Document:

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                                                                  EXHIBIT 10.31

                            STOCK PURCHASE AGREEMENT

      THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of this 31st
day of August, 2000, by and among TMP Worldwide Inc., a Delaware corporation
("TMP" or "Buyer"), Stratascape, Inc., a California corporation (the "Company"),
and the Shareholders of the Company listed on SCHEDULE A hereto (each a
"Shareholder" and collectively the "Shareholders").

            WHEREAS,  the Shareholders  collectively own 200 shares of the
common stock of the Company (the "Company Stock");

            WHEREAS, the 200 shares of the Company Stock referred to in the
previous recital (collectively, the "Company Shares," and individually, a
"Company Share") constitute all of the issued and outstanding capital stock of
the Company;

            WHEREAS, the Shareholders desire to sell the Company Shares to
Buyer, and Buyer desires to purchase the Company Shares from the Shareholders,
upon the terms and conditions set forth herein (the "Transaction");

            WHEREAS, for federal income tax purposes, the parties intend that
the Transaction shall qualify as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder;

            WHEREAS,  for  accounting  purposes,  the parties  intend that
the Transaction shall be accounted for as pooling of interests;

            WHEREAS, all annexes, disclosure schedules, exhibits and other
attachments hereto are incorporated herein by reference and, taken together with
this Agreement, including the foregoing Recitals, shall constitute but a single
agreement; and

            WHEREAS, the parties wish to set forth certain other agreements
among them.

            NOW THEREFORE, in consideration of the mutual covenants of the
parties set forth in this Agreement and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

                                   ARTICLE I
                                PURCHASE AND SALE

            1.1 SHARES. On the terms and subject to the conditions set forth in
this Agreement, at the Closing (as defined in Section 7.1 hereof) and upon the
basis of the representations, warranties, covenants and agreements contained
herein, the Shareholders shall sell, convey, transfer and deliver to Buyer, and
Buyer shall purchase from the Shareholders, the Company Shares in consideration
for the issuance to the Shareholders of an aggregate of that number of
unregistered shares of TMP Common Stock (as defined below) that is determined by
dividing twenty-three million four hundred and thirty thousand dollars
($23,430,000) by the average of the closing sale price per share of TMP Common
Stock as reported by the Nasdaq

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National Market for the 30-consecutive trading day period preceding the third
business day prior to the Closing Date (such average being hereinafter referred
to as the "Stated Price") rounded up to nearest whole number of shares of TMP
Common Stock (collectively, the "Purchase Price") pro-rata in accordance with
the percentages set forth on SCHEDULE A. As used herein, the term "TMP Common
Stock" means shares of common stock, $.001 par value per share, of Buyer. The
shares of TMP Common Stock issuable to the Shareholders hereunder in exchange
for the Company Shares are sometimes collectively referred to as the "TMP
Shares" and individually as a "TMP Share".

                                   ARTICLE II
                               MANNER OF EXCHANGE

            2.1 EXCHANGE OF SHARES. At the Closing, the Shareholders shall
deliver to Buyer a certificate or certificates representing all of the Company
Shares, accompanied by a stock power or powers duly executed in blank, with all
necessary stock transfer and other documentary stamps attached, and Buyer shall
deliver to the Shareholders, certificates representing the shares of TMP Common
Stock due to the Shareholders issued in the respective names of the
Shareholders, pro-rata in accordance with the percentages set forth on SCHEDULE
A; provided, however, that such certificates may be issued in the respective
names of any other person designated by the Shareholders and agreed to by the
Buyer as set forth on SCHEDULE 2.1 hereto.

            2.2 FURTHER ASSURANCES. At the Closing and from time to time
thereafter, the Shareholders shall execute such additional instruments and take
such other actions as Buyer may request in order to effectively sell, transfer
and assign the Company Shares to Buyer and confirm Buyer's title thereto.

                                  ARTICLE III
                REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
                                THE SHAREHOLDERS

            As an inducement to Buyer to enter into and perform its obligations
under this Agreement, the Company and the Shareholders, jointly and severally,
represent and warrant to Buyer as follows:

            3.1 ORGANIZATION AND GOOD STANDING. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
state of California and has full power and authority to conduct its business as
it is now being conducted and to own, operate or lease the properties and assets
it currently owns, operates or holds under lease. The Company is duly licensed
and qualified to do business and is in good standing as a foreign corporation in
each other jurisdiction set forth on SCHEDULE 3.1 hereto, which are all
jurisdictions where the character of its business or the nature of its
properties or assets makes such qualification or licensing necessary, except for
those jurisdictions where the failure to be so qualified, licensed or in good
standing would not individually or in the aggregate have a material adverse
effect on the business, results of operations, financial condition or assets of
the Company.

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            3.2 POWER AND AUTHORIZATION. The Company has full power and
authority to execute and deliver this Agreement and any agreement, document,
certificate or instrument being delivered pursuant to or in connection with the
transactions contemplated by this Agreement (collectively the "Transaction
Documents") to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. Each Shareholder
has full power and authority to execute and deliver this Agreement and each of
the other Transaction Documents to which it is or will be a party, and to
perform his obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Transaction Documents, and the performance by the Company of
its obligations hereunder and thereunder, and the consummation of the
transactions contemplated hereunder and thereunder, have been duly authorized by
the Company and by the Shareholders of the Company. The execution and delivery
of this Agreement and the Transaction Documents, and the performance by the
Shareholders of its obligations hereunder and thereunder, and the consummation
of the transactions contemplated hereunder and thereunder, have been duly
authorized by the unanimous vote of the Shareholders. This Agreement and the
Transaction Documents have been duly executed and delivered by the Company and
by each Shareholder and constitute the legal, valid and binding obligations of
the Company and of each Shareholder, enforceable against the Company and each
Shareholder in accordance with their respective terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, or similar laws affecting
creditors' rights generally or by general principles of equity.

            3.3 SUBSIDIARIES. The Company does not own or control (directly or
indirectly), or own or hold any right to acquire, any stock, partnership
interest, joint venture interest, equity participation or other security or
interest in any other entity, corporation, partnership, trust or any other
business association.

            3.4 ORGANIZATIONAL DOCUMENTS. The copies of the Certificate of
Incorporation and Bylaws of the Company, each as heretofore amended, which have
been delivered to Buyer are true, complete and correct. The minute books of the
Company made available to Buyer are true, correct and complete and contain a
complete summary of all meetings of directors and stockholders since the time of
incorporation of the Company and accurately reflect all transactions referred to
in such minutes in all material respects, and all material corporate actions and
decisions taken by the Company's board of directors, shareholders and any
committees of the board of directors. SCHEDULE 3.4 contains a true and complete
list of all officers and directors of the Company.

            3.5 OWNERSHIP OF THE COMPANY. The authorized capital stock of the
Company consists of 1,500 shares of Company Stock, of which 200 are issued and
outstanding, all of which are owned of record and beneficially by the
Shareholders, free and clear of any and all Liens (as defined in Section 10.10).
The designations, powers, preferences, rights, qualifications, limitations and
restrictions in respect of the Company Stock are as set forth in the Certificate
of Incorporation of the Company, as amended to the date hereof, and all such
designations, powers, preferences, rights, qualifications, limitations and
restrictions are valid, binding and enforceable and in accordance with all
applicable laws. All outstanding shares of capital stock of the Company have
been duly authorized and validly issued, are fully paid and non-assessable, and
were issued in compliance with all applicable federal and state securities laws.
None of the outstanding securities of the Company have been issued in violation
of any

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pre-emptive rights, rights of first refusal or similar rights applicable to the
Company. No contract, commitment or undertaking of any kind has been made for
the issuance of additional shares of capital stock or other securities of the
Company, nor is there in effect or outstanding any subscription, option, warrant
or other right to acquire any shares of the Company Stock or other instruments
convertible into or exchangeable for such shares. There are no voting trust
agreements or other contracts, agreements or arrangements restricting or
otherwise relating to voting, dividend or other rights with respect to the
Company's capital stock, except for such agreements that will be terminated
prior to the Closing as set forth on SCHEDULE 3.5 hereto. The Company does not
hold any shares of capital stock in its treasury. Upon delivery of the Company
Shares to Buyer pursuant to the provisions of this Agreement, Buyer will acquire
good, valid and marketable title to the Company Shares, free and clear of any
and all Liens. All transfer taxes imposed by law in connection with sale,
transfer and delivery of the Company Shares to Buyer have been paid.

            3.6   NO VIOLATION. The execution, delivery and performance by the
Company and the Shareholders of this Agreement and the Transaction Documents and
the consummation of the transactions contemplated herein and therein do not and
will not:

                  (a) conflict with, result in the breach, modification,
termination or violation of, or loss of any benefit under, constitute a default
under, accelerate the performance required by, result in or give rise to a right
to amend or modify the terms of, result in the creation of any Lien upon any
assets or properties, or in any manner release any party thereto from any
obligation under, any material mortgage, note, bond, indenture, contract,
agreement, lease, license or other instrument or obligation of any kind or
nature by which the Company or any Shareholder, or any of their respective
properties or assets, may be bound or affected;

                  (b) conflict with, violate or result in any loss of benefit
under, any permit, concession, franchise, order, judgment, writ, injunction,
regulation, statute or decree applicable to the Company; or

                  (c) conflict with or violate any provision of the Certificate
of Incorporation or Bylaws, each as heretofore amended, of the Company.

             3.7  NO CONSENT REQUIRED. Except as set forth on SCHEDULE 3.7, no
consent, approval, order or authorization of, or declaration, filing or
registration with, any person, entity or governmental authority is required to
be made or obtained by the Company or any Shareholder in connection with the
authorization, execution, delivery or performance of this Agreement, the
Transaction Documents or the transactions contemplated hereby and thereby.

             3.8  FINANCIAL STATEMENTS. As of the date hereof, SCHEDULE 3.8
contains the following: unaudited balance sheet and statements of income,
stockholders' equity and cash flows as of, and for the fiscal year ended,
December 31, 1997 (the "Historical Unaudited Financial Statements"), audited
balance sheets and statements of income, stockholders' equity and cash flows as
of, and for the fiscal years ended, December 31, 1998 and 1999, respectively
(the "Historical Audited Financial Statements"), and unaudited balance sheet as
of June 30, 2000 and statements of income, stockholders' equity and cash flows
for the six-months ended June 30, 1999 and 2000 (the "Interim Financial
Statements"); SCHEDULE 3.8 also contains unaudited balance sheets and statements
of income, stockholders' equity and cash flows as of and for the

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period January 1, 2000 through July 31, 2000 (the "Closing Date Financials").
Since July 31, 2000 through the date hereof, there has been no material adverse
change in the business, financial condition, assets, liabilities or retained
earnings of the Company, and neither the Company nor the Shareholders know of
any such change that is threatened or pending, nor has there been any damage,
destruction or loss, whether or not covered by insurance, which could reasonably
be anticipated to have a Material Adverse Effect (as defined in Section 10.10
hereof) on the Company. The materials included and to be included in SCHEDULE
3.8 hereto are sometimes collectively referred to herein as the "Financial
Statements".

                  Each of the Financial Statements is true, complete and correct
in all material respects, is consistent with the books and records of the
Company and is in accordance with GAAP (as defined in Section 10.10 hereof)
consistently applied and fairly presents the Company's financial condition,
assets, liabilities and retained earnings as of their respective dates and the
statements of income, stockholders' equity and cash flows for the periods
related thereto, subject in the case of the Interim Financial Statements and
Closing Date Financials, to normal year-end adjustments and the absence of
footnote disclosure. Insofar as the representations set forth in the preceding
sentence relate to the Closing Date Financials only, such representations are
made as of the date of delivery of the Closing Date Financials. All material
liabilities and obligations, whether accrued, absolute, contingent, direct or
indirect, perfected, inchoate, unliquidated or otherwise and whether due or to
become due, which existed as of December 31,1999, June 30, 2000 and July 31,
2000, have been disclosed in the balance sheets included in the Historical
Unaudited Financial Statements, Historical Audited Financial Statements, the
Interim Financial Statements and the Closing Date Financials, respectively, or
in the notes thereto. The statements of income included or to be included in the
Financial Statements do not contain any material items of special or
non-recurring income or other income not earned in the ordinary course of
business except as expressly specified on SCHEDULE 3.8 as attached hereto on the
date hereof. All amounts billed to the Company's customers and clients reflected
or to be reflected on the Financial Statements and SCHEDULE 3.15 hereto are for
Business (as defined in Section 10.10 hereof) activities and not for any other
business.

             3.9  ABSENCE OF UNDISCLOSED LIABILITIES. As of the date hereof, the
Company has not, and as of the Closing Date, the Company will not have, any
debts, liabilities or obligations of any nature (whether accrued, absolute,
contingent, direct, indirect, perfected, inchoate, unliquidated or otherwise and
whether due or to become due) arising out of transactions entered into on or
prior to the Closing Date, or any transaction, series of transactions, action or
inaction occurring on or prior to the Closing Date, or any state of facts or
condition existing on or prior to the Closing Date (regardless of when such
liability or obligation is asserted), including but not limited to liabilities
or obligations on account of Taxes (as defined in Section 10.10 hereof) or
governmental charges or penalties, assessments, interest or fines thereon or in
respect thereof, except for (a) liabilities specifically delineated in the
Historical Unaudited Financial Statements, Historical Audited Financial
Statements and/or the Interim Financial Statements, which are set forth on
SCHEDULE 3.8 as attached hereto on the date hereof, (b) liabilities and
obligations under agreements, contracts, leases or commitments disclosed in this
Agreement or in a schedule hereto (none of which relates to any breach of
contract, breach of warranty, tort, injury caused to another, infringement,
claim, lawsuit or violation of law or the allegation or claim thereof), and (c)
liabilities and obligations arising in the ordinary course of business,
consistent in form and amount with past practice, since December 31, 1999, none
of which, individually or in the aggregate, is material in amount with respect
to the business, results

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of operations, financial condition or assets of the Company. Except as disclosed
on SCHEDULE 3.9, the Company is not under any obligation, contingent or
otherwise, to refund or rebate any amounts paid or payable to it for services
rendered prior to the date hereof. As of the date hereof, the Company does not
have, and as of the Closing Date, the Company will not have, any debts,
liabilities or obligations of any nature (whether accrued, absolute, contingent,
direct, indirect, perfected, inchoate, unliquidated or otherwise and whether due
or to become due) to, or owing from, any shareholder of the Company.

            3.10  COMPLIANCE WITH LAWS; PERMITS. The Company is in compliance
with all laws, regulations, rules, ordinances, orders and other requirements
applicable to the operation, conduct or ownership of its property or business in
all material respects. Neither the Company nor any Shareholder has received
notice (written or oral) of the violation or of any claim of violation of any
law, regulation, rule, ordinance, order or other requirement or Permits (as
defined below) applicable to it. The Company holds all of the permits, licenses,
approvals and authorizations of governmental authorities or third parties
(collectively, "Permits") necessary or appropriate for the conduct of its
business. All such Permits are in full force and effect, and will remain with
the Company upon, and will not be affected by, the Closing; there is no
condition, nor has any event occurred, which constitutes or with the giving of
notice or passage of time or both would constitute a violation of the terms of
any Permit and no cancellation, modification or revocation of any of the Permits
is pending or, to the knowledge of the Company or either Shareholder,
threatened.

            3.11  PROPERTY. The Company owns no real property. The Company has
good and marketable title or rights as lessee to all real, personal, mixed,
tangible and intangible property of any kind or nature owned or used by the
Company, and the Company owns each of the assets shown or reflected or to be
shown or reflected on the Financial Statements, in each case free and clear of
all Liens, except for Liens identified on SCHEDULE 3.11 hereto on the date
hereof. The assets and properties owned or leased by the Company are sufficient
to operate and conduct the business of the Company in a manner consistent with
at least the same standards of quality and reliability as have been achieved as
of the date hereof.

                  All leases of real property and all material leases of
personal property leased by the Company and utilized in its business, including
any and all leases with related parties or any Affiliate (as defined in Section
10.10 hereof) of the Company (collectively, the "Leased Property"), are listed
on SCHEDULE 3.13, and true, correct and complete copies previously have been
furnished to Buyer. All leases with Affiliates and/or related parties carry
terms and conditions no less favorable nor more favorable in all material
respects to the Company than those which could have been obtained in arm's
length transactions with unrelated third parties. The Company enjoys peaceful
and undisturbed possession under all such leases. Any real property that the
Company occupies or leases is in good condition and repair with adequate
plumbing, heating and air conditioning and with access to public roads and
utilities as required for the conduct of its business, except for such
deficiencies which are not material, individually or in the aggregate, in nature
or cost.

            3.12 CONDITION OF PROPERTY AND RELATED MATTERS.

            (a)   All buildings, machinery, equipment and other tangible assets
used by the Company are in fair or good operating condition and repair,
reasonable wear and

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tear excepted, are usable in the ordinary course of business and are adequate
and suitable for the uses to which they are being put. None of such items
requires any repairs or replacement except for maintenance in the ordinary
course of business or such other repairs or replacements which are not material,
individually or in the aggregate, in nature or cost. All such assets and
property, including excluded assets and property, are located at real property
locations constituting the Leased Property, or as otherwise identified on
SCHEDULE 3.12 hereto.

            (b)   The properties and assets reflected in the balance sheet
included in the Historical Unaudited Financial Statements, Historical Audited
Financial Statements and the Interim Financial Statements, and to be included in
the Closing Date Financials, have, in the aggregate, a fair market or realizable
value at least equal to the value thereof reflected therein. The Company is not
contemplating, nor is the Company obligated to make, any capital expenditure in
excess of $10,000 individually or in the aggregate which has not been disclosed
to Buyer in writing.

            3.13  MATERIAL CONTRACTS. The Company has not entered into nor is it
bound by any material contract, agreement, relationship or commitment, written
or oral, including without limitation any obligations for money borrowed or
under material leases, or any arrangements with customers, other than those
identified on SCHEDULE 3.13 hereto (the "Material Contracts"); true, correct and
complete copies of all written Material Contracts and true and complete
descriptions of all oral Material Contracts previously have been furnished to
Buyer. Except as set forth on SCHEDULE 3.13, the Company is not in default, and
no event has occurred which with the giving of notice or the passage of time or
both would constitute a default by the Company, or to the knowledge of the
Company and the Shareholders, any other party under any Material Contract or any
other obligation owed by the Company, and, to the knowledge of the Company and
the Shareholders, no event has occurred which with the giving of notice or the
passage of time or both would constitute a default by any other party to any
such Material Contract or obligation. The consummation of the transactions
contemplated by the Transaction Documents will not result in a breach of any
Material Contract or the right of any other party to the Material Contract to
terminate the same and there are no negotiations pending to revise the terms of
any such Material Contracts. The Company is not a party to or bound by any
contract, agreement, relationship or commitment, whether or not deemed material,
which in any way restricts or purports to restrict the Company's ability to
acquire any property or assets or conduct business or provide services to any
person or entity anywhere in the world. Without limiting the foregoing, except
as set forth on SCHEDULE 3.13, neither the Company nor any Shareholder is a
party to, or obligated to any party under, any (i) shareholders' agreement,
buy/sell agreement or any other agreement, written or oral, relating to or in
any way affecting the disposition of the capital stock of the Company or (ii)
any agreement, written or oral, relating to the indemnification of directors
and/or officers of the Company.

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            3.14  INTELLECTUAL PROPERTY.

            (a)   the Company owns and possesses all right, title and interest
in and to, or has a valid license to use, all of the Proprietary Rights (as
defined below) necessary for the operation of the its business as presently
conducted and none of such Proprietary Rights have been abandoned;

            (b)   no claim by any third party contesting the validity,
enforceability, use or ownership of any such Proprietary Rights has been made,
is currently outstanding or, to the knowledge of the Company or the
Shareholders, is threatened, and neither the Company nor the Shareholders is
aware of any reasonable basis for any such claim;

            (c)   neither the Company, any Shareholder nor any registered agent
of any of the foregoing has received any notice of, nor is the Company or any
Shareholder aware of any reasonable basis for an allegation of, any infringement
or misappropriation by, or conflict with, any third party with respect to such
Proprietary Rights, nor has the Company, any Shareholder, or any registered
agent of any of them received any claim of infringement or misappropriation of
or other conflict with any Proprietary Rights of any third party;

            (d)   to the knowledge of the Company and the Shareholders, the
Company has not infringed, misappropriated or otherwise violated any Proprietary
Rights of any third parties, and neither the Company nor any Shareholder is
aware of any infringement, misappropriation or conflict which will occur as a
result of the continued operation of the Company as presently operated and as
contemplated to be operated or as a result of the consummation of the
transactions contemplated hereby;

            (e)   none of the Company's personnel, including without limitation
employees, agents, consultants and contractors, have contributed to or
participated in the conception and/or development of any Proprietary Rights
which are not licensed to the Company from a third party.

            As used herein, the term "Proprietary Rights" means all proprietary
information of the Company, including all patents, patent applications, patent
disclosures and inventions (whether or not patentable and whether or not reduced
to practice), all trademarks, service marks, trade dress, trade names, corporate
names, domain names, copyrights, all trade secrets, confidential information,
ideas, formulae, compositions, know-how, processes and techniques, drawings,
specifications, designs, logos, plans, improvements, proposals, technical and
computer data, documentation and software, financial, business and marketing
plans, and related information and all other proprietary, industrial or
intellectual property rights relating to the Company's businesses, including but
not limited to those found at the website at HTTP://WWW.STRATASCAPE.COM. The
consummation of the transactions contemplated by this Agreement and the
Transaction Documents will not adversely affect the right of Buyer or the
Company to continue to use the Company's Proprietary Rights. To the extent that
registration of any Proprietary Right is useful or required by law, such
Proprietary Right has been duly and validly registered or filed, and any fees
that are necessary to maintain in force any Proprietary Rights or registrations
thereof have been paid. SCHEDULE 3.14 sets forth a list and description of the
copyrights, trademarks, service marks, trade dress and trade names used or held
by the Company and, where appropriate, the date, serial or registration number,
and place of any

                                      -8-
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registration thereof.

            3.15  ACCOUNTS RECEIVABLE. SCHEDULE 3.15 is a true, correct and
complete listing and aging of the Company's accounts receivable as of the last
day of the last full calendar month preceding the date hereof determined in
accordance with GAAP consistently applied and determined in a manner consistent
with the presentation in the Financial Statements. All of such accounts
receivable have arisen in bona fide arm's length transactions in the ordinary
course of business and are valid and binding obligations of the account debtors.
Such accounts receivable are not subject to counterclaims or set-offs and are
collectible in full in the ordinary course of business within 120 days of the
relevant invoice date, except to the extent that reserves for doubtful accounts
have been established by the Company and are set forth on SCHEDULE 3.15 and
which reserves have been adequately reflected on, and are consistent with
presentation in, the Financial Statements attached hereto on the date hereof.
Promptly after the Closing Date but in no event later than thirty (30) days
thereafter, the Shareholders will deliver to Buyer a true, correct and complete
listing and aging of the Company's accounts receivable as of the day immediately
preceding the Closing Date determined in accordance with GAAP consistent with
the presentation in the Financial Statements (the "Closing Date Receivables"),
to be appended as part of SCHEDULE 3.15 hereto. SCHEDULE 3.15 shall be deemed
amended to include such listing upon delivery to Buyer thereof. As of the
Closing Date, the Closing Date Receivables have arisen in bona fide arm's length
transactions in the ordinary course of business and are valid and binding
obligations of the account debtors. Such accounts receivable are not subject to
counterclaims or set-offs and are collectible in full in the ordinary course of
business within 120 days of the relevant invoice date, except to the extent that
reserves for doubtful accounts are established by the Company and are set forth
on the Financial Statements and SCHEDULE 3.15, in each case as attached hereto
on the date hereof. The reserves for doubtful accounts established by the
Company and reflected or to be reflected on SCHEDULE 3.15 or on the Financial
Statements have been or shall be determined in accordance with GAAP consistently
applied and are and shall be consistent with the presentation in the Financial
Statements, it being understood that in no event shall the reserve with respect
to the Closing Date Receivables exceed 1% of the total face amount of the
Closing Date Receivables.

            3.16  NO PREBILLINGS OR PREPAYMENTS. Except as set forth on SCHEDULE
3.16, the Company has not billed and the Company will not bill, and the Company
has not received any payments (in the form of retainers or otherwise) from, any
of its customers or potential customers for services to be rendered or for
expenses to be incurred subsequent to the Closing Date.

            3.17  EMPLOYEE BENEFIT PLANS. Except as set forth in SCHEDULE 3.17,
neither the Company nor any Plan Affiliate (as defined in Section 10.10 hereof)
has maintained, sponsored, adopted, made contributions to or obligated itself to
make contributions to or to pay any benefits or grant rights under or with
respect to or made any commitments to create any "employee pension benefit plan"
(as defined in Section 3(2) of ERISA (as defined in Section 10.10 hereof)),
"employee welfare benefit plan" (as defined in Section 3(1) of ERISA),
"multi-employer plan" (as defined in Section 3(37) of ERISA), "employee benefit
plan" (as defined in Section 3(3) of ERISA), plan of deferred compensation,
medical plan, life insurance plan, disability plan, dental plan or other plan
providing benefits for the welfare of the Company's or any Plan Affiliate's
current employees or former employees, officers, directors or consultants or
beneficiaries thereof, personnel policy (including but not limited to vacation
time, holiday pay, bonus

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programs, moving expense reimbursement programs and sick leave), excess benefit
plan, bonus or incentive plan (including but not limited to stock options,
restricted stock, phantom stock, stock bonus and deferred bonus plans), salary
reduction agreement, change-of-control agreement, golden parachute, employment
agreement, consulting agreement or any other benefit, program or contract
(collectively, "Employee Benefit Plans"), whether or not written or pursuant to
a collective bargaining agreement, which has been in effect at any time since
January 1, 1997 or which could give rise to or result in the Company or Buyer
having any debt, liability, claim or obligation of any kind or nature, whether
accrued, absolute, contingent, direct, indirect, known or unknown, perfected or
inchoate or otherwise and whether or not due or to become due. True, correct and
complete copies of all Employee Benefit Plans previously have been furnished to
Buyer along with all applicable summary plan descriptions, material employee
communications, the annual reports for the two most recent years and the annual
and periodic accounting of plan assets. The Employee Benefit Plans (which, for
purposes of this sentence and notwithstanding the reference to January 1, 1997
above, include any such plan maintained, sponsored, adopted, contributed to or
obligated to by the Company or any Plan Affiliate within the last six years)
have been maintained in all material respects in compliance with governing
documents and agreements and with applicable laws, regulations, rules,
ordinances, orders and other requirement of law. The present value of all
benefits, determined as of the most recent valuation date for such benefits,
vested under each Employee Benefit Plan that is a "plan" (as defined in Section
3(3) of ERISA) does not exceed the value of the assets of such "plan" allocable
to such vested benefits, determined as of such date. None of the Employee
Benefits Plans is a "Multi-employer Plan" within the meaning of Section 3(37) of
ERISA and neither the Company nor any Plan Affiliate contributes to or has an
obligation to contribute to, or has within the last six years contributed to or
had an obligation to contribute to, a Multi-employer Plan. Neither the Company
nor any Plan Affiliate (i) has ever established, maintained or contributed to
(A) a plan intended to be tax qualified under Section 401(a) of the Code, or a
pension plan subject to Title IV of ERISA or to the minimum funding standards
under Section 412 of the Code or Section 302 of ERISA, or (B) a voluntary
employee benefit association or (ii) has incurred or will incur any liability
under Title IV of ERISA. With respect to each Employee Benefit Plan, there has
occurred no transaction prohibited by Section 406 of ERISA or which constitutes
a "prohibited transaction" under Section 4975(c) of the Code and with respect to
which a prohibited transaction exemption is not currently in effect. Except as
set forth in SCHEDULE 3.17, the consummation of the transactions contemplated by
this Agreement and the Transaction Documents will not (either alone or in
conjunction with another event, such as termination of employment or other
services) entitle any employee or other person to receive severance or other
compensation which would not otherwise be payable absent the consummation of the
transactions contemplated by this Agreement and the Transaction Documents or
cause the acceleration of the time of payment or vesting of any award or
entitlement under any Employee Benefit Plan. Each Employee Benefit Plan may be
unilaterally terminated and/or amended by the Company at any time without damage
or penalty. All contributions, insurance premiums, benefits and other payments
to or under each Employee Benefit Plan with respect to all periods through the
Closing have or will be made prior to the Closing or have been accrued on the
Financial Statements or will be accrued on the Closing Date Financials, in each
case in accordance with GAAP consistently applied. With respect to each Employee
Benefit Plan, (i) no application, proceeding or other matter is pending before
the Internal Revenue Service, the Department of Labor or any other governmental
agency; (ii) no action, suit, proceeding or claim (other than routine claims for
benefits) is pending or, to the Company's knowledge, threatened; and (iii) to
the knowledge of the Company and the Shareholders, no facts exist which could
give

                                      -10-
<PAGE>

rise to an action, suit, proceeding or claim which, if asserted, could result in
a material liability or expense to the Company or the plan assets. Except to the
extend required under Section 601 et. seq. of ERISA, Section 4980-B of the Code
or applicable state laws, neither the Company nor any Plan Affiliate maintains,
contributes to, or is obligated under any plan, contract, policy or arrangement
providing health or death benefits (whether or not insured) to current or former
employees or other personnel beyond the termination of their employment or other
services.

            3.18  SALARIES. SCHEDULE 3.18 contains a true, complete and correct
list setting forth (i) the names, job descriptions/titles, current compensation
rate (including but not limited to salary, commission and bonus compensation),
date of hire, vacation accrual rate and accrued vacation time of all individuals
presently employed by the Company indicating whether they are employed on a
salaried, hourly or piecework basis, and (ii) the names and total annual
compensation for all independent contractors who render services on a regular
basis to, or on behalf of, the Company whose current annual compensation is or
is expected to be in excess of $20,000. Except as set forth on SCHEDULE 3.18,
there has been no increase in the compensation of the foregoing individuals or
independent contractors since June 30, 1999. Except as set forth on SCHEDULE
3.18, there has not been any promise to the employees listed on SCHEDULE 3.18
orally or in writing of any bonus or increase in compensation, whether or not
legally binding, except for increases in the ordinary course of business
consistent with the Company's past compensation practices and except for
obligations incurred under existing bonus, insurance, pension or other Employee
Benefit Plans described on SCHEDULE 3.17 or 3.18. The Company has not made any
prepayments of salaries, bonuses or any other amounts due to any of its
employees or former employees. All obligations to employees, whether for
salaries, commissions, bonuses, vacation or otherwise, which are required to be
accrued on the Financial Statements in accordance with GAAP consistently applied
have been accrued on the Financial Statements or will be accrued on the Closing
Date Financials, in each case in accordance with GAAP consistently applied.

            3.19  PERSONNEL AGREEMENTS, PLANS AND ARRANGEMENTS. Except as listed
in SCHEDULE 3.17, 3.18 or 3.19, the Company is not a party to or obligated with
respect to any (a) outstanding contracts with current or former employees,
agents, consultants, advisers, salesmen, sales representatives, distributors,
sales agents, independent contractors, or dealers, or (b) collective bargaining
agreements or contracts with any labor or trade union, employee bargaining
agency or other representative of employees or any employee benefits provided
for by any such agreement. True, correct and complete copies of all items listed
on SCHEDULES 3.17, 3.18 and 3.19 previously have been furnished to Buyer. No
strike, picketing, slow-down, work stoppage, lock-out, union organizational
activity, allegation, charge or complaint of employment discrimination, unfair
labor practice or other similar occurrence has occurred or is pending or, to the
knowledge of the Company and the Shareholders, is threatened against the Company
nor do the Company or the Shareholders know of any basis for any such
allegation, charge, or complaint. The Company has complied in all material
respects with all applicable laws relating to the employment of labor, including
but not limited to provisions thereof relating to wages, hours, vacation pay,
equal opportunity, collective bargaining and the payment, deduction and
remittance of all amounts required to be deducted and/or remitted in respect of
wages and salaries and of other Taxes (as defined in Section 10.10) and such
deductions are consistent with past practices and in accordance with GAAP
consistently applied and consistent with the Financial Statements and either
remitted same to the legally constituted authorities entitled to receive payment
thereof or has reserved for same in its accounts and an amount of cash equal to
the amount of such reserve has been set aside for payment thereof. The Company
is not liable

                                      -11-
<PAGE>

for any arrears of wages or any Taxes or penalties with respect to the
foregoing. The Company has not entered into and the Company is not obligated to
enter into any agreement relating to the payment of vacation pay to any
employee, and the Company has no obligation to any employees to provide them
with pay for vacation time other than as required by generally applicable
provisions of law or as otherwise set forth on SCHEDULE 3.19. Neither the
Company nor any Shareholder has received notice from any employee of the Company
that any such employee is terminating his or her employment with the Company,
except for Kaajal Narain and Abha Singhvi, who intend to terminate their
employment with the Company concurrently with the Closing, nor to the knowledge
of the Company and the Shareholders does any employee intend to terminate his or
her employment with the Company as a result of the transactions contemplated
hereby. There are no administrative charges or court complaints pending or, to
the knowledge of the Company and the Shareholders, threatened against the
Company concerning alleged employment discrimination or any other matters
relating to the employment of labor. No trade union, counsel of trade unions,
employee bargaining agency or affiliated bargaining agent (i) holds bargaining
rights with respect to any of the Company's employees by way of certification,
interim certification, voluntary recognition, designation or successor right,
(ii) has applied to be certified as the bargaining agent of the Company's
employees, or (iii) has applied to have the Company declared a related employer
pursuant to the provision of applicable law. To the knowledge of the Company and
the Shareholders, no claim, injunction, fact, event or condition exists which
would give rise to a material claim by any employee or former employee
(including dependents and spouses thereof and other individuals covered
thereunder) of the Company under any workers compensation laws, regulations,
requirements or programs or for other medical costs and expenses.

            3.20  CUSTOMERS. SCHEDULE 3.20 is a complete list by dollar volume
of billings for each month during the period January 1, 1999 through the last
day of the last full calendar month preceding the date hereof to the twenty (20)
largest customers of the Company. Except as set forth on SCHEDULE 3.20, none of
the customers for whom the Company provided services at any time since January
1, 1999, whether or not one of the Company's twenty (20) largest, has canceled
or otherwise terminated, or, to the knowledge of the Company and the
Shareholders, threatened to cancel or otherwise terminate, its relationship with
the Company or materially reduced, or to the knowledge of the Company and the
Shareholders, threatened to materially reduce, its business with the Company.
Except as set forth on SCHEDULE 3.20, none of the customers for whom the Company
provided services on a project-by-project basis at any time since January 1,
1999, whether or not one of the Company's twenty (20) largest, has canceled or
terminated, or, to the knowledge of the Company and the Shareholders, threatened
to cancel or terminate its relationship with the Company prior to the expiration
of the engagement relating to the particular project for which the Company was
retained, or, to the knowledge of the Company and the Shareholders, threatened
to cease utilizing the Company's services or to materially reduce the
project-by-project business generally provided by the Company. Neither the
Company nor any Shareholder has received any notice and have no knowledge or
reason to believe that any customer intends to cancel or otherwise modify its
relationship with the Company on account of the transactions contemplated hereby
or otherwise.

            3.21  INTEREST OF THE COMPANY IN CUSTOMERS, ETC. Except as set forth
in SCHEDULE 3.21, neither the Company, the Shareholders nor any of their
respective Affiliates has any direct or indirect interest in any competitor,
supplier or customer of the Company or in any person from whom or to whom the
Company leases any real or personal property or in any other

                                      -12-
<PAGE>

person with whom the Company has any business relationship. SCHEDULE 3.21 also
describes, (i) all management, administrative, computer, telephone or other
services provided by any of the Company's Affiliates, any Shareholder or any of
the Affiliates of any Shareholder to the Company and all such services provided
by the Company to any of such persons and entities, and (ii) all other material
contracts, agreements, arrangements or transactions (including the purchase and
sale of inventory, supplies and other goods) between the Company, on the one
hand, and any of such individuals or entities on the other hand, currently in
effect, including, without limitation any agreement or arrangement relating to
indebtedness to or from any of such individuals or entities, in each case
setting forth the terms thereof if not effected on an arm's length basis.

            3.22  BOOKS AND RECORDS. All the books, records and accounts of the
Company are in all material respects accurate and complete, accurately reflect
all matters normally entered into the books, records or accounts maintained by
similar businesses, are in all material respects in accordance with all laws,
regulations and rules applicable to the Company and accurately present and
reflect in all material respects all of the transactions described therein. The
Company has accounting controls sufficient to ensure that its transactions are
(i) in all material respects executed in accordance with its management's
general or specific authorization and (ii) recorded in conformity with GAAP.

            3.23  INSURANCE POLICIES. SCHEDULE 3.23 is a correct and complete
list and description, including policy numbers, of all insurance policies owned
or held by the Company or otherwise covering the Company, its employees or
assets. Such policies are in full force and effect, and the Company is not in
default under any of them. Such insurance is of the kind and in the amount not
less than customarily obtained by corporations or other entities of established
reputation engaged in the same or similar business and similarly situated. The
Company has not received any notice of non-renewal, cancellation or intent to
cancel, not renew or increase premiums or deductibles with respect to such
insurance policies nor, to the knowledge of the Company and the Shareholders, is
there any basis for any such action. SCHEDULE 3.23 also contains a list of all
pending claims with any insurance company (other than health, medical and dental
insurance claims of employees) and any instances within the previous three years
of a denial of coverage of the Company by any insurance company.

            3.24  BANK ACCOUNTS. SCHEDULE 3.24 is a complete and correct list of
each bank and brokerage firm in which the Company has an account or safe deposit
box, the number of each such account or box, the names of all persons authorized
to draw thereon or to have access thereto, the amount on deposit in each such
account and a description of the items in each such box as of a date not more
than seven days prior to the date hereof.

            3.25  TAXES. Except as set forth on SCHEDULE 3.25:

                  (a) All Tax Returns (as defined in Section 10.10) required to
be filed by or on behalf of the Company on or before the Closing Date have been
or will be properly prepared and timely filed with the appropriate taxing
authorities in all jurisdictions in which such Tax Returns are required to be
filed (after giving effect to any valid extensions of time in which to make such
filings) and all such Tax Returns were or will be true, complete and correct in
all material respects.

                                      -13-
<PAGE>

                  (b) All Taxes (whether or not shown on any Tax Returns)
payable by or on behalf of the Company on or before the Closing Date have been
or will be fully and timely paid. The cash reserves or accruals for Taxes
provided in the books and records of the Company with respect to any period for
which Tax Returns have not yet been filed or for which Taxes are not yet due and
owing are, or prior to the Closing Date (as defined in Section 7.2 hereof), will
be, sufficient for all unpaid Taxes of the Company through and including the
Closing Date (including, without limitation, with respect to any Taxes resulting
from the Transactions contemplated by this Agreement). The Company has no
liability for Taxes of any other person as a transferee, successor, by contract
or otherwise.

                  (c) The Company has not executed or filed with the Internal
Revenue Service or any other taxing authority any agreement, waiver or other
document or arrangement extending or having the effect of extending the period
for assessment or collection of Taxes (including, but not limited to, any
applicable statute of limitation), and no power of attorney with respect to any
Tax matter is currently in force.

                  (d) The Company has complied in all material respects with all
applicable laws, rules and regulations relating to the payment and withholding
of Taxes and has duly and timely withheld from employee salaries, wages and
other compensation and has paid over to the appropriate taxing authorities all
amounts required to be so withheld and paid over for all periods ending on or
prior to the Closing Date under all applicable laws.

                  (e) Buyer has received complete copies of (A) all U.S.
federal, state, local and foreign income or franchise Tax Returns of the Company
relating to the taxable periods beginning after 1996 and (B) any audit report
issued within the last three years relating to Taxes due from or with respect to
the Company and its income, assets or operations. All income and franchise Tax
Returns filed by or on behalf of the Company for the taxable years ended on the
respective dates set forth on the SCHEDULE 3.25 have been examined by the
relevant taxing authority or the statute of limitations with respect to such Tax
Returns has expired.

                  (f) SCHEDULE 3.25 lists all material types of Taxes paid and
material types of Tax Returns filed by or on behalf of the Company. No claim has
been made by a taxing authority in a jurisdiction where the Company or any of
its subsidiaries does not file Tax Returns such that it is or may be subject to
taxation by that jurisdiction.

                  (g) All deficiencies asserted or assessments made as a result
of any examinations by the Internal Revenue Service or any other taxing
authority of the Tax Returns of or covering or including the Company have been
fully paid, and, to the knowledge of the Shareholders, there are no other audits
or investigations by any taxing authority or proceedings in progress, nor have
the Shareholders or the Company received any notice from any taxing authority
that it intends to conduct such an audit or investigation. No issue has been
raised by a U.S. federal, state, local or foreign taxing authority in any
current or prior examination which, by application of the same or similar
principles, could reasonably be expected to result in a proposed material
deficiency for any subsequent taxable period.

                  (h) Neither the Company nor any other Person (as defined in
Section 10.10) on behalf of the Company or any of its subsidiaries has (A) filed
a consent pursuant to

                                      -14-
<PAGE>

Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply
to any disposition of a subsection (f) asset (as such term is defined in Section
341(f)(4) of the Code) owned by the Company, (B) agreed to or is required to
make any adjustments pursuant to Section 481(a) of the Code or any similar
provision of state, local or foreign law by reason of a change in accounting
method initiated by the Company or has any knowledge that the Internal Revenue
Service has proposed any such adjustment or change in accounting method, or has
any application pending with any taxing authority requesting permission for any
changes in accounting methods that relate to the business or operations of the
Company or has otherwise taken any action that would have the effect of
deferring any liability for Taxes from any taxable period ending on or before
the Closing to any taxable period ending thereafter, (C) executed or entered
into a closing agreement pursuant to Section 7121 of the Code or any predecessor
provision thereof or any similar provision of state, local or foreign law with
respect to the Company, or (D) requested any extension of time within which to
file any Tax Return, which Tax Return has since not been filed when due.

                  (i) No property owned by the Company is (i) property required
to be treated as being owned by another Person pursuant to the provisions of
Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect
immediately prior to the enactment of the Tax Reform Act of 1986, (ii)
constitutes "tax-exempt use property" within the meaning of Section 168(h)(1) of
the Code or (iii) is "tax-exempt bond financed property" within the meaning of
Section 168(g) of the Code.

                  (j) The Company is not a party to any tax sharing or similar
agreement or arrangement (whether or not written) pursuant to which it will have
any obligation to make any payments after the Closing.

                  (k) There is no contract, agreement, plan or arrangement
covering any person that, individually or collectively, could give rise to the
payment of any amount that would not be deductible by Buyer or any of its
Affiliates by reason of Section 280G of the Code, or would constitute
compensation in excess of the limitation set forth in Section 162(m) of the
Code.

                  (l) The Company is not the subject of any private letter
ruling of the Internal Revenue Service or comparable rulings of other taxing
authorities.

                  (m) There are no Liens as a result of any unpaid Taxes upon
any of the assets of the Company.

                  (n) All material Tax elections of the Company are clearly set
forth in the Tax Returns described in Section 3.25(e)(A). The Company has not
had elections in effect for U.S. federal income tax purposes under Sections 108,
168, 338, 441, 463, 472, 1017, 1033 or 4977 of the Code.

                  (o) The Company has never been a member of any Affiliated
Group of corporations for any Tax purposes. The Company does not own any
interest in any entity that is treated as a partnership for U.S. federal income
tax purposes or would be treated as a pass-through or transparent entity for any
tax purpose.

                                      -15-
<PAGE>

                  (p) The Company is not a United States Real Property Holding
Corporation ("USRPHC") within the meaning of Section 897 of the Code and neither
was a USRPHC on any "determination date" (as defined in Section 1.897-2(c) of
the Treasury regulations under the Code) that occurred in the five year period
preceding the Closing.

                  (q) The Company has properly and timely elected under Section
1362 of the Code, and under each analogous or similar provision of state or
local law in each jurisdiction where it is required to file a Tax Return to be
treated as an "S" corporation for all taxable periods since its incorporation.
There has been no voluntary or involuntary termination or revocation of any such
election. The Company is not subject to any entity-level income, franchise or
similar Taxes imposed by any taxing authority, except for the California
entity-level franchise tax.

            3.26  LITIGATION. Except as set forth in SCHEDULE 3.26, there is no
claim, counter-claim, action, suit, order, proceeding or investigation pending
or, to the knowledge of the Company and the Shareholder, threatened against or
involving the Company (or pending or, to the knowledge of the Company and the
Shareholders, threatened against any of the officers, directors or key employees
of the Company with respect to business activities on behalf of the Company)
with respect to or affecting the Company, its accounts, business, properties,
assets or rights, or relating to the transactions contemplated hereby, before
any court, agency, regulatory, administrative or other governmental body or
officer or before any arbitrator; nor, to the knowledge of the Company and the
Shareholders, is there any reasonable basis for any such claim, action, suit,
proceeding or governmental, administrative or regulatory investigation. The
Company is not directly subject to or affected by any order, judgment, decree or
ruling of any court or governmental agency. Neither the Company nor any
Shareholder has received any written opinion or memorandum of legal advice from
legal counsel to the effect that either of them is exposed to any liability
which may be material to the business, prospects, results of operations,
financial condition or assets of the Company. The Company is not engaged in any
legal action to recover monies due it or for damages sustained by it, and none
of the assets of the Company nor any of its business practices is in any manner,
directly or indirectly, affected by injunction of any court or governmental,
administrative or regulatory agency, body or officer.

            3.27  ENVIRONMENTAL AND SAFETY REQUIREMENTS. The Company is in
material compliance with all applicable Environmental and Safety Requirements
(as defined below), and the Company possesses all required permits, licenses and
certificates, and has filed all notices or applications, required thereby.
Neither the Company nor any Shareholder has received any notice or other
communication from any party with respect to the Company's failure to comply
with Environmental and Safety Requirements. For purposes of this Agreement,
"Environmental and Safety Requirements" means all federal, provincial, foreign
and local laws, bylaws, rules, regulations, ordinances, decrees, orders,
statutes, actions, guidelines, standards, arrangements, injunctions, policies
and requirements relating to public health and safety, worker health and safety,
pollution and protection of the environment (including without limitation the
handling of any polluted, toxic or hazardous materials), all as amended. The
Company has no, nor are its properties subject to any, nor are there any facts
or circumstances which the Company or any Shareholder reasonably believes could
form the basis for any, liability, contingent or otherwise arising out of any
Environmental and Safety Requirements. The Company does not have in its
possession or under its control any hazardous substances, except those Hazardous
Substances as

                                      -16-
<PAGE>

are used in the ordinary course of the business of the Company and are used or
maintained in compliance with the Environmental and Safety Requirements.

            3.28  CONDUCT OF THE BUSINESS. Except as set forth on SCHEDULE 3.28,
since January 1, 1998, the Company has conducted its business only in the
ordinary course of business consistent with past custom and practice, and has
incurred no liabilities or obligations whatsoever other than in the ordinary
course of business consistent with past custom and practice and there has been
no material adverse change in the assets, condition (financial or otherwise),
results of operations, employee or customer relations or business activities of
the Company, nor does the Company or any Shareholder know of any such change
which is threatened, nor has there been any damage, destruction or loss
materially adversely affecting any of the assets, or the business condition
(financial or otherwise), results of operations, prospects or activities of the
Company, whether or not covered by insurance. Without limitation of the
foregoing and except as set forth on SCHEDULE 3.28, since January 1, 1998, the
Company has not:

                  (a) voluntarily or involuntarily sold, transferred, abandoned,
surrendered, subjected to a Lien or otherwise disposed of any assets or property
rights except in the ordinary course of business consistent with past custom and
practice;

                  (b) changed any accounting principles, methods or practices
utilized by it or changed any of its depreciation rates or amortization policies
or rates;

                  (c) made any loan or advance to any party in excess of $5,000;

                  (d) issued, redeemed or purchased any stock, bond or corporate
security or declared or made any payment or distribution on or with respect to
its capital stock (except for cash distributions made to the Shareholders prior
to Closing as set forth on SCHEDULE 5.3);

                  (e) incurred debt, liabilities, or obligations of any nature
whether accrued, absolute, contingent, direct, indirect, perfected or otherwise
and whether due or to become due except (i) current liabilities incurred and
liabilities under contracts entered into in the ordinary course of business
consistent with past custom and practice and (ii) bonus obligations to a
Shareholder incurred in the ordinary course of business consistent with past
custom and practice;

                  (f) increased the compensation payable to any of its officers,
employees or agents, except for increases of more than 5% as set forth on
SCHEDULE 3.28(f);

                  (g) paid any amounts to or for the benefit of the Shareholder,
or any officer, employee, consultant, contractor or agent other than salaries at
the rates set forth on SCHEDULE 3.18;

                  (h) waived any rights of substantial value;

                  (i) transferred or disposed of any cash or cash equivalents
outside of the ordinary course of business, consistent with past custom and
practice;

                                      -17-
<PAGE>

                  (j) entered into any other material transaction, except for
such transactions set forth on SCHEDULE 3.28(j); or

                  (k) committed to any of the foregoing.

            3.29  POWER OF ATTORNEY. Neither the Company nor any Shareholder has
given to any person or entity for any purpose any power of attorney which is
currently in effect.

            3.30  BROKERS. Except for the fee payable to Roth Capital Partners,
Inc. set forth on SCHEDULE 3.30, neither the Company nor any Shareholder has (i)
incurred any obligation or liability, contingent or otherwise, for brokers' or
finders' fees or commissions in connection with the transactions contemplated by
this Agreement or the Transaction Documents or (ii) made any statement or
representation or entered into any discussion which could give rise to any such
obligation or liability.

            3.31  OWNERSHIP OF BUYER COMMON STOCK. Neither the Company nor any
Shareholder, nor, to the best knowledge of the Company and the Shareholders, any
of the employees of the Company, own any shares of TMP Common Stock.

            3.32  NO ILLEGAL OR IMPROPER TRANSACTIONS. None of the Company, any
Shareholder or any of the Company's directors, officers or employees has,
directly or indirectly used funds or other assets of the Company, or made any
promise or undertaking in such regard, for (a) illegal contributions, gifts,
entertainment or other expenses relating to political activity; (b) illegal
payments to or for the benefit of governmental officials or employees, whether
domestic or foreign; (c) illegal payments to or for the benefit of any person,
firm, corporation or other entity, or any director, officer, employee, agent or
representative thereof; or (d) the establishment or maintenance of a secret or
unrecorded fund; and there have been no false or fictitious entries made in the
books or records of the Company.

            3.33  SECURITIES MATTERS.

                  (a) Each Shareholder has such knowledge and experience in
financial and business matters and such experience in evaluating and investing
in companies such as the Buyer as to be capable of evaluating the merits and
risks of an investment in the TMP Shares. Each Shareholder has the financial
ability to bear the economic risk of such Shareholder's investment in the TMP
Shares being acquired by such Shareholder hereunder, has adequate means for
providing for her current needs and contingencies and has no need for liquidity
with respect to her investment in Buyer.

                  (b) Each Shareholder is acquiring the TMP Shares for
investment for his/her own account, for investment purposes only, and not with
the view to, or for resale in connection with, any distribution thereof. Each
Shareholder understands that the TMP Shares have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or under the
securities laws of various states, by reason of a specified exemption from the
registration provisions thereunder which depends upon, among other things, the
bona fide nature of the Shareholder's investment intent as expressed herein.

                  (c) Each Shareholder acknowledges that the TMP Shares must be
held indefinitely unless they are subsequently registered under the Securities
Act and under

                                      -18-
<PAGE>

applicable state securities laws or an exemption from such registration is
available. Each Shareholder has been advised or is aware of the provisions of
Rule 144 promulgated under the Securities Act which permits limited resale of
the securities purchased in a private placement subject to the satisfaction of
certain conditions including, among other things, the availability of certain
current public information about Buyer and compliance with applicable
requirements regarding the holding period and the amount of securities to be
sold and the manner of sale.

                  (d) Each Shareholder has relied upon independent
investigations made by such Shareholder or her representatives and is fully
familiar with the business, results of operations, financial condition,
prospects and other affairs of Buyer and realizes the TMP Shares are a
speculative investment involving a high degree of risk for which there is no
assurance of any return. Each Shareholder has, among other things, received and
carefully reviewed (i) TMP's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999, and all amendments thereto, (ii) TMP's Quarterly
Reports on Form 10-Q for the quarter ended March 31, 2000 and June 30, 2000, and
all amendments thereto, (iii) TMP's Proxy Statement filed April 20, 2000, (iv)
TMP's Current Reports on Form 8-K dated January 4, 2000, January 11, 2000, June
30, 2000, July 12, 2000 and August 2, 2000, and all amendments thereto (the
items referred to in (i) through (iv) are collectively referred to herein as the
"Exchange Act Filings") and (v) all other information filed by TMP pursuant to
the Securities Act or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Each Shareholder acknowledges that in connection with the
transactions contemplated hereby, neither Buyer nor anyone acting on its behalf
or any other person has made, and such Shareholder is not relying upon, any
representations, statements or projections concerning Buyer, its present or
projected results of operations, financial condition, prospects, present or
future plans, acquisition plans, products and services, or the value of the TMP
Shares or TMP's business or any other matter in relation to TMP's business or
affairs. Each Shareholder has had an opportunity to discuss TMP's business,
management, financial affairs and acquisition plans with its management, to
review TMP's facilities, and to obtain such additional information concerning
such Shareholder's investment in the TMP Shares in order for such Shareholder to
evaluate its merits and risks, and such Shareholder has determined that the TMP
Shares are a suitable investment for such Shareholder and that at this time such
Shareholder could bear a complete loss of such Shareholder's investment.

                  (e) Each Shareholder is aware that no federal or state or
other agency has passed upon or made any finding or determination concerning the
fairness of the transactions contemplated by this Agreement and the Transaction
Documents or the adequacy of the disclosure of the exhibits and schedules hereto
or thereto and such Shareholder must forego the security, if any, that such a
review would provide.

                  (f) Each Shareholder understands and acknowledges that neither
the Internal Revenue Service nor any other tax authority has been asked to rule
on the tax consequences of the transactions contemplated hereby or by the
Transaction Documents and, accordingly, in making such Shareholder's decision to
acquire the TMP Shares such Shareholder has relied upon the investigations of
such Shareholder's own tax and business advisers in addition to such
Shareholder's own independent investigations, and that such Shareholder and such
Shareholder's advisers have fully considered all the tax consequences of such
Shareholder's acquisition of the TMP Shares.

                                      -19-
<PAGE>

                  (g) Each Shareholder is an "Accredited Investor" as that term
is defined in Rule 501(a) of Regulation D under the Securities Act by reason of
being a natural person who had an individual income in excess of $200,000 in
cash of the two most recent years and has a reasonable expectation of reaching
the same income level in the current year. Each Shareholder understands that all
certificates for the TMP Shares issued to such Shareholder shall bear a legend
in substantially the following form:

            "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
            SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED
            UNDER ANY STATE SECURITIES LAWS. THE SECURITIES MAY
            NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE
            DISPOSED OF WITHOUT SUCH REGISTRATION OR THE DELIVERY
            TO THE ISSUER OF AN OPINION OF COUNSEL, SATISFACTORY
            TO THE ISSUER, THAT SUCH DISPOSITION WILL NOT REQUIRE
            REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES
            ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
            LAWS."

            3.34  ACCOUNTING MATTERS. Neither the Company nor any Shareholder,
nor, to the knowledge of the Company and the Shareholders, any of the Company's
directors or officers, has taken any action or is aware of any facts or
circumstances in respect of the Company or its accounting procedures which would
have the effect of precluding accounting for the transactions contemplated by
this Agreement and the Transaction Documents as a "pooling of interests." Except
as set forth on SCHEDULE 3.34, since January 1, 1998, the Company has not
issued, redeemed or purchased any Company Shares, bond or corporate security or
otherwise altered its equity interests. No Shareholder has (i) since January 1,
1998 sold, transferred or assigned any securities of the Company or (ii) at any
time in any way reduced its risk or committed to reduce its risk with respect to
the Company Shares owned by such Shareholder or the TMP Shares to be acquired by
such Shareholder hereunder, whether by entering into a put, collar, option,
margin or other arrangement. Without in any way limiting the other provisions of
this Section, the Company is autonomous and is not currently, and has not been
since January 1, 1998, a division or subsidiary of another enterprise. The
Company is independent of Buyer and, except as disclosed on SCHEDULE 3.34,
between January 1, 1998 and the Closing Date, neither the Company nor any
Shareholder owned any shares of TMP Common Stock. Except as disclosed on
SCHEDULE 3.34, since January 1, 1998: the Company has not: (a) in any way
changed the equity interests of its securities or (b) disposed of significant
assets, and any changes in equity interests, acquisitions of treasury securities
or disposal of assets disclosed on SCHEDULE 3.34 were not in contemplation of
the transactions contemplated by this Agreement. Any transactions or
acquisitions of shares disclosed on SCHEDULE 3.34 were not in contemplation of
the transactions contemplated by this Agreement.

            3.35  NO MISREPRESENTATION. None of the representations and
warranties of the Company and the Shareholders set forth in this Agreement or
any of the Transaction Documents contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading in light of the circumstances in
which they were made. To the knowledge of the Company and the Shareholders,
there is no

                                      -20-
<PAGE>

material fact or information which has not been disclosed to Buyer in writing
which materially adversely affects or could reasonably be anticipated to
materially adversely affect the business, condition (financial or otherwise),
property or assets of the Company or the ability of the Company and the
Shareholders to consummate the transactions contemplated hereby.

                                   ARTICLE IV
                     REPRESENTATIONS AND WARRANTIES OF BUYER

            As an inducement to the Company and the Shareholders to enter into
and perform their respective obligations under this Agreement, Buyer hereby
represents and warrants to the Company and the Shareholders as follows:

            4.1   ORGANIZATION AND GOOD STANDING; POWER. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has full power and authority to conduct its business as it
is now being conducted and to own, operate or lease the properties and assets it
currently owns, operates or holds under lease. The Buyer is duly licensed and
qualified to do business and is in good standing as a foreign corporation in
each other jurisdiction, which are all jurisdictions where the character of its
business or the nature of its properties or assets makes such qualification or
licensing necessary, except for those jurisdictions where the failure to be so
qualified, licensed or in good standing would not individually or in the
aggregate have a material adverse effect on the business, results of operations,
financial condition or assets of the Buyer.

            4.2   AUTHORIZATION. The Buyer has full power and authority to
execute and deliver this Agreement and any agreement, document, certificate or
instrument being delivered pursuant to or in connection with the transactions
contemplated by this Agreement, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Transaction Documents, and
the performance by the Buyer of its obligations hereunder and thereunder, and
the consummation of the transactions contemplated hereunder and thereunder, have
been duly authorized by the Buyer. This Agreement and the Transaction Documents
have been duly executed and delivered by the Buyer and constitute the legal,
valid and binding obligations of the Buyer, enforceable against the Buyer in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, or similar laws affecting creditors'
rights generally or by general principles of equity.

            4.3   NO VIOLATION. The execution, delivery and performance by Buyer
of this Agreement and the Transaction Documents and the consummation of the
transactions contemplated herein and therein do not and will not:

                  (a) conflict with, result in the breach, modification,
termination or violation of, or loss of any benefit under, constitute a default
under, accelerate the performance required by, result in or give rise to a right
to amend or modify the terms of, result in the creation of any Lien upon any
assets or properties, or in any manner release any party thereto from any
obligation under, any mortgage, note, bond, indenture, contract, agreement,
lease, license or other instrument or obligation of any kind or nature by which
Buyer or any of its properties or assets may be bound or affected;

                                      -21-
<PAGE>

                  (b) conflict with, violate or result in any loss of benefit
under, any permit, concession, franchise, order, judgment, writ, injunction,
regulation, statute or decree; or

                  (c) conflict with or violate any provision of the Certificate
of Incorporation or Bylaws, each as heretofore amended, of Buyer.

            4.4   NO CONSENT REQUIRED. No consent, approval, order or
authorization of, or declaration, filing or registration with, any person,
entity or governmental authority is required to be made or obtained by Buyer in
connection with the authorization, execution, delivery or performance of this
Agreement, the Transaction Documents or the transactions contemplated hereby.

            4.5   BUYER FILINGS. None of the Exchange Act Filings, as of their
respective filing dates, contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading. Except as disclosed to the Shareholders in writing, in materials
filed by Buyer pursuant to the Securities Act or the Exchange Act, or set forth
in press releases that have been made public by Buyer (including but not limited
to those from time to time posted at or available through Nasdaq's website at
HTTP://WWW.NASDAQ.COM), there has been no material adverse change in the
financial condition of Buyer since March 31, 2000.

            4.6   ISSUANCE. The TMP Shares to be delivered by Buyer hereunder
have been duly authorized and, when issued and delivered in accordance with the
terms of this agreement, will be validly issued, fully paid and non-assessable
and will not be issued in violation of any preemptive rights, rights of first
refusal or similar rights.

                                   ARTICLE V
                      PRE-CLOSING COVENANTS AND OTHER TERMS

            5.1   PUBLIC ANNOUNCEMENTS. Prior to the Closing, no party will
issue or cause the publication of any press release or other public announcement
with respect to this Agreement or the Transaction Documents or the transactions
contemplated hereby or thereby without the prior consent of Buyer (in the case
of the Company and the Shareholders) or the Company (in the case of Buyer),
provided, however, that (i) nothing herein will prohibit any party from issuing
or causing publication of any such press release or public announcement to the
extent that such party determines such action to be required by law, or the
regulations of any government agency or the Nasdaq National Market in which case
the party making such determination will, if practicable in the circumstances,
use reasonable efforts to allow the other parties reasonable time to comment on
such release or announcement in advance of its issuance; (ii) the Company and
the Shareholders may disclose this Agreement and the Transaction Documents and
the transactions contemplated hereby or thereby to third parties in connection
with securing consents of such third parties and in connection with any permits,
approvals, filings or consents required by law to be obtained; and (iii) Buyer
may disclose this Agreement and the Transaction Documents and the transactions
contemplated hereby or thereby to third parties in connection with securing
consents of third parties and in connection with any permits, approvals, filings
or consents required by law to be obtained. To the extent feasible, prior to the

                                      -22-
<PAGE>

Closing, all press releases or other announcements or notices regarding the
transactions contemplated by this Agreement or the Transaction Documents shall
be made jointly by the parties.

            5.2   INVESTIGATION BY BUYER. Prior to the Closing, the Shareholders
and the Company will afford to the officers, attorneys, accountants or other
authorized representatives of Buyer reasonable access during normal business
hours to, and otherwise make available to Buyer, the offices, facilities,
properties, files, documents, contracts, insurance policies, books and records
of the Company so as to afford Buyer the opportunity to make such review,
examination and investigation of the Company as Buyer may request and the
Shareholders and the Company will cooperate with Buyer in connection with any
permits, approvals, filings or consents required by law to be obtained. Buyer
will be permitted to make extracts from or to make copies of such books and
records as may be reasonably necessary. No investigation, review, study or
examination by Buyer or its representatives shall offset, limit or diminish the
scope of the representations and warranties of the Company and the Shareholders
in this Agreement or reduce or limit the liability of the Company and the
Shareholders for any breach thereof.

            5.3   CONDUCT OF BUSINESS. From the date hereof through the Closing,
except as otherwise expressly provided for in this Agreement, the Company
covenants and agrees that it will, and the Shareholders agree to cause the
Company to, carry on the Company's business diligently, in the ordinary course
and in substantially the same manner as such business has previously been
carried out. Without limiting the foregoing or the other provisions of this
Agreement, the Company and the Shareholders, jointly and severally, covenant and
agree that:

                  (a) Except as otherwise expressly permitted in this Agreement,
the Company will not (i) increase in any manner the base compensation of, or
enter into any new bonus or incentive agreement or arrangement with, any of the
Company's employees, consultants or contractors, (ii) pay or agree to pay any
additional pension, retirement allowance or other employee benefit to any such
employee, consultant or contractor whether past or present, (iii) enter into any
new employment, severance, consulting, or other compensation agreement with any
existing employee, consultant or contractor, (iv) hire or offer to hire any new
employees, consultants or contractors, (v) pay any amount to or for the benefit
of any Shareholder or any officer, employee, consultant, contractor or agent
other than salaries at the rates set forth on SCHEDULE 3.18, except for (1)
payments made in the ordinary course of business consistent with past custom or
practice and (2) Shareholder distributions, as set forth on SCHEDULE 5.3, or
(vi) amend any existing or enter into any new Employee Benefit Plan.

                  (b) The Company will use its best efforts to keep available
the services of its present employees, consultants and contractors and preserve
the goodwill, reputation and present relationships of the Company with its
suppliers, customers, licensors and others having business relations with the
Company.

                  (c) The Company shall not create any obligation or liability
(absolute or contingent) in excess of $1,000, except for current liabilities
incurred in the ordinary course of business consistent with past custom and
practice, obligations under contracts entered into in the ordinary course of
business consistent with past custom and practice and expenses incurred in
connection with this Agreement (including, without limitation, reasonable
attorneys fees,

                                      -23-
<PAGE>

accounting fees and fees payable to Roth Capital Partners, Inc.); provided,
however, such expenses incurred in connection with this Agreement must be paid
by the Company prior to the Closing in accordance with SECTION 10.6 hereof.

                  (d) The Company will (i) maintain its property and assets in
good repair, order and condition (ordinary wear and tear excepted), (ii)
maintain and keep in full force existing insurance, (iii) maintain the books and
records in the usual, regular and ordinary manner on a basis consistent with
past practices, and (iv) perform and comply with its contractual obligations,
including without limitation obligations under Material Contracts and Permits.
The Company shall not mortgage, hypothecate, grant Liens in or otherwise
encumber its interest in the Leased Property, or sublease its interest in the
Leased Property or amend any lease to which it is a party or by which it is
bound.

                  (e) The Company shall not amend its Certificate of
Incorporation or Bylaws.

                  (f) Except in the ordinary course of business consistent with
past custom and practice or as otherwise expressly provided for in this
Agreement, the Company shall not: (i) sell, lease, transfer or otherwise dispose
of any of its properties or assets, including without limitation cash and cash
equivalents, (ii) create or permit to exist any new Lien on any of its
properties or assets, (iii) enter into any joint venture, partnership or other
similar arrangement, (iv) accelerate or delay any service to be rendered to a
customer of the Company in a manner inconsistent with past practices, (v) make
any new commitments for capital expenditures, or (vi) enter into any commitment
to borrow money.

                  (g) The Company shall duly and timely file all Tax Returns and
information returns and pay all Taxes when due.

                  (h) The Company shall not undertake any action or fail to take
any action that will result in a breach of the representations and warranties
set forth in ARTICLE III hereof as if made on and as of the Closing Date.

                  (i) The Company will not declare or pay any dividend or make
any other distribution to any shareholder with respect to the capital stock of
the Company, will not purchase or redeem any of its shares of capital stock,
will not issue rights or options to purchase or subscribe to any shares of its
capital stock, issue or sell any shares of its capital stock or alter its equity
interests.

                  (j) The Company will not grant any power of attorney.

                  (k) The Company and the Shareholders will promptly supply to
Buyer copies of all litigation or legal proceedings pertaining in any way to the
Company or the assets or business which may arise after the date hereof and will
advise the Buyer promptly in writing of any threat of litigation or other legal
proceedings pertaining thereto.

            5.4   NON-NEGOTIATION. In consideration of the substantial
expenditure of time, effort and expense undertaken by Buyer in connection with
its due diligence review and the preparation and execution of this Agreement and
the Transaction Documents, the Company and

                                      -24-
<PAGE>

the Shareholders jointly and severally agree that none of the Company, the
Shareholders or any of their respective representatives, agents or employees
will, after the execution of this Agreement until the earlier of (i) the
termination of this Agreement, or (ii) the Closing, directly or indirectly,
solicit, encourage, initiate, negotiate or discuss with any third party
(including by way of furnishing any information concerning the Company) or
permit the consummation of any acquisition proposal relating to or affecting the
Company or any part of the Company, or any direct or indirect interests in the
Company, whether by purchase of assets or stock, purchase of interests, business
combination, merger or other transaction, and that the Company and the
Shareholders will promptly advise Buyer of the terms of any communications the
Company or any Shareholder may receive or become aware of relating to any bid
for all or any part of any such interest in the Company.

            5.5   BEST EFFORTS. The Company and the Shareholders will each use
their best efforts between the date hereof and the Closing to secure fulfillment
of all of the conditions precedent to Buyer's obligations hereunder, and Buyer
will use its best efforts between the date hereof and the Closing to secure
fulfillment of all of the conditions precedent to the obligations of the Company
and the Shareholders hereunder.

            5.6   SHAREHOLDER. The Shareholders will cause the Company to comply
with the provisions of this ARTICLE V. The Shareholders further agree not to
grant any power of attorney with respect to the Company Shares, the Company, or
the Company's business or assets. No Shareholder will sell any Company Shares
(except to Buyer pursuant to this Agreement) or in any way reduce prior to the
Closing his risk or commit to reduce his risk with respect to Company Shares
owned by such Shareholder or the TMP Shares to be acquired by such Shareholder
hereunder, whether by entering into a put, collar, option, margin or other
arrangement.

            5.7   CLOSING DATE FINANCIALS. SCHEDULE 3.8 shall be deemed amended
to include the Closing Date Financials upon receipt thereof by the Buyer from
the Company.

                                   ARTICLE VI
                       CONDITIONS PRECEDENT TO THE CLOSING

            6.1   CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. The obligations
of Buyer under this Agreement to consummate the transactions contemplated hereby
will be subject to the satisfaction, at or prior to the Closing, of all of the
following conditions, any one or more of which may be waived at the option of
Buyer:

                  (a) NO BREACH OF COVENANTS; TRUE AND CORRECT REPRESENTATIONS
AND WARRANTIES. There shall have been no material breach by the Company or any
Shareholder in the performance of any of their respective covenants herein to be
performed by any or all of them in whole or in part prior to the Closing, and
the representations and warranties of the Company and the Shareholders contained
in this Agreement, if specifically qualified by materiality, shall be true and
correct as of the Closing and, if not so qualified, shall be true and correct in
all material respects as of the Closing, except for representations or
warranties that are made by their terms as of a date specified by month, day and
year, which shall be true and correct or true and correct in all material
respects, as applicable, as of such specified date.

                                      -25-
<PAGE>

Buyer shall receive at the Closing a certificate dated and validly executed on
behalf of the Company and the Shareholders certifying, in such detail as Buyer
may reasonably require, the fulfillment of the foregoing conditions, and
restating and reconfirming as of the Closing all of the covenants,
representations and warranties of the Company and the Shareholders contained in
this Agreement, specifying in detail the extent of any breaches thereof.

                  (b) DELIVERY OF DOCUMENTS. Buyer shall have received all
documents and other items to be delivered under Section 7.2.

                  (c) NO LEGAL OBSTRUCTION. No suit, action or proceeding not
disclosed in the Schedules to this Agreement by any person, entity or
governmental agency shall be pending or threatened in writing, which if
determined adverse to the Company, any Shareholder or Buyer's interests, could
reasonably be expected to have a material adverse effect upon (i) the
properties, assets, condition (financial or otherwise), operating results,
employee, customer or supplier relations, business activities or business
prospects of the Company, (ii) Buyer or its Affiliates, or (iii) the benefits to
Buyer or its Affiliates of the transactions contemplated hereby. No injunction,
restraining order or order of any nature shall have been issued by or be pending
before any court of competent jurisdiction or any governmental agency
challenging the validity or legality of the transactions contemplated hereby or
restraining or prohibiting the consummation of such transactions or compelling
Buyer to dispose of or discontinue or materially restrict the operations of a
significant portion of the Company. All material permits, approvals, filings and
consents required or advisable to be obtained or made, and all waiting periods
required or contemplated to expire, prior to the consummation of the
transactions contemplated hereby under applicable federal laws of the United
States or applicable laws of any state or foreign country having jurisdiction
over the transactions contemplated hereby shall have been obtained, made or
expired, as the case may be (all such permits, approvals, filings and consents
and the lapse of all such waiting periods being referred to as the "Requisite
Regulatory Approvals"), and all such Requisite Regulatory Approvals shall be in
full force and effect.

                  (d) DAMAGE OR DESTRUCTION. From the date hereof until the
Closing, there shall have been no material loss or destruction of any portion of
the properties or assets of the Company, nor any institution or threat of any
condemnation or other proceedings to acquire or limit the use of any of the
properties or assets of the Company.

                  (e) NO MATERIAL ADVERSE CHANGE. From the date hereof until the
Closing, there shall have been no material adverse change in the properties,
assets, condition (financial or otherwise), operating results, employee,
customer or supplier relations, business activities or business prospects of the
Company and the Company shall not have lost any material customer (or, in the
aggregate, any material portion of the Company's business).

                  (f) APPROVAL BY BUYER'S COUNSEL AND ACCOUNTANTS. All actions,
proceedings, instruments and documents reasonably required to carry out this
Agreement and all other related legal and accounting matters shall have been
reasonably approved as to form and substance by counsel and accountants for
Buyer.

                  (g) POOLING OF INTERESTS. Buyer shall be satisfied that the
transactions contemplated hereby may be accounted for as a pooling of interests.

                                      -26-
<PAGE>

                  (h) SHAREHOLDER LOANS. Any and all loans from the Company to
any Shareholder or any Affiliate of the Company shall have been repaid to the
Company in full, and documentation evidencing such repayment, in form and
substance satisfactory to Buyer, shall have been delivered to Buyer.

                  (i) LEASE(S). The leases entered into by the Company for the
premises located at 1050 Chestnut Street Menlo Park, California, Suites 201 and
202, shall have been amended, if necessary, to the satisfaction of the Buyer in
connection with the assumption of such leases by the Buyer.

            6.2   CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND THE
SHAREHOLDERS. The obligations of the Company and the Shareholders under this
Agreement to consummate the transactions contemplated hereby will be subject to
the satisfaction, at or prior to the Closing, of all the following conditions,
any one or more of which may be waived at the option of the Company and the
Shareholders:

                  (a) NO BREACH OF COVENANTS; TRUE AND CORRECT REPRESENTATIONS
AND WARRANTIES. There shall have been no material breach by Buyer in the
performance of any of the covenants herein to be performed by it in whole or in
part prior to the Closing, and the representations and warranties of Buyer
contained in this Agreement, if specifically qualified by materiality, shall be
true and correct as of the Closing and, if not so qualified, shall be true and
correct in all material respects as of the Closing, except for representations
or warranties that are made by their terms as of a date specified by month, day
and year, which shall be true and correct or true and correct in all material
respects, as applicable, as of such specified date. The Company and the
Shareholders shall receive at the Closing a certificate dated as of the Closing
and executed on behalf of Buyer, certifying in such detail as the Company and
the Shareholders may reasonably require, the fulfillment of the foregoing
conditions, and restating and reconfirming as of the Closing all of the
covenants, representations and warranties of Buyer contained in this Agreement,
specifying in detail the extent of any breaches thereof.

                  (b) DELIVERY OF DOCUMENTS. The Company and the Shareholders
shall have received all documents and other items to be delivered by Buyer under
Section 7.3.

                  (c) NO LEGAL OBSTRUCTION. No suit, action or proceeding not
disclosed in this Agreement by any person, entity or governmental agency shall
be pending or threatened in writing, which if determined adverse to the Buyer,
could reasonably be expected to have a material adverse effect upon (i) the
Buyer or (ii) the benefits to the Company or the Shareholders of the
transactions contemplated hereby. No injunction, restraining order or order of
any nature shall have been issued by or be pending before any court of competent
jurisdiction or any governmental agency challenging the validity or legality of
the transactions contemplated hereby or restraining or prohibiting the
consummation of such transactions or compelling the disposition of or
discontinue or materially restrict the operations of a significant portion of
the Buyer. All material permits, approvals, filings and consents required or
advisable to be obtained or made, and all waiting periods required or
contemplated to expire, prior to the consummation of the transactions
contemplated hereby under applicable federal laws of the United States or
applicable laws of any state or foreign country having jurisdiction over the
transactions contemplated hereby shall have been obtained, made or expired, as
the case may be, and all such Requisite Regulatory Approvals shall be in full
force and effect.

                                      -27-
<PAGE>

                  (d) APPROVAL BY COUNSEL AND ACCOUNTANTS. All actions,
proceedings, instruments and documents reasonably required to carry out this
Agreement and all other related legal and accounting matters shall have been
reasonably approved as to form and substance by counsel and accountants for the
Company and the Shareholders.

                  (e) NO MATERIAL ADVERSE CHANGE. From the date hereof until the
Closing, there shall have been no material adverse change in the properties,
assets, condition (financial or otherwise), operating results, employee,
customer or supplier relations, business activities or business prospects of
Buyer.

                                  ARTICLE VII
                                     CLOSING

            7.1   CLOSING. The consummation of the transactions that are the
subject of this Agreement are being closed (the "Closing") at the office of
Buyer, 622 3rd Avenue, 39th Floor, New York, NY 10017 no later than the third
business day after the satisfaction or waiver of the conditions to the parties'
obligations set forth in ARTICLE VI hereof (other than the delivery of
certificates and opinions contemplated to be delivered at the Closing, which
shall be delivered at the Closing) or at such other time or place as the parties
may mutually agree (the "Closing Date"). In the event that the transactions
contemplated hereby have not closed on or before September 30, 2000, and (i) on
such date the Company and the Shareholders on the one hand or Buyer on the other
is ready, willing and able to satisfy the conditions precedent to Closing of the
other party or parties (the "Ready Party"), and the other party or parties is or
are not so ready, willing and able, or (ii) the conditions to a party's
obligations set forth in ARTICLE VI hereof are not satisfied (except as a result
of a material default or breach of this Agreement by such party) (the "Specified
Party"), then the Ready Party or Specified Party may, in addition to any other
remedies it may have, terminate this Agreement upon written notice to the others
without liability to such other parties.

            7.2   DELIVERIES BY THE COMPANY AND THE SHAREHOLDER. At the Closing,
the Company and the Shareholders shall deliver or cause to be delivered to
Buyer:

                  (a) STOCK CERTIFICATES AND INSTRUMENTS OF CONVEYANCE.
Certificates for all of the Company Shares, accompanied by stock powers duly
executed in blank, with all necessary stock transfer and other documentary
stamps attached;

                  (b) CONSENTS. Copies of all written consents required to be
obtained by the Company or any Shareholder in connection with the transactions
contemplated by this Agreement and the Transaction Documents, if any, in form
and substance reasonably satisfactory to Buyer;

                  (c) OPINION OF COUNSEL. An opinion of counsel for the Company
and the Shareholders, dated as of the Closing Date, in form and substance
reasonably satisfactory to Buyer;

                                      -28-
<PAGE>

                  (d) CORPORATE DOCUMENTS. The Certificate of Incorporation of
the Company, as heretofore amended, certified by an appropriate official of its
jurisdiction of incorporation as being in effect as of a recent date, and the
Company's Certificate of Incorporation and Bylaws certified by an appropriate
officer of the Company as in effect at the Closing;

                  (e) CERTIFICATES OF GOOD STANDING AND TAX CLEARANCE.
Certificates of good standing and tax clearance, dated as of a recent date,
issued by an appropriate official of each of the state of California and of each
other jurisdiction in which the Company is qualified to do business;

                  (f) RESOLUTIONS. A copy of the resolutions of the Board of
Directors of the Company and of the Shareholders certified by the secretary of
the Company as having been duly and validly adopted and in full force and effect
as of the Closing Date authorizing execution and delivery of this Agreement and
the Transaction Documents and performance, and the appointment and elections of
officers and directors of the Company nominated by Buyer, and consummation of
the transactions contemplated hereby and thereby by the Company;

                  (g) RESIGNATIONS. Resignations of all of the directors and
officers of the Company, effective as of the Closing;

                  (h) LIEN SEARCHES. Such lien searches and such other
instruments showing that there were no financing statements, judgments, taxes or
other Liens outstanding against the Company or any of its assets or properties
as of the Closing Date or a date that is not more than ten days prior to the
Closing Date;

                  (i) TERMINATION OF SHAREHOLDERS' AGREEMENT. The Buyer shall
have received the unanimous written consent of each of the parties to the
Shareholders' Agreement dated March 19, 1998, as amended, terminating such
Agreement pursuant to Section 6.1(a) thereto effective as of the date
immediately prior to the Closing Date; and

                  (j) OTHER DOCUMENTS. Such other documents and instruments as
Buyer or its counsel or accountants reasonably shall deem necessary to
consummate the transactions contemplated hereby.

                  All documents delivered to Buyer shall be in form and
substance reasonably satisfactory to counsel and accountants for Buyer.

            7.3   DELIVERIES BY BUYER. At the Closing, Buyer will deliver to the
Company and/or the Shareholders, simultaneously with delivery of the items
referred to in Section 7.2 above:

                  (a) TMP SHARES. Certificates representing the TMP Shares being
issued to the Shareholders (or the permitted designees set forth on SCHEDULE
2.1), issued in the name of the Shareholders, pro-rata in accordance with the
percentages set forth on SCHEDULE A or a letter to Bank of New York, as transfer
agent and registrar to Buyer, authorizing such issuance; and

                                      -29-
<PAGE>

                  (b)   OTHER DOCUMENTS. Such other documents and instruments as
the Company, the Shareholders or their counsel or accountants reasonably shall
deem necessary to consummate the transactions contemplated hereby.

                        All documents delivered to the Company and/or the
Shareholders shall be in form and substance reasonably satisfactory to counsel
for the Company and the Shareholder.

                                  ARTICLE VIII
                                OTHER AGREEMENTS

            8.1   NONCOMPETITION; NONSOLICITATION AND CONFIDENTIALITY.

                  (a) NONCOMPETITION. Each Shareholder acknowledges that it has
extensive knowledge and a unique understanding of the business of the Company,
has been directly involved with the establishment and continued development of
the Company's customer relations and has had access to all of the proprietary
and confidential information used in the business of the Company. Each
Shareholder further acknowledges that if she or any of her Affiliates were to
compete with the Company or Buyer in such business following the Closing, great
harm would come to Buyer thereby destroying any value associated with the
purchase of the Company and the goodwill of the Company. In furtherance of the
sale of the Company Shares to Buyer hereunder by virtue of the transactions
contemplated hereby and to more effectively protect the value of the Company so
sold, each Shareholder covenants and agrees that, for a period beginning on the
Closing Date and ending on the date which is three years after the date such
Shareholder ceases to be employed by the Company, Buyer or an Affiliate of Buyer
(the "Term"), such Shareholder shall not, and such Shareholder shall cause her
Affiliates not to, directly or indirectly, as employee, agent, consultant,
stockholder, director, partner or in any other individual or representative
capacity, own, operate, manage, control, engage in, invest in or participate in
any manner in, act as a consultant or advisor to, render services for (alone or
in association with any person, firm, corporation or entity), or otherwise
assist any person or entity that engages in or owns, invests in, operates,
manages or controls any venture or enterprise that directly or indirectly
engages or proposes to engage in the Business anywhere in or into the United
States (the "Territory"), other than on behalf of and as an employee of the
Company, the Buyer or an Affiliate of the Buyer. Notwithstanding the foregoing,
nothing contained in this Section 8.1(a) shall prohibit a Shareholder or its
respective Affiliates from (i) owning not more than an aggregate of one percent
(1%) of any class of stock of any company which is listed on a national
securities exchange or traded in the over-the-counter market and which is
engaged in the Business, (ii) being employed in the human resources department
of a company that is not engaged in the Business, (iii) acting as a consultant
to the human resources department of a company that is not engaged in the
Business, provided that such Shareholder is acting in her individual capacity
and not in concert with other persons performing similar consulting services,
whether pursuant to a business enterprise or otherwise, and provided, further,
that such consulting services are not being rendered for the purpose of
assisting the third party to engage in the Business, and (iv) being employed by
or providing services to PaperFly Corporation (the "PaperFly"), provided that
PaperFly does not engage in the Business. Each Shareholder acknowledges that the
covenants contained in this ARTICLE VIII are essential conditions for Buyer
entering into this Agreement without which

                                      -30-
<PAGE>

Buyer would not have entered into this Agreement or have paid the consideration
payable by it. Each Shareholder acknowledges that the restrictions set forth
herein are reasonable, valid and necessary for the protection of the legitimate
interest of Buyer and the Company.

                  (b) NONSOLICITATION. Without limiting the provisions of
Section 8.1(a) hereof, each Shareholder agrees that, during the Term, neither
such Shareholder nor her respective Affiliates will, directly or indirectly, as
employee, agent, consultant principal or otherwise (i) solicit any Business from
or in any way transact or seek to transact any Business with or otherwise seek
to influence or alter the relationship between the Company or any of its
Affiliates with any person or entity to whom the Company or any of its
Affiliates provided services or to whom the Company or any of its Affiliates
made a presentation at any time during the one year period preceding the date
such Shareholder ceases to be employed by the Company, Buyer or an Affiliate of
Buyer, or (ii) solicit for employment or other services or otherwise seek to
influence or alter the relationship between the Company or any of its Affiliates
of any person who is or was an employee of the Company or any of its Affiliates
at any time during the one year period preceding the date such Shareholder
ceases to be employed by the Company, Buyer or an Affiliate of Buyer, other than
on behalf of and as an employee of the Company, Buyer or an Affiliate of Buyer;
provided, however, if Joann Bianchi remains employed with the Company, Buyer or
an Affiliate of Buyer during the 90 business day period following the Closing
Date, and is contemporaneously during such 90 day period or subsequently,
employed as employee, agent, consultant principal or otherwise, by PaperFly, the
Shareholders or their respective Affiliates, the Shareholders shall not be in
breach of this Section 8.1(b).

                  (c) CONFIDENTIALITY. After the Closing, each Shareholder and
its Affiliates shall strictly maintain the confidentiality of all information,
documents and materials relating to the Company or the transactions contemplated
by this Agreement, including without limitation the existence of the Agreement
and the terms thereof, except to the extent disclosure of any such information
is required by law or authorized by Buyer or reasonably occurs in connection
with disputes over the terms of this Agreement. In the event that such
Shareholder reasonably believes after consultation with counsel that it is
required by law to disclose any confidential information described in this
Section 8.1(c), such Shareholder will (i) provide Buyer with prompt notice
before such disclosure in order that Buyer may attempt to obtain a protective
order or other assurance that confidential treatment will be accorded to
confidential information, and (ii) cooperate with Buyer in attempting to obtain
such order or assurance. The provisions of this Section 8.1(c) shall not apply
to any information, documents or materials which (a) is or becomes available to
the public generally (other than as a result of a disclosure by a Shareholder or
one of her representatives), or (b) which are in the public domain or shall come
into the public domain, other than by reason of default by such Shareholder or
any of its Affiliates of this Agreement or becomes known in the industry through
no wrongful act on the part of such Shareholder or any of its Affiliates.

                  (d) REMEDIES. Without limiting the right of Buyer to pursue
all other legal and equitable rights available to it, including without
limitation, damages for the actual or threatened violation of this Section 8.1
by any Shareholder or any of its Affiliates, it is agreed that other remedies
cannot fully compensate Buyer for such a violation and that Buyer shall be
entitled to injunctive relief and/or specific performance to prevent violation
or continuing violation thereof, without bond and without the necessity of
showing actual monetary damages.

                                      -31-
<PAGE>

It is the intent and understanding of each party hereto that if, in any action
before any court or agency legally empowered to enforce this Section 8.1, any
term, restriction, covenant or promise in this Section 8.1 is found to be
unreasonable and for that reason unenforceable, then such term, restriction,
covenant or promise shall be deemed modified to the extent necessary to make it
enforceable by such court or agency.

            8.2   TRADING PROHIBITION. The Company and each Shareholder hereby
acknowledge that the transactions contemplated hereby and information disclosed
and to be disclosed to the Company, such Shareholder and their representatives
may, from time to time, constitute or include material non-public information
concerning Buyer. The Company and each Shareholder acknowledge that they are
aware, and that they have advised and will continue to advise all employees and
representatives of the Company or any Shareholder to whom the existence of this
transaction or any such information has been or may be disclosed that (i) the
federal securities laws may prohibit a person who has material, non-public
information from purchasing or selling securities of any company to which such
information relates and (ii) material non-public information shall not be
communicated to any other person except as expressly permitted by this
Agreement. Between the date of this Agreement and the Closing neither the
Company nor any Shareholder (nor any trustees or beneficiaries of the
Shareholder) will acquire any shares of common stock, $.001 par value per share,
of Buyer, except that the Shareholders may acquire the TMP Shares at Closing as
contemplated herein. Each Shareholder will not, and it will cause any of its
trustees and beneficiaries not to, in any way sell, transfer or assign any
Company Shares owned by any Shareholder or the TMP Shares to be acquired by any
Shareholder hereunder, or reduce his risk or commit to reduce his risk with
respect to the Company Shares owned by any Shareholder or TMP Shares to be
acquired by any Shareholder hereunder, whether by entering into a put, collar,
option, margin or other arrangement, until, in the case of TMP Shares, after the
filing with the SEC (as defined in Section 8.5) of financial results of Buyer
covering at least 30 days of post-Closing combined operations of Buyer and the
Company, except for the sale of Company Shares to Buyer as contemplated
hereunder.

            8.3   SURVIVAL OF REPRESENTATION AND WARRANTIES. All of the
representations and warranties set forth in this Agreement or in any of the
Transaction Documents shall survive the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby,
regardless of any investigation, inquiry or examination made for or on behalf of
or any knowledge of Buyer, the Company or any Shareholder or any of their
respective Affiliates, officers, directors, employees, agents, or
representatives or the acceptance by any of them of any certificate or opinion
for the applicable period of time set forth in the following sentences. Any
representations, warranties or portions thereof the breach of or
misrepresentation with respect to which would be expected to be encountered or
discerned in Buyer's audit of the financial statements containing combined
operations of Buyer and the Company for the fiscal year in which the Closing
occurs shall survive until the date Buyer's independent certified public
accountants issue their final report and opinion on such audit. Any other
representations, warranties or portions thereof shall survive for a period of
one year after Closing. The covenants set forth in Sections 9.1 (iv) and 9.2
(iii) shall for purposes of this Section 8.3 be deemed a representation and
warranty and shall be subject to the applicable survival periods described
above.

            8.4   COOPERATION AFTER THE CLOSING. Buyer, the Company and the
Shareholders will, at any time, and from time to time, after the Closing Date,
execute and deliver

                                      -32-
<PAGE>

such further instruments of conveyance and transfer and take such additional
action as may be reasonably necessary to effect, consummate, confirm or evidence
the transactions contemplated by this Agreement and the Transaction Documents.
Without limiting the other obligations of the Shareholders hereunder, the
Shareholders agree that, after the Closing, the Shareholders shall provide
reasonable cooperation and assistance to Buyer or the Company, at Buyer's or the
Company's sole cost and expense, with respect to any matters, disputes, suits or
claims by or against any person not a party to this Agreement.

            8.5   REGISTRATION OF TMP SHARES.

                  (a) REGISTRATION. Buyer shall, for the benefit of the
Shareholders, at Buyer's expense, (x) use its best efforts to cause to be filed
within 120 days after the Closing Date with the Securities and Exchange
Commission (the "SEC") a resale registration statement on any appropriate form
(the "Registration Statement") to register the TMP Shares held by the
Shareholders, (y) use commercially reasonable efforts to cause such Registration
Statement to be declared effective under the Securities Act of 1933, as amended
(the "Securities Act") by the SEC as soon thereafter as practicable and (z) use
commercially reasonable efforts to keep such Registration Statement effective
until the first anniversary of the Closing Date, in each case subject to Buyer
obtaining the necessary accountants' consents and its ability to comply with
applicable securities laws (including those pertaining to the applicable
registration form) and applicable confidentiality agreements. The Shareholders,
hereby agree to furnish to Buyer all information with respect to the
Shareholders necessary to make the disclosure in the Registration Statement with
respect to the Shareholders not materially misleading. Buyer further agrees, if
necessary, to supplement or amend the Registration Statement, if required by the
rules, regulations or instructions applicable to the registration form used by
Buyer for such Registration Statement or by the Securities Act or by any other
rules and regulations thereunder for resale registrations, in each case subject
to Buyer obtaining the necessary accountants' consents and its ability to comply
with applicable securities laws (including those pertaining to the applicable
registration form) and applicable confidentiality agreements.

                  (b) DISPOSITION OF TMP SHARES. Notwithstanding the foregoing,
the Shareholders agree that upon Buyer's notice at any time or from time to time
during the time a prospectus relating to the TMP Shares proposed to be sold by
the Shareholders is required to be delivered under the Securities Act of the
happening of any event as a result of which the prospectus included in the
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, the Shareholders will forthwith discontinue their
disposition of TMP Shares pursuant to the Registration Statement until the time
of the effectiveness of a supplement to or an amendment of such prospectus as
may be necessary so that, as thereafter delivered to the purchasers of such TMP
Shares, such prospectus shall not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing.

                  (c) NOTICE. The Shareholders agree that they will give Buyer
three business days notice in writing prior to any proposed utilisation of the
Registration Statement specifying the proposed number of shares of TMP Common
Stock to be sold and the proposed date of sale (which date shall be no more than
ten days from the date of notice) and also

                                      -33-
<PAGE>

specifying the proposed manner of sale. Such notice to be given by facsimile
transmission for the attention of Myron Olesnyckyj, Esq., telecopy number (212)
940-3908. Buyer must, if it wishes to prevent any Shareholder from using the
Registration Statement, give notice to such effect to such Shareholder by the
expiration of such five business day period (or three business day period, if
applicable). To the extent that any sale is not consummated within seven days of
the proposed date of sale indicated in the original notice from any Shareholder,
any proposed sale utilising the Registration Statement shall once again be
subject to the provisions of Section 8.5(b) and this Section 8.5(c).

                                      -34-
<PAGE>

            8.6   TAX MATTERS.

                  (a) TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE. The
Shareholders shall be responsible for the preparation of the Tax Returns of the
Company for all taxable periods ending on or prior to the Closing Date. Such Tax
Returns, together with all work papers and schedules related thereto, shall be
delivered to Buyer for its review and acceptance no later than thirty (30) days
prior to the earlier of (i) the date on which Buyer anticipates that Buyer's
independent certified public accountants will issue their final report and
opinion with respect to Buyer's audit of the financial statements containing
combined operations of Buyer and the Company for the fiscal year in which the
Closing occurs and (ii) the filing of such returns, and shall be prepared in a
manner consistent with prior practice unless otherwise required by applicable
laws.

                  (b) TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE CLOSING
DATE. Buyer shall prepare or cause to be prepared and file or cause to be filed
all Tax Returns of the Company for all periods which begin on or prior to the
Closing Date and end after the Closing Date.

                  (c) PRE-CLOSING PERIOD/POST-CLOSING PERIOD. For purposes of
this Agreement, the allocation of Taxes for a straddle period between the period
prior to the Closing Date (the "Pre-Closing Period") and the period after the
Closing Date (the "Post-Closing Period") shall be made on the basis of an
interim Closing of the books as of the end of the Closing Date; (b) any Tax
resulting from any transaction undertaken pursuant to or contemplated by this
Agreement is attributable to the Pre-Closing Period; and (c) any franchise Taxes
based on capitalization, debt or shares of stock authorized, issued and
outstanding and AD VALOREM Taxes, attributable to a Straddle Period, the portion
of such Taxes attributable to the Pre-Closing Period shall be the pro rata
portion of the amount of such Taxes based on the number of days in the period
ending on the Closing Date.

                  (d) NOTIFICATION. Buyer and the Shareholders shall promptly
notify each other in writing of any notice of any Tax audits of or assessments
against the Company for any Pre-Closing Periods. The failure of one party to
notify the other party of any such audit or assessment shall not relieve the
other party of its indemnification obligations under this Agreement except to
the extent any such failure actually prejudices the defense of any Tax claim.
The Shareholders shall, at their sole expense and in their reasonable
discretion, either settle any Tax claim with respect to any Tax assessed
directly against the Shareholders for any Pre-Closing Period at such time and on
such terms as they shall deem appropriate or assume the entire defense thereof;
PROVIDED, HOWEVER, that the Shareholders shall in no event take any position in
such settlement or defense that subjects Buyer or any affiliate thereof, or the
Company, to any civil fraud or any civil or criminal penalty. Notwithstanding
the foregoing, the Shareholders shall not settle any Tax claim without the prior
written consent of Buyer, which prior written consent shall not be unreasonably
withheld, to any change in the treatment of any item which would, in any manner
whatsoever, increase the Tax liability of Buyer or the Company for any
Post-Closing Period. Except as set forth in this Section 8.6(d), the
Shareholders shall not file or cause to be filed any amended Tax Return for a
Pre-Closing Period on behalf of the Company without the prior written consent of
Buyer.

                                      -35-
<PAGE>

                  (e) ACCESS TO INFORMATION. For the purposes of this Section
8.6, the Company and the Buyer agree that, the Shareholders (including their
legal advisors and accountants) shall be entitled to make such examinations of
the books and records of the Company as reasonably requested for the purposes of
preparing or filing Tax returns and settling any Tax claim, and to make extracts
and copies of such books and records. Any such examination shall be conducted
during regular business hours and under reasonable circumstances, and the Buyers
shall cooperate, and shall cause the Company to cooperate, fully therein.

                                   ARTICLE IX
                                 INDEMNIFICATION

            9.1   INDEMNIFICATION BY THE SHAREHOLDERS. From and after the
Closing, the Shareholders agrees to indemnify, defend and save Buyer and its
Affiliates, and each of their respective officers, directors, employees or
agents (each, an "Indemnified Buyer Party"), harmless from and against, and to
promptly pay to an Indemnified Buyer Party or reimburse an Indemnified Buyer
Party for, any and all liabilities (whether contingent, fixed or unfixed,
liquidated or unliquidated, or otherwise), obligations, deficiencies, demands,
claims, suits, actions, or causes of action, assessments, losses, costs,
expenses, interest, fines, penalties, actual or punitive damages or costs or
expenses of any and all investigations, proceedings, judgments, environmental
analyses, remediations, settlements and compromises (including reasonable fees
and expenses of attorneys, accountants and other experts incurred by any
indemnified party in any action or proceeding between such indemnified party and
the indemnitor or between any indemnified party and any third party or
otherwise) (individually a "Loss" and collectively, the "Losses") sustained or
incurred by any Buyer Indemnified Party relating to, resulting from, arising out
of or otherwise by virtue of (i) any misrepresentation or breach of a
representation or warranty made herein by the Company or any Shareholder, (ii)
any non-compliance with or breach by the Company or any Shareholder, or any
Affiliate of the Company or any Shareholder, of any of their respective
covenants or agreements contained in this Agreement or the Transaction Documents
to be performed by the Company, any Shareholder, or any Affiliate of the Company
or any Shareholder, (iii) any allegations by a third party that is not an
Indemnified Buyer Party which, if true, would constitute a misrepresentation or
breach of a representation or warranty made herein by the Company or any
Shareholder or non-compliance with or breach by the Company or any Shareholder,
or any Affiliate of the Company or any Shareholder of any of their respective
covenants or agreements contained in this Agreement or the Transaction Documents
to be performed by any Shareholder, the Company or any or their respective
Affiliates, (iv) any failure to obtain the consents set forth on SCHEDULE 3.7
hereto or (v) any obligation or liability, contingent or otherwise, of the
Company or any Shareholder for brokers' or finders' fees or commissions in
connection with the transactions contemplated by this Agreement or the
Transaction Documents.

            9.2   INDEMNIFICATION BY BUYER. From and after the Closing, Buyer
agrees to indemnify, defend and save the Shareholders and its Affiliates, and
each of their respective officers, directors, employees, agents, Employee
Benefit Plans and fiduciaries, plan administrators or other parties dealing with
such plans (each, an "Indemnified Seller Party") harmless from and against, and
to promptly pay to an Indemnified Seller Party or reimburse an Indemnified
Seller Party for, any and all Losses sustained or incurred by any Seller
Indemnified

                                      -36-
<PAGE>

Party relating to, resulting from, arising out of or otherwise by virtue of (i)
any misrepresentation or breach of a representation or warranty made herein by
Buyer, (ii) any non-compliance with or breach by Buyer or any Affiliate of Buyer
of any of the covenants or agreements contained in this Agreement or the
Transaction Documents to be performed by Buyer or any of its Affiliates, (iii)
any allegations by a third party that is not an Indemnified Seller Party which,
if true, would constitute a misrepresentation or breach of a representation or
warranty made herein by the Buyer or non-compliance with or breach by the Buyer,
or any Affiliate of the Buyer of any of their respective covenants or agreements
contained in this Agreement or the Transaction Documents to be performed by the
Buyer, or any or its respective Affiliates or (iv) any obligation or liability,
contingent or otherwise, of Buyer for brokers' or finders' fees or commissions
in connection with the transactions contemplated by this Agreement or the
Transaction Documents

            9.3   PROCEDURE FOR INDEMNIFICATION. The following procedure shall
apply to the foregoing agreements to indemnify and hold harmless:

                  (a) The party who is seeking indemnification (the "Claimant")
shall give written notice to the party from whom indemnification is sought (the
"Indemnitor") promptly after the Claimant learns of the claim or proceeding,
provided that the failure to give such notice shall not relieve the Indemnitor
of its obligations hereunder except to the extent it is actually damaged
thereby.

                  (b) With respect to any third-party claims or proceedings as
to which the Claimant is entitled to indemnification, the Indemnitor shall have
the right to select and employ counsel of its own choosing to defend against any
such claim or proceeding, to assume control of the defense of such claim or
proceeding, and to compromise, settle or otherwise dispose of the same, if the
Indemnitor deems it advisable to do so, all at the expense of the Indemnitor.
The parties will fully cooperate in any such action, and shall make available to
each other any books or records useful for the defense of any such claim or
proceeding. The Claimant may elect to participate in the defense of any such
third party claim at its sole expense, and may, at its sole expense, retain
separate counsel in connection therewith. Subject to the foregoing (i) the
Claimant shall not settle or compromise any such third party claim without the
prior written consent of the Indemnitor and (ii) the Indemnitor shall not settle
or compromise any such third party claim without the prior written consent of
the Claimant, in each case of (i) and (ii) which consent shall not be
unreasonably withheld.

            9.4   LIMITATION ON INDEMNIFICATION RIGHTS.

                  (a) Subject to the provisions of Sections 9.4(b) and 9.4(c)
below it is understood and agreed that no claim for recovery of indemnifiable
damages may be asserted based on a representation, warranty or applicable
portion thereof set forth in this Agreement or the Transaction Documents after
it has been extinguished in accordance with Section 8.3 hereof. The date on
which a claim would be extinguished in accordance with Section 8.3 but for the
provisions of this Section 9.4 is sometimes referred to as the "Expiration Date"
of such claim.

                  (b) In order to ensure that the transactions contemplated by
this Agreement and the Transactions Documents qualify for treatment as a pooling
of interests, the

                                      -37-
<PAGE>

parties agree that any dispute, disagreement or controversy between any party
relating to a warranty or representation or applicable portion thereof set forth
in this Agreement or Transaction Documents that is not resolved by the
applicable Expiration Date shall promptly be submitted to the American
Arbitration Association to be resolved by binding arbitration in accordance with
their rules. The place of arbitration shall be New York, New York. The
arbitration tribunal shall be composed of three arbitrators, one of which shall
be appointed by Buyer within ten business days of the applicable Expiration Date
and one of whom shall be appointed by the other party or parties to the dispute,
disagreement or controversy within ten business days of the applicable
Expiration Date and one of whom shall be appointed by such two arbitrators
within 15 business days of the applicable Expiration Date. The arbitrators will
be directed to and shall resolve such dispute, disagreement or controversy on
the basis of the information provided to them or soon as practicable and, in any
event, by the applicable Expiration Date.

                  (c) Notwithstanding anything to the contrary contained in this
Agreement, neither the Indemnified Buyer Parties, on the one hand, nor the
Indemnified Seller Parties, on the other hand, shall be entitled to be
indemnified pursuant to Section 9.1, Section 9.2 or any other provision hereof
unless and until the aggregate of all Losses incurred by Indemnified Buyer
Parties or the Indemnified Seller Parties, as the case may be, exceeds $100,000
("Basket"), at which time the indemnifying party shall be obligated to indemnify
the indemnified party for all Losses and not merely Losses in excess of such
$100,000; provided, however, that the Basket shall not be applicable, and the
Shareholders shall be required to pay the entire amount of all Losses with
respect to (i) accounts receivables from Break Through Software, Inc.,
Creditland, Inc. and Informative, Inc., as set forth on SCHEDULE 3.15, and (ii)
any taxes indicated on the document to be delivered pursuant to Section 7.2(e).
In the event that the Indemnified Buyer Parties are indemnified by the
Shareholders for any Losses resulting from clauses (i) and (ii) above, the
Indemnified Buyer Parties shall release any and all claims to such Losses
thereunder. Notwithstanding anything to the contrary contained in this
Agreement, the indemnification obligations of the Shareholders under Section 9.1
hereof shall not exceed $24,000,000 (the "Shareholders' Cap"); provided,
however, that the Shareholders' Cap shall not be applicable, and the
Shareholders shall be required to pay the entire amount of all Losses with
respect to which indemnification is provided hereunder, in the event that any
claim for indemnification shall be based upon or attributable to, or shall
result from, the breach of the representations and warranties set forth in
Sections 3.2, 3.5, 3.7, 3.17, 3.25, 3.27 and 3.33 hereof.

                  (d) The Shareholders shall be entitled, at their sole option,
to satisfy their indemnification obligations to the Indemnified Buyer Parties
under Section 9.1 hereof by surrendering that number of shares of TMP Common
Stock obtained by dividing (i) the amount of such indemnification obligation by
(ii) the Stated Price.

            9.5   WAIVER OF CLAIMS. Without in any way limiting the obligations
of the Shareholders under this Agreement, each Shareholder hereby expressly and
irrevocably waives any rights of contribution, subrogation, recoupment,
counterclaim, set-off or indemnification that such Shareholder may have against
the Company.

            9.6   SOLE REMEDY FOR DAMAGES. Subject to the provisions of the
next sentence of this Section 9.6, the indemnification obligations of the
parties set forth in this ARTICLE

                                      -38-
<PAGE>

IX shall constitute the sole and exclusive remedy of the parties for the
recovery of money damages with respect to any and all matters arising out of
this Agreement. Notwithstanding the foregoing, the terms of this Section 9.6
shall not be construed as limiting in any way whatsoever any remedy to which any
party may be entitled other than the recovery of money damages, including but
not limited to equitable remedies, specific performance, injunctive relief and
rescission.

                                   ARTICLE X
                                  MISCELLANEOUS

            10.1  NOTICES, CONSENTS, ETC. Any notices, consents or other
communication required to be sent or given hereunder by any of the parties shall
in every case be in writing and shall be deemed properly served if (a) delivered
personally, (b) delivered by registered or certified mail, in all such cases
with first class postage prepaid, return receipt requested, (c) delivered by
courier, at the addresses as set forth below or at such other addresses as may
be furnished in writing. All such notices and communications shall be deemed
received upon the actual delivery thereof in accordance with the foregoing.

                  (a) If to the Shareholders:

                  c/o   Abha Singhvi
                        1148 Village Drive
                        Belmont, California 94002

                        and

                        Kaajal Narain
                        18596 Arbolado Way
                        Saratoga, California 95070

                  (b) If to the Company (prior to the Closing):

                  Stratascape, Inc.
                  1050 Chestnut Street
                  Suite 201
                  Menlo Park, California 94025
                  Attn: Kaajal Narain

                  If prior to the Closing, with a copy to:

                  Squire, Sanders & Dempsey L.L.P.
                  Two Renaissance Square, Suite 2700
                  40 North Central Ave.
                  Phoenix, Arizona 85004
                  Attn: Gregory R. Hall, Esq.

                  If to Buyer or, after the Closing, the Company:

                                      -39-
<PAGE>

                  TMP Worldwide Inc.
                  622 3rd Avenue
                  39th Floor
                  New York, New York 10017
                  Attn: Andrew J. McKelvey

                        with copies to:

                  TMP Worldwide Inc.
                  622 Third Avenue
                  39th Floor
                  New York, New York 10017
                  Attn:  Myron Olesnyckyj, Esq.

            10.2  SEVERABILITY. The unenforceability or invalidity of any
provision of this Agreement shall not affect the enforceability or validity of
any other provision which shall remain in full force and effect and be
enforceable to the fullest extent permitted by law.

            10.3  AMENDMENT AND WAIVER. This Agreement may not be amended
orally. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any other breach.

            10.4  DOCUMENTS. Each party will execute all documents and take such
other actions as any other party may reasonably request in order to consummate
the transactions provided for herein and to accomplish the purposes of this
Agreement.

            10.5  COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same agreement.

            10.6  EXPENSES. Subject to the prior approval of Buyer, which
approval shall not be unreasonably withheld, the Company may pay, prior to
Closing, all reasonable costs and expenses incurred or to be incurred by the
Shareholders and/or the Company in negotiating and preparing this Agreement and
in closing and carrying out the transactions contemplated by this Agreement and
the Transaction Documents, including without limitation legal and accounting
fees and expenses and fees and expenses relating to the preparation of the
Financial Statements, and the Shareholders and the Company agree that such costs
and expenses shall be deemed obligations of the Company for purposes of the
Financial Statements.

            10.7  GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Agreement shall be governed by, the laws
of the State of New York, without giving effect to provisions thereof regarding
conflicts of law.

            10.8  HEADINGS. The subject headings of Articles and Sections of
this Agreement are included for purposes of convenience only and shall not
affect the construction or interpretation of any of its provisions.

                                      -40-
<PAGE>

            10.9  ASSIGNMENT. This Agreement will be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
Neither this Agreement nor any of the rights, interests or obligations hereunder
may be assigned or delegated by the Shareholders in any manner whatsoever,
whether directly or by operation of law or otherwise, without the prior written
consent of Buyer.

            10.10 DEFINITIONS. For purposes of this Agreement, the following
terms have the meaning set forth below:

                  "AFFILIATE" shall have the meaning ascribed to that term in
Rule 405 of the Securities Act of 1933, as amended.

                  "BUSINESS" shall mean the provision of services and products
relating to human capital management, including, but not limited to finding,
assessing and selecting individuals to fill permanent and temporary positions.

                  "CODE" means the Internal Revenue Code of 1986, as amended.

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

                  "GAAP" means United States generally accepted accounting
principles as of the date hereof.

                  "LIENS" means any liens, claims, mortgages, charges, security
interests, pledges or other encumbrances or adverse claims or interests of any
nature.

                  "MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE" with
respect to a party shall mean an event, change or occurrence which, individually
or together with any other event, change, or occurrence, has a material adverse
impact on (i) the financial position, business, or results of operations of such
party and its subsidiaries, if any, taken as a whole or (ii) the ability of such
party to perform its obligations under this Agreement or to consummate the
transactions contemplated by this Agreement.

                  "PERSON" means any Shareholder, individual, corporation,
partnership, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, regulatory body or other entity.

                  "PLAN AFFILIATE" means any person or entity with which the
Company constitutes all or part of a controlled group of corporations, a group
of trades or businesses under common control or an affiliated service group, as
each of those terms is defined in Section 414 of the Code.

                  "TAX" and "TAXES" includes any federal, state, local or
foreign income, gross receipts, capital, franchise, import, goods and services,
value added, sales and use, estimated, alternative minimum, add-on minimum,
sales, use, transfer, registration, excise, natural resources, severance, stamp,
occupation, premium, windfall profit, environmental,

                                      -41-
<PAGE>

customs, duties, real property, personal property, capital stock, social
security, unemployment, disability, payroll, license, employee withholding, or
other tax, of any kind whatsoever, including any interest, penalties or
additions to tax or additional amounts in respect of the foregoing; the
foregoing shall include any transferee or secondary liability for a Tax and any
liability assumed by agreement or arising as a result of being (or ceasing to
be) a Shareholder of any Affiliated Group, as defined in Section 1504 of the
Code (or being included (or required to be included) in any Tax Return relating
thereto).

                  "TAX RETURNS" means returns, declarations, reports, claims for
refund, information returns or other documents (including any related or
supporting Schedules, statements or information) filed or required to be filed
in connection with the determination, assessment or collection of any Taxes of
any party or the administration of any laws, regulations or administrative
requirements relating to any Taxes.

            10.11 ENTIRE AGREEMENT. This Agreement, the Transaction Documents,
and the documents, schedules and exhibits described herein or attached or
delivered pursuant hereto and the Confidentiality Agreement executed by Buyer
and the Company as of June 28, 2000, (the "Confidentiality Agreement")
collectively constitute the sole and only agreement among the parties with
respect to the subject matter hereof. Any agreements, representations or
documentation respecting the transactions contemplated by this Agreement,
including without limitation, the Letter Agreement, dated August 2, 2000,
between Buyer and the Company, and any correspondence, discussions or course of
dealing which are not expressly set forth in this Agreement, the Transaction
Documents, or the documents, schedules and exhibits described herein or attached
or delivered pursuant hereto or are null and void, it being understood that no
party has relied on any representation not set forth in this Agreement, the
Transaction Documents or the documents, schedules and exhibits described herein
or attached or delivered pursuant hereto. It is expressly understood and agreed
that upon Closing, the Confidentiality Agreement shall automatically be rendered
null and void to the same extent as if it were never executed.

            10.12 THIRD PARTIES. Except as expressly set forth in ARTICLE VIII
or IX of this Agreement, nothing herein expressed or implied is intended or
shall be construed to confer upon or give to any person or entity, other than
the parties to this Agreement and their respective permitted successors and
assigns, any rights or remedies under or by reason of this Agreement.

            10.13 INTERPRETATIVE MATTERS. Unless the context otherwise requires,
(a) all references to Articles, Sections or Schedules are to Articles, Sections
or Schedules in this Agreement, and (b) words in the singular or plural include
the singular and plural, pronouns stated in either the masculine, the feminine
or neuter gender shall include the masculine, feminine and neuter, and (d) the
term "including" shall mean by way of example and not by way of limitation.

            10.14 NO STRICT CONSTRUCTION. The language used in this Agreement
will be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
party hereto.

                                      -42-
<PAGE>

            10.15 DEFAULT. The mere lapse of time for performing any obligation
or covenant contained herein shall serve to put the party who is obliged to
perform or fulfill such obligation or covenant in default, without any notice or
demand being required therefor.

                                      -43-
<PAGE>

            IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.

                                    TMP WORLDWIDE INC.

                                    By:   /s/ Thomas G. Collison
                                       --------------------------------
                                          Name:  Thomas G. Collison
                                          Title: Vice Chairman

                                    STRATASCAPE, INC.

                                    By:   /s/ Abha Singhvi
                                       --------------------------------
                                          Name:  Abha Singhvi
                                          Title: Chief Executive Officer

                                          /s/ Abha Singhvi
                                    -----------------------------------
                                          Abha Singhvi

                                          /s/ Kaajal Narain
                                    -----------------------------------
                                          Kaajal Narain

                                      -44-
<PAGE>

                      SCHEDULES TO STOCK PURCHASE AGREEMENT

      The following schedules (each a "Schedule" and together the "Schedules")
to the Stock purchase Agreement (the "Agreement"), dated as of the 31st day of
August, 2000, by and among TMP Worldwide Inc., a Delaware corporation ("TMP" or
"Buyer"), Stratascape, Inc., a California corporation (the "Company"), and the
Shareholders of the Company listed on Schedule A hereto (each a "Shareholder"
and collectively, the "Shareholders") are incorporated by reference in and made
a part of the Agreement. Capitalized terms used but not defined in the Schedules
have the meanings ascribed thereto in the Agreement.

      Each disclosure in a particular Schedule is made specifically, and a
disclosure made in any particular Schedule or section thereof shall not be
deemed to have been disclosed in any other section of such Schedule or in any
other Schedule.

                                      -45-
<PAGE>

                                   SCHEDULE A

--------------------------------------------------------------
NAME AND ADDRESS OF   NUMBER OF SHARES
EACH SHAREHOLDER      OF COMMON STOCK    % OF COMPANY SHARES
--------------------------------------------------------------
Abha Singhvi                 100                 50%
1148 Village Drive
Belmont, CA 94002
--------------------------------------------------------------
Kaajal Narain                100                 50%
18596 Arbolado Way
Saratoga, CA 95070
--------------------------------------------------------------

                                      -46-<PAGE>

                                                                    Exhibit 10.3

                                 JNI CORPORATION

                              AMENDED AND RESTATED

                             1999 STOCK OPTION PLAN

         1.       ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

                  1.1 ESTABLISHMENT. This JNI Corporation 1999 Stock Option
Plan (the "PLAN") is hereby established effective as of April 24, 1999, and
amended and restated effective October 1999.

                  1.2 PURPOSE. The purpose of the Plan is to advance the
interests of the Participating Company Group and its shareholders by providing
an incentive to attract, retain and reward persons performing services for the
Participating Company Group and by motivating such persons to contribute to the
growth and profitability of the Participating Company Group.

                  1.3 TERM OF PLAN. The Plan shall continue in effect until the
earlier of its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been issued and all
restrictions on such shares under the terms of the Plan and the agreements
evidencing Options granted under the Plan have lapsed. However, all Options
shall be granted, if at all, within ten (10) years from the earlier of the date
the Plan is adopted by the Board or the date the Plan is duly approved by the
shareholders of the Company.

         2.       DEFINITIONS AND CONSTRUCTION.

                  2.1 DEFINITIONS. Whenever used herein, the following terms
shall have their respective meanings set forth below:

                           (a) "Board" means the Board of Directors of the
Company. If one or more Committees have been appointed by the Board to
administer the Plan, "Board" also means such Committee(s).

                           (b) "Code" means the Internal Revenue Code of 1986,
as amended, and any applicable regulations promulgated thereunder.

                           (c) "Committee" means the Compensation Committee or
other committee of the Board duly appointed to administer the Plan and having
such powers as shall be specified by the Board. Unless the powers of the
Committee have been specifically limited, the Committee shall have all of the
powers of the Board granted herein, including, without limitation, the power to
amend or terminate the Plan at any time, subject to the terms of the Plan and
any applicable limitations imposed by law.

                           (d) "Company" means JNI Corporation, a Delaware
corporation, or any successor corporation thereto.

                           (e) "Consultant" means any person, including an
advisor, engaged by a Participating Company to render services other than as an
Employee or a Director.

<PAGE>

                           (f) "Director" means a member of the Board or of the
board of directors of any other Participating Company.

                           (g) "Disability" means the inability of the Optionee,
in the opinion of a qualified physician acceptable to the Company, to perform
the major duties of the Optionee's position with the Participating Company Group
because of the sickness or injury of the Optionee.

                           (h) "Employee" means any person treated as an
employee (including an officer or a Director who is also treated as an employee)
in the records of a Participating Company and, with respect to any Incentive
Stock Option granted to such person, who is an employee for purposes of Section
422 of the Code; provided, however, that neither service as a Director nor
payment of a director's fee shall be sufficient to constitute employment for
purposes of the Plan.

                           (i) "Exchange Act" means the Securities Exchange Act
of 1934, as amended.

                           (j) "Fair Market Value" means, as of any date, the
value of a share of Stock or other property as determined by the Board, in its
discretion, or by the Company, in its discretion, if such determination is
expressly allocated to the Company herein, subject to the following:

                                    (i) If, on such date, the Stock is listed on
a national or regional securities exchange or market system, the Fair Market
Value of a share of Stock shall be the closing price of a share of Stock (or the
mean of the closing bid and asked prices of a share of Stock if the Stock is so
quoted instead) as quoted on the Nasdaq National Market, The Nasdaq SmallCap
Market or such other national or regional securities exchange or market system
constituting the primary market for the Stock, as reported in The Wall Street
Journal or such other source as the Company deems reliable. If the relevant date
does not fall on a day on which the Stock has traded on such securities exchange
or market system, the date on which the Fair Market Value shall be established
shall be the last day on which the Stock was so traded prior to the relevant
date, or such other appropriate day as shall be determined by the Board, in its
discretion.

                                    (ii) If, on such date, there is no public
market for the Stock, the Fair Market Value of a share of Stock shall be as
determined by the Board in good faith without regard to any restriction other
than a restriction which, by its terms, will never lapse.

                           (k) "Incentive Stock Option" means an Option intended
to be (as set forth in the Option Agreement) and which qualifies as an incentive
stock option within the meaning of Section 422(b) of the Code.

                           (l) "Insider" means an officer or a Director of the
Company or any other person whose transactions in Stock are subject to Section
16 of the Exchange Act.

                           (m) "Nonstatutory Stock Option" means an Option not
intended to be (as set forth in the Option Agreement) or which does not qualify
as an Incentive Stock Option.

<PAGE>

                           (n) "Option" means a right to purchase Stock (subject
to adjustment as provided in Section 4.2) pursuant to the terms and conditions
of the Plan. An Option may be either an Incentive Stock Option or a Nonstatutory
Stock Option.

                           (o) "Option Agreement" means a written agreement,
including any related form of stock option grant agreement, between the Company
and an Optionee setting forth the terms, conditions and restrictions of the
Option granted to the Optionee and any shares acquired upon the exercise
thereof.

                           (p) "Optionee" means a person who has been granted
one or more Options.

                           (q) "Parent Corporation" means any present or future
"parent corporation" of the Company, as defined in Section 424(e) of the Code.

                           (r) "Participating Company" means the Company or any
Parent Corporation or Subsidiary Corporation.

                           (s) "Participating Company Group" means, at any point
in time, all corporations collectively which are then Participating Companies.

                           (t) "RULE 16b-3" means Rule 16b-3 under the Exchange
Act, as amended from time to time, or any successor rule or regulation.

                           (u) "Securities Act" means the Securities Act of
1933, as amended.

                           (v) "Service" means an Optionee's employment or
service with the Participating Company Group, whether in the capacity of an
Employee, a Director or a Consultant. The Optionee's Service shall not be deemed
to have terminated merely because of a change in the capacity in which the
Optionee renders Service to the Participating Company Group or a change in the
Participating Company for which the Optionee renders such Service, provided that
there is no interruption or termination of the Optionee's Service. Furthermore,
an Optionee's Service with the Participating Company Group shall not be deemed
to have terminated if the Optionee takes any military leave, sick leave, or
other bona fide leave of absence approved by the Company; provided, however,
that if any such leave exceeds ninety (90) days, on the ninety-first (91st) day
of such leave the Optionee's Service shall be deemed to have terminated unless
the Optionee's right to return to Service with the Participating Company Group
is guaranteed by statute or contract. Notwithstanding the foregoing, unless
otherwise designated by the Company or required by law, a leave of absence shall
not be treated as Service for purposes of determining vesting under the
Optionee's Option Agreement. The Optionee's Service shall be deemed to have
terminated either upon an actual termination of Service or upon the corporation
for which the Optionee performs Service ceasing to be a Participating Company.
Subject to the foregoing, the Company, in its discretion, shall determine
whether the Optionee's Service has terminated and the effective date of such
termination.

                           (w) "Stock" means the common stock of the Company, as
adjusted from time to time in accordance with Section 4.2.

<PAGE>

                           (x) "Subsidiary Corporation" means any present or
future "subsidiary corporation" of the Company, as defined in Section 424(f) of
the Code.

                           (y) "Ten Percent Owner Optionee" means an Optionee
who, at the time an Option is granted to the Optionee, owns stock possessing
more than ten percent (10%) of the total combined voting power of all classes of
stock of a Participating Company within the meaning of Section 422(b)(6) of the
Code.

                           (z) "Termination of Employment" shall mean the time
when the employee-employer relationship between an Optionee and the
Participating Company is terminated for any reason, with or without cause,
including, but not by way of limitation, a termination by resignation,
discharge, death, Disability or retirement; but excluding (i) terminations where
there is a simultaneous reemployment or continuing employment of an Optionee by
any Participating Company, (ii) at the discretion of the Board, terminations
which result in a temporary severance of the employee-employer relationship, and
(iii) at the discretion of the Board, terminations which are followed by the
simultaneous establishment of a consulting relationship by a Participating
Company with the former employee. The Board, in its absolute discretion, shall
determine the effect of all matters and questions relating to Termination of
Employment, including, but not by way of limitation, the question of whether a
Termination of Employment resulted from a discharge for good cause, and all
questions of whether particular leaves of absence constitute Terminations of
Employment; provided, however, that, unless otherwise determined by the Board in
its discretion, a leave of absence, change in status from an employee to an
independent contractor or other change in the employee-employer relationship
shall constitute a Termination of Employment if, and to the extent that, such
leave of absence, change in status or other change interrupts employment for the
purposes of Section 422(a)(2) of the Code and the then applicable regulations
and revenue rulings under said Section. Notwithstanding any other provision of
this Plan, each Participating Company has an absolute and unrestricted right to
terminate an Employee's employment at any time for any reason whatsoever, with
or without cause, except to the extent expressly provided otherwise in writing.

                           (aa) "Termination without Cause" shall mean the time
when the employee-employer relationship between an Optionee and the Company or
any other Participating Company is terminated without cause, as termination
without cause is defined in the Optionee's employment agreement; provided
however, that if termination without cause is not therein defined, it shall have
such meaning, in conformance with applicable law, as the Board shall determine
is appropriate.

                  2.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the singular. Use
of the term "or" is not intended to be exclusive, unless the context clearly
requires otherwise.

         3.       ADMINISTRATION.

                  3.1 ADMINISTRATION BY THE BOARD. The Plan shall be
administered by the Board. All questions of interpretation of the Plan or of any
Option shall be determined by the Board, and

<PAGE>

such determinations shall be final and binding upon all persons having an
interest in the Plan or such Option.

                  3.2 AUTHORITY OF OFFICERS. Any officer of a Participating
Company shall have the authority to act on behalf of the Company with respect to
any matter, right, obligation, determination or election which is the
responsibility of or which is allocated to the Company herein, provided the
officer has apparent authority with respect to such matter, right, obligation,
determination or election.

                  3.3 ADMINISTRATION WITH RESPECT TO INSIDERS. With respect to
participation by Insiders in the Plan, at any time that any class of equity
security of the Company is registered pursuant to Section 12 of the Exchange
Act, the Plan shall be administered in compliance with the requirements, if any,
of Rule 16b-3.

                  3.4 POWERS OF THE BOARD. In addition to any other powers set
forth in the Plan and subject to the provisions of the Plan, the Board shall
have the full and final power and authority, in its discretion:

                           (a) to determine the persons to whom, and the time or
times at which, Options shall be granted and the number of shares of Stock to be
subject to each Option;

                           (b) to designate Options as Incentive Stock Options
or Nonstatutory Stock Options;

                           (c) to determine the Fair Market Value of shares of
Stock or other property;

                           (d) to determine the terms, conditions and
restrictions applicable to each Option (which need not be identical) and any
shares acquired upon the exercise thereof, including, without limitation, (i)
the exercise price of the Option, (ii) the method of payment for shares
purchased upon the exercise of the Option, (iii) the method for satisfaction of
any tax withholding obligation arising in connection with the Option or such
shares, including by the withholding or delivery of shares of stock, (iv) the
timing, terms and conditions of the exercisability of the Option or the vesting
of any shares acquired upon the exercise thereof, (v) the time of the expiration
of the Option, (vi) the effect of the Optionee's termination of Service with the
Participating Company Group on any of the foregoing, and (vii) all other terms,
conditions and restrictions applicable to the Option or such shares not
inconsistent with the terms of the Plan;

                           (e) to approve one or more forms of Option Agreement;

                           (f) to amend, modify, extend, cancel, renew, reprice
or otherwise adjust the exercise price of, or grant a new Option in substitution
for, any Option or to waive any restrictions or conditions applicable to any
Option or any shares acquired upon the exercise thereof;

<PAGE>

                           (g) to accelerate, continue, extend or defer the
exercisability of any Option or the vesting of any shares acquired upon the
exercise thereof, including with respect to the period following an Optionee's
termination of Service with the Participating Company Group;

                           (h) to prescribe, amend or rescind rules, guidelines
and policies relating to the Plan, or to adopt supplements to, or alternative
versions of, the Plan, including, without limitation, as the Board deems
necessary or desirable to comply with the laws of, or to accommodate the tax
policy or custom of, foreign jurisdictions whose citizens may be granted
Options; and

                           (i) to correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any Option Agreement and to make all
other determinations and take such other actions with respect to the Plan or any
Option as the Board may deem advisable to the extent consistent with the Plan
and applicable law.

         4.       SHARES SUBJECT TO PLAN.

                  4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment
as provided in Section 4.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be Two Million, Three Hundred Twelve
Thousand, Eight Hundred (2,312,800) and shall consist of authorized but unissued
or reacquired shares of Stock or any combination thereof. If an outstanding
Option for any reason expires or is terminated or canceled or if shares of Stock
are acquired upon the exercise of an Option subject to a Company repurchase
option and are 5 6 repurchased by the Company at the Optionee's exercise price,
the shares of Stock allocable to the unexercised portion of such Option or such
repurchased shares of Stock shall again be available for issuance under the
Plan. Notwithstanding the foregoing, at any such time as the offer and sale of
securities pursuant to the Plan is subject to compliance with Section 260.140.45
of Title 10 of the California Code of Regulations ("Section 260.140.45"), the
total number of shares of Stock issuable upon the exercise of all outstanding
Options (together with options outstanding under any other stock option plan of
the Company) and the total number of shares provided for under any stock bonus
or similar plan of the Company shall not exceed thirty percent (30%) (or such
other higher percentage limitation as may be approved by the shareholders of the
Company pursuant to Section 260.140.45) of the then outstanding shares of the
Company as calculated in accordance with the conditions and exclusions of
Section 260.140.45.

                  4.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event
of any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in the capital structure of the
Company, appropriate adjustments shall be made in the number and class of shares
subject to the Plan and to any outstanding Options and in the exercise price per
share of any outstanding Options. If a majority of the shares which are of the
same class as the shares that are subject to outstanding Options are exchanged
for, converted into, or otherwise become (whether or not pursuant to an
Ownership Change Event, as defined in Section 8.1) shares of another corporation
(the "New Shares"), the Board may unilaterally amend the outstanding Options to
provide that such Options are exercisable for New Shares. In the event of any
such amendment, the number of shares subject to, and the exercise price per
share of, the outstanding Options shall be adjusted in a fair and equitable
manner as determined by the Board,

<PAGE>

in its discretion. Notwithstanding the foregoing, any fractional share resulting
from an adjustment pursuant to this Section 4.2 shall be rounded down to the
nearest whole number, and in no event may the exercise price of any Option be
decreased to an amount less than the par value, if any, of the stock subject to
the Option. The adjustments determined by the Board pursuant to this Section 4.2
shall be final, binding and conclusive.

         5.       ELIGIBILITY AND OPTION LIMITATIONS.

                  5.1 PERSONS ELIGIBLE FOR OPTIONS. Options may be granted only
to Employees, Consultants, and Directors. For purposes of the foregoing
sentence, "Employees," "Consultants" and "Directors" shall include prospective
Employees, prospective Consultants and prospective Directors to whom Options are
granted in connection with written offers of an employment or other service
relationships with the Participating Company Group. Eligible persons may be
granted more than one (1) Option.

                  5.2 OPTION GRANT RESTRICTIONS. Any person who is not an
Employee on the effective date of the grant of an Option to such person may be
granted only a Nonstatutory Stock Option. An Incentive Stock Option granted to a
prospective Employee upon the condition that such person become an Employee
shall be deemed granted effective on the date such person commences Service with
a Participating Company, with an exercise price determined as of such date in
accordance with Section 6.1.

                  5.3 FAIR MARKET VALUE LIMITATION. To the extent that options
designated as Incentive Stock Options (granted under all stock option plans of
the Participating Company Group, including the Plan) become exercisable by an
Optionee for the first time during any calendar year for stock having a Fair
Market Value greater than One Hundred Thousand Dollars ($100,000), the portions
of such options which exceed such amount shall be treated as Nonstatutory Stock
Options. For purposes of this Section 5.3, options designated as Incentive Stock
Options shall be taken into account in the order in which they were granted, and
the Fair Market Value of stock shall be determined as of the time the option
with respect to such stock is granted. If the Code is amended to provide for a
different limitation from that set forth in this Section 5.3, such different
limitation shall be deemed incorporated herein effective as of the date and with
respect to such Options as required or permitted by such amendment to the Code.
If an Option is treated as an Incentive Stock Option in part and as a
Nonstatutory Stock Option in part by reason of the limitation set forth in this
Section 5.3, the Optionee may designate which portion of such Option the
Optionee is exercising. In the absence of such designation, the Optionee shall
be deemed to have exercised the Incentive Stock Option portion of the Option
first. Separate certificates representing each such portion shall be issued upon
the exercise of the Option.

         6.       TERMS AND CONDITIONS OF OPTIONS.

                  Options shall be evidenced by Option Agreements specifying the
number of shares of Stock covered thereby, in such form as the Board shall from
time to time establish. No Option or purported Option shall be a valid and
binding obligation of the Company unless evidenced by a fully executed Option
Agreement. Option Agreements may incorporate all or any

<PAGE>

of the terms of the Plan by reference and shall comply with and be subject to
the following terms and conditions:

                  6.1 EXERCISE PRICE. The exercise price for each Option shall
be established in the discretion of the Board; provided, however, that (a) the
exercise price per share for an Incentive Stock Option shall be not less than
the Fair Market Value of a share of Stock on the effective date of grant of the
Option, (b) the exercise price per share for a Nonstatutory Stock Option shall
be not less than eighty-five percent (85%) of the Fair Market Value of a share
of Stock on the effective date of grant of the Option, and (c) no Option granted
to a Ten Percent Owner Optionee shall have an exercise price per share less than
one hundred ten percent (110%) of the Fair Market Value of a share of Stock on
the effective date of grant of the Option. Notwithstanding the foregoing, an
Option (whether an Incentive Stock Option or a Nonstatutory Stock Option) may be
granted with an exercise price lower than the minimum exercise price set forth
above if such Option is granted pursuant to an assumption or substitution for
another option in a manner qualifying under the provisions of Section 424(a) of
the Code.

                  6.2 EXERCISE PERIOD. Options shall be exercisable at such time
or times, or upon such event or events, and subject to such terms, conditions,
performance criteria, and restrictions as shall be determined by the Board and
set forth in the Option Agreement evidencing such Option; provided, however,
that (a) no Option shall be exercisable after the expiration of ten (10) years
after the effective date of grant of such Option, (b) no Incentive Stock Option
granted to a Ten Percent Owner Optionee shall be exercisable after the
expiration of five (5) years after the effective date of grant of such Option,
(c) no Option granted to a prospective Employee, prospective Consultant or
prospective Director may become exercisable prior to the date on which such
person commences Service with a Participating Company, and (d) with the
exception of an Option granted to an officer, Director or Consultant, no Option
shall become exercisable at a rate less than twenty percent (20%) per year over
a period of five (5) years from the effective date of grant of such Option,
subject to the Optionee's continued Service. Subject to the foregoing, unless
otherwise specified by the Board in the grant of an Option, any Option granted
hereunder shall have a term of ten (10) years from the effective date of grant
of the Option.

                  6.3      PAYMENT OF EXERCISE PRICE.

                           (a) FORMS OF CONSIDERATION AUTHORIZED. Except as
otherwise provided below, payment of the exercise price for the number of shares
of Stock being purchased pursuant to any Option shall be made (i) in cash, by
check or cash equivalent, (ii) by tender to the Company, or attestation to the
ownership, of shares of Stock owned by the Optionee having a Fair Market Value
(as determined by the Company without regard to any restrictions on
transferability applicable to such stock by reason of federal or state
securities laws or agreements with an underwriter for the Company) not less than
the exercise price, (iii) by the assignment of the proceeds of a sale or loan
with respect to some or all of the shares being acquired upon the exercise of
the Option (including, without limitation, through an exercise complying with
the provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System) (a "Cashless Exercise"), (iv) by the
Optionee's promissory note in a form approved by the Company, (v) by such other
consideration as may be approved by the Board from time to time to the extent
permitted by applicable law, or (vi) by any combination

<PAGE>

thereof. The Board may at any time or from time to time, by adoption of or by
amendment to the standard forms of Option Agreement described in Section 7, or
by other means, grant Options which do not permit all of the foregoing forms of
consideration to be used in payment of the exercise price or which otherwise
restrict one or more forms of consideration.

                           (b) LIMITATIONS ON FORMS OF CONSIDERATION.

                                    (i) Tender of Stock. Notwithstanding the
foregoing, an Option may not be exercised by tender to the Company, or
attestation to the ownership, of shares of Stock to the extent such tender or
attestation would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Company's stock.
Unless otherwise provided by the Board, an Option may not be exercised by tender
to the Company, or attestation to the ownership, of shares of Stock unless such
shares either have been owned by the Optionee for more than six (6) months or
were not acquired, directly or indirectly, from the Company.

                                    (ii) Cashless Exercise. The Company
reserves, at any and all times, the right, in the Company's sole and absolute
discretion, to establish, decline to approve or terminate any program or
procedures for the exercise of Options by means of a Cashless Exercise.

                                    (iii) Payment by Promissory Note. No
promissory note shall be permitted if the exercise of an Option using a
promissory note would be a violation of any law. Any permitted promissory note
shall be on such terms as the Board shall determine at the time the Option is
granted. The Board shall have the authority to permit or require the Optionee to
secure any promissory note used to exercise an Option with the shares of Stock
acquired upon the exercise of the Option or with other collateral acceptable to
the Company. Unless otherwise provided by the Board, if the Company at any time
is subject to the regulations promulgated by the Board of Governors of the
Federal Reserve System or any other governmental entity affecting the extension
of credit in connection with the Company's securities, any promissory note shall
comply with such applicable regulations, and the Optionee shall pay the unpaid
principal and accrued interest, if any, to the extent necessary to comply with
such applicable regulations.

                  6.4 TAX WITHHOLDING. The Company shall have the right, but not
the obligation, to deduct from the shares of Stock issuable upon the exercise of
an Option, or to accept from the Optionee the tender of, a number of whole
shares of Stock having a Fair Market Value, as determined by the Company, equal
to all or any part of the federal, state, local and foreign taxes, if any,
required by law to be withheld by the Participating Company Group with respect
to such Option or the shares acquired upon the exercise thereof. Alternatively
or in addition, in its discretion, the Company shall have the right to require
the Optionee, through payroll withholding, cash payment or otherwise, including
by means of a Cashless Exercise, to make adequate provision for any such tax
withholding obligations of the Participating Company Group arising in connection
with the Option or the shares acquired upon the exercise thereof. The Company
shall have no obligation to deliver shares of Stock or to release shares of
Stock from an escrow established pursuant to the Option Agreement until the
Participating Company Group's tax withholding obligations have been satisfied by
the Optionee.

<PAGE>

                  6.5 REPURCHASE RIGHTS. Shares issued under the Plan may be
subject to a right of first refusal, one or more repurchase options, or other
conditions and restrictions as determined by the Board in its discretion at the
time the Option is granted. The Company shall have the right to assign at any
time any repurchase right it may have, whether or not such right is then
exercisable, to one or more persons as may be selected by the Company. Upon
request by the Company, each Optionee shall execute any agreement evidencing
such transfer restrictions prior to the receipt of shares of Stock hereunder and
shall promptly present to the Company any and all certificates representing
shares of Stock acquired hereunder for the placement on such certificates of
appropriate legends evidencing any such transfer restrictions.

                  6.6      EFFECT OF TERMINATION OF SERVICE.

                           (a) OPTION EXERCISABILITY. Subject to earlier
termination of the Option as otherwise provided herein, an Option shall be
exercisable after an Optionee's termination of Service as follows:

                                    (i) Disability. If the Optionee's Service
with the Participating Company Group is terminated because of the Disability of
the Optionee, the Option, to the extent unexercised and exercisable on the date
on which the Optionee's Service terminated, may be exercised by the Optionee (or
the Optionee's guardian or legal representative) at any time prior to the
expiration of twelve (12) months (or such longer period of time as determined by
the Board, in its discretion) after the date on which the Optionee's Service
terminated, but in any event no later than the date of expiration of the
Option's term as set forth in the Option Agreement evidencing such Option (the
"Option Expiration Date").

                                    (ii) Death. If the Optionee's Service with
the Participating Company Group is terminated because of the death of the
Optionee, the Option, to the extent unexercised and exercisable on the date on
which the Optionee's Service terminated, may be exercised by the Optionee's
legal representative or other person who acquired the right to exercise the
Option by reason of the Optionee's death at any time prior to the expiration of
twelve (12) months (or such longer period of time as determined by the Board, in
its discretion) after the date on which the Optionee's Service terminated, but
in any event no later than the Option Expiration Date. The Optionee's Service
shall be deemed to have terminated on account of death if the Optionee dies
within thirty (30) days (or such longer period of time as determined by the
Board, in its discretion) after the Optionee's termination of Service.

                                    (iii) Other Termination of Service. If the
Optionee's Service with the Participating Company Group terminates for any
reason, except Disability or death, the Option, to the extent unexercised and
exercisable by the Optionee on the date on which the Optionee's Service
terminated, may be exercised by the Optionee within three (3) months (or such
longer period of time as determined by the Board, in its discretion) after the
date on which the Optionee's Service terminated, but in any event no later than
the Option Expiration Date.

                           (b) EXTENSION IF EXERCISE PREVENTED BY LAW.
Notwithstanding the foregoing, if the exercise of an Option within the
applicable time periods set forth in Section 6.6(a) is prevented by the
provisions of Section 11 below, the Option shall remain exercisable until thirty
(30) days (or such longer period of time as determined by the Board, in its
discretion)

<PAGE>

after the date the Optionee is notified by the Company that the Option is
exercisable, but in any event no later than the Option Expiration Date.

                           (c) EXTENSION IF OPTIONEE SUBJECT TO SECTION 16(b).
Notwithstanding the foregoing, if a sale within the applicable time periods set
forth in Section 6.6(a) of shares acquired upon the exercise of the Option would
subject the Optionee to suit under Section 16(b) of the Exchange Act, the Option
shall remain exercisable until the earliest to occur of (i) the tenth (10th) day
following the date on which a sale of such shares by the Optionee would no
longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day
after the Optionee's termination of Service, or (iii) the Option Expiration
Date.

         7.       STANDARD FORMS OF OPTION AGREEMENT.

                  7.1 GENERAL. Unless otherwise provided by the Board at the
time the Option is granted, an Option shall comply with and be subject to the
terms and conditions set forth in the standard form of Option Agreement adopted
by the Board concurrently with its adoption of the Plan and as amended from time
to time.

                  7.2 AUTHORITY TO VARY TERMS. The Board shall have the
authority from time to time to vary the terms of any of the standard form of
Option Agreement described in this Section 7 either in connection with the grant
or amendment of an individual Option or in connection with the authorization of
a new standard form or forms; provided, however, that the terms and conditions
of any such new, revised or amended standard form or forms of Option Agreement
are not inconsistent with the terms of the Plan.

         8.       CHANGE IN CONTROL.

                  8.1      DEFINITIONS.

                           (a) An "Ownership Change Event" shall be deemed to
have occurred if any of the following occurs with respect to the Company: (i)
the direct or indirect sale or exchange in a single or series of related
transactions by the shareholders of the Company of more than fifty percent (50%)
of the voting stock of the Company; (ii) a merger or consolidation in which the
Company is a party; (iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Company; or (iv) a liquidation or
dissolution of the Company.

                           (b) A "Change In Control" shall mean an Ownership
Change Event or a series of related Ownership Change Events (collectively, a
"Transaction") wherein the shareholders of the Company immediately before the
Transaction do not retain immediately after the Transaction, in substantially
the same proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Company or the corporation or corporations to
which the assets of the Company were transferred (the "Transferee
Corporation(s)"), as the case may be. For purposes of the preceding sentence,
indirect beneficial ownership shall include, without limitation, an interest
resulting from ownership of the voting stock of one or more corporations which,
as a result of the Transaction, own the Company or the Transferee
Corporation(s), as the case may be, either directly or through one or more
subsidiary corporations. The Board shall

<PAGE>

have the right to determine whether multiple sales or exchanges of the voting
stock of the Company or multiple Ownership Change Events are related, and its
determination shall be final, binding and conclusive.

                  8.2 EFFECT OF CHANGE IN CONTROL ON OPTIONS. In the event of a
Change in Control, the surviving, continuing, successor, or purchasing
corporation or parent corporation thereof, as the case may be (the "Acquiring
Corporation"), may either assume the Company's rights and obligations under
outstanding Options or substitute for outstanding Options substantially
equivalent options for the Acquiring Corporation's stock. For purposes of this
Section 8.2, an Option shall be deemed assumed if, following the Change in
Control, the Option confers the right to purchase in accordance with its terms
and conditions, for each share of Stock subject to the Option immediately prior
to the Change in Control, the consideration (whether stock, cash or other
securities or property) to which a holder of a share of Stock on the effective
date of the Change in Control was entitled. Any Options which are neither
assumed or substituted for by the Acquiring Corporation in connection with the
Change in Control nor exercised as of the date of the Change in Control shall
terminate and cease to be outstanding effective as of the date of the Change in
Control. Notwithstanding the foregoing, shares acquired upon exercise of an
Option prior to the Change in Control and any consideration received pursuant to
the Change in Control with respect to such shares shall continue to be subject
to all applicable provisions of the Option Agreement evidencing such Option
except as otherwise provided in such Option Agreement.

                  8.3 ACCELERATION OF VESTING UPON CERTAIN EVENTS FOLLOWING
CHANGE OF CONTROL. In the event of a Change in Control wherein the Acquiring
Corporation does assume such Options or substitutes for outstanding Options
substantially equivalent options for the Acquiring Corporation's stock, then,
with respect to each Option held by persons then performing services as
Employees, the vesting of each Option (and, if applicable, the time during which
such Option may be exercised) shall be accelerated and such Option shall become
vested and exercisable with respect to fifty percent (50%) of the unvested
portion of such Option, if, within one (1) year from the date of such Change in
Control, either of the following events occurs: (1) a Termination without Cause
of an Optionee by the Participating Company or the Acquiring Corporation or (2)
the Employee holding such Option effects a Termination of Employment due to the
fact that there is a material reduction in such Employee's salary (excluding
bonuses (whether or not payable in cash), employee benefits or other non-cash
compensation) without the Employee's express consent.

         9.       PROVISION OF INFORMATION.

                  At least annually, copies of the Company's balance sheet and
income statement for the just completed fiscal year shall be made available to
each Optionee and purchaser of shares of Stock upon the exercise of an Option.
The Company shall not be required to provide such information to key employees
whose duties in connection with the Company assure them access to equivalent
information.

         10.      NONTRANSFERABILITY OF OPTIONS.

<PAGE>

                  During the lifetime of the Optionee, an Option shall be
exercisable only by the Optionee or the Optionee's guardian or legal
representative. No Option shall be assignable or transferable by the Optionee,
except by will or by the laws of descent and distribution.

         11.      COMPLIANCE WITH SECURITIES LAW.

                  The grant of Options and the issuance of shares of Stock upon
exercise of Options shall be subject to compliance with all applicable
requirements of federal, state and foreign law with respect to such securities.
Options may not be exercised if the issuance of shares of Stock upon exercise
would constitute a violation of any applicable federal, state or foreign
securities laws or other law or regulations or the requirements of any stock
exchange or market system upon which the Stock may then be listed. In addition,
no Option may be exercised unless (a) a registration statement under the
Securities Act shall at the time of exercise of the Option be in effect with
respect to the shares issuable upon exercise of the Option or (b) in the opinion
of legal counsel to the Company, the shares issuable upon exercise of the Option
may be issued in accordance with the terms of an applicable exemption from the
registration requirements of the Securities Act. The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any,
deemed by the Company's legal counsel to be necessary to the lawful issuance and
sale of any shares hereunder shall relieve the Company of any liability in
respect of the failure to issue or sell such shares as to which such requisite
authority shall not have been obtained. As a condition to the exercise of any
Option, the Company may require the Optionee to satisfy any qualifications that
may be necessary or appropriate, to evidence compliance with any applicable law
or regulation and to make any representation or warranty with respect thereto as
may be requested by the Company.

         12.      INDEMNIFICATION.

                  In addition to such other rights of indemnification as they
may have as members of the Board or officers or employees of the Participating
Company Group, members of the Board and any officers or employees of the
Participating Company Group to whom authority to act for the Board or the
Company is delegated shall be indemnified by the Company against all reasonable
expenses, including attorneys' fees, actually and necessarily incurred in
connection with the defense of any action, suit or proceeding, or in connection
with any appeal therein, to which they or any of them may be a party by reason
of any action taken or failure to act under or in connection with the Plan, or
any right granted hereunder, and against all amounts paid by them in settlement
thereof (provided such settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment in any
such action, suit or proceeding, except in relation to matters as to which it
shall be adjudged in such action, suit or proceeding that such person is liable
for gross negligence, bad faith or intentional misconduct in duties; provided,
however, that within sixty (60) days after the institution of such action, suit
or proceeding, such person shall offer to the Company, in writing, the
opportunity at its own expense to handle and defend the same.

         13.      TERMINATION OR AMENDMENT OF PLAN.

                  The Board may terminate or amend the Plan at any time.
However, subject to changes in applicable law, regulations or rules that would
permit otherwise, without the approval

<PAGE>

of the Company's shareholders, there shall be (a) no increase in the maximum
aggregate number of shares of Stock that may be issued under the Plan (except by
operation of the provisions of Section 4.2), (b) no change in the class of
persons eligible to receive Incentive Stock Options, and (c) no other amendment
of the Plan that would require approval of the Company's shareholders under any
applicable law, regulation or rule. No termination or amendment of the Plan may
adversely affect any then outstanding Option or any unexercised portion thereof,
without the consent of the Optionee, unless such termination or amendment is
required to enable an Option designated as an Incentive Stock Option to qualify
as an Incentive Stock Option or is necessary to comply with any applicable law,
regulation or rule.

         14.      SHAREHOLDER APPROVAL.

                  The Plan or any increase in the maximum aggregate number of
shares of Stock issuable thereunder as provided in Section 4.1 (the "Authorized
Shares") shall be approved by the shareholders of the Company within twelve (12)
months of the date of adoption thereof by the Board. Options granted prior to
shareholder approval of the Plan or in excess of the Authorized Shares
previously approved by the shareholders shall become exercisable no earlier than
the date of shareholder approval of the Plan or such increase in the Authorized
Shares, as the case may be.

<PAGE>

                                 JNI CORPORATION

                         TERMS OF STOCK OPTION AGREEMENT

                  The Company has granted to the Optionee, pursuant to a
Stock Option Grant Agreement (the "Grant Agreement") and the Company's
Amended and Restated 1999 Stock Option Plan (the "Plan"), an Option to
purchase certain shares of Stock, upon the terms and conditions set forth in
this Agreement. The Option shall in all respects be subject to the terms and
conditions of the Grant Agreement and the Plan, the provisions of which are
incorporated herein by reference.

         1.       DEFINITIONS AND CONSTRUCTION.

                  1.1 DEFINITIONS. Unless otherwise defined herein, capitalized
terms shall have the meanings assigned to such terms in the Grant Agreement or
the Plan.

                  1.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of this Agreement. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the singular. Use
of the term "or" is not intended to be exclusive, unless the context clearly
requires otherwise.

         2.       TAX CONSEQUENCES.

                  2.1 TAX STATUS OF OPTION. As indicated in the Grant Agreement,
this Option is intended to be either an Incentive Stock Option within the
meaning of Section 422(b) of the Code or a Nonstatutory Stock Option, which is
not intended to qualify as an Incentive Stock Option. The Optionee should
consult with the Optionee's own tax advisor regarding the tax effects of this
Option (and any requirements necessary to obtain favorable income tax treatment
under Section 422 of the Code, including, but not limited to, holding period
requirements).

                  2.2 FAIR MARKET VALUE LIMITATION. If this Option is designated
an Incentive Stock Option in the Grant Agreement, to the extent that the Option
(together with all Incentive Stock Options granted to the Optionee under all
stock option plans of the Participating Company Group, including the Plan)
becomes exercisable for the first time during any calendar year for shares
having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000),
the portion of such options which exceeds such amount will be treated as
Nonstatutory Stock Options. For purposes of this Section 2.2, options designated
as Incentive Stock Options are taken into account in the order in which they
were granted, and the Fair Market Value of stock is determined as of the time
the option with respect to such stock is granted. If the Code is amended to
provide for a different limitation from that set forth in this Section 2.2, such
different limitation shall be deemed incorporated herein effective as of the
date required or permitted by such amendment to the Code. If the Option is
treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option
in part by reason of the limitation set forth in this Section 2.2, the Optionee
may designate which portion of such Option the Optionee is exercising. In the
absence of such designation, the Optionee shall be deemed to have exercised the
Incentive Stock Option portion of the Option first. Separate certificates
representing each such portion shall be issued upon the exercise of the Option.
(NOTE TO OPTIONEE: If the aggregate Exercise Price of the Option (that is, the
Exercise Price multiplied by the Number of Option Shares) plus the aggregate

<PAGE>

exercise price of any other Incentive Stock Options you hold (whether granted
pursuant to the Plan or any other stock option plan of the Participating Company
Group) is greater than $100,000, you should contact the Chief Financial Officer
of the Company to ascertain whether the entire Option qualifies as an Incentive
Stock Option.

         3.       EXERCISE OF THE OPTION.

                  3.1 RIGHT TO EXERCISE. Except as otherwise provided herein,
the Option shall be exercisable on and after the first anniversary of the Date
of Option Grant and prior to the termination of the Option (as provided in
Section 5) in an amount not to exceed the Number of Option Shares multiplied by
the Vested Ratio less the number of shares previously acquired upon exercise of
the Option, subject to the Optionee's agreement that any shares purchased upon
exercise are subject to the Company's Right of First Refusal and Vested Share
Repurchase (as such terms are defined herein).

                  3.2 METHOD OF EXERCISE. Exercise of the Option shall be by
written notice to the Company which must state the election to exercise the
Option, the number of whole shares of Stock for which the Option is being
exercised and such other representations and agreements as to the Optionee's
investment intent with respect to such shares as may be required pursuant to the
provisions of this Agreement. The written notice must be signed by the Optionee
and must be delivered in person, by certified or registered mail, return receipt
requested, by confirmed facsimile transmission, or by such other means as the
Company may permit, to the Chief Financial Officer of the Company, or other
authorized representative of the Participating Company Group, prior to the
termination of the Option as set forth in Section 5, accompanied by full payment
of the aggregate Exercise Price for the number of shares of Stock being
purchased and an executed copy if required herein, of the then current form of
escrow agreement referenced below. The Option shall be deemed to be exercised
upon receipt by the Company of such written notice and the aggregate Exercise
Price.

                  3.3      PAYMENT OF EXERCISE PRICE.

                           (a) FORMS OF CONSIDERATION AUTHORIZED. Except as
otherwise provided below, payment of the aggregate Exercise Price for the number
of shares of Stock for which the Option is being exercised shall be made (i) in
cash, by check, or cash equivalent, (ii) by tender to the Company, or
attestation to the ownership, of whole shares of Stock owned by the Optionee
having a Fair Market Value (as determined by the Company without regard to any
restrictions on transferability applicable to such stock by reason of federal or
state securities laws or agreements with an underwriter for the Company) not
less than the aggregate Exercise Price, (iii) by means of a Cashless Exercise,
as defined in Section 3.3(b), or (iv) by any combination of the foregoing.

                           (b) LIMITATIONS ON FORMS OF CONSIDERATION.

                                    (i) Tender Of Stock. Notwithstanding the
foregoing, the Option may not be exercised by tender to the Company, or
attestation to the ownership, of shares of Stock to the extent such tender, or
attestation to the ownership, of Stock would constitute a violation of the
provisions of any law, regulation or agreement restricting the redemption of the
Company's stock. The Option may not be exercised by tender to the Company, or
attestation to

<PAGE>

the ownership, of shares of Stock unless such shares either have been owned by
the Optionee for more than six (6) months or were not acquired, directly or
indirectly, from the Company.

                                    (ii) Cashless Exercise. A "Cashless
Exercise" means the assignment in a form acceptable to the Company of the
proceeds of a sale or loan with respect to some or all of the shares of Stock
acquired upon the exercise of the Option pursuant to a program or procedure
approved by the Company (including, without limitation, through an exercise
complying with the provisions of Regulation T as promulgated from time to time
by the Board of Governors of the Federal Reserve System). The Company reserves,
at any and all times, the right, in the Company's sole and absolute discretion,
to decline to approve or terminate any such program or procedure. Generally, and
without limiting the Company's absolute discretion, a "cashless exercise" will
only be permitted at such times in which the shares underlying this Option are
publicly traded.

                  3.4 TAX WITHHOLDING. At the time the Option is exercised, in
whole or in part, or at any time thereafter as requested by the Company, the
Optionee hereby authorizes withholding from payroll and any other amounts
payable to the Optionee, and otherwise agrees to make adequate provision for
(including by means of a Cashless Exercise to the extent permitted by the
Company), any sums required to satisfy the federal, state, local and foreign tax
withholding obligations of the Participating Company Group, if any, which arise
in connection with the Option, including, without limitation, obligations
arising upon (i) the exercise, in whole or in part, of the Option, (ii) the
transfer, in whole or in part, of any shares acquired upon exercise of the
Option, (iii) the operation of any law or regulation providing for the
imputation of interest, or (iv) the lapsing of any restriction with respect to
any shares acquired upon exercise of the Option. The Optionee is cautioned that
the Option is not exercisable unless the tax withholding obligations of the
Participating Company Group are satisfied. Accordingly, the Optionee may not be
able to exercise the Option when desired even though the Option is vested, and
the Company shall have no obligation to issue a certificate for such shares.

                  3.5 CERTIFICATE REGISTRATION. Except in the event the Exercise
Price is paid by means of a Cashless Exercise, the certificate for the shares as
to which the Option is exercised shall be registered in the name of the
Optionee, or, if applicable, the Optionee's heirs.

                  3.6 RESTRICTIONS ON GRANT OF THE OPTION AND ISSUANCE OF
SHARES. The grant of the Option and the issuance of shares of Stock upon
exercise of the Option shall be subject to compliance with all applicable
requirements of federal, state or foreign law with respect to such securities.
The Option may not be exercised if the issuance of shares of Stock upon exercise
would constitute a violation of any applicable federal, state or foreign
securities laws or other law or regulations or the requirements of any stock
exchange or market system upon which the Stock may then be listed. In addition,
the Option may not be exercised unless (i) a registration statement under the
Securities Act shall at the time of exercise of the Option be in effect with
respect to the shares issuable upon exercise of the Option or (ii) in the
opinion of legal counsel to the Company, the shares issuable upon exercise of
the Option may be issued in accordance with the terms of an applicable exemption
from the registration requirements of the Securities Act. THE OPTIONEE IS
CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS
ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE THE OPTION
WHEN DESIRED EVEN

<PAGE>

THOUGH THE OPTION IS VESTED. The inability of the Company to obtain from any
regulatory body having jurisdiction the authority, if any, deemed by the
Company's legal counsel to be necessary to the lawful issuance and sale of any
shares subject to the Option shall relieve the Company of any liability in
respect of the failure to issue or sell such shares as to which such requisite
authority shall not have been obtained. As a condition to the exercise of the
Option, the Company may require the Optionee to satisfy any qualifications that
may be necessary or appropriate, to evidence compliance with any applicable law
or regulation and to make any representation or warranty with respect thereto as
may be requested by the Company.

                  3.7 FRACTIONAL SHARES. The Company shall not be required to
issue fractional shares upon the exercise of the Option.

         4.       NONTRANSFERABILITY OF THE OPTION.

                  The Option may be exercised during the lifetime of the
Optionee only by the Optionee or the Optionee's guardian or legal representative
and may not be assigned or transferred in any manner except by will or by the
laws of descent and distribution. Following the death of the Optionee, the
Option, to the extent provided in Section 6, may be exercised by the Optionee's
legal representative or by any person empowered to do so under the deceased
Optionee's will or under the then applicable laws of descent and distribution.

         5.       TERMINATION OF THE OPTION.

                  The Option shall terminate and may no longer be exercised on
the first to occur of (a) the Option Expiration Date, (b) the last date for
exercising the Option following termination of the Optionee's Service as
described in Section 6, or (c) pursuant to a Change in Control, to the extent
provided in the Plan.

         6.       EFFECT OF TERMINATION OF SERVICE.

                  6.1      OPTION EXERCISABILITY.

                           (a) DISABILITY. If the Optionee's Service with the
Participating Company Group is terminated because of the Disability of the
Optionee, the Option, to the extent unexercised and exercisable on the date on
which the Optionee's Service terminated, may be exercised by the Optionee (or
the Optionee's guardian or legal representative) at any time prior to the
expiration of twelve (12) months after the date on which the Optionee's Service
terminated, but in any event no later than the Option Expiration Date. (NOTE: If
an Incentive Stock Option is exercised more than three (3) months after the date
on which the Optionee's Service as an Employee terminated as a result of a
Disability other than a permanent and total disability as defined in Section
22(e)(3) of the Code, the Option will be treated as a Nonstatutory Stock Option
and not as an Incentive Stock Option to the extent required by Section 422 of
the Code.)

                           (b) DEATH. If the Optionee's Service with the
Participating Company Group is terminated because of the death of the Optionee,
the Option, to the extent unexercised and exercisable on the date on which the
Optionee's Service terminated, may be exercised by the Optionee's legal
representative or other person who acquired the right to exercise the Option by

<PAGE>

reason of the Optionee's death at any time prior to the expiration of twelve
(12) months after the date on which the Optionee's Service terminated, but in
any event no later than the Option Expiration Date. The Optionee's Service shall
be deemed to have terminated on account of death if the Optionee dies within
thirty (30) days after the Optionee's termination of Service.

                           (c) OTHER TERMINATION OF SERVICE. If the Optionee's
Service with the Participating Company Group terminates for any reason, except
Disability, or death, the Option, to the extent unexercised and exercisable by
the Optionee on the date on which the Optionee's Service terminated, may be
exercised by the Optionee within three (3) months (or such other longer period
of time as determined by the Board, in its sole discretion) after the date on
which the Optionee's Service terminated, but in any event no later than the
Option Expiration Date.

                  6.2 EXTENSION IF EXERCISE PREVENTED BY LAW. Notwithstanding
the foregoing, if the exercise of the Option within the applicable time periods
set forth in Section 6.1 is prevented by the provisions of Section 3.6, the
Option shall remain exercisable until thirty (30) days after the date the
Optionee is notified by the Company that the Option is exercisable, but in any
event no later than the Option Expiration Date. The Company makes no
representation as to the tax consequences of any such delayed exercise. The
Optionee should consult with the Optionee's own tax advisor as to the tax
consequences of any such delayed exercise.

                  6.3 EXTENSION IF OPTIONEE SUBJECT TO SECTION 16(b).
Notwithstanding the foregoing, if a sale within the applicable time periods set
forth in Section 6.1 of shares acquired upon the exercise of the Option would
subject the Optionee to suit under Section 16(b) of the Exchange Act, the Option
shall remain exercisable until the earliest to occur of (i) the tenth (10th) day
following the date on which a sale of such shares by the Optionee would no
longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day
after the Optionee's termination of Service, or (iii) the Option Expiration
Date. The Company makes no representation as to the tax consequences of any such
delayed exercise. The Optionee should consult with the Optionee's own tax
advisor as to the tax consequences of any such delayed exercise.

         7.       RIGHTS AS A SHAREHOLDER, EMPLOYEE OR CONSULTANT.

                  The Optionee shall have no rights as a shareholder with
respect to any shares covered by the Option until the date of the issuance of a
certificate for the shares for which the Option has been exercised (as evidenced
by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company). No adjustment shall be made for dividends,
distributions or other rights for which the record date is prior to the date
such certificate is issued, except as provided in Section 4.2 of the Plan. If
the Optionee is an Employee, the Optionee understands and acknowledges that,
except as otherwise provided in a separate, written employment agreement between
a Participating Company and the Optionee, the Optionee's employment is "at will"
and is for no specified term. Nothing in this Agreement shall confer upon the
Optionee any right to continue in the Service of a Participating Company or
interfere in any way with any right of the Participating Company Group to
terminate the Optionee's Service as an Employee or Consultant, as the case may
be, at any time.

<PAGE>

         8.       RIGHT OF FIRST REFUSAL.

                  8.1 GRANT OF RIGHT OF FIRST REFUSAL. Except as provided in
Section 8.7 below, in the event the Optionee, the Optionee's legal
representative, or other holder of shares acquired upon exercise of the Option
proposes to sell, exchange, transfer, pledge, or otherwise dispose of any shares
acquired upon exercise of the Option (the "Transfer Shares") to any person or
entity, including, without limitation, any shareholder of a Participating
Company, the Company shall have the right to repurchase the Transfer Shares
under the terms and subject to the conditions set forth in this Section 8 (the
"Right of First Refusal"). This Right of First Refusal terminates in accordance
with Section 8.9.

                  8.2 NOTICE OF PROPOSED TRANSFER. Prior to any proposed
transfer of the Transfer Shares, the Optionee shall deliver written notice (the
"Transfer Notice") to the Company describing fully the proposed transfer,
including the number of Transfer Shares, the name and address of the proposed
transferee (the "Proposed Transferee") and, if the transfer is voluntary, the
proposed transfer price, and containing such information necessary to show the
bona fide nature of the proposed transfer. In the event of a bona fide gift or
involuntary transfer, the proposed transfer price shall be deemed to be the Fair
Market Value of the Transfer Shares, as determined by the Board in good faith.
If the Optionee proposes to transfer any Transfer Shares to more than one
Proposed Transferee, the Optionee shall provide a separate Transfer Notice for
the proposed transfer to each Proposed Transferee. The Transfer Notice shall be
signed by both the Optionee and the Proposed Transferee and must constitute a
binding commitment of the Optionee and the Proposed Transferee for the transfer
of the Transfer Shares to the Proposed Transferee subject only to the Right of
First Refusal.

                  8.3 BONA FIDE TRANSFER. If the Company determines that the
information provided by the Optionee in the Transfer Notice is insufficient to
establish the bona fide nature of a proposed voluntary transfer, the Company
shall give the Optionee written notice of the Optionee's failure to comply with
the procedure described in this Section 8, and the Optionee shall have no right
to transfer the Transfer Shares without first complying with the procedure
described in this Section 8. The Optionee shall not be permitted to transfer the
Transfer Shares if the proposed transfer is not bona fide.

                  8.4 EXERCISE OF RIGHT OF FIRST REFUSAL. If the Company
determines the proposed transfer to be bona fide, the Company shall have the
right to purchase all, but not less than all, of the Transfer Shares (except as
the Company and the Optionee otherwise agree) at the purchase price and on the
terms set forth in the Transfer Notice by delivery to the Optionee of a notice
of exercise of the Right of First Refusal within thirty (30) days after the date
the Transfer Notice is delivered to the Company. The Company's exercise or
failure to exercise the Right of First Refusal with respect to any proposed
transfer described in a Transfer Notice shall not affect the Company's right to
exercise the Right of First Refusal with respect to any proposed transfer
described in any other Transfer Notice, whether or not such other Transfer
Notice is issued by the Optionee or issued by a person other than the Optionee
with respect to a proposed transfer to the same Proposed Transferee. If the
Company exercises the Right of First Refusal, the Company and the Optionee shall
thereupon consummate the sale of the Transfer Shares to the Company on the terms
set forth in the Transfer Notice within sixty (60) days after the date the
Transfer Notice is delivered to the Company (unless a longer period is offered
by the Proposed Transferee);

<PAGE>

provided, however, that in the event the Transfer Notice provides for the
payment for the Transfer Shares other than in cash, the Company shall have the
option of paying for the Transfer Shares by the present value cash equivalent of
the consideration described in the Transfer Notice as reasonably determined by
the Company. For purposes of the foregoing, cancellation of any indebtedness of
the Optionee to any Participating Company shall be treated as payment to the
Optionee in cash to the extent of the unpaid principal and any accrued interest
canceled.

                  8.5 FAILURE TO EXERCISE RIGHT OF FIRST REFUSAL. If the Company
fails to exercise the Right of First Refusal in full (or to such lesser extent
as the Company and the Optionee otherwise agree) within the period specified in
Section 8.4 above, the Optionee may conclude a transfer to the Proposed
Transferee of the Transfer Shares on the terms and conditions described in the
Transfer Notice, provided such transfer occurs not later than ninety (90) days
following delivery to the Company of the Transfer Notice. The Company shall have
the right to demand further assurances from the Optionee and the Proposed
Transferee (in a form satisfactory to the Company) that the transfer of the
Transfer Shares was actually carried out on the terms and conditions described
in the Transfer Notice. No Transfer Shares shall be transferred on the books of
the Company until the Company has received such assurances, if so demanded, and
has approved the proposed transfer as bona fide. Any proposed transfer on terms
and conditions different from those described in the Transfer Notice, as well as
any subsequent proposed transfer by the Optionee, shall again be subject to the
Right of First Refusal and shall require compliance by the Optionee with the
procedure described in this Section 8.

                  8.6 TRANSFEREES OF TRANSFER SHARES. All transferees of the
Transfer Shares or any interest therein, other than the Company, shall be
required as a condition of such transfer to agree in writing (in a form
satisfactory to the Company) that such transferee shall receive and hold such
Transfer Shares or interest therein subject to all of the terms and conditions
of this Option Agreement, including this Section 8 providing for the Right of
First Refusal with respect to any subsequent transfer. Any sale or transfer of
any shares acquired upon exercise of the Option shall be void unless the
provisions of this Section 8 are met.

                  8.7 TRANSFERS NOT SUBJECT TO RIGHT OF FIRST REFUSAL. The Right
of First Refusal shall not apply to any transfer or exchange of the shares
acquired upon exercise of the Option if such transfer or exchange is in
connection with an Ownership Change Event. If the consideration received
pursuant to such transfer or exchange consists of stock of a Participating
Company, such consideration shall remain subject to the Right of First Refusal
unless the provisions of Section 8.9 below result in a termination of the Right
of First Refusal.

                  8.8 ASSIGNMENT OF RIGHT OF FIRST REFUSAL. The Company shall
have the right to assign the Right of First Refusal at any time, whether or not
there has been an attempted transfer, to one or more persons as may be selected
by the Company.

                  8.9 EARLY TERMINATION OF RIGHT OF FIRST REFUSAL. The other
provisions of this Option Agreement notwithstanding, the Right of First Refusal
shall terminate and be of no further force and effect upon (a) the occurrence of
a Change in Control, unless the Acquiring Corporation assumes the Company's
rights and obligations under the Option or substitutes a substantially
equivalent option for the Acquiring Corporation's stock for the Option, or (b)
the existence of a public market for the class of shares subject to the Right of
First Refusal. A

<PAGE>

"PUBLIC MARKET" shall be deemed to exist if (i) such stock is listed on a
national securities exchange (as that term is used in the Exchange Act) or (ii)
such stock is traded on the over-the-counter market and prices therefor are
published daily on business days in a recognized financial journal.

         9.       VESTED SHARE REPURCHASE OPTION.

                  9.1 GRANT OF VESTED SHARE REPURCHASE OPTION. Except as
otherwise provided herein, in the event of the occurrence of any Repurchase
Event, as defined below, the Company shall have the right to repurchase the
Vested Shares acquired by the Optionee pursuant to the Option (the "Repurchase
Shares") under the terms and subject to the conditions set forth in this Section
9 (the "Vested Share Repurchase Option"). Each of the following events shall
constitute a "Repurchase Event":

                           (a) Termination of the Optionee's Service with the
Participating Company Group for any reason or no reason, with or without cause,
including death or Disability. The Repurchase Period, as defined below, shall
commence on the date of termination of the Optionee's Service.

                           (b) The Optionee, the Optionee's legal
representative, or other holder of shares acquired upon exercise of the Option
attempts to sell, exchange, transfer, pledge, or otherwise dispose of any
Repurchase Shares without complying with the provisions of Section 8. The
Repurchase Period, as defined below, shall commence on the date the Company
receives actual notice of such attempted sale, exchange, transfer, pledge or
other disposition.

                           (c) The receivership, bankruptcy or other creditor's
proceeding regarding the Optionee or the taking of any of the Optionee's shares
of Stock by legal process, such as a levy of execution. The Repurchase Period,
as defined below, shall commence on the date the Company receives actual notice
of the commencement of pendency of the receivership, bankruptcy or other
creditor's proceeding or the date of such taking, as the case may be. The Fair
Market Value of the Repurchase Shares shall be determined as of the last day of
the month preceding the month in which the proceeding involved commenced or the
taking occurred.

                  9.2 EXERCISE OF VESTED SHARE REPURCHASE OPTION. The Company
may exercise the Vested Share Repurchase Option by written notice to the
Optionee, the Optionee's legal representative, or other holder of the Repurchase
Shares, as the case may be, during the Repurchase Period. The "Repurchase
Period" shall be the period commencing at the time set forth in Section 9.1
above and ending on the later of (a) the date ninety (90) days after the
commencement of the Repurchase Period or (b) the date ninety (90) days after the
Option is last exercised. If the Company fails to give notice during the
Repurchase Period, the Vested Share Repurchase Option shall terminate (unless
the Company and the Optionee have extended the time for the exercise of the
Vested Share Repurchase Option) unless and until there is a subsequent
Repurchase Event. Notwithstanding a termination of the Vested Share Repurchase
Option, the remaining provisions of this Option Agreement shall remain in full
force and effect, including, without limitation, the Right of First Refusal. If
there is a subsequent Repurchase Event, the Vested Share Repurchase Option shall
again become exercisable as provided in this

<PAGE>

Section 9. The Vested Share Repurchase Option must be exercised, if at all, for
all of the Repurchase Shares, except as the Company and the Optionee otherwise
agree.

                  9.3 PAYMENT FOR REPURCHASE SHARES. The repurchase price per
share being repurchased by the Company pursuant to the Vested Share Repurchase
Option shall be an amount equal to the Fair Market Value of the shares
determined as of the date of the Repurchase Event (except as otherwise provided
in Section 9.1(c) above) by the Board in good faith. Payment by the Company to
the Optionee shall be made in cash on or before the last day of the Repurchase
Period. For purposes of this Section 9.3, cancellation of any indebtedness of
the Optionee to the Company shall be treated as payment to the Optionee in cash
to the extent of the unpaid principal and any accrued interest canceled.

                  9.4 TRANSFERS NOT SUBJECT TO VESTED SHARE REPURCHASE OPTION.
The Vested Share Repurchase Option shall not apply to any transfer or exchange
of shares acquired upon exercise of the Option if such transfer or exchange is
in connection with an Ownership Change Event as described in the Plan. If the
consideration received pursuant to such transfer or exchange consists of stock
of a Participating Company, such consideration will remain subject to the Vested
Share Repurchase Option unless the provisions of Section 9.6 below result in a
termination of the Vested Share Repurchase Option.

                  9.5 ASSIGNMENT OF VESTED SHARE REPURCHASE OPTION. The Company
shall have the right to assign the Vested Share Repurchase Option at any time,
whether or not such option is then exercisable, to one or more persons as may be
selected by the Company.

                  9.6 EARLY TERMINATION OF VESTED SHARE REPURCHASE OPTION. The
other provisions of this Option Agreement notwithstanding, the Vested Share
Repurchase Option shall terminate and be of no further force and effect upon (a)
the occurrence of a Change in Control as described in the Plan, unless the
Acquiring Corporation assumes the Company's rights and obligations under the
Option or substitutes a substantially equivalent option for the Acquiring
Corporation's stock for the Option, or (b) the existence of a public market, as
defined in Section 8.9, for the class of shares subject to the Vested Share
Repurchase Option.

         10.      ESCROW.

                  10.1 ESTABLISHMENT OF ESCROW. To ensure that shares subject to
the Vested Share Repurchase Option Provisions will be available for repurchase,
the Company may require the Optionee to deposit the certificate evidencing the
shares which the Optionee purchases upon exercise of the Option with an agent
designated by the Company under the terms and conditions of an escrow agreement
approved by the Company. If the Company does not require such deposit as a
condition of exercise of the Option, the Company reserves the right at any time
to require the Optionee to so deposit the certificate in escrow. Upon the
occurrence of an Ownership Change Event or a change in the character or amount
of any of the outstanding stock of the corporation the stock of which is subject
to the provisions of this Option Agreement, any and all new, substituted or
additional securities or other property to which the Optionee is entitled by
reason of the Optionee's ownership of shares of Stock acquired upon exercise of
the Option that remain, following such Ownership Change Event or other change,
subject to the Vested Share Repurchase Option Provisions, shall be immediately
subject to the escrow to the

<PAGE>

same extent as such shares of Stock immediately before such event. The Company
shall bear the expenses of the escrow.

                  10.2 DELIVERY OF SHARES TO OPTIONEE. As soon as practicable
after the expiration of the restrictions described in Section 10.1, but not more
frequently than twice each calendar year, the escrow agent shall deliver to the
Optionee the shares and any other property no longer subject to such
restrictions.

                  10.3 NOTICES AND PAYMENTS. In the event the shares and any
other property held in escrow are subject to the Company's exercise of the Right
of First Refusal or the Vested Share Repurchase Option Provisions, the notices
required to be given to the Optionee shall be given to the escrow agent, and any
payment required to be given to the Optionee shall be given to the escrow agent.
Within thirty (30) days after payment by the Company, the escrow agent shall
deliver the shares and any other property which the Company has purchased to the
Company and shall deliver the payment received from the Company to the Optionee.

         11.      STOCK DISTRIBUTIONS SUBJECT TO THIS AGREEMENT.

                  If, from time to time, there is any stock dividend, stock
split or other change, as described in Section 4.2 of the Plan, in the character
or amount of any of the outstanding stock of the corporation the stock of which
is subject to the provisions of this Agreement, then in such event any and all
new, substituted or additional securities to which the Optionee is entitled by
reason of the Optionee's ownership of the shares acquired upon exercise of the
Option shall be immediately subject to the Right of First Refusal and Vested
Share Repurchase Option with the same force and effect as the shares subject to
such restrictions immediately before such event.

         12.      NOTICE OF SALES UPON DISQUALIFYING DISPOSITION.

                  If the Option is designated as an Incentive Stock Option in
the Grant Agreement, the Optionee shall comply with the provisions of this
Section. The Optionee shall promptly notify the Chief Financial Officer of the
Company if the Optionee disposes of any of the shares acquired pursuant to the
Option within one (1) year after the date of the Optionee exercises all or part
of the Option or within two (2) years after the Date of Grant. Until such time
as the Optionee disposes of such shares in a manner consistent with the
provisions of this Agreement, unless otherwise expressly authorized by the
Company, the Optionee shall hold all shares acquired pursuant to the Option in
the Optionee's name (and not in the name of any nominee) for the one-year period
immediately after the exercise of the Option and the two-year period immediately
after Date of Grant. At any time during the one-year or two-year periods set
forth above, the Company may place a legend on any certificate representing
shares acquired pursuant to the Option requesting the transfer agent for the
Company's stock to notify the Company of any such transfers. The obligation of
the Optionee to notify the Company of any such transfer shall continue
notwithstanding that a legend has been placed on the certificate pursuant to the
preceding sentence.

         13.      LEGENDS.

                  The Company may at any time place legends referencing the
Right of First Refusal, the Vested Share Repurchase Option and any applicable
federal, state or foreign

<PAGE>

securities law restrictions on all certificates representing shares of stock
subject to the provisions of this Agreement. The Optionee shall, at the request
of the Company, promptly present to the Company any and all certificates
representing shares acquired pursuant to the Option in the possession of the
Optionee in order to carry out the provisions of this Section. Unless otherwise
specified by the Company, legends placed on such certificates may include, but
shall not be limited to, the following:

                  13.1 "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE
IN ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY RECEIVES
AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY
TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT."

                  13.2 "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO A RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION OR ITS ASSIGNEE
SET FORTH IN AN AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER, OR
SUCH HOLDER'S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICE OF THIS CORPORATION."

                  13.3 "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER, INCLUDING A VESTED SHARE REPURCHASE OPTION
IN FAVOR OF THE CORPORATION OR ITS ASSIGNEE SET FORTH IN AN AGREEMENT BETWEEN
THE CORPORATION AND THE REGISTERED HOLDER, OR SUCH HOLDER'S PREDECESSOR IN
INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS
CORPORATION."

                  13.4 If this Option is designated as an Incentive Stock Option
in the Grant Agreement: "THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY
THE CORPORATION TO THE REGISTERED HOLDER UPON EXERCISE OF AN INCENTIVE STOCK
OPTION AS DEFINED IN SECTION 422 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED ("ISO"). IN ORDER TO OBTAIN THE PREFERENTIAL TAX TREATMENT AFFORDED TO
ISOs, THE SHARES SHOULD NOT BE TRANSFERRED PRIOR TO [INSERT LATER OF TWO YEARS
AFTER THE DATE OF OPTION GRANT OR ONE YEAR AFTER THE DATE OF EXERCISE]. SHOULD
THE REGISTERED HOLDER ELECT TO TRANSFER ANY OF THE SHARES PRIOR TO THIS DATE AND
FOREGO ISO TAX TREATMENT, THE TRANSFER AGENT FOR THE SHARES SHALL NOTIFY THE
CORPORATION IMMEDIATELY. THE REGISTERED HOLDER SHALL HOLD ALL SHARES PURCHASED
UNDER THE INCENTIVE STOCK OPTION IN THE REGISTERED HOLDER'S NAME (AND NOT IN THE
NAME OF ANY NOMINEE) PRIOR TO THIS DATE OR UNTIL TRANSFERRED AS DESCRIBED
ABOVE."

<PAGE>

         14.      PUBLIC OFFERING.

                  The Optionee hereby agrees that in the event of any
underwritten public offering of stock, including an initial public offering of
stock, made by the Company pursuant to an effective registration statement filed
under the Securities Act, the Optionee shall not offer, sell, contract to sell,
pledge, hypothecate, grant any option to purchase or make any short sale of, or
otherwise dispose of any shares of stock of the Company or any rights to acquire
stock of the Company for such period of time from and after the effective date
of such registration statement as may be established by the underwriter for such
public offering; provided, however, that such period of time shall not exceed
one hundred eighty (180) days from the effective date of the registration
statement to be filed in connection with such public offering. The foregoing
limitation shall not apply to shares registered in the public offering under the
Securities Act. The Optionee shall be subject to this Section provided and only
if the officers and directors of the Company are also subject to similar
arrangements.

         15.      RESTRICTIONS ON TRANSFER OF SHARES.

                  No shares acquired upon exercise of the Option may be sold,
exchanged, transferred (including, without limitation, any transfer to a nominee
or agent of the Optionee), assigned, pledged, hypothecated or otherwise disposed
of, including by operation of law, in any manner which violates any of the
provisions of this Agreement, and any such attempted disposition shall be void.
The Company shall not be required (a) to transfer on its books any shares which
will have been transferred in violation of any of the provisions set forth in
this Option Agreement or (b) to treat as owner of such shares or to accord the
right to vote as such owner or to pay dividends to any transferee to whom such
shares will have been so transferred.

         16.      BINDING EFFECT.

                  Subject to the restrictions on transfer set forth herein, this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective heirs, executors, administrators, successors and assigns.

         17.      TERMINATION OR AMENDMENT.

                  The Board may terminate or amend the Plan or the Option at any
time; provided, however, that except in connection with a Change in Control, no
such termination or amendment may adversely affect the Option or any unexercised
portion hereof without the consent of the Optionee unless such termination or
amendment is necessary to comply with any applicable law or government
regulation or is required to enable an Option designated as an Incentive Stock
Option in the Grant Agreement to qualify as an Incentive Stock Option. No
amendment or addition to this Agreement shall be effective unless in writing.

         18.      NOTICES.

                  Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given (except to the extent that this
Option Agreement provides for effectiveness only upon actual receipt of such
notice) upon personal delivery or upon deposit in the United States Post Office,
by registered or certified mail, with postage and fees prepaid,

<PAGE>

addressed to the other party at the address shown on the Grant Agreement or at
such other address as such party may designate in writing from time to time to
the other party.

         19.      INTEGRATED AGREEMENT.

                  The Grant Agreement, this Agreement and the Plan constitute
the entire understanding and agreement of the Optionee and the Participating
Company Group with respect to the subject matter contained herein and therein
and there are no agreements, understandings, restrictions, representations, or
warranties among the Optionee and the Participating Company Group with respect
to such subject matter other than those as set forth or provided for herein or
therein. To the extent contemplated herein or therein, the provisions of the
Grant Agreement and this Agreement shall survive any exercise of the Option and
shall remain in full force and effect.

         20.      APPLICABLE LAW.

                  This Agreement shall be governed by the laws of the State of
California as such laws are applied to agreements between California residents
entered into and to be performed entirely within the State of California.

                                       Optionee: _______________________________

                                       Date: ___________________________________

<PAGE>

                                 EXERCISE NOTICE

JNI Corporation
9775 Towne Centre Drive
San Diego, CA 92121
Attention: Chief Financial Officer

Ladies and Gentlemen:

         1. Exercise of Option. I was granted a stock option (the "Option")
to purchase shares of the common stock of JNI Corporation (the "Company") on
_____________, _____, pursuant to the Company's 1999 Amended and Restated
Stock Option Plan (the "Plan") and pursuant to the Stock Option Grant
Agreement dated ______, 20__ and the related Terms of Stock Option Agreement
(together, the "Option Agreement"). I hereby elect to exercise the Option as
to a total of ______________ shares of the common stock of the Company (the
"Shares"), all of which have vested in accordance with the Option Agreement.

         2. Payment. Enclosed herewith is full payment in the aggregate amount
of $_____________ (representing $_______ per share) for the Shares in the manner
set forth in the Option Agreement. I authorize payroll withholding and otherwise
will make adequate provision for federal, state, local and foreign tax
withholding obligations of the Company, if any.

         3. Binding Effect. I agree that the Shares are being acquired in
accordance with and subject to the terms, provisions and conditions of the
Option Agreement, including the Right of First Refusal and Vested Share
Repurchase Option set forth therein, to all of which I hereby expressly assent.
This Agreement shall inure to the benefit of and be binding upon the my heirs,
executors, administrators, successors and assigns. I agree to deposit the
certificate(s) evidencing the Shares, along with a blank stock assignment
separate from certificate executed by me, with an escrow agent designated by the
Company, to be held by such escrow agent pursuant to the Option Agreement.

         4. Transfer. I am aware that Rule 144, promulgated under the Securities
Act, which permits limited public resale of securities acquired in a nonpublic
offering, is not currently available with respect to the Shares and, in any
event, is available only if certain conditions are satisfied. I understand that
any sale of the Shares that might be made in reliance upon Rule 144 may only be
made in limited amounts in accordance with the terms and conditions of such rule
and that a copy of Rule 144 will be delivered to me upon request.

         I agree that, if the Option is designated an Incentive Stock Option in
the Grant Agreement, I will promptly notify the Chief Financial Officer of the
Company if I transfer any of the Shares acquired pursuant to such incentive
stock option within one (1) year from the date I exercise all or part of the
Option or within two (2) years of the date of grant of the Option.

         My address of record is: ____________________________

         _____________________________________________________

         My Social Security Number is: _______________________

<PAGE>

         I understand that I am purchasing the Shares pursuant to the terms of
the Plan and my Option Agreement, copies of which I have received and carefully
read and understand.

                                              Very truly yours,

                                              _________________________

Receipt of the above is hereby acknowledged.

JNI CORPORATION

By: ___________________________

Title: _________________________

Dated: ________________________

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                                 JNI CORPORATION

                          STOCK OPTION GRANT AGREEMENT

         ______________________ (the "Optionee") has been granted an option
(the "Option") to purchase shares of the Common Stock of JNI Corporation, a
Delaware corporation (the "Company") pursuant to this Stock Option Grant
Agreement (the "Grant Agreement"), the JNI Corporation Amended and Restated
1999 Stock Option Plan (the "Plan") and the attached Terms of Stock Option
Agreement (the "Option Agreement"), the provisions of which are incorporated
herein by reference.

         TYPE OF OPTION: / / Incentive or / / Nonstatutory

         The following terms shall have their respective meanings as set forth
below or in the Plan:

          "DATE OF OPTION GRANT" means ________, 20____.

         "NUMBER OF OPTION SHARES" means ___________ shares of Stock.

         "EXERCISE PRICE" means $_____ per share of Stock.

         "OPTION EXPIRATION DATE" means the date ten (10) years after the Date
of Option Grant.

         "VESTED RATIO" means, on any relevant date, the ratio determined as
follows:

         (a) Prior to the first anniversary of the Date of Option Grant, the
Vested Ratio shall be zero.

         (b) On the first anniversary of the Date of Option Grant, the Vested
Ratio shall be 1/4, provided the Optionee's Service has not terminated prior to
the first anniversary of the Date of Option Grant.

         (c) For each full month of Optionee's Service from the first
anniversary of the Date of Option Grant until the Vested Ratio equals 1/1, the
Vested Ratio shall be increased by 1/48.

         By their signatures below, the parties hereto agree that the Option is
governed by the terms and conditions of the Plan as in effect on the Date of
Option Grant and the Option Agreement, both of which are attached hereto. The
Optionee acknowledges receipt of a copy of the Plan and the Option Agreement,
represents that he or she is familiar with the provisions contained therein, and
hereby accepts the Option subject to all of the terms and conditions thereof.

                                          JNI CORPORATION

                                          By:
                                             -----------------------------------

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                                          Title:
                                                --------------------------------
                                          Address:   9775 Towne Centre Drive
                                                     San Diego, CA 92121

                                          OPTIONEE

                                          By:
                                             -----------------------------------
                                          Name:
                                               ---------------------------------
                                                        (Please print)

                                          Address:
                                                  ------------------------------

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