Document:

AGREEMENT AND PLAN OF MERGER

         AGREEMENT  AND PLAN OF MERGER,  dated as of December  31, 1999  (herein
sometimes  referred  to as  the  "Agreement"),  by  and  among  DEERFIELD  VIDEO
PRODUCTIONS,  INC.,  a  New  York  corporation  ("Deerfield"),  DANIEL  SLADKUS,
residing at 380 Longhill Road,  Briarcliff Manor, New York 10501 ("Sladkus") and
WILLIAM G.  DOSCHER,  residing at PO Box 2187,  Oak Bluff,  Massachusetts  02557
("Doscher"),  on the one hand,  and VIRTUAL  EDUCATION  CORPORATION,  a Delaware
corporation  ("CVE  Parent")  and  DEERFIELD   ACQUISITION  CORP.,  a  New  York
corporation ("Newco"), on the other hand.

                              W I T N E S S E T H:

         WHEREAS,  the  respective  Boards of  Directors  of each of Newco,  CVE
Parent  and  Deerfield  deem it  desirable  and in the best  interests  of their
respective  corporations  and  stockholders  that  Newco  merge  with  and  into
Deerfield  (the  "Merger") in accordance  with this Agreement and the applicable
laws of the State of New York; and

         WHEREAS, Newco is a wholly owned subsidiary of CVE Parent.

         NOW, THEREFORE, the parties hereby agree as follows:

1.       MERGER OF NEWCO WITH AND INTO CVE PARENT.

         1.1.     MERGER AND SURVIVING CORPORATION.

                  1.1.1.   Pursuant  to the  applicable  law of the State of New
York,  Newco  shall merge with and into  Deerfield  and  Deerfield  shall be the
surviving  corporation after the Merger (the "Surviving  Corporation") and shall
continue to exist under the  provisions of the Business  Corporation  Law of the
State  of New  York  ("BCL").  The name of the  Surviving  Corporation  shall be
Deerfield

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Video  Productions,  Inc. The  separate  existence of Newco shall cease upon the
Effective Date (as defined below).

                  1.1.2.   The Articles of Incorporation of Deerfield shall from
and after the Effective Date, be the Articles of  Incorporation of the Surviving
Corporation,  until amended in accordance  with the BCL.  1.1.3.  The By-Laws of
Deerfield  shall,  from and after the  Effective  Date,  be the  By-Laws  of the
Surviving Corporation, until altered or amended in accordance with the BCL.

                  1.1.3.   The By-Laws of  Deerfield  shall,  from and after the
Effective  Date, be the By-Laws of the Surviving  Corporation,  until altered or
amended in accordance with the BCL.

         1.2.     EFFECTIVENESS  OF THE  MERGER.  In the  event  that all of the
conditions  precedent  to the  obligations  of each  of the  parties  hereto  as
hereinafter  set  forth  shall  either  have  been  satisfied  or  waived,   (a)
Certificate  of Merger  under  the  applicable  provisions  of New York law (the
"Merger  Certificate"),  shall be  delivered  for filing on the Closing Date (as
defined below) to the Secretary of State of New York and shall become  effective
upon the  acceptance of the filing of such Merger  Certificate by said Secretary
of  State,  which  date  shall be the  "Effective  Date"  for  purposes  of this
Agreement and which date shall be as soon as practicable after the Closing. 1.3.
CONVERSION  OF  NEWCO  STOCK  AND  DEERFIELD  STOCK.  The  manner  and  basis of
converting  the  shares  of  capital  stock of Newco and  Deerfield  shall be as
follows:

         1.3.     CONVERSION OF NEWCO STOCK AND DEERFIELD STOCK.  The manner and
basis of converting the shares of capital stock of Newco and Deerfield  shall be
as follows:

                  1.3.1.   Each of the 100  issued  and  outstanding  shares  of
common  stock of Newco  (the  "Newco  Stock"),  issued  and  outstanding  at the
Effective  Date and all rights  with  respect  thereto  shall,  by reason of and
simultaneous  with the Merger and  without  any action on the part of Newco,  be
converted into and shall become one share of the Surviving  Corporation's no par
value common stock.

1.3.2.

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                           1.3.2.1. Each of the 100  shares of  common  stock of
Deerfield (the  "Deerfield  Stock") issued and outstanding at the Effective Date
and all rights with respect  thereto shall, by reason of and  simultaneous  with
the  Merger  and  without  any  action on the part of the  holders  thereof,  be
cancelled and converted into (a) a right to receive 58.1 shares of common stock,
$.01 par value per share, of CVE Parent ("CVE Parent Stock"), and (b) a right to
receive such additional  shares,  if earned, of CVE Parent Stock as set forth in
Section 1.6 (the "Contingent Shares").

                           1.3.2.2. Immediately  following the  Effective  Date,
each holder of certificates  evidencing  outstanding  shares of Deerfield Stock,
upon the surrender of such certificates to CVE Parent, properly endorsed,  shall
be entitled to receive a  certificate  registered in the name of such holder for
that number of shares of CVE Parent  Stock as shall be equal to 58.1  multiplied
by the  number of shares  of  Deerfield  Stock  evidenced  by such  certificates
rounded to the nearest whole number.

                           1.3.2.3. All  rights   with   respect  to  shares  of
Deerfield Stock shall cease and terminate at the Effective Date, notwithstanding
that any  certificates  evidencing said shares of Deerfield Stock shall not have
been  surrendered  to CVE Parent,  and the holders of said shares  shall have no
interest in or claims against the Surviving Corporation, except for the right to
receive shares of CVE Parent Stock (including,  if earned, Contingent Shares) in
accordance with the terms hereof.

                  1.3.3.   Immediately following the Effective Date, any and all
                           options or other  rights to acquire any shares of the
                           capital stock or other equity securities of Deerfield
                           shall be cancelled  and shall  thereafter be void and
                           of no further force and effect.

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         1.4.     EFFECT OF MERGER.

                  1.4.1.   Except as otherwise  specifically  set forth  herein,
the identity, existence,  purposes, powers, franchises, rights and immunities of
Deerfield  shall  continue  unaffected  and  unimpaired  by the Merger,  and the
corporate identity,  existence,  purposes,  powers, franchises and immunities of
Newco  shall  be  merged  into  Deerfield,   and  Deerfield,  as  the  Surviving
Corporation,  shall  be fully  vested  therewith.  The  separate  existence  and
corporate  organization  of  Newco  (except  insofar  as  may  be  continued  by
applicable law) shall cease as of the Effective Date.

                  1.4.2.   At the Effective Date:

                           1.4.2.1. The  rights,   privileges,   good  will  and
franchises  and  all  property,   real,   personal  and  mixed  and  all  debts,
liabilities,  obligations  and penalties  due on whatever  account and all other
things in action  belonging or accruing to Newco shall be  bargained,  conveyed,
granted,  confirmed,  transferred,  assigned  and set over to and  vested in the
Surviving Corporation,  by operation of law and without further act or deed, and
all property  and rights and  liabilities,  and all and every other  interest of
Newco shall be as effectively the property, rights and interests and liabilities
of the Surviving  Corporation,  as they were of Newco; and

                           1.4.2.2. No action or  proceeding,  whether  civil or
criminal, pending at the Effective Date by or against either Deerfield or Newco,
or any stockholder,  officer or director thereof, shall abate or be discontinued
by the Merger, but may be enforced, prosecuted, settled or compromised as if the
Merger had not occurred, or the Surviving Corporation may be substituted in such
action or proceeding in place of  Deerfield,  or Newco,  as the case may be; and

                           1.4.2.3. All rights of employees  and  creditors  and
all  liens  upon  the  property  of  Deerfield  and  Newco  shall  be  preserved
unimpaired,  limited  in lien to the  property  affected  by such  liens  at the
Effective  Date, and all of the debts,  liabilities,  obligations  and duties of
Deerfield  and Newco shall  attach to the  Surviving  Corporation,  and shall be
enforceable against

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the Surviving Corporation to the same extent as if all such debts,  liabilities,
obligations  and  duties  had  been  incurred  or  contracted  by the  Surviving
Corporation.

         1.5.     DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The Board
of Directors of the  Surviving  Corporation  shall  consist of those persons set
forth on Exhibit A-1 hereto,  which  Directors  shall hold office from and after
the Effective Date, in accordance with the By-Laws of the Surviving  Corporation
until  the next  annual  meeting  of  stockholders  and until  their  respective
successors  shall have been duly  elected  and  qualified.  The  officers of the
Surviving  Corporation  shall be those  persons set forth on Exhibit A-2 hereto;
provided,  however,  that the listing of such  persons on said Exhibit A-2 shall
not  be  deemed  to  constitute  an  employment  agreement  with  the  Surviving
Corporation or any other entity or any assurance as to future  employment.  Such
persons shall continue to hold their respective offices until such time as their
successors shall have been duly appointed and qualified.

         1.6.     CONTINGENT CVE PARENT SHARES.

                  1.6.1.   DEFINITIONS.  For  purposes  of this  Agreement,  the
following terms shall have the following  meanings:

                           1.6.1.1. "Deerfield  Group" shall  initially mean the
following individuals, who are employees of Deerfield on the date hereof and who
will remain  employees of Deerfield after the Effective Date or become employees
of CVE Parent or an affiliate of CVE Parent on the  Effective  Date:  (a) Daniel
Sladkus ("Sladkus"),  president of Deerfield, whose primary duties will be sales
of New Media  Engagements  (defined  in  Section  1.6.4.)  and Video  Production
Engagements (Defined in Section 1.6.1.5), (b) John Briccetti ("Briccetti"),  who
will  be  a  sales  person  of  New  Media   Engagements  and  Video  Production
Engagements,  (c) Giavani  D'Arco  ("D'Arco"),  whose primary duty will be video
production,  and (d) John  Moorehead

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("Moorehead"),  whose primary duty will be video  production.  From time to time
during the Earn-Out  Period  (defined in Section  1.6.1.3)  Sladkus,  Briccetti,
D'Arco and/or  Moorehead may be replaced as a member of the Deerfield  Group, so
long as the person replacing one of the above persons performs substantially the
same duties as the person he is replacing.  The Deerfield Group shall at no time
consist of more than four  persons,  comprised of (i) two persons  whose primary
duties are sales of New Media  Engagements and Video Production  Engagements and
(ii) two persons whose  primary duty is video  production.  The Deerfield  Group
shall not be a separate division or formal group within CVE Parent or any of its
affiliates.  It shall exist solely for purposes of the calculations  required by
this Section 1.6;

                           1.6.1.2. "Deerfield  Group Net Sales  Revenue"  shall
mean sales revenue collected by CVE Parent or its affiliates during the Earn-Out
Period and for the 12 months after the expiration of the Earn-Out Period for New
Media  Engagements and Video Production  Engagements  which engagements (i) were
originated by members of the Deerfield Group during the Earn-Out Period and (ii)
were  memorialized  by a contract  entered into by CVE Parent or its affiliates,
during the Earn-Out Period, less such usual and customary discounts, returns and
allowances as are granted by CVE Parent or its affiliates, as the case may be.

                           1.6.1.3. "Earn-Out Period" shall mean the twenty-four
(24) month  period  beginning  on the  Effective  Date and  expiring  on the day
immediately  prior to the  twenty-four  (24) month  anniversary of the Effective
Date;

                           1.6.1.4. "New Media  Engagement" shall mean a project
for which CVE Parent or any of its  affiliates  is engaged  during the  Earn-Out
Period to create for a customer of CVE Parent a  production  on new media (e.g.,
CD ROM or Internet);

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                           1.6.1.5. "Video  Production  Engagement" shall mean a
project  for which CVE Parent or any of its  affiliates  is  engaged  during the
Earn-Out Period to create a video production for a customer of CVE Parent.

                  1.6.2.   ISSUANCE OF CONTINGENT SHARES.

                           1.6.2.1. If the  Deerfield  Group Net  Sales  Revenue
exceeds  $2,200,000,  CVE Parent  will issue and deliver up to an  aggregate  of
52,290  additional shares of CVE Parent Stock  ("Contingent  Shares") to Sladkus
and  Doscher,  of which  Sladkus  shall be entitled to 80% of such shares and of
which Doscher shall be entitled to 20% of such shares.  The aggregate  number of
Contingent Shares shall be calculated by multiplying  52,290 by a fraction,  (x)
the numerator of which shall be the difference  between the Deerfield  Group Net
Sales  Revenue  (but not  more  than  $3,000,000)  and  $2,200,000,  and (y) the
denominator of which shall be 800,000.

                           1.6.2.2. There shall be no  Contingent  Shares issued
if the Deerfield Group Net Sales Revenue is less than $2,200,000.

                           1.6.2.3. In  no  event   shall   more   than   52,290
Contingent Shares be issued.

                           1.6.2.4. Anything     herein    to    the    contrary
notwithstanding,  CVE Parent shall not be required to issue fractional shares in
connection  with the  calculation  of  Contingent  Shares to be  issued.  If the
calculation  called  for by this  Section  1.6  would  otherwise  result  in the
issuance of a fractional share of CVE Parent Stock, CVE Parent shall instead pay
to each of Sladkus and Doscher an amount of cash equal to the product of (x) the
fraction of the share that would  otherwise  be required and (y) the fair market
value of one  share of CVE  Parent  Stock on the  date on which  CVE  Parent  is
required to issue the Contingent Shares that would have generated the need for a
fractional share.

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                           1.6.2.5. EXAMPLE:  Assume  Deerfield  Group Net Sales
Revenue is  $2,850,000.  The number of  Contingent  Shares to be issued would be
calculated as follows:

                  $2,850,000 - $2,200,000 = $650,000  x  52,290
                                            --------
                                            $800,000

                  .8125 x  52,290 = 42,485

                  CVE Parent would be required to issue 42,485 Contingent Shares
                  and make a cash payment  representing  the fractional share in
                  accordance with Section 1.6.2.4.

                           1.6.2.6. DETERMINATION  OF  ADJUSTMENTS.   13  months
after the expiration of the Earn-Out Period, CVE Parent shall provide to Doscher
and Sladkus a report (the "Report")  setting forth the amount of Deerfield Group
Net Sales  Revenue that has been  collected by CVE Parent .

                           1.6.2.7. If Sladkus and Doscher object to the Report,
they may give  notice of their  objections  to CVE Parent  within  fifteen  (15)
business  days after their receipt of the Report.  If no such  assertion is made
within such fifteen (15) day period, or if Sladkus, Doscher and CVE Parent agree
upon all  matters in  dispute,  the  Report,  as  adjusted  to reflect  any such
agreements,  shall be final and binding on all parties hereto for the purpose of
determining  the number of Contingent  Shares,  if any, to be issued pursuant to
this  Section  1.6.

                           1.6.2.8. If the  parties  are unable to  resolve  all
items in dispute  within 30 days after the  delivery of the Report,  those items
shall be submitted for  resolution  to a firm of  independent  certified  public
accountants   jointly  selected  by  Sladkus,   Doscher  and  CVE  Parent.   The
determination  of such  accounting  firm  shall be final  and  binding  upon all
parties hereto. The parties will use their best efforts to resolve these matters
as  rapidly  as  practical.  The  fees  of any  firm  employed  pursuant  to the
provisions of this paragraph  shall be borne one-half by Sladkus and Doscher and
one-half by CVE Parent.

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                           1.6.2.9. Once the Report is deemed final, within five
(5) business days after such  agreement,  CVE Parent shall issue the  Contingent
Shares  and  make any  required  cash  payments  in lieu of  fractional  shares.

                           1.6.2.10.The right to receive the  Contingent  Shares
may not be sold,  pledged or transferred  except in compliance  with  applicable
securities  laws and is subject to CVE  Parent  receiving  an opinion of counsel
acceptable to CVE Parent's counsel to that effect.

2.       CLOSING.

         2.1.     CLOSING.  The closing of the transactions  contemplated hereby
(the "Closing")  shall take place at the offices of Andrew N. Karlen,  Esq., The
Inns of Court,  99 Court Street,  White Plains,  New York 10601 at 10:00 A.M. on
the third business day after the day on which the  transactions  contemplated by
this  Agreement  shall have been  approved  and  ratified by all  necessary  and
appropriate  corporate proceedings or at such other place, date or time as shall
be mutually agreed upon by the parties (such date or such other agreed upon time
and date is called the "Closing Date").

3.       REPRESENTATIONS AND WARRANTIES OF DEERFIELD AND SLADKUS

         3.1.     Deerfield  and  Sladkus  hereby  represent  and warrant to and
agree with Newco and CVE Parent as follows:

                  3.1.1.   ORGANIZATION, STANDING, QUALIFICATION. Deerfield is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New York,  with full power to conduct its  business as it is now
conducted and to own or lease and operate the assets and properties now owned or
leased and operated by it, and with full corporate  power to execute and deliver
this  Agreement  and  consummate  the Merger.  Deerfield  is not required by the
conduct of

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its  business or the  ownership  of its  property to qualify to do business as a
foreign corporation in any other jurisdiction.

                  3.1.2.   CAPITALIZATION  OF  DEERFIELD.  The total  authorized
capital stock of Deerfield consists of two hundred (200) shares of voting common
stock,  without par value ("Deerfield Stock"), of which one hundred (100) shares
are issued and  outstanding.  All such issued and  outstanding  shares have been
duly  authorized  and  validly  issued  and are fully  paid and  non-assessable.
Sladkus is the  beneficial  owner and holder of record of eighty  (80) shares of
Deerfield  Stock.  Sladkus has good and marketable title to said shares free and
clear  of  all  liens,  claims,  equities,  mortgages,  security  interests  and
encumbrances of any kind or nature (all of the foregoing, "Encumbrances").

                  3.1.3.   OPTIONS,   ETC.  Deerfield  has  no  outstanding  (a)
options,  warrants  or other  rights to  purchase,  acquire or convert  into any
shares  of its  capital  stock  or other  equity  securities,  or (b) any  other
agreement or right  (preemptive,  contractual or otherwise) to issue or sell any
shares of its capital  stock or other equity  securities.  There are no "phantom
stock rights" or agreements or similar rights or agreements intended to or which
confer upon any person,  firm or entity  ("Person") rights similar to any rights
accruing to owners of shares of capital stock of  Deerfield.  None of the shares
of Deerfield  Stock were issued in violation of the  Securities  Act of 1933, as
amended (the "Act"),  or the  securities  or blue sky laws of any state or other
jurisdiction.

                  3.1.4.   NO  RESTRICTIONS  ON  SECURITIES.  Deerfield is not a
party to any agreement (a) creating  rights in any person with respect to shares
of its  capital  stock,  or (b)  relating to the voting of shares of its capital
stock on any matter.

                  3.1.5.   VALIDITY,  ETC. This Agreement has been duly executed
and delivered by Deerfield and Sladkus,  is a valid and binding  obligation  and
agreement of each of them, enforceable in

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accordance with its terms (subject to any applicable  bankruptcy or similar laws
affecting  the  enforcement  of creditors'  rights  generally).  The  execution,
delivery and  performance  of this Agreement (i) will not violate or result in a
breach of or  constitute a default  under any note,  mortgage,  loan,  contract,
judgment or decree to which  Deerfield  or Sladkus is a party or by which either
of their  properties  or assets are bound,  (ii) will not afford any creditor of
Deerfield  the right to  accelerate  and  declare  at once due and  payable  any
indebtedness of Deerfield due in installments or not yet due, and (iii) will not
cause a forfeiture of any license or operating  permit  required to continue the
operation of Deerfield's business.

                  3.1.6.   TRANSACTIONS.  Deerfield  has not entered into and is
not  a  party  to  any  agreement,  commitment  or  understanding  binding  upon
Deerfield, except for transactions in the normal course of business, in amounts,
quantities  and nature which are normal and reasonable in relation to the normal
and  reasonable  requirements  of  Deerfield's  business  as the  same  has been
conducted heretofore and which have been fully recorded on the books and records
of Deerfield.

                  3.1.7.   CORPORATE PROPERTY.  Sladkus has not, nor to the best
of his  knowledge  after due inquiry has anyone  else,  removed from the past or
current  premises of  Deerfield  any lists,  records,  books,  files,  drawings,
designs,  computer  software or data,  or any other  related  property or things
belonging to Deerfield.  Nor does Sladkus or, to the best of his knowledge after
due inquiry does anyone else,  have in his/their  possession or under  his/their
control any lists, records, books, files, drawings,  designs,  computer software
or data, or any other related property or things belonging to Deerfield.

                  3.1.8.   CONSENTS.   No   consent   of  any  third   party  or
governmental  authority,  and no other  consent of any other person or entity is
required to consummate the transactions  contemplated  hereby, and the execution
and delivery and the performance of this Agreement and the

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transactions   contemplated   hereby  will  not  interfere  with  the  continued
operation,  after the consummation of the transactions  contemplated  hereby, of
the business in which Deerfield is engaged.  The Board of Directors of Deerfield
has approved the  transactions  contemplated by this Agreement and the execution
and  delivery   hereof.   Neither  the  execution  of  this  Agreement  nor  the
consummation  of  the  transactions  contemplated  by  this  Agreement  nor  the
fulfillment  of or the  compliance  with the terms,  conditions  and  provisions
hereof,  will conflict with or result in a breach of any relevant laws or of any
of the terms or provisions  of, or constitute a default or an event which,  with
notice or lapse of time or both,  would constitute a default under, the Articles
of Incorporation or the By-Laws of Deerfield, or any lease, license,  promissory
note,  conditional  sales  contract,  commitment,   indenture,  deed  of  trust,
instrument or other  agreement or order or decree to which  Deerfield or Sladkus
is a party or by which  Deerfield's  property is bound,  or  constitute an event
which would  permit any party to any such  agreement or document to terminate or
accelerate  such agreement or document,  or result in the creation or imposition
of a lien, charge or Encumbrance (defined in Section 3.1.2) against any asset of
Deerfield.  This Agreement  represents a valid and binding obligation of Sladkus
and Deerfield in accordance with its terms.

                  3.1.9.   CORPORATE CHARGES. Neither Sladkus nor to the best of
his  knowledge  anyone else,  has incurred any credit card or other  charges for
which  Deerfield  may be liable  except  for normal  and  reasonable  charges in
connection with the business of Deerfield.

                  3.1.10.  CORPORATE OPPORTUNITIES AND RELATED BUSINESS. Neither
Sladkus nor to the best of his knowledge anyone else, has diverted any orders or
jobs from  customers  or  prospective  customers  of Deerfield to Sladkus or any
Person,  firm or  corporation,  nor has Sladkus or to the best of his  knowledge
after due inquiry anyone else, induced any customer of Deerfield to cancel

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any order or job previously placed with Deerfield,  and Sladkus has not withheld
from Deerfield any orders or jobs or  prospective  orders or jobs from customers
or  prospective  customers of Deerfield.  Sladkus is not an owner,  shareholder,
lender, director, agent, employee or consultant of any corporation,  partnership
or other  entity  that is a  supplier  of goods or  services,  a  customer  or a
competitor to or of Deerfield,  or that leases any real or personal  property to
Deerfield, or that otherwise does business with Deerfield.

                           3.1.11.  TAXES   AND   TAX   RETURNS.   The   amounts
established  as  liabilities  or reserves for taxes on the Financial  Statements
(defined in Section  3.1.16.1)  are  sufficient  for the payment of all federal,
state and local taxes, and all employment and payroll-related  taxes,  including
any penalties or interest thereon,  whether or not based upon or measured by, in
whole or in part,  net income of  Deerfield  accrued  for or  applicable  to all
periods ended on or prior to the date of the Financial Statements. Deerfield has
duly made all  deposits  required by law to be made with  respect to  employees'
withholding  taxes.  Deerfield has duly filed with all appropriate  governmental
agencies  and  bodies,  whether  federal,  state or local,  all  income,  sales,
license, franchise,  excise, gross receipts,  employment and payroll-related and
real and  personal  property  tax returns  and all other tax returns  which were
required to be filed,  all of which properly  reflect the taxes owed by them for
the periods covered thereby and, to the extent due, Deerfield has paid all taxes
shown to be due on such returns.  With respect to sales of goods and services by
Deerfield,  Deerfield has not received any notice of assessment or deficiency or
proposed  assessment  by  the  Internal  Revenue  Service  or any  other  taxing
authority in connection  with such tax returns  which has not been  satisfied in
full and there is no pending tax  examination of or tax claim  asserted  against
Deerfield or any of its  properties.  None of the federal  income tax returns of
Deerfield has been audited by the Internal Revenue Service. No agreement for the
extension

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of time or waiver of the statute of  limitations  for the  assessment of any tax
deficiency or adjustment for any year is in effect as against  Deerfield.  True,
correct  and  complete  copies of all  federal,  state and local  income  and/or
franchise tax returns filed by Deerfield since December 31, 1996 have previously
been made  available  to CVE  Parent.  Schedule  3.1.11 sets forth a list of all
jurisdictions  with  respect  to which  Deerfield  files  tax  returns.

                  3.1.12.  RETIREMENT  PLANS.  Deerfield  maintains a Keogh plan
that has never been  funded.  There are no other  retirement  or other  employee
benefit plans,  or any  employment,  compensation or severance pay agreements or
arrangements with respect to which Deerfield has any obligations,  contingent or
otherwise.  Deerfield has no commitment,  whether formal or informal and legally
binding or not, to create any additional plan.

                  3.1.13.  LITIGATION.  Except as set forth in Schedule  3.1.13,
there is no action,  suit,  claim,  inquiry,  proceeding or  investigation by or
before any court or  Governmental  Body  pending  or, to the best  knowledge  of
Sladkus,  threatened against or involving Deerfield or Sladkus, nor is there any
valid  basis  for any such  action,  proceeding  or  investigation  which  could
materially and adversely affect the business, operations, prospects or financial
condition of Deerfield. Except as set forth in Schedule 3.1.13, Deerfield is not
in default under or in violation of any agreement,  commitment or restriction to
which it is a party or by which it or any of its  properties or assets is bound,
which default or violation could  materially and adversely  affect its business,
operations,  prospects or financial  condition.  Except as set forth in Schedule
3.1.13, Deerfield is not subject to any judgment, order or decree.

                  3.1.14.  COMPLIANCE  WITH LAWS.  Deerfield has complied  with,
and is now in compliance with, in all material  respects,  and the operations of
Deerfield  have been  conducted,  and are now being  conducted,  in all material
respects, in accordance with all applicable laws, rules,

                                       14
<PAGE>

regulations and other  requirements of all governmental  bodies having authority
or jurisdiction  over Deerfield.  Neither Sladkus nor Deerfield has received any
notification  of any  asserted  present or past  failure to comply with any such
laws,  rules or  regulations.  All  licenses,  permits  and orders  required  by
Deerfield to conduct its  business  and to sell its  products and services  have
been  obtained by Deerfield and are in effect;  and there exists no  outstanding
notice,  order or  directive  by any  governmental  authority to the effect that
Deerfield has failed to comply in any respect with any law, rule,  regulation or
ordinance,  or that a license,  permit or order is  required  to be  obtained by
Deerfield.   No  governmental   license,   permit  or   authorization,   and  no
registration,  declaration or filing with any court,  governmental  authority or
regulatory  agency,  is  required  as a  condition  for the  valid  and  binding
execution,  delivery and  performance of this Agreement by Sladkus,  Doscher and
Deerfield.

                  3.1.15.  TITLE TO ASSETS.

                           3.1.15.1. REAL  PROPERTY.   Deerfield  owns  no  real
property.  The lease between Deerfield,  as tenant, and Sasco 1997 Nireo LLC, as
landlord,  for Deerfield's  former offices at 50 Broadway,  Hawthorne,  New York
expired on October 15, 1999.  Deerfield  has  satisfied  all of its  obligations
under  said  lease,  and at the time of the  expiration  thereof,  there were no
uncured  defaults  thereunder.  Deerfield has no liability  with respect to such
lease.

                           3.1.15.2. TANGIBLE PERSONAL  PROPERTY.  Set  forth on
Schedule  3.1.15.2  annexed hereto is a true,  accurate and complete list of all
the personal  property  owned or leased by  Deerfield as of September  30, 1999.
Deerfield has good and marketable title to all of the personal  property used by
it,  free and  clear  of all  mortgages,  security  interests,  pledges,  liens,
conditional sales agreements, charges or Encumbrances of any kind, except as set
forth  in the  Schedule  3.1.15.2  annexed.  Except  as set  forth  in  Schedule
3.1.15.2, there is no financing statement under the

                                       15
<PAGE>

Uniform Commercial Code that names Deerfield as the debtor. At the Closing, each
and all of the loans set forth in Schedule  3.1.15.2 shall be eliminated so that
Deerfield will own all personal  property free and clear of liens,  Encumbrances
and charges.  Except as may be otherwise  set forth on Schedule  3.1.15.2,  each
item comprising the personal property is in good and usable condition,  ordinary
wear and tear  excepted,  fit for its  intended  purpose,  and is owned free and
clear  of all  interests  of any  kind  and  nature.

                           3.1.15.3. EQUIPMENT.  The equipment  of  Deerfield is
structurally sound with no known defects and is in good operating  condition and
repair  (ordinary  wear and tear excepted) and is adequate for the uses to which
it is being put, and none of such equipment is in need of maintenance or repairs
except for ordinary,  routine  maintenance  and repairs.  Neither  Deerfield nor
Sladkus  has  received  notification  that  Deerfield  is in  violation  of  any
applicable  law,  ordinance  or  regulation  in respect of its  equipment or its
operation,  and, to the best of Sladkus'  knowledge,  there is no such violation
which could have a material adverse effect on Deerfield.

                           3.1.15.4. SUFFICIENCY OF PROPERTIES  AND ASSETS.  The
properties  and  assets  owned  and  leased by  Deerfield  include  all  rights,
properties  and other  assets  necessary  to permit  Deerfield  to  conduct  its
business in all  material  respects in the same manner as it is conducted as of,
and has been conducted prior to, the date of this Agreement.

                           3.1.15.5. TRADEMARKS,  TRADE  NAMES  AND  COPYRIGHTS.
Schedule   3.1.15.5contains   a  true  and  complete  list  of  all  copyrights,
trademarks,  trade  names,  licenses,  patents,  permits,  slogans,  privileges,
internet domain name registrations and other similar intangible  property rights
and  interests  applied  for,  issued to or owned by  Deerfield,  or under which
Deerfield  is  licensed or  franchised,  or used or useful in the conduct of its
business,  all of which are valid and in good standing and to the best knowledge
of Sladkus and Deerfield uncontested (collectively,

                                       16
<PAGE>

"Rights").  Deerfield owns or validly licenses all Rights and other  proprietary
information  used in the conduct of its business as currently  being  conducted.
Deerfield has delivered to CVE Parent copies of each  registration,  application
for  registration  and all contracts or agreements  which evidence  ownership or
other interest of Deerfield of such Rights, licenses, or other authority. To the
knowledge of each of Deerfield and Sladkus,  Deerfield is not infringing upon or
otherwise acting adversely to any trademarks, trade names, copyrights,  patents,
patent applications,  internet domain name registrations,  know-how, methods, or
processes owned by any other Person or Persons,  and there is no claim or action
pending,  or to the best  knowledge  of Deerfield  or Sladkus  threatened,  with
respect thereto.  The consummation of the transactions  contemplated hereby will
enable CVE Parent to use and exploit the Rights  and, to the best  knowledge  of
Deerfield or Sladkus,  no claims have been  asserted by any person to the use of
any such Rights, and there is no valid basis for any such claims.

                  3.1.16.  FINANCIAL STATEMENTS, ETC.

                           3.1.16.1. FINANCIAL STATEMENTS. Deerfield and Sladkus
have  heretofore  delivered to CVE Parent (a)  Deerfield's  balance  sheet as of
September 30, 1999 (the "Balance  Sheet") and (b) Deerfield's  income  statement
for the nine (9) months ended September 30, 1999 (the "Income  Statement").  The
Balance  Sheet and the Income  Statement,  including in each case the  footnotes
thereto,  are together  referred to herein as the  "Financial  Statements."  The
Financial  Statements have been prepared in accordance  with Generally  Accepted
Accounting Principles, consistently applied throughout the periods involved, and
present fairly the financial position of Deerfield as of the dates set forth and
the results of its  operations  for the periods  indicated.  All of  Deerfield's
indebtedness,   liabilities,   claims  and   obligations   (including,   without
limitation,  liabilities  for taxes of any type imposed by any  jurisdiction  to
which either Deerfield or its assets is or was subject)

                                       17
<PAGE>

as of September 30, 1999, whether contingent or otherwise,  are reflected in the
Balance Sheet or are described on Schedule  3.1.16.1 (the "Exception  Schedule")
annexed hereto and all items of Deerfield's income, expense, profit and loss are
reflected in the Income  Statement or are described on the  Exception  Schedule.

                           3.1.16.2. ABSENCE OF UNDISCLOSED LIABILITIES.  Except
as and to the extent reflected or reserved against in the Financial  Statements,
as of September 30, 1999,  Deerfield had no liabilities or obligations,  secured
or  unsecured  (whether  absolute  or  contingent)  of a nature  required  to be
reflected in audited  financial  statements,  including  notes thereto.  Neither
Deerfield  nor Sladkus knows of, or has any  reasonable  grounds to know of, the
basis for the  assertion  against  Deerfield  as of  September  30,  1999 of any
material  claim or  liability  of any nature  not fully  reflected  or  reserved
against in the Financial  Statements  or any material  liability or claim of any
nature arising since that date,  except those incurred in the ordinary course of
business.

                           3.1.16.3. ORDINARY  COURSE OF BUSINESS.  The business
of  Deerfield  has been  operated  only in the  ordinary  and usual  course from
September 30, 1999 through the date hereof.

                           3.1.16.4. ABSENCE OF CHANGES.  Deerfield's  net worth
is not less than the net  worth  reflected  in the  Financial  Statements  as of
September 30, 1999.  Except as set forth in Schedule  3.1.16.4,  since September
30, 1999,  there has not been (a) any material  adverse  change in the financial
condition or in the  operations,  business,  prospects,  properties or assets of
Deerfield; (b) any material damage, destruction or loss to any of the properties
or assets of  Deerfield,  whether  or not  covered  by  insurance,  which  might
adversely  affect or impair the ability of  Deerfield to conduct its business or
the  continuation of such business after the  consummation  of the  transactions
contemplated  hereby;  (c) any labor  trouble or any event or  condition  of any
character

                                       18
<PAGE>

related thereto which may materially and adversely affect  Deerfield's  business
or the  continuation of such business after the consummation of the transactions
contemplated  hereby;  (d) any  declaration,  setting  aside or  payment  of any
dividend or any distribution with respect to Deerfield's  capital stock; (e) any
redemption,  purchase or other  acquisition  by  Deerfield of any of its capital
stock;  (f) any  contingent  liability  incurred by  Deerfield as a guarantor or
otherwise  with  respect  to  the  obligations  of  others;  (g)  any  mortgage,
Encumbrance  or lien placed upon any of the  properties  of Deerfield  and which
remain in existence on the date of this  Agreement or on the Closing  Date;  (h)
any purchase, sale or other disposition or any other agreement for the purchase,
sale or disposition  of any of the  properties or assets of Deerfield  except in
the ordinary course of business;  (i) any expense allowance paid Sladkus whether
in the form of advance or loan except for  reimbursement of expenses  previously
incurred or  reasonable  expenses  incurred in the ordinary  course of business.

                           3.1.16.5. CONDITIONS  AFFECTING  DEERFIELD'S BUSINESS
There are no  conditions  known to Deerfield or Sladkus with respect to markets,
facilities,  personnel, supplies or business relationships of Deerfield that may
materially and adversely affect Deerfield's business or prospects.

                           3.1.16.6. ACCOUNTS  RECEIVABLE.  All  receivables for
Deerfield,  as set forth on the Balance  Sheet as of  September  30,  1999,  are
valid, represent obligations for services performed prior to September 30, 1999,
and were  obtained in the  ordinary  course of business and in  accordance  with
Deerfield's customary credit practices.  Receivables of Deerfield at Closing are
the same as the  receivables as of September 30, 1999,  excepting only additions
and  reductions  made in the ordinary  course of business  after that date.  CVE
Parent is aware that a total of not more than  $99,000 of  Deerfield's  accounts
receivable are in collection.  With the exception of

                                       19
<PAGE>

said  $99,000,  all accounts  receivable  and other claims in favor of Deerfield
included on the Balance Sheet or subsequently arising have been collected or are
collectable.  Except as set forth and detailed on the Exception Schedule, during
the two years prior to the Closing Date, there have been no transactions between
Deerfield and any other company or entity affiliated with Deerfield.

                  3.1.17.  BANKRUPTCY.  Deerfield  has not filed any petition in
bankruptcy,  nor commenced any other proceeding for protection from creditors in
the United States, any state of the United States or in any other  jurisdiction,
nor has any such proceeding been filed or commenced, or, to the best of Sladkus'
knowledge, been threatened against Deerfield.

                  3.1.18.  BROKERS.   Neither  Sladkus  nor  Deerfield  has  any
contract with, nor is he/it under any obligation to, any broker, finder or other
intermediary in connection with the transactions  contemplated hereby, and he/it
agrees to indemnify fully and hold Newco and CVE Parent harmless with respect to
any claims  asserted  by any  broker,  finder or other  intermediary  who claims
compensation by virtue of allegedly representing him/it.

                  3.1.19.  SUBSIDIARIES.  Deerfield  does not own any  shares of
stock, or any equity or ownership interest, or any instruments  convertible into
an equity or ownership interest,  of any other corporation,  partnership,  joint
venture or other entity.

                  3.1.20.  CORPORATE DOCUMENTS.  Deerfield and Sladkus have made
available  to Newco and CVE Parent for  examination  true,  correct and complete
copies of the following items of Deerfield: the certificate of incorporation and
any amendments thereto;  the bylaws; all corporate minutes and written consents,
containing all records of all meetings,  actions and  proceedings of Deerfield's
shareholders and directors; the stock certificate book and transfer ledger; and,
the corporate  minute  book(s);  and corporate  income tax returns for the years
1996, 1997 and 1998

                                       20
<PAGE>

and monthly  income  statements  for the months ending  January 31, 1998 through
September 30, 1999.

                  3.1.21.  RELIANCE. Deerfield and Sladkus acknowledge and agree
that Newco and CVE Parent are relying upon the representations and warranties of
Deerfield  and  Sladkus  set  forth  herein,   regardless  of  any   independent
investigation  made by or on behalf of Newco or CVE Parent,  and  Deerfield  and
Sladkus agree that Newco and CVE Parent are justified in doing so.

                  3.1.22.  OFFICERS,   DIRECTORS;   BONUSES.   Schedule   3.1.22
attached  hereto  correctly  sets  forth,  as of the  date  hereof,  the  names,
positions,  and annual  compensation,  including  bonuses,  of all  officers and
directors  of  Deerfield,  together  with a statement  showing (a) the amount of
bonuses,  if any, to be paid to any other employee  pursuant to any past custom,
or present intention,  and (b) the amount of insurance,  if any, in favor of any
officer  or other  employee.  Except  as set  forth on  Schedule  3.1.22,  since
September 30, 1999,  there have been,  and to the date of Closing there will be,
(a) no  increase  in the  salary  or other  form of  compensation  of any of the
officers,  executives,  employees or agents of Deerfield  and no bonuses paid to
such officers, executives,  employees or agents, (b) no loans made to any of the
officers,  executives,  employees  or agents of  Deerfield,  (c) no dividends or
other  distributions  declared  or paid by  Deerfield,  and (d) no  purchase  by
Deerfield of its capital stock.

                  3.1.23.  CONTRACTS AND AGREEMENTS.

                           3.1.23.1. Set  forth  on  Schedule  3.1.23.1  annexed
hereto is a true, accurate and complete list of all agreements,  commitments and
understandings, written or oral, to which Deerfield is party or bound, excluding
employment  contracts which can be terminated by Deerfield on 30 days' notice or
less without a penalty or severance  obligations,  but including (i) labor union
or  collective  bargaining  agreements,  (ii) benefit  programs for  Deerfield's
employees,

                                       21
<PAGE>

including  retirement,  welfare,  hospitalization,  surgical,  dental  and major
medical group and individual insurance,  deferred compensation,  bonus, vacation
pay,  severance pay, or other fringe  benefit  arrangement,  agreement,  policy,
practice or custom; (iii) contracts that are not terminable at will by Deerfield
without penalty within 30 days of the date of this Agreement;  (iv) any purchase
contract or purchase commitment not in the ordinary course of business in excess
of Five Thousand Dollars ($5,000.00);  (v) agreements calling for the payment or
receipt of royalties or license fees of any nature or which  involve the license
of intangible property; (vi) any lease of equipment, machinery or other personal
property;  (vii) any  contract  which  would be deemed  breached  as a result of
consummation  of this  Agreement  (all of which  together are referred to as the
"Contracts").

                           3.1.23.2. Except as set forth in  Schedule  3.1.23.2,
all the Contracts are presently  valid,  binding and enforceable by Deerfield in
accordance  with their terms and are in full force and  effect,  and there is no
material  default  by  Deerfield  or the  written  claim of default by any party
thereto, or any threatened  cancellation  thereof known to Sladkus.  Sladkus has
heretofore  delivered to CVE Parent a copy of each Contract.  Deerfield is not a
party to any  collective  bargaining  agreement.  Deerfield  and Sladkus have no
reason to believe  that any of  Deerfield's  ten largest  customers or suppliers
would not do the business  said  customer or supplier  now does with  Deerfield,
with CVE Parent after the consummation of the transactions  contemplated hereby.
There are no defaults  under any Contract  and, to the best of  Deerfield's  and
Sladkus'  knowledge,  there  are no extant  circumstances  that  would  become a
default  under any  Contract  with the giving of notice or the  passage of time.

                  3.1.24.  INTEREST  IN  CREDITORS.  Excluding  any  interest in
Deerfield, neither Sladkus nor spouse or ancestral lineal descendant of Sladkus,
has any direct or indirect interest in any

                                       22
<PAGE>

creditor, competitor,  supplier, lessor or customer of Deerfield, other than the
interests set forth in Schedule  3.1.24.  3.1.25.  BANKS,  SAFETY DEPOSIT BOXES.
Schedule

                  3.1.25   lists  the  names  and  addresses  of  all  banks  or
financial  institutions  in which  Deerfield  has an account,  deposit or safety
deposit box, with the names of all persons  authorized to draw on these accounts
or deposits or to have access to the boxes.

                  3.1.26.  MINUTE BOOKS.  The minute books of Deerfield  reflect
that no actions  have been taken by its  shareholders,  board of  directors  and
committees  outside the ordinary course of business.  Sladkus will indemnify and
hold Newco and CVE Parent harmless from and against any third party liability or
claim  based  upon  or  resulting  from  lack  of  formality  or  due  corporate
authorization of actions taken by Deerfield prior to the Closing.

                  3.1.27.  INSURANCE.  Schedule  3.1.27 contains a list (stating
coverages, deductibles, self-insured retentions, co-insurance provisions and the
like) of all material  policies of fire,  liability,  worker's  compensation and
other forms of  insurance  owned or held by or covering  Deerfield or all or any
portion of its  property,  assets or  employees.  All such  policies are in full
force and effect, all billed premiums  (including  retrospective  premiums) with
respect  thereto  covering all periods up to and including the Closing Date have
been paid and no notice of  cancellation  or termination  has been received with
respect to any such policy. Such policies are sufficient for compliance with all
requirements  of law and of all agreements to which  Deerfield is a party,  will
remain  in full  force  and  effect  though  the  respective  dates set forth in
Schedule 3.1.27 without the payment of additional premiums,  and will not in any
way be affected by, or terminate or lapse by reason of, the  consummation of the
transactions contemplated hereby. Schedule 3.1.27 identifies all risks that have
been designated as being self-insured. No insurance has been

                                       23
<PAGE>

canceled  or refused  with  respect  to any  operations,  property  or assets of
Deerfield,  nor has the coverage of any insurance  been limited by any insurance
carrier which has carried,  or received any application  for, any such insurance
during  the last  three  years and no  insurer  has  notified  Deerfield  of its
intention not to renew any such insurance.

                  3.1.28.  EMPLOYMENT  PRACTICES.  Deerfield has paid in full to
its employees, agents and contractors all wages, salaries, commissions,  bonuses
and other direct  compensation  for all services  performed by them,  other than
amounts  that  have not yet  become  payable,  in  accordance  with  Deerfield's
customary  practices.  Deerfield  is not liable for any  severance  pay or other
payments on account of termination of any former  employee.  Except as set forth
in Schedule 3.1.28, Deerfield is in compliance in all material respects with all
applicable  laws  respecting  employment  and  employment  practices,  terms and
conditions of employment and wages and hours. Deerfield does not have in effect,
nor has it ever had in effect, any severance policy.

                  3.1.29.  PERSONNEL.  Schedule  3.1.29  lists  (a) the  current
salary rates of all salaried employees of Deerfield and (b) the wage rate ranges
for all  non-salaried  employees  and officers of  Deerfield by  classification,
including in the case of (a) and (b) all bonuses or other payments.

                  3.1.30.  STOCK RECEIVED AS INVESTMENT.

                           3.1.30.1. INVESTMENT INTENT. All shares of CVE Parent
Common  Stock to be acquired by Sladkus  pursuant  to this  Agreement  are being
acquired by Sladkus solely for the purpose of investment and not with a view to,
or for sale in connection with, any distribution  thereof.  Sladkus acknowledges
that he has been  advised  that all such shares of CVE Parent  Common Stock have
not been registered under the Securities Act of 1933, as amended (the "Act"), or
the securities laws of any state or other jurisdiction and Sladkus  acknowledges
that  such  shares  of CVE  Parent  Common  Stock  may not be sold or  otherwise
transferred unless they are registered

                                       24
<PAGE>

under  the Act or unless  an  exemption  from  such  registration  is  otherwise
available.  Sladkus  understands  and agrees  that all such shares of CVE Parent
Common Stock shall bear a legend in substantially the following form:

         "THE  SHARES  EVIDENCED  BY THIS  CERTIFICATE  HAVE  NOT  BEEN
         REGISTERED  UNDER THE  SECURITIES ACT OF 1933, AS AMENDED (THE
         "SECURITIES  ACT"), AND MAY NOT BE OFFERED,  SOLD,  PLEDGED OR
         OTHERWISE  TRANSFERRED  UNLESS A  REGISTRATION  STATEMENT WITH
         RESPECT  TO  THESE  SHARES  HAS  BECOME  EFFECTIVE  UNDER  THE
         SECURITIES  ACT, OR THE CORPORATION HAS BEEN FURNISHED WITH AN
         OPINION OF COUNSEL  SATISFACTORY TO THE CORPORATION  THAT SUCH
         REGISTRATION IS NOT REQUIRED."

                           3.1.30.2. PURCHASER LOCK-UP  AGREEMENT.  In the event
at any time CVE Parent shall have  completed an initial  public  offering of its
common  stock  (including  the common stock of a successor  corporation)  and in
connection therewith the underwriters shall require, as a condition to effecting
such  offering,   the  execution  of  "lock-up   agreements"  (I.E.   agreements
prohibiting  the sale of shares of common  stock by the  holders  thereof  for a
period  of  time),   Sladkus  shall   promptly,   and  without  payment  of  any
consideration,   execute  the  form  of  lock-up  agreement   presented  by  the
underwriters.

                  3.1.31.  DISCLOSURE.   No  representations  or  warranties  by
Deerfield  or Sladkus  in this  Agreement,  and no  statement  contained  in any
document,  including but not limited to Financial Statements,  the schedules and
exhibits annexed hereto,  any certificate,  or any other writing furnished or to
be furnished by Sladkus or Deerfield or any of its  representatives  pursuant to
the  provisions  hereof  or in  connection  with the  transactions  contemplated
hereby,  contains any untrue  statement  of material  fact or omits to state any
material fact necessary,  in light of the circumstances under which it was made,
in order to make the statements herein or therein not

                                       25
<PAGE>

misleading.  Documents  delivered  or to be  delivered  to Newco and CVE  Parent
pursuant to this Agreement are or will be true and complete  copies of what they
purport to be.

                  3.1.32.  SURVIVAL  OF  REPRESENTATIONS  AND  WARRANTIES.   All
representations  and  warranties  of  Deerfield  and  Sladkus  set forth in this
Agreement  shall be true from the date hereof through and including the Closing.
All such  representations  and  warranties  contained  in this  Agreement  shall
survive the Closing for a period of two years from the date of the Closing.

4.       REPRESENTATIONS AND WARRANTIES OF DOSCHER

         4.1.     Doscher  hereby  warrants  and  represents  to and agrees with
Newco and CVE Parent as  follows:

                  4.1.1.   OWNERSHIP OF SHARES.  Doscher is the beneficial owner
and holder of record of twenty (20) shares of Deerfield Stock,  which represents
twenty percent (20%) of the issued and  outstanding  Deerfield  Stock.  All such
shares  have been duly  authorized  and  validly  issued  and are fully paid and
non-assessable.  Doscher has good and  marketable  title to said shares free and
clear of all  Encumbrances of any kind or nature.  Said shares  represent all of
the shares of  Deerfield,  of any class,  owned by him.  Doscher  acquired  said
shares on April 5, 1984. Since that date, his sole  relationship  with Deerfield
has been as a passive  investor.  He has never  been  employed  by or  performed
services for  Deerfield,  or in any way been active in  Deerfield's  business or
affairs.

                  4.1.2.   VALIDITY.  This  Agreement has been duly executed and
delivered  by him,  is a valid and  binding  obligation  and  agreement  of him,
enforceable in accordance  with its terms (subject to any applicable  bankruptcy
or similar laws affecting the enforcement of creditors' rights  generally).  The
execution, delivery and performance of this Agreement will not violate or result

                                       26
<PAGE>

in a breach of or constitute a default under any note, mortgage, loan, contract,
judgment  or decree to which he is a party or by which he or his  properties  or
assets are bound.

                  4.1.3.   BROKERS. Doscher does not have any contract with, nor
is he under  any  obligation  to any  broker,  finder or other  intermediary  in
connection with the transactions contemplated hereby, and he agrees to indemnify
fully and hold CVE Parent and Newco harmless with respect to any claims asserted
by any broker, finder or other intermediary who claims compensation by virtue of
allegedly  representing him.

                  4.1.4.   RELIANCE.  Doscher  acknowledges  and agrees that CVE
Parent and Newco are relying upon the  representations and warranties of Doscher
set forth herein,  regardless  of any  independent  investigation  made by or on
behalf of CVE Parent and Newco, and that he agrees that CVE Parent and Newco are
justified in doing so.

                  4.1.5.   INVESTMENT INTENT.

                           4.1.5.1. All shares of CVE Parent  Common Stock to be
acquired by Doscher  pursuant to this Agreement are being acquired by him solely
for the purpose of investment  and not with a view to, or for sale in connection
with, any distribution  thereof.  Doscher  acknowledges that he has been advised
that all such shares of CVE Parent Common Stock have not been  registered  under
the Act, or the securities laws of any state or other  jurisdiction  and Doscher
acknowledges  that such  shares of CVE  Parent  Common  Stock may not be sold or
otherwise  transferred  unless  they are  registered  under the Act or unless an
exemption from such registration is otherwise available. Doscher understands and
agrees  that all such shares of CVE Parent  Common  Stock shall bear a legend in
substantially the following form:

         "THE  SHARES  EVIDENCED  BY THIS  CERTIFICATE  HAVE  NOT  BEEN
         REGISTERED  UNDER THE  SECURITIES ACT OF 1933, AS AMENDED (THE
         "SECURITIES  ACT"), AND MAY

                                       27
<PAGE>

         NOT BE OFFERED,  SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
         A  REGISTRATION  STATEMENT  WITH  RESPECT TO THESE  SHARES HAS
         BECOME  EFFECTIVE UNDER THE SECURITIES ACT, OR THE CORPORATION
         HAS BEEN FURNISHED WITH AN OPINION OF COUNSEL  SATISFACTORY TO
         THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED."

                           4.1.5.2. PURCHASER LOCK-UP AGREEMENT. In the event at
any time CVE Parent  shall have  completed  an initial  public  offering  of its
common  stock  (including  the common stock of a successor  corporation)  and in
connection therewith the underwriters shall require, as a condition to effecting
such  offering,   the  execution  of  "lock-up   agreements"  (I.E.   agreements
prohibiting  the sale of shares of common  stock by the  holders  thereof  for a
period  of  time),   Doscher  shall   promptly,   and  without  payment  of  any
consideration,   execute  the  form  of  lock-up  agreement   presented  by  the
underwriters.

                  4.1.6.   SURVIVAL  OF  REPRESENTATIONS  AND  WARRANTIES.   All
representations  and warranties of Doscher set forth in this Agreement  shall be
true  from  the  date  hereof  through  and  including  the  Closing.  All  such
representations  and warranties  contained in this  Agreement  shall survive the
Closing for a period of two years from the date of the Closing.

5.       REPRESENTATIONS AND WARRANTIES OF CVE PARENT AND NEWCO.

         5.1.     Newco and CVE Parent hereby  jointly and  severally  represent
and warrant to  Deerfield as follows:

                  5.1.1.   ORGANIZATION AND GOOD STANDING.

                           5.1.1.1. Newco  is  a  corporation   duly  organized,
validly  existing and in good standing  under the laws of the State of New York,
with full corporate power and authority to conduct its business as now conducted
and to own or lease and  operate the assets and  properties  now owned or leased
and  operated  by it.

                                       28
<PAGE>

                           5.1.1.2. CVE Parent is a corporation, duly organized,
validly  existing and in good standing,  under the laws of the State of Delaware
and is  qualified to do business in the State of New York,  with full  corporate
power and authority to conduct its business as now conducted and to own or lease
and operate the assets and properties now owned or leased and operated by it.

                           5.1.1.3. CVE  Parent  owns  100%  of the  outstanding
capital  stock of Creative  Visual  Enterprises,  Ltd.,  a Delaware  corporation
("CVE").

                  5.1.2.   CAPITALIZATION  OF CVE PARENT.  The total  authorized
capital stock of CVE Parent consists of 21,000,000  shares,  of which 20,000,000
are shares of common  stock,  par value  $0.0001 per share,  and  1,000,000  are
preferred  stock,  $.001 par value.  2,020,718 shares of common stock are issued
and outstanding and no shares of preferred stock are issued.  All of such issued
and  outstanding  shares of common stock have been duly  authorized  and validly
issued, are fully paid and non-assessable.

                  5.1.3.   VALIDITY,  ETC. This Agreement has been duly executed
and  delivered by Newco and CVE Parent,  is a valid and binding  obligation  and
agreement of each of them,  enforceable in accordance with its terms (subject to
any  applicable   bankruptcy  or  similar  laws  affecting  the  enforcement  of
creditors' rights  generally).  The execution,  delivery and performance of this
Agreement  (i) will not violate or result in a breach of or constitute a default
under any note, mortgage, loan, contract, judgment or decree to which Newco, CVE
Parent or CVE is a party or by which any of them or any of their  properties  or
assets is bound,  (ii) will not afford any creditor of Newco,  CVE Parent or CVE
the right to accelerate and declare at once due and payable any  indebtedness of
Newco,  CVE Parent or CVE due in installments or not yet due, and (iii) will not
cause a forfeiture of any license or operating  permit  required to continue the
operation of Newco's, CVE Parent's or CVE's business.

                                       29
<PAGE>

                  5.1.4.   CONSENTS.   No   consent   of  any  third   party  or
governmental  authority,  and no other  consent of any other person or entity is
required to consummate the transactions  contemplated  hereby, and the execution
and  delivery  and the  performance  of the  transactions  contemplated  by this
Agreement  will not  interfere  with the  continued  operation  of Newco's,  CVE
Parent's  or CVE's  business.  The Board of  Directors  of each of Newco and CVE
Parent has approved the  transactions  contemplated  by this  Agreement  and has
approved  the  execution  and  delivery  hereof.  Neither the  execution of this
Agreement  nor  the  consummation  of  the  transactions  contemplated  by  this
Agreement nor the  fulfillment of or the compliance  with the terms,  conditions
and provisions hereof,  will conflict with or result in a breach of any relevant
laws or of any of the terms or  provisions  of, or  constitute  a default  or an
event which,  with notice or lapse of time or both,  would  constitute a default
under, the Articles of  Incorporation or the By-Laws of Newco or CVE Parent,  or
any lease,  license,  promissory note,  conditional sales contract,  commitment,
indenture,  deed of trust,  instrument or other  agreement or order or decree to
which Newco, CVE Parent or CVE is a party or by which Newco's, CVE Parent's,  or
CVE's property is bound,  or constitute an event which would permit any party to
any such  agreement  or document to terminate or  accelerate  such  agreement or
document,  or  result  in the  creation  or  imposition  of a  lien,  charge  or
Encumbrance  against  any asset of Newco,  CVE  Parent  or CVE.  This  Agreement
represents a valid and binding  obligation of Newco and CVE Parent in accordance
with its terms.

                  5.1.5.   RELIANCE.  Newco and CVE Parent acknowledge and agree
that  Deerfield,  Sladkus and Doscher are relying upon the  representations  and
warranties  of  Newco  and  CVE  Parent  set  forth  herein,  regardless  of any
independent investigation made by or on behalf of Deerfield, Sladkus or Doscher,
and Newco and CVE Parent agree that they are justified in doing so.

                                       30
<PAGE>

                  5.1.6.   DISCLOSURE. No representations or warranties by Newco
and CVE Parent and no statement  contained in any  document,  including  but not
limited to any certificate, or any other writing furnished or to be furnished by
Newco or CVE Parent or any of its  representatives  pursuant  to the  provisions
hereof or in connection with the transactions  contemplated hereby, contains any
untrue statement of material fact or omits to state any material fact necessary,
in light of the  circumstances  under  which it was  made,  in order to make the
statements  herein or  therein  not  misleading.  Documents  delivered  or to be
delivered  to  Deerfield  pursuant  to this  Agreement  are or will be true  and
complete copies of what they purport to be.

                  5.1.7.   BROKERS.  Neither  Newco,  CVE  Parent  nor CVE has a
contract  with or is  under  an  obligation  to,  any  broker,  finder  or other
intermediary in connection with the transactions  contemplated  hereby, and each
of Newco and CVE Parent agrees to indemnify  fully and hold harmless  Deerfield,
Sladkus and Doscher with respect to any claims asserted by any broker, finder or
other intermediary.

                  5.1.8.   SURVIVAL  OF  REPRESENTATIONS  AND  WARRANTIES.   All
representations  and  warranties  of  Newco  and CVE  Parent  set  forth in this
Agreement  shall be true from the date hereof through and including the Closing.
All such  representations  and  warranties of Newco and CVE Parent  contained in
this Agreement shall survive the Closing for a period of two years from the date
of the Closing.

6.       PRE-CLOSING COVENANTS OF DEERFIELD, SLADKUS AND DOSCHER.

         6.1.     STOCKHOLDERS APPROVAL. Sladkus and Doscher hereby covenant and
agree to vote their  Deerfield  Stock in favor of the adoption of the Merger and
the transactions contemplated by this Agreement.

                                       31
<PAGE>

         6.2.     ACCESS TO BOOKS AND  RECORDS.  From the date hereof  until the
Closing Date,  Deerfield  and Sladkus  shall permit the  officers,  accountants,
attorneys and other  representatives  of Newco and CVE Parent,  upon  reasonable
prior notice,  to enter upon  Deerfield's  premises and have access to,  examine
and, at Newco's and CVE Parent's expense,  make copies of the books, records and
files of Deerfield  and furnish  Newco and CVE Parent with such  information  as
Newco and CVE Parent may reasonably request.  All such inspections shall be made
with due regard for the  operation of  Deerfield.  It is  acknowledged  that any
examination,  inquiry,  or  investigation  made by or on behalf of Newco and CVE
Parent,  whether prior or  subsequent  to the date hereof,  shall not in any way
alter the representations  and warranties made by Deerfield,  Sladkus or Doscher
in this  Agreement or the survival of such  representations  and  warranties  at
Closing.

         6.3.     CONDUCT  OF THE  BUSINESS.  From the  date  hereof  until  the
Closing Date,  Deerfield  shall,  and Sladkus shall cause Deerfield to, actively
and to the best of its  management's  ability  conduct its  business in the same
manner and under the same business policies as prior to the date hereof,  and to
cause Deerfield to preserve its  relationships  with its business  suppliers and
customers.  During such period,  Deerfield  shall not, and Sladkus  shall ensure
that Deerfield does not,  unless  authorized in writing by Newco and CVE Parent:

                  6.3.1.   Issue or sell any  capital  stock,  notes  (including
notes to finance  equipment  purchases  without  Newco's and CVE Parent's  prior
written consent to each such equipment  purchase),  bonds or other securities or
any  option  to  purchase  the same or enter  into any  agreement  with  respect
thereto, or acquire any stock of any corporation or any interest in any business
entity;

                                       32
<PAGE>

                  6.3.2.   Declare,  set  aside  or make any  dividend  or other
distribution  on its  capital  stock or redeem,  purchase  or acquire any shares
thereof or enter into any agreement in respect of the foregoing;

                  6.3.3.   Create,  incur,  pledge, or grant or suffer to exist,
any lien or other  Encumbrance  or  charge on any of its  assets or  properties,
tangible or  intangible,  including  those to finance the purchase or leasing of
equipment  unless Newco and CVE Parent shall give their prior written consent to
each such equipment purchase or lease;

                  6.3.4.   Incur  any  obligation  or  liability   (absolute  or
contingent)  not within the ordinary course of business and consistent with past
practices,  or pay any liability or obligation  (absolute or contingent),  other
than incurred in the ordinary course of Deerfield's business;

                  6.3.5.   Enter  into,  renew,  extend,  amend  or  modify  any
contract,  commitment  or  transaction  other  than in the  ordinary  course  of
business  and  consistent  with  past  practices;

                  6.3.6.   Amend  Deerfield's  Certificate of  Incorporation  or
By-Laws;

                  6.3.7.   Sell,  exchange or otherwise dispose of any assets of
Deerfield,  except in the ordinary  course of the business and  consistent  with
past practices;

                  6.3.8.   Create,   modify  or  terminate  any  corporate  bank
account, power of attorney or safety deposit box;

                  6.3.9.   Agree to pay, conditionally or otherwise, any pension
or any severance  pay to any director,  officer,  agent,  or employee  under any
existing pension plan or otherwise,  or increase the compensation  paid by it at
the date  hereof to any of its  officers  or  employees,  except  to the  extent
obligated to do so by existing plans or other  commitments  that have been fully
disclosed  to Newco and CVE Parent  prior to the date  hereof,  and except  that
Deerfield may increase the

                                       33
<PAGE>

annual salary of Iyhan Sulcevski,  Deerfield's  office manager,  from $27,000 to
not more than $30,000.

                  6.3.10.  Amend any  collective  bargaining  agreement to which
Deerfield  is a party or is subject,  except to the extent  that such  agreement
expires  and/or is  negotiated  by or through any trade  association  or similar
organization.

                  6.3.11.  Make any capital expenditures or capital additions or
betterments  except as may be  involved in ordinary  repairs,  maintenance,  and
replacements.

                  6.3.12.  Create or incur any  indebtedness,  whether funded or
not, except unsecured liabilities incurred in the ordinary course of business.

         6.4.     PRESERVATION OF ASSETS. From the date hereof until the Closing
Date, Deerfield shall keep its assets and properties in the same state of repair
as they are on the date hereof, normal wear and tear excepted,  and use its best
efforts to retain the services of its employees,  and preserve for Newco and CVE
Parent the goodwill of its customers,  licensors, lessors, vendors and suppliers
and others having business  relations with it and will operate its business only
in the ordinary course.

         6.5.     SATISFACTION  OF  CONDITIONS.  During the period from the date
hereof  until  the  Closing,  Sladkus  shall use his best  efforts  to cause the
satisfaction  of the  conditions to the  obligations of Newco and CVE Parent set
forth in Section 8.1 hereof.

7.       [INTENTIONALLY OMITTED]

8.       CONDITIONS PRECEDENT TO THE OBLIGATIONS OF NEWCO AND CVE PARENT.

         8.1.     The  obligations  of Newco  and CVE  Parent  pursuant  to this
Agreement  are  subject  to the  satisfaction  and  fulfillment  of  each of the
following conditions, provided, however, that Newco

                                       34
<PAGE>

and CVE Parent may, in their sole  discretion,  waive any of such conditions and
proceed with the transactions contemplated hereby:

                  8.1.1.   BOARD OF  DIRECTORS'  APPROVAL.  The  Merger  and the
transactions  contemplated  by this  Agreement  shall  have  been  approved  and
ratified by all necessary and appropriate  corporate  proceedings required under
the applicable provisions of the laws of the State of New York;

                  8.1.2.   REPRESENTATIONS  AND  WARRANTIES,  ETC.  All  of  the
representations  and  warranties  of  Deerfield,  Sladkus and Doscher  contained
herein shall be true and correct as if made on and as of the Closing  Date,  and
there shall be delivered  to Newco and CVE Parent at the Closing a  certificate,
in form and substance satisfactory to Newco and CVE Parent and its counsel, duly
executed by Sladkus,  Doscher and Deerfield to that effect. All of the covenants
in this  Agreement to be complied with and performed by Sladkus,  Doscher and/or
Deerfield on or before the Closing  Date,  including  the covenants set forth in
Article 6, shall have been complied with and performed.

                  8.1.3.   STOCK  CERTIFICATES.  The stock  certificates for the
shares of Deerfield Stock owned by Sladkus and Doscher shall have been delivered
at the Closing in accordance  with this  Agreement,  together with duly executed
stock powers therefor.

                  8.1.4.   GOOD  STANDING.  At the Closing,  Sladkus and Doscher
shall  deliver  to Newco and CVE  Parent a good  standing  certificate  from the
Secretary  of  State of the  State of New  York,  as of a recent  date,  showing
Deerfield to be duly organized,  validly existing and in good standing under the
laws of the State of New York.

                  8.1.5.   All terms,  conditions  and  covenants to be complied
with by Sladkus,  Doscher  and/or  Deerfield on or before the Closing Date shall
have been fully complied with or performed in all material respects.

                                       35
<PAGE>

                  8.1.6.   The  business  of  Deerfield   shall  not  have  been
adversely affected in any material way, whether or not insured against. Further,
none of  Deerfield's  ten largest  customers or  suppliers  shall have ceased or
indicated any intention to cease doing  business with Deerfield or indicated any
intention  not to do  business  with CVE Parent  after the  consummation  of the
transactions contemplated hereby.

                  8.1.7.   This  Agreement  and  the  transactions  contemplated
herein and hereby  shall have been duly and validly  authorized,  approved,  and
adopted by the Board of Directors and the  Shareholder of Newco and the Board of
Directors of CVE Parent in accordance with the requirements of applicable law.

                  8.1.8.   No  suit,   action  or  other   proceeding  shall  be
threatened or pending before any court or governmental agency which is likely to
result in the restraint,  prohibition,  or the obtaining of material  damages or
other  relief in  connection  with this  Agreement  or the  consummation  of the
transactions contemplated herein.

                  8.1.9.   Newco and CVE Parent shall have  received an opinion,
in form and content satisfactory to Newco and CVE Parent and their counsel, from
Young & Moriwaki, LLP, counsel for Deerfield, Sladkus and Doscher, to the effect
that:

                           8.1.9.1. Deerfield is a corporation  duly  organized,
validly  existing and in good standing  under the laws of the State of New York.
Deerfield  has all  requisite  corporate  power  and  authority  to carry on its
business as it is now conducted and to own and use its  properties in connection
therewith.

                           8.1.9.2. The  authorized  capital  stock of Deerfield
consists of 200 shares of common stock,  of which 100 are issued and outstanding
and no shares  are held in the  treasury  of  Deerfield.  All of the  issued and
outstanding shares of capital stock of Deerfield are (i) duly

                                       36
<PAGE>

authorized,  validly  issued,  fully  paid and  nonassessable,  (ii) are held of
record as follows: Daniel Sladkus, 80 shares, and William G. Doscher, 20 shares,
and (iii)  are free and clear of all  preemptive  rights,  liens,  encumbrances,
charges and  assessments.  To counsel's  knowledge,  there are no outstanding or
authorized (i) options, warrants, rights, contracts, calls, rights, puts, rights
to subscribe,  conversion  rights or other  agreements or  commitments  to which
Deerfield  is a party or which are  binding  upon  Deerfield  providing  for the
issuance,  disposition or  acquisition  of any of its capital stock,  (ii) stock
appreciation,  phantom  stock or similar  rights with respect to  Deerfield,  or
(iii) agreements,  voting trusts, proxies, or understandings with respect to the
voting of any shares of capital stock of Deerfield.

                           8.1.9.3. Deerfield,  Sladkus  and  Doscher  have  all
requisite  power and  authority  to execute  and deliver  the  Agreement  and to
perform their  obligations  thereunder.  The Agreement has been duly and validly
executed and delivered by Deerfield, Sladkus and Doscher and constitutes a valid
and binding obligation of them,  enforceable against them in accordance with its
terms, except as such enforceability may be subject to or affected by applicable
bankruptcy, insolvency,  reorganization,  moratorium, usury, fraudulent transfer
or other laws  relating to or  affecting  the rights and  remedies of  creditors
generally.

                           8.1.9.4. Neither  the   execution   and  delivery  by
Deerfield,  Sladkus  and  Doscher of this  Agreement,  nor the  consummation  by
Deerfield,  Sladkus  and  Doscher of the  transactions  contemplated  hereby (i)
requires  on the part of  Deerfield,  Sladkus or Doscher  any  filing  with,  or
permit, authorization, consent or approval of, any governmental entity which has
not been filed or  obtained,  or (ii)  conflicts  with,  results in a breach of,
constitutes  (with or  without  due  notice  or lapse of time or both) a default
under,  results  in the  acceleration  of,  creates  in any  party  the right to
accelerate,  terminate,  modify or cancel or  requires  any  notice,  consent or
waiver (which has

                                       37
<PAGE>

not been obtained) under, any contract,  lease, sublease,  license,  sublicense,
franchise,  permit,  indenture or other agreement or instrument known to counsel
to which Deerfield, Sladkus or Doscher is a party or by which Deerfield, Sladkus
or Doscher is bound or to which any of their respective assets is subject.

                  8.1.10.  That no material transactions shall have been entered
into by  Deerfield  other  than  transactions  in the usual  course of  business
between  September 30, 1999 and the Closing Date or other than as referred to in
this Agreement,  except with the written  consent of Newco and CVE Parent;  that
none of the properties or assets of Deerfield  shall have been sold or otherwise
disposed  of other than in the usual  course of  business  during  such  period,
except with the  written  consent of Newco and CVE  Parent;  and that  Deerfield
during such period shall have  performed and complied with the other  provisions
and conditions of this Agreement on its part to be performed and complied with.

                  8.1.11.  The  following  shall  have  been  delivered  to  CVE
Parent:

                           8.1.11.1. Resignations of all officers, directors and
shareholders of Deerfield, to be effective immediately following the Closing;

                           8.1.11.2. General releases by all officers, directors
and shareholders of Deerfield of any liability of Deerfield to them or any claim
which they may have against Deerfield;

                           8.1.11.3. The  minute  books,   stock  record  books,
corporate seal and other books and records of Deerfield;

                           8.1.11.4. A  general   release  by   Geoffrey   Minte
("Minte"),  a former shareholder of Deerfield,  of any liability of Deerfield to
him for any claim which he may have against Deerfield.

                  8.1.12   Sladkus and CVE Parent or an  affiliate of CVE Parent
shall have executed and delivered to each other an  Employment  Agreement,  such
Employment  Agreement to be in a

                                       38
<PAGE>

form  substantially  similar to that  provided  in  Exhibit  B. Such  Employment
Agreement  shall provide for a term of five (5) years  commencing on the Closing
Date.

9.       CONDITIONS  PRECEDENT  TO THE  OBLIGATIONS  OF  DEERFIELD,  SLADKUS AND
         DOSCHER.

         9.1.     The  obligations of Deerfield,  Sladkus and Doscher under this
Agreement shall be subject to the  satisfaction and fulfillment of the following
conditions,  any or all of which  may be  waived by  Deerfield,  Sladkus  and/or
Doscher at their sole discretion:

                  9.1.1.   REPRESENTATIONS  AND  WARRANTIES,  ETC.  All  of  the
representations and warranties of Newco and CVE Parent contained herein shall be
true and  correct as if made on and as of the Closing  Date,  and there shall be
delivered to  Deerfield,  Sladkus and Doscher at the Closing a  certificate,  in
form and  substance  satisfactory  to  Deerfield,  Sladkus,  Doscher  and  their
counsel, duly executed by Newco and CVE Parent, to that effect.

                  9.1.2.   All terms,  conditions  and  covenants to be complied
with by Newco and CVE Parent on or before the Closing Date shall have been fully
complied with or performed in all material respects.

                  9.1.3.   This  Agreement  and  the  transactions  contemplated
herein and hereby  shall have been duly and validly  authorized,  approved,  and
adopted by the Board of Directors and  Shareholder  of Newco and by the Board of
Directors of CVE Parent in accordance with the requirements of applicable law.

                  9.1.4.   No  suit,   action  or  other   proceeding  shall  be
threatened or pending before any court or governmental agency which is likely to
result in the restraint,  prohibition,  or the obtaining of material  damages or
other  relief in  connection  with this  Agreement  or the  consummation  of the
transactions contemplated herein.

                                       39
<PAGE>

                  9.1.5.   Deerfield, Sladkus and Doscher shall have received an
opinion, in form and content satisfactory to Sladkus, Doscher and their counsel,
from Andrew N.  Karlen,  counsel for Newco and CVE Parent,  to the effect  that:
each of Newco and CVE Parent is a duly  organized  and existing  corporation  in
good standing under the laws of their respective state of incorporation and that
CVE Parent is authorized to do business in New York;  the shares of common stock
of CVE  Parent  being  issued  hereunder  are  validly  issued,  fully  paid and
non-assessable,  and such shares are free and clear of all liens,  Encumbrances,
charges and assessments;  this Agreement has been duly executed and delivered by
Newco and CVE Parent and constitutes the legal, valid, and binding obligation of
Newco and CVE Parent, enforceable in accordance with its terms.

                  9.1.6.   REQUIRED  ITEMS.  CVE Parent shall have  delivered to
Sladkus and Doscher  certificates  representing  an aggregate of 5,810 shares of
CVE Parent stock

                  9.1.7.   Sladkus and CVE Parent or an  affiliate of CVE Parent
shall have executed and delivered to each other an  Employment  Agreement,  such
Employment  Agreement to be in a form substantially  similar to that provided in
Exhibit B. Such Employment  Agreement shall provide for a term of five (5) years
commencing on the Closing Date.

10.      INJUNCTIVE RELIEF.

         10.1.    The parties  hereto  recognize  that  irreparable  damage will
result to the  parties if any of the parties  fails or refuses to perform  their
obligations  under  this  Agreement,  and  that the  remedy  at law for any such
failure or refusal  will be  inadequate.  Accordingly,  in addition to any other
remedies  and damages  available  (none of which  remedies or damages are hereby
waived),  the parties shall be entitled,  in such event, to injunctive and other
equitable relief, including without limitation, specific performance.

                                       40
<PAGE>

11.      INVALIDITY AND SEVERABILITY.

         11.1.    If any  provisions  of this  Agreement  are  held  invalid  or
unenforceable,  such invalidity or  unenforceability  shall not affect the other
provisions  of this  Agreement  and,  to that  extent,  the  provisions  of this
Agreement are intended to be and shall be deemed severable.

12.      MUTUAL INDEMNIFICATIONS.

         12.1.    INDEMNIFICATION  BY  DEERFIELD  AND  SLADKUS.   Deerfield  and
Sladkus shall  indemnify and hold Newco and CVE Parent harmless from and against
any and all losses, claims, demands,  expenses, costs, obligations,  damages and
liabilities,  including  interest,  penalties  (and further  including,  but not
limited to, the costs of investigation and defense,  reasonable  attorney's fees
and appellate fees and costs),  which Newco and CVE Parent may incur,  suffer or
sustain,  which arise, result from or relate to (i) any inaccuracy in any of the
representations  and  warranties  of  Deerfield,  Sladkus  or  Doscher  in  this
Agreement  (including  the  annexed  schedules  and  exhibits)  or any  actions,
omissions or statements or acts  inconsistent with any such  representations  or
warranties,  (ii)  breach by  Deerfield,  Sladkus or  Doscher  of any  covenant,
representation,  warranty or  agreement  herein or  hereunder,  (iii) all debts,
claims or liabilities of whatever nature of Deerfield incurred prior to or as of
the Closing  Date and not  reflected  on the Balance  Sheet or on the  Exception
Schedule,  (iv)  any and  all  actions,  suits,  proceedings,  claims,  demands,
assessments,  judgments,  costs and expenses  incident to any of the matters set
forth in this Section 12.1 including  those incurred in connection  with actions
brought to recover from Sladkus  pursuant to this Section 12.1, or (v) any claim
by Minte against Deerfield, Sladkus, Doscher, Newco or CVE Parent, including but
not limited to any claim that  relates to or arises from this  Agreement  or the
transactions contemplated hereby.

         12.2.    INDEMNIFICATION  BY DOSCHER.  Doscher shall indemnify and hold
Newco and CVE Parent  harmless  from and  against  any and all  losses,  claims,
demands, expenses, costs, obligations,

                                       41
<PAGE>

damages and liabilities,  including interest,  penalties (and further including,
but  not  limited  to,  the  costs  of  investigation  and  defense,  reasonable
attorney?s  fees and  appellate  fees and  costs),  which CVE  Parent may incur,
suffer or sustain,  which arise,  result from or relate to (i) any inaccuracy in
any  of  the  representations  and  warranties  of  Doscher  in  this  Agreement
(including  the annexed  schedules  and  exhibits) or any actions,  omissions or
statements or acts  inconsistent  with any such  representations  or warranties,
(ii) breach by Doscher of any  covenant,  representation,  warranty or agreement
herein or hereunder,  (iii) all debts,  claims or liabilities of whatever nature
of Deerfield  incurred  prior to or as of the Closing Date and not  reflected on
the Balance Sheet or the Exception Schedule, or (iv) any and all actions, suits,
proceedings,  claims,  demands,  assessments,   judgments,  costs  and  expenses
incident to any of the matters set forth in this  Section 12.2  including  those
incurred in connection with actions brought to recover from Doscher  pursuant to
this Section 12.2, but excluding any claim by Minte against Deerfield,  Sladkus,
Doscher, Newco or CVE Parent.

         12.3.    INDEMNIFICATION BY NEWCO AND CVE PARENT.  Newco and CVE Parent
shall  indemnify  and hold  Sladkus,  Doscher and  Deerfield  harmless  from and
against any and all  losses,  claims,  demands,  expenses,  costs,  obligations,
damages and liabilities,  including interest,  penalties (and further including,
but  not  limited  to,  the  costs  of  investigation  and  defense,  reasonable
attorney's  fees and  appellate  fees and costs),  which  Deerfield,  Sladkus or
Doscher may incur, suffer or sustain,  which arise, result from or relate to (i)
any  inaccuracy in any of the  representations  and  warranties of Newco and CVE
Parent in this Agreement  (including the annexed  schedules and exhibits) or any
actions,   omissions  or   statements  or  acts   inconsistent   with  any  such
representations  or  warranties,  (ii)  breach  by Newco  and CVE  Parent of any
covenant,  representation,  warranty or agreement herein or hereunder, (iii) any
and all actions, suits,

                                       42
<PAGE>

proceedings,  claims,  demands,  assessments,   judgments,  costs  and  expenses
incident to any of the matters set forth in this  Section 12.3  including  those
incurred in connection with actions brought to recover from Newco and CVE Parent
pursuant to this Section 12.3.

13.      TERMINATION.

         13.1.    This  Agreement  may be  terminated  at any time  prior to the
Effective  Date,  whether  before  or  after  approval  by the  stockholders  of
Deerfield,  by mutual  consent of the Board of Directors  of  Deerfield  and the
Board of Directors of Newco.

14.      MISCELLANEOUS.

         14.1.    NOTICES.   All   notices,    requests,   demands   and   other
communications hereunder shall be in writing and shall be deemed to be effective
only if delivered  by hand or mailed by prepaid  registered  or certified  mail,
return receipt requested, or sent by Federal Express or a like overnight courier
service for delivery on the next business day to the parties at their  addresses
set forth above,  or to such other  address as each party may specify by written
notice  to the  other  from  time to time in  accordance  with the terms of this
section,  with a copy sent in the same  manner as said  notice  was given to the
party to:

                           Young & Moriwaki, LLP
                           777 Third Avenue, 19th Floor
                           New York, New York 10017, and

                           Andrew N. Karlen, Esq.
                           The Inns of Court
                           99 Court Street
                           White Plains, New York 10601

Such notices,  requests,  demands, and other  communications  hereunder shall be
deemed to have been duly given upon such personal  delivery (or on the date such
personal  delivery is first refused by the other party) or on the date three (3)
days after the date postmarked by the United States

                                       43
<PAGE>

Post Office, or on the next business day after deposited with Federal Express or
a like overnight  courier  service in a properly  addressed  prepaid wrapper for
delivery on the next business day, as the case may be.

         14.2.    BENEFITS,  ETC.  The rights  created by this  Agreement  shall
inure to the benefit of, and the  obligations  created  hereby  shall be binding
upon, the  successors,  heirs and permitted  assigns,  if any, of the respective
parties hereto.

         14.3.    ENTIRE AGREEMENT; CHANGES. This Agreement and the Exhibits and
Schedules annexed hereto, and the instruments  delivered in accordance  herewith
constitute  the entire  agreement  among the  parties  and  supersede  all prior
agreements and  understandings,  written or oral,  among the parties relating to
the  subject  matter  hereof.  This  Agreement  may  be  modified,   amended  or
supplemented  only by a writing signed by the party against whom  enforcement of
such modification, amendment or supplement is sought.

         14.4.    ASSIGNMENT.  Newco,  CVE  Parent,  Sladkus and Doscher may not
assign their respective  rights,  or delegate their respective duties hereunder,
except  that  Newco and CVE  Parent  shall  each have the right to assign  their
rights and delegate their duties hereunder to any successor corporation, limited
liability company or any other entity that results from a merger, consolidation,
reorganization or business combination to which Newco or CVE Parent, as the case
may be, is a party.

         14.5.    WAIVER.  Waiver by any party of a breach of any  provision  of
this  Agreement by any other party shall not operate or be construed as a waiver
of any subsequent breach by such other party. The failure of any party hereto to
take any action by reason of such  breach  shall not  deprive  such party of the
right to take action at any time while such breach continues.

                                       44
<PAGE>

         14.6.    GOVERNING LAW. This  Agreement and all  amendments  hereof and
waivers and consents hereunder shall be governed by and construed under the laws
of the State of New York  without  regard  to the  conflicts  of law  principles
thereof.

         14.7.    JURISDICTION.  Any action or proceeding seeking to enforce any
provision  of, or based on any right  arising  out of, this  Agreement  shall be
brought and litigated only in the Supreme Court of the State of New York, County
of Westchester, or the United States District Court for the Southern District of
New York  (White  Plains  Division  if  permitted  by the court) and each of the
parties  hereby  consents  to  the  jurisdiction  of  such  courts  (and  of the
appropriate  appellate  courts) in any such action or proceeding  and waives any
objection to venue laid therein.

         14.8.    RESPONSIBILITY FOR A REORGANIZATION  STRUCTURE.  The Merger is
intended to qualify as a tax-free  reorganization.  Structuring the transactions
contemplated by this Agreement and Plan of Merger to satisfy the requirements of
Internal Revenue Code  ss.368(a)(1)(A) is the sole  responsibility of Deerfield,
Sladkus and Doscher.  In no event shall Newco or CVE Parent incur any  liability
or  responsibility   to  Deerfield,   Sladkus  or  Doscher  as  a  result  of  a
determination at any time that the  transactions  contemplated by this Agreement
do  not  or  did  not  satisfy  the   requirements  of  Internal   Revenue  Code
ss.368(a)(1)(A).

         14.9.    EXPENSES. Deerfield, Sladkus and Doscher shall each bear their
own expenses incident to the preparation, negotiation, execution and delivery of
this Agreement.

         14.10.   CAPTIONS.  The captions in this Agreement are for  convenience
of  reference  only and shall not be given any effect in the  interpretation  of
this Agreement.

         14.11.   COUNTERPARTS.  This  Agreement  may be executed in two or more
counterparts,  each of which shall be considered  an original,  but all of which
together shall constitute the same instrument.

                                       45
<PAGE>

         14.12.   GENDER AND NUMBER.  All  references  in this  Agreement to the
masculine gender shall include the feminine and neuter genders,  and vice versa,
and all  references to the singular  shall  include the plural,  and vice versa.

         14.13.   CONTINUITY AND FURTHER  ASSURANCES.  On and after the Closing,
Deerfield,  Sladkus and Doscher agree to cooperate with Newco and CVE Parent and
provide their best efforts to assist Newco and CVE Parent in connection with the
continuity and smooth  transition of Deerfield's  business.  At any time or from
time to time after the  Closing,  Sladkus and Doscher  shall,  at the request of
Newco and CVE Parent,  take all actions necessary to put Newco and CVE Parent in
actual  possession  and control of  Deerfield's  business and shall  execute and
deliver such further instruments of sale, conveyance,  transfer,  assignment and
consent  and take  such  other  action as Newco and CVE  Parent  may  reasonably
request in order to more effectively  consummate the  transactions  contemplated
hereby or assist  Newco and CVE Parent in  exercising  their rights with respect
thereto.

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

                                       DEERFIELD VIDEO PRODUCTIONS, INC.
                                       (A New York Corporation)

                                       By:    /s/ DANIEL SLADKUS
                                             -----------------------------------
                                             Daniel Sladkus, President

                                                /s/ DANIEL SLADKUS
                                             -----------------------------------
                                             Daniel Sladkus, Individually

                                                /s/ WILLIAM G. DOSCHER
                                             -----------------------------------
                                             William G. Doscher, Individually

                                       46
<PAGE>

                                       VIRTUAL EDUCATION CORPORATION .
                                       (A Delaware Corporation)

                                       By:    /s/ WILLIAM K. GROLLMAN
                                             -----------------------------------
                                              William K. Grollman, President

                                       DEERFIELD ACQUISITION CORP.
                                       (A New York Corporation)

                                       By:    /s/ WILLIAM K. GROLLMAN
                                             -----------------------------------

                                       47
<PAGE>

                                   EXHIBIT A-1

                                    DIRECTORS

                             Dr. William K. Grollman
                             Jack Fingerhut
                             Allen Pesky

                                   EXHIBIT A-2

                                    OFFICERS

       Dr. William K. Grollman     President and Chief Executive Officer
       Jack Fingerhut              Executive Vice President and Secretary

                                       48EXHIBIT 10.12

                         [LETTERHEAD OF SMARTPROS LTD.]

                                              August 3, 2004

Allen S. Greene
100 Minnisink Road
Short Hills, New Jersey 07078

Dear Allen,

         This  letter  agreement  sets forth the terms of an award by  SmartPros
Ltd. (the  "Company")  to you in the form of shares of SmartPros'  common stock,
par value $.0001 per share (the "Common Stock").

         In  consideration of services  previously  rendered by you, the Company
hereby awards you 40,000 shares of Common Stock (the  "Shares")  pursuant to the
terms and conditions of this letter. As used herein the term "Shares" shall mean
and  include,  in addition  to the above  referenced  number of shares,  any new
shares or other securities  convertible into shares resulting from any merger or
reorganization  of the Company,  or the  recapitalization,  reclassification  or
split of the Shares, or any stock dividend paid on the Shares.

         The Shares shall be delivered to you,  subject to the terms hereof,  on
the Closing Date (as defined below).  The Company  represents and warrants that,
at the time of delivery,  the Shares are fully paid and non-assessable.  You are
entitled to all the rights and  privileges of a holder of the Shares,  including
the right to receive and retain all cash dividends  declared thereon and to vote
the Shares on all matters  presented  to  Stockholders  for vote.  However,  the
Shares are subject to certain restrictions as provided below.

         By accepting the Shares you agree as follows:

         1. Except as otherwise  set forth in this  paragraph 1, no Shares shall
be sold,  conveyed,  transferred,  pledged,  encumbered or otherwise disposed of
(any such  disposition  being  herein  called a  "Transfer")  prior to the third
anniversary (the "Termination  Date") of the date of the closing with respect to
the  Company's  initial  public  offering  (the  "Closing  Date").  (The  period
beginning  on  the  date  hereof  and  ending  on  the  Termination  Date  being
hereinafter called the "Risk Period"). This Transfer restriction shall lapse (a)
with  respect to 10,000  Shares on the Closing  Date and with  respect to 10,000
Shares on each of the first, second and third anniversaries of the Closing Date;
(b) with  respect to all of the Shares on the date on which your  employment  is
terminated  by  SmartPros  for any reason  other than for  "Cause" as defined by
Section 3.2 of the Third Amended Employment Agreement,  dated as of May 1, 2004,
between you and the Company (the  "Employment  Agreement");  (c) with respect to
all of the Shares on the date on which you elect to  terminate  your  employment
with the Company  pursuant to Section  3.3(a) of the Employment  Agreement;  (d)
with respect to all of the Shares on the date a "Change in Control",  as defined
in Section 7 of the Employment Agreement occurs with respect to the Company; and
(e) with

<PAGE>

respect to all of the Shares if your  employment is terminated on account of (i)
your  death  or  (ii)  your  disability,  as  defined  in  Section3.3(b)  of the
Employment Agreement.

         2. If at any time prior to the Termination Date, either (a) the Company
terminates  your  employment  as permitted by Section  3.2(a) of the  Employment
Agreement or (b) you terminate your  employment  with the Company for any reason
other than a reason  described  in  subsection  (c) of  paragraph  1 above (such
termination being herein called an "Event of Retransfer")  then, upon such Event
of Retransfer, you shall transfer to the Company that number of the Shares as to
which the  Transfer  restriction  shall  still apply on the day  following  such
termination as provided in paragraph 1 above.  Upon an Event of Retransfer,  you
shall deliver to the Company all stock  certificates  representing  such Shares,
duly endorsed with your signature guaranteed thereon by a New York City bank and
with all necessary transfer stamps affixed, and the Company shall deliver to you
a receipt  therefore.  Immediately  upon such Event of  Retransfer,  such Shares
shall be deemed to have been  transferred  to the  Company and you shall have no
further rights or privileges as a holder of the Shares so retransferred.

         3. You represent and agree that you will only sell, transfer, pledge or
hypothecate  any of the Shares pursuant to an effective  registration  statement
under the Securities Act of 1933 or in a transaction wherein  registration under
the Securities Act of 1933 is not required.

         4. All certificates for Shares shall be endorsed as follows:

         "The shares of stock  represented  by this  certificate  are subject to
certain  restrictions and obligations  stated in and are transferable  only upon
compliance  with the  provisions  of an Agreement  dated August __, 2004 between
this Corporation and the registered holder, a copy of which Agreement is on file
in the office of the Secretary of this Corporation."

         "The shares  represented by this  certificate  have not been registered
under the  Securities  Act of 1933. The shares have been acquired for investment
and must be held unless they are  subsequently  registered  under the Securities
Act of 1933 or, in the  opinion of  counsel  to  SmartPros,  an  exemption  from
registration  under said Act is available.  Any routine sales of the  securities
which may be made in reliance upon Rule 144 under said Act, if available, can be
made only in limited  amounts in accordance with all of the terms and conditions
of that Rule."

         5. In order to facilitate  compliance with the  transactions  described
herein,  the certificates  representing the Shares are being deposited in escrow
with Morse, Zelnick, Rose & Lander, LLP, as Escrowee, together with stock powers
duly  endorsed by you, in blank,  with your  signature  guaranteed  thereon by a
bank,  and shall be held and disposed of by the Escrowee in accordance  with all
of the terms hereof.  Provided an Event of Retransfer has not then occurred, the
Escrowee,  on the  Termination  Date or upon such earlier date when the Transfer
restrictions to which any of the Shares are subject lapse (or as soon thereafter
as is reasonably practicable),  shall return to you such certificates and powers
as shall represent the number of Shares to which the Transfer restrictions shall
have lapsed.  Such deposit shall not affect your rights as holder of the Shares.
The  Escrowee  shall be under no duty  except to receive  the  certificates  and
dispose of same in accordance with the terms hereof. The Company may redesignate
an Escrowee at any time on notice to you.

                                       2
<PAGE>

         6. This agreement shall be binding upon and inure to the benefit of you
and SmartPros and your and its respective successors and legal representatives.

                                     Very truly yours,

                                     SMARTPROS LTD.

                                     By:  /s/ JOHN F. GAMBA
                                        -------------------
                                              John F. Gamba,
                                              Chairman of the Board of Directors

Acceptance by Employee:

I hereby  accept  the  Shares  and  agree  to all of the  terms  and  conditions
described herein.

Dated:  August 3, 2004

                                       /s/ ALLEN S. GREENE
                                     -----------------------
                                     Allen S. Greene

Acceptance by Escrowee:

MORSE, ZELNICK, ROSE & LANDER, LLP

By:  /s/ JOEL J. GOLDSCHMIDT
   ---------------------------
     Joel J. Goldschmidt, Esq., Partner

Dated:  August 3, 2004

                                       3

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