<PAGE>   1
                                 Exhibit 10.38

                                TABLE OF CONTENTS
<TABLE>
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<S>               <C>                                                                              <C>
ARTICLE I THE MERGER.................................................................................1

         1.1      The Merger.........................................................................1
         1.2      Effective Time.....................................................................1
         1.3      Effect of the Merger...............................................................2
         1.4      Certificate of Incorporation and Bylaws............................................2
         1.5      Directors and Officers.............................................................2
         1.6      Effect of Merger on the Capital Stock of the Constituent Corporations..............2
         1.7      Surrender of Certificates..........................................................4
         1.8      No Further Ownership Rights in Company Common Stock................................5
         1.9      Lost, Stolen or Destroyed Certificates.............................................6
         1.10     Taking of Necessary Action; Further Action.........................................6

ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................................6

         2.1      Organization of the Company........................................................6
         2.2      Company Capital Structure..........................................................7
         2.3      Authority..........................................................................8
         2.4      No Conflict........................................................................8
         2.5      Consents...........................................................................9
         2.6      Company Financial Statements.......................................................9
         2.7      No Undisclosed Liabilities........................................................10
         2.8      No Changes........................................................................10
         2.9      Tax Matters.......................................................................12
         2.10     Restrictions on Business Activities...............................................15
         2.11     Title of Properties; Absence of Liens and Encumbrances; Condition of Equipment....15
         2.12     Intellectual Property.............................................................16
         2.13     Agreements, Contracts and Commitments.............................................19
         2.14     Interested Party Transactions.....................................................20
         2.15     Governmental Authorization........................................................21
         2.16     Litigation........................................................................21
         2.17     Accounts Receivable...............................................................21
         2.18     Accounts Payable..................................................................21
         2.19     Minute Books......................................................................22
         2.20     Environmental Matters.............................................................22
         2.21     Brokers' and Finders' Fees; Third Party Expenses..................................23
         2.22     Employee Benefit Plans and Compensation...........................................23
         2.23     Insurance.........................................................................26
         2.24     Compliance with Laws..............................................................26
</TABLE>


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                               TABLE OF CONTENTS
                                  (continued)

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         2.25     Warranties; Indemnities...........................................................27
         2.26     Complete Copies of Materials......................................................27
         2.27     Representations Complete..........................................................27

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER.......................................27

         3.1      Liens and Encumbrances............................................................27
         3.2      Title.............................................................................27
         3.3      Authorization.....................................................................27
         3.4      Ownership and Rights..............................................................28

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.........................................28

         4.1      Organization, Standing and Power..................................................28
         4.2      Authority.........................................................................28
         4.3      Capital Structure.................................................................28
         4.4      No Conflict.......................................................................29
         4.5      Consents..........................................................................29
         4.6      SEC Documents; Parent Financial Statements........................................29

ARTICLE V ADDITIONAL AGREEMENTS.....................................................................30

         5.1      Registration Rights Agreement.....................................................30
         5.2      Restrictions on Transfer..........................................................30
         5.3      Access to Information.............................................................30
         5.4      Confidentiality...................................................................31
         5.5      Expenses..........................................................................31
         5.6      Reasonable Efforts................................................................31
         5.7      Notification of Certain Matters...................................................31
         5.8      Additional Documents and Further Assurances.......................................32
         5.9      Employee Benefits.................................................................32
         5.10     Employment Offers.................................................................32
         5.11     Removal of Liens..................................................................32
         5.12     Stockholder List..................................................................32

ARTICLE VI SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION..............................32

         6.1      Survival of Representations, Warranties and Covenants.............................32
         6.2      Recovery For Losses...............................................................33

ARTICLE VII GENERAL PROVISIONS......................................................................33

         7.1      Notices...........................................................................33
         7.2      Interpretation....................................................................35
</TABLE>

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                               TABLE OF CONTENTS
                                  (continued)

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         7.3      Counterparts......................................................................35
         7.4      Entire Agreement; Assignment......................................................35
         7.5      Severability......................................................................35
         7.6      Other Remedies....................................................................35
         7.7      Governing Law.....................................................................35
         7.8      Rules of Construction.............................................................36
</TABLE>

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<PAGE>   4


         THIS AGREEMENT AND PLAN OF REORGANIZATION (the "AGREEMENT") is made and
entered into as of November 8, 2000 by and among XCare.net, Inc., a Delaware
corporation ("PARENT"), AX Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Parent ("SUB"), United/HealthScope, Inc. d/b/a Advica
Health Resources, a Delaware corporation, (the "COMPANY") and AHR Seller Group,
LLC, a Delaware limited liability company (the "STOCKHOLDER"). The Stockholder
is a party to this Agreement for purposes of Article III, V and VIII only.

                                    RECITALS

         A. The Boards of Directors of each of Parent, Sub and the Company
believe it is in the best interests of each company and its respective
Stockholder that Parent acquire the Company through the statutory merger of Sub
with and into the Company (the "MERGER") and, in furtherance thereof, have
approved the Merger.

         B. Pursuant to the Merger, among other things, all of the issued and
outstanding capital stock of the Company shall be converted into the right to
receive the consideration set forth herein.

         C. The Company and the Stockholder, on the one hand, and Parent and
Sub, on the other hand, desire to make certain representations, warranties,
covenants and other agreements in connection with the Merger.

         NOW, THEREFORE, in consideration of the mutual agreements, covenants
and other promises set forth herein, the mutual benefits to be gained by the
performance thereof, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged and accepted, the parties
hereby agree as follows:

                                   ARTICLE I
                                   THE MERGER

         1.1 The Merger. At the Effective Time (as defined in Section 1.2
hereof) and subject to and upon the terms and conditions of this Agreement and
the applicable provisions of the General Corporation Law of the State of
Delaware ("DELAWARE LAW"), Sub shall be merged with and into the Company, the
separate corporate existence of Sub shall cease and the Company shall continue
as the surviving corporation and as a wholly-owned subsidiary of Parent. The
surviving corporation after the Merger is sometimes referred to hereinafter as
the "SURVIVING CORPORATION."


         1.2 Effective Time. The date of this Agreement is referred to as the
"CLOSING DATE." On the Closing Date, the parties hereto shall cause the Merger
to be consummated by filing an Agreement of Merger (or like instrument) and the
accompanying officers' certificates, each in substantially the form attached
hereto as Exhibit A, with the Secretary of State of the State of Delaware (the
"AGREEMENT OF MERGER"), in accordance with the applicable provisions of Delaware



<PAGE>   5

Law (the time of acceptance by the Secretary of State of the State of Delaware
of such filing shall be referred to herein as the "EFFECTIVE TIME").


         1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, except as otherwise agreed to pursuant to the terms of this
Agreement, all the property, rights, privileges, powers and franchises of the
Company and Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Sub shall become the debts,
liabilities and duties of the Surviving Corporation.

         1.4 Certificate of Incorporation and Bylaws.

            (a) Unless otherwise determined by Parent prior to the Effective
Time, the Certificate of Incorporation of Sub, as in effect immediately prior to
the Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation at the Effective Time until thereafter amended in accordance with
Delaware Law and as provided in such Certificate of Incorporation; provided,
however, that at the Effective Time, Article I of the Certificate of
Incorporation of the Surviving Corporation shall be amended and restated in its
entirety to read as follows: "The name of the corporation is Advica Health
Resources, Inc."

            (b) Unless otherwise determined by Parent prior to the Effective
Time, the bylaws of Sub, as in effect immediately prior to the Effective Time,
shall be the bylaws of the Surviving Corporation at the Effective Time until
thereafter amended in accordance with Delaware Law and as provided in the
Certificate of Incorporation of the Surviving Corporation and such bylaws.

         1.5 Directors and Officers.

            (a) Unless otherwise determined by Parent prior to the Effective
Time, the directors of Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation immediately after the Effective Time,
each to hold the office of a director of the Surviving Corporation in accordance
with the provisions of Delaware Law and the Certificate of Incorporation and
bylaws of the Surviving Corporation until their successors are duly elected and
qualified.

            (b) Unless otherwise determined by Parent prior to the Effective
Time, the officers of Sub immediately prior to the Effective Time shall be the
officers of the Surviving Corporation immediately after the Effective Time, each
to hold office in accordance with the provisions of the bylaws of the Surviving
Corporation.

         1.6 Effect of Merger on the Capital Stock of the Constituent
Corporations.

            (a) DEFINITIONS. For all purposes of this Agreement, the following
terms shall have the following respective meanings:



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<PAGE>   6

                "ADDITIONAL CONSIDERATION" shall mean the amount equal to the
quotient obtained by dividing (x) $400,000 by (y) the Closing Stock Price.

                "AGGREGATE CONSIDERATION" shall mean 70,000 shares of Parent
Common Stock.

                "CLOSING STOCK PRICE" shall mean the average per share closing
sale price of Parent Common Stock as quoted on the Nasdaq National Market for
the ten (10) business days ending immediately prior to December 31, 2001.

                "COMPANY CAPITAL STOCK" shall mean the (i) shares of Company
Common Stock and (ii) shares of Company Preferred Stock.

                "COMPANY COMMON STOCK" shall mean the shares of Common Stock of
the Company.

                "COMPANY PREFERRED STOCK" shall mean the shares of Series A
Preferred Stock of the Company.

                "GAAP" shall mean United States generally accepted accounting
principles consistently applied.

                "KNOWLEDGE" shall mean (i) with respect to the Company, actual
knowledge of the Company's officers and directors and the knowledge that such
person would have obtained of the matter represented after reasonable inquiry
thereof under the circumstances and (ii) with respect to the Stockholder, the
actual knowledge of the Stockholder.

                "MATERIAL ADVERSE EFFECT" shall mean any change, event or effect
that is materially adverse to the business, assets (including intangible assets;
financial or otherwise), results of operations or capitalization of the Company
and its subsidiaries, taken as a whole.

                "PARENT COMMON STOCK" shall mean shares of Common Stock of
Parent.

                "STOCKHOLDER" shall mean each holder of any Company Capital
Stock immediately prior to the Closing Date.

                "TOTAL OUTSTANDING SHARES" shall be the aggregate number of
shares of Company Common Stock (including any other rights convertible into, or
exercisable or exchangeable for, shares of Company Common Stock on an
as-converted, exercised or exchanged basis) issued and outstanding immediately
prior to the Effective Time.


            (b) Conversion of Company Common Stock. At the Effective Time, each
outstanding share of the Company Common Stock (assuming conversion of all
Company Preferred Stock), upon the terms and subject to the conditions set forth
below and throughout this Agreement,



                                      -3-
<PAGE>   7

will be canceled and extinguished and be converted automatically into the right
to receive such number of shares of Parent Common Stock equal to the quotient
obtained by dividing (x) Aggregate Consideration by (y) the Total Outstanding
Shares, upon the terms and subject to conditions set forth in this Section 1.6
and throughout this Agreement. The Aggregate Consideration shall be
appropriately adjusted to reflect fully the effect of any stock split, reverse
stock split, stock dividend, reorganization, recapitalization or like change
with respect to Parent Common Stock occurring after the date hereof and prior to
the Effective Time.

            (c) Payment of Additional Consideration. If Medical Pathways
Management remains a customer of the Surviving Corporation beyond December 31,
2001 and the Surviving Corporation has collected revenues from Medical Pathways
Management of not less than $2,000,000 for the twelve (12) month period ending
December 31, 2001, Parent shall pay the Additional Consideration to the
Stockholder no later than January 31, 2002. Parent agrees to use commercially
reasonable efforts to retain Medical Pathways Management as a customer.

            (d) Capital Stock of Sub. Each share of Common Stock of Sub issued
and outstanding immediately prior to the Effective Time shall be converted into
and exchanged for one validly issued, fully paid and nonassessable share of
Common Stock of the Surviving Corporation. Each stock certificate of Sub
evidencing ownership of any such shares shall continue to evidence ownership of
such shares of capital stock of the Surviving Corporation.

            (e) Fractional Shares. No fraction of a share of Parent Common Stock
will be issued, but in lieu thereof, the Stockholder shall be entitled to
receive from Parent an amount of cash (rounded to the nearest whole cent) equal
to the product of (i) such fraction, multiplied by (ii) the Closing Stock Price.

         1.7 Surrender of Certificates.

            (a) Exchange Agent. Gary Scherping, Vice President of Finance of
Parent, shall serve as the exchange agent (the "EXCHANGE AGENT") for the Merger.

            (b) Parent to Provide Parent Common Stock. Promptly after the
Effective Time, but in any event not later than immediately following written
confirmation of approval of the Merger by the Secretary of State of the State of
Delaware, Parent shall make available to the Exchange Agent for exchange in
accordance with this Article I the shares of Parent Common Stock issuable
pursuant to Section 1.6 in exchange for outstanding shares of Company Common
Stock.

            (c) Exchange Procedures. On the Closing Date, the Stockholder will
surrender the certificate representing its shares of Company Common Stock (the
"COMPANY STOCK CERTIFICATES") to the Exchange Agent for cancellation together
with a letter of transmittal in such form and having such provisions that Parent
may reasonably request. Upon surrender of the Company Stock Certificate for
cancellation to the Exchange Agent, or such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly completed
and validly executed in accordance with the instructions thereto, subject to the
terms of Section 1.7(e) hereof, the



                                      -4-
<PAGE>   8

holder of such Company Stock Certificate shall be entitled to receive from the
Exchange Agent in exchange therefor a certificate representing the number of
whole shares of Parent Common Stock to which such holder is entitled pursuant to
Section 1.6, and the Company Stock Certificate so surrendered shall be canceled.
Until so surrendered, each outstanding Company Stock Certificate will be deemed
for all corporate purposes, to evidence only the ownership of the number of full
shares of Parent Common Stock into which such shares of Company Common Stock
shall have been so converted.

            (d) Distributions With Respect to Unexchanged Shares. No dividends
or other distributions declared or made after the Effective Time with respect to
Parent Common Stock with a record date after the Effective Time will be paid to
the holder of any unsurrendered Company Stock Certificate with respect to the
shares of Parent Common Stock represented thereby until the holder of record of
such Company Stock Certificate shall surrender such Certificate. Subject to
applicable law, following surrender of any such Company Stock Certificate, there
shall be paid to the record holder of the certificates representing whole shares
of Parent Common Stock issued in exchange therefor, without interest, at the
time of such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to such whole
shares of Parent Common Stock.

            (e) Transfers of Ownership. If any certificate for shares of Parent
Common Stock is to be issued in a name other than that in which the certificate
surrendered in exchange therefor is registered, it will be a condition of the
issuance thereof that the certificate so surrendered will be properly endorsed
and otherwise in proper form for transfer and that the person requesting such
exchange will have paid to Parent or any agent designated by it any transfer or
other taxes required by reason of the issuance of a certificate for shares of
Parent Common Stock in any name other than that of the registered holder of the
certificate surrendered, or established to the satisfaction of Parent or any
agent designated by it that such tax has been paid or is not payable.

            (f) No Liability. Notwithstanding anything to the contrary in this
Section 1.7, neither the Exchange Agent, the Surviving Corporation nor any party
hereto shall be liable to a holder of shares of Company Common Stock for any
amount properly paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.

         1.8 No Further Ownership Rights in Company Common Stock. The shares of
Parent Common Stock paid in respect of the surrender for exchange of shares of
Company Common Stock in accordance with the terms hereof, shall be deemed to be
full satisfaction of all rights pertaining to such shares of Company Common
Stock, and there shall be no further registration of transfers on the records of
the Surviving Corporation of shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Company Stock Certificates are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided in this Article I.

         1.9 Lost, Stolen or Destroyed Certificates. In the event any
certificates evidencing shares of Company Common Stock shall have been lost,
stolen or destroyed, the Exchange Agent shall



                                      -5-
<PAGE>   9

issue in exchange for such lost, stolen or destroyed certificates, upon the
making of an affidavit of that fact by the holder thereof, such amount, if any,
as may be required pursuant to Section 1.6 hereof; provided, however, that
Parent may, in its discretion and as a condition precedent to the issuance
thereof, require the Stockholder who is the owner of such lost, stolen or
destroyed certificates to deliver a bond in such amount as it may reasonably
direct against any claim that may be made against Parent or the Exchange Agent
with respect to the certificates alleged to have been lost, stolen or destroyed.

         1.10 Taking of Necessary Action; Further Action. If at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company, Parent, Sub, and the officers and directors of
the Company, Parent and Sub are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action.

                                   ARTICLE II
                        REPRESENTATIONS AND WARRANTIES OF
                                  THE COMPANY

     The Company hereby represents and warrants to Parent and Sub, subject to
such exceptions as are specifically disclosed in the disclosure letter
(referencing the appropriate section and paragraph numbers) supplied by the
Company to Parent (the "DISCLOSURE SCHEDULE") and dated as of the date hereof,
that on the date hereof and as of the Effective Time as though made at the
Effective Time as follows; provided, that the representations and warranties
made as of a specific date will be true and correct as of such date.

     2.1 Organization of the Company.

         (a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. The Company has the
corporate power to own its properties and to carry on its business as currently
conducted and as currently contemplated to be conducted. The Company conducts
its business through wholly-owned subsidiaries that are duly qualified or
licensed to do business and in good standing in each jurisdiction in which the
business of the Company is conducted. The Company has delivered a true and
correct copy of its Certificate of Incorporation and bylaws, each as amended to
date and in full force and effect on the date hereof, to Parent. Section 2.1(a)
of the Disclosure Schedule lists the directors and officers of the Company. The
operations now being conducted by the Company are not now and have never been
conducted by the Company under any other name (other than as listed in Section
2.1(a) of the Disclosure Schedule).


         (b) The Company's wholly-owned subsidiary, Advica Health Management,
Inc., (d/b/a Advica Health Resources) (the "NY SUB"), is a corporation duly
organized, validly existing and in good standing under the laws of New York. The
Company also has the following wholly-owned subsidiaries: (i) Advica of Long
Island, Inc., a New York corporation, (ii) HealthScope of



                                      -6-
<PAGE>   10

Connecticut, Inc., a Connecticut corporation, (iii) HealthScope Network, Inc., a
New York corporation and (iv) HealthScope IPA, Inc., a New York corporation
(together with the NY Sub, the "SUBSIDIARIES"). The Subsidiaries are each a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation. The Company owns all outstanding capital stock of
the Subsidiaries and there are no other rights to acquire any capital stock of
any of the Subsidiaries. Each Subsidiaries' capitalization is set forth on
Section 2.1(b) of the Disclosure Schedule. Each Subsidiary has the corporate
power to own its properties and to carry on its business as currently conducted
and as currently contemplated to be conducted. Each Subsidiary is duly qualified
or licensed to do business and in good standing as a foreign corporation in each
jurisdiction in which it conducts business. The Company has delivered a true and
correct copies of the incorporation documents and bylaws of each of the
Subsidiaries to Parent. All of the officers and directors of the Company and the
Subsidiaries have resigned as of the Effective Time.

     2.2 Company Capital Structure.

         (a) The authorized capital stock of the Company consists of (i)
2,000,000 shares of Class A Common Stock, of which 293,638 shares are issued and
outstanding as of the date hereof and all of which have been issued to the
Stockholder, (ii) 150,000 shares of Class B Common Stock, none of which are
issued and outstanding and (iii) 5,000,000 shares of Company Preferred Stock,
708,957 shares of which are designated Series A Preferred Stock and none of
which are issued and outstanding as of the date hereof. All outstanding shares
of Company Capital Stock are duly authorized, validly issued, fully paid and
non-assessable and not subject to preemptive rights created by statute, the
Certificate of Incorporation or bylaws of the Company, or any agreement to which
the Company is a party or by which it is bound. All outstanding shares of
Company Capital Stock have been issued or repurchased (in the case of shares
that were outstanding and repurchased by the Company) in compliance with all
applicable federal, state, foreign or local statutes, laws, rules or
regulations, including federal and state securities laws. The Company has not,
and will not have, suffer or incur any, liability (contingent or otherwise) or
Loss (as defined in Section 6.2(a)) relating to or arising out of the issuance
or repurchase of any Company Capital Stock. The designations, powers,
preferences, rights, qualifications, limitations and restrictions in respect of
the Company Preferred Stock are as set forth in the Company's Certificate of
Incorporation. There are not outstanding any adjustments made or required to be
made to the conversion rates applicable to Company Preferred Stock set forth in
the Company's Certificate of Incorporation. There are no declared or accrued but
unpaid dividends with respect to any shares of Company Common Stock. The Company
has no other capital stock authorized, issued or outstanding. The Stockholder
has voted to approve the Merger.

         (b) Except as contained in Section 2.2(b) of the Disclosure Schedule,
the Company and the Subsidiaries have never effectuated or maintained any stock
option plan or other plan providing for equity compensation of any person. As of
the Effective Time, there are no options, warrants, calls, rights, commitments
or agreements of any character, written or oral, to which the Company or any of
the Subsidiaries is a party or by which it is bound obligating the Company or
any of the Subsidiaries to issue, deliver, sell, repurchase or redeem, or cause
to be



                                      -7-
<PAGE>   11

issued, delivered, sold, repurchased or redeemed, any shares of the capital
stock of the Company or any of the Subsidiaries or obligating the Company or any
of the Subsidiaries to grant, extend, accelerate the vesting of, change the
price of, otherwise amend or enter into any such option, warrant, call, right,
commitment or agreement. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or other similar rights with
respect to the Company or any of the Subsidiaries. Except as contemplated
hereby, there are no voting trusts, proxies, or other agreements or
understandings with respect to the voting stock of the Company. As a result of
the Merger, Parent will be the sole record and beneficial holder of all issued
and outstanding Company Common Stock and all rights to acquire or receive any
shares of Company Common Stock, whether or not such shares of Company Common
Stock are outstanding.


     2.3 Authority. The Company has all requisite power and authority to enter
into this Agreement and any Related Agreements (as hereinafter defined in this
Section 2.3) to which they are party and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Company and no
further action is required on the part of the Company to authorize the Agreement
and any Related Agreements to which it is a party and the transactions
contemplated hereby and thereby, subject only to the approval of this Agreement
and the transactions contemplated hereby by the Stockholder. This Agreement and
the Merger have been approved by the Board of Directors of the Company. This
Agreement and each of the Related Agreements to which the Company and/or the
Stockholder is a party has been duly executed and delivered by the Company and
the Stockholder, as the case may be, and assuming the due authorization,
execution and delivery by the other parties hereto and thereto, constitute the
valid and binding obligations of the Company and the Stockholder, enforceable
against each such party in accordance with their respective terms, except as
such enforceability may be subject to the laws of general application relating
to bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies. For all
purposes of this Agreement, the term "RELATED AGREEMENTS" shall mean the
Agreement of Merger and any other agreements to which the Company is a party
that it enters into in order to consummate the transactions contemplated
therein.

     2.4 No Conflict. The execution and delivery by the Company and the
Stockholder of this Agreement and any Related Agreement to which the Company
and/or the Stockholder is a party, and the consummation of the transactions
contemplated hereby and thereby, will not conflict with or result in any default
under (with or without notice or lapse of time, or both) or give rise to a right
of termination, cancellation, modification or acceleration of any obligation or
loss of any benefit under (any such event, a "CONFLICT") (i) any provision of
the certificate of incorporation or bylaws of the Company or any of the
Subsidiaries, (ii) any mortgage, indenture, lease, contract, covenant or other
agreement, instrument or commitment, permit, concession, franchise or license
(each a "CONTRACT" and collectively the "CONTRACTS") to which the Company or any
of the Subsidiaries or any of its properties or assets (including intangible
assets), or to which any of the Stockholder is subject or (iii) any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to the
Company or any of the Subsidiaries or any of its properties (tangible and
intangible) or assets, or


                                      -8-
<PAGE>   12

applicable to the Stockholder. The Company and the Subsidiaries are in material
compliance with and have not breached or defaulted under, or received notice
that there has been a breach or default under, any of the terms or conditions of
any Contract, nor is the Company aware of any event that would constitute such a
breach or default with the lapse of time, giving of notice or both. Each
Contract is in full force and effect and the Company and Subsidiaries are not
subject to any default thereunder, nor to the Knowledge of the Company is any
party obligated to the Company pursuant to any such Contract subject to any
default thereunder. The Company has obtained, or will obtain prior to the
Effective Time, all necessary consents, waivers and approvals of parties to any
Contract as are required thereunder in connection with the Merger, or for any
such Contract to remain in full force and effect without limitation,
modification or alteration after the Effective Time. Following the Effective
Time, the Company and the Subsidiaries will be permitted to exercise all of
their rights under the Contracts without the payment of any additional amounts
or consideration other than ongoing fees, royalties or payments which the
Company or the Subsidiaries would otherwise be required to pay pursuant to the
terms of such Contracts had the transactions contemplated by this Agreement not
occurred.

     2.5 Consents. No consent, waiver, approval, order or authorization of, or
registration, declaration or filing with any court, administrative agency or
commission or other federal, state, county, local or other foreign governmental
authority, instrumentality, agency or commission (each, a "GOVERNMENTAL ENTITY")
or any third party, including a party to any agreement with the Company (so as
not to trigger any Conflict), is required by or with respect to the Company
and/or the Stockholder in connection with the execution and delivery of this
Agreement and any of the Related Agreements or the consummation of the
transactions contemplated hereby, except for (i) the filing of the Merger
Agreement with the Secretary of State of the State of Delaware, and (ii) the
approval of this Agreement and the transactions contemplated hereby by the
Stockholder.

     2.6 Company Financial Statements. Section 2.6 of the Disclosure Schedule
sets forth (i) the Company's audited financial statements as of December 31,
1999, and the related statements of income, cash flow and Stockholder equity for
the twelve (12) month period ended December 31, 1999 (the "YEAR-END FINANCIALS")
and (ii) the Company's unaudited financial statements as of September 30, 2000,
and the related unaudited statements of income for the nine (9) months ended
September 30, 2000 (collectively, the "INTERIM FINANCIALS," and, together with
the Year-End Financials, collectively, the "FINANCIALS"). The Financials are
correct in all material respects and have been prepared from, and in accordance
with, the books and records of the Company and in accordance with GAAP
consistently applied (except that the Interim Financials do not contain
footnotes and other presentation items that may be required by GAAP). The
Financials present fairly the financial condition and results of operation of
the Company as of and for the periods indicated, subject in the case of the
Interim Financials to normal year-end adjustments, applied in accordance with
the past practices of the Company. The Company's unaudited balance sheet as of
September 30, 2000 is referred to hereinafter as the "CURRENT BALANCE SHEET."



                                      -9-
<PAGE>   13

     2.7 No Undisclosed Liabilities. As of the date of the Current Balance
Sheet, there were no liabilities of a type required by GAAP to be reflected in a
balance sheet that were not so reflected in the Current Balance Sheet.

     2.8 No Changes. Since the date of the Current Balance Sheet, there has not
been, occurred or arisen any:

         (a) amendments or changes to the Certificate of Incorporation or bylaws
of the Company;

         (b) capital expenditure or capital expenditure commitment by the
Company or the Subsidiaries exceeding $10,000 individually or $25,000 in the
aggregate;

         (c) except as set forth in Section 2.8(c) of the Disclosure Schedule,
payment, discharge or satisfaction, in any amount in excess of $10,000 in any
one case, or $25,000 in the aggregate, of any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
payment, discharge or satisfaction in the ordinary course of business of
liabilities reflected or reserved against in the Current Balance Sheet;

         (d) except as set forth in Section 2.8(d) of the Disclosure Schedule,
destruction of, damage to or loss of any material assets or material business or
loss of any material customer of the Company or any of the Subsidiaries;

         (e) claim of wrongful discharge or other unlawful employment practice
or action;

         (f) change in accounting methods or practices (including any change in
depreciation or amortization policies or rates) by the Company or any of the
Subsidiaries other than as required by GAAP;

         (g) change in any election in respect of Taxes (as defined below),
adoption or change in any accounting method in respect of Taxes, agreement or
settlement of any claim or assessment in respect of Taxes, or extension or
waiver of the limitation period applicable to any claim or assessment in respect
of Taxes;

         (h) revaluation by the Company or any of the Subsidiaries of any of
their assets as set forth on the Current Balance Sheet;

         (i) declaration, setting aside or payment of a dividend or other
distribution (whether in cash, stock or property) in respect of any Company
Common Stock or Company Preferred Stock, or any split, combination or
reclassification in respect of any shares of Company Common Stock or Company
Preferred Stock, or any issuance or authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of Company
Common Stock or Company Preferred Stock, or any direct or indirect repurchase,
redemption, or other acquisition by the Company of any shares of Company Common
Stock or Company Preferred Stock (or warrants or




                                      -10-
<PAGE>   14

other rights convertible into, exercisable or exchangeable therefor), except as
set forth in the Exchange Agreement dated as of November 8, 2000 between the
Stockholder and certain other parties (the "EXCHANGE AGREEMENT");

         (j) increase in the salary or other compensation payable or to become
payable by the Company to any of its officers, directors, employees or advisors,
or the declaration, payment or commitment or obligation of any kind for the
payment by the Company of a severance payment, termination payment, bonus or
other additional salary or compensation to any such person, except for
settlements in lieu of contractual termination rights with certain senior
executives and other personnel of the Company;

         (k) other than any contract not involving the license, purchase or sale
of Intellectual Property or Intellectual Property Rights (each as defined in
Section 2.12 hereof) entered into in the ordinary course of business consistent
with past practice involving an amount not in excess of $10,000 individually or
$25,000 in the aggregate, any agreement, contract, covenant, instrument, lease,
license or commitment to which the Company is a party or by which its assets
(including intangible assets) are bound or any termination, extension, amendment
or modification of the terms of any agreement, contract, covenant, instrument,
lease, license or commitment to which the Company is a party or by which its
assets are bound;

         (l) sale, lease or other disposition of any of the material assets or
material properties of the Company or any of the Subsidiaries or any creation of
any security interest in such material assets or material properties, except as
set forth in the Exchange Agreement;

         (m) loan by the Company or any of the Subsidiaries to any person or
entity, incurring by the Company or any of the Subsidiaries of any indebtedness,
guaranteeing by the Company or any of the Subsidiaries of any indebtedness,
issuance or sale of any debt securities of the Company or guaranteeing of any
debt securities of others, except for advances to employees for travel and
business expenses in the ordinary course of business consistent with past
practices;

         (n) waiver or release of any right or claim of the Company or any of
the Subsidiaries, including any write-off or other compromise of any account
receivable of the Company or any of the Subsidiaries;

         (o) except as set forth in Section 2.8(o) of the Disclosure Schedule,
the commencement, settlement, notice or, to the Knowledge of the Company, threat
of any lawsuit or proceeding or other investigation against the Company or any
of the Subsidiaries or their affairs, or any reasonable basis for any of the
foregoing;

         (p) notice of any claim or potential claim of ownership by any person
other than the Company of the Company Intellectual Property (as defined in
Section 2.12 hereof) owned by or developed or created by the Company or of
infringement by the Company of any other person's Intellectual Property (as
defined in Section 2.12 hereof);

                                      -11-
<PAGE>   15

         (q) issuance or sale, or contract to issue or sell, by the Company or
any of the Subsidiaries of any shares of Company Common Stock or the capital
stock of any of the Subsidiaries or securities convertible into, or exercisable
or exchangeable for, shares of Company Common Stock or the capital stock of any
of the Subsidiaries, or any securities, warrants, options or rights to purchase
any of the foregoing, except for issuances of Company Common Stock upon the
exercise thereof;

         (r) (i) license of any Intellectual Property or entering into of any
agreement with respect to the Intellectual Property of any person or entity,
(ii) agreement with respect to the development of any Intellectual Property with
a third party or (iii) material change in pricing or royalties set or charged by
the Company to its customers or licensees or in pricing or royalties set or
charged by persons who have licensed Intellectual Property to the Company;

         (s) agreement or modification to agreement pursuant to which any other
party was granted marketing, distribution, development or similar rights of any
type or scope with respect to any products or technology of the Company, except
for transactions in connection with the modification to the Mpower License
Agreement as set forth in the Letter Agreement between Parent and the NY Sub
dated October 6, 2000;

         (t) hiring or termination of employees of the Company or any of the
Subsidiaries, except as set forth in Section 2.8(t) of the Disclosure Schedule;

         (u) except as set forth in Section 2.8(u) of the Disclosure Schedule,
any material event or condition that has had or is reasonably likely to have a
Material Adverse Effect on the Company or any of the Subsidiaries;

         (v) agreement by the Company or any of the Subsidiaries or any officer
or employees pursuant to which the Company or any of the Subsidiaries are bound
to do any of the things described in the preceding clauses (a) through (u) of
this Section 2.8 (other than negotiations and agreements with Parent and its
representatives regarding or in connection with the transactions contemplated by
this Agreement); or

         (w) except as described in the preceding clauses (a) through (v) of
this Section 2.8, any material transaction (or series of related transactions)
by the Company involving aggregate consideration in excess of $25,000, except in
the ordinary course of business as conducted on that date and consistent with
past practices.

     2.9 Tax Matters.

         (a) Definition of Taxes. For the purposes of this Agreement, the term
"TAX" or, collectively, "TAXES" shall mean (i) any and all federal, state, local
and foreign taxes, assessments and other governmental charges, duties,
impositions and liabilities, including taxes based upon or measured by gross
receipts, income, profits, sales, use and occupation, and value added, ad
valorem, transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes, together



                                      -12-
<PAGE>   16

with all interest, penalties and additions imposed with respect to such amounts,
(ii) any liability for the payment of any amounts of the type described in
clause (i) of this Section 2.9(a) as a result of being a member of an
affiliated, consolidated, combined or unitary group for any period, and (iii)
any liability for the payment of any amounts of the type described in clauses
(i) or (ii) of this Section 2.9(a) as a result of any express or implied
obligation to indemnify any other person or as a result of any obligations under
any agreements or arrangements with any other person with respect to such
amounts and including any liability for taxes of a predecessor entity.

         (b) Tax Returns and Audits.

            (i) As of the Effective Time, the Company will have prepared and
timely filed all required federal, state, local and foreign returns, estimates,
information statements and reports ("RETURNS") relating to any and all Taxes
concerning or attributable to the Company and the Subsidiaries or their
operations and such Returns are true and correct and have been completed in
accordance with applicable law.

            (ii) As of the Effective Time, the Company and the Subsidiaries (A)
will have timely paid all Taxes they are required to pay and withheld with
respect to their employees all federal and state income taxes, Federal Insurance
Contribution Act ("FICA"), Federal Unemployment Tax Act ("FUTA") and other Taxes
required to be withheld, and (B) will have accrued on the Current Balance Sheet
all Taxes attributable to the periods preceding the Current Balance Sheet and
will not have incurred any liability for Taxes for the period commencing after
the date of the Current Balance Sheet and ending immediately prior to the
Effective Time, other than in the ordinary course of business.

            (iii) The Company and the Subsidiaries have not been delinquent in
the payment of any Tax, nor is there any Tax deficiency outstanding, assessed or
proposed against the Company or any of the Subsidiaries, nor has the Company or
any of the Subsidiaries executed any waiver of any statute of limitations on or
extending the period for the assessment or collection of any Tax.

            (iv) No audit or other examination of any Return of the Company or
any of the Subsidiaries is presently in progress, nor has the Company or any of
the Subsidiaries been notified of any request for such an audit or other
examination.

            (v) The Company and the Subsidiaries have no liabilities for unpaid
federal, state, local and foreign Taxes which have not been accrued or reserved
on the Current Balance Sheet, whether asserted or unasserted, contingent or
otherwise, and the Company and the Subsidiaries have not incurred any liability
for Taxes since the date of the Current Balance Sheet other than in the ordinary
course of business.

            (vi) The Company and the Subsidiaries have made available to Parent
or its legal counsel, copies of all foreign, federal, state and local income and
all state and local sales and use Returns filed for all periods since its
inception.



                                      -13-
<PAGE>   17

            (vii) There are (and immediately following the Effective Time there
will be) no liens, pledges, charges, claims, restrictions on transfer,
mortgages, security interests or other encumbrances of any sort (collectively,
"LIENS") on the assets of the Company or any of the Subsidiaries relating to or
attributable to Taxes other than Liens for Taxes not yet due and payable.

            (viii) The Company has no Knowledge of any basis for the assertion
of any claim relating or attributable to Taxes which, if adversely determined,
would result in any Lien on the assets of the Company.

            (ix) None of the Company's assets is treated as "tax-exempt use
property," within the meaning of Section 168(h) of the Code.

            (x) The Company has not filed any consent agreement under Section
341(f) of the Code or agreed to have Section 341(f)(4) of the Code apply to any
disposition of a subsection (f) asset (as defined in Section 341(f)(4) of the
Code) owned by the Company.

            (xi) The Company is not a party to any tax sharing, indemnification
or allocation agreement nor does the Company owe any amount under any such
agreement.

            (xii) The Company's and the Subsidiaries' tax basis in its assets
for purposes of determining its future amortization, depreciation and other
federal income Tax deductions is accurately reflected on the Company's and
Subsidiaries' tax books and records.

            (xiii) Neither the Company nor any of the Subsidiaries have been, at
any time, a "United States Real Property Holding Corporation" within the meaning
of Section 897(c)(2) of the Code.

            (xiv) No adjustment relating to any Return filed by the Company or
any Subsidiary has been proposed formally or, to the Knowledge of the Company,
informally by any tax authority to the Company or any representative thereof.

            (xv) Neither the Company nor any of the Subsidiaries (a) been a
member of an affiliated group (within the meaning of Code ss.1504(a)) filing a
consolidated federal income Tax Return (other than a group the common parent of
which was Company), (b) liability for the Taxes of any person (other than
Company or any of its Subsidiaries) under Treas. Reg. ss. 1.1502-6 (or any
similar provision of state, local or foreign law), as a transferee or successor,
by contract, or otherwise and (c) been a party to any joint venture, partnership
or other agreement that could be treated as a partnership for Tax purposes.

            (xvi) Neither the Company nor any of the Subsidiaries have
constituted either a "distributing corporation" or a "controlled corporation" in
a distribution of stock qualifying for tax-free treatment under Section 355 of
the Code (x) in the two years prior to the date of this Agreement or (y) in a
distribution which could otherwise constitute part of a "plan" or "Series of




                                      -14-
<PAGE>   18

related transactions" (within the meaning of Section 355(e) of the Code) in
conjunction with the Merger.

         (c) Executive Compensation Tax. There is no contract, agreement, plan
or arrangement to which the Company or any of the Subsidiaries is a party,
including, without limitation, the provisions of this Agreement, covering any
employee or former employee of the Company or any of the Subsidiaries, which,
individually or collectively, could give rise to the payment of any amount that
would not be deductible pursuant to Sections 280G, 404 or 162(m) of the Code.


     2.10 Restrictions on Business Activities. There is no agreement
(non-compete or otherwise), commitment, judgment, injunction, order or decree to
which the Company or any of the Subsidiaries is a party or otherwise binding
upon the Company which has or may reasonably be expected to have the effect of
materially prohibiting or impairing any business practice of the Company or any
of the Subsidiaries, any acquisition of property (tangible or intangible) by the
Company or any of the Subsidiaries, the conduct of business by the Company or
otherwise limiting the freedom of the Company or any of the Subsidiaries to
engage in any line of business or to compete with any person. Without limiting
the generality of the foregoing, neither the Company nor any of its Subsidiaries
has entered into any agreement under which the Company or any of its
Subsidiaries is materially restricted from selling, licensing or otherwise
distributing any of its technology or products to or providing services to,
customers or potential customers or any class of customers, in any geographic
area, during any period of time or in any segment of the market.

     2.11 Title of Properties; Absence of Liens and Encumbrances; Condition of
Equipment.

         (a) Neither the Company nor any of its Subsidiaries owns any real
property, nor has it ever owned any real property. Section 2.11(a) of the
Disclosure Schedule sets forth a list of all real property currently leased by
the Company or any of its Subsidiaries, the name of the lessor, the date of the
lease and each amendment thereto and, with respect to any current lease, the
aggregate annual rental payable under any such lease. All such current leases
are in full force and effect, are valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
default or event of default (or event which with notice or lapse of time, or
both, would constitute a default) by the Company or any of its Subsidiaries, or
to the Knowledge of the Company, by any other party.

         (b) The Company and the Subsidiaries have good and valid title to, or,
in the case of leased properties and assets, valid leasehold interests in, all
of its tangible properties and assets, real, personal and mixed, used or held
for use in its business, free and clear of any Liens, except (i) as reflected in
the Current Balance Sheet, (ii) Liens for Taxes not yet due and payable, and
(iii) such imperfections of title and encumbrances, if any, which do not detract
materially from the value or interfere materially with the present use of the
property subject thereto or affected thereby.

         (c) Section 2.11(c) of the Disclosure Schedule lists all material items
of equipment (the "EQUIPMENT") owned or leased by the Company and the
Subsidiaries and such



                                      -15-
<PAGE>   19

Equipment is (i) adequate for the conduct of the business of the Company and the
Subsidiaries as currently conducted and as currently contemplated to be
conducted, and (ii) to the Knowledge of the Company, in good operating
condition, regularly and properly maintained, subject to normal wear and tear.


         (d) The Company and the Subsidiaries have sole and exclusive ownership,
free and clear of any Liens, of all customer lists, customer contact
information, customer correspondence and customer licensing and purchasing
histories relating to its current and former customers (the "CUSTOMER
INFORMATION"), except for the rights of such customers in the Customer
Information not granted by the Company. No person other than the Company or the
Subsidiaries possesses any claims or rights with respect to use of the Customer
Information, except for the rights of such customers in the Customer Information
not granted by the Company or the Subsidiaries.

     2.12 Intellectual Property.

         (a) Definitions. For all purposes of this Agreement, the following
terms shall have the following respective meanings:

     "INTELLECTUAL PROPERTY" shall mean any or all of the following (i) works of
authorship including, without limitation, computer programs, source code and
executable code, whether embodied in software, firmware or otherwise,
development tools, documentation, designs, files, records, data, all media on
which any of the foregoing is recorded, all web addresses, sites and domain
names, and mask works, (ii) inventions (whether or not patentable), invention
disclosures, improvements, and technology, (iii) proprietary and confidential
information, trade secrets and know how, (iv) databases, data compilations and
collections, customer lists and technical data, (v) logos, trade names, trade
dress, trademarks and service marks, (vi) domain names, web addresses and sites,
(vii) tools, methods and processes, and (viii) all instantiations and
disclosures of the foregoing in any form and embodied in any media and all
documentation relating to the foregoing.

     "INTELLECTUAL PROPERTY RIGHTS" shall mean common law and statutory rights
worldwide associated with (i) patents and patent applications, (ii) copyrights,
copyrights registrations and copyrights applications and "moral" rights, (iii)
the protection of trade and industrial secrets and confidential information,
(iv) trademarks, trade names and service marks, logos, common law trademarks and
service marks, trademark and servicemark registrations and applications and
application therefor and all goodwill associated therewith throughout the world,
(v) divisions, continuations, continuations-in-part, renewals, reissuances,
provisionals and extensions of the foregoing (as applicable), all mask works,
mask work registrations and applications therefore throughout the world.

     "COMPANY INTELLECTUAL PROPERTY" shall mean any Intellectual Property and
Intellectual Property Rights that are owned by or exclusively licensed to the
Company or any of the Subsidiaries.

                                      -16-
<PAGE>   20

     "REGISTERED INTELLECTUAL PROPERTY RIGHTS" shall mean Intellectual Property
Rights that have been registered, filed, certified or otherwise perfected by
recordation with any state, government or other public legal authority anywhere
in the world.

         (b) The Company owns no Registered Intellectual Property, in whole or
in part. All Intellectual Property licensed to the Company is free and clear of
any Liens or other encumbrances. The Company is the exclusive owner or exclusive
licensee of all Company Intellectual Property.

         (c) Other than (i) "shrink-wrap" and similar widely available binary
code and commercial end-user licenses and (ii) as set forth on Section 2.12(f)
of the Disclosure Schedule, to the extent that any Intellectual Property has
been developed or created independently or jointly by any person other than the
Company or any of the Subsidiaries for which the Company or any of the
Subsidiaries has, directly or indirectly, paid, the Company has a written
agreement with such person with respect thereto, and the Company and the
Subsidiaries thereby has obtained ownership of, and is the exclusive owner of,
all such Intellectual Property therein and associated Intellectual Property
Rights by operation of law or by valid assignment.

         (d) The Company has not transferred ownership of, or granted any
exclusive license of or exclusive right to use, or authorized the retention of
any exclusive rights to use or joint ownership of, any Intellectual Property or
Intellectual Property Rights that is or was Company Intellectual Property, to
any other person.

         (e) Other than (i) "shrink-wrap" and similar widely available binary
code and commercial end-user licenses, and (ii) as set forth in Section 2.12(f)
of the Disclosure Schedule, the Company Intellectual Property constitutes all
the Intellectual Property and Intellectual Property Rights used in and/or
necessary to the conduct of the business of the Company as it currently is
conducted or is currently contemplated to be conducted, including, without
limitation, the design, development, manufacture, use, import and sale of
products, technology and services (including products, technology or services
currently under development). Consummation of the transactions contemplated by
this Agreement will not result in the loss of, or otherwise adversely affect,
any ownership rights of the Company in any Company Intellectual Property.

         (f) Other than "shrink-wrap" and similar widely distribute binary code
and commercial end-user licenses, Section 2.12(f) of the Disclosure Schedule
lists all contracts, licenses and agreements to which the Company or any of the
Subsidiaries is a party with respect to any Intellectual Property and
Intellectual Property Rights. No person who has licensed Intellectual Property
or Intellectual Property Rights to the Company or any of the Subsidiaries has
ownership rights or license rights to improvements made by the Company or any of
the subsidiaries in such Intellectual Property which has been licensed to the
Company or any of the Subsidiaries.

         (g) Other than "shrink-wrap" and similar widely distributed binary code
and commercial end-user licenses, Section 2.12(g) of the Disclosure Schedule
lists all contracts, licenses and agreements between the Company or any of the
Subsidiaries and any other person wherein or



                                      -17-
<PAGE>   21

whereby the Company or any of the Subsidiaries have agreed to, or assumed, any
obligation or duty to warrant, indemnify, reimburse, hold harmless, guaranty or
otherwise assume or incur any obligation or liability or provide a right of
rescission with respect to the infringement or misappropriation by the Company
or any of the Subsidiaries or such other person of the Intellectual Property
Rights of any person other than the Company or any of the Subsidiaries.

         (h) The operation of the business of the Company and the Subsidiaries
as it currently is conducted or is currently contemplated to be conducted,
including but not limited to the design, development, use, import, manufacture
and sale of the products, technology or services (including products, technology
or services currently under development) of the Company and the Subsidiaries has
not, does not and, to the Knowledge of the Company will not infringe or
misappropriate the Intellectual Property Rights of any person, violate the
rights of any person (including rights to privacy or publicity), or constitute
unfair competition or trade practices under the laws of any jurisdiction, and
neither the Company nor any of the Subsidiaries has received no notice from any
person claiming that such operation or any act, product, technology or service
(including products, technology or services currently under development) of the
Company or any of the Subsidiaries infringes or misappropriates the Intellectual
Property Rights of any person or constitutes unfair competition or trade
practices under the laws of any jurisdiction (nor is the Company aware of any
basis therefor).

         (i) There are no contracts, licenses or agreements between the Company
or any of the Subsidiaries and any other person with respect to Company
Intellectual Property under which there is any dispute, to the Knowledge of the
Company, regarding the scope of such agreement, or performance under such
agreement including with respect to any payments to be made or received by the
Company or any of the Subsidiaries thereunder.

         (j) Neither this Agreement nor the transactions contemplated by this
Agreement, including the assignment to Parent by operation of law or otherwise
(to the extent that such transactions are deemed to effect such assignment) of
any contracts or agreements to which the Company is a party, will result in: (i)
Parent, Sub or the Company granting to any third party any right to or with
respect to any Intellectual Property or Intellectual Property Rights owned by,
or licensed to, any of them, (ii) Parent, Sub or the Company being bound by, or
subject to, any non-compete or other material restriction on the operation or
scope or their respective businesses, or (iii) Parent, Sub or the Company being
obligated to pay any royalties or other material amounts to any third party in
excess of those payable by any of them, respectively, in the absence of this
Agreement or the transactions contemplated hereby.

         (k) To the Knowledge of the Company, no person is infringing or
misappropriating any Company Intellectual Property.

         (l) The Company has taken reasonable steps to protect the Company's and
Subsidiaries' rights in confidential information and trade secrets of the
Company or provided by any other person to the Company or any of the
Subsidiaries. Without limiting the foregoing, the Company and the Subsidiaries
have, and enforce, a policy requiring each employee and certain



                                      -18-
<PAGE>   22

consultants to execute confidentiality agreements substantially in the Company's
standard forms, and all or substantially all current and former employees and
certain consultants of the Company have executed such an agreement in
substantially the Company's standard form.

         (m) No Company Intellectual Property or, to the Knowledge of the
Company, Intellectual Property Rights or service of the Company or any of the
Subsidiaries is subject to any proceeding or outstanding decree, order, judgment
or settlement agreement or stipulation that restricts in any manner the use,
transfer or licensing thereof by the Company or any of the Subsidiaries or may
affect the validity, use or enforceability of such Company Intellectual
Property.

         (n) To the Knowledge of the Company, no (i) product, technology,
service or publication of the Company, (ii) material published or distributed by
the Company or (iii) conduct or statement of Company constitutes obscene
material, a defamatory statement or material, false advertising or otherwise
violates any law or regulation.

         (o) None of the Company Intellectual Property was developed by or on
behalf of or using grants or any other subsidies of any governmental entity.


     2.13 Agreements, Contracts and Commitments.

         (a) Except as set forth in or excepted from (by virtue of the specific
exclusions contained in Section 2.12(g) or Section 2.12(h) of the Disclosure
Schedule) Sections 2.12(g) and 2.12(h) of the Disclosure Schedule, or as set
forth in Section 2.13(a) of the Disclosure Schedule, neither the Company nor any
of the Subsidiaries is a party to or is it bound by:

            (i) any employment or consulting agreement, contract or commitment
with an employee or individual consultant or salesperson or consulting or sales
agreement, contract or commitment with a firm or other organization;

            (ii) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation rights plan or stock purchase plan, any of the
benefits of which will be increased, or the vesting of 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;

            (iii) any fidelity or surety bond or completion bond;

            (iv) any lease of personal property having a value in excess of
$10,000 individually or $25,000 in the aggregate;

            (v) any agreement, contract or commitment relating to capital
expenditures and involving future payments in excess of $10,000 individually or
$25,000 in the aggregate;

                                      -19-
<PAGE>   23

            (vi) any agreement, contract or commitment relating to the
disposition or acquisition of assets or any interest in any business enterprise
outside the ordinary course of the Company's business;

            (vii) any mortgages, indentures, guarantees, loans or credit
agreements, security agreements or other agreements or instruments relating to
the borrowing of money or extension of credit;

            (viii) any purchase order or contract for the purchase of materials
involving in excess of $10,000 individually or $25,000 in the aggregate;

            (ix) any construction contracts;

            (x) any dealer, distribution, joint marketing or development
agreement;

            (xi) any sales representative, original equipment manufacturer,
value added, remarketer, reseller or independent software vendor or other
agreement for use or distribution of the Company's products, technology or
services; or

            (xii) any other agreement, contract or commitment that involves
$10,000 individually or $25,000 in the aggregate or more and is not cancelable
without penalty within thirty (30) days.

     2.14 Interested Party Transactions. Except as set forth in Section 2.14 of
the Disclosure Schedule, no officer, director or, to the Knowledge of the
Company, stockholder of the Company (nor any ancestor, sibling, descendant or
spouse of any of such persons, or any trust, partnership or corporation in which
any of such persons has or has had an interest), has or has had, directly or
indirectly, (i) an interest in any entity which furnished or sold, or furnishes
or sells, services, products or technology that the Company or any of the
Subsidiaries furnishes or sells, or proposes to furnish or sell, or (ii) any
interest in any entity that purchases from or sells or furnishes to the Company
or any of the Subsidiaries, any goods or services, or (iii) a beneficial
interest in any Contract to which the Company or any of the Subsidiaries is a
party; provided, however, that ownership of no more than one percent (1%) of the
outstanding voting stock of a publicly traded corporation shall not be deemed to
be an "interest in any entity" for purposes of this Section 2.14.

     2.15 Governmental Authorization. Each consent, license, permit, grant or
other authorization (i) pursuant to which the Company or any of the Subsidiaries
currently operates or holds any interest in any of its properties, or (ii) which
is required for the operation of the Company's or the Subsidiaries' business as
currently conducted or currently contemplated to be conducted or the holding of
any such interest (collectively, "COMPANY AUTHORIZATIONS") has been issued or
granted to the Company or Subsidiaries. The Company Authorizations are in full
force and effect and constitute all Company Authorizations required to permit
the Company and the Subsidiaries to operate or conduct its business or hold any
interest in its properties or assets.

                                      -20-
<PAGE>   24


     2.16 Litigation. Except as set forth in Section 2.16 of the Disclosure
Schedule, there is no action, suit, claim or proceeding of any nature pending,
or to the Knowledge of the Company threatened, against the Company, its
properties (tangible or intangible) or any of its officers or directors, nor to
the Knowledge of the Company is there any reasonable basis therefor. There is no
investigation or other proceeding pending or to the Knowledge of the Company
threatened, against the Company or any of the Subsidiaries, any of its
properties (tangible or intangible) or any of their officers or directors by or
before any Governmental Entity, nor to the Knowledge of the Company is there any
reasonable basis therefor. No Governmental Entity has at any time challenged or
questioned the legal right of the Company or any of its Subsidiaries to conduct
its operations as presently or previously conducted or as presently contemplated
to be conducted.

     2.17 Accounts Receivable.

         (a) The Company and the Subsidiaries have made available to Parent a
list of all accounts receivable of the Company as of September 30, 2000,
together with a range of days elapsed since invoice.

         (b) All of the Company's accounts receivable arose in the ordinary
course of business, are carried at values determined in accordance with GAAP
consistently applied and, are collectible except to the extent of reserves
therefor set forth in the Current Balance Sheet or, for receivables arising
subsequent to September 30, 2000, as reflected on the books and records of the
Company (which are prepared in accordance with GAAP). Except as set forth in
Section 2.17(b) of the Disclosure Schedule, no person has any Lien on any of the
Company's accounts receivable and no request or agreement for deduction or
discount has been made with respect to any of the Company's accounts receivable.

     2.18 Accounts Payable. Section 2.18 of the Disclosure Schedule sets forth,
as of the date or dates set forth therein, (i) the name of each person to which
the Company or any of its Subsidiaries has any accounts payable (including
accrued expenses payable) and (ii) the amount, if any, to which such persons has
agreed in writing to reduce such account payable. The Company has delivered to
the Purchaser copies of all correspondence, agreements and other documentation
related to any reduction of the accounts payable referred to in clause (iii).


     2.19 Minute Books. The minutes of the Company made available to Parent or
to counsel for Parent are the only minutes of the Company and contain accurate
summaries of all meetings of the Board of Directors (or committees thereof) of
the Company and its Stockholder or actions by written consent since the time of
incorporation of the Company.

     2.20 Environmental Matters.

         (a) Hazardous Material. The Company has not: (i) operated any
underground storage tanks at any property that the Company has at any time
owned, operated, occupied or leased, or (ii) illegally released any amount of
any substance that has been designated by any Governmental Entity or by
applicable federal, state or local law to be radioactive, toxic, hazardous or
otherwise a



                                      -21-
<PAGE>   25

danger to health or the environment, including, without limitation, PCBs,
asbestos, petroleum, and urea-formaldehyde and all substances listed as
hazardous substances pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, or defined as a hazardous
waste pursuant to the United States Resource Conservation and Recovery Act of
1976, as amended, and the regulations promulgated pursuant to said laws (a
"HAZARDOUS MATERIAL"), but excluding office and janitorial supplies properly and
safely maintained. To the Knowledge of the Company, no Hazardous Materials are
present in, on or under any property, including the land and the improvements,
ground water and surface water thereof, that the Company has at any time owned,
operated, occupied or leased.

         (b) Hazardous Materials Activities. The Company has not transported,
stored, used, manufactured, disposed of, released or exposed its employees or
others to Hazardous Materials in violation of any law in effect on or before the
Effective Time, nor has the Company disposed of, transported, sold, or
manufactured any product containing a Hazardous Material (any or all of the
foregoing being collectively referred to herein as "HAZARDOUS MATERIALS
ACTIVITIES") in violation of any rule, regulation, treaty or statute promulgated
by any Governmental Entity in effect prior to or as of the date hereof to
prohibit, regulate or control Hazardous Materials or any Hazardous Material
Activity.

         (c) Permits. The Company currently holds all environmental approvals,
permits, licenses, clearances and consents (the "ENVIRONMENTAL PERMITS")
necessary for the conduct of the Company's Hazardous Material Activities,
respectively, and other businesses of the Company as such activities and
businesses are currently being conducted and as currently contemplated to be
conducted.

         (d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is pending, or to the
Knowledge of the Company threatened, concerning any Environmental Permit,
Hazardous Material or any Hazardous Materials Activity of the Company. The
Company has no Knowledge of any fact or circumstance which is reasonably likely
to involve the Company in any environmental litigation or impose upon the
Company any environmental liability.

     2.21 Brokers' and Finders' Fees; Third Party Expenses. The Company has not
incurred, nor will it incur, directly or indirectly, any liability for brokerage
or finders' fees or agents' commissions or any similar charges in connection
with the Agreement or any transaction contemplated hereby. Section 2.21 of the
Disclosure Schedule sets forth the principal terms and conditions of any
agreement, written or oral, with respect to such fees.

     2.22 Employee Benefit Plans and Compensation.

         (a) Definitions. For all purposes of this Agreement, the following
terms shall have the following respective meanings:

                                      -22-
<PAGE>   26

     "AFFILIATE" shall mean any other person or entity under common control with
the Company within the meaning of Section 414(b), (c), (m) or (o) of the Code,
and the regulations issued thereunder.

     "COMPANY EMPLOYEE PLAN" shall mean any plan, program, policy, practice,
contract, agreement or other material arrangement providing for compensation,
severance, termination pay, deferred compensation, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or remuneration
of any kind, whether written, unwritten or otherwise, funded or unfunded,
including without limitation, each "employee benefit plan," within the meaning
of Section 3(3) of ERISA which is or has been maintained, contributed to, or
required to be contributed to, by the Company or any Affiliate for the benefit
of any Employee, or with respect to which the Company or any Affiliate has or
may have any liability or obligation.

     "COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.

     "DOL" shall mean the United States Department of Labor.

     "EMPLOYEE" shall mean any current or former employee, consultant or
director of the Company or any Affiliate.

     "EMPLOYEE AGREEMENT" shall mean each management, employment, severance,
consulting, relocation, repatriation, expatriation, visas, work permit or other
agreement, or contract between the Company or any Affiliate and any Employee.

     "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.

     "FMLA" shall mean the Family Medical Leave Act of 1993, as amended.

     "IRS" shall mean the United States Internal Revenue Service.

     "PBGC" shall mean the United States Pension Benefit Guaranty Corporation.

     "PENSION PLAN" shall mean each Company Employee Plan which is an "employee
pension benefit plan," within the meaning of Section 3(2) of ERISA.


         (b) Schedule. Section 2.22(b) of the Disclosure Schedule contains an
accurate and complete list of each Company Employee Plan and each Employee
Agreement under each Company Employee Plan or Employee Agreement. The Company
has no plan or commitment to establish any new Company Employee Plan or Employee
Agreement, to modify any Company Employee Plan or Employee Agreement (except to
the extent required by law or to conform any such Company Employee Plan or
Employee Agreement to the requirements of any applicable law, in each case as
previously disclosed to Parent in writing, or as required by this Agreement), or
to enter into



                                      -23-
<PAGE>   27

any Company Employee Plan or Employee Agreement. Schedule 2.22(b) of the
Disclosure Schedule also sets forth a table setting forth the name and salary of
each employee of the Company.

         (c) Documents. The Company has made available to Parent (i) correct and
complete copies of all documents embodying each Company Employee Plan and each
Employee Agreement including, without limitation, all amendments thereto and all
related trust documents, (ii) the three (3) most recent annual reports (Form
Series 5500 and all schedules and financial statements attached thereto), if
any, required under ERISA or the Code in connection with each Company Employee
Plan, (iii) if the Company Employee Plan is funded, the most recent annual and
periodic accounting of Company Employee Plan assets, (iv) the most recent
summary plan description together with the summary(is) of material modifications
thereto, if any, required under ERISA with respect to each Company Employee
Plan, (v) all material written agreements and contracts relating to each Company
Employee Plan, including, without limitation, administrative service agreements
and group insurance contracts, (vi) all communications material to any Employee
or Employees relating to any Company Employee Plan and any proposed Company
Employee Plans, in each case, relating to any amendments, terminations,
establishments, increases or decreases in benefits, acceleration of payments or
vesting schedules or other events which would result in any liability to the
Company, (vii) all correspondence to or from any governmental agency relating to
any Company Employee Plan, (viii) all COBRA forms and related notices, (ix) all
policies pertaining to fiduciary liability insurance covering the fiduciaries
for each Company Employee Plan, (x) all discrimination tests for each Company
Employee Plan for the most recent plan year, and (xi) all registration
statements, annual reports (Form 11-K and all attachments thereto) and
prospectuses prepared in connection with each Company Employee Plan.

         (d) Employee Plan Compliance. The Company has performed all obligations
required to be performed by it under, is not in default or violation of, and has
no Knowledge of any default or violation by any other party to each Company
Employee Plan, and each Company Employee Plan has been established and
maintained in accordance with its terms and in compliance with all applicable
laws, statutes, orders, rules and regulations, including but not limited to
ERISA or the Code. No "prohibited transaction," within the meaning of Section
4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise exempt
under Section 408 of ERISA, has occurred with respect to any Company Employee
Plan. There are no actions, suits or claims pending, or to the Knowledge of the
Company threatened or reasonably anticipated (other than routine claims for
benefits) against any Company Employee Plan or against the assets of any Company
Employee Plan. Each Company Employee Plan can be amended, terminated or
otherwise discontinued after the Effective Time in accordance with its terms,
without liability to Parent, the Company or any Affiliate (other than ordinary
administration expenses). There are no audits, inquiries or proceedings pending
or to the Knowledge of the Company threatened by the IRS or DOL with respect to
any Company Employee Plan. Neither the Company nor any Affiliate is subject to
any penalty or tax with respect to any Company Employee Plan under Section
502(i) of ERISA or Sections 4975 through 4980 of the Code.

                                      -24-
<PAGE>   28

         (e) No Pension Plans. Neither the Company nor any other Affiliate has
ever maintained, established, sponsored, participated in, or contributed to, any
(i) Pension Plans subject to Title IV of ERISA, or (ii) "multiemployer plan"
within the meaning of Section (3)(37) of ERISA.

         (f) No Post-Employment Obligations. No Company Employee Plan provides,
or reflects or represents any liability to provide, retiree life insurance,
retiree health or other retiree employee welfare benefits to any person for any
reason, except as may be required by COBRA or other applicable statute, and the
Company has never represented, promised or contracted (whether in oral or
written form) to any Employee (either individually or to Employees as a group)
or any other person that such Employee(s) or other person would be provided with
retiree life insurance, retiree health or other retiree employee welfare
benefit, except to the extent required by statute.

         (g) COBRA. The Company and each Affiliate has, prior to the Effective
Time, materially complied with the health care continuation requirements of
COBRA, the requirements of FMLA or any similar provisions of state law
applicable to its Employees.

         (h) Effect of Transaction. The execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either alone or
upon the occurrence of any additional or subsequent events) constitute an event
under any Company Employee Plan, Employee Agreement, trust or loan that will or
may result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any Employee, except as expressly
required by this Agreement.

         (i) Employment Matters. The Company: (i) is in material compliance with
all applicable foreign, federal, state and local laws, rules and regulations
respecting employment, employment practices, terms and conditions of employment
and wages and hours, in each case, with respect to Employees, (ii) has withheld
and reported all amounts required by law or by agreement to be withheld and
reported with respect to wages, salaries and other payments to Employees, (iii)
is not liable for any arrears of wages or any taxes or any penalty for failure
to comply with any of the foregoing, and (iv) is not liable for any payment to
any trust or other fund governed by or maintained by or on behalf of any
governmental authority, with respect to unemployment compensation benefits,
social security or other benefits or obligations for Employees (other than
routine payments to be made in the normal course of business and consistent with
past practice). There are no pending or to the Knowledge of the Company
threatened, or reasonably anticipated claims or actions against the Company
under any worker's compensation policy or long-term disability policy.

         (j) Labor. No work stoppage or labor strike against the Company is
pending or to the Knowledge of the Company threatened, or reasonably
anticipated. The Company does not know of any activities or proceedings of any
labor union to organize any Employees. There are no actions, suits, claims,
labor disputes or grievances pending or to the Knowledge of the Company
threatened, or reasonably anticipated relating to any labor, safety or
discrimination matters involving any Employee, including, without limitation,
charges of unfair labor



                                      -25-
<PAGE>   29

practices or discrimination complaints. To the Knowledge of the Company, the
Company has not engaged in any unfair labor practices within the meaning of the
National Labor Relations Act. The Company is not presently, nor has it been in
the past, a party to, or bound by, any collective bargaining agreement or union
contract with respect to Employees and no collective bargaining agreement is
being negotiated by the Company.

         (k) No Interference or Conflict. To the Knowledge of the Company, no
stockholder, officer, employee or consultant of the Company is obligated under
any contract or agreement subject to any judgment, decree or order of any court
or administrative agency that would interfere with such person's efforts to
promote the interests of the Company or that would interfere with the Company's
business. Neither the execution nor delivery of this Agreement, nor the carrying
on of the Company's business as presently conducted or proposed to be conducted
nor any activity of such officers, directors, employees or consultants in
connection with the carrying on of the Company's business as presently conducted
or currently proposed to be conducted, will to the Knowledge of the Company
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any contract or agreement under which any of such
officers, directors, employees or consultants is now bound.

     2.23 Insurance. Section 2.23 of the Disclosure Schedule lists all insurance
policies and fidelity bonds covering the assets, business, equipment,
properties, operations, employees, officers and directors of the Company or any
Affiliate. There is no claim by the Company or any Affiliate pending under any
of such policies or bonds as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or bonds. All premiums due and
payable under all such policies and bonds have been paid, and the Company and
its Affiliates are otherwise in material compliance with the terms of such
policies and bonds (or other policies and bonds providing substantially similar
insurance coverage). The Company has no Knowledge of threatened termination of,
or premium increase with respect to, any of such policies.

     2.24 Compliance with Laws. The Company and the Subsidiaries have materially
complied with and are not in material violation of any foreign, federal, state
or local statute, law or regulation nor have either the Company or any of the
Subsidiaries received any notice of non-compliance or violation with respect
thereto.

     2.25 Warranties; Indemnities. Except for the warranties and indemnities
contained in those contracts and agreements set forth in Section 2.12(h) of the
Disclosure Schedule and warranties implied by law, neither the Company nor any
of the Subsidiaries have given any warranties or indemnities relating to
products or technology sold or services rendered by the Company or any of the
Subsidiaries.

     2.26 Complete Copies of Materials. The Company has delivered or made
available true and complete copies of each document (or summaries of same) that
has been requested by Parent or its counsel.

     2.27 Representations Complete. None of the representations or warranties
made by the Company (as modified by the Disclosure Schedule) in this Agreement,
nor any statements made in



                                      -26-
<PAGE>   30

any exhibit, schedule or certificate furnished by the Company pursuant to this
Agreement contains or will contain at the Effective Time any untrue statement of
a material fact or omits or will omit at the Effective Time to state any
material fact necessary in order to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading. The information furnished on or in any documents mailed, delivered
or otherwise furnished to Stockholder in connection with the solicitation of
their consent to this Agreement and the Merger, will not contain, at or prior to
the Effective Time any untrue statement of a material fact and will not omit to
state any material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
Notwithstanding the foregoing, Company makes no representation or warranty with
respect to any information supplied by Parent which is contained in any of the
foregoing documents.

     Each disclosure made in any section of the Disclosure Schedule shall be
deemed to be disclosed in and incorporated into all sections of the Disclosure
Schedule.

                                  ARTICLE III
                REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER

     The Stockholder hereby represents and warrants to Parent and Sub that on
the date hereof and as of the Effective Time as though made at the Effective
time as follows:

     3.1 Liens and Encumbrances. The Stockholder is the sole beneficial owner of
the Company Capital Stock.

     3.2 Title. The Stockholder has good and marketable title to the Company
Capital Stock and the right and authority to transfer and sell Company Capital
Stock without any third party consent (unless such third party consent has been
obtained).

     3.3 Authorization. This Agreement, when executed and delivered by the
Stockholder, will constitute valid and legally binding obligations of the
Stockholder, enforceable in accordance with its terms, except as may be limited
by principles of public policy, and subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies.

     3.4 Ownership and Rights. Immediately after the Closing, the Stockholder
will, directly or indirectly, own no capital stock or debt or rights to acquire
any capital stock or debt of the Company, nor be a party to any agreement with
the Company other than this Agreement.

     3.5 Approval of Merger. The Stockholder has voted to approve the Merger.

                                   ARTICLE IV
                REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB

                                      -27-
<PAGE>   31

     Parent and Sub hereby represent and warrant to the Company that on the date
hereof and as of the Effective Time as though made at the Effective Time as
follows; provided, that the representations and warranties made as of a
specified date will be true and correct as of such date.

     4.1 Organization, Standing and Power. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Sub is a corporation duly organized, validly existing and in good
standing under the laws of Delaware. Each of Parent and Sub has the corporate
power to own its properties and to carry on its business as now being conducted
and is duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the failure to be so qualified or licensed would have a
material adverse effect on the business, assets (including intangible assets),
condition (financial or otherwise), results of operations or capitalization of
Parent (a "PARENT MATERIAL ADVERSE EFFECT"); provided, however, changes in the
trading prices of Parent Common Stock (in and of itself) shall not be deemed a
Parent Material Adverse Effect.

     4.2 Authority. Each of Parent and Sub has all requisite corporate power and
authority to enter into this Agreement and any Related Agreements to which it is
a party and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Parent and Sub. This Agreement to
which Parent and Sub are parties have been duly executed and delivered by Parent
and Sub and constitute the valid and binding obligations of Parent and Sub,
enforceable in accordance with their terms, except as such enforceability may be
limited by principles of public policy and subject to the laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies.

     4.3 Capital Structure.

         (a) The authorized stock of Parent consists of 100,000,000 shares of
Common Stock, $.01 par value, of which 16,254,801 shares were issued and
outstanding as of September 30, 2000, and 5,000,000 shares of undesignated
Preferred Stock, $.01 par value. No shares of Preferred Stock are issued or
outstanding. The authorized capital stock of Sub consists of 100 shares of
Common Stock, $.001 par value, 100 shares of which, as of the date hereof, are
issued and outstanding and are held by Parent. All such shares of Parent and Sub
have been duly authorized, and all such issued and outstanding shares have been
validly issued, are fully paid and nonassessable, are free of any liens or
encumbrances other than any liens or encumbrances created by or imposed upon the
holders thereof, are not subject to preemptive rights created by statute, the
charter documents or Bylaws of Parent as currently in effect or any agreement to
which Parent is a party or by which it is bound, and have been issued in
compliance with federal and state securities laws. As of September 30, 2000,
Parent has reserved 3,050,000 shares of Common Stock for issuance pursuant to
its employee and director stock and option plans.

                                      -28-
<PAGE>   32

         (b) The shares of Parent Common Stock to be issued pursuant to the
Merger will be duly authorized, validly issued, fully paid, non-assessable, free
of any liens or encumbrances and not subject to any preemptive rights or rights
of first refusal created by statute or the charter documents or Bylaws of Parent
or Sub or any agreement to which Parent or Sub is a party or is bound and will
be issued in compliance with federal and state securities laws.

     4.4 No Conflict. The execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default under (with or without notice or
lapse of time, or both), or give rise to a Conflict under (i) any provision of
the certificate of incorporation, as amended, and Bylaws of Parent or Sub, (ii)
any mortgage, indenture, lease, contract or other agreement or instrument,
permit, concession, franchise or license to which Parent or any of its
respective properties or assets are subject and which has been filed as an
exhibit to Parent's filings under the Securities Act or the Securities and
Exchange Act of 1934, as amended (the "EXCHANGE ACT") or (iii) any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Parent
or Sub or their respective properties or assets, except in each case where such
Conflict will not have a Parent Material Adverse Effect or will not affect on
the legality, validity or enforceability of this Agreement.

     4.5 Consents. No consent, waiver, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity, or any third
party is required by or with respect to Parent or Sub in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable securities laws and the HSR Act, (ii) such consents, waivers,
approvals, orders, authorizations, registrations, declarations and filings
which, if not obtained or made, would not have a Material Adverse Effect, and
(iii) the filing of the Merger Agreement with the Secretary of State of the
State of Delaware.

     4.6 SEC Documents; Parent Financial Statements. Parent has made available
to the Company a true and complete copy of each annual, quarterly and other
report, registration statement (without exhibits) and definitive proxy statement
filed by Parent with the Securities and Exchange Commission (the "SEC") since
December 31, 1999 (the "PARENT SEC DOCUMENTS"). As of their respective filing
dates, the Parent SEC Documents complied in all material respects with the
requirements of the Securities Act and the Exchange Act as the case may be, and
the rules and regulations of the SEC promulgated thereunder applicable to such
Parent SEC Documents, and none of the Parent SEC Documents contained on their
filing dates 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, except to the extent corrected by a subsequently filed Parent SEC
Document. The financial statements of Parent included in the Parent SEC
Documents (the "PARENT FINANCIAL STATEMENTS") complied as to form in all
material respects with the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with GAAP applied on a consistent
basis throughout the periods indicated



                                      -29-
<PAGE>   33

(except as may be indicated in the notes thereto or, in the case of unaudited
financial statements, as permitted under Form 10-Q under the Exchange Act) and
fairly presented the consolidated financial position of Parent and its
consolidated subsidiaries as of the respective dates thereof and the
consolidated results of Parent's operations and cash flows for the periods
indicated (subject to, in the case of unaudited statements, to normal and
recurring year-end audit adjustments).

                                   ARTICLE V
                             ADDITIONAL AGREEMENTS

     5.1 Registration Rights Agreement. Pursuant to a Registration Rights
Agreement in the form attached hereto as Exhibit B (the "REGISTRATION RIGHTS
AGREEMENT"), Parent shall agree to grant "piggy back" rights with respect to the
registration under the Securities Act of the resale by the Stockholder of Parent
Common Stock to be issued to Stockholder. The parties hereto acknowledge and
agree that the Parent Common Stock to be issued pursuant to this Agreement shall
constitute "restricted securities" within the meaning of Rule 144 promulgated
under the Securities Act until so registered.

     5.2 Restrictions on Transfer. Each share of Parent Common Stock to be
issued hereunder shall be issued without any legend restricting such transfer of
shares except (i) as it relates to restrictions on transfer pursuant to Rule 144
or of the Securities Act or (ii) any other legend in the opinion of counsel for
Parent required to comply with the Securities Act.

     5.3 Access to Information. The Company shall afford Parent and its
accountants, counsel and other representatives, reasonable access upon
reasonable prior notice, during the period prior to the Effective Time to (i)
all of the Company's properties, books, contracts, commitments and records,
including the Company's source code, (ii) all other information concerning the
business, properties and personnel (subject to restrictions imposed by
applicable law) of the Company as Parent may reasonably request, and (iii) all
employees of the Company as identified by Parent. The Company agrees to provide
to Parent and its accountants, counsel and other representatives copies of
internal financial statements (including Tax returns and supporting
documentation) promptly upon request. No information or knowledge obtained in
any investigation pursuant to this Section 5.3 shall affect or be deemed to
modify any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger in accordance with the terms
and provisions hereof, except that Parent shall in good faith notify the Company
prior to the Effective Time of any circumstances learned as a result of such
investigation that, to the Knowledge of Parent, may be deemed to violate any of
the representations and warranties set forth herein.

     5.4 Confidentiality. Each of the parties hereto hereby agrees that the
information obtained in any investigation pursuant to Section 5.4 hereof, or
pursuant to the negotiation and execution of this Agreement or the effectuation
of the transactions contemplated hereby, shall be governed by the terms of the
Mutual Nondisclosure Agreement effective as of October 3, 2000 (the
"CONFIDENTIAL DISCLOSURE AGREEMENT") among the Company and Parent.

                                      -30-
<PAGE>   34

     5.5 Expenses. Except as set forth in the following sentence, all fees and
expenses incurred in connection with the Merger including, without limitation,
all legal, accounting, financial advisory, consulting and all other fees and
expenses of third parties (the "THIRD PARTY EXPENSES") incurred by or on behalf
of a party in connection with the negotiation and effectuation of the terms and
conditions of this Agreement and the transactions contemplated hereby, shall be
the obligation of the respective party incurring such fees and expenses. Company
shall provide Parent with a statement of an estimate of the Third Party Expenses
(the "ESTIMATED THIRD PARTY EXPENSES") incurred by or on behalf of the Company
three (3) business days following the Closing Date (the "STATEMENT OF
EXPENSES"), which expenses shall be paid by Parent within twenty (20) business
days of receipt of the Statement of Expenses. Notwithstanding the foregoing, the
Third Party Expenses of the Company in excess of $100,000 shall be deducted from
the Aggregate Consideration.

     5.6 Reasonable Efforts. Subject to the terms and conditions provided in
this Agreement, each of the parties hereto shall use commercially reasonable
efforts to take promptly, or cause to be taken, all actions, and to do promptly,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated hereby, to obtain all necessary waivers, consents and approvals and
to effect all necessary registrations and filings and to remove any injunctions
or other impediments or delays, legal or otherwise, in order to consummate and
make effective the transactions contemplated by this Agreement for the purpose
of securing to the parties hereto the benefits contemplated by this Agreement;
provided, however, that Parent shall not be required to agree to any divestiture
by Parent or the Company or any of Parent's subsidiaries or affiliates of shares
of capital stock or of any business, assets or property of Parent or its
subsidiaries or affiliates or of the Company, its affiliates, or the imposition
of any material limitation on the ability of any of them to conduct their
businesses or to own or exercise control of such assets, properties and stock.


     5.7 Notification of Certain Matters. The Company or the Stockholder, as the
case may be, shall give prompt notice to Parent of: (i) the occurrence or
non-occurrence of any event, the occurrence or non-occurrence of which is likely
to cause any representation or warranty of the Company or the Stockholder,
respectively and as the case may be, contained in this Agreement to be untrue or
inaccurate at or prior to the Effective Time and (ii) any failure of the Company
or the Stockholder, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 5.7
shall not (a) limit or otherwise affect any remedies available to the party
receiving such notice or (b) constitute an acknowledgment or admission of a
breach of this Agreement. No disclosure by the Company or the Stockholder
pursuant to this Section 5.7, however, shall be deemed to amend or supplement
the Disclosure Schedule or prevent or cure any misrepresentations, breach of
warranty or breach of covenant.

     5.8 Additional Documents and Further Assurances. Each party hereto, at the
request of another party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be necessary or
desirable for effecting completely the consummation of the Merger and the
transactions contemplated hereby.



                                      -31-
<PAGE>   35

     5.9 Employee Benefits. Employees of the Company who continue in service
with the Parent or the Surviving Corporation following the Effective Time shall
be eligible to receive benefits consistent with Parent's standard human
resources policies. Parent will or will cause the Surviving Corporation to give
full credit under such policies for prior service at the Company for purposes of
eligibility, vesting, benefit accrual, and determination of the level benefits.

     5.10 Employment Offers. The Company shall use commercially reasonable
efforts to encourage each of its employees to accept the offer of employment
made by Parent, including without limitation executing and delivering to such
employees Parent's standard confidentiality and assignment of inventions
agreement.

     5.11 Removal of Liens. The Company shall remove all Liens pursuant to the
Uniform Commercial Code on the property of the Company prior to or concurrently
with the Closing.

     5.12 Stockholder List. Immediately prior to the Closing, the Company shall
provide Parent a statement certified by any officer of the Company setting forth
any changes which would have been required to be set forth on Section 2.2(a) and
Section 2.2(b) of the Disclosure Schedule as if such sections of Disclosure
Schedules had been made and delivered as of Closing.

                                   ARTICLE VI
           SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

     6.1 Survival of Representations, Warranties and Covenants. The
representations and warranties of the Company contained in this Agreement, or in
any certificate or other instrument delivered pursuant to this Agreement, shall
terminate nine (9) months after the Closing Date (the "TERMINATION DATE");
provided, however, that the representations and warranties of the Company
contained in Section 2.2 and Section 2.9 hereof shall survive indefinitely, and
until the expiration of the applicable statute of limitations, respectively. The
representations and warranties of the Stockholder contained in this Agreement,
or in any certificate or other instrument delivered pursuant to this Agreement,
shall terminate on the Termination Date. The representations and warranties of
Parent and Sub contained in this Agreement, or in any certificate or other
instrument delivered pursuant to this Agreement, shall terminate on the
Termination Date.

     6.2 Recovery For Losses.

         (a) Indemnification. The Stockholder agrees to indemnify and hold
Parent and its officers, directors and affiliates harmless against all claims,
losses, liabilities, damages, deficiencies, costs and expenses, including
reasonable attorneys' fees and expenses of investigation and defense (including,
without limitation, indirect and consequential damages) (hereinafter
individually a "LOSS" and collectively "LOSSES") incurred by Parent, its
officers, directors, or affiliates (including the Surviving Corporation)
(collectively, the "INDEMNIFIED PARTIES") directly or indirectly as a result of
any inaccuracy or breach of a representation or warranty of the Company
contained in this Agreement or in any certificate, instrument or other document
delivered by Company pursuant to the terms of this Agreement, any failure by the
Company to perform or comply with any covenant



                                      -32-
<PAGE>   36

contained herein. Nothing herein shall limit the liability of the Parent, the
Company or Stockholder for any breach of any representation, warranty or
covenant if the Merger does not close. The Stockholder shall not have any right
of contribution from the Company or Parent with respect to any Loss pursuant to
this Article VI. Any claims for Losses must be made on or before the Termination
Date.

         (b) Limitations on Indemnification. Except (i) as to any inaccuracy or
breach of a representation or warranty contained in Section 2.2 and Section 2.9
hereof and (ii) for claims based on fraud, in the event the Merger is
consummated, the maximum amount that the Indemnified Parties may recover for
losses under this Agreement shall be the Aggregate Consideration and the
Additional Consideration, if such Additional Consideration is paid by Parent. In
the event of (i) any inaccuracy or breach of a representation or warranty
contained in Section 2.2 and Section 2.9 hereof, or (ii) any claim based on
fraud, the Indemnified Parties may recover any and all losses from the
Stockholder without limitation. Notwithstanding any provision of this Agreement
to the contrary, after the Effective Time Parent shall not be entitled to
indemnification until it has recognized Losses in excess of $50,000 in the
aggregate, in which case Parent shall be entitled to recover for all Losses in
excess of $50,000.

                                  ARTICLE VII
                               GENERAL PROVISIONS

     7.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
messenger or courier service, or mailed by registered or certified mail (return
receipt requested) or sent via facsimile (with acknowledgment of complete
transmission) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice); provided, however,
that notices sent by mail will not be deemed given until received:

         (a) if to Parent, to:

             XCare.net, Inc.
             6400 S. Fiddler's Green Circle
             Suite 1400
             Englewood, CO 80111
             Attention: Chief Executive Officer
             Telephone No.: (720) 554-1220
             Facsimile No.:  (303) 488-9705

             with a copy to:

             Wilson Sonsini Goodrich & Rosati
             Professional Corporation
             650 Page Mill Road

                                      -33-
<PAGE>   37



             Palo Alto, California 94304
             Attention:  Kathleen B. Bloch, Esq.
             Telephone No.: (650) 493-9300
             Facsimile No.: (650) 493-6811

         (b) if to the Company, to:

             United/Healthscope, Inc.
             4828 Parkway Plaza Blvd.
             Two Parkway Plaza, Suite 170
             Charlotte, NC  28217
             Attention:  Bob Dawson
             Telephone No.: (704) 329-7065
             Facsimile No.: (704) 329-7075

         (c) if to the Stockholder, to:

             AHR Seller Group LLC
             c/o Atlantic Medical Capital, L.P.
             156 West 56th Street, Suite 1605
             New York, NY 10019
             Attention: H. Tomkins O'Connor
             Telephone No.: (212) 307-3580
             Facsimile No.: (212) 957-1586

             With a copy to:

             O'Sullivan, Graev & Karabell, LLP
             30 Rockefeller Plaza, 27th Floor
             New York, NY  10112
             Attention:  Audrey A. Rohan, Esq.
             Telephone No.:  (212) 408-2400
             Facsimile No.:  (212) 218-6220

     7.2 Interpretation. The words "include," "includes" and "including" when
used herein shall be deemed in each case to be followed by the words "without
limitation." The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

     7.3 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.

                                      -34-
<PAGE>   38

     7.4 Entire Agreement; Assignment. This Agreement, the Exhibits hereto, the
Disclosure Schedule, the Confidential Disclosure Agreement, and the documents
and instruments and other agreements among the parties hereto referenced herein:
(i) constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings both
written and oral, among the parties with respect to the subject matter hereof,
(ii) are not intended to confer upon any other person any rights or remedies
hereunder and (iii) shall not be assigned by operation of law or otherwise,
except that Parent may assign its rights and delegate its obligations hereunder
to its affiliates as long as Parent remains ultimately liable for all of
Parent's obligations hereunder.

     7.5 Severability. In the event that any provision of this Agreement or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.

     7.6 Other Remedies. Any and all remedies herein expressly conferred upon a
party will be deemed cumulative with and not exclusive of any other remedy
conferred hereby, or by law or equity upon such party, and the exercise by a
party of any one remedy will not preclude the exercise of any other remedy.

     7.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
Each of the parties hereto irrevocably consents to the exclusive jurisdiction
and venue of any court within New York County, State of New York, in connection
with any matter based upon or arising out of this Agreement or the matters
contemplated herein, agrees that process may be served upon them in any manner
authorized by the laws of the State of New York for such persons and waives and
covenants not to assert or plead any objection which they might otherwise have
to such jurisdiction, venue and such process. Each of the parties hereto
irrevocably waives such person's right to a jury trial of any claim or cause of
action arising out of this Agreement or any of the transactions contemplated
hereby and waives and covenants not to assert or plead any objection which such
person might otherwise have to such waiver of jury trial.

     7.8 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.


                                      -35-
<PAGE>   39



         IN WITNESS WHEREOF, Parent, Sub, the Company and the Stockholder have
caused this Agreement to be signed, all as of the date first written above.

XCARE.NET, INC.                        AX ACQUISITION
                                       CORPORATION

By:                                    By:
    ------------------------------         ---------------------------------
      Name:                                Name:
      Title:                               Title:


                                       UNITED/HEALTHSCOPE, INC.

                                       By:
                                           --------------------------------
                                           Name:
                                           Title:


                                       STOCKHOLDER

                                       By:
                                           --------------------------------
                                           Name:
                                           Title:





<PAGE>   40

                      AGREEMENT AND PLAN OF REORGANIZATION

                                  BY AND AMONG

                                 XCARE.NET, INC.

                           AX ACQUISITION CORPORATION

                               UNITED/HEALTHSCOPE

                                       AND

                              AHR SELLER GROUP, LLC



                          Dated as of November 8, 2000



<PAGE>   41


                                INDEX OF EXHIBITS
<TABLE>
<CAPTION>

         EXHIBIT                    DESCRIPTION
         -------                    -----------

<S>                                 <C>
         Exhibit A                  Form of Certificate of Merger

         Exhibit B                  Registration Rights Agreement

</TABLE>


<PAGE>   42


                                    EXHIBIT A

                          FORM OF CERTIFICATE OF MERGER





<PAGE>   43



                                    EXHIBIT B

                          REGISTRATION RIGHTS AGREEMENT