AGREEMENT AND PLAN OF MERGER

     This  AGREEMENT  AND PLAN OF MERGER (the  "AGREEMENT")  is made and entered
into as of this 7th day of August,  2000 by and among EBIZ ENTERPRISES,  INC., a
Nevada  corporation  ("EBIZ"),  LINUXMALL.COM,   INC.,  a  Delaware  corporation
("LMI"),  and LINUX MALL  ACQUISITION,  INC.,  a Delaware  corporation  ("MERGER
SUB").

                                    RECITALS

          A. Ebiz and LMI have entered into a letter of intent  reflecting  each
     entity's desire that Ebiz acquire all of the outstanding  capital stock and
     equity interests of LMI by means of a merger (the "Merger") of LMI with and
     into Merger Sub, a direct, wholly owned subsidiary of Ebiz.

          B. For federal income tax purposes, the parties intend that the Merger
     qualify as a  reorganization  within the  meaning of Section  368(a) of the
     Internal Revenue Code of 1986, as amended (the "CODE").

          C.  The  parties  hereby  set  forth  the  terms,  considerations  and
     conditions of the Merger.

                                    AGREEMENT

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

                                    ARTICLE 1
                         THE MERGER AND RELATED MATTERS

          1.1 THE MERGER.

          (a) At the Effective Time (as hereinafter  defined) and subject to and
upon the terms and conditions of this  Agreement,  LMI shall merge with and into
Merger Sub in accordance  with the provisions of the General  Corporation Law of
the State of Delaware  (the  "DGCL"),  the separate  corporate  existence of LMI
shall cease and Merger Sub shall  continue  as the  surviving  corporation  (the
"SURVIVING CORPORATION").  The "EFFECTIVE TIME" shall occur upon the filing with
the Delaware  Secretary of State of a certificate of merger (the "CERTIFICATE OF
MERGER")  substantially in the form of Exhibit A attached hereto and executed in
accordance with the applicable  provisions of the DGCL, or at such later time as
may be agreed to by Ebiz and LMI and  specified  in the  Certificate  of Merger.
Provided that this Agreement has not been terminated  pursuant to Article 9, the
parties  will  cause the  Certificate  of Merger to be filed  with the  Delaware
Secretary  of State as soon as  practicable  after the  Closing  (as  defined in
Section 1.2 below).

          (b) The Merger  shall have the effects set forth in Sections  259, 260
and 261 of the DGCL.  Without  limiting the  generality  of the  foregoing,  and
subject thereto, at the Effective Time, all the properties,  rights, privileges,
powers and  franchises of LMI shall vest in the Surviving  Corporation,  and all
debts,  liabilities  and duties of LMI shall become the debts,  liabilities  and
duties of the Surviving  Corporation.  If, at any time after the Effective Time,
the Surviving Corporation considers or is advised that any deeds, bills of sale,
assignments,  assurances  or any  other  actions  or  things  are  necessary  or
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desirable to vest,  perfect or confirm of record or  otherwise in the  Surviving
Corporation  its right,  title or  interest  in, to or under any of the  rights,
properties, or assets of either LMI or Merger Sub, or otherwise to carry out the
intent and  purposes  of this  Agreement,  the  officers  and  directors  of the
Surviving Corporation will be authorized to execute and deliver, in the name and
on  behalf  of each of LMI and  Merger  Sub,  all  such  deeds,  bills  of sale,
assignments and assurances and to take and do, in the name and on behalf of each
of LMI and  Merger  Sub,  all such  other  actions  and  things  as the Board of
Directors  of  the  Surviving  Corporation  may  determine  to be  necessary  or
desirable to vest,  perfect or confirm any and all right, title and interest in,
to and under such rights,  properties or assets in the Surviving  Corporation or
otherwise to carry out the intent and purposes of this Agreement.

          1.2 CLOSING.

          The closing of the Merger (the "CLOSING") shall take place (i) at 9:00
a.m.  (Mountain Standard Time) at the offices of Lewis and Roca, LLP, within ten
business days  following the date on which the last of the  conditions set forth
in Article 6 (other than the filing of the  Certificate of Merger and other than
any such  conditions  which by their  terms are not  capable of being  satisfied
until the Closing Date (as hereinafter  defined) or thereafter) is satisfied or,
when  permissible,  waived, or (ii) on such other date and at such other time or
place as is mutually agreed by the parties hereto. The date on which the Closing
occurs is hereinafter referred to as the "CLOSING DATE."

          1.3 CONVERSION OF SECURITIES.  At the Effective Time, by virtue of the
Merger  and  without  any  action on the part of Ebiz,  Merger  Sub,  LMI or the
holders of any of their respective securities:

          (a) Each share of common stock of LMI, par value $0.01 per share ("LMI
COMMON STOCK")  outstanding  immediately prior to the Effective Time (other than
those  shares  for which an  election  for  dissenters'  rights has been made as
contemplated  by Section 1.4) shall be converted into and represent the right to
receive,  and shall be  exchangeable  for,  2.2 validly  issued,  fully paid and
non-assessable shares of common stock of Ebiz, par value $0.001 per share ("EBIZ
COMMON STOCK").

          (b) Each share of Series A  Preferred  Stock of LMI (the "LMI SERIES A
PREFERRED  STOCK")  or  Series  B  Preferred  Stock of LMI  (the  "LMI  SERIES B
PREFERRED STOCK"), each par value $0.01 per share (collectively,  "LMI PREFERRED
STOCK"),  outstanding  immediately prior to the Effective Time (other than those
shares  for  which  an  election  for  dissenters'   rights  has  been  made  as
contemplated  by  Section  1.4)  shall be  converted  into the number of validly
issued,  fully paid and non-assessable  shares of Ebiz Common Stock equal to (i)
with  respect  to the LMI  Series A  Preferred  Stock,  the  product  of (A) 2.2
multiplied by (B) the number of shares of LMI Common Stock into which each share
of LMI  Series  A  Preferred  Stock  is  convertible  immediately  prior  to the
Effective  Time and (ii) with respect to the LMI Series B Preferred  Stock,  the
product of (A) 2.2  multiplied  by (B) the number of shares of LMI Common  Stock
into which each share of LMI Series B Preferred Stock is convertible immediately
prior to the  Effective  Time.  Immediately  prior to the  Effective  Time,  all
outstanding  debentures  of LMI  issued  before  March 1, 2000 and a  Designated
Portion (as hereinafter  defined) of the  outstanding  principal and interest of
each   debenture   of  LMI  issued  after  March  1,  2000  shall  be  converted
automatically  into LMI  Preferred  Stock in  accordance  with the terms of such
debentures.  "DESIGNATED  PORTION"  shall mean  30.5%,  unless  the  liquidation
provisions contained in Article IV.B.2(b)(i) of the Certificate of Incorporation
of LMI and  Section  3(b)(i)  of the  Certificate  of  Designations  of Series B
Preferred Stock of LMI are waived, amended or otherwise rendered inapplicable to
the Merger on or before the Closing Date, in which case Designated Portion shall
mean 20%. All LMI Preferred Stock issued upon such conversion shall be converted
into Ebiz Common Stock as provided above.  The portion of outstanding  principal
and  interest of each  debenture  of LMI issued after March 1, 2000 that remains
unconverted  immediately after the Effective Time, which portion shall be 69.5%,
unless the  liquidation  provisions  contained  in Article  IV.B.2(b)(i)  of the
Certificate of  Incorporation  of LMI and Section  3(b)(i) of the Certificate of
Designations of Series B Preferred Stock of LMI are waived, amended or otherwise

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<PAGE>
rendered inapplicable to the Merger on or before the Closing Date, in which case
such portion shall be 80%,  shall be assumed by Ebiz at the Effective  Time (the
"ASSUMED LMI  DEBENTURES")  on the terms and  conditions  set forth in each such
debenture;  provided,  however,  that ninety days after the Effective  Time, the
Assumed LMI Debentures  shall convert  automatically  into shares of Ebiz Common
Stock on such a basis that there is issued  with  respect to each of the Assumed
LMI Debentures the same number of shares of Ebiz Common Stock as would have been
issued with respect to such Assumed LMI Debenture had it been converted into LMI
Preferred Stock  immediately  prior to the Effective Time. Prior to the Closing,
all  outstanding  convertible  notes (the "CANOPY  NOTES")  issued to The Canopy
Group,  Inc.  ("CANOPY") shall, at the election of Canopy and in accordance with
the terms of the Canopy Notes,  either be repaid by LMI or be converted into LMI
Common Stock.

          (c) For purposes of this Agreement,  "MERGER CONSIDERATION" shall mean
(i) with respect to each share of LMI Common Stock, the number of shares of Ebiz
Common Stock into which each share of LMI Common Stock is converted  pursuant to
Section  1.3(a)  of this  Agreement,  (ii)  with  respect  to each  share of LMI
Preferred Stock, the number of shares of Ebiz Common Stock into which each share
of LMI Preferred Stock is converted pursuant to Section 1.3(b) of this Agreement
and (iii) with  respect to the Assumed LMI  Debentures,  the number of shares of
Ebiz  Common  Stock into which the Assumed LMI  Debentures  are to be  converted
pursuant to Section 1.3(b) of this Agreement.

          1.4 DISSENTING SHARES.

          (a)  Notwithstanding  anything to the contrary in this  Agreement,  if
appraisal  rights are  available to holders of LMI Common Stock or LMI Preferred
Stock  pursuant to Section 262 of the DGCL  ("SECTION  262"),  each  outstanding
share of LMI  Common  Stock or LMI  Preferred  Stock,  the  holder  of which has
demanded and perfected his demand for appraisal of the fair value of such shares
in  accordance  with Section 262 and has not  effectively  withdrawn or lost his
right to such appraisal (the "DISSENTING  SHARES"),  shall not be converted into
or represent a right to receive the Merger Consideration, but the holder thereof
shall be entitled  only to such rights as are granted by Section  262. LMI shall
give Ebiz prompt  written  notice upon receipt of any such  written  demands for
appraisal of the fair value of shares of LMI Common Stock or LMI Preferred Stock
and of withdrawals of such demands and any other  instruments  provided pursuant
to Section 262 (any stockholder duly making such demand being hereafter called a
"DISSENTING  STOCKHOLDER").  Each Dissenting  Stockholder who becomes  entitled,
pursuant  to the  provisions  of Section  262,  to payment for his shares of LMI
Common Stock or LMI  Preferred  Stock shall  receive  payment  therefor from the
Surviving  Corporation (but only after the amount thereof shall have been agreed
upon or at the times and in the  amounts  required  by  Section  262),  and such
shares of LMI Common Stock or LMI Preferred  Stock, as the case may be, shall be
cancelled.

          (b) If any holder of shares of LMI Common Stock or LMI Preferred Stock
who demands  appraisal of the fair value of his shares  under  Section 262 shall
effectively withdraw or lose (through failure to perfect or otherwise) his right
to such appraisal, the shares of LMI Common Stock or LMI Preferred Stock of such
holder shall be converted into a right to receive the Merger Consideration.

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<PAGE>
          1.5 EXCHANGE OF SHARE CERTIFICATES.

          (a) As soon as  practicable  after the Effective Time and surrender to
Ebiz  of  any  certificate  (a  "CERTIFICATE")  that  immediately  prior  to the
Effective  Time  represented  any  shares of LMI Common  Stock or LMI  Preferred
Stock, Ebiz shall, subject to Section 1.5(c) and Article 10, if such Certificate
represented shares of stock which were converted in the Merger into the right to
receive the Merger  Consideration,  distribute  to the person in whose name such
Certificate shall have been issued, a certificate registered in the name of such
person representing the Merger Consideration  payable in respect of such shares.
Each Certificate so surrendered shall forthwith be cancelled.

          (b) As soon as  practicable  after the  conversion  of the Assumed LMI
Debentures pursuant to Section 1.3(b), Ebiz shall, subject to Section 1.5(c) and
Article 10,  distribute to the holders of Assumed LMI Debentures,  a certificate
registered in the name of each such holder representing the Merger Consideration
payable in respect of the conversion of the Assumed LMI Debentures.

          (c) At and after the  Effective  Time,  there shall be no transfers on
the stock  transfer  books of the Surviving  Corporation of shares of LMI Common
Stock,  LMI Preferred  Stock or Assumed LMI Debentures  that were converted into
the right to receive the Merger  Consideration.  Each share of Ebiz Common Stock
into which shares of LMI Common Stock or LMI Preferred  Stock shall be converted
in the Merger shall be deemed to have been issued at the  Effective  Time.  Each
share of Ebiz  Common  Stock  into which the  Assumed  LMI  Debentures  shall be
converted in  connection  with the Merger shall be deemed to have been issued at
the time such conversion occurs pursuant to Section 1.3(b).

          1.6 WARRANTS; STOCK OPTIONS.

          (a) Upon the Effective Time, Ebiz shall assume LMI's obligations under
the  warrants  issued by LMI ("LMI  WARRANTS"),  a list of which is contained in
Schedule 3.5 and pursuant to the terms of the LMI  Warrants,  each warrant shall
be exercisable for the number of shares of Ebiz Common Stock to which the holder
of such warrant would have been entitled to receive in the Merger if such holder
had exercised its LMI Warrant immediately before the Merger.

          (b) Upon the Effective Time,  Ebiz shall assume all outstanding  stock
options  of LMI (the  "LMI  STOCK  OPTIONS"),  a list of which is  contained  in
Schedule 3.5, with  adjustment in the number and exercise  price as set forth in
the  terms  of the LMI  Stock  Options,  and  such LMI  Stock  Options  shall be
exercisable for shares of Ebiz Common Stock.

          1.7 TAX FREE MERGER.  The  cancellation  of shares of LMI Common Stock
and LMI  Preferred  Stock  issued  prior to Closing in exchange  for Ebiz Common
Stock is intended to qualify as a reorganization within the meaning of ss.368(a)
of the Code.  The parties  hereto will perform and refrain from  performing  all
acts  as  required  by  the  Code  and  all  rules,   regulations   or  judicial
interpretations  thereof as necessary to cause this transaction to be treated as
a  reorganization  as stated  above,  to the extent such  treatment is available
without altering the terms of this Agreement.

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<PAGE>
                                    ARTICLE 2
                                ADDITIONAL TERMS

          2.1  EXECUTIVE  MANAGEMENT.  Upon  consummation  of  the  Merger,  the
executive management of Ebiz shall be:

       Jeffrey Rassas                     Chairman and President
       David Shaw                         Chief Executive Officer
       Stephen Herman                     Chief Marketing Officer
       Ray Goshorn                        Chief Financial Officer

At the Closing,  Ebiz shall offer to enter into Employment  Agreements with such
persons substantially in the form attached as Exhibit B hereto.

          2.2 BOARD OF DIRECTORS.  Upon  consummation of the Merger,  Ebiz shall
cause the number of members of its Board of Directors to equal seven. Ebiz shall
fill 5 of such 7 directorships  by appointing 2 inside  Directors as directed by
LMI acting  through  its Chief  Executive  Officer  and 3 outside  Directors  as
mutually  agreed  upon by Ebiz and LMI acting  through  their  respective  Chief
Executive Officers (collectively the "APPOINTED DIRECTORS").  Each such Director
shall be  appointed  to hold office  until a successor  is properly  elected and
qualified.  At the next annual or special meeting of Ebiz shareholders following
the Merger at which an  election  of  Directors  is  properly  held,  Ebiz shall
nominate  the  Appointed  Directors  along with the  Directors of Ebiz as of the
Closing for election to the Board of  Directors of Ebiz,  and shall not nominate
any other person for a Director position. At Closing, the principal shareholders
of Ebiz and LMI  shall  execute  a  Shareholder  Voting  Agreement  and Proxy in
substantially the form attached as Exhibit C hereto. As used herein,  "principal
shareholder"  means any holder of 10% or more of the authorized and  outstanding
shares, as of the Closing, of LMI Common Stock or Ebiz Common Stock.

          2.3  NAME OF  SURVIVING  CORPORATION:  CERTIFICATE  OF  INCORPORATION;
BYLAWS

          (a) At the Effective Time, the Certificate of  Incorporation of Merger
Sub,  as in  effect  immediately  prior  to the  Effective  Time,  shall  be the
Certificate  of  Incorporation  of the Surviving  Corporation  until  thereafter
amended as provided by Delaware law.

          (b) At the  Effective  Time,  the Bylaws of Merger  Sub,  as in effect
immediately  prior to the Effective  Time,  shall be the Bylaws of the Surviving
Corporation until thereafter amended as provided by Delaware law.

          2.4 REGISTRATION RIGHTS/LOCK-UP.

          (a) At the  Closing,  Ebiz  shall  enter  into a  Registration  Rights
Agreement (the "REGISTRATION RIGHTS Agreement") with each of the shareholders of
LMI, substantially in the form attached as Exhibit D hereto. Upon the conversion
of the Assumed LMI  Debentures  pursuant  to Section  1.3(b),  Schedule A to the
Registration Rights Agreement shall be automatically amended to list each holder
of an Assumed LMI Debenture as a  "Shareholder"  with respect to the Ebiz Common
Stock received by such holder in connection with the conversion.

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<PAGE>
          (b) At the  Closing,  Ebiz  shall  cause  each of  Stephen  Herman and
Jeffrey  Rassas  to  execute  and  deliver  a lock-up  agreement  (the  "LOCK-UP
AGREEMENT") substantially in the form attached as Exhibit E hereto.

                                    ARTICLE 3
                      REPRESENTATIONS AND WARRANTIES OF LMI

     LMI hereby represents and warrants to Ebiz as follows:

          3.1 ORGANIZATION, CAPACITY AND AUTHORITY.

          (a) LMI has been duly  organized  and is validly  existing and in good
standing  under the laws of the  State of  Delaware  and has the full  corporate
power and  authority to own its  properties  and to carry on its business as now
being  conducted.  LMI is duly  qualified  and in  good  standing  as a  foreign
corporation  in the  states  set  forth on  Schedule  3.1(a)  hereto  and is not
required  to  qualify  in any other  state as a foreign  corporation,  where the
failure  to do so  would  have a  material  adverse  effect  on its  conduct  of
business.  LMI has  full  corporate  power  and  authority  to enter  into  this
Agreement  and,  subject to  obtaining  the approval of LMI's  stockholders,  to
perform its obligations  hereunder.  The execution,  delivery and performance of
this Agreement have been duly authorized by the Board of Directors of LMI and no
other  corporate  proceeding  on the part of LMI is necessary to authorize  this
Agreement  or the  transactions  contemplated  hereby other than the approval of
this Agreement and the transactions  contemplated  hereby by LMI's  stockholders
and holders of LMI debentures.

          (b) Except as set forth on Schedule  3.1(b),  LMI does not directly or
indirectly own any equity or similar interest in, or any interest convertible or
exchangeable   for,  any  equity  or  similar   interest  in,  any  corporation,
partnership, joint venture or other business association or entity.

          3.2 NO CONFLICT, BREACH OR DEFAULT. The execution and delivery of this
Agreement and the performance by LMI of the terms hereof do not (a) assuming the
approval of this  Agreement and the  transactions  contemplated  hereby by LMI's
stockholders,  conflict  with or result in a  violation  of the  Certificate  of
Incorporation or Bylaws of LMI, (b) violate any order, writ,  judgment or decree
to which  LMI is a party or is  subject,  or (c)  conflict  with or  result in a
violation of, or result in a breach of any provision of, or constitute a default
(or an event  which,  with notice or lapse of time or both,  would  constitute a
default)  under,  or result in the termination of, or accelerate the performance
required by, or result in the creation of any lien, security interest, charge or
encumbrance  upon any of the properties or assets of LMI under any of the terms,
conditions or provisions of any note, bond, mortgage,  indenture, deed of trust,
lease,  license,  agreement or other  instrument  or  obligation to which LMI is
bound or by which LMI or any of its properties or assets may be bound except, in
the  case  of  this  clause  (c),  where  such  conflict,   violation,  default,
termination,  cancellation  or  acceleration  would not,  individually or in the
aggregate,  have a  material  adverse  effect on the  transactions  contemplated
hereby or on the business, assets, results of operations, financial condition or
prospects ("MATERIAL ADVERSE EFFECT") of LMI.

          3.3 APPROVALS AND CONSENTS.  Except for the filing of the  Certificate
of Merger with the  Secretary of State of the State of  Delaware,  and except as
set  forth  on  Schedule  3.3  hereto,  no  approval,  authorization,   consent,
exemption,   registration,  filing  or  other  action  by  or  filing  with  any
governmental authority is required in connection with the execution and delivery
by LMI of this Agreement or the transactions contemplated herein.

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          3.4 VALID OBLIGATION.  This Agreement  constitutes a legal,  valid and
binding obligation of LMI enforceable  against LMI in accordance with its terms,
except  that (a) the  enforceability  of the same may be limited  by  applicable
bankruptcy, insolvency,  reorganization or similar laws affecting enforcement of
creditors'  rights  generally,  and (b) the remedy of specific  performance  and
injunctive  and other  forms of  equitable  relief may be  subject to  equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.

          3.5 CAPITAL STOCK OF LMI. The authorized capital stock of LMI consists
of 25,000,000  shares of common stock, $.01 par value, of which 2,651,662 shares
are issued and outstanding and 15,000,000  shares of preferred stock,  $.001 par
value, of which (i) 2,400,000  shares have been designated as Series A Preferred
Stock of which no  shares  are  outstanding,  (ii)  8,600,000  shares  have been
designated as Series B Preferred  Stock of which no shares are  outstanding  and
(iii) 4,000,000 shares are undesignated of which no shares are outstanding.  LMI
has awarded  options to purchase  559,250  shares of common stock under the 2000
Incentive Stock Option Plan. All the  outstanding  shares of common stock of LMI
have been  duly and  validly  authorized  and  issued,  and are  fully-paid  and
non-assessable,  and there exist no  preemptive  rights of any present or former
stockholders  of the common stock.  Except as set forth on Schedule 3.5, LMI has
no other outstanding  securities convertible into or exercisable for its capital
stock and no other  agreements of any nature  whatsoever  whereby LMI may, under
any circumstances,  be obligated to issue, sell, repurchase or redeem additional
shares of capital stock.

          3.6 LMI FINANCIAL STATEMENTS.

          (a)  Schedule   3.6(a)  hereto  sets  forth  a  listing  of  financial
statements  of  LMI  delivered  to  Ebiz   (collectively,   the  "LMI  FINANCIAL
STATEMENTS").  The LMI Financial  Statements are true, accurate and complete and
present  fairly the  financial  position  of LMI as of the dates  stated and the
results of the operations of LMI for the periods stated.

          (b)  LMI  has no  liabilities  or  obligations  of a  material  nature
(whether accrued, absolute, asserted,  unasserted, known, unknown, contingent or
otherwise)  except  for  those  described  in the  most  current  LMI  Financial
Statements  ("CURRENT LMI FINANCIAL  STATEMENTS"),  described in Schedule 3.6(b)
hereto or otherwise disclosed to Ebiz.

          3.7 BOOKS AND  RECORDS.  The books and records of LMI are complete and
correct and have been  maintained in accordance  with sound business  practices,
including the maintenance of an adequate system of internal controls.  The books
and records, financial and otherwise, of LMI accurately set out and disclose the
financial  position of LMI,  and all  transactions  of LMI have been  accurately
recorded in such books and records. The minute books of LMI contain accurate and
complete  records of all meetings  held of, and all material  corporate  actions
taken by, its  shareholders  or Board of Directors or any committee of its Board
of Directors.

          3.8  REGULATORY  FILINGS.   LMI  has  heretofore  filed  all  reports,
registration statements and schedules as required pursuant to any applicable law
except  where  the  failure  to make such  filings  has not had and could not be
reasonably  expected to have a Material  Adverse Effect on LMI. All such filings
by LMI complied as of their respective  dates in all material  respects with the
applicable  requirements  of such  laws and the rules  and  regulations  adopted
thereunder.

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          3.9  ABSENCE OF CERTAIN  CHANGES  AND  EVENTS.  Except as set forth in
Schedule  3.9,  since  the date of the most  current  LMI  Financial  Statements
delivered  to Ebiz,  there has not been any  change in the  affairs,  prospects,
condition (financial or otherwise,  or arising as a result of any legislative or
regulatory change), operations,  liabilities,  earnings or business of LMI which
has  had or  reasonably  could  be  expected  to  have,  individually  or in the
aggregate with other changes, a Material Adverse Effect on LMI.

          3.10 NO BREACH OF STATUTE,  DECREE OR ORDER.  Except as  disclosed  in
Schedule  3.10,  LMI is not in default  under,  or in  violation in any material
respect of, any material applicable statute, law, ordinance, decree, order, rule
or  regulation  of  any  state  or  federal   regulatory  agency  or  any  other
governmental  body, and the  consummation of this Agreement and the transactions
contemplated hereby will not constitute or result in any such default, breach or
violation.  Except as set forth in Schedule 3.10, there is no known or suspected
material  action or  proceeding by any  governmental  body pending or threatened
against LMI relating to the conduct of its  business,  and, to the best of LMI's
knowledge, there is no basis for any such action or proceeding.

          3.11  LITIGATION.  Except as described  in Schedule  3.11 or otherwise
similarly  disclosed to Ebiz,  there is no suit,  claim,  action,  proceeding or
governmental investigation now pending or threatened,  nor, to the best of LMI's
knowledge,  is there any  condition  or set of facts which will give rise to any
litigation,  against LMI before any court,  administrative or regulatory body or
any  governmental  agency  arising  out  of or  relating  to any  aspect  of the
business, or any part of the properties,  of LMI, or concerning the transactions
contemplated by this Agreement.  Except as disclosed in Schedule 3.11, there are
no decrees,  injunctions  or orders of any court or  governmental  department or
agency  outstanding  or  threatened  against  LMI  relating to any aspect of its
business or any part of its properties or that could prevent consummation of the
transactions contemplated by this Agreement.

          3.12 EMPLOYEE BENEFIT PLANS; EMPLOYEE MATTERS.

          (a)  Except  for the plans  and  arrangements  set  forth on  Schedule
3.12(a)  (the "LMI  PLANS"),  neither  LMI nor any member of the LMI  Controlled
Group (as hereinafter defined) now maintains, has ever maintained or contributed
to, or has any plans or  commitments  for, any employee  benefit  plans (as such
term is defined in ss. 3(3) of the Employee  Retirement  Income  Security Act of
1974, as amended  ("ERISA"))  or any other  retirement,  pension,  stock option,
stock  appreciation  right,  profit sharing,  incentive  compensation,  deferred
compensation,  savings,  thrift,  vacation pay, severance pay, or other employee
compensation  or benefit plan,  agreement,  practice,  or  arrangement,  whether
written or  unwritten,  whether or not  legally  binding.  For  purposes of this
Agreement,  "LMI CONTROLLED GROUP" means a controlled or affiliated group within
the meaning of Code ss. 414(b),  (c), (m), or (o) of which LMI is a member.  LMI
has  made  available  to Ebiz  correct  and  complete  copies  of all LMI  Plans
(including a detailed  written  description  of any LMI Plan that is  unwritten,
including  a  description  of  eligibility  criteria,  participation,   vesting,
benefits,  funding  arrangements and assets and any other provisions relating to
LMI) and,  with respect to each LMI Plan, a copy of each of the  following:  (i)
the most recent  favorable  determination  letter issued by the Internal Revenue
Service,  (ii) materials submitted to the Internal Revenue Service in support of
a pending  determination letter request,  (iii) the most recent letter issued by
the Internal  Revenue  Service  recognizing  tax exemption,  (iv) each insurance
contract, trust agreement, or other funding vehicle, (v) the three most recently
filed Forms 5500 plus all schedules and attachments,  and (vi) each summary plan
description  or  other  general  explanation  or  communication  distributed  or
otherwise provided to employees with respect to each LMI Plan that describes the
terms of the LMI Plan.

                                       8
<PAGE>
          (b) Each LMI Plan has at all times been in compliance,  in form and in
operation,  in all material respects with all applicable requirements of law and
regulations, including without limitation, ERISA.

          (c) With  respect  to each LMI  Plan,  there  are no  actions,  suits,
grievances,  arbitrations or other manner of dispute,  or claims with respect to
any LMI Plan (except for routine claims for benefits made in the ordinary course
of plan  administration for which plan  administrative  procedures have not been
exhausted)  pending,  threatened or imminent  against or with respect to any LMI
Plan,  any plan sponsor,  or any fiduciary (as such term is defined in ERISA ss.
3(21)) of such LMI Plan,  and LMI has no  knowledge of any facts that could give
rise to any action, suit, grievance,  arbitration or other manner of dispute, or
claim.

          (d)  Neither  LMI nor any member of the LMI  Controlled  Group has any
liability  for  post-retirement  welfare  benefits  except for the  continuation
coverage required by Code ss. 4980B.

          (e)  The  consummation  of  the  transactions   contemplated  by  this
Agreement will not result in any "excess parachute  payments" within the meaning
of Code ss. 280G.

          (f) No LMI Plan  provides  retiree  medical or retiree life  insurance
benefits  to any  person and LMI is not  contractually  or  otherwise  obligated
(whether or not in writing) to provide any person with life insurance or medical
benefits upon retirement or termination of employment, other than as required by
the  provisions  of Sections  601 through 608 of ERISA and Section  4980B of the
Code.

          (g) Schedule  3.12(g)  sets forth a true and complete  list of each of
the following  agreements,  arrangements and commitments to which LMI is a party
or by  which  it may  be  bound  (the  "LMI  EMPLOYMENT  CONTRACTS"):  (i)  each
employment,  consulting,  agency or commission  agreement not terminable without
liability to LMI upon 60 days' or less prior notice to the employee,  consultant
or agent and involving  compensation  or  remuneration  of more than $50,000 per
annum;  (ii) each labor union or  collective  bargaining  agreement;  (iii) each
agreement  with any executive  officer or other key employee of LMI the benefits
of which are contingent,  or the terms of which are materially altered, upon the
occurrence of a transaction  involving  LMI of the nature  contemplated  by this
Agreement; (iv) each agreement with respect to any officer or other key employee
of LMI providing any term of employment or compensation  guarantee extending for
a period longer than one year; and (v) each equity incentive plan and each other
agreement or plan any of the benefits of which will be increased, or the vesting
of the benefits of which will be  accelerated,  by the  occurrence of any of the
transactions  contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement. True and complete copies of each LMI Employment Contract have
been made available to Ebiz.

          3.13  PERMITS  AND  LICENSES.  LMI  has  such  permits,  licenses  and
authorities as required by any governmental authority with jurisdiction over LMI
with respect to its business as currently conducted and to own or lease, operate
and use its  assets  and  properties,  except  where  the  failure  to have such
permits,  licenses  or  authorities  has not had and  could  not  reasonably  be
expected to have a Material  Adverse  Effect on LMI.  Except as may be expressly
permitted  by the  terms  of  this  Agreement  or  otherwise  disclosed  in this
Agreement or any schedule hereto, the business of LMI as presently  conducted in

                                       9
<PAGE>
any jurisdiction  complies in all material respects with all known and suspected
applicable  legal  requirements  of such  jurisdiction,  all known and suspected
requisite  governmental  approvals have been duly obtained and are in full force
and effect,  and there is no basis for any governmental  body to deny or rescind
any approval for the conduct of the business of LMI.

          3.14 MATERIAL CONTRACTS. Attached hereto as Schedule 3.14 is a list of
all contracts of LMI ("LMI MATERIAL  CONTRACTS") (a) for an aggregate payment by
or to it of more than $10,000,  (b)  extending for a term beyond 12 months,  (c)
relating to the acquisition or disposition of any material asset or any interest
in any  business  enterprise,  (d)  containing  a  guaranty  of  liabilities  or
obligations of others,  (e) containing any covenant  limiting the freedom of LMI
to engage in any line of business or to compete with any person or entity or (f)
for all policies of insurance in force as of the date hereof.  True and complete
copies of all LMI Material  Contracts  have been made available to Ebiz. LMI has
fulfilled,  or taken all actions necessary to enable it to fulfill when due, its
obligations  under each of such contracts.  All parties thereto have complied in
all material  respects with the provisions  thereof and no party is in breach or
violation of, or in default under such contracts.

          3.15 TAX Matters.

          (a) All Returns (as hereinafter  defined)  required to be filed by LMI
have been duly filed on a timely basis and all Returns  filed by or on behalf of
LMI  (including all attached  statements  and schedules) are true,  complete and
correct in all  respects,  except for such  failures to file and  failures to be
true, complete and correct as would not, individually or in the aggregate,  have
a  Material  Adverse  Effect on LMI.  No claim has been  made or  threatened  in
writing by any  jurisdiction  where LMI does not file returns that LMI is or may
be subject to Taxes in that  jurisdiction.  All Taxes (as  hereinafter  defined)
shown to be payable on such Returns or on  subsequent  assessments  with respect
thereto  have been paid in full on a timely  basis,  except  to the  extent  any
nonpayment is reflected as a liability on the LMI Financial Statements. No other
Taxes are  payable  by LMI with  respect  to items or  periods  covered  by such
Returns (whether or not shown on or reportable on such Returns), except for such
Taxes as would not,  individually or in the aggregate,  have a Material  Adverse
Effect on LMI.

          (b) LMI has  withheld  and paid over all Taxes  required  to have been
withheld and paid over  (including any estimated  taxes),  and has complied with
all  information  reporting  and  backup  withholding  requirements,   including
maintenance of required records with respect thereto, in connection with amounts
paid or owing to any employee,  creditor,  independent contractor or other third
party,  except for such  failures to  withhold or pay over and such  failures to
comply as would not,  individually or in the aggregate,  have a Material Adverse
Effect on LMI.

          (c) No Return filed by or on behalf of LMI contains any position  that
is or would be  subject  to  penalties  under  section  6602 of the Code and the
Regulations  thereunder  (and any  corresponding  provision  of state,  local or
foreign law).

          (d) There are no liens on any of the  assets  of LMI with  respect  to
Taxes,  other than liens for Taxes not yet due and payable or for Taxes that are
being  contested in good faith  through  appropriate  proceedings  and for which
appropriate reserves have been established,  except for such liens as would not,
individually or in the aggregate, have a Material Adverse Effect on LMI.

                                       10
<PAGE>
          (e)  Except as  disclosed  on  Schedule  3.15(e),  LMI has never  been
included in an affiliated group of  corporations,  within the meaning of section
1504 of the Code and never been a member of any combined or unitary group.

          (f) LMI has furnished  Ebiz with true and complete  copies of: (i) all
Returns  of LMI for all  periods  since  May 30,  1998,  and (ii) all tax  audit
reports, work papers,  statements of deficiencies or closing or other agreements
received by LMI or on its behalf relating to Taxes.

          (g) LMI does not do business in, or derive a material amount of income
from, any state,  local,  territorial or foreign taxing  jurisdiction other than
those for which Returns have been furnished to Ebiz.

          (h) Except for items disclosed on Schedule 3.15(h) attached hereto:

               (i)  None  of the  Returns  of LMI has  ever  been  audited  by a
governmental   or  taxing   authority  and  there  are  no  audits,   inquiries,
investigations  or examinations  relating to any such Returns pending or, to the
knowledge of LMI, threatened in writing.

               (ii) No deficiencies  exist or have been asserted in writing with
respect to Taxes of LMI and no  written  notice  has been  received  by LMI with
respect to the failure to file any Return or pay any Taxes.

               (iii)  LMI is  not a  party  to  any  action  or  proceeding  for
assessment or collection  of Taxes,  nor has any such action or proceeding  been
asserted or, to the knowledge of LMI, threatened in writing against it or any of
its assets.

               (iv) No extension of time to file any Return  (which has not been
filed) has been  requested  by or granted to LMI. No waiver or  extension of any
statute of limitations is in effect with respect to Taxes or Returns of LMI.

               (v) LMI is not (and has  never  been) a party to any tax  sharing
agreement,  tax  indemnity  agreement,  tax  allocation  agreement,  or  similar
arrangement with any person.

               (vi) No action  has been  taken  that  would  have the  effect of
deferring  any  significant  liability  for Taxes of LMI from a period  prior to
Closing to a period after Closing.

               (vii) LMI has never been an "S corporation" under the Code.

               (viii) LMI's liability for unpaid Taxes for all periods ending on
or before May 31, 2000  determined  according to generally  accepted  accounting
principles ("GAAP") does not exceed the amount of the current liability accruals
for  Taxes  (excluding  reserves  for  deferred  Taxes)  on  the  LMI  financial
statements as of that date,  and the amount of LMI's  liability for unpaid Taxes
for all periods ending on or before the Closing Date  determined on a GAAP basis
will  not  exceed  the  amount  of the  current  liability  accruals  for  Taxes
(excluding  reserves for deferred  Taxes) as such  accruals will be reflected on
the balance sheet of LMI as of the Closing Date, except to the extent any excess
of such Taxes over the relevant current  liability accrual amount would not have
a Material Adverse Effect on LMI.

          (i) Subject to the items disclosed on Schedule 3.15(h) attached
hereto:

                                       11
<PAGE>
               (i) LMI is not  required  to treat any asset as owned by  another
person for federal income tax purposes or as tax-exempt  bond financed  property
or tax-exempt use property within the meaning of Section 168 of the Code.

               (ii)  LMI  has  not  entered   into  any   agreement,   contract,
arrangement  or plan that has  resulted or would  result,  separately  or in the
aggregate,  in the payment of any amount  subject to the  provisions  of Section
280G or Section  4999 of the Code or any similar  provision  of state,  local or
foreign tax law.

               (iii) LMI has not made an election  under Section 338 of the Code
and no action has been taken that would  result in any income tax  liability  to
LMI as a result of a deemed  election  within the  meaning of Section 338 of the
Code.

               (iv) No consent under  Section  341(f) of the Code has been filed
with respect to LMI.

               (v) LMI has not disposed of any property that is currently or was
previously being accounted for under the installment method.

               (vi) Within the last five years,  LMI has not agreed to make, and
has not been required to make, any  adjustment  under Code Section 481 by reason
of a change in accounting method or otherwise.

               (vii)  LMI  is  not  a  United  States  real   property   holding
corporation  within the meaning of Section 897(c)(2) of the Code and Ebiz is not
required to withhold any amount on the acquisition of the shares of LMI.

               (viii)  LMI has not made  and  will  not  make a deemed  dividend
election  under  Treas.  Reg.ss.  1.1502-32(f)(2)  or a consent  dividend  under
Section 565 of the Code.

               (ix) None of the  assets or  operations  of LMI is subject to any
joint venture, partnership or other arrangement or contract that is treated as a
partnership for federal income tax purposes.

               (x) LMI has not made any election  comparable to those  described
in this section under any state, local or foreign tax laws nor is it required to
apply any rules  comparable to those  described in this Section under any state,
local or foreign tax laws.

               (xi) The transactions  contemplated hereby are not subject to the
tax  withholding  provisions  of Section 3406 of the Code, or of Subchapter A of
Chapter 3 of the Code, or of any other provision of law.

          (j)  Schedule  3.15(j)  contains  information  that  is  accurate  and
complete in all  material  respects  with  respect to: (A) all tax  elections in
effect  with  respect  to LMI;  (B) the  current  tax basis of the assets of LMI
broken out by asset class;  (C) the net operating losses of LMI by taxable year;
(D) the net capital losses of LMI by taxable year;  and (E) the overall  foreign
losses of LMI under Section 904(f) of the Code that are subject to recapture.

                                       12
<PAGE>
          (k) There are no transfer taxes  (exclusive of income taxes) that will
become due and  payable as a result of the Merger  under  Colorado,  Delaware or
federal law.

          (l)  "TAXES"  as used in  this  Agreement  means  all  taxes,  however
denominated,  including any interest,  penalties or other  additions to tax that
may become payable in respect thereof,  imposed by any  governmental  authority,
which taxes shall include, without limiting the generality of the foregoing, all
income or profits taxes,  payroll and employee  withholding taxes,  unemployment
insurance,  social  security taxes,  sales and use taxes,  value added taxes, ad
valorem taxes,  excise taxes,  franchise taxes,  gross receipts taxes,  business
license taxes,  occupation  taxes,  real and personal  property  taxes,  escheat
amounts, stamp taxes,  environmental taxes,  severance taxes,  production taxes,
transfer taxes,  workers'  compensation,  Pension Benefit  Guaranty  Corporation
premiums and other governmental charges, and other obligations of the same or of
a similar nature to any of the foregoing.

          (m)   "RETURNS"  as  used  in  this   Agreement   means  all  returns,
declarations,  reports, forms, claims for refund, estimates, information returns
and statements and other  documentation,  including  amendments,  required to be
maintained or filed with or supplied to any governmental authority in connection
with any Taxes.

          3.16 TITLE TO  PROPERTIES.  Except as disclosed in Schedule  3.16, LMI
has good and marketable  title,  free and clear of any mortgage,  pledge,  lien,
charge or other  encumbrance,  to all of its real and/or  personal  property and
other  assets  whether  reflected  on the Current LMI  Financial  Statements  or
otherwise, or acquired by it subsequent to the date thereof or used by it in the
ordinary  course of its business,  except for (a) liens or  encumbrances on such
property or assets described in the Current LMI Financial Statements,  (b) liens
for current taxes not yet due and payable,  (c) such  imperfections of title and
encumbrances,  if any, as are not material in character, amount or extent and do
not  detract  from  the  value  or  interfere  with  the  present  or  presently
contemplated  future use of the properties  subject thereto or affected thereby,
and (d) acquisitions  and  dispositions in the ordinary course of business.  LMI
enjoys  peaceable and  undisturbed  possession  under all material  leases under
which it is  operating,  and all of its premises  which are leased,  are in good
condition  and repair and are suitable for the purposes for which such  premises
are  being  utilized.  LMI has not  received  any  notice  of  violation  of any
applicable  zoning  ordinance or other law,  order,  regulation  or  requirement
relating to its operations or to its owned or leased properties.

          3.17.  ENVIRONMENTAL  MATTERS.  To the best  knowledge of LMI, LMI has
duly  complied  with,  and the  operation of its  business,  equipment and other
assets  and the  facilities  owned or leased by LMI are in  compliance  with the
provisions of all applicable federal, state and local environmental,  health and
safety laws, statutes,  ordinances, rules and regulations of any governmental or
quasi  governmental  authority  relating  to  (i)  errors  or  omissions,   (ii)
discharges to the atmosphere,  soils, surface water or ground water, (iii) solid
or  liquid  waste  disposal,  (iv)  the  use,  storage,  generation,   handling,
transport,  discharge,  release or disposal of toxic or hazardous  substances or
waste, (v) the emission of non-ionizing  electromagnetic radiation or (vi) other
environmental,  health or safety  matters,  including  without  limitation,  all
maters set forth in the Comprehensive  Environmental Response,  Compensation and
Liability Act, as amended;  the Occupational Safety and Health Act; the Resource
Conservation  Recovery Act of 1976; the Federal Water  Pollution  Control Act of
1970; the Safe Drinking Water Act of 1974; the Toxic  Substances  Control Act of
1976; the Occupational  Safety and the Clean Air Act, as amended  (collectively,
"ENVIRONMENTAL AND HEALTH LAWS"). To the knowledge of the Company,  there are no
investigations,  administrative proceedings, judicial actions, orders, claims or
notices  that are pending,  anticipated  or  threatened  against LMI relating to

                                       13
<PAGE>
violations of the  Environmental and Health Laws. The Company has not received a
notice  of,  and does  not  know or have any  reason  to  suspect,  facts  which
constitute a violation of any  Environmental and Health Laws which relate to the
use,  ownership  or  occupancy  of any  property  or  facilities  used by LMI in
connection with the operation of its business or any activity of the business of
LMI  which  would  result  in  a  violation  or  threatened   violation  of  any
Environmental or Health Laws.

          3.18 INTELLECTUAL PROPERTY.

          (a)  LMI  owns,  or  is  licensed  or  otherwise   possesses   legally
enforceable rights to use, all patents,  trademarks, trade names, service marks,
copyrights,  and any applications therefor, trade dress, business names, product
names,  logos,  slogans,  domain  names,  technology,   processes,   schematics,
know-how,  trade secrets,  computer  software  programs or applications (in both
source code and object code form), design and program  documentation,  analysis,
data flow  diagrams,  website  content  and all  other  tangible  or  intangible
proprietary  information  or  material  ("INTELLECTUAL  PROPERTY")  used  in the
business of LMI as currently conducted, except to the extent that the failure to
have such rights has not and could not reasonably be expected to have a Material
Adverse Effect on LMI.

          (b) Schedule 3.18 (b) lists:  (i) all patents and patent  applications
and all registered and unregistered  trademarks,  trade names and service marks,
registered  domain names and registered and unregistered  copyrights,  which LMI
considers  to be  material to its  business  and  included  in the  Intellectual
Property,  including the jurisdictions in which each such Intellectual  Property
right  has been  issued  or  registered  or in which  any  application  for such
issuance  and  registration  has  been  filed,   (ii)  all  material   licenses,
sublicenses  and other  agreements  as to which LMI is a party and  pursuant  to
which any person is authorized to use any Intellectual  Property,  and (iii) all
material  licenses,  sublicenses and other agreements as to which LMI is a party
and  pursuant  to  which  LMI is  authorized  to use any  third  party  patents,
trademarks or  copyrights,  including  software  ("LMI THIRD PARTY  INTELLECTUAL
PROPERTY  RIGHTS"),  in each case which are incorporated in, are, or form a part
of any product or service of LMI.

          (c) To the  knowledge of LMI,  there has not been and  currently is no
unauthorized  use,   disclosure,   infringement  or   misappropriation   of  any
Intellectual  Property  or any  trade  secret  of LMI,  or any LMI  Third  Party
Intellectual  Property  Right,  by any third  party,  including  any employee or
former  employee of LMI. LMI has not entered into any agreement to indemnify any
other person against any charge of  infringement of any  Intellectual  Property,
other than  indemnification  provisions  contained in purchase orders arising in
the ordinary course of business,  or contained in license agreements relating to
Intellectual Property licensed to or by LMI in the ordinary course of business.

          (d) LMI is not,  and  will  not be as a result  of the  execution  and
delivery of this Agreement or the  performance of LMI's  obligations  under this
Agreement,  in breach of any license,  sublicense or other agreement relating to
the Intellectual  Property or LMI Third Party Intellectual  Property Rights, the
breach of which could have a Material Adverse Effect on LMI.

          (e) All patents,  registered  trademarks,  service  marks,  registered
domain names and copyrights  held by LMI are valid and  subsisting.  LMI (i) has
not been  sued in any suit,  action  or  proceeding  which  involves  a claim of
infringement of any patents, trademarks, service marks, domain names, copyrights
or violation of any trade secret or other  proprietary  right of any third party
and (ii) has not brought any action,  suit or  proceeding  for  infringement  of
Intellectual   Property  or  breach  of  any  license  or  agreement   involving
Intellectual  Property  against any third  party.  To the  knowledge of LMI, the

                                       14
<PAGE>
manufacture,  marketing,  licensing  or sale of the products and services of LMI
does not infringe any patent, trademark,  service mark, copyright, trade secret,
domain name or other proprietary right of any third party.

          (f) LMI has secured valid written assignments from all consultants and
employees  who  contributed  to the  creation  or  development  of  Intellectual
Property  of the rights to such  contributions  that LMI does not already own by
operation of law.

          3.19  CONDITIONS  AND  SUFFICIENCY  OF ASSETS.  All real  property and
equipment of LMI are  structurally  sound and in good  operating  condition  and
repair and are  adequate  for the uses  thereof.  None of the real  property  or
equipment is in need of  maintenance  or repairs  except for  ordinary,  routine
maintenance  and repair that are not  material.  The real property and equipment
are sufficient for the continued conduct of the business of LMI.

          3.20  ACCURACY  OF  STATEMENTS.  LMI has  disclosed  to Ebiz all facts
required to be disclosed  by this  Agreement  and  material to the  liabilities,
assets, business, prospects, conditions,  organization and operations (financial
and otherwise) of LMI. Neither this Agreement nor any exhibit or schedule hereto
nor any  certificate,  document,  instrument or  information  furnished or to be
furnished  by LMI to  Ebiz  in  connection  with  this  Agreement  or any of the
transactions  contemplated  hereby contains or will contain any untrue statement
of a material  fact or omit or will omit to state a material  fact  necessary to
make the statements  contained herein or therein,  in light of the circumstances
under which they are made, not misleading.

          3.21  BROKERS'  AND  FINDERS'  FEES.  Except for  commissions  or fees
payable to Chase  Securities,  Inc.,  LMI has not incurred,  and will not incur,
directly or indirectly,  any liability for brokerage or finders' fees or agents'
commissions  or investment  bankers'  fees or any similar  charges in connection
with this Agreement or any transaction contemplated hereby.

                                   ARTICLE 4
                     REPRESENTATIONS AND WARRANTIES OF EBIZ
                                 AND MERGER SUB

          Ebiz and Merger Sub hereby represent and warrant to LMI as follows:

          4.1 (a)  ORGANIZATION  AND  AUTHORITY  OF EBIZ.  Ebiz  has  been  duly
organized  and is validly  existing and in good  standing  under the laws of the
State of  Nevada  and has the full  corporate  power  and  authority  to own its
properties  and to carry on its  business as now being  conducted.  Ebiz is duly
qualified and in good standing as a foreign  corporation in the states set forth
on Schedule 4.1(a) hereto and is not required to qualify in any other state as a
foreign  corporation,  where the failure to do so would have a material  adverse
effect on its conduct of business. Ebiz and Merger Sub have full corporate power
and  authority  to enter into this  Agreement  and to perform  their  respective
obligations hereunder. The execution, delivery and performance of this Agreement
has been duly  authorized  by the  respective  Boards of  Directors  of Ebiz and
Merger Sub and no other corporate  proceedings on the part of Ebiz or Merger Sub
are  necessary to authorize  this  Agreement and the  transactions  contemplated
hereby.

                                       15
<PAGE>
          (b) EBIZ  SUBSIDIARIES.  Each  wholly or  partially  owned  subsidiary
(singularly   "SUBSIDIARY"  and  collectively,   the  "SUBSIDIARIES")  of  Ebiz,
including  Merger Sub, is set forth on Schedule  4.1(b) hereto.  Each Subsidiary
has been duly  organized and is validly  existing and in good standing under the
laws of its state of  organization  as set forth in Schedule  4.1(b) and has the
full  corporate  power and authority to own its  properties  and to carry on its
business as now being conducted.  Each Subsidiary is duly qualified as a foreign
corporation  in the states set forth on Schedule  4.1(b) and is not  required to
qualify in any other state as a foreign corporation,  where the failure to do so
would have a material adverse effect on its conduct of business. Except as noted
on Schedule 4.1(b), Ebiz owns 100% of the outstanding equity interest of each of
the Subsidiaries.

          4.2 NO CONFLICT, BREACH OR DEFAULT. The execution and delivery of this
Agreement  and the  performance  by Ebiz and  Merger Sub of its terms do not (a)
conflict  with or result in a  violation  of the  articles of  incorporation  or
bylaws or other organizational documents of Ebiz or any Subsidiary,  (b) violate
any order,  writ,  judgment or decree to which Ebiz or any Subsidiary is a party
or is subject,  or (c) conflict with or result in a violation of, or result in a
breach of any  provision  of, or  constitute a default (or an event which,  with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance  required by, or result in the
creation of any lien,  security interest,  charge or encumbrance upon any of the
properties  or  assets  of  Ebiz  or any  Subsidiary  under,  any of the  terms,
conditions or provisions of any note, bond mortgage,  indenture,  deed of trust,
lease, license, agreement or other instrument or obligation to which Ebiz or any
Subsidiary  is  bound  or by  which  Ebiz  or any  Subsidiary  or  any of  their
properties or assets may be bound, except, in the case of this clause (c), where
such conflict,  violation,  default,  termination,  cancellation or acceleration
would not  individually or in the aggregate,  have a Material  Adverse Effect on
Ebiz.

          4.3  APPROVALS  AND  CONSENTS.  Except  as set forth on  Schedule  4.3
hereto, no approval, authorization,  consent, exemption, filing, registration or
other  action  by or filing  with any  governmental  authority  is  required  in
connection  with the  execution  and  delivery  by Ebiz and  Merger  Sub of this
Agreement or the transactions contemplated herein or therein.

          4.4 VALID OBLIGATION.  This Agreement  constitutes a legal,  valid and
binding  obligation of Ebiz and Merger Sub  enforceable  against each of them in
accordance with its terms, except that (a) the enforceability of the same may be
limited by applicable  bankruptcy,  insolvency,  reorganization  or similar laws
affecting  enforcement  of creditors'  rights  generally,  and (b) the remedy of
specific  performance and injunctive and other forms of equitable  relief may be
subject to equitable  defenses and to the  discretion  of the court before which
any proceeding therefor may be brought.

          4.5 VALIDLY ISSUED SHARES; SECURITIES ACT EXEMPTION; BLUE SKY.

          (a)  Upon  issuance,  all  Ebiz  Common  Stock  to be  issued  to  the
shareholders of LMI in exchange for the LMI Common Stock and LMI Preferred Stock
will  be  duly  authorized,   validly  issued,   fully  paid  and  nonassessable
outstanding shares of the capital stock of Ebiz.

          (b) The issuance of the Ebiz Common Stock to the  shareholders  of LMI
pursuant to the terms of this  Agreement  constitutes a transaction  exempt from
registration  under the  Securities  Act of 1933,  as amended  (the  "SECURITIES
ACT").

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<PAGE>
          (c)  Ebiz  has  obtained  all  necessary  Blue  Sky  law  permits  and
qualifications,  or has available exemptions therefrom,  for the issuance of the
Ebiz  Common  Stock to the  shareholders  of LMI  pursuant  to the terms of this
Agreement.

          4.6 CAPITAL STOCK OF EBIZ AND MERGER SUB. The authorized capital stock
of Ebiz  consists of 70,000,000  shares of common stock and 5,000,000  shares of
preferred  stock of which  9,041,166  shares of common stock and 7,590 shares of
preferred  stock  designated  as its  Series  A 10%  Convertible  Preferred  are
outstanding. An additional 575,732 shares of common stock have been reserved for
issuance upon the exercise of outstanding warrants.  Ebiz has awarded options to
purchase 761,700 shares of common stock under its 1998 Equity Incentive Plan and
has additional  options to purchase 850,000 shares of common stock  outstanding.
The  authorized  capital  stock of Merger Sub  consists of 1000 shares of common
stock,  100  of  which  are  issued  and  outstanding.  All of  the  issued  and
outstanding  shares of Merger Sub are owned by Ebiz. All the outstanding  shares
of common  stock of Ebiz and  Merger  Sub are duly and  validly  authorized  and
issued,  fully-paid and non-assessable,  and there exist no preemptive rights of
any present or former  stockholders of the common stock.  Except as set forth in
Schedule  4.6,  Ebiz has no other  outstanding  securities  convertible  into or
exercisable  for  its  capital  stock  and no  other  agreements  of any  nature
whatsoever  whereby Ebiz may,  under any  circumstances,  be obligated to issue,
sell,  repurchase or redeem shares of its capital  stock.  Ebiz has a sufficient
number of Ebiz Common Stock authorized to issue the Merger  Consideration at the
Effective Time and to fulfill the obligations under the LMI Warrants and the LMI
Stock Options that are to be assumed by Ebiz at the Effective Time.

          4.7 EBIZ FINANCIAL STATEMENTS.

          (a)  Schedule   4.7(a)  hereto  sets  forth  a  listing  of  financial
statements  of  Ebiz  delivered  to  LMI  (collectively,   the  "EBIZ  FINANCIAL
STATEMENTS").  The Ebiz Financial Statements are true, accurate and complete and
present fairly the consolidated  financial position of Ebiz and its Subsidiaries
as of the  dates  stated  and the  results  of the  operations  of Ebiz  and its
Subsidiaries  for the periods  stated and have been prepared in accordance  with
GAAP,  consistently  applied with all  adjustments  as mandated by any agency or
other authority.

          (b)  Neither  Ebiz  nor  its  Subsidiaries  have  any  liabilities  or
obligations  of  a  material  nature  (whether  accrued,   absolute,   asserted,
unasserted,  known, unknown, contingent or otherwise) except for those disclosed
in  the  most  current  Ebiz  Financial   Statements  ("CURRENT  EBIZ  FINANCIAL
STATEMENTS") or in Schedule 4.7(b) hereto.

          4.8 BOOKS AND  RECORDS.  The  books  and  records  of Ebiz and of each
Subsidiary are complete and correct and have been  maintained in accordance with
sound  business  practices  and the  requirements  of  Section  13(b)(2)  of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"),  including the
maintenance of an adequate system of internal  controls.  The books and records,
financial and  otherwise,  of Ebiz and each  Subsidiary  accurately  set out and
disclose  the  financial  position  of  Ebiz  and of  each  Subsidiary,  and all
transactions of Ebiz and of each  Subsidiary  have been  accurately  recorded in
such books and records in accordance  with GAAP. The minute books of Ebiz and of
each Subsidiary  contain  accurate and complete records of all meetings held of,
and all  material  corporate  actions  taken  by,  the  shareholders,  Board  of
Directors  or  any  committee  of  the  Board  of  Directors  of  Ebiz  or  such
Subsidiaries.

          4.9 REGULATORY FILINGS.  Ebiz and each Subsidiary has heretofore filed
all reports,  registration  statements and schedules as required pursuant to any
applicable  law except  where the  failure to make such  filings has not had and

                                       17
<PAGE>
could not be reasonably  expected to have a Material Adverse Effect on Ebiz. All
such filings by Ebiz and each such  Subsidiary  complied as of their  respective
dates in all material respects with the applicable requirements of such laws and
the rules and regulations adopted thereunder.

          4.10  ABSENCE OF CERTAIN  CHANGES AND  EVENTS.  Except as set forth in
Schedule  4.10,  since the date of the most  Current Ebiz  Financial  Statements
delivered  to LMI,  there  has not been any  change in the  affairs,  prospects,
condition (financial or otherwise,  or arising as a result of any legislative or
regulatory change), operations, liabilities, earnings or business of Ebiz or any
Subsidiary which has had or reasonably  could be expected to have,  individually
or in the aggregate with other changes, a Material Adverse Effect on Ebiz.

          4.11 NO BREACH OF STATUTE,  DECREE OR ORDER.  Except as  disclosed  in
Schedule  4.11,  neither  Ebiz nor any  Subsidiary  is in default  under,  or in
violation in any respect of, any material  applicable  statute,  law, ordinance,
decree,  order, rule or regulation of any state or federal  regulatory agency or
any other  governmental  body,  and the  consummation  of this Agreement and the
transactions  contemplated  hereby  will not  constitute  or  result in any such
default, breach or violation.  Except as set forth in Schedule 4.11, there is no
known or suspected  material  action or  proceeding  by any  governmental  body,
pending or threatened against Ebiz or any Subsidiary  relating to the conduct of
its business, and to the best of Ebiz's knowledge there is no basis for any such
action or proceeding.

          4.12  LITIGATION.  Except as disclosed in Schedule  4.12,  there is no
suit,  claim,  action,  proceeding or governmental  investigation now pending or
threatened,  nor, to the best of Ebiz's knowledge, is there any condition or set
of facts which will give rise to any litigation,  against Ebiz or any Subsidiary
before any court,  administrative or regulatory body or any governmental  agency
arising  out of or relating  to any aspect of the  business,  or any part of the
properties,   of  Ebiz  or  any  Subsidiary,   or  concerning  the  transactions
contemplated by this Agreement.  Except as disclosed in Schedule 4.12, there are
no decrees,  injunctions  or orders of any court or  governmental  department or
agency outstanding or threatened against Ebiz or any Subsidiary  relating to any
aspect of its  business  or any part of its  properties  or that  could  prevent
consummation of the transactions contemplated by this Agreement.

          4.13 EMPLOYEE BENEFIT PLANS; EMPLOYEE MATTERS.

          (a)  Except  for the plans  and  arrangements  set  forth on  Schedule
4.13(a) (the "EBIZ Plans"),  neither Ebiz nor any member of the Ebiz  Controlled
Group (as hereinafter defined) now maintains, has ever maintained or contributed
to, or has any plans or  commitments  for, any employee  benefit  plans (as such
term is  defined  in ERISA ss.  3(3)) or any other  retirement,  pension,  stock
option,  stock  appreciation  right,  profit  sharing,  incentive  compensation,
deferred compensation,  savings,  thrift,  vacation pay, severance pay, or other
employee  compensation  or benefit plan,  agreement,  practice,  or arrangement,
whether written or unwritten,  whether or not legally  binding.  For purposes of
this Agreement,  "EBIZ CONTROLLED  GROUP" means a controlled or affiliated group
within  the  meaning of Code ss.  414(b),  (c),  (m),  or (o) of which Ebiz is a
member.  Ebiz has made available to LMI correct and complete  copies of all Ebiz
Plans  (including  a  detailed  written  description  of any Ebiz  Plan  that is
unwritten,  including a  description  of  eligibility  criteria,  participation,
vesting,  benefits,  funding  arrangements  and assets and any other  provisions
relating  to Ebiz) and,  with  respect to each Ebiz Plan,  a copy of each of the
following:  (i) the most recent  favorable  determination  letter  issued by the
Internal  Revenue  Service,  (ii)  materials  submitted to the Internal  Revenue

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<PAGE>
Service in support of a pending  determination  letter  request,  (iii) the most
recent letter issued by the Internal Revenue Service  recognizing tax exemption,
(iv) each insurance contract, trust agreement, or other funding vehicle, (v) the
three most recently  filed Forms 5500 plus all schedules  and  attachments,  and
(vi) each summary plan description or other general explanation or communication
distributed  or otherwise  provided to employees  with respect to each Ebiz Plan
that describes the terms of the Ebiz Plan.

          (b) Each Ebiz Plan has at all times been in compliance, in form and in
operation,  in all material respects with all applicable requirements of law and
regulations, including without limitation, ERISA.

          (c) With  respect  to each Ebiz  Plan,  there are no  actions,  suits,
grievances,  arbitrations  or other manner of dispute,  or claim with respect to
any Ebiz Plan  (except  for routine  claims for  benefits  made in the  ordinary
course of plan administration for which plan administrative  procedures have not
been exhausted)  pending,  threatened or imminent against or with respect to any
Ebiz Plan, any plan sponsor,  or any fiduciary (as such term is defined in ERISA
ss. 3(21)) of such Ebiz Plan,  and Ebiz has no knowledge of any facts that could
give  rise to any  action,  suit,  grievance,  arbitration  or other  manner  of
dispute, or claim.

          (d) Neither Ebiz nor any member of the Ebiz  Controlled  Group has any
liability  for  post-retirement  welfare  benefits  except for the  continuation
coverage required by Code ss. 4980B.

          (e)  The  consummation  of  the  transactions   contemplated  by  this
Agreement will not result in any "excess parachute  payments" within the meaning
of Code ss. 280G.

          (f) No Ebiz Plan provides  retiree  medical or retiree life  insurance
benefits  to any person and Ebiz is not  contractually  or  otherwise  obligated
(whether or not in writing) to provide any person with life insurance or medical
benefits upon retirement or termination of employment, other than as required by
the  provisions  of Sections  601 through 608 of ERISA and Section  4980B of the
Code.

          (g) Schedule  4.13(g)  sets forth a true and complete  list of each of
the following  agreements,  arrangements  and  commitments  to which Ebiz or any
Subsidiary  is a  party  or by  which  it may be  bound  (the  "EBIZ  EMPLOYMENT
CONTRACTS"): (i) each employment, consulting, agency or commission agreement not
terminable  without  liability to Ebiz or any  Subsidiary  upon 60 days' or less
prior notice to the employee,  consultant or agent and involving compensation or
remuneration of more than $50,000 per annum; (ii) each labor union or collective
bargaining  agreement;  (iii) each agreement with any executive officer or other
key employee of Ebiz or any Subsidiary the benefits of which are contingent,  or
the terms of which are materially altered,  upon the occurrence of a transaction
involving Ebiz or any Subsidiary of the nature  contemplated  by this Agreement;
(iv) each agreement with respect to any officer or other key employee of Ebiz or
any  Subsidiary  providing  any term of  employment  or  compensation  guarantee
extending for a period longer than one year; and (v) each equity  incentive plan
and each other agreement or plan any of the benefits of which will be increased,
or the vesting of the benefits of which will be  accelerated,  by the occurrence
of any of the transactions contemplated by this Agreement or the value of any of
the benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. True and complete copies of each Ebiz Employment
Contract have been made available to LMI.

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<PAGE>
          4.14 PERMITS AND LICENSES.  Ebiz and each Subsidiary has such permits,
licenses  and  authorities  as  required  by  any  governmental  authority  with
jurisdiction  over  Ebiz or any  Subsidiary  with  respect  to its  business  as
currently  conducted  and to own or  lease,  operate  and  use  its  assets  and
properties  except  where  the  failure  to  have  such  permits,   licenses  or
authorities has not had and could not be reasonably  expected to have a Material
Adverse  Effect on Ebiz.  Except as may be  expressly  permitted by the terms of
this Agreement or otherwise  disclosed in this Agreement or any schedule hereto,
the  business  of  Ebiz  and  each  Subsidiary  as  presently  conducted  in any
jurisdiction  complies in all  material  respects  with all known and  suspected
applicable  legal  requirements  of such  jurisdiction,  all known and suspected
requisite  governmental  approvals have been duly obtained and are in full force
and effect,  and there is no basis for any governmental  body to deny or rescind
any approval for the conduct of the business of Ebiz or any Subsidiary.

          4.15 MATERIAL CONTRACTS. Attached hereto as Schedule 4.15 is a list of
all  contracts  of  Ebiz  and  each  of its  Subsidiaries  (the  "EBIZ  MATERIAL
CONTRACTS") (a) for an aggregate  payment by or to it of more than $10,000,  (b)
extending  for a term  beyond 12 months,  (c)  relating  to the  disposition  or
acquisition  of any material  asset or any interest in any business  enterprise,
(d)  containing  a  guaranty  of  liabilities  or  obligations  of  others,  (e)
containing any covenant limiting the freedom of Ebiz or any Subsidiary to engage
in any line of  business  or compete  with any person or entity,  or (f) for all
policies of insurance in force as of the date hereof.  True and complete  copies
of all  Ebiz  Material  Contracts  have  been  delivered  to LMI.  Ebiz and each
Subsidiary,  as  applicable,  has fulfilled,  or taken all actions  necessary to
enable it to fulfill when due its obligations under each of such contracts.  All
parties  thereto have  complied in all  material  respects  with the  provisions
thereof  and no party is in breach or  violation  of, or in  default  under such
contracts.

          4.16 TAX MATTERS.

          (a) All Returns  required to be filed by Ebiz or any  Subsidiary  have
been duly filed on a timely basis and all Returns  filed by or on behalf of Ebiz
or any Subsidiary  (including  all attached  statements and schedules) are true,
complete  and  correct in all  respects,  except for such  failures  to file and
failures to be true,  complete and correct as would not,  individually or in the
aggregate,  have a Material  Adverse  Effect on Ebiz.  No claim has been made or
threatened in writing by any jurisdiction  where Ebiz or any Subsidiary does not
file returns that Ebiz or any  Subsidiary  is or may be subject to Taxes in that
jurisdiction.  All Taxes  shown to be payable on such  Returns or on  subsequent
assessments  with  respect  thereto  have been  paid in full on a timely  basis,
except to the extent any  nonpayment  is  reflected  as a liability  on the Ebiz
Financial Statements.  No other Taxes are payable by Ebiz or any Subsidiary with
respect to items or periods covered by such Returns  (whether or not shown on or
reportable on such Returns), except for such Taxes as would not, individually or
in the aggregate, have a Material Adverse Effect on Ebiz.

          (b) Ebiz and each  Subsidiary  has  withheld  and paid  over all Taxes
required to have been withheld and paid over  (including  any estimated  taxes),
and  has  complied  with  all  information   reporting  and  backup  withholding
requirements, including maintenance of required records with respect thereto, in
connection  with amounts paid or owing to any  employee,  creditor,  independent
contractor  or other third  party,  except for such  failures to withhold or pay
over and such failures to comply as would not, individually or in the aggregate,
have a Material Adverse Effect on Ebiz.

                                       20
<PAGE>
          (c) No Return filed by or on behalf of Ebiz or any Subsidiary contains
any position that is or would be subject to penalties  under section 6602 of the
Code and the Regulations  thereunder (and any corresponding  provision of state,
local or foreign law).

          (d) There are no liens on any of the assets of Ebiz or any  Subsidiary
with respect to Taxes, other than liens for Taxes not yet due and payable or for
Taxes that are being contested in good faith through appropriate proceedings and
for which appropriate  reserves have been established,  except for such liens as
would not,  individually or in the aggregate,  have a Material Adverse Effect on
Ebiz.

          (e) Except as  disclosed  on Schedule  4.16(e),  neither  Ebiz nor any
Subsidiary has been included in an affiliated group of corporations,  within the
meaning of section  1504 of the Code or been a member of any combined or unitary
group.

          (f) Ebiz has furnished  LMI with true and complete  copies of: (i) all
Returns of Ebiz and each  Subsidiary  for all periods  since June 30, 1997,  and
(ii) all tax audit reports,  work papers,  statements of deficiencies or closing
or other  agreements  received by Ebiz, any Subsidiary or on any of their behalf
relating to Taxes.

          (g) Neither  Ebiz nor any  Subsidiary  does  business in, or derives a
material amount of income from, any state, local,  territorial or foreign taxing
jurisdiction other than those for which Returns have been furnished to LMI.

          (h) Except for items disclosed on Schedule 4.16(h) attached hereto:

               (i) None of the Returns of Ebiz or any  Subsidiary  has ever been
audited  by a  governmental  or  taxing  authority  and  there  are  no  audits,
inquiries,  investigations or examinations  relating to any such Returns pending
or, to the knowledge of Ebiz, threatened in writing.

               (ii) No deficiencies  exist or have been asserted in writing with
respect  to Taxes  of Ebiz or any  Subsidiary  and no  written  notice  has been
received  by Ebiz or any  Subsidiary  with  respect  to the  failure to file any
Return or pay any Taxes.

               (iii) Neither Ebiz nor any Subsidiary is a party to any action or
proceeding  for  assessment or  collection of Taxes,  nor has any such action or
proceeding  been  asserted or, to the  knowledge of Ebiz,  threatened in writing
against Ebiz, any Subsidiary or any of their respective assets.

               (iv) No extension of time to file any Return  (which has not been
filed) has been requested by or granted to Ebiz or any Subsidiary.  No waiver or
extension  of any statute of  limitations  is in effect with respect to Taxes or
Returns of Ebiz or any Subsidiary.

               (v)  Neither  Ebiz nor any  Subsidiary  is (and has never been) a
party to any tax sharing  agreement,  tax indemnity  agreement,  tax  allocation
agreement, or similar arrangement with any person.

                                       21
<PAGE>
               (vi) No action  has been  taken  that  would  have the  effect of
deferring any  significant  liability for Taxes of Ebiz or any Subsidiary from a
period prior to closing to a period after closing.

               (vii)  Neither  Ebiz  nor  any  Subsidiary  has  ever  been an "S
corporation" under the Code.

               (viii) The aggregate  liability of Ebiz and the  Subsidiaries for
unpaid Taxes for all periods  ending on or before March 31,2000  determined on a
GAAP basis does not exceed the  amount of the  current  liability  accruals  for
Taxes (excluding  reserves for deferred Taxes) on the Ebiz financial  statements
as of that date, and the aggregate  liability of Ebiz and the  Subsidiaries  for
unpaid Taxes for all periods ending on or before the Closing Date  determined on
a GAAP basis will not exceed the amount of the current  liability  accruals  for
Taxes (excluding reserves for deferred Taxes) as such accruals will be reflected
on the balance  sheet of Ebiz as of the Closing  Date,  except to the extent any
excess of such Taxes over the relevant  current  liability  accrual amount would
not have a Material Adverse Effect on Ebiz.

          (i) Subject to the items disclosed on Schedule 4.16(h) attached
hereto:

               (i)  Neither  Ebiz nor any  Subsidiary  is  required to treat any
asset  as owned  by  another  person  for  federal  income  tax  purposes  or as
tax-exempt bond financed  property or tax-exempt use property within the meaning
of Section 168 of the Code.

               (ii)  Neither  Ebiz  nor any  Subsidiary  has  entered  into  any
agreement,  contract,  arrangement  or plan that has  resulted or would  result,
separately  or in the  aggregate,  in the  payment of any amount  subject to the
provisions of Section 280G or Section 4999 of the Code or any similar  provision
of state, local or foreign tax law.

               (iii) Neither Ebiz nor any  Subsidiary has made an election under
Section  338 of the Code and no action has been  taken that would  result in any
income tax liability to Ebiz or any Subsidiary as a result of a deemed  election
within the meaning of Section 338 of the Code.

               (iv) No consent under  Section  341(f) of the Code has been filed
with respect to Ebiz or any Subsidiary.

               (v) Neither Ebiz nor any  Subsidiary has disposed of any property
that is currently or was previously  being  accounted for under the  installment
method.

               (vi) Within the last five years,  neither Ebiz nor any Subsidiary
has agreed to make,  and has been required to make,  any  adjustment  under Code
Section 481 by reason of a change in accounting method or otherwise.

               (vii)  Neither Ebiz nor any  Subsidiary  is a United  States real
property  holding  corporation  within the meaning of Section  897(c)(2)  of the
Code.

               (viii)  Neither Ebiz nor any  Subsidiary  has made or will make a
deemed  dividend  election  under Treas.  Reg.ss.  1.1502-32(f)(2)  or a consent
dividend under Section 565 of the Code.

                                       22
<PAGE>
               (ix) None of the assets or operations  of Ebiz or any  Subsidiary
is subject to any joint venture,  partnership  or other  arrangement or contract
that is treated as a partnership for federal income tax purposes.

               (x)  Neither  Ebiz nor any  Subsidiary  has  made  any  elections
comparable to those described in this section under any state,  local or foreign
tax laws or is required to apply any rules comparable to those described in this
Section under any state, local or foreign tax laws.

               (xi) The transactions  contemplated hereby are not subject to the
tax  withholding  provisions  of Section 3406 of the Code, or of Subchapter A of
Chapter 3 of the Code, or of any other provision of law.

          (j)  Schedule  4.16(j)  contains  information  that  is  accurate  and
complete in all  material  respects  with  respect to: (A) all tax  elections in
effect with  respect to Ebiz and each  Subsidiary;  (B) the current tax basis of
the assets of Ebiz and each  Subsidiary  broken out by asset class;  (C) the net
operating  losses  of Ebiz and each  Subsidiary  by  taxable  year;  (D) the net
capital losses of Ebiz and each  Subsidiary by taxable year; and (E) the overall
foreign losses of Ebiz and each Subsidiary under Section 904(f) of the Code that
are subject to recapture.

          (k) There are no transfer taxes  (exclusive of income taxes) that will
become  due and  payable as a result of the Merger  transaction  under  Arizona,
Delaware, Nevada or federal law.

          4.17 TITLE TO PROPERTIES.  Except as disclosed in Schedule 4.17,  Ebiz
and each  Subsidiary  has  good  and  marketable  title,  free and  clear of any
mortgage,  pledge, lien, charge or other encumbrance,  to all of its real and/or
personal  property  and other  assets  whether  reflected  on the  Current  Ebiz
Financial  Statements  or  otherwise,  or acquired by it  subsequent to the date
thereof or used by it in the  ordinary  course of its  business,  except for (a)
liens or encumbrances  on such property or assets  described in the Current Ebiz
Financial  Statements,  (b) liens for current taxes not yet due and payable, (c)
such  imperfections  of title and  encumbrances,  if any, as are not material in
character,  amount or extent and do not detract from the value or interfere with
the  present or  presently  contemplated  future use of the  properties  subject
thereto or  affected  thereby,  and (d)  acquisitions  and  dispositions  in the
ordinary  course of business.  Ebiz and each  Subsidiary  enjoys  peaceable  and
undisturbed  possession  under all material  leases under which it is operating,
and all of its premises  which are leased,  are in good condition and repair and
are  suitable  for the  purposes  for which such  premises  are being  utilized.
Neither  Ebiz nor any  Subsidiary  has  received  any notice of violation of any
applicable  zoning  ordinance or other law,  order,  regulation  or  requirement
relating to its operations or to its owned or leased properties.

          4.18.  ENVIRONMENTAL  MATTERS To the best knowledge of Ebiz,  Ebiz and
each  Subsidiary  has duly  complied  with,  and the  operation of its business,
equipment  and other  assets and the  facilities  owned or leased by Ebiz or any
Subsidiary  are in compliance  with the  provisions of all  applicable  federal,
state and local  environmental,  health and safety laws,  statutes,  ordinances,
rules  and  regulations  of any  governmental  or quasi  governmental  authority
relating to (i) errors or omissions,  (ii) discharges to the atmosphere,  soils,
surface water or ground water,  (iii) solid or liquid waste  disposal,  (iv) the
use, storage, generation, handling, transport, discharge, release or disposal of
toxic or  hazardous  substances  or  waste,  (v) the  emission  of  non-ionizing
electromagnetic  radiation  or  (vi)  Environmental  and  Health  Laws.  To  the

                                       23
<PAGE>
knowledge  of Ebiz,  there are no  investigations,  administrative  proceedings,
judicial  actions,  orders,  claims or notices that are pending,  anticipated or
threatened  against  Ebiz  or  any  Subsidiary  relating  to  violations  of the
Environmental  and Health Laws.  Ebiz has not received a notice of, and does not
know or have any reason to suspect,  facts which  constitute  a violation of any
Environmental and Health Laws which relate to the use, ownership or occupancy of
any property or facilities used by Ebiz or any Subsidiary in connection with the
operation  of its  business  or any  activity  of the  business  of  Ebiz or any
Subsidiary  which would  result in a violation  or  threatened  violation of any
Environmental or Health Laws.

          4.19 INTELLECTUAL PROPERTY.

          (a)  Ebiz  owns,  or  is  licensed  or  otherwise   possesses  legally
enforceable rights to use all Intellectual Property used in the business of Ebiz
as  currently  conducted,  except to the  extent  that the  failure to have such
rights has not and could not  reasonably be expected to have a Material  Adverse
Effect on Ebiz.

          (b) Schedule  4.19(b) lists:  (i) all patents and patent  applications
and all registered and unregistered  trademarks,  trade names and service marks,
registered domain names and registered and unregistered  copyrights,  which Ebiz
considers  to be  material to its  business  and  included  in the  Intellectual
Property,  including the jurisdictions in which each such Intellectual  Property
right  has been  issued  or  registered  or in which  any  application  for such
issuance  and  registration  has  been  filed,   (ii)  all  material   licenses,
sublicenses  and other  agreements  as to which Ebiz is a party and  pursuant to
which any person is authorized to use any Intellectual  Property,  and (iii) all
material licenses,  sublicenses and other agreements as to which Ebiz is a party
and  pursuant  to which  Ebiz is  authorized  to use any  third  party  patents,
trademarks or copyrights,  including  software  ("EBIZ THIRD PARTY  INTELLECTUAL
PROPERTY  RIGHTS"),  in each case which are incorporated in, are, or form a part
of any product or service of Ebiz.

          (c) To the  knowledge of Ebiz,  there has not been and currently is no
unauthorized  use,   disclosure,   infringement  or   misappropriation   of  any
Intellectual  Property  or any trade  secret of Ebiz,  or any Ebiz  Third  Party
Intellectual  Property  Right,  by any third  party,  including  any employee or
former  employee of Ebiz.  Ebiz has not entered into any  agreement to indemnify
any  other  person  against  any  charge  of  infringement  of any  Intellectual
Property,  other than  indemnification  provisions  contained in purchase orders
arising in the ordinary course of business,  or contained in license  agreements
relating to Intellectual  Property licensed to or by Ebiz in the ordinary course
of business.

          (d) Ebiz is not,  and will not be as a  result  of the  execution  and
delivery of this Agreement or the performance of Ebiz's  obligations  under this
Agreement,  in breach of any license,  sublicense or other agreement relating to
the Intellectual  Property or Ebiz Third Party Intellectual Property Rights, the
breach of which could have a Material Adverse Effect on Ebiz.

          (e) All patents,  registered  trademarks,  service  marks,  registered
domain names and copyrights held by Ebiz are valid and subsisting.  Ebiz (i) has
not been  sued in any suit,  action  or  proceeding  which  involves  a claim of
infringement of any patents, trademarks, service marks, domain names, copyrights
or violation of any trade secret or other  proprietary  right of any third party
and (ii) has not brought any action,  suit or  proceeding  for  infringement  of
Intellectual   Property  or  breach  of  any  license  or  agreement   involving
Intellectual  Property  against any third party.  To the knowledge of Ebiz,  the
manufacture,  marketing,  licensing or sale of the products and services of Ebiz

                                       24
<PAGE>
does not infringe any patent, trademark,  service mark, copyright, trade secret,
domain name or other proprietary right of any third party.

          (f) Ebiz has secured valid written  assignments  from all  consultants
and employees who  contributed to the creation or  development  of  Intellectual
Property of the rights to such  contributions  that Ebiz does not already own by
operation of law.

          4.20  CONDITIONS  AND  SUFFICIENCY  OF ASSETS.  All real  property and
equipment  of  Ebiz  and  each  Subsidiary  is  structurally  sound  and in good
operating  condition and repair and are adequate for the uses  thereof.  None of
the real property or equipment is in need of  maintenance  or repairs except for
ordinary,  routine  maintenance  and  repair  that  are not  material.  The real
property and equipment are sufficient for the continued  conduct of the business
of Ebiz and each Subsidiary.

          4.21 EBIZ REPORTS AND FINANCIAL STATEMENTS. Ebiz has made available to
LMI true and complete copies of all reports, registration statements, definitive
proxy  statements and other documents (in each case together with all amendments
thereto)  filed by Ebiz or its  predecessor  with the  Securities  and  Exchange
Commission (the "COMMISSION") since October 1, 1999 (such reports,  registration
statements,  definitive proxy statements and other documents,  together with any
amendments  thereto,  are  sometimes  collectively  referred  to  as  the  "EBIZ
COMMISSION  FILINGS").  The  Ebiz  Commission  Filings  constitute  all  of  the
documents  (other than  preliminary  material) that Ebiz or its  predecessor was
required to file with the  Commission  since such date.  As of their  respective
dates,  each of the Ebiz Commission  Filings  complied in all material  respects
with the applicable requirements of the Securities Act, the Exchange Act and the
rules and  regulations  under  each such  Act,  and none of the Ebiz  Commission
Filings  contained as of such date any untrue  statement  of a material  fact or
omitted to state a material fact  required to be stated  therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.  When filed with the Commission,  the financial statements
included in the Ebiz  Commission  Filings  complied  as to form in all  material
respects with the applicable  rules and regulations of the Commission.  Ebiz has
complied  with all of the rules,  regulations  and  requirements  for trading of
Ebiz's common stock on the OTC Bulletin Board.

          4.22  ACCURACY  OF  STATEMENTS.  Ebiz has  disclosed  to LMI all facts
required to be disclosed  by this  Agreement  and  material to the  liabilities,
assets, business, prospects, conditions,  organization and operations (financial
and  otherwise)  of Ebiz and its  Subsidiaries.  Neither this  Agreement nor any
exhibit  or  schedule  hereto  nor any  certificate,  documents,  instrument  or
information  furnished  or to be  furnished  by  Ebiz  or  Merger  Sub to LMI in
connection with this Agreement or any of the transactions  contemplated  hereby,
or will contain any untrue statement of a material fact or omits or will omit to
state a material  fact  necessary  to make the  statements  contained  herein or
therein,  in  light  of  the  circumstances  under  which  they  are  made,  not
misleading.

          4.23 BROKERS AND FINDERS'  FEES.  Ebiz has not incurred,  and will not
incur,  directly or indirectly,  any liability for brokerage or finders' fees or
agents'  commissions  or  investment  bankers'  fees or any  similar  changes in
connection with this Agreement or any transaction contemplated hereby.

                                       25
<PAGE>
                                    ARTICLE 5
                            COVENANTS OF LMI AND EBIZ

          5.1  ACCESS TO  INFORMATION.  LMI shall  provide  Ebiz,  its  counsel,
accountants and other  representatives  and Ebiz shall provide LMI, its counsel,
accountants and other  representatives  full access,  from and after the date of
this  Agreement,  to all  of  their  respective  properties,  books,  contracts,
commitments and records,  and each shall furnish to the other during such period
all such information concerning its affairs as the other may reasonably request.
In addition,  each shall make its officers,  personnel and vendors  available to
discuss with the  designated  representatives  of the other the substance of all
documents,  financial  statements and other information provided by the party to
the other and such other  matters as either  party shall deem  pertinent  to the
transactions contemplated by this Agreement.

          5.2 CONDUCT OF BUSINESS.  Except as otherwise  consented to in writing
by the other,  from the effective date of execution of this Agreement  until the
Closing Date or the date of termination of this Agreement,  each of LMI and Ebiz
shall:

          (a) maintain and operate its  properties in a manner  consistent  with
the  efficient  operation of its  business and conduct its business  only in the
ordinary course.  It shall not be considered to be in the ordinary course of its
business to make any  acquisition of direct or indirect  ownership or control of
voting shares of any other  corporation,  or of any interest in any partnership,
joint venture,  association or similar organization,  other than shares acquired
in satisfaction of a security interest or of a debt previously  contracted or in
a fiduciary or custodial capacity.

          (b)   punctually  pay  and  discharge  all  Taxes,   assessments   and
governmental  charges lawfully  imposed upon it or any of its property,  or upon
the income and profits thereof; provided, however, that nothing herein contained
shall  require a party to pay or discharge any Tax  assessment  or  governmental
charge so long as the validity  thereof  shall be contested in good faith and by
appropriate proceedings unless property essential to the conduct of its business
will be lost, forfeited or materially endangered.

          (c) maintain its existence as a corporation in good standing under the
laws of its state of organization  and comply in all material  respects with all
laws,  governmental  regulations,  rules and  ordinances,  and judicial  orders,
judgments and decrees applicable to its business or its properties, except while
contesting the validity of any of the foregoing in good faith and by appropriate
proceedings.

          (d) notify the other of the  commencement  of any material  litigation
against it or of the existence of any adverse  business  conditions  threatening
its continued, normal business operations or of any agreement,  consent or order
involving its operations.

          (e) at all times  maintain,  preserve and keep its  properties in good
repair,  working  order  and  condition  in all  material  respects  so that the
business carried on in connection  therewith may be properly and  advantageously
conducted.

          (f)  make  every   reasonable   effort  to  fulfill  its   contractual
obligations and to maintain in effect its insurance as currently in effect.

          (g) use its best efforts to preserve its business  relations  with its
present customers.

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<PAGE>
          (h) use its best efforts to assure,  to the extent within its control,
the  satisfaction  of the conditions to the  effectiveness  of the  transactions
contemplated in this Agreement.

          5.3 NEGATIVE  COVENANTS.  Prior to the Closing Date or the termination
of this  Agreement,  neither  LMI nor Ebiz  shall,  unless the other  shall have
otherwise consented in writing:

          (a) amend its  Articles  of  Incorporation  or  Bylaws,  except to the
extent necessary to effect the transactions contemplated by this Agreement, and,
in the case of LMI, as referenced in Section 1.3(b) of this Agreement;.

          (b) issue,  sell or  otherwise  dispose  of any shares of its  capital
stock  or any of its  securities  convertible  into or  representing  a right or
option to purchase  any such shares or enter into other  agreements  to issue or
sell any shares of its capital stock or change the presently  outstanding shares
of such  stock  into a  greater  or lesser  number of shares  either by way of a
recapitalization, reorganization, consolidation of shares or the like, or by way
of a merger or  consolidation,  other than (i) the sale by LMI of such shares of
LMI  Preferred  Stock  and/or  LMI  Common  Stock as are  necessary  in order to
consummate the proposed bridge financing and investment  transaction with Canopy
or  similar   investor,   or  the  proposed  asset  acquisition  and  investment
transaction with Caldera Systems,  Inc. ("CALDERA") or (ii) the issuance by Ebiz
of such shares of Ebiz Common  Stock as are required to comply with the terms of
the $7,100,000 Subordinated Convertible Debenture, dated August 25, 1999, issued
by Ebiz in favor of JEM Ventures EBIZ, LLC.

          (c)   purchase,   redeem,   retire  or  otherwise   acquire  or  sell,
hypothecate, pledge or otherwise encumber, any shares of its capital stock.

          (d)  declare,  set aside,  make or pay stock or cash  dividends on any
share of its  capital  stock or make any  other  distribution  of  assets to the
holders of any shares of its capital stock.

          (e)  institute  a  wage  or  salary  adjustment  increasing  the  base
compensation  rate of any person whose annual base compensation rate on the date
hereof  exceeds  $25,000,  pay a new employee an annual base  compensation  rate
exceeding  $50,000,  enter  into any  agreement,  understanding  or  commitment,
written or oral, which obligates LMI, its successors or assigns,  to pay, at any
time, to a new employee an annual base compensation rate exceeding  $50,000,  or
institute or agree to institute wage or salary  adjustments  which, taken either
individually or in the aggregate, increase by more than 10% the aggregate of the
annual base  compensation  rates paid by either on the date hereof to all of its
employees.

          (f) enter into or institute any  employment  contracts,  including but
not limited to employee policy manual,  deferred compensation,  non-competition,
bonus, stock option,  profit-sharing,  pension,  retirement,  consultation after
retirement,   payments  upon   retirement,   severance   agreement,   incentive,
extraordinary  vacation  accrual,  education  payment  or  benefit,  disability,
medical,  life or other  insurance plan or arrangement or, except as required by
applicable  law or  regulation,  renew,  amend,  modify  or  terminate  any such
arrangement or plan now in existence.

          (g) enter into any agreement,  understanding or commitment, written or
oral,  with any  other  person  which  is in any  manner  inconsistent  with its
obligations   arising  under  this  Agreement,   other  than  those  agreements,
understandings  and  commitments  entered  into by LMI in  connection  with  the
contemplated  bridge  financing and investment  transaction with Canopy or asset
acquisition and investment transaction with Caldera.

                                       27
<PAGE>
          (h) make any loan,  advance or  commitment  to extend credit to any of
its directors,  officers or any affiliated or related  persons of such directors
or officers;  renew any outstanding loan or any outstanding commitment to extend
credit to any of its directors, officers or any affiliated or related persons of
such  directors  or  officers;  increase  any  outstanding  loan  to  any of its
directors,  officers or any  affiliated or related  persons of such directors or
officers; or enter into any agreement,  understanding or commitment,  written or
oral, which obligates it, its successors or assigns, to make any loan or advance
or payment to any of its  directors or officers or to any  affiliated or related
persons of any such directors or officers.

          (i) sell,  lease or  otherwise  transfer or dispose of any property or
asset,  other  than in the  ordinary  course of  business  consistent  with past
practice.

          (j) take,  or agree to take,  any other  action that would make any of
its representations or warranties contained in this Agreement untrue.

          5.4 CONTINUED RELATIONSHIPS. LMI shall preserve intact the business of
LMI and  Ebiz  shall  preserve  intact  the  business  of Ebiz  and  each of the
Subsidiaries  and keep available the services of their  respective  officers and
employees and maintain good relationships  with suppliers,  customers and others
having business  relationships with any of the parties,  and shall not cause any
change in the  business,  condition or results of  operations  which may have an
adverse  effect on any the  assets,  business,  condition  or  prospects  of the
respective party.

          5.5 CONFIDENTIALITY.

          (a) Except as contemplated  by this  Agreement,  as required by law or
otherwise  expressly consented to in writing by Ebiz and LMI, all information or
documents furnished  hereunder by any party shall be kept strictly  confidential
by the party or  parties to whom  furnished  at all times  prior to the  Closing
Date, and in the event such transactions are not consummated,  each shall return
to the other all documents  furnished  hereunder and copies thereof upon request
and shall continue to keep confidential all information  furnished hereunder and
shall  not  thereafter  use the  same  for its  advantage.  Notwithstanding  the
foregoing,  (i) Ebiz or LMI may,  with the consent of the other,  which  consent
shall not be  unreasonably  withheld or delayed,  issue or make a press release,
announcement or other  disclosure  regarding this Agreement and the transactions
contemplated hereby which it reasonably  determines necessary or desirable under
applicable law, and (ii) Ebiz may, at any time after the date of this Agreement,
file with the Commission a form 8-K pursuant to the Exchange Act with respect to
the  transactions  contemplated by this  Agreement,  which Form 8-K may include,
among other things,  financial  statements and pro forma  financial  information
with respect to LMI. Prior to the Closing Date or termination of this Agreement,
LMI shall cooperate with Ebiz and provide such  information and documents as may
be required in connection with any such filings.

          (b) If the Closing is not  consummated,  each party  hereto will hold,
and Ebiz shall  cause its  Subsidiaries  to hold,  in  absolute  confidence  any
information  obtained  from another party except to the extent (i) such party is
required to disclose such  information by law or regulation,  (ii) disclosure of
such  information is necessary in connection with the pursuit of a claim by such
party against  another  party,  (iii) such  information  was known by such party
prior to such  disclosure or was thereafter  developed or obtained by such party
independent  of such  disclosure,  or (iv) such  information  becomes  generally
available  to the public or is otherwise  no longer  confidential.  Prior to any

                                       28
<PAGE>
disclosure of information pursuant to the exception in clause (i) or (ii) of the
preceding sentence, the party intending to disclose the same shall so notify the
party  which  provided  the same in order that such party may seek a  protective
order or other appropriate remedy should it choose to do so. Notwithstanding the
foregoing,  Ebiz or LMI may, with the consent of the other,  which consent shall
not be  unreasonably  withheld  or  delayed,  issue  or  make a  press  release,
announcement or other disclosure regarding the termination of this Agreement and
the transactions contemplated hereby which it reasonably determines necessary or
desirable under applicable law.

          5.6 NO  SOLICITATION.  LMI,  Ebiz and those acting on behalf of either
will not, and LMI and Ebiz will use their best efforts to cause their  officers,
employees, agents, and representatives (including any investment banker) to not,
directly or indirectly, solicit, encourage, or initiate any discussions with, or
negotiate or otherwise deal with, or provide any  information  to, any person or
entity other than the other and its officers,  employees, and agents, concerning
any merger, other business  combination,  sale of substantial assets, or similar
transaction involving either or any sale of any of their capital stock or of the
capital  stock or other  securities  or assets of either.  Each will  notify the
other immediately upon receipt of any inquiry, offer or proposal relating to any
of the foregoing.  None of the foregoing shall prohibit (i) sale of equity stock
of Ebiz or conversion of debt of LMI as contemplated under this Agreement,  (ii)
providing information to others in a manner in keeping with the ordinary conduct
of the parties' business, or providing information to government  authorities or
(iii) pursuit of the transactions referenced in Section 5.3(b) of this Agreement
with respect to Canopy or Caldera.

          5.7  AGREEMENT  OF   AFFILIATES.   If  the  Merger  will  qualify  for
pooling-of-interests accounting treatment, shares of Ebiz Common Stock issued to
affiliates  of LMI in  exchange  for  their  shares of LMI  Common  Stock or LMI
Preferred  Stock  shall not be  transferable  until  such time as the  financial
results  covering at least 30 days of combined  operations  of Ebiz and LMI have
been  published  within  the  meaning  of  Section  201.01  of the  Commission's
Codification of Financial Reporting Policies.  Ebiz shall be entitled to place a
restrictive  legend on  certificates  issued to LMI  affiliates  to enforce  the
provisions of this section.

          5.8 NOTIFICATION OF CERTAIN  MATTERS.  Between the date hereof and the
Closing  Date,  each party will give prompt notice in writing to the other party
of:  (i) any  information  that  indicates  that any of its  representations  or
warranties  contained  herein was not true and  correct as of the date hereof or
will not be true and correct at and as of the  Closing  Date with the same force
and  effect  as if  made  at and as of the  Closing  Date  (except  for  changes
permitted or contemplated by this  Agreement),  (ii) the occurrence of any event
which will result, or has a reasonable prospect of resulting,  in the failure of
any condition  specified in Article 6 hereof to be satisfied or (iii) any notice
or other  communication  from any third party  alleging that the consent of such
third  party  is  or  may  be  required  in  connection  with  the  transactions
contemplated by this Agreement or that such  transactions  otherwise may violate
the rights of or confer remedies upon such third party.

          5.9 ACTIONS BY MERGER SUB. In its capacity as the sole  stockholder of
Merger Sub,  Ebiz shall cause  Merger Sub to approve and adopt the Merger and to
take all corporate action necessary on its part to consummate the Merger and the
transactions  contemplated  hereby.  Merger  Sub  shall  not  conduct  any other
business, and will have no other assets or liabilities.

          5.10 AMENDMENT OF STOCK OPTION PLAN.  Prior to the Closing Date,  Ebiz
shall amend its 1998  Equity  Incentive  Plan to  increase  the number of shares
authorized under such plan to an amount sufficient to assume all outstanding LMI
Stock Options pursuant to Section 1.6(b) hereof.

                                       29
<PAGE>
          5.11  CONVERSION OF EBIZ PREFERRED  STOCK.  Prior to the Closing Date,
Ebiz shall cause any and all  outstanding  shares of its  preferred  stock to be
converted into shares of Ebiz Common Stock.

                                    ARTICLE 6
                              CONDITIONS PRECEDENT

          6.1 CONDITIONS TO THE  OBLIGATION OF EBIZ TO CLOSE.  The obligation of
Ebiz to consummate the transactions  contemplated hereby shall be subject to the
satisfaction,  on or  prior  to the  Closing  Date,  of  each  of the  following
conditions:

          (a) during  the  period  from the date of the  Current  LMI  Financial
Statements  to the Closing  Date,  there shall not have  occurred  any  material
adverse change,  other than as set forth on any schedule or exhibit  hereto,  in
the financial condition, business or operation of LMI taken as a whole, and Ebiz
shall have received at the Closing a  certificate  dated as of the Closing Date,
signed by the Chief Executive Officer and Chief Financial Officer of LMI to that
effect;

          (b) each of the  representations  and  warranties  of LMI contained in
this Agreement shall, in all material respects,  be true when made and as of the
Closing Date, with the same effect as though such representations and warranties
had been made on and as of such date;  each of the covenants  and  agreements of
LMI to be  performed  on or prior to the  Closing  Date  shall  have  been  duly
performed in all material respects;  and Ebiz shall have received at the Closing
a  certificate  to that effect  dated as of the Closing Date and executed by the
Chief Executive Officer and Chief Financial Officer of LMI;

          (c) Ebiz shall have  received  an opinion  from Holme  Roberts & Owen,
LLP, counsel to LMI, substantially in the form of Exhibit F attached hereto;

          (d) Ebiz shall have  received an opinion  from  Southwest  Securities,
Inc. or similarly  qualified firm, as determined by Ebiz, to the effect that the
Merger is fair to its shareholders;

          (e) all outstanding  debentures of LMI issued before March 1, 2000 and
the Designated Portion of the value of each outstanding  debenture of LMI issued
after March 1, 2000 shall have been converted into LMI Preferred  Stock or other
equity of LMI, or shall have been converted automatically in accordance with the
terms  of such  debentures  or upon  the  consummation  of the  Merger,  and all
outstanding  Canopy  Notes shall have been repaid or  converted  into LMI Common
Stock;

          (f) there  shall not have been issued or be in effect any order of any
court,  agency or other tribunal of competent  jurisdiction which has the effect
of  prohibiting   or  prohibits  the   performance  of  the  Agreement  and  the
transactions  contemplated  thereby or imposes limitations on the ability of LMI
to exercise and possess all of its rights, privileges, immunities and franchises
or to otherwise  conduct its business (with  limitations  applicable only to all
similar entities engaged in similar business) as of the Closing Date;

          (g) all proceedings, corporate or otherwise, to be taken in connection
with the transactions contemplated by this Agreement,  including the shareholder
approvals  of the  transactions  contemplated  by  this  Agreement,  shall  have

                                       30
<PAGE>
occurred and all appropriate  documents  incident thereto as Ebiz may reasonably
request shall have been  delivered to it,  including,  without  limitation,  the
receipt of appropriate consents from any third parties which may be necessary to
effect the transactions contemplated hereby;

          (h) no action, suit or proceeding before any court or any governmental
or  regulatory  authority  shall  have  been  commenced  or  threatened,  and no
investigation  by any  governmental  or  regulatory  authority  shall  have been
commenced  against  the  parties  hereto or any of the  affiliates,  associates,
officers or directors,  or any of them,  seeking to restrain,  prevent or change
the transactions contemplated hereby, or questioning the validity or legality of
any such  transactions  contemplated  hereby,  or  questioning  the  validity or
legality of any such transactions,  or seeking damages in connection with any of
such transactions;

          (i) LMI shall have received any requisite  approvals to this Agreement
from all third parties having, under the terms of its respective loan, lease and
other agreements, the right to approve or reject this Agreement or to cancel its
agreement with LMI on or before the Closing Date; LMI hereby represents that all
such third parties will have been  disclosed to Ebiz as of the Closing Date; (j)
LMI shall have received  confirmation,  in form and substance mutually agreeable
to Ebiz and LMI, of at least $2,000,000 in new funding;

          (k) Mark Bolzern shall have  transferred  to LMI such number of shares
of LMI Common Stock as would,  if converted in the Merger,  be converted into at
least 200,000 shares of Ebiz Common Stock  pursuant to the conversion  ratio set
forth in Section 1.3(a) of this Agreement; and

          (l) LMI  shall  execute  and  deliver  or  cause  to be  executed  and
delivered to Ebiz such  documents  as are  required at the Closing,  pursuant to
Article 7.

          6.2  CONDITIONS TO THE  OBLIGATION OF LMI TO CLOSE.  The obligation of
LMI to consummate the transactions  contemplated  hereby shall be subject to the
satisfaction,  on or  prior  to the  Closing  Date,  of  each  of the  following
conditions:

          (a) during  the period  from the date of the  Current  Ebiz  Financial
Statements  to the Closing  Date,  there shall not have  occurred  any  material
adverse change,  other than as set forth on any schedule or exhibit  hereto,  in
the financial condition, business or operation of Ebiz taken as a whole, and LMI
shall have received at the Closing a  certificate  dated as of the Closing Date,
signed by the Chief  Executive  Officer and Chief  Financial  Officer of Ebiz to
that effect;

          (b) each of the  representations and warranties of Ebiz and Merger Sub
contained in this Agreement shall, in all material  respects,  be true when made
and as of the Closing Date, with the same effect as though such  representations
and warranties  had been made on and as of such date;  each of the covenants and
agreements  of Ebiz and Merger Sub to be  performed  on or prior to the  Closing
Date shall have been duly performed in all material respects; and LMI shall have
received at the  Closing a  certificate  to that effect  dated as of the Closing
Date and executed by the Chief Executive  Officer and Chief Financial Officer of
Ebiz;

          (c) LMI shall  have  received  an opinion  from  Lewis and Roca,  LLP,
counsel to Ebiz, substantially in the form attached as Exhibit G hereto;

                                       31
<PAGE>
          (d) LMI's  stockholders shall have approved the Merger pursuant to the
requirements of the DGCL, a majority of the holders of each class of outstanding
debentures of LMI shall have approved the Merger and LMI shall have received all
other approvals reasonably  necessary,  in the opinion of LMI, to consummate the
Merger, including, without limitation, the consents and waivers described in the
Information Statement relating to the Merger, dated on or about the date hereof,
furnished to holders of securities of LMI;

          (e) there  shall not have been issued or be in effect any order of any
court,  agency or other tribunal of competent  jurisdiction which has the effect
of  prohibiting   or  prohibits  the   performance  of  the  Agreement  and  the
transactions  contemplated thereby or imposes limitations on the ability of Ebiz
to exercise and possess all of its rights, privileges, immunities and franchises
or to otherwise  conduct its business (with  limitations  applicable only to all
similar entities engaged in similar business) as of the Closing Date;

          (f) all proceedings, corporate or otherwise, to be taken in connection
with the transactions contemplated by this Agreement,  including the shareholder
approvals  of the  transactions  contemplated  by  this  Agreement,  shall  have
occurred and all appropriate  documents  incident  thereto as LMI may reasonably
request shall have been  delivered to it,  including,  without  limitation,  the
receipt of appropriate consents from any third parties which may be necessary to
effect the transactions contemplated hereby;

          (g) no action, suit or proceeding before any court or any governmental
or  regulatory  authority  shall  have  been  commenced  or  threatened,  and no
investigation  by any  governmental  or  regulatory  authority  shall  have been
commenced  against  the  parties  hereto or any of the  affiliates,  associates,
officers or directors,  or any of them,  seeking to restrain,  prevent or change
the transactions contemplated hereby, or questioning the validity or legality of
any such  transactions  contemplated  hereby,  or  questioning  the  validity or
legality of any such transactions,  or seeking damages in connection with any of
such transactions; and

          (h)  Ebiz  and each  Subsidiary  shall  have  received  any  requisite
approvals to this  Agreement from all third parties  having,  under the terms of
its respective loan, lease and other agreements,  the right to approve or reject
this  Agreement or to cancel its  agreement  with Ebiz on or before the Closing;
Ebiz hereby  represents  that all such third parties will have been disclosed to
LMI as of the Closing Date; and

          (i) Ebiz  shall  execute  and  deliver  or cause  to be  executed  and
delivered to LMI such  documents  as are  required at the  Closing,  pursuant to
Article 7.

                                    ARTICLE 7
                                     CLOSING

          7.1  DOCUMENTS  TO BE DELIVERED  BY EBIZ.  At the  Closing,  Ebiz will
deliver the following to LMI:

          (a) SHARE CERTIFICATES.  Certificates  representing the shares of Ebiz
Common Stock constituting the Merger  Consideration other than such certificates
to be issued after Closing with respect to the Assumed LMI  Debentures  pursuant
to Section 1.3(b) of this Agreement;

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          (b) CERTIFIED RESOLUTIONS.  Certified resolutions of each of the Board
of  Directors  of Ebiz and Merger Sub  approving  the  execution,  delivery  and
performance  of  this  Agreement  and  authorizing   the   consummation  of  the
transactions contemplated hereby;

          (c)  OFFICER'S  CERTIFICATE.  A  certificate,  dated as of the Closing
Date, signed by the Chief Executive Officer and Chief Financial Officer of Ebiz,
as required pursuant to Section 6.2;.

          (d) OPINION. A written opinion of Lewis and Roca, LLP, counsel to Ebiz
addressed  to LMI,  dated as of the  Closing  Date,  in  substantially  the form
attached as Exhibit G;

          (e) GOOD STANDING CERTIFICATES. Governmental certificates showing that
Ebiz is duly incorporated, validly existing and in good standing in the State of
Nevada and  qualified  to do  business  as a foreign  corporation  in each state
listed in Schedule  4.1(a),  certified  as of a date not more than ten (10) days
before the Closing Date;

          (f) WARRANTS.  Warrants  exercisable  for shares of Ebiz Common Stock,
approved  by the  Board  of  Directors  of Ebiz and  issued  to the  holders  of
outstanding  LMI  Warrants  pursuant  to the terms and  conditions  set forth in
Section 1.6(a);

          (g)  STOCK  OPTIONS.  Notices  of  grant or  equivalent  documentation
approved  by the Board of  Directors  of Ebiz and  issued to each  holder of LMI
Stock  Options,  evidencing  the  assumption of the LMI Stock Options  listed in
Schedule 3.5 pursuant to the terms and conditions set forth in Section 1.6(b);

          (h) LOCK UP AGREEMENTS. Lock Up Agreements executed by each of Stephen
Herman  and  Jeffrey  Rassas as  required  pursuant  to  Section  2.4(b)  and in
substantially the form attached as Exhibit E;

          (i) COMPENSATION  AGREEMENT. A Compensation Agreement substantially in
the form attached as Exhibit H; and

          (j)  OTHER  DOCUMENTS.  Such  additional  certificates,   instruments,
documents, information and materials as LMI may reasonably request.

          7.2 DOCUMENTS TO BE DELIVERED BY LMI. At the Closing, LMI will deliver
the following to Ebiz:

          (a) SHARE  CERTIFICATES.  Certificates  representing the shares of the
outstanding LMI Common Stock and LMI Preferred Stock;

          (b)  CERTIFIED  RESOLUTIONS.  Certified  resolutions  of the  Board of
Directors of LMI  approving  the  execution,  delivery and  performance  of this
Agreement and authorizing  the  consummation  of the  transactions  contemplated
hereby;

          (c)  OFFICER'S  CERTIFICATE.  A  certificate,  dated as of the Closing
Date,  signed by the Chief Executive Officer and Chief Financial Officer of LMI,
as required pursuant to Section 6.1;

                                       33
<PAGE>
          (d) OPINION. A written opinion of Holme Roberts & Owen LLP, counsel to
LMI addressed to Ebiz, dated as of the Closing Date, in  substantially  the form
attached as Exhibit F;

          (e) GOOD STANDING CERTIFICATES. Governmental certificates showing that
LMI is duly  organized,  validly  existing and in good  standing in the State of
Delaware  and  qualified to do business as a foreign  corporation  in each state
listed in Schedule  3.1(a),  certified  as of a date not more than ten (10) days
before the Closing Date; and

          (f)  OTHER  DOCUMENTS.  Such  additional  certificates,   instruments,
documents, information and materials as Ebiz may reasonably request.

          7.3  MUTUAL  DELIVERIES.  At the  Closing,  each of Ebiz and  LMI,  as
applicable, shall execute and deliver or cause to be executed and delivered:

          (a) A  Certificate  of Merger  substantially  in the form  attached as
Exhibit A;

          (b)  Employment  Agreements  as  required  pursuant  to Section 2.1 in
substantially the form attached as Exhibit B;

          (c) A Shareholder  Voting Agreement and Proxy, as required pursuant to
Section 2.2 and in substantially the form attached hereto as Exhibit C; and

          (d) A Registration  Rights  Agreement as required  pursuant to Section
2.4(a) and in substantially the form attached hereto as Exhibit D.

                                    ARTICLE 8
                              AMENDMENT AND WAIVER

          8.1 AMENDMENT AND MODIFICATION.  This Agreement may only be amended or
modified  in a writing  signed by Ebiz and LMI at any time prior to the  Closing
Date.

          8.2 WAIVER.  At any time prior to the Closing Date, the parties hereto
may by  mutual  agreement  extend  the  time for the  performance  of any of the
obligations  or other acts of any other  party  hereto.  Any party may waive any
inaccuracies in the  representations and warranties of any other party contained
herein or in any  schedule  or  document  delivered  pursuant  hereto  and waive
compliance  by  any  other  party  with  any  of the  covenants,  agreements  or
conditions  contained herein. Any agreement on the part of a party hereto to any
such  extension or waiver shall be valid only if set forth in an  instrument  in
writing signed by the parties hereto.

                                    ARTICLE 9
                                   TERMINATION

          9.1 TERMINATION BY PARTIES.  This Agreement may be terminated prior to
the Closing Date:

          (a) (i) At the  option  of Ebiz,  upon  written  notice  to the  other
parties, if in the good faith opinion of the Board of Directors of Ebiz, LMI has
breached any of the  representations  and warranties or other  covenants of this
Agreement  or any  condition  precedent  set forth in Section  6.1 has failed to
occur,  or (ii) at the option of LMI, upon written  notice to the other parties,
if in the good faith  opinion of the Board of Directors  of LMI,  either Ebiz or

                                       34
<PAGE>
Merger Sub has  breached  any of the  representations  and  warranties  or other
covenants of this Agreement or any condition  precedent set forth in Section 6.2
has failed to occur;

          (b) by mutual agreement of Ebiz and LMI; and

          (c) at the option of the respective Board of Directors of Ebiz or LMI,
if any  litigation is instituted  against LMI or Ebiz, the object of which is to
enjoin any party from proceeding with the transactions  contemplated  under this
Agreement or to seek damages  against any party hereto or any officer,  director
or  agent of any  party as a result  of the  transactions  proposed  under  this
Agreement.

          9.2 EFFECT OF  TERMINATION.  In the event this Agreement is terminated
as provided in Sections 9.1(b) or 9.1(c) or as provided in Section 9.1(a) to the
extent such  termination is a result of a condition  precedent  having failed to
occur,  this  Agreement  shall be void and of no further force and effect,  and,
except as set forth  herein and  Section  5.5 above,  there  shall be no further
liability  on the  part  of Ebiz or LMI or any of  their  respective  directors,
officers  or  stockholders  as a result  of this  Agreement.  Section  5.5 shall
survive any termination of this Agreement.

                                   ARTICLE 10
                                 INDEMNIFICATION

          10.1  DEFINITIONS.  Capitalized  terms used in this Article 10 and not
defined  elsewhere in this  Agreement  shall have the meanings  ascribed to them
below:

          "APPLICABLE  STOCK  PERCENTAGE"  shall mean,  with respect to each LMI
Stockholder,  the percentage  that  corresponds to a fraction,  the numerator of
which is an amount  equal to the total  number  of  shares  (on a fully  diluted
basis) of LMI Common Stock or securities  convertible into LMI Common Stock held
by  such  LMI  Stockholder  immediately  prior  to the  Effective  Time  and the
denominator  of which is an  amount  equal to the total  number of shares  (on a
fully  diluted  basis) of LMI Common Stock or  securities  convertible  into LMI
Common Stock outstanding as of immediately prior to the Effective Time.

          "DAMAGES" shall mean any loss,  liability,  obligation,  debt,  claim,
damage or expense  (including costs of investigation  and defense and reasonable
attorneys' fees).

          "DUE   DATE"   shall   mean  the  date  that  is  30  days  after  the
Indemnification Determination Date.

          "EBIZ AVERAGE  TRADING PRICE" shall mean,  with respect to any trading
day,  the  average  of the high and low bid  prices  for  Ebiz  Common  Stock as
reported by the OTC Bulletin Board for such day.

          "EBIZ DESIGNATED  REPRESENTATIVE" shall mean Jeffrey Rassas; provided,
however,  if Ebiz  designates  any person to succeed  Jeffrey Rassas as the Ebiz
Designated  Representative  by a writing  executed by an  authorized  officer of
Ebiz, then the Ebiz Designated Representative shall mean such successor.

                                       35
<PAGE>
          "EBIZ  INDEMNIFICATION  AMOUNT"  shall  mean the  total  amount of all
Damages,  without any offset with respect to the LMI Indemnification Amount, due
and  payable  to Ebiz  pursuant  to  Section  10.3(b),  as  determined  by Final
Decision.

          "EBIZ SHARE VALUE" shall mean the per share Ebiz Average Trading Price
as of the fifth trading day prior to the Due Date.

          "ESCROW AGENT" shall mean Colonial  Trust,  or such other escrow agent
as may be agreed upon in writing by the Ebiz Designated  Representative  and the
LMI Designated Representative.

          "ESCROWED  SHARES"  shall  mean 5  percent  of (i) the  shares of Ebiz
Common Stock to be delivered to the LMI Stockholders  pursuant to Section 1.3 of
this  Agreement and (ii) the shares of Ebiz Common Stock issued upon  conversion
of the Assumed LMI Debentures pursuant to Section 1.3(b) of this Agreement,  all
such shares  referenced in the immediately  preceding  clauses (i) or (ii) to be
deposited into an escrow account to be held by the Escrow Agent.

          "FINAL  DECISION"  shall  mean  a  final,  binding  written  agreement
executed  by  the  Ebiz  Designated   Representative   and  the  LMI  Designated
Representative,  pursuant  to which  such  Representatives  agree as to the Ebiz
Indemnification Amount and the LMI Indemnification Amount; provided, however, if
such Representatives  cannot agree upon such Amounts,  then Final Decision shall
mean a final,  non-appealable  decision  of the  arbitrator  pursuant to Section
10.5, or if such decision is appealed to a court of law, a final, non-appealable
judgement or order issued by a court of competent  jurisdiction,  setting  forth
such Amounts.

          "INDEMNIFICATION CAP" shall mean $1,000,000.00.

          "INDEMNIFICATION  CLAIM"  shall  mean a  claim  asserted  by  the  LMI
Designated Representative pursuant to Section 10.3(a) or a claim asserted by the
Ebiz Designated  Representative  pursuant to Section  10.3(b),  in each case, by
providing  written  notice of such claim to other  Representative  in accordance
with Section 10.4(a) below.

          "INDEMNIFICATION  DETERMINATION  DATE"  shall mean the date upon which
all Indemnification Claims are resolved by Final Decision.

          "LMI  DESIGNATED  REPRESENTATIVE"  shall  mean David  Shaw,  provided,
however,  if the LMI Stockholders  designate any person to succeed David Shaw as
the  LMI  Designated  Representative  by  a  written  consent  executed  by  LMI
Stockholders  holding not less that a majority of all shares of LMI Common Stock
held by the LMI  Stockholders at the time the LMI  Stockholders  are determined,
then the LMI Designated Representative shall mean such successor.

          "LMI  INDEMNIFICATION  AMOUNT"  shall  mean the  total  amount  of all
Damages,  without any offset with  respect to the Ebiz  Indemnification  Amount,
owed by Ebiz to the LMI Stockholders  pursuant to Section 10.3(a), as determined
by Final Decision.

          "LMI  STOCKHOLDERS"  shall mean (i) holders of LMI Common Stock or LMI
Preferred Stock  immediately  prior to the Effective Time, whose shares of stock
are  converted in the Merger into the right to receive the Merger  Consideration
and (ii) holders of Assumed LMI Debentures at the Effective  Time, who, upon the

                                       36
<PAGE>
conversion of such debentures,  are entitled to receive the Merger Consideration
as provided by Section 1.3 of this Agreement.

          "NET INDEMNIFICATION AMOUNT" shall mean the difference between (i) the
LMI Indemnification Amount and (ii) the Ebiz Indemnification Amount.

          10.2 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE. All
representations,  warranties,  covenants and obligations in this Agreement or in
the  certificates  delivered  pursuant to Sections  6.1(a),  6.1(b),  6.2(a) and
6.2(b) or any other certificate delivered pursuant to this Agreement (other than
the  Certificate  of Merger) will survive  until the  expiration  of all periods
during  which a "NOTICE  OF CLAIM"  may be  submitted  as  provided  in  Section
10.4(a); provided,  however, if any Notice of Claim is submitted within the time
period  provided for the submission  thereof  pursuant to Section  10.4(a),  the
non-survival of any such representation,  warranty, covenant or obligation shall
not affect, terminate or prejudice any Indemnified Claim as to which such Notice
of Claim is timely submitted. The right to indemnification,  payment of Damages,
or  other  remedy  based  on  the  representations,  warranties,  covenants  and
obligations  in  this  Agreement  will  not be  affected  by  any  investigation
conducted  with  respect  to, or any  knowledge  acquired  or  capable  of being
acquired,  whether  before or after the execution and delivery of this Agreement
or the Closing Date, with respect to the accuracy of or compliance with any such
representation  or warranty,  or the  performance of or compliance with any such
covenant or obligation.

          10.3   INDEMNIFICATION   AFTER   EFFECTIVE  TIME.  If  the  Merger  is
consummated pursuant to this Agreement,  the indemnification  provisions of this
Article 10 shall be effective immediately after the Effective Time:

          (a)  INDEMNIFICATION  OF LMI  STOCKHOLDERS.  In  accordance  with  the
procedures  and subject to the  limitations  set forth in Sections 10.4 and 10.5
below, Ebiz shall defend,  indemnify and hold harmless the LMI Stockholders from
and against any Damages arising, directly or indirectly,  from and in connection
with (a) any inaccuracy or breach of any representation or warranty made by Ebiz
in this  Agreement  or in any  certificate  delivered  by Ebiz  pursuant to this
Agreement  (except the  Certificate  of  Merger),  or (b) any failure by Ebiz to
perform or comply with any covenant or obligation of Ebiz in this Agreement.

          (b)  INDEMNIFICATION  OF EBIZ. In accordance  with the  procedures and
subject to the  limitations  set forth in Sections 10.4 and 10.5 below,  the LMI
Stockholders shall defend, indemnify and hold harmless Ebiz from and against any
Damages  arising,  directly or indirectly,  from and in connection  with (a) any
inaccuracy  or  breach of any  representation  or  warranty  made by LMI in this
Agreement or in any  certificate  delivered  by LMI  pursuant to this  Agreement
(except  the  Certificate  of  Merger),  or (b) any failure by LMI to perform or
comply with any covenant or obligation of LMI in this Agreement.

          (c) INTENDED THIRD PARTY  BENEFICIARIES.  The provisions  contained in
this  Article 10 are  intended to benefit  the LMI  Stockholders,  provided  the
rights and  remedies of the LMI  Stockholders  under this Article 10 may only be
exercised by or on their behalves by the LMI Designated Representative,  and are
subject to the limitations and conditions set forth in this Article 10. The Ebiz
shareholders shall not constitute third party beneficiaries under this Agreement
and shall have no right to enforce any right or remedy hereunder.

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<PAGE>
          (d)  EXCLUSIVE  REMEDIES.  After  the  Effective  Time,  the  remedies
provided in this Article 10 shall be the sole and exclusive  remedies  available
to LMI, the LMI Stockholders  and Ebiz with respect to the matters  described in
Sections 10.3(a) or 10.3(b) of this Agreement.

          10.4 LIMITATIONS ON INDEMNIFICATION OBLIGATIONS.

          (a) TIME LIMIT TO ASSERT CLAIM. All Indemnification Claims held by the
LMI  Stockholders or Ebiz shall expire and be of no force or effect unless:  (i)
in the case of the LMI Stockholders,  the LMI Designated  Representative submits
to the Ebiz Designated Representative a Notice of Claim meeting the requirements
set forth in this  subsection (a) within 9 months after the Effective  Time, or,
if later,  within 30 days  after the Ebiz  Designated  Representative  submits a
Notice of Claim to the LMI  Designated  Representative;  and (ii) in the case of
Ebiz,  the  Ebiz  Designated   Representative  submits  to  the  LMI  Designated
Representative  a Notice of Claim  meeting  the  requirements  set forth in this
subsection (a) within 9 months after the Effective Time, or, if later, within 30
days after the LMI  Designated  Representative  submits a Notice of Claim to the
Ebiz Designated  Representative.  To be effective, a Notice of Claim shall be in
writing, signed by the Designated  Representative submitting the Indemnification
Claim, delivered in accordance with Section 11.6 of this Agreement, and specify,
in  general  terms,  the basis for the claim  and the  amount of  Damages  being
claimed.

          (b) DE MINIMUS  CLAIM.  If it is determined by Final Decision that the
Net Indemnification  Amount is less than $250,000.00,  then no person shall have
any obligation to any other person under Section 10.3,  and the Escrowed  Shares
shall be transferred to the LMI Stockholders pursuant to Section 10.4(f) of this
Agreement.  If the Net Indemnification Amount is greater than $250,000.00,  then
the party  prevailing  under any Final Decision shall be entitled to recover its
full Indemnification  Amount, subject to any other limitations set forth in this
Article 10, including,  without limitation,  Sections 10.4(c) and (e) hereof, it
being intended that such Indemnification  Amount shall be payable from the first
dollar.

          (c) OFFSET OF CLAIMS.  If it is determined by Final  Decision that the
Ebiz Indemnification Amount is greater than the LMI Indemnification Amount, then
the LMI Indemnification  Amount shall be offset against the Ebiz Indemnification
Amount,  the LMI Stockholders  shall not be entitled to any recovery  whatsoever
with respect to their Indemnification Claims, and Ebiz shall only be entitled to
recover with respect to its Indemnification Claims an amount equal to the excess
of the Ebiz Indemnification Amount over the LMI Indemnification Amount. If it is
determined by Final Decision that the LMI Indemnification Amount is greater than
the Ebiz Indemnification  Amount, then the Ebiz Indemnification  Amount shall be
offset against the LMI Indemnification Amount, Ebiz shall not be entitled to any
recovery  whatsoever  with respect to its  Indemnification  Claims,  and the LMI
Stockholders   shall  only  be  entitled  to  recover   with  respect  to  their
Indemnification  Claims an amount equal to the excess of the LMI Indemnification
Amount over the Ebiz Indemnification Amount.

          (d) DUE DATE.  All  amounts  which  become  payable  pursuant  to this
Article 10 shall be due and payable on the Due Date.

          (e) INDEMNIFICATION CAP.  Notwithstanding  anything in this Section 10
to the contrary,  neither the LMI  Stockholders,  as a group, nor Ebiz, shall be
entitled to any recovery in excess of the Indemnification Cap.

                                       38
<PAGE>
          (f) ESCROW.  The Escrowed  Shares,  when  initially  issued,  shall be
issued to the Escrow Agent as nominee of the LMI Stockholders, such shares to be
deposited in an escrow account.  The Escrowed Shares shall be allocated  against
the  number of shares of Ebiz  Common  Stock to which  each LMI  Stockholder  is
entitled on a pro rata basis in accordance  with the relative  Applicable  Stock
Percentage  of each LMI  Stockholder.  The Escrowed  Shares shall be held by the
Escrow Agent in escrow, and shall be transferred or released by the Escrow Agent
only as  follows.  If no Notice  of Claim is  submitted  by the Ebiz  Designated
Representative to the LMI Designated  Representative  within the applicable time
period  provided  in Section  10.4(a),  then the  Escrow  Agent  shall  promptly
transfer all of the Escrowed Shares to the LMI  Stockholders on a pro rata basis
in  accordance  with  the  relative  Applicable  Stock  Percentage  of each  LMI
Stockholder.  If  a  Notice  of  Claim  is  submitted  by  the  Ebiz  Designated
Representative to the LMI Designated  Representative  within the applicable time
period  provided  in  Section  10.4(a),  then the  Escrow  Agent  shall hold the
Escrowed  Shares until the first to occur of the issuance of a Final Decision or
the waiver and release by Ebiz of the Indemnification Claims to which the Notice
of Claim  relates.  If the Final  Decision  results in Ebiz being entitled to no
payment  pursuant  to  this  Article  10 or if  Ebiz  waives  and  releases  its
Indemnification Claims, then the Escrow Agent shall promptly transfer all of the
Escrowed  Shares to the LMI  Stockholders on a pro rata basis in accordance with
the relative  Applicable Stock Percentage of each LMI Stockholder.  If, however,
pursuant to the Final Decision it is determined  that Ebiz is entitled  pursuant
to this  Article  10 to receive  payment  with  respect  to its  Indemnification
Claims, then the Escrow Agent shall transfer to Ebiz on the Due Date such number
of Escrowed  Shares as have an aggregate Ebiz Share Value equal to the amount of
such payment and shall transfer all of the remaining  Escrowed Shares to the LMI
Stockholders  on a pro rata basis in  accordance  with the  relative  Applicable
Stock Percentage of each LMI Stockholder. Any LMI Stockholder may, but shall not
be required, to redeem any Escrowed Shares allocable to him that are required to
be transferred  to Ebiz pursuant to this  subsection (f) by paying to the Escrow
Agent,  prior to the  transfer  thereof to Ebiz,  the Ebiz  Share  Value of such
Escrowed  Shares.  Any Escrowed Shares that are so redeemed shall be transferred
to the  redeeming  LMI  Stockholder  and the cash paid to redeem  such  Escrowed
Shares shall be paid, in lieu of such shares, to Ebiz.

          (g) NON-RECOURSE OBLIGATIONS. Ebiz's sole recourse with respect to any
amount to which it is entitled to receive from the LMI Stockholders  pursuant to
this Article 10 shall be to the Escrowed Shares.  No LMI Stockholder  shall have
any personal liability to Ebiz whatsoever under this Article 10.

          (h) PAYMENT TO LMI STOCKHOLDERS. Any amount which Ebiz is obligated to
pay to the LMI Stockholders  pursuant to this Article 10 shall be payable to the
LMI Stockholders on a pro rata basis in accordance with the relative  Applicable
Stock  Percentage of each LMI  Stockholder.  At the option of the Board of Ebiz,
each LMI Stockholder shall receive any amount to which it is entitled under this
Article  10 either in cash or in Ebiz  Common  Stock,  valued at the Ebiz  Share
Value.

          10.5 DISPUTE  RESOLUTION  PROCEDURE.  Within the 10 days after the the
first date upon which each Designated  Representative  has submitted a Notice of
Claim to the other, or, if only one Designated  Representative  submits a Notice
of Claim,  within 10 days  after the  expiration  of the last  deadline  for the
submission  of a Notice of Claim  pursuant to Section  10.4(a) (such 10th day is
referred to herein as the "BASE Date"),  the Ebiz Designated  Representative and
the  LMI  Designated   Representative  shall  meet  and  engage  in  good  faith
negotiations to resolve any pending  Indemnification  Claims.  If the Designated
Representatives  cannot  resolve the dispute within 30 days after the Base Date,
the Designated  Representatives shall mediate the dispute in accordance with the

                                       39
<PAGE>
Commercial Mediation Rules of the American Arbitration  Association ("AAA"), but
the  mediation  proceeding  may not  revoke  or  revise  any  provision  of this
Agreement.  If  within  60 days  after  the Base  Date the  matter  has not been
resolved  to  the  satisfaction  of  the  Designated   Representatives,   either
Designated  Representative  may submit the matter to  arbitration  in accordance
with the Commercial Arbitration Rules of the AAA, by a sole arbitrator,  but the
arbitration proceeding may not revoke or revise any provision of this Agreement.
The  arbitrator  selected  shall be an  independent  third  party and shall have
knowledge  and  experience  in the matters  addressed by the claim.  Arbitration
shall be the sole and  exclusive  remedy of the LMI  Stockholders  and Ebiz with
respect to any Indemnification  Claim;  PROVIDED,  that the arbitrator shall not
have the power or  authority  to award  consequential,  incidental  or  punitive
damages.  Unless all the parties to an arbitration otherwise consent in writing,
the  location of the  arbitration  hearings  and the place of entry of the award
shall be in Phoenix,  Arizona. The parties consent to exclusive jurisdiction of,
and agree that sole venue will lie in, the state and  federal  courts in Arizona
or the  state  of the  otherwise  agreed  location  for any  allowable  judicial
proceeding relating to any arbitration under this Agreement,  including entry of
a judgment on the award.  The  arbitration  award shall be final and binding and
shall not be reviewable in any court on any grounds except corruption,  fraud or
undue  means  of a  party  or  for  evident  partiality  or  corruption  of  the
arbitrator.  The parties intend to eliminate all other court review of the award
and the arbitration  proceedings.  Except for a proceeding to enforce or confirm
an award or except for a  proceeding  brought by all  parties to the  dispute to
vacate  or  modify  an  award,  the  initiation  of  any  suit  relating  to  an
Indemnification Claim that is arbitrable under this Agreement shall constitute a
material breach of this Agreement.

          10.6  EXERCISE OF RIGHTS WITH RESPECT TO ESCROWED  SHARES.  During the
period the Escrowed Shares are held in escrow pursuant to Section  10.4(f),  the
LMI Stockholders shall be entitled to exercise the voting rights with respect to
such shares in proportion to their relative  Applicable Stock  Percentages.  The
LMI Stockholders shall also be entitled to any dividends or other  distributions
with respect to the Escrowed Shares in such proportions.

                                   ARTICLE 11
                                  MISCELLANEOUS

          11.1 ENTIRE AGREEMENT.  This Agreement, and the exhibits and schedules
attached hereto,  and the agreements  contemplated by this Agreement contain the
entire  agreement  among  the  parties  and  supersede  all  prior   agreements,
arrangements and understandings relating to the subject matter hereof. There are
nor written or oral agreements,  understandings,  representations  or warranties
between the parties other than those set forth or referred to in this Agreement.

          11.2  EXPENSES.  All legal and other  costs and  expenses  incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the  party  incurring  such  costs  and  expenses.  Notwithstanding  the
foregoing,  if this  Agreement  is  terminated  by a party  (the  "Non-breaching
Party") as a result of a  material  breach by the other  party  (the  "Breaching
Party") of its covenants or agreements  contained herein or the  representations
and  warranties  made by it herein,  the  Breaching  Party shall  reimburse  the
Non-breaching   Party  for  all  reasonable   out-of-pocket  fees  and  expenses
(including,  without  limitation,  fees and expenses of counsel and accountants)
incurred in connection with the negotiation, preparation and performance of this
Agreement and the transactions  contemplated  hereby. Such payment shall be made
by the Breaching Party within 5 business days of receipt of  documentation  from
the Non-breaching Party in reasonable detail supporting the amount of such costs
and  expenses.  The remedies set forth in this Section 11.2 shall be in addition
to any other rights and remedies allowed by law.

                                       40
<PAGE>
          11.3 ATTORNEYS FEES.  Notwithstanding Section 11.2 above, in the event
of any  proceeding  to enforce this  Agreement,  the  prevailing  party shall be
entitled to receive from the losing  party all  reasonable  costs and  expenses,
including the  reasonable  fees of  attorneys,  accountants  and other  experts,
incurred by the prevailing party in investigating and prosecuting (or defending)
such action at trial or upon any appeal.

          11.4  SECTION  HEADINGS.   The  section  headings  contained  in  this
Agreement  are for  reference  purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.

          11.5  ASSIGNMENT.  This  Agreement  shall not be assigned by any party
without the written  consent of the other parties and any  attempted  assignment
without such written consent shall be null and void and without legal effect.

          11.6  NOTICES.  All  notices  hereunder  shall be  deemed  given if in
writing  and  delivered  personally  or sent  by  telex,  telegram,  telecopier,
registered mail or certified mail (return  receipt  requested) to the parties at
the  addresses  below (or at such other  addresses as shall be specified by like
notice).  Any notice,  however  given,  shall be effective five days after it is
sent.

                  If to Ebiz:               Ebiz Enterprises, Inc.
                                            15695 North 83rd Way
                                            Scottsdale, AZ  85260
                                            Attn:  Jeffrey I. Rassas
                                            Fax:  480-778-1001

                  With a copy to:           Thomas J. Morgan
                                            Lewis and Roca LLP
                                            40 North Central Avenue
                                            Phoenix, Arizona 85004
                                            Fax:  602-734-3911

                  If to LMI:                LinuxMall.com, Inc.
                                            13750 East Rice Place
                                            Suite 100
                                            Aurora, Colorado 80015
                                            Attn:  David Shaw
                                            Fax:  303-699-2793

                  With a copy to:           Garth B. Jensen
                                            Holme Roberts & Owen LLP
                                            1700 Lincoln St., Suite 4100
                                            Denver, Colorado 80203
                                            Fax:  303-866-0200

          11.7 GOVERNING LAW. This Agreement  shall be governed by and construed
in accordance  with the laws of the State of Arizona  without regard to conflict
of law principles.

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<PAGE>
          11.8 EQUITABLE REMEDIES.  The parties acknowledge that the remedies at
law may be inadequate to protect against any default  hereunder,  and consent to
the granting of injunctive  relief or other forms of equitable relief by a court
of  competent  jurisdiction  or a  similar  judicial  body,  whether  temporary,
preliminary or final, whether or not actual damages can be shown.

          11.9 NUMBER OF DAYS.  In computing  the number of days for purposes of
this  Agreement,  all days will be  counted,  including  Saturdays,  Sundays and
holidays; provided, however, that if the final day of any time period falls on a
Saturday,  Sunday or day that is a legal  holiday in the State of Arizona,  then
the final day will be deemed to be the next day that is not a  Saturday,  Sunday
or day that is a legal holiday in the State of Arizona.

          11.10  PROVISIONS  SEVERABLE.  The  provisions  of this  Agreement are
independent of and severable from each other,  and no provision will be affected
or rendered  invalid or  unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.
Further, if a court of competent  jurisdiction  determines that any provision of
this Agreement is invalid or unenforceable as written,  the court may interpret,
construe,  rewrite or revise such  provision,  to the fullest  extent allowed by
law, so as to make it valid and  enforceable,  consistent with the intent of the
parties hereto.

          11.11  CONSTRUCTION.  The parties hereto hereby  acknowledge and agree
that each party has participated in the drafting of this Agreement and that this
Agreement  has  been,  to the  extent  it was felt  necessary,  reviewed  by the
respective   legal  counsel  for  the  parties  hereto  and  that  the  rule  of
construction to the effect that any  ambiguities are to be resolved  against the
drafting party will not be applied to the  interpretation of this Agreement.  No
inference  in favor of, or  against,  any party will be drawn from the fact that
one party has drafted any portion hereof.

          11.12  HEADINGS.  The  headings  contained in this  Agreement  are for
convenience  only and will not affect  the  meaning  or  interpretation  of this
Agreement.

          11.13  COUNTERPARTS.  This  Agreement may be executed in any number of
counterparts,  each of which will be deemed to be an  original  as  against  any
party whose signature appears thereon, and all of which will together constitute
one and the same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, bears the signatures of all
of  the  parties   reflected  hereon  as  the  signatories.   Any  photocopy  or
telefacsimilie of this Agreement,  with all signatures reproduced on one or more
sets of signature  pages,  will be considered  for all purposes as if it were an
executed counterpart of this Agreement.

          11.14 RECITALS,  SCHEDULES AND EXHIBITS.  The recitals,  schedules and
exhibits  referred  to in this  Agreement  shall  be  construed  with and are an
integral part of this Agreement and are incorporated herein by this reference.

                                       42
<PAGE>
          IN WITNESS  WHEREOF,  this  Agreement has been executed by each of the
parties as of the day and year first above written.

                                        EBIZ:

                                        EBIZ ENTERPRISES, INC.


                                        By: /s/ Jeffrey I. Rassas
                                           -------------------------------------
                                           Jeffrey I. Rassas
                                           Chief Executive Officer



                                        MERGER SUB:


                                        By: /s/ Jeffrey I. Rassas
                                           -------------------------------------
                                           President

                                        LMI:

                                        LINUXMALL.COM, INC.


                                        By: /s/ David Shaw
                                           -------------------------------------
                                           David Shaw
                                           Chief Executive Officer

                                       43
<PAGE>
                            EXHIBIT AND SCHEDULE LIST

         Exhibit A             Form of Certificate of Merger

         Exhibit B             Form of Employment Agreement

         Exhibit C             Form of Shareholder Voting Agreement

         Exhibit D             Form of Registration Rights Agreement

         Exhibit E             Form of Lock-Up Agreement

         Exhibit F             Form of Opinion of Holme Roberts & Owen LLP

         Exhibit G             Form of Opinion of Lewis and Roca LLP

         Exhibit H             Form of Compensation Agreement


         Schedule 3.1(a)       LMI Jurisdictions of Qualification

         Schedule 3.1(b)       LMI Interests in Other Business Entities

         Schedule 3.3          LMI Approvals and Consents

         Schedule 3.5          LMI Options, Warrants and Convertible Securities

         Schedule 3.6(a)       LMI Financial Statements

         Schedule 3.6(b)       LMI Additional Liabilities

         Schedule 3.9          LMI Adverse Changes and Events

         Schedule 3.10         LMI Defaults

         Schedule 3.11         LMI Litigation

         Schedule 3.12(a)      LMI Plans

         Schedule 3.12(g)      LMI Employee Contracts, Etc.

         Schedule 3.14         LMI Material Contracts and Insurance Policies

         Schedule 3.15(e)      LMI Taxes

         Schedule 3.15(h)      LMI Certain Tax Exceptions

         Schedule 3.15(j)      LMI Certain Tax Elections, Etc.

                                       44
<PAGE>
         Schedule 3.16         LMI Title Defects

         Schedule 3.18(b)      LMI Intellectual Property

         Schedule 4.1(a)       Ebiz Jurisdictions of Qualification

         Schedule 4.1(b)       Ebiz Subsidiaries

         Schedule 4.3          Ebiz Approvals and Consents

         Schedule 4.6          Ebiz Options, Warrants and Convertibles

         Schedule 4.7(a)       Ebiz Financial Statements

         Schedule 4.7(b)       Ebiz Additional Liabilities

         Schedule 4.10         Ebiz Adverse Changes and Events

         Schedule 4.11         Ebiz Defaults

         Schedule 4.12         Ebiz Litigation

         Schedule 4.13(a)      Ebiz Plans

         Schedule 4.13(g)      Ebiz Employee Contracts

         Schedule 4.15         Ebiz Material Contracts and Insurance Policies

         Schedule 4.16(e)      Ebiz Taxes due or unfiled or extended

         Schedule 4.16(h)      Ebiz Certain Tax Exceptions

         Schedule 4.16(j)      Ebiz Certain Tax Elections, Etc.

         Schedule 4.17         Ebiz Encumbrances

         Schedule 4.19(b)      Ebiz Intellectual Property

                                       45