Document:

Exhibit 99.5

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THIS SECURITY AND THE  SECURITIES  ISSUABLE  UPON EXERCISE  HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT
(i)  PURSUANT  TO A  REGISTRATION  STATEMENT  UNDER  THE ACT  WHICH  HAS  BECOME
EFFECTIVE AND IS CURRENT WITH RESPECT TO THE  SECURITIES,  OR (ii) PURSUANT TO A
SPECIFIC  EXEMPTION  FROM  REGISTRATION  UNDER THE ACT BUT ONLY UPON THE  HOLDER
HEREOF FIRST HAVING  OBTAINED THE WRITTEN  OPINION OF COUNSEL OR OTHER  EVIDENCE
REASONABLY  SATISFACTORY  TO THE  COMPANY,  THAT  THE  PROPOSED  DISPOSITION  IS
CONSISTENT WITH ALL APPLICABLE  PROVISIONS OF THE ACT AS WELL AS ANY APPLICABLE,
"BLUE SKY" OR SIMILAR SECURITIES LAW.
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                                                          October 15, 2004

                                     WARRANT

                                  DYNTEK, INC.

      For good and valuable  consideration  the receipt and sufficiency of which
is hereby  acknowledged  by  DynTek,  Inc.,  a  Delaware  corporation,  with its
principal office at 18881 Von Karman Ave., Irvine, CA 92612 (the "Company"),  DC
Asset  Management LLC (the "Holder"),  of 830 Third Avenue,  New York, NY 10022,
subject to the terms and conditions of this Warrant, is hereby granted the right
to purchase,  at the initial  exercise price (the "Initial  Exercise  Price") of
$0.50 per share of common stock,  $0.0001 par value, of the Company (the "Common
Stock"),  at any one or more times  after the date  hereof  until  5:00 p.m.  on
September  30, 2009,  in the  aggregate,  1,150,000  shares of Common Stock (the
"Shares") subject to adjustment as provided in Section 5 hereof.

      This  Warrant  initially  is  exercisable  at the Initial  Exercise  Price
payable in cash  (except as provided  below),  by wire  transfer of  immediately
available funds or other form of payment satisfactory to the Company, subject to
adjustment as provided in Section 5 hereof.

      1. Exercise of Warrant.  The purchase  rights  represented by this Warrant
are exercisable at the option of the Holder hereof,  in whole or in part, at one
or more times  during any period in which this  Warrant may be  exercised as set
forth  above.  The Holder  shall not be deemed to have  exercised  its  purchase
rights  hereunder  until the Company  receives  written  notice of the  Holder's
intent to exercise its purchase rights hereunder. The written notice shall be in
the form of the Subscription  Form attached hereto and made a part hereof.  Less
than  all of the  Shares  may be  purchased  under  this  Warrant.  In  lieu  of
exercising this Warrant by the payment of cash, the Holder may elect to receive,
without the payment by the Holder of any additional consideration,  shares equal
to the  value  of this  Warrant  (or the  portion  thereof  being  canceled)  by
surrender of this Warrant at the principal  office of the Company  together with
notice of such  election,  in which event the Company  shall issue to the holder
hereof a number of shares of Common Stock computed using the following formula:

<PAGE>

                                    Y (A - B)
                                    ---------
                                X =     A

Where

            X --  The  number  of  shares  of  Common  Stock to be issued to the
                  Holder pursuant to this net exercise;

            Y --  The  number of shares of Common  Stock in respect of which the
                  exercise election is made;

            A --  The Market Price of one share of the Company's Common Stock at
                  the time the exercise election is made;

            B --  The Exercise Price (as adjusted to the date of net exercise).

      In addition to issuing to the Holder the number of shares  represented  by
"X" in the forgoing  formula  pursuant to such exercise,  the Company shall also
reduce  the  number of Shares  covered  by this  Warrant by the number of shares
represented by "Y" in the foregoing formula.

      As used  herein,  the term  "Market  Price"  shall mean the average of the
closing price of the Company's Common Stock on any national securities exchange,
on the  Nasdaq  National  Market  or the  Nasdaq  SmallCap  Market,  or,  if the
Company's Common Stock is not so listed on any national securities exchange,  on
the Nasdaq National Market or the Nasdaq SmallCap  Market,  then on the domestic
over-the-counter   market  as  reported  by  the  National   Quotation   Bureau,
Incorporated,  or any similar successor  organization,  for the ten (10) trading
days prior to the date the Holder exercises this Warrant.

      2.  Issuance  of  Certificates.  Upon the  exercise of this  Warrant,  the
issuance  of  certificates  for Shares  underlying  this  Warrant  shall be made
forthwith  (and in any event within three days) after the  Company's  receipt of
(i) written notice  hereunder as specified in Section 1 above) and/or (ii) funds
in respect of the Purchase Price (as defined in Section 4(b) hereof) pursuant to
Section 4 hereof  for the shares so  exercised  and such  certificates  shall be
issued in the name of the Holder hereof.

      3.  Restriction  on  Transfer;  Investment  Representations;  Registration
Rights.

            (a) Restriction on Transfer.  The Holder  acknowledges  that neither
this Warrant nor any Shares  issuable upon exercise  hereof have been registered
under the  Securities  Act of 1933,  as amended (the "Act"),  and neither may be
sold or transferred in whole or in part unless the Holder shall have first given
prior  written  notice  to the  Company  describing  such sale or  transfer  and
furnished to the Company an opinion of counsel  reasonably  satisfactory  to the
Company,  to the effect that the  proposed  sale or transfer may be made without
registration  under the Act;  provided,  however,  that the foregoing  shall not
apply if there  is in  effect a  registration  statement  with  respect  to this
Warrant or the Shares issuable upon exercise hereof,  as the case may be, at the
time of the  proposed  sale or  transfer.  If that is not the  case,  then  upon
exercise,  in part  or in

                                       2
<PAGE>

whole,  of  this  Warrant,  each  certificate  issued  representing  the  Shares
underlying this Warrant shall bear a legend to the foregoing effect.

            (b) Investment  Representations.  The Holder represents that: (i) it
is an accredited investor within the meaning of Regulation D under the Act; (ii)
it is acquiring this Warrant and upon exercise hereof,  the Shares,  for its own
account  for  investment  only,  and not with a view  towards,  or for resale in
connection with, their distribution;  (iii) it has had an opportunity to discuss
the  Company's  business  and  affairs  with  management  of the  Company and is
satisfied with the results thereof;  (iv) it has also had the opportunity to ask
questions of and receive answers from, the Company and its management  regarding
the terms and  conditions of its  investment;  and (v) it has received a copy of
the Company's  Annual Report on Form 10-K relating to fiscal year ended June 30,
2004.

            (c)  Registration  Rights.  The  Holder  shall  have such  rights to
request the Company to register all or any of the Shares  issuable upon exercise
of this Warrant as set forth in the  Registration  Rights  Agreement,  dated the
date hereof,  by and among the  Company,  Holder and other  purchasers  named in
Schedule 1 thereto.

      4. Price.

            (a) Initial and Adjusted  Purchase Price. The initial Purchase Price
shall be equal to the Initial Exercise Price. The adjusted  Purchase Price shall
be the price that shall result from time to time from any and all adjustments of
the  initial  purchase  price in  accordance  with the  provisions  of Section 5
hereof.

            (b) Purchase Price.  The term "Purchase Price" herein shall mean the
initial Purchase Price or the adjusted Purchase Price, as the case may be.

      5. Adjustments of Purchase Price and Number of Shares.  The Shares subject
to this Warrant and the Purchase Price thereof shall be  appropriately  adjusted
by the Company in accordance herewith.

            (a)  Adjustment  to  Purchase  Price and Number of Shares.  In case,
prior to the expiration of this Warrant by exercise or by its terms, the Company
shall issue any shares of its Common Stock as a stock  dividend or subdivide the
number  of  outstanding  shares of its  Common  Stock  into a greater  number of
shares,  then in either of such cases,  the then  applicable  purchase price per
share of the shares of Common  Stock  purchasable  pursuant  to this  Warrant in
effect  at the time of such  action  shall be  proportionately  reduced  and the
number of shares at that time  purchasable  pursuant  to this  Warrant  shall be
proportionately  increased;  and  conversely,  in the  event the  Company  shall
contract the number of  outstanding  shares of Common  Stock by  combining  such
shares into a smaller number of shares,  then, in such case, the then applicable
purchase price per share of the shares of Common Stock  purchasable  pursuant to
this  Warrant  in effect  at the time of such  action  shall be  proportionately
increased and the number or shares of Common Stock purchasable  pursuant to this
Warrant shall be  proportionately  decreased.  If the Company shall, at any time
during  the term of this  Warrant,  declare a  dividend  payable  in cash on its
Common  Stock  and  shall,  at  substantially   the  same  time,  offer  to  its
stockholders  a right to  purchase  new Common  Stock from the  proceeds of such
dividend or for an amount substantially

                                       3
<PAGE>

equal to the dividend, all Common Stock so issued shall, for the purpose of this
Warrant, be deemed to have been issued as a stock dividend. Any dividend paid or
distributed  upon the Common Stock shall be treated as a dividend paid in Common
Stock to the extent that shares of Common  Stock are  issuable  upon  conversion
thereof.

            (b) Purchase Price Reset  Provision.  In the event that prior to the
expiration of this Warrant the Company sells publicly or privately (i) shares of
its Common Stock,  (ii) securities  convertible into shares of its Common Stock,
or  (iii)  options  or  warrants  to  purchase  shares  of its  Common  Stock or
securities  convertible into shares of its Common Stock at a sale, conversion or
exercise price per share (the "Issue Price"),  as the case may be, less than the
Purchase  Price then in effect,  the Purchase  Price shall be reset to the Issue
Price and the number of shares  purchasable  pursuant to this  Warrant  shall be
increased pro rata to the percentage reduction in the Purchase Price,  provided,
however,  that the reset provision shall not apply to (x) any shares issued upon
exercise  or  conversion  of any  currently  outstanding  options,  warrants  or
convertible  securities,  or (y) any Common Stock  options or warrants  issuable
pursuant  to  an  existing   employee   stock  option  plan  or  other  existing
compensation  arrangement or any underlying  Common Stock issued on the exercise
thereof,  but not pursuant to any amendment  relating thereto to the extent such
amendment   increases  the  number  of  shares   issuable  under  such  plan  or
arrangement.  The Issue Price shall be calculated taking into account the amount
paid for the  issuance of such Common  Stock,  option or warrant or  convertible
security  and the  amount,  if any,  payable  upon the  exercise  or  conversion
thereof.  Notwithstanding  the  foregoing,  no  adjustment  shall be made to the
exercise  price of the  Warrants to the extent such  adjustment  would cause the
number of shares  purchasable  pursuant to this Warrant,  when  aggregated  with
other  issuances  of  securities  of the Company  required to be  aggregated  in
accordance with the Nasdaq Marketplace Rules and interpretations  thereunder, to
exceed  nineteen  and  nine-tenths  percent  (19.9%) of the Common  Stock of the
Company outstanding on the date hereof or the date of the initial issuance under
a prior  offering,  if such prior offering would be aggregated  pursuant to such
Rules and interpretations with the shares purchasable pursuant to this Warrant.

            (c)  Recapitalization.  In  case,  prior to the  expiration  of this
Warrant by  exercise  or by its terms,  the Company  shall be  recapitalized  by
reclassifying its outstanding Common Stock, (other than a change in par value to
no par value),  or the Company or a successor  corporation  shall consolidate or
merge  with  or  convey  all or  substantially  all  of its or of any  successor
corporation's  property and assets to any other corporation or corporations (any
such other corporations being included within the meaning of the term "successor
corporation"  hereinbefore  used in the event of any  consolidation or merger of
any such other  corporation with, or the sale of all or substantially all of the
property of any such other corporation to, another corporation or corporations),
then,  as  a  condition  of  such  recapitalization,  consolidation,  merger  or
conveyance,  lawful and adequate  provision  shall be made whereby the Holder of
this Warrant shall thereafter have the right to purchase,  upon the basis and on
the terms and  conditions  specified in this  Warrant,  in lieu of the shares of
Common Stock of the Company  theretofore  purchasable  upon the exercise of this
Warrant, such shares of stock,  securities or assets of the other corporation as
to which the Holder of this  Warrant  would have been  entitled had this Warrant
been exercised immediately prior to such recapitalization, consolidation, merger
or  conveyance;  and in any such event,  the rights of the Warrant Holder to any
adjustment in the number of shares of Common Stock purchasable upon the exercise
of this Warrant,  as hereinbefore  provided,  shall continue and be preserved in
respect of any stock which the Holder becomes entitled to purchase.

                                       4
<PAGE>

            (d) Dissolution.  In case the Company at any time while this Warrant
shall remain unexpired and unexercised  shall sell all or  substantially  all of
its property or dissolve,  liquidate  or wind up its affairs,  lawful  provision
shall be made as part of the terms of any such sale, dissolution, liquidation or
winding  up, so that the Holder of this  Warrant  may  thereafter  receive  upon
exercise  hereof in lieu of each share of Common  Stock of the Company  which it
would have been entitled to receive,  the same kind and amount of any securities
or assets as may be  issuable,   distributable  or  payable  upon any such sale,
dissolution,  liquidation  or  winding  up with  respect to each share of Common
Stock of the Company; provided, however, that in any case of any such sale or of
dissolution, liquidation or winding up, the right to exercise this Warrant shall
terminate on a date fixed by the Company. Such date so fixed shall be no earlier
than 3 P.M. New York City Time, on the thirtieth  (30th) day next succeeding the
date on which notice of such  termination  of the right to exercise this Warrant
has been given by mail to the  registered  Holder of this Warrant at its address
as it appears on the books of the Company.

            (e) No Fractional  Shares.  Upon any exercise of this Warrant by the
Holder, the Company shall not be required to deliver fractions of one share, but
adjustment in the purchase  price payable by the Holder shall be made in respect
of any such  fraction of one share on the basis of the purchase  price per share
then applicable upon exercise of this Warrant.

            (f)  Notices.  In the event that,  prior to the  expiration  of this
Warrant by  exercise  or by its terms,  the Company  shall  determine  to take a
record of its stockholders for the purpose of determining  stockholders entitled
to receive any dividend, stock dividend,  distribution or other right whether or
not it may cause any change or adjustment in the number, amount, price or nature
of the  securities  or assets  deliverable  upon the  exercise  of this  Warrant
pursuant to the foregoing provisions,  the Company shall give at least ten days'
prior  written  notice to the effect  that it intends to take such record to the
registered  Holder of this  Warrant at its address as it appears on the books of
the  Company,  said  notice to specify the date as of which such record is to be
taken,  the purpose for which such record is to be taken,  and the effect  which
the action which may be taken will have upon this Warrant.

            (g) Registered  Owner. The Company may deem and treat the registered
Holder of the Warrant at any time as the absolute owner hereof for all purposes,
and shall not be affected by any notice to the contrary.

            (h) Status. This Warrant shall not entitle any Holder thereof to any
of the rights of a stockholder,  and shall not entitle any Holder thereof to any
dividend  declared upon the Common Stock unless the Holder shall have  exercised
the within  Warrant and purchased the shares of Common Stock prior to the record
date fixed by the Board of Directors for the  determination of holders of Common
Stock entitled to exercise any such rights or receive said dividend.

      6.  Replacement  of  Warrant.  Upon  receipt by the  Company  of  evidence
reasonably  satisfactory to it of the loss, theft,  destruction or mutilation of
this Warrant,  and, in case of such loss, theft,  destruction or mutilation,  of
indemnity or security reasonably satisfactory to it in its sole discretion,  and
reimbursement to the Company of all expenses incidental or relating thereto, and
upon  surrender  and  cancellation  of this  Warrant  (unless  lost,  stolen  or
destroyed),  the Company  will make and deliver a new Warrant of like tenor,  in
lieu of this Warrant.

                                       5
<PAGE>

      7. Notices to Warrant Holder.  Except as set forth in Section 5(f) hereto,
nothing  contained in this Warrant  shall be  construed as  conferring  upon the
Holder  hereof  the  right  to vote or to  consent  or to  receive  notice  as a
shareholder  in respect of any  meetings  of  shareholders  for the  election of
directors  or  any  other  matter,  or as  having  any  rights  whatsoever  as a
shareholder of the Company.

      8.  Notices.  All notices,  requests,  consents  and other  communications
hereunder  shall be in  writing  and shall be deemed to have been duly made when
delivered, or mailed by registered or certified mail, return receipt requested:

            (a) If to the registered  Holder of this Warrant,  to the address of
such Holder as shown on the books of the Company; or

            (b) If to the Company, to the address set forth on the first page of
this Warrant or to such other  address as the Company may designate by notice to
the Holder.

      9.  Successors.  All  the  covenants,   agreements,   representations  and
warranties  contained  in this Warrant  shall bind the parties  hereto and their
respective heirs, executors, administrators,  distributees, permitted successors
and permitted  assigns.  This Warrant may not be  transferred  without the prior
written  consent of the Company.  Any  attempted  assignment in violation of the
preceding sentence shall be void and of no effect.

      10.  Holdings.  The  headings in this Warrant are inserted for purposes of
convenience only and shall have no substantive effect.

      11. Law Governing.  This Warrant is delivered in the State of New York and
shall be construed and enforced in accordance with, and governed by, the laws of
the State of New York,  without  giving  effect to conflicts of law  principles.
Each of the  parties  agrees to the  jurisdiction  of the federal  courts  whose
districts  encompass any part of the City of New York or the state courts of the
State of New York sitting in the City of New York in connection with any dispute
arising under this Warrant and hereby waives, to the maximum extent permitted by
law, any objection,  including any objection based on forum non  conveniens,  to
the bringing of any such proceeding in such jurisdictions.

                                       6
<PAGE>

      IN WITNESS  WHEREOF,  the Company has caused this  Warrant to be signed in
its  corporate  name  by,  and  such  signature  to be  attested  to by,  a duly
authorized officer as of the date first above written.

                                              DYNTEK, INC.

                                              By: _____________________________
                                                  Name: Steven J. Ross
                                                  Title: Chief Executive Officer
ACCEPTED AND AGREED:

DC ASSET MANAGEMENT LLC

By: _______________________________
    Name:
    Title:

                                       7
<PAGE>

                                   ASSIGNMENT

                    (To Be Executed By the Registered Holder
                   to Effect a Transfer of the Within Warrant)

FOR VALUE RECEIVED _____________________________________________________________

hereby sells, assigns and transfers unto _______________________________________

________________________________________________________________________________
(Name)

________________________________________________________________________________
(Address)

________________________________________________________________________________

the right to purchase  Common  Stock  evidenced  by the within  Warrant,  to the
extent  ___________  of shares  of Common  Stock,  and does  hereby  irrevocably
constitute and appoint _________________________________________________________
to  transfer  the said  right on the books of the  Company,  with full  power of
substitution.

Dated: ________________________, 20__.

                                              __________________________________
                                                          (Signature)

________________________________________________________________________________

NOTICE:     The signature to this  assignment  must  correspond with the name as
            written  upon the case of the within  Warrant  in every  particular,
            without alteration or enlargement, or any change whatsoever and must
            be guaranteed by a bank, other than a savings bank or trust company,
            having an office or  correspondent  in New York, or by a firm having
            membership  on a  registered  national  securities  exchange  and an
            office in New York, New York.

<PAGE>

                              FORM OF SUBSCRIPTION

                  (To be signed only upon exercise of Warrant)

To DynTek, Inc.

The undersigned hereby elects to [check applicable subsection]:

      (a)   Purchase  _________________  (1)  shares of Common  Stock of DynTek,
            Inc.  pursuant  to the terms of the  attached  Warrant  and  tenders
            herewith  payment in full for the purchase price of the shares being
            purchased, together with all applicable transfer taxes, if any;

      OR

      (b)   Exercise  the  attached  Warrant for  ____________  shares of Common
            Stock  purchasable  under the Warrant  pursuant to the net  exercise
            provisions of Section 1 of such Warrant.

The undersigned hereby represents that:

      (a)   it is an  accredited  investor  within the meaning of  Regulation  D
            under the Act; and

      (b)   it is acquiring the Shares for its own account for investment  only,
            and not with a view towards, or for resale in connection with, their
            distribution.

Dated:

                                              __________________________________
                                              (Signature  must  conform  in  all
                                              respects  to  name  of  Holder  as
                                              specified   on  the  face  of  the
                                              Warrants)

                                              __________________________________
                                                          (Address)

---------------
      (1)   Insert  here the  maximum  number  of  shares  or,  in the case of a
            partial  exercise,  the  portion  thereof as to which the Warrant is
            being exercised.Exhibit 99.7

                          AGREEMENT AND PLAN OF MERGER

                                  by and among

                                  DynTek, Inc.

                             ITI Acquisition Corp.,

                         Integration Technologies, Inc.,

               the Shareholders of Integration Technologies, Inc.

            and Casper Zublin, Jr. as the Shareholder Representative

                          dated as of October 14, 2004

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

<PAGE>

                          AGREEMENT AND PLAN OF MERGER

      THIS AGREEMENT AND PLAN OF MERGER (the  "Agreement"),  is made and entered
into as of October 14, 2004, by and among DynTek,  Inc., a Delaware  corporation
("Parent"),  ITI  Acquisition  Corp., a California  corporation and wholly owned
Subsidiary  of  Parent  ("Merger  Sub"),  Integration   Technologies,   Inc.,  a
California  corporation (the "Company"),  the shareholders on the signature page
hereto (the  "Shareholders")  and Casper  Zublin,  Jr.,  in his  capacity as the
shareholder  representative  (the  "Representative").  Certain other capitalized
terms used in this Agreement are defined in Exhibit A attached hereto.

                                    RECITALS

      WHEREAS, the respective Boards of Directors of Parent,  Merger Sub and the
Company believe it is in the best interest of each company and their  respective
stockholders  to consummate the business  combination  transaction  provided for
herein  in which  Merger  Sub would  merge  with and into the  Company  with the
Company as the surviving corporation (the "Merger");

      WHEREAS, the respective Boards of Directors of Parent,  Merger Sub and the
Company have approved this Agreement and the Merger,  upon the terms and subject
to the conditions  set forth in this  Agreement in accordance  with the Delaware
General  Corporation  Law  ("DGCL"),  the  California  General  Corporation  Law
("CGCL") and their respective charter documents; and

      WHEREAS, each of Parent, Merger Sub and the Company desire to make certain
representations,  warranties,  covenants and  agreements in connection  with the
Merger and also to prescribe various conditions to the consummation thereof.

                                    AGREEMENT

      NOW, THEREFORE, in consideration of the foregoing and the mutual promises,
representations,  warranties,  covenants and agreements  herein  contained,  the
parties hereto, intending to be legally bound, hereby agree as follows:

                                   ARTICLE 1

                                   THE MERGER

      1.1. The Merger. Upon the terms and subject to the conditions set forth in
this Agreement,  and in accordance with the DGCL and the CGCL,  Merger Sub shall
be merged  with and into the  Company  at the  Effective  Time of the Merger (as
defined in Section 1.3).  Following the Merger, the separate corporate existence
of Merger Sub shall  cease,  and the Company  shall  continue  as the  surviving
corporation  (the "Surviving  Corporation")  and shall succeed to and assume all
the rights, properties,  liabilities and obligations of Merger Sub in accordance
with the CGCL.

      1.2.  Closing.  The closing of the Merger (the "Closing") shall take place
at the offices of Stradling  Yocca Carlson & Rauth at 660 Newport  Center Drive,
Suite 1600,  Newport Beach,  California  92660 at the date and time on which the
conditions to Closing set forth in Article 9 of this  Agreement  shall have been
satisfied  or waived  by the  appropriate  party or at such time as the  parties
hereto agree. The date on which the Closing actually occurs and the transactions
contemplated hereby become effective is hereinafter  referred to as the "Closing
Date." At the time of the Closing,

<PAGE>

Parent,  Merger Sub and the Company  shall  deliver the  certificates  and other
documents and instruments required to be delivered hereunder.

      1.3.  Effective  Time of the Merger.  At the Closing,  the parties  hereto
shall (a) cause an  agreement of merger in  substantially  the form of Exhibit B
(the  "California  Agreement  of  Merger")  to be  executed  and filed  with the
Secretary  of State of the State of  California,  as provided in Section 1103 of
the CGCL and (b) take all such other and  further  actions as may be required by
the CGCL or other applicable Law to make the Merger effective.  The Merger shall
become  effective  as of the  date  and  time of the  filing  of the  California
Agreement  of Merger.  The date and time of such  effectiveness  are referred to
herein as the "Effective Time."

      1.4. Effects of the Merger.  Subject to the foregoing,  the effects of the
Merger  shall be as provided in the  applicable  provisions  of the DGCL and the
CGCL.

      1.5.  Articles of Incorporation  and Bylaws of the Surviving  Corporation.
The Articles of  Incorporation of Merger Sub as in effect  immediately  prior to
the  Effective  Time shall be the  Articles of  Incorporation  of the  Surviving
Corporation  until  thereafter  changed  or amended  as  provided  therein or in
accordance  with  applicable  Law.  The  Bylaws  of  Merger  Sub  as  in  effect
immediately  prior to the  Effective  Time shall be the Bylaws of the  Surviving
Corporation  until  thereafter  changed  or amended  as  provided  therein or in
accordance with applicable law.

      1.6.  Directors  and  Officers.  The  directors and officers of Merger Sub
immediately  prior to the Effective  Time shall be the directors and officers of
the Surviving Corporation until their successors shall have been duly elected or
appointed and qualified in accordance with applicable Law or until their earlier
death,  resignation  or removal in accordance  with the Surviving  Corporation's
Articles of Incorporation and Bylaws.

                                   ARTICLE 2

                    EFFECT OF THE MERGER ON THE CAPITAL STOCK
                            OF COMPANY AND MERGER SUB

      2.1.  Effect on Capital  Stock.  At the  Effective  Time, by virtue of the
Merger and without any action on the part of Parent, Merger Sub or the Company:

            (a) Capital Stock of Merger Sub. Each issued and  outstanding  share
of capital  stock of Merger Sub shall by virtue of the  Merger and  without  any
action on the part of any holder  thereof,  be  converted  into one share of the
Company's common stock. Such newly issued shares shall thereafter constitute all
of the issued and outstanding capital stock of the Surviving Corporation.

            (b) Conversion of the Company Stock.  Subject to other provisions of
this Article 2:

                  (i) Each share of the  Company  Stock  issued and  outstanding
immediately  prior to the  Effective  Time shall,  by virtue of the  Merger,  be
converted automatically into the right to receive (A) an amount in cash equal to
the Per Share Cash Consideration;  (B) a payment of the Per Share Collared Stock
Consideration,  pursuant to Section 2.3; (C) a contingent cash payment, pursuant
to Section 2.4, equal to the Per Share EBITDA Earn-Out Consideration; and

                                       2
<PAGE>

(D) a contingent  cash payment,  pursuant to Section 2.5, equal to the Per Share
Revenue Earn-Out Consideration.

                  (ii) The capitalization of the Company as of immediately prior
to the Effective Time shall be set forth on a Merger  Consideration  certificate
to  be  delivered  by  the  Company  to  the  Parent  at  Closing  (the  "Merger
Consideration  Certificate").  Parent  and the  Surviving  Corporation  shall be
entitled to rely on the Merger  Consideration  Certificate  in  connection  with
payment of the Merger Consideration pursuant to this Section 2.1.

                  (iii)  Each  share of Company  Stock  issued  and  outstanding
immediately prior to the Effective Time shall no longer be outstanding and shall
automatically  be canceled and retired and shall cease to exist, and each holder
of a  certificate  representing  any such shares  shall cease to have any rights
with respect  thereto,  except the right to receive,  upon the  surrender of any
such   certificates,   the  Merger   Consideration  to  be  issued  or  paid  in
consideration therefor upon the surrender of such certificate in accordance with
Sections 2.2, without interest.

                  (iv)  Each  share of  Company  Stock  held by the  Company  as
treasury  stock or held by  Parent,  Merger Sub or any  Subsidiary  or parent of
Parent,  Merger Sub or the Company immediately prior to the Effective Time shall
be canceled, retired and cease to exist, and no consideration shall be delivered
with respect thereto.

      2.2. Surrender and Payment.

            (a)  Immediately  after the Effective  Time,  upon surrender by each
holder of record of a  certificate  or  certificates  (the  "Certificates")  for
cancellation  to the  Parent or to such agent or agents as may be  appointed  by
Parent,  the holder of such Certificate shall be entitled to receive in exchange
therefor the Merger  Consideration,  and the  Certificate so  surrendered  shall
forthwith be cancelled.  Until so surrendered,  each  Certificate will be deemed
from and after the Effective Time, for all corporate  purposes,  to evidence the
right to receive the Merger Consideration.

            (b) If any  portion of the Merger  Consideration  is to be paid to a
Person  other  than the  registered  holder  of the  Shares  represented  by the
Certificates  surrendered in exchange therefor,  it shall be a condition to such
payment  that the  Certificates  so  surrendered  shall be properly  endorsed or
otherwise  be in proper form for transfer  and that the Person  requesting  such
payment shall pay to the Parent any transfer or other taxes required as a result
of such payment to a Person other than the  registered  holder of such Shares or
establish  to the  satisfaction  of the Parent that such tax has been paid or is
not payable.

            (c) If any  Certificate  shall have been lost,  stolen or destroyed,
upon the making of an affidavit of that fact, in form and  substance  acceptable
to the Parent,  by the person  claiming such  Certificate to be lost,  stolen or
destroyed, and complying with such other conditions as the Parent may reasonably
impose (including the execution of an indemnification undertaking or the posting
of an indemnity  bond or other surety in favor of the Parent with respect to the
Certificate alleged to be lost, stolen or destroyed), the Parent will deliver to
such  person  the  Merger   Consideration   payable  in  respect  of  each  such
Certificate, without interest thereon.

      2.3.  Payment of Collared Stock  Consideration  After the Closing.  On the
terms and subject to the conditions of this Section 2.3, holders of Shares shall
be entitled to receive an

                                       3
<PAGE>

aggregate  number of whole shares of Parent  Common  Stock,  rounded down to the
nearest  whole  share,  as  computed  in  accordance  with  Section  2.3(a) (the
"Collared Stock Consideration").

            (a) Collared Stock  Consideration  Amount.  The aggregate  number of
shares of Parent Common Stock payable as Collared Stock  Consideration  shall be
determined based on the average closing sale price per share (the "Share Price")
of Parent Common Stock reported on the Nasdaq SmallCap Market (the "Nasdaq") for
the thirty (30) trading  days prior to (and not  including)  June 28, 2005.  The
aggregate  number of shares of Parent  Common  Stock  payable as Collared  Stock
Consideration  shall be: (i) 2,140,000 shares if the Share Price is greater than
$1.00  but less than  $1.50;  (ii) that  number  of shares  equal to  $2,140,000
divided by the Share Price if the Share Price is less than $1.00,  provided that
the maximum number of shares  issuable  pursuant to this clause (ii) shall be no
more than 4,280,000  shares;  or (iii) that number of shares equal to $3,210,000
divided  by  the  Share  Price  if  the  Share  Price  is  greater  than  $1.50.
Notwithstanding  the  foregoing,  if  the  total  value  of the  Collared  Stock
Consideration  as  determined  pursuant  to this  Section  2.3(a)  is less  than
$2,140,000,  then Parent  shall pay the amount equal to the  difference  in cash
pursuant to Section 2.3(c) below.

            (b) Cash Option.  At the option of the  Representative,  up to fifty
percent (50%) of the Collared  Stock  Consideration  as  determined  pursuant to
Section  2.3(a)  above may be paid in cash,  instead of shares of Parent  Common
Stock. To exercise this option, the Representative  shall provide written notice
to Parent on or before June 29, 2005.

            (c)  Payment  of  Collared   Stock   Consideration.   Upon  a  final
determination  of the Collared  Stock  Consideration  pursuant to Section 2.3(a)
above, Parent shall instruct its transfer agent to issue shares of Parent Common
Stock,   on  or  before  June  30,  2005,   representing   such  Collared  Stock
Consideration to the holders of Shares;  provided that each Shareholder delivers
to Parent an  executed  investment  representation  letter in a form  reasonably
acceptable to Parent.  If any portion of the Collared Stock  Consideration is to
be paid in cash pursuant to Section 2.3(a) and/or  Section 2.3(b) above,  on the
same date that the shares of Parent  Common  Stock are issued  pursuant  to this
Section 2.3(c),  Parent shall pay to the  Representative for distribution to the
holders of Shares the cash payment portion of the Collared Stock  Consideration.
The Collared  Stock  Consideration  shall be allocated  among the holders of the
Shares according to each such holder's  proportionate  ownership interest as set
forth on the Merger Consideration Certificate.

            (d)  Limit  on  Number   of   Shares   of   Parent   Common   Stock.
Notwithstanding  the foregoing  provisions of this Section 2.3, in no event will
Parent be required to issue shares of Parent Common Stock if such issuance would
require  stockholder  approval under applicable Nasdaq Marketplace Rules. In the
event the  number of shares  issuable  as  Collared  Stock  Consideration  is so
limited, Parent will pay the difference to the Shareholders in cash.

      2.4.  Contingent EBITDA Earn-Out  Consideration  After the Closing. On the
terms and subject to the conditions of this Section 2.4, holders of Shares shall
be  entitled  to receive an  aggregate  cash  payment  of up to  $1,500,000  (as
computed in accordance with Section 2.4(a), the "EBITDA Earn-Out Consideration")
in respect of such Shares  following  the  Effective  Time, if and to the extent
earned as provided in this Section 2.4.

            (a)  EBITDA  Earn-Out  Consideration  Amount.  The  EBITDA  Earn-Out
Consideration  shall be equal to the lesser of (i) the amount that is determined
by multiplying the

                                       4
<PAGE>

Company's  EBITDA by the quotient that is equal to  $1.50/$1.00,  for the period
between  July 1, 2004  through  June 30,  2005 (the  "Earn-Out  Period") or (ii)
$1,500,000.

                  (i) Determination of EBITDA. Within thirty (30) days after the
end of the Earn-Out  Period,  Parent and its auditors  shall conduct a review of
the financial statements of the Company as of the end of the Earn-Out Period and
shall prepare and deliver to the  Representative a computation of EBITDA for the
Earn-Out Period (the "EBITDA  Earn-Out  Notice").  Parent and its auditors shall
make  available  to the  Representative  and his  auditors  all records and work
papers used in preparing EBITDA for the Earn-Out Period.  If the  Representative
disagrees with the computation of EBITDA, the Representative  may, within thirty
(30) days  after  receipt of the EBITDA  Earn-Out  Notice,  deliver a notice (an
"EBITDA Earn-Out Objection Notice") to Parent setting forth the Representative's
calculation of EBITDA for such Earn-Out Period. If the  Representative  does not
deliver an Earn-Out Objection Notice within such 30 day period,  then EBITDA for
the Earn-Out Period shall be deemed finally determined to be as set forth in the
EBITDA Earn-Out Notice.  Parent and the Representative shall use reasonable best
efforts to resolve any  disagreements  as to the  computation of EBITDA for such
Earn-Out  Period,  but if they do not obtain a final  resolution  within 30 days
after  Parent  has  received  the  Earn-Out  Objection  Notice,  Parent  and the
Representative shall jointly retain an independent accounting firm of recognized
national standing to resolve any remaining  disagreements  (the "Firm").  Parent
and the Representative shall direct the Firm to render a determination within 30
days after its retention and Parent,  the  Representative,  and their respective
agents  will  cooperate  with the Firm  during  its  engagement.  The Firm  will
consider only those items and amounts in the  calculation of EBITDA set forth in
the EBITDA Earn-Out  Objection  Notice which Parent and the  Representative  are
unable to  resolve.  Parent  and the  Representative  shall  each  make  written
submissions  to the Firm  promptly  (and in any event  within 30 days  after the
Firm's engagement),  which submissions shall contain such party's computation of
EBITDA for the Earn-Out Period and information,  arguments, and support for such
party's  position.   The  Firm  shall  review  such  submissions  and  base  its
determination  solely on them. In resolving any disputed  item, the Firm may not
assign a value to any item greater than the greatest value for such item claimed
by either party or less than the smallest  value for such item claimed by either
party.  The  Firm's  determination  will be based on the  definition  of  EBITDA
included  herein.  The  determination  made by the  Firm  shall be  binding  and
conclusive  on the parties  hereto for all purposes  under this  Agreement.  The
expenses of the Firm shall be shared  equally such that half of the expenses are
paid by  Parent  and half of the  expenses  shall  reduce  the  EBITDA  Earn-Out
Consideration payable to the Shareholders;  provided,  however, Parent shall pay
for all of the  expenses  of the Firm if EBITDA as  determined  by Parent in the
EBITDA  Earn-Out  Notice is understated by more than ten percent (10%) of EBITDA
as determined by the Firm.

                  (ii) Payment  Procedures.  Parent shall  deliver the aggregate
EBITDA Earn-Out Consideration,  as adjusted per Section 2.4(a)(i) above, in cash
to the  Representative  for  distribution to the holders of Shares in accordance
with Section  2.1(b) on or before July 30, 2005 unless  otherwise  subject to an
EBITDA Earn-Out Objection Notice.

      2.5.  Contingent Revenue Earn-Out  Consideration After the Closing. On the
terms and subject to the conditions of this Section 2.5, holders of Shares shall
be  entitled  to receive an  aggregate  cash  payment  of up to  $1,500,000  (as
computed  in   accordance   with   Section   2.5(a),   the   "Revenue   Earn-Out
Consideration")  in respect of such Shares  following the Effective Time, if and
to the extent earned as provided in this Section 2.5.

                                       5
<PAGE>

            (a) Revenue  Earn-Out  Consideration  Amount.  The Revenue  Earn-Out
Consideration  shall be equal to the lesser of (i) the amount that is determined
by  multiplying  the  Company's  gross  revenue  for the  Earn-Out  Period  (the
"Earn-Out  Revenue")  by the  quotient  that is  equal to  $1.00/$12.00  or (ii)
$1,500,000.

            (b) Determination of Earn-Out Revenue. Within thirty (30) days after
the  end of the  Earn-Out  Period,  Parent  shall  prepare  and  deliver  to the
Representative  a statement  to the  Representative  setting  forth the Earn-Out
Revenue and identifying the aggregate  Revenue Earn-Out  Consideration,  if any,
and such  reasonable  detail required to support the calculation of the Earn-Out
Revenue (the "Revenue Earn-Out Notice").  If the  Representative  disagrees with
the computation of the Earn-Out Revenue,  the Representative  may, within thirty
(30)days  after  receipt of the  Revenue  Earn-Out  Notice,  deliver a notice (a
"Revenue   Earn-Out   Objection   Notice")   to   Parent   setting   forth   the
Representative's  calculation of the Earn-Out  Revenue for such Earn-Out Period.
If the  Representative  does not  deliver a Revenue  Earn-Out  Objection  Notice
within such 30 day period,  then the Earn-Out  Revenue for the  Earn-Out  Period
shall be deemed  finally  determined to be as set forth in the Revenue  Earn-Out
Notice.  Parent and the  Representative  shall use  reasonable  best  efforts to
resolve any disagreements as to the computation of the Earn-Out Revenue for such
Earn-Out  Period,  but if they do not obtain a final  resolution  within 30 days
after Parent has received the Revenue Earn-Out Objection Notice,  Parent and the
Representative  shall  jointly  retain the Firm.  Parent and the  Representative
shall  direct  the Firm to  render a  determination  within  30 days  after  its
retention  and Parent,  the  Representative,  and their  respective  agents will
cooperate with the Firm during its engagement. The Firm will consider only those
items and amounts in the  calculation  of the Earn-Out  Revenue set forth in the
Revenue Earn-Out Objection Notice which Parent and the Representative are unable
to resolve. Parent and the Representative shall each make written submissions to
the Firm promptly (and in any event within 30 days after the Firm's engagement),
which submissions shall contain such party's computation of the Earn-Out Revenue
for the Earn-Out Period and information, arguments, and support for such party's
position.  The Firm shall  review such  submissions  and base its  determination
solely on them. In resolving any disputed  item, the Firm may not assign a value
to any item  greater  than the  greatest  value for such item  claimed by either
party or less than the smallest value for such item claimed by either party. The
Firm's  determination  will be based on the  definition of the Earn-Out  Revenue
included  herein.  The  determination  made by the  Firm  shall be  binding  and
conclusive  on the parties  hereto for all purposes  under this  Agreement.  The
expenses of the Firm shall be shared  equally such that half of the expenses are
paid by Parent  and half of the  expenses  shall  reduce  the  Revenue  Earn-Out
Consideration payable to the Shareholders;  provided,  however, Parent shall pay
for all of the expenses of the Firm if the  Earn-Out  Revenue as  determined  by
Parent in the Revenue  Earn-Out  Notice is  understated by more than ten percent
(10%) of Revenue as determined by the Firm.

            (c) Payment of Revenue Earn-Out Consideration.  Parent shall deliver
the aggregate  Revenue Earn-Out  Consideration,  as adjusted pursuant to Section
2.5(b) above, in cash to the  Representative  for distribution to the holders of
Shares in  accordance  with  Section  2.1(b) on or before  July 30,  2005 unless
otherwise subject to an EBITDA Earn-Out Objection Notice.

      2.6. Change in Control.  The maximum amount of the  consideration  payable
pursuant  to  Sections  2.3,  2.4  and  2.5  shall  be  paid  in full as soon as
practicable upon a Change in Control of Parent (i.e. $3,210,000,  in the case of
the Collared Stock Consideration; $1,500,000, in the case of the EBITDA Earn-Out
Consideration   and   $1,500,000,   in  the   case  of  the   Revenue   Earn-Out
Consideration).  In such an  event,  the  Share  Price  for the  Collared  Stock
Consideration  shall be based on average closing price as reported on the Nasdaq
for the thirty (30) trading days prior to the earlier

                                       6
<PAGE>

of (i)  public  announcement  of a Change  in  Control  transaction  or (ii) two
trading days prior to consummation of a Change in Control transaction.

      2.7.  Additional  Actions.  If, at any time after the Effective  Time, the
Surviving  Corporation  shall  consider or be advised  that any deeds,  bills of
sale,  assignments,  assurances  or any other actions or things are necessary or
desirable to vest,  perfect or confirm of record or  otherwise in the  Surviving
Corporation  its right,  title or  interest  in, to or under any of the  rights,
properties or assets of Merger Sub or the Company or otherwise to carry out this
Agreement,  the officers and  directors of the  Surviving  Corporation  shall be
authorized  to execute and deliver,  in the name and on behalf of Merger Sub and
the Company,  all such deeds,  bills of sale,  assignments and assurances and to
take and do, in the name and on behalf of Merger  Sub or the  Company,  all such
other  actions and things as may be necessary  or desirable to vest,  perfect or
confirm  any and all right,  title and  interest  in, to and under such  rights,
properties or assets in the  Surviving  Corporation  or otherwise  carry out the
transactions contemplated by this Agreement.

      2.8.  Withholding Taxes;  Payments to Public Officials.  Parent and Merger
Sub shall be entitled to deduct and withhold from any  consideration  payable or
otherwise  deliverable  to holders of Shares  pursuant  to this  Agreement  such
amounts as Parent and Merger Sub may be required to deduct or withhold therefrom
under the Code or under any provision of state, local or foreign Tax Law. To the
extent such amounts are so deducted or withheld,  such amounts  shall be treated
for all  purposes  under this  Agreement  as having  been paid to the holders of
Shares to whom such amounts would  otherwise have been paid.  Neither Parent nor
Merger Sub shall be liable to holders of Shares for any cash  amounts  delivered
to any public official pursuant to any applicable abandoned property, escheat or
similar Law.

                                   ARTICLE 3

              REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
                                  SHAREHOLDERS

      The Company and the  Shareholders,  jointly and  severally,  represent and
warrant to Parent and  Merger  Sub that,  except as set forth in the  disclosure
schedules  delivered  by the  Company to Parent  and  Merger  Sub (the  "Company
Disclosure  Schedule")  which  have been  provided  to Parent  prior to the date
hereof:

      3.1.  Corporate  Existence and Power.  The Company is a  corporation  duly
incorporated,  validly existing and in good standing under the laws of the State
of California,  and has all corporate  powers and authority and all governmental
licenses, authorizations, permits, consents and approvals required to own, lease
and operate its properties and to carry on its business as now conducted, except
for those licenses, authorizations,  permits, consents and approvals the absence
of which would not,  individually or in the aggregate,  have a Material  Adverse
Effect on the Company. The Company is duly qualified to do business as a foreign
corporation   and  is  in  good  standing  in  each   jurisdiction   where  such
qualification is necessary,  except for those jurisdictions where the failure to
be so qualified  would not,  individually  or in the aggregate,  have a Material
Adverse Effect on the Company.  The Company has  heretofore  delivered to Parent
true and complete copies of the Company's  Articles of Incorporation  and Bylaws
as currently in effect.

      3.2. Subsidiaries.  The Company does not own, directly or indirectly,  any
equity  or other  ownership  interest  in any  corporation,  partnership,  joint
venture or other entity or enterprise.

                                       7
<PAGE>

      3.3. Corporate Authorization.

            (a) The execution,  delivery and  performance by the Company of this
Agreement  and the  consummation  of the  transactions  contemplated  hereby are
within  the  Company's  corporate  powers and have been duly  authorized  by all
necessary  corporate action,  except for the required approval of the holders of
the Company's  capital stock in connection with the  consummation of the Merger.
This  Agreement  and the  Merger  have been  duly  authorized  by all  necessary
corporate action of the Company in accordance with the CGCL.

            (b) The  Company's  Board of  Directors,  pursuant  to any action by
written  consent,  has  unanimously  (i) determined  that this Agreement and the
transactions  contemplated hereby (including the Merger) are fair to, and in the
best  interests  of,  its  shareholders,  and (ii)  approved  and  adopted  this
Agreement and the transactions contemplated hereby (including the Merger), which
approval satisfies in full any applicable requirements of the CGCL.

            (c) This  Agreement  has been duly  executed  and  delivered  by the
Company.  This  Agreement  constitutes,  and  the  Transaction  Documents  to be
executed and delivered by the Company will constitute,  legal, valid and binding
obligations of the Company,  enforceable against the Company, as applicable,  in
accordance  with  their  respective  terms,   except  to  the  extent  that  its
enforceability   may  be   limited   by   applicable   bankruptcy,   insolvency,
reorganization,  moratorium or other laws affecting the enforcement of creditors
rights generally or by general equitable principles.

      3.4. Governmental Authorization.  The execution,  delivery and performance
by the  Company of this  Agreement  and the  consummation  by the Company of the
transactions  contemplated  hereby  require  no action by or in  respect  of, or
filing with, any governmental  body, agency,  official or authority,  other than
(a) the filing of the  California  Agreement  of Merger and other  documents  in
accordance with the CGCL, and (b) any other filings, approvals or authorizations
which,  if not obtained,  would not,  individually  or in the aggregate,  have a
Material  Adverse Effect on the Company or Materially  impair the ability of the
Company to consummate the transactions contemplated by this Agreement.

      3.5.  Non-Contravention.  The execution,  delivery and  performance by the
Company  of  this  Agreement  and  the   consummation  by  the  Company  of  the
transactions  contemplated hereby do not and will not (i) contravene or conflict
with the  Articles of  Incorporation  or Bylaws of the  Company,  (ii)  assuming
compliance with the matters  referred to in Section 3.4,  contravene or conflict
with  or  constitute  a  violation  of  any  provision  of  any  Law,  judgment,
injunction,  order or decree  binding upon or applicable  to the Company,  (iii)
require the consent or other  action of any Person  under,  constitute a default
under, or give rise to any right of termination, cancellation or acceleration of
any right or  obligation of the Company or to a loss of any benefit to which the
Company is entitled  under any  provision  of any  Material  agreement  or other
instrument binding upon the Company or any Material license, franchise,  permit,
certificate,  approval or other similar authorization  affecting, or relating in
any way to, the assets or business of the  Company,  (iv) result in the creation
or imposition of any Material Lien on any asset of the Company,  except,  in the
case of clauses (ii) and (iii),  for such matters as would not,  individually or
in the  aggregate,  have a Material  Adverse Effect on the Company or Materially
impair the ability of the Company to consummate the transactions contemplated by
this Agreement.

                                       8
<PAGE>

      3.6. Compliance with Law and Other Instruments.

            (a) The  Company  holds all  licenses,  permits  and  authorizations
necessary for the lawful conduct of its business as now being conducted pursuant
to  all  applicable  Laws  of  all  governmental  bodies,   agencies  and  other
authorities having  jurisdiction over the Company or any part of its operations,
and there are no violations or claimed  violations by the Company,  or action or
proceeding pending against the Company with respect to any such license,  permit
or authorization or any such Law. Section 3.6 of the Company Disclosure Schedule
sets forth all such required licenses, permits and authorizations.

            (b) The  business of the Company has been and is being  conducted in
compliance  with all  applicable  Laws,  except for violations or failures to so
comply that would not, individually or in the aggregate, have a Material Adverse
Effect on the Company.  No investigation  or review by any Regulatory  Authority
with respect to the Company is pending or threatened in writing. The Company has
not received any written  communication  in the past two years from a Regulatory
Authority that alleges that the Company is not in compliance with any applicable
Law.

      3.7. Capitalization.

            (a) The authorized  capital stock of the Company  consists of 50,000
shares of common stock. As of the date of this Agreement,  there are outstanding
44,210 shares of common stock.

            (b)  All  outstanding   shares  of  Company  Stock  have  been  duly
authorized and validly issued and are fully paid and  nonassessable  and free of
preemptive  rights.  Except  as set  forth in this  Section  3.7,  there  are no
outstanding  (i)  shares of  capital  stock or other  voting  securities  of the
Company,  (ii) securities of the Company  convertible  into or exchangeable  for
shares of capital stock or voting  securities of the Company,  or (iii) options,
restricted stock,  stock  appreciation  rights,  other stock based  compensation
awards or other rights to acquire from the Company,  or other  obligation of the
Company to issue, any capital stock, voting securities or securities convertible
into or  exchangeable  for capital  stock or voting  securities  of the Company.
There are no outstanding  obligations  of the Company to  repurchase,  redeem or
otherwise  acquire  any  securities  referred to in clauses  (i),  (ii) or (iii)
above.

            (c)  As  of  the  date  hereof,  there  are  no  outstanding  bonds,
debentures,  notes or other indebtedness of the Company having the right to vote
(or convertible  into or exercisable for Company Stock having the right to vote)
on any matters on which shareholders of the Company may vote.

            (d) All of the  Company  Stock was issued or  granted in  compliance
with all applicable federal and state securities laws.

            (e) To the knowledge of the Company and the Shareholders,  there are
no voting  agreements  or voting  trusts  between or among any Person or Persons
relating to the Company or the Company  Stock.  The Company is not  obligated to
issue or repurchase  any shares of Company Stock for any purpose,  and no Person
has entered  into any  Contract  (whether  preemptive  or  contractual)  for the
purchase, subscription or issuance of any unissued shares or other securities of
the Company, whether now or in the future.

                                       9
<PAGE>

      3.8. Company Financial Statements; Absence of Undisclosed Liabilities.

            (a) Schedule 3.8(a) of the Company Disclosure  Schedule contains the
Company's  unaudited  balance  sheets as of  December  31, 2002 and 2003 and the
related  audited  statements  of income for the fiscal  years then ended and the
Company's  unaudited  balance  sheet as of  September  30,  2004 and the related
unaudited  statement  of income for the period  then  ended  (collectively,  the
"Company Financial Statements"). The Company Financial Statements present fairly
the  financial  condition  and  results of  operations  of the Company as of the
respective  dates and for the respective  periods  referred to in such financial
statements.

            (b) The Company Financial  Statements,  including the notes thereto,
have  been  prepared  in  accordance  with  United  States  generally   accepted
accounting  principles  ("GAAP")  applied  consistently  throughout  the periods
involved (except as disclosed  therein).  No financial  statements of any Person
other than the  Company are  required  to be  included in the Company  Financial
Statements.

            (c) Except as set forth in the  Company  Financial  Statements,  the
Company does not have any  liabilities  or  obligations  of any nature  (whether
accrued,  absolute,   contingent  or  otherwise),  except  for  liabilities  and
obligations incurred in the ordinary course of business and which,  individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect on the Company.

      3.9. Absence of Certain Changes. Since September 30, 2004, the business of
the Company has been  conducted  in the  ordinary  course  consistent  with past
practice and there has not been any:

            (a) event,  occurrence or development of a state of circumstances or
facts which would,  individually  or in the aggregate,  have a Material  Adverse
Effect on the Company (other than adverse effects arising from the execution and
performance of this Agreement, changes in general economic conditions or changes
applicable  generally to the industry) or any event,  occurrence or  development
which  would have a Material  Adverse  Effect on the  ability of the  Company to
consummate the Merger;

            (b)  declaration,  setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company,  or any
repurchase,  redemption or other  acquisition by the Company of any  outstanding
shares of capital stock or other securities of, or other ownership  interests in
the Company;

            (c) split,  combination,  re-classification  of any Company Stock or
any amendment of any term of any outstanding security of the Company;

            (d)  incurrence,  assumption  or  guarantee  by the  Company  of any
indebtedness for borrowed money other than in the ordinary course and in amounts
and on terms consistent with past practices;

            (e) creation or other  incurrence  by the Company of any Lien on any
Asset other than in the ordinary course consistent with past practices;

                                       10
<PAGE>

            (f)  transaction  or  commitment  made, or any contract or agreement
entered into, by the Company  relating to its assets or business  (including the
acquisition or disposition of any assets) or any  relinquishment  by the Company
of any contract or other right, in either case,  Material to the Company,  other
than  transactions  and commitments in the ordinary course  consistent with past
practices and those contemplated by this Agreement;

            (g) change in any method of accounting,  method of tax accounting or
accounting  practice  by the  Company,  except  for  any  such  change  that  is
consistent with GAAP or required by reason of a concurrent change in GAAP;

            (h) (i) grant of any severance or termination  pay to any current or
former director,  officer or employee of the Company,  (ii) entering into of any
employment,  deferred  compensation or other similar agreement (or any amendment
to any such existing agreement) with any current or former director,  officer or
employee of the Company,  (iii) increase in benefits  payable under any existing
severance or termination pay policies or employment agreements, (iv) increase in
compensation,  bonus or other  benefits  payable or otherwise  made available to
current or former directors, officers or employees of the Company (other than in
the  ordinary   course  of  business  for  employees  other  than  officers  and
directors),  (v) the declaration or payment of any bonuses or year-end  payments
to any current or former  directors,  officers or employees  of the Company,  or
(vi)  establishment,  adoption,  or amendment  (except as required by applicable
Law), of any collective  bargaining,  bonus,  profit sharing,  thrift,  pension,
retirement, deferred compensation,  compensation, stock option, restricted stock
or other benefit plan or  arrangement  covering any current or former  director,
officer or employee of the Company;

            (i) labor dispute, other than routine individual grievances,  or, to
the knowledge of the Company and the Shareholders, any activity or proceeding by
a labor union or representative thereof to organize any employees of the Company
or any lockouts,  strikes,  slowdowns,  work stoppages or threats  thereof by or
with respect to such employees;

            (j) tax election or any settlement of tax liability,  in either case
that is Material to the Company;

            (k)  asset   acquisition   or   expenditure  in  excess  of  $50,000
individually or $250,000 in the aggregate;

            (l) payment,  prepayment or discharge of liability other than in the
ordinary course of business or any failure to pay any liability when due;

            (m) write-offs or write-downs of any assets of the Company;

            (n)  creation,  termination  or amendment of, or waiver of any right
under, any Material Contract of the Company;

            (o) damage,  destruction or loss having,  or reasonably  expected to
have, a Material Adverse Effect on the Company;

            (p) event  that,  if taken  during the period  from the date of this
Agreement  through the Effective Time,  would constitute a breach of Section 5.1
hereof; or

            (q) agreement or commitment to do any of the foregoing.

                                       11
<PAGE>

      3.10.  Litigation.  There  is no  action,  suit,  investigation,  audit or
proceeding  pending  against,  or to  the  knowledge  of  the  Company  and  the
Shareholders  threatened  against or  affecting,  the  Company,  its officers or
directors  or any of its  properties  before  any  court  or  arbitrator  or any
governmental body, agency or official. No former shareholder,  employee, officer
or  director of the Company  has any claim  pending or to the  knowledge  of the
Company and the  Shareholders  threatened  against the Company,  its officers or
directors  or any of its  properties  relating to sales of Company  Stock by the
Company or any of the  Company's  current or former  shareholders.  Neither  the
Company nor any of its  officers and  directors  nor any of its  properties  are
subject to any  order,  writ,  judgment,  decree or  injunction  of any court or
arbitrator or any governmental body, agency or official. To the knowledge of the
Company and the  Shareholders,  there are no facts or  circumstances  that could
reasonably  be expected  to give rise to any  actions set forth in this  Section
3.10.

      3.11. Taxes.

            (a) Except as set forth in (or resulting  from matters set forth in)
Section 3.11 of the Company Disclosure Schedule or as could not, individually or
in the  aggregate,  reasonably be expected to have a Material  Adverse Effect on
the Company:

                  (i) the  Company  has  prepared  and  timely  filed  with  the
appropriate  governmental  agencies  all  franchise,  income  and all  other Tax
returns  and  reports  required  to be filed on or  before  the  Effective  Time
(collectively the "Returns"),  taking into account any extension of time to file
granted to or obtained on behalf of the Company;

                  (ii)  all  Taxes  of the  Company  shown  on such  Returns  or
otherwise  known by the  Company to be due or payable  have been  timely paid in
full to the proper authorities, other than such Taxes as are adequately reserved
for in accordance with GAAP;

                  (iii) all  deficiencies  resulting  from Tax  examinations  of
income,  sales and  franchise  and all other Returns filed by the Company in any
jurisdiction  in which such  Returns are  required to be so filed have been paid
and no claim has been made by an authority in a  jurisdiction  where the Company
does  not  file  Returns  that  it is or may be  subject  to  taxation  by  that
jurisdiction;

                  (iv) no deficiency  has been asserted or assessed  against the
Company which has not been satisfied or otherwise  resolved,  and no examination
of  the  Company  is  pending  or,  to the  knowledge  of the  Company  and  the
Shareholders,  threatened for any Material amount of Tax by any taxing authority
and there is no dispute or claim  concerning  any Tax  liability  of the Company
either  claimed by any authority in writing,  or to the knowledge of the Company
and the Shareholders, reasonably expected to be claimed;

                  (v) no extension of the period for assessment or collection of
any Material Tax is currently in effect and no extension of time within which to
file any Material Return has been requested;

                  (vi) all Returns filed by the Company are correct and complete
in all respects or adequate  reserves have been  established with respect to any
additional Taxes that may be due (or may become due) as a result of such Returns
not being correct or complete;

                  (vii) to the knowledge of the Company and the Shareholders, no
Tax liens have been filed with respect to any Taxes;

                                       12
<PAGE>

                  (viii) the  Company  has not:  (A) filed a consent  under Code
Section 341(f) concerning collapsible corporations; (B) executed, become subject
to, or entered into any closing  agreement  pursuant to Section 7121 of the Code
or any similar or predecessor provision thereof under the Code or other Tax Law,
(C) received approval to make or agreed to a change in accounting method, or (D)
incurred or assumed any liability  for the Taxes of any Person.  The Company has
disclosed on its federal  income Tax Returns all  positions  taken  therein that
could give rise to a substantial understatement of federal income Tax within the
meaning of Section 6662 of the Code;

                  (ix) no  Company  asset is  property  that is  required  to be
treated as being  owned by any other  Person  pursuant  to the  so-called  "safe
harbor lease"  provisions of former  Section  168(f)(8) of the Code; the Company
has not agreed to make,  nor are they  required to make,  any  adjustment  under
Section  481(a)  of the Code by  reason  of a change  in  accounting  method  or
otherwise;  the  transaction  contemplated  herein  is not  subject  to the  Tax
withholding provisions of Code Section 3406, or of subchapter A of Chapter 3, of
the Code or of any other provision of Law; and the Company is not a party to any
joint  venture,  partnership,  or other  arrangement  or contract which could be
treated as a partnership for federal income Tax purposes;

                  (x) the  Company  has not  entered,  nor does it plan to enter
into, any agreement,  arrangement,  plan or similar circumstance with any Person
that could result in a distribution, apportionment or reallocation under Section
482 of the Code or other similar provision of the Tax Law;

                  (xi) the Company has not made since January 1, 2001,  and will
not make,  any  voluntary  adjustment  by  reason of a change in its  accounting
methods for any pre-Merger period;

                  (xii)  the  Company  has made  timely  payments  of the  Taxes
required to be deducted and withheld in connection with amounts paid or owing to
any employee,  independent  contractor,  creditor,  shareholder,  or other third
party;

                  (xiii) the  Company  is not a party to any Tax  sharing or Tax
matters agreement;

                  (xiv) to the  knowledge  of the Company and the  Shareholders,
the Company is not liable to suffer any recapture, clawback or withdrawal of any
relief or exemption from Tax howsoever arising  (including the entering into and
the consummation of the Merger), and whether by virtue of any act or omission by
the Company or by any other Person or Persons;

                  (xv) to the knowledge of the Company and the Shareholders, the
Company is not liable to be  assessed  for or made  accountable  for any Tax for
which  any  other  Person  or  Persons  may be  liable  to be  assessed  or made
accountable  whether by virtue of the entering into or the  consummation  of the
Merger  or by  virtue  of any act or acts done by or which may be done by or any
circumstance or circumstances involving or which may involve any other Person or
Persons; and

                  (xvi) The Company has not been a United  States real  property
holding  corporation  within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

            (b)  The  Company  is not a party  to any  agreement,  contract,  or
arrangement  that would, as a result of the  transactions  contemplated  hereby,
result, separately or in the aggregate, in

                                       13
<PAGE>

(i) the payment of any "excess parachute payments" within the meaning of Section
280G of the  Code by  reason  of the  Merger,  (ii) the  payment  of any form of
reimbursement  for any Tax incurred by any Person  arising under Section 280G of
the Code, or (iii) the payment of any amounts not deductible by the Company,  in
whole or in part, by reason of Section 162(m) of the Code.

      3.12. The Company Employee Benefit Plans.

            (a) Section 3.12(a) of the Company Disclosure  Schedule sets forth a
list of all of the Company's  employee benefit plans, as defined in Section 3(3)
of ERISA.

            (b) Section 3.12(b) of the Company Disclosure  Schedule sets forth a
true  and  complete  list of all  other  profit-sharing,  deferred  compensation
(including a list of participants therein), bonus, stock option, stock purchase,
stock bonus, phantom stock, vacation pay, holiday pay, severance, dependent care
assistance,   excess  benefit,  incentive  compensation,   salary  continuation,
medical, life or other insurance,  employment,  severance,  termination,  golden
parachute, consulting,  supplemental retirement plan or agreement,  supplemental
unemployment  and  other  employee  benefit  plans,   programs,   agreements  or
arrangements,   including  all  unwritten  employee  benefit  plans,   programs,
agreements and arrangements, if any, maintained or contributed to by the Company
for the benefit of the Company's  Employees (or former employees) or independent
contractors and/or their beneficiaries. The plans identified in Sections 3.12(a)
and  3.12(b)  are  collectively  referred  to  herein  as  "Benefit  Plans."  An
arrangement will not fail to be a Benefit Plan simply because it only covers one
individual,  or because the Company's obligations under the plan arise by reason
of its being a "successor employer" under applicable Law.

            (c) The Company has delivered or made available to Parent a true and
complete  copy of each Benefit Plan and any related  funding  agreements  (e.g.,
trust agreements or insurance contracts),  including all amendments (and Section
3.12(b) of the Company  Disclosure  Schedule  includes a description of any such
amendment that is not in writing).

            (d) Except as set forth in Section 3.12(d) of the Company Disclosure
Schedule,  the Company does not maintain or contribute to, nor has maintained or
contributed  to, any  Benefit  Plan that is  subject to Section  302 of ERISA or
Section 412 of the Code.

            (e) No  Benefit  Plan is a  "multi-employer  plan,"  as  defined  in
Section 3(37) of ERISA, nor is a plan described in Section 4063(a) of ERISA.

            (f) All costs of  administering,  and  contributions  required to be
made by the Company to, each Benefit Plan under the terms of that Benefit  Plan,
ERISA, the Code or any other applicable Law have been timely made, and are fully
deductible.  All amounts  properly accrued to date as liabilities of the Company
under, or with respect to, each Benefit Plan (including  administrative expenses
and incurred  but not reported  claims) for the current plan year of the Benefit
Plan have been recorded on the appropriate  books, to the extent required by Law
or GAAP.

            (g) Except as set forth in Section 3.12(g) of the Company Disclosure
Schedule, each Benefit Plan has been maintained and operated in accordance with,
and complies  currently  with, in all Material  respects,  all applicable  Laws,
including  but not  limited to ERISA and the Code.  Each  Benefit  Plan has been
operated in all Material respects in accordance with its terms.

                                       14
<PAGE>

            (h) To the  knowledge  of the Company and the  Shareholders,  (i) no
prohibited  transaction  has occurred  with respect to any of the Benefit  Plans
which is not exempt under Section 4975 of the Code and Section 406 of ERISA, and
(ii) the Company has not engaged in any transaction  with respect to any Benefit
Plan which could subject it to either a Material civil penalty assessed pursuant
to Section 409, 502(i) or 502(l) of ERISA, or a Material tax imposed pursuant to
Section 4975 or 4976 of the Code.

            (i) Except as set forth in Section 3.12(i) of the Company Disclosure
Schedule, the Company does not maintain any plan that provides (or will provide)
medical or death  benefits to one or more,  current or future  former  employees
(including  retirees) beyond their  retirement or other  termination of service,
other than benefits  that are required to be provided  pursuant to Section 4980B
of the Code or state Law continuation coverage or conversion rights.

            (j) Except as set forth in Section 3.12(j) of the Company Disclosure
Schedule, there are no proceedings or lawsuits,  pending or, to the knowledge of
the Company and the  Shareholders,  threatened,  and,  to the  knowledge  of the
Company  and  the  Shareholders,  are no  investigations,  either  currently  in
progress  or expected to be  instituted  in the future,  relating to any Benefit
Plan, by any  administrative  agency,  whether local, state or federal or by any
fiduciary, participant or beneficiary of such plan.

            (k) Except as set forth in Section 3.12(k) of the Company Disclosure
Schedule,  none of the  Benefit  Plans  or any  other  employment  agreement  or
arrangement  entered  into by the  Company  will  entitle  any current or former
employee to any benefits or other  compensation  that become payable solely as a
result of the consummation of this transaction.

            (l) None of the Benefit  Plans are  subject to the tax on  unrelated
business  taxable income or unrelated debt financed  income under Section 511 of
the Code.

            (m) Except as set forth in Section 3.12(m) of the Company Disclosure
Schedule, to the knowledge of the Company and the Shareholders,  no Benefit Plan
has any  interest  in any  annuity  contract or other  investment  or  insurance
contract  issued by an  insurance  company  that is the  subject of  bankruptcy,
conservatorship, rehabilitation or similar proceeding.

            (n) Section  3.12(n) of the Company  Disclosure  Schedule lists each
individual who (i) has elected to continue  participating in a group health plan
of the  Company  pursuant to an election  under  COBRA,  or (ii) has not made an
election under COBRA but who is still eligible to make such election.

      3.13.  Banking and Finders' Fees. There is no investment  banker,  broker,
finder or other intermediary, which has been retained by or is authorized to act
on behalf of the  Company  who might be  entitled  to any fee or  commission  in
connection with the transactions contemplated by this Agreement.

      3.14. Environmental Compliance.

            (a) The Company is in compliance with all Environmental Laws and all
Environmental  Permits  (except where  non-compliance  would not have a Material
Adverse Effect upon the Company).

                                       15
<PAGE>

            (b) The Company has not received any written  notice  regarding  any
violation of any Environmental Laws, or any Company  Environmental  Liabilities,
including any investigatory, remedial or corrective obligations, relating to the
Company or its facilities arising under Environmental Laws.

            (c) Except as set forth in Section  3.14 of the  Company  Disclosure
Schedule:

                  (i)  The  Company  has  not  caused,  or  is  not  causing  or
threatening  to cause any disposals or releases of any Hazardous  Material on or
under any properties which it (A) leases, occupies or operates or (B) previously
owned, leased, occupied or operated and, to the knowledge of the Company and the
Shareholders,  without inquiry,  no such disposals or releases occurred prior to
the Company  having taken title to, or  possession  or operation of, any of such
properties;  and to the knowledge of the Company and the  Shareholders,  without
inquiry,  no such  disposals or releases are  migrating or have  migrated off of
such  properties in subsurface  soils,  groundwater  or surface waters after the
Company has taken title to, or  possession  or operation of any such  properties
and, to the knowledge of the Company and the Shareholders,  no such disposals or
releases are  migrating or have  migrated off of such  properties  in subsurface
soils, groundwater or surface water prior to such time;

                  (ii) The  Company  has not (A)  arranged  for the  disposal or
treatment  of Hazardous  Material at any  facility  owned or operated by another
Person,  or (B) accepted  any  Hazardous  Material for  transport to disposal or
treatment  facilities  or  other  sites  selected  by  the  Company  from  which
facilities or sites there has been a release or there is a release or threatened
release  of  a  Hazardous   Material;   any  facility   identified   in  Section
3.14(c)(ii)(A)  was duly licensed in accordance with Law and has not been listed
in connection with the Comprehensive Environmental Response,  Compensation,  and
Liability Act (CERCLA) by the United States  Environmental  Protection  Agency's
Comprehensive  Environmental Response,  Compensation,  and Liability Information
System  (CERCLIS) or National  Priorities  List (NPL) or any  equivalent or like
listing of sites under state or local Law  (whether  for  potential  releases of
substances listed in CERCLA or other substances);

                  (iii)  The  Company  does not have any  reason to  believe  or
suspect that, and to the knowledge of the Company and the Shareholders,  without
inquiry,  there is no release or threatened  release of, any Hazardous  Material
originating  from a property  other than those leased or operated by the Company
has  come to be (or may  come to be)  located  on or  under  properties  leased,
occupied or operated by the Company;

                  (iv) The  Company  has not ever  installed,  used,  buried  or
removed any surface  impoundment  or  underground  tank or vessel on  properties
owned,  leased,  occupied  or  operated  by the  Company  or any of the  Company
Subsidiaries;

                  (v) The Company is and has been in  compliance in all Material
respects with all federal, state, local or foreign Laws, permits,  approvals and
authorizations  relating to air, water, industrial hygiene and worker health and
safety,  anti-pollution,  hazardous or toxic  wastes,  materials or  substances,
pollutants  or  contaminants,  and  to the  knowledge  of the  Company  and  the
Shareholders,  without inquiry,  no condition exists on any of the real property
owned  by or used  in the  business  of the  Company  that  would  constitute  a
violation  of any such Law or that  constitutes  or  threatens  to  constitute a
public or private nuisance; and

                                       16
<PAGE>

                  (vi) There has been no litigation,  administrative proceedings
or  investigations  or any other actions,  claims,  demands notices of potential
responsibility  or requests for information  brought or, to the knowledge of the
Company and the Shareholders,  threatened  against the Company or any settlement
reached  by it with any  Person or  Persons  alleging  the  presence,  disposal,
release or threatened release of any Hazardous Material on, from or under any of
such properties or as otherwise relating to potential environmental  liabilities
or the actual or alleged injury to human health or the  environment by reason of
the current  conditions or operation of the Company facilities or past condition
and operations or activities of the Company facilities.

      3.15. Collective Bargaining Arrangements. The Company is not a party to or
bound by any  employee  collective  bargaining  agreement,  nor is the Company a
party  to  or  affected  by  or,  to  the  knowledge  of  the  Company  and  the
Shareholders,  threatened  with, any dispute or controversy with a union or with
respect to unionization or collective  bargaining involving the employees of the
Company.

      3.16. Accounts Receivable; Deferred Revenue.

            (a) The accounts  receivable  reflected  in the balance  sheet as of
September 30, 2004 of the Company Financial  Statements are owned free and clear
by the Company and are based on the Company's reasonable judgment and its normal
credit review procedures, business practices and GAAP, and are fully collectible
in accordance  with their terms in an amount not less than their  aggregate book
value. "Aggregate book value," for this purpose, shall mean the recorded amounts
of such accounts receivable,  less any recorded allowance for doubtful accounts,
trade  allowances and return  allowances,  all as established in accordance with
GAAP  consistently  applied.  Any such allowances for doubtful  accounts,  trade
allowances  and  return  allowances  are  established  in  accordance  with past
practices and are consistent with past  collectibility  results and returns.  To
the  knowledge  of the  Company  and the  Shareholders,  there  are no  facts or
circumstances  which may indicate that any recorded  allowances are  inadequate.
Except as set forth in Section 3.16(a) of the Company Disclosure  Schedule,  and
subject  to  adjustments  mutually  agreed  upon by the  parties,  all  accounts
receivable for customer  collections and billings prior to the Closing Date have
been properly  recorded on the Company's books and records on a timely basis and
in the month in which the  Company's  efforts  and  activities  generating  such
income were expended.

            (b) The  deferred  revenue  reflected  in the  balance  sheet  as of
September 30, 2004 of the Company Financial  Statement is based on the Company's
reasonable  judgment and business  practices,  as established in accordance with
GAAP consistently applied. Except as set forth in Section 3.16(b) of the Company
Disclosure  Schedule,  all deferred revenue relating to contracts executed prior
to the  Closing  Date has been  properly  recorded  on the  Company's  books and
records on a timely  basis and in the month in which the  Company  received  the
cash payment.

      3.17.  Warranties.  To the knowledge of the Company and the  Shareholders,
there is no fact or event which has  occurred at any time since  January 1, 2001
which has formed or could  reasonably be expected to form the basis of any claim
against  the  Company,  whether or not covered by  insurance,  for breach of any
implied warranty.

      3.18.  Interests in Real Property.  Section 3.18 of the Company Disclosure
Schedule is the  complete  and correct  list and brief  description  of all real
property leased by the Company on the Closing Date. The Company does not own any
real  property.  All real  property  leases to which the  Company is a party are
valid and in full  force and effect  and are valid and  binding  on the  parties

                                       17
<PAGE>

thereto,  assuming  enforceability as to the parties other than the Company, and
the  Company  is  not  in  Default  of  any  Material  provision  thereof.   All
improvements  and  fixtures  made by or at the  direction of the Company on real
properties  leased  by the  Company  conform  in all  Material  respects  to all
applicable  health,  fire, safety,  environmental,  zoning and building laws and
ordinances; and all materials,  buildings,  structures (or the space used by the
Company in such buildings or structures) and fixtures used by the Company in the
conduct of its business are in good  operating  condition  and repair,  ordinary
wear and tear  excepted,  and are sufficient for the type and magnitude of their
respective operations.

      3.19.  Personal Property.  The Company has good and marketable title, free
and clear of all title defects,  security interests,  pledges,  options, claims,
liens,  encumbrances and restrictions of any nature  whatsoever to all inventory
and receivables and to any item of machinery,  equipment,  or tangible  personal
property  reflected on the balance sheet as of September 30, 2004 of the Company
Financial  Statements  or used in the  business  by the Company  (regardless  of
whether  reflected on the balance  sheet as of September 30, 2004 of the Company
Financial Statements). All the machinery,  equipment and other tangible personal
property used in the business by the Company is in good operating  condition and
repair,  normal wear and tear  excepted.  At the Closing Date,  the Company will
possess all of the personal  property  wherever  located required to conduct its
respective business as conducted prior to the Closing.

      3.20.  Employees,  Directors  and  Officers.  Section  3.20 of the Company
Disclosure  Schedule comprises a complete and correct list of all of the present
employees,  officers and directors of the Company (the  "Employees"),  including
the direct  compensation  (including  wages,  salaries and actual or anticipated
bonuses)  to be paid in the  current  fiscal  year to such  Persons.  Except  as
disclosed in Section 3.20 of the Company Disclosure  Schedule,  no unpaid salary
or bonuses,  other than for the immediately  preceding pay period and other than
pursuant  to the  existing  deferred  compensation  plans of the  Company is now
payable to any of such officers, directors or employees.

      3.21. Patents, Intellectual Property; Software.

            (a) The Company owns or possesses legally enforceable rights to use,
all  Intellectual  Property  Material to the  operation  of the  business of the
Company as  currently  conducted,  or to products or  services  currently  under
development by the Company (collectively, "Material Intellectual Property"), and
has the right to use, license,  sublicense or assign the same as contemplated in
the operation of the business as currently  conducted without Material liability
to,  or any  requirement  of  consent  from,  any other  Person  or party.  Such
Intellectual  Property  constitutes all Intellectual  Property necessary for the
conduct of the business of the Company in the manner conducted immediately prior
to the  Closing.  All  Material  Intellectual  Property  is either  owned by the
Company free and clear of all Liens or is used pursuant to a license  agreement;
each such  license  agreement  is valid and  enforceable  and in full  force and
effect  assuming  enforceability  as to the parties other than the Company;  the
Company is not in  Material  Default  thereunder;  and to the  knowledge  of the
Company and the Shareholders,  no corresponding  licensor is in Material Default
thereunder.  Neither the use, development,  manufacture,  marketing,  licensing,
furnishing or intended use of any Products currently licensed,  utilized,  sold,
provided or  furnished  by the Company or  currently  under  development  by the
Company infringes or otherwise conflicts with any Intellectual Property or other
right of any Person;  there is no pending or threatened (in writing) litigation,
adversarial  proceeding,  administrative  action  or  other  challenge  or claim
relating to any Material  Intellectual  Property;  there is no outstanding Order
relating to any Material Intellectual  Property; to the knowledge of the Company
and the Shareholders, there is currently no infringement by any

                                       18
<PAGE>

Person of any Material  Intellectual  Property;  and the  Material  Intellectual
Property  owned,  used or possessed by the Company is sufficient and adequate to
conduct  the  business  of the  Company to the full  extent as such  business is
currently conducted.  To the knowledge of the Company and the Shareholders,  the
Products do not include any Intellectual Property that is in the public domain.

            (b) The  Company has the right to use,  pursuant to valid  licenses,
all software  development  tools,  library functions,  compilers,  and all other
Third Party Software that are used in the operation of the Company or to create,
modify,  compile,  operate or support any Software that is Material Intellectual
Property or is incorporated  into any Product,  except for any deficiencies that
would not have a Material  Adverse Effect on the Company.  Without  limiting the
foregoing,  no open source or public library Software,  including any version of
Software  licensed  pursuant  to  any  GNU  public  license,  was  used  in  the
development  or  modification  of any  Software  that is  Material  Intellectual
Property or is incorporated into any Product.

            (c) The Company has taken reasonable steps to protect,  maintain and
safeguard   the  Material   Intellectual   Property,   including   any  Material
Intellectual Property for which improper or unauthorized disclosure would impair
its  value  or  validity   Materially,   and  has  executed  and  required  such
nondisclosure   agreements   as  are   reasonably   necessary   to  protect  the
confidentiality  of  Material   Intellectual   Property  and  made  filings  and
registrations in connection with the foregoing  reasonably required to safeguard
the Material Intellectual Property.

            (d) The  Company  is the  sole  and  exclusive  owner  of all  Owned
Software that is required to conduct its business including, without limitation,
the products and services  currently under  development by the Company.  Section
3.21(d)(i)  of the Company  Disclosure  Schedule  sets forth a true and complete
list of all Material Owned Software owned by the Company. Section 3.21(d)(ii) of
the  Company  Disclosure  Schedule  sets forth a true and  complete  list of all
Material Third Party Software used by the Company.

            (e) The  Company  is the  sole  and  exclusive  owner  of all  Owned
Databases  that  are  required  to  conduct  its  business  including,   without
limitation,  the  products  and  services  currently  under  development  by the
Company. Section 3.21(e)(i) of the Company Disclosure Schedule sets forth a true
and complete  list of all  Material  Owned  Databases  of the  Company.  Section
3.21(e)(ii)  of the Company  Disclosure  Schedule sets forth a true and complete
list of all Material Third Party Databases used by the Company.

            (f) No Material  confidential  or trade  secret  information  of the
Company   has  been   provided   to  any  Person   except   subject  to  written
confidentiality  agreements,  except  for  any  such  disclosure  which  has not
resulted and could not  reasonably  be expected to result in a Material  Adverse
Effect on the Company.

            (g) The Company has valid  copyrights in all Material  copyrightable
material  necessary  for the conduct of its  business as being  conducted on the
date hereof, whether or not registered with the U.S. copyright office, including
all  copyrights  in the Products  containing  Material  copyrightable  material.
Consummation of the  transactions  contemplated  hereby will not alter or impair
the validity of any copyrights or copyright registrations.

            (h) To the  knowledge  of  the  Company  and  the  Shareholders,  no
employee of the Company is in violation of any term of any employment  contract,
patent disclosure  agreement or any other contract or agreement  relating to the
relationship of any such employee with the Company or

                                       19
<PAGE>

any other party because of the nature of the business  conducted by, or proposed
to be conducted by the Company.

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

            (j) Section 3.21(j) of the Company Disclosure  Schedule sets forth a
list of all  issued and  pending  patents,  all  registered  copyrights  and all
applications  therefor  and all  trademarks  and  service  marks  whether or not
registered  currently used in the business conducted by the Company,  including,
without  limitation,  products and services  currently under  development by the
Company.

            (k) Except in the normal course of prosecution:  (i) the Company has
not taken any  action or failed  to take any  action  that  would  result in the
abandonment,   cancellation,   forfeiture,   relinquishment,   invalidation   or
unenforceability of any trademark,  copyright, patent or any application for any
of the foregoing,  (ii) all  registered  trademarks and all patents owned by the
Company, to the extent filed with the United States Patent and Trademark Office,
have  been  filed  and  obtained  in  accordance   with  all  applicable   legal
requirements  and are currently in effect and in compliance  with all applicable
legal requirements (including, in the case of registered trademarks,  the timely
post-registration  filing of affidavits of use and  incontestability and renewal
applications),  and without limiting the generality of any of the foregoing, the
Company has timely paid all filing, examination, issuance, post registration and
maintenance  fees,  annuities  and the like  associated  with or  required  with
respect to any of the foregoing.

            (l)  No  trademark  or  patent  owned  by  the  Company,  and to the
knowledge of the Company and the  Shareholders,  no trademark or patent licensed
to the  Company,  has  been or is now  involved  in any  interference,  reissue,
reexamination,  opposition  or  cancellation  proceeding  and, to the  Company's
knowledge and the  Shareholders,  no such action is or has been  threatened with
respect to any such trademarks or patents.

      3.22. Contracts.

            (a) Except as set forth in Section 3.22(a) of the Company Disclosure
Schedule, the Company is not a party to any:

                  (i) Contract that involves performance of services or delivery
of goods or  materials  by or to the  Company of an amount or value in excess of
$100,000;

                  (ii) Contract that was not entered into in the ordinary course
of business and that involves  expenditures or receipts of the Company in excess
of $50,000;

                  (iii)   lease,   rental  or  occupancy   agreement,   license,
installment and conditional  sale  agreement,  and other Contract  affecting the
ownership of,  leasing of, title to, use of, or any leasehold or other  interest
in, any real or personal property;

                  (iv)  licensing  agreement or other  Contract  with respect or
relating to Material Intellectual Property;

                                       20
<PAGE>

                  (v) collective  bargaining  agreement and other Contract to or
with any labor union or other representative of a group of employees;

                  (vi) joint venture,  partnership,  and other Contract (however
named)  involving a sharing of profits,  losses,  costs,  or  liabilities by the
Company with any other Person;

                  (vii) Contract containing covenants that in any way purport to
restrict in any  material  respect the  business  activity of the Company or any
current or future  Affiliate  of the Company or limit the freedom of the Company
or any  current  or future  Affiliate  of the  Company  to engage in any line of
business or to compete with any Person anywhere in the world;

                  (viii)  Contract  providing  for  payments to or by any Person
based on sales, purchases, or profits, other than direct payments for goods;

                  (ix) Contract  between the Company,  on the one hand,  and any
Affiliate of the Company, on the other hand;

                  (x)  Contract   regarding   indebtedness  for  borrowed  money
(including  guaranties of the obligations of others with respect thereto) or any
capitalized  lease obligation or similar  arrangement,  or under which a Lien on
any  tangible  or  intangible  asset of the  Company or any of their  respective
capital stock or equity securities is imposed;

                  (xi)  Contract  under which the Company has advanced or loaned
money to any of its Employees other than advancement of expenses in the ordinary
course of business;

                  (xii)  Contract  covering  the  employment,   compensation  or
severance, of or otherwise relating to, any Employee;

                  (xiii) Contract for joint,  collaborative  or shared research,
development or research and development;

                  (xiv)  Contract  that  obligates  the  Company  to  act  as  a
guarantor or surety,  or to  otherwise  provide  credit  support for any Person,
irrespective  of  the  amount  involved  or  type  of  underlying  liability  or
obligation;

                  (xv)  Contract  that  contains  obligations  of the Company to
indemnify third parties against any type of liability,  whether known,  unknown,
fixed, contingent or otherwise; and

                  (xvi) amendment,  supplement and modification (whether oral or
written)  in respect  of any of the  foregoing  or any  Contract,  agreement  or
commitment to enter into amend, supplement or modify any of the foregoing.

            (b) The  Company has  allowed  Parent to inspect,  and to the extent
requested by Parent has  delivered  or caused to be delivered to Parent,  a true
and correct copy of, each  written  Contract  listed in Schedule  3.22(a) of the
Company Disclosure  Schedule,  and a written summary setting forth the terms and
conditions of each oral Contract referred to therein, in each case, as in effect
on, and as amended through the date hereof.  With respect to each such Contract:
(i) the  Company  is not in breach or  default,  and,  to the  knowledge  of the
Company and its Shareholders no event has occurred or circumstances  exist which
(with or without  notice or lapse of time or both) could  reasonably be expected
to  constitute  a  material  breach  or  Default  of,  or  permit   termination,

                                       21
<PAGE>

modification or acceleration  under, the Contract;  (ii) no party has repudiated
any provision of the  Contract;  (iii) the Contract is legally valid and binding
and is enforceable in accordance  with its terms against the Company and, to the
knowledge of the Company and the Shareholders, any other parties thereto, except
that  (A)  such  enforcement  may  be  subject  to any  bankruptcy,  insolvency,
reorganization,  moratorium, fraudulent transfer or other Laws, now or hereafter
in effect,  relating  to or limiting  creditors'  rights  generally  and (B) the
remedy of specific  performance  and  injunctive  and other  forms of  equitable
relief,  may be subject to equitable defenses and to the discretion of the court
before which any  proceeding  therefor may be brought;  and (iv) the Company has
not  given  to,  or  received  from  any  other  Person,  any  notice  or  other
communication  regarding  any actual or alleged  violation or breach  thereof or
default thereunder.  The Contracts relating to the design, sale,  manufacture or
provisions of the Products or services by the Company  thereof have been entered
into in the  ordinary  course of business and have been entered into without the
commission  of any  action  alone or in  concert  with any  other  Person or any
consideration  having been paid or promised  that is or would be in violation of
any Law.

      3.23.  Affiliate  Transactions.  There are no Material  Contracts or other
Material transactions between the Company and any Affiliate of the Company.

      3.24. Insurance and Banking Facilities.  The Company has in full force and
effect all insurance  and indemnity  policies that are customary in coverage and
amount  for a company  of its size and  industry.  Section  3.24 of the  Company
Disclosure  Schedule  comprises a complete and correct list of (i) all contracts
of  insurance  and  indemnity  of or relating to the Company  (except  insurance
related to employee benefits) in force at the date of this Agreement  (including
name of insurer or indemnitor,  agent,  annual  charge,  coverage and expiration
date); (ii) the names and locations of all banks or depository  organizations in
which the Company has accounts; and (iii) the names of all Persons authorized to
draw on such  accounts.  All premiums and other payments due with respect to all
contracts  of  insurance  or  indemnity in force at the date hereof have been or
will be paid,  and the  Company  knows  of no  circumstance  (including  without
limitation the consummation of the transactions contemplated by this Agreement),
which  has  caused,  or  might  cause,  any  such  contract  to be  canceled  or
terminated.  There are no  Material  claims by the Company  under any  insurance
policies  of the Company as to which  coverage  has been  questioned,  denied or
disputed by the underwriters of such policies.

      3.25.  Powers of Attorney and  Suretyships.  The Company does not have any
powers of attorney  outstanding  (other  than a power of attorney  issued in the
ordinary course of business with respect to tax matters or to customs agents and
customs  brokers),  and,  except for  obligations  as an endorser of  negotiable
instruments  incurred in the ordinary  course of business,  the Company does not
have any  obligations  or  liabilities  (absolute or  contingent)  as guarantor,
surety, co-signer,  endorser,  co-maker,  indemnitor or otherwise respecting the
obligation of any other Person.

      3.26.  Minutes and Stock  Records.  The Company has  provided  Parent with
complete  and  correct  copies of the  minute  books and  stock  records  of the
Company.  Such  items  contain a complete  and  correct  record in all  Material
respects  of all  proceedings  and  actions  taken at all  meetings  of, and all
actions taken by written consent by, the holders of capital stock of the Company
and its Board of Directors,  and all original issuances and subsequent transfers
and repurchases of their respective capital stock.

      3.27. Customers;  Payors.  Section 3.27 of the Company Disclosure Schedule
lists (i) the top 20 customers by billings  for the Company  (collectively,  the
"Customers"), during twelve month

                                       22
<PAGE>

period ended June 30, 2004.  The Company has received no oral or written  notice
or other  indication  from any of the  Customers  or  payors  stating  that such
Customer  or payor  intends to  terminate  its  business  relationship  with the
Company, or Materially reduce the volume of business it does with the Company.

      3.28. Transfer of SMB Business. The transfer of the SMB Business shall not
not (i) contravene or conflict with the Articles of  Incorporation  or Bylaws of
the Company,  (ii)  contravene or conflict with or constitute a violation of any
provision  of any Law,  judgment,  injunction,  order or decree  binding upon or
applicable  to the  Company,  (iii)  require the consent or other  action of any
Person  under,  constitute  a  default  under,  or  give  rise to any  right  of
termination,  cancellation  or  acceleration  of any right or  obligation of the
Company or to a loss of any benefit to which the  Company is entitled  under any
provision of any Material agreement or other instrument binding upon the Company
or any  Material  license,  franchise,  permit,  certificate,  approval or other
similar  authorization  affecting,  or  relating  in any way to,  the  assets or
business of the  Company,  (iv)  result in the  creation  or  imposition  of any
Material Lien on any asset of the Company,  except,  in the case of clauses (ii)
and (iii), for such matters as would not, individually or in the aggregate, have
a Material Adverse Effect on the Company or Materially impair the ability of the
Company to consummate the transactions contemplated by this Agreement.

      3.29. Full Disclosure.  All of the  representations and warranties made by
the Company in this Agreement,  and all statements set forth in the certificates
delivered by the Company at the Closing  pursuant to this  Agreement,  are true,
correct and  complete  in all  Material  respects  and do not contain any untrue
statement  of a Material  fact or omit to state any Material  fact  necessary in
order to make such  representations,  warranties or statements,  in light of the
circumstances  under  which  they  were  made,  misleading.  The  copies  of all
documents  furnished by the Company  pursuant to the terms of this Agreement are
complete and accurate copies of the original documents.

                                   ARTICLE 4

             REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

      Parent and Merger Sub, jointly and severally, represent and warrant to the
Company that, except as set forth in Parent Disclosure Schedule:

      4.1.  Corporate  Existence  and Power.  Each of Parent and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the  state  of its  incorporation.  Each of  Parent  and  Merger  Sub has all
requisite  corporate  powers  and  authority  and  all  governmental   licenses,
authorizations,  permits,  consents  and  approvals  required  to  carry  on its
business as now conducted, except for those licenses,  authorizations,  permits,
consents and  approvals the absence of which would not,  individually  or in the
aggregate, have a Material Adverse Effect on Parent. Parent is duly qualified to
do  business  as  a  foreign  corporation  and  is  in  good  standing  in  each
jurisdiction   where  such   qualification   is  necessary,   except  for  those
jurisdictions where the failure to be so qualified would not, individually or in
the aggregate,  have a Material Adverse Effect on Parent.  Parent has heretofore
delivered  to the  Company  true  and  complete  copies  of the  Certificate  of
Incorporation and Bylaws, as currently in effect,  for each of Parent and Merger
Sub.

                                       23
<PAGE>

      4.2. Corporate Authorization.

            (a) The  execution,  delivery and  performance by each of Parent and
Merger Sub of this Agreement and the Transaction  Documents and the consummation
of the  transactions  contemplated  hereby and thereby are within the  corporate
powers of each of Parent and Merger Sub,  and have been duly  authorized  by all
necessary corporate action.

            (b) The board of  directors  of each of Parent and Merger  Sub, at a
meeting duly called and held,  have each (i) determined  that this Agreement and
the Transaction  Documents and the transactions  contemplated hereby and thereby
(including  the  Merger)  are  in  the  best   interests  of  their   respective
stockholders,  and (ii) approved and adopted this Agreement and the  Transaction
Documents and the transactions  contemplated  hereby and thereby  (including the
Merger),  which  approval  satisfies  in full  any  applicable  requirements  of
Subchapter IX of the DGCL.

            (c) This  Agreement  has been duly  executed and delivered by Parent
and Merger Sub. This Agreement constitutes,  and the Transaction Documents to be
executed and delivered will constitute legal,  valid and binding  obligations of
Parent and Merger Sub, enforceable against Parent and Merger Sub, as applicable,
in  accordance  with  their  respective  terms,  except to the  extent  that its
enforceability   may  be   limited   by   applicable   bankruptcy,   insolvency,
reorganization,  moratorium or other Laws affecting the enforcement of creditors
rights generally or by general equitable principles.

      4.3.  Consents  and  Approvals;  No  Violations.  Assuming  the  truth and
accuracy of the Company's  representations  and warranties  contained in Section
3.4, except for filings, permits, authorizations,  consents and approvals as may
be required under, and other applicable  requirements of, the 1933 Act, the 1934
Act, or the rules and regulations promulgated  thereunder,  or of any Regulatory
Authority pursuant thereto,  state securities or blue sky Laws and the filing of
the Agreement of Merger with the Secretary of State of the State of  California,
no filing with or notice to, and no permit,  authorization,  consent or approval
of, any  Governmental  Entity is  necessary  for the  execution  and delivery by
Parent or Merger Sub of this Agreement or the  consummation  by Parent or Merger
Sub of the transactions  contemplated hereby, except where the failure to obtain
such permits,  authorizations,  consents or approvals or to make such filings or
give such  notice  would not have a Material  Adverse  Effect on the  ability of
Parent or Merger Sub to consummate the Merger.  Neither the execution,  delivery
and  performance of this Agreement by Parent or Merger Sub nor the  consummation
by  Parent  or  Merger  Sub of the  transactions  contemplated  hereby  will (a)
conflict  with or  result  in any  breach  of any  provision  of the  respective
Certificate  of  Incorporation  or Bylaws (or similar  governing  documents)  of
Parent or Merger  Sub,  (b) result in a  violation  or breach of, or  constitute
(with or without  due notice or lapse of time or both) a Default  under,  any of
the terms,  conditions  or provisions of any note,  bond,  mortgage,  indenture,
lease, license,  contract,  agreement or other instrument or obligation to which
Parent  or  Merger  Sub is a party  or by  which  any of  them  or any of  their
respective  properties  or assets may be bound or (c) violate  any order,  writ,
injunction,  decree or Law applicable to Parent or Merger Sub or any of Parent's
subsidiaries or any of their respective properties or assets, except in the case
of (b) or (c) for  violations,  breaches  or  defaults  which  would  not have a
Material Adverse Effect on the ability of Parent or Merger Sub to consummate the
Merger.

      4.4. No Prior  Activities.  Except for obligations  incurred in connection
with its incorporation or the negotiation and consummation of this Agreement and
the  transactions  contemplated  hereby,  Merger Sub has  neither  incurred  any
obligation or liability or engaged in any

                                       24
<PAGE>

business  or  activity  of any  type or kind  whatsoever  or  entered  into  any
agreement or arrangement with any person or entity.

      4.5.  Financing.  Parent  has cash or cash  equivalents,  or has  obtained
financing  commitments  in  amounts  sufficient  to  consummate  the  Merger  in
accordance  with the terms of this  Agreement.  Parent has no  knowledge  of any
facts or  circumstances  which  would give it any  reason to  believe  that such
financing will not be available.

      4.6.  Valid  Issuance of Parent Common Stock.  The shares of Parent Common
Stock to be  issued  pursuant  to this  Agreement  will,  when  issued,  be duly
authorized, validly issued, fully paid and non-assessable.

      4.7. SEC Documents; Financial Statements.

      (a) Parent has filed all forms, reports and documents required to be filed
by Parent with the Securities and Exchange Commission since January 1, 2004 (the
"SEC  Documents").  As of  their  respective  filing  dates,  the SEC  Documents
complied  in all  material  respects  with the  requirements  of the  Securities
Exchange Act of 1934, as amended and the Securities Act of 1933, as amended, and
none of the Parent SEC Documents  contained  any untrue  statement of a material
fact or  omitted  to state a  material  fact  required  to be stated  therein or
necessary to make the statements made therein,  in light of the circumstances in
which  they were  made,  not  misleading,  except  to the  extent  corrected  by
subsequently filed Parent SEC Documents.

      (b)  The  financial  statements  of  Parent  included  in the  Parent  SEC
Documents  were  complete  and  correct  in all  material  respects  as of their
respective  filing  dates;  complied as to form in all  material  respects  with
applicable accounting  requirements and with the published rules and regulations
of the SEC with respect  thereto;  were  prepared in accordance  with  generally
accepted accounting  principles applied on a consistent basis and fairly present
the  consolidated  financial  condition and  operating  results of Parent at the
dates and during the periods indicated therein.

      4.8.  Litigation.  There  is no  action,  suit,  investigation,  audit  or
proceeding pending against,  or to the Knowledge of Parent threatened against or
affecting, Parent, its officers or directors or any of its properties before any
court or  arbitrator or any  governmental  body,  agency or official.  No former
shareholder, employee, officer or director of Parent has any claim pending or to
the Knowledge of Parent threatened  against Parent, its officers or directors or
any of its properties  relating to sales Parent Stock by Parent.  Neither Parent
nor any of its officers and directors nor any of its  properties  are subject to
any order,  writ,  judgment,  decree or injunction of any court or arbitrator or
any governmental body, agency or official. To the Knowledge of Parent, there are
no facts or circumstances  that could reasonably be expected to give rise to any
actions set forth in this Section 4.8.

      4.9. Banking and Finders' Fees. There is and will be no investment banker,
broker,  finder or other intermediary retained by or authorized to act on behalf
of Parent or any of the Parent  Subsidiaries who might be entitled to any fee or
commission from Parent or any of the Parent  Subsidiaries  upon  consummation of
the transactions contemplated by this Agreement.

                                       25
<PAGE>

                                   ARTICLE 5

                            COVENANTS OF THE COMPANY

      5.1. Conduct of the Company  Business.  Except as set forth in Section 5.1
of the Company Disclosure  Schedule,  prior to the Closing Date, except with the
prior written consent of Parent or as expressly  contemplated by this Agreement,
the Company shall:

            (a)  conduct  its  business  in  substantially  the same  manner  as
presently  being  conducted and refrain from entering  into any  transaction  or
Contract other than in the ordinary  course of business and consistent with past
practices;  and, accept for accounting  adjustments  mutually agreed upon by the
parties, not make any change in its methods of management, marketing, accounting
(except as required by GAAP), or operations other than in the ordinary course of
business and consistent with past practices;

            (b) obtain  approval from Parent prior to  undertaking  any Material
new business opportunity outside the ordinary course of business;

            (c)  confer at the  request  of Parent  with one or more  designated
representatives of Parent to report Material  operational  matters and to report
the general status of ongoing business operations;

            (d) notify Parent of any governmental complaints,  investigations or
hearings  (or  communications  indicating  that the  same may be  contemplated),
adjudicatory proceedings or submissions involving any Material property or other
Material Assets;

            (e) not (i) grant of any severance or termination pay to any current
or former  director,  officer or  employee of the  Company,  (ii) enter into any
employment,  deferred  compensation or other similar agreement (or any amendment
to any such existing agreement) with any current or former director,  officer or
employee  of the  Company  except as  contemplated  herein,  (iii)  increase  in
benefits  payable under any existing  severance or  termination  pay policies or
employment  agreements,  (iv) increase in compensation,  bonus or other benefits
payable or otherwise made available to current or former directors,  officers or
employees of the Company (other than in the ordinary  course of business  salary
increases for employees other than officers and  directors),  (v) declare or pay
of any bonuses or year-end payments to any current or former directors, officers
or employees of the  Company,  or (vi)  establish,  adopt,  or amend  (except as
required by applicable Law), any collective  bargaining,  bonus, profit sharing,
thrift, pension, retirement, deferred compensation,  compensation, stock option,
restricted  stock or other benefit plan or  arrangement  covering any current or
former director, officer or employee of the Company;

            (f) except in the ordinary  course of business and  consistent  with
past  practices,  not (i) create or incur any  indebtedness  (or, even if in the
ordinary course of business, not in excess of $50,000 in the aggregate), or (ii)
release or create any Liens of any nature whatsoever except for Permitted Liens;

            (g) except in the ordinary  course of business  and,  even if in the
ordinary  course  of  business,   then  not  in  an  amount  to  exceed  $50,000
individually  or  $250,000  in the  aggregate,  not make or  commit  to make any
capital  expenditure,  or enter into any lease of capital equipment as lessee or
lessor;

                                       26
<PAGE>

            (h) pay or discharge  liabilities,  when due, in the ordinary course
of business and consistent with past  practices,  subject to good faith disputes
with respect thereto;

            (i) write-off or write-down any assets of the Company;

            (j) not  amend  the  Articles  of  Incorporation,  Bylaws  or  other
governing instruments of the Company, except as contemplated by this Agreement;

            (k) not make any changes in its  accounting  methods or practices or
revalue  its Assets,  except for (i) those  changes  required by GAAP,  and (ii)
changes in its tax accounting  methods or practices that may be  necessitated by
changes in applicable Tax Laws;

            (l) not issue,  sell, pledge,  encumber,  authorize the issuance of,
enter into any Contract to issue,  sell,  pledge,  encumber,  or  authorize  the
issuance of, or otherwise permit to become outstanding, any additional shares of
the Company Stock, or any stock  appreciation  rights,  or any option,  warrant,
conversion,  or  other  right  to  acquire  any  such  stock,  or  any  security
convertible  into any such  stock,  or pay or declare or agree to pay or declare
any dividend or other distribution with respect to any the Company Stock;

            (m) not make any loan or  otherwise  arrange  for the  extension  of
credit to any Employee or increase the  aggregate  amount of any loan  currently
outstanding to any Employee;

            (n) not sell or otherwise  dispose of any Material Asset or make any
Material  commitment relating to its Assets other than in the ordinary course of
business or enter into or terminate any lease of real property other than in the
ordinary course of business;

            (o) not  purchase or redeem,  or agree to  purchase  or redeem,  any
security of the Company (including any share of Company Stock);

            (p) not transfer or license to any Person or otherwise extend, amend
or modify any rights to the Intellectual Property of the Company,  other than in
the ordinary course of business consistent with past practice;

            (q) not (i) enter into any new Material Contract,  other than in the
ordinary course of business  consistent with past practices,  or (ii) Materially
modify, amend or terminate any Material Contract to which the Company is a party
or waive,  release,  or assign any Material rights or claims thereunder,  in any
such case in a manner Materially adverse to Parent;

            (r) not take any actions that could reasonably be expected to result
in a Material Adverse Effect on the Company; or

            (s) authorize  any, or commit or agree to take any of, the foregoing
actions.

      5.2. Shareholder Approval. The Company will, as promptly as practicable in
accordance  with  applicable Law and its Articles of  Incorporation  and Bylaws,
submit this Agreement,  the Merger and related matters for the consideration and
approval  by  the  Company's   shareholders.   In  connection   with  soliciting
shareholder  approval,  the Company shall  prepare and  distribute to holders of
Shares a disclosure statement which summarizes the material terms and conditions
of the Merger, and this Agreement,  which disclosure statement shall include the
unanimous  recommendation  of the  Company's  Board of Directors in favor of the
Merger. Such

                                       27
<PAGE>

approval by written consent or shareholder vote will be solicited, in compliance
with applicable  Laws. If approval is obtained by written  consent,  the Company
shall give, in a timely manner (and shall provide Parent true and correct copies
of) all  notices  required  to be  given  under  Section  603 of the  CGCL.  The
information  distributed  to the holders of shares  shall not contain any untrue
statement of a material  fact or omit to state any material  fact required to be
stated  therein  or  necessary  in  order  to make the  statements  therein  not
misleading.

      5.3.  Satisfaction  of  Conditions  Precedent.  During  the  term  of this
Agreement,  the Company  will use its  commercially  reasonable  best efforts to
satisfy or cause to be satisfied all the conditions precedent that are set forth
in Article 9, and the Company will use its commercially  reasonable best efforts
to cause the Merger and the other transactions contemplated by this Agreement to
be consummated.

      5.4. No Other Negotiations.  As of the date of this Agreement, the Company
has not entered into any agreement or understanding with, and is not engaging in
any discussions with any third party  concerning an Alternative  Acquisition (as
defined below)  including,  without  limitation,  any agreement or understanding
that would  require  the  Company to notify any third party of the terms of this
Agreement.  From and after the date of this  Agreement  until the earlier of the
Effective  Time or the  termination  of this  Agreement in  accordance  with its
terms,  the Company shall not,  directly or indirectly,  (a) initiate,  solicit,
encourage,   negotiate,   accept  or  discuss  any   transaction  or  series  of
transactions with any Person, other than Parent and its Affiliates involving any
recapitalization, restructuring, financing, merger, consolidation, sale, license
or  encumbrance  or other  business  combination  transaction  or  extraordinary
corporate transaction of the Company which would or could reasonably be expected
to impede,  interfere  with,  prevent or  materially  delay the Merger (any such
efforts  by any  such  Person,  including  a  firm  proposal  to  make  such  an
acquisition,  to be referred to as an  "Alternative  Acquisition"),  (b) provide
information with respect to the Company to any Person, other than Parent and its
Affiliates,  relating to a possible Alternative Acquisition by any Person, other
than Parent and its  Affiliates,  (c) enter into an  agreement  with any Person,
other  than  Parent and its  Affiliates,  providing  for a possible  Alternative
Acquisition,  or  (d)  make  or  authorize  any  statement,   recommendation  or
solicitation in support of any possible  Alternative  Acquisition by any Person,
other than by Parent and its Affiliates.

      If the Company  receives  any  unsolicited  offer,  inquiry or proposal to
enter into discussions or negotiations  relating to an Alternative  Acquisition,
or that could reasonably be expected to lead to an Alternative  Acquisition,  or
any request for nonpublic information relating to the Company, the Company shall
promptly notify Parent thereof,  including information as to the identity of the
party making any such offer,  inquiry or proposal and the specific terms of such
offer,  inquiry or proposal,  as the case may be, and shall keep Parent promptly
informed of any developments with respect to same.

      5.5.  Access.  The Company  shall afford to Parent,  and to the  officers,
employees, accountants, counsel, financial advisors and other representatives of
Parent,  reasonable  access during normal business hours during the period prior
to the  Effective  Time  or the  termination  of  this  Agreement  to all of the
Company's properties, books, contracts, commitments,  personnel and records and,
during such period,  the Company shall furnish promptly to Parent, (a) a copy of
each report,  schedule,  registration  statement and other documents filed by it
during such period pursuant to the  requirements of federal or state  securities
laws and (b) all other  information  concerning  its  business,  properties  and
personnel as Parent or its representatives may reasonably request. Except to the
extent otherwise required by Law, Parent will hold any confidential  information
obtained pursuant to this

                                       28
<PAGE>

Section 5.5 in accordance with the  confidentiality  provisions of the letter of
intent entered into between the Parent and the Company dated  September 17, 2004
(the "Confidentiality Agreement").

      5.6. Notification of Certain Matters. The Company shall give prompt notice
to Parent of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence  of which would cause any the Company  representation or warranty
contained  in this  Agreement  to be  untrue  or  inaccurate  at or prior to the
Effective Time and (ii) any failure of the Company 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 5.6 shall not limit or otherwise affect the remedies available hereunder
to Parent.

                                   ARTICLE 6

                               COVENANTS OF PARENT

      6.1.  Obligations of Merger Sub. Parent shall take all action necessary to
cause  Merger  Sub to  perform  its  obligations  under  this  Agreement  and to
consummate the Merger on the terms and conditions set forth in this Agreement.

      6.2.  Notification of Certain Matters.  Parent shall give prompt notice to
the Company of (i) the occurrence or  non-occurrence of any event the occurrence
or  non-occurrence  of which would cause any Parent  representation  or warranty
contained  in this  Agreement  to be  untrue  or  inaccurate  at or prior to the
Effective  Time and (ii) any  failure of Parent 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 6.4 shall not limit or otherwise affect the remedies available hereunder
to the Company.

      6.3. Transferred Employees.  Parent shall offer to hire, as of the Closing
Date,  subject  in each case to  completion  of an  employment  application  and
execution of any documents as may be lawfully required by Parent,  the employees
set forth on Schedule 6.3 (the  "Transferred  Employees."  The  existing  Parent
benefit plans will be offered to each  Transferred  Employee on the Closing Date
to the extent  commensurate  with the position and seniority of existing  Parent
employees  and the salary for each such  Transferred  Employee  shall be no less
than the salary of such Transferred  Employee paid by the Company as of the date
hereof.

      6.4.  Issuance of Options.  Immediately  after the  Closing,  Parent shall
issue and deliver to Company Employees who become employees of Parent and in the
respective  amounts as determined in the sole  discretion of Parent,  100,000 of
Parent Common  Stock,  which shares shall vest at the rate of one third per year
pursuant to a three year vesting  schedule and shall be conditioned on continued
employment with Parent.

      6.5. Payment of Shareholder  Indebtedness.  Immediately after the Closing,
Parent  shall  contribute  cash  equal to the  Shareholder  Indebtedness  to the
Company and shall cause such  contributed  cash to be used to pay-off and retire
all of the Shareholder Indebtedness.

      6.6.  Satisfaction  of  Conditions  Precedent.  During  the  term  of this
Agreement,  Parent will use its commercially  reasonable best efforts to satisfy
or cause to be  satisfied  all the  conditions  precedent  that are set forth in
Article 9, and Parent will use its commercially reasonable best efforts to cause
the Merger  and the other  transactions  contemplated  by this  Agreement  to be
consummated.

                                       29
<PAGE>

      6.7. Tax Matters.

            (a)  (a)  Preparation  and  Filing  of  Company  Tax  Returns.   The
Shareholders shall prepare and file (or cause the preparation and filing of) all
Tax  Returns  with  respect to the  Company  required  to be filed  prior to the
Closing,  and shall  timely pay (or cause to be paid) all Taxes  required  to be
paid with respect to such  returns.  Parent shall prepare and file (or cause the
preparation  and filing of) all other Tax Returns  with  respect to the Company,
provided however Parent shall permit the Shareholders (or their  representative)
to review any Tax Returns filed by Parent  relating to taxable  periods prior to
the Closing  Date,  and Parent shall make such  revisions to such Returns as are
reasonably requested by the Shareholders (or their representative).

            (b) Contests.  Whenever any Taxing authority asserts a claim,  makes
an  assessment  or  otherwise  disputes  the  amount  of  Taxes  for  which  the
Shareholders  is or may be liable  with  respect  to the  Company  or under this
Agreement,  Parent shall inform the Shareholders  within five (5) business days,
and the  Shareholders  shall  have the right to  control,  at the  Shareholder's
expense,  any resulting  proceedings and to determine whether and when to settle
any such  claim,  assessment  or  dispute  to the  extent  such  proceedings  or
determinations  affects the amount of Taxes for which such  Shareholders  may be
liable under this Agreement or otherwise; provided however that the Shareholders
shall not settle any such  claim,  assessment  or dispute  without  the  written
consent of Parent, which consent shall not be unreasonably withheld

            (c) Tax Records. Parent shall, at its own expense, preserve and keep
records in its possession  relating to the  preparation of any Tax Returns for a
tax period of the Company  ending on or before the  Closing and such  records as
may  be  reasonably  required  for  the  defense  of  any  audit,   examination,
administrative  appeal or  litigation of any such Tax Return for such tax period
until the expiration of the applicable  statute of limitations of the respective
the tax period, which in no case will considered to be longer than six (6) years
from date of the  filing of the  relevant  Tax  Return.  Parent  shall make such
records available to the Shareholders,  at the Shareholders'  expense, as may be
reasonably required by the Shareholders.

            (d)  Cooperation.   Parent,  at  the  Shareholders'  expense,  shall
cooperate with, and make available to, the Shareholders  such Tax data and other
information as may be reasonably required in connection with (i) the preparation
and filing of any Tax Return, election, consent or certification, or any similar
item, (ii) any  determinations  of liability or (iii) any audit,  examination or
other  proceeding  with respect to Taxes ("Tax Data").  Such  cooperation  shall
include,  without  limitation,  making  employees  and  independent  auditors or
accountants  reasonably  available  on  a  mutually  convenient  basis  for  all
reasonable purposes,  including, without limitation, to provide explanations and
background  information and to permit the copying of books, records,  schedules,
workpapers,  notices,  revenue agent reports,  settlements or closing agreements
and other documents  containing the Tax Data. Parent shall execute (or cause the
appropriate  persons to execute) to execute,  powers of attorney in favor of the
Shareholders  as necessary or advisable to enable the  Shareholders  to exercise
their respective rights under this Section 6.7.

                                       30
<PAGE>

                                   ARTICLE 7

                       COVENANTS OF PARENT AND THE COMPANY

      7.1.  Notices of Certain  Events.  The Company and Parent  shall  promptly
notify the other party of:

            (a) any notice or other  communication from any Person alleging that
the  consent  of such  Person  is or may be  required  in  connection  with  the
transactions contemplated by this Agreement;

            (b) any  notice  or other  communication  from any  governmental  or
regulatory  agency in  connection  with the  transactions  contemplated  by this
Agreement;

            (c)  any  actions,  suits,  claims,  investigations  or  proceedings
commenced or, to its knowledge,  threatened against, relating to or involving or
otherwise  affecting such party that, if pending on the date of this  Agreement,
would have been  required  to be  disclosed  pursuant to Articles 3 or 4 or that
relate to the consummation of the transactions contemplated by this Agreement or
any  other  development  that  would  cause a breach  of any  representation  or
warranty made by a party hereunder to be untrue or inaccurate at or prior to the
Effective Time; and

            (d) any failure by a party to comply  with or satisfy any  covenant,
condition  or  agreement  or be  complied  with or  satisfied  by it under  this
Agreement.

Delivery  of notice  pursuant to this  Section 7.1 shall not limit or  otherwise
affect remedies available to either party hereunder.

      7.2. Public Announcements.  Parent and the Company shall consult with each
other before issuing any press release or other public statement with respect to
this Agreement or the  transactions  contemplated  herein,  and except as may be
required by applicable Law as advised by counsel,  will not issue any such press
release or make any such public  statement with respect to this  Agreement,  the
Merger or any other  transactions  contemplated  by this  Agreement  without the
prior written consent of the other party.

      7.3.  Transfer  Taxes.  Parent  and the  Company  shall  cooperate  in the
preparation,  execution and filing of all returns, questionnaires,  applications
or other documents  regarding any real property  transfer or gains,  sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer,  recording,
registration  and other fees,  and any similar  taxes  which  become  payable in
connection  with the  transactions  contemplated  hereby  that are  required  or
permitted to be filed on or before the Effective  Time.  Parent,  Merger Sub and
the  Company  agree that the Company  (prior to the  Merger)  and the  Surviving
Corporation (following the Merger) will pay any real property, transfer or gains
tax,  stamp tax,  stock transfer tax, or other similar tax imposed on the Merger
or the surrender of the Shares pursuant to the Merger  (collectively,  "Transfer
Taxes"),  excluding  any  Transfer  Taxes as may  result  from the  transfer  of
beneficial interests in the Shares other than as a result of the Merger, and any
penalties or interest with respect to the Transfer Taxes.  The Company agrees to
cooperate  with Parent in the filing of any returns with respect to the Transfer
Taxes.

      7.4.  Reasonable  Efforts.  The parties further agree to use  commercially
reasonable best efforts to take, or cause to be taken,  all actions,  and to do,
or cause to be done, and to assist and

                                       31
<PAGE>

cooperate  with the other  parties  in doing,  all things  necessary,  proper or
advisable to  consummate  and make  effective,  in the most  expeditious  manner
practicable,  the  Merger  and  the  other  transactions  contemplated  by  this
Agreement,  including  (A) the  obtaining  of all  other  necessary  actions  or
nonactions,  waivers, consents,  licenses, permits,  authorizations,  orders and
approvals from  governmental  authorities  and the making of all other necessary
registrations  and  filings,  (B) the  obtaining of all  consents,  approvals or
waivers from third parties  related to or required in connection with the Merger
that are necessary to consummate the Merger and the transactions contemplated by
this  Agreement or required to prevent a Material  Adverse Effect on the Company
from occurring prior to or after the Effective Time, (C) the satisfaction of all
conditions  precedent  to  the  parties'  obligations  hereunder,  and  (D)  the
execution and delivery of any additional instruments necessary to consummate the
transactions  contemplated  by, and to fully  carry out the  purposes  of,  this
Agreement.  Notwithstanding  the  foregoing  or  any  other  provision  of  this
Agreement,  nothing in this Section 7.4 shall limit a party's right to terminate
this  Agreement  pursuant to Section  10.1, so long as such party has up to then
complied with its obligations under this Section 7.4.

      7.5. Fees and Expenses.  All fees and expenses  incurred by the Company in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the  Company,  whether  or not the Merger is  consummated.  All fees and
expenses incurred by the Parent and Merger Sub in connection with this Agreement
and the transactions  contemplated  hereby shall be paid by the Parent. Fees and
expenses incurred by any party in connection with the transactions  contemplated
by this Agreement shall include, without limitation,  fees and expenses incurred
for legal, financial, accounting and other advisors.

      7.6. Registration.

            (a) "Piggy-Back" Registration.

                  (i) If at any time Parent  shall  determine to register any of
its Common Stock other than pursuant to (A) a  registration  relating  solely to
the sale of securities to participants in a Parent employee benefits plan, (B) a
registration  on  any  form  which  does  not  include  substantially  the  same
information  as would be required to be  included  in a  registration  statement
covering  the sale of the  shares of Parent  Common  Stock  issued  pursuant  to
Section 2.3 above (such  shares of Parent  Common  Stock,  for  purposes of this
Section  7.66  only,  "Registrable  Shares"),  (C) a  registration  relating  to
securities  issued  in  connection  with  an  acquisition  by  Parent,  or (D) a
registration  in which the only Parent  Common Stock being  registered is Parent
Common Stock issuable upon  conversion of debt  securities  which are also being
registered),  it  shall  send  to the  Representative  written  notice  of  such
determination  and, if within twenty (20) days after receipt of such notice, the
Representative  shall so request in writing,  Parent shall use its  commercially
reasonable best efforts to include in such  registration  all or any part of the
Registrable Shares that the Representative requests to be registered.

                  (ii) If such  registration  involves  an  underwritten  public
offering and the managing  underwriter  determines in its sole  discretion  that
marketing  factors  require a  limitation  on the  number of shares  that may be
included  in the  registration,  the  number of shares  to be  included  in such
registration  shall be apportioned as follows:  First,  the Common Stock held by
officers and  directors  of Parent  shall be excluded to the extent  required by
such limitation.  Second,  the Registrable  Shares requested to be registered by
the Representative  shall be excluded to the extent required by such limitation.
Third,  Parent Common Stock  requested to be registered by selling  stockholders
with  registration  rights other than under this Agreement  shall be excluded to
the extent

                                       32
<PAGE>

required by such limitation.  If the Representative  disapproves of the terms of
such  underwriting,  he may elect to  withdraw  therefrom  by written  notice to
Parent and the underwriter.

            (b)  Registration  on Form S-3.  If the  Registrable  Shares are not
registered  for resale  pursuant to Section  7.6(a)  above by December 31, 2005,
Parent agrees to file with the SEC a Registration  Statement on Form S-3 (or any
successor short form registration  involving a similar amount of disclosure;  or
if then  ineligible  to use any such  form,  then any  other  available  form of
registration  statement)  registering the resale of the Registrable Shares to be
made on a continuous  basis pursuant to Rule 415 of the Securities  Act.  Parent
will use its commercially reasonable efforts to file such Registration Statement
with  the  SEC  (subject  to  review  of  such  Registration  Statement  by  the
Representative pursuant to Section 7.6(c)) within thirty (30) days after receipt
of written  request by the  Representative  to register such shares  pursuant to
this Section 7.6(b) and to cause the Registration  Statement to become effective
within  ninety  (90)  days  after  the  filing  of the  Registration  Statement;
provided,  however,  that in the event that the Registration  Statement receives
SEC review,  Parent will use its  commercially  reasonable  efforts to cause the
Registration  Statement to become effective within one hundred twenty (120) days
after the filing of the Registration Statement. Once effective, the Registration
Statement shall remain continuously effective until the earlier of (i) two years
after the date on which the shares of Parent  Common  Stock  issued  pursuant to
Section 2.5  registered  thereunder  were delivered and (ii) such time as all of
the shares of Parent  Common  Stock  issued  pursuant to Section 2.5  registered
thereunder may be sold pursuant to Rule 144 promulgated under the Securities Act
without  restriction on the number of such shares that may be sold. Upon written
notice to the Representative,  Parent may, not more often than four times during
any Parent fiscal year, suspend use of a Registration  Statement for a period of
up to thirty (30) days, provided, that no more than three such periods may occur
consecutively,  unless,  in the good faith judgment of the Board of Directors of
Parent, there is material nonpublic  information the disclosure of which at that
point in time would have a Material Adverse Effect on Parent.  Any sales of such
shares of Parent  Common Stock  pursuant to a  Registration  Statement  shall be
subject to Parent's  insider trading policy and procedures,  as applicable.  The
Shareholders,  through the Representative,  shall have the right to cause Parent
to file a Registration Statement pursuant to this Section 7.6(b) on one occasion
only.

            (c) Review by the Representative.  The Representative  covenants and
agrees  that it shall use its  commercially  reasonable  efforts  to  provide to
Parent on a timely basis such consents, representations and information from the
Shareholders  as may  reasonably  be required by Parent in  connection  with the
preparation and filing of a Registration  Statement or related prospectus or any
amendment or supplement  thereto.  Parent will,  prior to filing a  Registration
Statement or related prospectus or any amendment or supplement thereto,  furnish
to the  Representative  copies of such Registration  Statement and prospectus or
any  amendment  or  supplement  thereto as proposed to be filed,  together  with
exhibits thereto,  which documents will be subject to review and approval by the
Representative (such approval not to be unreasonably withheld or delayed).

            (d) Expenses.  Parent shall pay all expenses of  registration of any
shares of Parent  Common  Stock  pursuant to Section  7.6(a) or Section  7.6(b),
except brokerage commissions,  legal expenses, and such other expenses as may be
required by law to be paid by the  Shareholders,  which commissions and expenses
shall be paid by the party by which such expenses are incurred.

            (e)  Notification.  Parent will promptly  notify the  Representative
upon the occurrence of any of the following  events in respect of a Registration
Statement  or related  prospectus:  (i) receipt of any  request  for  additional
information by the SEC or any other federal or

                                       33
<PAGE>

state  governmental   authority  during  the  period  of  effectiveness  of  the
Registration   Statement  or  amendments  or  supplements  to  the  Registration
Statement or any related  prospectus;  (ii) the issuance by the SEC or any other
federal  or state  governmental  authority  of any  stop  order  suspending  the
effectiveness of the Registration Statement or the initiation of any proceedings
for  that  purpose;  (iii)  receipt  of any  notification  with  respect  to the
suspension  of  the  qualification  or  exemption  from   qualification  of  the
Registrable Shares registered  pursuant to Sections 7.6(a) or 7.6(b) for sale in
any jurisdiction or the initiation of any proceeding for such purpose;  (iv) the
happening  of any  event  that  makes  any  statement  made in the  Registration
Statement or related  prospectus  or any document  incorporated  or deemed to be
incorporated  therein  by  reference  untrue  in any  material  respect  or that
requires  the  making of any  changes  in the  Registration  Statement,  related
prospectus  or  documents  so that (or  Parent  otherwise  becomes  aware of any
statement  included  in  the  Registration  Statement,   related  prospectus  or
documents that is untrue in any material  respect or that requires the making of
any changes in the Registration  Statement,  related  prospectus or documents so
that), in the case of the Registration Statement, it will not contain any untrue
statement of a material  fact or omit to state any material  fact required to be
stated therein or necessary to make the statements  therein not misleading,  and
that in the case of the  related  prospectus,  it will not  contain  any  untrue
statement of a material  fact or omit to state any material  fact required to be
stated therein or necessary to make the statements  therein, in the light of the
circumstances  under  which they were made,  not  misleading;  and (v)  Parent's
reasonable  determination  that a  post-effective  amendment to the Registration
Statement  would be  appropriate  (in which  event  Parent  will  promptly  make
available  to  the  Representative  any  such  supplement  or  amendment  to the
Registration Statement and, as applicable, the related prospectus).

            (f)  Indemnification.  In the event that any Registrable  Shares are
included in a Registration Statement under this Agreement:

                  (i) To the extent  permitted  by law,  Parent will  indemnify,
defend and hold harmless each Shareholder  that holds such  Registrable  Shares,
and agents, employees, attorneys,  accountants,  underwriters (as defined in the
Securities  Act) for such  Shareholder  or such  underwriter  and any person who
controls  such  Shareholder  or  such  underwriter  within  the  meaning  of the
Securities Act or the Exchange Act (each, a  "Shareholder  Indemnified  Person")
against any losses, claims, damages, expenses or liabilities (collectively,  and
together  with  actions,   proceedings   or  inquiries  by  any   regulatory  or
self-regulatory  organization,   whether  commenced  or  threatened  in  respect
thereof, "Claims") to which any of them become subject under the Securities Act,
the Exchange Act or otherwise,  insofar as such Claims arise out of or are based
upon any of the following statements,  omissions or violations in a Registration
Statement filed pursuant to this Agreement, any post-effective amendment thereof
or any prospectus  included therein:  (a) any untrue statement or alleged untrue
statement  of a material  fact  contained in the  Registration  Statement or any
post-effective  amendment  thereof or the omission or alleged  omission to state
therein a material fact  required to be stated  therein or necessary to make the
statements  therein not misleading,  (b) any untrue  statement or alleged untrue
statement of a material  fact  contained in the  prospectus  or any  preliminary
prospectus  (as it may be amended or  supplemented)  or the  omission or alleged
omission to state  therein any material  fact  necessary to make the  statements
made therein,  in light of the circumstances  under which the statements therein
were made, not misleading,  or (c) any violation or alleged  violation by Parent
of the  Securities  Act, the Exchange  Act or any other law,  including  without
limitation any state  securities law or any rule or regulation  thereunder  (the
matters  in  the  foregoing   clauses  (a)  through  (c)  being,   collectively,
"Violations").  Notwithstanding  anything to the contrary  contained herein, the
indemnification  agreement contained in this Section 7.6(f)(i) does not apply to
a Claim by a  Shareholder  Indemnified  Person  arising  out of or based  upon a
Violation that

                                       34
<PAGE>

occurs in reliance upon and in conformity with  information  furnished to Parent
by such  Shareholder  Indemnified  Person  expressly for use in the Registration
Statement or any such amendment thereof or supplement thereto; and (ii) does not
apply to amounts  paid in  settlement  of any Claim if such  settlement  is made
without  the  prior  written  consent  of  Parent,  which  consent  will  not be
unreasonably  withheld.  This indemnity obligation will remain in full force and
effect  regardless  of any  investigation  made by or on behalf of a Shareholder
Indemnified  Person and will  survive the  transfer  of shares of Parent  Common
Stock by the Shareholders under Section 7.6(g) of this Agreement.

                  (ii) In connection with any Registration  Statement in which a
Shareholder  is  participating,  each such  Shareholder  will indemnify and hold
harmless,  to the  same  extent  and in the same  manner  set  forth in  Section
7.6(f)(i) above,  Parent, each of its directors,  each of its officers who signs
the Registration Statement,  each person, if any, who controls Parent within the
meaning of the  Securities  Act or the Exchange  Act, and any other  stockholder
selling  securities  pursuant  to  the  Registration  Statement  or  any  of its
directors or officers or any person who  controls  such  stockholder  within the
meaning of the  Securities  Act or the Exchange Act (each a "Parent  Indemnified
Person")  against  any Claim to which any of them may become  subject  under the
Securities Act, the Exchange Act or otherwise,  insofar as such Claim arises out
of or is based upon any  Violation,  in each case to the extent (and only to the
extent)  that such  Violation  occurs in reliance  upon and in  conformity  with
information  furnished to Parent by such  Shareholder  expressly for use in such
Registration  Statement.  However,  the  indemnity  agreement  contained in this
Section  7.6(f)(ii) does not apply to amounts paid in settlement of any Claim if
such  settlement  is  effected   without  the  prior  written  consent  of  such
Shareholder, which consent will not be unreasonably withheld, and no Shareholder
will be liable under this Agreement for the amount of any Claim that exceeds the
net proceeds  actually  received by such  Shareholder as a result of the sale of
shares of Parent  Common Stock  pursuant to such  Registration  Statement.  This
indemnity will remain in full force and effect  regardless of any  investigation
made by or on  behalf  of a  Parent  Indemnified  Person  and will  survive  the
transfer of the shares of Parent Common Stock by the Shareholders  under Section
7.6(g) of this Agreement.

                  (iii) If any proceeding  shall be brought or asserted  against
any person entitled to indemnity under Sections  7.6(f)(i) or 7.6(f)(ii) hereof,
such  indemnified  party promptly shall notify the person from whom indemnity is
sought in writing,  and the indemnifying party shall assume the defense thereof,
including the employment of counsel  reasonably  satisfactory to the indemnified
party and the payment of all reasonable fees and expenses incurred in connection
with defense  thereof;  provided,  however,  that the failure of any indemnified
party to give  such  notice  shall not  relieve  the  indemnifying  party of its
obligations or liabilities pursuant to this Agreement,  except (and only) to the
extent that it shall be finally determined by a court of competent  jurisdiction
(which  determination  is not  subject  to appeal or further  review)  that such
failure  shall  have  proximately  and  materially   adversely   prejudiced  the
indemnifying party.

                  (iv) An  indemnified  party  shall  have the  right to  employ
separate  counsel  in any such  proceeding  and to  participate  in the  defense
thereof,  but the fees and expenses of such  counsel  shall be at the expense of
such indemnified party or indemnified parties unless: (i) the indemnifying party
has agreed in writing to pay such fees and expenses; (ii) the Indemnifying Party
shall have  failed  promptly  to assume the  defense of such  proceeding  and to
employ counsel  reasonably  satisfactory to such  indemnified  party in any such
proceeding;  or (iii) the named parties to any such  proceeding  (including  any
impleaded  parties)  include both such  indemnified  party and the  indemnifying
party,  and such  indemnified  party shall have been  advised by counsel  that a
conflict of

                                       35
<PAGE>

interest  is  likely  to  exist  if the  same  counsel  were to  represent  such
indemnified party and the indemnifying party (in which case, if such indemnified
party  notifies  the  indemnifying  party in  writing  that it  elects to employ
separate  counsel at the expense of the  indemnifying  party,  the  indemnifying
party  shall not have the right to assume the defense  thereof and such  counsel
shall be at the reasonable expense of the indemnifying party; provided, however,
that in no event shall the  indemnifying  party be responsible  for the fees and
expenses of more than one separate counsel). The indemnifying party shall not be
liable for any settlement of any such  proceeding  effected  without its written
consent, which consent shall not be unreasonably withheld. No indemnifying party
shall,  without the prior written consent of the indemnified  party,  effect any
settlement of any pending  proceeding in respect of which any indemnified  party
is a party,  unless such settlement  includes an  unconditional  release of such
indemnified  party from all  liability on Claims that are the subject  matter of
such proceeding.

            (g) Assignment of Registration  Rights. The rights set forth in this
Section 7.6, may be assigned by the  Shareholders to transferees or assignees of
all or any portion of the  Registrable  Shares,  but only if (a) the Shareholder
agrees in writing with the  transferee or assignee to assign such rights,  and a
copy of such  agreement is furnished  to Parent  within a reasonable  time after
such assignment,  (b) Parent is, within a reasonable time after such transfer or
assignment,  furnished  with  written  notice  of the name and  address  of such
transferee  or  assignee  and  the   securities   with  respect  to  which  such
registration  rights are being transferred or assigned,  (c) after such transfer
or assignment,  the further  disposition of such securities by the transferee or
assignee is restricted  under the Securities Act and applicable state securities
laws, (d) at or before the time Parent received the written notice  contemplated
by clause (b) of this  sentence,  the  transferee or assignee  agrees in writing
with Parent to be bound by all of the provisions  contained herein,  and (e) the
transferee  is an  "accredited  investor" as that term is defined in Rule 501 of
Regulation D.

            (h) Additional  Requirements.  Until termination of the Registration
Statement,  Parent will use its commercially reasonable efforts to make and keep
public information available,  as those terms are understood and defined in Rule
144 promulgated under the Securities Act and file on a timely basis with the SEC
all  information  that it may be required to file under  either of Section 13 or
Section  15(d) of the  Exchange  Act and, so long as it is required to file such
information,   use  its   commercially   reasonable   efforts  to  maintain  the
availability of Rule 144 promulgated  under the Securities Act (or any successor
exemptive  rule  hereinafter  in effect) with respect to shares of Parent common
stock.

                                   ARTICLE 8

                                 INDEMNIFICATION

      8.1. Indemnification of Parent and Merger Sub.

            (a)  Subject to the  limitations  contained  in this  Article 8, the
Company and the Shareholders shall severally, but not jointly, defend, indemnify
and  hold  harmless  Parent  and  Merger  Sub  and  their  respective  officers,
directors,  stockholders,  employees  and agents  from and  against  any and all
losses, claims,  judgments,  liabilities,  demands,  charges,  suits, penalties,
costs or expenses, including court costs and reasonable attorneys' fees, in each
case net of insurance  proceeds  and tax benefits (to the extent  quantifiable),
("Claims and Liabilities") with respect to or arising from (i) the breach of any
warranty or any  inaccuracy  of any  representation  made by the Company in this

                                       36
<PAGE>

Agreement,  (ii) the breach of any covenant or agreement  made by the Company in
this Agreement or (iii) the transfer of the SMB Business.

            (b) In addition the  obligations  set forth in Section 8.1(a) above,
the Company and the  Shareholders  shall,  severally  and not  jointly,  defend,
indemnify and hold harmless Parent and Merger Sub and their respective officers,
directors,  stockholders,  employees  and agents  against any and all Claims and
Liabilities  with respect to or arising from any claims for any right to receive
Merger  Consideration made by any Person who is not a holder of Company Stock at
the  Effective  Time or is a holder of  Company  Stock and  claiming  a right to
Merger Consideration inconsistent with the Merger Consideration Certificate.

            (c)  Any   indemnification   payable  with  respect  to  Claims  and
Liabilities asserted pursuant to this Section 8.1 shall be apportioned among the
Shareholders,  on a pro rata basis based on their respective ownership interests
as set forth on the Merger Consideration  Certificate.  No indemnification shall
be payable  with  respect to Claims and  Liabilities  asserted  pursuant to this
Section  8.1 to  the  extent  the  cumulative  amount  of all  such  Claims  and
Liabilities exceeds $1,000,000 (the "Indemnification Cap"), and the liability of
any  Shareholder  under this  Section  8.1 shall not  exceed  the  Shareholder's
portion  of the  liability,  on a pro rata basis  based upon such  Shareholder's
ownership interest as set forth on the Merger Consideration Certificate.

      8.2.  Indemnification of the Company.  Parent shall defend,  indemnify and
hold harmless the Company, and its officers, directors, shareholders,  employees
and agents from and against any and all Claims and  Liabilities  with respect to
or  arising  from  (i)  breach  of  any  warranty  or  any   inaccuracy  of  any
representation  made by Parent or Merger Sub, or (ii) breach of any  covenant or
agreement  made by Parent or Merger Sub in this  Agreement.  No  indemnification
shall be payable with  respect to Claims and  Liabilities  asserted  pursuant to
this  Section  8.2 to the extent the  cumulative  amount of all such  Claims and
Liabilities exceeds the value of the Collared Stock Consideration paid in shares
of Parent Common Stock.

      8.3. Claims Procedure. Promptly after the receipt by any indemnified party
(the  "Indemnitee")  of notice of the  commencement  of any action or proceeding
against such Indemnitee,  such Indemnitee shall, if a claim with respect thereto
is or may be made  against any  indemnifying  party (the  "Indemnifying  Party")
pursuant to this Article 8, give such  Indemnifying  Party written notice of the
commencement  of such action or proceeding  and give such  Indemnifying  Party a
copy of  such  claim  and/or  process  and all  legal  pleadings  in  connection
therewith.  The failure to give such notice  shall not relieve any  Indemnifying
Party of any of its  indemnification  obligations  contained  in this Article 8,
except  where,  and  solely  to the  extent  that,  such  failure  actually  and
Materially  prejudices the rights of such Indemnifying  Party. Such Indemnifying
Party shall have,  upon request  within  thirty (30) days after  receipt of such
notice,  but not in any event after the  settlement or compromise of such claim,
the  right to  defend,  at its own  expense  and by its own  counsel  reasonably
acceptable to the Indemnitee,  any such matter involving the asserted  liability
of the Indemnitee;  provided,  however,  that if the Indemnitee  determines that
there is a reasonable  probability  that a claim may  Materially  and  adversely
affect  it,  other  than  solely as a result of money  payments  required  to be
reimbursed  in full by such  Indemnifying  Party  under  this  Article 8 or if a
conflict of interest exists between  Indemnitee and the Indemnifying  Party, the
Indemnitee  shall have the right to defend,  compromise  or settle such claim or
suit; and,  provided,  further,  that such  settlement or compromise  shall not,
unless consented to in writing by such  Indemnifying  Party,  which shall not be
unreasonably  withheld,  be conclusive as to the liability of such  Indemnifying
Party to the Indemnitee.  In any event, the Indemnitee,  such Indemnifying Party
and its counsel shall cooperate in

                                       37
<PAGE>

the defense against, or compromise of, any such asserted liability, and in cases
where the  Indemnifying  Party shall have  assumed the defense,  the  Indemnitee
shall have the right to participate in the defense of such asserted liability at
the Indemnitee's own expense.  In the event that such  Indemnifying  Party shall
decline to participate in or assume the defense of such action,  prior to paying
or  settling  any claim  against  which such  Indemnifying  Party is, or may be,
obligated under this Article 8 to indemnify an Indemnitee,  the Indemnitee shall
first supply such  Indemnifying  Party with a copy of a final court  judgment or
decree holding the Indemnitee  liable on such claim or, failing such judgment or
decree,  the terms and conditions of the settlement or compromise of such claim.
An  Indemnitee's  failure to supply such final  court  judgment or decree or the
terms and  conditions of a settlement or compromise to such  Indemnifying  Party
shall  not  relieve  such  Indemnifying  Party  of any  of  its  indemnification
obligations  contained in this Article 8, except where, and solely to the extent
that,  such  failure  actually  and  Materially  prejudices  the  rights of such
Indemnifying  Party.  If the  Indemnifying  Party is defending  the claim as set
forth  above,  the  Indemnifying  Party shall have the right to settle the claim
only  with  the  consent  of the  Indemnitee;  provided,  however,  that  if the
Indemnitee  shall  fail to  consent  to the  settlement  of such a claim  by the
Indemnifying  Party,  which  settlement  (i) the claimant has  indicated it will
accept,  and (ii) includes an  unconditional  release of the  Indemnitee and its
Affiliates  by the claimant and imposes no Material  restrictions  on the future
activities of the Indemnitee and its affiliates,  the  Indemnifying  Party shall
have no  liability  with  respect  to any  payment  required  to be made to such
claimant  in  respect  of  such  claim  in  excess  of the  proposed  amount  of
settlement.  If the  Indemnitee is defending  the claim as set forth above,  the
Indemnitee  shall have the right to settle or  compromise  any claim  against it
after  consultation  with, but without the prior  approval of, any  Indemnifying
Party,  provided,  however, that such settlement or compromise shall not, unless
consented  to in  writing  by  such  Indemnifying  Party,  which  shall  not  be
unreasonably  withheld,  be conclusive as to the liability of such  Indemnifying
Party to the Indemnitee.

      8.4. Exclusive Remedy.  Each of the parties hereto acknowledges and agrees
that,  from and after the Closing Date, its sole and exclusive  monetary  remedy
with  respect  to any and all  claims  relating  to the  subject  matter of this
Agreement shall be pursuant to the indemnification  provisions set forth in this
Article 8, except that nothing in this Agreement shall be deemed to constitute a
waiver of any injunctive or other  equitable  remedies or any tort claims of, or
causes of  action  arising  from,  intentionally  fraudulent  misrepresentation,
willful breach or deceit.

      8.5. Representative.

            (a) The Representative shall serve as the agent for and on behalf of
the  Shareholders  (in  their  capacities  as such)  to:  (i)  receive,  assert,
negotiate,  enter into settlements and compromises of, and comply with orders of
courts and awards of arbitrators  with respect to, any Claims and Liabilities by
any Indemnitee,  against any such Shareholder or by any such Shareholder against
any  Indemnifying  Party  or any  other  dispute  between  Parent  and any  such
Shareholder,  in each  case  relating  to  this  Agreement  or the  transactions
contemplated  hereby  or  thereby;  and  (ii)  take  all  actions  necessary  or
appropriate in the judgment of the  Representative for the accomplishment of the
foregoing,  in each case  without  having to seek or obtain  the  consent of any
Person under any  circumstance.  Any and all Claims and  Liabilities  between or
among any Indemnitee,  the  Representative  and/or any one or more  Shareholders
relating to this Agreement or the transactions  contemplated hereby shall (i) in
the case of any claim or dispute  asserted by or against or  involving  any such
Shareholder  (in its capacity as such) (other than any claim  against or dispute
with the  Representative),  be asserted  or  otherwise  addressed  solely by the
Representative on behalf of such Shareholder (and not by such Shareholder acting
on its own behalf). The Person serving as the

                                       38
<PAGE>

Representative may be replaced from time to time by the holders of a majority in
interest  of the shares  held by the  Shareholders  upon not less than ten days'
prior written notice to Parent. No bond shall be required of the Representative,
and the Representative  shall receive no compensation for his services.  Notices
or  communications to or from the  Representative  shall constitute notice to or
from each of the Shareholders.

            (b) The  Representative  shall not be liable to any  Shareholder for
any act done or omitted  hereunder  as the  Representative  while acting in good
faith. The Representative undertakes to perform such duties and only such duties
as are  specifically  set forth in this  Agreement  and no implied  covenants or
obligations  shall be read into this Agreement against the  Representative.  The
Shareholders shall,  severally and not jointly,  on a pro rata basis,  indemnify
the Representative and hold him harmless against any loss,  liability or expense
incurred without gross negligence,  bad faith or willful  misconduct on the part
of the Representative and arising out of or in connection with the acceptance or
administration of his duties hereunder,  including without  limitation the legal
costs  and  expenses  of  defending  the  Representative  against  any  claim or
liability in connection with the performance of the Representative's duties.

            (c)   Notwithstanding   anything   herein  to  the   contrary,   the
Representative  is not  authorized  to, and shall  not,  accept on behalf of any
holder of Company Stock any Merger Consideration to which such holder of Company
Stock is entitled under this Agreement and the  Representative  shall not in any
manner exercise,  or seek to exercise,  any voting power whatsoever with respect
to shares of capital  stock of the Company or Parent now or  hereafter  owned of
record or beneficially by any holder of Company Stock unless the  Representative
is  expressly  authorized  to do so in  writing  signed by the holder of Company
Stock. In all matters  relating to this Article 8, the  Representative  shall be
the only party entitled to assert the rights of the holders of Company Stock and
the  Representative  shall  perform  all of the  obligations  of the  holders of
Company Stock hereunder.  Representative shall promptly, and in any event within
five (5) business  days,  provide  written  notice to the affected of any action
taken on their behalf by the Representative  pursuant to the authority delegated
to the Representative under this Section 8.5.

            (d) The  Representative  shall have reasonable access to information
about the Company and the  reasonable  assistance of the Company's  officers and
employees  for  purposes  of  performing  its duties and  exercising  its rights
hereunder,  provided that the Representative  shall treat confidentially and not
disclose any nonpublic  information  from or about the Company to anyone (except
on a need to know  basis to  individuals  who  agree to treat  such  information
confidentially).

                                   ARTICLE 9

                              CONDITIONS TO MERGER

      9.1.  Condition  to  Obligation  of Each Party to Effect the  Merger.  The
respective  obligations of Parent,  Merger Sub and the Company to consummate the
transactions  contemplated  herein are subject to the  satisfaction or waiver in
writing at or prior to the Effective Time of the following conditions.

            (a) No Injunctions.  No temporary restraining order,  preliminary or
permanent  injunction issued by any court of competent  jurisdiction  preventing
the  consummation of the  transactions  contemplated  herein shall be in effect;
provided,  however,  that each party shall have used its reasonable best efforts
to prevent the entry of such orders or injunctions and to appeal as

                                       39
<PAGE>

promptly as possible any such orders or injunctions and to appeal as promptly as
possible any such orders or injunctions that may be entered.

            (b) Company  Shareholder  Approval.  This  Agreement  and the Merger
shall have been  approved  and adopted by the  requisite  vote of the  Company's
shareholders in accordance with the Company's  Articles of Incorporation and the
CGCL.

            (c) Regulatory  Approvals.  Parent shall have obtained all approvals
required  by the SEC and the NASDAQ  Marketplace  Rules in  connection  with the
Merger, if any.

            (d) Transfer of the SMB Business.  The SMB Business  shall have been
transferred to a new business  entity and the employment of all employees of the
SMB Business shall have been terminated.

      9.2.  Additional  Conditions to  Obligations of Parent and Merger Sub. The
obligations  of  Parent  and  the  Merger  Sub to  consummate  the  transactions
contemplated herein are also subject to the satisfaction or waiver in writing at
or prior to the Effective Time of the following conditions.

            (a) Representations and Warranties.  Each of the representations and
warranties  of the Company in this  Agreement  and in any  certificate  or other
written document delivered to Parent pursuant hereto that is expressly qualified
by a reference to materiality shall be true in all respects as so qualified, and
each of the  representations and warranties of the Company in this Agreement and
in any certificate or other written document delivered to Parent pursuant hereto
that is not so qualified shall be true and correct in all Material respects,  on
and as of the Effective Time as though such  representation or warranty had been
made on and as of such time (except that those  representations  and  warranties
which address matters only as of a particular date shall remain true and correct
as of such date), and Parent and Merger Sub shall have received a certificate to
such  effect  signed by the  President  and the Chief  Executive  Officer of the
Company.

            (b)  Agreements  and  Covenants.  The Company shall have  Materially
performed  or  complied  with all  agreements  and  covenants  required  by this
Agreement to be performed or complied  with by them on or prior to the Effective
Time,  and Parent shall have received a certificate to such effect signed by the
President and Chief Executive Officer of the Company.

            (c)  Certificate  of Secretary.  The Company shall have delivered to
Parent a certificate  executed by the Secretary of the Company  certifying:  (i)
resolutions  duly  adopted by the Board of  Directors  and  shareholders  of the
Company  authorizing  this  Agreement  and the  Merger;  (ii)  the  Articles  of
Incorporation  and Bylaws of the Company as in effect  immediately  prior to the
Effective Time, including all amendments thereto; (iii) the Merger Consideration
Certificate;  and (iv) the  incumbency of the officers of the Company  executing
this Agreement and all agreements and documents contemplated hereby.

            (d)   Consents   Obtained.   All   consents,   waivers,   approvals,
authorizations or orders required to be obtained, and all filings required to be
made,  by the  Company for the  authorization,  execution  and  delivery of this
Agreement and the  consummation by it of the  transactions  contemplated  hereby
shall have been obtained and made by the Company including,  without limitation,
those  set  forth  on  Schedule  9.2(d),  except  for  such  consents,  waivers,
approvals, authorizations and orders, which if not listed in Schedule 9.2(d) and
not obtained, and such filings,

                                       40
<PAGE>

which if not listed in  Schedule  9.2(d) and not made,  would not be  reasonably
likely  to have a  Material  Adverse  Effect  on the  Company  or the  Surviving
Corporation.

            (e) Absence of Material  Adverse Effect.  Since the date of the this
Agreement,  there shall not have been any Material Adverse Effect on the Company
that has not been cured as of the Final Date.

            (f) Employment Agreements. Parent shall have entered into employment
agreements, in the form approved by Parent with Casper Zublin.

            (g)  Non-Competition  Agreements.  Parent  shall have  entered  into
non-competition  agreements, in the form approved by Parent, with each of Casper
Zublin, David Upton and Chris Richner.

            (h) Severance  Agreements.  Parent shall have entered into severance
agreements,  in the form approved by Parent,  with each of David Upton and Chris
Richner.

            (i)  Resignation  of  Officers  and  Directors.  Parent  shall  have
received  letters of resignation  from each of the officers and directors of the
Company immediately prior to the Effective Time, which resignations in each case
shall be effective as of the Effective Time.

            (j) Termination of Employee Benefit Plans. If the Company  maintains
or sponsors any Benefit  Plans,  the  Company's  Board of  Directors  shall have
adopted a resolution  terminating  each such Benefit  Plan  contingent  upon the
Closing and effective at least one calendar day prior to the Effective Time.

            (k) Closing of Financing.  Parent shall have consummated a financing
through the sale of debt and/or equity securities with aggregate  proceeds of at
least $2,500,000.

      9.3. Additional  Conditions to Obligations of the Company. The obligations
of the  Company to  consummate  the  transactions  contemplated  herein are also
subject to the  satisfaction  or waiver in writing at or prior to the  Effective
Time of the following conditions.

            (a) Representations and Warranties.  Each of the representations and
warranties of Parent and Merger Sub in this Agreement and in any  certificate or
other  written  document  delivered  to the  Company  pursuant  hereto  that  is
expressly  qualified by a reference to materiality shall be true in all respects
as so qualified,  and each of the  representations  and warranties of Parent and
Merger Sub in this Agreement and in any  certificate  or other written  document
delivered to the Company  that is not so qualified  shall be true and correct in
all  material  respects,  on  and  as of  the  Effective  Time  as  though  such
representation  or warranty  had been made on and as of such time  (except  that
those  representations  and  warranties  which  address  matters  only  as  of a
particular date shall remain true and correct as of such date),  and the Company
shall have received a certificate to such effect signed by the President and the
Chief Executive Officer of Parent.

            (b)  Agreements  and  Covenants.  Parent  and  Merger Sub shall have
performed  or  complied  with all  agreements  and  covenants  required  by this
Agreement to be  performed  or complied  with by them on or prior to the Closing
and the Company shall have  received a certificate  to such effect signed by the
President and the Chief Executive Officer of Parent.

                                       41
<PAGE>

            (c) Guarantees.  The personal  guarantees of Casper Zublin,  Jr. and
Glen Ackerman in respect of  obligations of the Company shall have been released
and/or assumed by Parent.

            (d)  SMB  Management  Agreement.  Parent  shall  have  executed  and
delivered an agreement  for provision of certain  management  services by Parent
for the SMB Business in a form reasonably satisfactory to the Company.

                                   ARTICLE 10

                                   TERMINATION

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

            (a) by mutual  written  agreement  duly  authorized by the Boards of
Directors of the Company and Parent;

            (b) by  Parent  if the  Company  has  breached  any  representation,
warranty,  covenant or agreement of such other party set forth in this Agreement
and such  breach has  resulted  or can  reasonably  be expected to result in the
failure to satisfy the conditions set forth in Section 9.2(a) and 9.2(b), in the
case of the Company,  or in Section 9.3(a) and 9.3(b),  in the case of Parent or
Merger Sub;  provided,  however,  that, if such breach is reasonably  capable of
being cured by the  breaching  party  prior to the Final Date and the  breaching
party is continuing to exercise its reasonable efforts to cure such breach, then
the other party may not terminate this Agreement  under this Section  10.1(b) on
account of such breach  until the 30th  calendar  day from the date on which the
breaching party received a written notice of such breach from the other party or
the Final Date, whichever is earlier;

            (c) by either Parent or the Company if the required  approval of the
shareholders  of the  Company  shall not have been  obtained  prior to the Final
Date;

            (d) by either Parent or the Company,  if the Effective  Time has not
occurred on or before the Final Date (as defined below),  other than as a result
of a breach of this Agreement by the terminating party; or

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

      As used herein, the "Final Date" shall be November 1, 2004.

      10.2.  Notice of  Termination.  Any  termination of this  Agreement  under
Section 10.1 above will be  effective  by the delivery of written  notice of the
terminating party to the other party hereto.

      10.3.  Effect  of  Termination.  In the  case of any  termination  of this
Agreement as provided in this Section 10, this Agreement  shall be of no further
force and effect  (except as provided in Section 10.3) and nothing  herein shall
relieve  any  party  from  liability  for  any  breach  of  this  Agreement.  No
termination of this Agreement shall affect the obligations contained in the

                                       42
<PAGE>

Confidentiality  Agreement which shall survive  termination of this Agreement in
accordance with its terms.

                                   ARTICLE 11

              SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS

      All representations,  warranties and covenants of the parties contained in
this Agreement will remain operative and in full force and effect, regardless of
any investigation  made by or on behalf of the parties to this Agreement,  until
the date that is the first  anniversary  of the  Closing  Date,  whereupon  such
representations, warranties and covenants will expire (except for covenants that
by their terms survive for a longer period).

                                   ARTICLE 12

                               GENERAL PROVISIONS

      12.1.  Notices.  All notices  required or permitted  hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified; (b) when sent by confirmed facsimile if sent during normal
business hours of the recipient, if not, then on the next business day; (c) five
days after having been sent by  registered  or certified  mail,  return  receipt
requested,  postage  prepaid;  or (d) two days after  deposit  with a nationally
recognized  overnight  courier,   specifying  two  day  delivery,  with  written
verification of receipt.  All communications shall be sent to the parties at the
following  addresses  or  facsimile  numbers  specified  below (or at such other
address  or  facsimile  number  for a party as shall be  designated  by ten days
advance written notice to the other parties hereto):

            (a)   If to Parent or Merger Sub:

                  DynTek, Inc.
                  18881 Von Karman Ave.
                  Suite 250
                  Irvine, CA  92612
                  Attn:  Chief Financial Officer
                  Ph:  (949) 955-0078
                  Fax:  (949) 955-0086

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

                  Stradling Yocca Carlson & Rauth
                  660 Newport Center Drive, Suite 1600
                  Newport Beach, California 92660
                  Attn:  Christopher Ivey, Esq.
                  Ph:  (949) 725-4121
                  Fax: (949) 725-4100

                                       43
<PAGE>

                  If to the Company:

                  Integration Technologies, Inc.
                  19700 Fairchild Road, Suite 250
                  Irvine, California 92612
                  Attn:  Casper Zublin, Jr.
                  Ph:
                  Fax:

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

                  Manatt Phelps & Phillips
                  695 Town Center Drive
                  Fourteenth Floor
                  Costa Mesa, CA 92626
                  Attn:  Ivan A. Gaviria, Esq.
                  Ph:  (714) 371-2529
                  Fax:  (714) 371-2567

      12.2.  Amendment.  To the extent  permitted by Law, this  Agreement may be
amended by a subsequent  writing signed by each of the parties upon the approval
of the Boards of Directors of each of the parties,  whether  before or after any
shareholder  approval  of the  issuance  of the  Merger  Consideration  has been
obtained; provided, that after any such approval by the holders of Shares, there
shall be made no amendment that pursuant to the CGCL requires  further  approval
by such shareholders without the further approval of such shareholders.

      12.3. Waiver. At any time prior to the Closing,  any party hereto may with
respect to any other party hereto (a) extend the time for  performance of any of
the obligations or other acts, (b) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered pursuant hereto, or
(c) waive compliance with any of the agreements or conditions  contained herein.
Any such  extension  or waiver shall be valid if set forth in an  instrument  in
writing signed by the party or parties to be bound thereby.

      12.4. Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or
delay on the part of any party  hereto in the  exercise  of any right  hereunder
shall impair such right or be construed to be a waiver of, or  acquiescence  in,
any breach of any  representation,  warranty or agreement herein,  nor shall any
single or partial  exercise of any such right preclude other or further exercise
thereof or of any other  rights.  Except as otherwise  provided  hereunder,  all
rights and remedies  existing  under this  Agreement are  cumulative to, and not
exclusive of, any rights or remedies otherwise available.

      12.5. Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or  interpretation  of
this Agreement.

      12.6.  Severability.  If any term or other  provision of this Agreement is
invalid,  illegal or incapable  of being  enforced by any rule of Law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the  economic or legal  substance  of
the  transactions  contemplated  hereby is not affected in any manner adverse to
any party. Upon such  determination that any term or other provision is invalid,
illegal or incapable of being

                                       44
<PAGE>

enforced,  the  parties  hereto  shall  negotiate  in good faith to modify  this
Agreement  so as to effect  the  original  intent of the  parties  as closely as
possible,  in a  mutually  acceptable  manner,  to  the  end  that  transactions
contemplated hereby are fulfilled to the extent possible.

      12.7. Entire Agreement.  This Agreement  (including the Company Disclosure
Schedule  and the  Parent  Disclosure  Schedule  together  with the  Transaction
Documents  and the exhibits and  schedules  attached  hereto and thereto and the
certificates referenced herein) and the Confidentiality Agreement constitute the
entire agreement and supersedes all prior agreements and undertakings  both oral
and  written,  among the  parties,  or any of them,  with respect to the subject
matter hereof and, except as otherwise expressly provided herein.

      12.8.  Assignment.  No party may  assign  this  Agreement  or  assign  its
respective  rights or delegate  their duties (by operation of Law or otherwise),
without the prior written  consent of the other party.  This  Agreement  will be
binding  upon,  inure to the  benefit of and be  enforceable  by the parties and
their respective successors and assigns.

      12.9. Parties In Interest.  This Agreement shall be binding upon and inure
solely to the  benefit  of each party  hereto,  and  nothing in this  Agreement,
express or implied,  is intended  to or shall  confer upon any other  Person any
right,  benefit  or remedy of any nature  whatsoever  under or by reason of this
Agreement, including, without limitation, by way of subrogation.

      12.10.  Governing  Law. This  Agreement will be governed by, and construed
and enforced in  accordance  with the laws of the State of California as applied
to contracts  that are executed and performed in  California,  without regard to
the  principles  of  conflicts of law  thereof.  Each party  hereby  irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
Orange County,  California for the  adjudication of any dispute  hereunder or in
connection  herewith or with any  transaction  contemplated  hereby or discussed
herein,  and hereby  irrevocably  waives,  and agrees not to assert in any suit,
action  or  proceeding,  any  claim  that it is not  personally  subject  to the
jurisdiction  of any such  court,  that  such  suit,  action  or  proceeding  is
improper.  Each party hereby  irrevocably waives personal service of process and
consents  to process  being  served in any such suit,  action or  proceeding  by
mailing a copy  thereof to such party at the address in effect for notices to it
under this  Agreement  and agrees that such service  shall  constitute  good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law.

      12.11.  Counterparts.  This  Agreement  may be  executed  in  one or  more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed  shall be deemed to be an original but all of which taken
together shall  constitute  one and the same  agreement.  This  Agreement  shall
become effective when  counterparts  have been signed by each of the parties and
delivered by facsimile or other means to the other party. Any party who delivers
a signature page via facsimile  agrees to later deliver an original  counterpart
to all other parties.

      12.12.  Attorneys  Fees.  If any  action or  proceeding  relating  to this
Agreement, or the enforcement of any provision of this Agreement is brought by a
party hereto against any party hereto, the prevailing party shall be entitled to
recover reasonable  attorneys' fees, costs and disbursements (in addition to any
other relief to which the prevailing party may be entitled).

      12.13. Gender. For purposes of this Agreement, references to the masculine
gender shall include feminine and neuter genders and entities.

                                       45
<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Agreement and Plan of
Merger to be executed as of the date first written above by their respective
officers thereunto duly authorized.

                                            DYNTEK, INC., a Delaware corporation

                                            By: ________________________________

                                            Name: ______________________________

                                            Title: _____________________________

                                            ITI ACQUISITION CORP., a California
                                            corporation

                                            By: ________________________________

                                            Name: ______________________________

                                            Title: _____________________________

                                            INTEGRATION TECHNOLOGIES, INC., a
                                            California corporation

                                            By: ________________________________

                                            Name: ______________________________

                                            Title: _____________________________

                                            REPRESENTATIVE

                                            By: ________________________________

                                                [_______________]

                                            SHAREHOLDERS

                                            ____________________________________
                                                Glen Ackerman

                [SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]

<PAGE>

                                           SHAREHOLDERS (Continued)

                                           ____________________________________
                                               Lisa Ackerman

                                           ____________________________________
                                               Chris Richner

                                           ____________________________________
                                               David Upton

                                           CW ZUBLIN TRUST UNDER DECLARATION
                                           OF TRUST DATED 4/6/01, CASPER ZUBLIN,
                                           JR., TRUSTEE

                                           ____________________________________
                                               CASPER ZUBLIN, JR., TRUSTEE

                [SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]

<PAGE>

                                    EXHIBIT A

                               CERTAIN DEFINITIONS

      The following terms, as used in the Purchase Agreement, have the following
meanings:

      "Affiliate"  shall  mean  with  respect  to any  Person,  any  individual,
corporation,  partnership,  firm,  joint  venture,  limited  liability  company,
association,   joint-stock  company,  trust,   unincorporated   organization  or
Governmental  Entity,  or  other  Person  directly  or  indirectly  controlling,
controlled by or under common  control with such Person,  including all officers
and directors of such Person.

      "Alternative  Acquisition"  shall have the meaning as set forth in Section
5.4 of the Agreement.

      "Agreement" shall have the meaning as set forth in the Preamble.

      "Assets" of a Person shall mean all of the assets, properties,  businesses
and rights of such  Person of every kind,  nature,  character  and  description,
whether real, personal or mixed, tangible or intangible,  accrued or contingent,
or  otherwise  relating to or utilized in such  Person's  business,  directly or
indirectly, in whole or in part, whether or not carried on the books and records
of such  Person,  and  whether  or not  owned in the name of such  Person or any
Affiliate of such Person and wherever located.

      "Benefit  Plans" shall have the meaning as set forth in Section 3.12(b) of
the Agreement.

      "California  Agreement  of Merger"  shall have the meaning as set forth in
Section 1.3 of the Agreement.

      "Cash   Consideration"   shall  mean  $2,500,000,   less  the  Shareholder
Indebtedness as of the Closing Date.

      "Certificates"  shall have the  meaning as set forth in Section  2.2(a) of
the Agreement.

      "Change  in  Control"  shall  mean  (i)  the   acquisition,   directly  or
indirectly,  in one  transaction  or a series  of  related  transactions  of the
beneficial  ownership of securities of Parent possessing more than fifty percent
(50%) of the  total  combined  voting  power of all  outstanding  securities  of
Parent;  (ii) a merger or  consolidation in which the holders of the outstanding
voting  securities  of Parent  immediately  prior to such  merger  hold,  in the
aggregate,  securities  possessing  less than fifty  percent  (50%) of the total
combined voting power of all outstanding  voting  securities of Parent or of the
acquiring entity  immediately after such merger; or (iii) the sale,  transfer or
other  disposition (in one transaction or a series of related  transactions)  of
all or  substantially  all of the assets of Parent,  except for a transaction in
which the holders of the  outstanding  voting  securities of Parent  immediately
prior  to  such  transaction(s)  receive  as  a  distribution  with  respect  to
securities of Parent,  in the aggregate,  securities  possessing more than fifty
percent  (50%) of the total  combined  voting  power of all  outstanding  voting
securities of the acquiring entity immediately after such transaction(s).

      "Claims"  shall have the meaning as set forth in Section  7.6(f)(i) of the
Agreement.

                                      A-1
<PAGE>

      "Claims  and  Liabilities"  shall have the meaning as set forth in Section
8.1(a) of the Agreement.

      "Closing"  shall  have the  meaning  as set  forth in  Section  1.2 of the
Agreement.

      "Closing  Date"  shall have the meaning as set forth in Section 1.2 of the
Agreement.

      "Code" means the Internal Revenue Code of 1986, as amended,  and the rules
and regulations promulgated thereunder.

      "Collared  Stock  Consideration"  shall  have the  meaning as set forth in
Section 2.3 of the Agreement.

      "Company" shall have the meaning as set forth in the Preamble.

      "Company  Disclosure  Schedule" shall mean the written disclosure schedule
pursuant to Article 3 of the Agreement  delivered on or prior to the date hereof
by the Company and the  Shareholders  to Parent that is arranged in the numbered
and lettered  paragraphs  corresponding to the numbered and lettered  paragraphs
contained in the Agreement.

      "Company  Environmental  Liabilities"  mean any and all  liabilities of or
relating to the Company, whether contingent or fixed, actual or potential, known
or unknown,  which (i) arise under or relate to matters covered by Environmental
Laws and (ii) relate to actions occurring or conditions  existing on or prior to
the Closing Date.

      "Company  Financial  Statements"  shall  have the  meaning as set forth in
Section 3.8(a) of the Agreement.

      "Company  Intellectual  Property" means all Material Intellectual Property
other than  Material  Intellectual  Property  that is the subject of Third Party
Licenses.

      "Company Stock" means the Common Stock of the Company.

      "Confidentiality Agreement" shall have the meaning as set forth in Section
5.5 of the Agreement.

      "Contract" means any written or oral agreement,  arrangement,  commitment,
contract,   indenture,   instrument,   lease,  obligation,   plan,  restriction,
understanding  or  undertaking  of any kind or character,  or other  document to
which any Person is a party or by which such Person is bound or  affecting  such
Person's capital stock, Assets or business.

      "Customers"  shall have the  meaning  as set forth in Section  3.27 of the
Agreement.

      "Databases"  means and includes all  compilations  of data and all related
documentation  and written  narratives of all procedures used in connection with
the collection,  processing and distribution of data contained therein, together
with  information  that describes the attributes of certain data and such data's
relationship to other data, including,  without limitation, (A) whether the data
must be numerical, alphabetic, or alphanumeric, (B) range or type limitations of
the data, (C) one-to-one,  one-to-many, or many-to-many relationships with other
data, (D) file layouts, and (E) data formats.

                                      A-2
<PAGE>

      "Default"  shall mean (i) any breach or violation of or default  under any
Contract,  Order or  Permit,  (ii) any  occurrence  of any  event  that with the
passage  of time or the giving of notice or both  would  constitute  a breach or
violation  of or  default  under any  Contract,  Order or  Permit,  or (iii) any
occurrence  of any event that with or without  the passage of time or the giving
of notice would give rise to a right to terminate or revoke,  change the current
terms of, or renegotiate,  or to accelerate,  increase,  or impose any Liability
under, any Contract, Order or Permit.

      "DGCL"  shall  have  the  meaning  as set  forth  in the  Recitals  of the
Agreement.

      "Earn-Out  Revenue"  shall have the meaning as set forth in Section 2.5(a)
of the Agreement.

      "Earn-Out Period" shall have the meaning as set forth in Section 2.4(a) of
the Agreement.

      "EBITDA"  means  earnings  before   interest,   taxes,   depreciation  and
amortization,  all as determined in accordance with GAAP, on a basis  consistent
with  prior   periods.   For  purposes  of  calculating   the  EBITDA   Earn-Out
Consideration  pursuant to Section 2.4 of the Agreement,  the salaries and other
overhead  expenses of Casper Zublin,  Bill Tomlinson and Lanie Sechrest shall be
excluded from the expense calculation.

      "EBITDA  Earn-Out  Consideration"  shall have the  meaning as set forth in
Section 2.4 of the Agreement.

      "EBITDA  Earn-Out  Notice"  shall have the meaning as set forth in Section
2.4(a)(i) of the Agreement.

      "EBITDA Earn-Out  Objection Notice" shall have the meaning as set forth in
Section 2.4(a)(i) of the Agreement.

      "Effective Time" shall have the meaning as set forth in Section 1.3 of the
Agreement.

      "Employees"  shall have the  meaning  as set forth in Section  3.20 of the
Agreement.

      "Environmental  Laws" mean any and all federal,  state,  local and foreign
statutes, laws, judicial decisions,  regulations,  ordinances, rules, judgments,
orders,  decrees,  codes,  plans,  injunctions,  permits,  concessions,  grants,
franchises,  licenses,  agreements and  governmental  restrictions,  relating to
human  health,  the  environment  or to  emissions,  discharges  or  releases of
pollutants,  contaminants  or  other  Hazardous  Material  or  wastes  into  the
environment,  including without  limitation  ambient air, surface water,  ground
water  or  land,  or  otherwise   relating  to  the   manufacture,   processing,
distribution,  use,  treatment,  storage,  disposal,  transport  or  handling of
pollutants,  contaminants or other Hazardous  Material or wastes or the clean-up
or other remediation thereof.

      "Environmental  Permits" means,  with respect to any Person,  all permits,
licenses, franchises,  certificates,  approvals and other similar authorizations
of governmental  authorities  relating to or required by Environmental  Laws and
affecting,  or relating in any way to, the  business of such Person as currently
conducted.

      "ERISA"  means the Employee  Retirement  Income  Security Act of 1974,  as
amended, and the rules and regulations promulgated thereunder.

                                      A-3
<PAGE>

      "Final  Date" shall have the  meaning as set forth in Section  10.1 of the
Agreement.

      "Firm"  shall have the  meaning as set forth in Section  2.4(a)(i)  of the
Agreement.

      "GAAP"  shall  have the  meaning  as set  forth in  Section  3.8(b) of the
Agreement.

      "Governmental  Entity" shall mean any  government  or any agency,  bureau,
board,  directorate,   commission,   court,  department,   official,   political
subdivision,  tribunal,  or other  instrumentality  of any  government,  whether
federal, state or local, domestic or foreign.

      "Hazardous Material" means any toxic, radioactive,  corrosive or otherwise
hazardous substance, including petroleum, its derivatives, by-products and other
hydrocarbons, or any substance having any constituent elements displaying any of
the  foregoing  characteristics,  which in any  event  is  regulated  under  any
Environmental Law.

      "Indemnifying Party" shall have the meaning as set forth in Section 8.3 of
the Agreement.

      "Indemnitee"  shall have the  meaning  as set forth in Section  8.3 of the
Agreement.

      "Intellectual  Property" shall mean all rights,  privileges and priorities
provided  under  applicable  Law  relating  to  intellectual  property,  whether
registered or unregistered, including without limitation all (i) (a) inventions,
discoveries,  processes,  formulae,  designs, methods,  techniques,  procedures,
concepts,  developments,  technology,  mask works,  new and useful  improvements
thereof and know-how relating  thereto,  whether or not patented or eligible for
patent protection;  (b) copyrights and copyrightable  works,  including computer
applications,  programs,  Products,  Software,  databases and related items; (c)
trademarks,  service marks, trade names, brand names,  product names,  corporate
names, logos and trade dress, the goodwill of any business  symbolized  thereby,
and all common-law rights relating thereto;  and (d) trade secrets,  proprietary
data  and  other   confidential   information;   and  (ii)  all   registrations,
applications,  recordings,  and licenses or other similar  agreements related to
the foregoing.

      "Law"  shall  mean any code,  law,  ordinance,  regulation,  reporting  or
licensing  requirement,  rule, or statute  applicable to a Person or its Assets,
liabilities or business, including those promulgated, interpreted or enforced by
any Regulatory Authority.

      "Lien"  means,  with respect to any Asset,  any  mortgage,  lien,  pledge,
charge, security interest or encumbrance of any kind in respect to such Asset.

      "Material"  and  "Materially"  for  purposes  of this  Agreement  shall be
determined  in light of the facts and  circumstances  of the matter in question;
provided  that any  specific  monetary  amount  stated in this  Agreement  shall
determine materiality in that instance.

      "Material  Adverse Effect" means,  with respect to any Person,  a Material
adverse  effect on the condition  (financial or  otherwise),  business,  Assets,
liabilities or the operating  results of such Person and its Subsidiaries  taken
as a whole.

      "Material  Intellectual  Property"  shall have the meaning as set forth in
Section 3.21(a) of the Agreement.

      "Merger" shall have the meaning as set forth in the Recitals.

                                      A-4
<PAGE>

      "Merger  Consideration" shall consist of (i) the Cash Consideration,  (ii)
the Collared Stock  Consideration,  (iii) the EBITDA Earn-Out  Consideration and
(iv) the Revenue Earn-Out Consideration.

      "Merger Consideration  Certificate" shall have the meaning as set forth in
Section 2.1(b)(vii) of the Agreement.

      "Merger Sub" shall have the meaning as set forth in the Preamble.

      "Nasdaq"  shall have the  meaning  as set forth in  Section  2.3(a) of the
Agreement.

      "NASD" means National Association of Securities Dealers, Inc.

      "Order"  shall  mean  any  administrative   decision  or  award,   decree,
injunction,  judgment, order,  quasi-judicial decision or award, ruling, or writ
of any federal,  state, local or foreign or other court,  arbitrator,  mediator,
tribunal, administrative agency or Regulatory Authority.

      "Owned Databases" means all Databases other than Third Party Databases.

      "Owned Software" means all Software other than Third Party Software.

      "Parent" shall have the meaning as set forth in the Preamble.

      "Parent Common Stock " means the common stock of Parent.

      "Parent Disclosure  Schedule" shall mean the written  disclosure  schedule
pursuant to Article 4 of the Agreement  delivered on or prior to the date hereof
by Parent to the Company  that is arranged in  paragraphs  corresponding  to the
numbered  and  lettered  paragraphs  corresponding  to the numbered and lettered
paragraphs contained in the Agreement.

      "Parent Indemnified Person" shall have the meaning as set forth in Section
7.6(f)(ii) of the Agreement.

      "Per Share  Cash  Consideration"  shall mean the amount  equal to the Cash
Consideration  divided by the total issued and outstanding shares of the Company
Stock  immediately  prior to the  Effective  Time and as set forth on the Merger
Consideration Certificate.

      "Per Share  Collared Stock  Consideration"  shall mean the amount equal to
the Collared Stock Consideration  payable pursuant to Section 2.3 divided by the
total issued and outstanding  shares of the Company Stock  immediately  prior to
the Effective Time and as set forth on the Merger Consideration Certificate.

      "Per Share EBITDA Earn-Out  Consideration"  shall mean the amount equal to
the EBITDA Earn-Out Consideration payable pursuant to Section 2.4 divided by the
total issued and outstanding  shares of the Company Stock  immediately  prior to
the Effective Time and as set forth on the Merger Consideration Certificate.

      "Per Share Revenue Earn-Out  Consideration" shall mean the amount equal to
the Revenue  Earn-Out  Consideration  payable pursuant to Section 2.5 divided by
the total issued and outstanding

                                      A-5
<PAGE>

shares of the Company Stock  immediately  prior to the Effective Time and as set
forth on the Merger Consideration Certificate.

      "Person"  means  an  individual,   a   corporation,   a  partnership,   an
association,  a trust,  a  limited  liability  company  or any  other  entity or
organization,  including a government or political  subdivision or any agency or
instrumentality thereof.

      "Permit" shall mean any federal,  state,  local,  or foreign  governmental
approval,  authorization,  certificate,  consent,  easement,  filing, franchise,
letter of good standing, license, notice, permit, qualification, registration or
right  of or from  any  Governmental  Entity  (or any  extension,  modification,
amendment  or waiver of any of these) to which any  Person is a party or that is
or may be binding upon or inure to the benefit of any Person or its  securities,
Assets or business, or any notice,  statement,  filing or other communication to
be filed with or delivered to any Governmental Entity.

      "Permitted  Liens"  shall  mean (a) Liens for  taxes  and  assessments  or
governmental  charges  or levies  not at the time due or in respect of which the
validity  thereof  shall  currently be  contested  in good faith by  appropriate
proceedings;  (b)  Liens in  respect  of  pledges  or  deposits  under  workers'
compensation laws or similar legislation, carriers', warehousemen's, mechanics',
laborers' and  materialmen's  and similar Liens, if the  obligations  secured by
such  Liens are not then  delinquent  or are being  contested  in good  faith by
appropriate proceedings;  (c) Liens incidental to the conduct of the business of
the Company which were not incurred in connection with the borrowing of money or
the  obtaining  of  advances  or  credits  and  which  do not  in the  aggregate
Materially  detract from the value of its property or Materially  impair the use
thereof in the operation of its business and (d) Liens securing obligations that
are individually not in excess of $25,000.

      "Products" means the Software products created,  developed or owned by the
Company and all related  products,  including any Intellectual  Property related
thereto.

      "Registrable  Shares"  shall  have the  meaning  as set  forth in  Section
7.6(a)(i) of the Agreement.

      "Registration  Statement" shall mean any registration statement filed with
the SEC pursuant to Section 7.6(a) or Section 7.6(b) of this Agreement.

      "Regulatory  Authorities"  shall mean,  collectively,  the  Federal  Trade
Commission,  the United States Department of Justice, and all foreign,  federal,
state and local regulatory  agencies and other  Governmental  Entities or bodies
having  jurisdiction  over the parties and their respective  Assets,  employees,
businesses  and/or  Subsidiaries,  including  the  NASD and the  Securities  and
Exchange Commission.

      "Representative"  shall have the meaning as set forth in Section 2.3(b) of
the Agreement.

      "Returns" shall have the meaning as set forth in Section 3.11(a)(i) of the
Agreement.

      "Revenue  Earn-Out  Consideration"  shall have the meaning as set forth in
the Preamble of the Agreement.

      "Revenue  Earn-Out  Notice" shall have the meaning as set forth in Section
2.5(b) of the Agreement.

                                      A-6
<PAGE>

      "Revenue Earn-Out Objection Notice" shall have the meaning as set forth in
Section 2.5(b) of the Agreement.

      "Share Price" shall have the meaning as set forth in Section 2.3(a) of the
Agreement.

      "Shareholder  Indemnified  Person"  shall have the meaning as set forth in
Section 7.6(f)(i) of the Agreement.

      "Shareholder  Indebtedness" shall mean that indebtedness of the Company to
certain  shareholders  as set forth on Schedule 3.22 to the Agreement,  plus all
additional interest that may accrue on such indebtedness up to and including the
day immediately prior to the Closing Date.

      "Shares"  shall mean the issued and  outstanding  shares of Company  Stock
immediately  prior to the Effective Time, other than (i) shares of Company Stock
held by the Company and (ii) shares of Company Stock held by Parent,  Merger Sub
or any other Subsidiary or parent of Parent or Merger Sub, if any.

      "SMB  Business"  shall mean that portion of the  Company's  business  that
excludes the mid-market  enterprise business.  A schedule of assets,  contracts,
employees  and any other  elements of the SMB  Business is detailed on Exhibit C
attached hereto.

      "Software"  means and includes all  computer  programs,  whether in source
code, object code or other form (including without limitation any embedded in or
otherwise  constituting part of a computer hardware  device),  algorithms,  edit
controls,  methodologies,  applications,  flow  charts  and any and all  systems
documentation  (including,  but not limited  to, data entry and data  processing
procedures, report generation and quality control procedures), logic and designs
for all programs, and file layouts and written narratives of all procedures used
in the coding or maintenance of the foregoing.

      "Subsidiary"  means,  with  respect to any  Person,  (i) any  corporation,
association or other business  entity of which more than 50% of the total voting
power of shares of capital stock entitled  (without  regard to the occurrence of
any  contingency)  to vote in the  election of  directors,  managers or trustees
thereof is at the time owned or  controlled,  directly  or  indirectly,  by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof)  and (ii) any  partnership  (a) the sole  general  partner or  managing
general  partner of which is such Person or a  Subsidiary  of such Person or (b)
the only general  partners of which are such Person or one or more  Subsidiaries
of such Person (or any combination thereof).

      "Surviving Corporation" shall have the meaning as set forth in Section 1.1
of the Agreement.

      "Tax" or "Taxes" shall mean all United States federal, state,  provincial,
local or foreign taxes and any other applicable  duties,  levies,  fees, charges
and  assessments  that  are in the  nature  of a tax,  including  income,  gross
receipts,   property,  sales,  use,  license,  excise,  franchise,  ad  valorem,
value-added,  transfer, severance, stamp, occupation, premium, windfall profits,
environmental  (including taxes under Section 59A of the Code), customs, capital
stock,  real  property,  personal  property,   alternative  or  add-on  minimum,
estimated,  social  security  payments,  and  health  taxes and any  deductibles
relating  to wages,  salaries  and  benefits  and  payments  to  subcontractors,
together with all interest, penalties and additions imposed with respect to such
amounts.

                                      A-7
<PAGE>

      "Tax Data"  shall have the  meaning as set forth in Section  6.7(d) of the
Agreement.

      "Third Party Databases" means Databases  licensed or leased to the Company
or any of its Subsidiaries by third parties.

      "Third Party Licenses" means all licenses and other  agreements with third
parties  relating to any  Intellectual  Property or products that the Company is
licensed  or  otherwise  authorized  by  such  third  parties  to  use,  market,
distribute or incorporate into products marketed and distributed by the Company.

      "Third  Party  Technology"  means all  Intellectual  Property and products
owned by third parties and licensed pursuant to Third Party Licenses.

      "Third Party Software" means Software licensed or leased to the Company or
its Subsidiaries by third parties,  including  commonly  available "shrink wrap"
software copyrighted by third parties.

      "Transaction Documents" means the Agreement, the Confidentiality Agreement
and any other document executed and delivered  pursuant hereto together with any
exhibits or schedules to such documents.

      "Transfer Taxes" shall have the meaning as set forth in Section 7.3 of the
Agreement.

      "Violations"  shall have the meaning as set forth in Section  7.6(f)(i) of
the Agreement.

                                      A-8
<PAGE>

                                    EXHIBIT B

                         CALIFORNIA AGREEMENT OF MERGER

                                    Exhibit B

<PAGE>

                                    EXHIBIT C

                                  SMB BUSINESS

                                    Exhibit C

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