AGREEMENT AND PLAN OF MERGER

                                     AMONG

                          CORT INVESTMENT GROUP, INC.
                             (a Texas corporation)


                             RSI ACQUISITION CORP.
                            (an Arizona corporation)

                                       and

                          RECONDITIONED SYSTEMS, INC.
                            (an Arizona corporation)


<PAGE>

     This Agreement and Plan of Merger (the  "Agreement") is made as of the 30th
day of October,  1998, among Cort Investment  Group,  Inc., a Texas  corporation
d/b/a Contract Network ("CNI");  RSI Acquisition  Corp., an Arizona  corporation
("Merger Corp."), which is wholly-owned by CNI; and Reconditioned Systems, Inc.,
an Arizona corporation ("RSI").

                              W I T N E S S E T H:

     WHEREAS,  the respective  Boards of Directors of CNI,  Merger Corp. and RSI
each  have  determined  that it is in the best  interests  of  their  respective
stockholders  for CNI and  Merger  Corp.  to  acquire  RSI  upon the  terms  and
conditions set forth herein;

     NOW,  THEREFORE,  in  consideration  of the mutual covenants and agreements
contained herein, and certain other good and valuable consideration, the receipt
and  sufficiency of which are hereby  acknowledged,  the parties hereto covenant
and agree as follows:


                                   ARTICLE 1.
                                   THE MERGER

     1.1. MERGER.  In accordance  with the  provisions of the  Arizona  Business
Corporation  Act, at the Effective Date (as hereinafter  defined),  Merger Corp.
shall be merged (the "Merger")  into RSI, as soon as  practicable  following the
satisfaction or waiver, if permissible,  of the conditions set forth in Articles
6 and 7. Following the Merger,  RSI shall continue as the surviving  corporation
(the "Surviving  Corporation")  and shall continue to be governed by the laws of
the State of Arizona.

     1.2. CONTINUING  OF CORPORATE  EXISTENCE.  Except as may  otherwise  be set
forth  herein,  the  corporate  existence  and  identity  of RSI,  with  all its
purposes, powers, franchises,  privileges, rights and immunities, shall continue
unaffected  and  unimpaired  by the  Merger,  and the  corporate  existence  and
identity of Merger Corp., with all its purposes, powers, franchises, privileges,
rights and immunities,  at the Effective Date shall be merged with and into that
of RSI, and the Surviving  Corporation  shall be vested fully  therewith and the
separate  corporate  existence  and  identity of Merger Corp.  shall  thereafter
cease.

     1.3. EFFECTIVE DATE.  The Merger shall become  effective upon the filing of
the Articles of Merger with the  Corporation  Commission of the State of Arizona
pursuant to the provisions of the Arizona Business  Corporation Act (the "BCA").
The date and time when the Merger shall become effective is hereinafter referred
to as the "Effective Date."


<PAGE>

     1.4. CORPORATE GOVERNANCE.

          (a) The  Articles  of  Incorporation  of  RSI,  as  in  effect  on the
     Effective  Date,  shall  continue in full force and effect and shall be the
     Articles of Incorporation of the Surviving Corporation.

          (b) The Bylaws of RSI, as in effect as of the  Effective  Date,  shall
     continue in full force and effect and shall be the Bylaws of the  Surviving
     Corporation.

          (c) The members of the Board of Directors of the Surviving Corporation
     shall be (i) the three  persons  holding such office in Merger Corp.  as of
     the Effective Date and (ii) Wayne R. Collignon and Dirk D. Anderson.

          (d) The  officers of the  Surviving  Corporation  shall be the persons
     holding such offices in Merger Corp. as of the Effective Date,  except that
     Wayne R. Collignon shall be elected as President and Dirk D. Anderson shall
     be elected as Chief Financial Officer of the Surviving Corporation.

     1.5. RIGHTS AND  LIABILITIES  OF THE SURVIVING  CORPORATION.  The Surviving
Corporation shall have the following rights and obligations:

          (a) The Surviving  Corporation  shall have all the rights,  privileges
     immunities  and  powers  and  shall  be  subject  to  all  the  duties  and
     liabilities  of a  corporation  organized  under  the laws of the  State of
     Arizona.

          (b) The title to all real estate and other  property  owned by RSI and
     Merger Corp. shall be vested in the Surviving  Corporation without revision
     or impairment;

          (c) The Surviving Corporation automatically has all of the liabilities
     of RSI and Merger Corp.; and

          (d) At the Effective Date, a proceeding  pending against RSI or Merger
     Corp.  may be  continued  as if the Merger  did not occur or the  Surviving
     Corporation may be substituted in the proceeding.

     1.6. CLOSING.

          (a) A closing  into escrow of the  transactions  contemplated  by this
     Agreement (the "Escrow  Closing") shall take place at the offices of RSI in
     Tempe,  Arizona  commencing  at 10:00 a.m.,  local time, on the date (i) on
     which the Special Meeting (as defined herein) of RSI's shareholders  occurs
     or (ii) as soon as possible  thereafter  when each of the other  conditions
     set forth in  Articles 6 and 7 have been  satisfied  or waived,  or at such

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<PAGE>

     other place,  time and date as shall be fixed by mutual  agreement  between
     CNI and RSI. The day on which the Escrow Closing shall occur is referred to
     herein as the "Escrow  Closing Date." Each party will cause to be prepared,
     executed  and  delivered  into  escrow  with  counsel  to RSI and CNI  (the
     "Co-Escrow  Agents") the Articles of Merger and all other  appropriate  and
     customary  documents as any party or its counsel may reasonably request for
     the  purpose  of  consummating  the   transactions   contemplated  by  this
     Agreement.  CNI shall  deposit  with the  Exchange  Agent (as  described in
     Section 2.3 below) the cash amounts specified therein on the Escrow Closing
     Date.  In order to  facilitate  the Escrow  Closing,  RSI will allow  CNI's
     lenders  to perfect  security  interests  in RSI's  assets as of the Escrow
     Closing  Date;  it being  understood  that such lenders  shall  irrevocably
     undertake in writing to immediately  release such security interests if the
     Closing does not occur as contemplated herein. Such lenders shall also have
     a security interest in the Exchange Fund (as defined in Section 2.3), which
     shall be released on the  Effective  Date.  All actions taken at the Escrow
     Closing shall be deemed to have been taken  simultaneously  at the time the
     last of any such actions is taken or completed.

          (b)  The consummation  of the Merger  shall  occur  promptly  upon the
     occurrence of the delivery of joint written  instructions  given by RSI and
     CNI to the Co-Escrow  Agents to effect the filing of the Articles of Merger
     as  described  in  Section  2.3(b).  The day on which  such  joint  written
     instructions are delivered to the Co-Escrow Agents is referred to herein as
     the "Closing Date."

                                   ARTICLE 2.
                   CONVERSION OF SHARES; TREATMENT OF OPTIONS

     2.1. CONVERSION OF SHARES.  At the  Effective Date, by virtue of the Merger
and without any action on the part of the holder thereof:

          (a)  The outstanding  shares of RSI common  stock,  no par value ("RSI
     Common  Stock"),  and the  options and  warrants  to acquire  shares of RSI
     Common Stock  outstanding on the Effective Date (the  "Options")  shall, in
     the  aggregate at the  Effective  Date, by virtue of the Merger and without
     any action on the part of the holders  thereof,  be converted  into the sum
     (the "Merger  Consideration")  of (i) $8,575,000  plus (ii) the "Adjustment
     Amount."

          (b)  The Merger Consideration  shall be allocated  among the shares of
     RSI Common Stock and Options on the basis set forth below:

               (i)   Each  outstanding  share  of  RSI  Common  Stock  shall  be
          converted  into an amount in cash (the "Net Price Per Share") equal to
          the  result   after  the   following   calculation:   (X)  the  Merger

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<PAGE>

          Consideration plus the total Option Consideration,  divided by (Y) the
          total  number  of RSI  Common  Stock  Equivalents  outstanding  on the
          Effective Date.

               (ii)  Each  Outstanding  Option,  other  than  Out of  the  Money
          Options,  shall be canceled and converted into an amount in cash equal
          to the product of (X) the number of shares of RSI Common Stock subject
          to the  canceled  Option and (Y) the excess of the Net Price Per Share
          over the exercise price subject to such Option;

               (iii) Each Out of the Money Option shall be canceled without cost
          or liability to RSI or the Surviving Corporation.

          (c)  Each share of Common Stock, $.01 par value, of Merger Corp. which
     shall be outstanding  immediately  prior to the Effective Date shall at the
     Effective  Date, by virtue of the Merger and without any action on the part
     of the holder  thereof,  be  converted  into one share of newly  issued RSI
     Common Stock.

          (d)  For purposes of this provision,

               (i)   "Adjustment Amount" means the amount,  if any, by which the
          Merger Consideration has been increased as described in Section 2.3(c)
          hereof.

               (ii)  "Option Consideration"  means the total dollar  amount that
          would be paid to RSI upon the exercise of all  outstanding  Options on
          the Effective Date, other than Out of the Money Options;

               (iii) "Out of the Money  Options" means all Options which have an
          exercise  price per share  equal to or greater  than the Net Price Per
          Share; and

               (iv)  "RSI Common Stock Equivalents"  means the  number of shares
          of RSI Common Stock  outstanding on the Effective Date plus the number
          of shares of RSI Common  Stock that could be issued upon the  exercise
          of all Options,  other than Out of the Money  Options,  outstanding on
          the Effective Date.

It is  understood  that for all purposes the warrants  issued to CNI to purchase
230,000  shares  of RSI  Common  Stock  (the  "CNI  Warrants"),  which  are  not
exercisable  until the termination of this Agreement  under certain  conditions,
shall  not  be  deemed  to be  outstanding  and  shall  not be  included  in the
computation of Option Consideration or RSI Common Stock Equivalents.

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<PAGE>

     2.2. DISSENTING SHARES.  Shares of RSI Common Stock held by any shareholder
entitled to relief as a dissenter under Sections  10-1301 through 10-1331 of the
BCA  ("Dissenting  Shares") shall not be converted into the right to receive the
consideration  in  accordance  with  Section  2.1,  but  shall be  canceled  and
converted  into such  consideration  as may be due with  respect to such  Shares
pursuant to the  applicable  provisions of the BCA unless and until the right of
such shareholder to receive fair value for such Dissenting  Shares terminates in
accordance with Sections 10-1301 through 10-1331 of the BCA.

     2.3. EXCHANGE AGENT.

          (a) CNI shall  authorize  Harris Trust & Savings  Bank,  or such other
     firm as is  reasonably  acceptable  to RSI,  to  serve  as  exchange  agent
     hereunder  (the  "Exchange  Agent").  On the Escrow Closing Date, CNI shall
     deposit or shall cause to be deposited  in trust with the  Exchange  Agent,
     the sum of  $8,575,000,  less  any  amounts  required  to be  reserved  for
     Dissenting Shares (such deposited cash amount being hereinafter referred to
     as the "Exchange Fund").

          (b) The Exchange  Agent shall hold the  Exchange  Fund in escrow until
     the  earliest of (i) receipt by the  Exchange  Agent of a copy of the joint
     written  instructions  of RSI and CNI to the Co-Escrow  Agents  pursuant to
     Section  2.4(d) to cause the Articles of Merger to be filed,  whereupon the
     Exchange  Agent shall use the  Exchange  Fund solely for the  purposes  set
     forth in subsections 2.3(d) through (g) below; (ii) receipt by the Exchange
     Agent of a notice from CNI pursuant to Section  2.4(d) that it is entitled,
     and so elects,  to terminate this  Agreement,  whereupon the Exchange Agent
     shall  promptly  deliver the Exchange  Fund to CNI; or (iii) the failure of
     the  Exchange  Agent to receive the notices  under clause (i) or (ii) above
     prior to May 15, 1999,  whereupon the Exchange Agent shall promptly deliver
     the Exchange Fund to CNI.

          (c) The  Exchange  Fund  may be  invested  by the  Exchange  Agent  as
     directed  by  CNI  only  in  direct   obligations  of  the  United  States,
     obligations  for which the full faith and  credit of the  United  States is
     pledged to provide for the payment of principal  and  interest,  commercial
     paper rated of the highest quality by Moody's Investors  Services,  Inc. or
     Standard & Poor's  Corporation or certificates of deposit,  bank repurchase
     agreements  or bankers'  acceptances  of a commercial  bank having at least
     $100,000,000 in assets (collectively,  "Permitted Investments") or in money
     market  funds  which are  invested  in  Permitted  Investments.  Of the net
     earnings  which are generated on the Exchange Fund, 50% of all net earnings
     generated  from the Escrow  Closing  Date through the Closing Date shall be
     segregated from the Exchange Fund,  reserved for CNI and paid to CNI as and
     when requested by CNI; and the remaining 50% of such net earnings generated

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<PAGE>

     for such  period  (such  remaining  50%  portion,  net of the  Cure  Amount
     referenced  in Section  2.4(d),  is referred  to herein as the  "Adjustment
     Amount")  shall be retained in the Exchange Fund and shall become a part of
     the Merger  Consideration.  If  applicable,  the Exchange  Agent shall also
     deduct  from the  Adjustment  Amount,  and pay to CNI,  the Cure  Amount in
     accordance with the provisions of Section 2.4.

          (d) The Exchange Agent shall pay the Merger  Consideration as provided
     for in this Section 2.3 out of the Exchange  Fund.  As soon as  practicable
     after the Effective  Date, the Exchange Agent shall mail and otherwise make
     available to each record holder  (other than holders of Dissenting  Shares)
     who, as of the Effective  Date,  was a holder of either (i) an  outstanding
     certificate or certificates  which  immediately prior to the Effective Date
     represented  shares  of RSI  Common  Stock  (the  "Certificates")  or  (ii)
     Options,  a form of  letter  of  transmittal  and  instructions  for use in
     effecting the surrender of the Certificates or Options for payment therefor
     and conversion thereof.

          (e) Delivery of Certificates or Options shall be effected, and risk of
     loss and title to the  Certificates or Options shall pass, only upon proper
     delivery of the  Certificates or Options to the Exchange Agent and the form
     of letter of transmittal  shall so reflect.  Upon surrender to the Exchange
     Agent of a Certificate or Option,  together with such letter of transmittal
     duly executed,  the holder of such  Certificate or Option shall be entitled
     to receive in  exchange  therefor,  as promptly  as  practicable  after the
     Effective Date, a check representing the Merger Consideration to which such
     holder  shall have  become  entitled  pursuant  to this  Article 2, and the
     Certificate or Option so surrendered shall forthwith be canceled.

          (f) If any portion of the  consideration  to be  received  pursuant to
     this Article 2 upon exchange of a Certificate  or Option is to be issued or
     paid to a person  other than the person in whose  name the  Certificate  or
     Option  surrendered  in  exchange  therefor  is  registered,  it shall be a
     condition of such  issuance and payment that the  Certificate  or Option so
     surrendered  shall be  properly  endorsed or  otherwise  in proper form for
     transfer and that the person  requesting such exchange shall pay in advance
     any  transfer or other taxes  required by reason of the issuance of a check
     representing cash to such other person, or establish to the satisfaction of
     the  Exchange  Agent  that  such tax has  been  paid or that no such tax is
     applicable.

          (g) In  the  case  of  any   lost,   mislaid,   stolen  or   destroyed
     Certificates,  the holder thereof may be required, as a condition precedent
     to the  delivery  to such  holder of the  consideration  described  in this
     Article  2, to  deliver  to CNI a bond in  such  reasonable  sum as CNI may
     direct as indemnity against any claim that may be made against the Exchange

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     Agent,  CNI or the Surviving  Corporation  with respect to the  Certificate
     alleged to have been lost, mislaid, stolen or destroyed.

          (h) After the Effective Date, there shall be no transfers on the stock
     transfer  books of the  Surviving  Corporation  of the shares of RSI Common
     Stock that were  outstanding  immediately  prior to the Effective Date. If,
     after the  Effective  Date,  Certificates  are  presented to the  Surviving
     Corporation  for  transfer,  they shall be canceled and  exchanged  for the
     consideration described in this Article 2.

          (i) Any portion of the  Exchange  Fund that  remains  unclaimed by the
     stockholders  of RSI for six  months  after  the  Effective  Date  shall be
     returned to CNI,  upon  demand,  and any holder of RSI Common Stock who has
     not theretofore  complied with Section 2.3(d) shall thereafter look only to
     CNI for  issuance  of the  consideration  to which  such  holder has become
     entitled  pursuant to this Article 2; provided,  however,  that neither the
     Exchange  Agent nor any party  hereto shall be liable to a holder of shares
     of RSI Common Stock for any amount required to be paid to a public official
     pursuant to any applicable abandoned property, escheat or similar law.

     2.4. COMPUTATION OF ADJUSTMENT AMOUNT.

          (a) No later  than 30 days after the Escrow  Closing  Date,  CNI shall
     prepare and deliver to the Board of Directors of RSI an unaudited statement
     of the  current  assets and  current  liabilities  of the Company as of the
     Escrow Closing Date (the "Closing Balance  Sheet"),  prepared in accordance
     with  generally  accepted  accounting  principles.  CNI shall promptly make
     available to RSI and its  accountants  all work papers and other  pertinent
     information used in connection therewith.

          (b) Within five days after the Closing  Balance  Sheet is delivered to
     RSI pursuant to subsection (a) above,  RSI shall  complete its  examination
     thereof  and shall  deliver  to CNI  either  (i) a  written  acknowledgment
     accepting  the  Closing  Balance  Sheet  or  (ii)  a  written  report  (the
     "Objection  Report")  setting  forth  in  reasonable  detail  any  proposed
     objections to the Closing  Balance  Sheet.  A failure by RSI to deliver the
     Objection  Report within the required  five-day period shall constitute its
     acceptance of the calculations set forth in the Closing Balance Sheet.

          (c) During a period of  10 days  following  the  receipt by CNI of the
     Objection Report, RSI and CNI shall attempt to resolve any differences they
     may have with respect to the matters raised in the Objection Report. In the
     event  RSI and CNI  fail to  agree  on any of  CNI's  proposed  adjustments
     contained  in the  Objection  Report  within such 10-day  period,  then the
     parties will submit such dispute to the Phoenix office of Arthur  Andersen,
     L.L.P., certified public accountants  ("Independent Auditors"), to make the

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     final  determination,  prior to the 60th day after the Escrow Closing Date,
     with respect to the Closing Balance Sheet.  The decision of the Independent
     Auditors shall be final and binding on the parties.  The costs and expenses
     of the Independent  Auditors and their services  rendered  pursuant to this
     subsection shall be borne equally by CNI and RSI.

          (d)  If, after finalization  of the Closing Balance Sheet (which shall
     be deemed to mean either the acceptance by RSI of the Closing Balance Sheet
     in  accordance  with Section  2.4(b) above or, if RSI delivers an Objection
     Report,  upon the resolution of the matters raised in the Objection  Report
     pursuant to Section  2.4(c) above,  but which shall in no event occur prior
     to February  28,  1999),  the Closing  Balance  sheet shall reveal that RSI
     shall not have been in compliance with the financial covenants set forth in
     Section 2.4(e) below (all computed in accordance with GAAP as of the Escrow
     Closing Date), then

               (i)  if the Cure Amount (defined  below) is equal to or less than
          the  Adjustment  Amount,  the Cure Amount will be segregated  from the
          Exchange  Fund and  will be paid  over to CNI,  whereupon  CNI and RSI
          shall furnish joint written  instructions to the Co-Escrow Agents (and
          a copy to the Exchange  Agent) to file the Articles of Merger with the
          Corporation Commission of the State of Arizona;

               (ii)  if the Cure Amount is greater than the  Adjustment  Amount,
          then CNI shall elect either to (X) waive its right to receive any Cure
          Amount in excess of the  Adjustment  Earnings  (whereupon  CNI and RSI
          shall  furnish  the  joint  written  instructions   described  in  the
          preceding  clause (i)) or (Y) terminate this Agreement  (whereupon CNI
          shall provide notice of such  termination to the Co-Escrow  Agents and
          the Exchange Agent); or

               (iii) For purposes of this Section  2.4(d)(i) and (ii), the "Cure
          Amount" shall mean the smallest  dollar amount that would cure any and
          all  deficiencies in the financial  covenants listed in Section 2.4(e)
          below,  it being  understood  that such  amount may be applied to cure
          multiple covenants.

          (e)  For purposes of this  Section 2.4, RSI shall be required to be in
     compliance with the following  financial covenants as of the Escrow Closing
     Date:

               (i)  Cash and cash  equivalents,  plus net  accounts  receivable,
          minus customer deposits, shall exceed $1,925,000;

               (ii) Cash, plus net accounts  receivable,  plus inventory,  minus
          total liabilities, shall exceed $2,475,000;

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               (iii) Total liabilities shall be less than $800,000;

               (iv)  Accounts payable shall be less than $475,000;

               (v)   Inventory shall be at least $900,000;

               (vi)  Total assets, minus  intangible  assets,  plus the value of
          intangible assets listed on Schedule 2.4 ($45,078.37),  plus $800,000,
          minus total liabilities, shall be greater than $3,725,000; and

               (vii) Shareholders' equity shall be at least $2,925,000.


                                   ARTICLE 3.
                     REPRESENTATIONS AND WARRANTIES OF RSI

     RSI hereby represents and warrants to CNI and Merger Corp. as follows:

     3.1.  ORGANIZATION  AND GOOD  STANDING OF RSI.  RSI is a  corporation  duly
organized,  validly existing and in good standing under the laws of Arizona. RSI
does not own any  equity  interest  in any  other  corporation,  partnership  or
similar entity.

     3.2.  FOREIGN  QUALIFICATION.  RSI is  duly  qualified  or  licensed  to do
business and is in good standing as a foreign  corporation in every jurisdiction
where the failure so to qualify would have a material  adverse effect on (i) its
business,  operations,  assets or financial  condition (an "RSI Material Adverse
Effect")  or (ii) the  validity or  enforceability  of, or the ability of RSI to
perform its obligations under, this Agreement.

     3.3.  CORPORATE  POWER  AND  AUTHORITY.  RSI has the  corporate  power  and
authority to own,  lease and operate its  properties  and assets and to carry on
its business as  currently  being  conducted.  RSI has the  corporate  power and
authority to execute and deliver this Agreement and,  subject to the approval of
this Agreement and the Merger by its  shareholders,  to perform its  obligations
under this Agreement and to consummate the Merger.  The execution,  delivery and
performance by RSI of this  Agreement has been duly  authorized by all necessary
corporate  action  (other than the approval of this  Agreement and the Merger by
its shareholders).

     3.4.  BINDING EFFECT.  This Agreement has been duly executed  and delivered
by RSI and is the legal,  valid and binding  obligation  of RSI  enforceable  in
accordance with its terms except that:

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          (a) enforceability  may be limited by bankruptcy,  insolvency or other
     similar laws affecting creditors' rights;

          (b) the availability of equitable remedies may be limited by equitable
     principles of general applicability; and

          (c) rights to  indemnification  may be limited  by  considerations  of
     public policy.

     3.5. ABSENCE OF RESTRICTIONS AND CONFLICTS. Subject only to the approval of
the adoption of this Agreement and the Merger by RSI's  shareholders  and except
as set forth on SCHEDULE 3.5, the  execution,  delivery and  performance of this
Agreement  and  the  consummation  of the  Merger  and  the  fulfillment  of and
compliance  with the terms and conditions of this Agreement do not and will not,
with the  passing of time or the giving of notice or both,  violate or  conflict
with,  constitute  a  breach  of or  default  under,  result  in the loss of any
material benefit under, or permit the acceleration of any obligation  under, (i)
any term or provision of the Articles of  Incorporation  or Bylaws of RSI,  (ii)
any "Material Contract" (as defined herein), (iii) any judgment, decree or order
of any court or  governmental  authority or agency to which RSI is a party or by
which RSI or its properties is bound,  or (iv) any statute,  law,  regulation or
rule  applicable  to RSI other  than such  violations,  conflicts,  breaches  or
defaults  which would not have an RSI Material  Adverse  Effect.  Except for the
filing of the  Articles of Merger with the Arizona  Corporation  Commission  and
publication  thereof as required by the BCA, and compliance  with the applicable
requirements  of the Securities  Exchange Act of 1934, as amended (the "Exchange
Act"), the Securities Act of 1933, as amended (the "Securities Act"), applicable
state  securities laws and the rules and regulations of the Nasdaq Stock Market,
no consent, approval, order or authorization of, or registration, declaration or
filing with, any governmental  agency or public or regulatory unit, agency, body
or authority  with respect to RSI is required in connection  with the execution,
delivery or  performance  of this  Agreement by RSI or the  consummation  of the
transactions contemplated hereby.

     3.6. CAPITALIZATION OF RSI.

          (a) The authorized  capital stock of RSI consists of 20,000,000 shares
     of common  stock,  no par  value.  As of the date  hereof,  there  were (i)
     1,473,834 shares of RSI Common Stock issued and  outstanding,  (ii) 300,000
     shares of RSI Common  Stock  reserved  for  issuance  upon the  exercise of
     outstanding  Options,  and  (iii) no  shares of RSI  Common  Stock  held as
     treasury shares.

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          (b) All of the issued and outstanding  shares of RSI Common Stock have
     been duly  authorized and validly issued and are fully paid,  nonassessable
     and free of preemptive rights.

          (c) To RSI's knowledge, other than as set forth on SCHEDULE 3.6, there
     are no voting trusts,  stockholder  agreements or other voting arrangements
     by the shareholders of RSI.

          (d) Except as set forth in  subsection  (a) above and in SCHEDULE 3.6,
     and  except for the CNI  Warrants,  there is no  outstanding  subscription,
     contract,  convertible or exchangeable security,  option,  warrant, call or
     other right obligating RSI to issue, sell,  exchange,  or otherwise dispose
     of, or to purchase,  redeem or otherwise acquire,  shares of, or securities
     convertible into or exchangeable for, capital stock of RSI.

     3.7. RSI SEC REPORTS.  RSI has made  available to CNI and Merger Corp.  (i)
RSI's Annual Report on Form 10-KSB for the year ended March 31, 1998,  including
all exhibits  filed thereto and items  incorporated  therein by reference,  (ii)
RSI's  Quarterly  Report on Form  10-QSB for the fiscal  quarter  ended June 30,
1998,   including  all  exhibits  thereto  and  items  incorporated  therein  by
reference,  (iii) the proxy statement  relating to RSI's meeting of shareholders
held on August 14, 1998 and (iv) all other  reports or  registration  statements
(as amended or  supplemented  prior to the date  hereof),  filed by RSI with the
Securities and Exchange  Commission  (the "SEC") since April 1, 1996,  including
all exhibits  thereto and items  incorporated  therein by  reference  (items (i)
through (iv) being referred to as the "RSI SEC Reports"). As of their respective
dates,  the RSI SEC Reports did not contain any untrue  statement  of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements  therein,  in light of the circumstances under which they
were made,  not  misleading.  Since  April 1, 1996,  RSI has filed all  material
forms, reports and documents with the SEC required to be filed by it pursuant to
the federal securities laws and the SEC rules and regulations  thereunder,  each
of which  complied as to form,  at the time such form,  report or  document  was
filed,  in  all  material  respects  with  the  applicable  requirements  of the
Securities  Act,  the  Exchange  Act and the  applicable  rules and  regulations
thereunder.

     3.8. FINANCIAL STATEMENTS AND RECORDS OF RSI. RSI has made available to CNI
and Merger Corp.  true,  correct and complete copies of the following  financial
statements (the "RSI Financial Statements"):

          (a) the financial  statements  of RSI of March 31, 1997 and 1998,  and
     for the  years  then  ended,  including  the  notes  thereto,  in each case
     examined  by  and  accompanied  by the  report  of  Semple  &  Cooper,  LLP
     (collectively, the "RSI Year-End Statements"); and

                                       11
<PAGE>

          (b) the  unaudited  balance sheet of RSI as of June 30, 1998 (the "RSI
     Balance  Sheet"),  with  any  notes  thereto,  and  the  related  unaudited
     statement of income for the three months then ended (collectively, the "RSI
     Quarterly Statements").

The RSI Year-End Statements and the RSI Quarterly  Statements present fairly, in
all material respects, the financial position of RSI as of the dates thereof and
the results of operations and cash flows thereof for the periods then ended,  in
each case in conformity with generally accepted accounting  principles ("GAAP"),
consistently applied,  except as noted therein.  Since March 31, 1998, there has
been no change in accounting  principles or standards  applicable to, or methods
of  accounting  (including  valuation  methods)  utilized  by,  RSI,  except  as
specifically noted in the RSI Financial Statements. The books and records of RSI
have been and are being  maintained in accordance  with good business  practice,
reflect  only valid  transactions  and are  complete and correct in all material
respects.

     3.9. ABSENCE OF CERTAIN CHANGES.  Since March 31, 1998, RSI has not, except
as otherwise set forth on SCHEDULE 3.9:

          (a)  suffered any adverse change in the business,  operations, assets,
     or  financial   condition,   except  as  reflected  on  the  RSI  Quarterly
     Statements;

          (b)  suffered  any damage or  destruction  to or loss of the assets of
     RSI,  whether or not  covered by  insurance,  which  property or assets are
     material to the operations or business of RSI taken as a whole, or lost the
     business relationship of any significant customer of RSI;

          (c)  settled, forgiven,  compromised,  canceled,  released,  waived or
     permitted to lapse any material rights or claims other than in the ordinary
     course of business;

          (d)  entered into or terminated any material agreement,  commitment or
     transaction,  or agreed to make or made any changes in  material  leases or
     agreements,   other  than  renewals  or  extensions   thereof  and  leases,
     agreements,  transactions and commitments entered into or terminated in the
     ordinary course of business;

          (e)  written  up,  written  down or written  off the book value of any
     material  amount  of assets  or  changed  any  valuation  methods  or other
     accounting standards;

          (f)  declared,   paid  or  set  aside  for  payment  any  dividend  or
     distribution  with respect to RSI's capital stock or  repurchased  any such
     capital stock;



                                       12
<PAGE>

          (g)  redeemed,  purchased or otherwise  acquired,  or sold, granted or
     otherwise  disposed of, directly or indirectly,  any of RSI's capital stock
     or  securities  (other than shares  issued upon exercise of the Options) or
     any  rights to  acquire  such  capital  stock or  securities,  or agreed to
     changes in the terms and  conditions of any such rights  outstanding  as of
     the date of this Agreement;

          (h)  increased  the  compensation  of,  paid any bonuses to or made or
     guaranteed  any loan in  excess  of  $1,000  in favor of any  employees  or
     contributed  to any employee  benefit plan,  other than in accordance  with
     accruals set forth on the RSI Quarterly Statements;

          (i)  entered into any employment, consulting or compensation agreement
     with any person or group, providing for payment in excess of $5,000 by RSI;

          (j)  entered into any collective bargaining  agreement with any person
     or group;

          (k)  entered into, adopted or amended any employee benefit plan;

          (l)  created,   incurred  or  assumed  any  debt  for  borrowed  money
     (including obligations in respect of capital leases);

          (m)  acquired or disposed of any  material asset other than  inventory
     in the ordinary course of business;

          (n)  entered  into any  transaction  outside  the  ordinary  course of
     business; or

          (o)  entered into any agreement to do any of the foregoing.

     3.10. NO MATERIAL  UNDISCLOSED  LIABILITIES.  There are no  liabilities  or
obligations of RSI of any nature,  whether  absolute,  accrued,  contingent,  or
otherwise,  other  than the  liabilities  and  obligations  that are  reflected,
accrued or  reserved  against  on the RSI  Balance  Sheet,  or  incurred  in the
ordinary  course of business and consistent  with past practices since March 31,
1998.

     3.11. TAX RETURNS;  TAXES. RSI has duly filed all U.S. federal and material
state, county, local and foreign tax returns and reports required to be filed by
it,  including  those with respect to income,  payroll,  property,  withholding,
social security,  unemployment,  franchise,  excise and sales taxes and all such
returns and reports are  correct in all  material  respects;  has either paid in
full all taxes that have become due as reflected on any return or report and any
interest and penalties with respect thereto or has fully accrued on its books or
has established adequate reserves for all taxes payable but not yet due; and has

                                       13
<PAGE>

made  cash  deposits  with  appropriate  governmental  authorities  representing
estimated payments of taxes, including income taxes and employee withholding tax
obligations. No extension or waiver of any statute of limitations or time within
which to file any return has been granted to or requested by RSI with respect to
any  tax.  No  unsatisfied  deficiency,  delinquency  or  default  for any  tax,
assessment or governmental charge has been claimed, proposed or assessed against
RSI, nor has RSI received notice of any such deficiency, delinquency or default.
RSI has no material tax  liabilities  other than those  reflected on RSI Balance
Sheet and those  arising  in the  ordinary  course  of  business  since the date
thereof.  RSI will make  available to CNI true,  complete and correct  copies of
RSI's U.S.  federal tax returns for the last five years and make  available such
other tax returns  requested by CNI. The U.S.  federal income tax liabilities of
RSI have been  calculated in accordance the  guidelines of the Internal  Revenue
Service. The Internal Revenue Service has audited RSI for all fiscal years up to
and  including  the year  ended  March  31,  1995.  At March 31,  1998,  the net
operating loss carryforward of RSI was at least $2,100,000.

     3.12.  MATERIAL  CONTRACTS.  RSI has  furnished  or made  available  to CNI
accurate  and  complete  copies of the Material  Contracts  (as defined  herein)
applicable to RSI. Except as set forth on SCHEDULE 3.12,  there is not under any
of the Material  Contracts any existing  breach,  default or event of default by
RSI nor event  that  with  notice or lapse of time or both  would  constitute  a
breach,  default or event of default by RSI other  than  breaches,  defaults  or
events of default which would not have an RSI Material Adverse Effect,  nor does
RSI know of, and RSI has not  received  notice of, or made a claim with  respect
to, any breach or default by any other party thereto  which would,  severally or
in the aggregate,  have an RSI Material Adverse Effect. As used herein, the term
"Material Contracts" shall mean the following:

          (i)   contracts with  any  labor  union;  employee  benefit  plans  or
     contracts;  and  employment,  consulting  or similar  contracts,  including
     confidentiality agreements;

          (ii)  leases, whether as lessor or lessee; loan agreements, mortgages,
     indentures,  instruments  of  indebtedness  or  commitments  in  each  case
     involving  indebtedness  for borrowed money or money loaned to others;  and
     guaranty or suretyship,  performance bond,  indemnification or contribution
     agreements involving  obligations;

          (iii) contracts with third parties that involve aggregate  payments by
     RSI after the date hereof of more than $25,000 per annum;

          (iv)  insurance policies material to the business of RSI; and

          (v)   other contracts that are material to the operations, business or
     financial condition of RSI.



                                       14
<PAGE>

     3.13. LITIGATION  AND GOVERNMENT CLAIMS.  Except  as disclosed  on SCHEDULE
3.13, there is no pending suit, claim, action or litigation,  or administrative,
arbitration or other proceeding or governmental investigation or inquiry against
RSI.  To the  knowledge  of RSI,  there are no such  proceedings  threatened  or
contemplated.  RSI is not subject to any judgment, decree,  injunction,  rule or
order of any court,  or, to the knowledge of RSI, any  governmental  restriction
applicable to RSI which is reasonably likely (i) to have an RSI Material Adverse
Effect or (ii) to cause a material  limitation  on CNI's  ability to operate the
business of RSI (as it is currently operated) after the Effective Date.

     3.14. COMPLIANCE WITH LAWS. RSI has all material authorizations, approvals,
licenses  and orders to carry on its business as it is now being  conducted,  to
own or hold under lease the  properties  and assets it owns or holds under lease
and to perform  all of its  obligations  under the  agreements  to which it is a
party.  RSI has been and is, to the  knowledge  of RSI, in  compliance  with all
applicable laws,  regulations and administrative orders of any country, state or
municipality  or of any subdivision of any thereof to which its business and its
employment of labor or its use or occupancy of properties or any part hereof are
subject in any material respect.

     3.15. EMPLOYEE BENEFIT PLANS.  Each employee  benefit plan, as such term is
defined in Section 3(3) of the Employee  Retirement Income Security Act of 1974,
as amended ("ERISA"), of RSI (collectively the "Employee Plans") complies in all
material  respects with all  applicable  requirements  of ERISA and the Internal
Revenue Code of 1986, as amended (the "Code"),  and other  applicable laws. None
of the Employee  Plans is an employee  pension  benefit plan or a  multiemployer
plan, as such terms are defined in ERISA.  Neither RSI nor any of its directors,
officers, employees or agents has, with respect to any Employee Plan, engaged in
any "prohibited  transaction," as such term is defined in the Code or ERISA, nor
has any Employee Plan engaged in such prohibited  transaction which could result
in any taxes or penalties or other prohibited transactions.

     3.16. EMPLOYMENT AGREEMENTS; LABOR RELATIONS.

           (a)  SCHEDULE 3.16 sets forth a  complete  and  accurate  list of all
     material   employee   benefit  or   compensation   plans,   agreements  and
     arrangements  to which RSI is a party and which is not disclosed in the RSI
     SEC Reports,  including without  limitation (i) all severance,  employment,
     consulting or similar contracts, (ii) all material agreements and contracts
     with "change of control"  provisions  or similar  provisions  and (iii) all
     indemnification agreements or arrangements with directors or officers.

          (b)  RSI is in compliance  in all  material  respects  with  all  laws
     (including  Federal and state laws)  respecting  employment  and employment
     practices, terms and conditions of employment,  wages and hours, and is not

                                       15
<PAGE>

     engaged in any unfair labor or unlawful  employment  practice.  There is no
     unlawful employment practice  discrimination charge pending before the EEOC
     or EEOC  recognized  state  "referral  agency."  There is no  unfair  labor
     practice charge or complaint  against RSI pending before the National Labor
     Review  Board.  There is no labor  strike,  dispute,  slowdown  or stoppage
     actually  pending  or,  to the  knowledge  of RSI,  threatened  against  or
     involving   or   affecting   RSI  and  no  National   Labor   Review  Board
     representation  question  exists  respecting its  employees.  Except as set
     forth on SCHEDULE 3.16, no grievance or  arbitration  proceeding is pending
     and no  written  claim  therefor  has been  delivered  to RSI.  There is no
     collective bargaining agreement that is binding on RSI.

     3.17. INTELLECTUAL PROPERTY. RSI owns or has valid, binding and enforceable
rights to use all material  patents,  trademarks,  trade names,  service  marks,
service names, copyrights, applications therefor and licenses or other rights in
respect  thereof  ("Intellectual  Property")  used or held for use in connection
with the business of RSI,  without any known conflict with the rights of others.
RSI has  not  received  any  notice  from  any  other  person  pertaining  to or
challenging  the  right of RSI to use any  Intellectual  Property  or any  trade
secrets, proprietary information, inventions, know-how, processes and procedures
owned or used or licensed to RSI.

     3.18. REAL ESTATE; ENVIRONMENTAL LAWS.

           (a) (i) Applicable  zoning  ordinances  permit the operation of RSI's
     business at its 444 West  Fairmont,  Tempe,  Arizona leased site (the "Real
     Estate");  (ii) RSI has all easements and rights,  including  easements for
     all  utilities,  services,  roadways and other means of ingress and egress,
     necessary  to operate  the  business;  and (iii)  neither the whole nor any
     portion of the Real Estate has been condemned,  requisitioned  or otherwise
     taken by any  public  authority,  and no notice  of any such  condemnation,
     requisition or taking has been received. No such condemnation,  requisition
     or taking is threatened or  contemplated,  and there are no pending  public
     improvements which may result in special  assessments  against or which may
     otherwise materially and adversely affect the Real Estate. To the knowledge
     of RSI,  (i) the Real  Estate has not been used for  deposit or disposal of
     hazardous  wastes or  substances in violation of any past or current law in
     any material respect and (ii) there is no material  liability under past or
     current law with respect to any hazardous  wastes or substances  which have
     been disposed of on or in the Real Estate.

           (b)  RSI has not received any notice of, and has no actual  knowledge
     of, any material violation of any zoning, building, health, fire, water use
     or similar statute,  ordinance,  law, regulation or code in connection with
     the Real Estate.



                                       16
<PAGE>

           (c)  RSI has complied with all environmental, health and safety laws,
     and no action, suit, proceeding, hearing, investigation, charge, complaint,
     claim or demand  has been  filed or  commenced  against  RSI  alleging  any
     failure  so to  comply.  RSI has  obtained  and is in  compliance  with all
     permits,  licenses  and  other  authorizations  which  are  required  under
     environmental,  health and safety  laws.  No  hazardous  or toxic  material
     exists in any  structure  located on, or exists on or under the surface of,
     the Real Estate which is, in any case, in material  violation of applicable
     environmental,  health  or  safety  laws.  For  purposes  of this  Section,
     "hazardous or toxic  material"  shall mean waste,  substance,  materials or
     particulate matter regulated as hazardous or toxic under any environmental,
     health or safety law. For purposes of this Section, "environmental,  health
     and  safety   laws"   means  the   Comprehensive   Environmental   Response
     Compensation  and  Liability  Act of 1980,  the Resource  Conservation  and
     Recovery  Act of 1976 and the  Occupational  Safety and Health Act of 1970,
     each as amended,  together with all other laws of federal,  state and local
     governments (and all agencies thereof)  concerning  pollution or protection
     of the  environment,  public  health and  safety,  or  employee  health and
     safety,  including  laws  relating to  emissions,  discharges,  releases or
     threatened  releases of pollutants,  contaminants or chemical,  industrial,
     hazardous or toxic  materials or wastes into  ambient air,  surface  water,
     ground water or lands or otherwise relating to the manufacture, processing,
     distribution,  use, treatment,  storage, disposal, transport or handling of
     pollutants,  contaminants  or  chemical,  industrial,  hazardous  or  toxic
     materials or wastes.

     3.19. CONDITION OF ASSETS.  All of the assets (other than inventory) of RSI
viewed as a whole and not on an asset by asset basis are in good  condition  and
working order, ordinary wear and tear excepted,  and are reasonably suitable for
the uses for which  intended,  free from any defects  known to RSI,  except such
minor defects, as do not substantially interfere with the continued use thereof.
RSI has in force such insurance of its properties and operations as is set forth
on SCHEDULE 3.19.

     3.20. ACCOUNTS  RECEIVABLE.   The accounts  receivable set forth on the RSI
Quarterly  Statements  are  reflected  thereon  in  accordance  with  GAAP.  The
allowance  for  collection  losses  on the RSI  Quarterly  Statements  has  been
determined in accordance with GAAP  consistent with past practice.  The accounts
receivable arising since the date of the RSI Quarterly  Statements are valid and
genuine  subject to no  setoffs  or  counterclaims  and are  collectible  in the
ordinary  course of  business,  subject to RSI's  recorded  reserve for doubtful
accounts.



                                       17
<PAGE>

     3.21. INVENTORY. All inventory used in the conduct of the operations of the
business  reflected on the RSI Quarterly  Statements or acquired  since the date
thereof,  was  acquired  and has  been  maintained  in the  ordinary  course  of
business,  consists  substantially of good and  merchantable  quality and, other
than after acquired inventory, has been recorded on the RSI Quarterly Statements
in accordance with GAAP.

     3.22. YEAR 2000.  All  operating  system,  application  and other  computer
software  owned by or licensed to RSI,  and all  computer  hardware  and related
equipment  leased or owned by RSI, is currently Year 2000  compliant,  or to the
extent that such software or hardware is not currently Year 2000 compliant,  RSI
has in place and is implementing detailed plans to ensure that such software and
hardware will be Year 2000 compliant no later than June 30, 1999.

     3.23. BROKERS AND FINDERS.  None of RSI  or its  officers or directors  has
employed any broker, finder or investment bank or incurred any liability for any
investment  banking fees,  financial  advisory fees,  brokerage fees or finders'
fees in connection with the transactions  contemplated  hereby. RSI is not aware
of any claim for payment of any finder's fees,  brokerage or agent's commissions
or other like  payments  in  connection  with the  negotiations  leading to this
Agreement or the consummation of the transactions contemplated hereby.


                                   ARTICLE 4.
             REPRESENTATIONS AND WARRANTIES OF CNI AND MERGER CORP.

     CNI and Merger Corp. hereby represent and warrant to RSI as follows:

     4.1.  ORGANIZATION  AND GOOD  STANDING.  Each of CNI and Merger Corp.  is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation.

     4.2.  CORPORATE  POWER AND AUTHORITY.  Each of CNI and Merger Corp. has the
corporate  power and  authority  to own,  lease  and  operate  their  respective
properties and assets and to carry on their  respective  businesses as currently
being  conducted.  Each of CNI and  Merger  Corp.  has the  corporate  power and
authority to execute and deliver this  Agreement and to perform its  obligations
under this Agreement and to consummate the Merger.  The execution,  delivery and
performance by CNI and Merger Corp. of this Agreement have been duly  authorized
by all necessary corporate action.

     4.3.  BINDING EFFECT.  This Agreement has been duly  executed and delivered
by CNI and Merger Corp.  and is the legal,  valid and binding  obligation of CNI
and Merger Corp., enforceable in accordance with its terms except that:



                                       18
<PAGE>

          (a) enforceability  may be limited by bankruptcy,  insolvency or other
     similar laws affecting creditors' rights;

          (b) the availability of equitable remedies may be limited by equitable
     principles of general applicability; and

          (c) rights to  indemnification  may be limited  by  considerations  of
     public policy.

     4.4  ABSENCE OF RESTRICTIONS AND CONFLICTS. Subject only to the approval of
the adoption of this Agreement,  the Merger and the Warrant by each of CNI's and
Merger Corp.'s  shareholders,  the execution,  delivery and  performance of this
Agreement and the Warrant and the consummation of the Merger and the fulfillment
of and  compliance  with the  terms and  conditions  of this  Agreement  and the
Warrant do not and will not, with the passing of time or the giving of notice or
both, violate or conflict with,  constitute a breach of or default under, result
in the loss of any material  benefit under,  or permit the  acceleration  of any
obligation  under, (i) any term or provision of the Articles of Incorporation or
Bylaws of each of CNI and Merger Corp.,  (ii) any  judgment,  decree or order of
any court or  governmental  authority  or agency to which  either  CNI or Merger
Corp.  is a party or by which either CNI or Merger Corp. or its  properties  are
bound, or (iii) any statute,  law,  regulation or rule applicable to each of CNI
and Merger Corp.  other than such  violations,  conflicts,  breaches or defaults
which  would not have a material  adverse  effect on the  business,  operations,
assets or  financial  condition  of either  CNI or Merger  Corp.  Except for the
filing of the  Articles of Merger with the Arizona  Corporation  Commission  and
publication  thereof as  required  by the BCA,  compliance  with the  applicable
requirements  of the  Securities  Act,  the Exchange  Act and  applicable  state
securities  laws,  no  consent,   approval,   order  or  authorization   of,  or
registration,  declaration or filing with, any governmental  agency or public or
regulatory  unit,  agency,  body or  authority  with  respect to each of CNI and
Merger  Corp.  is  required  in  connection  with  the  execution,  delivery  or
performance of this Agreement and the Warrant by each of CNI and Merger Corp. or
the consummation of the transactions contemplated hereby.

     4.5  BROKERS AND FINDERS.  Except for ECDI Capital Corp. (the fees of which
shall be paid by CNI), none of CNI or its officers or directors has employed any
broker,  finder or investment  bank or incurred any liability for any investment
banking  fees,  financial  advisory  fees,  brokerage  fees or finders'  fees in
connection with the transactions  contemplated  hereby.  CNI is not aware of any
claim for payment of any  finder's  fees,  brokerage or agent's  commissions  or
other  like  payments  in  connection  with  the  negotiations  leading  to this
Agreement or the consummation of the transactions contemplated hereby.

                                       19
<PAGE>

                                   ARTICLE 5.
                        CERTAIN COVENANTS AND AGREEMENTS

     5.1. CONDUCT OF BUSINESS BY RSI. From the date hereof to the Escrow Closing
Date, RSI will,  except as required in connection  with the Merger and the other
transactions contemplated by this Agreement and except as otherwise disclosed on
the schedules hereto or consented to in writing by CNI:

          (a)  carry on its  business  in the  ordinary  and  regular  course in
     substantially the same manner as heretofore conducted and not engage in any
     new line of business or enter into any material  agreement,  transaction or
     activity or make any material  commitment  except those in the ordinary and
     regular course of business and not otherwise  prohibited under this Section
     5.1;

          (b)  neither change nor amend its Articles of Incorporation or Bylaws;

          (c) other than pursuant to the exercise of the Options  outstanding on
     the date hereof,  not issue,  sell or grant options,  warrants or rights to
     purchase or subscribe  to, or enter into any  arrangement  or contract with
     respect  to the  issuance  or sale of any of the  capital  stock  of RSI or
     rights or obligations  convertible  into or exchangeable  for any shares of
     the  capital  stock  of RSI  and  not  alter  the  terms  of any  presently
     outstanding  options  or option  plans or make any  changes  (by  split-up,
     combination, reorganization or otherwise) in the capital structure of RSI;

          (d) not  declare,  pay or set aside for payment any  dividend or other
     distribution in respect of the capital stock or other equity  securities of
     RSI and not redeem, purchase or otherwise acquire any shares of the capital
     stock or other securities of RSI or rights or obligations  convertible into
     or exchangeable  for any shares of the capital stock or other securities of
     RSI or obligations convertible into such, or any options, warrants or other
     rights to purchase or subscribe to any of the foregoing;

          (e) not acquire or enter into any  agreement  to  acquire,  by merger,
     consolidation  or purchase of stock or assets,  any business or entity,  or
     dispose  of any  material  asset  other than the sale of  inventory  in the
     ordinary course of business;

          (f) use its  reasonable  efforts  to  preserve  intact  the  corporate
     existence,  goodwill and business organization of RSI, to keep the officers
     and employees of RSI available to RSI and to preserve the  relationships of
     RSI with suppliers, customers and others having business relations with any
     of them;

                                       20
<PAGE>

          (g) not (i) create, incur or assume any debt (including obligations in
     respect of capital  leases) or,  except in the ordinary  course of business
     under existing lines of credit, create, incur or assume any short-term debt
     for borrowed money,  (ii) assume,  guarantee,  endorse or otherwise  become
     liable or responsible (whether directly, contingently or otherwise) for the
     obligations of any other person, (iii) make any loans or advances in excess
     of $1,000 to any other person,  or (iv) make any capital  contributions to,
     or investments in, any person;

          (h) not (i) enter  into,  modify or extend in any  manner the terms of
     any  employment,   severance  or  similar   agreements  with  officers  and
     directors,  (ii) grant any  increase  in the  compensation  of  officers or
     directors, whether now or hereafter payable, or (iii) grant any increase in
     the compensation of any other employees  except for compensation  increases
     in the ordinary  course of business and  consistent  with past practice (it
     being  understood  by the parties  hereto that for the purposes of (ii) and
     (iii) above increases in compensation  shall include any increase  pursuant
     to any option,  bonus, stock purchase,  pension,  profit-sharing,  deferred
     compensation,   retirement   or  other  plan,   arrangement,   contract  or
     commitment);

          (i) not make or incur any individual capital  expenditure in excess of
     $5,000 or capital expenditures in the aggregate in excess of $10,000 except
     as  disclosed  on  Schedule  5.1(i)  for  purposes  of  becoming  Year 2000
     compliant (as used herein, "capital expenditure" shall mean all payments in
     respect  of the cost of any  fixed  asset or  improvement  or  replacement,
     substitution  or addition  thereto which is deemed a long-term  asset under
     GAAP,  including  those costs arising in connection with the acquisition of
     such assets by way of increased  product or service charges or offset items
     or in connection with capital leases);

          (j)  perform  all of its  obligations  under  all  Material  Contracts
     (except those being contested in good faith) and not enter into,  assume or
     amend any contract or commitment  that would be a Material  Contract  other
     than contracts to provide  services  entered into in the ordinary course of
     business; and

          (k) prepare and file all federal, state, local and foreign returns for
     taxes and other tax reports,  filings and amendments thereto required to be
     filed by it, and allow CNI,  at its  request,  to review all such  returns,
     reports,  filings  and  amendments  at RSI's  offices  prior to the  filing
     thereof,  which review shall not  interfere  with the timely filing of such
     returns.

     In connection  with the continued  operation of the business of RSI between
the date of this Agreement and the Escrow Closing Date, RSI shall confer in good
faith and on a regular and frequent  basis with one or more  representatives  of


                                       21
<PAGE>

CNI designated in writing to report  operational  matters of materiality and the
general status of ongoing  operations.  In addition,  upon reasonable notice not
less than 24 hours in  advance,  RSI will allow CNI  employees  and agents to be
present at RSI's business  locations during normal business hours to observe the
business  and  operations  of RSI.  Between  the  Escrow  Closing  Date  and the
Effective  Date,  RSI will allow CNI employees and agents to be present at RSI's
business  locations without the requirement of advance notice, and RSI shall not
take any action which CNI  reasonably  asserts  would  constitute a violation of
Section 5.1 hereof.  RSI  acknowledges  that CNI does not and will not waive any
rights it may have prior to the Escrow  Closing  Date under this  Agreement as a
result of such  consultations,  nor shall CNI be  responsible  for any decisions
made by RSI's  officers  and  directors  with  respect to matters  which are the
subject of such consultation.

     5.2.  NOTICE OF ANY MATERIAL  CHANGE.  RSI shall,  promptly after the first
notice  or  occurrence  thereof,  advise  CNI in  writing  of any  event  or the
existence of any state of facts that would make any of its  representations  and
warranties in this Agreement untrue in any material respect.

     5.3.  INSPECTION AND ACCESS TO INFORMATION.

          (a) Between the date of this  Agreement  and the Escrow  Closing Date,
     RSI will provide to CNI and its  accountants,  counsel and other authorized
     representatives  reasonable  access,  during normal  business  hours to its
     premises,  properties,  contracts,  commitments,  books,  records and other
     information (including tax returns filed and those in preparation) and will
     cause its  officers  to furnish to CNI and its  authorized  representatives
     such  financial,   technical  and  operating  data  and  other  information
     pertaining  to its  business,  as CNI shall  from  time to time  reasonably
     request.

          (b) CNI and its representatives  shall maintain the confidentiality of
     all information (other than information which is generally available to the
     public)  concerning RSI acquired pursuant to the transactions  contemplated
     hereby in the event that the Merger is not consummated. All files, records,
     documents, information, data and similar items relating to the confidential
     information of RSI,  whether  prepared by CNI or otherwise  coming into its
     possession  (other  than  information  which  (i) is or  becomes  generally
     available to the public  other than as a result of a  disclosure  by CNI or
     its  representatives,  (ii) is or  becomes  available  to CNI from a source
     other than RSI, its  subsidiaries or RSI's  representatives,  provided that
     such source is not, and was not, bound by a confidentiality  agreement with
     RSI or any of its  affiliates  or  representatives  or (iii) RSI  agrees in
     writing  was  available  to  CNI  on  a  nonconfidential   basis  prior  to
     disclosure),  shall  remain  the  exclusive  property  of RSI and  shall be
     promptly delivered to RSI upon termination of this Agreement.

                                       22
<PAGE>

     5.4. SHAREHOLDERS' MEETING; PROXY STATEMENT.

          (a) RSI shall call a meeting of its shareholders to be held as soon as
     practicable after the date hereof for the purpose of voting upon the Merger
     and this Agreement (the "Special Meeting").

          (b) RSI will use its reasonable efforts to hold the Special Meeting as
     promptly as practicable and will, through its Board of Directors, recommend
     to its  shareholders  approval  of the  Merger  and this  Agreement  at the
     Special Meeting; provided,  however, that such recommendation is subject to
     any action  taken by, or upon the  authority  of, the Board of Directors of
     RSI in a response to an Acquisition  Proposal (as defined  hereinafter) and
     in the exercise of its good faith  judgment as to its  fiduciary  duties to
     the  shareholders  of RSI,  which such judgment is based upon the advice of
     independent, outside legal counsel that a failure of the Board to withdraw,
     modify or change its recommendation due to an Acquisition Proposal would be
     likely to constitute a breach of its fiduciary duties to such shareholders.

          (c) As  promptly  as  practicable  but in no event  later than 30 days
     after the execution of this Agreement,  RSI shall promptly prepare and file
     with the SEC a proxy  statement  with  respect to the Special  Meeting (the
     "Proxy  Statement").  Each of CNI and RSI agrees to provide as  promptly as
     practicable  to the other such  information  concerning  its  business  and
     financial  statements  and  affairs as, in the  reasonable  judgment of the
     other party,  may be required or  appropriate or is customary for inclusion
     in the Proxy Statement,  and to cause its counsel and auditors to cooperate
     with the other's  counsel  and  auditors  in the  preparation  of the Proxy
     Statement.  The  information  provided  by CNI and RSI for use in the Proxy
     Statement  shall be true  and  correct  in all  material  respects  without
     omission of any  material  fact which is required to make such  information
     not false or misleading.

          (d) At the time the Proxy  Statement is mailed to RSI's  shareholders,
     the Proxy Statement will (i) not contain any untrue statement of a material
     fact, or omit to state any material  fact required to be stated  therein as
     necessary,  in  order  to make  the  statements  therein,  in  light of the
     circumstances  under which they were made,  not misleading or necessary and
     (ii) comply in all material  respects  with the  provisions of the Exchange
     Act, as applicable,  and the rules and  regulations  thereunder;  provided,
     however,  no  representation is made by RSI with respect to statements made
     in the Proxy Statement  based on information  supplied by CNI expressly for
     inclusion  or   incorporation  by  reference  in  the  Proxy  Statement  or
     information omitted with respect to CNI.

     5.5. REASONABLE EFFORTS;  FURTHER ASSURANCES;  COOPERATION.  Subject to the
other  provisions  of this  Agreement,  the parties  hereby shall each use their


                                       23
<PAGE>

reasonable  efforts to perform their obligations herein and to take, or cause to
be taken or do, or cause to be done, all things reasonably necessary,  proper or
advisable  under  applicable law to obtain all regulatory  approvals and satisfy
all  conditions to the  obligations  of the parties under this  Agreement and to
cause the Merger and the other  transactions  contemplated  herein to be carried
out promptly in accordance  with the terms hereof and shall cooperate fully with
each other and their respective officers, directors, employees, agents, counsel,
accountants  and other  designees in  connection  with any steps  required to be
taken as a part of their respective obligations under this Agreement,  including
without limitation:

          (a) RSI and CNI shall  promptly  make  their  respective  filings  and
     submissions  and shall take,  or cause to be taken,  all actions and do, or
     cause to be done,  all things  reasonably  necessary,  proper or  advisable
     under  applicable laws and  regulations to obtain any required  approval of
     any federal,  state or local  governmental  agency or regulatory  body with
     jurisdiction over the transactions contemplated by this Agreement.

          (b) In the event  any  claim,  action,  suit,  investigation  or other
     proceeding  by any  governmental  body or other person is  commenced  which
     questions  the  validity  or  legality  of the  Merger  or any of the other
     transactions  contemplated hereby or seeks damages in connection therewith,
     the parties  agree to cooperate  and use all  reasonable  efforts to defend
     against such claim, action, suit, investigation or other proceeding and, if
     an  injunction  or other order is issued in any such action,  suit or other
     proceeding,  to use all reasonable efforts to have such injunction or other
     order lifted, and to cooperate reasonably regarding any other impediment to
     the consummation of the transactions contemplated by this Agreement.

          (c) Each party  shall give prompt  written  notice to the other of (i)
     the  occurrence,  or failure to occur,  of any event  which  occurrence  or
     failure would be likely to cause any  representation  or warranty of RSI or
     CNI,  as the case may be,  contained  in this  Agreement  to be  untrue  or
     inaccurate in any material  respect at any time from the date hereof to the
     Escrow  Closing  Date or that will or may result in the  failure to satisfy
     any of the  conditions  specified in Article 6 or 7 and (ii) any failure of
     RSI or CNI,  as the case may be, to comply  with or satisfy  any  covenant,
     condition or agreement to be complied with or satisfied by it hereunder.

     5.6.  PUBLIC  ANNOUNCEMENTS.  The timing and  content of all  announcements
regarding any aspect of this Agreement or the Merger to the financial community,
government  agencies,  employees or the general public shall be mutually  agreed
upon  in  advance  (unless  CNI or RSI is  advised  by  counsel  that  any  such
announcement or other disclosure not mutually agreed upon in advance is required
to be made by law or  applicable  Nasdaq  Stock  Market rule and then only after
making a reasonable attempt to comply with the provisions of this Section).

                                       24
<PAGE>

     5.7.  NO SOLICITATIONS.  From the date hereof until the Escrow Closing Date
or  until  this  Agreement  is  terminated  or  abandoned  as  provided  in this
Agreement,  RSI shall  not  directly  or  indirectly  (i)  solicit  or  initiate
discussion with or (ii) enter into  negotiations or agreements  with, or furnish
any  information  to, any  corporation,  partnership,  person or other entity or
group (other than CNI, an affiliate of CNI or their  authorized  representatives
pursuant  to this  Agreement)  concerning  any  proposal  for a merger,  sale of
substantial  assets,  sale of shares of stock or securities or other takeover or
business combination transaction (the "Acquisition Proposal") involving RSI, and
RSI will instruct its officers,  directors, advisors and its financial and legal
representatives and consultants not to take any action contrary to the foregoing
provisions  of  this  sentence;  provided,  however,  that  RSI,  its  officers,
directors,  advisors and its financial and legal representatives and consultants
shall not be prohibited  prior to the Escrow Closing Date from taking any action
described  in (ii)  above to the  extent  such  action  is taken by, or upon the
authority  of,  the Board of  Directors  of RSI in the  exercise  of good  faith
judgment as to its fiduciary  duties to the  shareholders of RSI, which judgment
is based upon the advice of independent, outside legal counsel that a failure of
the Board of Directors of RSI to take such action would be likely to  constitute
a breach of its fiduciary duties to such  shareholders;  PROVIDED FURTHER,  that
nothing in this  Section 5.7 shall  prevent RSI or the Board of  Directors  from
taking, and disclosing to RSI's shareholders,  a position  contemplated by Rules
14d-9 and 14e-2  promulgated  under the  Exchange  Act with regard to any tender
offer or from making such disclosure to RSI's shareholders  which, as advised in
an opinion of counsel,  is required  under  applicable  law. RSI will notify CNI
promptly if RSI becomes  aware that any  inquiries or proposals are received by,
any information is requested from or any  negotiations or discussions are sought
to be initiated with, RSI with respect to an Acquisition Proposal, and RSI shall
promptly  deliver to CNI any  written  inquiries  or  proposals  received by RSI
relating to an Acquisition  Proposal,  except,  in each case,  when RSI has been
advised by independent  outside counsel for RSI that providing such  information
to CNI would be likely  to result in a breach of the  fiduciary  duties of RSI's
Board of Directors to RSI's  shareholders.  Each time, if any, that the Board of
Directors  of RSI  determines,  upon  advice of such  legal  counsel  and in the
exercise of its good faith judgment as to its fiduciary  duties to shareholders,
that it must enter into  negotiations  with, or furnish any  information to, any
corporation,  partnership,  person or other  entity or group (other than CNI, an
affiliate of CNI or their authorized representatives) concerning any Acquisition
Proposal,  RSI will  give CNI  prompt  notice of such  determination,  except in
instances  where RSI receives the advice of  independent,  outside legal counsel
for RSI  that  providing  such  information  to CNI  would  be a  breach  of the
fiduciary duties of RSI's Board of Directors.

     5.8  SURVIVAL  OF  COVENANTS  AND  AGREEMENTS.  All  of the  covenants  and
agreements  contained in this Article 5, except those  contained in Section 5.4,
shall survive from the Escrow Closing Date to the Effective Date.

                                       25
<PAGE>

                                   ARTICLE 6.
                   CONDITIONS PRECEDENT TO OBLIGATIONS OF RSI

     Except as may be waived by RSI, the  obligations  of RSI to consummate  the
transactions contemplated by this Agreement shall be subject to the satisfaction
on or before the Escrow Closing Date of each of the following conditions:

     6.1.  COMPLIANCE.  CNI shall have, or shall have caused to be, satisfied or
complied  with and performed in all material  respects all terms,  covenants and
conditions  of this  Agreement  to be complied  with or  performed  by CNI on or
before the Escrow Closing Date.

     6.2.  REPRESENTATIONS  AND  WARRANTIES.  All  of  the  representations  and
warranties  made by CNI in this  Agreement  shall  be true  and  correct  in all
material  respects at and as of the Escrow  Closing Date with the same force and
effect as if such  representations and warranties had been made at and as of the
Escrow  Closing  Date,  except for changes  permitted  or  contemplated  by this
Agreement.

     6.3.  CERTIFICATES.  RSI shall have received a certificate or certificates,
executed on behalf of CNI by an executive officer of CNI, to the effect that the
conditions contained in Sections 6.1 and 6.2 hereof have been satisfied.

     6.4.  SHAREHOLDER  APPROVAL.  This  Agreement  shall have been approved and
adopted by the  affirmative  vote of the  holders  of a  majority  of all of the
outstanding shares (as of the "record date" set forth in the Proxy Statement) of
RSI Common Stock.


                                   ARTICLE 7.
          CONDITIONS PRECEDENT TO OBLIGATIONS OF CNI AND MERGER CORP.

     Except as may be waived by CNI and Merger Corp., the obligations of CNI and
Merger Corp. to consummate the transactions contemplated by this Agreement shall
be subject to the satisfaction, on or before the Escrow Closing Date, of each of
the following conditions:

     7.1.  COMPLIANCE.  RSI shall have, or shall have caused to be, satisfied or
complied with and performed in all material respects all terms,  covenants,  and
conditions of this Agreement to be complied with or performed by it on or before
the Escrow Closing Date.

     7.2.  REPRESENTATIONS  AND  WARRANTIES.  All  of  the  representations  and
warranties  made by RSI in this  Agreement  shall  be true  and  correct  in all
material  respects at and as of the Escrow  Closing Date with the same force and


                                       26
<PAGE>

effect as if such  representations and warranties had been made at and as of the
Escrow  Closing  Date,  except for changes  permitted  or  contemplated  by this
Agreement.

     7.3. CERTIFICATES.  CNI shall have received a certificate  or certificates,
executed on behalf of RSI by an executive officer of RSI, to the effect that the
conditions in Sections 7.1 and 7.2 hereof have been satisfied.

     7.4. DUE DILIGENCE. The due diligence review of RSI's business conducted by
CNI shall not have revealed any item which in CNI's  reasonable  judgment  would
constitute a material  adverse change or a prospect of a material adverse change
in a particular balance sheet or statement of income item of RSI.

     7.5  EMPLOYMENT AGREEMENTS.   CNI  shall  have   entered   into  employment
agreements  with the executive  management of RSI in the form attached hereto as
EXHIBIT 7.5.


                                    ARTICLE 8.
                                  MISCELLANEOUS

     8.1. TERMINATION.  In addition to the  provisions regarding termination set
forth elsewhere herein, this Agreement and the transactions  contemplated hereby
may be terminated at any time:

          (a) on or before the Effective Date, by mutual consent of RSI and CNI;

          (b) on or before the Escrow  Closing  Date, by CNI if there has been a
     material misrepresentation or breach of warranty in the representations and
     warranties  of RSI set forth herein or a failure to perform in any material
     respect a covenant on the part of RSI with respect to its  representations,
     warranties and covenants set forth in this Agreement;

          (c) on or before the Escrow  Closing  Date, by RSI if there has been a
     material misrepresentation or breach of warranty in the representations and
     warranties  of CNI set forth herein or a failure to perform in any material
     respect a covenant on the part of CNI with respect to its  representations,
     warranties and covenants set forth in this Agreement;

          (d) by  either  of CNI or RSI if  the  Escrow  Closing  Date  has  not
     occurred by March 31, 1999,  unless such failure of  consummation is due to
     the failure of the  terminating  party to perform or observe the covenants,
     agreements, and conditions hereof to be performed or observed by it;

          (e) on or before the Escrow  Closing  Date, by either of RSI or CNI if
     the transactions contemplated hereby violate any nonappealable final order,


                                       27
<PAGE>

     decree,  or judgment  of any court or  governmental  body or agency  having
     competent jurisdiction;

          (f) on or before the Escrow Closing Date, by RSI if in the exercise of
     the good faith judgment of its Board of Directors  (which judgment is based
     upon the advice of independent,  outside legal counsel) as to its fiduciary
     duties to its  shareholders  such  termination  is required by reason of an
     Acquisition  Proposal  or, if the Board of  Directors  of RSI  withdraws or
     materially  modifies or changes its  recommendation  to its shareholders to
     approve  this  Agreement  and the  Merger  if there  exists at such time an
     Acquisition  Proposal  for RSI and such change in  recommendation  is based
     upon the advice of independent, outside legal counsel;

          (g) on or before the Escrow  Closing  Date, by CNI if the RSI Board of
     Directors withdraws or materially modifies or changes its recommendation to
     the  shareholders  of RSI to approve this Agreement and the Merger if there
     exists at such time an Acquisition Proposal; and

          (h) by CNI in accordance with clause (ii)(Y) of Section 2.4(d).

     8.2. EXPENSES.  If the transactions  contemplated by this Agreement are not
consummated, each party hereto shall pay its own expenses incurred in connection
with this Agreement and the transactions contemplated hereby.

     8.3. ENTIRE  AGREEMENT.  This Agreement and the exhibits hereto contain the
complete   agreement  among  the  parties  with  respect  to  the   transactions
contemplated hereby and supersede all prior agreements and understandings  among
the parties with respect to such transactions.  The parties hereto have not made
any  representation  or warranty except as expressly set forth in this Agreement
or in any certificate or schedule  delivered pursuant hereto. The obligations of
any party under any agreement  executed  pursuant to this Agreement shall not be
affected by this section.

     8.4. SURVIVAL OF REPRESENTATIONS  AND WARRANTIES.  The  representations and
warranties  of each  party  contained  herein  or in any  exhibit,  certificate,
document or instrument  delivered  pursuant to this Agreement  shall not survive
the occurrence of the Merger.

     8.5. COUNTERPARTS.  This  Agreement  may  be  executed  in  any  number  of
counterparts,  each of which when so executed and  delivered  shall be deemed an
original, and such counterparts together shall constitute only one original.

     8.6. NOTICES. All notices, demands,  requests, or other communications that
may be or are  required to be given,  served,  or sent by any party to any other
party  pursuant  to this  Agreement  shall be in  writing  and  shall be sent by


                                       28
<PAGE>

facsimile transmission, next-day courier or mailed by first-class, registered or
certified mail,  return receipt  requested,  postage prepaid,  or transmitted by
hand delivery, addressed as follows:

          (i)  If to RSI:

               444 West Fairmont
               Tempe, Arizona 85282
               Attn: Scott W. Ryan, Chairman
               Telephone: 602-968-1772
               Fax: 602-894-1907

               with a copy (which shall not constitute notice) to:

               Fennemore Craig
               3003 N. Central, Suite 2600
               Phoenix, Arizona 85012-2913
               Attn: Karen McConnell
               Telephone: 602-916-5307
               Fax: 602-916-5507

         (ii)  If to CNI or Merger Corp.:

               10390 Brockwood Road
               Dallas, Texas 75238
               Attn: Michael O'Neal, CEO
               Telephone: 214-340-6400
               Fax: 214-340-8269

               with a copy (which shall not constitute notice) to:

               Crouch & Hallett, L.L.P.
               717 North Harwood Street, Suite 1400
               Dallas, Texas  75201
               Attention: Bruce H. Hallett
               Telephone:  214-922-4120
               Fax:  214-953-0576

Each party may designate by notice in writing a new address to which any notice,
demand,  request, or communication may thereafter be so given,  served, or sent.
Each notice,  demand,  request, or communication that is mailed,  delivered,  or
transmitted in the manner  described above shall be deemed  sufficiently  given,
served,  sent,  and received for all purposes at such time as it is delivered to
the addressee (with the return receipt, the delivery receipt or the affidavit of
messenger being deemed conclusive  evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.



                                       29
<PAGE>

     8.7.  SUCCESSORS; ASSIGNMENTS. This Agreement  and the  rights,  interests,
and  obligations  hereunder shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns.  Neither this
Agreement nor any of the rights,  interests or  obligations  hereunder  shall be
assigned, by operation of law or otherwise, by any of the parties hereto without
the prior written consent of the other.

     8.8.  GOVERNING  LAW.  This  Agreement  shall be construed  and enforced in
accordance with the laws of the State of Arizona (except the choice of law rules
thereof).

     8.9.  WAIVER AND OTHER ACTION. This Agreement may be amended,  modified, or
supplemented only by a written instrument  executed by the parties against which
enforcement of the amendment, modification or supplement is sought.

     8.10. SEVERABILITY.  If any  provision  of  this  Agreement  is held  to be
illegal, invalid, or unenforceable, such provision shall be fully severable, and
this Agreement shall be construed and enforced as if such illegal,  invalid,  or
unenforceable  provision  were never a part  hereof;  the  remaining  provisions
hereof  shall  remain in full force and effect and shall not be  affected by the
illegal, invalid, or unenforceable provision or by its severance; and in lieu of
such  illegal,  invalid,  or  unenforceable  provision,  there  shall  be  added
automatically as part of this Agreement,  a provision as similar in its terms to
such  illegal,  invalid,  or  unenforceable  provision as may be possible and be
legal, valid, and enforceable.

     8.11. NO THIRD PARTY  BENEFICIARIES.  Nothing  expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person,
firm or corporation  other than the parties hereto and their  shareholders,  any
rights,  remedies,  obligations  or  liabilities  under  or by  reason  of  this
Agreement or result in such  person,  firm or  corporation  being deemed a third
party beneficiary of this Agreement.

     8.12. MUTUAL CONTRIBUTION.  The parties to this Agreement and their counsel
have mutually  contributed to its drafting.  Consequently,  no provision of this
Agreement  shall be  construed  against  any party on the ground that such party
drafted the  provision  or caused it to be drafted or the  provision  contains a
covenant of such party.

     8.13. 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 hereto and delivered to each of the other parties hereto.

     8.14. MEDIATION.   If  within  10  days  of  the  receipt  of  notice  of a
controversy  or dispute  among the parties,  the  controversy  or dispute is not
settled through negotiation, then any party may refer the controversy or dispute
to mediation under the Commercial  Mediation  Rules of the American  Arbitration
Association. The mediator shall be appointed within 10 days of the initiation of
the mediation.  The mediation shall be held in Dallas, Texas. If the controversy
or dispute is not settled within 30 days after the  appointment of the mediator,
then any party may refer the controversy or dispute to arbitration in accordance
with  Section 8.15  hereof.  Notwithstanding  the  foregoing,  CNI's  failure to
deposit the required cash amount to the Exchange Fund in accordance with Section


                                       30
<PAGE>

2.3(a)  shall not  constitute  a  controversy  or  dispute  that is  subject  to
mediation.  In the event CNI fails to comply  with its  obligations  pursuant to
said Section 2.3(a),  it (a) consents to submit itself to personal  jurisdiction
of any  federal or state  court in the State of Arizona  and (b) agrees  that it
will not attempt to deny such personal  jurisdiction  by motion or other request
for leave from any such court.

     8.15. ARBITRATION.  Any controversy or dispute among the parties arising in
connection  with this  Agreement  shall  first be  submitted  for  mediation  in
accordance with Section 8.14 hereof.  Failing settlement through such mediation,
the  dispute  shall be  submitted  to a panel of three  arbitrators  and finally
settled by arbitration in accordance  with the commercial  arbitration  rules of
the  American  Arbitration  Association.  Each of the  disputing  parties  shall
appoint one arbitrator,  and these two arbitrators shall independently  select a
third arbitrator.  Arbitration shall take place in Dallas,  Texas. Fees incurred
by each party in such  arbitration  shall be borne by the party  incurring  such
fees.  Any award for monetary  damages  resulting  from  nonpayment  of sums due
hereunder  shall bear interest from the date on which such sums were  originally
due and payable.  Judgment  upon the award  rendered may be entered in any court
having  jurisdiction  or  application  may be made to such  court  for  judicial
acceptance  of the  award  and an  order  of  enforcement,  as the  case may be.
Notwithstanding the foregoing, CNI's failure to deposit the required cash amount
to the Exchange Fund in accordance  with Section  2.3(a) shall not  constitute a
controversy or dispute that is subject to arbitration. In the event CNI fails to
comply with its obligations  pursuant to said Section 2.3(a), it (a) consents to
submit  itself to  personal  jurisdiction  of any  federal or state court in the
State of Arizona and (b) agrees  that it will not attempt to deny such  personal
jurisdiction by motion or other request for leave from any such court.


                         [signatures on following page]



                                       31
<PAGE>

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


                                       CORT INVESTMENT GROUP, INC.


                                       By: /s/ Michelle Swanger, President
                                           -------------------------------------


                                       RSI ACQUISITION CORP.


                                       By: /s/ Michelle Swanger, President
                                           -------------------------------------



                                       RECONDITIONED SYSTEMS, INC.


                                       By: /s/ Scott W. Ryan
                                           -------------------------------------


                                       32
<PAGE>
                   SCHEDULES TO AGREEMENT AND PLAN OF MERGER
                            DATED OCTOBER 30, 1998:

GENERAL

These  Schedules are attached to and form a part of that creation  Agreement and
Plan of Merger (the  "Agreement")  dated October  30,1998 among Cort  Investment
Group, Inc., RSI Acquisition Corp., and Reconditioned Systems, Inc.

Unless otherwise defined or unless the context otherwise  requires,  capitalized
terms used in the  Schedules  shall have the  meanings  ascribed  to them in the
Agreement. The Schedule numbers, heading and any reference in these Schedules to
a Section of the  Agreement  are for  convenience  only and are not  intended to
limit, and shall not be construed as limiting,  the disclosures contained herein
which may also be applicable to another Section or Sections.

The following Schedules comprise the disclosures authorized by the Agreement.


                                  SCHEDULE 3.5

RSI must obtain  written  approval of the Merger and/or the grant of the lien on
RSI's assets to CNI's lenders from the following third parties:

M&I Thunderbird Bank  (Commercial Lender)
One East Camelback Road
Phoenix, Arizona  85016

Glenborough Properties (Landlord)
2633 East Indian School Road, Suite 320
Phoenix, Arizona  85016

Frieden Neopost  (Postage Machine)
315 S. 48th St., Suite 110
Tempe, Arizona  85281

Penske Truck Leasing  (Truck)
2219 S. 2nd Place
Phoenix, Arizona  85004

Advanta Business Systems (Postal Machine)
P.O. Box 1228
Voorhees, New Jersey  08043-1228


                                  SCHEDULE 3.6

RSI has entered into stock option  agreements with each of Dirk Anderson,  Wayne
Collignon,  and Scott Ryan.  These stock option  agreements  provide that if the
optionee's  employment  with RSI is  terminated  for any  reason  other than the
optionee's  death,  the option may be  exercised at any time within three months
after the date of termination but not more than ten years after the grant of the
option.

Additionally,  the 1997 RSI Stock Option Plan permits the Board of Directors, in
its sole  discretion,  to accelerate the benefits of any award under the Plan in
the  event of a  Corporate  Transaction  or  Change  of  Control.  A  "Corporate

                                      S-1
<PAGE>

Transaction"  includes any reverse  merger in which RSI is the surviving  entity
but in which  securities  possessing  more than 50% of the total combined voting
power of RSI's  outstanding  securities  are  transferred to a person or persons
different from the persons holding those  securities  immediately  prior to such
merger.  A "Change of Control" is a change in ownership or control of RSI either
by (i) the direct or  indirect  acquisition  by any  person or related  group of
persons  other than RSI or a person that  directly or  indirectly  controls,  is
controlled  by, or is under common  control with,  RSI of  beneficial  ownership
(within the meaning of Rule 13d-13 of the Exchange Act) of securities possessing
more than 50% of the total combined voting power of RSI's outstanding securities
pursuant to a tender or exchange  offer made directly to RSI's  shareholders  or
other  transaction,  in each  case  which  RSI's  Board  of  Directors  does not
recommend such  shareholders  to accept;  or (ii) a change in the composition of
the RSI Board of Directors over a period of 36  consecutive  months or less such
that a majority  of the Board  members  (rounded  up to the next  whole  number)
ceases, by reason of one or more contested elections for Board membership, to be
comprised of individuals  who either have been Board member  continuously  since
the  beginning of such period or have been elected or nominated  for election as
Board members  during such period or have been elected or nominated for election
as Board members  during such period by at least a majority of the Board members
continuously serving at the beginning of such period who were still in office at
the time such election or nomination was approved by the Board.


                                  SCHEDULE 3.9

RSI has not experienced the changes set forth in subsections (a) through (g) and
(j) through (o).

(h)  RSI has increased the compensation  of the following  employees since March
     31,  1998 in  excess  of  $1,000  in the  following  annual  dollar  amount
     (assuming a 40 hour work week):

Stephanie Yrun          $   2,500.00   Wade Thompson         $   3,120.00
Harvey Foster IV        $   1,040.00   Richard Thompson      $   1,560.00
Paul Serpa              $   1,560.00   Sheldon Sweat         $   1,560.00
David Kendrick          $   2,080.00   Ricardo Lopez         $   1,040.00
Shannan Crawford        $   2,500.00   Calixtro Lopez        $   1,040.00
James Allen             $   1,040.00   Kris Mohlin           $   2,000.00
Harvey Foster III       $   1,040.00   Thu Le                $   1,560.00
David Gossett           $   1,040.00   Calistro Lopez        $   1,040.00
John Greeson            $   1,040.00   Elliot Frayre         $   2,080.00
Karla Herman            $   3,750.00   Roderick Jackson      $   2,080.00
Kelly Beacham           $   1,040.00   Gay Thach             $   1,560.00


(i)  See Schedule  3.16 for a list of  employment,  consulting  or  compensation
     agreements  with any  person or group  providing  for  payment in excess of
     $5,000 by RSI.



                                      S-2
<PAGE>

                                 SCHEDULE 3.11

As  of  March  31,  1998,  the  net  operating  loss  carryforward  of  RSI  was
approximately  $2.1  million  or federal  income  taxes and  approximately  $1.9
million for Arizona state income taxes.


                                 SCHEDULE 3.12

RSI has furnished CNI with summaries and certificates of insurance,  but has not
provided CNI copies of the insurance  policies.  These policies are available on
request.


                                 SCHEDULE 3.13

RSI is a party to a lawsuit  filed in Texas,  entitled  Furniture  Man,  Inc. v.
Reconditioned  Systems,  Inc. The lawsuit includes a counterclaim by RSI against
Furniture Man, Inc. ("FMI").  The claim and counterclaim  result from a contract
dispute, with both parties alleging breach of contract. The court ruled in favor
of RSI,  and ordered FMI to pay  approximately  $9,807.23 to RSI for damages and
RSI's court costs and legal fees. FMI filed a motion for a new trial,  which the
court denied. Judgment will become final on October 28, 1998.


                                 SCHEDULE 3.16

(a)  RSI has entered into Retail  Salesperson  Compensation  Agreements with the
     following individuals (see Supplement A attached):

     Anne St. Lawrence
     John Fritz
     Michelle Martin-Craig
     Deborah Rhodes
     Jeff Johnsen
     Paul Campbell

     RSI has entered into Wholesale Salesperson Compensation Agreements with the
     following individuals (see Supplement B attached):

     Melissa Doyle
     George Scott Kimball

     RSI's employee benefit plans include the following:

     Blue Cross/Blue Shield Medical Insurance
     Guardian Dental Insurance
     Standard Insurance Long-term and Short-term Disability Insurance
     Guardian Life Insurance
     RSI 401(k) Retirement Savings Plan


                                      S-3

<PAGE>

     RSI's  articles  or   incorporation   and  bylaws  contain   identification
     provisions in favor of directors, officers and agents.

     RSI has entered into  Indemnification  Agreements  with its directors dated
     August 5, 1996. These  Indemnification  Agreements were approved by the RSI
     shareholders.

(b)  There are no grievances or arbitration  proceedings  that are pending,  and
     RSI has not received any written claim therefor.


                                 SCHEDULE 3.19

None


                                 SCHEDULE 3.22

RSI has determined that its current accounting  software and the majority of its
computer  hardware are not Year 2000 compliant.  RSI is currently  investigating
hardware  and software  options.  At this time,  RSI is  strongly  favoring  the
purchase of Dynamics  Accounting and Manufacturing  software and conversion to a
Windows NT operating systems  environment for its networking needs. In addition,
the majority of RSI's  hardware  will be replaced  with  upgraded  systems.  The
estimated cost to complete this project is:

     Dynamics Computer Software                           $30,000
     Computer Training and Installation                   $65,000
     Training and Support                                 $ 5,000


At the request of CNI, RSI agrees that unless RSI receives the prior  consent of
CNI to proceed,  RSI will delay the  implementation  of a Year 2000  solution as
long as the Merger is proceeding to conclusion in good faith.


                                      S-4
<PAGE>

                                  EXHIBIT 7.5

(Employment  Agreements for Dirk D. Anderson and Wayne R. Collignon - Previously
filed pursuant to Regulation S-B - See Exhibits 10.25 and 10.26).


SUPPLEMENT A

                           RECONDITIONED SYSTEMS, INC.
                             COMPENSATION AGREEMENT



NAME:          John K. Fritz

DRAW:          $27,000 annually, $1,038.46 bi-weekly

COMMISSIONS:   25% of gross profit for all sales on which the gross profit is at
               least 20%.  For sales on which the gross profit is less than 20%,
               the commission % will be equal to the gross profit %.


Commissions  earned in excess of draws  received  will be paid by the end of the
month following the month in which they were earned.  Following an initial three
month  grace  period,  draws  received in excess of  commissions  earned will be
carried  forward.  If,  subsequent to the initial grace period,  draws  received
exceed  commissions  earned for a period of three months, RSI may terminate your
employment without prejudice. If at the conclusion of your employment your draws
received exceed your  commissions  earned,  you are required to repay the excess
draws (excluding any excess accumulated during your grace period).

Commissions  will be earned on invoiced  shipments  only. Any  additional  costs
incurred  by the  Company  as a result of errors  made by you,  your  failure to
obtain  proper  credit  information,  or your failure to cooperate in collection
efforts will directly reduce your commissions.

All other terms of your employment are outlined in the RSI Employee Handbook.

These terms are be kept confidential between you and RSI Management.  Disclosure
of this  Compensation  Agreement  to any other RSI  employee or anyone else will
result in termination of this Compensation Agreement.






--------------------------------             -----------------------------------
John K. Fritz                                Wayne R. Collignon, President & CEO
                                             Reconditioned Systems, Inc.


                                      E-1

<PAGE>


SUPPLEMENT B

                           RECONDITIONED SYSTEMS, INC.
                             COMPENSATION AGREEMENT



NAME:          Scott Kimball

DRAW:          $40,000 annually, $1,538.46 bi-weekly

COMMISSIONS:   5% of wholesale  gross profit between $50,000 and $74,999 monthly
               and 10% of wholesale gross profit in excess of $75,000 monthly.


Commissions  will be paid by the end of the month  following  the month in which
they were earned.

Commissions  will be earned on invoiced  shipments  only. Any  additional  costs
incurred  by the  Company  as a result of errors  made by you,  your  failure to
obtain  proper  credit  information,  or your failure to cooperate in collection
efforts will directly reduce your commissions.

All other terms of your employment are outlined in the RSI Employee Handbook.

These terms are be kept confidential between you and RSI Management.  Disclosure
of this  Compensation  Agreement  to any other RSI  employee or anyone else will
result in termination of this Compensation Agreement.








--------------------------------             -----------------------------------
Scott Kimball                                Wayne R. Collignon, President & CEO
                                             Reconditioned Systems, Inc.

                                      E-2