Document:

EXHIBIT 10.37

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                            ASSET PURCHASE AGREEMENT

                                      AMONG

                QORUS.COM, INC., TMT HOLDINGS, INC., AELIX, INC.

                                       AND

                           AVERY COMMUNICATIONS, INC.

                           DATED AS OF MAY 29, 2001

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                              TABLE OF CONTENTS

                                                                            Page

   ARTICLE I            DEFINITIONS............................................1
       SECTION 1.1      DEFINITIONS............................................1

   ARTICLE II           PURCHASE AND SALE OF THE BUSINESS......................8
       SECTION 2.1      PURCHASE AND SALE OF THE ACQUIRED ASSETS...............8
       SECTION 2.2      TAX TREATMENT..........................................8

   ARTICLE III          CLOSING; ASSUMPTION OF LIABILITIES.....................9
       SECTION 3.1      CLOSING................................................9
       SECTION 3.2      ASSUMPTION OF ASSUMED LIABILITIES......................9
       SECTION 3.3      EXCLUSION OF LIABILITIES...............................9

   ARTICLE IV           CONDITIONS TO CLOSING..................................9
       SECTION 4.1      CONDITIONS TO BUYER'S OBLIGATION.......................9
       SECTION 4.2      CONDITIONS TO PARENT AND SELLER'S OBLIGATION..........11
       SECTION 4.3      FRUSTRATION OF CLOSING CONDITIONS.....................12

   ARTICLE V            REPRESENTATIONS AND WARRANTIES OF PARENT AND SELLER...12
       SECTION 5.1      ORGANIZATION, STANDING AND AUTHORITY..................12
       SECTION 5.2      NO VIOLATION; CONSENTS AND APPROVALS..................13
       SECTION 5.3      SEC DOCUMENTS; UNDISCLOSED LIABILITIES................14
       SECTION 5.4      ABSENCE OF CHANGES OR EVENTS..........................14
       SECTION 5.5      TAXES.................................................15
       SECTION 5.6      TITLE TO ASSETS AND REAL PROPERTY LEASES..............16
       SECTION 5.7      CONTRACTS.............................................17
       SECTION 5.8      LITIGATION............................................20
       SECTION 5.9      EMPLOYEE AND RELATED MATTERS; ERISA...................20
       SECTION 5.10     COMPLIANCE WITH LAWS..................................22
       SECTION 5.11     LABOR MATTERS.........................................23
       SECTION 5.12     INTELLECTUAL PROPERTY, ETC............................23
       SECTION 5.13     SUFFICIENCY OF ASSETS.................................25
       SECTION 5.14     CONDITION OF ACQUIRED ASSETS..........................25
       SECTION 5.15     RECEIVABLES...........................................25
       SECTION 5.16     INSURANCE.............................................25
       SECTION 5.17     BROKERS...............................................25
       SECTION 5.18     SUPPLIERS.............................................25
       SECTION 5.19     CUSTOMERS; RESELLERS..................................26
       SECTION 5.20     DISCLOSURE DOCUMENTS..................................26
       SECTION 5.21     STATE TAKEOVER STATUTES...............................26

   ARTICLE VI           REPRESENTATIONS AND WARRANTIES OF BUYER...............26
       SECTION 6.1      ORGANIZATION, STANDING AND AUTHORITY. BUYER...........26
       SECTION 6.2      NO VIOLATION; CONSENTS AND APPROVALS..................27
       SECTION 6.3      BROKERS...............................................27
       SECTION 6.4      DISCLOSURE DOCUMENTS..................................27

   ARTICLE VII          COVENANTS OF PARENT AND SELLER........................28
       SECTION 7.1      ACCESS................................................28
       SECTION 7.2      ORDINARY CONDUCT......................................28
       SECTION 7.3      CONFIDENTIALITY.......................................31
       SECTION 7.4      STOCKHOLDER ACTION BY WRITTEN CONSENT;
                        PREPARATION OF THE PARENT INFORMATION STATEMENT.......31
       SECTION 7.5      EXPENSES..............................................32

   ARTICLE VIII         COVENANTS OF BUYER....................................32

   ARTICLE IX           MUTUAL COVENANTS......................................32
       SECTION 9.1      BUYER STOCKHOLDER APPROVAL............................32
       SECTION 9.2      BULK TRANSFER LAWS....................................33
       SECTION 9.3      CONSENTS; EXCLUDED CONTRACTS..........................33
       SECTION 9.4      PUBLICITY.............................................34
       SECTION 9.5      COMMERCIALLY REASONABLE EFFORTS.......................34
       SECTION 9.6      FURTHER ASSURANCES....................................34
       SECTION 9.7      TAX MATTERS...........................................34
       SECTION 9.8      ACCOUNTS..............................................35

   ARTICLE X            NONCOMPETITION........................................35
       SECTION 10.1     NONCOMPETITION........................................35

   ARTICLE XI           INDEMNIFICATION.......................................36
       SECTION 11.1     INDEMNIFICATION BY PARENT AND SELLER..................36
       SECTION 11.2     INDEMNIFICATION BY BUYER..............................36
       SECTION 11.3     LOSSES NET OF INSURANCE...............................37
       SECTION 11.4     TERMINATION OF INDEMNIFICATION........................37
       SECTION 11.5     PROCEDURES RELATING TO THIRD PARTY AND
                        DIRECT INDEMNIFICATION CLAIMS.........................37
       SECTION 11.6     INDEMNITY PAYMENTS....................................39

   ARTICLE XII          TERMINATION...........................................39
       SECTION 12.1     TERMINATION...........................................39
       SECTION 12.2     OTHER TRANSACTION AGREEMENTS;
                        MATERIAL TO BE RETURNED...............................40
       SECTION 12.3     EFFECT OF TERMINATION.................................41

   ARTICLE XIII         MISCELLANEOUS.........................................41
       SECTION 13.1     ASSIGNMENT............................................41
       SECTION 13.2     NO THIRD PARTY BENEFICIARIES..........................41
       SECTION 13.3     AMENDMENTS............................................41
       SECTION 13.4     CONSENTS AND APPROVALS................................41
       SECTION 13.5     WAIVERS...............................................41
       SECTION 13.6     SURVIVAL OF REPRESENTATIONS...........................42
       SECTION 13.7     NOTICES...............................................42
       SECTION 13.8     EXHIBITS AND SCHEDULES; INTERPRETATION................43
       SECTION 13.9     COUNTERPARTS..........................................43
       SECTION 13.10    ENTIRE AGREEMENT......................................43
       SECTION 13.11    SEVERABILITY..........................................43
       SECTION 13.12    GOVERNING LAW.........................................43

                                    SCHEDULES

Schedule 1.1(a)...Fixed Assets and Equipment
Schedule 1.1(b)...Credits and Prepaid Expenses
Schedule 1.1(c)...Acquired Intellectual Property
Schedule 1.1(d)...Permits
Schedule 1.1(e)...Assigned Contracts
Schedule 2.2......         Purchase Price Allocation
Schedule 5.2......         No Violation; Consents and Approvals
Schedule 5.4(a)...Absence of Changes or Events
Schedule 5.4(b)...Absence of Changes or Events
Schedule 5.5......         Taxes
Schedule 5.6(a)...Title to Assets and Real Property Leases
Schedule 5.6(b)...Title to Assets and Real Property Leases
Schedule 5.7(a) ..Contracts
Schedule 5.7(b)...Contracts
Schedule 5.8......         Litigation
Schedule 5.9(a)...Employee and Related Matters; ERISA
Schedule 5.9(e)...Employee and Related Matters; ERISA
Schedule 5.10(a)..Compliance with Laws
Schedule 5.10(b)..Compliance with Laws
Schedule 5.11.....         Labor Matters
Schedule 5.12(a)..Intellectual Property
Schedule 5.12(b)..Intellectual Property
Schedule 5.16.....         Insurance
Schedule 5.18.....         Suppliers
Schedule 5.19.....         Customers; Resellers
Schedule 6.2......         No Violation; Consents and Approvals
Schedule 7.2......         Ordinary Conduct

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                                       42

                            ASSET PURCHASE AGREEMENT

         ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of  May 29, 2001,
among Qorus.com,  Inc., a Florida corporation ("Parent"),  TMT Holdings, Inc., a
Delaware  corporation and a wholly owned  subsidiary of Parent  ("TMT"),  Aelix,
Inc., a Delaware  corporation  and a wholly owned  subsidiary of Parent ("Aelix"
and,  collectively  with TMT,  "Seller"),  and  Avery  Communications,  Inc.,  a
Delaware corporation ("Buyer").

         Buyer desires to purchase from Parent and Seller, and Parent and Seller
desire to sell to Buyer, the Business (defined below) upon the terms and subject
to the conditions of this Agreement.

         The Board of Directors  of Parent,  by  resolution  duly  adopted,  has
declared  that it deems the sale of the property and assets of Parent and Seller
to Buyer to be  expedient  and for the best  interests  of Parent,  and deems it
advisable and in the best interests of its  stockholders to consummate,  and has
approved,  this Agreement and the transactions  contemplated hereby on the terms
and conditions set forth herein.

         Accordingly, the parties hereto hereby agree as follows:

ARTICLE I.........
                                   DEFINITIONS

Section  1.1.......DEFINITIONS.  As used in this Agreement,  the following terms
shall have the following meanings:

         "Acquired  A/R" shall mean all  receivables  constituting  the right to
receive  payments in respect of goods or services  arising out of or relating to
the operation or conduct of the Business.

         "Acquired  Assets"  shall mean all the  right,  title and  interest  of
Parent and Seller in all the businesses, properties, assets, goodwill and rights
of Parent and Seller of whatever  kind and  nature,  wherever  located,  real or
personal, tangible or intangible, that are owned, controlled, leased or licensed
by Parent  and  Seller  and  used,  held for use or  intended  to be used in the
operation or conduct of the Business other than the Excluded  Assets,  including
(other than the Excluded Assets):

(i)      subject to Section 9.1, the Acquired Intellectual Property;

(ii)     subject to Section 9.1, the Assigned  Contracts,  including  any rights
         thereunder arising at or after the Closing;

(iii)    the Acquired A/R;

(iv)     subject toSection 9.1, the Acquired Permits;

(v)      the Leased Real  Property and the  improvements  and fixtures  thereon,
         furniture and other appurtenances thereto;

(vi)     all equipment (including vehicles) and other tangible fixed assets that
         are listed on Schedule 1.1(a);

(vii)    all credits,  prepaid  expenses,  deferred  charges,  advance payments,
         security  deposits and other  prepaid items that are listed on Schedule
         1.1(b) used,  held for use or intended to be used in, or that arise out
         of, the operation or conduct of the Business;

(viii)   all rights,  claims and credits to the extent  relating to the Business
         or to any Acquired Asset or any Assumed Liability, including all rights
         in and to products sold or leased  (including  products  returned after
         the  applicable   Closing  and  rights  of  rescission,   replevin  and
         reclamation)  in the  operation  or  conduct  of the  Business  and any
         rights,  claims and credits  arising under  insurance  policies and all
         guarantees, representations, warranties, indemnities and similar rights
         in favor of Parent or Seller to the extent  relating to the Business or
         to any Acquired Asset or Assumed Liability;

(ix)     all goodwill generated by or associated with the Business; and

(x)      all customers' and suppliers' lists, sales and promotional  literature,
         customer and supplier correspondence, manuals, files, data, papers, and
         other  information,  whether in hard copy or computer or other  format,
         that are used,  held for use or intended to be used,  or that arise out
         of, the operation or conduct of the Business (collectively,  the "Books
         and Records").

         "Acquired  Intellectual  Property"  shall  mean all  right,  title  and
interest  of Parent  and  Seller  in, to and  under  the  Intellectual  Property
(including  rights under licenses and settlement  agreements)  that is listed on
Schedule 1.1(c).

         "Acquired Permits" shall mean all Permits listed on Schedule 1.1(d).

         "Affiliate"  shall mean,  with respect to any person,  any other person
directly or indirectly  Controlling,  Controlled by or under common Control with
such first person.

         "Agreement" shall mean this Asset Purchase Agreement.

         "Asset  Acquisition  Statement" shall have the meaning ascribed to such
term in Section 2.2(a).

         "Assigned  Contract"  shall mean the Contracts of Parent or Seller that
are listed on Schedule 1.1(e).

         "Assumed  Liabilities" shall mean (i) all obligations,  liabilities and
commitments under the Assigned  Contracts arising after the date of the Closing,
except  obligations,  liabilities  or  obligations  arising out of any actual or
alleged  breach on or prior to the  Closing  Date by  Parent  or  Seller  of, or
nonperformance  on or prior to the Closing Date by Parent or Seller  under,  any
Assigned  Contract and (ii) those  obligations,  liabilities and commitments for
operating  expenses  (such as telephone,  utilities or payroll)  incurred in the
ordinary  course of  business  during  the thirty  (30) day  period  immediately
preceding the Closing Date.

         "Benefit Plans" shall have the meaning ascribed to such term in Section
5.9(a).

         "Books and Records" shall have the meaning ascribed to such term in the
definition of "Acquired Assets".

         "Business" shall mean the intelligent  message  communications  service
business of Parent and Seller, including the research, development, manufacture,
distribution,  marketing, sale and service of intelligent message communications
service systems.

         "Business  Day" shall mean any day other than (a) a Saturday or Sunday,
(b) any other day on which commercial banks in Chicago,  Illinois are authorized
or required by law to close.

         "Business  Material  Adverse  Effect"  shall  mean any  state of facts,
change, development,  event, occurrence, action or omission that individually or
in the  aggregate  could  reasonably  be  expected  to (i)  result in a material
adverse  effect on the  business,  assets,  properties,  financial  condition or
results  of  operations  of the  Business,  taken as a whole,  (ii)  prevent  or
materially impede, interfere with, hinder or delay the consummation by Parent or
Seller of the  transactions  contemplated by this Agreement or (iii) result in a
material  impairment on the ability of Buyer to continue  operating the Business
after  the  Closing  in  substantially  the  same  manner  as  it  was  operated
immediately prior to the date of this Agreement.

         "Business  Net Income" shall mean the  after-Tax  income  calculated in
accordance  with GAAP generated by the Business,  after charging all appropriate
cost of sales, selling, general and administrative  expenses,  whether direct or
allocated.  Allocations of Buyer's overhead,  interest expense, income taxes and
other  expenses to the Business  shall be made in the  reasonable  discretion of
Buyer's Board of Directors.

         "Business  Property"  shall have the  meaning  ascribed to such term in
Section 5.6(b).

         "Buyer"   shall  have  the  meaning   ascribed  to  such  term  in  the
introductory paragraph of this Agreement.

         "Buyer Material Adverse Effect" shall mean any state of facts,  change,
development,  event,  occurrence,  action or omission  that could  reasonably be
expected to prevent or materially  impede,  interfere with,  hinder or delay the
consummation by Buyer of the transactions contemplated by this Agreement.

         "Buyer  Stockholder  Approval" shall have the meaning  ascribed to such
term in Section 9.1.

         "Closing" shall have the meaning ascribed to such term in Section 3.1.

         "Closing Date" shall mean the date on which the Closing shall occur.

         "Code" shall mean the Internal  Revenue Code of 1986,  as amended,  and
the Treasury Regulations promulgated thereunder.

         "Commonly  Controlled  Entity" shall have the meaning  ascribed to such
term in Section 5.9(a).

         "Competitive  Activities"  shall have the meaning ascribed to such term
in Section 10.1(a).

         "Contracts"  shall  mean  any loan or  credit  agreement,  note,  bond,
mortgage,  indenture,  benefit plan, deed of trust,  license,  lease,  sublease,
contract, purchase order commitment or agreement, written or unwritten.

         "Control"  shall  mean the power to direct  the  affairs of a person by
reason of ownership  of voting  stock (or other  similar  equity  interest),  by
contract or otherwise.

         "Controlling  Party"  shall have the  meaning  ascribed to such term in
Section 11.5(a).

         "Direct Claim" shall have the meaning  ascribed to such term in Section
11.5(b).

         "Due Date"  shall have the  meaning  ascribed  to such term in .Section
9.7(d)

         "Earn Out" shall have the meaning ascribed to such term in Section 2.1.

         "Environmental  Law" shall mean all laws (including common law), rules,
regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices
or binding  agreements  issued,  promulgated or entered into by any Governmental
Entity, relating in any way to the environment,  the preservation or reclamation
or natural  resources,  the presence or handling  of, or exposure to,  hazardous
substances, or to health and safety matters.

         "Environmental Permits" shall have the meaning ascribed to such term in
Section 5.10(b).

         "ERISA" shall have the meaning ascribed to such term in Section 5.9(a)

         "Exchange  Act"  shall mean the  Securities  Exchange  Act of 1934,  as
amended.

         "Excluded  Assets"  shall  mean all  assets of Parent  and  Seller  not
specifically included in the definition of Acquired Assets and such assets shall
not be sold, conveyed,  assigned,  transferred or delivered to Buyer pursuant to
this Agreement.

         "Excluded Liabilities" shall mean:

(a)      any  obligation,  liability or commitment of whatever  nature,  whether
         presently in existence  or arising  hereafter,  of Parent or Seller the
         assumption  of which is not expressly  provided for by this  Agreement;
         and

(b)      (i) any  liability,  obligation  or commitment of Parent or Seller that
         arises out of or is associated  with any Excluded Asset or any business
         of Parent or Seller,  or that arises out of the ownership by, Parent or
         Seller of the Excluded  Assets or is associated with the realization of
         the benefits of any Excluded Asset;

(ii)     any  liability,  obligation or commitment of Parent or Seller to any of
         their respective Affiliates;

(iii)    any  liability,  obligation or commitment of or relating to the Benefit
         Plans,  or  relating  to  any  current  or  former  officer,  employee,
         independent  contractor  or  director  of  Parent  or  Seller  or their
         benefits or compensation, including the termination thereof;

(iv)     any liabilities for Excluded Taxes;

(v)      any indebtedness (other than ordinary course trade payables); and

(vi)     any  liability,  obligation or commitment  arising under  Environmental
         Law, which liability, obligation or commitment relates to or arises out
         of (A) any acts or  omissions  of  Parent  or Seller on or prior to the
         Closing,  or (B) any facts,  circumstances or conditions existing on or
         prior to the Closing  relating to Hazardous  Substances,  including any
         management,  disposal or arranging for disposal of Hazardous Substances
         by Parent or Seller or otherwise in connection with the Business or the
         Acquired  Assets or activities or operations  occurring or conducted in
         connection  with  any   predecessor   operations  of  the  Business  or
         otherwise.

         "Excluded Taxes" shall mean any liability, obligation or commitment for
Taxes  whether or not  accrued,  assessed or currently  due and payable,  (A) of
Parent or Seller or (B) relating to the operation and ownership of the Business,
the Acquired  Assets or the Assumed  Liabilities for any Pre-Closing Tax Periods
and, except as otherwise provided in Section 9.8(a),  any liability,  obligation
or commitment for Transfer Taxes. For purposes of this Agreement, in the case of
any Straddle Period,  (i) Property Taxes for the Pre-Closing Tax Period shall be
equal to the  amount of such  Property  Taxes  for the  entire  Straddle  Period
multiplied  by a fraction,  the  numerator of which is the number of days during
the Straddle  Period that are in the  Pre-Closing Tax Period and the denominator
of which is the number of days in the  entire  Straddle  Period,  and (ii) Taxes
(other than Property  Taxes) for the Pre-Closing Tax Period shall be computed as
if such  taxable  period  ended as of the close of  business  on the date of the
Closing.

         "Exhibits" shall mean the exhibits to this Agreement.

         "Final  Determination"  shall  mean,  a  "determination"  as defined in
Section 1313(a) of the Code or the execution of an Internal Revenue Service Form
870-AD.

         "GAAP" shall mean generally  accepted  accounting  principles in effect
from time to time in the United States of America.

         "Governmental  Entity" shall have the meaning  ascribed to such term in
Section 5.2(b).

         "Hazardous Substances" shall mean any (A) petroleum, petroleum products
or  byproducts  or any other  hydrocarbons,  asbestos,  urea  formaldehyde  foam
insulation,  polychlorinated  biphenyls,  radon gas,  chlorofluorocarbons or any
other  ozone-depleting  substances;  or (B) any chemical,  material,  substance,
waste,  pollutant or contaminant that is prohibited,  limited or regulated by or
pursuant to any Environmental Law.

         "Indemnified  Party"  shall have the  meaning  ascribed to such term in
Section 11.5.

         "Injunction"  shall have the  meaning  ascribed to such term in Section
4.1.

         "Intellectual Property" shall mean Software, trademarks, service marks,
brand names,  certification  marks,  trade dress,  assumed names,  domain names,
trade names  (including the name "Aelix") and other  indications of origin,  the
goodwill associated with the foregoing and registrations in any jurisdiction of,
and applications in any jurisdiction to register,  the foregoing,  including any
extension,  modification  or renewal of any such  registration  or  application;
inventions,   discoveries   and  ideas,   whether   patentable  or  not  in  any
jurisdiction;   patents,   applications   for  patents   (including   divisions,
provisionals,  continuations,  continuations in-part and renewal  applications),
and  any  renewals,   extensions  or  reissues  thereof,  in  any  jurisdiction;
non-public   information,   trade  secrets,   know-how,   formulae,   processes,
procedures,  research records, records of inventions,  test information,  market
surveys, software and confidential information, whether patentable or not in any
jurisdiction  and  rights in any  jurisdiction  to limit  the use or  disclosure
thereof by any person; writings and other works, whether copyrightable or not in
any  jurisdiction;  registrations or applications for registration of copyrights
in any  jurisdiction,  and any  renewals  or  extensions  thereof;  any  similar
intellectual  property or proprietary rights; and any claims or causes of action
(pending,  threatened or which could be filed)  arising out of or related to any
infringement or misappropriation of any of the foregoing.

         "IRS" shall mean the Internal Revenue Service.

         "Leased Real Property" shall have the meaning  ascribed to such term in
Section 5.6(b).

         "Liens" shall have the meaning ascribed to such term in Section 5.6(a)

         "Loss" shall have the meaning ascribed to such term in Section 11.1.

         "Multiemployer  Plan" shall have the  meaning  ascribed to such term in
Section 5.9(b).

         "Non-Controlling Party" shall have the meaning ascribed to such term in
Section 11.5(a)(i).

         "Parent"  shall  have  the  meaning   ascribed  to  such  term  in  the
introductory paragraph of this Agreement.

         "Parent Information  Statement" shall have the meaning ascribed to such
term in Section 5.2(b).

         "Parent SEC Documents"  shall have the meaning ascribed to such term in
Section 5.3.

         "Parent  Stockholder  Consent" shall have the meaning  ascribed to such
term in Section 7.4.

         "Pension Plans" shall have the meaning ascribed to such term in Section
5.9(a).

         "Permits"  shall  have the  meaning  ascribed  to such term in  Section
5.10(a).

         "Permitted  Liens"  shall  have the  meaning  ascribed  to such term in
Section 5.6(a).

         "Person" shall mean any natural person, corporation,  limited liability
company, partnership,  joint venture, trust, business association,  Governmental
Entity or other entity.

         "Personnel"  shall have the  meaning  ascribed  to such term in Section
5.12(c).

         "Pre-Closing  Tax  Period"  shall  mean,  any Tax  period  (or  portion
thereof) ending on or before the Closing Date.

         "Property  Taxes"  shall mean real,  personal and  intangible  property
taxes and similar ad valorem obligations.

         "Proxy  Statement"  shall  have the  meaning  ascribed  to such term in
Section 9.1.

         "Purchase  Price"  shall  have the  meaning  ascribed  to such  term in
Section 2.1.

         "Real Property  Leases" shall have the meaning ascribed to such term in
Section 5.6(b).

         "Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying,  discharging,   injecting,  escaping,  leaching,  dumping,  disposing,
depositing, dispersing, emanating, or migrating of any Hazardous Substances into
or through the environment.

         "Representatives"   shall  have  the  meaning  ascribed  to  such  term
in.Section 7.1(a)

         "Restricted  Assets"  shall have the  meaning  ascribed to such term in
Section 9.1.

         "Return" shall mean any return, statement, report or form, including in
each case any amendments thereto, required to be filed with any Taxing Authority
by or with respect to Taxes of the Business.

         "Schedules" shall mean the schedules to this Agreement.

         "SEC" shall mean the Securities and Exchange Commission.

         "Seller"  shall  have  the  meaning   ascribed  to  such  term  in  the
introductory paragraph of this Agreement.

         "Software"  shall  mean  all  types  of  computer  software   programs,
including operating systems,  application programs, software tools, firmware and
software imbedded in equipment,  including both object code and source code. The
term   "Software"   shall  also   include  all  written  or   electronic   data,
documentation,  and  materials  that explain the structure or use of Software or
that were used in the  development  of Software or are used in the  operation of
the Software including logic diagrams, flow charts,  procedural diagrams,  error
reports, manuals and training materials, look-up tables and databases.

         "Straddle Period" shall mean, any complete Tax period that includes but
does not end on the Closing Date.

         "Subsidiary"  of any person  shall mean any other  person (i) more than
50% of whose outstanding shares or securities representing the right to vote for
the election of directors or other managing  authority of such other person are,
now or hereafter,  owned or Controlled,  directly or  indirectly,  by such first
person, but such other person shall be deemed to be a Subsidiary only so long as
such ownership or Control exists, or (ii) which does not have outstanding shares
or  securities  with such  right to vote,  as may be the case in a  partnership,
joint  venture  or  unincorporated  association,  but  more  than  50% of  whose
ownership  interest  representing the right to make the decisions for such other
person is, now or hereafter,  owned or Controlled,  directly or  indirectly,  by
such first person, but such other person shall be deemed to be a Subsidiary only
so long as such ownership or Control exists.

         "Tax"  shall  mean all  income,  profits,  franchise,  gross  receipts,
capital, net worth, sales, use, withholding,  turnover, value added, ad valorem,
registration,   general  business,   employment,  social  security,  disability,
occupation, real property,  personal property (tangible and intangible),  stamp,
transfer  (including real property  transfer or gains),  conveyance,  severance,
production,  excise and other  taxes,  withholdings,  duties,  levies,  imposts,
license  and  registration  fees  and  other  similar  charges  and  assessments
(including  any  and all  fines,  penalties  and  additions  attributable  to or
otherwise imposed on or with respect to any such taxes, charges, fees, levies or
other  assessments,  and  interest  thereon)  imposed  by or on  behalf  of  any
Governmental Entity.

         "Tax  Claim"  shall have the  meaning  ascribed to such term in Section
11.5(a)(ii)

         "Taxing Authority" shall mean any governmental or regulatory authority,
body  or  instrumentality  exercising  any  authority  to  impose,  regulate  or
administer the imposition of Taxes.

         "Third  Party  Claim"  shall have the meaning  ascribed to such term in
Section 11.5(a).

         "Transaction  Agreements"  shall  mean  this  Agreement  and all  other
agreements executed in connection herewith  including,  without limitation,  any
and all  bills  of  sale,  assignments  or  other  instruments  of  transfer  or
conveyance,  and any and all  assumption  agreements  and other  instruments  of
assumption.

         "Transfer  Taxes"  shall  have the  meaning  ascribed  to such  term in
Section 9.7(a).

ARTICLE II
                        PURCHASE AND SALE OF THE BUSINESS

Section 2.1 PURCHASE AND SALE OF THE ACQUIRED  ASSETS.  On the terms and subject
to the  conditions  of this  Agreement,  each of Parent and Seller  shall  sell,
convey,  transfer,  assign and deliver to Buyer,  and Buyer shall  purchase from
Parent and Seller, the Acquired Assets,  free and clear of any Liens (other than
Permitted  Liens),  for a purchase  price (the  "Purchase  Price")  equal to (i)
$2,980,000,  plus any  amounts  loaned  between  the date hereof and the Closing
Date,  payable in the form of cancellation of notes payable of Parent and Seller
to Buyer  or its  Subsidiaries,  (ii) the  payment  by Buyer to  Parent  of five
percent (5%) of the Business Net Income for a period of five (5) years following
the  Closing  Date (the  "Earn  Out") and (iii) the  assumption  of the  Assumed
Liabilities as provided in Section 3.2. The Earn Out shall be payable  annually,
within ninety (90) days of the end of the calendar year. Buyer may carry forward
any net losses from any year to offset  future  Business  Net Income,  but in no
event shall Parent be required to refund any Earn Out amounts previously paid.

Section 2.2       TAX TREATMENT.

(a)      Buyer, Parent and Seller recognize their mutual obligations pursuant to
         Section  1060 of the Code to  timely  file IRS Form  8594  (the  "Asset
         Acquisition  Statement") with each of their  respective  Federal income
         tax returns.  Buyer and Seller shall mutually agree upon the allocation
         of the Purchase Price in a manner  consistent with Schedule 2.2 and the
         provisions  of  Section  1060 of the Code,  which  allocation  shall be
         revised  from time to time to reflect any  adjustment  to the  Purchase
         Price required by this Agreement or otherwise by applicable law. Buyer,
         Parent and Seller agree that, to the extent that the Purchase  Price is
         so adjusted,  Buyer, Parent and Seller, for all Tax purposes (including
         for purposes of completing Form 8594) shall allocate such adjustment to
         the item or items to which it is principally attributable.

(b)      Except as otherwise required pursuant to a Final Determination,  Buyer,
         Parent and Seller agree to be bound by and act in  accordance  with the
         allocations of the Purchase Price set forth in Schedule 2.2 for all Tax
         purposes, including for purposes of any Returns, including any forms or
         reports  (including  IRS Form 8594)  required  to be filed  pursuant to
         Section 1060 of the Code or any comparable provision of local, state or
         foreign law, to refrain from taking any position  inconsistent with any
         such Return or Schedule  2.2, and to cooperate in the  preparation  of,
         and to timely  file,  any such  forms or reports  required  to be filed
         pursuant to Section 1060 or any such comparable provision in the manner
         required by applicable law.

ARTICLE III
                       CLOSING; ASSUMPTION OF LIABILITIES

Section 3.1 CLOSING. The closing (the "Closing") of the purchase and sale of the
Acquired Assets shall be held at 10:00 a.m. on September 30, 2001, or as soon as
practicable  following the satisfaction or waiver of the conditions set forth in
Section 4.1 and Section  4.2(excluding those conditions intended to be satisfied
at such  Closing).  The  Closing  shall  take place at the  offices of  Winstead
Sechrest & Minick P.C., 5400 Renaissance Tower, 1201 Elm Street,  Dallas,  Texas
75270 or at such  other  location  as may be  designated  by Buyer,  subject  to
Parent's consent (which shall not be unreasonably  withheld or delayed).  At the
Closing,  Parent and Seller  shall cause to be  delivered  to Buyer all bills of
sale,  assignments  and other  instruments  of transfer or  conveyance as may be
required under applicable law or as Buyer may reasonably  request to transfer to
Buyer the Acquired Assets.

Section 3.2  ASSUMPTION  OF ASSUMED  LIABILITIES.  At the  Closing,  Buyer shall
deliver to Parent or Seller all assumption  agreements and other  instruments as
may be required under applicable law or reasonably requested by Parent to effect
the  assumption  of the  Assumed  Liabilities;  PROVIDED  that the terms of such
instruments  shall not result in an increase in the  obligations of Buyer beyond
those expressly set forth in this Agreement.

Section 3.3  EXCLUSION OF  LIABILITIES.  Notwithstanding  any  provision of this
Agreement to the  contrary,  the  Excluded  Liabilities  are  excluded  from the
Assumed  Liabilities  and Buyer  shall not assume or be liable for any  Excluded
Liability,  and all  Excluded  Liabilities  shall be  retained  by and  shall be
obligations and commitments of Parent and Seller.

ARTICLE IV
                              CONDITIONS TO CLOSING

Section  4.1  CONDITIONS  TO  BUYER'S  OBLIGATION.  The  obligation  of Buyer to
consummate the Closing is subject to the satisfaction (or waiver by Buyer) as of
the Closing Date of the following conditions:

(i)      The Buyer Stockholder Approval shall have been obtained.

(ii)     The Parent Stockholder Consent shall have been obtained.

(iii)    The  representations  and  warranties  of  Parent  and  Seller  in this
         Agreement  (without  regard  to  any   qualifications   therein  as  to
         materiality  or Business  Material  Adverse  Effect)  shall be true and
         correct,  in each case as of the date of this  Agreement  and as of the
         date of the  Closing  as though  made on such date (or,  in the case of
         each  representation  and  warranty  which  expressly  speaks  as of an
         earlier  date,  as of the earlier date as of which such  representation
         and warranty speaks),  unless the failure of such  representations  and
         warranties to be true and correct,  individually  or in the  aggregate,
         could not  reasonably be expected to have a Business  Material  Adverse
         Effect.  Each of Parent and  Seller  shall  have  delivered  to Buyer a
         certificate  on its behalf  dated the  Closing  Date,  and signed by an
         authorized officer or other signatory  representing and confirming that
         the foregoing condition has been satisfied.

(iv)     Each of  Parent  and  Seller  shall  have  performed,  in all  material
         respects  all  covenants,  obligations  and  agreements  required to be
         performed or complied with by Parent or Seller,  as the case may be, by
         the time of the Closing. Each of Parent and Seller shall have delivered
         to Buyer a certificate on its behalf dated the Closing and signed by an
         authorized officer or other signatory  representing and confirming that
         the foregoing condition has been satisfied.

(v)      There shall not be pending or threatened any suit, action or proceeding
         by any person that has a reasonable  likelihood  of success (A) seeking
         to  restrain  or  prohibit  the  acquisition  by  Buyer  or  any of its
         Subsidiaries  of any of the Acquired  Assets or the Business or seeking
         to obtain from Buyer or any of its  Subsidiaries  any damages  that are
         material (individually or in the aggregate) in relation to the value of
         the  Business,  taken as a whole,  (B) seeking to prohibit or limit the
         ownership  or  operation  by  Buyer or any of its  Subsidiaries  of any
         material  portion  of the  business  or  assets  of Buyer or any of its
         material Subsidiaries or the Business, or to compel Buyer or any of its
         Subsidiaries to dispose of or hold separate any material portion of the
         business or assets of Buyer or any of its Subsidiaries or the Business,
         in each case as a result  of any of the  transactions  contemplated  by
         this  Agreement,  (C) seeking to impose  limitations  on the ability of
         Buyer or any of its  Subsidiaries  to acquire or hold, or exercise full
         rights of ownership of, the Acquired  Assets or (D) seeking to prohibit
         Buyer or any of its Subsidiaries  from  effectively  controlling in any
         material respect the Business.

(vi)     No action shall have been taken,  or any statute,  rule,  regulation or
         order shall have been  enacted or entered or deemed  applicable  to the
         transactions   contemplated  by  this   Agreement,   and  no  temporary
         restraining order or preliminary or permanent injunction or other order
         (each,  an  "Injunction")  shall have been  issued by any  Governmental
         Entity,  (A)  granting  any of the relief  referred  to in clauses  (A)
         through  (D) of  (Subsection v)or (B) which  otherwise could reasonably
         be expected to have a Business Material Adverse Effect.

(vii)    All  material  (individually  or  in  the  aggregate)   authorizations,
         consents,  Permits,  orders or approvals of, or declarations or filings
         with, or expirations of waiting  periods  imposed by, any  Governmental
         Entity reasonably  necessary in connection with the consummation of the
         Closing shall have been obtained or made.

(viii)   All material  (individually  or in the  aggregate)  consents,  waivers,
         authorizations and approvals of any person necessary to transfer all of
         the Acquired Assets (other than with respect to Assigned  Contracts) to
         Buyer  (without  regard to the effect of, or any reference to,  Section
         9.1) or  otherwise  shall have been duly  obtained and shall be in full
         force and effect on the Closing Date.

(ix)     Since the date of this  Agreement,  there shall not have  occurred  any
         state of  facts,  change,  development,  event,  occurrence,  action or
         omission  that  individually  or in the aggregate  could  reasonably be
         expected  to result in a  Business  Material  Adverse  Effect.  Each of
         Parent and Seller shall have  delivered to Buyer a  certificate  on its
         behalf dated the Closing Date,  and signed by an authorized  officer or
         other  signatory   representing   and  confirming  that  the  foregoing
         condition has been satisfied.

(x)      Buyer shall have received the opinion of ComStock  Valuation  Advisors,
         Inc. to the effect that, as of the Closing  Date,  the  acquisition  by
         Buyer of the Acquired  Assets as contemplated by this Agreement is fair
         to the stockholders of Buyer from a financial point of view.

Section 4.2 CONDITIONS TO PARENT AND SELLER'S OBLIGATION. The obligation of each
of Parent and Seller to  consummate  the Closing is subject to the  satisfaction
(or waiver by Parent and/or Seller, as applicable) as of the Closing Date of the
following conditions:

(i)      The Parent Stockholder Consent shall have been obtained.

(ii)     The  representations and warranties of Buyer in this Agreement (without
         regard  to  any  qualifications  therein  as to  materiality  or  Buyer
         Material Adverse Effect) shall be true and correct,  in each case as of
         the date of this Agreement and as of the Closing Date as though made on
         such date (or, in the case of each  representation  and warranty  which
         expressly  speaks as of an earlier  date,  as of the earlier date as of
         which such  representation  and warranty speaks,  unless the failure of
         such   representations   and   warranties   to  be  true  and  correct,
         individually  or in the aggregate,  could not reasonably be expected to
         have a Buyer  Material  Adverse  Effect.  Buyer shall have delivered to
         Parent and Seller a  certificate  on behalf of Buyer  dated the Closing
         Date and  signed by an  authorized  officer of Buyer  representing  and
         confirming that the foregoing condition has been satisfied.

(iii)    Buyer shall have  performed  in all material  respects  all  covenants,
         obligations  and agreements  required by this Agreement to be performed
         or complied with by Buyer, by the time of the Closing. Buyer shall have
         delivered to Parent and Seller a  certificate  on behalf of Buyer dated
         the  Closing  Date  and  signed  by  an  authorized  officer  of  Buyer
         representing  and  confirming  that the  foregoing  condition  has been
         satisfied.

(iv)     All  material  (individually  or  in  the  aggregate)   authorizations,
         consents,  Permits,  orders or approvals of, or declarations or filings
         with, or expirations of waiting  periods  imposed by, any  Governmental
         Entity reasonably  necessary in connection with the consummation of the
         Closing shall have been obtained or made.

(v)      There shall not be pending or threatened any suit, action or proceeding
         by any Governmental Entity that has a reasonable  likelihood of success
         (A) seeking to restrain or prohibit the disposition by Parent or Seller
         of any of the Acquired  Assets or the Business or (B) seeking to obtain
         from  Parent  or Seller  any  damages  to the  extent  relating  to the
         transactions   contemplated   by  this   Agreement  that  are  material
         (individually  or in the  aggregate) in relation to the value of Parent
         and Seller, taken as a whole

(vi)     No  statute,  rule,  regulation  or order  shall  have been  enacted or
         entered or deemed  applicable to the transactions  contemplated by this
         Agreement which has the effect of prohibiting  the  consummation of any
         of such  transactions  and no Injunction  shall have been issued by any
         Governmental Entity prohibiting any of the transactions contemplated by
         this Agreement.

(vii)    Parent shall have received the opinion of ComStock Valuation  Advisors,
         Inc. to the effect that, as of the Closing Date,  the Purchase Price is
         fair to Parent from a financial point of view.

Section 4.3 FRUSTRATION OF CLOSING  CONDITIONS.  None of Buyer, Parent or Seller
may rely on the  failure  of any  condition  set forth in this  Article IV to be
satisfied  if such  failure  was caused by such  party's  failure to act in good
faith  or to use  its  commercially  reasonable  efforts,  as and to the  extent
required by Section 9.3, to cause the Closing to occur.

ARTICLE V
               REPRESENTATIONS AND WARRANTIES OF PARENT AND SELLER

         Each of Parent and Seller hereby  jointly and severally  represents and
warrants to Buyer as follows:

Section 5.1 ORGANIZATION, STANDING AND AUTHORITY. PARENT AND SELLER. Parent is a
corporation duly  incorporated,  validly existing and in good standing under the
laws of  Florida.  Each  Seller  is a  corporation  duly  incorporated,  validly
existing and in good  standing  under the laws of  Delaware.  Each of Parent and
Seller has all requisite  corporate  power and authority to conduct the Business
in the United States of America as it is currently  conducted and to own,  lease
or operate the assets and properties used in connection therewith. Parent is the
holder of all of the issued and outstanding  capital stock of each Seller.  Each
of Parent and Seller is duly authorized, qualified or licensed to do business as
a foreign corporation and is in good standing in every jurisdiction  wherein, by
reason of the nature of the Business or the  character  of the Acquired  Assets,
such  qualification  is  necessary  or  desirable,  except for failures to be so
authorized,  qualified,  licensed or in good standing which,  individually or in
the  aggregate,  could not  reasonably  be expected to have a Business  Material
Adverse Effect.  Subject,  in the case of the sale of the property and assets of
Parent and Seller to Buyer pursuant to this Agreement,  to Parent  obtaining the
Parent  Stockholder  Consent,  each of  Parent  and  Seller  has  all  requisite
corporate  power and  authority  to enter into this  Agreement  to which it is a
party, to comply with the terms of such Transaction Agreements and to consummate
the transactions  contemplated thereby. All corporate acts and other proceedings
required to be taken by each of Parent and Seller to  authorize  the  execution,
delivery and  performance of the  Transaction  Agreements to which it is a party
and the consummation of the transactions contemplated thereby have been duly and
properly taken,  subject,  in the case of the sale of the property and assets of
Parent and Seller to Buyer pursuant to this Agreement,  to Parent  obtaining the
Parent Stockholder Consent. The Board of Directors of Parent, by resolution duly
adopted,  has  declared  the sale of such  property  and  assets  to Buyer to be
expedient  and for the best  interests of Parent,  and deems it advisable and in
the best  interests of its  stockholders  to consummate,  and has approved,  the
Transaction  Agreements and the transactions  contemplated  thereby on the terms
and conditions set forth in the Transaction Agreements.  Each of the Transaction
Agreements  to which each of Parent and Seller is a party has been duly executed
and  delivered by it and  constitutes  its legal,  valid and binding  obligation
enforceable  against it in  accordance  with its terms  (subject  to  applicable
bankruptcy,  insolvency,  reorganization,  moratorium,  fraudulent  transfer and
other similar laws affecting  creditors'  rights  generally from time to time in
effect and to general  principles of equity,  including concepts of materiality,
reasonableness,  good faith and fair dealing regardless of whether considered in
a proceeding in equity or at law).

Section 5.2       NO VIOLATION; CONSENTS AND APPROVALS.
------------------

(a)      Except as set forth on Schedule 5.2, the execution and delivery of this
         Agreement by each of Parent and Seller does not, and the  execution and
         delivery  by  each  of  Parent  and  Seller  of the  other  Transaction
         Agreements  to  which  it  is a  party  and  the  consummation  of  the
         transactions contemplated thereby and compliance with the terms thereof
         will not, (i) conflict with or result in any violation of any provision
         of the certificate or articles of incorporation or by-laws of Parent or
         Seller,  (ii)  conflict  with,  result in a violation  or breach of, or
         constitute a default (with or without notice or lapse of time or both),
         or give rise to any right of,  or result  in, a  termination,  right of
         first refusal, amendment, revocation,  cancellation or acceleration, or
         loss of material benefit, or to increased,  guaranteed,  accelerated or
         additional  rights  or  entitlements  of any  person,  or result in the
         creation of any Lien on any asset or in or upon any  property of Parent
         or Seller under,  any Contract or Permit to which Parent or Seller is a
         party, except for any such conflict,  violation, breach, default, loss,
         right,  entitlement  or Lien which,  individually  or in the aggregate,
         could not  reasonably be expected to have a Business  Material  Adverse
         Effect,  or (iii)  conflict  with or result in a violation  of, or give
         rise to the loss of a material  benefit,  or result in the  creation of
         any Lien on any asset or any  property  of the Parent or Seller  under,
         any judgment, order, decree, writ, injunction, statute, law, ordinance,
         rule or regulation applicable to Parent or Seller or to the property or
         assets of Parent or Seller,  except for any such  conflict,  violation,
         loss  or  Lien  which,  individually  or in the  aggregate,  could  not
         reasonably be expected to have a Business Material Adverse Effect.

(b)      Except as set forth on Schedule  5.2, no  consent,  approval,  license,
         Permit,  order,  authorization of, registration,  declaration or filing
         with, or notice to, any domestic or foreign  court,  administrative  or
         regulatory  agency or  commission  or other  governmental  authority or
         instrumentality  (whether  local,  municipal,  provincial,  Federal  or
         otherwise)  (each, a "Governmental  Entity") is required to be obtained
         or made by or with respect to Parent or Seller in  connection  with the
         execution   and  delivery  of  the   Transaction   Agreements   or  the
         consummation  of the  transactions  contemplated  thereby or compliance
         with the terms  thereof,  other than (i) the filing by Parent  with the
         SEC of an  information  statement  relating  to the Parent  Stockholder
         Consent  (the  "Parent  Information  Statement"),  and (ii) such  other
         consents,   approvals,   licenses,  permits,  orders,   authorizations,
         registrations,  declarations  or  filings  the  failure  of which to be
         obtained or made could not reasonably be expected,  individually  or in
         the aggregate, to have a Business Material Adverse Effect.

Section  5.3 SEC  DOCUMENTS;  UNDISCLOSED  LIABILITIES.  Parent  has  filed  all
required reports,  schedules, forms, statements and other documents with the SEC
since  December  4,  1999  (including  all  filed  reports,   schedules,  forms,
statements  and  other  documents  whether  or not  required,  the  "Parent  SEC
Documents").  As of their respective dates, the Parent SEC Documents complied in
all material  respects with the  requirements  of the Securities Act of 1933, as
amended,  or the Exchange Act, as the case may be, and the rules and regulations
of the SEC promulgated thereunder applicable to such Parent SEC Documents,  and,
with  respect to any matter  relating  to the  Business,  none of the Parent SEC
Documents  contained any untrue statement of a material fact or omitted to state
a material fact required to be stated  therein or necessary in order to make the
statements  therein,  in light of the circumstances  under which they were made,
not misleading.  Except to the extent that  information  contained in any Parent
SEC Document has been revised or superseded by a later filed Parent SEC Document
which was filed and publicly available prior to the date of this Agreement, with
respect to any matter relating to the Business, none of the Parent SEC Documents
contains any untrue  statement of a material fact or omits to state any material
fact required to be stated  therein or necessary in order to make the statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading.  The  financial  statements  of Parent  included  in the  Parent SEC
Documents comply as to form in all material respects with applicable  accounting
requirements  and the published  rules and  regulations  of the SEC with respect
thereto,  have been  prepared in accordance  with GAAP  (except,  in the case of
unaudited  statements,  as  permitted  by Form  10-Q of the  SEC)  applied  on a
consistent  basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated  financial position of Parent
and its  consolidated  Subsidiaries as of the dates thereof and the consolidated
results of their  operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end adjustments). Except for
exceptions to the following which,  individually or in the aggregate,  could not
reasonably  be  expected to have a Business  Material  Adverse  Effect,  neither
Parent nor any of its  Subsidiaries  has any  liabilities  or obligations of any
nature (whether accrued, absolute,  contingent or otherwise) required by GAAP to
be  recognized  or disclosed on a  consolidated  balance sheet of Parent and its
consolidated  Subsidiaries  or in  the  notes  thereto  and  which  are  not  so
recognized or disclosed.

Section  5.4  ABSENCE  OF CHANGES  OR  EVENTS.  Except as set forth on  Schedule
5.4(a),  since  December  31,  2000,  there  has been no set of  facts,  change,
development,  event, effect,  condition or occurrence which,  individually or in
the aggregate,  has had or could reasonably be expected to constitute a Business
Material  Adverse  Effect.  Since  December  31,  2000,  as of the  date of this
Agreement, Parent and Seller have carried on the Business in the ordinary course
of business  consistent with past practice.  Since December 31, 2000,  except as
set forth on Schedule  5.4(b),  as of the date of this Agreement  neither Parent
nor Seller has, in each case insofar as the Business is concerned:

(i)      failed to pay any creditor any amount arising from the operation of the
         Business owed to such creditor when due, other than good faith disputes
         reserved  against in accordance with GAAP and trade payables arising in
         the ordinary course of business and not past due more than 45 days;

(ii)     failed to discharge  or satisfy any Lien on any of the Acquired  Assets
         other than Permitted Liens;

(iii)    permitted,  allowed or suffered any Acquired Asset to become  subjected
         to any Lien of any nature whatsoever other than Permitted Liens;

(iv)     sold,  leased,  licensed or otherwise  disposed of any of the assets of
         the Business (or entered into any contract to do any of the foregoing),
         except  obsolete or worn out equipment  sold in the ordinary  course of
         business consistent with past practice which was not otherwise material
         (individually  or in the  aggregate)  to the  Business or canceled  any
         material  indebtedness  or  waived  any  material  claims  or rights of
         material value;

(v)      disposed of any material  Intellectual  Property used, or held for use,
         or intended to be used,  in the conduct or operation of the Business or
         allowed any material rights with respect to such Intellectual  Property
         to lapse for a period of 180 days prior to the applicable Closing;

(vi)     defaulted  on  any  material  obligation  relating  to the  conduct  or
         operation of the Business;

(vii)    granted any  allowances  or discounts  outside the  ordinary  course of
         business consistent with past practice;

(viii)   changed  the  employee  compensation  and  benefits  structure  of  the
         Business in a manner that adversely affects in a material (individually
         or in the aggregate) respect the cost structure of the Business,  taken
         as a whole;

(ix)     incurred or assumed any  liabilities,  obligations or  indebtedness  or
         guaranteed any such  liabilities,  obligations or  indebtedness,  other
         than in the ordinary course of business,  in each case, with respect to
         the Business;

(x)      suffered  any damage,  destruction  or loss,  whether or not covered by
         insurance,  that, individually or in the aggregate, could reasonably be
         expected to have a Business Material Adverse Effect;

(xi)     effected any material  write down of any of the material  assets of the
         Business; or

(xii)    entered  into any  agreement  or made any  commitment  to do any of the
         foregoing.

Section 5.5 TAXES. Except as set forth on Schedule 5.5, (a) none of the Acquired
Assets is "tax exempt use property"  within the meaning of Section 168(h) of the
Code;  (b) none of the  Acquired  Assets is a lease  made  pursuant  to  Section
168(f)(8) of the Internal  Revenue Code of 1954;  (c) neither  Parent nor Seller
nor any of their  respective  Affiliates  has made  with  respect  to  Parent or
Seller, or any assets of the Business any consent under Section 341 of the Code;
(d) none of the Acquired  Assets to be  transferred  by persons  other than U.S.
persons (as defined in Section 7701(a)(30) of the Code) is a "United States Real
Property  Interest"  as defined in Section 897 of the Code;  (e) no Liens (other
than Permitted  Liens) for material Taxes have been filed and no material claims
for Taxes have been  asserted  in writing  with  respect  to the  Business,  the
Acquired  Assets or the  Assumed  Liabilities;  (f)  Parent  and  Seller and any
affiliated  group,  within the  meaning of  Section  1504 of the Code,  of which
Parent or Seller is or has been a member, (i) has filed or caused to be filed in
a timely  manner  (within any  applicable  extension  periods)  all material Tax
returns,  reports and forms  required  to be filed by the Code or by  applicable
state, local or foreign Tax laws and (ii) all Taxes due on such returns, reports
and forms have been  timely  paid in full or will be timely  paid in full by the
due date  thereof;  (g)  none of  Parent  or  Seller  has  been a  member  of an
affiliated  group,  within the  meaning of  Section  1504 of the Code,  filing a
consolidated  Federal income tax return (other than a group the common parent of
which was Parent);  and (h) none of Parent or Seller has any  liability  for the
Taxes of any  Person  (other  than any of Parent  or  Seller)  under  Regulation
Section 1.1502-6 (or any similar  provision of state,  local, or foreign law) or
pursuant to any tax allocation or sharing agreement.

Section 5.6       TITLE TO ASSETS AND REAL PROPERTY LEASES.

(a)      Either  Parent or Seller has good and valid title to, or, with  respect
         to real property and interests in real property,  a leasehold  interest
         in,  all the  Acquired  Assets,  in each  case  free  and  clear of all
         mortgages, liens, options, charges, easements, leases, subleases, title
         defects, security interests,  charges, claims, rights of first refusal,
         options  and  encumbrances  of any  kind  ("Liens")  except  (i)  those
         disclosed on Schedule 5.6(a),  (ii) mechanics',  carriers',  workmen's,
         repairmen's  or other similar liens arising or incurred in the ordinary
         course  of  business,   (iii)  conditional  sales  contracts  (covering
         personalty and equipment,  but not real property) and equipment  leases
         entered into in the ordinary course of business,  (iv) Liens for Taxes,
         assessments  and  other  governmental  charges  which  are  not due and
         payable or which may  thereafter be paid without  penalty and (v) other
         Liens  which do not  impair  the  continued  use and  operation  of any
         Acquired  Asset in the conduct of the Business (the items  described in
         clauses (i) through (v) above are hereinafter  referred to collectively
         as  "Permitted  Liens").  None of the Liens  described  in clauses  (i)
         through (v),  individually or in the aggregate,  materially impairs, or
         could  reasonably be expected to materially  impair,  the continued use
         and operation of the Acquired  Assets (other than  immaterial  Acquired
         Assets)  to  which  they  relate  in the  conduct  of the  Business  as
         presently conducted. This Section 5.6(a)does not relate to matters with
         respect  to Real  Property  Leases,  which are the  subject  of Section
         5.6(b) below.

(b)      Schedule 5.6(b) sets forth a complete list of all leases, subleases and
         occupancy  agreements  (collectively,  as same may have been amended or
         supplemented, "Real Property Leases") and also identifies real property
         and  interests  in real  property  leased by Parent or Seller and used,
         held for use or intended to be used in the  operation or conduct of the
         Business (individually,  a "Leased Real Property"), and identifies each
         of the Real  Property  Leases by date  thereof (as well as the dates of
         any amendments,  modifications and supplements  thereto),  the original
         parties  thereto  (and,  in the event of any  assignments,  the current
         parties thereto),  the expiration date of the term thereof, and whether
         any unexercised, extant renewal option(s) exist thereunder (and, in the
         event that any of the Real Property  Leases are  subleases,  identifies
         the  underlying  prime  leases),   and  identifies  any  nondisturbance
         agreements,   reciprocal  easement  or  operating  agreements  relating
         thereto.  True, correct and complete  descriptions of any easements and
         copies of the Real Property Leases and any operating agreements and any
         other  instruments  and agreements  identified in Schedule  5.6(b) have
         been  delivered to Buyer.  Each of the Real Property  Leases,  and each
         such instrument and agreement, is in full force and effect, and, except
         as set forth on Schedule  5.6(b),  neither (as  applicable)  Parent nor
         Seller,  or party to or beneficiary  of such  instrument and agreement,
         nor, to the  knowledge  of Parent or Seller,  any of the other  parties
         thereto,  has received or given any notice of default  thereunder which
         is extant  (i.e.,  same was not cured or waived  within the  applicable
         grace period),  and, to the knowledge of Parent or Seller, no event has
         occurred  which,  with the giving of notice or the passage of time,  or
         both, would constitute a material default by Parent or Seller under any
         Real Property Lease or under any such instrument and agreement.  Parent
         or Seller has good and valid title to the  leasehold  estates under the
         Real Property Leases in all Leased Property (such Leased Property being
         sometimes referred to herein, individually,  as a "Business Property"),
         in each case free and clear of all Liens,  except the following  Liens:
         (i) such as are set forth in Schedule  5.6(b),  (ii) leases,  subleases
         and similar  agreements  set forth in Schedule  5.7,  (iii)  easements,
         covenants,  rights-of-way and other similar  restrictions of record and
         (i) (A) zoning, building and other similar restrictions, (B) Liens that
         have been  placed by any  developer,  landlord  or other third party on
         property  over  which  Parent or Seller has  easement  rights or on any
         Leased  Property  and  subordination  or  similar  agreements  relating
         thereto and (C)  unrecorded  easements,  covenants,  rights-of-way  and
         other similar restrictions.  None of the items set forth in clauses (i)
         through  (iv)  above,  individually  or in  the  aggregate,  materially
         impairs,  or could  reasonably  be expected to materially  impair,  the
         continued  use and  operation of the Leased Real Property to which they
         relate in the conduct of the Business as presently conducted.

Section 5.7       CONTRACTS.

(a)      Except as set forth on the subsection of Schedule  5.7(a),  referencing
         the  subsection  of this Section  5.7(a) set forth  below,  there is no
         Contract that  constitutes  or contains an Acquired Asset or an Assumed
         Liability that is:

(i)      a Contract providing for future performance in consideration of amounts
         previously paid;

(ii)     a Contract that is material,  individually or in the aggregate,  to the
         Assigned  Contracts,  taken as a whole,  and that  provides  for future
         performance  with materially  less than the standard  charges to be due
         for such  performance  or with  materially  lower than standard  profit
         margins,  in each case  measured as of the date on which such  Contract
         was entered into;

(iii)    a Contract  falling  within a category  for which  Parent or Seller has
         standard form agreements (as such form  agreements  existed on the date
         on which such  Contract was entered,  which form  agreements  have been
         made  available  to  Buyer)  that  deviates  from  such  standard  form
         agreements  in a manner  that (A)  materially  increases  the actual or
         potential  liabilities  or costs of Parent or Seller or (B)  materially
         limits the actual or potential  rights or benefits of Parent or Seller,
         in each case as  compared to those which would have arisen if there had
         been no such deviation from the relevant standard form agreement;

(iv)     a Contract  granting the other party or any third person "most  favored
         nation" status;

(v)      a Contract  pursuant to which  following  the  Closing  would limit the
         ability  of Buyer  to  compete  with any  person  or to  engage  in any
         activity or  business,  or pursuant to which any benefit is required to
         be given or lost as a result of so competing or engaging;

(vi)     a Contract  providing for "exclusivity" or under which Parent or Seller
         is restricted,  or which after the Closing would restrict Buyer, or any
         of its Affiliates, with respect to distribution, marketing, development
         or manufacture;

(vii)    a license or  franchise  granted by Parent or Seller  pursuant to which
         Parent or Seller has agreed to provide  any third  party with access to
         source  code or to provide  for  source  code to be put in escrow or to
         refrain from granting license or franchise rights to any other person;

(viii)   a Contract providing for liquidated damages;

(ix)     a Contract granting a third party any license to Intellectual  Property
         that is not limited to the  internal use of such third party other than
         any such Contract with a value added reseller or a distributor  entered
         into in the ordinary course of business consistent with past practice;

(x)      a Contract that guarantees a result or commits to performance levels;

(xi)     a  Contract  which (A) has  aggregate  future  sums due from  Parent or
         Seller in excess of $50,000 and is not  terminable  by Parent or Seller
         for a cost of less than  $25,000 or (B) is  otherwise  material  to the
         Business as presently conducted;

(xii)    a Contract providing for payments of royalties to third parties that is
         not terminable on 90 days or less notice;

(xiii)   an employment  agreement or employment  Contract that is not terminable
         at will by Parent or Seller or both without any penalty and without any
         obligation  of Parent or Seller to pay severance or other amounts other
         than base salary, accrued commissions, on-target earnings, vacation pay
         and legally mandated benefits;

(xiv)    (A) an employee collective  bargaining agreement or other Contract with
         any labor union,  (B) a plan,  program or a Contract  that provides for
         the  payment  of  bonus,  severance,  termination  or  similar  type of
         compensation  or benefits upon the  termination  or  resignation of any
         employee  of the  Business  or (C) a plan,  program  or  Contract  that
         provides for medical or life insurance benefits for former employees of
         the  Business  or for  current  employees  of the  Business  upon their
         retirement from, or termination of employment with, the Business (other
         than  health  coverage  continuation  provided  under the  Consolidated
         Omnibus Budget Reconciliation Act of 1985, as amended);

(xv)     a Contract providing for confidential treatment by the Parent or Seller
         of third party information other than non-disclosure agreements entered
         into by the  Parent  or  Seller  in the  ordinary  course  of  business
         consistent with past practice;

(xvi)    a  Contract   under  which  Parent  or  Seller  has  (A)  incurred  any
         indebtedness  for borrowed  money that is currently  owing or (B) given
         any guarantee of any such indebtedness;

(xvii)   a Contract creating or granting a Lien (including Liens upon properties
         acquired  under  conditional  sales,  capital  leases  or  other  title
         retention or security devices);

(xviii)  a Contract (A) that contains a prohibition  on the assignment of all or
         any portion  thereof by Parent or Seller to any other  person  (without
         regard to any  exception  permitting  assignments  to  Subsidiaries  or
         Affiliates)  or (B) that the  consummation  of any of the  transactions
         contemplated  by  the  Transaction  Agreements  or  the  execution  and
         delivery or effectiveness  of the Transaction  Agreements will conflict
         with, result in a violation or breach of, or constitute a default under
         (with or without  notice or lapse of time or both),  or give rise under
         such  Contract to any right of, or result in, a  termination,  right of
         first refusal, amendment, revocation,  cancellation or acceleration, or
         loss of material benefit, or to increased,  guaranteed,  accelerated or
         additional rights or entitlements of any person;

(xix)    except to the extent included in the preceding  subparagraph  (xviii) a
         Contract that requires consent, waiver, approval or authorization of or
         notice  to a  third  party  in the  event  of or  with  respect  to the
         consummation of any of the transactions contemplated by the Transaction
         Agreements  or the  execution  and  delivery  or  effectiveness  of the
         Transaction Agreements;

(xx)     a Contract  containing  (whether in the Contract itself or by operation
         of law) any  provisions  dealing  with a "change of control" or similar
         event  with  respect  to the Parent or Seller or all or any part of the
         Business  which would apply in any way to the  Business,  the  Acquired
         Assets or Buyer following the Closing,  in each case to the extent such
         provision(s)  would  apply  to the  consummation  of  the  transactions
         contemplated by the Transaction Agreements;

(xxi)    a Contract  with (A) any  shareholder  of Parent,  (B) any Affiliate of
         Parent or Seller or of any  shareholder  of Parent or Seller or (C) any
         director,  officer or employee of Parent or Seller or of any  Affiliate
         of Parent or Seller  (other than (A)  employment  agreements  otherwise
         covered above,  offer letters of at will employment or benefit plans or
         (B) invention assignments,  confidentiality agreements or nondisclosure
         agreements for the benefit of Parent or Seller);

(xxii)   a  Contract  not  containing  a waiver  of  incidental,  consequential,
         punitive  and  special  damages in favor of Parent or Seller (and their
         respective assignees) in all circumstances;

(xxiii)  a Contract  entered into in the last five years in connection  with the
         settlement   or  other   resolution   of  any  suit,   claim,   action,
         investigation or proceeding; and

(xxiv)   a Contract not made in the ordinary course of business.

(b)      Except as set forth on Schedule  5.7(b) or for  exceptions  which could
         not  reasonably  be expected  to be  material,  individually  or in the
         aggregate,  to such Assigned Contract, each Assigned Contract is valid,
         binding  and in full force and effect and is  enforceable  by Parent or
         Seller,  as  applicable,  in  accordance  with its  terms  (subject  to
         applicable   bankruptcy,   insolvency,   reorganization,    moratorium,
         fraudulent transfer and other similar laws affecting  creditors' rights
         generally  from time to time in effect  and to  general  principles  of
         equity, including concepts of materiality,  reasonableness,  good faith
         and fair dealing  regardless  of whether  considered in a proceeding in
         equity or at law).  Except as set forth on Schedule 5.7(b),  Parent and
         Seller have performed in all material respects all obligations required
         to be performed by them under the Assigned Contracts,  and no event has
         occurred  that would  render them (with or without the lapse of time or
         the giving of  notice,  or both) in breach in any  material  respect or
         default thereunder and, to the knowledge of Parent and Seller as of the
         date hereof, no event has occurred that would render any other party to
         an Assigned  Contract  (with or without the lapse of time or the giving
         of  notice,  or both) in  breach in any  material  respect  or  default
         thereunder.  Neither  Parent nor Seller  has,  except as  disclosed  on
         Schedule  5.7(b),  received any written  notice of the intention of any
         party to terminate  any Assigned  Contract or that any party  considers
         that Parent or Seller is in breach in any  material  respect or default
         thereunder  or in potential  breach in any material  respect or default
         thereunder.  Complete and correct copies of all the Assigned  Contracts
         identified  on Schedule  5.7(a),  together with all  modifications  and
         amendments  thereto  to the  date of this  Agreement,  have  been  made
         available to Buyer.

Section 5.8  LITIGATION.  Schedule 5.8 sets forth a complete and correct list of
all  claims,   actions,   suits  or  judicial,   administrative  and  regulatory
proceedings or investigations pending or, to the knowledge of Parent and Seller,
threatened by or against Parent or Seller affecting the Business or the Acquired
Assets (i) which involves an amount in  controversy  in excess of $50,000,  (ii)
which, as of the date hereof,  seeks material injunctive relief, (iii) which may
give rise to any legal restraint on or prohibition against or limit the material
benefits to Buyer of the transactions contemplated by the Transaction Agreements
or  (iv)  which  if  resolved  in  accordance  with  plaintiff's  demands  could
reasonably be expected to have a Business  Material Adverse Effect.  There is no
injunction, order, judgment, writ or decree to which Parent or Seller is a party
or subject to, or in default  under  which,  individually  or in the  aggregate,
could reasonably be expected to have a Business  Material  Adverse Effect.  This
Section  5.8 does not relate to  matters  with  respect to Taxes,  which are the
subject of Section 5.5, or Acquired Intellectual Property, which are the subject
of Section 5.12.

Section 5.9       EMPLOYEE AND RELATED MATTERS; ERISA.

(a)      Schedule  5.9(a)  contains a true and  complete  list of all  "employee
         welfare  benefit  plans" (as  defined in Section  3(1) of the  Employee
         Retirement  Income  Security  Act  of  1974,  as  amended   ("ERISA")),
         "employee  pension benefit plans" (as defined in Section 3(2) of ERISA)
         ("Pension  Plans")  and  any  other  bonus,  pension,   profit-sharing,
         deferred compensation,  incentive compensation,  stock ownership, stock
         purchase,  stock appreciation,  restricted stock, stock option, phantom
         stock,   performance,   retirement,   thrift,   savings,  stock  bonus,
         cafeteria,  paid  time-off,   perquisite,   fringe  benefit,  vacation,
         severance, disability, death benefit, hospitalization, medical, welfare
         benefit or other plan, program,  policy,  arrangement or understanding,
         and each  employment,  consulting,  deferred  compensation,  severance,
         termination or indemnification agreements or arrangements but expressly
         excluding  any  governmental  plan or program that  requires  mandatory
         payment  of  social  insurance  taxes  or  similar  contributions  to a
         governmental fund with respect to wages of any employee  (collectively,
         "Benefit  Plans") that are  maintained or contributed to or required to
         be  maintained or  contributed  to by Parent or Seller or any person or
         entity  that,  together  with Parent or Seller,  is treated as a single
         employer (a "Commonly  Controlled  Entity") under Section 414(b),  (c),
         (m) or (o) of the Code or Section 4001 of ERISA. Parent and Seller have
         made available to Buyer true,  correct and complete  copies of (1) each
         such Benefit  Plan,  (3) the most recent  summary plan  description  or
         similar document for each such Benefit Plan for which such summary plan
         description is required or was otherwise  provided to plan participants
         or  beneficiaries  and (4) each trust  agreement and insurance  annuity
         contract  relating to any such Benefit Plan. Each Benefit Plan has been
         administered  in accordance  with its terms.  Parent and Seller and all
         the  Benefit  Plans  are in  substantial  compliance  in  all  material
         respects with all  applicable  provisions of ERISA and the Code and all
         other applicable laws.

(b)      (i) No Benefit Plan is a "multiemployer  plan" (as such term is defined
         in Section  3(37) of ERISA (a  "Multiemployer  Plan"),  (ii) no Pension
         Plan is subject to Title IV of ERISA,  (iii) each Pension Plan intended
         to qualify  under  Section  401(a) of the Code has received a favorable
         determination  letter from the Internal  Revenue  Service,  and no such
         letter has been revoked,  nor has revocation been  threatened,  nor has
         any such Plan been amended  since the date of its most recent letter in
         any respect that would adversely  affect its  qualification or increase
         its costs, and (iv) there is no pending,  or to the knowledge of Parent
         and Seller, threatened litigation relating to the Benefit Plans.

(c)      (i) None of Parent,  Seller,  any officer of Parent or Seller or any of
         the Benefit  Plans which are  subject to ERISA,  including  the Pension
         Plans,  any trusts created  thereunder or any trustee or  administrator
         thereof,  has engaged in a  "prohibited  transaction"  (as such term is
         defined  in Section  406 of ERISA or  Section  4975 of the Code) or any
         other  breach of  fiduciary  responsibility  that could  reasonably  be
         expected to subject Parent,  Seller, or any officer of Parent or Seller
         to the  Tax or  penalty  on  prohibited  transactions  imposed  by such
         Section  4975 or to any  liability  under  Section  502(i) or 502(l) of
         ERISA,  (ii) none of such Benefit Plans and trusts has been terminated,
         nor has there been any  "reportable  event" (as that term is defined in
         Section 4043 of ERISA) for which the 30-day  reporting  requirement has
         not been waived with  respect to any Benefit  Plan during the last five
         years, and no notice of a reportable event will be required to be filed
         in connection  with the  transactions  contemplated  by this Agreement,
         (iii) neither Parent nor Seller has incurred a "complete withdrawal" or
         a "partial  withdrawal" (as such terms are defined in Sections 4203 and
         4205, respectively, of ERISA) since the effective date of such Sections
         4203 and 4205 with  respect  to any  Multiemployer  Plan,  and (iv) all
         contributions  and premiums  required to be made under the terms of any
         Benefit Plan as of the date hereof have been timely made.

(d)      With  respect to any Benefit Plan that is an employee  welfare  benefit
         plan, (i) no such Benefit Plan is unfunded or funded through a "welfare
         benefit fund" (as such term is defined in Section  419(e) of the Code),
         (ii) each such Benefit Plan that is a "group health plan" (as such term
         is defined  in  Section  5000(b)(1)  of the  Code),  complies  with the
         applicable  requirements of Section 4980B(f) of the Code and (iii) each
         such Benefit  Plan may be amended or  terminated  without  liability to
         Parent or Seller. Neither Parent has any obligations for retiree health
         and life benefits under any Benefit Plan.

(e)      Except as set forth on  Schedule  5.9(e),  neither  the  execution  and
         delivery of this Agreement nor the obtaining of the Parent  Stockholder
         Consent nor the consummation of the  transactions  contemplated by this
         Agreement  will (x) entitle any Covered  Employee to severance pay, (y)
         accelerate  the time of payment or  vesting or trigger  any  payment or
         funding  (through a grantor  trust or  otherwise)  of  compensation  or
         benefits  under,  increase  the amount  payable  or  trigger  any other
         obligation  pursuant  to,  any of the  Benefit  Plans in respect of any
         Covered  Employee  or (z)  result in any breach or  violation  of, or a
         default under, any of the Benefit Plans.

Section 5.10      COMPLIANCE WITH LAWS.

(a)      Except for exceptions to the following  which,  individually  or in the
         aggregate, could not reasonably be expected to have a Business Material
         Adverse Effect,  the Business has in effect all certificates,  permits,
         licenses,   franchises   approvals,   qualifications,    registrations,
         certifications,  and other similar authorizations from any Governmental
         Entity  ("Permits")  that are necessary or desirable for the conduct of
         the Business as currently conducted and the ownership of the assets and
         the  properties  of  the  Business.   The  Permits  that  are  material
         (individually  or in the  aggregate)  to the  Business or the  Acquired
         Assets,  in each  case  taken as a  whole,  are set  forth on  Schedule
         5.10(a).  Parent and Seller have  complied and are in compliance in all
         material respects with all existing laws, rules, regulations,  Permits,
         ordinances, orders, judgments, writs, injunctions, statutes and decrees
         applicable  to  the  existence,  condition  (financial  or  otherwise),
         operations,  properties,  assets or  business  of the  Business  and no
         condition or state of facts exists that could reasonably be expected to
         give rise to a violation of, or a material  liability or default under,
         any of the  foregoing.  The execution and delivery of this Agreement by
         each of Parent and Seller does not, and the  execution  and delivery by
         each of Parent and Seller of the other Transaction  Agreements to which
         it is a party and the  consummation  of the  transactions  contemplated
         hereby and thereby and compliance with the terms hereof and thereof are
         not reasonably  likely to cause the revocation or  cancellation  of any
         such  Permit,  except  for  such  revocations  or  cancellations  that,
         individually  or in the aggregate,  could not reasonably be expected to
         be material (individually or in the aggregate) to the Business. Neither
         Parent nor Seller has  received  any written  communication  during the
         past two years from any person that alleges that the Business is not in
         compliance  in  all  material  respects  with,  or is  subject  to  any
         liability  under,  any  existing  laws,  rules,  regulations,  Permits,
         ordinances, orders, judgments, writs, injunctions,  statutes or decrees
         applicable  to  the  existence,  condition  (financial  or  otherwise),
         operations,  properties, assets or business of the Business or relating
         to the revocation or modification of any material Permit. Except as set
         forth on Schedule  5.10(a),  neither Parent nor Seller has received any
         written  notice that any  investigation  or review by any  Governmental
         Entity is pending  with  respect to any of the  Acquired  Assets or the
         Business or that any such investigation or review is contemplated. This
         Section 5.10(a) does not relate to matters with respect to Taxes, which
         are the subject of Section 5.5, labor matters, which are the subject of
         Section 5.11,  Intellectual Property,  which are the subject of Section
         5.12 or  environmental  matters,  which  are  the  subject  of  Section
         5.10(b).

(b)      Except as set forth on Schedule 5.10(b),

(i)               the Business is in  compliance  in all material  respects with
                  all Environmental Laws;

(ii)              the  Business  holds  and is in  compliance  in  all  material
                  respects with all Permits  required under  Environmental  Laws
                  ("Environmental Permits");

(iii)             neither   Parent   nor  Seller  has   received   any   written
                  communication  that  alleges  that the  Business is subject to
                  liability under Environmental Laws;

(iv)              neither  Parent nor Seller is subject to, with  respect to the
                  Business or Acquired  Assets,  any  judgment,  decree or order
                  relating to compliance  with any  Environmental  Law or to any
                  investigation, remediation, reclamation, Release or monitoring
                  of, or in connection with, any Hazardous Substance;

(v)               no Lien has been  attached,  asserted or, to the  knowledge of
                  Parent or Seller,  threatened, to or against any of the Leased
                  Real Property pursuant to any Environmental Law;

(vi)              there has been no treatment,  storage,  disposal,  arrangement
                  for disposal or Release of any Hazardous  Substance in, on, at
                  or under any property in  connection  with the Business or the
                  Acquired Assets at any time that could  reasonably be expected
                  to result in liability under Environmental Law;

(vii)             with respect to the Business and the Acquired Assets,  neither
                  Parent  nor  Seller  has  received  an   information   request
                  regarding,  or has been named a potentially  responsible party
                  for,  any Federal  National  Priorities  List site (as defined
                  under  Environmental  Law) or any other site  under  analogous
                  state or foreign law; and

(viii)            there are not now,  and to the  knowledge of Parent or Seller,
                  there never have been, any aboveground or underground  storage
                  tanks at, on or under any of the Leased Real Property.

Section 5.11 LABOR  MATTERS.  Except as set forth in Schedule 5.11, (i) there is
not any pending or threatened,  and during the past 12 months there has not been
any,  labor  dispute or strike,  work  stoppage or lockout  with  respect to the
Business;  (ii)  neither  Parent nor Seller is  engaged  in any  unlawful  labor
practice in connection with the conduct of the Business; (iii) there are not any
unfair  labor  practice  charges  against  Parent or Seller  pending  before the
National Labor Relations Board or any similar  sovereign,  state or local agency
in  connection  with the  conduct  of the  Business;  and (iv) there are not any
proceedings  in connection  with the conduct of the Business  pending before the
Equal Employment  Opportunity  Commission or any similar foreign, state or local
agency responsible for the prevention of unlawful employment  practices,  in the
case of each of  clauses  (i),  (ii),  (iii) and (iv)  above  which is  material
(individually or in the aggregate) to the Business.

Section 5.12      INTELLECTUAL PROPERTY, ETC.

(a)      Schedule  1.1(c) sets forth a true and  complete  list of all  Acquired
         Intellectual  Property  organized,  where applicable,  under categories
         labeled  "software",  "patents",  "trademarks" and  "copyrights."  With
         respect to all Acquired  Intellectual  Property  that is  registered or
         subject to an application for registration, Schedule 5.12(a) sets forth
         a  list  of all  jurisdictions  in  which  such  Acquired  Intellectual
         Property  is   registered   or   registrations   applied  for  and  all
         registration and application  numbers.  Except as set forth in Schedule
         5.12(a),  (i) all the  Acquired  Intellectual  Property  consisting  of
         patents, trademarks or copyrights has been duly registered in, filed in
         or  issued  by  the   appropriate   Governmental   Entity   where  such
         registration,  filing or issuance is  necessary  or  desirable  for the
         conduct  of the  Business  as  presently  conducted  and all  necessary
         affidavits  of  continuing  use  have  been  filed  and  all  necessary
         maintenance fees have been paid to continue all rights in effect,  (ii)
         Parent or Seller is the sole and  exclusive  owner of,  and  Parent and
         Seller have the right to use,  execute,  reproduce,  display,  perform,
         modify, enhance,  distribute,  prepare derivative works of and to make,
         have made,  sell,  convey,  transfer or assign,  without payment to any
         other  person,   all  the  Acquired   Intellectual   Property  and  the
         consummation  of  the  transactions  contemplated  by  the  Transaction
         Agreements do not and will not conflict with,  alter or impair any such
         rights, and (iii) during the past 3 years neither Parent nor Seller has
         received any written or oral  communication  from any person  asserting
         any ownership interest in any Acquired  Intellectual  Property.  All of
         the  Acquired  Intellectual  Property is  merchantable  and fit for its
         intended purpose.  All of the software (including any data) included in
         the Acquired Intellectual Property is free of viruses and other harmful
         code  and none of such  software  (including  any  data)  contains  any
         material (individually or in the aggregate) errors, bugs or defects.

(b)      Except as set forth on Schedule  5.12(b) or except for any such license
         entered into in the ordinary  course of business  consistent  with past
         practice,  neither Parent or Seller has granted any license of any kind
         relating to the  Acquired  Intellectual  Property or the  marketing  or
         distribution thereof.  Neither Parent nor Seller is bound by or a party
         to any option, license or similar Contract relating to the Intellectual
         Property of any other person for the use of such Acquired  Intellectual
         Property  in the  conduct  of the  Business,  except  as set  forth  in
         Schedule  5.12(b)  and  except  for  "shrink-wrap"  license  agreements
         relating to computer  software  licensed in the ordinary  course of the
         Business. Neither the Acquired Intellectual Property nor the conduct of
         the Business as presently conducted violate,  conflict with or infringe
         in any material respect the Intellectual  Property of any other person.
         No claims  are  pending  or, to the  knowledge  of Parent  and  Seller,
         threatened,  against Parent or Seller by any person with respect to the
         ownership,  validity or  enforceability  or use in the  Business of any
         Intellectual  Property  and (ii)  during  the past 3 years  Parent  nor
         Seller has received any written  communication  alleging that Parent or
         Seller has in the conduct of the Business  violated any rights relating
         to Intellectual Property of any person.

(c)      All Acquired Intellectual Property has been maintained in confidence in
         accordance with protection procedures  customarily used in the industry
         to protect rights of like importance. All former and current members of
         management and key personnel of the Business,  including all former and
         current employees,  agents, consultants and independent contractors who
         have  contributed to or  participated in the conception and development
         of the Acquired Intellectual Property (collectively, "Personnel"), have
         executed and  delivered to Parent or Seller a  proprietary  information
         agreement  restricting  such  person's  right to  disclose  proprietary
         information  of Parent  and  Seller  and  assigning  all  rights in the
         Acquired  Intellectual  Property  to Parent or Seller,  and waiving all
         moral rights in any works in which moral rights may exist. No former or
         current Personnel has filed, asserted or, to the knowledge of Parent or
         Seller,  threatened  any claim  against  Parent or Seller in connection
         with such person's involvement in the conception and development of any
         of the Acquired Intellectual Property. None of the current employees of
         Parent or Seller has any patents issued or applications pending for any
         device,  process, design or invention of any kind now used or needed by
         Parent or Seller in the  furtherance of the Business,  which patents or
         applications have not been assigned to Parent or Seller.

(d)      To the  knowledge  of Parent or  Seller,  no  person is  infringing  or
         otherwise  violating  any right of  Parent  or  Seller in any  material
         respect with respect to any Intellectual  Property owned by or licensed
         to Parent or Seller.

Section 5.13 SUFFICIENCY OF ASSETS. The Acquired Assets, comprise all the assets
primarily  employed by Parent or Seller in  connection  with the  Business.  The
Acquired  Assets are  sufficient  for the  conduct of the  Business  immediately
following the Closing in  substantially  the same manner as currently  conducted
and there are no assets  which are  material to the  conduct of the  Business as
currently conducted other than the Acquired Assets.

Section 5.14  CONDITION OF ACQUIRED  ASSETS.  The Acquired  Assets are in normal
operating  condition and repair  (ordinary wear and tear and immaterial  defects
excluded).

Section 5.15 RECEIVABLES. All the Acquired A/R (a) represent actual indebtedness
or other  obligations  incurred by the applicable  account  debtors and (b) have
arisen from bona fide transactions in the ordinary course of the Business. As of
the date of this Agreement, all the Acquired A/R, to the knowledge of Parent and
Seller, are good and collectible at the aggregate recorded amounts thereof,  net
of any  applicable  reserves for doubtful  accounts  reflected on the  financial
statements included in the Parent SEC Documents.

Section 5.16 INSURANCE. Parent or Seller maintain policies of fire and casualty,
liability  and other forms of  insurance  with  respect to the  Business in such
amounts,  with  such  deductibles  and  against  such  risks  and  losses as are
customary for businesses such as the Business. The insurance policies maintained
by Parent and Seller with respect to the  Business are listed in Schedule  5.16.
All such  policies  are in full force and effect,  all  premiums due and payable
thereon have been paid, and no notice of  cancellation  or termination  has been
received  with  respect  to any  such  policy  which  has not been  replaced  on
substantially similar terms prior to the date of such cancellation.  There is no
claim pending under any such policies as to which coverage has been  questioned,
denied or disputed. Such insurance is of the type and in the amounts customarily
carried by persons conducting businesses similar to the Business.

Section 5.17 BROKERS. No broker,  investment banker,  financial advisor or other
person is entitled  to any  broker's,  finder's,  financial  advisor's  or other
similar fee or commission in connection with the  Transaction  Agreements or the
transactions  contemplated  thereby based upon arrangements made by or on behalf
of Parent or Seller.

Section 5.18  SUPPLIERS.  Except for the suppliers named in Schedule 5.18, as of
the date of this  Agreement,  the  Business has not  purchased,  from any single
supplier, goods or services for which the aggregate purchase price exceeds 5% of
the total amount of goods and services purchased by the Business during its most
recent full fiscal year. Except as set forth in Schedule 5.18, between March 31,
2001 and the date of this Agreement, there has not been (i) any material adverse
change  in the  business  relationship  of the  Business  with any  supplier  of
merchandise  named in  Schedule  5.18 or (ii) any  change in any  material  term
(including credit terms) of the supply  agreements or related  arrangements with
any such supplier.

Section 5.19 CUSTOMERS;  RESELLERS. Except for the customers and resellers named
in Schedule  5.19,  as of the date of this  Agreement the Business does not have
any  customer or  reseller to whom it made more than 5% of its sales  during its
most recent  full fiscal  year.  Except as set forth in Schedule  5.19,  between
March  31,  2001  and the  date of this  Agreement,  there  has not been (i) any
material  adverse change in the business  relationship  of the Business with any
customer or reseller  named in Schedule  5.19 or (ii) any change in any material
term (including credit terms) of the sales agreements or related agreements with
any such customer or reseller. During the past three years preceding the date of
this  Agreement,  neither  Parent nor Seller has received  any written  customer
complaint  concerning  the products and services of the Business,  nor have they
had any such products returned by a purchaser thereof, other than complaints and
returns made in the ordinary  course of business  that,  individually  or in the
aggregate,  could not reasonably be expected to have a Business Material Adverse
Effect.

Section 5.20  DISCLOSURE  DOCUMENTS.  The Parent  Information  Statement and any
amendments or  supplements  thereto will,  when filed,  comply as to form in all
material  respects with the applicable  requirements of the Exchange Act. At the
time the Parent Information  Statement and the Proxy Statement or any amendments
or supplements  thereto,  first mailed to the  stockholders of Parent and Buyer,
respectively,  the Parent  Information  Statement  and the Proxy  Statement,  as
supplemented or amended, if applicable, will not contain any untrue statement of
a material  fact or omit 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.  The representations and warranties contained in this
Section 5.20 will not apply to  statements  or omissions  included in the Parent
Information  Statement  based  upon  information  furnished  to  Parent by Buyer
specifically for use therein.

Section  5.21 STATE  TAKEOVER  STATUTES.  No state  takeover  statute or similar
statute or regulation applies to the execution and delivery by Parent and Seller
of the  Transaction  Agreements or the  consummation by Parent and Seller of the
transactions  contemplated by the Transaction  Agreements in accordance with the
Transaction Agreements.

ARTICLE VI
                     REPRESENTATIONS AND WARRANTIES OF BUYER

         Buyer hereby represents and warrants to Parent and Seller as follows:
Section 6.1 ORGANIZATION,  STANDING AND AUTHORITY. BUYER. Buyer is a corporation
duly  incorporated,  validly  existing  and in good  standing  under the laws of
Delaware.  Buyer has all requisite  corporate  power and authority to enter into
the  Transaction  Agreements  to  which  it is a  party  and to  consummate  the
transactions  contemplated  thereby.  All corporate  acts and other  proceedings
required  to be  taken  by  Buyer  to  authorize  the  execution,  delivery  and
performance  of the  Transaction  Agreements  to  which  it is a  party  and the
consummation  of the  transactions  contemplated  thereby  have  been  duly  and
properly taken. Each of the Transaction Agreements to which Buyer is a party has
been duly executed and delivered by Buyer and constitutes  the legal,  valid and
binding  obligation of Buyer,  enforceable  against Buyer in accordance with its
terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws affecting creditors' rights generally
from time to time in effect  and to  general  principles  of  equity,  including
concepts of materiality,  reasonableness, good faith and fair dealing regardless
of whether considered in a proceeding in equity or at law).

Section 6.2       NO VIOLATION; CONSENTS AND APPROVALS.

(a)      Except as set forth on Schedule 6.2, the execution and delivery of this
         Agreement by Buyer does not, and the execution and delivery by Buyer of
         the  other  Transaction  Agreements  to  which  it is a  party  and the
         consummation of the  transactions  contemplated  hereby and thereby and
         compliance  with the terms  hereof and thereof  will not,  (i) conflict
         with or result in any violation of any provision of the  certificate of
         incorporation  or by-laws of Buyer,  (ii)  conflict  with,  result in a
         violation or breach of, or constitute a default (with or without notice
         or lapse of time or both),  or give  rise to any right of  termination,
         right  of  first  refusal,  amendment,   revocation,   cancellation  or
         acceleration, or loss of material benefit, or to increased, guaranteed,
         accelerated  or  additional  rights or  entitlements  of any  person or
         result  in the  creation  of any Lien on any asset or any  property  of
         Buyer  under  any  Contracts  or  Permit,  to which  Buyer or any other
         Purchasing Company is a party, except for any such conflict, violation,
         breach, default, loss or right, entitlement or Lien which, individually
         or in the  aggregate,  could not  reasonably be expected to result in a
         Buyer  Material  Adverse  Effect or (iii)  conflict with or result in a
         violation of, or give rise to the loss of a material  benefit or result
         in the  creation of any Lien on any asset or  property of Buyer  under,
         any judgment, order, decree, writ, injunction, statute, law, ordinance,
         rule or regulation  applicable to Buyer or to the property or assets of
         Buyer,  except for any such  conflict,  violation,  loss or Lien which,
         individually  or in the aggregate,  could not reasonably be expected to
         have a Buyer Material Adverse Effect.

(b)      Except as set forth on Schedule  6.2, no  consent,  approval,  license,
         permit, order or authorization of, registration,  declaration or filing
         with, or notice to, any Governmental  Entity is required to be obtained
         or made by or with respect to Buyer in  connection  with the  execution
         and delivery of the Transaction  Agreements or the  consummation of the
         transactions  contemplated  thereby,  other  than  (i)  such  consents,
         approvals,  licenses, permits, orders,  authorizations,  registrations,
         declarations  or filings  the  failure of which to be  obtained or made
         could  not  reasonably  be  expected  to have,  individually  or in the
         aggregate, a Buyer Material Adverse Effect.

Section 6.3 BROKERS.  No broker,  investment banker,  financial advisor or other
person is entitled  to any  broker's,  finder's,  financial  advisor's  or other
similar fee or commission in connection with the  Transaction  Agreements or the
transactions  contemplated  thereby based upon arrangements made by or on behalf
of Buyer or any of its Subsidiaries.

Section 6.4 DISCLOSURE DOCUMENTS.  The written information with respect to Buyer
and any of its Subsidiaries that Buyer furnishes to Parent  specifically for use
in the Parent  Information  Statement will not contain any untrue statement of a
material fact or omit 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  at the time such Parent  Information  Statement,  or any
amendment or supplement thereto, is first mailed to the stockholders of Parent.

ARTICLE VII
                         COVENANTS OF PARENT AND SELLER

         Each of Parent and Seller covenants and agrees as follows:

Section 7.1       ACCESS.

(a)      Prior to the  Closing,  Parent  and  Seller  shall  give  Buyer and its
         employees,   counsel,   accountants,   investment   bankers  and  other
         representatives  and advisors  (collectively,  "Representatives")  full
         access upon reasonable  advance notice and during normal business hours
         to all offices and other  facilities  used in the  Business  and to all
         books, records, agreements, documents, information, personnel, data and
         files to the extent  relating to the  Business,  and during such period
         shall furnish to the  Representatives  any  information  concerning the
         Business  as they may  reasonably  request  (including,  to the  extent
         practicable,  by electronic means). No investigation by Buyer or any of
         its  Subsidiaries  and no other receipt of  information by Buyer or its
         Subsidiaries  shall  operate  as  a  waiver  or  otherwise  affect  any
         representation or warranty of Parent or Seller or any covenant or other
         provision in this Agreement.

(b)      After  the  Closing,   Parent  and  Seller  will  give  Buyer  and  its
         Subsidiaries and their Representatives reasonable access, during normal
         business hours and upon  reasonable  notice,  to all books,  documents,
         information,  data,  files  and  other  records  relating  to  (i)  the
         operation  of the  Business  prior to such  Closing,  (ii) the Acquired
         Assets or (iii) the Assumed Liabilities, and to furnish copies thereof,
         which Buyer or its  Subsidiaries  or their  Representatives  reasonably
         request,  including in connection  with claims,  proceedings,  actions,
         investigations,  audits  and  other  regulatory  or  legal  proceedings
         involving (x) the operation of the Business after such Closing, (y) the
         Acquired Assets or (z) the Assumed  Liabilities,  and Parent and Seller
         shall furnish  reasonable  assistance (at Buyer's  expense)  (including
         access  to  personnel)  to  Buyer  and  its   Subsidiaries   and  their
         Representatives  in connection with such claims and other  proceedings.
         Parent and  Seller  shall not  destroy  any such  records  prior to the
         seventh  anniversary of the Closing,  and in any event will not destroy
         or permit the destruction of any such records  without  providing Buyer
         with notice detailing the contents of such records, and providing Buyer
         with the opportunity to obtain such records,  at least 60 days prior to
         the destruction thereof.

Section 7.2       ORDINARY CONDUCT.

(a)      Except for  matters set forth in Schedule  7.2 or  otherwise  expressly
         permitted or required by the terms of this Agreement,  from the date of
         this  Agreement  to the Closing,  Parent and Seller  shall  conduct the
         Business in the usual, regular and ordinary course consistent with past
         practice and use all commercially reasonable efforts to keep intact the
         Business,   and  preserve  the   relationships  of  the  Business  with
         customers, suppliers, licensors, licensees, distributors, resellers and
         others with whom the  Business  deals to the end that the  Business and
         the goodwill of the Business shall be unimpaired at the Closing.  Prior
         to the Closing, Parent and Seller shall not take any action that would,
         or  that  could  reasonably  be  expected  to,  result  in  any  of the
         conditions  set forth in Article IV not being  satisfied.  In  addition
         (and without  limiting the  generality of the  foregoing),  during such
         period  prior to the  Closing,  except as set forth in Schedule  7.2 or
         otherwise  expressly  permitted by the terms of this Agreement,  Parent
         and Seller shall not in each case insofar as the Business is concerned:

         (i)      amend  any  certificate  of  incorporation,  by-laws  or other
                  similar  governing  instrument of any Subsidiary the equity or
                  other  ownership  interests  of  which  are  included  in  the
                  Acquired Assets;

         (ii)     incur or assume any  liabilities,  obligations or indebtedness
                  or   guarantee   any   such   liabilities,    obligations   or
                  indebtedness,  other than in the  ordinary  course of business
                  and consistent with past practice;

         (iii)    (A)  acquire or agree to  acquire by merging or  consolidating
                  with, or by purchasing a substantial portion of the assets of,
                  or by any  other  manner,  any  business  or any  corporation,
                  company, partnership,  limited liability company, trust, joint
                  venture,  business association or other business  organization
                  or division  thereof or otherwise  acquire any assets that are
                  material (individually or in the aggregate) to the Business or
                  (B) make or  incur or  commit  to make or  incur  any  capital
                  expenditure;

         (iv)     enter  into any lease of real  property  or any  renewal of an
                  existing  lease of real  property that may  constitute  Leased
                  Real Property;

         (v)      pay, discharge,  modify or satisfy any claims,  liabilities or
                  obligations (whether accrued, absolute,  contingent,  asserted
                  or  otherwise)  outside  of the  ordinary  course of  business
                  consistent with past practice;

         (vi)     make  loans,   advances  or  capital   contributions   to,  or
                  investments in, any other person;

         (vii)    enter  into,  extend or renew (A) any  Contract  or  amendment
                  thereof (1) which  contains  any  provision  listed in Section
                  5.7, (2) which contains any other provision  listed in Section
                  5.7 unless such  Contract or amendment is necessary to operate
                  the  Business  as it  was  operated  in  the  ordinary  course
                  consistent with past practice immediately prior to the date of
                  this  Agreement  or (3) which  restricts  the  ability  of the
                  Business to own, operate, sell, transfer,  pledge or otherwise
                  dispose of or encumber any Acquired Asset, (B) any Contract or
                  amendment  thereof  that grants any party the right or ability
                  to access,  license  or use all or a  material  portion of the
                  Acquired  Intellectual Property of, (C) any Contract providing
                  for  the   services   of  any   dealer,   distributor,   sales
                  representative,  or similar  representative,  or (D) any other
                  Contract,  other  than,  in the case of clauses (C) or (D), in
                  the ordinary course of business  consistent with past practice
                  with a  term  not  in  excess  of  one  year;  or  accelerate,
                  terminate,  modify,  waive,  relinquish,  assign or cancel any
                  material (individually or in the aggregate) Contract;

         (viii)   engage in any other transaction  involving the Business or the
                  Acquired  Assets other than in the ordinary course of business
                  consistent with past practice;

         (ix)     settle or  compromise  (A) any suit or claim  relating  to the
                  transactions  contemplated  by the  Transaction  Agreements or
                  threatened   suit  or  claim  relating  to  the   transactions
                  contemplated by the  Transaction  Agreements or (B) other than
                  any such  litigation  set forth on Schedule  5.8, any material
                  litigation or material threatened litigation;

         (x)      accelerate  the billing or collection or other  realization of
                  cash or Excluded Assets from the Acquired Assets or accelerate
                  the  provision  of goods and services of the Business or delay
                  the  payment  of   liabilities   which  would  become  Assumed
                  Liabilities  or grant any allowance or discount,  in each case
                  outside the ordinary  course of business  consistent with past
                  practice;

         (xi)     write down any of its material assets,  including any Acquired
                  Intellectual  Property,  or make any change in any  accounting
                  principal,  method or practice  (financial,  Tax or otherwise)
                  other than those required by GAAP or applicable law;

         (xii)    take any action or fail to take any action  which would result
                  in the  material  loss or  reduction  in value of the Acquired
                  Intellectual Property, taken as a whole;

         (xiii)   take  any  action  that  would  or that  could  reasonably  be
                  expected to result in (A) any  representation  and warranty of
                  Parent or Seller set forth in this Agreement that is qualified
                  as to materiality becoming untrue, (B) any such representation
                  and warranty that is not so qualified  becoming  untrue in any
                  material  respect  or (C) any  condition  to the  transactions
                  contemplated  hereby  and set forth in  Section  4.1 not being
                  satisfied; or

         (xiv)    authorize  any of,  or  commit  or agree to take,  whether  in
                  writing or otherwise, to do any of, the foregoing actions.

(b)      CONSULTATION  AND  NOTICE.   (i)  In  connection  with  the  continuing
         operation of the Business  between the date of this  Agreement  and the
         Closing,  Parent and Seller shall consult in good faith on a reasonably
         regular  basis  with the  Representatives  of Buyer to report  material
         (individually  or  in  the  aggregate)  operational  developments,  the
         general  status of  relationships  with  customers and resellers of the
         Business  and the  general  status of ongoing  operations  pursuant  to
         procedures  reasonably  requested by such  Representatives.  Parent and
         Seller  acknowledge that any such  consultation  shall not constitute a
         waiver  by  Buyer  of any  rights  it may  have  under  this  Agreement
         (including  any such rights under  Section 4.1 or Article XI), and that
         the  Buyer  shall  not have any  liability  or  responsibility  for any
         actions of Parent,  Seller, or any of their respective  Representatives
         with respect to matters that are the subject of such consultations.

         (ii)     Parent and Seller shall promptly notify Buyer of:

(A)      Parent  and  Seller  shall  promptly  advise  Buyer in  writing  of the
         occurrence of any matter or event that (I) is, or that could reasonably
         be expected to be, material  (individually  or in the aggregate) to the
         business,  assets,  properties,  condition (financial or otherwise), or
         results of  operations  of the  Business  or (II) could  reasonably  be
         expected to result in (a) any  representation and warranty of Parent or
         Seller set forth in this  Agreement that is qualified as to materiality
         becoming untrue,  (b) any such  representation and warranty that is not
         so  qualified  becoming  untrue  in any  material  respect  or (c)  any
         condition  to the  transactions  contemplated  hereby  and set forth in
         Section 4.1 not being satisfied;

(B)      any  written  notice or other  written  communication  from any  person
         (other than a  Governmental  Entity)  alleging that the consent of such
         person is required in connection with the transactions  contemplated by
         the Transaction Agreements;

(C)      any written  notice or other written  communication  from any customer,
         distributor  or  reseller  of the  Business  to the  effect  that  such
         customer or reseller is terminating or otherwise  materially  adversely
         modifying  its  relationship  with  Parent or Seller as a result of the
         transactions contemplated by the Transaction Agreements;

(D)      except as otherwise  prohibited by applicable  law, any notice or other
         communication  from any  Governmental  Entity  in  connection  with the
         transactions contemplated by the Transaction Agreements; and

(E)      any actions, suits, claims, investigations or proceedings commenced or,
         to its  knowledge  threatened  against,  relating  to or  involving  or
         otherwise  affecting Parent or Seller, or the Business that, if pending
         on the date of this  Agreement,  would have been  required to have been
         disclosed pursuant to Section 5.8 or that relate to the consummation of
         the transactions contemplated by the Transaction Agreements.

Section 7.3  CONFIDENTIALITY.  Parent and Seller  shall keep  confidential,  and
shall use commercially  reasonable  efforts to cause their respective  officers,
directors,   employees  and  advisors  to,  keep   confidential  all  non-public
information  relating  to the  Business,  the  Acquired  Assets  or the  Assumed
Liabilities,  except as required by compulsory legal process. Each of Parent and
Seller  shall  enforce  any  confidentiality  agreement  to  which it is a party
relating to the  Business,  the Acquired  Assets or the Assumed  Liabilities  on
Buyer's behalf and, following the Closing, at Buyer's request and cost.

Section 7.4  STOCKHOLDER  ACTION BY WRITTEN  CONSENT;  PREPARATION OF THE PARENT
INFORMATION  STATEMENT.  In lieu of  calling a meeting  of the  stockholders  of
Parent,  Parent  will seek  approval  and  adoption  of this  Agreement  and the
transactions  contemplated  hereby by  written  consent of the  stockholders  of
Parent (the "Parent Stockholder Consent").  Such approval will be sought so that
the Parent  Stockholder  Consent shall be obtained and shall be effective on the
21st day after the date the Parent Information  Statement is first sent or given
to the stockholders of Parent.  The Board of Directors of Parent shall recommend
approval and adoption of this Agreement and the transactions contemplated hereby
by the  stockholders  of  Parent.  In  connection  with such  action by  written
consent,  Parent will (i)  promptly  prepare and file with the SEC, use its best
efforts to have cleared by the SEC and thereafter  mail to its  stockholders  as
promptly as practicable  the Parent  Information  Statement,  and (ii) otherwise
comply with all legal  requirements  applicable to approvals by its stockholders
of this Agreement and the transactions contemplated hereby. Parent shall provide
Buyer and its counsel with  sufficient  opportunity to comment upon the form and
substance of the Parent  Information  Statement  (including  any  amendments  or
supplements  thereto) prior to filing such with the SEC and Parent shall use its
reasonable  best efforts to  incorporate  Buyer's  reasonable  comments into the
Parent Information  Statement (including any amendments or supplements thereto).
Parent shall promptly provide to Buyer copies of any comments  received from the
SEC in  connection  therewith  and shall consult with Buyer in responding to the
SEC.

Section 7.5 EXPENSES.  Whether or not the transactions  contemplated  hereby are
consummated,  and except as  otherwise  expressly  provided  in the  Transaction
Agreements,  all costs and expenses  incurred in connection with the Transaction
Agreements and the transactions contemplated thereby shall be paid by Buyer.

ARTICLE VIII
                               COVENANTS OF BUYER

         Intentionally omitted.

ARTICLE IX
                                MUTUAL COVENANTS

         Each of Parent, Seller and Buyer covenants and agrees as follows:

Section 9.1 BUYER  STOCKHOLDER  APPROVAL.  If, in the sole  discretion of Buyer,
acting through its Board of Directors, Buyer determines to submit this Agreement
and the transactions  contemplated hereby to Buyer's  stockholders for approval,
or, it shall be determined  that such approval is required under  applicable law
(in either case, the "Buyer Stockholder  Approval"),  Buyer shall (i) as soon as
practicable  following the date of this Agreement,  establish a record date for,
duly call, give notice of, convene and hold a meeting of its  stockholders  (the
"Buyer Stockholders Meeting") for the purpose of obtaining the Buyer Stockholder
Approval, (ii) through its Board of Directors, recommend to its stockholders the
approval and adoption of this Agreement and the other transactions  contemplated
hereby and (iii) use its  reasonable  efforts to solicit  the Buyer  Stockholder
Approval.  Buyer  shall  prepare  and file  with the SEC a proxy or  information
statement (in either case, the "Proxy  Statement").  The Parent and Seller shall
furnish  all  information  concerning  the Parent and Seller and the  holders of
Parent's common stock as may be reasonably requested in connection with any such
action and the  preparation,  filing and  distribution  of the Proxy  Statement.
Buyer will use all reasonable  efforts to cause the Proxy Statement to be mailed
to Buyer's  stockholders as promptly as practicable after being advised that the
SEC has no further comments with respect thereto.  No filing of, or amendment or
supplement  to, or  correspondence  to the SEC or its staff with  respect to the
Proxy  Statement will be made by Parent,  Seller or Buyer without  providing the
other party a reasonable  opportunity to review and comment thereon.  Buyer will
inform Parent and Seller,  promptly  after it receives  notice  thereof,  of any
request by the SEC for the amendment of the Proxy Statement or comments  thereon
and  responses  thereto or requests by the SEC for  additional  information  and
will,  as promptly as  practicable,  provide to Parent and Seller  copies of all
correspondence and filings with the SEC with respect to the Proxy Statement.  If
at any time prior to the Closing Date any information  relating to Buyer, Parent
or Seller, or any of their respective Affiliates,  directors or officers, should
be  discovered  by  Buyer,  Parent  or  Seller,  that  should be set forth in an
amendment or supplement to the Proxy  Statement,  so that any of such  documents
would not  include  any  misstatement  of a  material  fact or omit to state any
material  fact  necessary  to make  the  statements  therein,  in  light  of the
circumstances  under  which  they were  made,  not  misleading,  the party  that
discovers such information  shall promptly notify the other parties hereto,  and
an appropriate  amendment or supplement  describing  such  information  shall be
promptly filed with the SEC and, to the extent required by law,  disseminated to
the stockholders of Buyer.

Section 9.2 BULK  TRANSFER  LAWS.  Buyer,  Parent and Seller  each hereby  waive
compliance by Parent and Seller with the  provisions of the "bulk sales",  "bulk
transfer"  or  similar  laws of any state.  Each of Parent and Seller  agrees to
indemnify and hold Buyer harmless against any and all claims,  losses,  damages,
liabilities,  costs and expenses incurred by Buyer or any of its Affiliates as a
result of any failure to comply with any such "bulk sales",  "bulk  transfer" or
similar laws.

Section 9.3 CONSENTS; EXCLUDED CONTRACTS. Notwithstanding anything in any of the
Transaction Agreements to the contrary, none of the Transaction Agreements shall
constitute an agreement to assign or transfer any interest in any asset,  claim,
right or benefit the transfer of which is otherwise  contemplated hereby if such
an  assignment  or  transfer or attempt to make such an  assignment  or transfer
without the consent or  approval of a third party would  constitute  a breach or
other  contravention  of the rights of such third party, or affect adversely the
rights  of any  party  hereto  or any of their  Affiliates,  as the case may be,
thereunder  (such assets being  collectively  referred to herein as  "Restricted
Assets");  and any  transfer or  assignment  to Buyer by Parent or Seller of any
interest under any such  Restricted  Asset shall be made subject to such consent
or approval  being  obtained.  Parent,  Seller and Buyer shall use  commercially
reasonable  efforts,  to obtain such consents or approvals prior to the Closing;
PROVIDED,  HOWEVER,  that Buyer shall not be required to incur any out of pocket
cost or expense in connection  with such efforts and Parent and Seller shall not
be required to pay any consent fees or make any other financial accommodation to
any person in order to obtain any such consents or  approvals.  In the event any
such  consent or approval is not  obtained  by five  Business  Days prior to the
Closing,  (i) Parent and Seller shall inform Buyer at such time of such fact and
continue at Buyer's  request to cooperate with Buyer in attempting to obtain any
such  consent or approval  and (ii) at the  Closing,  Parent and Seller shall at
their  expense  effect  alternative  arrangements  in  the  form  of a  license,
sublease,  or operating  agreement in form and substance  satisfactory  to Buyer
until such time as such consent or approval has been  obtained  which results in
Buyer  receiving  all the benefits and bearing all the  ordinary  course  costs,
liabilities and other obligations with respect to any such Restricted Asset, and
(iii)  notwithstanding  anything in the Transaction  Agreements to the contrary,
unless and until any such  consent or approval  with  respect to any  Restricted
Asset is obtained,  such Restricted Asset shall not constitute an Acquired Asset
and any associated  liability shall not constitute an Assumed  Liability for any
purpose under the Transaction Agreements.

Section  9.4  PUBLICITY.  Parent,  Seller  and Buyer  each  agree that no public
release  or  announcement  concerning  the  transactions   contemplated  by  the
Transaction   Agreements  shall  be  issued  by  such  party  or  any  of  their
Representatives  without  the prior  written  consent of the other  such  party,
except  as  required  by  applicable  law or the  rules  or  regulations  of any
securities  exchange on which securities of such party are listed, in which case
the party that is required (or whose  Representatives  are required) to make the
release or  announcement  shall  allow the other such party  reasonable  time to
comment on such release or announcement  in advance of such issuance;  PROVIDED,
HOWEVER,  that  each  of  Parent  and  Buyer  may,  following  reasonable  prior
consultation  with  the  other  party,  make  internal  announcements  to  their
respective employees.

Section 9.5 COMMERCIALLY REASONABLE EFFORTS. Subject to the terms and conditions
of this Agreement, including Section 9.3, each of Parent, Seller and Buyer shall
use all commercially reasonable efforts to cause the Closing to occur, including
using its  commercially  reasonable  efforts  to obtain all  material  consents,
permits,  authorizations  and approvals  of, and to make all necessary  filings,
notifications or registrations with, all Governmental Entities and other persons
which are necessary for the consummation of the transactions contemplated by the
Transaction Agreements.

Section 9.6 FURTHER ASSURANCES.  From time to time after the Closing, and for no
further  consideration,   each  of  Parent,  Seller  and  Buyer  shall  execute,
acknowledge and deliver such assignments,  transfers,  consents, assumptions and
other documents and instruments and take such other actions as may reasonably be
deemed  necessary or desirable by the other party to consummate the transactions
contemplated  hereby  (including (i)  transferring  back to Parent or Seller any
Excluded Asset or Excluded Liability, which Excluded Asset or Excluded Liability
was  inadvertently  transferred to Buyer at the Closing and (ii) transferring to
Buyer any Acquired Asset or Assumed Liability  contemplated by this Agreement to
be  transferred  to Buyer at the  Closing  which was not so  transferred  at the
Closing).

Section 9.7       TAX MATTERS.

(a)      All real,  personal and intellectual  property  transfer,  documentary,
         sales,  use,  registration,  value-added,  stamp duty and other similar
         Taxes (including interest,  penalties and additions to Tax) incurred in
         connection  with  the  transactions  contemplated  by  the  Transaction
         Agreements ("Transfer Taxes") shall be borne by Buyer.

(b)      Each of Parent and  Seller  shall  deliver  to Buyer at each  Closing a
         Certificate in form and substance  satisfactory to Buyer, duly executed
         and   acknowledged,   certifying   any  facts  that  would  exempt  the
         transactions  contemplated  hereby  from  withholding  pursuant  to the
         provisions of the Foreign Investment in Real Property Tax Act.

(c)      Buyer, Parent and Seller shall cooperate with respect to Tax matters.

(d)      In the case of any Return with respect to a Straddle Period required to
         be filed by Buyer after the Closing for the Business,  Seller shall pay
         Buyer the  amount of any  Excluded  Tax that is or would  otherwise  be
         payable with respect to such Return at least five  Business  Days prior
         to the date such payment is or would otherwise be due (the "Due Date");
         PROVIDED that Buyer shall furnish Parent and Seller with a copy of such
         Return and Buyer's  calculations  with respect to such  Excluded  Taxes
         within a reasonable  period of time (but no less than 10 days) prior to
         the  relevant  Due Date,  and Buyer shall make such  revisions  to such
         Returns as are reasonably requested by Parent or Seller.

Section 9.8       ACCOUNTS.

(a)      Each of Parent and Seller hereby constitutes and appoints, effective as
         of the Closing,  Buyer and assigns them as true and lawful  attorney of
         Parent and Seller  with full power of  substitution  (i) to collect for
         the  account of Buyer any  Acquired  Assets and (ii) to  institute  and
         prosecute all proceedings which Buyer and its Subsidiaries may in their
         sole  discretion  deem proper in order to enforce  any right,  title or
         interest  in,  to or  under  the  Acquired  Assets,  and to  defend  or
         compromise any and all actions,  suits or proceedings in respect of the
         Acquired Assets.

(b)      All  payments  and  reimbursements  received by Parent or Seller or any
         Affiliate  thereof in  connection  with or arising out of the  Acquired
         Assets or Assumed  Liabilities  after the Closing shall be held by such
         person in trust for the benefit of Buyer and,  promptly upon receipt by
         such person of any such payment or reimbursement  such person shall pay
         over to Buyer,  the  amount of such  payment or  reimbursement  without
         right of setoff.

(c)      All payments and  reimbursements  received by Buyer or their Affiliates
         in  connection  with or arising out of the Excluded  Assets or Excluded
         Liabilities  after the applicable  Closing shall be held by such person
         in trust for the  benefit  of Parent or  Seller,  as  applicable,  and,
         promptly   upon   receipt  by  such  person  of  any  such  payment  or
         reimbursement,  such  person  shall pay over to Parent  or  Seller,  as
         applicable,  the amount of such payment or reimbursement  without right
         of setoff.

(d)      Each of Parent and Seller  covenants and agrees that it shall  promptly
         forward  to  Buyer  any  mail  (physical,   electronic  or  otherwise),
         facsimile  or  telephone  inquiries  of  actual or  potential  clients,
         customers,  suppliers  and  vendors  of or  relating  to the  Business,
         including customer orders.

ARTICLE X
                                 NONCOMPETITION

Section 10.1  NONCOMPETITION.  Each of Parent and Seller  understands that Buyer
shall be  entitled  to  protect  and  preserve  the going  concern  value of the
Business to the extent  permitted  by law and that Buyer would not have  entered
into the  Transaction  Agreements  absent the  provisions of this Article X and,
therefore,  for a period of five years  (subject  to the  limitations  set forth
below)  from the  Closing  Date,  Parent  and  Seller  shall  not and  shall use
commercially  reasonable  efforts to cause their  respective  Affiliates not to,
directly or indirectly:

(a)      engage in activities or  businesses,  or establish any new  businesses,
         that   compete  in  any  respect   with  the   Business   ("Competitive
         Activities"),    including    not   (i)    developing,    distributing,
         manufacturing,  marketing  or selling  products or services of the type
         sold by the  Business,  (ii)  soliciting  any  customer or  prospective
         customer of the Business to purchase  any products or services  sold by
         the Business or products or services, competitive therewith from anyone
         other than Buyer and its  Subsidiaries,  and (iii) assisting any person
         in any way to do, or attempt to do,  anything  prohibited by clause (i)
         or (ii) above;

(b)      except  to the  extent  prohibited  by  applicable  law,  engage in any
         action, activity or course of conduct that is substantially detrimental
         to the Business or its business  reputation,  including (i) soliciting,
         recruiting  or hiring any employees of the Business or persons who have
         worked for the Business and (ii) soliciting or encouraging any employee
         of the Business to leave the employment of the Business;

         PROVIDED,  that, the foregoing shall not prohibit Parent, Seller or any
of their  respective  Affiliates  from hiring any  employee who has ceased to be
employed by the Business for at least 12 months.

ARTICLE XI
                                 INDEMNIFICATION

Section  11.1  INDEMNIFICATION  BY PARENT AND SELLER.  Parent and Seller  shall,
jointly and  severally,  indemnify  Buyer and its  Affiliates  and each of their
respective   officers,   directors,   employees,    stockholders,   agents   and
representatives  against and hold them harmless from (whether in connection with
a Third  Party  Claim or a Direct  Claim)  any loss,  claim,  damage,  liability
(whether  asserted  or  unasserted,  absolute  or  contingent),  cost,  expense,
obligations,  judgments, Liens, injunctions,  charges, orders, decrees, rulings,
dues, assessments,  Taxes, fines, penalties, fees and amounts paid in settlement
(including  reasonable  fees and  expenses of counsel  consistent  with  Section
11.5(a)(ii))  (each a "Loss" and,  collectively,  "Losses") as incurred (payable
promptly upon written  request) by any such  indemnified  party arising from, in
connection  with or otherwise  with respect to (i) subject to Section 13.6,  any
failure of any  representation  or warranty of Parent or Seller contained in the
Transaction Agreements or any certificate delivered by or on behalf of Parent or
Seller in connection  therewith to be true and correct in all respects (it being
agreed that for purposes of such right to  indemnification,  the representations
and  warranties  of Parent  and  Seller  shall be deemed  not  qualified  by any
references  therein  to  materiality  generally  or to whether or not any breach
would  result or could  reasonably  be  expected  to result in a Buyer  Material
Adverse Effect or a Business  Material Adverse  Effect);  (ii) any breach of any
obligation of Parent or Seller  contained in the Transaction  Agreements;  (iii)
any of the  Excluded  Liabilities;  or (iv) the  operation  or  ownership of the
Excluded Assets.

Section 11.2  INDEMNIFICATION BY BUYER. From and after the Closing,  Buyer shall
indemnify  Parent,  Seller and each of their  respective  Affiliates and each of
their  respective  officers,  directors,  employees,  stockholders,  agents  and
representatives  against and hold them harmless from (whether in connection with
a Third Party Claim or a Direct  Claim) any Loss as incurred  (payable  promptly
upon written request) by any such indemnified  party arising from, in connection
with or otherwise  with respect to (i) subject to Section  13.6,  any failure of
any  representation  or warranty of Buyer or any of its Affiliates  contained in
the Transaction Agreements or any certificate delivered by or on behalf of Buyer
in  connection  therewith  to be true and correct in all  material  respects (it
being  agreed  that  for the  purposes  of such  right to  indemnification,  the
representations and warranties of Buyer and shall be deemed not qualified by any
reference therein to materiality generally or to whether or not any breach would
result or could  reasonably  be expected to result in a Buyer  Material  Adverse
Effect or a Business Material Adverse Effect), (ii) any breach of any obligation
of Buyer,  or any of its  Affiliates  contained in the  Transaction  Agreements;
(iii) any of the Assumed Liabilities or (iv) the operation of the Business after
the Closing.

Section  11.3  LOSSES  NET OF  INSURANCE.  The  amount  of any  Loss  for  which
indemnification  is provided  under this  Article XI shall be net of any amounts
actually  recovered  by the  indemnified  party under  insurance  policies  with
respect to such Loss and any such amounts actually  recovered by any indemnified
party to the extent  relating to any Loss  previously  paid by any  indemnifying
party hereunder shall be paid over promptly to such indemnifying party.

Section 11.4  TERMINATION OF  INDEMNIFICATION.  The obligations to indemnify and
hold  harmless  any party (i) pursuant to clause (i) of each of Section 11.1 and
Section 11.2 shall  terminate  when the  applicable  representation  or warranty
terminates  pursuant to Section 13.6 and (ii)  pursuant to the other  clauses of
Section 11.1 and Section 11.2 shall not terminate;  PROVIDED, HOWEVER, that such
obligations  to indemnify and hold harmless  shall not terminate with respect to
any item as to which  the  person  to be  indemnified  shall  have,  before  the
expiration of the applicable  period,  made a Third Party Claim or Direct Claim,
as applicable.

Section  11.5  PROCEDURES  RELATING  TO THIRD  PARTY AND DIRECT  INDEMNIFICATION
CLAIMS.

(a)      THIRD PARTY CLAIMS. In order for a person (the "indemnified  party") to
         be  entitled  to any  indemnification  pursuant  to this  Article XI in
         respect of,  arising out of or  involving a claim or demand made by any
         person  other than a party  hereto  against  the  indemnified  party (a
         "Third  Party  Claim"),   such   indemnified   party  must  notify  the
         indemnifying party in writing of the Third Party Claim promptly, and in
         any event within 20 Business  Days,  after receipt by such  indemnified
         party of notice of the  Third  Party  Claim;  PROVIDED,  HOWEVER,  that
         failure to give such notification shall not affect the  indemnification
         provided  under this  Agreement  except to the extent the  indemnifying
         party shall have been actually and materially prejudiced as a result of
         such failure.  Thereafter,  the indemnified  party shall deliver to the
         indemnifying party promptly, and in any event within ten Business Days,
         after the indemnified  party's receipt  thereof,  copies of all notices
         and  documents  (including  court papers)  received by the  indemnified
         party  relating  to the Third  Party  Claim;  PROVIDED,  HOWEVER,  that
         failure to make such  delivery  shall not  affect  the  indemnification
         provided  under this  Agreement  except to the extent the  indemnifying
         party shall have been actually and materially prejudiced as a result of
         such failure.

(ii)     If a Third  Party  Claim is made  against  an  indemnified  party,  the
         indemnifying  party  shall be entitled  to  participate  in the defense
         thereof and, if it so chooses and  acknowledges its obligation to fully
         indemnify  the  indemnified  party  therefor  in  accordance  with this
         Agreement,  to assume and  control  the defense  thereof  with  counsel
         selected by the  indemnifying  party and  reasonably  acceptable to the
         indemnified party (which acceptance shall not be unreasonably  withheld
         or  delayed.)  Should  the  indemnifying  party so elect to assume  the
         defense of a Third Party  Claim,  the  indemnifying  party shall not be
         liable  to  the  indemnified  party  for  legal  expenses  subsequently
         incurred  by the  indemnified  party in  connection  with  the  defense
         thereof.   If  the  indemnifying   party  assumes  such  defense,   the
         indemnified  party shall have the right to  participate  in the defense
         thereof  and to  employ  at its  own  expense  counsel  not  reasonably
         objected  to by  the  indemnifying  party  separate  from  the  counsel
         employed  by the  indemnifying  party,  it  being  understood  that the
         indemnifying party shall control such defense, subject to the remaining
         terms of this  Section  11.5(a)(ii).  The  indemnifying  party shall be
         liable for the reasonable fees and expenses of one primary counsel, and
         to the extent  reasonably  required in connection with such Third Party
         Claim,  one or more local  counsel,  and such  other  counsel as may be
         reasonably  required due to a conflict among  indemnified  parties,  in
         each case employed by the indemnified party for any period during which
         the  indemnifying  party has not assumed the  defense  thereof.  If the
         indemnifying  party  chooses  to defend or  prosecute  any Third  Party
         Claim,  all the parties  hereto shall  cooperate  and shall cause their
         Affiliates  to cooperate in the defense or  prosecution  thereof.  Such
         cooperation  shall  include the  retention  and (upon the  indemnifying
         party's request) the provision to the indemnifying party of records and
         information that are reasonably relevant to such Third Party Claim, and
         making  employees  available on a mutually  convenient basis to provide
         additional   information  and  explanation  of  any  material  provided
         hereunder. Whether or not the indemnifying party assumes the defense of
         a Third  Party  Claim,  the  indemnified  party  shall  not  admit  any
         liability  with respect to, or settle,  compromise or  discharge,  such
         Third  Party Claim  without  the  indemnifying  party's  prior  written
         consent (which consent shall not be unreasonably  withheld or delayed).
         If the  indemnifying  party assumes the defense of a Third Party Claim,
         the  indemnified  party shall agree to any  settlement,  compromise  or
         discharge  of such Third  Party Claim that the  indemnifying  party may
         recommend and that by its terms (or pursuant to a binding commitment of
         the indemnifying  party)  obligates the  indemnifying  party to pay the
         full amount  (subject to any  limitation  on payment  contained in this
         Article  XI) of such  liability  in  connection  with such Third  Party
         Claim,  which releases the indemnified  party  completely in connection
         with  such  Third  Party  Claim.  Notwithstanding  the  foregoing,  the
         indemnifying  party  shall not be entitled to assume the defense of any
         Third  Party  Claim (and shall be liable  for the  reasonable  fees and
         expenses of one primary counsel,  and to the extent reasonably required
         in connection  with such Third Party Claim,  one or more local counsel,
         and such other counsel as may be reasonably  required due to a conflict
         among  indemnified  parties,  incurred  by  the  indemnified  party  in
         defending  such Third  Party  Claim) if the Third  Party Claim seeks an
         order,  injunction or other  equitable  relief or relief for other than
         money damages against the indemnified  party that the indemnified party
         reasonably  determines,  after  conferring  with its  outside  counsel,
         cannot be separated from any related claim for money  damages.  If such
         equitable  relief or other relief  portion of the Third Party Claim can
         be so separated from that for money  damages,  the  indemnifying  party
         shall be  entitled  to assume the  defense of the  portion  relating to
         money damages.

         Notwithstanding the foregoing in this Section  11.5(a)(ii),  if a Third
Party Claim  includes or could  include both a claim for Taxes that are Excluded
Taxes and a claim for Taxes  that are  Assumed  Liabilities,  and such claim for
Taxes that are Excluded  Taxes is not  separable  from such claim for Taxes that
are Assumed  Liabilities,  Parent and/or Seller, as applicable (if the claim for
Taxes that are Excluded Taxes exceeds or could  reasonably be expected to exceed
in amount the claim for Taxes that are Assumed  Liabilities),  or otherwise  the
Buyer  (Parent  and/or  Seller or Buyer,  as the case may be,  the  "Controlling
Party"),  shall be  entitled  to control  the  defense of such Third Party Claim
(such Third Party  Claim,  a "Tax  Claim").  In such case,  the other party (the
"Non-Controlling  Party")  shall  be  entitled  to  participate  fully  (at  the
Non-Controlling  Party's sole  expense) in the conduct of such Tax Claim and the
Controlling  Party shall not settle  such Tax Claim  without the consent of such
Non-Controlling  Party  (which  consent  shall not be  unreasonably  withheld or
delayed).  The costs and  expenses of  conducting  the defense of such Tax Claim
shall be reasonably  apportioned  based on the relative amounts of the claim for
Taxes  that are  Excluded  Taxes  and the  claim  for  Taxes  that  are  Assumed
Liabilities.

(b)      DIRECT  CLAIMS.  In the  event any  indemnified  party  should  have an
         indemnification   claim  against  any  indemnifying   party  under  the
         Transaction  Agreements that does not involve a Third Party Claim being
         asserted against or sought to be collected from such indemnified  party
         (a "Direct Claim"),  the indemnified party shall deliver notice of such
         Direct Claim to the indemnifying  party. The failure by any indemnified
         party so to  notify  the  indemnifying  party  shall  not  relieve  the
         indemnifying  party  from  any  liability  that  it may  have  to  such
         indemnified party, except to the extent that the indemnifying party has
         been  actually  and  materially  prejudiced  by  such  failure.  If the
         indemnifying  party  does not notify the  indemnified  party  within 15
         Business Days following its receipt of such notice that the indemnified
         party  disputes such Direct Claim,  such Direct Claim  specified by the
         indemnified  party  in such  notice  shall  be  conclusively  deemed  a
         liability  of the  indemnifying  party  under  this  Article XI and the
         indemnifying  party  shall  pay the  amount  of such  liability  to the
         indemnified  party on demand, or in the case of any notice in which the
         amount of the Direct  Claim is  estimated,  on such later date when the
         amount of such Direct Claim is finally determined; PROVIDED that in any
         such case such payment shall be made in  accordance  with Section 11.9.
         If the  indemnifying  party disputes its liability with respect to such
         Direct  Claim  in a  timely  manner,  the  indemnifying  party  and the
         indemnified party shall proceed in good faith to negotiate a resolution
         of such dispute.

Section 11.6 INDEMNITY  PAYMENTS.  Any indemnity  payment hereunder (i) shall be
made by wire transfer to an account specified by Buyer in immediately  available
funds, (ii) shall be made on an after-tax basis and (iii) shall be treated as an
adjustment to the Purchase Price for Tax purposes unless otherwise provided in a
Final Determination.

ARTICLE XII
                                   TERMINATION

Section 12.1      TERMINATION.

(a)      Notwithstanding  anything  in  this  Agreement  to the  contrary,  this
         Agreement may be terminated and the  transactions  contemplated  hereby
         abandoned at any time prior to the Closing Date whether before or after
         the Parent  Stockholder  Consent has been obtained upon written  notice
         (other  than  in  the  case  of  Section  12.1(a)(i)  below)  from  the
         terminating   party  to  the   non-terminating   party  specifying  the
         subsection of this Section 12.1 pursuant to which such  termination  is
         effected:

(i)      by mutual written consent of Parent and Buyer;

(ii)     by Buyer upon written  notice to Parent if any of the conditions to the
         Closing  set  forth in  Section  4.1 shall  have  become  incapable  of
         fulfillment and shall not have been waived in writing by Buyer;

(iii)    by Parent upon written  notice to Buyer if any of the conditions to the
         Closing  set  forth in  Section  4.2 shall  have  become  incapable  of
         fulfillment and shall not have been waived in writing by Parent;

(iv)     by either  Parent or Buyer upon written  notice to the other such party
         if the  Closing  does  not  occur on or prior  to  December  31,  2001;
         PROVIDED,  HOWEVER, that the right to terminate this Agreement pursuant
         to this Section  12.1(a)(iv) shall not be available to any party hereto
         if the failure to consummate the Closing by such date was caused by the
         breach of this Agreement by such party;

(v)      by Parent,  if Buyer breaches or fails to perform in any respect any of
         its   representations,   warranties  or  covenants  contained  in  this
         Agreement  and such breach or failure to perform (x) would give rise to
         the  failure of a  condition  set forth in  Section  4.2(ii) or Section
         4.2(iii)  and  (y)  cannot  be or has not  been  cured  within  30 days
         following  delivery  by Parent  of  written  notice  of such  breach or
         failure to perform;

(vi)     by  Buyer,  if Parent or Seller  breaches  or fails to  perform  in any
         respect any of its  representations,  warranties or covenants contained
         in this  Agreement and such breach or failure to perform (x) would give
         rise to the  failure of a  condition  set forth in  Section  4.1(ii) or
         Section 4.1(iii) and (y) cannot be or has not been cured within 30 days
         following delivery by Buyer of written notice of such breach or failure
         to perform;

(vii)    by either Parent or Buyer if any Injunction  granting any of the relief
         set forth in clauses  (A) through  (D) of Section   4.1(v)  shall be in
         effect and shall have become a final  non-appealable  order,  decree or
         ruling;  PROVIDED  that the party seeking to terminate  this  Agreement
         pursuant to this clause shall have used commercially reasonable efforts
         to prevent the entry of and to remove such Injunction.

Section 12.2      OTHER TRANSACTION AGREEMENTS; MATERIAL TO BE RETURNED.

(a)      In the  event  that this  Agreement  is  terminated  by Parent or Buyer
         pursuant  to  Section  12.1,  the  transactions   contemplated  by  the
         Transaction  Agreements shall be terminated,  without further action by
         any party hereto,  and each of Parent and Buyer shall immediately enter
         into written consents to terminate Transaction Agreements.

(b)      Furthermore, in the event that this Agreement is terminated as provided
         herein:

(i)               Buyer shall return all documents and other  material  received
                  from   Parent   or   Seller   or  any  of   their   respective
                  Representatives  relating to the Business or the  transactions
                  contemplated by the Transaction  Agreements,  whether obtained
                  before or after the execution of this Agreement, to Parent or,
                  at its option, destroy such documents and material; and

(ii)              Parent  and  Seller  shall  return  all  documents  and  other
                  material  received  from Buyer or its  Subsidiaries  or any of
                  their  Representatives  relating to Buyer or the  transactions
                  contemplated by the Transaction  Agreements,  whether obtained
                  before or after the execution of this Agreement,  to Buyer, or
                  at its option, destroy such documents and material.

Section 12.3 EFFECT OF TERMINATION.  Upon the termination hereof, this Agreement
shall become void and of no further force and effect,  except for the provisions
of (i)  Section  5.17 and Section 7.5  relating  to  brokers,  (ii)  Section 7.3
relating to  confidentiality,  (iii)  Section 9.4  relating to  publicity,  (iv)
Section 7.5 relating to certain  expenses  and (v) this Article XII.  Nothing in
this Article XII shall be deemed to release any party from any liability for any
breach by such party of the terms and  provisions of this Agreement or to impair
the right of any party to compel specific  performance by any other party of its
obligations under this Agreement.

ARTICLE XIII
                                  MISCELLANEOUS

Section 13.1  ASSIGNMENT.  Neither this  Agreement nor any rights or obligations
hereunder may be assigned or otherwise  transferred  by any party  (including by
operation of law) without the prior written consent of the other parties hereto,
and any  assignment or transfer  without such consent shall be null and void and
of no effect,  except that Buyer may assign its right to purchase  the  Acquired
Assets or any portion  thereof  hereunder to an Affiliate or Subsidiary of Buyer
without the prior written consent of Parent or Seller;  PROVIDED,  HOWEVER, that
no assignment shall limit the assignor's obligations hereunder.

Section  13.2 NO THIRD  PARTY  BENEFICIARIES.  Except as provided in Article XI,
this Agreement is for the sole benefit of the parties hereto and their permitted
assigns and nothing  herein  expressed or implied  shall give or be construed to
give to any person,  other than the parties hereto and such  permitted  assigns,
any legal or equitable rights hereunder, whether as third party beneficiaries or
otherwise.

Section 13.3 AMENDMENTS.  This Agreement may be amended by the parties hereto at
any time,  whether  before  or after the  Parent  Stockholder  Consent  has been
obtained;  PROVIDED, HOWEVER, that after the Parent Stockholder Consent has been
obtained, there shall be made no amendment that by law requires further approval
by the stockholders of Parent without the further approval of such stockholders.
No amendment to this Agreement shall be effective  unless it shall be in writing
and signed by Parent and Buyer (and Parent agrees to cause Seller to execute any
such amendment).

Section  13.4  CONSENTS  AND  APPROVALS.  For any matter  under  this  Agreement
requiring  the  consent or  approval of any party to be valid and binding on the
parties hereto, such consent or approval must be in writing.

Section 13.5 WAIVERS.  No failure or delay of any party in exercising  any right
or remedy  hereunder shall operate as a waiver thereof,  nor shall any single or
partial   exercise  of  any  such  right  or  power,   or  any   abandonment  or
discontinuance of steps to enforce such a right or power,  preclude any other or
further exercise thereof or the exercise of any other right or power. Subject to
Section 11.6 the rights and remedies of the parties hereunder are cumulative and
are not  exclusive  of any rights or remedies  which they would  otherwise  have
hereunder.  None of the Transaction Agreements (or any provision thereof) may be
waived except  pursuant to a writing  executed by the waiving  party;  PROVIDED,
HOWEVER,  that after the Parent  Stockholder  Consent has been  obtained,  there
shall  be  made  no  waiver  that  by  law  requires  further  approval  by  the
stockholders of Parent without the further approval of such stockholders.

Section 13.6 SURVIVAL OF REPRESENTATIONS.  The representations and warranties in
the  Transaction  Agreements  shall survive the Closings  solely for purposes of
Article XI hereof and such representations and warranties shall terminate on the
day that is one year after the  Closing  Date;  PROVIDED,  HOWEVER,  that if any
Third  Party  or  Direct   Claim  for   indemnification   which   relates  to  a
representation  or  warranty  is made prior to the time such  representation  or
warranty  terminates  under this  Section  13.6,  then such  representation  and
warranty shall survive  solely in connection  with such Claim until such time as
such  Claim  has been  finally  resolved  in  accordance  with the terms of this
Agreement.

Section 13.7 NOTICES. All notices or other communications  required or permitted
to be given hereunder shall be in writing and shall be delivered by hand or sent
by facsimile or sent, postage prepaid, by registered,  certified or express mail
or  reputable  overnight  courier  service  and  shall be deemed  given  when so
delivered by hand or sent by facsimile,  or if mailed,  three days after mailing
(one Business Day in the case of express mail or overnight courier service),  as
follows (or at such other  address for a party as shall be  specified  by notice
given in accordance with this Section 13.7):

                  if to Buyer:

                           Avery Communications, Inc.
                           190 South LaSalle Street
                           Suite 1710
                           Chicago, IL  60603
                           Attention: Patrick J. Haynes, III
                           Facsimile:  (312) 419-0172

                  with copies to:

                           Winstead Sechrest & Minick P.C.
                           5400 Renaissance Tower
                           1201 Elm Street
                           Dallas, Texas  75270-2199
                           Attention: Bruce A. Cheatham
                           Fax: (214) 745-5390

<PAGE>

                  if to Parent or Seller:

                           Qorus.com, Inc.
                           190 South LaSalle Street, Suite 1710
                           Chicago, Illinois  60603
                           Attention: Thomas C. Ratchford
                           Facsimile: (312) 419-0172

                  with copies to:

                           Qorus.com, Inc.
                           190 South LaSalle Street, Suite 1710
                           Chicago, Illinois  60603
                           Attention: Robert T. Isham, Jr.
                           Facsimile: (312) 419-0172

Section 13.8 EXHIBITS AND SCHEDULES;  INTERPRETATION.  The headings contained in
this Agreement or in any Exhibit or Schedule hereto and in the table of contents
to this  Agreement are for  reference  purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.  All Exhibits and Schedules
annexed hereto or referred to herein are hereby  incorporated in and made a part
of this Agreement as if set forth in full herein.  Any capitalized terms used in
any  Schedule  or Exhibit  but not  otherwise  defined  therein,  shall have the
meaning as defined in this Agreement. When a reference is made in this Agreement
to a Section, Article, Exhibit or Schedule, such reference shall be to a Section
or Article of, or an Exhibit or Schedule  to, this  Agreement  unless  otherwise
indicated.  For  all  purposes  hereof,  the  terms  "include",  "includes"  and
"including" shall be deemed followed by the words "without limitation".

Section  13.9  COUNTERPARTS.  This  Agreement  may be  executed  in one or  more
counterparts (including by facsimile),  all of which shall be considered one and
the  same  agreement,   and  shall  become  effective  when  one  or  more  such
counterparts  have been signed by each of the parties and delivered to the other
parties.

Section  13.10 ENTIRE  AGREEMENT.  The  Transaction  Agreements,  including  the
schedules,  exhibits,  annexes  and  attachments  thereto,  contain  the  entire
agreement  and  understanding  between  the parties  hereto with  respect to the
subject  matter  hereof and  thereof  and  supersede  all prior  agreements  and
understandings relating to such subject matter.

Section  13.11  SEVERABILITY.   If  any  provision  of  this  Agreement  or  the
application  of any such provision to any person or  circumstance  shall be held
invalid,  illegal  or  unenforceable  in any  respect  by a court  of  competent
jurisdiction,  such invalidity,  illegality or unenforceability shall not affect
any other provision hereof.

Section 13.12  GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance  with,  the laws of the State of Delaware,  without  regard to the
laws that might  otherwise  govern under  applicable  principles  of conflict of
laws.

                       [Balance of this page intentionally
                                  left blank.]

<PAGE>

         IN WITNESS  WHEREOF,  the  parties  have  caused  this  Asset  Purchase
Agreement to be duly executed as of the date first above written.

               AVERY COMMUNICATIONS, INC.

               By:      /s/ Scot M. McCormick
                        -----------------------------------------------------
                        Name:    Scot M. McCormick
                               ----------------------------------------------
                        Title:   Vice President and Chief Financial Officer
                                ---------------------------------------------

               QORUS.COM, INC.

               By:       /s/ Thomas C. Ratchford
                        -----------------------------------------------------
                        Name:    Thomas C. Ratchford
                               ----------------------------------------------
                        Title:   Chief Financial Officer
                                ---------------------------------------------

               TMT HOLDINGS, INC.

               By:       /s/ Thomas C. Ratchford
                        -----------------------------------------------------
                        Name:    Thomas C. Ratchford
                               ----------------------------------------------
                        Title:   Chief Financial Officer
                                ---------------------------------------------

               AELIX, INC.

               By:       /s/ Thomas C. Ratchford
                        -----------------------------------------------------
                        Name:    Thomas C. Ratchford
                               ----------------------------------------------
                        Title:   Chief Financial Officer
                                ---------------------------------------------EXHIBIT 10.38
                          -NOTE EXTENSION, MODIFICATION
                                       AND
                               AMENDMENT AGREEMENT

         This  NOTE  EXTENSION,   MODIFICATION  AND  AMENDMENT  AGREEMENT  (this
"Agreement")  is dated and  effective as of May 31, 2001,  and is being  entered
among Qorus.com, Inc., a Florida corporation ("Qorus"),  Aelix, Inc., a Delaware
corporation  ("Aelix,"  and,  collectively  with Qorus,  the  "Borrowers,"  and,
individually,  a  "Borrower"),  Thurston  Interests,  LLC,  a  Delaware  limited
liability  company  ("Thurston  Interests"),  Apex  Investment Fund III, L.P., a
Delaware  limited  partnership  ("Apex III"),  Apex Strategic  Partners,  LLC, a
Delaware limited liability company ("Apex  Partners"),  Thurston  Communications
Corporation, a Delaware corporation ("Thurston Communications"), Customer Care &
Technology  Holdings,   Inc.,  a  Delaware  corporation  ("CCT  Holdings,"  and,
collectively  with  Thurston  Interests,  Apex III,  Apex  Partners and Thurston
Communications,  the "Lenders,"  and,  individually,  a "Lender"),  and Thurston
Interests, as agent for itself and the other Lenders (in such capacity, together
with its successors in such capacity, the "Agent").

                                R E C I T A L S:
                                 - - - - - - - -

         The  Borrowers  together  borrowed an aggregate of  $7,664,999.04  (the
"Loans") from the Lenders  during 2000 and 2001 for the purpose of funding their
respective  operations.  The Loans are  evidenced  by the  unsecured  promissory
notes, as the same have been or may be amended, modified,  renewed, extended, or
supplemented from time to time and all substitutions therefor (collectively, the
"Notes," and,  individually,  a "Note") of the Borrowers payable to the Lenders,
as described on Exhibit A hereto.

         The Borrowers have requested the Lenders to extend the maturity date of
the Notes to December 31, 2001.

         The  Lenders  have  agreed  to  extend  the  maturity  of the  Notes as
requested only if, in consideration therefor, the Borrowers secure the repayment
of the Notes by granting to the Agent,  on behalf of the  Lenders,  a first lien
security  interest in and to substantially  all the assets of the Borrowers upon
the terms and conditions hereinafter set forth.

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
covenants  herein  contained,  the parties,  intending to be legally  bound,  do
hereby agree as follows:

Article 1

                                   Definitions

Section 1.1 Definitions. As used in this Agreement, the following terms have the
following meanings:

<PAGE>

                  "Affiliate" means, as to any Person, any other Person (a) that
         directly or indirectly, through one or more intermediaries, controls or
         is controlled  by, or is under common  control with,  such Person;  (b)
         that directly or indirectly  beneficially owns or holds five percent or
         more of any class of voting stock of such  Person;  or (c) five percent
         or  more of the  voting  stock  of  which  is  directly  or  indirectly
         beneficially  owned  or  held  by the  Person  in  question.  The  term
         "control" means the possession, directly or indirectly, of the power to
         direct or cause  direction of the  management and policies of a Person,
         whether  through the ownership of voting  securities,  by contract,  or
         otherwise; provided, however, in no event shall the Agent or any Lender
         be deemed an Affiliate of the Borrower or any of its Subsidiaries.

                  "Business Day" means any day on which commercial banks are not
         authorized or required to close in Chicago, Illinois.

                  "Collateral"  has  the  meaning   specified  in  the  Security
         Agreement,  together with any other property and  collateral  which may
         now or hereafter secure the Obligations or any part thereof.

                  "Default"  means an Event of Default or the  occurrence  of an
         event or  condition  which  with  notice or lapse of time or both would
         become an Event of Default.

                  "Dollars"  and "$" mean lawful  money of the United  States of
         America.

                  "Event of Default" has the meaning specified in Section 6.1.

                  "Governmental  Authority" means any nation or government,  any
         state  or  political  subdivision  thereof  and any  entity  exercising
         executive,   legislative,   judicial,   regulatory,  or  administrative
         functions of or pertaining to government.

                  "Lien" means any lien, mortgage,  security interest, tax lien,
         financing  statement,   pledge,  charge,   hypothecation,   assignment,
         preference,  priority,  or  other  encumbrance  of any  kind or  nature
         whatsoever  (including,  without  limitation,  any conditional  sale or
         title retention agreement),  whether arising by contract,  operation of
         law, or otherwise.

                  "Loan Documents" means this Agreement, the Security Agreement,
         the Notes, and all other promissory notes,  security agreements,  deeds
         of trust, assignments,  guaranties,  and other instruments,  documents,
         and agreements executed and delivered pursuant to or in connection with
         this Agreement,  as such  instruments,  documents,  and agreements have
         been or may be amended,  modified,  renewed,  extended, or supplemented
         from time to time.

                  "Maximum  Rate"  means,  at any time and with  respect  to any
         Lender,  the maximum rate of interest  under  applicable  law that such
         Lender may charge the  Borrowers.  The Maximum Rate shall be calculated
         in a manner  that takes into  account any and all fees,  payments,  and
         other charges in respect of the Loan Documents that constitute interest
         under  applicable  law.  Each change in any interest  rate provided for
         herein  based  upon the  Maximum  Rate  resulting  from a change in the
         Maximum  Rate shall take effect  without  notice to the Borrower at the
         time of such change in the Maximum Rate.

                  "Obligated Party" means Qorus,  Aelix and any other Person who
         is or becomes party to any agreement that guarantees or secures payment
         and performance of the Obligations or any part thereof.

                  "Obligations"   means  all  obligations,   indebtedness,   and
         liabilities  of any of the  Borrowers to the Agent,  the  Lenders,  and
         their Affiliates,  or any of them,  arising pursuant to any of the Loan
         Documents, now existing or hereafter arising, whether direct, indirect,
         related, unrelated, fixed, contingent, liquidated, unliquidated, joint,
         several,  or joint and  several,  including,  without  limitation,  the
         obligations,  indebtedness,  and  liabilities  of any of the  Borrowers
         under this Agreement,  the Notes and the other Loan Documents,  and all
         attorneys'  fees and other  expenses  incurred  in the  enforcement  or
         collection thereof.

                  "Person" means any  individual,  corporation,  business trust,
         association,   company,   partnership,   joint  venture,   Governmental
         Authority, or other entity.

                  "Required  Lenders" means Lenders  holding at least 66-2/3% of
         the outstanding aggregate principal amount of the Notes.

                  "Security  Agreement"  means,  collectively,  (a) that certain
         Blanket  Security  Agreement  among the Borrowers and the Agent of even
         date  herewith,  as the same may be amended,  restated or modified from
         time to time and (b) any  other  security  agreement  of any  Obligated
         Party in favor of the Agent for the benefit of the Lenders, in form and
         substance  satisfactory  to the  Agent,  as the  same  may be  amended,
         supplemented, or modified.

                  "Subsidiary"  means  any  corporation  of  which  at  least  a
         majority of the outstanding shares of stock having by the terms thereof
         ordinary  voting power to elect a majority of the board of directors of
         such  corporation  (irrespective of whether or not at the time stock of
         any other class or classes of such corporation shall have or might have
         voting power by reason of the happening of any  contingency)  is at the
         time directly or indirectly  owned or controlled by any Borrower or one
         or more of the  Subsidiaries  or by any Borrower and one or more of the
         Subsidiaries.

                  "UCC"  means the Uniform  Commercial  Code as in effect in the
         State of  Illinois  as the same has been or may be  amended  or revised
         from time to time,  or, if so required  with respect to any  particular
         collateral by mandatory  provisions of applicable  law, as in effect in
         the jurisdiction in which such Collateral is located.

Section 1.2 Other  Definitional  Provisions.  All definitions  contained in this
Agreement  are equally  applicable to the singular and plural forms of the terms
defined.  The words  "hereof,"  "herein," and  "hereunder"  and words of similar
import referring to this Agreement refer to this Agreement as a whole and not to
any particular  provision of this Agreement.  Unless  otherwise  specified,  all
Article and Section references pertain to this Agreement. Terms used herein that
are defined in the UCC, unless otherwise defined herein, shall have the meanings
specified in the UCC.

Article 2

               Extension of Maturity Dates and Amendment of Notes

Section 2.1  Extension  of Maturity  Date.  Subject to Section 2.4 hereof,  each
Lender severally agrees to extend the maturity date of each Note payable to such
Lender to  December  31,  2001.  Subject  to Section  2.4  hereof,  each  Lender
severally  agrees that each Note  payable to such Lender is hereby  modified and
amended to provide  that each Note  payable to such Lender is due and payable on
or before December 31, 2001.

Section 2.2 No Other Amendments.  Each of the other terms and provisions of each
of the Notes shall remain in full force and effect.

Section 2.3 Exchange of Notes Not Required.  Subject to Section 2.4 hereof, each
Lender  severally  agrees that the Borrowers may attach a copy of this Agreement
to the Notes to  evidence  the  amendment  of the Notes set forth in Section 2.1
hereof,  and that it shall not be  necessary  otherwise  to amend or reissue any
Note to give effect to such amendment.

Section 2.4 Consent of All Lenders Required.  The extension of the maturity date
of the Notes and the  amendment  of the  Notes  for which  provision  is made in
Section  2.1 hereof  shall not be  effective  for any Note  unless  each  Lender
becomes a party hereto.

Article 3

                                    Security

Section 3.1 Collateral.  To secure full and complete  payment and performance of
the  Obligations,  each Borrower shall grant to the Agent for the benefit of the
Lenders  a  perfected  first  priority  lien and  security  interest  in all the
Collateral pursuant to the Security  Agreement.  Each Borrower shall execute and
deliver  the  Security  Agreement  to the Agent.  Each  Borrower  and each other
Obligated  Party shall execute and cause to be executed  such further  documents
and instruments, including, without limitation, UCC financing statements, as the
Agent,  in its sole  discretion,  deems  necessary  or desirable to evidence and
perfect its liens and security interests in the Collateral.

Section  3.2  Setoff.  If an  Event  of  Default  shall  have  occurred  and  is
continuing,  each Lender is hereby authorized at any time and from time to time,
without  notice  to either  of the  Borrowers  (any  such  notice  being  hereby
expressly  waived  by each of the  Borrowers),  to set off and apply any and all
deposits  at any time  held and  other  indebtedness  at any time  owing by such
Lender to or for the credit or the  account of either of the  Borrowers  against
any and all of the  obligations  of either  of the  Borrowers  now or  hereafter
existing under this  Agreement,  such Lender's Note or Notes,  or any other Loan
Document,  irrespective  of whether or not the Agent or such  Lender  shall have
made any demand  under this  Agreement  or such  Lender's  Note or Notes or such
other Loan Document and although such obligations may be unmatured.  Each Lender
agrees  promptly to notify the  Borrowers  (with a copy to the Agent)  after any
such setoff and application, provided that the failure to give such notice shall
not affect the validity of such setoff and application.  The rights and remedies
of  each  Lender  hereunder  are  in  addition  to  other  rights  and  remedies
(including,  without  limitation,  other rights of setoff) which such Lender may
have.

Article 4

                              Conditions Precedent

Section 4.1 Extension of Maturity Date and Amendment of Notes. The obligation of
each Lender to extend the maturity of the Notes and to amend the Notes as herein
provided  is  subject  to the  condition  precedent  that the Agent  shall  have
received all of the following,  each dated (unless otherwise indicated) the date
hereof, in form and substance satisfactory to the Agent:

(a)      Security  Agreement.  The Security Agreement executed by each Borrower,
         along  with the  delivery  of the  capital  stock  of the  Subsidiaries
         pledged pursuant to the Security Agreement, together with undated stock
         powers; and

(b)      Financing  Statements.   UCC  financing  statements  executed  by  each
         Borrower covering the Collateral.

Section  4.2  Additional  Documentation.  The Agent  shall  have  received  such
additional  approvals,  opinions, or documents as the Agent or its legal counsel
may reasonably request.

Article 5

                         Representations and Warranties

         To induce the Agent and the Lenders to enter into this  Agreement,  the
Borrowers  jointly  and  severally  represent  and  warrant to the Agent and the
Lenders that:

Section 5.1  Corporate  Existence.  Each Borrower and each  Subsidiary  (a) is a
corporation  duly organized,  validly  existing,  and in good standing under the
laws of the jurisdiction of its incorporation;  (b) has all requisite  corporate
power and  authority to own its assets and carry on its business as now being or
as  proposed  to be  conducted;  and  (c) is  qualified  to do  business  in all
jurisdictions  in which the  nature of its  business  makes  such  qualification
necessary and where failure to so qualify would have a material  adverse  effect
on its business, condition (financial or otherwise),  operations,  prospects, or
properties.  Each  Borrower has the  corporate  power and  authority to execute,
deliver,  and perform its obligations  under this  Agreement,  the Notes and the
other Loan Documents to which it is or may become a party.

Section  5.2  Corporate  Action;  No  Breach.  The  execution,   delivery,   and
performance  by each  Borrower of this  Agreement,  the Notes and the other Loan
Documents to which such Person is or may become a party and compliance  with the
terms and  provisions  hereof  and  thereof  have been  duly  authorized  by all
requisite  corporate  action on the part of such  Person and do not and will not
(a) violate or conflict  with,  or result in a breach of, or require any consent
under (i) the articles of incorporation or bylaws of the Borrowers or any of the
Subsidiaries,  (ii) any applicable law, rule, or regulation or any order,  writ,
injunction,  or decree of any Governmental Authority or arbitrator, or (iii) any
agreement  or  instrument  to which the  either of the  Borrowers  or any of the
Subsidiaries  is a party or by which  any of them or any of  their  property  is
bound or  subject,  or (b)  constitute  a default  under any such  agreement  or
instrument,  or result in the  creation  or  imposition  of any Lien  (except as
provided in Article 3) upon any of the  revenues or assets of the  Borrowers  or
any Subsidiary.

Section 5.3 Operation of Business.  Each Borrower and each Subsidiary  possesses
all licenses, permits, franchises,  patents,  copyrights,  trademarks, and trade
names,  or rights  thereto,  necessary to conduct  their  respective  businesses
substantially  as now conducted and as presently  proposed to be conducted,  and
each  Borrower  and each  Subsidiary  is not in violation of any valid rights of
others with respect to any of the foregoing.

Section 5.4 Enforceability. This Agreement, the Notes and the Security Agreement
constitute,  and the other Loan Documents to which each Borrower is party,  when
delivered,  shall constitute,  the legal, valid, and binding obligations of such
Person,  enforceable  against such Person in  accordance  with their  respective
terms,  except as limited by  bankruptcy,  insolvency,  or other laws of general
application relating to the enforcement of creditors' rights.

Section 5.5 Approvals. No authorization,  approval, or consent of, and no filing
or registration  with, any  Governmental  Authority or third party is or will be
necessary for the  execution,  delivery,  or performance by any Borrower of this
Agreement,  the Notes,  the Security  Agreement and the other Loan  Documents to
which  such  Borrower  is  or  may  become  a  party  or  for  the  validity  or
enforceability thereof.

Section 5.6 Disclosure. No statement,  information,  report, representation,  or
warranty  made by the  Borrowers  in this  Agreement,  the Notes,  the  Security
Agreement or in any other Loan  Document or furnished to the Agent or any Lender
in connection  with this  Agreement,  the Notes,  the Security  Agreement or any
transaction  contemplated  hereby or thereby  contains any untrue statement of a
material  fact or  omits  to  state  any  material  fact  necessary  to make the
statements  herein or  therein  not  misleading.  There is no fact  known to any
Borrower which has a material adverse effect,  or which might in the future have
a material adverse effect, on the business,  condition (financial or otherwise),
operations,  prospects, or properties of the Borrower or any Subsidiary that has
not been disclosed in writing to the Agent and the Lenders.

Section 5.7 Compliance with Laws.  Neither any Borrower nor any Subsidiary is in
violation in any material respect of any law, rule, regulation, order, or decree
of any Governmental Authority or arbitrator.

Section  5.8  Collateral.  Effective  as of May 31,  2001,  pursuant to the Loan
Documents described in Article 3, each Borrower has granted to the Agent a first
priority  perfected  security  interest  in  substantially  all of its  personal
property assets.

Article 6

                                     Default

Section 6.1 Events of Default.  Each of the following  shall be deemed an "Event
of Default":

(a)      Any Borrower shall fail to pay when due any principal or interest owing
         under the Notes; or shall fail to pay when due any other Obligations or
         any part thereof and such failure continues for five (5) days.

(b)      Any Borrower,  any Subsidiary,  or any Obligated Party shall commence a
         voluntary  proceeding  seeking  liquidation,  reorganization,  or other
         relief  with  respect  to  itself or its  debts  under any  bankruptcy,
         insolvency,  or other similar law now or hereafter in effect or seeking
         the appointment of a trustee, receiver, liquidator, custodian, or other
         similar  official of it or a substantial  part of its property or shall
         consent  to  any  such  relief  or to  the  appointment  of  or  taking
         possession  by any  such  official  in an  involuntary  case  or  other
         proceeding  commenced against it or shall make a general assignment for
         the benefit of  creditors or shall  generally  fail to pay its debts as
         they become due or shall take any corporate  action to authorize any of
         the foregoing.

(c)      An involuntary  proceeding shall be commenced against any Borrower, any
         Subsidiary, or any Obligated Party seeking liquidation, reorganization,
         or other relief with  respect to it or its debts under any  bankruptcy,
         insolvency,  or other similar law now or hereafter in effect or seeking
         the appointment of a trustee, receiver, liquidator,  custodian or other
         similar official for it or a substantial part of its property, and such
         involuntary  proceeding  shall  remain  undismissed  and unstayed for a
         period of sixty (60) days.

(d)      This  Agreement  or any other Loan  Document  shall cease to be in full
         force and effect or shall be declared  null and void or the validity or
         enforceability   thereof  shall  be  contested  or  challenged  by  any
         Borrower,  any  Subsidiary,   any  Obligated  Party  or  any  of  their
         respective  shareholders,  or any Borrower or any Obligated Party shall
         deny that it has any further  liability or obligation  under any of the
         Loan Documents,  or any Lien or security  interest  created by the Loan
         Documents  shall for any  reason  cease to be a valid,  first  priority
         perfected  security  interest  in and lien  upon any of the  Collateral
         purported to be covered thereby.

(e)      Any Borrower or any Subsidiary,  or any of their respective properties,
         revenues,   or  assets,  shall  become  the  subject  of  an  order  of
         forfeiture,  seizure, or divestiture,  and the same shall not have been
         discharged (or provisions shall not be made for such discharge)  within
         thirty (30) days from the date of entry thereof.

Section 6.2 Remedies. If any Event of Default shall occur and be continuing, the
Agent may, and if directed by the Required Lenders, shall, do any one or more of
the following:

(a)      Acceleration.  Declare  all  outstanding  principal  of and accrued and
         unpaid interest on the Notes and all other obligations of the Borrowers
         under the Loan  Documents  immediately  due and  payable,  and the same
         shall thereupon  become  immediately  due and payable,  without notice,
         demand, presentment, notice of dishonor, notice of acceleration, notice
         of intent to accelerate, protest, or other formalities of any kind, all
         of which are hereby expressly waived by each Borrower.

(b)      Judgment.  Reduce any claim to judgment.

(c)      Foreclosure.  Foreclose  or  otherwise  enforce any Lien granted to the
         Agent for the benefit of itself and the  Lenders to secure  payment and
         performance of the Obligations in accordance with the terms of the Loan
         Documents.

(d)      Rights.  Exercise any and all rights and remedies  afforded by the laws
         of the State of Illinois or any other jurisdiction,  by any of the Loan
         Documents, by equity, or otherwise.

Section 6.3  Performance by the Agent. If any Borrower shall fail to perform any
covenant or agreement in accordance  with the terms of the Loan  Documents,  the
Agent may,  at the  direction  of the  Required  Lenders,  perform or attempt to
perform such  covenant or agreement on behalf of such  Borrower.  In such event,
such  Borrower  shall,  at the  request  of the Agent,  promptly  pay any amount
expended  by  the  Agent  in  connection  with  such  performance  or  attempted
performance to the Agent,  together with interest thereon from and including the
date of such  expenditure to but excluding the date such  expenditure is paid in
full.  Notwithstanding  the foregoing,  it is expressly  agreed that neither the
Agent  nor any  Lender  shall  have  any  liability  or  responsibility  for the
performance of any obligation of any Borrower under this Agreement or any of the
other Loan Documents.

Article 7

                           Relationship Among Lenders

Section 7.1  Appointment  and Grant of Authority.  Each Lender  hereby  appoints
Thurston  Interests as its Agent under and for the  purposes of this  Agreement,
the Notes,  the Security  Agreement  and each other Loan  Document.  Each Lender
authorizes the Agent to act on behalf of such Lender under this  Agreement,  the
Notes and each  other  Loan  Document,  and,  in the  absence  of other  written
instructions  from the Required  Lenders received from time to time by the Agent
(with respect to which the Agent agrees that it will comply, except as otherwise
provided in this Article 7 or as otherwise advised by counsel), to exercise such
powers hereunder and thereunder as are specifically  delegated to or required of
the Agent by the terms hereof and thereof,  together  with such powers as may be
reasonably incidental thereto.  Each Lender hereby authorizes,  consents to, and
directs  each  Borrower  to deal with the Agent as the true and lawful  agent of
such Lender to the extent set forth herein.  No implied  covenants or additional
obligations  shall be read into the Loan Documents as against the Agent.  At any
time and from time to time the Agent may request such further written  direction
from the Lenders as the Agent may require.

Section 7.2 Non-Reliance on Agent. Each Lender agrees that it has, independently
and  without  reliance  on the  Agent or any  other  Lender,  and  based on such
documents  and  information  as it has deemed  appropriate,  made its own credit
analysis of the Borrowers and decision to enter into this Agreement and become a
"Lender"  hereunder,  and that it will,  independently and without reliance upon
the  Agent,  and  based on such  documents  and  information  as it  shall  deem
appropriate  at the time,  continue to make its own  analysis  and  decisions in
taking or not taking  action  under the Loan  Documents.  The Agent shall not be
required to keep informed as to the  performance  or observance by the Borrowers
of the Loan Documents or any other  document  referred to or provided for herein
or to inspect the  properties  or books of the  Borrowers.  Except for  notices,
reports and other documents and information  expressly  required to be furnished
to the  Lenders  by the Agent  hereunder,  the Agent  shall not have any duty or
responsibility  to  provide  any  Lender  with any  credit or other  information
concerning the affairs, financial condition or business of the Borrowers (or any
of their related companies) which may come into the Agent's possession.

Section 7.3 Responsibility of the Agent and Other Matters.

(a)      The Agent shall have no duties,  responsibilities or liabilities except
         those  expressly  set forth in the Loan  Documents,  and those  duties,
         responsibilities  and  liabilities  shall be subject to the limitations
         and qualifications set forth in this Article 7 or in an applicable Loan
         Document.   The   duties  of  the  Agent   shall  be   mechanical   and
         administrative in nature.

(b)      Neither the Agent nor any of its directors, officers or employees shall
         be liable for any action  taken or omitted  (whether or not such action
         taken or omitted is within or without the Agent's  responsibilities and
         duties  expressly set forth in this  Agreement)  under or in connection
         with  the  Loan  Documents  or any  other  instrument  or  document  in
         connection herewith, except for gross negligence or willful misconduct.
         Without  limiting  the  foregoing,  neither  the  Agent  nor any of its
         directors,  officers or employees shall be responsible for, or have any
         duty  to  examine  into  (a)  the  genuineness,   execution,  validity,
         effectiveness,  enforceability,  value or  sufficiency  of (i) the Loan
         Documents,  or (ii) any document or instrument furnished pursuant to or
         in connection with the Loan Documents, (b) the creation,  perfection or
         priority of any of the Liens purported to be created by any of the Loan
         Documents,  or the  genuineness,  enforceability,  existence,  value or
         sufficiency of any collateral  security,  (c) the collectibility of any
         amounts  owed by the  Borrowers,  (d) any  recitals  or  statements  or
         representations  or warranties in connection  with the Loan  Documents,
         (e) any  failure  of any party to the Loan  Documents  to  receive  any
         communication   sent,  or  (f)  the  assets,   liabilities,   financial
         condition,  results of operations,  business or creditworthiness of the
         Borrowers.  Any such  inquiry  which may be made by the Agent shall not
         obligate it to make any further inquiry or to take any action.

(c)      The Agent  shall be entitled to act,  and shall be fully  protected  in
         acting upon, any  communication  in whatever form believed by the Agent
         in good faith to be genuine and correct and to have been signed or sent
         or made by a proper person or persons or entity.  The Agent may consult
         counsel and shall be entitled to act,  and shall be fully  protected in
         any action  taken in good faith,  in  accordance  with advice  given by
         counsel.  The Agent may employ agents and  attorneys-in-fact  and shall
         not be liable  for the  default  or  misconduct  of any such  agents or
         attorneys-in-fact selected by the Agent with reasonable care. The Agent
         shall not be bound to  ascertain  or inquire as to the  performance  or
         observance  of any of the terms,  provisions  or conditions of the Loan
         Documents on any Borrower's part. Any such inquiry which may be made by
         the Agent shall not obligate it to make any further  inquiry or to take
         any action.

Section  7.4  Action on  Instructions.  The Agent  shall be  entitled  to act or
refrain  from  acting,  and in all cases shall be fully  protected  in acting or
refraining  from acting,  under the Loan  Documents or any other  instrument  or
document in connection  herewith or therewith in accordance with instructions in
writing from the Lenders or the Required Lenders, as applicable.

Section 7.5  Indemnification.  To the extent any Borrower does not reimburse and
save the Agent  harmless  according  to the terms hereof for and from all costs,
expenses and  disbursements  in connection  herewith,  such costs,  expenses and
disbursements  shall be borne by the  Lenders  ratably  in  accordance  with the
amount of their respective loans to the Borrowers,  and the Lenders hereby agree
on such  basis  (i) to  reimburse  the Agent for all such  costs,  expenses  and
disbursements  on request  and (ii) to  indemnify  and save  harmless  the Agent
against and from any and all losses, obligations,  penalties, actions, judgments
and suits and other  costs,  expenses  and  disbursements  of any kind or nature
whatsoever  which may be imposed on, incurred by or asserted  against the Agent,
other than as a consequence  of gross  negligence  or willful  misconduct on the
part of the Agent,  arising out of or in connection  with the Loan  Documents or
any instrument or document in connection  herewith or therewith,  or any request
of  the  Lenders,   including,   without  limitation  the  costs,  expenses  and
disbursements   in  connection  with  defending  itself  against  any  claim  or
liability, or answering any subpoena,  related to the exercise or performance of
any of its powers or duties under the Loan Documents or the taking of any action
under or in connection with the Loan Documents.  The Agent shall not be required
to take any action hereunder, under the Notes, or under any other Loan Document,
or to prosecute or defend any suit in respect of this  Agreement,  the Notes, or
any other Loan Document, unless it is indemnified hereunder to its satisfaction.
If any  indemnity  in favor of the  Agent  shall be or  become,  in the  Agent's
determination,  inadequate,  the Agent may call for  additional  indemnification
from the Lenders and cease to do the acts  indemnified  against  hereunder until
such additional indemnity is given.

Section 7.6 Thurston Interests and Affiliates. With respect to the Loans made by
Thurston  Interests  under its  Notes,  Thurston  Interests  shall have the same
rights and powers under the Loan  Documents  applicable to it in its  individual
capacity as any other Lender and may exercise the same as though it were not the
Agent.  Thurston  Interests and its  Affiliates may lend money to, and generally
engage, and continue to engage, in any kind of business with the Borrowers as if
Thurston Interests were not the Agent.

Section  7.7 Notice to Holder of Notes.  The Agent may deem and treat the payees
of the Notes as the owners  thereof for all purposes  unless a written notice of
assignment,  negotiation or transfer  thereof has been filed with the Agent. Any
request,  authority or consent of any holder of any Note shall be conclusive and
binding on any subsequent holder, transferee or assignee of such Note.

Section 7.8  Successor  Agent.  The Agent may resign as such at any time upon at
least 30 days' prior notice to the  Borrowers  and all Lenders.  If the Agent at
any time shall  resign,  the Required  Lenders may appoint  another  Lender as a
successor  Agent,  which  shall  thereupon  become  the Agent  hereunder.  If no
successor Agent shall have been so appointed by the Required Lenders,  and shall
have accepted such appointment, within 30 days after the retiring Agent's giving
notice of  resignation,  then the retiring Agent may, but shall not be obligated
to, on behalf of the Lenders,  appoint a successor Agent,  which shall be one of
the Lenders.  Upon the  acceptance of any  appointment  as Agent  hereunder by a
successor  Agent,  such  successor  Agent shall be entitled to receive  from the
retiring Agent such documents of transfer and assignment as such successor Agent
may reasonably  request,  and shall thereupon  succeed to and become vested with
all  rights,  powers,  privileges  and  duties of the  retiring  Agent,  and the
retiring Agent shall be discharged  from its duties and  obligations  under this
Agreement.  After any retiring Agent's  resignation  hereunder as the Agent, the
provisions  of this Article 7 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was the Agent  under this  Agreement;  and
Section 8.1 and Section 8.2 shall continue to inure to its benefit.

Article 8

                                  Miscellaneous

Section 8.1  Expenses.  Each Borrower  hereby  agrees to pay on demand:  (a) all
costs  and  expenses  of the  Agent  and the  Lenders  in  connection  with  the
preparation,  negotiation, execution, and delivery of this Agreement, the Notes,
the Security  Agreement and the other Loan Documents and any and all amendments,
modifications,  renewals,  extensions,  and  supplements  thereof  and  thereto,
including,  without  limitation,  the fees and expenses of legal counsel for the
Agent and the  Lenders,  (b) all costs and expenses of the Agent and the Lenders
in connection with any  restructuring or workout of the Obligations,  whether or
not  consummated  and  whether  or not  in  connection  with  any  voluntary  or
involuntary   bankruptcy  or  insolvency   proceedings,   any  Default  and  the
enforcement of this Agreement,  the Notes,  the Security  Agreement or any other
Loan Document,  including,  without  limitation,  the fees and expenses of legal
counsel  for the Agent and legal  counsel  for the  Lenders,  (c) all  transfer,
stamp, documentary,  or other similar taxes,  assessments,  or charges levied by
any Governmental Authority in respect of this Agreement, the Notes, the Security
Agreement  or any  of  the  other  Loan  Documents,  (d)  all  costs,  expenses,
assessments,   and  other  charges  incurred  in  connection  with  any  filing,
registration,  recording,  or  perfection  of  any  security  interest  or  Lien
contemplated by this Agreement,  the Notes, the Security  Agreement or any other
Loan  Document,  and (e) all other costs and  expenses  incurred by the Agent in
connection with this Agreement,  the Notes, the Security  Agreement or any other
Loan Document.

Section 8.2 Indemnification. The Borrowers hereby jointly and severally agree to
indemnify  the  Agent  and each  Lender  and each  Affiliate  thereof  and their
respective officers, directors,  employees, attorneys, and agents from, and hold
each of them harmless against, any and all losses, liabilities, claims, damages,
penalties, judgments,  disbursements,  costs, and expenses (including attorneys'
fees) to which any of them may become subject which directly or indirectly arise
from  or  relate  to (a)  the  negotiation,  execution,  delivery,  performance,
administration,  or  enforcement  of any of the Loan  Documents,  except  to the
extent that such losses,  liabilities,  claims, damages,  penalties,  judgments,
disbursements,  costs and  expenses  are  determined  in a final  non-appealable
judgment by a court of competent  jurisdiction to have resulted from the willful
misconduct of the party  seeking  indemnification,  (b) any of the  transactions
contemplated  by the Loan  Documents,  (c) any breach by any of the Borrowers of
any representation,  warranty,  covenant, or other agreement contained in any of
the Loan Documents, or (d) any investigation,  litigation,  or other proceeding,
including,  without limitation,  any threatened  investigation,  litigation,  or
other  proceeding   relating  to  any  of  the  foregoing  (all  the  foregoing,
collectively, the "Indemnified Liabilities").  Without limiting any provision of
this  Agreement,  the Notes,  the  Security  Agreement  or any of the other Loan
Document,  it is the express intention of the parties hereto that each Person to
be  indemnified  under  this  Section  8.2  shall be  indemnified  from and held
harmless against any and all losses,  liabilities,  claims, damages,  penalties,
judgments,  disbursements,  costs,  and  expenses  (including  attorneys'  fees)
arising out of or resulting  from the sole or  contributory  negligence  of such
Person.  The  agreements  of the  Borrowers  in this  Section 8.2 shall  survive
termination of this Agreement.

Section 8.3  Limitation  of  Liability.  None of the Agent,  any Lender,  or any
Affiliate,  officer, director,  employee,  attorney, or agent thereof shall have
any liability with respect to, and each Borrower  hereby waives,  releases,  and
agrees  not to sue any of them  upon,  any  claim  for  any  special,  indirect,
incidental,  or  consequential  damages suffered or incurred by such Borrower in
connection with, arising out of, or in any way related to, this Agreement or any
of the other Loan  Documents,  or any of the  transactions  contemplated by this
Agreement  or any of the other Loan  Documents.  Each  Borrower  hereby  waives,
releases,  and  agrees  not to sue  the  Agent  or any  Lender  or any of  their
respective Affiliates,  officers, directors, employees, attorneys, or agents for
punitive damages in respect of any claim in connection with,  arising out of, or
in any way related to, this Agreement,  the Notes, the Security Agreement or any
of the other Loan  Documents,  or any of the  transactions  contemplated by this
Agreement, the Notes, the Security Agreement or any of the other Loan Documents.

Section  8.4  No  Duty.  All  attorneys,  accountants,   appraisers,  and  other
professional Persons and consultants retained by the Agent and the Lenders shall
have the right to act  exclusively  in the interest of the Agent and the Lenders
and shall have no duty of  disclosure,  duty of loyalty,  duty of care, or other
duty or  obligation  of any type or nature  whatsoever to any Borrower or to any
Borrower's shareholders or any other Person.

Section 8.5 No Fiduciary  Relationship.  The relationship  between each Borrower
and each Lender is solely that of debtor and creditor, and neither the Agent nor
any Lender has any  fiduciary or other special  relationship  with any Borrower,
and no term or condition of any of the Loan  Documents  shall be construed so as
to deem the  relationship  between any  Borrower and any Lender to be other than
that of debtor and creditor.

Section 8.6 Equitable  Relief.  Each Borrower  recognizes that in the event such
Borrower  fails  to  pay,  perform,  observe,  or  discharge  any  or all of the
Obligations,  any remedy at law may prove to be  inadequate  relief to the Agent
and the Lenders.  Each Borrower therefore agrees that the Agent and the Lenders,
if the Agent or the Lenders so  request,  shall be  entitled  to  temporary  and
permanent  injunctive  relief in any such case without the  necessity of proving
actual damages.

Section 8.7 No Waiver;  Cumulative Remedies. No failure on the part of the Agent
or any Lender to exercise and no delay in  exercising,  and no course of dealing
with respect to, any right,  power,  or  privilege  under this  Agreement  shall
operate as a waiver  thereof,  nor shall any single or partial  exercise  of any
right,  power, or privilege  under this Agreement  preclude any other or further
exercise  thereof or the exercise of any other right,  power, or privilege.  The
rights and remedies  provided  for in this  Agreement,  the Notes,  the Security
Agreement and the other Loan  Documents are  cumulative and not exclusive of any
rights and remedies provided by law.

Section 8.8  Successors and Assigns.  This  Agreement  shall be binding upon and
inure to the benefit of the parties hereto and their  respective  successors and
permitted  assigns.  No  Borrower  may assign or  transfer  any of its rights or
obligations  hereunder without the prior written consent of the Agent and all of
the Lenders. Each Borrower and each Lender agree that any Lender may at any time
pledge or assign a security  interest in all or any portion of its rights  under
this Agreement (including under its Note or Notes) to secure obligations of such
Lender;  provided,  however,  that no such pledge or assignment  shall release a
Lender from any of its  obligations  hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.

Section 8.9 Survival.  All representations and warranties made in this Agreement
or any  other  Loan  Document  or in any  document,  statement,  or  certificate
furnished in  connection  with this  Agreement  shall  survive the execution and
delivery of this Agreement and the other Loan Documents, and no investigation by
the Agent or any Lender or any  closing  shall  affect the  representations  and
warranties  or the right of the Agent or any Lender to rely upon  them.  Without
prejudice to the survival of any other obligation of any Borrower hereunder, the
obligations  of each  Borrower  under  Section 8.1 and Section 8.2 shall survive
repayment of the Notes.

Section 8.10 Entire  Agreement.  This Agreement,  the Notes,  and the other Loan
Documents  referred  to herein  embody the  final,  entire  agreement  among the
parties  hereto  and  supersede  any  and  all  prior  commitments,  agreements,
representations,  and  understandings,  whether written or oral, relating to the
subject  matter  hereof and may not be  contradicted  or varied by  evidence  of
prior,  contemporaneous,  or subsequent  oral  agreements or  discussions of the
parties hereto. There are no oral agreements among the parties hereto.

Section  8.11  Amendments,  Etc.  No  amendment,  modification  or waiver of, or
consent with respect to, any provision of the Loan Documents  shall in any event
be effective unless the same shall be in writing and signed and delivered by the
Agent  and  the  Required  Lenders;   provided,   however,  that  no  amendment,
modification  or  waiver  which  (a)  extends  the  maturity  of any Note or any
installment thereof, (b) decreases the time or the amount of any interest or fee
payable thereunder,  (c) changes the rate of interest payable,  (d) releases any
Collateral  from the Lien in favor of the Agent,  or (e)  changes  this  Section
8.11, shall be effective unless signed by the Agent and all Lenders.  Any waiver
of any provision of this Agreement, any Note or any of the other Loan Documents,
and any consent to any departure by any Borrower from the terms of any provision
of the Loan Documents,  shall be effective only in the specific instance and for
the specific purpose for which given.

Section 8.12 Maximum Interest Rate. No provision of this Agreement, the Notes or
of any other Loan  Document  shall  require  the  payment or the  collection  of
interest in excess of the maximum  amount  permitted by  applicable  law. If any
excess  of  interest  in such  respect  is  hereby  provided  for,  or  shall be
adjudicated  to be so provided,  in any Loan Document or otherwise in connection
with this loan  transaction,  the  provisions  of this Section  shall govern and
prevail and neither the Borrower nor the sureties,  guarantors,  successors,  or
assigns of the  Borrower  shall be  obligated  to pay the excess  amount of such
interest or any other excess sum paid for the use, forbearance,  or detention of
sums loaned pursuant hereto. In the event any Lender ever receives, collects, or
applies as interest  any such sum,  such amount  which would be in excess of the
maximum  amount  permitted by  applicable  law shall be applied as a payment and
reduction of the principal of the indebtedness evidenced by such Lender's Notes;
and,  if the  principal  of such  Lender's  Notes  has been  paid in  full,  any
remaining  excess  shall  forthwith  be  paid  to the  applicable  Borrower.  In
determining  whether or not the  interest  paid or payable  exceeds  the Maximum
Rate, each Borrower and each Lender shall, to the extent permitted by applicable
law, (a) characterize any non-principal  payment as an expense,  fee, or premium
rather than as  interest,  (b)  exclude  voluntary  prepayments  and the effects
thereof,  and (c) amortize,  prorate,  allocate,  and spread in equal or unequal
parts the total amount of interest  throughout the entire  contemplated  term of
the  indebtedness  evidenced  by the Notes so that  interest for the entire term
does not exceed the Maximum Rate.

Section 8.13 Notices. All notices and other communications  provided for in this
Agreement and the other Loan Documents to which any Borrower is a party shall be
given or made by telex, telegraph,  telecopy,  cable, or in writing and telexed,
telecopied,  telegraphed,  cabled,  mailed by  certified  mail,  return  receipt
requested,  or delivered to the intended  recipient at the "Address for Notices"
specified below its name on the signature  pages hereof;  or, as to any party at
such  other  address  as shall be  designated  by such party in a notice to each
other party given in  accordance  with this  Section  8.13.  Except as otherwise
provided in this Agreement, all such communications shall be deemed to have been
duly  given  when  transmitted  by  telex  or  telecopy,  subject  to  telephone
confirmation of receipt, or delivered to the telegraph or cable office,  subject
to telephone  confirmation of receipt,  or when personally  delivered or, in the
case of a mailed notice, three (3) days after being duly deposited in the mails,
in each case given or addressed as aforesaid.

Section 8.14 Governing Law; Venue;  Service of Process.  This Agreement shall be
governed by and construed in  accordance  with the laws of the State of Illinois
and the applicable laws of the United States of America. This Agreement has been
entered  into in Cook  County,  Illinois,  and it shall be  performable  for all
purposes in Cook County, Illinois. Any action or proceeding against any Borrower
under or in  connection  with any of the Loan  Documents  may be  brought in any
state  or  federal  court  in  Cook  County,   Illinois.  Each  Borrower  hereby
irrevocably (a) submits to the nonexclusive jurisdiction of such courts, and (b)
waives any  objection it may now or  hereafter  have as to the venue of any such
action or  proceeding  brought  in any such  court or that any such  court is an
inconvenient  forum. Each Borrower agrees that service of process upon it may be
made by certified or registered mail, return receipt requested, at its corporate
headquarters.  Nothing herein or in any of the other Loan Documents shall affect
the  right of the  Agent or any  Lender to serve  process  in any  other  manner
permitted  by law or shall  limit the right of the Agent or any  Lender to bring
any action or  proceeding  against any  Borrower  or with  respect to any of its
property  in courts in other  jurisdictions.  Any  action or  proceeding  by any
Borrower  against  the  Agent or any  Lender  shall be  brought  only in a court
located in Cook County, Illinois.

Section  8.15  Counterparts.  This  Agreement  may be  executed  in one or  more
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.  Telecopies of signatures
shall be binding and effective as originals.

Section 8.16  Severability.  Any provision of this  Agreement held by a court of
competent  jurisdiction  to be  invalid  or  unenforceable  shall not  impair or
invalidate  the  remainder of this  Agreement  and the effect  thereof  shall be
confined to the provision held to be invalid or illegal.

Section 8.17 Headings.  The headings,  captions,  and arrangements  used in this
Agreement are for convenience  only and shall not affect the  interpretation  of
this Agreement.

Section  8.18   Construction.   Each  Borrower,   the  Agent,  and  each  Lender
acknowledges  that each of them has had the benefit of legal  counsel of its own
choice and has been  afforded an  opportunity  to review this  Agreement and the
other Loan  Documents  with its legal  counsel and that this  Agreement  and the
other Loan  Documents  shall be construed  as if jointly  drafted by the parties
hereto.

Section 8.19 Independence of Covenants.  All covenants  hereunder shall be given
independent  effect so that if a particular action or condition is not permitted
by any of such  covenants,  the fact that it would be  permitted by an exception
to, or be otherwise  within the limitations of, another covenant shall not avoid
the occurrence of a Default if such action is taken or such condition exists.

Section 8.20 Waiver of Jury Trial. To the fullest extent permitted by applicable
law, each of the parties  hereto  hereby  irrevocably  and expressly  waives all
right to a trial by jury in any action,  proceeding,  or  counterclaim  (whether
based upon  contract,  tort, or otherwise)  arising out of or relating to any of
the Loan Documents or the  transactions  contemplated  thereby or the actions of
the  Agent or any  Lender in the  negotiation,  administration,  or  enforcement
thereof.

Section 8.21 Amendment.  This Agreement  amends the Notes. The execution of this
Agreement and the other Loan Documents executed in connection  herewith does not
extinguish the  indebtedness  outstanding in connection with the Notes, nor does
it constitute a novation with respect to such indebtedness.

Article 9

                                     Release

Section 9.1 Release.  Each Borrower  represents and warrants that as of the date
hereof there are no claims or offsets  against or defenses or  counterclaims  to
its or any  Obligated  Parties'  obligations  under any Note or any of the other
Loan  Documents.  To  induce  the  Agent  and the  Lenders  to enter  into  this
Agreement,   each  Borrower  hereby  unconditionally  and  irrevocably  remises,
acquits, and fully and forever releases and discharges the Agent and each Lender
and all  respective  Affiliates and  subsidiaries  of the Agent and the Lenders,
their respective officers, servants,  employees, agents, attorneys,  principals,
directors and shareholders,  and their respective heirs, legal  representatives,
successors and assigns  (collectively,  the "Released Lenders Parties") from any
and all claims, demands, causes of action, obligations, remedies, suits, damages
and liabilities (collectively,  the "Borrower Claims") of any nature whatsoever,
whether now known,  suspected or claimed,  whether  arising under common law, in
equity or under  statute,  which such  Borrower  ever had or now has against the
Released  Lenders  Parties  which may have arisen at any time on or prior to the
date of this  Agreement and which were in any manner related to any of the Notes
or any of the other Loan Documents or the  enforcement or attempted  enforcement
by the Agent or the Lenders of rights,  remedies or recourses  related  thereto.
Each  Borrower  covenants and agrees never to commence,  voluntarily  aid in any
way,  prosecute  or cause  to be  commenced  or  prosecuted  against  any of the
Released  Lenders Parties any action or other  proceeding  based upon any of the
Borrower  Claims  which  may have  arisen at any time on or prior to the date of
this Agreement and were in any manner related to any Note or to any of the other
Loan  Documents.  The  agreements  of each  Borrower set forth in this Article 9
shall survive termination of this Agreement.

                  [Remainder of Page Intentionally Left Blank]

<PAGE>

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

                   QORUS.COM, INC.

                   By:
                            ----------------------------------------------------
                            Name:   Thomas C. Ratchford
                                 -----------------------------------------------
                            Title:     Chief Financial Officer
                                    --------------------------------------------

                   AELIX, INC.

                   By:
                            ----------------------------------------------------
                            Name:    Patrick J. Haynes, III
                                  ----------------------------------------------
                            Title:      Director
                                     -------------------------------------------

                   Address for Notices:
                   -------------------

                   190 South LaSalle Street, Suite 1710
                   Chicago, IL  60603
                   Fax No.:  (312) 419-0172
                   Telephone No.:  (312) 419-0077
                   Attention:  Thomas C. Ratchford

                   THURSTON INTERESTS, LLC,
                   as Agent and as Lender

                   By:
                            ----------------------------------------------------
                            Name:   Patrick J. Haynes, III
                                  ----------------------------------------------
                            Title:     Manager
                                     -------------------------------------------

                   Address for Notices:
                   -------------------

                   190 South LaSalle Street, Suite 1710
                   Chicago, IL  60603
                   Fax No.:  (312) 419-0172
                   Telephone No.:  (312) 419-0077
                   Attention:  Patrick J. Haynes, III

  LENDERS:

                   APEX INVESTMENT FUND III, L.P.

                   By:
                            ----------------------------------------------------
                            Name:  George M. Middlemas
                                   ---------------------------------------------
                            Title:  Managing General Partner
                                    --------------------------------------------

                   Address for Notices:
                   -------------------

                   225 W. Washington Street, Suite 1450
                   Chicago, Illinois 60606
                   Fax No.: (312) 857-2800
                   Telephone No.: (312) 857-1800
                   Attention: George M. Middlemas

                   APEX STRATEGIC PARTNERS, LLC

                   By:
                            ----------------------------------------------------
                            Name:  George M. Middlemas
                                   ---------------------------------------------
                            Title:  Managing Member of the Manager
                                    --------------------------------------------

                   Address for Notices:
                   -------------------

                   225 W. Washington Street, Suite 1450
                   Chicago, Illinois 60606
                   Fax No.: (312) 857-2800
                   Telephone No.: (312) 857-1800
                   Attention: George M. Middlemas

                   THURSTON COMMUNICATIONS
 CORPORATION

                   By:
                            ----------------------------------------------------
                            Name:  Scot M. McCormick
                                   ---------------------------------------------
                            Title:  Chief Financial Officer
                                    --------------------------------------------

                   Address for Notices:
                   -------------------

                   190 South LaSalle Street, Suite 1710
                   Chicago, IL  60603
                   Fax No.:  (312) 419-0172
                   Telephone No.:  (312) 419-0077
                   Attention:  Scot M. McCormick

                   CUSTOMER CARE & TECHNOLOGY
                   HOLDINGS, INC.

                   By:
                            ----------------------------------------------------
                            Name:  Willard C. McNitt III
                                   ---------------------------------------------
                            Title:  Chief Financial Officer
                                    --------------------------------------------

                   Address for Notices:
                   -------------------

                   190 South LaSalle Street, Suite 1710
                   Chicago, IL  60603
                   Fax No.:  (312) 419-0172
                   Telephone No.:  (312) 419-0077
                   Attention:  Willard C. McNitt III

                      A-1
                   Exhibit A

------------------------------------------- ----------------- ---------------
Lender                                            Amount        Maturity Date
------------------------------------------- ----------------- ---------------

Thurston Interests, LLC                        $2,218,000.00    May 31, 2001

Apex Investment Fund III, L.P.                 $2,041,762.25    May 31, 2001

Apex Strategic Partners, LLC                     $108,236.79    May 31, 2001

Thurston Communications    Corporation                          May 31, 2001
                                               $3,022,000.00

Customer Care & Technology                                      May 31, 2001
         Holdings, Inc.                          $275,000.00
                                            -----------------
                               Total           $7,664,999.04
------------------------------------------- ----------------- ---------------

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