Document:

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                          AGREEMENT AND PLAN OF MERGER

                                      AMONG

                              EXABYTE CORPORATION,

                            BRONCO ACQUISITION, INC.,

                               ECRIX CORPORATION,

                                CERTAIN LENDERS,

                                       AND

                                CERTAIN INVESTORS

                           DATED AS OF AUGUST 22, 2001

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                                TABLE OF CONTENTS
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                                                                                      PAGE

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ARTICLE I THE MERGER......................................................................1

    1.1 The Merger........................................................................1

    1.2 The Closing.......................................................................1

    1.3 Effective Date and Time...........................................................2

    1.4 Certificate of Incorporation of the Surviving Corporation.........................2

    1.5 Bylaws of the Surviving Corporation...............................................2

    1.6 Effects of Merger.................................................................2

    1.7 Directors and Officers............................................................3

    1.8 Conversion of Shares..............................................................4

    1.9 Tax-Free Reorganization...........................................................9

ARTICLE II PURCHASE OF CONVERTIBLE SECURED PROMISSORY NOTES...............................9

    2.1 The Loan..........................................................................9

    2.2 Delivery..........................................................................9

ARTICLE III PURCHASE OF SERIES H CONVERTIBLE PREFERRED STOCK.............................10

    3.1 Authorization; Agreement To Sell And Purchase....................................10

    3.2 Closing, Delivery and Payment....................................................10

    3.3 Rights and Preferences of Series H Shares........................................11

    3.4 Registration Agreement...........................................................11

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................11

    4.1 Organization.....................................................................11

    4.2 Enforceability...................................................................12

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    4.3 Capitalization...................................................................12

    4.4 Subsidiaries and Affiliates......................................................14

    4.5 No Approvals; No Conflicts.......................................................14

    4.6 Financial Statements.............................................................15

    4.7 Absence of Certain Changes or Events.............................................15

    4.8 Taxes............................................................................17

    4.9 Property.........................................................................20

    4.10 Contracts.......................................................................22

    4.11 Customers and Suppliers.........................................................23

    4.12 Warranties and Returns..........................................................24

    4.13 Claims and Legal Proceedings....................................................24

    4.14 Labor and Employment Matters....................................................24

    4.15 Employee Benefit Plans..........................................................25

    4.16 Personnel.......................................................................29

    4.17 Intellectual Property...........................................................29

    4.18 Accounts Receivable.............................................................33

    4.19 Inventory.......................................................................33

    4.20 Corporate Books and Records.....................................................33

    4.21 Licenses, Permits, Authorizations, etc..........................................33

    4.22 Compliance With Laws............................................................34

    4.23 Insurance.......................................................................34

    4.24 Brokers or Finders..............................................................34

    4.25 Bank Accounts...................................................................35

    4.26 Insider Interests...............................................................35

    4.27 Compliance WITH ENVIRONMENTAL Laws..............................................35

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    4.28 Information Supplied by the Company.............................................36

    4.29 Full Disclosure.................................................................37

    4.30 Absence of Undisclosed Liabilities..............................................37

    4.31 Government Contracts............................................................37

ARTICLE V REPRESENTATIONS AND WARRANTIES OF INVESTORS
        AND LENDERS REGARDING SECURITIES MATTERS.........................................38

    5.1 Requisite Power and Authority....................................................38

    5.2 Investment Representations.......................................................38

    5.3 Investor Bears Economic Risk.....................................................38

    5.4 Acquisition for Own Account......................................................38

    5.5 Investor and Lender Can Protect Its Interest.....................................39

    5.6 Accredited Investor..............................................................39

    5.7 Parent Information...............................................................39

    5.8 Rule 144.........................................................................39

    5.9 Information Furnished by Investors and Lenders...................................39

ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.......................40

    6.1 Organization.....................................................................40

    6.2 Enforceability...................................................................41

    6.3 Capitalization...................................................................42

    6.4 Subsidiaries and Affiliates......................................................43

    6.5 No Approvals; No Conflicts.......................................................43

    6.6 Financial Statements.............................................................44

    6.7 Absence of Certain Changes or Events.............................................44

    6.8 Taxes............................................................................46

    6.9 Property.........................................................................49

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    6.10 Contracts.......................................................................51

    6.11 Customers and Suppliers.........................................................52

    6.12 Warranties and Returns..........................................................53

    6.13 Claims and Legal Proceedings....................................................53

    6.14 Labor and Employment Matters....................................................53

    6.15 Employee Benefit Plans..........................................................54

    6.16 Personnel.......................................................................58

    6.17 Intellectual Property...........................................................58

    6.18 Accounts Receivable.............................................................61

    6.19 Inventory.......................................................................61

    6.20 Corporate Books and Records.....................................................62

    6.21 Licenses, Permits, Authorizations, etc..........................................62

    6.22 Compliance With Laws............................................................62

    6.23 Insurance.......................................................................62

    6.24 Brokers or Finders..............................................................63

    6.25 Insider Interests...............................................................63

    6.26 Compliance WITH ENVIRONMENTAL Laws..............................................64

    6.27 Information Supplied by Parent..................................................64

    6.28 Full Disclosure.................................................................65

    6.29 Absence of Undisclosed Liabilities..............................................65

    6.30 Government Contracts............................................................65

    6.31 Securities -- Parent Common Stock...............................................65

    6.32 Securities -- H Shares and Notes................................................65

    6.33 SEC Documents; Parent Financial Statements......................................66

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ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB.................67

    7.1 Accuracy of Representations and Warranties.......................................67

    7.2 Performance of Agreements........................................................67

    7.3 Compliance Certificate...........................................................67

    7.4 No Material Adverse Change.......................................................67

    7.5 Approvals........................................................................68

    7.6 Secretary's Certificate..........................................................68

    7.7 Compliance With Laws.............................................................68

    7.8 Stockholder Approval.............................................................68

    7.9 Legal Proceedings................................................................68

    7.10 Affiliate Letters...............................................................69

    7.11 Termination of Certain Agreements...............................................69

    7.12 Dissenter Rights Exercised Greater Than 20% of Stock............................69

    7.13 Consents to Merger..............................................................69

    7.14 Receipt of Loan from Company....................................................69

    7.15 Amendment to Certificate........................................................70

    7.16 Lock-Up Agreements..............................................................70

    7.17 SEC Effectiveness...............................................................70

    7.18 Series H Purchase...............................................................70

ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY..........................70

    8.1 Accuracy of Representations and Warranties.......................................70

    8.2 Performance of Agreements........................................................71

    8.3 Compliance Certificate...........................................................71

    8.4 No Material Adverse Change.......................................................71

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    8.5 Approvals and Consents...........................................................71

    8.6 Secretary's Certificate..........................................................71

    8.7 Compliance With Laws.............................................................72

    8.8 Legal Proceeding.................................................................72

    8.9 Stockholder Approval.............................................................72

    8.10 Parent's Trading Market Listing.................................................72

    8.11 S-4 Effectiveness...............................................................72

    8.12 Congress Consent................................................................73

ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF THE INVESTORS..........................73

    9.1 Closing of the Merger............................................................73

    9.2 Compliance With Laws.............................................................73

    9.3 Registration Rights Agreement....................................................73

ARTICLE X COVENANTS......................................................................73

    10.1 Conduct of Business by the Company Pending the Merger...........................73

    10.2 Conduct of Business by Parent Pending the Merger................................76

    10.3 Access to Information; Confidentiality..........................................79

    10.4 Notification of Certain Matters.................................................80

    10.5 Further Action; Best Efforts....................................................80

    10.6 Approval of Parent Stockholders; Preparation of Proxy Statement.................80

    10.7 Company Stockholder Approval....................................................81

    10.8 Preparation of S-4..............................................................81

    10.9 Parent Common Stock.............................................................82

    10.10 Dissenting Shares..............................................................82

    10.11 Publicity......................................................................82

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    10.12 No Solicitation, etc...........................................................83

    10.13 Regulatory and Other Approvals.................................................84

    10.14 Company Employees..............................................................85

    10.15 Rights Agreement...............................................................86

ARTICLE XI TERMINATION, AMENDMENT AND WAIVER.............................................86

    11.1 Termination.....................................................................86

    11.2 Effect Of Termination...........................................................87

    11.3 Amendment.......................................................................88

    11.4 Waiver..........................................................................88

ARTICLE XII GENERAL......................................................................89

    12.1 No Survival of Representations and Warranties...................................89

    12.2 Expenses........................................................................89

    12.3 Notices.........................................................................89

    12.4 Severability....................................................................90

    12.5 Entire Agreement................................................................90

    12.6 Assignment......................................................................90

    12.7 Parties in Interest.............................................................91

    12.8 Governing Law; Jurisdiction; Venue..............................................91

    12.9 No Third-Party Beneficiary......................................................91

    12.10 Counterparts...................................................................91

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                                    EXHIBITS

Exhibit 1.3                Certificate of Merger
Exhibit 2.1                Notes
Exhibit 3.1.1(a)           Parent H Certificate
Exhibit 3.1.2              Investor Purchase Schedule
Exhibit 3.4                Registration Rights Agreement
Exhibit 4                  Company Disclosure Memorandum
Exhibit 6                  Parent Disclosure Memorandum
Exhibit 6.5(b)             Rights Agreement Amendment
Exhibit 7.10               Affiliate Letter
Exhibit 7.16               Lock Up Agreement

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                          AGREEMENT AND PLAN OF MERGER

         This Agreement and Plan of Merger (this "AGREEMENT") is made and
entered into as of August 22, 2001, by and among Exabyte Corporation, a Delaware
corporation ("PARENT"), Bronco Acquisition, Inc., a Delaware corporation and a
wholly owned subsidiary of Parent ("MERGER SUB"), Ecrix Corporation, a Delaware
corporation (the "COMPANY"), the investors listed on the signature page of this
Agreement (the "INVESTORS") and the lenders listed on the signature pages of
this Agreement (the "LENDERS").

                                    RECITALS

         A.       The Company, Parent and Merger Sub believe it advisable and in
their respective best interests to effect a merger of the Company and Merger Sub
pursuant to this Agreement (the "MERGER").

         B.       The Board of Directors of the Company has approved this
Agreement and the Merger as required by applicable law, and will submit this
Agreement to the Company's stockholders for their approval.

         C.       The Boards of Directors of Parent and Merger Sub and the sole
stockholder of Merger Sub have approved this Agreement and the Merger as
required by applicable law.

                                    AGREEMENT

         In consideration of the terms of this Agreement, the parties hereto
agree as follows:

                                    ARTICLE I
                                   THE MERGER

         1.1      THE MERGER

         Upon the terms and subject to the conditions of this Agreement, at the
Effective Time (as defined in SECTION 1.3) the separate existence of Merger Sub
shall cease and Merger Sub shall be merged with and into the Company, and the
Company shall continue as the surviving corporation in the Merger and a wholly
owned subsidiary of Parent (the Company as the surviving corporation after the
Merger is sometimes referred to herein as the "SURVIVING CORPORATION").

         1.2      THE CLOSING

         Upon the terms and subject to the conditions of this Agreement, the
closing of the Merger (the "Closing") shall take place on the earliest
practicable business day (the "CLOSING DATE"), but not later than the fifth
business day, after the satisfaction or

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waiver of the conditions set forth in ARTICLES VII AND VIII at 10 a.m. local
time at the offices of Holland & Hart LLP, Suite 500, 1050 Walnut Street,
Boulder, CO 80302, or such other date, time or location as Parent and the
Company shall agree.

         1.3      EFFECTIVE DATE AND TIME

         On the Closing Date and upon the terms and subject to the conditions of
this Agreement, the Company and Merger Sub shall cause the appropriate
certificate (the "CERTIFICATE OF MERGER") substantially in the form attached as
EXHIBIT 1.3 complying with the applicable provisions of the Delaware General
Corporate Law ("DGCL") to be properly executed and filed with the Secretary of
State of the State of Delaware (the "DELAWARE SECRETARY OF STATE"). The Merger
shall become effective on the date (the "EFFECTIVE DATE") and at the time (the
"EFFECTIVE TIME") of filing of the Certificate of Merger or at such other time
as may be specified in the Certificate of Merger as filed. If the Delaware
Secretary of State requires any changes in the Certificate of Merger as a
condition to filing or to issuing its certificate to the effect that the Merger
is effective, Parent, Merger Sub and the Company will execute any necessary
revisions incorporating such changes, provided such changes are not materially
inconsistent with and do not result in any material change in the terms of this
Agreement.

         1.4      CERTIFICATE OF INCORPORATION OF THE SURVIVING CORPORATION

         At the Effective Time, the Certificate of Incorporation of Merger Sub
as in effect immediately prior to the Effective Time shall become the
Certificate of Incorporation of the Surviving Corporation, except that the name
of the corporation shall set forth therein shall be changed to the name of the
Company. Thereafter, the Certificate of Incorporation of the Surviving
Corporation may be amended in accordance with its terms and as provided by law.

         1.5      BYLAWS OF THE SURVIVING CORPORATION

         At the Effective Time, the Bylaws of Merger Sub as in effect
immediately prior to the Effective Time shall become the Bylaws of the Surviving
Corporation, except that the name of the corporation set forth therein shall be
changed to the name of the Company. Thereafter, the Bylaws may be amended or
repealed in accordance with their terms and the Certificate of Incorporation of
the Surviving Corporation and as provided by law.

         1.6      EFFECTS OF MERGER

         The Surviving Corporation shall, by virtue of the Merger and in
accordance with the DGCL, possess all the properties and rights and be subject
to all the liabilities of the Company and Merger Sub. From and after the
Effective Time, the Merger shall have all effects provided by applicable law.

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         1.7      DIRECTORS AND OFFICERS

         At the Effective Time, the directors of Merger Sub shall continue in
office as the directors of the Surviving Corporation and the officers of the
Merger Sub shall continue in office as the officers of the Surviving
Corporation, and such directors and officers shall hold office in accordance
with and subject to the Certificate of Incorporation and Bylaws of the Surviving
Corporation. At the Effective Time,(i) the number of members of the Board of
Directors of Parent (the "Board") shall be increased to seven (7), (ii) Parent
shall remove or accept the resignations of two members of the Board, and (iii)
the resulting vacancies on the Board shall be filled by the election of G.
Jackson Tankersley, Jr., William J. Almon, Sr. and Juan A. Rodriguez ("COMPANY
DESIGNEES") as directors of Parent, each to serve until the next annual meeting
of stockholders of Parent at which such directorship is up for reelection and
until their successors are elected and qualified. These directors shall be
placed in one or more classes of directors whose staggered terms expire at the
2002, 2003 and 2004 Annual Meetings of stockholders of Parent, respectively.
Except as provided in the last sentence of this Section 1.7 the Parent agrees to
take all action necessary such that the Parent's Board of Directors shall at all
times include three directors (or such greater number of directors as shall
constitute the maximum number of members that represent a numerical minority of
the Board) who are nominated by the Company Designees and included in the slate
of proposed directors put forth by the Parent to its stockholders and
recommended for election in the proxy solicitation materials disseminated by the
Parent. Upon the death, resignation or removal of any Company Designee, Parent
will cause the vacancy to be filled by a subsequent designee recommended by the
remaining Company Designees then serving on the Board. The Company Designees
shall be covered by any directors' and officers' liability insurance maintained
from time to time on the same terms as the other members of the Board and shall
be entitled to the benefit of any indemnification arrangements applicable to
other members of the Board. The Company Designees shall have the right to
receive all fees paid and options and other awards granted and expenses
reimbursed to non-employee directors generally, except that in the event that
any Company Designee shall also be an employee of Parent, such Company Designee
shall only be entitled to receive compensation for his service on the Board of
Directors consistent with the policies of Parent's Board of Directors governing
the compensation of employee directors generally. If at any time, the Investors
shall beneficially own (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as currently in effect) less than 30% of the then
outstanding voting power of all classes of the Parent's voting securities, the
number of directors that Parent shall be obligated to include on the Board of
Directors pursuant to the fourth sentence of this Section 1.7 shall be reduced
so that the number of Company Designees expressed as a percentage of the entire
Board of Directors is approximately equal to the percentage of the outstanding
voting power then beneficially owned by the Investors rounded to the nearest
whole directorship but in any event not a majority; provided, however that if
the Investors shall beneficially own less than 10% of the outstanding voting
power of all classes of the Parent's voting securities, the number of Company
Designees shall be zero.

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         1.8      CONVERSION OF SHARES

                  1.8.1    Exchange Ratios

         As of the Effective Time, by virtue of the Merger and without any
action on the part of the Company, Merger Sub, Parent or any of their respective
stockholders:

                  (a)      All shares of any class of capital stock of the
Company held by the Parent, Merger Sub or any other subsidiary of the Parent or
held by the Company as treasury shares shall be canceled.

                  (b)      The outstanding shares of preferred stock of the
Company (the "COMPANY PREFERRED STOCK"), other than shares of Company Preferred
Stock for which dissenters' rights are perfected and shares canceled pursuant to
paragraph (a) above, shall be converted into the right to receive up to
9,000,000 shares of Parent's common stock, $0.001 par value per share ("PARENT
COMMON STOCK"), with the exchange ratio for each series of Company Preferred
Stock to be as follows (each, a "COMPANY PREFERRED STOCK EXCHANGE RATIO"):

                           (i)      Each issued and outstanding share of the
         Company's Series D-1 Preferred Stock (other than dissenters shares)
         shall be converted into the right to receive .82400 shares of Parent
         Common Stock (the "SERIES D-1 PREFERRED STOCK EXCHANGE RATIO").

                           (ii)     Each issued and outstanding share of the
         Company's Series D Preferred Stock (other than dissenters shares) shall
         be converted into the right to receive .04857 shares of Parent Common
         Stock.

                           (iii)    Each issued and outstanding share of the
         Company's Series C Preferred Stock (other than dissenters shares) shall
         be converted into the right to receive .04048 shares of Parent Common
         Stock.

                           (iv)     Each issued and outstanding share of the
         Company's Series B Preferred Stock (other than dissenters shares) shall
         be converted into the right to receive .02371 shares of Parent Common
         Stock.

                           (v)      Each issued and outstanding share of the
         Company's Series A Preferred Stock (other than dissenters shares) shall
         be converted into the right to receive .00952 shares of Parent Common
         Stock.

                  (c)      The outstanding shares of common stock of the Company
(the "COMPANY COMMON STOCK" and together with the Company Preferred Stock, the
"COMPANY CAPITAL STOCK"), other than shares of Company Common Stock for which
dissenters' rights are perfected and shares that are canceled pursuant to
paragraph 1.8.1(a) above, shall be converted into the right to receive a total
of 1,000,000 shares of Parent Common Stock, with each outstanding share of
Company Common Stock

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converted into the right to receive a number of shares of Parent Common Stock
equal to (i) 1,000,000 divided by (ii) the total number of shares of Company
Common Stock outstanding immediately prior to the Effective Time (the "COMPANY
COMMON STOCK EXCHANGE RATIO") provided that the 1,000,000 shares of Parent
Common Stock issuable to holders of the Company Common Stock shall be reduced by
the number of shares of Parent Common Stock attributable to shares of Company
Common Stock for which dissenters' rights have been properly exercised under the
DGCL.

                  (d)      In the event there is any change after the date of
this Agreement to the number of shares of Company Preferred Stock to be
exchanged as a result of the Merger, the applicable Company Preferred Stock
Exchange Ratio shall be appropriately adjusted so that the aggregate number of
shares of Parent Common Stock issuable as a result of the Merger upon conversion
of the Company Preferred Stock shall not exceed 9,000,000 shares (less any
shares otherwise issuable to holders of Company Preferred Stock that have
properly exercised dissenters' rights under the DGCL). The number of shares of
Parent Common Stock shall be appropriately adjusted in the event of a stock
split, stock combination or other similar change in the Parent's Capital Stock
effected prior to Closing.

                  (e)      Each issued and outstanding share of capital stock of
Merger Sub shall be converted into one share of common stock of the Surviving
Corporation.

                  (f)      Each outstanding Option to purchase shares of
Company Common Stock (the "OPTIONS") issued pursuant to the Company's 1998
Incentive Stock Option Plan and Equity Incentive Plan (the "COMPANY OPTION
PLANS"), each warrant to purchase shares of the Company's Series B Preferred
Stock (the "B WARRANTS") and each warrant to purchase shares of the Company's
Series D-2 Preferred Stock (the "D-2 WARRANTS"), whether or not vested or
exercisable, shall, unless such Option, B Warrant or D-2 Warrant shall have
been exercised prior to consummation of the Merger, terminate by its terms in
connection with the Merger. The Board of Directors of the Company shall take
such action or make such determinations as necessary to terminate the
Options, B Warrants and D-2 Warrants at the Effective Time of the Merger.
Notwithstanding the foregoing, to the extent any B Warrants are exercised
prior to the Effective Time, the shares of the Company's Series B Preferred
Stock issued upon such exercise shall be converted into shares of Parent
Common Stock in accordance with the applicable Company Preferred Stock
Exchange Ratio; provided, however, that such Company Preferred Stock Exchange
Ratio shall be adjusted to the product of the applicable Company Preferred
Stock Exchange Ratio multiplied by a fraction, (i) the numerator of which
shall be the aggregate number of shares of the Company's Series B Preferred
Stock outstanding as of the date of this Agreement and (ii) the denominator
of which shall be the aggregate number of shares of the Company's Series B
Preferred Stock outstanding immediately prior to the Effective Time.
Notwithstanding the foregoing, to the extent any D-2 Warrants are exercised
prior to the Effective Time, the shares of the Company's Series D-2 Preferred
Stock issued upon such exercise shall be converted into shares of Parent
Common Stock in accordance with the Series D-1 Preferred Stock Exchange
Ratio; provided, however, that such Series D-1 Preferred Stock Exchange Ratio
shall be adjusted to the product of

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the Series D-1 Preferred Stock Exchange Ratio multiplied by a fraction, (i) the
numerator of which shall be the aggregate number of shares of the Company's
Series D-1 Preferred Stock outstanding as of the date of this Agreement and (ii)
the denominator of which shall be the aggregate number of shares of the
Company's Series D-1 Preferred Stock and Series D-2 Preferred Stock outstanding
immediately prior to the Effective Time.

                  (g)      Holders of shares of Company Capital Stock who have
complied with all the requirements for perfecting dissenters' rights, as
required under the DGCL, shall be entitled to their rights under the DGCL with
respect to such shares (the "DISSENTING SHARES"). Notwithstanding the foregoing,
if any holder of Dissenting Shares shall effectively withdraw or lose (through
failure to perfect or otherwise) the right to dissent, then, as of the later of
the Effective Time and the occurrence of such event, such holder's shares shall
automatically be converted into and represent only the right to receive the
shares of Parent Common Stock to which such holder is then entitled under this
Agreement and the DGCL, without interest thereon and upon surrender of the
certificate or certificates representing such shares. Notwithstanding any
provision of this Agreement to the contrary, any Dissenting Shares held by a
stockholder who has perfected dissenter's rights for such shares in accordance
with the DGCL shall not be converted into Parent Common Stock pursuant to this
SECTION 1.8.1.

                  (h)      If, prior to the Effective Time, Parent or the
Company effects a subdivision of its outstanding shares into a greater number of
shares, or a combination of its outstanding shares into a lesser number of
shares, or reorganizes, reclassifies or otherwise changes its outstanding shares
into the same or a different number of shares or other classes, or declares a
dividend on its outstanding shares payable in shares of its capital stock or
securities convertible into shares of its capital stock, then the Company Common
Stock Exchange Ratio and the Company Preferred Stock Exchange Ratios will be
adjusted appropriately so as to maintain the relative proportionate interests of
the holders of shares of Company Capital Stock and the holders of shares of
Parent Common Stock.

                  1.8.2    Exchange of Certificates

                  (a)      As promptly as practicable after the Effective Time,
Parent shall make available to BankBoston, N.A., the "EXCHANGE AGENT," the
certificates representing the whole shares of Parent Common Stock issued
pursuant to Section 1.8.1 in exchange for outstanding shares of Company Capital
Stock.

                  (b)      The Exchange Agent shall mail on or prior to the
Closing Date to each holder of record as of the date 10 business days prior to
the Closing Date of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Company Capital Stock (and as
soon as practicable to stockholders that became holders of Company Capital Stock
subsequent to such date), other than shares to be canceled in accordance with
Section 1.8.1(a), (i) a letter of

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transmittal (the "LETTER OF TRANSMITTAL") in customary form and (ii)
instructions for effecting the surrender of the certificates in exchange for
certificates representing Parent Common Stock. Upon surrender of a certificate
for cancellation to the Exchange Agent or to such other agent or agents as may
be appointed by Parent, together with such Letter of Transmittal, duly executed,
and such other documents as may reasonably be required by the Exchange Agent,
the holder of such certificate shall be entitled to receive in exchange
therefor, by the later of (a) ten business days following the Effective Time and
(b) ten business days following the surrender of such certificate, a certificate
representing that number of whole shares of Parent Common Stock which such
holder has the right to receive pursuant to the provisions of SECTION 1.8.1, and
the certificate so surrendered shall forthwith be canceled.

                  (c)      In the event that any certificates representing
shares of Company Capital Stock shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the stockholder claiming such
certificate to be lost, stolen or destroyed, Parent shall issue in exchange for
such lost, stolen or destroyed certificate the shares of Parent Common Stock
that such stockholder is entitled to receive pursuant to SECTION 1.8.1;
provided, however, that Parent may, in its discretion and as a condition
precedent to the issuance thereof, require such stockholder to provide Parent
with a reasonable and customary indemnity agreement against any claim that may
be made against Parent with respect to the certificate alleged to have been
lost, stolen or destroyed.

                  (d)      The shares of Parent Common Stock that each
stockholder of the Company shall be entitled to receive pursuant to the Merger
shall be deemed to have been issued at the Effective Time. If the Merger
Consideration (or any portion thereof) is to be delivered to any person other
than the person in whose name the certificate or certificates representing
shares of Company Capital Stock surrendered in exchange therefor are registered,
it shall be a condition to such exchange that the person requesting such
exchange pay to Parent any transfer or other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered holder
of the certificate or certificates so surrendered, or shall establish to the
satisfaction of Parent that such tax has been paid or is not applicable.
Notwithstanding anything to the contrary, neither Parent nor any other party
hereto shall be liable to a holder of shares of Company Capital Stock for any
Merger Consideration delivered to a public official pursuant to applicable law,
including abandoned property, escheat and similar laws to the extent required
under law to be so delivered.

                  (e)      Parent or the Exchange Agent will be entitled to
deduct and withhold from the Merger Consideration such amounts as Parent or the
Exchange Agent are required to deduct and withhold with respect to the making of
such payment under the Code, or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld, such amounts will be treated
for all purposes of this Agreement as having been paid to the former holder of
the Company Capital Stock in respect of whom such deduction and withholding were
made by Parent or the Exchange Agent.

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                  1.8.3    Fractional Shares

                  No Parent Common Stock representing a fraction of Parent
Common Stock or book-entry credit of the same will be issued pursuant to the
Merger, but in lieu thereof each former holder of Company Capital Stock
otherwise entitled to receive a fractional interest in Parent Common Stock will
be entitled to receive in accordance with the provisions of this Section 1.8.3 a
cash payment in lieu of that fractional interest representing the holder's
proportionate interest in the net proceeds from the sale by the Exchange Agent
on behalf of all holders otherwise entitled to fractional interests in shares of
Parent Common Stock (the "EXCESS SHARES"). The sale of the Excess Shares by the
Exchange Agent shall be executed through the Parent's Trading Market. Until the
net proceeds of the sale of the Excess Shares have been distributed to the
former holders of Company Capital Stock, the Exchange Agent will hold the
proceeds in trust for those former holders (the "EXCESS SHARES TRUST").
Commissions, transfer taxes and other out-of-pocket transaction costs, including
the expenses and compensation, of the Exchange Agent incurred in connection with
the sale of the Excess Shares shall be paid from cash held in the Excess Shares
Trust. The Exchange Agent shall determine the portion of the Excess Shares Trust
to which each former holder of Common Stock shall be entitled, if any, by
multiplying the amount of the aggregate net proceeds comprising the Excess
Shares Trust by a fraction the numerator of which shall be the fractional
interest of Parent Common Stock to which such former holder would otherwise be
entitled and the denominator of which is the aggregate amount of fractional
interests in Parent Common Stock to which all former holders of Company Capital
Stock would otherwise be entitled. As soon as practicable after the
determination of the amount of cash, if any, to be paid to former holders of
Company Capital Stock in lieu of fractional interests in Parent Common Stock,
the Exchange Agent shall make available those amounts to the former holders
without interest.

                  1.8.4    No Further Transfers; No Further Ownership Rights In
Company Capital Stock; No Dividends or Other Distributions

         All shares of Parent Common Stock issued upon the surrender for
exchange of shares of Company Capital Stock in accordance with the terms hereof
shall be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of Company Capital Stock, and there shall be no
further registration of transfers on the records of the Surviving Corporation of
shares of Company Capital Stock that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, certificates formerly representing
shares of Company Capital Stock are presented to the Surviving Corporation, they
shall be forwarded to Parent and shall be canceled and exchanged in accordance
with this SECTION 1.8, unless such certificates for Parent Common Stock have
already been issued in respect of such shares in reliance upon an affidavit of
loss or otherwise, in any case subject to applicable law in the case of
Dissenting Shares. No dividends or other distributions payable with respect to
Parent Common Stock shall be paid to the holder of any unsurrendered
certificates evidencing Company Capital Stock until such certificates are
surrendered and exchanged for shares of Parent Common Stock in accordance with
this Agreement.

                                       8
<Page>

         1.9      TAX-FREE REORGANIZATION

         It is intended that the Merger shall constitute a "REORGANIZATION"
within the meaning of Section 368(a) of the Code, and that this Agreement shall
constitute a "PLAN OF REORGANIZATION" for purposes of the Code

                                   ARTICLE II
                PURCHASE OF CONVERTIBLE SECURED PROMISSORY NOTES

         2.1      THE LOAN

         At the time of full execution of this Agreement (the "EXECUTION TIME"),
pursuant to a Loan and Security Agreement of even date herewith (the "LOAN
AGREEMENT") Meritage, Centennial and Almon or their respective affiliates (the
"LENDERS") severally and not jointly agree to lend to Parent the aggregate
amount of Two Million Dollars ($2,000,000) (the "LOAN AMOUNT"), of which the
Lenders' respective participation amounts shall be $1,139,847 for Meritage,
$603,688 for Centennial and $256,465 for Almon, against the issuance and
delivery by the Parent of convertible secured promissory notes in substantially
the form attached hereto as EXHIBIT 2.1 (the "NOTES"); provided, however, that
the Loan Amount shall be advanced in two separate installments, the first of
which shall be in the amount of One Million Five Hundred Thousand Dollars
($1,500,000) and the second of which shall be subject to the satisfaction of
certain conditions contained in the Loan Agreement and shall be in the amount of
Five Hundred Thousand Dollars ($500,000), each of which installments shall be
advanced by the Lenders on a pro rata basis. In the event of termination of this
Agreement, the Notes shall be subject to acceleration, extension or conversion
in accordance with the provisions set forth therein.

         2.2      DELIVERY

         At the Execution Time (i) the Lenders shall deliver to Parent certified
checks or wire transfer funds in the aggregate amount of One Million Five
Hundred Thousand Dollars ($1,500,000) (the "INITIAL LOAN AMOUNT") and (ii)
Parent shall issue and deliver to the Lenders (i) Convertible Secured Promissory
Notes in favor of the Lenders in their respective participation amounts
substantially in the form attached hereto as EXHIBIT 2.1 and (ii) UCC-1
financing statements or other security documents reasonably satisfactory to the
Lenders evidencing a second priority security interest in substantially all the
assets of Parent. Upon the satisfaction of the requirements set forth in the
Loan Agreement, the Lenders shall deliver to Parent certified checks or wire
transfer funds in the aggregate amount of Five Hundred Thousand Dollars
($500,000) (the "REMAINING LOAN AMOUNT").

                                       9
<Page>

                                   ARTICLE III
                PURCHASE OF SERIES H CONVERTIBLE PREFERRED STOCK

         3.1      AUTHORIZATION; AGREEMENT TO SELL AND PURCHASE

                  3.1.1    On or prior to the Closing, Parent shall authorize
the sale and issuance of shares of its Series H Convertible Preferred Stock (the
"H SHARES") having the rights, preferences, privileges and restrictions set
forth in the Certificate of Designations of Powers, Preferences, Qualifications,
Limitations and Restrictions of Series H Convertible Preferred Stock of Parent,
attached hereto as EXHIBIT 3.1.1(a) (the "PARENT H CERTIFICATE").

                  3.1.2    At the Closing, Parent hereby agrees to issue and
sell to those persons and entities identified as Investors, and each Investor
severally agrees to purchase from Parent, the number of H Shares set forth
opposite such Investor's name on EXHIBIT 3.1.2, at a purchase price of One
Dollar ($1.00) per Share.

                  3.1.3    Notwithstanding the preceding sentence, any amounts
that an Investor has advanced to Parent as a loan pursuant to Article II of this
Agreement and any unpaid accrued interest on such amounts shall, unless earlier
repaid, be credited to such Investor and such Investor's total purchase price
for the H Shares under this Article III shall be reduced by the sum of the
unpaid principal amount plus any unpaid accrued interest.

                  3.1.4    Any amounts to be paid to Parent hereunder shall be
paid by certified check or wire transfer of funds to a designated account of
Parent, provided that in the event of a wire transfer, wire transfer
instructions are delivered to the Investors at least one business day prior to
the Closing.

                  3.1.5    If prior to the Effective Time, Parent effects a
subdivision of its outstanding shares into a greater number of shares, or a
combination of its outstanding shares into a lesser number of shares, or
reorganizes, reclassifies or otherwise changes its outstanding shares into the
same or a different number of shares or other classes, or declares a dividend on
its outstanding shares payable in shares of its capital stock or securities
convertible into shares of its capital stock, then (i) the number of H Shares,
(ii) the purchase price per H Share and (iii) the Series H Conversion Price (as
defined in the Parent H Certificate), shall each be proportionately increased or
decreased so that the aggregate purchase price of the H Shares shall equal
$9,400,000.

         3.2      CLOSING, DELIVERY AND PAYMENT

         At the Closing, Parent will deliver to the Investors certificates
representing the number of H Shares to be purchased at the Closing by each
Investor, against payment of the purchase price therefor by certified check or
wire transfer of immediately available funds.

                                       10
<Page>

         3.3      RIGHTS AND PREFERENCES OF SERIES H SHARES

         The rights, preferences, privileges and restrictions of the H Shares
shall be as set forth in the Parent H Certificate.

         3.4      REGISTRATION AGREEMENT

         At Closing, the Parent and the Investors shall execute and deliver a
Registration Rights Agreement for the benefit of the Investors in the form set
forth hereto as EXHIBIT 3.4.

                                   ARTICLE IV
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         Except as is otherwise set forth in the Company Disclosure Memorandum
attached hereto as EXHIBIT 4 (the "DISCLOSURE MEMORANDUM") under a reference to
the appropriate Section to which such disclosure relates (unless the
applicability of such disclosure to any other Section is reasonably apparent in
light of the nature of the disclosure), and in order to induce Parent, Merger
Sub, each Lender and each Investor to enter into and perform this Agreement and
the other agreements and certificates that are required to be executed pursuant
to this Agreement (collectively, the "OPERATIVE DOCUMENTS"), the Company
represents and warrants to Parent, Merger Sub, each Lender and each Investor as
of the date of this Agreement as follows in this ARTICLE IV. The Company shall
be deemed to have "KNOWLEDGE" of a fact or circumstance, if any executive
officer or director of the Company has actual knowledge of any such fact or
circumstance, including, without limitation, any fact or circumstance brought to
the attention of an executive officer or director of the Company by Parent
subsequent to the date of this Agreement.

         4.1      ORGANIZATION

         The Company is a corporation duly organized, validly existing and in
good standing (to the extent such terms exist) under the laws of the State of
Delaware. The Company has all requisite corporate power and authority to own,
operate and lease its properties and assets and to carry on its business as now
conducted and as currently proposed to be conducted. The Company is duly
qualified and licensed as a foreign corporation to do business and is in good
standing (to the extent "qualified to do business" and "good standing" exist) in
each jurisdiction in which the character of the Company's properties occupied,
owned or held under lease or the nature of the business conducted by the Company
makes such qualification or licensing necessary, except where the failure to be
so qualified or in good standing would not have a Company Material Adverse
Effect. For purposes of this Agreement, the term "Company Material Adverse
Effect" shall mean any material adverse effect on the business, operations,
assets, financial condition or results of operations of the Company; provided,
however, that Company Material Adverse Effect shall not include any change,
circumstance, event or effect that relates to or results from the announcement
or other disclosure or

                                       11
<Page>

consummation of the transactions contemplated by this Agreement or general
economic conditions.

         4.2      ENFORCEABILITY

         The Company has all requisite corporate power and authority to execute,
deliver and perform its obligations under this Agreement and each of the other
Operative Documents to which it is a party and each of the certificates,
instruments and documents executed or delivered by it pursuant to the terms of
this Agreement. All corporate action on the part of the Company and its
officers, directors and stockholders necessary for (i) the authorization,
execution, delivery and performance of this Agreement and the other Operative
Documents to which the Company is a party, (ii) the consummation of the Merger,
and (iii) the performance of all the Company's obligations under this Agreement
and the other Operative Documents to which the Company is a party, required to
be taken as of the Closing, has been taken, or will as of the Closing have been
taken. The affirmative vote of (x) a majority of the shares of the Company
Capital Stock voting on an as-converted basis, (y) two-thirds of the shares of
all classes of Company Preferred Stock voting as a single class, and (z)
two-thirds of the shares of the Series D-1 Preferred Stock in favor of a waiver
of certain rights under the Company's Restated Certificate of Incorporation is
required to duly approve this Agreement and the Merger in accordance with its
terms. This Agreement has been, and each of the other Operative Documents to
which the Company is a party at the Closing will have been, duly executed and
delivered by the Company, and this Agreement is, and each of the other Operative
Documents to which the Company is a party will be at the Closing, assuming due
authorization, execution and delivery of this Agreement and the other Operative
Documents by Parent and Merger Sub, a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
to the effect, if any, of (i) applicable bankruptcy, insolvency, reorganization,
moratorium and other similar federal and state laws affecting the rights or
remedies of creditors generally and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.

         4.3      CAPITALIZATION

                  (a)      The authorized capital stock of the Company consists
of 125,000,000 shares, consisting of 70,000,000 shares of Company Common Stock,
par value $.001 per share, and 55,000,000 shares of Company Preferred Stock, par
value $.01 per share. Of the authorized Company Preferred Stock, 1,420,875
shares are designated as Series A Preferred Stock, 2,612,275 shares are
designated as Series B Preferred Stock, 4,894,118 shares are designated as
Series C Preferred Stock, 16,000,000 shares are designated as Series D Preferred
Stock, 10,000,000 shares are designated as Series D-1 Preferred Stock and
20,000,000 shares are designated as Series D-2 Preferred Stock.

                                       12
<Page>

                  (b)      As of the date of this Agreement, the issued and
outstanding capital stock of the Company consists solely of 6,185,127 shares of
Company Common Stock; 1,420,875 shares of Series A Preferred Stock, 2,612,275
shares of Series B Preferred Stock, 4,879,412 shares of Series C Preferred
Stock, 15,368,224 shares of Series D Preferred Stock, and 9,708,737 shares of
Series D-1 Preferred Stock, which are held of record by the stockholders of the
Company as set forth on Schedule 4.3(b) to the Disclosure Memorandum. Such
outstanding shares are, and immediately prior to the Closing will be, duly
authorized and validly issued, fully paid and nonassessable. True and correct
copies of the stock records of the Company, showing all issuances and transfers
of shares of capital stock of the Company since inception, have been provided to
Parent or its counsel.

                  (c)      As of the date of this Agreement, other than (i)
Options to purchase up to 5,830,260 shares of Company Common Stock that have
been granted under the Company Option Plan, (ii) Warrants to purchase up to
19,417,474 shares of Series D-2 Preferred Stock (the "D-2 WARRANTS"), (iii)
Warrants to purchase 20,625 shares of Series B Preferred Stock, and (iv) the
rights created pursuant to the Company's Third Amended and Restated Stockholders
Agreement and this Agreement, there are no outstanding rights of first refusal
or offer, preemptive rights, options, warrants, conversion rights or other
agreements (or obligations to issue such options, warrants or conversion
rights), either directly or indirectly, for the purchase or acquisition from the
Company or, to the Company's knowledge, any stockholder of any shares of Company
Capital Stock or any securities convertible into or exchangeable for shares of
Company Capital Stock (all such Options, Warrants and other rights are sometimes
referred to herein as "STOCK PURCHASE RIGHTS"). The Company has provided to
Parent a spreadsheet referencing this representation that accurately reflects
the number of such Options, any Warrants and Stock Purchase Rights outstanding,
the grant or issue dates, vesting schedules and exercise or conversion prices
thereof and, in each case, the identities of the holders and an indication of
their relationships to the Company (if any exist other than a security holder).
The Company has delivered to Parent true and correct copies of the Company
Option Plan, the form of stock option agreements relating to Options granted
thereunder, and all Warrants and the Third Amended and Restated Stockholders
Agreement.

                  (d)      The Company is not a party to any agreement and, to
the Company's knowledge, there is no agreement between any person, that affects
or relates to the voting or giving of written consents with respect to any
securities of the Company or the voting by any director of the Company, other
than the Third Amended and Restated Stockholders Agreement. No stockholder of
the Company or any affiliate thereof is indebted to the Company, and the Company
is not indebted to any stockholder of the Company or any affiliate thereof,
except (i) directors' fees and compensation paid to officers and employees at
rates not exceeding the rates of compensation disclosed on Schedule 4.16 to the
Disclosure Memorandum, and (ii) travel or similar expenses advanced to employees
in connection with their employment duties in the ordinary course of business.
The Company is not under any contractual or other obligation to

                                       13
<Page>

register any of its presently outstanding securities or any of its securities
that may hereafter be issued other than pursuant to the Third Amended and
Restated Stockholders Agreement, which Agreement shall terminate as of the
Closing.

                  (e)      All rights of refusal, preemptive, co-sale rights and
registration rights granted by the Company with respect to the Company Capital
Stock or Stock Purchase Rights of the Company are described on Schedule 4.3(e)
to the Disclosure Memorandum.

                  (f)      All Options have been granted at the price determined
by the Board of Directors of the Company in good faith to be equal to the fair
market value of the Company Common Stock at the date of grant.

         4.4      SUBSIDIARIES AND AFFILIATES

         The Company does not own or control, and has not since its inception
owned or controlled, directly or indirectly, any corporation, partnership,
limited liability company or other business entity. The Company does not own,
directly or indirectly, any ownership, equity or voting interest in any
corporation, partnership, joint venture or other entity, and has no agreement or
commitment to purchase any such interest.

         4.5      NO APPROVALS; NO CONFLICTS

         The execution, delivery and performance by the Company of this
Agreement and the other Operative Documents to which the Company is a party, the
effectiveness of the Merger and the performance by the Company of its
obligations pursuant to this Agreement and the other Operative Documents to
which it is a party, will not (a) constitute a material violation (with or
without the giving of notice or lapse of time, or both) of any provision of law
or any judgment, decree, order, regulation or rule of any court or other
governmental authority applicable to the Company; (b) require any consent,
approval or authorization of, or declaration, filing or registration with, any
person, corporation, partnership, joint venture, association, organization,
other entity or governmental or regulatory authority (a "PERSON"), except for
(i) compliance with applicable securities laws, (ii) the filing of all documents
necessary to consummate the Merger with the Delaware Secretary of State, (iii)
the approval by the stockholders of the Company of the transactions contemplated
hereby, as provided under the DGCL and the Certificate of Incorporation and
Bylaws of the Company, and (iv) if applicable, the notification requirements of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HART-SCOTT-RODINO
ACT"); (c) result in a material default (with or without the giving of notice or
lapse of time, or both) under, or acceleration or termination of, or the
creation in any party of the right to accelerate, terminate, modify or cancel,
any material agreement, lease, note or other restriction, encumbrance,
obligation or liability to which the Company is a party or by which it is bound
or to which any assets of the Company are subject; (d) result in the creation of
any Encumbrance (as defined in SECTION 4.9(d) other than a Permitted
Encumbrance) upon any material assets of the Company; (e) conflict with or
result in a breach of or constitute a default under any provision of

                                       14
<Page>

the Certificate of Incorporation or Bylaws of the Company; or (f) invalidate or
materially adversely affect any permit, license or authorization currently
material to the conduct of the business of the Company.

         4.6      FINANCIAL STATEMENTS

         The Company has delivered to Parent (a) a balance sheet and statements
of operations, stockholders' equity and cash flows of the Company at and for
each of the fiscal years ended February 28, 2001, February 29, 2000 and February
28, 1999, and accompanying notes, audited by PriceWaterhouseCoopers LLP,
independent auditors and certified public accountants, and (b) the unaudited
balance sheet and unaudited statement of operations, stockholders' equity and
cash flows of the Company at and for the three month period ended May 31, 2001
(the "UNAUDITED FINANCIAL STATEMENTS"). All the foregoing financial statements
are herein referred to as the "FINANCIAL STATEMENTS." The balance sheet of the
Company as of February 28, 2001 is herein referred to as the "COMPANY BALANCE
SHEET." The Financial Statements have been prepared in conformity with generally
accepted accounting principles in the United States ("GAAP") (except in the case
of the Unaudited Financial Statements with respect to the absence of footnotes
and subject to normal year-end audit adjustments) on a basis consistent with
prior accounting periods and fairly present the financial position, results of
operations and changes in financial position of the Company as of the dates and
for the periods indicated. Schedule 4.6 to the Disclosure Memorandum sets forth
all promissory notes, loans, lines of credits or similar obligations pursuant to
which the Company is an obligor, together with all the amounts owed by the
Company under such obligations, as of February 28, 2001, and all liabilities
under equipment leases of the Company (the "OPERATING LEASE LIABILITIES") as of
February 28, 2001. Schedule 4.6 sets forth all indebtedness or other amounts
owed by stockholders to the Company, as of the date hereof.

         4.7      ABSENCE OF CERTAIN CHANGES OR EVENTS

         From the date of the Company Balance Sheet through and including the
date hereof, the Company has conducted its business in the ordinary course and
has not entered into or agreed to enter into any transactions, agreements or
commitments, suffered the occurrence of any event or events or experienced any
change in business, operations, assets, financial condition or results of
operations that, in the aggregate, has resulted in a Company Material Adverse
Effect. Without limiting the generality of the foregoing, except for
transactions specifically contemplated in this Agreement or the other Operative
Documents, from the date of the Company Balance Sheet through and including the
date hereof, the Company has not:

                  (a)      received written notice or, to the knowledge of the
Company, oral notice that there has been or will be a loss of, or contract
cancellation by, any current customer, supplier or licenser of the Company,
which loss or cancellation would result in lost annual revenues to the Company
of at least $1,000,000;

                                       15
<Page>

                  (b)      forgiven or canceled any indebtedness or waived any
claims or rights of material value (including, without limitation, any
indebtedness owing by any stockholder, officer, director, employee or affiliate
of the Company);

                  (c)      granted, other than in the ordinary course of
business and consistent with past practice or as would otherwise not be
material, any increase in the compensation of directors, officers, employees or
consultants;

                  (d)      borrowed or agreed to borrow any funds, assumed or
become subject to, whether directly or by way of guarantee or otherwise, any
material liabilities or obligations (absolute, accrued or contingent), or
incurred any material liabilities or obligations (absolute, accrued or
contingent), except liabilities and obligations incurred in the ordinary course
of business and consistent with past practice not in excess of $50,000
individually;

                  (e)      paid, discharged or satisfied any material claims,
liabilities or obligations (absolute, accrued or contingent) other than the
payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of claims, liabilities and obligations reflected
or reserved against in the Company Balance Sheet or incurred in the ordinary
course of business and consistent with past practice since the date of the
Company Balance Sheet, or prepaid any obligation having a fixed maturity of more
than 90 days from the date such obligation was issued or incurred;

                  (f)      permitted or allowed any of its material property or
assets (real, personal or mixed, tangible or intangible) to be subjected to any
Encumbrance, except conditional sales or similar security interests granted in
connection with the purchase of equipment or supplies in the ordinary course of
business;

                  (g)      written down the value of any inventory (including
write-downs by reason of shrinkage or markdown) or written off as uncollectible
any notes or accounts receivable, except for write-downs and write-offs that are
in the aggregate less than $250,000, incurred in the ordinary course of business
and consistent with past practice;

                  (h)      sold, transferred or otherwise disposed of any of its
properties or assets (real, personal or mixed, tangible or intangible) with an
aggregate net book value in excess of $100,000, except the sale of inventory in
the ordinary course of business and consistent with past practice;

                  (i)      made any single capital expenditure or commitment in
excess of $100,000 for additions to property, plant, equipment or intangible
capital assets or made aggregate capital expenditures in excess of $500,000 for
additions to property, plant, equipment or intangible capital assets;

                  (j)      made any change in any method of accounting or
accounting practice or internal control procedure, except for any change which
is required by reason of U.S. GAAP or Regulation S-X under the Exchange Act;

                                       16
<Page>

                  (k)      issued any capital stock, other securities or options
or other rights to acquire capital stock or other securities, or declared, paid
or set aside for payment any dividend or other distribution in respect of its
capital stock, or redeemed, purchased or otherwise acquired, directly or
indirectly, any shares of capital stock or other securities of the Company
except for the issuance of shares of Company Capital Stock upon exercise or
conversion of outstanding Options or Stock Purchase Rights;

                  (l)      except for transactions that are not material in the
aggregate, loaned or advanced any amount to, or sold, transferred or leased any
properties or assets (real, personal or mixed, tangible or intangible) to, or
entered into any agreement or arrangement with, any of the Company's officers,
directors or employees or any affiliate of the Company's officers, directors or
employees, except (i) directors' fees and compensation paid to officers and
employees at rates not exceeding the rates of compensation disclosed on Schedule
4.16 of the Disclosure Memorandum, and (ii) travel or similar expenses advanced
to employees in connection with their employment duties in the ordinary course
of business;

                  (m)      entered into or agreed to any sale, assignment,
transfer or license of any patents, trademarks, copyrights, trade secrets or
other intangible assets of the Company to a third party or any amendment or
change to any existing license or other agreement relating to intellectual
property, except in the ordinary course of business;

                  (n)      incurred, assumed or guaranteed any indebtedness for
borrowed money other than in the ordinary and usual course of business,
consistent with past practice, and in amounts and on terms consistent with past
practice; or

                  (o)      agreed, whether in writing or otherwise, to take any
action described in this SECTION 4.7.

         4.8      TAXES

                  (a) (i) All Tax Returns (as defined below) required to be
filed by or on behalf of the Company have been filed on a timely basis with the
appropriate governmental authority in all jurisdictions in which such Tax
Returns are required to be filed, and all such Tax Returns were at the time they
were filed true, correct and complete in all material aspects; (ii) all Taxes
(as defined below) of the Company (whether or not reflected on any Tax Return)
have been fully and timely paid or properly accrued; (iii) no waivers of
statutes of limitation have been given by the Company that remain in effect or
requested from the Company in connection with any Tax Returns covering the
Company with respect to any Taxes payable by it; (iv) no taxing authority in a
jurisdiction where the Company does not file Tax Returns has made in writing or
otherwise a claim, assertion or threat to the Company that the Company is or may
be subject to taxation by such jurisdiction; (v) the Company has duly and timely
withheld from employee salaries, wages, compensation and other payments and paid
over to the appropriate governmental authority all amounts required to be so
withheld and paid over for all periods under all applicable laws; (vi) there are

                                       17
<Page>

no liens with respect to Taxes on any of the Company's property or assets other
than liens for current Taxes not yet payable; (vii) there are no Tax rulings,
requests for rulings or closing agreements relating to the Company that could
affect the liability for Taxes or the amount of taxable income of the Company
for any period (or portion of a period) after the date hereof; and (viii) any
adjustment of Taxes of the Company made by the IRS (as defined in Section
4.15.1(f)) in any examination that is required to be reported to the appropriate
state, local or foreign taxing authorities has been reported, and any additional
Taxes due with respect thereto have been paid.

                  (b)      There is no dispute or claim concerning any Tax
liability of the Company either (i) claimed or raised by any governmental
authority in writing or (ii) as to which any of the directors and officers (and
employees responsible for Tax matters) of the Company have knowledge based on
contact or correspondence with any agent of such authority. Schedule 4.8 to the
Disclosure Memorandum lists all Tax Returns filed with respect to the Company
for taxable periods ended on or after the Company's 1997 fiscal year that have
been audited, and indicates those Tax Returns that currently are the subject of
audit. The Company has made available to Parent correct and complete copies of
all Tax Returns, examination reports and statements of deficiencies assessed
against or agreed to by the Company since the Company's inception.

                  (c)      The Company has not made any payment or payments, is
not obligated to make any payment or payments and is not a party to (or a
participating employer in) any agreement or Employee Benefit Plan (as defined in
Section 4.15.1(c)) that could obligate it, the Surviving Corporation or Parent
to make any payment or payments that would constitute an "excess parachute
payment," as defined in Section 280G of the Code (or any similar provision of
state, local or foreign law) or that would otherwise not be deductible under
Section 162 or Section 404 of the Code.

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

                  (e)      The Company is not a party to any Tax allocation or
sharing agreement. The Company (i) has not been a member of a Tax Group filing a
consolidated income Tax Return under Section 1501 of the Code (or any similar
provision of state, local or foreign law) and (ii) does not have any liability
for Taxes of any person under Treasury Regulations Section 1.1502-6 (or any
similar provision of state, local or foreign law) as a transferee or successor
by contract or otherwise.

                  (f)      The unpaid Taxes of the Company (i) did not, as of
February 28, 2001, exceed the reserve for Tax liability set forth on the face
(rather than any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) of the Company Balance Sheet and (ii)
do not exceed that reserve as adjusted for the passage of time and operations in
the ordinary course of business through the Closing Date.

                                       18
<Page>

                  (g)      All Options that the Company has treated as incentive
stock options under Section 421 of the Code meet the requirements of Section 422
of the Code.

                  (h)      None of the assets of the Company (i) is "tax exempt
use property" within the meaning of Section 168(h) of the Code; (ii) is property
that the Company is required to treat as being owned by any other person
pursuant to the "safe harbor lease" provisions of former Section 168(f)(8) of
the Internal Revenue Code of 1954; or (iii) directly or indirectly secures any
debt the interest on which is tax-exempt under Section 103(a) of the Code.

                  (i)      The Company has not taken or agreed to take any
action, or failed to take any action, that would prevent the Merger from
qualifying as a reorganization within the meaning of the Code.

                  (j)      The Company has not been a party to a distribution to
which Section 355(d) or (e) of the Code applies.

                  (k)      The Company has not filed a consent under Section
341(f) of the Code concerning collapsible corporations.

                  (l)      The Company has disclosed on its federal Tax Returns
all positions taken therein that could give rise to a substantial understatement
of federal income Tax within the meaning of Section 6662 of the Code.

         As used in this Agreement, the following terms shall have the following
meanings:

         "TAXES" means (i) all foreign, federal, state, county or local taxes,
charges, fees, levies, imposts, duties and other assessments, including, but not
limited to, any income, alternative minimum or add-on, estimated, gross income,
gross receipts, sales, use, transfer, transactions, intangibles, ad valorem,
value-added, franchise, registration, title, license, capital, paid-up capital,
profits, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, real property, recording, personal property, federal highway use,
commercial rent, environmental (including, but not limited to, taxes under
Section 59A of the Code) or windfall profit tax, custom, duty or other fee or
other like assessment or charge of any kind whatsoever imposed by any tax
authority, together with any interest, penalties or additions to tax; (ii) any
liability for payment of amounts described in clause (i) whether as a result of
transferee liability, of being a member of an affiliated, consolidated, combined
or unitary group for any period, or otherwise through operation of law; and
(iii) any liability for the payment of amounts described in clause (i) or (ii)
as a result of any tax sharing, tax indemnity or tax allocation agreement, or
any other express or implied agreement to indemnify any other person; and "TAX"
means any of the foregoing Taxes.

                                       19
<Page>

         "TAX GROUP" means any federal, state, local or foreign consolidated,
affiliated, combined, unitary or other similar group of which the Company is now
or was formerly a member.

         "TAX RETURNS" means any return, declaration, report, claim for refund,
information return, statement or other similar document relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.

         4.9      PROPERTY

                  (a)      Schedule 4.9(a) to the Disclosure Memorandum contains
a complete and accurate list of all real property owned, leased or currently
being used by the Company (the "REAL PROPERTY"). The Company has delivered to
Parent or its counsel true and complete copies of all written leases, subleases,
rental agreements, contracts of sale, tenancies or licenses relating to the Real
Property.

                  (b)      Schedule 4.9(b) to the Disclosure Memorandum contains
a complete and accurate list of each item of personal property having a book
value in excess of $1,000 that is owned, leased, rented or used by the Company
(the "PERSONAL PROPERTY"); provided that such list need not describe the Company
Intellectual Property (as defined in SECTION 4.17 below), listed on Schedule
4.17 to the Disclosure Memorandum or Inventory. The Company has delivered or
made available to Parent true and complete copies of all leases, subleases,
rental agreements, contracts of sale, tenancies or licenses to which the
Personal Property is subject.

                  (c)      The Real Property and the Personal Property include
all the properties and assets (whether real, personal or mixed, tangible or
intangible) (other than, in the case of the Personal Property, property rights
with an individual book value of less than $1,000 and the Company Intellectual
Property) reflected in the Company Balance Sheet (except for such properties or
assets sold since the date of the Company Balance Sheet in the ordinary course
of business and consistent with past practice) and all the properties and assets
purchased by the Company since the date of the Company Balance Sheet (other
than, in the case of the Personal Property, property rights with an individual
book value of less than $1,000 and the Company Intellectual Property). The Real
Property and the Personal Property include all material property used in the
business of the Company, other than the Company Intellectual Property. The
Company's offices and other structures and its Personal Property are in good
operating condition and repair, normal wear and tear excepted, and are adequate
for the uses to which they are being put.

                  (d)      The Company's title to or leasehold interest in each
parcel of the Real Property is free and clear of all liens, mortgages, pledges,
deeds of trust, security interests, charges, encumbrances and other adverse
claims or interests of any kind, except for Permitted Encumbrances (as defined
below) (each, an "ENCUMBRANCE"). Each lease of any portion of the Real Property
is valid, binding and enforceable in accordance with its terms against the
Company and, to Company's knowledge, the

                                       20
<Page>

parties thereto, the Company has performed in all material respects all
obligations imposed on it thereunder, and neither the Company nor, to the
Company's knowledge, any other party thereto is in default thereunder, nor is
there any event that with notice or lapse of time, or both, would constitute
a default thereunder by the Company or, to the Company's knowledge, by any
other party. The Company has not granted any lease, sublease, tenancy or
license of, or entered into any rental agreement or contract of sale with
respect to, any portion of the Real Property.

                  (e)      For the purposes of this Agreement, "PERMITTED
ENCUMBRANCES" shall mean (i) liens for Taxes or governmental charges or claims
(A) not yet due and payable or (B) being contested in good faith, if a reserve
or other appropriate provision, if any, as shall be required by GAAP shall have
been made therefor, (ii) statutory liens of landlords, liens of carriers,
warehouse persons, mechanics and material persons and other liens imposed by law
incurred in the ordinary course of business for sums (A) not yet due and payable
or (B) being contested in good faith, if a reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made therefor,
(iii) liens incurred or deposits made in connection with workers' compensation,
unemployment insurance and other similar types of social security programs or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return of money bonds
and similar obligations, in each case in the ordinary course of business,
consistent with past practice, (iv) easements, rights-of-way, restrictions and
other similar charges or encumbrances, in each case, which do not interfere with
the ordinary conduct of business of the Company and do not materially detract
from the value of the property upon which such encumbrance exists, and (v) and
liens granted as of the date of this Agreement to Silicon Valley Bank pursuant
to a Loan and Security Agreement with Silicon Valley Bank dated June 29, 2000,
as amended October 31, 2000.

                  (f)      The Personal Property is free and clear of all
Encumbrances except Permitted Encumbrances, and, other than leased Personal
Property that is so noted on the list supplied pursuant to SECTION 4.9(b), the
Company owns such Personal Property. Each lease, license, rental agreement,
contract of sale or other agreement to which the Personal Property is subject is
valid, binding and enforceable in accordance with its terms against the Company
and, to Company's knowledge, parties thereto, the Company has performed in all
material respects all obligations imposed on it thereunder, and neither the
Company nor, to the Company's knowledge, any other party thereto is in default
thereunder, nor is there any event that with notice or lapse of time, or both,
would constitute a default by the Company or, to the Company's knowledge, any
other party thereunder. The Company has not granted any lease, sublease, tenancy
or license of any portion of the Personal Property, except in the ordinary
course of business.

                  (g)      To the Company's knowledge, there are no applicable
adverse zoning, building or land use codes or rules, ordinances, regulations or
other restrictions relating to zoning or land use that currently or could
reasonably be expected to prevent, or cause the imposition of material fines or
penalties as the result of, the use of all or

                                       21
<Page>

any portion of the Real Property for the conduct of the business as presently
conducted. The Company has received all necessary material approvals with regard
to occupancy and maintenance of the Real Property.

         4.10     CONTRACTS

                  4.10.1   Material Contracts

         Schedule 4.10.1 to the Disclosure Memorandum contains a complete and
accurate list (other than the IP Rights listed on Schedule 4.17 to the
Disclosure Memorandum) of all written and, to the knowledge of the Company, oral
contracts, agreements and understandings to which the Company is currently a
party or by which the Company is currently bound, providing for potential
payments by or to the Company in excess of $500,000, including, without
limitation, security agreements, license agreements, software development
agreements, distribution agreements, joint venture agreements, reseller
agreements, credit agreements and instruments relating to the borrowing of money
(each, a "MATERIAL CONTRACT"). All contracts set forth on Schedule 4.10.1 are
valid, binding and enforceable in accordance with their terms against Company
and, to the Company's knowledge, the other parties thereto, except as to the
effect, if any, of (a) applicable bankruptcy, insolvency, reorganization,
moratorium and other similar federal and state laws affecting the rights or
remedies of creditors generally, (b) rules of law governing specific
performance, injunctive relief and other equitable remedies, and (c) the
enforceability of provisions requiring indemnification in connection with the
offering, issuance or sale of securities, and are in full force and effect, the
Company has performed in all material respects all material obligations imposed
on it thereunder, and neither the Company nor, to the Company's knowledge, any
other party thereto is in material default thereunder, nor, to the Company's
knowledge, is there any event that with notice or lapse of time, or both, would
constitute a default by the Company or, to the Company's knowledge, any other
party thereunder. True and complete copies of each such written Material
Contract have been delivered to Parent by the Company. Except as set forth on
Schedule 4.10.1 to the Disclosure Memorandum, the Company has no:

                  (a)      contracts, agreements or arrangements (i) with
distributors or dealers that cannot be canceled by the Company within 60 days'
notice without liability, penalty or premium, (ii) with directors, officers,
stockholders, employees, agents, consultants, advisors, salespeople, or sales
representatives providing for the payment of any bonus or commission based on
sales or earnings, or (iii) affecting or relating to former employees of the
Company;

                  (b)      employment agreement, or any other agreement for
services that contains severance or termination pay liabilities or obligations;

                  (c)      noncompetition agreement or other arrangement that
would prevent the Company from carrying on its business anywhere in the world;

                                       22
<Page>

                  (d)      written or, to the knowledge of the Company, oral
notice that any party to a contract listed on Schedule 4.10.1 to the Disclosure
Memorandum intends to cancel, terminate or refuse to renew such contract (if
such contract is renewable);

                  (e)      material dispute with any of its suppliers,
customers, distributors, OEM resellers, licensors or licensees;

                  (f)      product distribution agreement, development agreement
or license agreement as licensor or licensee (except for agreements relating to
"OFF-THE-SHELF SOFTWARE" as defined below in SECTION 4.17.3);

                  (g)      joint venture contract or arrangement or any other
agreement that involves a sharing of profits with other persons;

                  (h)      instrument evidencing indebtedness for borrowed money
by way of a direct loan, sale of debt securities, purchase money obligation,
conditional sale or guarantee, or otherwise, except for trade indebtedness
incurred in the ordinary course of business, and except as disclosed in the
Financial Statements; or

                  (i)      agreements or commitments to provide indemnification,
other than those entered into in the ordinary course of business.

                  4.10.2   Required Consents

         The execution and delivery of this Agreement and the performance of the
obligations of the Company hereunder will not constitute a material default
under any Material Contract and do not require the consent of any other party to
any Material Contract, except for those consents listed on Schedule 4.10.2 to
the Disclosure Memorandum.

         4.11     CUSTOMERS AND SUPPLIERS

         Schedule 4.11 to the Disclosure Memorandum sets forth (a) a complete
and accurate list of the customers of the Company accounting for 5% or more of
the Company's revenues during the fiscal year ended February 28, 2001 and (b) a
complete and accurate list of the suppliers of the Company from whom the Company
has purchased 5% or more of the goods or services purchased by the Company in
the fiscal year ended February 28, 2001. As of the date hereof, the Company has
not received any written, or to the knowledge of the Company, oral notice from
its customers or suppliers that would cause it, in its reasonable judgment, to
expect any material reduction in the business activity between the Company and
any customers or suppliers named on such Schedule 4.11.

                                       23
<Page>

         4.12     WARRANTIES AND RETURNS

         Schedule 4.12 to the Disclosure Memorandum sets forth the Company's
warranties currently made with respect to its business, products and services,
and current policies with respect to returns of products in the course of the
Company's conduct of the business. Except as set forth on the Disclosure
Schedule, the Company has not made any express warranties in connection with the
sale of its products and services. Claims against the Company for warranty costs
(individually or in the aggregate, but net of warranties passed through to
vendors) with respect to products and services during each of the last three
fiscal years did not exceed $350,000, and there are no outstanding or, to the
Company's knowledge, threatened claims for any such warranty costs that would
exceed $300,000 (individually or in the aggregate, but net of warranties passed
through to vendors). As used above, the term "WARRANTY COST" shall mean costs
and expenses associated with correcting, returning or replacing defective or
allegedly defective products or services, whether such costs and expenses arise
out of claims sounding in warranty, contract, tort or otherwise.

         4.13     CLAIMS AND LEGAL PROCEEDINGS

         Except as disclosed on Schedule 4.13 to the Disclosure Memorandum,
there are no claims, actions, suits, arbitrations, investigations or proceedings
("Proceedings") pending or, to the Company's knowledge, threatened against the
Company or any of its assets before or by any court or governmental entity
except for such Proceedings as would not be material. To the Company's
knowledge, there is no valid basis for any claim, action, suit, arbitration,
proceeding or investigation before or by any person that would have a Company
Material Adverse Effect. There are no outstanding or unsatisfied judgments,
orders, decrees or stipulations to which the Company is a party.

         4.14     LABOR AND EMPLOYMENT MATTERS

         There are no material labor disputes, employee grievances or
disciplinary actions pending or, to the Company's knowledge, threatened against
the Company or any of its present or former employees. The Company has complied
in all material respects with all material provisions of law relating to
employment and employment practices, terms and conditions of employment, wages
and hours. The Company is not engaged in any unfair labor practice, and there is
no labor strike, dispute, slowdown or stoppage pending or, to the Company's
knowledge, threatened against or affecting the Company. The Company is not a
party to any collective bargaining agreement. The Company has no knowledge of
any organizational efforts presently being made or threatened by or on behalf of
any labor union with respect to employees of the Company. Each current employee,
officer and consultant of the Company has executed a Company Employment
Proprietary Information Agreement in the form provided to Parent. To the
Company's knowledge, no employee (or person performing similar functions) of the
Company is in violation of any such agreement or any employment agreement,
noncompetition agreement, patent disclosure agreement, invention assignment
agreement, proprietary

                                       24
<Page>

information agreement or other contract or agreement relating to the
relationship of such employee with the Company or any other party. Except for
the employees identified on Schedule 4.14 to the Disclosure Memorandum, all
employees of the Company are employed on an "at will" basis, and, to the
Company's knowledge, are eligible to work and are lawfully employed in the
United States.

         4.15     EMPLOYEE BENEFIT PLANS

                  4.15.1   Definitions

         As used in this Agreement, the following terms shall have the following
meanings:

                  (a)      "COBRA" means the health care continuation provisions
of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (as
set forth in Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the
Code).

                  (b)      "DOL" means the United States Department of Labor.

                  (c)      "EMPLOYEE BENEFIT PLAN" means any retirement,
pension, profit sharing, deferred compensation, stock bonus, savings, bonus,
incentive, cafeteria, medical, dental, vision, hospitalization, life insurance,
accidental death and dismemberment, medical expense reimbursement, dependent
care assistance, tuition reimbursement, disability, sick pay, holiday, vacation,
severance, change of control, stock purchase, stock option, restricted stock,
phantom stock, stock appreciation rights, fringe benefit or other employee
benefit plan, fund, policy, program, contract, arrangement or payroll practice
of any kind (including any "employee benefit plan," as defined in Section 3(3)
of ERISA) or any employment, consulting or personal services contract, whether
written or oral, qualified or nonqualified, funded or unfunded, or domestic or
foreign, (i) sponsored, maintained or contributed to by the Company or, if an
employment, consulting or personal services contract, to which the Company is a
party, (ii) covering or benefiting any current or former officer, employee,
agent, director or independent contractor of the Company (or any dependent or
beneficiary of any such individual), or (iii) with respect to which the Company
has (or could have) any obligation or liability.

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

                  (e)      "HIPAA" means the Health Insurance Portability and
Accountability Act of 1997, as amended.

                  (f)      "IRS" means the United States Internal Revenue
Service.

                  4.15.2   Employee Benefit Plan Listing

                                       25
<Page>

         Schedule 4.15.2 contains a complete and accurate list of all material
written, and to the knowledge of the Company, oral Employee Benefit Plans. The
Company does not have any agreement, arrangement, commitment or obligation,
whether formal or informal, whether written or unwritten and whether legally
binding or not, to create, enter into or contribute to any additional Employee
Benefit Plan, or to modify or amend any existing Employee Benefit Plan, except
for amendments required by statute, regulation or administrative pronouncement.
There has been no amendment, interpretation or other announcement (written or
oral) by the Company or any other Person relating to, or change in participation
or coverage under, any Employee Benefit Plan that, either alone or together with
other such items or events, could materially increase the expense of maintaining
such Employee Benefit Plan (or the Employee Benefit Plans taken as a whole)
above the level of expense incurred with respect thereto for the most recent
fiscal year included in the Financial Statements. The terms of each Employee
Benefit Plan permit the Company to amend or terminate such Employee Benefit Plan
at any time and for any reason (except to the extent prohibited by law) without
penalty and without material liability or expense. None of the rights of the
Company under any Employee Benefit Plan will be impaired in any way by this
Agreement or the consummation of the transactions contemplated by this
Agreement.

                  4.15.3   Documents Provided

         The Company has made available to Parent true, correct and complete
copies (or, in the case of unwritten Employee Benefit Plans, descriptions) of
all Employee Benefit Plans (and all amendments thereto), along with, to the
extent applicable to the particular Employee Benefit Plan, copies of the
following: (a) the last three annual reports (Form 5500 series) filed with
respect to such Employee Benefit Plan; (b) the most recent summary plan
descriptions (and all summaries of material modifications related thereto) and
employee manuals distributed with respect to such Employee Benefit Plan; (c) all
material communications filed or distributed with respect to such Employee
Benefit Plan during the last year; (d) all contracts and agreements (and any
amendments thereto) relating to such Employee Benefit Plan, including, without
limitation, trust agreements, investment management agreements, annuity
contracts, insurance contracts, bonds, indemnification agreements and service
provider agreements; (e) the most recent determination letter issued by the IRS
with respect to such Employee Benefit Plan; (f) all written communications
relating to the amendment, creation or termination of such Employee Benefit
Plan, or an increase or decrease in benefits, acceleration of payments or
vesting or other events that could result in a material liability to the Company
since the date of the most recently completed and filed annual report (Form 5500
series); (g) all correspondence to or from any governmental entity or agency
relating to such Employee Benefit Plan; (h) samples of all administrative forms
currently in use, including, without limitation, all COBRA and HIPAA forms and
notices; (i) all coverage, nondiscrimination, top heavy and Code Section 415
tests performed with respect to such Employee Benefit Plan for the last three
years; and (j) the most recent Joint Proxy and Registration Statement, annual
report (Form 11-K) and prospectus prepared in connection with such Employee
Benefit Plan.

                                       26
<Page>

                  4.15.4   Compliance

         With respect to each Employee Benefit Plan: (a) such Employee Benefit
Plan is, and at all times since inception has been, maintained, administered,
operated and funded in all material respects in accordance with its terms and in
compliance with all applicable requirements of all applicable laws, statutes,
orders, rules and regulations, including, without limitation, ERISA, COBRA,
HIPAA and the Code; (b) the Company and all other Persons (including, without
limitation, all fiduciaries) have, at all times, properly performed in all
material respects all of their duties and obligations (whether arising by
operation of law or by contract) under or with respect to such Employee Benefit
Plan, including, without limitation, all reporting, disclosure and notification
obligations; (c) all returns, reports and other information (including, without
limitation, all Form 5500 series annual reports, together with all schedules and
audit reports required with respect thereto) relating to such Employee Benefit
Plan required to be filed with any governmental entity or agency have been
accurately completed and timely and properly filed; (d) all notices, statements,
reports and other disclosure (including, without limitation, all summary plan
descriptions) required to be given or made to participants in such Employee
Benefit Plan or their beneficiaries have been accurately completed and timely
and properly disclosed or provided; (e) neither the Company nor any fiduciary of
such Employee Benefit Plan has engaged in any transaction or acted or failed to
act in a manner that violates the fiduciary requirements of ERISA or any other
applicable law; (f) no transaction or event has occurred or is threatened or
about to occur (including any of the transactions contemplated in or by this
Agreement) that constitutes or could constitute a prohibited transaction under
Section 406 or 407 of ERISA or under Section 4975 of the Code for which an
exemption is not available; and (g) the Company has not incurred, and there
exists no condition or set of circumstances in connection with which the
Company, the Surviving Corporation or Parent could incur, directly or
indirectly, any material liability or expense (except for routine contributions,
benefit payments and administrative expenses) under ERISA, the Code or any other
applicable law, statute, order, rule or regulation, or pursuant to any
indemnification or similar agreement, with respect to such Employee Benefit
Plan.

                  4.15.5   Qualification

         Each Employee Benefit Plan that is intended to be qualified under
Section 401(a) of the Code is, and at all times since inception has been, so
qualified and its related trust is, and at all times since inception has been,
exempt from taxation under Section 501(a) of the Code. Each such Employee
Benefit Plan either (a) is the subject of an unrevoked favorable determination
letter from the IRS with respect to such Employee Benefit Plan's qualified
status under the Code, as amended by the Tax Reform Act of 1986 and all
subsequent legislation, or (b) has remaining a period of time under the Code or
applicable Treasury regulations or IRS pronouncements in which to apply to the
IRS for such a letter and to make any amendments necessary to obtain such a
letter from the IRS which shall apply retroactively to the inception of

                                       27
<Page>

such Employee Benefit Plan. No fact exists or is reasonably expected by the
Company to arise, that could adversely affect the qualification or exemption of
any such Employee Benefit Plan or its related trust. No such Employee Benefit
Plan is a "top-heavy plan," as defined in Section 416 of the Code.

                  4.15.6   Contributions, Premiums and Other Payments

         All contributions, premiums and other payments due or required to be
paid to (or with respect to) each Employee Benefit Plan have been timely paid,
or, if not yet due but due on or before the Closing Date, or if to become due
with respect to any period before or ending on the Closing Date, have been
accrued as a liability on the Company Balance Sheet. All income taxes and wage
taxes that are required by law to be withheld from benefits derived under the
Employee Benefit Plans have been properly withheld and remitted to the proper
depository.

                  4.15.7   Related Employers

         The Company is not, and has never been, a member of (i) a controlled
group of corporations, within the meaning of Section 414(b) of the Code, (ii) a
group of trades or businesses under common control, within the meaning of
Section 414(c) of the Code, (iii) an affiliated service group, within the
meaning of Section 414(m) of the Code, or (iv) any other group of Persons
treated as a single employer under Section 414(o) of the Code.

                  4.15.8   Multiemployer, Defined Benefit and Money Purchase
Pension Plans and Multiple Employer Welfare Arrangements

         The Company does not maintain or contribute to, and has never
maintained or contributed to (or been obligated to contribute to), (a) a
multiemployer plan as defined in Section 3(37) or Section 4001(a)(3) of ERISA or
414(f) of the Code, (b) a multiple employer plan within the meaning of Section
4063 or 4064 of ERISA or Section 413(c) of the Code, (c) an employee benefit
plan, fund, program, contract or arrangement that is subject to Section 412 of
the Code, Section 302 of ERISA or Title IV of ERISA, or (d) a multiple employer
welfare arrangement as defined in Section 3(40) of ERISA.

                  4.15.9   Post-Termination Benefits

         Neither the Company nor any Employee Benefit Plan provides or has any
obligation to provide (or contribute toward the cost of) post-employment or
post-termination benefits of any kind, including, without limitation, death and
medical benefits, with respect to any current or former officer, employee,
agent, director or independent contractor of the Company, other than (a)
continuation coverage mandated by Sections 601 through 608 of ERISA and Section
4980B(f) of the Code, (b) retirement benefits under any Employee Benefit Plan
that is qualified under Section 401(a) of the Code, and (c) deferred
compensation that is accrued as a current liability on the Company Balance
Sheet.

                                       28
<Page>

                  4.15.10  Suits, Claims and Investigations

         There are no actions, suits or claims (other than routine claims for
benefits and qualified domestic relations orders) pending or, to the knowledge
of the Company, threatened with respect to (or against the assets of) any
Employee Benefit Plan, nor, to the knowledge of the Company, is there a basis
for any such action, suit or claim. No Employee Benefit Plan is currently under
investigation, audit or review, directly or indirectly, by the IRS, the DOL or
any other governmental entity or agency, and, to the knowledge of the Company,
no such action is contemplated or under consideration by the IRS, the DOL or any
other governmental entity or agency.

                  4.15.11  Effect of Transaction

         Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement, will (a)
entitle any individual to severance pay, unemployment compensation or any other
payment from the Company, the Surviving Corporation, Parent or any Employee
Benefit Plan, (b) otherwise increase the amount of compensation due to any
individual or forgive indebtedness owed by any individual, (c) result in any
benefit or right becoming established or increased, or accelerate the time of
payment or vesting of any benefit, under any Employee Benefit Plan, or (d)
require the Company, the Surviving Corporation or Parent to transfer or set
aside any assets to fund or otherwise provide for any benefits for any
individual.

         4.16     PERSONNEL

         Schedule 4.16 to the Disclosure Memorandum lists (a) the names, titles
and current compensation amounts of all employees of the Company with annual
base salaries or wages in excess of $50,000, (b) compensation amounts of all
directors of the Company, and (c) the names and current compensation packages of
all independent contractors and consultants of the Company with annual
compensation in excess of $50,000. The Company is not in default with respect to
any of its obligations relating to payment of wages and has no, and will not
incur any, material obligation or liability for severance or back pay owed
through or by virtue of the Merger.

         4.17     INTELLECTUAL PROPERTY

                  4.17.1   DEFINITIONS

         For purposes of this SECTION 4.17, the following terms shall have the
following meanings:

                  (a)      "INTELLECTUAL PROPERTY RIGHTS" means all industrial
and intellectual property rights, including, without limitation, patents, patent
applications, patent rights, trademarks, trademark applications, trade names,
service marks, service mark applications, Internet domain names, Internet domain
name applications, copyrights, copyright applications, moral rights, know-how,
trade secrets, proprietary processes and formulae, confidential information,
franchises, licenses, inventions, instructions,

                                       29
<Page>

marketing materials, trade dress, logos and designs and all documentation and
media constituting, describing or relating to the foregoing, including, without
limitation, manuals, memoranda and records.

                  (b)      "COMPANY INTELLECTUAL PROPERTY" means all
Intellectual Property Rights owned by, licensed to or otherwise available to the
Company.

                  4.17.2   GENERAL

         The Company owns or has sufficient rights to use, including the right
to bring actions for the infringement of, and the Company Intellectual Property
represents, all Intellectual Property Rights necessary or required for the
conduct of the Company's business as currently conducted and as currently
proposed to be conducted. The Company is not a party to any agreement that
contains any restriction on the Company's ability to use or practice any Company
Intellectual Property that is material to the business of the Company as
presently conducted or as currently proposed to be conducted.

                  4.17.3   LISTING OF COMPANY INTELLECTUAL PROPERTY

         SECTION 4.17.3 contains a true and complete list of all of the
Company's patents, patent applications, trademarks, trademark applications,
trade names, service marks, service mark applications, Internet domain names,
Internet domain name applications, copyrights, copyright registrations and
applications, and any other filings and formal actions made or taken pursuant to
Federal, state, local and foreign laws by the Company to protect its interests
in the Company Intellectual Property.

                  4.17.4   INBOUND LICENSE AGREEMENTS

         SCHEDULE 4.17.4 sets forth a complete and accurate list of each
agreement (the "INBOUND LICENSE AGREEMENTS") granting to the Company any right
to use or practice any Intellectual Property Rights other than rights in
software commercially available on reasonable terms to any person for a license
fee of no more than fifty thousand dollars ($50,000) or shrink wrap licenses to
commercially available software sold at retail, indicating for each agreement
the title, the parties thereto, the term thereof and the amount of any future
royalty or license fee payable thereunder. To the Company's knowledge, all
Inbound License Agreements are valid, binding and in full force and effect. The
Company has performed in all material respects its obligations under the Inbound
License Agreements, the Company is not in default thereunder, and to the
Company's knowledge no event or circumstance has occurred under any Inbound
License Agreement that with notice or lapse of time or both would constitute a
default or event of default on the part of the Company or give to any other
party the right to terminate or modify any of the Company's rights under such
Inbound License Agreement. There is no material outstanding or, to the knowledge
of the Company, threatened dispute or disagreement with respect to any Inbound
License Agreement. The Company has not received written notice that any party to
any Inbound License Agreement intends to cancel, terminate or refuse to renew
(if renewable) any of the Company's rights under such Inbound License Agreement
or to exercise or decline to exercise any option or right thereunder.

                                       30
<Page>

                  4.17.5   OUTBOUND LICENSE AGREEMENTS

         Schedule 4.17.5 sets forth a complete and accurate list of each
agreement (the "OUTBOUND LICENSE AGREEMENTS") under which the Company has
granted any right to use or practice any Intellectual Property Rights other than
nonexclusive rights in software granted in the ordinary course of the Company's
business for which the total payments to the Company did not exceed fifty
thousand dollars ($50,000) and that are not otherwise material to the Company,
indicating for each agreement the title, the parties thereto and the term
thereof. To the Company's knowledge, all Outbound License Agreements are valid,
binding and in full force and effect. The Company has performed in all material
respects its obligations under the Outbound License Agreements, the Company is
not in default thereunder, and to the Company's knowledge no event or
circumstance has occurred under any Outbound License Agreement that with notice
or lapse of time or both would constitute a default or event of default on the
part of the Company or give to any other party the right to terminate or modify
any of the Company's rights under such Outbound License Agreement. There is no
material outstanding or, to the knowledge of the Company, threatened dispute or
disagreement with respect to any Outbound License Agreement. The Company has not
received written notice that any party to any Outbound License Agreement intends
to cancel, terminate or refuse to renew (if renewable) such Outbound License
Agreement or to exercise or decline to exercise any option or right thereunder.

                  4.17.6   NO INFRINGEMENT BY THE COMPANY

         The Company Intellectual Property and the conduct of the Company's
business as currently conducted and as currently proposed to be conducted do not
infringe, violate, misappropriate or otherwise misuse any third party
Intellectual Property Rights, and the Company has not received any complaint,
claim or notice alleging any such infringement, violation, misappropriation or
misuse or any act of unfair competition by the Company. To the best knowledge of
the Company, no goods, services, or other products which are sold, licensed or
otherwise supplied, used or employed by the Company infringe, violate,
misappropriate or otherwise misuse any third party Intellectual Property Rights,
and the Company has not received any complaint, claim or notice alleging any
such infringement, violation, misappropriation or misuse. Nothing has come to
the attention of the Company to the effect that the name of the Company or any
business name, trade mark, service mark or domain name used or owned by the
Company is the same as, or is confusingly or deceptively similar to, the name of
any other company or business, trade name or domain name or to the trade mark or
service mark owned or used by any other person. No litigation is now or, within
the five (5) years prior to the date of this Agreement, was pending and, to the
knowledge of the Company, no notice or other claim in writing has been received
by the Company (i) alleging that the Company has engaged in any activity or
conduct that infringes, violates, misappropriates or otherwise misuses the
Intellectual Property Rights of any third party or (ii) challenging the
ownership, use, validity or enforceability of any Company Intellectual Property.

                  4.17.7   NO INFRINGEMENT BY THIRD PARTIES

                                       31
<Page>

         To the Company's knowledge, no third party is infringing, violating,
misappropriating or misusing any Company Intellectual Property that is owned or
exclusively licensed to the Company, or committing any act of unfair competition
with respect to the Company, and no such claims have been brought against any
third party by the Company. The Company has not entered into any agreement
granting any Person the right to bring any action with respect to, or otherwise
to enforce, any Company Intellectual Property.

                  4.17.8   PROTECTION OF INTELLECTUAL PROPERTY RIGHTS

         The Company has taken reasonable steps to protect the Company
Intellectual Property. Without limiting the generality of the foregoing, the
Company enforces a policy of requiring each employee, consultant and contractor
of the Company to execute agreements that contain provisions designed to prevent
unauthorized disclosure of the Company Intellectual Property. With respect to
employees, such agreements are substantially in the Company's standard forms and
also assign to the Company all Intellectual Property Rights relating to the
Company's business that are developed by the employee in the course of his or
her activities for the Company or are developed during working hours using the
resources of the Company. With respect to contractors and consultants, the
agreements either assign all Intellectual Property Rights developed pursuant to
the agreement or license such rights on agreed-upon terms. Except under
confidentiality obligations, to the knowledge of the Company, there has been no
disclosure by the Company of material confidential information or trade secrets.
The Company has not disclosed any source code to any software to any person or
entity other than an employee of the Company who is under a written
nondisclosure agreement; and, except as described in Schedule 4.17.8, neither
the Company nor any escrow agent is under any contractual or other obligation to
disclose any source code or other Company Intellectual Property. If, as
disclosed on Schedule 4.17.8, the Company has deposited any source code or other
Company Intellectual Property into source code escrows or similar arrangements,
no event has occurred that has or could reasonably form the basis for a release
of such source code or other Company Intellectual Property from such escrows or
arrangements.

                  4.17.9   INDEMNIFICATION FOR USE OF INTELLECTUAL PROPERTY
RIGHTS

         Other than pursuant to standard agreements with customers or supppliers
of the Company entered into in the ordinary course of business (accurate and
complete copies of which have been made available to Parent by the Company), the
Company has not entered into any agreement or offered to indemnify any Person
against any charge of infringement, violation, misappropriation or misuse of
Intellectual Property Rights.

                  4.17.10  ASSIGNMENT; CHANGE OF CONTROL

         The execution, delivery and performance by the Company of this
Agreement, and the consummation of the transactions contemplated hereby, will
not result in the loss or impairment of, or give rise to any right of any third
party to terminate or alter, any of

                                       32
<Page>

the Company Intellectual Property or the Company's rights under any Inbound
License Agreement or Outbound License Agreement, nor require any consent in
respect of any Company Intellectual Property, nor require any disclosure or
release of any source code or other Company Intellectual Property from any
escrows or other arrangements.

         4.18     ACCOUNTS RECEIVABLE

         All accounts receivable of the Company reflected in the Company Balance
Sheet ("ACCOUNTS") represent amounts due for services performed or sales
actually made in the ordinary course of business and are carried at values
determined in accordance with GAAP. To the Company's knowledge, the bad debt
reserves and allowances reflected in the Company Balance Sheet are adequate.

         4.19     INVENTORY

                  (a)      All items in the inventory reflected in the Company
Balance Sheet or as currently owned by the Company for use in the operation of
the business (i) have been valued consistent with the inventory valuation policy
of the Company in accordance with GAAP consistently applied and (ii) are of a
quality and quantity usable and salable in the ordinary course of business.

                  (b)      The Company's inventories of finished products and
evaluation units as of August 17, 2001, the approximate quantities thereof, and
their locations are set forth in Schedule 4.19 to the Disclosure Memorandum. In
addition, Schedule 4.19 sets forth the value of all raw materials and work in
progress as of August 17, 2001.

                  (c)      The Company is not aware of any adverse condition,
other than shortages of parts, raw materials and supplies common to the industry
generally, affecting the quality or supply of raw materials, intermediates,
supplies, parts and other materials available to the Company that are necessary
to manufacture, package or label the products or are otherwise used in the
business.

         4.20     CORPORATE BOOKS AND RECORDS

         The Company has furnished to Parent or its representatives for their
examination true and complete copies of (a) the Certificate of Incorporation and
Bylaws of the Company as currently in effect, including all amendments thereto
and (b) the minute books of the Company. Such minutes reflect all meetings of
the Company's stockholders, Board of Directors and any committees thereof since
the Company's inception, and such minutes accurately reflect in all material
respects the events of and actions taken at such meetings.

         4.21     LICENSES, PERMITS, AUTHORIZATIONS, ETC.

         The Company has received all required material governmental approvals,
authorizations, consents, licenses, orders, registrations and permits of all
agencies,

                                       33
<Page>

whether federal, state, local or foreign (the "PERMITS"), except where the
failure to receive any Permit would not have a Company Material Adverse Effect.
Schedule 4.21 to the Disclosure Memorandum contains a list of all Permits with
expiration dates, if any. The Company is in material compliance with the terms
of all Permits, and all Permits are valid and in full force and effect, and no
proceeding is pending or, to the Company's knowledge, threatened, the object of
which is to revoke, limit or otherwise affect any Permit. The Company has not
received any notifications of any asserted failure to obtain any Permit or any
past and unremedied failure to obtain any Permit.

         4.22     COMPLIANCE WITH LAWS

         The Company is and has been in material compliance with all federal,
state, local and foreign laws, rules, regulations, ordinances, decrees and
orders applicable to the operation of its business, to its employees, or to its
property, including, without limitation, all such laws, rules, ordinances,
decrees and orders relating to antitrust, consumer protection, currency
exchange, environmental protection, equal opportunity, prevention of domestic
and foreign corrupt practices, health, occupational safety, good laboratory
practices, pension, securities and trading-with-the-enemy matters. The Company
has not received any written notification of any asserted present or past
unremedied failure by the Company to comply with any of such laws, rules,
ordinances, decrees or orders.

         4.23     INSURANCE

         The Disclosure Memorandum sets forth a true and correct list of all
insurance policies maintained by the Company. The Company maintains commercially
reasonable levels of (a) insurance on its property (including leased premises)
that insures against loss or damage by fire or other casualty and (b) insurance
against liabilities, claims and risks, in each case, of a nature and in such
amounts as are normal and customary in the Company's industry for companies of
similar size and financial condition. All insurance policies of the Company are
in full force and effect, all premiums with respect thereto due as of the date
hereof have been paid, and no written notice of cancellation or termination has
been received with respect to any such policy or binder. Such policies or
binders are sufficient for compliance with all requirements of law currently
applicable to the Company and of all agreements to which the Company is a party.
Such policies will not terminate or lapse by reason of the transactions
contemplated by this Agreement.

         4.24     BROKERS OR FINDERS

         The Company has not incurred, and will not incur, directly or
indirectly, as a result of any action taken by or on behalf of the Company, any
liability for investment banking, brokerage or finders' fees or agents'
commissions or any similar charges in connection with the Merger, this Agreement
or any transactions contemplated hereby.

                                       34
<Page>

         4.25     BANK ACCOUNTS

         Schedule 4.25 to the Disclosure Memorandum sets forth the names and
locations of all banks, trust companies, savings and loan associations and other
financial institutions at which the Company maintains safe deposit boxes or
accounts of any nature and the names of all Persons authorized to draw thereon,
make withdrawals therefrom or have access thereto.

         4.26     INSIDER INTERESTS

         No stockholder or officer, director, employee, or consultant of the
Company has any interest (other than as a stockholder of the Company) (a) in any
Real Property, Personal Property, Technology or IP Rights used in or directly
pertaining to the business of the Company, including, without limitation,
inventions, patents, trademarks or trade names, or (b) to the Company's
knowledge, in any agreement, contract, arrangement or obligation relating to the
Company, its business or its operations. There are no agreements, understandings
or proposed transactions between the Company and any of its officers, directors,
stockholders or affiliates other than with respect to officers, employees or
directors, agreements and arrangements relating to their employment or
directorship. To the Company's knowledge, except for beneficial or record
ownership of not more than one percent of the outstanding securities of an
entity whose shares are registered under the Exchange Act (as defined in SECTION
6.26), the Company and its officers and directors have no interest, either
directly or indirectly, in any entity, including, without limitation, any
corporation, partnership, joint venture, proprietorship, firm, licensee,
business or association (whether as an employee, officer, director, stockholder,
agent, independent contractor, security holder, creditor, consultant or
otherwise) that presently (i) provides any services, produces and/or sells any
products or product lines, or engages in any activity that is the same, similar
to or competitive with any activity or business in which the Company is now
engaged or proposes to engage; (ii) is a supplier, customer or creditor; or
(iii) has any direct or indirect interest in any material asset or property,
real or personal, tangible or intangible, of the Company or any property, real
or personal, tangible or intangible, that is necessary for the conduct of the
Company's business.

         4.27     COMPLIANCE WITH ENVIRONMENTAL LAWS

                  4.27.1   FOR PURPOSES OF THIS SECTION 4.27,

                  (a)      "Environmental, Health, and Safety Requirements"
shall mean all federal, state, local and foreign statutes, regulations,
ordinances and other provisions having the force or effect of law, all judicial
and administrative orders and determinations, all contractual obligations and
all common law concerning public health and safety, worker health and safety,
and pollution or protection of the environment, including without limitation all
those relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or cleanup of any

                                       35
<Page>

Hazardous Materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation, each as
amended, now in effect. This includes, but is not limited to, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, and
the Solid Waste Disposal Act, as amended; and

                  (b)      "Hazardous Materials" shall mean all substances
designated, regulated, defined or addressed by Environmental, Health and Safety
Requirements.

                  4.27.2   The Company is, and at all times has been, in full
compliance with, and has not been and is not in violation of or liable under,
any Environmental, Health, and Safety Requirements except where such violation
or failure to be in compliance with such Environmental, Health, and Safety
Requirements would not have a Company Material Adverse Effect.

                  4.27.3   The Company has no basis to expect, nor has it
received any written or oral notice, report, order, summons, inquiry or other
communication from any governmental authority or any person regarding any actual
or alleged violation of or failure to comply with Environmental, Health, and
Safety Requirements, or any liabilities or potential liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise) arising under
Environmental, Health, and Safety Requirements, including any investigatory,
remedial or corrective obligations, relating to the Company, its properties,
facilities or operations or any other properties, facilities or assets in which
the Company has had an interest, or with respect to any property at or to which
Hazardous Materials generated, transferred, or used by the Company or any other
person for whose conduct it is or may be held responsible, have been
transported, stored, handled, received or disposed.

                  4.27.4   To the Company's knowledge, there has been no release
or threat of release of any Hazardous Materials, whether by the Company or any
other person, at or from the Company's properties, facilities or operations, any
other locations where Hazardous Materials were generated, used or transferred
from or by the Company's properties, facilities or operations or any other
properties, facilities or operations in which the Company had an interest.

                  4.27.5   The Company has delivered to Parent true and complete
copies of any and all environmental assessments and reports relating to the
Company's properties, facilities or operations.

         4.28     INFORMATION SUPPLIED BY THE COMPANY

         None of the information supplied or to be supplied by the Company for
inclusion in the S-4 or contained in any other material to be delivered to its
stockholders in connection with any written consent by or meeting of such
stockholders (collectively, "STOCKHOLDER MATERIALS"), at the date on which the
S-4 is declared effective by the SEC

                                       36
<Page>

(as defined in SECTION 6.28) or on the date of such approval, contains or will
contain any untrue statement of a material fact or omits or will omit 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 are made,
not materially misleading; provided, however, that the Company makes no
representations or warranties regarding information furnished by or related to
any party other than the Company.

         4.29     FULL DISCLOSURE

         None of the representations and warranties made by the Company herein
(as modified by the Disclosure Memorandum), nor any statement made in any
schedule or the Compliance Certificate and Secretary's Certificate furnished by
the Company pursuant to SECTIONS 7.3 and 7.6, respectively, of this Agreement,
contains any untrue statement of material fact, or omits to state any material
fact necessary in order to make the statements contained herein or therein, in
light of the circumstances under which they were made, not misleading.

         4.30     ABSENCE OF UNDISCLOSED LIABILITIES

         The Company and its consolidated subsidiaries have no material
liabilities or obligations of any nature (absolute, contingent or otherwise)
that are not fully reflected or reserved against in the Company Balance Sheet
and that would be required under GAAP to be reflected or reserved in order for
the Company Balance Sheet to fairly represent the consolidated financial
condition of the Company as of such date, except liabilities or obligations
incurred since the date of the Company Balance Sheet in the ordinary course of
business and consistent with past practices.

         4.31     GOVERNMENT CONTRACTS

         The Company has not, during the past five years, attempted to sell to
or bid on any contract or subcontract with or for any agency of the U. S.
government or any foreign government and had any such attempt denied as a result
of any prohibition against the Company's dealing with or for or any such agency
or government, and the Company has no knowledge of any such prohibition. The
Company has not been, nor to its knowledge is it currently being, audited or
investigated by the United States Government Accounting Office, the United
States Department of Justice, the United States Department of Defense or any of
its agencies, the Defense Contract Audit Agency or the inspector general or
other authorities of any agency of the U. S. government, or any foreign
government, nor, to the Company's knowledge, has such audit or investigation
been threatened.

                                       37
<Page>

                                    ARTICLE V
                        REPRESENTATIONS AND WARRANTIES OF
               INVESTORS AND LENDERS REGARDING SECURITIES MATTERS

         Each Investor and Lender, severally and not jointly, hereby represents
and warrants to Parent as follows:

         5.1      REQUISITE POWER AND AUTHORITY

         Such Investor and Lender has all necessary power and authority under
all applicable provisions of law to execute and deliver this Agreement and to
carry out its provisions. All actions on such Investor's and Lender's part
required for the lawful execution and delivery of this Agreement have been or
will be effectively taken prior to the Closing

         5.2      INVESTMENT REPRESENTATIONS

         Such Investor and Lender understands that neither the H Shares, the
Notes nor the shares of Parent Common Stock into which such H Shares and Notes
are convertible (the "CONVERSION SHARES") have been registered under the
Securities Act of 1933, as amended (the "SECURITIES ACT"). Such Investor and
Lender also understands that the H Shares and Notes, respectively, are being
offered and sold pursuant to an exemption from registration contained in the
Securities Act based in part upon the Investor's representations contained in
this Agreement.

         5.3      INVESTOR BEARS ECONOMIC RISK

         Such Investor and Lender has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to Parent so that it is capable of evaluating the merits and risks of its
investment in Parent and has the capacity to protect its own interests. Such
Investor and Lender must bear the economic risk of this investment indefinitely
unless the H Shares or the Notes, respectively (or, in the case of each, the
Conversion Shares) are registered pursuant to the Securities Act, or an
exemption from registration is available. Such Investor and Lender understands
that until the H Shares or the Notes, as the case may be, or the Conversion
Shares are registered, there is no assurance that any exemption from
registration under the Securities Act will be available and that, even if
available, such exemption may not allow such Investor to transfer all or any
portion of the H Shares or Notes, as the case may be, or the Conversion Shares
under the circumstances, in the amounts or at the times such Investor might
propose.

         5.4      ACQUISITION FOR OWN ACCOUNT

         Such Investor and Lender is acquiring the H Shares and Notes,
respectively, and will acquire the Conversion Shares for its own account for
investment only, and not with a view towards their distribution in violation of
applicable securities laws.

                                       38
<Page>

         5.5      INVESTOR AND LENDER CAN PROTECT ITS INTEREST

         Such Investor and Lender represents that, by reason of its or of its
management's business or financial experience, such Investor and Lender has the
capacity to protect its own interests in connection with the transactions
contemplated in this Agreement. Further, such Investor and Lender is aware of no
publication of any advertisement in connection with the transactions
contemplated by the Agreement.

         5.6      ACCREDITED INVESTOR

         Such Investor and Lender represents that it is an accredited investor
within the meaning of Regulation D under the Securities Act.

         5.7      PARENT INFORMATION

         Such Investor and Lender has had an opportunity to discuss Parent's
business, management and financial affairs with directors, officers and
management of Parent. Such Investor and Lender has also had the opportunity to
ask questions of, and receive answers from, Parent and its management regarding
the terms and conditions of this investment.

         5.8      RULE 144

         Such Investor and Lender acknowledges and agrees that the H Shares and
Notes, respectively, and the Conversion Shares must be held indefinitely unless
they are subsequently registered under the Securities Act or an exemption from
such registration is available. Such Investor and Lender has been advised or is
aware of the provisions of Rule 144 promulgated under the Securities Act, which
permits limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things: the
availability of certain current public information about Parent, the resale
occurring not less than one year after a party has purchased and paid for the
security to be sold, the sale being through an unsolicited "broker's
transaction" or in transactions directly with a market maker (as said term is
defined under the Securities Exchange Act of 1934, as amended) and the number of
shares being sold during any three-month period not exceeding specified
limitations.

         5.9      INFORMATION FURNISHED BY INVESTORS AND LENDERS

         Each Investor and each Lender, as to itself or himself only, represents
and warrants the matters set forth in this Section 5.9. None of the information
supplied or to be supplied by the Investor or the Lender in connection with the
transactions contemplated by this Agreement, at the date on which such
information is given or on the Closing Date, contains or will contain any untrue
statement of a material fact or omits or will omit 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 are made, not materially
misleading; provided, however, that the Investor or the Lender

                                       39
<Page>

make no representations or warranties regarding information furnished by or
related to any party other than the Investors or the Lenders. None of the
information supplied or to be supplied by the Investor or the Lender for
inclusion in the Stockholder Materials, at the date on which the S-4 is declared
effective by the SEC or on the date of approval of any of the transactions
contemplated hereby by the stockholders of the Company, contains or will contain
any untrue statement of a material fact or omit or will omit 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 are made, not
materially misleading; provided, however, that the Investor or the Lender makes
no representations or warranties regarding information furnished by or related
to any party other than the Investor or the Lender.

                                   ARTICLE VI
                        REPRESENTATIONS AND WARRANTIES OF
                              PARENT AND MERGER SUB

         In order to induce the Company, the Lenders and the Investors to enter
into and perform this Agreement and the other Operative Documents, Parent and
Merger Sub jointly and severally represent and warrant (except where such
representation or warranty specifically related to only one of the Parent or
Merger Sub, in which case only that party makes such representation or
warranty), and except as otherwise set forth in the Parent Disclosure Memorandum
attached hereto as EXHIBIT 6 (the "PARENT DISCLOSURE MEMORANDUM"), to the
Company, the Lenders and the Investors as of the date of this Agreement as
follows in this Article VI: The Parent shall be deemed to have "KNOWLEDGE" of a
fact or circumstance if any executive officer or director of Parent has actual
knowledge of any such fact or circumstance, including without limitation any
fact or circumstance brought to the attention of an officer or director of
Parent by the Company.

         6.1      ORGANIZATION

         Parent and Merger Sub are corporations duly organized, validly existing
and in good standing (to the extent such terms exist) under the laws of the
State of Delaware. Parent and Merger Sub have all requisite corporate power and
authority to own, operate and lease their respective properties and assets and
to carry on their respective businesses as now conducted and as currently
proposed to be conducted. Parent and Merger Sub are duly qualified and licensed
as foreign corporations to do business and are in good standing (to the extent
"qualified to do business" and "good standing" exist) in each jurisdiction in
which the character of Parent and Merger Sub's properties occupied, owned or
held under lease or the nature of the business conducted by Parent and Merger
Sub makes such qualification or licensing necessary, except where the failure to
be so qualified or in good standing would not have a Parent Material Adverse
Effect. For purposes of this Agreement, the term "Parent Material Adverse
Effect" shall mean any material adverse effect on the business, operations,
assets, financial condition or results of operations of the Parent; provided,
however, that Parent Material Adverse

                                       40
<Page>

Effect shall not include any change, circumstance, event or effect that relates
to or results from the announcement or other disclosure or consummation of the
transactions contemplated by this Agreement or general economic conditions.

         6.2      ENFORCEABILITY

                  6.2.1    Parent and Merger Sub have all requisite corporate
power and authority to execute, deliver and perform their obligations under this
Agreement and each of the other Operative Documents to which they are a party
and each of the certificates, instruments and documents executed or delivered by
them pursuant to the terms of this Agreement. All corporate action on the part
of Parent and Merger Sub and their officers, directors and stockholders
necessary for (i) the authorization, execution, delivery and performance of this
Agreement and the other Operative Documents to which Parent and Merger Sub are a
party, (ii) the consummation of the Merger, and (iii) the performance of all
Parent and Merger Sub obligations under this Agreement and the other Operative
Documents to which Parent and Merger Sub are a party, required to be taken as of
the Closing, has been taken, or will as of the Closing have been taken. Due to
the requirements of the Nasdaq National Market System (the "Parent's Trading
Market"), the stockholders of Parent shall consider this Agreement and the
Merger and the following vote of the holders of Parent Capital Stock is
sufficient for the Parent's stockholders to duly approve this Agreement and the
Merger: the affirmative vote of a majority of the shares of Parent Common Stock
and Series G Preferred Stock, voting together as a single class, present or
represented and voting on the matter at a meeting at which a quorum is present.
With respect to any related amendments to Parent's Restated Certificate of
Incorporation, the following vote of Parent's Capital Stock shall be required:
the affirmative vote of a majority of the outstanding shares of Parent Common
Stock and Series G Preferred Stock voting together as a single class.

                  6.2.2    This Agreement has been, and each of the other
Operative Documents to which the Parent and Merger Sub are a party at the
Closing will have been, duly executed and delivered by the Parent and Merger
Sub, and this Agreement is, and each of the other Operative Documents to which
Parent and Merger Sub are a party will be at the Closing, assuming due
authorization, execution and delivery of this Agreement and the other Operative
Documents by the Company, the Investors and the Lenders, a legal, valid and
binding obligation of the Parent and Merger Sub, enforceable against Parent and
Merger Sub in accordance with its terms, except as to the effect, if any, of (i)
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
federal and state laws affecting the rights or remedies of creditors generally
and (ii) rules of law governing specific performance, injunctive relief and
other equitable remedies.

                                       41
<Page>

         6.3      CAPITALIZATION

                  (a) The authorized capital stock of Parent consists of
64,000,000 shares, consisting of 50,000,000 shares of Parent Common Stock, par
value $.001 per share, and 14,000,000 shares of preferred stock, par value $.001
per share. Of the authorized preferred stock, 1,500,000 shares are designated as
Series G Preferred Stock, par value $.001 per share (the "SERIES G PREFERRED"),
and 500,000 shares are designated as Series A Preferred Junior Participating
Preferred, and 10,000,000 shares will be designated as Series H Preferred Stock,
par value $.001 per share.

                  (b) As of the date of this Agreement, the issued and
outstanding capital stock of the Company consists solely of 23,287,184 shares of
Parent Common Stock; and 1,500,000 shares of Series G Preferred Stock. Such
outstanding shares are, and immediately prior to the Closing will be, duly
authorized and validly issued, fully paid and nonassessable.

                  (c) As of the date of this Agreement, other than (i) Options
to purchase up to 7,167,247 shares of Parent Common Stock that have been granted
under the Parent Option Plans, (ii) Warrants to purchase up to 150,000 shares of
Parent Common Stock, (iii) the rights created pursuant to the Rights Agreement
dated as of January 24, 1991 by and between the Parent and Fleet National Bank
(f/k/a/ The First National Bank of Boston) as amended (the "Rights Agreement")
and 249,529 shares reserved under the Parent's Stock Purchase Plan, this
Agreement, (iv) and the Series G Preferred, there are no outstanding rights of
first refusal or offer, preemptive rights, options, warrants, conversion rights
or other agreements (or obligations to issue such options, warrants or
conversion rights), either directly or indirectly, for the purchase or
acquisition from Parent or, to the Parent's knowledge, any stockholder of any
shares of Capital Stock or any securities convertible into or exchangeable for
shares of any Capital Stock of Parent ("PARENT CAPITAL STOCK") (all such
Options, Warrants and other rights are sometimes referred to herein as "PARENT
STOCK PURCHASE RIGHTS"). Parent has provided to the Company a spreadsheet
referencing this representation that accurately reflects the number of such
Options, any Warrants and Parent Stock Purchase Rights outstanding, the grant or
issue dates, vesting schedules and exercise or conversion prices thereof and, in
each case, the identities of the holders and an indication of their
relationships to Parent (if any exist other than a security holder). Parent has
delivered to the Company true and correct copies of the Parent Option Plans, the
form of stock option agreements relating to Options granted thereunder, and all
warrants to purchase Parent Common Stock.

                  (d) Parent is not a party to any agreement and, to Parent's
knowledge (other than agreements entered into in connection with this
Agreement), there is no agreement between any person, that affects or relates to
the voting or giving of written consents with respect to any securities of
Parent or the voting by any director of Parent. Based upon a review of the
filings made with the SEC, no stockholder of Parent owning beneficially 5% or
more of any class of Parent Capital Stock ("5% PARENT STOCKHOLDER")

                                       42
<Page>

or any affiliate thereof is indebted to Parent, and Parent is not indebted to
any 5% Parent Stockholder or any affiliate thereof. Parent is not under any
contractual or other obligation to register any of its presently outstanding
securities or any of its securities that may hereafter be issued other than
pursuant to the agreements shown in the Parent Disclosure Memorandum or as
contemplated by this Agreement.

                  (e) All rights of refusal, preemptive, co-sale rights and
registration rights granted by Parent with respect to Parent Capital Stock or
Parent Stock Purchase Rights are described on Schedule 6.3(e) to the Parent
Disclosure Memorandum.

         6.4      SUBSIDIARIES AND AFFILIATES

         Except as disclosed in the Parent Disclosure Memorandum, neither Parent
or Merger Sub owns or controls, directly or indirectly, any corporation,
partnership, limited liability company or other business entity.

         6.5      NO APPROVALS; NO CONFLICTS

                    (a) The execution, delivery and performance by Parent of
this Agreement and the other Operative Documents to which Parent and Merger Sub
are a party, the effectiveness of the Merger and the performance by Parent and
Merger Sub of their obligations pursuant to this Agreement and the other
Operative Documents to which they are a party, will not (a) constitute a
material violation (with or without the giving of notice or lapse of time, or
both) of any provision of law or any judgment, decree, order, regulation or rule
of any court or other governmental authority applicable to Parent or Merger Sub;
(b) require any consent, approval or authorization of, or declaration, filing or
registration with, any Person, except for (i) compliance with applicable
securities laws, (ii) the filing of all documents necessary to consummate the
Merger with the Delaware Secretary of State, (iii) the approval by the
stockholders of Parent and Merger Sub of the transactions contemplated hereby,
as provided under the rules of Parent's Trading Market and the Certificate of
Incorporation and Bylaws of Parent and Merger Sub, respectively, and (iv) if
applicable, the notification requirements of the Hart-Scott-Rodino Act; (c)
result in a material default (with or without the giving of notice or lapse of
time, or both) under, or acceleration or termination of, or the creation in any
party of the right to accelerate, terminate, modify or cancel, any material
agreement, lease, note or other restriction, encumbrance, obligation or
liability to which Parent or Merger Sub is a party or by which either is bound
or to which any assets of Parent or Merger Sub are subject; (d) result in the
creation of any Encumbrance upon any material assets of Parent or Merger Sub;
(e) conflict with or result in a breach of or constitute a default under any
provision of the Certificate of Incorporation or Bylaws of Parent or Merger Sub;
or (f) invalidate or materially adversely affect any permit, license or
authorization currently material to the conduct of the business of Parent.

                    (b) Parent has adopted an amendment to the Rights Agreement,
a true and correct copy of which has been delivered to the Company and its
counsel and attached

                                       43
<Page>

to this Agreement as EXHIBIT 6.5(b), pursuant to which the Investors will not be
deemed to be Acquiring Persons (as defined in the Rights Agreement) as a result
of the execution or consummation of the transactions provided for by this
Agreement including without limitation, the consummation of the Merger, and the
Investors will be permitted to purchase such additional shares of Parent as set
forth in the amendment to the Rights Agreement without being deemed to be
Acquiring Persons.

         6.6      FINANCIAL STATEMENTS

         Parent has delivered to the Company (a) a consolidated balance sheet
and consolidated statements of operations, stockholders' equity and cash flows
of Parent at and for each of the fiscal years ended December 30, 2000, January
1, 2000, and January 2, 1999, and accompanying notes, audited by
PriceWaterhouseCoopers LLP, independent auditors and certified public
accountants, and (b) the unaudited balance sheet and unaudited statement of
operations, stockholders' equity and cash flows of parent at and for each of the
three month periods ended March 31, 2001 and June 30, 2001 (the "PARENT
UNAUDITED FINANCIAL STATEMENTS"). All the foregoing financial statements are
herein referred to as the "PARENT FINANCIAL STATEMENTS." The balance sheet of
Parent as of December 30, 2000 is herein referred to as the "PARENT BALANCE
SHEET." The Parent Financial Statements have been prepared in conformity with
GAAP (except in the case of the Parent Unaudited Financial Statements with
respect to the absence of footnotes and subject to normal year-end audit
adjustments) on a basis consistent with prior accounting periods and fairly
present the consolidated financial position, results of operations and changes
in financial position of Parent as of the dates and for the periods indicated.
Schedule 6.6 to the Disclosure Memorandum sets forth all promissory notes,
loans, lines of credits or similar obligations pursuant to which Parent is an
obligor, together with all the amounts owed by Parent under such obligations, as
of December 30, 2000, and all liabilities under equipment leases of Parent (the
"PARENT OPERATING LEASE LIABILITIES") as of December 30, 2000. Schedule 6.6 sets
forth all indebtedness or other amounts owed by any 5% Parent Stockholders to
the Parent, as of the date hereof.

         6.7      ABSENCE OF CERTAIN CHANGES OR EVENTS

         From the date of Parent Balance Sheet through and including the date
hereof, Parent has conducted its business in the ordinary course and has not
entered into or agreed to enter into any transactions, agreements or
commitments, suffered the occurrence of any event or events or experienced any
change in business, operations, assets, financial condition or results of
operations that, in the aggregate, has resulted in a Parent Material Adverse
Effect. Without limiting the generality of the foregoing, except for
transactions specifically contemplated in this Agreement or the other Operative
Documents, from the date of the Balance Sheet through and including the date
hereof, Parent has not:

                                       44
<Page>

                    (a) received written notice or, to the knowledge of Parent,
oral notice that there has been or will be a loss of, or contract cancellation
by, any current customer, supplier or licenser of Parent, which loss or
cancellation would result in lost annual revenues to Parent of at least
$1,000,000;

                    (b) forgiven or canceled any indebtedness or waived any
claims or rights of material value (including, without limitation, any
indebtedness owing by any stockholder, officer, director, employee or affiliate
of Parent);

                    (c) granted, other than in the ordinary course of business
and consistent with past practice or as would otherwise not be material, any
increase in the compensation of directors, officers, employees or consultants;

                    (d) borrowed or agreed to borrow any funds, assumed or
become subject to, whether directly or by way of guarantee or otherwise, any
material liabilities or obligations (absolute, accrued or contingent), or
incurred any material liabilities or obligations (absolute, accrued or
contingent), except liabilities and obligations incurred in the ordinary course
of business and consistent with past practice not in excess of $250,000
individually;

                    (e) paid, discharged or satisfied any material claims,
liabilities or obligations (absolute, accrued or contingent) other than the
payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of claims, liabilities and obligations reflected
or reserved against in the Parent Balance Sheet or incurred in the ordinary
course of business and consistent with past practice since the date of the
Parent Balance Sheet, or prepaid any obligation having a fixed maturity of more
than 90 days from the date such obligation was issued or incurred;

                    (f) permitted or allowed any of its material property or
assets (real, personal or mixed, tangible or intangible) to be subjected to any
Encumbrance, except conditional sales or similar security interests granted in
connection with the purchase of equipment or supplies in the ordinary course of
business;

                    (g) written down the value of any inventory (including
write-downs by reason of shrinkage or markdown) or written off as uncollectible
any notes or accounts receivable, except for write-downs and write-offs that are
in the aggregate less than $500,000, incurred in the ordinary course of business
and consistent with past practice;

                    (h) sold, transferred or otherwise disposed of any of its
properties or assets (real, personal or mixed, tangible or intangible) with an
aggregate net book value in excess of $250,000, except the sale of inventory in
the ordinary course of business and consistent with past practice;

                    (i) made any single capital expenditure or commitment in
excess of $250,000 for additions to property, plant, equipment or intangible
capital assets or

                                       45
<Page>

made aggregate capital expenditures in excess of $2,000,000 for additions to
property, plant, equipment or intangible capital assets;

                    (j) made any change in any method of accounting or
accounting practice or internal control procedure, except for any change which
is required by reason of U.S. GAAP or Regulation S-X under the Exchange Act;

                    (k) issued any capital stock, other securities or options or
other rights to acquire capital stock or other securities, or declared, paid or
set aside for payment any dividend or other distribution in respect of its
capital stock, or redeemed, purchased or otherwise acquired, directly or
indirectly, any shares of capital stock or other securities of Parent except for
the issuance of shares of Parent Capital Stock upon exercise or conversion of
outstanding Options or Parent Stock Purchase Rights;

                    (l) except for transactions that are not material in the
aggregate, loaned or advanced any amount to, or sold, transferred or leased any
properties or assets (real, personal or mixed, tangible or intangible) to, or
entered into any agreement or arrangement with, any of Parent's officers,
directors or employees or any affiliate of Parent's officers, directors or
employees, except (i) directors' fees and compensation paid to officers and
employees at rates not exceeding the rates of compensation disclosed on Schedule
6.16 of the Parent Disclosure Memorandum, and (ii) travel or similar expenses
advanced to employees in connection with their employment duties in the ordinary
course of business;

                    (m) entered into or agreed to any sale, assignment, transfer
or license of any patents, trademarks, copyrights, trade secrets or other
intangible assets of Parent to a third party or any amendment or change to any
existing license or other agreement relating to intellectual property, except in
the ordinary course of business;

                    (n) incurred, assumed or guaranteed any indebtedness for
borrowed money other than in the ordinary and usual course of business,
consistent with past practice, and in amounts and on terms consistent with past
practice; or

                    (o) agreed, whether in writing or otherwise, to take any
action described in this SECTION 6.7.

         6.8      TAXES

                  (a) (i)    All Parent Tax Returns (as defined below), with
respect to each of the tax years subsequent to fiscal year 1997, required to be
filed by or on behalf of Parent have been filed on a timely basis with the
appropriate governmental authority in all jurisdictions in which such Parent Tax
Returns are required to be filed, and all such Parent Tax Returns were at the
time they were filed true, correct and complete in all material aspects; (ii)
all Taxes of Parent (whether or not reflected on any Parent Tax Return) have
been fully and timely paid or properly accrued; (iii) no waivers of statutes of
limitation have been given by Parent that remain in effect or requested from
Parent

                                       46
<Page>

in connection with any Parent Tax Returns covering Parent with respect to any
Taxes payable by it; (iv) no taxing authority in a jurisdiction where Parent
does not file Parent Tax Returns has made in writing or otherwise a claim,
assertion or threat to Parent that Parent is or may be subject to taxation by
such jurisdiction; (v) Parent has duly and timely withheld from employee
salaries, wages, compensation and other payments and paid over to the
appropriate governmental authority all amounts required to be so withheld and
paid over for all periods under all applicable laws; (vi) there are no liens
with respect to Taxes on any of Parent's property or assets other than liens for
current Taxes not yet payable; (vii) there are no Tax rulings, requests for
rulings or closing agreements relating to Parent that could affect the liability
for Taxes or the amount of taxable income of Parent for any period (or portion
of a period) after the date hereof; and (viii) any adjustment of Taxes of Parent
made by the IRS in any examination that is required to be reported to the
appropriate state, local or foreign taxing authorities has been reported, and
any additional Taxes due with respect thereto have been paid.

                    (b) There is no dispute or claim concerning any Tax
liability of Parent either (i) claimed or raised by any governmental authority
in writing or (ii) as to which any of the directors and officers (and employees
responsible for Tax matters) of Parent have knowledge based on contact or
correspondence with any agent of such authority. Schedule 6.8 to the Parent
Disclosure Memorandum lists all Parent Federal Income Tax Returns filed with
respect to Parent for taxable periods ended on or after Parent's 1999 fiscal
year that have been audited, and indicates those Parent Federal Income Tax
Returns that currently are the subject of audit. Parent has made available to
the Company correct and complete copies of all Parent Federal Income Tax
Returns, examination reports and statements of deficiencies assessed against or
agreed to by Parent since Parent's 1999 fiscal year.

                    (c) Parent has not made any payment or payments, is not
obligated to make any payment or payments and is not a party to (or a
participating employer in) any agreement or Employee Benefit Plan that could
obligate it, the Surviving Corporation or the Company to make any payment or
payments that would constitute an "excess parachute payment," as defined in
Section 280G of the Code (or any similar provision of state, local or foreign
law) or that would otherwise not be deductible under Section 162 or Section 404
of the Code.

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

                    (e) Parent is not a party to any Tax allocation or sharing
agreement. Parent (i) has not been a member of a Parent Tax Group filing a
consolidated income tax return under Section 1501 of the Code (or any similar
provision of state, local or foreign law) and (ii) does not have any liability
for Taxes of any person under Treasury Regulations Section 1.1502-6 (or any
similar provision of state, local or foreign law) as a transferee or successor
by contract or otherwise.

                                       47
<Page>

                    (f) The unpaid Taxes of Parent (i) did not, as of December
30, 2000, exceed the reserve for Tax liability set forth on the face (rather
than any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) of the Parent Balance Sheet and (ii) do not exceed
that reserve as adjusted for the passage of time and operations in the ordinary
course of business through the Closing Date.

                    (g) All Options that Parent has treated as incentive stock
options under Section 421 of the Code meet the requirements of Section 422 of
the Code.

                    (h) None of the assets of Parent (i) is "tax exempt use
property" within the meaning of Section 168(h) of the Code; (ii) is property
that Parent is required to treat as being owned by any other person pursuant to
the "safe harbor lease" provisions of former Section 168(f)(8) of the Internal
Revenue Code of 1954; or (iii) directly or indirectly secures any debt the
interest on which is tax-exempt under Section 103(a) of the Code.

                    (i) Parent has not taken or agreed to take any action, or
failed to take any action, that would prevent the Merger from qualifying as a
reorganization within the meaning of the Code.

                    (j) Parent has not been a party to a distribution to which
Section 355(d) or (e) of the Code applies.

                    (k) Parent has not filed a consent under Section 341(f) of
the Code concerning collapsible corporations.

                    (l) Parent has disclosed on its federal Parent Tax Returns
all positions taken therein that could give rise to a substantial understatement
of federal income Tax within the meaning of Section 6662 of the Code.

         As used in this Agreement, the following terms shall have the following
meanings:

         "TAXES" means (i) all foreign, federal, state, county or local taxes,
charges, fees, levies, imposts, duties and other assessments, including, but not
limited to, any income, alternative minimum or add-on, estimated, gross income,
gross receipts, sales, use, transfer, transactions, intangibles, ad valorem,
value-added, franchise, registration, title, license, capital, paid-up capital,
profits, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, real property, recording, personal property, federal highway use,
commercial rent, environmental (including, but not limited to, taxes under
Section 59A of the Code) or windfall profit tax, custom, duty or other fee or
other like assessment or charge of any kind whatsoever imposed by any tax
authority, together with any interest, penalties or additions to tax; (ii) any
liability for payment of amounts described in clause (i) whether as a result of
transferee liability, of being a member of an affiliated, consolidated, combined
or unitary group for any period, or

                                       48
<Page>

otherwise through operation of law; and (iii) any liability for the payment of
amounts described in clause (i) or (ii) as a result of any tax sharing, tax
indemnity or tax allocation agreement, or any other express or implied agreement
to indemnify any other person; and "TAX" means any of the foregoing Taxes.

         "PARENT TAX GROUP" means any federal, state, local or foreign
consolidated, affiliated, combined, unitary or other similar group of which
Parent is now or was formerly a member.

         "PARENT TAX RETURNS" means any Parent return, declaration, report,
claim for refund, information return, statement or other similar document
relating to Taxes, including any schedule or attachment thereto, and including
any amendment thereof.

         6.9      PROPERTY

                    (a) Schedule 6.9(a) to the Parent Disclosure Memorandum
contains a complete and accurate list of all real property owned, leased or
currently being used by Parent (the "PARENT REAL PROPERTY"). Parent has
delivered to the Company or its counsel true and complete copies of all written
leases, subleases, rental agreements, contracts of sale, tenancies or licenses
relating to the Parent Real Property.

                    (b) Schedule 6.9(b) to the Parent Disclosure Memorandum
contains a complete and accurate list of each item of personal property having a
book value in excess of $100,000 that is owned, leased, rented or used by Parent
(the "PARENT PERSONAL PROPERTY"); provided that such list need not describe
Parent Intellectual Property (as defined in Section 6.17 below), listed on
Schedule 6.17 to the Disclosure Memorandum, or Inventory. Parent has delivered
or made available to the Company true and complete copies of all leases,
subleases, rental agreements, contracts of sale, tenancies or licenses to which
the Parent Personal Property is subject.

                    (c) The Parent Real Property and the Parent Personal
Property include all the properties and assets (whether real, personal or mixed,
tangible or intangible) (other than, in the case of the Parent Personal
Property, property rights with an individual book value of less than $100,000
and the Parent Intellectual Property) reflected in the Parent Balance Sheet
(except for such properties or assets sold since the date of Parent Balance
Sheet in the ordinary course of business and consistent with past practice) and
all the properties and assets purchased by Parent since the date of the Parent
Balance Sheet (other than, in the case of the Parent Personal Property, property
rights with an individual book value of less than $100,000 and the Parent
Intellectual Property). The Parent Real Property and the Parent Personal
Property include all material property used in the business of Parent, other
than the Parent Intellectual Property. Parent's offices and other structures and
the Parent Personal Property are in good operating condition and repair, normal
wear and tear excepted, and are adequate for the uses to which they are being
put.

                                       49
<Page>

                    (d) Parent's title to or leasehold interest in each parcel
of the Parent Real Property is free and clear of all Encumbrances except for
Parent Permitted Encumbrances as defined below. Each lease of any portion of the
Parent Real Property is valid, binding and enforceable in accordance with its
terms against Parent and to Parent's knowledge the parties thereto, Parent has
performed in all material respects all obligations imposed on it thereunder, and
neither Parent nor, to Parent's knowledge, any other party thereto is in default
thereunder, nor is there any event that with notice or lapse of time, or both,
would constitute a default thereunder by Parent or, to Parent's knowledge, by
any other party. Parent has not granted any lease, sublease, tenancy or license
of, or entered into any rental agreement or contract of sale with respect to,
any portion of the Parent Real Property, except for any subleases or assignments
that Parent contemplates and has disclosed to the Company regarding Parent's
Boulder facilities, which sublease or assignment is disclosed in the Parent
Disclosure Memorandum.

                    (e) For the purposes of this Agreement, "PARENT PERMITTED
ENCUMBRANCES" shall mean (i) liens for Taxes or governmental charges or claims
(A) not yet due and payable or (B) being contested in good faith, if a reserve
or other appropriate provision, if any, as shall be required by GAAP shall have
been made therefor, (ii) statutory liens of landlords, liens of carriers,
warehouse persons, mechanics and material persons and other liens imposed by law
incurred in the ordinary course of business for sums (A) not yet due and payable
or (B) being contested in good faith, if a reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made therefor,
(iii) liens incurred or deposits made in connection with workers' compensation,
unemployment insurance and other similar types of social security programs or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return of money bonds
and similar obligations, in each case in the ordinary course of business,
consistent with past practice, (iv) security interests incurred under Parent's
line of credit with Congress Financial Corporation and any other security
interests or liens existing at the date of this Agreement as disclosed in the
SEC Documents, and (v) easements, rights-of-way, restrictions and other similar
charges or encumbrances, in each case, which do not interfere with the ordinary
conduct of business of the Parent and do not materially detract from the value
of the property upon which such encumbrance exists.

                    (f) The Parent Personal Property is free and clear of all
Encumbrances, except Parent Permitted Encumbrances, and other than leased Parent
Personal Property that is so noted on the list supplied pursuant to SECTION
6.9(b), Parent owns such Parent Personal Property. Each lease, license, rental
agreement, contract of sale or other agreement to which the Parent Personal
Property is subject is valid, binding and enforceable in accordance with its
terms against Parent and, to Parent's knowledge, the parties thereto, Parent has
performed in all material respects all obligations imposed on it thereunder, and
neither Parent nor, to Parent's knowledge, any other party thereto is in default
thereunder, nor is there any event that with notice or lapse of time, or both,
would constitute a default by Parent or, to Parent's knowledge, any other party

                                       50
<Page>

thereunder. Parent has not granted any lease, sublease, tenancy or license of
any portion of the Parent Personal Property, except in the ordinary course of
business.

                    (g) To Parent's knowledge, there are no applicable adverse
zoning, building or land use codes or rules, ordinances, regulations or other
restrictions relating to zoning or land use that currently or could reasonably
be expected to prevent, or cause the imposition of material fines or penalties
as the result of, the use of all or any portion of the Parent Real Property for
the conduct of the business as presently conducted. Parent has received all
necessary material approvals with regard to occupancy and maintenance of the
Parent Real Property.

         6.10      CONTRACTS

                   6.10.1    MATERIAL CONTRACTS

         Schedule 6.10.1 to the Parent Disclosure Memorandum contains a complete
and accurate list (other than the Intellectual Property Rights listed on
Schedule 6.17 to the Parent Disclosure Memorandum) of all written and, to the
knowledge of Parent, oral contracts, agreements and understandings to which
Parent is currently a party or by which Parent is currently bound, providing for
potential payments by or to Parent in excess of $2,000,000, including, without
limitation, security agreements, license agreements, software development
agreements, distribution agreements, joint venture agreements, reseller
agreements, credit agreements and instruments relating to the borrowing of money
(each, a "PARENT MATERIAL CONTRACT"). All contracts set forth on Schedule 6.10.1
are valid, binding and enforceable in accordance with their terms against Parent
and, to the Parent's knowledge, the other parties thereto, except as to the
effect, if any, of (a) applicable bankruptcy, insolvency, reorganization,
moratorium and other similar federal and state laws affecting the rights or
remedies of creditors generally, (b) rules of law governing specific
performance, injunctive relief and other equitable remedies, and (c) the
enforceability of provisions requiring indemnification in connection with the
offering, issuance or sale of securities, and are in full force and effect,
Parent has performed in all material respects all material obligations imposed
on it thereunder, and neither Parent nor, to Parent's knowledge, any other party
thereto is in material default thereunder, nor, to Parent's knowledge, is there
any event that with notice or lapse of time, or both, would constitute a default
by Parent or, to Parent's knowledge, any other party thereunder. True and
complete copies of each such written Parent Material Contract have been
delivered to the Company by Parent. Except as set forth on Schedule 6.10.1 to
the Parent Disclosure Memorandum, Parent has no:

                    (a) contracts, agreements or arrangements (i) with
distributors or dealers that cannot be canceled by Parent within 60 days' notice
without liability, penalty or premium, (ii) with directors, officers,
stockholders, employees, agents, consultants, advisors, salespeople, or sales
representatives providing for the payment of any bonus or commission based on
sales or earnings, or (iii) affecting or relating to former employees of Parent;

                                       51
<Page>

                    (b) employment agreement, or any other agreement for
services that contains severance or termination pay liabilities or obligations;

                    (c) noncompetition agreement or other arrangement that would
prevent Parent from carrying on its business anywhere in the world;

                    (d) written or, to the knowledge of Parent, oral notice that
any party to a contract listed on Schedule 6.10.1 to the Parent Disclosure
Memorandum intends to cancel, terminate or refuse to renew such contract (if
such contract is renewable);

                    (e) material dispute with any of its suppliers, customers,
distributors, OEM resellers, licensors or licensees;

                    (f) product distribution agreement, development agreement or
license agreement as licensor or licensee (except for agreements relating to
"Off-The-Shelf Software") or otherwise disclosed in Section 6.17 to the Parent
Disclosure Memorandum;

                    (g) joint venture contract or arrangement or any other
agreement that involves a sharing of profits with other persons;

                    (h) instrument evidencing indebtedness for borrowed money by
way of a direct loan, sale of debt securities, purchase money obligation,
conditional sale or guarantee, or otherwise, except for trade indebtedness
incurred in the ordinary course of business, and except as disclosed in the
Parent Financial Statements; or

                    (i) agreements or commitments to provide indemnification,
other than those entered into in the ordinary course of business.

                    6.10.2    REQUIRED CONSENTS

         The execution and delivery of this Agreement and the performance of the
obligations of Parent hereunder will not constitute a material default under any
Parent Material Contract and do not require the consent of any other party to
any Parent Material Contract, except for those consents listed on Schedule
6.10.2 to the Parent Disclosure Memorandum.

         6.11      CUSTOMERS AND SUPPLIERS

         Schedule 6.11 to the Parent Disclosure Memorandum sets forth (a) a
complete and accurate list of the customers of Parent accounting for 5% or more
of Parent's revenues during the fiscal year ended December 30, 2000, and (b) a
complete and accurate list of the suppliers of Parent from whom Parent has
purchased 5% or more of the goods or services purchased by Parent in the fiscal
year ended December 30, 2000. As of the date hereof, Parent has not received any
written, or to the knowledge of Parent, oral notice from its customers or
suppliers that would cause it, in its reasonable

                                       52
<Page>

judgment, to expect any material reduction in the business activity between
Parent and any customers or suppliers named on such Schedule 6.11.

         6.12      WARRANTIES AND RETURNS

         Schedule 6.12 to the Parent Disclosure Memorandum sets forth Parent's
warranties currently made with respect to its business, products and services,
and current policies with respect to returns of products in the course of
Parent's conduct of the business. Except as set forth on the Parent Disclosure
Memorandum, Parent has not made any express warranties in connection with the
sale of its products and services. Claims against Parent for warranty costs
(individually or in the aggregate, but net of warranties passed through to
vendors) with respect to products and services during each of the last three
fiscal years did not exceed $8,600,000, and there are no outstanding or, to
Parent's knowledge, threatened claims for any such warranty costs that would
exceed $10,200,000 (individually or in the aggregate, but net of warranties
passed through to vendors). As used above, the term "WARRANTY COST" shall mean
costs and expenses associated with correcting, returning or replacing defective
or allegedly defective products or services, whether such costs and expenses
arise out of claims sounding in warranty, contract, tort or otherwise.

         6.13      CLAIMS AND LEGAL PROCEEDINGS

         Except as disclosed on Schedule 6.13 to the Parent Disclosure
Memorandum, there are no Proceedings pending or, to Parent's knowledge,
threatened against Parent or any of its assets before or by any court or
governmental entity except such Proceedings as would not be material. To
Parent's knowledge, there is no valid basis for any claim, action, suit,
arbitration, proceeding or investigation before or by any person that would have
a Parent Material Adverse Effect. There are no outstanding or unsatisfied
judgments, orders, decrees or stipulations to which Parent is a party.

         6.14      LABOR AND EMPLOYMENT MATTERS

         There are no material labor disputes, employee grievances or
disciplinary actions pending or, to Parent's knowledge, threatened against
Parent or any of its present or former employees. Parent has complied in all
material respects with all material provisions of law relating to employment and
employment practices, terms and conditions of employment, wages and hours.
Parent is not engaged in any unfair labor practice, and there is no labor
strike, dispute, slowdown or stoppage pending or, to Parent's knowledge,
threatened against or affecting Parent. Parent is not a party to any collective
bargaining agreement. Parent has no knowledge of any organizational efforts
presently being made or threatened by or on behalf of any labor union with
respect to employees of Parent. Except as disclosed in the Parent Disclosure
Memorandum, each current employee, officer and consultant of Parent has executed
a Parent Employment Proprietary Information Agreement in the form provided to
the Company. To Parent's knowledge, no employee (or person performing similar
functions) of Parent is in violation of any such agreement or any employment
agreement, noncompetition

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agreement, patent disclosure agreement, invention assignment agreement,
proprietary information agreement or other contract or agreement relating to the
relationship of such employee with Parent or any other party. All employees of
Parent are employed on an "at will" basis, and, to Parent's knowledge, are
eligible to work and are lawfully employed in the United States.

         6.15      EMPLOYEE BENEFIT PLANS

                    6.15.1    DEFINITIONS

         As used in this Agreement, "PARENT EMPLOYEE BENEFIT PLAN" means any
retirement, pension, profit sharing, deferred compensation, stock bonus,
savings, bonus, incentive, cafeteria, medical, dental, vision, hospitalization,
life insurance, accidental death and dismemberment, medical expense
reimbursement, dependent care assistance, tuition reimbursement, disability,
sick pay, holiday, vacation, severance, change of control, stock purchase, stock
option, restricted stock, phantom stock, stock appreciation rights, fringe
benefit or other employee benefit plan, fund, policy, program, contract,
arrangement or payroll practice of any kind (including any "employee benefit
plan," as defined in Section 3(3) of ERISA) or any employment, consulting or
personal services contract, whether written or oral, qualified or nonqualified,
funded or unfunded, or domestic or foreign, (i) sponsored, maintained or
contributed to by Parent or, if an employment, consulting or personal services
contract, to which Parent is a party, (ii) covering or benefiting any current or
former officer, employee, agent, director or independent contractor of Parent
(or any dependent or beneficiary of any such individual), or (iii) with respect
to which Parent has (or could have) any obligation or liability.

                    6.15.2    EMPLOYEE BENEFIT PLAN LISTING

         Schedule 6.15.2 contains a complete and accurate list of all material
written, and to the knowledge of Parent, oral Parent Employee Benefit Plans.
Except as disclosed in the Parent Disclosure Memorandum, Parent does not have
any agreement, arrangement, commitment or obligation, whether formal or
informal, whether written or unwritten and whether legally binding or not, to
create, enter into or contribute to any additional Parent Employee Benefit Plan,
or to modify or amend any existing Parent Employee Benefit Plan, except for
amendments required by statute, regulation or administrative pronouncement.
There has been no amendment, interpretation or other announcement (written or
oral) by Parent or any other Person relating to, or change in participation or
coverage under, any Parent Employee Benefit Plan that, either alone or together
with other such items or events, could materially increase the expense of
maintaining such Parent Employee Benefit Plan (or the Parent Employee Benefit
Plans taken as a whole) above the level of expense incurred with respect thereto
for the most recent fiscal year included in the Parent Financial Statements. The
terms of each Parent Employee Benefit Plan permit Parent to amend or terminate
such Parent Employee Benefit Plan at any time and for any reason (except to the
extent prohibited by law) without penalty

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and without material liability or expense. None of the rights of the Company
under any Parent Employee Benefit Plan will be impaired in any way by this
Agreement or the consummation of the transactions contemplated by this
Agreement.

                    6.15.3    DOCUMENTS PROVIDED

         Parent has made available to the Company true, correct and complete
copies (or, in the case of unwritten Parent Employee Benefit Plans,
descriptions) of all Parent Employee Benefit Plans (and all amendments thereto),
along with, to the extent applicable to the particular Parent Employee Benefit
Plan, copies of the following: (a) the last three annual reports (Form 5500
series) filed with respect to such Parent Employee Benefit Plan; (b) the most
recent summary plan descriptions (and all summaries of material modifications
related thereto) and employee manuals distributed with respect to such Parent
Employee Benefit Plan; (c) all material communications filed or distributed with
respect to such Parent Employee Benefit Plan during the last year; (d) all
contracts and agreements (and any amendments thereto) relating to such Parent
Employee Benefit Plan, including, without limitation, trust agreements,
investment management agreements, annuity contracts, insurance contracts, bonds,
indemnification agreements and service provider agreements; (e) the most recent
determination letter issued by the IRS with respect to such Parent Employee
Benefit Plan; (f) all written communications relating to the amendment, creation
or termination of such Parent Employee Benefit Plan, or an increase or decrease
in benefits, acceleration of payments or vesting or other events that could
result in a material liability to Parent since the date of the most recently
completed and filed annual report (Form 5500 series); (g) all correspondence to
or from any governmental entity or agency relating to such Parent Employee
Benefit Plan; (h) samples of all administrative forms currently in use,
including, without limitation, all COBRA and HIPAA forms and notices; (i) all
coverage, nondiscrimination, top heavy and Code Section 415 tests performed with
respect to such Parent Employee Benefit Plan for the last three years; and (j)
the most recent Joint Proxy and Registration Statement, annual report (Form
11-K) and prospectus prepared in connection with such Parent Employee Benefit
Plan.

                    6.15.4    COMPLIANCE

         With respect to each Parent Employee Benefit Plan: (a) such Parent
Employee Benefit Plan is, and at all times since 1997has been, maintained,
administered, operated and funded in all material respects in accordance with
its terms and in compliance with all applicable requirements of all applicable
laws, statutes, orders, rules and regulations, including, without limitation,
ERISA, COBRA, HIPAA and the Code; (b) Parent and all other Persons (including,
without limitation, all fiduciaries) have, at all times, properly performed in
all material respects all of their duties and obligations (whether arising by
operation of law or by contract) under or with respect to such Parent Employee
Benefit Plan, including, without limitation, all reporting, disclosure and
notification obligations; (c) all returns, reports and other information
(including, without limitation, all Form 5500 series annual reports, together
with all schedules and

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audit reports required with respect thereto) relating to such Parent Employee
Benefit Plan required to be filed with any governmental entity or agency have
been accurately completed and timely and properly filed; (d) all notices,
statements, reports and other disclosure (including, without limitation, all
summary plan descriptions) required to be given or made to participants in such
Parent Employee Benefit Plan or their beneficiaries have been accurately
completed and timely and properly disclosed or provided; (e) neither Parent nor
any fiduciary of such Parent Employee Benefit Plan has engaged in any
transaction or acted or failed to act in a manner that violates the fiduciary
requirements of ERISA or any other applicable law; (f) no transaction or event
has occurred or is threatened or about to occur (including any of the
transactions contemplated in or by this Agreement) that constitutes or could
constitute a prohibited transaction under Section 406 or 407 of ERISA or under
Section 4975 of the Code for which an exemption is not available; and (g) Parent
has not incurred, and there exists no condition or set of circumstances in
connection with which Parent, the Surviving Corporation or the Company could
incur, directly or indirectly, any material liability or expense (except for
routine contributions, benefit payments and administrative expenses) under
ERISA, the Code or any other applicable law, statute, order, rule or regulation,
or pursuant to any indemnification or similar agreement, with respect to such
Parent Employee Benefit Plan.

                    6.15.5    QUALIFICATION

         Each Parent Employee Benefit Plan that is intended to be qualified
under Section 401(a) of the Code is, and at all times since 1997 has been, so
qualified and its related trust is, and at all times since inception has been,
exempt from taxation under Section 501(a) of the Code. Each such Parent Employee
Benefit Plan either (a) is the subject of an unrevoked favorable determination
letter from the IRS with respect to such Parent Employee Benefit Plan's
qualified status under the Code, as amended by the Tax Reform Act of 1986 and
all subsequent legislation, or (b) has remaining a period of time under the Code
or applicable Treasury regulations or IRS pronouncements in which to apply to
the IRS for such a letter and to make any amendments necessary to obtain such a
letter from the IRS which shall apply retroactively to the inception of such
Parent Employee Benefit Plan. No fact exists or is reasonably expected by the
Company to arise, that could adversely affect the qualification or exemption of
any such Parent Employee Benefit Plan or its related trust. No such Parent
Employee Benefit Plan is a "top-heavy plan," as defined in Section 416 of the
Code.

                    6.15.6    CONTRIBUTIONS, PREMIUMS AND OTHER PAYMENTS

         All contributions, premiums and other payments due or required to be
paid to (or with respect to) each Parent Employee Benefit Plan have been timely
paid, or, if not yet due but due on or before the Closing Date, or if to become
due with respect to any period before or ending on the Closing Date, have been
accrued as a liability on the Parent Balance Sheet. All income taxes and wage
taxes that are required by law to be

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withheld from benefits derived under the Parent Employee Benefit Plans have been
properly withheld and remitted to the proper depository.

                    6.15.7    RELATED EMPLOYERS

         Parent is not, and has never been, a member of (i) a controlled group
of corporations, within the meaning of Section 414(b) of the Code, (ii) a group
of trades or businesses under common control, within the meaning of Section
414(c) of the Code, (iii) an affiliated service group, within the meaning of
Section 414(m) of the Code, or (iv) any other group of Persons treated as a
single employer under Section 414(o) of the Code.

                    6.15.8    MULTIEMPLOYER, DEFINED BENEFIT AND MONEY PURCHASE
PENSION PLANS AND MULTIPLE EMPLOYER WELFARE ARRANGEMENTS

         Parent does not maintain or contribute to, and has never maintained or
contributed to (or been obligated to contribute to), (a) a multiemployer plan as
defined in Section 3(37) or Section 4001(a)(3) of ERISA or 414(f) of the Code,
(b) a multiple employer plan within the meaning of Section 4063 or 4064 of ERISA
or Section 413(c) of the Code, (c) an employee benefit plan, fund, program,
contract or arrangement that is subject to Section 412 of the Code, Section 302
of ERISA or Title IV of ERISA, or (d) a multiple employer welfare arrangement as
defined in Section 3(40) of ERISA.

                    6.15.9    POST-TERMINATION BENEFITS

         Neither Parent nor any Parent Employee Benefit Plan provides or has any
obligation to provide (or contribute toward the cost of) post-employment or
post-termination benefits of any kind, including, without limitation, death and
medical benefits, with respect to any current or former officer, employee,
agent, director or independent contractor of Parent, other than (a) continuation
coverage mandated by Sections 601 through 608 of ERISA and Section 4980B(f) of
the Code, (b) retirement benefits under any Parent Employee Benefit Plan that is
qualified under Section 401(a) of the Code, and (c) deferred compensation that
is accrued as a current liability on the Parent Balance Sheet.

                    6.15.10   SUITS, CLAIMS AND INVESTIGATIONS

         There are no actions, suits or claims (other than routine claims for
benefits and qualified domestic relations orders) pending or, to the knowledge
of Parent, threatened with respect to (or against the assets of) any Parent
Employee Benefit Plan, nor, to the knowledge of Parent, is there a basis for any
such action, suit or claim. No Parent Employee Benefit Plan is currently under
investigation, audit or review, directly or indirectly, by the IRS, the DOL or
any other governmental entity or agency, and, to the knowledge of Parent, no
such action is contemplated or under consideration by the IRS, the DOL or any
other governmental entity or agency.

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<Page>

                    6.15.11   EFFECT OF TRANSACTION

         Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement, will (a)
entitle any individual to severance pay, unemployment compensation or any other
payment from Parent, the Surviving Corporation, the Company or any Parent
Employee Benefit Plan, (b) otherwise increase the amount of compensation due to
any individual or forgive indebtedness owed by any individual, (c) result in any
benefit or right becoming established or increased, or accelerate the time of
payment or vesting of any benefit, under any Parent Employee Benefit Plan, or
(d) require Parent, the Surviving Corporation or the Company to transfer or set
aside any assets to fund or otherwise provide for any benefits for any
individual.

         6.16      PERSONNEL

         Schedule 6.16 to the Parent Disclosure Memorandum lists (a) the names,
titles and current compensation amounts of all employees of Parent with annual
base salaries or wages in excess of $50,000, (b) compensation amounts of all
directors of Parent, and (c) the names and current compensation packages of all
independent contractors and consultants of Parent with annual compensation in
excess of $50,000. Parent is not in default with respect to any of its
obligations relating to payment of wages and has no, and will not incur any,
material obligation or liability for severance or back pay owed through or by
virtue of the Merger.

         6.17      INTELLECTUAL PROPERTY

                    6.17.1    DEFINITIONS

         For purposes of this SECTION 6.17, the following terms shall have the
following meanings:

         "PARENT INTELLECTUAL PROPERTY" means all Intellectual Property Rights
owned by, licensed to or otherwise available to Parent.

                    6.17.2    GENERAL

         The Parent owns or has sufficient rights to use, including the right to
bring actions for the infringement of, and the Parent Intellectual Property
represents, all Intellectual Property Rights necessary or required for the
conduct of the Parent's business as currently conducted and as currently
proposed to be conducted. Parent is not a party to any agreement that contains
any restriction on Parent's ability to use or practice any Parent Intellectual
Property that is material to the business of Parent as presently conducted or as
currently proposed to be conducted.

                    6.17.3    LISTING OF PARENT INTELLECTUAL PROPERTY

         SECTION 6.17.3 contains a true and complete list of all of Parent's
patents, patent applications, trademarks, trademark applications, trade names,
service marks, service mark

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applications, Internet domain names, Internet domain name applications,
copyrights, copyright registrations and applications, and any other filings and
formal actions made or taken pursuant to Federal, state, local and foreign laws
by Parent to protect its interests in Parent Intellectual Property.

                    6.17.4    INBOUND LICENSE AGREEMENTS

         SCHEDULE 16.17.4 sets forth a complete and accurate list of each
agreement (the "PARENT INBOUND LICENSE AGREEMENTS") granting to Parent any right
to use or practice any Intellectual Property Rights other than rights in
software commercially available on reasonable terms to any person for a license
fee of no more than fifty thousand dollars ($50,000) or shrink wrap licenses to
commercially available software sold at retail, indicating for each agreement
the title, the parties thereto, the term thereof and the amount of any future
royalty or license fee payable thereunder. To Parent's knowledge, all Parent
Inbound License Agreements are valid, binding and in full force and effect.
Parent has performed in all material respects its obligations under the Parent
Inbound License Agreements, Parent is not in default thereunder, and to Parent's
knowledge no event or circumstance has occurred under any Parent Inbound License
Agreement that with notice or lapse of time or both would constitute a default
or event of default on the part of Parent or give to any other party the right
to terminate or modify any of Parent's rights under such Parent Inbound License
Agreement. There is no material outstanding or, to the knowledge of Parent,
threatened dispute or disagreement with respect to any Parent Inbound License
Agreement. Parent has not received written notice that any party to any Parent
Inbound License Agreement intends to cancel, terminate or refuse to renew (if
renewable) any of Parent's rights under such Parent Inbound License Agreement or
to exercise or decline to exercise any option or right thereunder.

                    6.17.5    OUTBOUND LICENSE AGREEMENTS

         Schedule 16.17.5 sets forth a complete and accurate list of each
agreement (the "PARENT OUTBOUND LICENSE AGREEMENTS") under which Parent has
granted any right to use or practice any Intellectual Property Rights other than
nonexclusive rights in software granted in the ordinary course of Parent's
business for which the total payments to Parent did not exceed fifty thousand
dollars ($50,000) and that are not otherwise material to Parent, indicating for
each agreement the title, the parties thereto and the term thereof. To Parent's
knowledge, all Parent Outbound License Agreements are valid, binding and in full
force and effect. Parent has performed in all material respects its obligations
under the Parent Outbound License Agreements, Parent is not in default
thereunder, and to Parent's knowledge no event or circumstance has occurred
under any Parent Outbound License Agreement that with notice or lapse of time or
both would constitute a default or event of default on the part of Parent or
give to any other party the right to terminate or modify any of Parent's rights
under such Parent Outbound License Agreement. There is no material outstanding
or, to the knowledge of Parent, threatened dispute or disagreement with respect
to any Parent Outbound License Agreement. Parent has not received written notice
that any party to any Parent Outbound License Agreement intends to cancel,
terminate or refuse to renew (if renewable) such Parent Outbound License
Agreement or to exercise or decline to exercise any option or right thereunder.

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                    6.17.6    NO INFRINGEMENT BY PARENT

         Parent Intellectual Property and the conduct of Parent's business as
currently conducted and as currently proposed to be conducted do not infringe,
violate, misappropriate or otherwise misuse any third party Intellectual
Property Rights, and Parent has not received any complaint, claim or notice
alleging any such infringement, violation, misappropriation or misuse or any act
of unfair competition by Parent. To the best knowledge of Parent, no goods,
services, or other products which are sold, licensed or otherwise supplied, used
or employed by Parent infringe, violate, misappropriate or otherwise misuse any
third party Intellectual Property Rights, and Parent has not received any
complaint, claim or notice alleging any such infringement, violation,
misappropriation or misuse. Nothing has come to the attention of Parent to the
effect that the name of Parent or any business name, trade mark, service mark or
domain name used or owned by Parent is the same as, or is confusingly or
deceptively similar to, the name of any other company or business, trade name or
domain name or to the trade mark or service mark owned or used by any other
person. No litigation is now or, within the five (5) years prior to the date of
this Agreement, was pending and, to the knowledge of Parent, no notice or other
claim in writing has been received by Parent (i) alleging that Parent has
engaged in any activity or conduct that infringes, violates, misappropriates or
otherwise misuses the Intellectual Property Rights of any third party or (ii)
challenging the ownership, use, validity or enforceability of any Parent
Intellectual Property.

                    6.17.7    NO INFRINGEMENT BY THIRD PARTIES

         To Parent's knowledge, no third party is infringing, violating,
misappropriating or misusing any Parent Intellectual Property that is owned or
exclusively licensed to Parent, or committing any act of unfair competition with
respect to Parent, and no such claims have been brought against any third party
by Parent. Parent has not entered into any agreement granting any Person the
right to bring any action with respect to, or otherwise to enforce, any Parent
Intellectual Property.

                    6.17.8    PROTECTION OF INTELLECTUAL PROPERTY RIGHTS

         Parent has taken reasonable steps to protect Parent Intellectual
Property. Without limiting the generality of the foregoing, Parent enforces a
policy of requiring each employee, consultant and contractor of Parent to
execute agreements that contain provisions designed to prevent unauthorized
disclosure of Parent Intellectual Property. With respect to employees, such
agreements are substantially in Parent's standard forms and also assign to
Parent all Intellectual Property Rights relating to Parent's business that are
developed by the employee in the course of his or her activities for Parent or
are developed during working hours using the resources of Parent. With respect
to contractors and consultants, the agreements either assign all Intellectual
Property Rights developed pursuant to the agreement or license such rights on
agreed-upon terms. Except under confidentiality obligations, to the knowledge of
Parent, there has been no

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disclosure by Parent of material confidential information or trade secrets.
Parent has not disclosed any source code to any software to any person or entity
other than an employee of Parent who is under a written nondisclosure agreement;
and, except as described in Schedule 6.17.8, neither Parent nor any escrow agent
is under any contractual or other obligation to disclose any source code or
other Parent Intellectual Property. If, as disclosed on Schedule 6.17.8, Parent
has deposited any source code or other Parent Intellectual Property into source
code escrows or similar arrangements, no event has occurred that has or could
reasonably form the basis for a release of such source code or other Parent
Intellectual Property from such escrows or arrangements.

                    6.17.9    INDEMNIFICATION FOR USE OF INTELLECTUAL PROPERTY
RIGHTS

         Other than pursuant to standard agreements with customers or supppliers
of Parent entered into in the ordinary course of business (accurate and complete
copies of which have been made available to the Company by Parent), Parent has
not entered into any agreement or offered to indemnify any Person against any
charge of infringement, violation, misappropriation or misuse of Intellectual
Property Rights.

                    6.17.10   ASSIGNMENT; CHANGE OF CONTROL

         The execution, delivery and performance by Parent of this Agreement,
and the consummation of the transactions contemplated hereby, will not result in
the loss or impairment of, or give rise to any right of any third party to
terminate or alter, any of the Parent Intellectual Property or Parent's rights
under any Parent Inbound License Agreement or Parent Outbound License Agreement,
nor require any consent in respect of any Parent Intellectual Property, nor
require any disclosure or release of any source code or other Parent
Intellectual Property from any escrows or other arrangements.

         6.18     ACCOUNTS RECEIVABLE

         All accounts receivable of Parent reflected in the Parent Balance Sheet
("PARENT ACCOUNTS") represent amounts due for services performed or sales
actually made in the ordinary course of business and are carried at values
determined in accordance with GAAP. To Parent's knowledge, the bad debt reserves
and allowances reflected in the Parent Balance Sheet are adequate.

         6.19     INVENTORY

                  (a) All items in the inventory reflected in the Parent Balance
Sheet or as currently owned by Parent for use in the operation of the business
(i) have been valued consistent with the inventory valuation policy of Parent in
accordance with GAAP consistently applied and (ii) are of a quality and quantity
usable and salable in the ordinary course of business.

                  (b) Parent's inventories of finished products and evaluation
units as of July 31, 2001, the approximate quantities thereof, and their
locations are set forth in

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Schedule 6.19(b) to the Disclosure Memorandum. In addition, Schedule 6.19(b)
sets forth the value of all raw materials and work in progress as of July 31,
2001.

                  (c) Parent is not aware of any adverse condition, other than
shortages of parts, raw materials and supplies common to the industry generally,
affecting the quality or supply of raw materials, intermediates, supplies, parts
and other materials available to Parent that are necessary to manufacture,
package or label the products or are otherwise used in the business.

         6.20     CORPORATE BOOKS AND RECORDS

         Parent and Merger Sub have furnished to the Company or its
representatives for their examination true and complete copies of (a) the
Certificate of Incorporation and Bylaws of Parent and Merger Sub as currently in
effect, including all amendments thereto and (b) the minute books of Parent.
Such minutes reflect all meetings of Parent's stockholders, Board of Directors
and any committees thereof since Parent's inception, and such minutes accurately
reflect in all material respects the events of and actions taken at such
meetings.

         6.21     LICENSES, PERMITS, AUTHORIZATIONS, ETC.

         Parent has received all required Permits, except where the failure to
receive any Permit would not have a Parent Material Adverse Effect. Schedule
6.21 to the Parent Disclosure Memorandum contains a list of all Permits with
expiration dates, if any. Parent is in material compliance with the terms of all
Permits, and all Permits are valid and in full force and effect, and no
proceeding is pending or, to Parent's knowledge, threatened, the object of which
is to revoke, limit or otherwise affect any Permit. Parent has not received any
notifications of any asserted failure to obtain any Permit or any past and
unremedied failure to obtain any Permit.

         6.22     COMPLIANCE WITH LAWS

         Parent is and has been in material compliance with all federal, state,
local and foreign laws, rules, regulations, ordinances, decrees and orders
applicable to the operation of its business, to its employees, or to its
property, including, without limitation, all such laws, rules, ordinances,
decrees and orders relating to antitrust, consumer protection, currency
exchange, environmental protection, equal opportunity, prevention of domestic
and foreign corrupt practices, health, occupational safety, good laboratory
practices, pension, securities and trading-with-the-enemy matters. Parent has
not received any written notification of any asserted present or past unremedied
failure by Parent to comply with any of such laws, rules, ordinances, decrees or
orders.

         6.23     INSURANCE

         The Parent Disclosure Memorandum sets forth a true and correct list of
all insurance policies maintained by Parent at the date of this Agreement.
Parent maintains

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commercially reasonable levels of (a) insurance on its property (including
leased premises) that insures against loss or damage by fire or other casualty
and (b) insurance against liabilities, claims and risks, in each case, of a
nature and in such amounts as are normal and customary in Parent's industry for
companies of similar size and financial condition. All insurance policies of
Parent are in full force and effect, all premiums with respect thereto due as of
the date hereof have been paid, and no written notice of cancellation or
termination has been received with respect to any such policy or binder. Such
policies or binders are sufficient for compliance with all requirements of law
currently applicable to Parent and of all agreements to which Parent is a party.
Such policies will not terminate or lapse by reason of the transactions
contemplated by this Agreement.

         6.24     BROKERS OR FINDERS

         Except for Broadview International, LLC, whose fees shall be the sole
responsibility of Parent, Parent has not incurred, and will not incur, directly
or indirectly, as a result of any action taken by or on behalf of Parent, any
liability for investment banking, brokerage or finders' fees or agents'
commissions or any similar charges in connection with the Merger, this Agreement
or any transactions contemplated hereby.

         6.25     INSIDER INTERESTS

         Based solely upon a review of publicly available filings with the
Securities and Exchange Commission (the "SEC"), no 5% Parent Stockholder,
officer or director of Parent has any interest (other than as a stockholder of
Parent) (a) in any Parent Real Property, Parent Personal Property, Parent
Intellectual Property used in or directly pertaining to the business of Parent,
including, without limitation, inventions, patents, trademarks or trade names,
or (b) to Parent's knowledge, in any agreement, contract, arrangement or
obligation relating to Parent, its business or its operations. There are no
agreements, understandings or proposed transactions between Parent and any of
its officers, directors, 5% Parent Stockholders or affiliates other than with
respect to officers, employees or directors, agreements and arrangements
relating to their employment or directorship. To Parent's knowledge, except for
beneficial or record ownership of not more than one percent of the outstanding
securities of an entity whose shares are registered under the Securities
Exchange Act of 1934 (the "EXCHANGE ACT"), Parent and its officers and directors
have no interest, either directly or indirectly, in any entity, including,
without limitation, any corporation, partnership, joint venture, proprietorship,
firm, licensee, business or association (whether as an employee, officer,
director, stockholder, agent, independent contractor, security holder, creditor,
consultant or otherwise) that presently (i) provides any services, produces
and/or sells any products or product lines, or engages in any activity that is
the same, similar to or competitive with any activity or business in which
Parent is now engaged or proposes to engage; (ii) is a supplier, customer or
creditor; or (iii) has any direct or indirect interest in any material asset or
property, real or personal, tangible or intangible, of Parent or

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any property, real or personal, tangible or intangible, that is necessary for
the conduct of Parent's business.

         6.26     COMPLIANCE WITH ENVIRONMENTAL LAWS

                  6.26.1 Parent is, and at all times has been, in full
compliance with, and has not been and is not in violation of or liable under,
any Environmental, Health, and Safety Requirements except where such violation
or failure to be in compliance with such Environmental, Health, and Safety
Requirements would not have a Parent Material Adverse Effect.

                  6.26.2 Parent has no basis to expect, nor has it received any
written or oral notice, report, order, summons, inquiry or other communication
from any governmental authority or any person regarding any actual or alleged
violation of or failure to comply with Environmental, Health, and Safety
Requirements, or any liabilities or potential liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise) arising under Environmental,
Health, and Safety Requirements, including any investigatory, remedial or
corrective obligations, relating to Parent, its properties, facilities or
operations or any other properties, facilities or assets in which Parent has had
an interest, or with respect to any property at or to which Hazardous Materials
generated, transferred, or used by Parent or any other person for whose conduct
it is or may be held responsible, have been transported, stored, handled,
received or disposed.

                  6.26.3 To Parent's knowledge, there has been no release or
threat of release of any Hazardous Materials, whether by Parent or any other
person, at or from Parent's properties, facilities or operations, any other
locations where Hazardous Materials were generated, used or transferred from or
by Parent's properties, facilities or operations or any other properties,
facilities or operations in which Parent had an interest.

                  6.26.4 Parent has delivered to the Company true and complete
copies of any and all environmental assessments and reports relating to Parent's
properties, facilities or operations.

         6.27     INFORMATION SUPPLIED BY PARENT

         None of the information supplied or to be supplied by Parent for
inclusion in the S-4 or contained in any other material to be delivered to its
stockholders in connection with any written consent by or meeting of such
stockholders (collectively, "PARENT STOCKHOLDER MATERIALS"), at the date on
which the S-4 is declared effective by the Securities and Exchange Commission
(the "SEC") or on the date of such approval, contains or will contain any untrue
statement of a material fact or omits or will omit 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 are made, not materially
misleading; provided, however, that Parent makes no representations or
warranties regarding information furnished by or related to any party other than
Parent.

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6.28       FULL DISCLOSURE

         None of the representations and warranties made by Parent herein (as
modified by the Parent Disclosure Memorandum), nor any statement made in any
schedule or the Compliance Certificate and Secretary's Certificate furnished by
Parent pursuant to this Agreement, contains any untrue statement of material
fact, or omits to state any material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.

         6.29     ABSENCE OF UNDISCLOSED LIABILITIES

         The Parent and its consolidated subsidiaries have no material
liabilities or obligations of any nature (absolute, contingent or otherwise)
that are not fully reflected or reserved against in the Parent Balance Sheet and
that would be required under GAAP to be reflected or reserved in order for the
Parent Balance Sheet to fairly represent the consolidated financial condition of
the Parent as of such date, except liabilities or obligations incurred since the
date of the Parent Balance Sheet in the ordinary course of business and
consistent with past practices.

         6.30     GOVERNMENT CONTRACTS

         Parent has not, during the past five years, attempted to sell to or bid
on any contract or subcontract with or for any agency of the U. S. government or
any foreign government and had any such attempt denied as a result of any
prohibition against Parent's dealing with or for or any such agency or
government, and Parent has no knowledge of any such prohibition. Parent has not
been, nor to its knowledge is it currently being, audited or investigated by the
United States Government Accounting Office, the United States Department of
Justice, the United States Department of Defense or any of its agencies, the
Defense Contract Audit Agency or the inspector general or other authorities of
any agency of the U. S. government, or any foreign government, nor, to Parent's
knowledge, has such audit or investigation been threatened.

         6.31     SECURITIES -- PARENT COMMON STOCK

         The Parent Common Stock to be issued in the Merger pursuant to this
Agreement has been duly authorized for issuance, and such Parent Common Stock,
when issued and delivered to the Company's stockholders pursuant to this
Agreement, (a) will be validly issued, fully paid and nonassessable, free of
preemptive rights and (b) will be registered under the Securities Act of 1933,
as amended (the "Securities Act"), and the Exchange Act and registered or exempt
from registration under applicable blue sky laws.

         6.32     SECURITIES -- H SHARES AND NOTES

         The H Shares to be issued pursuant to this Agreement have been duly
authorized for issuance, and such H Shares, when issued and delivered to the
Investors pursuant to

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this Agreement, will be validly issued, fully paid and nonassessable and free of
preemptive rights. The Notes to be issued pursuant to this Agreement has been
duly authorized for issuance.

         6.33     SEC DOCUMENTS; PARENT FINANCIAL STATEMENTS

         True and complete copies of all reports or Registration Statements
filed by Parent with the SEC since December 30, 2000, are available to the
Company on the SEC's web site at www.sec.gov, and Parent has made available to
the stockholders true and complete copies of its Annual Report on Form 10-K for
the fiscal year ended December 30, 2000, all Forms 8-K and Forms 10-Q, filed
after the date of the last of the Form 10-K and its Proxy Statement relating to
its 2001 Annual Meeting of Shareholders, (collectively, the "SEC DOCUMENTS").
Parent has filed all required forms, reports and documents with the SEC since
January 1, 1998, including, in the form filed with the SEC, together with any
amendments thereto, (i) Annual Reports on Form 10-K, (ii) proxy statements
relating to the Company's meetings of stockholders (whether annual or special),
(iii) Quarterly Reports on Form 10-Q, and (iv) any required other reports or
registration statements, all of which complied when filed in all material
respects with all applicable requirements of the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder (the "SECURITIES
ACT") and the Exchange Act. As of their respective filing dates, each of the SEC
Documents complied in all material respects with the requirements of the
Securities Act and the Exchange Act, and the rules and regulations of the SEC
promulgated thereunder. Except to the extent that information contained in any
Parent SEC form, report or other document was revised or superseded by a later
filed form, report or other document filed by Parent, none of Parent's forms,
reports or other documents filed with the SEC contained any untrue statement of
a material fact or omitted 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 Parent financial
statements, included in the SEC Documents comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP consistently applied (except as may be indicated in the
notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q
of the SEC), were true and correct in all material respects as of their
respective dates and present fairly, in accordance with GAAP, the consolidated
financial condition of Parent at the dates thereof and the consolidated results
of its operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end adjustments and any other
adjustments described therein). There has been no material change in Parent
accounting policies except as described in the notes to the Parent Financial
Statements.

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                                   ARTICLE VII
                       CONDITIONS PRECEDENT TO OBLIGATIONS
                            OF PARENT AND MERGER SUB

         The obligations of Parent and Merger Sub to perform and observe the
covenants, agreements and conditions hereof to be performed and observed by them
at or before the Closing shall be subject to the satisfaction of the following
conditions, which may be expressly waived only in writing signed by Parent:

         7.1      ACCURACY OF REPRESENTATIONS AND WARRANTIES

         The representations and warranties of the Company contained herein (as
modified by the Disclosure Memorandum) (a) that are expressly qualified by a
reference to materiality shall be true in all respects as so qualified when made
and at and as of the Effective Time and (b) that are not so qualified shall have
been true and correct in all material respects when made and at and as of the
Effective Time and, except (i) for changes contemplated by this Agreement and
the other Operative Documents, and (ii) to the extent that such representations
and warranties speak as of an earlier date, shall be true and correct in all
material respects as of such date. Notwithstanding the foregoing, the condition
set forth in this Section 7.1 shall be deemed to be satisfied if such breaches
of the Company's representations and warranties (if any) do not have a Company
Material Adverse Effect or a material diminution of benefits expected to be
realized by the Parent as a result of the Merger.

         7.2      PERFORMANCE OF AGREEMENTS

         The Company shall have performed in all material respects all
obligations and agreements and complied in all material respects with all
covenants contained in this Agreement or any other Operative Document to be
performed and complied with by it at or prior to the Closing. Notwithstanding
the foregoing, the condition set forth in this Section 7.2 shall be deemed to be
satisfied if such nonperformance or noncompliance (if any) do not have a Company
Material Adverse Effect or a material diminution of benefits expected to be
realized by the Parent as a result of the Merger.

         7.3      COMPLIANCE CERTIFICATE

         Parent shall have received a certificate of the President and the Chief
Financial Officer of the Company, dated the Closing Date, in form and substance
satisfactory to Parent, certifying that the conditions to the obligations of
Parent and Merger Sub in SECTIONS 7.1, 7.2, 7.4, and 7.5 have been fulfilled.

         7.4      NO MATERIAL ADVERSE CHANGE

         Since the date of this Agreement and at the Effective Time, there shall
not have occurred any Company Material Adverse Effect.

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         7.5      APPROVALS

         All transfers of permits or licenses and all approvals of or notices to
public agencies, federal, state, local or foreign, the granting or delivery of
which is necessary for the consummation of the transactions contemplated hereby,
or for the continued operation of the Company, shall have been obtained (except
for such of the foregoing as, if not obtained, would not have a Company Material
Adverse Effect)and all waiting periods specified by law (including that required
by the Hart-Scott-Rodino Act) shall have passed.

         7.6      SECRETARY'S CERTIFICATE

         Parent shall have received a certificate of the Secretary of the
Company, in form and substance satisfactory to Parent, as to the authenticity
and effectiveness of the actions of the Board of Directors and stockholders of
the Company authorizing the Merger and the transactions contemplated by this
Agreement and the other Operative Documents. Copies of the Company's Certificate
of Incorporation, certified by the Delaware Secretary of State, and Bylaws,
certified by the Secretary of the Company, shall be attached to such
certificate.

         7.7      COMPLIANCE WITH LAWS

         The effectiveness of the Merger and the performance by Parent and the
Company of their respective obligations pursuant to this Agreement and the other
Operative Documents shall be legally permitted by all laws and regulations to
which Parent or the Company is subject.

         7.8      STOCKHOLDER APPROVAL

         This Agreement and the Merger (and, in the case of Parent, the
amendment of its Certificate of Incorporation to increase the authorized shares
of Parent Common Stock and Parent's Preferred Stock to amounts at least
sufficient to permit consummation of the transactions contemplated in this
Agreement) shall have been approved by (i) the Company's stockholders as
required by the Company's Certificate of Incorporation and applicable law and
(ii) Parent's stockholders are required by Parent's Certificate of Incorporation
and applicable law and any requirements of Parent's Trading Market.

         7.9      LEGAL PROCEEDINGS

         No order of any court or administrative agency shall be in effect
enjoins, restrains, conditions or prohibits consummation of this Agreement or
any other Operative Document, and no litigation, investigation or administrative
proceeding shall be pending that would enjoin, restrain, condition or prevent
consummation of this Agreement or any other Operative Document.

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         7.10     AFFILIATE LETTERS

         The Company shall have delivered or caused to be delivered to Parent an
Affiliate Letter substantially in the form of EXHIBIT 7.10 from all of those
Persons who were, on the date on which the requisite number of consents or votes
had been obtained to approve the Merger, "affiliates" of the Company within the
meaning of Rule 145 of the rules and regulations promulgated under the
Securities Act.

         7.11     TERMINATION OF CERTAIN AGREEMENTS

         Any and all rights of refusal, co-sale rights and registration rights
(other than pursuant to the Registration Rights Agreement) for the benefit of
the holders of Company Capital Stock, or Stock Purchase Rights, all as set forth
in the Disclosure Memorandum, shall have terminated.

         7.12     DISSENTER RIGHTS EXERCISED GREATER THAN 20% OF STOCK

         Holders of not more than 20% of the outstanding shares of Company
Common Stock shall have not voted in favor of the Merger or not consented
thereto in writing and shall have delivered before the Effective Time timely
written notice of such holders' intent to demand payment as dissenting
stockholders for such shares in accordance with the DGCL.

         7.13     CONSENTS TO MERGER

         Schedules 4.5, 4.9, 4.10.2 and 4.14 to the Disclosure Memorandum that
treat the Merger as an assignment or otherwise by their terms require consent.
The Company shall have received and shall have delivered to Parent or its
counsel written consents to the Merger from each of the parties (other than the
Company) to such agreements, leases, notes or other documents, which consents
shall be reasonably satisfactory in all respects to Parent, provided however
that the Company shall not be required to obtain any consents required from
Silicon Valley Bank; and provided, further that the Company shall not be
required to deliver any consent if the failure to obtain such consent would not
have a Company Material Adverse Effect. Without limiting the foregoing, the
Company agrees to cooperate with Parent in negotiations with Silicon Valley Bank
regarding financing arrangements of the Surviving Corporation.

         7.14     RECEIPT OF LOAN FROM COMPANY

         The Lenders shall have loaned Parent the Initial Loan Amount in
accordance with Article II hereof.

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         7.15     AMENDMENT TO CERTIFICATE

         The Parent H Certificate shall have been duly adopted by Parent by all
necessary corporate action of its Board of Directors and stockholders and shall
have been properly filed with and accepted by the Secretary of State of the
State of Delaware.

         7.16     LOCK-UP AGREEMENTS

         The Investors shall have executed and delivered a lock-up agreement in
substantially the form attached hereto as EXHIBIT 7.16.

         7.17     SEC EFFECTIVENESS

         The SEC shall have declared the Proxy /Registration Statement on Form
S-4 prepared pursuant to SECTION 10.6.2 AND 10.8 effective and no stop order
suspending the effectiveness of such Proxy /Registration Statement on Form S-4
or any part thereof shall have been issued and no proceeding for that purpose
shall have been initiated or threatened in writing by the SEC. Such
Proxy/Registration Statement on Form S-4 shall register all shares of Parent
Common Stock issuable at the Closing of the Merger pursuant to SECTION 1.8.1.

         7.18     SERIES H PURCHASE

         The Investors shall upon the Closing purchase Series H Shares in
accordance with ARTICLE III of this Agreement.

                                  ARTICLE VIII
                             CONDITIONS PRECEDENT TO
                           OBLIGATIONS OF THE COMPANY

         The obligations of the Company to perform and observe the covenants,
agreements and conditions hereof to be performed and observed by it at or before
the Closing shall be subject to the satisfaction of the following conditions,
which may be expressly waived only in writing signed by the Company.

         8.1      ACCURACY OF REPRESENTATIONS AND WARRANTIES

         The representations and warranties of Parent and Merger Sub contained
herein (a) that are expressly qualified by a reference to materiality shall be
true in all respects as so qualified when made and at and as of the Effective
Time and (b) that are not so qualified shall have been true and correct in all
material respects when made and at and as of the Effective Time and, except (i)
for changes contemplated by this Agreement and the other Operative Documents and
(ii) to the extent that such representations and warranties speak as of an
earlier date, shall be true and correct in all material respects as of such
date. Notwithstanding the foregoing, the condition set forth in this Section 8.1
shall be deemed to be satisfied if such breaches of the Parent's representations
and

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warranties (if any) do not have a Parent Material Adverse Effect or a material
diminution of benefits expected to be realized by the Company's stockholders as
a result of the Merger.

         8.2      PERFORMANCE OF AGREEMENTS

         Parent and Merger Sub shall have performed in all material respects all
obligations and agreements and complied in all material respects with all
covenants contained in this Agreement or any other Operative Document to be
performed and complied with by them at or prior to the Closing. Notwithstanding
the foregoing, the condition set forth in this Section 8.2 shall be deemed to be
satisfied if such nonperformance or noncompliance (if any) do not have a Parent
Material Adverse Effect or a material diminution of benefits expected to be
realized by the Company's stockholders as a result of the Merger.

         8.3      COMPLIANCE CERTIFICATE

         The Company shall have received a certificate of an officer of each of
Parent and the Merger Sub, dated the Closing Date, substantially in form and
substance reasonably satisfactory to the Company, certifying that the conditions
to the obligations of the Company in SECTIONS 8.1, 8.2, 8.4 and 8.5 have been
fulfilled.

         8.4      NO MATERIAL ADVERSE CHANGE

         Since the date of this Agreement and at the Effective Time, there shall
not have occurred any Parent Material Adverse Effect.

         8.5      APPROVALS AND CONSENTS

         All transfers of permits or licenses and all approvals of or notices to
public agencies, federal, state, local or foreign, the granting or delivery of
which is necessary for the consummation of the transactions contemplated hereby,
or for the continued operation of Parent, shall have been obtained(except for
such of the foregoing as, if not obtained, would not have a Company Material
Adverse Effect), and all waiting periods specified by law (including that
required by the Hart-Scott-Rodino Act) shall have passed. All other consents,
approvals and notices referred to in this Agreement required to be obtained or
delivered by Parent or Merger Sub shall have been so obtained or delivered;
provided, however, that Parent shall not be required to deliver any consent if
the failure to obtain such consent would not have a Parent Material Adverse
Effect.

         8.6      SECRETARY'S CERTIFICATE

         The Company shall have received the certificate of the Secretary of
Parent and Merger Sub, in form and substance satisfactory to Company, as to the
authenticity and effectiveness of the actions of the Board of Directors and
stockholders of Parent

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authorizing the Merger and the transactions contemplated by this Agreement and
the other Operative Documents. Copies of Parent's Certificate of Incorporation,
certified by the Delaware Secretary of State, and of Parent's Bylaws, certified
by the Secretary of the Parent, shall be attached to such certificate.

         8.7      COMPLIANCE WITH LAWS

         The effectiveness of the Merger and the performance by Parent and the
Company of the obligations hereunder and under the other Operative Documents
shall be legally permitted by all laws and regulations to which Parent or the
Company is subject.

         8.8      LEGAL PROCEEDING

         No order of any court or administrative agency shall be in effect that
enjoins, restrains, conditions or prohibits consummation of this Agreement or
any other Operative Document, and no litigation, investigation or administrative
proceeding shall be pending which would enjoin, restrain, condition or prevent
consummation of this Agreement or any other Operative Document.

         8.9      STOCKHOLDER APPROVAL

         This Agreement and the Merger (and, in the case of Parent, the
amendment of its Certificate of Incorporation) shall have been approved by (i)
the Company's stockholders as required by the Company's Certificate of
Incorporation and applicable law and (ii) Parent's stockholders as required by
Parent's Certificate of Incorporation and applicable law and any requirements of
Parent's Trading Market.

         8.10     PARENT'S TRADING MARKET LISTING

         The shares of Parent Common Stock issuable to stockholders of the
Company pursuant to this Agreement shall have been authorized for inclusion on
the Parent's Trading Market, subject to isssuance and Parent's Common Stock
shall not have been delisted from trading on Parent's Trading Market.

         8.11     S-4 EFFECTIVENESS

         The SEC shall have declared the Proxy/Registration Statement on Form
S-4 prepared pursuant to SECTION 10.8 effective and no stop order suspending the
effectiveness of such Proxy/Registration Statement on Form S-4 or any part
thereof shall have been issued and no proceeding for that purpose shall have
been initiated or threatened in writing by the SEC. Such Proxy/Registration
Statement on Form S-4 shall register all shares of Parent Common Stock issuable
at the Closing of the Merger pursuant to SECTION 1.8.1(b).

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         8.12     CONGRESS CONSENT

         The consent of Congress to the Merger and the other transactions
contemplated by this Agreement and the other Operative Documents obtained in the
Third Amendment to Loan and Security Agreement, Waiver and Consent shall not
have been revoked, amended or nullified.

                                   ARTICLE IX
                             CONDITIONS PRECEDENT TO
                          OBLIGATIONS OF THE INVESTORS

         The obligation of each Investor to perform and observe the covenants,
agreements and conditions hereof to be performed and observed by such Investor
at or before the Closing shall be subject to the satisfaction of the following
conditions, which, as to such Investor, may be expressly waived only in writing
signed by such Investor:

         9.1      CLOSING OF THE MERGER

         The Merger shall Close as contemplated by this Agreement.

         9.2      COMPLIANCE WITH LAWS

         The purchase of the H Shares by the Investors pursuant to Article III
and the performance by Parent and the Company of their respective obligations
pursuant to this Agreement and the other Operative Documents shall be legally
permitted by all laws and regulations to which Parent or the Company is subject.

         9.3      REGISTRATION RIGHTS AGREEMENT

         The Parent shall have executed and delivered the Registration Rights
Agreement.

                                    ARTICLE X
                                    COVENANTS

         Between the date of this Agreement and the Effective Time, or such
later period as set forth in these covenants, the parties covenant and agree as
set forth in this ARTICLE IX.

         10.1     CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER

         Unless Parent shall otherwise agree in writing, the business of the
Company shall be conducted in, and the Company shall not take any action except
in, the ordinary course of business and in a manner consistent with past
practice and in accordance with applicable law; and the Company shall use
commercially reasonable efforts to preserve

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intact the business organization of the Company, to keep available the services
of the current officers, employees and consultants of the Company and to
preserve the current relationships of the Company with, and the goodwill of,
customers, suppliers and other Persons with which the Company has significant
business relations. By way of amplification and not limitation, except as
otherwise contemplated by this Agreement, the Company shall not, between the
date of this Agreement and the Effective Time, directly or indirectly do any of
the following without the prior written consent of Parent, except as set forth
in Schedule 10.1(a) through (o) to the Company Disclosure Memorandum, which
consent shall not be unreasonably withheld or delayed:

                  (a) amend or otherwise change its Certificate of Incorporation
or Bylaws, except for an amendment to its Certificate of Incorporation limiting
dividends payable on Company Preferred Stock or an amendment to increase the
authorized capital of the Company solely to satisfy existing dividend
obligations;

                  (b) except for the issuance of shares of Company Capital Stock
(x) upon the exercise or conversion of currently outstanding Options or Stock
Purchase Rights, or (y) grants of Company Common Stock to existing or new
employees or options to purchase Company Common Stock to existing or new
employees with an exercise price equal to the then current fair market value
determined in good faith by the Board of Directors of the Company, issue, sell,
contract to issue or sell, pledge, dispose of, grant, encumber or authorize the
issuance, sale, pledge, disposition, grant or Encumbrance of (i) any shares of
capital stock of any class of the Company, (ii) any options, warrants,
convertible securities or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest (including, without limitation,
any phantom interest) of the Company, or (iii) except in the ordinary course of
business, any assets of the Company;

                  (c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock or other securities, property or otherwise,
with respect to any Company Capital Stock;

                  (d) reclassify, combine, split, subdivide, redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock or other
securities, except pursuant to rights of repurchase or refusal with respect to
employees or directors pursuant to currently outstanding agreements identified
on the Disclosure Schedule;

                  (e) (i) acquire (including, without limitation, by merger,
consolidation or acquisition of stock or assets) any corporation, partnership,
other business organization or division thereof or, except in the ordinary
course of business, any material amount of assets; (ii) incur or modify any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible for,
the obligations of any Person, or make any loans or advances, except in the
ordinary course of business and consistent with past practice not in excess of
$100,000 and except for equipment lease financings not to exceed $250,000 in the

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aggregate and capital expenditures made in accordance with a written budget
agreed to by Parent that references this section of this Agreement; (iii) enter
into any contract or agreement other than in the ordinary course of business,
consistent with past practice and the value of which does not exceed $100,000;
(iv) authorize any capital expenditure, except in the ordinary course of
business consistent with past practice, in excess of $50,000 or make aggregate
capital expenditures in excess of $100,000; (v) enter into any purchasing or
other similar agreement in which the cash obligation of the Company exceeds
$250,000 or which shall not terminate or be subject to termination for
convenience upon 60 days' or less notice; (vi) license any Company Intellectual
Property, except in the ordinary course of business consistent with past
practice; or (vii) enter into or amend any contract, agreement, commitment or
arrangement with respect to any matter set forth in this SECTION 10.1(e);

                  (f) except for "stay bonuses" arrangements with employees not
to exceed an aggregate of $300,000, increase the compensation payable or to
become payable to its officers, employees, agents or consultants, or grant any
severance or termination pay to, or enter into or amend any employment or
severance agreement with, any director, officer or other employee of the
Company, or establish, adopt, enter into or amend any Employee Benefit Plan,
compensation, stock option, employment, severance, benefit or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any director,
officer or employee;

                  (g) except for any change which is required by reason of U.S.
GAAP or Regulation S-X under the Exchange Act make any material change with
respect to accounting methods or policies or procedures (including, without
limitation, procedures with respect to the payment of accounts payable and
collection of accounts receivable);

                  (h) make any Tax election or settle or compromise any Tax
liability;

                  (i) pay, discharge or satisfy any material claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction in the ordinary course of
business and consistent with past practice of claims, liabilities and
obligations reflected or reserved against in the Company Balance Sheet or
incurred in the ordinary course of business and consistent with past practice
since the date of the Company Balance Sheet, or prepay any obligation having a
fixed maturity of more than 90 days from the date such obligation was issued or
incurred;

                  (j) sell, transfer or otherwise dispose of any of its
properties or assets (real, personal or mixed, tangible or intangible) with an
aggregate net book value in excess of $50,000, except the sale of inventory in
the ordinary course of business and consistent with past practice;

                  (k) except for transactions that are not material in the
aggregate, loan or advance any amount to, or sell, transfer or lease any
properties or assets (real, personal or mixed, tangible or intangible) to, or
enter into any agreement or arrangement with,

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any of the Company's officers, directors or employees or any affiliate of the
Company's officers, directors or employees, except (i) directors' fees and
compensation paid to officers and employees at rates not exceeding the rates of
compensation disclosed on Schedule 4.16 of the Disclosure Memorandum, (ii)
travel or similar expenses advanced to employees in connection with their
employment duties in the ordinary course of business, and (iii) agreements and
arrangements that are expressly provided to be entered into with such persons
under the terms of this Agreement;

                  (l) other than in the ordinary course of business, take any
action, other than the execution of this Agreement or consummation of the
transactions contemplated hereby, that would result in loss of or contract
cancellation by any current customer, supplier or licenser of the Company, which
loss or contract cancellation would result in lost annual revenues to the
Company of at least $100,000;

                  (m) other than in the ordinary course of business, forgive or
cancel any indebtedness or waive any claims or rights in each case of material
value (including, without limitation, any indebtedness owing by any stockholder,
officer, director, employee or affiliate of the Company);

                  (n) knowingly take any action that would or is reasonably
likely to result in any of the representations or warranties of the Company set
forth in this Agreement being untrue in any material respect, or in any covenant
of the Company set forth in this Agreement being breached, or in any of the
conditions to the Merger specified in Article VII not being satisfied; or

                  (o) agree, whether in writing or otherwise, to do any of the
foregoing.

         10.2     CONDUCT OF BUSINESS BY PARENT PENDING THE MERGER

         Unless the Company shall otherwise agree in writing, the business of
the Company shall be conducted in, and Parent shall not take any action except
in, the ordinary course of business and in a manner consistent with past
practice and in accordance with applicable law; and Parent shall use
commercially reasonable efforts to preserve intact the business organization of
Parent, to keep available the services of the current officers, employees and
consultants of Parent and to preserve the current relationships of Parent with,
and the goodwill of, customers, suppliers and other Persons with which Parent
has significant business relations. By way of amplification and not limitation,
except as otherwise contemplated by this Agreement, Parent shall not, between
the date of this Agreement and the Effective Time, directly or indirectly do any
of the following without the prior written consent of the Company, except as set
forth in Section 10.2 to the Parent Disclosure Memorandum, which consent shall
not be unreasonably withheld or delayed:

                  (a) amend or otherwise change its Certificate of Incorporation
or Bylaws, except for an amendment to its Certificate of Incorporation limiting
dividends payable

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on Preferred Stock of the Parent or an amendment to increase the authorized
capital of the Company solely to satisfy existing dividend obligations;

                  (b) except for the issuance of shares of the capital stock of
the Parent upon the exercise or conversion of currently outstanding Options or
Stock Purchase Rights and except for (i) grants of options to purchase in the
aggregate 150,000 shares of Parent Common Stock to existing employees and (ii)
grants to new employees with an exercise price equal to the then current fair
market value determined in good faith by the Board of Directors of Parent, in a
manner consistent with past practice issue, sell, contract to issue or sell,
pledge, dispose of, grant, encumber or authorize the issuance, sale, pledge,
disposition, grant or Encumbrance of (i) any shares of capital stock of any
class of Parent, (ii) any options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock, or any other
ownership interest (including, without limitation, any phantom interest) of
Parent, or (iii) except in the ordinary course of business or as contemplated by
Schedule 10.2(b), any assets of Parent;

                  (c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock or other securities, property or otherwise,
with respect to any capital stock of the Parent, except pursuant to the
Certificate of Incorporation as a result of the transactions contemplated
hereby;

                  (d) reclassify, combine, split, subdivide, redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock or other
securities, except pursuant to rights of repurchase or refusal with respect to
employees or directors pursuant to currently outstanding agreements identified
on the Disclosure Schedule;

                  (e) (i) acquire (including, without limitation, by merger,
consolidation or acquisition of stock or assets) any corporation, partnership,
other business organization or division thereof or, except in the ordinary
course of business, any material amount of assets; (ii) incur or modify any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible for,
the obligations of any Person, or make any loans or advances, except in the
ordinary course of business and consistent with past practice not in excess of
$50,000 and except for equipment lease financings not to exceed $250,000 in the
aggregate and capital expenditures made in accordance with a written budget
agreed to by the Company that references this section of this Agreement; (iii)
enter into any contract or agreement other than in the ordinary course of
business, consistent with past practice and the value of which does not exceed
$1,000,000; (iv) authorize any capital expenditure, except as included in the
forecast as of August 3, 2001 and operational plans as of the date of this
Agreement, which is described in Schedule 10.2(e), or in the ordinary course of
business consistent with past practice, in excess of $500,000 or make aggregate
capital expenditures in excess of $1,500,000; (v) enter into any purchasing or
other similar agreement in which the cash obligation of Parent exceeds
$2,000,000 or which shall not terminate or be subject to termination for
convenience upon 60 days' or

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less notice; (vi) license any Parent Intellectual Property, except in the
ordinary course of business consistent with past practice; or (vii) enter into
or amend any contract, agreement, commitment or arrangement with respect to any
matter set forth in this Section 10.2(e);

                  (f) increase the compensation payable or to become payable to
its officers, employees, agents or consultants, or grant any severance or
termination pay to, or enter into or amend any employment or severance agreement
with, any director, officer or other employee of Parent, or establish, adopt,
enter into or amend any Employee Benefit Plan, compensation, stock option,
employment, severance, benefit or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee;

                  (g) except for any change which is required by reason of U.S.
GAAP or Regulation S-X under the Exchange Act, make any material change with
respect to accounting methods or policies or procedures (including, without
limitation, procedures with respect to the payment of accounts payable and
collection of accounts receivable);

                  (h) make any Tax election or settle or compromise any Tax
liability;

                  (i) pay, discharge or satisfy any material claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction in the ordinary course of
business and consistent with past practice of claims, liabilities and
obligations reflected or reserved against in the Parent Balance Sheet or
incurred in the ordinary course of business and consistent with past practice
since the date of the Parent Balance Sheet, or prepay any obligation having a
fixed maturity of more than 90 days from the date such obligation was issued or
incurred;

                  (j) except for transactions that are not material in the
aggregate, loan or advance any amount to, or sell, transfer or lease any
properties or assets (real, personal or mixed, tangible or intangible) to, or
enter into any agreement or arrangement with, any of Parent's officers,
directors or employees or any affiliate of Parent's officers, directors or
employees, except (i) directors' fees and compensation paid to officers and
employees at rates not exceeding the rates of compensation disclosed on Schedule
6.19 of the Disclosure Memorandum, (ii) travel or similar expenses advanced to
employees in connection with their employment duties in the ordinary course of
business, and (iii) agreements and arrangements that are expressly provided to
be entered into with such persons under the terms of this Agreement;

                  (k) other than in the ordinary course of business, take any
action, other than the execution of this Agreement or consummation of the
transactions contemplated hereby, that would result in loss of or contract
cancellation by any current customer, supplier or licenser of Parent, which loss
or contract cancellation would result in lost annual revenues to Parent of at
least $1,000,000;

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                  (l) other than in the ordinary course of business, forgive or
cancel any indebtedness or waive any claims or rights in each case of material
value (including, without limitation, any indebtedness owing by any stockholder,
officer, director, employee or affiliate of Parent);

                  (m) knowingly take any action that would or is reasonably
likely to result in any of the representations or warranties of Parent set forth
in this Agreement being untrue in any material respect, or in any covenant of
Parent set forth in this Agreement being breached, or in any of the conditions
to the Merger specified in Article VIII and IX not being satisfied; or

                  (n) agree, whether in writing or otherwise, to do any of the
foregoing.

         10.3     ACCESS TO INFORMATION; CONFIDENTIALITY

                  10.3.1 From the date hereof to the Effective Time, the Company
shall, and shall cause the officers, directors, employees and agents of the
Company to, afford the officers, employees and agents of Parent access at all
reasonable times to the officers, employees, agents, properties, offices, plants
and other facilities, books and records of the Company and shall furnish Parent
with all financial, operating and other data and information as Parent, through
its officers, employees or agents, may reasonably request so as to conduct a
full due diligence investigation of the Company's prospects, business, assets,
contracts, rights, liabilities and obligations, including, without limitation,
its intellectual property, financial, marketing, employee, legal, regulatory and
environmental matters. From the date hereof until the Effective Time, the
Company shall provide Parent with monthly and other financial statements of the
Company as they become available internally at the Company, all of which
financial statements will be prepared in good faith and consistent with past
practice.

                  10.3.2 From the date hereof to the Effective Time, Parent
shall, and shall cause the officers, directors, employees and agents of Parent
to, afford the officers, employees and agents of the Company access at all
reasonable times to the officers, employees, agents, properties, offices, plants
and other facilities, books and records of Parent and shall furnish the Company
with all financial, operating and other data and information as the Company,
through its officers, employees or agents, may reasonably request so as to
conduct a full due diligence investigation of Parent's prospects, business,
assets, contracts, rights, liabilities and obligations, including, without
limitation, its intellectual property, financial, marketing, employee, legal,
regulatory and environmental matters. From the date hereof until the Effective
Time, Parent shall provide the Company with monthly and other financial
statements of Parent as they become available internally at Parent, all of which
financial statements will be prepared in good faith and consistent with past
practice.

                  10.3.3 The parties shall continue to comply with and to
perform their respective obligations under the Mutual Confidentiality Agreement
between Parent and the Company entered into as of June 21, 2001 (the
"Confidentiality Agreement").

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         10.4     NOTIFICATION OF CERTAIN MATTERS

         Each party shall give prompt notice to the other parties of (a) the
occurrence or nonoccurrence of any event that would be likely to cause any
representation or warranty made by such party contained in this Agreement to be
untrue or inaccurate in any material respect and (b) any material failure by
such party to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this SECTION 10.4 shall not limit or otherwise affect
the remedies available to the parties hereunder.

         10.5     FURTHER ACTION; BEST EFFORTS

         Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use its best efforts to take, or cause to be taken, all
appropriate action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated hereby, including, without limitation,
using its best efforts to (i) obtain all waivers, licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental authorities
and parties to contracts with the Company as are necessary for the consummation
of the transactions contemplated hereby, (ii) defend all lawsuits or other legal
proceedings challenging this Agreement or the consummation of the transactions
contemplated hereby, (iii) lift or rescind any injunction or restraining order
or other order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby, (iv) effect all necessary registrations and
filings, including, but not limited to, if applicable, filings under the HSR Act
and submissions of information requested by governmental authorities, (v)
provide all necessary information for the Registration Statement and (vi)
fulfill the conditions to the Merger. Without limiting the generality of the
foregoing, the parties hereto agree that they will seek to close the transaction
no later than December 31, 2001. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement or the other Operative Documents, each party to this Agreement shall
use its best efforts to promptly take all such action. After the Closing, each
party hereto, at the request of the other party, and at the sole cost and
expense of Parent, will take any further actions reasonably necessary or
desirable to carry out the purposes of this Agreement or any other Operative
Document, to vest in the Surviving Corporation full title to all properties,
assets and rights of the Company and to effect the issuance of the Parent Common
Stock and the H Shares to the stockholders of the Company pursuant to the terms
and conditions hereof.

         10.6     APPROVAL OF PARENT STOCKHOLDERS; PREPARATION OF PROXY
STATEMENT.

                  10.6.1 APPROVAL OF PARENT STOCKHOLDERS

         As soon as reasonably practicable after the public announcement of this
Agreement, Parent shall, through its Board of Directors, duly call, give notice
of, convene and hold a meeting of its stockholders (the "PARENT STOCKHOLDERS
MEETING") for

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the purpose of obtaining such approvals as are required by the applicable rules
and regulations of the Parent's Trading Market and, if applicable, Delaware law,
to consummate the transactions contemplated by this Agreement and the amendment
to increase Parent's authorized shares as described above in SECTION 7.9 (the
"PARENT STOCKHOLDERS' APPROVAL"). Subject to its rights to terminate this
Agreement pursuant to Section 11.1, Parent shall, through its Board of
Directors, include in the Proxy Statement (defined in Section 10.7.2 below) the
recommendation of the Board of Directors that the Parent stockholders grant such
approval, and shall use its reasonable best efforts to obtain such approval.

                  10.6.2 PREPARATION OF PROXY STATEMENT

         As soon as reasonably practicable after the public announcement of this
Agreement, Parent shall in consultation with the Company prepare and file with
the SEC a preliminary proxy statement (the "PROXY STATEMENT"), and all other
required materials, to be used in connection with the solicitation of proxies by
Parent for the Parent Stockholders Meeting. Parent shall use commercially
reasonable efforts to respond to any SEC comments regarding its Proxy Statement
and to have such comments cleared as promptly as practicable, and shall promptly
mail the Proxy Statement in its definitive form to its shareholders. The Company
agrees to provide as promptly as practicable to Parent such information
concerning its stockholders and its business and financial statements and
affairs as may reasonably be required or appropriate for inclusion in the
Proxy/Registration Statement (as defined below) or in any amendments or
supplements thereto, and to cause its counsel and auditors to cooperate with
Parent's counsel and auditors in the preparation of the Proxy/Registration
Statement, including responses to SEC comments, as appropriate.

         10.7     COMPANY STOCKHOLDER APPROVAL

         The Company will seek the approval at a special meeting of stockholders
or the written consent of the stockholders at the earliest practicable date
approving this Agreement, the Merger and related matters, which approval will be
recommended by the Board of Directors of the Company, provided however, that
such recommendation is subject to Section 10.13 hereof.

         10.8     PREPARATION OF S-4

         As promptly as practicable after the date hereof, Parent and the
Company will prepare and Parent will file with the SEC a Registration Statement
on Form S-4 (containing Parent's Proxy Statement (the "PROXY/REGISTRATION
STATEMENT") to register all shares of Parent Common Stock issuable at the
Closing of the Merger. Parent will use its reasonable best efforts to have the
Proxy/Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing. Parent shall make all necessary
filings with respect to the Merger and the transactions contemplated thereby
under the Securities Act and the Exchange Act and applicable state blue sky laws
and the rules and regulations thereunder. Parent shall also take any

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action required to be taken under any applicable state securities laws in
connection with the issuance of Parent Common Stock in the Merger and issuance
of the H Shares and the Notes. No filing of, or amendment or supplement to, the
Proxy/Registration Statement will be made by Parent without providing the
Company and its counsel the opportunity to review and comment thereon. The
Parent will advise the Company, promptly after it receives notice thereof, of
the time when the Proxy/Registration Statement has become effective or any
supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the Parent Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Proxy/Registration Statement or comments
thereon and responses thereto or requests by the SEC for additional information.
If at any time prior to the Effective Time any information relating to the
Company or Parent, or any of their respective affiliates, officers or directors,
should be discovered by the Company or Parent which should be set forth in an
amendment or supplement to any of the Proxy/Registration 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 which
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 the Company and Parent.

         10.9     PARENT COMMON STOCK

         Parent agrees to apply for listing on the Parent's Trading Market the
shares of Parent Common Stock comprising the Merger Consideration, and those
shares required to be reserved for issuance upon exercise of Options assumed in
connection with the Merger by filing with the Parent's Trading Market a
Notification of Listing of Additional Shares (or such other form as may be
required by the Parent's Trading Market) from and after the Closing and
otherwise in accordance with the rules and regulations of the Parent's Trading
Market.

         10.10    DISSENTING SHARES

         Prior to the Closing Date, the Company shall furnish Parent with the
name and address of each stockholder of the Company who, prior to the Closing,
has requested appraisal rights pursuant to the DGCL and the number of Dissenting
Shares owned by such stockholder.

         10.11    PUBLICITY

         No party hereto shall issue any press release or otherwise make any
statements to any third party with respect to this Agreement or the transactions
contemplated hereby, other than press releases mutually acceptable to the
parties hereto to be issued as soon as practicable after the date hereof and
after the Closing, and the filing of a Current Report on Form 8-K, the Proxy
Statement and the S-4 by Parent; provided, however,

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that communications by the Company to its investors shall not be deemed to be
statements to a third party. Notwithstanding the foregoing, Parent shall be
permitted to make any public statement without obtaining the approval of any
other party hereto if (a) Parent shall have been advised by counsel that
disclosure is required under applicable securities laws, and (b) Parent has
first used reasonable efforts to obtain the approval of the Company, which
approval shall not be unreasonably withheld or delayed; and provided, further,
that Parent shall be permitted to make additional public statements so long as
such public statements are consistent with the statements contained in the
mutually approved press releases, the Form 8-K or the S-4.

         10.12    NO SOLICITATION, ETC.

                  (a) Each of the Company and Parent (the "Agreeing Party")
agrees that it shall not, nor shall it permit any of its subsidiaries to, nor
shall it authorize any officer, director or employee or any investment banker,
attorney, accountant, agent or other advisor or representative or any of its
subsidiaries to (i) solicit, initiate or knowingly encourage the submission of
any Takeover Proposal (as hereinafter defined), (ii) enter into any agreement
with respect to a Takeover Proposal or (iii) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Takeover Proposal; PROVIDED, HOWEVER,
that to the extent required by the fiduciary obligations of the Board of
Directors of the Agreeing Party, as determined in good faith by a majority of
the members thereof (after consultation with outside legal counsel), the
Agreeing Party may, in response to unsolicited requests therefor, participate in
discussions or negotiations with, or furnish information pursuant to a
confidentiality agreement no less favorable to such party in all material
respects than the Confidentiality Agreement to, any person who indicates a
willingness to make a Superior Proposal (as hereinafter defined). For all
purposes of this Agreement, "TAKEOVER PROPOSAL" means any proposal for a merger,
consolidation, share exchange, business combination or other similar transaction
involving the Agreeing Party or any of its Significant Subsidiaries (as
hereinafter defined), or any proposal or offer to acquire, directly or
indirectly, 25% or more of any class of equity securities in, 25% or more of any
voting securities of, or 25% or more of the assets of, the Agreeing Party or any
of its Significant Subsidiaries, as the case may be. The Agreeing Party shall
cease and cause to be terminated all existing discussions or negotiations with
any persons conducted heretofore with respect to, or that could reasonably be
expected to lead to, any Takeover Proposal. As used herein, a "SIGNIFICANT
SUBSIDIARY" means any subsidiary of the Agreeing Party that would constitute a
"SIGNIFICANT SUBSIDIARY" within the meaning of Rule 1-02 of Regulation S-X of
the SEC.

                  (b) Except to the extent permitted below, neither the Board of
Directors of the Agreeing Party nor any committee thereof shall (i) withdraw or
modify, in a manner adverse to the other party (either the Company or Parent),
the approval or recommendation by the Board of Directors of the Agreeing Party
or any such committee

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of this Agreement or the Merger or (ii) approve or recommend, or propose to
approve or recommend, any Takeover Proposal. Notwithstanding the foregoing, (i)
the Board of Directors of the Agreeing Party, to the extent required by its
fiduciary obligations and subject to Section 11.2 hereof, as determined in good
faith by a majority of the members thereof (after consultation with outside
legal counsel), may approve or recommend a Superior Proposal (and, in connection
therewith, withdraw or modify its approval or recommendation of this Agreement
or the Merger) and (ii) nothing contained in this Agreement shall prevent the
Board of Directors of the Agreeing Party from complying with Rule 14d-9 and Rule
14e-2 promulgated under the Exchange Act with regard to a Takeover Proposal, if
applicable. For all purposes of this Agreement, "SUPERIOR PROPOSAL" means a bona
fide written proposal made by a third party to acquire the Agreeing Party
pursuant to a tender or exchange offer, a merger or other business combination,
a share exchange, a sale of all or substantially all its assets or otherwise on
terms which a majority of the members of the Board of Directors of the Agreeing
Party determines in good faith (taking into account the advice of any
independent financial advisors) to be more favorable to the Agreeing Party and
its stockholders than the Merger (and any revised proposal made by the other
party) and for which financing, to the extent required, is then fully committed
or reasonably determined to be likely to be available by the Board of Directors
of the Agreeing Party.

                  (c) The Agreeing Party shall notify the other party (either
the Company or Parent) promptly (but in no event later than the next business
day) after receipt by the Agreeing Party (or its advisors) of any Takeover
Proposal or any request for nonpublic information in connection with a Takeover
Proposal or for access to the properties, books or records of the Company by any
person or entity that informs the Company or its advisors that it is considering
making, or has made, a Takeover Proposal. Such notice shall indicate the
identity of the person making the Takeover Proposal, inquiry or contact, and the
material terms and conditions of the Takeover Proposal, inquiry or contact and
shall include copies of any written materials received by the Agreeing Party or
its representatives in connection with such proposal, discussion, negotiation or
inquiry.

         10.13    REGULATORY AND OTHER APPROVALS.

                  10.13.1 Subject to the terms and conditions of this Agreement
and the other Operative Documents, each of the Company and Parent will use
commercially reasonable efforts to do, or cause to be done, all things
necessary, proper or advisable to, as promptly as practicable, obtain all
consents, approvals or actions of, make all filings with and give all notices to
any court, tribunal or administrative, governmental or regulatory body, agency,
commission, division, department, public body or other authority, whether
federal, state, local or foreign (each a "GOVERNMENTAL ENTITY") or any other
public or private third parties required of the Company, Parent or the Merger
Sub to consummate the Merger and provide such other information and
communications to such Governmental Entities or other public or private third
parties as the other party hereto or such Governmental Entities or other public
or private third parties may

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reasonably request. In addition to and not in limitation of the foregoing, each
of the parties will (x) take promptly all actions necessary to make the filings
required of Parent and the Company or their affiliates under the
Hart-Scott-Rodino Act and under comparable merger notification or competition
laws of non-U.S. jurisdictions, (y) comply at the earliest practicable date with
any request for additional information received by such party or its affiliates
from the Federal Trade Commission (the "FTC") or the Antitrust Division of the
Department of Justice (the "Antitrust Division") pursuant to the
Hart-Scott-Rodino Act or the authorities of such other jurisdictions, and (z)
cooperate with the other party in connection with such party's filings under the
Hart-Scott-Rodino Act and in connection with resolving any investigation or
other inquiry concerning the Merger or the other matters contemplated by this
Agreement commenced by the FTC, the Antitrust Division, state attorneys general
or any other Governmental Entity.

                  10.13.2 In furtherance and not in limitation of the covenants
in Section 10.5, Parent and the Company shall each use all reasonable efforts to
resolve such objections, if any, as may be asserted with respect to any
transactions contemplated by this Agreement by any Governmental Entity. If any
administrative, judicial or legislative action or proceeding is threatened to be
instituted by any such authority challenging any of the transactions
contemplated by this Agreement, Parent and the Company will each cooperate to
contest and resist the institution of any such action or proceeding.

         10.14    COMPANY EMPLOYEES

                  10.14.1 From and after the Effective Time, Parent and the
Surviving Corporation will honor and assume (and Parent guarantees the
obligations of Surviving Corporation hereunder), in accordance with their terms,
all indemnification obligations of the Company under the Company's Certificate
of Incorporation and Bylaws, each as in effect as of the date of this Agreement
to any officer, director, agent or employee of the Company for acts and
omissions prior to the Closing. Parent shall cause all employees of the
Surviving Corporation immediately after the Effective Time to be eligible to
participate in the "employee welfare benefit plans" and "employee pension plans"
(within the meaning of Section 3(1) and Section 3(2) of ERISA, respectively) of
Parent in which similarly situated employees of Parent are generally eligible to
participate (or, alternatively, may choose in their discretion to continue
certain or all of the benefit plans currently provided by Company to its
employees or otherwise to provide benefits comparable to some or all of such
plans); provided that nothing herein shall prevent Merger Sub or Parent from
terminating the employment of any such employee or modifying or terminating such
plans from time to time. For purposes of any length of service requirements,
waiting periods, vesting periods or differential benefits based on length of
service in any such plan for which an employee may be eligible after the
Effective Time, Merger Sub or Parent shall ensure that service by such employee
with the Company shall be deemed to have been service with Merger Sub or Parent,
as applicable, including with respect to existing options held by employees of
the Company: provided that options granted by Parent to employees of the
Surviving Corporation

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immediately following the Effective Time to effect the intent of this
paragraph shall be vested no more than to the same extent that they would
have been vested had they been granted pursuant to the customary terms of
Parent's stock option grants (which currently vest in equal monthly
increments over a four year period) and had such employee been hired upon the
later of (i) two years prior to such date of grant or (ii) the date that such
employee commenced full-time employment at the Company as though such grant
had been made on such deemed date of hire, and in no event shall such options
be vested on the date of grant by Parent as to more than 50% of the shares
subject to such option and the Company and Parent agree to cooperate
reasonably to implement this provision on a case by case basis.

                  10.14.2 Parent confirms that it is Parent's intention that,
subject to applicable law, Parent and the Surviving Corporation will provide
salary and benefits to employees of the Company who continue to be employed by
the Surviving Corporation after the Effective Time, including participation in
the stock option and other compensatory plans of Parent, which will, in the
aggregate, be substantially equivalent, to those currently provided by Parent
to its similarly situated employees. Notwithstanding the foregoing, nothing in
this Agreement shall otherwise limit the Surviving Corporation's right to
amend, modify or terminate any employee benefit plan or arrangement. Parent
agrees that any person employed by the Company at the Effective Time whose
employment is terminated by the Surviving Corporation on or prior to the first
anniversary of the Effective Time shall be provided severance benefits pursuant
to any written severance agreement, substantially as described on the Company's
Disclosure Memorandum or substantially similar to that provided to similarly
situated employees of Parent at the time of termination.

         10.15    RIGHTS AGREEMENT.

         Parent will not take any action to revoke, amend or nullify the
amendment to the Rights Agreement referred to in Section 6.5(b), (the "Rights
Amendment"); provided, however that Parent may amend the Rights Amendment (i)
solely for the purpose of including in the definition of "Acquiring Person"
Meritage and its Affiliates and Associates in the event that they
beneficially hold 20% or more of the Common Shares then outstanding and (ii)
with the prior written consent of Meritage.

                                   ARTICLE XI
                        TERMINATION, AMENDMENT AND WAIVER

         11.1     TERMINATION

         This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time (notwithstanding any approval of this Agreement
by the stockholders of the Company):

                  (a) by mutual written consent of the Company and Parent;

                  (b) by either the Company or Parent, if the Merger has not
been consummated by December 31, 2001; provided, however, that (x) the right to
terminate this Agreement under this subsection (b) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Effective Time to occur on or
before such date and (y) such date shall be extended by one day for each day
following 14 days after the execution of this Agreement that the Company has not
provided to Parent the information referred to in

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the last sentence of Section 10.6.2 in the form for inclusion in the
Proxy/Registration Statement;

                  (c) by either the Company or Parent, if there shall be any law
or regulation that makes consummation of the Merger illegal or if any judgment,
injunction, order or decree enjoining Parent, Merger Sub or the Company from
consummating the Merger is entered and such judgment, injunction, order or
decree shall become final, binding and nonappealable; provided, however, that
the party seeking to terminate this Agreement pursuant to this subsection (c)
shall have used all reasonable efforts to remove such judgment, injunction,
order or decree;

                  (d) by the Company, in the event of a breach by Parent of any
representation, warranty or agreement contained herein that has not been cured,
or as to which best efforts are not being employed to cure within 30 days after
notice thereof is given to Parent and such breach has resulted in a Parent
Material Adverse Effect or if the conditions to the Company's obligations in
Article VIII become incapable of satisfaction through no fault of the Company;

                  (e) by Parent, in the event of a breach by the Company of any
representation, warranty or agreement contained herein that has not been cured
or as to which best efforts are not being employed to cure within 30 days after
notice thereof is given to the Company and such breach has resulted in a Company
Material Adverse Effect or if the conditions to Parent's obligations in Article
VII become incapable of satisfaction through no fault of Parent;

                  (f) by Parent or the Company in connection with entering into
a definitive agreement permitted by Section 10.12; provided that the terminating
party has complied with all provisions thereof, including the notice provisions
therein and the payment of amounts pursuant to Section 11.2;

                  (g) by Parent if the votes required by the holders of the
Company Capital Stock in order to approve the Merger and the transactions
contemplated by this Agreement and the other Operative Documents are not
received on or before the Closing Date by written consent or at a duly held
meeting of the holders of the Company Capital Stock after such a meeting has
been held; or

                  (h) by the Company if the votes required by the holders of the
Parent Capital Stock in order to approve the Merger and the transactions
contemplated by this Agreement and the other Operative Documents are not
received on or before the Closing Date at a duly held meeting of the holders of
the Parent Capital Stock after such a meeting has been held.

         11.2     EFFECT OF TERMINATION.

                  11.2.1 In the event of termination of this Agreement by either
the Company or Parent as provided in Section 11.1, written notice thereof shall
be given as

                                       87
<Page>

promptly as possible to the other party hereto, and this Agreement shall
forthwith become null and void and there shall be no liability or obligation on
the part of either the Company or Parent (or any of their respective
Representatives or affiliates), except (i) that the provisions of Sections 10.3
and 10.5, this Section 11.2 and Article XII will continue to apply following any
such termination, (ii) that nothing contained herein shall relieve any party
hereto from liability for breach of its representations, warranties, covenants
or agreements contained in this Agreement, and (iii) as provided in Section
11.2.2 below.

                  11.2.2 If either party terminates this Agreement pursuant to
Section 11.1(f), the terminating party shall pay to the non-terminating party by
wire transfer in immediately available funds to an account specified in writing
by the non-terminating party immediately upon notice of such termination, a
termination fee of One Million US Dollars (US$1,000,000) and, if the Parent is
the non-terminating party, the Parent shall immediately repay the Notes in full
in accordance with their terms.

                  11.2.3 The parties acknowledge that the agreements in Section
11.2.2 are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, they each would not enter into this
Agreement; accordingly, if either party fails to pay in a timely manner the
amounts due pursuant to Section 11.2.2 and, in order to obtain such payment, the
non-terminating party makes a claim that results in a judgment against the other
party for the amounts set forth in Section 11.2.2, the terminating party shall
pay to the non- terminating party its reasonable costs and expenses (including
reasonable attorneys' fees and expenses) in connection with such suit, together
with interest on the amounts set forth in Section 11.2.2 from the date of demand
to the date of payment at the rate published as the "prime rate" daily in THE
WALL STREET JOURNAL in effect on the date such payment was required to be made.

                  11.2.4 If any provision of this Section 11.2 shall be void
under applicable law, or if the performance by any party of its obligations
hereunder is prohibited by applicable law, but such provision or action would be
permissible if some part or all of Section 11.2 were deleted, then such
modification as may be necessary to make such provision or action permissible
shall be deemed to have taken place.

         11.3     AMENDMENT

         This Agreement may be amended by the parties hereto at any time before
or after approval of Parent's or Company's stockholders; after such approval,
however, no amendment will be made that by applicable law requires the further
approval of Parent's or Company's stockholders without obtaining such further
approval.

         11.4     WAIVER

         At any time prior to the Effective Time, any party hereto may (a)
extend the time for the performance of any obligation or other act of any other
party hereto, (b) waive any inaccuracy in the representations and warranties
contained herein or in any

                                       88
<Page>

document delivered pursuant hereto, or (c) waive compliance with any agreement
or condition contained herein. Any such extension or waiver shall be valid only
if set forth in an instrument in writing signed by the party or parties to be
bound thereby.

                                  ARTICLE XII
                                     GENERAL

         12.1     NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES

                  None of the representations and warranties in this Agreement
or in any instrument or document delivered pursuant to this Agreement shall
survive the Effective Time. THIS SECTION 12.1 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after the
Effective Time.

         12.2     EXPENSES

         Regardless of whether the transactions contemplated by this Agreement
are consummated, each party shall pay its own fees and expenses incident to the
negotiation, preparation and execution of this Agreement and the other Operative
Documents (including investment banking, legal and accounting fees and
expenses),

         12.3     NOTICES

         Any notice, request or demand desired or required to be given hereunder
shall be in writing given by personal delivery, confirmed facsimile transmission
or overnight courier service, in each case addressed as respectively set forth
below or to such other address as any party shall have previously designated by
such a notice. The effective date of any notice, request or demand shall be the
date of personal delivery, the date on which successful facsimile transmission
is confirmed or the date actually delivered by a reputable overnight courier
service, as the case may be, in each case properly addressed as provided herein
and with all charges prepaid.

         To Parent or Merger Sub:

                  Exabyte Corporation
                  1685 38th Street
                  Boulder, Colorado 80301
                  Fax: (303) 417-7900
                  Attention: President

         with a copy to:

                  Holland & Hart LLP
                  1050 Walnut Street
                  Suite 500
                  Boulder, CO  80302

                                       89
<Page>

                  Fax: (303) 473-2720
                  Attention: Nina Lopez

         To the Company:

                  Ecrix Corporation
                  5525 Central Avenue
                  Boulder, CO  80301
                  Fax:
                  Attention:

         with a copy to:

                  Bartlit Beck Herman Palenchar & Scott
                  1899 Wynkoop Street, Suite 800
                  Denver, CO 80202
                  Fax: (303) 592-3140
                  Attention: James L. Palenchar

         12.4     SEVERABILITY

         If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby may be consummated as originally contemplated
to the fullest extent possible.

         12.5     ENTIRE AGREEMENT

         This Agreement, the Confidentiality Agreement and the other Operative
Documents constitute the entire agreement among the parties with respect to the
subject matter hereof and thereof and supersede all prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof and thereof.

         12.6     ASSIGNMENT

         This Agreement shall not be assigned by operation of law or otherwise;
provided, however, that Merger Sub's rights and obligations may be assigned to
and assumed by Parent or any other corporation wholly owned (directly or through
intermediate wholly owned subsidiaries) by Parent, provided that in such event
Parent shall unconditionally guarantee the full payment and performance of all
obligations of such assignee.

                                       90
<Page>

         12.7     PARTIES IN INTEREST

         This Agreement shall be binding on and inure solely to the benefit of
the parties hereto and their respective successors, heirs, legal representatives
and permitted assigns.

         12.8     GOVERNING LAW; JURISDICTION; VENUE

         This Agreement and the transactions contemplated hereby, including the
Merger, shall be governed by and construed in accordance with the laws of the
State of Delaware.

         Any request for relief related to any dispute that arises out of or is
related to this Agreement or any of the transactions contemplated by this
Agreement or the other Operative Documents, shall be brought in any federal
court located in the State of Colorado or any federal or state court located in
the State of Delaware. Each of the parties hereto (a) consents to submit itself
to the personal jurisdiction of any such court located in the State of Colorado
or the State of Delaware, as the case may be, in the event any dispute arises
out of or relates to this Agreement or any of the transactions contemplated by
this Agreement, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
including, without limitation, a motion to dismiss on the grounds of forum non
conveniens, (c) agrees that it will not bring any action arising out of or
relating to this Agreement or any of the transactions contemplated by this
Agreement in any court other than a federal court sitting in the State of
Delaware or the State of Colorado or a Delaware state court, (d) agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
specified by law, and (e) waives any right to a trial by jury with respect to
any claim, counterclaim or action arising out of or in connection with this
Agreement or the transactions contemplated hereby.

         12.9     NO THIRD-PARTY BENEFICIARY

         The terms and provisions of this Agreement are intended solely for the
benefit of each party hereto and their respective successors or permitted
assigns, and, except as provided in Sections 10.14.1 and 10.14.2, it is not the
intention of the parties to confer third-party beneficiary rights under any
other person.

         12.10    COUNTERPARTS

         This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed and delivered shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement. To expedite the process of entering into this Agreement,
the parties acknowledge that Transmitted Copies of this Agreement will be
equivalent to original documents until

                                       91
<Page>

such time as original documents are completely executed and delivered.
"TRANSMITTED COPIES" will mean copies that are reproduced or transmitted via
photocopy, facsimile or other process of complete and accurate reproduction
and transmission.

                [Remainder of this page intentionally left blank]

                                       92
<Page>

         IN WITNESS WHEREOF, the parties hereto have entered into and signed
this Agreement and Plan of Merger as of the date and year first above written.

                               EXABYTE CORPORATION

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

<Page>

                               BRONCO ACQUISITION, INC.

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

<Page>

                               ECRIX CORPORATION

                               By
                                  ----------------------------------------------
                               Name: Juan A. Rodriguez
                               Title: Chairman and CEO

<Page>

                               INVESTORS:

                               MERITAGE PRIVATE EQUITY FUND, L.P.
                               By: Meritage Investment Partners, LLC
                               Its: General Partner

                               By:
                                   ---------------------------------------------
                               Name: G. Jackson Tankersley, Jr.
                               Title: Member

<Page>
                               MERITAGE PRIVATE EQUITY PARALLEL FUND, L.P.
                               By: Meritage Investment Partners, LLC
                               Its: General Partner

                               By:
                                   ---------------------------------------------
                                    G. Jackson Tankersley, Jr.
                                    Member

<Page>

                               MERITAGE ENTREPRENEURS FUND, L.P.
                               By:    Meritage Investment Partners, LLC
                               Its:   General Partner

                                      By:
                                          --------------------------------------
                                           G. Jackson Tankersley, Jr.
                                           Member

<Page>

                                      MILLENNIAL HOLDINGS LLC

                                      By:
                                          --------------------------------------
                                           G. Jackson Tankersley, Jr.
                                           Managing Member

<Page>

                                      THE MILLENNIAL FUND

                                      By:
                                          --------------------------------------
                                      Name: G. Jackson Tankersley, Jr.

<Page>

                                      TANKERSLEY FAMILY LIMITED PARTNERSHIP

                                      By:
                                          --------------------------------------
                                           G. Jackson Tankersley, Jr.
                                           General Partner

<Page>

                               CENTENNIAL FUND V, L.P.
                               By:    Centennial Holdings V, L.P.
                                      its General Partner

                                      By:
                                          --------------------------------------
                                           Jeffrey H. Schutz, General Partner

<Page>

                               CENTENNIAL ENTREPRENEURS FUND V, L.P.
                               By:    Centennial Holdings V, L.P.
                                      its General Partner

                                      By:
                                          --------------------------------------
                                           Jeffrey H. Schutz, General Partner

<Page>

                               CENTENNIAL FUND VI, L.P.
                               By:    Centennial Holdings VI, LLC
                                      its General Partner

                                      By:
                                          --------------------------------------
                                           Jeffrey H. Schutz, Managing Principal

<Page>

                               CENTENNIAL ENTREPRENEURS FUND VI, L.P.
                               By:    Centennial Holdings VI, LLC
                                      its General Partner

                                      By:
                                          --------------------------------------
                                           Jeffrey H. Schutz, Managing Principal

<Page>

                           CENTENNIAL HOLDINGS I, LLC

                           By:
                               -------------------------------------------------
                                  Jeffrey H. Schutz, Managing Director

<Page>

                            BIG PARTNERS V.L.P.

                            By
                                  ----------------------------------------------
                            Name: Allen A. Builder
                            Title: General Partner

<Page>

                             HEXAGON INVESTMENTS LLC
                             By:  Hexagon Investments, Inc., its Manager

                                    By:
                                        ----------------------------------------
                                          Brian Fleischmann, VP

<Page>

                             GRANDHAVEN LLC
                             By:  Hexagon Investments, Inc., its Manager

                                    By:
                                        ----------------------------------------
                                          Brian Fleischmann, VP

<Page>

                             LEGACY ENTERPRISES LLC
                             By:  Hexagon Investments, Inc., its Manager

                                    By:
                                        ----------------------------------------
                                          Brian Fleischmann, VP

<Page>

                             LABYRINTH ENTERPRISES LLC
                             By:  Hexagon Investments, Inc., its Manager

                                    By:
                                        ----------------------------------------
                                          Brian Fleischmann, VP

<Page>

                             JAMES MONROE III, GRANTOR TRUST

                             By
                                    --------------------------------------------
                                     James Monroe III, Trustee

<Page>

                             VALLEY VENTURES II, L.P.
                             By: Valley Ventures II, Management LLC
                                 General Partner
                             By
                                    --------------------------------------------
                             Name: John M. Holliman III
                             Title: Managing Member

<Page>

                             ----------------------------------
                             CURTIS R. JENSEN

<Page>

                             ----------------------------------
                             WILLIAM J. ALMON, SR.

<Page>

                             ----------------------------------
                             MARK ROSSI

<Page>

                             LENDERS:

                             ----------------------------------
                             WILLIAM J. ALMON, SR.

<Page>

                             MERITAGE PRIVATE EQUITY FUND, L.P.
                             By:  Meritage Investment Partners, LLC,
                             Its: General Partner

                                   By:
                                       -----------------------------------------
                                         John Garrett, Principal

<Page>

                             CENTENNIAL FUND V, L.P.
                             By: Centennial Holdings V, L.P.
                             Its: General Partner
                             By
                                    --------------------------------------------
                             Name: Jeffrey H. Schutz
                             Title: General Partner

<Page>

                             CENTENNIAL ENTREPRENEURS FUND V, L.P.
                             By:    Centennial Holdings V, L.P.
                                    its General Partner

                                    By:
                                        ----------------------------------------
                                         Jeffrey H. Schutz, General Partner

<Page>

                             CENTENNIAL FUND VI, L.P.
                             By:    Centennial Holdings VI, LLC
                                    its General Partner

                                    By:
                                        ----------------------------------------
                                         Jeffrey H. Schutz, Managing Principal

<Page>

                             CENTENNIAL ENTREPRENEURS FUND VI, L.P.
                             By:    Centennial Holdings VI, LLC
                                    its General Partner

                                    By:
                                        ----------------------------------------
                                         Jeffrey H. Schutz, Managing Principal

<Page>

                             CENTENNIAL HOLDINGS I, LLC

                             By:
                                 -----------------------------------------------
                                    Jeffrey H. Schutz, Managing Director<Page>

                                                                     EXHIBIT 4.1

                                  CONAGRA, INC.
                                       and
            CHASEMELLON SHAREHOLDER SERVICES, L.L.C., as Rights Agent

                                RIGHTS AGREEMENT

                            Dated as of July 12, 1996

                                      27

<Page>

TABLE OF CONTENTS
<Table>
<Caption>

                                                                                                 Page
<S>                                                                                              <C>
Section 1.        Certain Definitions .............................................................. 1
Section 2.        Appointment of Rights Agent ...................................................... 5
Section 3.        Issue of Right Certificates ...................................................... 5
Section 4.        Form of Right Certificates ....................................................... 7
Section 5.        Countersignature and Registration ................................................ 7
Section 6.        Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
                  Destroyed, Lost or Stolen Right Certificates ..................................... 8
Section 7.        Exercise of Rights, Purchase Price; Expiration Date of Rights .................... 9
Section 8.        Cancellation and Destruction of Right Certificates ...............................10
Section 9.        Availability of Shares of Preferred Stock ........................................10
Section 10.       Preferred Stock Record Date  .....................................................11
Section 11.       Adjustment of Purchase Price, Number of Shares and Number of Rights ..............12
Section 12.       Certificate of Adjusted Purchase Price or Number of Shares .......................19
Section 13.       Consolidation, Merger or Sale or Transfer of Assets or Earnings Power ............20
Section 14.       Fractional Rights and Fractional Shares ..........................................23
Section 15.       Rights of Action .................................................................24
Section 16.       Agreement of Right Holders .......................................................24
Section 17.       Right Certificate Holder Not Deemed a Stockholder ................................25
Section 18.       Concerning the Rights Agent ......................................................25
Section 19.       Merger or Consolidation or Change of Name of Rights Agent ........................26
Section 20.       Duties of Rights Agent ...........................................................26
Section 21.       Change of Rights Agent ...........................................................28
Section 22.       Issuance of New Right Certificates ...............................................29
Section 23.       Redemption .......................................................................29
Section 24.       Exchange .........................................................................30
Section 25.       Notice of Certain Events .........................................................31
Section 26.       Notices ..........................................................................32
Section 27.       Supplements and Amendments .......................................................33
Section 28.       Successors .......................................................................33
Section 29.       Benefits of this Agreement .......................................................33
Section 30.       Determinations and Actions by the Board of Directors .............................33
Section 31.       Severability .....................................................................34
Section 32.       Governing Law ....................................................................34
Section 33.       Counterparts .....................................................................34
Section 34.       Descriptive Headings .............................................................34
</Table>

                                       28

<Page>

RIGHTS AGREEMENT

         Rights Agreement, dated as of July 12, 1996 ("Agreement"), between
ConAgra, Inc., a Delaware corporation (the "Company"), and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent (the "Rights Agent").

         The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each share of
Common Stock (as hereinafter defined) of the Company outstanding as of the Close
of Business (as defined below) on July 24, 1996 (the "Record Date"), each Right
representing the right to purchase one one-thousandth (subject to adjustment) of
a share of Preferred Stock (as hereinafter defined), upon the terms and subject
to the conditions herein set forth, and has further authorized and directed the
issuance of one Right (subject to adjustment as provided herein) with respect to
each share of Common Stock that shall become outstanding between the Record Date
and the earlier of the Distribution Date and the Expiration Date (as such terms
are hereinafter defined); provided, however, that Rights may be issued with
respect to shares of Common Stock that shall become outstanding after the
Distribution Date and prior to the Expiration Date in accordance with Section
22.

         Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:

         Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meaning indicated:

         (a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which shall be the Beneficial Owner (as such term is
hereinafter defined) of 15% or more of the shares of Common Stock then
outstanding, but shall not include an Exempt Person (as such term is hereinafter
defined); provided, however, that (i) if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an "Acquiring
Person" became such inadvertently (including, without limitation, because (A)
such Person was unaware that it beneficially owned a percentage of Common Stock
that would otherwise cause such Person to be an "Acquiring Person" or (B) such
Person was aware of the extent of its Beneficial Ownership of Common Stock but
had no actual knowledge of the consequences of such Beneficial Ownership under
this Agreement) and without any intention of changing or influencing control of
the Company, and if such Person as promptly as practicable divested or divests
itself of Beneficial Ownership of a sufficient number of shares of Common Stock
so that such Person would no longer be an "Acquiring Person," then such Person
shall not be deemed to be or to have become an "Acquiring Person" for any
purposes of this Agreement; (ii) if, as of the date hereof, any Person is the
Beneficial Owner of 15% or more but less than 20% of the shares of Common Stock
outstanding, such Person shall not be or become an "Acquiring Person" unless and
until such time as such Person shall become the Beneficial Owner of additional
shares of Common Stock (other than pursuant to a dividend or distribution paid
or made by the Company on the outstanding Common Stock in shares of Common Stock
or pursuant to a split or subdivision of the outstanding Common Stock), unless,
upon becoming the Beneficial Owner of such additional shares of Common Stock,
such Person is not then the Beneficial Owner of 15% or more of the shares of
Common Stock then outstanding; and (iii) no Person shall become an "Acquiring
Person" as the result of an acquisition of shares of Common Stock by the Company
which, by reducing the number of shares outstanding, increases the proportionate
number of shares of Common Stock beneficially owned by such Person to 15% or
more of the shares of Common

                                      29

<Page>

Stock then outstanding, provided, however, that if a Person shall become the
Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding by reason of such share acquisitions by the Company and shall
thereafter become the Beneficial Owner of any additional shares of Common
Stock (other than pursuant to a dividend or distribution paid or made by the
Company on the outstanding Common Stock in shares of Common Stock or pursuant
to a split or subdivision of the outstanding Common Stock), then such Person
shall be deemed to be an "Acquiring Person" unless upon becoming the
Beneficial Owner of such additional shares of Common Stock such Person does
not beneficially own 15% or more of the shares of Common Stock then
outstanding. For all purposes of this Agreement, any calculation of the
number of shares of Common Stock outstanding at any particular time,
including for purposes of determining the particular percentage of such
outstanding shares of Common Stock of which any Person is the Beneficial
Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in effect on the
date hereof.

         (b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act, as in effect on the date hereof.

         (c) A Person shall be deemed the "Beneficial Owner" of, shall be deemed
to have "Beneficial Ownership" of and shall be deemed to "beneficially own" any
securities:

            (i) which such Person or any of such Person's Affiliates or
Associates is deemed to beneficially own, directly or indirectly, within the
meaning of Rule l3d-3 of the General Rules and Regulations under the Exchange
Act as in effect on the date hereof;

            (ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), or upon the exercise of conversion rights, exchange
rights, rights, warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to beneficially own, (x)
securities tendered pursuant to a tender or exchange offer made by or on behalf
of such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase, (y) securities which such Person
has a right to acquire upon the exercise of Rights at any time prior to the time
that any Person becomes an Acquiring Person or (z) securities issuable upon the
exercise of Rights from and after the time that any Person becomes an Acquiring
Person if such Rights were acquired by such Person or any of such Person's
Affiliates or Associates prior to the Distribution Date or pursuant to Section
3(a) or Section 22 hereof ("Original Rights") or pursuant to Section 11(i) or
Section 11(n) with respect to an adjustment to Original Rights; or (B) the right
to vote pursuant to any agreement, arrangement or understanding; provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security by reason of such agreement, arrangement or
understanding if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations promulgated under
the Exchange Act and (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report); or

            (iii)which are beneficially owned, directly or indirectly, by any
other Person and with

                                       30

<Page>

respect to which such Person or any of such Person's Affiliates or Associates
has any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with respect
to a bona fide public offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by the proviso to Section
1(c)(ii)(B)) or disposing of such securities of the Company; provided, however,
that no Person who is an officer, director or employee of an Exempt Person shall
be deemed, solely by reason of such Person's status or authority as such, to be
the "Beneficial Owner" of, to have "Beneficial Ownership" of or to "beneficially
own" any securities that are "beneficially owned" (as defined in this Section
l(c)), including, without limitation, in a fiduciary capacity, by an Exempt
Person or by any other such officer, director or employee of an Exempt Person.

         (d) "Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which banking institutions in the State of Nebraska or the city in
which the principal office of the Rights Agent is located are authorized or
obligated by law or executive order to close.

         (e) "Close of Business" on any given date shall mean 5:00 P.M., Omaha,
Nebraska time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Omaha, Nebraska time, on the next
succeeding Business Day.

         (f) "Common Stock" when used with reference to the Company shall mean
the Common Stock, presently par value $5.00 per share, of the Company. "Common
Stock" when used with reference to any Person other than the Company shall mean
the common stock (or, in the case of an unincorporated entity, the equivalent
equity interest) with the greatest voting power of such other Person or, if such
other Person is a subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person.

         (g) "Common Stock Equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereof.

         (h) "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.

         (i) "Distribution Date" shall have the meaning set forth in Section 3
hereof.

         (j) "Equivalent Preferred Shares" shall have the meaning set forth in
Section 11(b) hereof.

         (k) "Exempt Person" shall mean the Company or any Subsidiary (as such
term is hereinafter defined) of the Company, in each case including, without
limitation, in its fiduciary capacity, or any employee benefit plan of the
Company or of any Subsidiary of the Company, or any entity or trustee holding
Common Stock for or pursuant to the terms of any such plan or for the purpose of
funding any such plan or funding other employee benefits for employees of the
Company or of any Subsidiary of the Company.

         (l) "Exchange Ratio" shall have the meaning set forth in Section 24
hereof.

         (m) "Expiration Date" shall have the meaning set forth in Section 7
hereof.

         (n) "Flip-In Event" shall have the meaning set forth in Section
11(a)(ii) hereof.

                                       31

<Page>

         (o) "Final Expiration Date" shall have the meaning set forth in Section
7 hereof.

         (p) "NASDAQ" shall mean The NASDAQ Stock Market.

         (q) "New York Stock Exchange" shall mean the New York Stock Exchange,
Inc.

         (r) "Person" shall mean any individual, firm, corporation, partnership,
limited liability company, trust or other entity, and shall include any
successor (by merger or otherwise) to such entity.

         (s) "Preferred Stock" shall mean the Series A Junior Participating
Class E Preferred Stock, without par value, of the Company having the rights and
preferences set forth in the Form of Certificate of Designation attached to this
Agreement as Exhibit A.

         (t) "Principal Party" shall have the meaning set forth in Section 13(b)
hereof.

         (u) "Redemption Date" shall have the meaning set forth in Section 7
hereof.

         (v) "Redemption Price" shall have the meaning set forth in Section 23
hereof.

         (w) "Right Certificate" shall have the meaning set forth in Section 3
hereof.

         (x) "Securities Act" shall mean the Securities Act of 1933, as amended.

         (y) "Section 11(a)(ii) Trigger Date" shall have the meaning set forth
in Section 11(a)(iii) hereof.

         (z) "Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.

         (aa) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become such, or such
earlier date as a majority of the Board of Directors shall become aware of the
existence of an Acquiring Person.

         (bb) "Subsidiary" of any Person shall mean any corporation or other
entity of which securities or other ownership interests having ordinary voting
power sufficient to elect a majority of the board of directors or other persons
performing similar functions are beneficially owned, directly or indirectly, by
such Person, and any corporation or other entity that is otherwise controlled by
such Person.

         (cc) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.

         (dd) "Summary of Rights" shall have the meaning set forth in Section 3
hereof.

         (ee) "Trading Day" shall have the meaning set forth in Section 11(d)(i)
hereof.

         Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights

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<Page>

Agent to act as agent for the Company and the holders of the Rights (who, in
accordance with Section 3 hereof, shall prior to the Distribution Date be the
holders of Common Stock) in accordance with the terms and conditions hereof,
and the Rights Agent hereby accepts such appointment. The Company may from
time to time appoint such co-Rights Agents as it may deem necessary or
desirable.

         Section 3.  Issue of Right Certificates.

         (a) Until the Close of Business on the earlier of (i) the tenth day
after the Stock Acquisition Date or (ii) the tenth Business Day (or such later
date as may be determined by action of the Board of Directors prior to such time
as any Person becomes an Acquiring Person) after the date of the commencement by
any Person (other than an Exempt Person) of, or of the first public announcement
of the intention of such Person (other than an Exempt Person) to commence, a
tender or exchange offer the consummation of which would result in any Person
(other than an Exempt Person) becoming the Beneficial Owner of shares of Common
Stock aggregating 15% or more of the Common Stock then outstanding (the earlier
of such dates being herein referred to as the "Distribution Date", provided,
however, that if either of such dates occurs after the date of this Agreement
and on or prior to the Record Date, then the Distribution Date shall be the
Record Date), (x) the Rights will be evidenced (subject to the provisions of
Section 3(b) hereof) by the certificates for Common Stock registered in the
names of the holders thereof and not by separate Right Certificates, and (y) the
Rights will be transferable only in connection with the transfer of Common
Stock. As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign and the Company will send
or cause to be sent (and the Rights Agent will, if requested, send) by
first-class, insured, postage-prepaid mail, to each record holder of Common
Stock as of the close of business on the Distribution Date (other than any
Acquiring Person or any Associate or Affiliate of an Acquiring Person), at the
address of such holder shown on the records of the Company, a Right Certificate,
in substantially the form of Exhibit B hereto (a "Right Certificate"),
evidencing one Right (subject to adjustment as provided herein) for each share
of Common Stock so held. As of the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.

         (b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Shares of Preferred
Stock, in substantially the form of Exhibit C hereto (the "Summary of Rights"),
by first-class, postage-prepaid mail, to each record holder of Common Stock as
of the Close of Business on the Record Date (other than any Acquiring Person or
any Associate or Affiliate of any Acquiring Person), at the address of such
holder shown on the records of the Company. With respect to certificates for
Common Stock outstanding as of the Record Date, until the Distribution Date, the
Rights will be evidenced by such certificates registered in the names of the
holders thereof together with the Summary of Rights. Until the Distribution Date
(or, if earlier, the Expiration Date), the surrender for transfer of any
certificate for Common Stock outstanding on the Record Date, with or without a
copy of the Summary of Rights, shall also constitute the transfer of the Rights
associated with the Common Stock represented thereby.

         (c) Certificates issued for Common Stock (including, without
limitation, upon transfer of outstanding Common Stock, disposition of Common
Stock out of treasury stock or issuance or reissuance of Common Stock out of
authorized but unissued shares) after the Record Date but prior to the earlier
of the Distribution Date and the Expiration Date shall have impressed on,
printed on, written on or otherwise affixed to them the following legend:

                                       33

<Page>

         This certificate also evidences and entitles the holder hereof to
         certain rights as set forth in a Rights Agreement between ConAgra, Inc.
         and ChaseMellon Shareholder Services, L.L.C., as Rights Agent, dated as
         of July 12, 1996 as the same may be amended from time to time (the
         "Rights Agreement"), the terms of which are hereby incorporated herein
         by reference and a copy of which is on file at the principal executive
         offices of ConAgra, Inc. Under certain circumstances, as set forth in
         the Rights Agreement, such Rights will be evidenced by separate
         certificates and will no longer be evidenced by this certificate.
         ConAgra, Inc. will mail to the holder of this certificate a copy of the
         Rights Agreement without charge after receipt of a written request
         therefor. Under certain circumstances, as set forth in the Rights
         Agreement, Rights owned by or transferred to any Person who is or
         becomes an Acquiring Person (as defined in the Rights Agreement) and
         certain transferees thereof will become null and void and will no
         longer be transferable.

With respect to such certificates containing the foregoing legend, until the
Distribution Date the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate, except as otherwise provided
herein, shall also constitute the transfer of the Rights associated with the
Common Stock represented thereby. In the event that the Company purchases or
otherwise acquires any Common Stock after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Stock shall be deemed
canceled and retired so that the Company shall not be entitled to exercise any
Rights associated with the Common Stock which are no longer outstanding.

         Notwithstanding this paragraph (c), the omission of a legend shall not
affect the enforceability of any part of this Agreement or the rights of any
holder of the Rights.

         Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase shares and of assignment to be printed on the
reverse thereof) shall be substantially in the form set forth in Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange or interdealer quotation system on which the Rights may from time to
time be listed or quoted, or to conform to usage. Subject to the provisions of
Sections 11, 13 and 22 hereof, the Right Certificates shall entitle the holders
thereof to purchase such number of one one-thousandths of a share of Preferred
Stock as shall be set forth therein at the price per one one-thousandth of a
share of Preferred Stock set forth therein (the "Purchase Price"), but the
number of such one one-thousandths of a share of Preferred Stock and the
Purchase Price shall be subject to adjustment as provided herein.

         Section 5.  Countersignature and Registration.

         (a) The Right Certificates shall be executed on behalf of the Company
by the Chief Executive Officer of the Company, either manually or by facsimile
signature, shall have affixed thereto the Company's seal or a facsimile thereof
and shall be attested by the Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless countersigned.

                                       34

<Page>

In case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the
Company, such Right Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the Person who signed such Right Certificates had not ceased
to be such officer of the Company; and any Right Certificate may be signed on
behalf of the Company by any Person who, at the actual date of the execution
of such Right Certificate, shall be a proper officer of the Company to sign
such Right Certificate, although at the date of the execution of this
Agreement any such Person was not such an officer.

         (b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at an office or agency designated for such purpose, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.

         Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.

         (a) Subject to the provisions of Sections 7(e), 11(a)(ii), 13 and 14
hereof, at any time after the Distribution Date and prior to the Expiration
Date, any Right Certificate or Right Certificates may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one one-thousandths
of a share of Preferred Stock as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate or
Right Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the office or agency of the
Rights Agent designated for such purpose. Thereupon the Rights Agent shall
countersign and deliver to the Person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.

         (b) Subject to the provisions of Section 11(a)(ii) hereof, at any time
after the Distribution Date and prior to the Expiration Date, upon receipt by
the Company and the Rights Agent of evidence reasonably satisfactory to them of
the loss, theft, destruction or mutilation of a Right Certificate, and, in case
of loss, theft or destruction, of indemnity or security reasonably satisfactory
to them, and, at the Company's request, reimbursement to the Company and the
Rights Agent of all reasonable expenses incidental thereto, and upon surrender
to the Rights Agent and cancellation of the Right Certificate if mutilated, the
Company will make and deliver a new Right Certificate of like tenor to the
Rights Agent for delivery to the registered holder in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.

                                      35

<Page>

         Section 7. Exercise of Rights, Purchase Price; Expiration Date of
Rights.

         (a) Except as otherwise provided herein, the Rights shall become
exercisable on the Distribution Date, and thereafter the registered holder of
any Right Certificate may, subject to Section 11(a)(ii) hereof and except as
otherwise provided herein, exercise the Rights evidenced thereby in whole or in
part upon surrender of the Right Certificate, with the form of election to
purchase on the reverse side thereof duly executed, to the Rights Agent at the
office or agency of the Rights Agent designated for such purpose, together with
payment of the aggregate Purchase Price with respect to the total number of one
one-thousandths of a share of Preferred Stock (or other securities, cash or
other assets, as the case may be) as to which the Rights are exercised, at any
time which is both after the Distribution Date and prior to the time (the
"Expiration Date") that is the earliest of (i) the Close of Business on July 12,
2006 (the "Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (the "Redemption Date") or (iii) the
time at which such Rights are exchanged as provided in Section 24 hereof.

         (b) The Purchase Price shall be initially $200.00 for each one
one-thousandth of a share of Preferred Stock purchasable upon the exercise of a
Right. The Purchase Price and the number of one one-thousandths of a share of
Preferred Stock or other securities or property to be acquired upon exercise of
a Right shall be subject to adjustment from time to time as provided in Sections
11 and 13 hereof and shall be payable in lawful money of the United States of
America in accordance with paragraph (c) of this Section 7.

         (c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights, with the form of election to
purchase duly executed, accompanied by payment of the aggregate Purchase Price
for the shares of Preferred Stock to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof, in cash or by certified check,
cashier's check or money order payable to the order of the Company, the Rights
Agent shall thereupon promptly (i) (A) requisition from any transfer agent of
the Preferred Stock certificates for the number of shares of Preferred Stock to
be purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) requisition from the depositary agent
depositary receipts representing interests in such number of one one-thousandths
of a share of Preferred Stock as are to be purchased (in which case certificates
for the Preferred Stock represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and the Company hereby directs the
depositary agent to comply with such request, (ii) when appropriate, requisition
from the Company the amount of cash to be paid in lieu of issuance of fractional
shares in accordance with Section 14 hereof, (iii) promptly after receipt of
such certificates or depositary receipts, cause the same to be delivered to or
upon the order of the registered holder of such Right Certificate, registered in
such name or names as may be designated by such holder and (iv) when
appropriate, after receipt, promptly deliver such cash to or upon the order of
the registered holder of such Right Certificate.

         (d) Except as otherwise provided herein, in case the registered holder
of any Right Certificate shall exercise less than all of the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent to the exercisable
Rights remaining unexercised shall be issued by the Rights Agent to the
registered holder of such Right Certificate or to his duly authorized assigns,
subject to the provisions of Section 14 hereof.

         (e) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder of

                                       36

<Page>

Rights upon the occurrence of any purported transfer or exercise of Rights
pursuant to Section 6 hereof or this Section 7 unless such registered holder
shall have (i) completed and signed the certificate contained in the form of
assignment or form of election to purchase set forth on the reverse side of
the Rights Certificate surrendered for such transfer or exercise and (ii)
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) thereof as the Company shall reasonably request.

         Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.

         Section 9.  Availability of Shares of Preferred Stock.

         (a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued shares of Preferred Stock
or any shares of Preferred Stock held in its treasury, the number of shares of
Preferred Stock that will be sufficient to permit the exercise in full of all
outstanding Rights.

         (b) So long as the shares of Preferred Stock (and, following the time
that any Person becomes an Acquiring Person, shares of Common Stock and other
securities) issuable upon the exercise of Rights may be listed or admitted to
trading on any national securities exchange, or quoted on NASDAQ, the Company
shall use its best efforts to cause, from and after such time as the Rights
become exercisable, all shares reserved for such issuance to be listed or
admitted to trading on such exchange, or quoted on NASDAQ, upon official notice
of issuance upon such exercise.

         (c) From and after such time as the Rights become exercisable, the
Company shall use its best efforts, if then necessary to permit the issuance of
shares of Preferred Stock (and, following the time that any Person becomes an
Acquiring Person, shares of Common Stock and other securities) upon the exercise
of Rights, to register and qualify such shares of Preferred Stock (and,
following the time that any Person becomes an Acquiring Person, shares of Common
Stock and other securities) under the Securities Act and any applicable state
securities or "Blue Sky" laws (to the extent exemptions therefrom are not
available), cause such registration statement and qualifications to become
effective as soon as possible after such filing and keep such registration and
qualifications effective until the earlier of the date as of which the Rights
are no longer exercisable for such securities and the Expiration Date. The
Company may temporarily suspend, for a period of time not to exceed 90 days, the
exercisability of the Rights in order to prepare and file a registration
statement under the Securities Act and permit it to become effective. Upon any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction

                                       37

<Page>

unless the requisite qualification in such jurisdiction shall have been
obtained and until a registration statement under the Securities Act (if
required) shall have been declared effective.

         (d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all shares of Preferred Stock (and, following
the time that any Person becomes an Acquiring Person, shares of Common Stock and
other securities) delivered upon exercise of Rights shall, at the time of
delivery of the certificates therefor (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.

         (e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Right Certificates or
of any shares of Preferred Stock (or shares of Common Stock or other securities)
upon the exercise of Rights. The Company shall not, however, be required to pay
any transfer tax which may be payable in respect of any transfer or delivery of
Right Certificates to a Person other than, or the issuance or delivery of
certificates or depositary receipts for the Preferred Stock (or shares of Common
Stock or other securities) in a name other than that of, the registered holder
of the Right Certificate evidencing Rights surrendered for exercise or to issue
or deliver any certificates or depositary receipts for Preferred Stock (or
shares of Common Stock or other securities) upon the exercise of any Rights
until any such tax shall have been paid (any such tax being payable by that
holder of such Right Certificate at the time of surrender) or until it has been
established to the Company's reasonable satisfaction that no such tax is due.

         Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate for Preferred Stock is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the shares of
Preferred Stock represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock transfer books of the Company
are closed, such Person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the Preferred Stock transfer books of the Company are open. Prior to
the exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a holder of Preferred Stock for which the
Rights shall be exercisable, including, without limitation, the right to vote or
to receive dividends or other distributions, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.

         Section 11. Adjustment of Purchase Price, Number and Kind of Shares and
Number of Rights. The Purchase Price, the number of shares of Preferred Stock or
other securities or property purchasable upon exercise of each Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.

         (a)(i) In the event the Company shall at any time after the date of
this Agreement (A) declare and pay a dividend on the Preferred Stock payable in
shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C)
combine the outstanding Preferred Stock into a smaller number of shares of
Preferred Stock or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation),

                                       38

<Page>

except as otherwise provided in this Section 11(a), the Purchase Price in
effect at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and the number and
kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to
such date and at a time when the Preferred Stock transfer books of the
Company were open, the holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the consideration
to be paid upon the exercise of one Right be less than the aggregate par
value of the shares of capital stock of the Company issuable upon exercise of
one Right.

         (ii) Subject to Section 24 of this Agreement, in the event any Person
becomes an Acquiring Person (the first occurrence of such event being referred
to hereinafter as the "Flip-In Event"), then (A) the Purchase Price shall be
adjusted to be the Purchase Price in effect immediately prior to the Flip- In
Event multiplied by the number of one one-thousandths of a share of Preferred
Stock for which a Right was exercisable immediately prior to such Flip-In Event,
whether or not such Right was then exercisable, and (B) each holder of a Right,
except as otherwise provided in this Section 11(a)(ii) and Section 11(a)(iii)
hereof, shall thereafter have the right to receive, upon exercise thereof at a
price equal to the Purchase Price (as so adjusted), in accordance with the terms
of this Agreement and in lieu of shares of Preferred Stock, such number of
shares of Common Stock as shall equal the result obtained by dividing the
Purchase Price (as so adjusted) by 50% of the current per share market price of
the Common Stock (determined pursuant to Section 11(d) hereof) on the date of
such Flip-In Event; provided, however, that the Purchase Price (as so adjusted)
and the number of shares of Common Stock so receivable upon exercise of a Right
shall, following the Flip-In Event, be subject to further adjustment as
appropriate in accordance with Section 11(f) hereof. Notwithstanding anything in
this Agreement to the contrary, however, from and after the Flip-In Event, any
Rights that are beneficially owned by (x) any Acquiring Person (or any Affiliate
or Associate of any Acquiring Person), (y) a transferee of any Acquiring Person
(or any such Affiliate or Associate) who becomes a transferee after the Flip-In
Event or (z) a transferee of any Acquiring Person (or any such Affiliate or
Associate) who became a transferee prior to or concurrently with the Flip-In
Event pursuant to either (I) a transfer from the Acquiring Person to holders of
its equity securities or to any Person with whom it has any continuing
agreement, arrangement or understanding regarding the transferred Rights or (II)
a transfer which the Board of Directors has determined is part of a plan,
arrangement or understanding which has the purpose or effect of avoiding the
provisions of this paragraph, and subsequent transferees of such Persons, shall
be void without any further action and any holder of such Rights shall
thereafter have no rights whatsoever with respect to such Rights under any
provision of this Agreement. The Company shall use all reasonable efforts to
ensure that the provisions of this Section 11(a)(ii) are complied with, but
shall have no liability to any holder of Right Certificates or other Person as a
result of its failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder. From and after
the Flip-In Event, no Right Certificate shall be issued pursuant to Section 3 or
Section 6 hereof that represents Rights that are or have become void pursuant to
the provisions of this paragraph, and any Right Certificate delivered to the
Rights Agent that represents Rights that are or have become void pursuant to the
provisions of this paragraph shall be canceled. From and after the occurrence of
an event specified in Section 13(a) hereof, any Rights that theretofore have not
been exercised pursuant to this Section 11(a)(ii) shall thereafter be
exercisable only in accordance with Section 13 and not pursuant to this Section
11(a)(ii).

                                       39

<Page>

         (iii) The Company may at its option substitute for a share of Common
Stock issuable upon the exercise of Rights in accordance with the foregoing
subparagraph (ii) a number of shares of Preferred Stock or fraction thereof such
that the current per share market price of one share of Preferred Stock
multiplied by such number or fraction is equal to the current per share market
price of one share of Common Stock. In the event that there shall not be
sufficient shares of Common Stock issued but not outstanding or authorized but
unissued to permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii), the Board of Directors shall, to the extent
permitted by applicable law and any material agreements then in effect to which
the Company is a party (A) determine the excess (such excess, the "Spread") of
(1) the value of the shares of Common Stock issuable upon the exercise of a
Right in accordance with the foregoing subparagraph (ii) (the "Current Value")
over (2) the Purchase Price (as adjusted in accordance with the foregoing
subparagraph (ii)), and (B) with respect to each Right (other than Rights which
have become void pursuant to the foregoing subparagraph (ii)), make adequate
provision to substitute for the shares of Common Stock issuable in accordance
with the foregoing subparagraph (ii) upon exercise of the Right and payment of
the Purchase Price (as adjusted in accordance therewith), (1) cash, (2) a
reduction in such Purchase Price, (3) shares of Preferred Stock or other equity
securities of the Company (including, without limitation, shares or fractions of
shares of preferred stock which, by virtue of having dividend, voting and
liquidation rights substantially comparable to those of the shares of Common
Stock, are deemed in good faith by the Board of Directors to have substantially
the same value as the shares of Common Stock (such shares of Preferred Stock and
shares or fractions of shares of preferred stock are hereinafter referred to as
"Common Stock Equivalents")), (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing, having a value which, when
added to the value of the shares of Common Stock issued upon exercise of such
Right, shall have an aggregate value equal to the Current Value (less the amount
of any reduction in such Purchase Price), where such aggregate value has been
determined by the Board of Directors upon the advice of a nationally recognized
investment banking firm selected in good faith by the Board of Directors;
provided, however, that if the Company shall not make adequate provision to
deliver value pursuant to clause (B) above within thirty (30) days following the
Flip-In Event (the "Section 11(a) (ii) Trigger Date"), then the Company shall be
obligated to deliver, to the extent permitted by applicable law and any material
agreements then in effect to which the Company is a party, upon the surrender
for exercise of a Right and without requiring payment of such Purchase Price,
shares of Common Stock (to the extent available), and then, if necessary, such
number or fractions of shares of Preferred Stock (to the extent available) and
then, if necessary, cash, which shares and/or cash have an aggregate value equal
to the Spread. If, upon the occurrence of the Flip-In Event, the Board of
Directors shall determine in good faith that it is likely that sufficient
additional shares of Common Stock could be authorized for issuance upon exercise
in full of the Rights, then, if the Board of Directors so elects, the thirty
(30) day period set forth above may be extended to the extent necessary, but not
more than ninety (90) days after the Section 11(a) (ii) Trigger Date, in order
that the Company may seek stockholder approval for the authorization of such
additional shares (such thirty (30) day period, as it may be extended, is herein
called the "Substitution Period"). To the extent that the Company determines
that some action need be taken pursuant to the second and/or third sentence of
this Section 11(a)(iii), the Company (x) shall provide, subject to Section
11(a)(ii) hereof and the last sentence of this Section 11(a)(iii) hereof, that
such action shall apply uniformly to all outstanding Rights and (y) may suspend
the exercisability of the

                                       40

<Page>

Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such second sentence and to determine the
value thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this Section 11(a)(iii),
the value of the shares of Common Stock shall be the current per share market
price (as determined pursuant to Section 11(d)(i)) on the Section 11(a)(ii)
Trigger Date and the per share or fractional value of any "Common Stock
Equivalent" shall be deemed to equal the current per share market price of
the Common Stock. The Board of Directors of the Company may, but shall not be
required to, establish procedures to allocate the right to receive shares of
Common Stock upon the exercise of the Rights among holders of Rights pursuant
to this Section 11(a)(iii).

         (b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Stock (or shares having the same rights,
privileges and preferences as the Preferred Stock ("equivalent preferred
shares")) or securities convertible into Preferred Stock or equivalent preferred
shares at a price per share of Preferred Stock or equivalent preferred shares
(or having a conversion price per share, if a security convertible into shares
of Preferred Stock or equivalent preferred shares) less than the then current
per share market price of the Preferred Stock (determined pursuant to Section
11(d) hereof) on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock and equivalent preferred shares
outstanding on such record date plus the number of shares of Preferred Stock and
equivalent preferred shares which the aggregate offering price of the total
number of shares of Preferred Stock and/or equivalent preferred shares so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market price, and
the denominator of which shall be the number of shares of Preferred Stock and
equivalent preferred shares outstanding on such record date plus the number of
additional shares of Preferred Stock and/or equivalent preferred shares to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible); provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company issuable
upon exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent. Shares of Preferred Stock and equivalent preferred
shares owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed; and in the event that
such rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.

         (c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Stock) or subscription rights or warrants (excluding those referred to
in Section 11(b) hereof), the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
then current per share market price of the Preferred Stock (determined pursuant
to Section 11(d) hereof) on such record date, less the fair market value (as
determined in good faith by the Board of Directors of the Company whose

                                       41

<Page>

determination shall be described in a statement filed with the Rights Agent) of
the portion of the assets or evidences of indebtedness so to be distributed or
of such subscription rights or warrants applicable to one share of Preferred
Stock, and the denominator of which shall be such current per share market price
(determined pursuant to Section 11(d) hereof) of the Preferred Stock; provided,
however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital stock
of the Company to be issued upon exercise of one Right. Such adjustments shall
be made successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Purchase Price shall again be adjusted to
be the Purchase Price which would then be in effect if such record date had not
been fixed.

         (d)(i) Except as otherwise provided herein, for the purpose of any
computation hereunder, the "current per share market price " of any security (a
"Security " for the purpose of this Section 11(d)(i)) on any date shall be
deemed to be the average of the daily closing prices per share of such Security
for the 30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the event that the
current per share market price of the Security is determined during a period
following the announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or securities
convertible into such shares, or (B) any subdivision, combination or
reclassification of such Security, and prior to the expiration of 30 Trading
Days after the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then, and in each
such case, the current per share market price shall be appropriately adjusted to
reflect the current market price per share equivalent of such Security. The
closing price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported by the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Security is not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Security is
listed or admitted to trading or, if the Security is not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use, or, if on any
such date the Security is not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Security selected by the Board of Directors of the
Company. The term "Trading Day" shall mean a day on which the principal national
securities exchange on which the Security is listed or admitted to trading is
open for the transaction of business or, if the Security is not listed or
admitted to trading on any national securities exchange, a Business Day.

         (ii) For the purpose of any computation hereunder, if the Preferred
Stock is publicly traded, the "current per share market price" of the Preferred
Stock shall be determined in accordance with the method set forth in Section
11(d)(i). If the Preferred Stock is not publicly traded but the Common Stock is
publicly traded, the "current per share market price" of the Preferred Stock
shall be conclusively deemed to be the current per share market price of the
Common Stock as determined pursuant to Section 11(d)(i) multiplied by the then
applicable Adjustment Number (as defined in and determined in accordance with
the Certificate of Designation for the Preferred Stock). If neither the Common
Stock nor the Preferred Stock is publicly traded, "current per share market
price" shall mean the fair value per share as determined in good faith by the
Board of Directors of the Company, whose determination shall be described

                                      42

<Page>

in a statement filed with the Rights Agent.

         (e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one hundred-thousandth of a
share of Preferred Stock or one-hundreth of a share of Common Stock or other
share or security as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no later
than the earlier of (i) three years from the date of the transaction which
requires such adjustment or (ii) the Expiration Date.

         (f) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than the Preferred
Stock, thereafter the Purchase Price and the number of such other shares so
receivable upon exercise of a Right shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Sections 11(a),
11(b), 11(c), 11(e), 11(h), 11(i) and 11(m) hereof, as applicable, and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred
Stock shall apply on like terms to any such other shares.

         (g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.

         (h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-thousandths of
a share of Preferred Stock (calculated to the nearest one hundred-thousandth of
a share of Preferred Stock) obtained by (i) multiplying (x) the number of one
one-thousandths of a share purchasable upon the exercise of a Right immediately
prior to such adjustment by (y) the Purchase Price in effect immediately prior
to such adjustment of the Purchase Price and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such adjustment of
the Purchase Price.

         (i) The Company may elect on or after the date of any adjustment of the
Purchase Price pursuant to Sections 11(b) or 11(c) hereof to adjust the number
of Rights, in substitution for any adjustment in the number of one
one-thousandths of a share of Preferred Stock purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one one-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest
one-hundredth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right

                                       43

<Page>

Certificates have been issued, shall be at least 10 days later than the date
of the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the
Company may, as promptly as practicable, cause to be distributed to holders
of record of Right Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option
of the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by
the Company, new Right Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein and shall be registered in the names of the holders of
record of Right Certificates on the record date specified in the public
announcement.

         (j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-thousandths of a share of Preferred Stock issuable upon
the exercise of a Right, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of one
one-thousandths of a share of Preferred Stock which were expressed in the
initial Right Certificates issued hereunder.

         (k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the fraction of
Preferred Stock or other shares of capital stock issuable upon exercise of a
Right, the Company shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable shares of Preferred Stock or other such
shares at such adjusted Purchase Price.

         (l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event issuing to the holder of any Right exercised after such record date the
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Preferred Stock and other capital
stock or securities of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.

         (m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such adjustments in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Stock, issuance
wholly for cash of any shares of Preferred Stock at less than the current market
price, issuance wholly for cash of Preferred Stock or securities which by their
terms are convertible into or exchangeable for Preferred Stock, dividends on
Preferred Stock payable in shares of Preferred Stock or issuance of rights,
options or warrants referred to hereinabove in Section 11(b), hereafter made by
the Company to holders of its Preferred Stock shall not be taxable to such
stockholders.

         (n) Anything in this Agreement to the contrary notwithstanding, in the
event that at any time after the date of this Rights Agreement and prior to the
Distribution Date, the Company shall (i) declare and pay any dividend on the
Common Stock payable in Common Stock or (ii) effect a

                                      44

<Page>

subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of a dividend payable in Common
Stock) into a greater or lesser number of shares of Common Stock, then, in
each such case, the number of Rights associated with each share of Common
Stock then outstanding, or issued or delivered thereafter, shall be
proportionately adjusted so that the number of Rights thereafter associated
with each share of Common Stock following any such event shall equal the
result obtained by multiplying the number of Rights associated with each
share of Common Stock immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.

         (o) The Company agrees that, after the earlier of the Distribution Date
or the Stock Acquisition Date, it will not, except as permitted by Sections 23,
24 or 27 hereof, take (or permit any Subsidiary to take) any action if at the
time such action is taken it is reasonably foreseeable that such action will
diminish substantially or eliminate the benefits intended to be afforded by the
Rights.

                                       45

<Page>

         Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Common Stock and the
Preferred Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate in accordance with Section 25 hereof (if
so required under Section 25 hereof). The Rights Agent shall be fully protected
in relying on any such certificate and on any adjustment therein contained and
shall not be deemed to have knowledge of any such adjustment unless and until it
shall have received such certificate.

         Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.

         (a) In the event, directly or indirectly, at any time after the Flip-In
Event (i) the Company shall consolidate with or shall merge into any other
Person, (ii) any Person shall merge with and into the Company and the Company
shall be the continuing or surviving corporation of such merger and, in
connection with such merger, all or part of the Common Stock shall be changed
into or exchanged for stock or other securities of any other Person (or of the
Company) or cash or any other property, or (iii) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one or more transactions, assets or earning power aggregating 50%
or more of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person (other than the Company or one or more
wholly owned Subsidiaries of the Company), then upon the first occurrence of
such event, proper provision shall be made so that: (A) each holder of a Right
(other than Rights which have become void pursuant to Section 11(a)(ii) hereof)
shall thereafter have the right to receive, upon the exercise thereof at the
Purchase Price (as theretofore adjusted in accordance with Section 11(a)(ii)
hereof), in accordance with the terms of this Agreement and in lieu of shares of
Preferred Stock or Common Stock of the Company, such number of validly
authorized and issued, fully paid, non-assessable and freely tradeable shares of
Common Stock of the Principal Party (as such term is hereinafter defined), not
subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall equal the result obtained by dividing the Purchase Price (as
theretofore adjusted in accordance with Section 11(a)(ii) hereof) by 50% of the
current per share market price of the Common Stock of such Principal Party
(determined pursuant to Section 11(d) hereof) on the date of consummation of
such consolidation, merger, sale or transfer; provided, however, that the
Purchase Price (as theretofore adjusted in accordance with Section 11(a)(ii)
hereof) and the number of shares of Common Stock of such Principal Party so
receivable upon exercise of a Right shall be subject to further adjustment as
appropriate in accordance with Section 11(f) hereof to reflect any events
occurring in respect of the Common Stock of such Principal Party after the
occurrence of such consolidation, merger, sale or transfer; (B) such Principal
Party shall thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations and duties of the
Company pursuant to this Rights Agreement; (C) the term "Company" shall
thereafter be deemed to refer to such Principal Party; and (D) such Principal
Party shall take such steps (including, but not limited to, the reservation of a
sufficient number of its shares of Common Stock in accordance with Section 9
hereof) in connection with such consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to the shares of its Common Stock
thereafter deliverable upon the exercise of the Rights; provided that, upon the
subsequent occurrence of any consolidation, merger, sale or transfer of assets
or other extraordinary transaction in respect of such Principal Party, each
holder of a Right shall thereupon be entitled to receive, upon exercise of a
Right and payment of the Purchase Price as provided in this Section 13(a), such
cash, shares, rights, warrants and other property which

                                       46

<Page>

such holder would have been entitled to receive had such holder, at the time
of such transaction, owned the Common Stock of the Principal Party receivable
upon the exercise of a Right pursuant to this Section 13(a), and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property.

         (b)  "Principal Party" shall mean:

            (i) in the case of any transaction described in (i) or (ii) of the
first sentence of Section 13(a) hereof: (A) the Person that is the issuer of the
securities into which the shares of Common Stock are converted in such merger or
consolidation, or, if there is more than one such issuer, the issuer the shares
of Common Stock of which have the greatest aggregate market value of shares
outstanding, or (B) if no securities are so issued, (x) the Person that is the
other party to the merger, if such Person survives said merger, or, if there is
more than one such Person, the Person the shares of Common Stock of which have
the greatest aggregate market value of shares outstanding or (y) if the Person
that is the other party to the merger does not survive the merger, the Person
that does survive the merger (including the Company if it survives) or (z) the
Person resulting from the consolidation; and

            (ii) in the case of any transaction described in (iii) of the first
sentence in Section 13(a) hereof, the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or earning
power so transferred or if the Person receiving the greatest portion of the
assets or earning power cannot be determined, whichever of such Persons is the
issuer of Common Stock having the greatest aggregate market value of shares
outstanding; provided, however, that in any such case described in the foregoing
clause (b)(i) or (b)(ii), if the Common Stock of such Person is not at such time
or has not been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, then (1) if such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has been so
registered, the term "Principal Party" shall refer to such other Person, or (2)
if such Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Stock of all of which is and has been so registered, the term
"Principal Party" shall refer to whichever of such Persons is the issuer of
Common Stock having the greatest aggregate market value of shares outstanding,
or (3) if such Person is owned, directly or indirectly, by a joint venture
formed by two or more Persons that are not owned, directly or indirectly, by the
same Person, the rules set forth in clauses (1) and (2) above shall apply to
each of the owners having an interest in the venture as if the Person owned by
the joint venture was a Subsidiary of both or all of such joint venturers, and
the Principal Party in each such case shall bear the obligations set forth in
this Section 13 in the same ratio as its interest in such Person bears to the
total of such interests.

         (c) The Company shall not consummate any consolidation, merger, sale or
transfer referred to in Section 13(a) hereof unless prior thereto the Company
and the Principal Party involved therein shall have executed and delivered to
the Rights Agent an agreement confirming that the requirements of Sections 13(a)
and (b) hereof shall promptly be performed in accordance with their terms and
that such consolidation, merger, sale or transfer of assets shall not result in
a default by the Principal Party under this Agreement as the same shall have
been assumed by the Principal Party pursuant to Sections 13(a) and (b) hereof
and providing that, as soon as

                                       47
<Page>

practicable after executing such agreement pursuant to this Section 13, the
Principal Party will:

            (i) prepare and file a registration statement under the Securities
Act, if necessary, with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, use its best efforts to
cause such registration statement to become effective as soon as practicable
after such filing and use its best efforts to cause such registration statement
to remain effective (with a prospectus at all times meeting the requirements of
the Securities Act) until the Expiration Date and similarly comply with
applicable state securities laws;

            (ii) use its best efforts, if the Common Stock of the Principal
Party shall be listed or admitted to trading on the New York Stock Exchange or
on another national securities exchange, to list or admit to trading (or
continue the listing of) the Rights and the securities purchasable upon exercise
of the Rights on the New York Stock Exchange or such securities exchange, or, if
the Common Stock of the Principal Party shall not be listed or admitted to
trading on the New York Stock Exchange or a national securities exchange, to
cause the Rights and the securities receivable upon exercise of the Rights to be
authorized for quotation on NASDAQ or on such other system then in use;

            (iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act; and

            (iv) obtain waivers of any rights of first refusal or preemptive
rights in respect of the Common Stock of the Principal Party subject to purchase
upon exercise of outstanding Rights.

                                       48

<Page>

         (d) In case the Principal Party has provision in any of its authorized
securities or in its certificate of incorporation or by-laws or other instrument
governing its corporate affairs, which provision would have the effect of (i)
causing such Principal Party to issue (other than to holders of Rights pursuant
to this Section 13), in connection with, or as a consequence of, the
consummation of a transaction referred to in this Section 13, shares of Common
Stock or Common Stock Equivalents of such Principal Party at less than the then
current market price per share thereof (determined pursuant to Section 11(d)
hereof) or securities exercisable for, or convertible into, Common Stock or
Common Stock Equivalents of such Principal Party at less than such then current
market price, or (ii) providing for any special payment, tax or similar
provision in connection with the issuance of the Common Stock of such Principal
Party pursuant to the provisions of Section 13, then, in such event, the Company
hereby agrees with each holder of Rights that it shall not consummate any such
transaction unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
that the provision in question of such Principal Party shall have been canceled,
waived or amended, or that the authorized securities shall be redeemed, so that
the applicable provision will have no effect in connection with, or as a
consequence of, the consummation of the proposed transaction.

         (e) The Company covenants and agrees that it shall not, at any time
after the Flip-In Event, enter into any transaction of the type described in
clauses (i) through (iii) of Section 13(a) hereof if (i) at the time of or
immediately after such consolidation, merger, sale, transfer or other
transaction there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights, (ii)
prior to, simultaneously with or immediately after such consolidation, merger,
sale, transfer or other transaction, the stockholders of the Person who
constitutes, or would constitute, the Principal Party for purposes of Section
13(b) hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates or Associates or (iii) the form or nature
of organization of the Principal Party would preclude or limit the
exercisability of the Rights.

         Section 14.  Fractional Rights and Fractional Shares.

         (a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional Rights (except prior
to the Distribution Date in accordance with Section 11(n) hereof). In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Right Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of

                                      49

<Page>

the closing bid and asked prices as furnished by a professional market maker
making a market in the Rights selected by the Board of Directors of the
Company. If on any such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as determined in good faith
by the Board of Directors of the Company shall be used.

         (b) The Company shall not be required to issue fractions of Preferred
Stock (other than fractions which are integral multiples of one one-thousandths
of a share of Preferred Stock) or to distribute certificates which evidence
fractional shares of Preferred Stock (other than fractions which are integral
multiples of one one-thousandths of a share of Preferred Stock) upon the
exercise or exchange of Rights. Interests in fractions of Preferred Stock in
integral multiples of one one- thousandths of a share of Preferred Stock may, at
the election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it;
provided, that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Stock represented by such
depositary receipts. In lieu of fractional shares of Preferred Stock that are
not integral multiples of one one-thousandths of a share of Preferred Stock, the
Company shall pay to the registered holders of Right Certificates at the time
such Rights are exercised or exchanged as herein provided an amount in cash
equal to the same fraction of the current market value of a whole share of
Preferred Stock (as determined in accordance with Section 14(a) hereof) for the
Trading Day immediately prior to the date of such exercise or exchange.

         (c) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock upon the exercise or exchange of Rights. In lieu of such fractional
shares of Common Stock, the Company shall pay to the registered holders of the
Right Certificates with regard to which such fractional shares of Common Stock
would otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole share of Common Stock (as determined in
accordance with Section 14(a) hereof) for the Trading Day immediately prior to
the date of such exercise or exchange.

         (d) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise or exchange of a Right (except as provided above).

                                       50

<Page>

         Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), on his own behalf and for his own
benefit, may enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate (or, prior to
the Distribution Date, such Common Stock) in the manner provided therein and in
this Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of, the obligations of
any Person subject to this Agreement.

         Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:

         (a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Stock;

         (b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or agency of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer; and

         (c) the Company and the Rights Agent may deem and treat the Person in
whose name the Right Certificate (or, prior to the Distribution Date, the Common
Stock certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Right Certificates or the Common Stock certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to the contrary.

         Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Stock or any
other securities of the Company which may at any time be issuable on the
exercise or exchange of the Rights represented thereby, nor shall anything
contained herein or in any Right Certificate be construed to confer upon the
holder of any Right Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in this Agreement), or to
receive dividends or subscription rights, or otherwise, until the Rights
evidenced by such Right Certificate shall have been exercised or exchanged in
accordance with the provisions hereof.

         Section 18.  Concerning the Rights Agent.

         (a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its

                                       51

<Page>

reasonable expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability or
expense, incurred without negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim of liability
arising therefrom, directly or indirectly. In no case will the Rights Agent
be liable for special, indirect, incidental or consequential loss or damages
of any kind whatsoever, even if the Rights Agent has been advised of the
possibility of such damages.

         (b) The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in connection
with, its administration of this Agreement in reliance upon any Right
Certificate or certificate for the Preferred Stock or Common Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons, or otherwise upon the advice of counsel as set
forth in Section 20 hereof.

         Section 19.  Merger or Consolidation or Change of Name of Rights Agent.

         (a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
stock transfer or corporate trust powers of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.

         (b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.

         Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:

         (a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the

                                        52

<Page>

Company), and the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.

         (b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chief Executive Officer and the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon such
certificate.

         (c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own negligence, bad faith or willful misconduct.

         (d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.

         (e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 11(a)(ii) hereof) or any adjustment in
the terms of the Rights provided for in Sections 3, 11, 13, 23 and 24, or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after receipt of a certificate furnished pursuant to Section 12,
describing such change or adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any shares of Preferred Stock or other securities to be issued
pursuant to this Agreement or any Right Certificate or as to whether any shares
of Preferred Stock or other securities will, when issued, be validly authorized
and issued, fully paid and nonassessable.

         (f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.

         (g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person reasonably believed by the Rights Agent to be one of the Chief Executive
Officer or the Secretary of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be liable
for any action taken or suffered by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions. Any application by the Rights Agent for written instructions
from the Company may, at the option of the Rights Agent, set forth in writing
any action proposed to be taken or omitted by the Rights Agent under this

                                       53

<Page>

Agreement and the date on and/or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five Business Days after the date
any officer of the Company actually receives such application unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.

         (h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.

                                       54

<Page>

         (i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.

         (j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the form of
assignment or the form of election to purchase set forth on the reverse thereof,
as the case may be, has not been completed to certify the holder is not an
Acquiring Person (or an Affiliate or Associate thereof), the Rights Agent shall
not take any further action with respect to such requested exercise or transfer
without first consulting with the Company.

         Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Stock or Preferred Stock by registered or certified mail, and,
following the Distribution Date, to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock or Preferred Stock by registered or certified mail, and, following
the Distribution Date, to the holders of the Right Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of 30 days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Right Certificate (who shall, with such notice, submit his
Right Certificate for inspection by the Company), then the registered holder of
any Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation, or an affiliate of
such corporation, organized and doing business under the laws of the United
States or the laws of any state of the United States or the District of
Columbia, in good standing, having an office in the State of New York, which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50 million. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock or Preferred Stock, and, following the Distribution Date, mail
a notice thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.

         Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new

                                       55

<Page>

Right Certificates evidencing Rights in such forms as may be approved by its
Board of Directors to reflect any adjustment or change in the Purchase Price
and the number or kind or class of shares or other securities or property
purchasable under the Right Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or
sale of Common Stock following the Distribution Date and prior to the
Expiration Date, the Company may with respect to shares of Common Stock so
issued or sold pursuant to (i) the exercise of stock options, (ii) under any
employee plan or arrangement, (iii) upon the exercise, conversion or exchange
of securities, notes or debentures issued by the Company or (iv) a
contractual obligation of the Company, in each case existing prior to the
Distribution Date, issue Rights Certificates representing the appropriate
number of Rights in connection with such issuance or sale.

         Section 23.  Redemption.

         (a) The Board of Directors of the Company may, at any time prior to the
Flip-In Event, redeem all but not less than all the then outstanding Rights at a
redemption price of $.01 per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(the redemption price being hereinafter referred to as the "Redemption Price").
The redemption of the Rights may be made effective at such time, on such basis
and with such conditions as the Board of Directors in its sole discretion may
establish. The Redemption Price shall be payable, at the option of the Company,
in cash, shares of Common Stock, or such other form of consideration as the
Board of Directors shall determine.

         (b) Immediately upon the action of the Board of Directors ordering the
redemption of the Rights pursuant to paragraph (a) of this Section 23 (or at
such later time as the Board of Directors may establish for the effectiveness of
such redemption), and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. The Company shall
promptly give public notice of any such redemption; provided, however, that the
failure to give, or any defect in, any such notice shall not affect the validity
of such redemption. Within 10 days after such action of the Board of Directors
ordering the redemption of the Rights (or such later time as the Board of
Directors may establish for the effectiveness of such redemption), the Company
shall mail a notice of redemption to all the holders of the then outstanding
Rights at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Stock. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption shall state the method by which the
payment of the Redemption Price will be made.

         Section 24.  Exchange.

         (a) The Board of Directors of the Company may, at its option, subject
to the provisions of Article XVIII of the Company's Certificate of
Incorporation, at any time after the Flip-In Event, exchange all or part of the
then outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 11(a)(ii) hereof) for
Common Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such amount per Right being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after an Acquiring Person shall have become the Beneficial Owner of

                                       56

<Page>

shares of Common Stock aggregating 50% or more of the shares of Common Stock
then outstanding. From and after the occurrence of an event specified in
Section 13(a) hereof, any Rights that theretofore have not been exchanged
pursuant to this Section 24(a) shall thereafter be exercisable only in
accordance with Section 13 and may not be exchanged pursuant to this Section
24(a). The exchange of the Rights by the Board of Directors may be made
effective at such time, on such basis and with such conditions as the Board
of Directors in its sole discretion may establish.

         (b) Immediately upon the effectiveness of the action of the Board of
Directors of the Company ordering the exchange of any Rights pursuant to
paragraph (a) of this Section 24 and without any further action and without any
notice, the right to exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that number of shares
of Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public notice
of any such exchange; provided, however, that the failure to give, or any defect
in, such notice shall not affect the validity of such exchange. The Company
shall promptly mail a notice of any such exchange to all of the holders of the
Rights so exchanged at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange of the
shares of Common Stock for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of Section 11(a)(ii)
hereof) held by each holder of Rights.

         (c) The Company may at its option substitute, and, in the event that
there shall not be sufficient shares of Common Stock issued but not outstanding
or authorized but unissued to permit an exchange of Rights for Common Stock as
contemplated in accordance with this Section 24, the Company shall substitute to
the extent of such insufficiency, for each share of Common Stock that would
otherwise be issuable upon exchange of a Right, a number of shares of Preferred
Stock or fraction thereof (or equivalent preferred shares, as such term is
defined in Section 11(b)) such that the current per share market price
(determined pursuant to Section 11(d) hereof) of one share of Preferred Stock
(or equivalent preferred share) multiplied by such number or fraction is equal
to the current per share market price of one share of Common Stock (determined
pursuant to Section 11(d) hereof) as of the date of such exchange.

         Section 25.  Notice of Certain Events.

         (a) In case the Company shall at any time after the earlier of the
Distribution Date or the Stock Acquisition Date propose (i) to pay any dividend
payable in stock of any class to the holders of its Preferred Stock or to make
any other distribution to the holders of its Preferred Stock (other than a
regular quarterly cash dividend), (ii) to offer to the holders of its Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares
of Preferred Stock or shares of stock of any class or any other securities,
rights or options, (iii) to effect any reclassification of its Preferred Stock
(other than a reclassification involving only the subdivision or combination of
outstanding Preferred Stock), (iv) to effect the liquidation, dissolution or
winding up of the Company, or (v) to pay any dividend on the Common Stock
payable in Common Stock or to effect a subdivision, combination or consolidation
of the Common Stock (by reclassification or otherwise than by payment of
dividends in Common Stock), then, in each such case, the Company shall give to
each holder of a Right Certificate, in accordance with

                                      57

<Page>

Section 26 hereof, a notice of such proposed action, which shall specify the
record date for the purposes of such stock dividend, or distribution of
rights or warrants, or the date on which such liquidation, dissolution or
winding up is to take place and the date of participation therein by the
holders of the Common Stock and/or Preferred Stock, if any such date is to be
fixed, and such notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least 10 days prior to the record date for
determining holders of the Preferred Stock for purposes of such action, and
in the case of any such other action, at least 10 days prior to the date of
the taking of such proposed action or the date of participation therein by
the holders of the Common Stock and/or Preferred Stock, whichever shall be
the earlier.

         (b) In case any event described in Section 11(a)(ii) or Section 13
shall occur then the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate (or if occurring prior to the Distribution
Date, the holders of the Common Stock) in accordance with Section 26 hereof, a
notice of the occurrence of such event, which notice shall describe such event
and the consequences of such event to holders of Rights under Section 11(a)(ii)
and Section 13 hereof.

         Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:

                                       58

<Page>

                  ConAgra, Inc.
                  One ConAgra Drive
                  Omaha, Nebraska 68102
                  Attention: Secretary

Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:

                  ChaseMellon Shareholder Services, L.L.C.
                  450 West 33rd Street
                  New York, New York 10001
                  Attn: V.P. Administration

Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.

         Section 27. Supplements and Amendments. Except as provided in the
penultimate sentence of this Section 27, for so long as the Rights are then
redeemable, the Company may in its sole and absolute discretion, and the Rights
Agent shall if the Company so directs, supplement or amend any provision of this
Agreement in any respect without the approval of any holders of the Rights. At
any time when the Rights are no longer redeemable, except as provided in the
penultimate sentence of this Section 27, the Company may, and the Rights Agent
shall, if the Company so directs, supplement or amend this Agreement without the
approval of any holders of Rights in order to (i) cure any ambiguity, (ii)
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, (iii) shorten or lengthen any time
period hereunder, or (iv) change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable; provided that no such
supplement or amendment shall adversely affect the interests of the holders of
Rights as such (other than an Acquiring Person or an Affiliate or Associate of
an Acquiring Person), and no such amendment may cause the Rights again to become
redeemable or cause the Agreement again to become amendable other than in
accordance with this sentence. Notwithstanding anything contained in this
Agreement to the contrary, no supplement or amendment shall be made which
changes the Redemption Price. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment.

         Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.

         Section 29. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Stock).

                                       59

<Page>

         Section 30. Determinations and Actions by the Board of Directors. The
Board of Directors of the Company shall have the exclusive power and authority
to administer this Agreement and to exercise the rights and powers specifically
granted to the Board of Directors of the Company or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including, without limitation, a determination
to redeem or not redeem the Rights or to amend this Agreement). All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) that
are done or made by the Board of Directors of the Company in good faith, shall
(x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights, as such, and all other parties, and (y) not subject the
Board of Directors to any liability to the holders of the Rights.

         Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.

         Section 32. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.

         Section 33. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.

         Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.

                                      60

<Page>

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

                                       CONAGRA, INC.

                                       By: /s/ James P. O'Donnell
                                          ------------------------------------
                                       Name: James P. O'Donnell
                                       Title: Senior Vice President
                                       and Chief Financial Officer

                                       CHASEMELLON SHAREHOLDER
                                       SERVICES, L.L.C., as Rights Agent
                                       By:     /s/ Stanley E. Siekierski
                                          ------------------------------------
                                       Name: Stanley E. Siekierski
                                       Title: Vice President

                                      61

<Page>

                                                                       Exhibit A
                                     FORM OF
                           CERTIFICATE OF DESIGNATION

                                       of

             SERIES A JUNIOR PARTICIPATING CLASS E PREFERRED STOCK

                                       of

                                  CONAGRA, INC.

Pursuant to Section 151 of the General Corporation Law of the State of Delaware

         ConAgra, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware, in accordance with the provisions of
Section 103 thereof, DOES HEREBY CERTIFY:

         That pursuant to the authority vested in the Board of Directors in
accordance with the provisions of the Certificate of Incorporation of the said
Corporation, the said Board of Directors on July 12, 1996 adopted the following
resolution creating a series of 1,000,000 shares of Class E Preferred Stock
designated as "Series A Junior Participating Class E Preferred Stock":

         RESOLVED, that pursuant to the authority vested in the Board of
         Directors of this Corporation in accordance with the provisions of
         the Certificate of Incorporation, a series of Class E Preferred
         Stock, without par value, of the Corporation be and hereby is
         created, and that the designation and number of shares thereof and
         the voting and other powers, preferences and relative,
         participating, optional or other rights of the shares of such series
         and the qualifications, limitations and restrictions thereof are as
         follows:

         Series A Junior Participating Class E Preferred Stock

         1. Designation and Amount. There shall be a series of Class E Preferred
Stock that shall be designated as "Series A Junior Participating Class E
Preferred Stock," and the number of shares constituting such series shall be
1,000,000. Such number of shares may be increased or decreased by resolution of
the Board of Directors; provided, however, that no decrease shall reduce the
number of shares of Series A Junior Participating Class E Preferred Stock to
less than the number of shares then issued and outstanding plus the number of
shares issuable upon exercise of outstanding rights, options or warrants or upon
conversion of outstanding securities issued by the Corporation.

         2.  Dividends and Distribution.

         (A) Subject to the prior and superior rights of the holders of any
shares of any series of

                                     62

<Page>

preferred stock ranking prior and superior to the shares of Series A Junior
Participating Class E Preferred Stock with respect to dividends, the holders
of shares of Series A Junior Participating Class E Preferred Stock, in
preference to the holders of shares of any class or series of stock of the
Corporation ranking junior to the Series A Junior Participating Class E
Preferred Stock in respect thereof, shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on the first day of March,
June, September and December in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Junior Participating Class E Preferred Stock,
in an amount per share (rounded to the nearest cent) equal to the greater of
(a) $1.00 or (b) the Adjustment Number (as defined below) times the aggregate
per share amount of all cash dividends, and the Adjustment Number times the
aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock, par value $5.00
per share, of the Corporation (the "Common Stock") since the immediately
preceding Quarterly Dividend Payment Date, or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Junior Participating Class E Preferred Stock.
The "Adjustment Number" shall initially be 1000. In the event the Corporation
shall at any time after July 12, 1996 (the "Rights Declaration Date") (i)
declare and pay any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such
case the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.

         (B) The Corporation shall declare a dividend or distribution on the
Series A Junior Participating Class E Preferred Stock as provided in paragraph
(A) above immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock).

         (C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Junior Participating Class E Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such shares
of Series A Junior Participating Class E Preferred Stock, unless the date of
issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Junior Participating Class E
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Junior Participating Class E Preferred Stock in an amount
less than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Junior Participating Class E
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 60 days prior to the
date fixed for the payment thereof.

                                       63

<Page>

         3. Voting Rights. The holders of shares of Series A Junior
Participating Class E Preferred Stock shall have the following voting rights:

         (A) Each share of Series A Junior Participating Class E Preferred Stock
shall entitle the holder thereof to a number of votes equal to the Adjustment
Number on all matters submitted to a vote of the stockholders of the
Corporation.

         (B) Except as required by law and by Section 10 hereof, holders of
Series A Junior Participating Class E Preferred Stock shall have no special
voting rights and their consent shall not be required (except to the extent they
are entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.

         4.  Certain Restrictions.

         (A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Junior Participating Class E Preferred Stock as provided
in Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series A
Junior Participating Class E Preferred Stock outstanding shall have been paid in
full, the Corporation shall not

             (i) declare or pay dividends on, make any other distributions on,
or redeem or purchase or otherwise acquire for consideration any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Class E Preferred Stock,

             (ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior Participating
Class E Preferred Stock, except dividends paid ratably on the Series A Junior
Participating Class E Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled; or

             (iii) purchase or otherwise acquire for consideration any shares of
Series A Junior Participating Class E Preferred Stock, or any shares of stock
ranking on a parity with the Series A Junior Participating Class E Preferred
Stock, except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of Series A
Junior Participating Class E Preferred Stock, or to such holders and holders of
any such shares ranking on a parity therewith, upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series or classes.

         (B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.

         5. Reacquired Shares. Any shares of Series A Junior Participating Class
E Preferred Stock purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired promptly after the acquisition thereof. All
such shares shall upon their retirement become

                                       64

<Page>

authorized but unissued shares of Class E Preferred Stock and may be reissued
as part of a new series of Class E Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to any
conditions and restrictions on issuance set forth herein.

         6. Liquidation, Dissolution or Winding Up. (A) Upon any liquidation,
dissolution or winding up of the Corporation, voluntary or otherwise, no
distribution shall be made to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Junior Participating Class E Preferred Stock unless, prior thereto, the
holders of shares of Series A Junior Participating Class E Preferred Stock shall
have received an amount per share (the "Series A Liquidation Preference") equal
to the greater of (i) $100 plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment,
or (ii) the Adjustment Number times the per share amount of all cash and other
property to be distributed in respect of the Common Stock upon such liquidation,
dissolution or winding up of the Corporation.

         (B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of all classes of preferred
stock, if any, that rank on a parity with the Series A Junior Participating
Class E Preferred Stock in respect thereof, then the assets available for such
distribution shall be distributed ratably to the holders of the Series A Junior
Participating Class E Preferred Stock and the holders of such parity shares in
proportion to their respective liquidation preferences.

                                       65

<Page>

         (C) Neither the merger or consolidation of the Corporation into or with
another corporation nor the merger or consolidation of any other corporation
into or with the Corporation shall be deemed to be a liquidation, dissolution or
winding up of the Corporation within the meaning of this Section 6.

         7. Consolidation, Merger, Etc. In case the Corporation shall enter into
any consolidation, merger, combination or other transaction in which the
outstanding shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case each share
of Series A Junior Participating Class E Preferred Stock shall at the same time
be similarly exchanged or changed in an amount per share equal to the Adjustment
Number times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged.

         8. No Redemption. Shares of Series A Junior Participating Class E
Preferred Stock shall not be subject to redemption by the Company.

         9. Ranking. The Series A Junior Participating Class E Preferred Stock
shall rank junior to all other series of all classes of the Corporation's
preferred stock as to the payment of dividends and as to the distribution of
assets upon liquidation, dissolution or winding up, unless the terms of any such
series shall provide otherwise, and shall rank senior to the Common Stock as to
such matters.

         10. Amendment. At any time that any shares of Series A Junior
Participating Class E Preferred Stock are outstanding, the Certificate of
Incorporation of the Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Junior Participating Class E Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of two- thirds of the
outstanding shares of Series A Junior Participating Class E Preferred Stock,
voting separately as a class.

         11. Fractional Shares. Series A Junior Participating Class E Preferred
Stock may be issued in fractions of a share that shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Junior Participating Class E Preferred
Stock.

         IN WITNESS WHEREOF, the undersigned has executed this Certificate this
12th day of July, 1996.

                                       CONAGRA, INC.

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

                                       66

<Page>

                                    Exhibit B
                            Form of Right Certificate

Certificate No. R-______

         NOT EXERCISABLE AFTER JULY 12, 2006 OR EARLIER IF REDEMPTION OR
         EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT
         AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
         CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
         OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING
         PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES
         THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.

Right Certificate

                                     CONAGRA, INC.

         This certifies that ____________________________ or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of July 12, 1996, as the same may be amended from
time to time (the "Rights Agreement"), between ConAgra, Inc., a Delaware
corporation (the "Company"), and ChaseMellon Shareholder Services, L.L.C., as
Rights Agent (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M., Omaha, Nebraska time, on July 12, 2006 at the office or
agency of the Rights Agent designated for such purpose, or of its successor as
Rights Agent, one one- thousandth of a fully paid non-assessable share of Series
A Junior Participating Class E Preferred Stock, without par value (the
"Preferred Stock"), of the Company, at a purchase price of $200.00 per one
one-thousandth of a share of Preferred Stock (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase duly executed. The number of Rights evidenced by this Rights
Certificate (and the number of one one-thousandths of a share of Preferred Stock
which may be purchased upon exercise hereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price as of July 12, 1996,
based on the Preferred Stock as constituted at such date. As provided in the
Rights Agreement, the Purchase Price, the number of one one-thousandths of a
share of Preferred Stock (or other securities or property) which may be
purchased upon the exercise of the Rights and the number of Rights evidenced by
this Right Certificate are subject to modification and adjustment upon the
happening of certain events.

         This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of

                                       67

<Page>

the Rights Agent, the Company and the holders of the Right Certificates.
Copies of the Rights Agreement are on file at the principal executive offices
of the Company and the above- mentioned office or agency of the Rights Agent.
The Company will mail to the holder of this Right Certificate a copy of the
Rights Agreement without charge after receipt of a written request therefor.

         This Right Certificate, with or without other Right Certificates, upon
surrender at the office or agency of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of shares of Preferred Stock as the Rights evidenced by the
Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.

         Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company at a redemption price of
$.01 per Right or (ii) may be exchanged in whole or in part for shares of the
Company's Common Stock, par value $5.00 per share, or shares of Preferred Stock.

         No fractional shares of Preferred Stock or Common Stock will be issued
upon the exercise or exchange of any Right or Rights evidenced hereby (other
than fractions of Preferred Stock which are integral multiples of one
one-thousandths of a share of Preferred Stock, which may, at the election of the
Company, be evidenced by depository receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.

         No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preferred
Stock or of any other securities of the Company which may at any time be
issuable on the exercise or exchange hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement) or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised or exchanged as provided in the Rights
Agreement.

         This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.

         WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _____________________________ ___, 199_.

                                       CONAGRA, INC.

ATTEST

                                       By:
                                          ------------------------------------
                                       [Title]

                                       68

<Page>

---------------------------------
[Title]

Countersigned:

CHASEMELLON SHAREHOLDER SERVICES, L.L.C., as Rights Agent

By
  -------------------------------
      [Title]

                                       69

<Page>

                    Form of Reverse Side of Right Certificate

                               FORM OF ASSIGNMENT

(To be executed by the registered holder if such holder desires to transfer the
Right Certificate)

         FOR VALUE RECEIVED __________________________ hereby sells, assigns and
transfers unto

-----------------------------------------------------------------------
                  (Please print name and address of transferee)

-----------------------------------------------------------------------
Rights represented by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
________________________ Attorney, to transfer said Rights on the books of the
within-named Company, with full power of substitution.

Dated:
       -----------------------------

------------------------------------
                  Signature

Signature Guaranteed:

         Signatures must be guaranteed by a bank, trust company, broker, dealer
or other eligible institution participating in a recognized signature guarantee
medallion program.

 .............................................................................
                  (To be completed)

         The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by, were not acquired by the
undersigned from, and are not being assigned to an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).

------------------------------------
                  Signature

              Form of Reverse Side of Right Certificate - continued

                          FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to exercise Rights represented by the
Rights Certificate)

                                       70
<Page>

To  CONAGRA, INC.:

         The undersigned hereby irrevocably elects to exercise ________ Rights
represented by this Right Certificate to purchase the shares of Preferred Stock
(or other securities or property) issuable upon the exercise of such Rights and
requests that certificates for such shares of Preferred Stock (or such other
securities) be issued in the name of:

------------------------------------------------------------------------
                         (Please print name and address)

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

If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:

Please insert social security
or other identifying number

------------------------------------------------------------------------
                         (Please print name and address)

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

Dated:
      ------------------------

------------------------------------
                  Signature
(Signature must conform to holder specified on Right Certificate)

Signature Guaranteed:

         Signature must be guaranteed by a bank, trust company, broker, dealer
or other eligible institution participating in a recognized signature guarantee
medallion program.

Form of Reverse Side of Right Certificate - continued

------------------------------------------------------------------------
                         (To be completed)

         The undersigned certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by, and were not acquired by the
undersigned from, an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement).

------------------------------------
                  Signature

                                       71

<Page>

NOTICE

         The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.

         In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, such Assignment or Election to Purchase will not be honored.

                                       72

<Page>

Exhibit C

         UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
         RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN
         ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN
         TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE
         TRANSFERABLE.

                          SUMMARY OF RIGHTS TO PURCHASE
                          SHARES OF PREFERRED STOCK OF
                                  CONAGRA, INC.

         On July 12, 1996, the Board of Directors of ConAgra, Inc. (the
"Company") declared a dividend of one preferred share purchase right (a "Right")
for each outstanding share of common stock, par value $5.00 per share, of the
Company (the "Common Stock"). The dividend is payable on July 24, 1996 (the
"Record Date") to the stockholders of record on that date. Each Right entitles
the registered holder to purchase from the Company one one-thousandth of a share
of Series A Junior Participating Class E Preferred Stock, without par value, of
the Company (the "Preferred Stock") at a price of $200.00 per one one-thousandth
of a share of Preferred Stock (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement dated as
of July 12, 1996, as the same may be amended from time to time (the "Rights
Agreement"), between the Company and ChaseMellon Shareholder Services, L.L.C.,
as Rights Agent (the "Rights Agent").

         Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired beneficial ownership of 15% or more of the
outstanding shares of Common Stock or (ii) 10 business days (or such later date
as may be determined by action of the Board of Directors prior to such time as
any person or group of affiliated persons becomes an Acquiring Person) following
the commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of the outstanding shares of
Common Stock (the earlier of such dates being called the "Distribution Date"),
the Rights will be evidenced, with respect to any of the Common Stock
certificates outstanding as of the Record Date, by such Common Stock certificate
together with a copy of this Summary of Rights.

         The Rights Agreement provides that, until the Distribution Date (or
earlier expiration of the Rights), the Rights will be transferred with and only
with the Common Stock. Until the Distribution Date (or earlier expiration of the
Rights), new Common Stock certificates issued after the Record Date upon
transfer or new issuances of Common Stock will contain a notation incorporating
the Rights Agreement by reference. Until the Distribution Date (or earlier
expiration of the Rights), the surrender for transfer of any certificates for
shares of Common Stock outstanding as of the Record Date, even without such
notation or a copy of this Summary of Rights, will also constitute the transfer
of the Rights associated with the shares of Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.

                                       73

<Page>

         The Rights are not exercisable until the Distribution Date. The Rights
will expire on July 12, 2006 (the "Final Expiration Date"), unless the Final
Expiration Date is advanced or extended or unless the Rights are earlier
redeemed or exchanged by the Company, in each case as described below.

         The Purchase Price payable, and the number of shares of Preferred Stock
or other securities or property issuable, upon exercise of the Rights is subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Stock, (ii) upon the grant to holders of the Preferred Stock of certain rights
or warrants to subscribe for or purchase Preferred Stock at a price, or
securities convertible into Preferred Stock with a conversion price, less than
the then-current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular periodic cash dividends or dividends payable in
Preferred Stock) or of subscription rights or warrants (other than those
referred to above).

         The number of outstanding Rights is subject to adjustment in the event
of a stock dividend on the Common Stock payable in shares of Common Stock or
subdivisions, consolidations or combinations of the Common Stock occurring, in
any such case, prior to the Distribution Date.

         Shares of Preferred Stock purchasable upon exercise of the Rights will
not be redeemable. Each share of Preferred Stock will be entitled, when, as and
if declared, to a minimum preferential quarterly dividend payment of $1.00 per
share but will be entitled to an aggregate dividend of 1000 times the dividend
declared per share of Common Stock. In the event of liquidation, dissolution or
winding up of the Company, the holders of the Preferred Stock will be entitled
to a minimum preferential payment of $100 per share (plus any accrued but unpaid
dividends) but will be entitled to an aggregate payment of 1000 times the
payment made per share of Common Stock. Each share of Preferred Stock will have
1000 votes, voting together with the Common Stock. Finally, in the event of any
merger, consolidation or other transaction in which outstanding shares of Common
Stock are converted or exchanged, each share of Preferred Stock will be entitled
to receive 1000 times the amount received per share of Common Stock. These
rights are protected by customary antidilution provisions.

         Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the value of the one one-thousandth interest in a share of
Preferred Stock purchasable upon exercise of each Right should approximate the
value of one share of Common Stock.
         In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereupon become void),
will thereafter have the right to receive upon exercise of a Right that number
of shares of Common Stock having a market value of two times the exercise price
of the Right.

         In the event that, after a person or group has become an Acquiring
Person, the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold,
proper provisions will be made so that each holder of a Right (other than Rights
beneficially owned by an Acquiring Person which will have become void) will
thereafter have the right to receive upon the exercise of a Right that number of
shares of common stock of the person with whom the Company has engaged in the
foregoing transaction (or its parent) that at the time of such transaction have
a market value of two times the exercise price of the Right.

                                       74

<Page>

         At any time after any person or group becomes an Acquiring Person and
prior to the earlier of one of the events described in the previous paragraph or
the acquisition by such Acquiring Person of 50% or more of the outstanding
shares of Common Stock, the Board of Directors of the Company may exchange the
Rights (other than Rights owned by such Acquiring Person which will have become
void), in whole or in part, for shares of Common Stock or Preferred Stock (or a
series of the Company's preferred stock having equivalent rights, preferences
and privileges), at an exchange ratio of one share of Common Stock, or a
fractional share of Preferred Stock (or other preferred stock) equivalent in
value thereto, per Right.

         With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preferred Stock or Common Stock
will be issued (other than fractions of Preferred Stock which are integral
multiples of one one-thousandths of a share of Preferred Stock, which may, at
the election of the Company, be evidenced by depositary receipts), and in lieu
thereof an adjustment in cash will be made based on the current market price of
the Preferred Stock or the Common Stock.

         At any time prior to the time an Acquiring Person becomes such, the
Board of Directors of the Company may redeem the Rights in whole, but not in
part, at a price of $.01 per Right (the "Redemption Price"). The redemption of
the Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.

         For so long as the Rights are then redeemable, the Company may, except
with respect to the redemption price, amend the Rights Agreement in any manner.
After the Rights are no longer redeemable, the Company may, except with respect
to the redemption price, amend the Rights Agreement in any manner that does not
adversely affect the interests of holders of the Rights.

         Until a Right is exercised or exchanged, the holder thereof, as such,
will have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends.

         A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
July __, 1996. A copy of the Rights Agreement is available free of charge from
the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
as the same may be amended from time to time, which is hereby incorporated
herein by reference.

                            CERTIFICATE OF ADJUSTMENT

         This is to certify pursuant to Section 12 of the Rights Agreement,
dated as of July 12, 1996, as amended (the "Rights Agreement"), between ConAgra,
Inc., a Delaware corporation (the "Company") and Chase Mellon Shareholder

                                       75

<Page>

Services, L.L.C., as Rights Agent, that:

I.       Statement of Facts.

         At its July 11, 1997 meeting, the Company's Board of Directors declared
a two-for-one split of the shares of common stock, par value $5.00 per share, of
the Company (the "Common Stock"), to be effected in the form of a stock dividend
(the "Distribution") on October 1, 1997 to holders of record of the Common Stock
on September 5, 1997.

II.      Adjustments Pursuant to the Rights Agreement.

         Pursuant to the provisions of the Sections 11(n) of the Rights
Agreement effective, as of October 1, 1997, the Right associated with each share
of Common Stock is hereby adjusted so that one-half Right shall be associated
with each share of Common Stock outstanding immediately after the Distribution.

Dated this 1st day of October, 1997.

                                       CONAGRA, INC.

                                       By:     /s/ J. P. O'Donnell
                                          ------------------------------------
                                       Name:  J. P. O'Donnell
                                       Title: Executive Vice President,
                                              Chief Financial Officer
                                              Corporate Secretary

                                       76

<Page>

                                    AMENDMENT

                                       TO

                      RIGHTS AGREEMENT DATED JULY 12, 1996

         This Amendment executed between ConAgra, Inc. (the "Company") and
ChaseMellon Shareholder Services, L.L.C. ("ChaseMellon") dated as of July 10,
1998 amends the Rights Agreement between the Company and ChaseMellon dated July
12, 1996 (the "Rights Agreement").

RECITALS

         A. Section 21 of the Rights Agreement permits the Company to remove a
Rights Agent (as defined in the Rights Agreement) and appoint a successor Rights
Agent.

         B. Pursuant to the terms of the Rights Agreement, ChaseMellon serves as
the Rights Agent.

         C. The Company has appointed Norwest Bank of Minnesota, N.A.
("Norwest") as its transfer agent and registrar and dividend disbursing agent
and Rights Agent pursuant to a resolution adopted by the Board of Directors of
the Company on July 10, 1998.

         D. Pursuant to Section 21 of the Rights Agreement, the Company has
provided notification to ChaseMellon on July 10, 1998 that it has appointed
Norwest as Rights Agent effective August 10, 1998.

         NOW, THEREFORE, the Company and ChaseMellon agree as follows:

         Effective August 10, 1998, the term "Rights Agent" shall be amended to
         mean Norwest and its successors and assigns or any successor entity
         appointed by the Company.

         The fifth sentence of Section 21 is deleted and is replaced with the
following:

         Any successor Rights Agent, whether appointed by the Company or by such
         a court, shall be a corporation organized and doing business under the
         laws of the United States or of any state of the United States or the
         District of Columbia so long as such corporation is in good standing,
         and is authorized under such laws to exercise corporate trust powers
         and is subject to supervision or examination by federal or state
         authority and which has at the time of its appointment as Rights Agent
         a combined capital and surplus of at least $50 million.

                                       77

<Page>

         Section 26 is amended by deleting the address for the Rights Agent
provided for and inserting instead:

                  Norwest Bank of Minnesota, N.A.
                  161 North Concord Exchange
                  South St. Paul, MN  55075

         This amendment shall be governed by and construed in accordance with
the laws of the State of Delaware.

         This amendment may be executed in counterparts and each such
counterpart shall be deemed to be an original.

         The Rights Agreement as amended by this Amendment shall be read
together to constitute one agreement.

CONAGRA, INC.                               CHASEMELLON SHAREHOLDER
                                            SERVICES, L.L.C.

By:  /s/ J. P. O'Donnell                    By:  /s/ Stanley E. Siekierski
   --------------------------------            ----------------------------
     J.P. O'Donnell                              Stanley E. Siekierski
     Executive Vice President,                   Title:  Vice President
     Chief Financial Officer and
     Corporate Secretary

         Norwest Bank of Minnesota, N.A. herewith accepts appointment as
successor Rights Agent effective August 10, 1998 as described in the attached
Amendment dated as of July 10, 1998 to Rights Agreement between ConAgra, Inc.
and ChaseMellon Shareholder Services, L.L.C. dated July 12, 1996.

                                       NORWEST BANK OF MINNESOTA, N.A.

                                       /s/ Lisa Dornburg
                                       ------------------------------------
                                       By:  Lisa Dornburg
                                       Title:  OFFICER, NORWEST BANK MN, N.A.

                                       78

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