determined as hereinafter provided, in effect
    on the date the certificate is surrendered for conversion and (D) in
    the case of the Series D Preferred Stock, by dividing the Original
    Series D Issue Price by the Conversion Price applicable to such share,
    determined as hereinafter provided, in effect on the date the
    certificate is surrendered for conversion. The initial Conversion Price
    per share for shares of Series A Preferred Stock shall be the Original
    Series A Issue Price, the initial Conversion Price for shares of Series
    B Preferred Stock shall be the Original Series B Issue Price, the
    initial Conversion Price for shares of Series C-1 Preferred Stock shall
    be the Original Series C-1 Issue Price and the initial Conversion Price
    for shares of Series D Preferred Stock shall be the Original Series D
    Issue Price; provided, however, that the Conversion Price for the
    Series A Preferred Stock, the Series B Preferred Stock, the Series C-1
    Preferred Stock and the Series D Preferred Stock shall be subject to
    adjustment as set forth in subsection 4(d).

        (b) Automatic Conversion. Each share of Series A Preferred Stock,
    Series B Preferred Stock, Series C-1 Preferred Stock and Series D
    Preferred Stock shall automatically be converted into shares of Common
    Stock at the Conversion Price at the time in effect for such series of
    Preferred Stock immediately upon the earlier of (i) this corporation's
    sale of its Common Stock in a firm commitment underwritten public
    offering pursuant to a registration statement on Form S-1 or Form SB-2
    under the Securities Act of 1933, as amended, the public offering price
    of which was not less than $10.00 per share (as adjusted for any stock
    splits, stock dividends, recapitalizations or the like) and $25,000,000
    in the aggregate or (ii) the date specified by written consent or
    agreement of the holders of a majority of the then outstanding shares
    of Series B Preferred Stock, Series C-1 Preferred Stock and Series D
    Preferred Stock, voting together as a class and not as separate series.

        (c) Mechanics of Conversion. Before any holder of shares of
    Preferred Stock shall be entitled to convert the same into shares of
    Common Stock, he or she shall surrender the certificate or certificates
    therefor, duly endorsed, at the office of this corporation or of any
    transfer agent for the shares of Preferred Stock, and shall give
    written notice to this corporation at its principal corporate office,
    of the election to convert the same and shall state therein the name or
    names in which the certificate or certificates for shares of Common
    Stock are to be issued. This corporation shall, as soon as practicable
    thereafter, issue and deliver at such office to such holder of shares
    of Preferred Stock, or to the nominee or nominees of such holder, a
    certificate or certificates for the number of shares of Common Stock to
    which such holder shall be entitled as aforesaid. Such conversion shall
    be deemed to have been made immediately prior to the close of business
    on the date of such surrender of the shares of Preferred Stock to be
    converted, and the person or persons entitled to receive the shares of
    Common Stock issuable upon such conversion shall be treated for all
    purposes as the record holder or holders of such shares of Common Stock
    as of such date. If the conversion is in connection with an
    underwritten offering of securities registered pursuant to the
    Securities Act of 1933, the conversion may, at the option of any holder
    tendering Preferred Stock for conversion, be conditioned upon the
    closing with the underwriters of the sale of securities pursuant to
    such offering, in which event the

                                      B-5
<PAGE>

    persons entitled to receive the Common Stock upon conversion of the
    Preferred Stock shall not be deemed to have converted such Preferred
    Stock until immediately prior to the closing of such sale of
    securities.

        (d) Conversion Price Adjustments of Preferred Stock. The Conversion
    Price of the Series A Preferred Stock, the Series B Preferred Stock,
    the Series C-1 Preferred Stock and the Series D Preferred Stock shall
    be subject to adjustment from time to time as follows:

          (i) In the event this corporation should at any time or from
      time to time after the date upon which any shares of Series B
      Preferred Stock, Series C-1 Preferred Stock or Series D Preferred
      Stock were first issued (the "Purchase Date") fix a record date for
      the effectuation of a split or subdivision of the outstanding shares
      of Common Stock or the determination of holders of Common Stock
      entitled to receive a dividend or other distribution payable in
      additional shares of Common Stock or other securities or rights
      convertible into, or entitling the holder thereof to receive
      directly or indirectly, additional shares of Common Stock
      (hereinafter referred to as "Common Stock Equivalents") without
      payment of any consideration by such holder for the additional
      shares of Common Stock or the Common Stock Equivalents (including
      the additional shares of Common Stock issuable upon conversion or
      exercise thereof), then, as of such record date (or the date of such
      dividend distribution, split or subdivision if no record date is
      fixed), the Conversion Price of each series of Preferred Stock shall
      be appropriately decreased so that the number of shares of Common
      Stock issuable on conversion of each share of such series shall be
      increased in proportion to such increase of the aggregate of shares
      of Common Stock outstanding and those issuable with respect to such
      Common Stock Equivalents.

           (ii) If the number of shares of Common Stock outstanding at any
      time after the Purchase Date is decreased by a combination of the
      outstanding shares of Common Stock, then, following the record date
      of such combination, the Conversion Price for each series of
      Preferred Stock shall be appropriately increased so that the number
      of shares of Common Stock issuable on conversion of each share of
      such series shall be decreased in proportion to such decrease in
      outstanding shares.

        (e) Other Distributions. In the event this corporation shall
    declare a distribution payable in securities of other persons,
    evidences of indebtedness issued by this corporation or other persons,
    assets (excluding cash dividends) or options or rights not referred to
    in subsection 4(d)(i), then, in each such case for the purpose of this
    subsection 4(e), the holders of shares of Preferred Stock shall be
    entitled to a proportionate share of any such distribution as though
    they were the holders of the number of shares of Common Stock of this
    corporation into which their shares of Preferred Stock are convertible
    as of the record date fixed for the determination of the holders of
    Common Stock of this corporation entitled to receive such distribution.

        (f) Recapitalizations. If at any time or from time to time there
    shall be a recapitalization of the Common Stock (other than a
    subdivision, combination or merger or sale of assets transaction
    provided for elsewhere in this Section 4 or Section 2) provision shall
    be made so that the holders of the Preferred Stock shall thereafter be
    entitled to receive upon conversion of shares of Preferred Stock the
    number of shares of stock or other securities or property of the
    corporation or otherwise, to which a holder of Common Stock deliverable
    upon conversion would have been entitled on such recapitalization. In
    any such case, appropriate adjustment shall be made in the application
    of the provisions of this Section 4 with respect to the rights of the
    holders of shares of Preferred Stock after the recapitalization to the
    end that the provisions of this Section 4 (including adjustment of the
    Conversion Price then in effect and the number of shares purchasable
    upon conversion of such shares of Preferred Stock) shall be applicable
    after that event as nearly equivalent as may be practicable.

        (g) No Impairment. This corporation will not, by amendment of its
    Certificate of Incorporation or through any reorganization,
    recapitalization, transfer of assets, consolidation, merger,
    dissolution,

                                      B-6
<PAGE>

    issue or sale of securities or any other voluntary action, avoid or
    seek to avoid the observance or performance of any of the terms to be
    observed or performed hereunder by this corporation, but will at all
    times in good faith assist in the carrying out of all the provisions of
    this Section 4 and in the taking of all such action as may be necessary
    or appropriate in order to protect the Conversion Rights of the holders
    of shares of Preferred Stock against impairment.

        (h) No Fractional Shares and Certificate as to Adjustments.

          (i) No fractional shares shall be issued upon the conversion of
      any share or shares of Preferred Stock, and the number of shares of
      Common Stock to be issued shall be rounded to the nearest whole
      share. Whether or not fractional shares are issuable upon such
      conversion shall be determined on the basis of the total number of
      shares of Preferred Stock the holder is at the time converting into
      Common Stock and the number of shares of Common Stock issuable upon
      such aggregate conversion.

           (ii) Upon the occurrence of each adjustment or readjustment of
      the Conversion Price of the Preferred Stock pursuant to this Section
      4, this corporation, at its expense, shall promptly compute such
      adjustment or readjustment in accordance with the terms hereof and
      prepare and furnish to each holder of such series of Preferred Stock
      a certificate setting forth such adjustment or readjustment and
      showing in detail the facts upon which such adjustment or
      readjustment is based. This corporation shall, upon the written
      request at any time of any holder of Preferred Stock, furnish or
      cause to be furnished to such holder a like certificate setting
      forth (A) such adjustment and readjustment, (B) the Conversion Price
      for such series of Preferred Stock at the time in effect, and (C)
      the number of shares of Common Stock and the amount, if any, of
      other property that at the time would be received upon the
      conversion of a share of such Preferred Stock.

        (i) Notices of Record Date. In the event of any taking by this
    corporation of a record of the holders of any class of securities for
    the purpose of determining the holders thereof who are entitled to
    receive any dividend (other than a cash dividend) or other
    distribution, any right to subscribe for, purchase or otherwise acquire
    any shares of stock of any class or any other securities or property,
    or to receive any other right, this corporation shall mail to each
    holder of Preferred Stock, at least twenty (20) days prior to the date
    specified therein, a notice specifying the date on which any such
    record is to be taken for the purpose of such dividend, distribution or
    right, and the amount and character of such dividend, distribution or
    right.

        (j) Reservation of Stock Issuable Upon Conversion. This corporation
    shall at all times reserve and keep available out of its authorized but
    unissued shares of Common Stock, solely for the purpose of effecting
    the conversion of the shares of Preferred Stock, such number of its
    shares of Common Stock as shall from time to time be sufficient to
    effect the conversion of all outstanding shares of Preferred Stock; and
    if at any time the number of authorized but unissued shares of Common
    Stock shall not be sufficient to effect the conversion of all then
    outstanding shares of Preferred Stock, in addition to such other
    remedies as shall be available to the holder of such shares of
    Preferred Stock, this corporation will take such corporate action as
    may, in the opinion of its counsel, be necessary to increase its
    authorized but unissued shares of Common Stock to such number of shares
    as shall be sufficient for such purposes, including, without
    limitation, engaging in best efforts to obtain the requisite
    stockholder approval of any necessary amendment to this Certificate of
    Incorporation.

        (k) Notices. Any notice required by the provisions of this Section
    4 to be given to the holders of shares of Preferred Stock shall be
    deemed given if deposited in the United States mail, postage prepaid,
    and addressed to each holder of record at his address appearing on the
    books of this corporation.

                                      B-7
<PAGE>

     5. Voting Rights.

        (a) General Voting Rights. Except as provided in Section 5(b)
    below, the holder of each share of Preferred Stock shall have the right
    to one vote for each share of Common Stock into which such share of
    Preferred Stock could then be converted, and with respect to such vote,
    such holder shall have full voting rights and powers equal to the
    voting rights and powers of the holders of Common Stock, and shall be
    entitled, notwithstanding any provision hereof, to notice of any
    stockholders' meeting in accordance with the bylaws of this
    corporation, and shall be entitled to vote, together with holders of
    Common Stock, with respect to any question upon which holders of Common
    Stock have the right to vote. Fractional votes shall not, however, be
    permitted and any fractional voting rights available on an as-converted
    basis (after aggregating all shares into which shares of Preferred
    Stock held by each holder could be converted) shall be rounded to the
    nearest whole number (with one-half being rounded upward).

        (b) Voting for the Election of Directors. So long as at least a
    majority of the shares of Series B Preferred Stock originally issued
    remain outstanding, the holders of such shares of Series B Preferred
    Stock shall be entitled to elect one (1) director of this corporation
    at each annual election of directors. So long as at least a majority of
    the shares of Series C-1 Preferred Stock originally issued remain
    outstanding, the holders of such shares of Series C-1 Preferred Stock
    shall be entitled to elect one (1) director of this corporation at each
    annual election of directors. So long as at least a majority of the
    shares of Series A Preferred Stock originally issued remain
    outstanding, the holders of Common Stock (excluding any shares of
    Common Stock issued or issuable upon conversion of Series B Preferred
    Stock, Series C-1 Preferred Stock and Series D Preferred Stock) and
    Series A Preferred Stock (voting together as a single class and not as
    separate series, and on an as-converted basis) shall be entitled to
    elect two (2) directors of this corporation at each annual election of
    directors. The fifth director of this corporation shall be an
    individual who is unanimously approved by the other board members
    elected pursuant to this Section 5.

      In the case of any vacancy (other than a vacancy caused by removal)
      in the office of a director occurring among the directors elected by
      the holders of a class or series of stock pursuant to this Section
      5(b), the remaining directors so elected by that class or series may
      by affirmative vote of a majority thereof (or the remaining director
      so elected if there be but one, or if there are no such directors
      remaining, by the affirmative vote of the holders of a majority of
      the shares of that class or series), elect a successor or successors
      to hold office for the unexpired term of the director or directors
      whose place or places shall be vacant. Any director who shall have
      been elected by the holders of a class or series of stock or by any
      directors so elected as provided in the immediately preceding
      sentence hereof may be removed during the aforesaid term of office,
      either with or without cause, by, and only by, the affirmative vote
      of the holders of the shares of the class or series of stock
      entitled to elect such director or directors, given either at a
      special meeting of such stockholders duly called for that purpose or
      pursuant to a written consent of stockholders, and any vacancy
      thereby created may be filled by the holders of that class or series
      of stock represented at the meeting or pursuant to unanimous written
      consent.

     6. Protective Provisions. So long as any shares of Series B Preferred
  Stock, Series C-1 Preferred Stock or Series D Preferred Stock are
  outstanding, this corporation shall not without first obtaining the
  approval (by vote or written consent, as provided by law) of the holders of
  at least a majority of the then outstanding shares of:

        (a) Series B Preferred Stock, Series C-1 Preferred Stock and Series
    D Preferred Stock, voting as a single class and not as separate series,
    (i) sell, convey, or otherwise dispose of all or substantially all of
    its property or business or merge into or consolidate with any other
    corporation (other than a wholly-owned subsidiary corporation) or
    effect any transaction or series of related transactions in which more
    than fifty percent (50%) of the voting power of this corporation is
    disposed of, (ii) authorize or issue, or obligate itself to issue, any
    other equity security, including any other security convertible into or
    exercisable for any equity security, having a preference over, or being
    on a parity

                                      B-8
<PAGE>

    with, the Series B Preferred Stock, Series C-1 Preferred Stock or
    Series D Preferred Stock with respect to dividends, liquidation,
    redemption or voting, (iii) redeem, purchase or otherwise acquire (or
    pay into or set aside for a sinking fund for such purpose) any share or
    shares of Preferred Stock or Common Stock, provided, however, that this
    restriction shall not apply to the repurchase of shares of Common Stock
    from employees, officers, directors, consultants or other persons
    performing services for this corporation or any subsidiary pursuant to
    agreements under which this corporation has the option to repurchase
    such shares at cost upon the occurrence of termination of employment,
    (iv) pay dividends on the Common Stock of the corporation, or (v)
    change the authorized number of directors of this corporation;

        (b) Series B Preferred Stock, (i) alter or change the rights,
    preferences or privileges of the shares of Series B Preferred Stock so
    as to affect adversely such shares, (ii) increase or decrease (other
    than by conversion) the total number of authorized shares of Series B
    Preferred Stock, or (iii) amend this corporation's Certificate of
    Incorporation or bylaws so as to affect adversely the shares of Series
    B Preferred Stock;

        (c) Series C-1 Preferred Stock, (i) alter or change the rights,
    preferences or privileges of the shares of Series C-1 Preferred Stock
    so as to affect adversely such shares, (ii) increase or decrease (other
    than by conversion) the total number of authorized shares of Series C-1
    Preferred Stock or (iii) amend this corporation's Certificate of
    Incorporation or bylaws so as to affect adversely the shares of Series
    C-1 Preferred Stock;

        (d) Series D Preferred Stock, (i) alter or change the rights,
    preferences or privileges of the shares of Series D Preferred Stock so
    as to affect adversely such shares, (ii) increase or decrease (other
    than by conversion) the total number of authorized shares of Series D
    Preferred Stock or (iii) amend this corporation's Certificate of
    Incorporation or bylaws so as to affect adversely the shares of Series
    D Preferred Stock.

     7. Status of Converted Stock. In the event any shares of Preferred Stock
  shall be converted pursuant to Section 4 hereof, the shares so converted
  shall be cancelled and shall not be issuable by this corporation. The
  Certificate of Incorporation of this corporation shall be appropriately
  amended to effect the corresponding reduction in this corporation's
  authorized capital stock.

     8. Voting as a Class. Except as otherwise specifically provided herein,
  the Series B Preferred Stock, the Series C-1 Preferred Stock and Series D
  Preferred Stock shall vote or consent together as a single class and not as
  separate series.

   C. Common Stock. The rights, preferences, privileges and restrictions
granted to and imposed on the Common Stock are as set forth below in this
Article IV(C).

     1. Dividend Rights. Subject to the prior rights of holders of all
  classes of stock at the time outstanding having prior rights as to
  dividends and subject to the rights of holders of Series B Preferred Stock,
  Series C-1 Preferred Stock and Series D Preferred Stock under Section
  B.6(h) hereof, the holders of the Common Stock shall be entitled to
  receive, when and as declared by the Board of Directors, out of any assets
  of this corporation legally available therefor, such dividends as may be
  declared from time to time by the Board of Directors.

     2. Liquidation Rights. Upon the liquidation, dissolution or winding up
  of this corporation, the assets of this corporation shall be distributed as
  provided in Section B.2 of Article IV hereof.

     3. Redemption. The Common Stock is not redeemable.

     4. Voting Rights. Except as provided in Section B.5(b) hereof, the
  holder of each share of Common Stock shall have the right to one vote for
  each such share, and shall be entitled to notice of any stockholders'
  meeting in accordance with the bylaws of this corporation, and shall be
  entitled to vote upon such matters and in such manner as may be provided by
  law.

                                      B-9
<PAGE>

                                   ARTICLE V

   Except as otherwise provided in this Certificate of Incorporation, in
furtherance and not in limitation of the powers conferred by statute, the
Board of Directors is expressly authorized to make, repeal, alter, amend and
rescind any or all of the Bylaws of this corporation.

                                  ARTICLE VI

   Subject to Article IV, Section 6(a)(v) hereof, the number of directors of
this corporation shall be fixed from time to time by a bylaw or amendment
thereof duly adopted by the Board of Directors or by the stockholders.

                                  ARTICLE VII

   Elections of directors need not be by written ballot unless the Bylaws of
this corporation shall so provide.

                                 ARTICLE VIII

   Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of this corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of this corporation.

                                  ARTICLE IX

   A director of this corporation shall, to the fullest extent permitted by
the General Corporation Law as it now exists or as it may hereafter be
amended, not be personally liable to this corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to this
corporation or its stockholders, (ii) for acts or omissions not in good faith
or that involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the General Corporation Law, or (iv) for any transaction
from which the director derived any improper personal benefit. If the General
Corporation Law is amended, after approval by the stockholders of this
Article, to authorize corporation action further eliminating or limiting the
personal liability of directors, then the liability of a director of this
corporation shall be eliminated or limited to the fullest extent permitted by
the General Corporation Law, as so amended.

   Any amendment, repeal or modification of this Article IX, or the adoption
of any provision of this Certificate of Incorporation inconsistent with this
Article IX, by the stockholders of this corporation shall not apply to or
adversely affect any right or protection of a director of this corporation
existing at the time of such amendment, repeal, modification or adoption.

                                   ARTICLE X

   To the fullest extent permitted by applicable law, this corporation is
authorized to provide indemnification of (and advancement of expenses to)
directors, officers and agents of this corporation (and any other persons to
which the General Corporation Law permits this corporation to provide
indemnification) through bylaw provisions, agreements with such directors,
officers, agents or other persons, vote of stockholders or disinterested
directors or otherwise, in excess of the indemnification and advancement
otherwise permitted by Section 145 of the General Corporation Law, subject
only to limits created by applicable General Corporation Law (statutory or
non-statutory), with respect to actions for breach of duty to this
corporation, its stockholders, and others.

   Any amendment, repeal or modification of the foregoing provisions of this
Article X shall not adversely affect any right or protection of a director,
officer, agent, or other person existing at the time of, or increase the
liability of any director of this corporation with respect to any acts or
omissions of such director, officer or agent occurring prior to, such
amendment, repeal or modification.


                                     B-10
<PAGE>

   SECOND: The foregoing amendment and restatement was approved by the holders
of the requisite number of shares of said corporation in accordance with
Section 228 of the General Corporation Law.

   THIRD: That said amendment and restatement was duly adopted in accordance
with the provisions of Sections 242 and 245 of the General Corporation Law.

   IN WITNESS WHEREOF, the undersigned has executed this Restated Certificate
of Incorporation this 2nd day of August, 2000.

                                          GUILD.COM, INC.

                                                    /s/ Gordon Mayer
                                          By: _________________________________
                                          Name: Gordon Mayer
                                          Title: Chief Executive Officer and
                                           President

                                      B-11
<PAGE>

                                                                        ANNEX C

                           CERTIFICATE OF AMENDMENT
                                      OF
                      RESTATED CERTIFICATE INCORPORATION
                                      OF
                                GUILD.COM, INC.

   The undersigned officer of Guild.com, Inc., a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "Corporation"), does hereby certify as follows:

   FIRST: That the Board of Directors of the Corporation duly adopted the
following resolution proposing to amend the Restated Certificate of
Incorporation of the Corporation, declaring such amendment to be advisable and
in the best interest of the Corporation and its stockholders and recommending
to the stockholders of the Corporation that they vote in favor of said
amendment:

  RESOLVED, that Article IV(B)(2)(d)(i) of the Restated Certificate of
  Incorporation of the Corporation shall be amended to modify the liquidation
  preferences of the Series A, B, C-1 and D stockholders, subject to the
  approval of the Corporation's stockholders, as described below, by adding
  the following paragraph as a new paragraph immediately following the
  existing Section 2(d)(i) of Article IV(B):

      "For purposes of this Section 2, and notwithstanding any
      contrary provision of this Section 2 or as set forth
      elsewhere herein, the merger (the "Merger") of the
      corporation with Ashford-Guild Art Corporation, a Delaware
      corporation (the "Merger Sub") pursuant to the terms and
      conditions of that certain Agreement and Plan of
      Reorganization by and among Ashford.com, Inc., a Delaware
      corporation ("Ashford"), the corporation and Merger Sub
      dated January 3, 2001 (the "Merger Agreement") shall be
      deemed to be a liquidation, dissolution and winding up of
      the corporation, and the liquidation preferences and the
      consideration to be received by each holder of Series A
      Preferred Stock, Series B Preferred Stock, Series C-1
      Preferred Stock and Series D Preferred Stock in connection
      with the Merger shall be determined as set forth in Exhibit
      B-1 of the Merger Agreement if the value of the Merger
      Consideration (as defined in the Merger Agreement) is less
      than the aggregate amount of the liquidation preferences of
      the Series B Preferred Stock, the Series C-1 Preferred
      Stock and the Series D Preferred Stock as such series are
      entitled to pursuant to Section 2(a)."

  FURTHER RESOLVED, that the foregoing amendment shall be subject to the
  approval of (i) a majority of the outstanding shares of the Corporation's
  common stock and preferred stock voting as a single class, and (ii) a
  majority of the outstanding shares of the Corporation's Series A, Series B,
  Series C-1 and Series D preferred stock, each voting as a separate series
  and not as a single class.

   SECOND: That the foregoing amendment was approved by the holders of the
requisite number of shares of the Corporation at a special meeting of the
stockholders of the Corporation which was duly called and held in accordance
with Subchapter VII of the General Corporation Law of the State of Delaware.

   THIRD: That the foregoing amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.

   FOURTH: That the capital of the Corporation shall not be reduced under or
by reason of said amendment.

                                      C-1
<PAGE>

   IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Amendment of the Restated Certificate of Incorporation this      day of
           , 2001.

                                          Company Name

                                          By: _________________________________
                                          Name: Gordon Mayer
                                          TItle: President

                                      C-2
<PAGE>

                                                                         ANNEX D

                        DELAWARE GENERAL CORPORATION LAW

SEC. 262 APPRAISAL RIGHTS.

   (a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to Section
228 of this title shall be entitled to an appraisal by the Court of Chancery of
the fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and
the words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions
thereof, solely of stock of a corporation, which stock is deposited with the
depository.

   (b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Section 251 (other than a merger effected pursuant to
Section 251(g) of this title), Section 252, Section 254, Section 257, Section
258, Section 263 or Section 264 of this title:

      (1) Provided, however, that no appraisal rights under this section
  shall be available for the shares of any class or series of stock, which
  stock, or depository receipts in respect thereof, at the record date fixed
  to determine the stockholders entitled to receive notice of and to vote at
  the meeting of stockholders to act upon the agreement of merger or
  consolidation, were either (i) listed on a national securities exchange or
  designated as a national market system security on an interdealer quotation
  system by the National Association of Securities Dealers, Inc. or (ii) held
  of record by more than 2,000 holders; and further provided that no
  appraisal rights shall be available for any shares of stock of the
  constituent corporation surviving a merger if the merger did not require
  for its approval the vote of the stockholders of the surviving corporation
  as provided in subsection (f) of Section 251 of this title.

      (2) Notwithstanding paragraph (1) of this subsection, appraisal rights
  under this section shall be available for the shares of any class or series
  of stock of a constituent corporation if the holders thereof are required
  by the terms of an agreement of merger or consolidation pursuant to
  Sections 251, 252, 254, 257, 258, 263 and 264 of this title to accept for
  such stock anything except:

       a. Shares of stock of the corporation surviving or resulting from
    such merger or consolidation, or depository receipts in respect
    thereof;

       b. Shares of stock of any other corporation, or depository receipts
    in respect thereof, which shares of stock (or depository receipts in
    respect thereof) or depository receipts at the effective date of the
    merger or consolidation will be either listed on a national securities
    exchange or designated as a national market system security on an
    interdealer quotation system by the National Association of Securities
    Dealers, Inc. or held of record by more than 2,000 holders;

       c. Cash in lieu of fractional shares or fractional depository
    receipts described in the foregoing subparagraphs a. and b. of this
    paragraph; or

       d. Any combination of the shares of stock, depository receipts and
    cash in lieu of fractional shares or fractional depository receipts
    described in the foregoing subparagraphs a., b. and c. of this
    paragraph.

      (3) In the event all of the stock of a subsidiary Delaware corporation
  party to a merger effected under Section 253 of this title is not owned by
  the parent corporation immediately prior to the merger, appraisal rights
  shall be available for the shares of the subsidiary Delaware corporation.

                                      D-1
<PAGE>

   (c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.

   (d) Appraisal rights shall be perfected as follows:

     (1) If a proposed merger or consolidation for which appraisal rights are
  provided under this section is to be submitted for approval at a meeting of
  stockholders, the corporation, not less than 20 days prior to the meeting,
  shall notify each of its stockholders who was such on the record date for
  such meeting with respect to shares for which appraisal rights are
  available pursuant to subsection (b) or (c) hereof that appraisal rights
  are available for any or all of the shares of the constituent corporations,
  and shall include in such notice a copy of this section. Each stockholder
  electing to demand the appraisal of such stockholder's shares shall deliver
  to the corporation, before the taking of the vote on the merger or
  consolidation, a written demand for appraisal of such stockholder's shares.
  Such demand will be sufficient if it reasonably informs the corporation of
  the identity of the stockholder and that the stockholder intends thereby to
  demand the appraisal of such stockholder's shares. A proxy or vote against
  the merger or consolidation shall not constitute such a demand. A
  stockholder electing to take such action must do so by a separate written
  demand as herein provided. Within 10 days after the effective date of such
  merger or consolidation, the surviving or resulting corporation shall
  notify each stockholder of each constituent corporation who has complied
  with this subsection and has not voted in favor of or consented to the
  merger or consolidation of the date that the merger or consolidation has
  become effective; or

     (2) If the merger or consolidation was approved pursuant to Section 228
  or Section 253 of this title, each constituent corporation, either before
  the effective date of the merger or consolidation or within ten days
  thereafter, shall notify each of the holders of any class or series of
  stock of such constituent corporation who are entitled to appraisal rights
  of the approval of the merger or consolidation and that appraisal rights
  are available for any or all shares of such class or series of stock of
  such constituent corporation, and shall include in such notice a copy of
  this section; provided that, if the notice is given on or after the
  effective date of the merger or consolidation, such notice shall be given
  by the surviving or resulting corporation to all such holders of any class
  or series of stock of a constituent corporation that are entitled to
  appraisal rights. Such notice may, and, if given on or after the effective
  date of the merger or consolidation, shall, also notify such stockholders
  of the effective date of the merger or consolidation. Any stockholder
  entitled to appraisal rights may, within 20 days after the date of mailing
  of such notice, demand in writing from the surviving or resulting
  corporation the appraisal of such holder's shares. Such demand will be
  sufficient if it reasonably informs the corporation of the identity of the
  stockholder and that the stockholder intends thereby to demand the
  appraisal of such holder's shares. If such notice did not notify
  stockholders of the effective date of the merger or consolidation, either
  (i) each such constituent corporation shall send a second notice before the
  effective date of the merger or consolidation notifying each of the holders
  of any class or series of stock of such constituent corporation that are
  entitled to appraisal rights of the effective date of the merger or
  consolidation or (ii) the surviving or resulting corporation shall send
  such a second notice to all such holders on or within 10 days after such
  effective date; provided, however, that if such second notice is sent more
  than 20 days following the sending of the first notice, such second notice
  need only be sent to each stockholder who is entitled to appraisal rights
  and who has demanded appraisal of such holder's shares in accordance with
  this subsection. An affidavit of the secretary or assistant secretary or of
  the transfer agent of the corporation that is required to give either
  notice that such notice has been given shall, in the absence of fraud, be
  prima facie evidence of the facts stated therein. For purposes of
  determining the stockholders entitled to receive either notice, each
  constituent corporation may fix, in advance, a record date that shall be
  not more than 10 days prior to the date the notice is given, provided, that
  if the notice is given on or after the effective date of the merger or
  consolidation, the record date shall be such effective date. If no record
  date is fixed and the notice is given

                                      D-2
<PAGE>

  prior to the effective date, the record date shall be the close of business
  on the day next preceding the day on which the notice is given.

   (e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10
days after such stockholder's written request for such a statement is received
by the surviving or resulting corporation or within 10 days after expiration of
the period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.

   (f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.

   (g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.

   (h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court may,
in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on the
list filed by the surviving or resulting corporation pursuant to subsection (f)
of this section and who has submitted such stockholder's certificates of stock
to the Register in Chancery, if such is required, may participate fully in all
proceedings until it is finally determined that such stockholder is not
entitled to appraisal rights under this section.

                                      D-3
<PAGE>

   (i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.

   (j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.

   (k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation,
either within 60 days after the effective date of the merger or consolidation
as provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the
Court of Chancery shall be dismissed as to any stockholder without the approval
of the Court, and such approval may be conditioned upon such terms as the Court
deems just.

   (l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.

                                      D-4
<PAGE>

                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

   Ashford's Certificate of Incorporation in effect as of the date hereof, and
Ashford's Certificate of Incorporation to be in effect upon the closing of the
merger (collectively, the "Certificate") provides that, except to the extent
prohibited by the Delaware General Corporation Law, as amended, or the DGCL,
Ashford's directors shall not be personally liable to Ashford or its
stockholders for monetary damages for any breach of fiduciary duty as directors
of Ashford. Under the DGCL, the directors have a fiduciary duty to Ashford
which is not eliminated by this provision of the Certificate and, in
appropriate circumstances, equitable remedies such as injunctive or other forms
of non-monetary relief will remain available. In addition, each director will
continue to be subject to liability under the DGCL for breach of the director's
duty of loyalty to Ashford, for acts or omissions which are found by a court of
competent jurisdiction to be not in good faith or involving intentional
misconduct, for knowing violations of law, for actions leading to improper
personal benefit to the director, and for payment of dividends or approval of
stock repurchases or redemptions that are prohibited by the DGCL. This
provision also does not affect the directors' responsibilities under any other
laws, such as the federal securities laws or state or federal environmental
laws. Ashford has obtained liability insurance for its officers and directors.

   Section 145 of the DGCL empowers a corporation to indemnify its directors
and officers and to purchase insurance with respect to liability arising out of
their capacity or status as directors and officers, provided that this
provision shall not eliminate or limit the liability of a director:

  .  for any breach of the director's duty of loyalty to the corporation or
     its stockholders;

  .  for acts or omissions not in good faith or which involve intentional
     misconduct or a knowing violation of law;

  .  arising under Section 174 of the DGCL; or

  .  for any transaction from which the director derived an improper personal
     benefit.

   The DGCL provides further that the indemnification permitted thereunder
shall not be deemed exclusive of any other rights to which the directors and
officers may be entitled under the corporation's bylaws, any agreement, a vote
of stockholders or otherwise. The Certificate eliminates the personal liability
of directors to the fullest extent permitted by Section 102(b)(7) of the DGCL
and provides that Ashford shall fully indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that such person is or was a director
or officer of Ashford, or is or was serving at the request of Ashford as a
director or officer of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

   See Exhibit Index.

(b) Financial Statement Schedules

   None.

                                      II-1
<PAGE>

ITEM 22. UNDERTAKINGS.

   (1) The undersigned registrant hereby undertakes:

     (a) To file, during any period in which offers or sales are being made,
  a post-effective amendment to this registration statement:

       (i) To include any prospectus required by Section 10(a)(3) of the
    Securities Act of 1933;

       (ii) To reflect in the prospectus any facts or events arising after
    the effective date of the registration statement (or the most recent
    post-effective amendment thereof) which, individually or in the
    aggregate, represent a fundamental change in the information set forth
    in the registration statement;

       (iii) To include any material information with respect to the plan
    of distribution not previously disclosed in the registration statement
    or any material change to such information in the registration
    statement;

      (b) That, for the purpose of determining any liability under the
  Securities Act of 1933, each such post-effective amendment shall be deemed
  to be a new registration statement relating to the securities offered
  therein, and the offering of such securities at that time shall be deemed
  to be the initial bona fide offering thereof.

     (c) To remove from the registration by means of a post-effective
  amendment any of the securities being registered which remain unsold at the
  termination of the offering.

    (2) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
undersigned registrant undertakes that such reoffering prospectus will contain
the information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.

   (3) The undersigned registrant undertakes that every prospectus (i) that is
filed pursuant to paragraph (2) immediately preceding, or (ii) that purports to
meet the requirements of Section 10(a)(3) of the Securities Act of 1933 and is
used in connection with an offering of securities subject to Rule 415, will be
filed as a part of an amendment to the registration statement and will not be
used until such amendment is effective, and that, for purposes of determining
any liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

   (4) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

   (5) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.

                                      II-2
<PAGE>

   (6) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.

   (7) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

                                      II-3
<PAGE>

                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended,
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Houston, Texas, on the
6th day of March 2001.

Date: March 6, 2001                       ASHFORD.COM, INC.
                                          (Registrant)

                                                /s/ Kenneth E. Kurtzman
                                          By: _________________________________
                                                    Kenneth E. Kurtzman
                                                  Chief Executive Officer

                                          (DULY AUTHORIZED OFFICER)

                               POWER OF ATTORNEY

   We, the undersigned officers and directors of Ashford.com, Inc., hereby
severally constitute and appoint Kenneth E. Kurtzman and Ryan Maierson, our
true and lawful attorneys, with full power to them, to sign for us and in our
names in the capacities indicated below, any amendments to this registration
statement, and generally to do all things in our names and on our behalf in
such capacities to enable Ashford.com, Inc. to comply with the provisions of
the Securities Act of 1933, as amended, and all the requirements of the
Securities and Exchange Commission.

<TABLE>
<CAPTION>
              Signature                          Title                   Date
              ---------                          -----                   ----

<S>                                    <C>                        <C>
     /s/ Kenneth E. Kurtzman           Chief Executive Officer,      March 6, 2001
______________________________________  Director
         Kenneth E. Kurtzman

    /s/ James H. Whitcomb, Jr.         President, Chief              March 6, 2001
______________________________________  Information Officer,
        James H. Whitcomb, Jr.          Director

         /s/ David F. Gow              Chief Financial Officer       March 6, 2001
______________________________________
             David F. Gow

        /s/ J. Robert Shaw             Chairman of the Board         March 6, 2001
______________________________________
            J. Robert Shaw

       /s/ Kevin R. Harvey             Director                      March 6, 2001
______________________________________
           Kevin R. Harvey

     /s/ Colombe M. Nicholas           Director                      March 6, 2001
______________________________________
         Colombe M. Nicholas

         /s/ Robert Cohn               Director                      March 6, 2001
______________________________________
             Robert Cohn
</TABLE>

                                      II-4
<PAGE>

                                 EXHIBIT INDEX

<TABLE>
 <C>  <S>
  2.1 Agreement and Plan of Reorganization, dated January 3, 2001, by and among
      Ashford.com, Inc., Ashford-Guild Art Corporation and Guild.com, Inc.,
      attached as Annex A to the joint proxy statement/prospectus which is part
      of this registration statement.
  2.2 Option Agreement dated August 17, 1999, by and among Ashford, Power
      Reserve, Inc. and Richard E. Paige (incorporated herein by reference to
      Ashford's Current Report on Form 8-K/A filed on November 12, 1999).
  2.3 Asset Acquisition Agreement dated October 26, 1999 by and between Ashford
      and Power Reserve, Inc. (incorporated herein by reference to Ashford's
      Current Report on Form 8-K/A filed on November 12, 1999).
  2.4 Asset Acquisition Agreement dated October 26, 1999 by and between Ashford
      and Richard E. Paige (incorporated herein by reference to Ashford's
      Current Report on Form 8-K/A filed on November 12, 1999).
  2.5 Agreement and Plan of Reorganization dated as of January 14, 2000 by and
      among Ashford, Ashford-Jasmin Fragrance Company and Jasmin.com
      Corporation (incorporated herein by reference to Ashford's Current Report
      on Form 8-K/A filed on February 1, 1999).
  3.1 Amended and Restated Certificate of Incorporation of Ashford.com, Inc.
      (incorporated herein by reference to Ashford's Registration Statement on
      Form S-1 (File No. 333-82759)).
  3.2 Bylaws of Ashford.com, Inc. (incorporated herein by reference to
      Ashford's Registration Statement on Form S-1 (File No. 333-82759)).
  4.1 Amended and Restated Investors' Rights Agreement, dated July 9, 1999, by
      and among Ashford.com, Inc. and the investors and founders named therein
      (incorporated herein by reference to Ashford's Registration Statement on
      Form S-1 (File No. 333-82759)).
  4.2 Specimen Certificate of Ashford's common stock (incorporated herein by
      reference to Ashford's Registration Statement on Form S-1 (File No. 333-
      82759)).
  4.3 Reference is made to Exhibits 3.1 and 3.2.
  5.1 Form of Opinion of Gunderson Dettmer Stough Villeneuve Franklin &
      Hachigian, LLP as to the legality of the securities being registered.
  8.1 Form of Opinion of Gunderson Dettmer Stough Villeneuve Franklin &
      Hachigian, LLP regarding certain U.S. income tax aspects of the merger.
  8.2 Form of Opinion of Briggs and Morgan, P.A. regarding certain U.S. income
      tax aspects of the merger.
 10.1 Form of Indemnification Agreement entered into between Ashford and its
      directors and officers (incorporated herein by reference to Ashford's
      Registration Statement on Form S-1 (File No. 333-82759)).
 10.2 1998 Stock Incentive Plan (incorporated herein by reference to Ashford's
      Registration Statement on Form S-1 (File No. 333-82759)).
 10.3 1999 Equity Incentive Plan (incorporated herein by reference to Ashford's
      Registration Statement on Form S-1 (File No. 333-82759)).
 10.4 1999 Employee Stock Purchase Plan (incorporated herein by reference to
      Ashford's Registration Statement on Form S-1 (File No. 333-82759)).
 10.5 Office Lease dated July 1999 by and between Ashford and Crescent Real
      Estate Funding III, L.P. (incorporated herein by reference to Ashford's
      Registration Statement on Form S-1 (File No. 333-82759)).
 10.6 Employment Agreement dated May 10, 1999 by and between Ashford and
      Kenneth E. Kurtzman (incorporated herein by reference to Ashford's
      Registration Statement on Form S-1 (File No. 333-82759)).
</TABLE>

<PAGE>

<TABLE>
 <C>   <S>
 10.7  Employment Agreement dated November 28, 1998 between Ashford and James
       H. Whitcomb, Jr. (incorporated herein by reference to Ashford's
       Registration Statement on Form S-1 (File No. 333-82759)).
 10.8  Advertising Agreement dated July 30, 1999 between Ashford and America
       Online, Inc. (incorporated herein by reference to Ashford's Registration
       Statement on Form S-1 (File No. 333-82759)).
 10.9  Credit Agreement dated August 9, 1999 between Ashford and Chase Bank of
       Texas, National Association (incorporated herein by reference to
       Ashford's Registration Statement on Form S-1 (File No. 333-82759)).
 10.10 Stock Purchase Agreement dated as of November 29, 1999 by and among
       Ashford, Amazon.com, Inc. and Amazon.com Advertising Services NV, Inc.
       (incorporated herein by reference to Ashford's Current Report on Form 8-
       K filed on December 15, 1999).
 10.11 Loan and Security Agreement by and among Congress Financial Corporation
       (Southwest) as Lender and Ashford.com, Inc., Ashford Buying Company,
       Ashford Corporate Gifts, Inc., and Ashford-Jasmin Fragrance Company
       (incorporated herein by reference to Ashford's Current Report on Form 8-
       K filed on October 3, 2000).
 10.12 Form of Voting Agreement between Ashford.com, Inc. and certain
       stockholders.
 10.13 Form of Voting Agreement between Guild.com, Inc. and certain
       stockholders.
 10.14 Form of Affiliate Letter to Ashford.com, Inc. from certain stockholders.
 10.15 Form of Lock-Up Agreement to Ashford.com, Inc. from certain
       stockholders.
 21.1  Subsidiaries (incorporated herein by reference to Exhibit 21.1 of
       Ashford's Annual Report on Form 10-K dated June 27, 2000).
 23.1  Consent of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP
       (included in Exhibit 5.1 and Exhibit 8.1 hereto).
 23.2  Consent of Briggs and Morgan, P.A. (included in Exhibit 8.2 hereto).
 23.3  Consent of Arthur Andersen LLP, independent accountants for Ashford.com,
       Inc.
 23.4  Consent of Ernst & Young LLP, independent accountants for Guild.com,
       Inc.
 24.1  Power of Attorney of Ashford.com, Inc. (included on the signature page
       to this registration statement).
 99.1  Form of Proxy for Special Meeting of Stockholders of Ashford.com, Inc.
 99.2  Form of Proxy for Special Meeting of Stockholders of Guild.com, Inc.
</TABLE>