(collectively, the "Securityholder Agents"), and State Street Bank and Trust

 

                                                                   Exhibit 10.11

                          AGREEMENT AND PLAN OF MERGER

                                      AMONG

                     INTRINSIX CORP., INTRINSIX MERGER CORP.

                                       AND

                             SEVA TECHNOLOGIES, INC.

                                  JUNE 11, 1999

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

Exhibit A - Escrow Agreement
Exhibit B - Affiliate Agreement
Exhibit C - Investment Agreement
Exhibit D - Opinion of Wilson, Sonsini, Goodrich & Rosati
Exhibit E - Opinion of Hale and Dorr LLP
Exhibit F - Investment Questionnaire
Exhibit G - Purchaser Representative Questionnaire

                                      -2-

                          AGREEMENT AND PLAN OF MERGER

      Agreement entered into as of June 11, 1999 by and among Intrinsix Corp. a
Massachusetts corporation (the "Buyer"), Intrinsix Merger Corp., a Massachusetts
corporation and a wholly-owned subsidiary of the Buyer (the "Transitory
Subsidiary"), and SEVA Technologies, Inc., a California corporation (the
"Company"). The Buyer, the Transitory Subsidiary and the Company are referred to
collectively herein as the "Parties."

      This Agreement contemplates a tax-free merger of the Company into the
Transitory Subsidiary. In such merger, the stockholders of the Company will
receive capital stock of the Buyer in exchange for their capital stock of the
Company.

      Now, therefore, in consideration of the representations, warranties and
covenants herein contained, the Parties agree as follows.

                                    ARTICLE I

                                   THE MERGER

      1.1 The Merger. Upon and subject to the terms and conditions of this
Agreement, the Company shall merge with and into the Transitory Subsidiary (with
such merger referred to herein as the "Merger") at the Effective Time (as
defined below). From and after the Effective Time, the separate corporate
existence of the Company shall cease and the Transitory Subsidiary shall
continue as the surviving corporation in the Merger (the "Surviving
Corporation") with the corporate purposes as specified in its Articles of
Organization, as the same may be amended from time to time. The "Effective Time"
shall be the time at which the Company and the Transitory Subsidiary file the
articles of merger or other appropriate documents prepared and executed in
accordance with the relevant provisions of the Massachusetts Business
Corporation Law and the California Corporations Code (the "Articles of Merger")
with the Secretary of States of The Commonwealth of Massachusetts and the State
of California. The Merger shall have the effects set forth in Section 80 of
Chapter 156B of the Massachusetts Business Corporation Law.

      1.2 The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Hale and Dorr LLP,
60 State Street, Boston,

                                      -6-

Massachusetts, commencing at 10:00 a.m. local time on June 30, 1999, or, if all
of the conditions to the obligations of the Parties to consummate the
transactions contemplated hereby have not been satisfied or waived by such date,
on such mutually agreeable later date as soon as practicable after the
satisfaction or waiver of all conditions to the obligations of the Parties to
consummate the transactions contemplated hereby (the "Closing Date").

      1.3 Actions at the Closing. At the Closing, (a) the Company shall deliver
to the Buyer and the Transitory Subsidiary the various certificates, instruments
and documents referred to in Section 5.2, (b) the Buyer and the Transitory
Subsidiary shall deliver to the Company the various certificates, instruments
and documents referred to in Section 5.3, (c) the Company and the Transitory
Subsidiary shall file with the Secretary of States of The Commonwealth of
Massachusetts and the State of California the Articles of Merger, (d) each
Company Stockholder (as defined in Section 1.5(a)) shall deliver to the Buyer
the certificate(s) (the "Certificates") representing his or her shares of
Company Common Stock (as defined in Section 2.2), (e) the Buyer shall deliver a
certificate for the Initial Shares (as defined in Section 1.5(a)) in accordance
with Section 1.5 and (f) the Buyer, Yatin Trivedi and Larry F. Saunders acting
as duly appointed securityholder agents on behalf of the Company Stockholders
(collectively, the "Securityholder Agents"), and State Street Bank and Trust
Company (the "Escrow Agent") shall execute and deliver the Escrow Agreement
substantially in the form attached hereto as Exhibit A (the "Escrow Agreement")
and the Buyer shall deliver to the Escrow Agent a certificate for the Escrow
Shares (as defined in Section 1.5(a)) being placed in escrow on the Closing Date
pursuant to Section 1.10.

      1.4 Additional Action. The Surviving Corporation may, at any time after
the Effective Time, take any action, including executing and delivering any
document, in the name and on behalf of either the Company or the Transitory
Subsidiary, in order to consummate the transactions contemplated by this
Agreement.

      1.5 Conversion of Shares. At the Effective Time, by virtue of the Merger
and without any action on the part of any Party or the holders of the shares of
common stock, no par value per share, of the Company ("Company Common Stock"):

            (a) Subject to the provisions of Section 1.6 and Section 1.9, each
share of Company Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares of Company Common Stock owned beneficially by
the Buyer or the Transitory Subsidiary, Dissenting Shares (as defined in Section
1.7) and shares of Company Common Stock held in the Company's treasury) shall be
converted into and represent the right to receive

                                      -7-

(subject to the provisions of Section 1.10) such number of shares of common
stock, no par value per share, of the Buyer ("Buyer Common Stock") as is equal
to the conversion ratio, which shall initially be equal to 0.2193 (the
"Conversion Ratio"). Stockholders of record of the Company ("Company
Stockholders") shall be entitled to receive immediately 90% of the shares of
Buyer Common Stock into which their shares of Company Common Stock were
converted pursuant to this Section 1.5(a) (the "Initial Shares"); the remaining
10% of the shares of Buyer Common Stock into which Company Common Stock were
converted pursuant to this Section 1.5(a) (the "Escrow Shares") shall be
deposited in escrow pursuant to Section 1.10 and shall be held and disposed of
in accordance with the terms of the Escrow Agreement. The Initial Shares and the
Escrow Shares shall together be referred to herein as the "Merger Shares."

            (b) Each share of Company Common Stock held in the Company's
treasury immediately prior to the Effective Time and each share of Company
Common Stock owned beneficially by the Buyer or the Transitory Subsidiary shall
be cancelled and retired without payment of any consideration therefor.

            (c) Each share of common stock, no par value per share, of the
Transitory Subsidiary issued and outstanding immediately prior to the Effective
Time shall be converted into and thereafter evidence one share of common stock,
no par value per share, of the Surviving Corporation.

      1.6 Adjustment of the Conversion Ratios.

In the event that, prior to the Effective Date, any stock split, combination,
reclassification or stock dividend with respect to the Buyer Common Stock, any
change or conversion of Buyer Common Stock into other securities or any other
dividend or distribution with respect to the Buyer Common Stock should occur or,
if a record date with respect to any of the foregoing should occur, appropriate
and proportionate adjustments shall be made to each Conversion Ratio, and
thereafter all references to an Conversion Ratio shall be deemed to be such
Conversion Ratio as so adjusted.

      1.7 Dissenting Shares.

            (a) For purposes of this Agreement, "Dissenting Shares" means shares
of Company Common Stock held as of the Effective Time by a Company Stockholder
who has not voted such shares of Company Common Stock in favor of the adoption
of this Agreement and the Merger and with respect to which purchase shall have
been duly demanded and perfected in

                                      -8-

accordance with Section 1301 of the California Corporations Code Law and not
effectively withdrawn or forfeited prior to the Effective Time. Dissenting
Shares shall not be converted into or represent the right to receive Merger
Shares, unless such Company Stockholder shall have forfeited his right to demand
purchase under the California Corporations Code or withdrawn, with the consent
of the Company, his demand for purchase. If such Company Stockholder has so
forfeited or withdrawn his right to appraisal of Dissenting Shares, then (i) as
of the occurrence of such event, such holder's Dissenting Shares shall cease to
be Dissenting Shares and shall be converted into and represent the right to
receive the Merger Shares issuable in respect of such shares of Company Common
Stock pursuant to Section 1.5(a), and (ii) promptly following the occurrence of
such event, the Buyer shall deliver to such Company Stockholder a certificate
representing 90% of the Merger Shares to which such holder is entitled pursuant
to Section 1.5(a) (which shares shall be considered Initial Shares for all
purposes of this Agreement) and shall deliver to the Escrow Agent a certificate
representing the remaining 10% of the Merger Shares to which such holder is
entitled pursuant to Section 1.5(a) (which shares shall be considered Escrow
Shares for all purposes of this Agreement).

            (b) The Company shall give the Buyer (i) prompt notice of any
written demands for purchase of any Company Shares under Section 1301 of the
California Corporations Code, withdrawals of such demands, and any other
instruments that relate to such demands received by the Company and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for purchase under the California Corporations Code. The Company shall not,
except with the prior written consent of the Buyer, make any payment with
respect to any demands for purchase of shares of Company Common Stock or offer
to settle or settle any such demands.

      1.8 Dividends. No dividends or other distributions that are payable to the
holders of record of Buyer Common Stock as of a date on or after the Closing
Date shall be paid to former Company Stockholders entitled by reason of the
Merger to receive Initial Shares until such holders surrender their Certificates
in accordance with Section 1.12. Upon such surrender, the Buyer shall pay or
deliver to the persons in whose name the certificates representing such Initial
Shares are issued any dividends or other distributions that are payable to the
holders of record of Buyer Common Stock as of a date on or after the Closing
Date and which were paid or delivered between the Effective Time and the time of
such surrender; provided that no such person shall be entitled to receive any
interest on such dividends or other distributions.

                                      -9-

      1.9 Fractional Shares. No certificates or script representing fractional
Initial Shares shall be issued to former Company Stockholders upon the surrender
for exchange of Certificates, and such former Company Stockholders shall not be
entitled to any voting rights, rights to receive any dividends or distributions
or other rights as a stockholder of the Buyer with respect to any fractional
Initial Shares that would otherwise be issued to such former Company
Stockholders. In lieu of any fractional Initial Shares that would otherwise be
issued, each former Company Stockholder that would have been entitled to receive
a fractional Initial Share shall, upon proper surrender of such person's
Certificates, receive such whole number of Initial Shares as is equal to the
precise number of Initial Shares to which such person would be entitled, rounded
up to the nearest whole number.

      1.10 Escrow.

            (a) On the Closing Date, the Buyer shall deliver to the Escrow Agent
a certificate (issued in the name of the Escrow Agent or its nominee)
representing the Escrow Shares, as described in Section 1.5(a), for the purpose
of securing the indemnification obligations of the Company Stockholders set
forth in this Agreement. The Escrow Shares shall be held by the Escrow Agent
under the Escrow Agreement pursuant to the terms thereof. The Escrow Shares
shall be held as a trust fund and shall not be subject to any lien, attachment,
trustee process or any other judicial process of any creditor of any party, and
shall be held and disbursed solely for the purposes and in accordance with the
terms of the Escrow Agreement.

            (b) The adoption of this Agreement and the approval of the Merger by
the Company Stockholders shall constitute approval of the Escrow Agreement and
of all of the arrangements relating thereto, including without limitation the
placement of the Escrow Shares in escrow and the appointment of the
Securityholder Agents.

      1.11 Options.

            (a) As of the Effective Time, all options to purchase Company Common
Stock issued by the Company pursuant to its stock option plans or otherwise
("Options"), whether vested or unvested, shall be assumed by the Buyer.
Immediately after the Effective Time, each Option outstanding immediately prior
to the Effective Time shall be deemed to constitute an option to acquire, on the
same terms and conditions as were applicable under such Option at the Effective
Time, such number of shares of Buyer Common Stock as is equal to the number of
Company Common Stock subject to the unexercised portion of such Option
multiplied by the Conversion Ratio (with any fraction resulting from such
multiplication to be

                                      -10-

rounded up to the nearest whole number). The exercise price per share of each
such assumed Option shall be equal to the exercise price of such Option
immediately prior to the Effective Time, divided by the Conversion Ratio,
rounded down to the nearest cent. The term, exercisability, vesting schedule,
status as an "incentive stock option" under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), if applicable, and all of the other terms
of the Options shall otherwise remain unchanged.

            (b) As soon as practicable after the Effective Time, the Buyer or
the Surviving Corporation shall deliver to the holders of Options appropriate
notices setting forth such holders' rights pursuant to such Options, as amended
by this Section 1.11, and the agreements evidencing such Options shall continue
in effect on the same terms and conditions (subject to the amendments provided
for in this Section 1.11 and such notice).

            (c) The Buyer shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Buyer Common Stock for delivery
upon exercise of the Options assumed in accordance with this Section 1.11.

            (d) The Company shall obtain, prior to the Closing, the consent from
each holder of an Option to the amendment of such Option pursuant to this
Section 1.11 (unless such consent is not required under the terms of the
applicable agreement, instrument or plan).

      1.12 Exchange of Certificates.

            (a) Until surrendered, the Certificate(s) which represented shares
of Company Common Stock at the Effective Time shall be deemed for all corporate
purposes to evidence ownership of the shares of the Buyer Common Stock into
which the shares of Company Common Stock evidenced by the Certificate(s) so
surrendered shall have been converted in accordance with Section 1.5. From and
after the Effective Time, the holders of shares of Company Common Stock shall
cease to have any rights in respect of such shares of Company Common Stock
(except as provided herein or by law) and their rights shall be solely in
respect to the shares of the Buyer Common Stock into which the shares of Company
Common Stock evidenced by the Certificate(s) so surrendered shall have been
converted in accordance with Section 1.5.

            (b) If any shares of the Buyer Common Stock are to be issued or
delivered in the name of a person other than the person in whose name the
Certificate(s) surrendered in exchange therefor is registered, it shall be a
condition to the issuance or delivery of such shares

                                      -11-

of Buyer Common Stock that (i) the Certificate(s) so surrendered shall be
transferable, and shall be properly assigned, endorsed or accompanied by
appropriate stock powers, (ii) such transfer shall otherwise be proper and (iii)
the person requesting such transfer shall pay the Buyer, or its exchange agent,
any transfer or other taxes payable by reason of the foregoing or establish to
the satisfaction of the Buyer that such taxes have been paid or are not required
to be paid. Notwithstanding the foregoing, no Party shall be liable to a holder
of shares of Company Common Stock for any shares of the Buyer Common Stock
issuable to such holder pursuant to Section 1.5 that are delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.

            (c) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed, the Buyer shall issue in
exchange for such lost, stolen or destroyed Certificate the shares of the Buyer
Common Stock issuable in exchange therefor pursuant to Section 1.5. The Buyer
may, in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed Certificate to provide to
the Buyer an indemnity agreement against any claim that may be made against the
Buyer with respect to the Certificate alleged to have been lost, stolen or
destroyed.

      1.13 Articles of Organization. The Articles of Organization of the
Surviving Corporation shall be the same as the Articles of Organization of the
Transitory Subsidiary immediately prior to the Effective Time, except that the
name of the corporation set forth therein shall be changed to the name of the
Company.

      1.14 By-laws. The By-laws of the Surviving Corporation shall be the same
as the By-laws of the Transitory Subsidiary immediately prior to the Effective
Time, except that the name of the corporation set forth therein shall be changed
to the name of the Company.

      1.15 No Further Rights. From and after the Effective Time, no shares of
Company Common Stock shall be deemed to be outstanding, and holders of
Certificates shall cease to have any rights with respect thereto, except as
provided herein or by law.

      1.16 Closing of Transfer Books. At the Effective Time, the stock transfer
books of the Company shall be closed and no transfer of shares of Company Common
Stock shall thereafter be made. If, after the Effective Time, Certificates are
presented to the Surviving Corporation or the exchange agent, they shall be
cancelled and exchanged for Initial Shares in accordance with Section 1.5(a),
subject to Section 1.10 and to applicable law in the case of Dissenting Shares.

                                      -12-

                   ARTICLE II - REPRESENTATIONS AND WARRANTIES
                                 OF THE COMPANY

      The Company represents and warrants to the Buyer that the statements
contained in this Article II are true and correct, except as set forth in the
disclosure schedule attached hereto (the "Disclosure Schedule"). The Disclosure
Schedule shall be initialed by the Parties and shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Article
II, and the disclosures in any paragraph of the Disclosure Schedule shall
qualify only the corresponding paragraph in this Article II.

      2.1 Organization, Qualification and Corporate Power. The Company is a
corporation duly organized, validly existing and in corporate and tax good
standing under the laws of the state of its incorporation. The Company is duly
qualified to conduct business and is in corporate and tax good standing under
the laws of each jurisdiction in which the nature of its businesses or the
ownership or leasing of its properties requires such qualification. The Company
has all requisite corporate power and authority to carry on the businesses in
which it is engaged and to own and use the properties owned and used by it. The
Company has furnished to the Buyer true and complete copies of its Articles of
Incorporation and By-laws, each as amended and as in effect on the date hereof.
The Company is not in default under or in violation of any provision of its
Articles of Incorporation or By-laws.

      2.2 Capitalization. The authorized capital stock of the Company consists
of 10,000,000 shares of Company Common Stock, of which 2,280,000 shares are
issued and outstanding. Section 2.2 of the Disclosure Schedule sets forth a
complete and accurate list of (i) all stockholders of the Company, indicating
the number of shares of Company Common Stock held by each stockholder, and (ii)
all holders of Options and warrants, indicating the number of shares of Company
Common Stock subject to each Option and warrant. All of the issued and
outstanding shares of Company Common Stock are, and all shares of Company Common
Stock that may be issued upon exercise of Options and warrants will be, duly
authorized, validly issued, fully paid, nonassessable and free of all preemptive
rights. There are no outstanding or authorized options, warrants, rights,
agreements or commitments to which the Company is a party or which are binding
upon the Company providing for the issuance, disposition or acquisition of any
of its capital stock, other than the Options and warrants listed in Section 2.2
of the Disclosure Schedule. There are no outstanding or authorized stock
appreciation, phantom stock or similar rights with respect to the Company. There
are no agreements, voting trusts, proxies, or understandings with respect to the
voting, or registration

                                      -13-

under the Securities Act of 1933, as amended (the "Securities Act"), of any
shares of Company Common Stock. All of the issued and outstanding shares of
Company Common Stock were issued in compliance with applicable federal and state
securities laws.

      2.3 Authorization of Transaction. The Company has all requisite power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement and, subject to the
adoption of this Agreement and the approval of the Merger by a majority of the
votes represented by the outstanding shares of Company Common Stock entitled to
vote on this Agreement and the Merger (the "Requisite Stockholder Approval"),
the performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of the Company. Without
limiting the generality of the foregoing: (a) the Board of Directors of the
Company, at a meeting duly called and held or by the unanimous vote of all
directors (i) determined that the Merger is fair and in the best interests of
the Company and the Company Stockholders, (ii) adopted this Agreement in
accordance with the provisions of the California Corporations Code, and (iii)
directed that this Agreement and the Merger be submitted to the Company
Stockholders for their adoption and approval and recommended that Company
Stockholders vote in favor of the adoption of this Agreement and the approval of
the Merger; (b) the Company provided to each holder of shares of Company Common
Stock, prior to the vote by the Company Stockholders with respect to the Merger
and this Agreement, copies of the Buyer Financial Statements (as defined in
Section 3.5) and all information required under Section 1301 of the California
Corporations Code concerning their rights to demand purchase; and (c) prior to
the Effective Time, the holders of the shares of Company Common Stock shall have
approved this Agreement and the Merger, in accordance with the provisions of the
California Corporations Code, at a meeting duly called and held or by unanimous
written consent. This Agreement has been duly and validly executed and delivered
by the Company and, assuming due and valid execution by the other parties
hereto, constitutes a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.

      2.4 Noncontravention. Subject to compliance with the applicable
requirements of the Securities Act and any applicable state securities laws, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the filing
of the Articles of Merger as required by the Massachusetts Business Corporation
Law and the California Corporations Code, neither the execution and delivery of
this Agreement by the Company, nor the consummation by the Company of the
transactions contemplated hereby, will (a) conflict with or violate any
provision

                                      -14-

of the charter or By-laws of the Company, (b) require on the part of the Company
or any corporation with respect to which the Company, directly or indirectly,
has the power to vote or direct the voting of sufficient securities to elect a
majority of the directors (a "Subsidiary") any filing with, or any permit,
authorization, consent or approval of, any court, arbitrational tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency (a "Governmental Entity") , other than any filing, permit,
authorization, consent or approval which if not obtained or made would not have
a material adverse effect on the assets, business, financial condition, results
of operations or future prospects of the Company or on the ability of the
Parties to consummate the transactions contemplated by this Agreement, (c)
conflict with, result in a breach of, constitute (with or without due notice or
lapse of time or both) a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify or cancel, or require any
notice, consent or waiver under, any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest (as defined below) or other
arrangement to which the Company is a party or by which the Company is bound or
to which any of their assets is subject, other than any conflict, breach,
default, acceleration, termination, modification or cancellation which
individually or in the aggregate would not have a material adverse effect on the
assets, business, financial condition, results of operations or future prospects
of the Company or on the ability of the Parties to consummate the transactions
contemplated by this Agreement, (d) result in the imposition of any Security
Interest upon any assets of the Company or (e) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company or any
of its properties or assets. For purposes of this Agreement, "Security Interest"
means any mortgage, pledge, security interest, encumbrance, charge, or other
lien (whether arising by contract or by operation of law), other than (i)
mechanic's, materialmen's, and similar liens, (ii) liens arising under worker's
compensation, unemployment insurance, social security, retirement, and similar
legislation, and (iii) liens on goods in transit incurred pursuant to
documentary letters of credit, in each case arising in the ordinary course of
business consistent with past custom and practice (including with respect to
frequency and amount) ("Ordinary Course of Business") of the Company and not
material to the Company.

      2.5 Subsidiaries. The Company has no Subsidiaries.

      2.6 Financial Statements. The Company has provided to the Buyer and
attached as Section 2.6 of the Disclosure Schedule the unaudited consolidated
balance sheets and statements of income, changes in stockholders' equity and
cash flows of the Company (a) as of and for each of the fiscal years ended
December 31, 1996, 1997 and 1998 and (b) for the four months ended

                                      -15-

as of April 30, 1999 (the "Most Recent Balance Sheet Date") (collectively, the
"Financial Statements"). The Financial Statements for the fiscal year ended
December 31, 1998 and for the four months ended as of the Most Recent Balance
Sheet Date have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods covered thereby, fairly present the financial condition, results of
operations and cash flows of the Company and the Subsidiaries as of the
respective dates thereof and for the periods referred to therein and are
consistent with the books and records of the Company and the Subsidiaries;
provided, however, that such Financial Statements do not include footnotes.

      2.7 Absence of Certain Changes. Except as otherwise contemplated by this
Agreement, since the Most Recent Balance Sheet Date, (a) there has occurred no
event or development which has had, or could reasonably be foreseen to have in
the future, a Company Material Adverse Effect (as defined below), and (b) the
Company has not taken any of the actions set forth in paragraphs (a) through (o)
of Section 4.3. For purposes of this Agreement, "Company Material Adverse
Effect" means a material adverse effect on the assets, business, financial
condition, results of operations or future prospects of the Company or on the
ability of the Parties to consummate the Merger and the transaction contemplated
thereby.

      2.8 Undisclosed Liabilities. The Company does not have any liability
(whether known or unknown, whether absolute or contingent, whether liquidated or
unliquidated and whether due or to become due), except for (a) liabilities shown
on the balance sheet referred to in clause (b) of Section 2.6 (the "Most Recent
Balance Sheet"), (b) liabilities which have arisen since the Most Recent Balance
Sheet Date in the Ordinary Course of Business and which are similar in nature
and amount to the liabilities which arose during the comparable period of time
in the immediately preceding fiscal period and (c) contractual and other
liabilities incurred in the Ordinary Course of Business which are not required
by GAAP to be reflected on a balance sheet.

      2.9 Tax Matters.

            (a) The Company has filed all Tax Returns (as defined below) that it
was required to file and all such Tax Returns were correct and complete in all
material respects. The Company has paid all Taxes (as defined below) that are
shown to be due on any such Tax Returns. The unpaid Taxes of the Company for tax
periods through the Most Recent Balance Sheet Date do not exceed the accruals
and reserves for Taxes set forth on the Most Recent Balance Sheet. The Company
does not have any actual or potential liability for any Tax obligation of any
taxpayer (including without limitation any affiliated group of corporations or

                                      -16-

other entities that included the Company during a prior period) other than the
Company. All Taxes that the Company is or was required by law to withhold or
collect have been duly withheld or collected and, to the extent required, have
been paid to the proper Governmental Entity. For purposes of this Agreement,
"Taxes" means all taxes, charges, fees, levies or other similar assessments or
liabilities, including without limitation income, gross receipts, ad valorem,
premium, value-added, excise, real property, personal property, sales, use,
transfer, withholding, employment, payroll and franchise taxes imposed by the
United States of America or any state, local or foreign government, or any
agency thereof, or other political subdivision of the United States or any such
government, and any interest, fines, penalties, assessments or additions to tax
resulting from, attributable to or incurred in connection with any tax or any
contest or dispute thereof. For purposes of this Agreement, "Tax Returns" means
all reports, returns, declarations, statements or other information required to
be supplied to a taxing authority in connection with Taxes.

            (b) The Company has delivered to the Buyer correct and complete
copies of all federal income Tax Returns, examination reports and statements of
deficiencies assessed against or agreed to by the Company since January 1, 1996.
The federal income Tax Returns of the Company have not been audited by the
Internal Revenue Service. No examination or audit of any Tax Returns of the
Company by any Governmental Entity is currently in progress or, to the knowledge
of the Company, threatened or contemplated. The Company has not waived any
statute of limitations with respect to taxes or agreed to an extension of time
with respect to a tax assessment or deficiency.

            (c) The Company is not a "consenting corporation" within the meaning
of Section 341(f) of the Code and none of the assets of the Company are subject
to an election under Section 341(f) of the Code. 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)(l)(A)(ii) of the Code. The Company is not a party to any Tax allocation
or sharing agreement.

            (d) The Company is not and has never been a member of an "affiliated
group" of corporations (within the meaning of Section 1504 of the Code). The
Company has not made an election under Treasury Reg. Section 1.1502-20(g). The
Company is not and has not been required to make a basis reduction pursuant to
Treasury Reg. Section 1.1502-20(b) or Treasury Reg. Section 1.337(d)-2T(b).

                                      -17-

      2.10 Assets. The Company owns or leases all tangible assets necessary for
the conduct of its businesses as presently conducted and as presently proposed
to be conducted. Each such tangible asset is free from material defects, has
been maintained in accordance with normal industry practice, is in good
operating condition and repair (subject to normal wear and tear) and is suitable
for the purposes for which it presently is used. No asset of the Company
(tangible or intangible) is subject to any Security Interest.

      2.11 Intellectual Property.

            (a) The Company owns, or is licensed or otherwise possesses legally
enforceable rights to use, all patents, trademarks, trade names, service marks,
copyrights, and any applications for such patents, trademarks, trade names,
service marks and copyrights, schematics, technology, know-how, computer
software programs or applications and tangible or intangible proprietary
information or material (collectively, "Intellectual Property") that are used to
conduct its business as currently conducted or planned to be conducted. Section
2.11 of the Disclosure Schedule lists (i) all patents and patent applications
and all trademarks, registered copyrights, trade names and service marks which
are used in the business of the Company, including the jurisdictions in which
each such Intellectual Property right has been issued or registered or in which
any such application for such issuance or registration has been filed, (ii) all
material written licenses, sublicenses and other agreements to which the Company
is a party and pursuant to which any person is authorized to use any
Intellectual Property rights, and (iii) all material written licenses,
sublicenses and other agreements as to which the Company is a party and pursuant
to which the Company is authorized to use any third party patents, trademarks or
copyrights, including software ("Third Party Intellectual Property Rights")
which are used in the business of the Company or which form a part of any
product or service of the Company (excluding software that is available through
commercial distributors or in commercial retail stores and subject to
"shrink-wrap" agreements). The Company is not a party to any oral license,
sublicense or agreement which, if reduced to written form, would be required to
be listed in Section 2.11 of the Disclosure Schedule under the terms of this
Section 2.11(a).

            (b) The Company is not and will not be as a result of the execution
and delivery of this Agreement or the performance of the Company's obligations
under this Agreement, in breach of any license, sublicense or other agreement
relating to the Intellectual Property or Third Party Intellectual Property
Rights.

            (c) The Company has not been named in any suit, action or proceeding
which involves a claim of infringement of any Intellectual Property right of any
third party. To the

                                      -18-

knowledge of the Company, the manufacturing, marketing, licensing or sale of the
products or performance of the service offerings of the Company does not
infringe any Intellectual Property right of any third party; and to the
knowledge of the Company, the Intellectual Property rights of the Company are
not being infringed by activities, products or services of any third party.

      2.12 Real Property. The Company does not own any real property. Section
2.12 of the Disclosure Schedule lists and describes briefly all real property
leased or subleased to the Company and lists the term of such lease, any
extension and expansion options, and the rent payable thereunder. The Company
has delivered to the Buyer correct and complete copies of the leases and
subleases (as amended to date) listed in Section 2.12 of the Disclosure
Schedule. With respect to each lease and sublease listed in Section 2.12 of the
Disclosure Schedule:

            (a) the lease or sublease is legal, valid, binding, enforceable and
in full force and effect;

            (b) the lease or sublease will continue to be legal, valid, binding,
enforceable and in full force and effect immediately following the Closing in
accordance with the terms thereof as in effect prior to the Closing;

            (c) no party to the lease or sublease is in breach or default, and
no event has occurred which, with notice or lapse of time, would constitute a
breach or default or permit termination, modification, or acceleration
thereunder;

            (d) there are no disputes, oral agreements or forbearance programs
in effect as to the lease or sublease;

            (e) neither the Company nor any Subsidiary has assigned,
transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in
the leasehold or subleasehold;

            (f) all facilities leased or subleased thereunder are supplied with
utilities; and

            (g) to the knowledge of the Company, the owner of the facility
leased or subleased has good and clear record and marketable title to the parcel
of real property, free and clear of any Security Interest, easement, covenant or
other restriction, except for recorded easements, covenants, and other
restrictions which do not impair the Intended Uses, occupancy or value of the
property subject thereto.

                                      -19-

      2.13 Contracts. Section 2.13 of the Disclosure Schedule lists the
following written arrangements (including without limitation written agreements)
to which the Company is a party:

            (a) any written arrangement (or group of related written
arrangements) for the lease of personal property from or to third parties
providing for lease payments in excess of $5,000 per annum;

            (b) any written arrangement (or group of related written
arrangements) for the purchase or sale of raw materials, commodities, supplies,
products or other personal property or for the furnishing or receipt of services
(i) which calls for performance over a period of more than one year, (ii) which
involves more than the sum of $5,000, or (iii) in which the Company has granted
manufacturing rights, "most favored nation" pricing provisions or exclusive
marketing or distribution rights relating to any products or territory or has
agreed to purchase a minimum quantity of goods or services or has agreed to
purchase goods or services exclusively from a certain party;

            (c) any written arrangement establishing a partnership or joint
venture;

            (d) any written arrangement (or group of related written
arrangements) under which it has created, incurred, assumed, or guaranteed (or
may create, incur, assume, or guarantee) indebtedness (including capitalized
lease obligations) involving more than $5,000 or under which it has imposed (or
may impose) a Security Interest on any of its assets, tangible or intangible;

            (e) any written non-competition arrangement or material
confidentiality agreement;

            (f) any written arrangement involving any of the Company
Stockholders or their affiliates, as defined in Rule 12b-2 under the Exchange
Act ("Affiliates");

            (g) any written arrangement under which the consequences of a
default or termination could have a material adverse effect on the assets,
business, financial condition, results of operations or future prospects of the
Company; and

            (h) any other written arrangement (or group of related written
arrangements) either involving more than $5,000 or not entered into in the
Ordinary Course of Business.

                                      -20-

      The Company has delivered to the Buyer a correct and complete copy of each
written arrangement (as amended to date) listed in Section 2.13 of the
Disclosure Schedule. With respect to each written arrangement so listed: (i) the
written arrangement is legal, valid, binding and enforceable and in full force
and effect; (ii) the written arrangement will continue to be legal, valid,
binding and enforceable and in full force and effect immediately following the
Closing in accordance with the terms thereof as in effect prior to the Closing;
and (iii) to the knowledge of the Company, no party is in breach or default, and
no event has occurred which with notice or lapse of time would constitute a
breach or default or permit termination, modification, or acceleration, under
the written arrangement. Except as set forth on Section 2.13 of the Disclosure
Schedule, the Company is not a party to any oral contract, agreement or other
arrangement which, if reduced to written form, would be required to be listed in
Section 2.13 of the Disclosure Schedule under the terms of this Section 2.13.

      2.14 Accounts Receivable. Except as set forth in Section 2.14 of the
Disclosure Schedule, all accounts receivable of the Company reflected on the
Most Recent Balance Sheet are valid receivables subject to no setoffs or
counterclaims and are current and collectible (within 90 days after the date on
which it first became due and payable), net of the applicable reserve for bad
debts on the Most Recent Balance Sheet. All accounts receivable reflected in the
financial or accounting records of the Company that have arisen since the Most
Recent Balance Sheet Date are valid receivables subject to no setoffs or
counterclaims and are collectible, net of a reserve for bad debts in an amount
proportionate to the reserve shown on the Most Recent Balance Sheet.

      2.15 Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Company.

      2.16 Insurance. Section 2.16 of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including fire,
theft, casualty, general liability, workers compensation, business interruption,
environmental, product liability and automobile insurance policies and bond and
surety arrangements) to which the Company has been a party, a named insured, or
otherwise the beneficiary of coverage at any time within the past five years:

            (a) the name of the insurer, the name of the policyholder and the
name of each covered insured;

            (b) the policy number and the period of coverage;

                                      -21-

            (c) the scope (including an indication of whether the coverage was
on a claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate) of
coverage; and

            (d) a description of any retroactive premium adjustments or other
loss-sharing arrangements.

(i) Each such insurance policy is enforceable and in full force and effect; (ii)
such policy will continue to be enforceable and in full force and effect
immediately following the Closing in accordance with the terms thereof as in
effect prior to the Closing; (iii) the Company is not in breach or default
(including with respect to the payment of premiums or the giving of notices)
under such policy, and no event has occurred which, with notice or the lapse of
time, would constitute such a breach or default or permit termination,
modification or acceleration, under such policy; and (iv) the Company has not
received any notice from the insurer disclaiming coverage or reserving rights
with respect to a particular claim or such policy in general. The Company has
not incurred any material loss, damage, expense or liability covered by any such
insurance policy for which it has not properly asserted a claim under such
policy.

      2.17 Litigation. Section 2.17 of the Disclosure Schedule identifies, and
contains a brief description of, (a) any unsatisfied judgment, order, decree,
stipulation or injunction and (b) any claim, complaint, action, suit,
proceeding, hearing or investigation of or in any Governmental Entity or before
any arbitrator to which the Company is a party or, to the knowledge of the
Company, is threatened to be made a party. None of the complaints, actions,
suits, proceedings, hearings, and investigations set forth in Section 2.17 of
the Disclosure Schedule could reasonably be expected to have a material adverse
effect on the assets, business, financial condition, results of operations or
future prospects of the Company.

      2.18 Service Warranty. No service provided by the Company is subject to
any guaranty, warranty, right of return or other indemnity other than (i) the
applicable warranty terms which are set forth in Section 2.18 of the Disclosure
Schedule and (ii) any general warranty of merchantability or fitness for a
particular purpose implied as a matter of state law which continues to be
applicable notwithstanding the disclaimer of such warranty made by the Company
in writing. Section 2.18 of the Disclosure Schedule sets forth the aggregate
expenses incurred by the Company in fulfilling its obligations under any
guaranty, warranty, right of return and indemnity provisions during each of the
fiscal years and the interim period covered by the Financial Statements; and the
Company does not know of any reason why such expenses should significantly
increase as a percentage of sales in the future.

                                      -22-

      2.19 Employees. Section 2.19 of the Disclosure Schedule contains a list of
all employees/officers of the Company, along with the position and the annual
rate of compensation of each such person. Each such employee has entered into a
confidentiality/assignment of inventions agreement with the Company, a copy of
which has previously been delivered to the Buyer. To the knowledge of the
Company, no key employee or group of employees has any present plans to
terminate employment with the Company. The Company is not a party to or bound by
any collective bargaining agreement, nor has experienced any strikes,
grievances, claims of unfair labor practices or other collective bargaining
disputes. The Company has no knowledge of any organizational effort made or
threatened, either currently or within the past two years, by or on behalf of
any labor union with respect to employees of the Company.

      2.20 Employee Benefits.

            (a) Section 2.20(a) of the Disclosure Schedule contains a complete
and accurate list of all Employee Benefit Plans (as defined below) maintained,
or contributed to, by the Company or any ERISA Affiliate (as defined below). For
purposes of this Agreement, "Employee Benefit Plan" means any "employee pension
benefit plan" (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), any "employee welfare benefit plan"
(as defined in Section 3(1) of ERISA), and any other written or oral plan,
agreement or arrangement involving direct or indirect compensation, including
without limitation insurance coverage, severance benefits, disability benefits,
deferred compensation, bonuses, stock options, stock purchase, phantom stock,
stock appreciation or other forms of incentive compensation or post-retirement
compensation. For purposes of this Agreement, "ERISA Affiliate" means any entity
which is a member of (i) a controlled group of corporations (as defined in
Section 414(b) of the Code), (ii) a group of trades or businesses under common
control (as defined in Section 414(c) of the Code), or (iii) an affiliated
service group (as defined under Section 414(m) of the Code or the regulations
under Section 414(o) of the Code), any of which includes the Company. Complete
and accurate copies of (i) all Employee Benefit Plans which have been reduced to
writing, (ii) written summaries of all unwritten Employee Benefit Plans, (iii)
all related trust agreements, insurance contracts and summary plan descriptions,
and (iv) all annual reports filed on IRS Form 5500, 5500C or 5500R for the last
five plan years for each Employee Benefit Plan, have been delivered to the
Buyer. Each Employee Benefit Plan has been administered in all material respects
in accordance with its terms and each of the Company and the ERISA Affiliates
has in all material respects met its obligations with respect to such Employee
Benefit Plan and has made all required contributions thereto. The Company and
all

                                      -23-

Employee Benefit Plans are in compliance in all material respects with the
currently applicable provisions of ERISA and the Code and the regulations
thereunder.

            (b) There are no investigations by any Governmental Entity,
termination proceedings or other claims (except claims for benefits payable in
the normal operation of the Employee Benefit Plans and proceedings with respect
to qualified domestic relations orders) suits or proceedings against or
involving any Employee Benefit Plan or asserting any rights or claims to
benefits under any Employee Benefit Plan that could give rise to any material
liability.

            (c) All the Employee Benefit Plans that are intended to be qualified
under Section 401(a) of the Code have received determination letters from the
Internal Revenue Service to the effect that such Employee Benefit Plans are
qualified and the plans and the trusts related thereto are exempt from federal
income taxes under Sections 401(a) and 501(a), respectively, of the Code, no
such determination letter has been revoked and revocation has not been
threatened, and no such Employee Benefit Plan has been amended since the date of
its most recent determination letter or application therefor in any respect, and
no act or omission has occurred, that would adversely affect its qualification
or materially increase its cost.

            (d) Neither the Company nor any ERISA Affiliate has ever maintained
an Employee Benefit Plan subject to Section 412 of the Code or Title IV of
ERISA.

            (e) At no time has the Company or any ERISA Affiliate been obligated
to contribute to any "multi-employer plan" (as defined in Section 4001(a)(3) of
ERISA).

            (f) There are no unfunded obligations under any Employee Benefit
Plan providing benefits after termination of employment to any employee of the
Company (or to any beneficiary of any such employee), including but not limited
to retiree health coverage and deferred compensation, but excluding continuation
of health coverage required to be continued under Section 4980B of the Code and
insurance conversion privileges under state law.

            (g) No act or omission has occurred and no condition exists with
respect to any Employee Benefit Plan maintained by the Company or any ERISA
Affiliate that would subject the Company or any ERISA Affiliate to any material
fine, penalty, tax or liability of any kind imposed under ERISA or the Code.

                                      -24-

            (h) No Employee Benefit Plan is funded by, associated with, or
related to a "voluntary employee's beneficiary association" within the meaning
of Section 501(c)(9) of the Code.

            (i) No Employee Benefit Plan, plan documentation or agreement,
summary plan description or other written communication distributed generally to
employees by its terms prohibits the Company from amending or terminating any
such Employee Benefit Plan.

            (j) Section 2.20(j) of the Disclosure Schedule discloses each: (i)
agreement with any director, executive officer or other key employee of the
Company (A) the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving the Company
of the nature of any of the transactions contemplated by this Agreement, (B)
providing any term of employment or compensation guarantee or (C) providing
severance benefits or other benefits after the termination of employment of such
director, executive officer or key employee; (ii) agreement, plan or arrangement
under which any person may receive payments from the Company that may be subject
to the tax imposed by Section 4999 of the Code or included in the determination
of such person's "parachute payment" under Section 280G of the Code; and (iii)
agreement or plan binding the Company, including without limitation any stock
option plan, stock appreciation right plan, restricted stock plan, stock
purchase plan, severance benefit plan, or any Employee Benefit Plan, any of the
benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement.

      2.21 Environmental Matters.

            (a) The Company has complied with all applicable Environmental Laws
(as defined below) , except for violations of Environmental Laws that do not and
will not, individually or in the aggregate, have a material adverse effect on
the assets, business, financial condition, results of operations or future
prospects of the Company. There is no pending or, to the knowledge of the
Company, threatened civil or criminal litigation, written notice of violation,
formal administrative proceeding, or investigation, inquiry or information
request by any Governmental Entity, relating to any Environmental Law involving
the Company, except for litigation, notices of violations, formal administrative
proceedings or investigations, inquiries or information requests that will not,
individually or in the aggregate, have a material adverse effect on the assets,
business, financial condition, results of operations or future prospects of the

                                      -25-

Company. For purposes of this Agreement, "Environmental Law" means any federal,
state or local law, statute, rule or regulation or the common law relating to
the environment or occupational health and safety, including without limitation
any statute, regulation or order pertaining to (i) treatment, storage, disposal,
generation and transportation of industrial, toxic or hazardous substances or
solid or hazardous waste; (ii) air, water and noise pollution; (iii) groundwater
and soil contamination; (iv) the release or threatened release into the
environment of industrial, toxic or hazardous substances, or solid or hazardous
waste, including without limitation emissions, discharges, injections, spills,
escapes or dumping of pollutants, contaminants or chemicals; (v) the protection
of wild life, marine sanctuaries and wetlands, including without limitation all
endangered and threatened species; (vi) storage tanks, vessels and containers;
(vii) underground and other storage tanks or vessels, abandoned, disposed or
discarded barrels, containers and other closed receptacles; (viii) health and
safety of employees and other persons; and (ix) manufacture, processing, use,
distribution, treatment, storage, disposal, transportation or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or oil or petroleum products or solid or hazardous waste. As used above, the
terms "release" and "environment" shall have the meaning set forth in the
federal Comprehensive Environmental Compensation, Liability and Response Act of
1980 ("CERCLA").

            (b) To the knowledge of the Company, there have been no releases of
any Materials of Environmental Concern (as defined below) into the environment
at any parcel of real property or any facility formerly or currently owned,
operated or controlled by the Company. With respect to any such releases of
Materials of Environmental Concern, the Company has given all required notices
to Governmental Entities (copies of which have been provided to the Buyer). The
Company is not aware of any releases of Materials of Environmental Concern at
parcels of real property or facilities other than those owned, operated or
controlled by the Company that could reasonably be expected to have a material
impact on the real property or facilities owned, operated or controlled by the
Company. For purposes of this Agreement, "Materials of Environmental Concern"
means any chemicals, pollutants or contaminants, hazardous substances (as such
term is defined under CERCLA), solid wastes and hazardous wastes (as such terms
are defined under the federal Resources Conservation and Recovery Act), toxic
materials, oil or petroleum and petroleum products, or any other material
subject to regulation under any Environmental Law.

            (c) Set forth in Section 2.21(c) of the Disclosure Schedule is a
list of all environmental reports, investigations and audits relating to
premises currently or previously

                                      -26-

owned or operated by the Company (whether conducted by or on behalf of the
Company or a third party, and whether done at the initiative of the Company or
directed by a Governmental Entity or other third party) which were issued or
conducted during the past five years and which the Company has possession of or
reasonable access to. Complete and accurate copies of each such report, or the
results of each such investigation or audit, have been provided to the Buyer.

            (d) Set forth in Section 2.21(d) of the Disclosure Schedule is a
list of all of the solid and hazardous waste transporters and treatment, storage
and disposal facilities that have been utilized by the Company since November
19, 1980, the effective date of the hazardous waste regulatory program under the
Resource Conservation and Recovery Act. The Company is not aware of any material
environmental liability of any such transporter or facility.

      2.22 Legal Compliance. The Company and the conduct and operations of its
business are in compliance with each law (including rules and regulations
thereunder) of any federal, state, local or foreign government, or any
Governmental Entity, which (a) affects or relates to this Agreement or the
transactions contemplated hereby or (b) is applicable to the Company or its
business, except for any violation of or default under a law referred to in
clause (b) above which reasonably may be expected not to have a material adverse
effect on the assets, business, financial condition, results of operations or
future prospects of the Company.

      2.23 Permits. Section 2.23 of the Disclosure Schedule sets forth a list of
all material permits, licenses, registrations, certificates, orders or approvals
from any Governmental Entity (including without limitation those issued or
required under Environmental Laws and those relating to the occupancy or use of
owned or leased real property) ("Permits") issued to or held by the Company.
Such listed Permits are the only Permits that are required for the Company to
conduct its business as presently conducted or as proposed to be conducted,
except for those the absence of which would not have any material adverse effect
on the assets, business, financial condition, results of operations or future
prospects of the Company. Each such Permit is in full force and effect and, to
the best of the knowledge of the Company, no suspension or cancellation of such
Permit is threatened and there is no basis for believing that such Permit will
not be renewable upon expiration. Each such Permit will continue in full force
and effect following the Closing.

      2.24 Certain Business Relationships With Affiliates. No Affiliate of the
Company(a) owns any property or right, tangible or intangible, which is used in
the business of the Company, (b) has any claim or cause of action against the
Company, or (c) owes any money to the Company. Section 2.24 of the Disclosure
Schedule describes any transactions or

                                      -27-

relationships between the Company and any Affiliate thereof which are reflected
in the statements of operations of the Company included in the Financial
Statements.

      2.25 Brokers' Fees. Except as set forth on Schedule 2.25, the Company does
not have any liability or obligation to pay any fees or commissions to any
broker, finder or agent with respect to the transactions contemplated by this
Agreement.

      2.26 Books and Records. The minute books and other similar records of the
Company contain true and complete records of all actions taken at any meetings
of the Company's stockholders, Board of Directors or any committee thereof and
of all written consents executed in lieu of the holding of any such meeting.

      2.27 Customers and Suppliers. Section 2.27 of the Disclosure Schedule sets
forth a list of each customer that accounted for more than 25% of the
consolidated revenues of the Company during the last full fiscal year or the
interim period through the Most Recent Balance Sheet Date and the amount of
revenues accounted for by such customer during each such period.

      2.28 Pooling. To the best knowledge of the Company, neither the Company
nor any of its Affiliates has through the date of this Agreement taken or agreed
to take any action that would prevent the Company and the Buyer from accounting
for the business combination to be effected by the Merger as a "pooling of
interests" in conformity with GAAP.

      2.29 Disclosure. No representation or warranty by the Company contained in
this Agreement, and no statement contained in the Disclosure Schedule or any
other document, certificate or other instrument delivered to or to be delivered
by or on behalf of the Company pursuant to this Agreement contains or will
contain any untrue statement of a material fact or omits or will omit to state
any material fact necessary, in light of the circumstances under which it was or
will be made, in order to make the statements herein or therein not misleading.
The Company has disclosed to the Buyer all information relating to the business
of the Company or the transactions contemplated by this Agreement, except for
the absence of disclosure which would not result in a Company Material Adverse
Effect.

                                   ARTICLE III

                   REPRESENTATIONS AND WARRANTIES OF THE BUYER
                          AND THE TRANSITORY SUBSIDIARY

                                      -28-

      Each of the Buyer and the Transitory Subsidiary represents and warrants to
the Company as follows:

      3.1 Organization. Each of the Buyer and the Transitory Subsidiary is a
corporation duly organized, validly existing and in corporate and tax good
standing under the laws of the state of its incorporation. Each of the Buyer and
the Transitory Subsidiary is duly qualified to conduct business and is in
corporate and tax good standing under the laws of each jurisdiction in which the
nature of its businesses or the ownership or leasing of its properties requires
such qualification. Each of the Buyer and the Transitory Subsidiary has all
requisite corporate power and authority to carry on the businesses in which it
is engaged and to own and use the properties owned and used by it. Each of the
Buyer and the Transitory Subsidiary has furnished to the Company true and
complete copies of its Articles of Incorporation and By-laws, each as amended
and as in effect on the date hereof. Each of the Buyer and the Transitory
Subsidiary is not in default under or in violation of any provision of its
Articles of Incorporation or By-laws.

      3.2 Capitalization. The authorized capital stock of the Buyer consists of
12,000,000 shares of Buyer Common Stock, of which 6,098,110 shares are issued
and outstanding and 1,738,725 shares are held in the treasury of the Buyer.
Section 3.2 of the Disclosure Schedule sets forth a complete and accurate list
of (i) all stockholders of the Buyer, indicating the number of shares of Buyer
Common Stock held by each stockholder, and (ii) all holders of options and
warrants, as of March 31, 1999, indicating the number of shares of Buyer Common
Stock subject to each option and warrant. Since March 31, 1999 until the Closing
Date, any options granted by the Buyer shall have been granted pursuant to the
Buyer's Incentive Stock Option Plan. All of the issued and outstanding shares of
Buyer Common Stock are, and all shares of Buyer Common Stock that may be issued
upon exercise of options and warrants will be, duly authorized, validly issued,
fully paid, nonassessable and free of all preemptive rights. There are no
outstanding or authorized options, warrants, rights, agreements or commitments
to which the Buyer is a party or which are binding upon the Buyer providing for
the issuance, disposition or acquisition of any of its capital stock, other than
the options and warrants listed in Section 3.2 of the Disclosure Schedule. There
are no outstanding or authorized stock appreciation, phantom stock or similar
rights with respect to the Buyer. There are no agreements, voting trusts,
proxies, or understandings with respect to the voting, or registration under the
Securities Act of any shares of Buyer Common Stock. All of the issued and
outstanding shares of Buyer Common Stock were issued in compliance with
applicable federal and state securities laws.

                                      -29-

      3.3 Authorization of Transaction. Each of the Buyer and the Transitory
Subsidiary has all requisite power and authority to execute and deliver this
Agreement and (in the case of the Buyer) the Escrow Agreement and to perform its
obligations hereunder and thereunder. The execution and delivery of this
Agreement and (in the case of the Buyer) the Escrow Agreement by the Buyer and
the Transitory Subsidiary and the performance of this Agreement and (in the case
of the Buyer) the Escrow Agreement the consummation of the transactions
contemplated hereby and thereby by the Buyer and the Transitory Subsidiary have
been duly and validly authorized by all necessary corporate action on the part
of the Buyer and Transitory Subsidiary. This Agreement has been duly and validly
executed and delivered by the Buyer and the Transitory Subsidiary and
constitutes a valid and binding obligation of the Buyer and the Transitory
Subsidiary, enforceable against them in accordance with its terms.

      3.4 Noncontravention. Subject to compliance with the applicable
requirements of the Securities Act and any applicable state securities laws, the
Exchange Act, and the filing of the Articles of Merger as required by the
Massachusetts Business Corporation Law and the California Corporations Code,
neither the execution and delivery of this Agreement or (in the case of the
Buyer) the Escrow Agreement by the Buyer or the Transitory Subsidiary, nor the
consummation by the Buyer or the Transitory Subsidiary of the transactions
contemplated hereby or thereby, will (a) conflict or violate any provision of
the charter or By-laws of the Buyer or the Transitory Subsidiary, (b) require on
the part of the Buyer or the Transitory Subsidiary any filing with, or permit,
authorization, consent or approval of, any Governmental Entity, other than any
filing, permit, authorization, consent or approval which if not obtained or made
would not have a material adverse effect on the assets, business, financial
condition, results of operations or future prospects of the Buyer or on the
ability of the Parties to consummate the transactions contemplated by this
Agreement, (c) conflict with, result in breach of, constitute (with or without
due notice or lapse of time or both) a default under, result in the acceleration
of, create in any party any right to accelerate, terminate, modify or cancel, or
require any notice, consent or waiver under, any contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money, instrument of indebtedness, Security Interest or other
arrangement to which the Buyer or Transitory Subsidiary is a party or by which
either is bound or to which any of their assets are subject , other than any
conflict, breach, default, acceleration, termination, modification or
cancellation which individually or in the aggregate would not have a material
adverse effect on the assets, business, financial condition, results of
operations or future prospects of the Buyer or on the ability of the Parties to
consummate the transactions contemplated by this Agreement, or (d) violate any
order, writ, injunction, decree,

                                      -30-

statute, rule or regulation applicable to the Buyer or the Transitory Subsidiary
or any of their properties or assets.

      3.5 Financial Statements. The Buyer has provided to the Company (a) the
audited consolidated balance sheets and statements of income, changes in
stockholders' equity and cash flows of the Buyer as of and for each of the last
three fiscal years; and (b) the unaudited consolidated balance sheet and
statements of income, changes in stockholders' equity and cash flows as of and
for the four months ended as of April 30, 1999 (the "Buyer Most Recent Balance
Sheet Date"). Such financial statements (collectively, the "Buyer Financial
Statements") have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby, fairly present the financial
condition, results of operations and cash flows of the Buyer and the Transitory
Subsidiary as of the respective dates thereof and for the periods referred to
therein and are consistent with the books and records of the Buyer and the
Transitory Subsidiary; provided, however, that the Buyer Financial Statements
referred to in clause (b) above are subject to normal recurring year-end
adjustments (which will not be material) and do not include footnotes.

      3.6 Absence of Certain Changes. Except as otherwise contemplated by this
Agreement, since the Buyer Most Recent Balance Sheet Date, there has occurred no
event or development which has had, or could reasonably be foreseen to have in
the future, a Buyer Material Adverse Effect. For purposes of this Agreement,
"Buyer Material Adverse Effect" means a material adverse effect on the assets,
business, financial condition, results of operations or future prospects of the
Buyer or on the ability of the Parties to consummate the Merger and the
transaction contemplated thereby.

      3.7 Tax Matters.

            (a) The Buyer has filed all Tax Returns that it was required to file
and all such Tax Returns were correct and complete in all material respects. The
Buyer has paid all Taxes (as defined below) that are shown to be due on any such
Tax Returns. The unpaid Taxes of the Buyer for tax periods through the Buyer
Most Recent Balance Sheet Date do not exceed the accruals and reserves for Taxes
set forth on the Buyer Most Recent Balance Sheet. The Buyer does not have any
actual or potential liability for any Tax obligation of any taxpayer (including
without limitation any affiliated group of corporations or other entities that
included the Buyer during a prior period) other than the Buyer. All Taxes that
the Buyer is or was required by law to withhold or collect have been duly
withheld or collected and, to the extent required, have been paid to the proper
Governmental Entity.

                                      -31-

            (b) The Buyer has delivered to the Company correct and complete
copies of all federal income Tax Returns, examination reports and statements of
deficiencies assessed against or agreed to by the Buyer for 1996 and 1997. The
federal income Tax Returns of the Buyer have been audited by the Internal
Revenue Service or are closed by the applicable statute of limitations for all
taxable years through 1995. No examination or audit of any Tax Returns of the
Buyer by any Governmental Entity is currently in progress or, to the knowledge
of the Buyer, threatened or contemplated. The Buyer has not waived any statute
of limitations with respect to taxes or agreed to an extension of time with
respect to a tax assessment or deficiency.

            (c) The Buyer is not a "consenting corporation" within the meaning
of Section 341(f) of the Code and none of the assets of the Buyer are subject to
an election under Section 341(f) of the Code. The Buyer 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)(l)(A)(ii)
of the Code. The Buyer is not a party to any Tax allocation or sharing
agreement.

            (d) The Buyer is not and has never been a member of an "affiliated
group" of corporations (within the meaning of Section 1504 of the Code). The
Buyer has not made an election under Treasury Reg. Section 1.1502-20(g). The
Buyer is not and has not been required to make a basis reduction pursuant to
Treasury Reg. Section 1.1502-20(b) or Treasury Reg. Section 1.337(d)-2T(b).

      3.8 Intellectual Property.

            (a) The Buyer owns, or is licensed or otherwise possesses legally
enforceable rights to use the Intellectual Property that are used to conduct its
business as currently conducted or planned to be conducted. Section 3.8 of the
Disclosure Schedule lists (i) all patents and patent applications and all
trademarks, registered copyrights, trade names and service marks which are used
in the business of the Buyer, including the jurisdictions in which each such
Intellectual Property right has been issued or registered or in which any such
application for such issuance or registration has been filed, (ii) all material
written licenses, sublicenses and other agreements to which the Buyer is a party
and pursuant to which any person is authorized to use any Intellectual Property
rights, and (iii) all material written licenses, sublicenses and other
agreements as to which the Buyer is a party and pursuant to which the Buyer is
authorized to use any Third Party Intellectual Property Rights which are used in
the business of the Buyer or which form a part of any product or service of the
Buyer (excluding software that is available through commercial distributors or
in commercial retail stores and subject to "shrink-wrap" agreements). The Buyer

                                      -32-

is not a party to any oral license, sublicense or agreement which, if reduced to
written form, would be required to be listed in Section 3.8 of the Disclosure
Schedule under the terms of this Section 3.8(a).

            (b) The Buyer is not and will not be as a result of the execution
and delivery of this Agreement or the performance of the Buyer's obligations
under this Agreement, in breach of any license, sublicense or other agreement
relating to the Intellectual Property or Third Party Intellectual Property
Rights.

            (c) The Buyer has not been named in any suit, action or proceeding
which involves a claim of infringement of any Intellectual Property right of any
third party. To the knowledge of the Buyer, the manufacturing, marketing,
licensing or sale of the products or performance of the service offerings of the
Buyer does not infringe any Intellectual Property right of any third party; and
to the knowledge of the Buyer, the Intellectual Property rights of the Buyer are
not being infringed by activities, products or services of any third party.

      3.9 Litigation. Section 3.9 of the Disclosure Schedule identifies, and
contains a brief description of, (a) any unsatisfied judgment, order, decree,
stipulation or injunction and (b) any claim, complaint, action, suit,
proceeding, hearing or investigation of or in any Governmental Entity or before
any arbitrator to which the Buyer is a party or, to the knowledge of the Buyer,
is threatened to be made a party. None of the complaints, actions, suits,
proceedings, hearings, and investigations set forth in Section 3.9 of the
Disclosure Schedule could reasonably be expected to have a material adverse
effect on the assets, business, financial condition, results of operations or
future prospects of the Buyer.

      3.10 Brokers' Fees. Neither the Buyer nor the Transitory Subsidiary has
any liability or obligation to pay any fees or commissions to any broker, finder
or agent with respect to the transactions contemplated by this Agreement.

      3.11 Deferred Compensation. The Buyer does not have any employee deferred
compensation arrangements other than the Buyer's 401(k) Plan.

      3.12 Disclosure. No representation or warranty by the Buyer contained in
this Agreement, and no statement contained in the any document, certificate or
other instrument delivered to or to be delivered by or on behalf of the Buyer
pursuant to this Agreement, contains or will contain any untrue statement of a
material fact or omit or will omit to state any material

                                      -33-

fact necessary, in light of the circumstances under which it was or will be
made, in order to make the statements herein or therein not misleading.

                                   ARTICLE IV

                                    COVENANTS

      4.1 Reasonable Best Efforts; Notice and Consents.

            (a) Each of the Parties shall each use its best efforts, to the
extent commercially reasonable ("Reasonable Best Efforts"), (i) to take, or
cause to be taken, all appropriate action, and do, or cause to be done, all
things necessary and proper under applicable law to consummate and make
effective the transactions contemplated hereby as promptly as practicable,
including without limitation using its Reasonable Best Efforts to ensure that
(A) its representations and warranties remain true and correct in all material
respects through the Closing Date and (B) the conditions to the obligations of
the other Parties to consummate the Merger are satisfied, (ii) to obtain from
any Governmental Entity or any other third party any consents, licenses,
permits, waivers, approvals, authorizations, or orders required to be obtained
or made by the Parties or any of their Affiliates in connection with the
authorization, execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby (including without limitation those listed
in Section 2.4 or Section 2.23 of the Disclosure Schedule and (iii) as promptly
as practicable, to make all necessary filings, and thereafter make any other
required submissions, with respect to this Agreement and the Merger required
under any applicable federal or state securities laws and any other applicable
law. The Parties shall cooperate with each other in connection with the making
of all such filings, including providing copies of all such documents to the
non-filing Parties and its advisors prior to filing and, if requested, to accept
all reasonable additions, deletions or changes suggested in connection
therewith. Each of the Parties shall use its Reasonable Best Efforts to furnish
to the other Parties all information required for any application or other
filing to be made pursuant to the rules and regulations of any applicable law in
connection with the transactions contemplated by this Agreement.

            (b) Each of the Parties shall give (and shall cause their respective
Affiliates to give) any notices to third parties, and use (and cause their
respective Affiliates to use) their Reasonable Best Efforts to obtain any third
party consents related to or required in connection with the Merger that are (i)
necessary to consummate the transactions contemplated hereby, (ii) disclosed or
required to be disclosed in the Disclosure Schedule or (iii) required to prevent
a

                                      -34-

Company Material Adverse Effect or a Buyer Material Adverse Effect from
occurring prior to or after the Effective Time.

            (c) No Company Stockholder shall take any action to rescind or
modify the written consent of stockholders of the Company approving the Merger.

      4.2 Written Consent.

            (a) The Company shall use its Reasonable Best Efforts to obtain, as
promptly as practicable, the Requisite Stockholder Approval pursuant to a
written consent of the Company Stockholders, holding over 98% of the outstanding
shares of Company Common Stock, in accordance with the applicable requirements
of the California Corporations Code.

            (b) The Company shall comply with all applicable provisions of and
rules under all applicable provisions of the Securities Act, state securities
laws and California Corporations Code in the preparation and solicitation of the
written consent of the Company Stockholders.

            (c) Yatin Trivedi and Larry F. Saunders each agree to (i) vote all
shares of Company Common Stock that are beneficially owned by him, or for which
he has voting authority, in favor of the adoption of this Agreement and the
approval of the Merger and (ii) otherwise use his best efforts to obtain the
Requisite Stockholder Approval.

      4.3 Operation of Business. Except as contemplated by this Agreement,
during the period from the date of this Agreement to the Effective Time, the
Company shall (and shall cause each Subsidiary to) conduct its operations in the
Ordinary Course of Business and in compliance with all applicable laws and
regulations and, to the extent consistent therewith, use all reasonable efforts
to preserve intact its current business organization, keep its physical assets
in good working condition, use reasonable efforts to keep available the services
of its current officers and employees and preserve its relationships with
customers, suppliers and others having business dealings with it to the end that
its goodwill and ongoing business shall not be impaired in any material respect.
Without limiting the generality of the foregoing, prior to the Effective Time,
neither the Company nor any Subsidiary shall, without the written consent of the
Buyer:

            (a) issue, sell, deliver or agree or commit to issue, sell or
deliver (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) or authorize the
issuance, sale or delivery of, or redeem or repurchase,

                                      -35-

any stock of any class or any other securities or any rights, warrants or
options to acquire any such stock or other securities (except pursuant to the
conversion or exercise of convertible securities, Options or warrants
outstanding on the date hereof), or amend any of the terms of any such
convertible securities, Options or warrants;

            (b) split, combine or reclassify any shares of its capital stock;
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock;

            (c) create, incur or assume any debt not currently outstanding
(including obligations in respect of capital leases) other than purchases on
credit in the ordinary course of business; assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person or entity; or make any loans,
advances or capital contributions to, or investments in, any other person or
entity;

            (d) enter into, adopt or amend any Employee Benefit Plan or any
employment or severance agreement or arrangement of the type described in
Section 2.20(j) or (except for normal increases in the Ordinary Course of
Business) increase in any manner the compensation or fringe benefits of, or
materially modify the employment terms of, its directors, officers or employees,
generally or individually, or pay any benefit not required by the terms in
effect on the date hereof of any existing Employee Benefit Plan;

            (e) acquire, sell, lease, encumber or dispose of any assets or
property (including without limitation any shares or other equity interests in
or securities of any Subsidiary or any corporation, partnership, association or
other business organization or division thereof), other than purchases and sales
of assets in the Ordinary Course of Business;

            (f) amend its charter or By-laws;

            (g) change in any material respect its accounting methods,
principles or practices, except insofar as may be required by a generally
applicable change in GAAP;

            (h) except as otherwise contemplated by this Agreement, discharge or
satisfy any Security Interest or pay any obligation or liability other than in
the Ordinary Course of Business;

                                      -36-

            (i) mortgage or pledge any of its property or assets or subject any
such assets to any Security Interest;

            (j) sell, assign, transfer or license any Intellectual Property,
other than in the Ordinary Course of Business;

            (k) enter into, amend, terminate, take or omit to take any action
that would constitute a violation of or default under, or waive any rights
under, any material contract or agreement;

            (l) make or commit to make any capital expenditure in excess of
$5,000 per item;

            (m) take any action or fail to take any action permitted by this
Agreement with the knowledge that such action or failure to take action would
result in (i) any of the representations and warranties of the Company set forth
in this Agreement becoming untrue or (ii) any of the conditions to the Merger
set forth in Article V not being satisfied;

            (n) take any action that would jeopardize the treatment of the
Merger as a "pooling of interests" for accounting purposes; or

            (o) agree in writing or otherwise to take any of the foregoing
actions.

      4.4 Full Access. The Company shall (and shall cause each Subsidiary to)
permit representatives of the Buyer to have full access (at all reasonable
times, and in a manner so as not to interfere with the normal business
operations of the Company and the Subsidiaries) to all premises, properties,
financial and accounting records, contracts, other records and documents, and
personnel, of or pertaining to the Company and each Subsidiary. Each of the
Buyer and the Transitory Subsidiary (a) shall treat and hold as confidential any
Confidential Information (as defined below), (b) shall not use any of the
Confidential Information except in connection with this Agreement, and (c) if
this Agreement is terminated for any reason whatsoever, shall return to the
Company all tangible embodiments (and all copies) thereof which are in its
possession. For purposes of this Agreement, "Confidential Information" means any
confidential or proprietary information of the Company or any Subsidiary that is
furnished in writing to the Buyer or the Transitory Subsidiary by the Company or
any Subsidiary in connection with this Agreement and is labelled confidential or
proprietary; provided, however, that it shall not include any information (i)
which, at the time of disclosure, is available publicly, (ii) which, after
disclosure,

                                      -37-

becomes available publicly through no fault of the Buyer or the Transitory
Subsidiary, or (iii) which the Buyer or the Transitory Subsidiary knew or to
which the Buyer or the Transitory Subsidiary had access prior to disclosure.

      4.5 Notice of Breaches. The Company shall promptly deliver to the Buyer
written notice of any event or development that would (a) render any statement,
representation or warranty of the Company in this Agreement (including the
Disclosure Schedule) inaccurate or incomplete in any material respect, or (b)
constitute or result in a breach by the Company of, or a failure by the Company
to comply with, any agreement or covenant in this Agreement applicable to such
party. The Buyer or the Transitory Subsidiary shall promptly deliver to the
Company written notice of any event or development that would (i) render any
statement, representation or warranty of the Buyer or the Transitory Subsidiary
in this Agreement inaccurate or incomplete in any material respect, or (ii)
constitute or result in a breach by the Buyer or the Transitory Subsidiary of,
or a failure by the Buyer or the Transitory Subsidiary to comply with, any
agreement or covenant in this Agreement applicable to such party. No such
disclosure shall be deemed to avoid or cure any such misrepresentation or
breach.

      4.6 Exclusivity. Until the earlier of the Effective Time or the
termination of this Agreement in accordance with Section 7.1, the Company shall
not, and the Company shall use its best efforts to cause its Affiliates and each
of its officers, directors, employees, representatives and agents not to,
directly or indirectly, (a) encourage, solicit, initiate, engage or participate
in discussions or negotiations with any person or entity (other than the Buyer)
concerning any merger, consolidation, sale of material assets, tender offer,
recapitalization, accumulation of shares of Company Common Stock, proxy
solicitation or other business combination involving the Company, any Subsidiary
or any division of the Company or any Subsidiary, (b) provide any non-public
information concerning the business, properties or assets of the Company or any
Subsidiary to any person or entity (other than the Buyer), or dispose of any of
the assets of the Company other than in the Ordinary Course of Business. The
Company shall immediately notify the Buyer of, and shall disclose to the Buyer
all details of, any inquiries, discussions or negotiations of the nature
described in the first sentence of this Section 4.6.

      4.7 Agreements from Certain Affiliates of the Company. Concurrently with
the execution of this Agreement, the Company shall deliver to the Buyer a list
of all persons or entities who are at such time Affiliates of the Company (the
"Company Affiliates"). In order to help ensure that the Merger will be accounted
for as a "pooling of interests," that the issuance of Merger Shares will comply
with the Securities Act and that the Merger will be treated as a tax-

                                      -38-

free reorganization, the Company shall cause each Company Affiliate to execute
and deliver to the Buyer, prior to obtaining the written consent of the Company
Stockholders pursuant to Section 4.2(a), a written agreement substantially in
the form attached hereto as Exhibit B (the "Affiliate Agreement"). If any
Company Affiliate fails to execute and deliver an Affiliate Agreement, the Buyer
shall be entitled to place appropriate legends on the certificates evidencing
the Merger Shares to be issued to such person or entity and any other shares of
Buyer Common Stock issued to such person or entity upon exercise of an Option or
warrant, and to issue appropriate stock transfer instructions to the transfer
agent for the Buyer Common Stock, to the effect that (a) such shares may only be
sold, transferred or otherwise disposed of, and the holder thereof may only
reduce his or its interest in or risk relating to such shares, after financial
results covering at least 30 days of combined operations of the Company and the
Buyer after the Effective Time shall have been publicly released, and (b) such
shares may be sold publicly only in compliance with Rule 145 under the
Securities Act.

      4.8 Tax-Free Reorganization. The Buyer and the Company shall each use its
best efforts to cause the Merger to be treated as a reorganization within the
meaning of Section 368(a) of the Code. The Parties hereby adopt this Agreement
as a plan of reorganization.

      4.9 Pooling Accounting. From and after the date hereof and until the
Effective Time, neither the Company nor the Buyer, nor any of their respective
Subsidiaries, shall knowingly take any action, or knowingly fail to take any
action, the result of which is reasonably likely to jeopardize the treatment of
the Merger as a pooling-of-interests for accounting purposes.

      4.10 Non-Competition.

            (a) While employed by the Buyer, each of Yatin Trivedi and Larry F.
Saunders (each, a "Principal") and any of their respective Affiliates shall not:

                  (i) be employed by, provide consulting or other services to,
or otherwise be involved with, whether as an investor or otherwise (other than
as an investor holding less than 1% of the total outstanding stock of a publicly
held company), any competitor of the Company or the Buyer;

                  (ii) recruit, solicit or induce, or attempt to induce, any
employee, employees, consultant, consultants, subcontractor or subcontractors of
the Company or the Buyer to terminate their employment or consulting with, or
otherwise cease their relationship with, the Company or the Buyer; or

                                      -39-

                  (iii) solicit, divert or take away, or attempt to divert or
take away, the business or patronage of any of the clients, customers or
accounts, or prospective clients, customers or accounts, of the Company or the
Buyer.

            (b) Termination for Cause or Resignation.

                  (i) If, during the period of two years after the Effective
Date (the "Non-Compete Period"), a Principal's employment with the Buyer
following the Closing is terminated by the Buyer for Cause (as defined below) or
by the Principal ("Resignation"), then neither such Principal nor any of his
respective Affiliates shall engage in any of the actions specified in (1)
Section 4.10(a)(i) for the longer of the remaining Non-Compete Period or a
period of 180 days from the date of such termination of employment (the
"Employment Termination Date") and (2) Section 4.10(a)(ii) and Section
4.10(a)(iii) for the longer of the remaining Non-Compete Period or a period of
one year from the Employment Termination Date. For the purposes of this Section
4.10, termination for "Cause" shall be deemed to exist upon (x) a good faith
finding by the Buyer of failure of the Principal to perform his assigned duties
for the Buyer, dishonesty, gross negligence or misconduct, or (y) conviction of
the Principal of, or the entry of a pleading of guilty or nolo contendere by the
Principal to, any crime involving moral turpitude or any felony.

                  (ii) If, after the Non-Compete Period, a Principal's
employment with the Buyer following the Closing is terminated by the Buyer for
Cause or by Resignation, then neither the Principals nor any of their respective
Affiliates shall engage in any of the actions specified in (1) Section
4.10(a)(i) for a period of 180 days from the Employment Termination Date and (2)
Section 4.10(a)(ii) and Section 4.10(a)(iii) for a period of one year from the
Employment Termination Date.

            (c) Termination Without Cause or Constructive Termination.

                  (i) If, during the Non-Compete Period, a Principal's
employment with the Buyer following the Closing is terminated by the Buyer
without Cause or as a result of such Principal's Constructive Termination (as
defined below), then neither the Principals nor any of their respective
Affiliates shall engage in any of the actions specified in Section 4.10(a)(ii)
and Section 4.10(a)(iii) for the longer of the remaining Non-Compete Period or a
period of one year from the Employment Termination Date. For purposes of this
Section 4.10, "Constructive Termination" shall mean a reduction in a Principal's
assigned duties or base salary which is not consented to by such Principal, and
which reduction continues for a period of 60 days after

                                      -40-

delivery of written notice by such Principal to the President of the Buyer,
which notice describes in reasonable detail, to the best of such Principal's
belief, that his assigned duties have been reduced.

                  (ii) If, after the Non-Compete Period, a Principal's
employment with the Buyer following the Closing is terminated by the Buyer
without Cause or as a result of such Principal's Constructive Termination, then
neither the Principals nor any of their respective Affiliates shall engage in
any of the actions specified in Section 4.10(a)(ii) and Section 4.10(a)(iii) for
a period of one year from the Employment Termination Date.

            (d) The Parties agree that the duration and geographic scope of the
non-competition provision set forth in this Section 4.10 are reasonable. In the
event that any court of competent jurisdiction determines that the duration or
the geographic scope, or both, are unreasonable and that such provision is to
that extent unenforceable, the Parties and Principals agree that the provision
shall remain in full force and effect for the greatest time period and in the
greatest area that would not render it unenforceable. The Parties and Principals
intend that this non-competition provision shall be deemed to be a series of
separate covenants, one for each and every county of each and every state of the
United States of America and each and every political subdivision of each and
every country outside the United States of America where this provision is
intended to be effective. Each of the Principals agrees that damages are an
inadequate remedy for any breach of this provision and that the Buyer shall,
whether or not it is pursuing any potential remedies at law, be entitled to
equitable relief in the form of preliminary and permanent injunctions without
bond or other security upon any actual or threatened breach of this
non-competition provision.

            (e) Each of the Principals acknowledges that this Section 4.10 does
not constitute a contract of employment, does not imply that the Buyer will
continue such Principal's employment for any period of time and does not change
the at-will nature of such Principal's employment.

      4.11 Securities Laws Matters.

            (a) The Company agrees to cooperate with the Buyer in qualifying the
issuance of the Merger Shares to the Company Stockholders under Section 4(2) of
the Securities Act and/or Regulation D under the Securities Act, and in
complying with all state securities laws in respect thereto. Neither Company nor
any of its Affiliates is or shall be authorized to act on the Buyer's behalf
with respect to any aspect of the transactions contemplated by this Agreement

                                      -41-

or make any solicitations of or representations to any of the Company
Stockholders on the Buyer's behalf. Neither this Agreement nor any other act by
the Buyer shall be deemed an offer with respect to Merger Shares.

            (b) The Company understands and agrees that:

                  (i) each certificate representing Merger Shares issued to
Company Stockholders will bear the following legend:

                  "The shares represented by this certificate have not been
                  registered under the Securities Act of 1933, as amended, and
                  may not be sold, transferred or otherwise disposed of in the
                  absence of an effective registration statement under such Act
                  or an opinion of counsel satisfactory to the corporation to
                  the effect that such registration is not required."

                  (ii) each Company Stockholder receiving Merger Shares will be
required to sign an investment agreement in the form attached hereto as Exhibit
C (the "Investment Agreement").

      4.12 Observation Rights. While employed by the Buyer or until the Buyer's
securities are publicly traded, each of Yatin Trivedi and Larry F. Saunders
shall be permitted to attend meetings of the Board of Directors of the Buyer and
receive copies of materials distributed to the Board of Directors; provided that
they may be excluded from any meetings or portions thereof when the Board of
Directors elects to meet in executive session.

      4.13 Post-Signing Adjustment. In the event that the representation made by
Buyer under Section 3.2 hereof regarding the number of shares of outstanding
Buyer capital stock (the "Represented Shares") was incorrect when made because
the actual number of outstanding shares of Buyer capital stock (the "Actual
Shares") on the Closing Date is greater than the Represented Shares, Buyer
hereby agrees to issue to the Company Stockholders as additional consideration a
number of shares of Buyer Common Stock equal to the difference between (i) the
Actual Shares multiplied by the Conversion Ratio, and (ii) the Represented
Shares multiplied by the Conversion Ratio.

                                    ARTICLE V

                                      -42-

                      CONDITIONS TO CONSUMMATION OF MERGER

      5.1 Conditions to Each Party's Obligations. The respective obligations of
each Party to consummate the Merger are subject to the satisfaction of the
following conditions:

            (a) this Agreement and the Merger shall have received the Requisite
Stockholder Approval; and

            (b) no action, suit or proceeding shall be pending or threatened by
any Governmental Entity wherein an unfavorable judgment, order, decree,
stipulation or injunction would be reasonably likely to (i) prevent consummation
of any of the transactions contemplated by this Agreement, (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation or (iii) affect adversely the right of the Buyer to own, operate or
control any of the assets and operations of the Surviving Corporation and the
Subsidiaries following the Merger, and no such judgment, order, decree,
stipulation or injunction shall be in effect.

      5.2 Conditions to Obligations of the Buyer and the Transitory Subsidiary.
The obligation of each of the Buyer and the Transitory Subsidiary to consummate
the Merger is subject to the satisfaction of the following additional
conditions:

            (a) the number of Dissenting Shares shall not exceed 5% of the
number of outstanding shares of Company Common Stock as of the Effective Time;

            (b) the Company shall have obtained all of the waivers, permits,
consents, approvals or other authorizations, and effected all of the
registrations, filings and notices, referred to in Section 4.1, except for any
which if not obtained or effected would not have a material adverse effect on
the assets, business, financial condition, results of operations or future
prospects of the Company or any Subsidiary or on the ability of the Parties to
consummate the transactions contemplated by this Agreement;

            (c) the representations and warranties of the Company set forth in
Article II shall be true and correct when made on the date hereof and shall be
true and correct in all material respects as of the Effective Time as if made as
of the Effective Time, except for representations and warranties made as of a
specific date, which shall be true and correct as of such date;

                                      -43-

            (d) the Company shall have performed or complied with in all
material respects its agreements and covenants required to be performed or
complied with under this Agreement as of or prior to the Effective Time;

            (e) the Company shall have delivered to the Buyer and the Transitory
Subsidiary a certificate (without qualification as to knowledge or materiality
or otherwise) to the effect that each of the conditions specified in Section 5.1
and clauses (a) through (d) of this Section 5.2 is satisfied in all respects;

            (f) the Buyer and the Transitory Subsidiary shall have received from
Wilson Sonsini Goodrich & Rosati, counsel to the Company, an opinion with
respect to the matters set forth in Exhibit D attached hereto, addressed to the
Buyer and the Transitory Subsidiary and dated as of the Closing Date;

            (g) except for any Company Stockholder who holds only Dissenting
Shares, (i) each Company Stockholder shall have executed and delivered an
Investment Agreement, and (ii) each Company Stockholder shall have executed and
delivered an investment questionnaire in the form attached hereto as Exhibit F
(an "Investment Questionnaire") or each Company Stockholder shall have had
executed and delivered on his or her behalf, a Purchaser Representative
Questionnaire in the form attached hereto as Exhibit G (a "Purchaser
Representative Questionnaire");

            (h) the offer, sale and issuance of the Merger Shares pursuant
hereto shall be exempt from registration under the Securities Act pursuant to
Section 4(2) of the Securities Act and/or Regulation D under the Securities Act
and applicable state securities laws;

            (i) the Buyer and the Transitory Subsidiary shall have received the
resignations, effective as of the Effective Time, of each director and officer
of the Company and the Subsidiaries specified by the Buyer in writing at least
five business days prior to the Closing;

            (j) the Company shall have obtained (and shall have provided copies
thereof to the Buyer) from each of its employees, who is employed by the Company
immediately prior to the Effective Time, a consent to assign to the Buyer the
Proprietary Information Agreement executed by such employee and the Company;

                                      -44-

            (k) the Company shall have obtained (and shall have provided copies
thereof to the Buyer) a release from Michael Carroll of all claims against
Buyer, Transitory Subsidiary and other respective affiliates;

            (l) the Buyer shall have received duly executed Affiliate Agreements
from each of the Affiliates of the Company pursuant to Section 4.7;

            (m) the Escrow Agent and Securityholder Agents shall have executed
and delivered the Escrow Agreement substantially in the form attached as Exhibit
A subject to modifications requested by the Escrow Agent and reasonably
acceptable to the Buyer and the Company;

            (n) the California Franchise Tax Board shall have issued the Tax
Clearance Certificate for the Company; and

            (o) all actions to be taken by the Company in connection with the
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to effect the transactions
contemplated hereby shall be reasonably satisfactory in form and substance to
the Buyer and the Transitory Subsidiary.

      5.3 Conditions to Obligations of the Company. The obligation of the
Company to consummate the Merger is subject to the satisfaction of the following
additional conditions:

            (a) the representations and warranties of the Buyer and the
Transitory Subsidiary set forth in Article III shall be true and correct when
made on the date hereof and shall be true and correct in all material respects
as of the Effective Time as if made as of the Effective Time, except for
representations and warranties made as of a specific date, which shall be true
and correct as of such date;

            (b) each of the Buyer and the Transitory Subsidiary shall have
performed or complied with in all material respects its agreements and covenants
required to be performed or complied with under this Agreement as of or prior to
the Effective Time;

            (c) each of the Buyer and the Transitory Subsidiary shall have
delivered to the Company a certificate (without qualification as to knowledge or
materiality or otherwise) to the effect that each of the conditions specified in
(a) and (b) of this Section 5.3 is satisfied in all respects;

                                      -45-

            (d) the Company shall have obtained all of the waivers, permits,
consents, approvals or other authorizations referred to in Section 4.1, except
for any waivers, permits, consents, approvals or authorizations in whose absence
the Merger could be consummated without materially adversely affecting the
Company or the Company Stockholders;

            (e) the Company shall have received from Hale and Dorr LLP, counsel
to the Buyer and the Transitory Subsidiary, an opinion with respect to the
matters set forth in Exhibit E attached hereto, addressed to the Company and
dated as of the Closing Date;

            (f) the Company, Escrow Agent, and Securityholder Agents shall have
executed and delivered the Escrow Agreement substantially in the form attached
as Exhibit A subject to modifications requested by the Escrow Agent and
reasonably acceptable to the Buyer and the Company; and

            (g) all actions to be taken by the Buyer and the Transitory
Subsidiary in connection with the consummation of the transactions contemplated
hereby and all certificates, opinions, instruments and other documents required
to effect the transactions contemplated hereby shall be reasonably satisfactory
in form and substance to the Company.

                                   ARTICLE VI

                                 INDEMNIFICATION

      6.1 Indemnification. The Company and the Company Stockholders shall
jointly and severally indemnify the Surviving Corporation and the Buyer (the
"Indemnified Persons") in respect of, and hold the Indemnified Persons harmless
against, any and all debts, obligations and other liabilities (whether absolute,
accrued, contingent, fixed or otherwise, or whether known or unknown, or due or
to become due or otherwise), monetary damages, fines, fees, penalties, interest
obligations, deficiencies, losses and expenses (including without limitation
amounts paid in settlement, interest, court costs, costs of investigators, fees
and expenses of attorneys, accountants, financial advisors and other experts,
and other expenses of litigation) incurred or suffered by the Indemnified
Persons or any Affiliate thereof ("Damages"):

            (a) resulting from, relating to or constituting any
misrepresentation, breach of warranty or failure to perform any covenant or
agreement of the Company contained in this Agreement or in the Certificate
delivered pursuant to Section 5.2(e);

                                      -46-

            (b) resulting from any failure of any Company Stockholders to have
good, valid and marketable title to the issued and outstanding shares of Company
Common Stock held by such Company Stockholders, free and clear of all liens,
claims, pledges, options, adverse claims or charges of any nature whatsoever; or

            (c) resulting from any claim by a stockholder or former stockholder
of the Company, or any other person, firm, corporation or entity, seeking to
assert, or based upon: (i) ownership or rights to ownership of any shares of
stock of the Company; (ii) any rights of a stockholder (other than the right to
receive the Merger Shares pursuant to this Agreement or rights to demand
purchase under the applicable provisions of the California Corporations Code),
including any option, preemptive rights or rights to notice or to vote; (iii)
any rights under the charter or By-laws of the Company; or (iv) any claim that
his, her or its shares were wrongfully repurchased by the Company.

      6.2 Method of Asserting Claims.

            (a) All claims for indemnification by an Indemnified Person pursuant
to this Article VI shall be made in accordance with the provisions of the Escrow
Agreement.

            (b) If a third party asserts that an Indemnified Person is liable to
such third party for a monetary or other obligation which may constitute or
result in Damages for which such Indemnified Person may be entitled to
indemnification pursuant to this Article VI, and such Indemnified Person
reasonably determines that it has a valid business reason to fulfill such
obligation, then (i) such Indemnified Person shall be entitled to satisfy such
obligation, without prior notice to or consent from the Securityholder Agents,
(ii) such Indemnified Person may make a claim for indemnification pursuant to
this Article VI in accordance with the provisions of the Escrow Agreement, and
(iii) such Indemnified Person shall be reimbursed, in accordance with the
provisions of the Escrow Agreement, for any such Damages for which it is
entitled to indemnification pursuant to this Article VI (subject to the right of
the Securityholder Agents to dispute the Indemnified Person's entitlement to
indemnification under the terms of this Article VI).

            (c) The Indemnified Person shall give prompt written notification to
the Securityholder Agents of the commencement of any action, suit or proceeding
relating to a third party claim for which indemnification pursuant to this
Article VI may be sought; provided, however, that no delay on the part of the
Indemnified Person in notifying the Securityholder Agents shall relieve the
Company and the Company Stockholders of any liability or obligation

                                      -47-

hereunder except to the extent of any damage or liability caused by or arising
out of such failure. Within 20 days after delivery of such notification, the
Securityholder Agents may, upon written notice thereof to the Indemnified
Person, assume control of the defense of such action, suit or proceeding with
counsel reasonably satisfactory to the Indemnified Person, provided the
Securityholder Agents acknowledge in writing to the Indemnified Person that any
damages, fines, costs or other liabilities that may be assessed against the
Indemnified Person in connection with such action, suit or proceeding constitute
Damages for which the Indemnified Person shall be entitled to indemnification
pursuant to this Article VI. If the Securityholder Agents do not so assume
control of such defense, the Indemnified Person shall control such defense. The
party not controlling such defense may participate therein at its own expense;
provided that if the Securityholder Agents assume control of such defense and
the Indemnified Person reasonably concludes that the indemnifying parties and
the Indemnified Person have conflicting interests or different defenses
available with respect to such action, suit or proceeding, the reasonable fees
and expenses of counsel to the Indemnified Person shall be considered "Damages"
for purposes of this Agreement. The party controlling such defense shall keep
the other party advised of the status of such action, suit or proceeding and the
defense thereof and shall consider in good faith recommendations made by the
other party with respect thereto. The Indemnified Person shall not agree to any
settlement of such action, suit or proceeding without the prior written consent
of the Securityholder Agents, which shall not be unreasonably withheld. The
Securityholder Agents shall not agree to any settlement of such action, suit or
proceeding without the prior written consent of the Indemnified Person, which
shall not be unreasonably withheld.

      6.3 Survival. The representations and warranties of the Company set forth
in this Agreement shall survive the Closing and the consummation of the
transactions contemplated hereby and continue until one year after the Closing
Date and shall not be affected by any examination made for or on behalf of the
Buyer or the knowledge of any of the Buyer's officers, directors, stockholders,
employees or agents; provided, however, that those representations and
warranties of the Company and the Buyer that relate to contingencies that are
subject to resolution through the audit process shall only survive the execution
and delivery hereof and the Closing until the earlier of (i) the public issuance
of the first independent audit report on the Buyer following the Closing which
covers a period of time subsequent to the Closing and (ii) the first anniversary
of the Closing Date. Notwithstanding the foregoing, the representations and
warranties contained in Section 2.21 relating to environmental matters and the
representations and warranties contained in Section 2.9 relating to tax matters
shall survive the Closing and the consummation of the transactions contemplated
thereby and continue until the expiration of the applicable statute of
limitations relating to such representations. If a notice is given in

                                      -48-

accordance with the Escrow Agreement before expiration of such periods, then
(notwithstanding the expiration of such time period) the representation or
warranty applicable to such claim shall survive until, but only for purposes of,
the resolution of such claim. The representations and warranties of the Buyer
contained in Section 3.2 shall survive the Closing and the consummation of the
transactions contemplated hereby and shall continue until the date of the
consummation of the Buyer's initial public offering or the sale of substantially
all of the Buyer's assets or the transfer of a majority of the Buyer's voting
stock or a merger, whichever occurs first.

      6.4 Limitations. The Escrow Agreement is intended to secure the
indemnification obligations of the Company Stockholders under this Agreement,
and shall be the sole and exclusive remedy of the Buyer subject to the
provisions of this Section 6.4. The aggregate liability of the Company and the
Company Stockholders to the Buyer for any reason (including, without limitation,
for any misrepresentation or breach of any representation, warranty or covenant
contained in this Agreement) shall not exceed the amount of the Escrow Shares;
provided, however, that the foregoing limitation shall not apply to liability
for fraud.

                                   ARTICLE VII

                                   TERMINATION

      7.1 Termination of Agreement. The Parties may terminate this Agreement
prior to the Effective Time (whether before or after Requisite Stockholder
Approval) as provided below:

            (a) the Parties may terminate this Agreement by mutual written
consent;

            (b) the Buyer may terminate this Agreement by giving written notice
to the Company in the event the Company is in breach, and the Company may
terminate this Agreement by giving written notice to the Buyer and the
Transitory Subsidiary in the event the Buyer or the Transitory Subsidiary is in
breach, of any material representation, warranty or covenant contained in this
Agreement, and such breach is not remedied within 15 days of delivery of written
notice thereof;

            (c) any Party may terminate this Agreement by giving written notice
to the other Parties at any time after the Company Stockholders have voted on
whether to approve this Agreement and the Merger in the event this Agreement and
the Merger failed to receive the Requisite Stockholder Approval;

                                      -49-

            (d) the Buyer may terminate this Agreement by giving written notice
to the Company if the Closing shall not have occurred on or before the 120th day
following the date of this Agreement by reason of the failure of any condition
precedent under Section 5.1 or Section 5.2 hereof (unless the failure results
primarily from a breach by the Buyer or the Transitory Subsidiary of any
representation, warranty or covenant contained in this Agreement); or

            (e) the Company may terminate this Agreement by giving written
notice to the Buyer and the Transitory Subsidiary if the Closing shall not have
occurred on or before the 120th day following the date of this Agreement by
reason of the failure of any condition precedent under Section 5.1 or Section
5.3 hereof (unless the failure results primarily from a breach by the Company of
any representation, warranty or covenant contained in this Agreement).

      7.2 Effect of Termination. If any Party terminates this Agreement pursuant
to Section 7.1, all obligations of the Parties hereunder shall terminate without
any liability of any Party to any other Party (except for any liability of any
Party for breaches of this Agreement); provided, however, that the
confidentiality provisions contained in Section 4.4 shall survive any such
termination.

                                  ARTICLE VIII

                                   DEFINITIONS

For purposes of this Agreement, each of the following defined terms is defined
in the Section of this Agreement indicated below.

      Defined Term                                          Section
      ------------                                          -------

Actual Shares                                               4.13
Affiliates                                                  2.13(f)
Affiliate Agreement                                         4.7
Articles of Merger                                          1.1
Buyer                                                       Introduction
Buyer Common Stock                                          1.5(a)
Buyer Financial Statements                                  3.5
Buyer Material Adverse Effect                               3.6

                                      -50-

Buyer Most Recent Balance Sheet Date                        3.5
Cause                                                       4.10(b)(i)
CERCLA                                                      2.21(a)
Certificates                                                1.3
Closing                                                     1.2
Closing Date                                                1.2
Code                                                        1.11(a)
Company                                                     Introduction
Company Affiliates                                          4.7
Company Common Stock                                        2.2
Company Material Adverse Effect                             2.7
Company Stockholders                                        1.5(a)
Confidential Information                                    4.4
Constructive Termination                                    4.10(c)(i)
Conversion Ratio                                            1.5(a)
Damages                                                     6.1, 6.2(c)
Disclosure Schedule                                         Article II
Dissenting Shares                                           1.7(a)
Effective Time                                              1.1
Employee Benefit Plan                                       2.20(a)
Employment Termination Date                                 4.10(b)(i)
Environmental Law                                           2.21(a)
ERISA                                                       2.20(a)
ERISA Affiliate                                             2.20(a)
Escrow Agreement                                            1.3
Escrow Agent                                                1.3
Escrow Shares                                               1.5(a)
Exchange Act                                                2.4
Financial Statements                                        2.6
GAAP                                                        2.6
Governmental Entity                                         2.4
Indemnified Persons                                         6.1
Initial Shares                                              1.5(a)
Intellectual Property                                       2.11(a)
Investment Agreement                                        4.11(b)(ii)
Investment Questionnaire                                    5.2(g)

                                      -51-

Materials of Environmental Concern                          2.21(b)
Merger                                                      1.1
Merger Shares                                               1.5(a)
Most Recent Balance Sheet                                   2.8
Most Recent Balance Sheet Date                              2.6
Non-Compete Period                                          4.10(b)(i)
Options                                                     1.11(a)
Ordinary Course of Business                                 2.4
Parties                                                     Introduction
Permits                                                     2.23
Principal                                                   4.10(a)
Purchaser Representative Questionnaire                      5.2(g)
Reasonable Best Efforts                                     4.1(a)
Represented Shares                                          4.13
Requisite Stockholder Approval                              2.3
Resignation                                                 4.10(b)(i)
Securities Act                                              2.2
Security Interest                                           2.4
Securityholder Agents                                       1.3
Subsidiary                                                  2.4
Surviving Corporation                                       1.1
Taxes                                                       2.9(a)
Tax Returns                                                 2.9(a)
Third Party Intellectual Property Rights                    2.11(a)
Transitory Subsidiary                                       Introduction

                                   ARTICLE IX

                                  MISCELLANEOUS

      9.1 Press Releases and Announcements. No Party shall issue any press
release or public disclosure relating to the subject matter of this Agreement
without the prior written approval of the other Parties; provided, however, that
any Party may make any public disclosure it believes in good faith is required
by law or regulation (in which case the disclosing Party shall advise the other
Parties and provide them with a copy of the proposed disclosure prior to making
the disclosure).

                                      -52-

      9.2 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns; provided, however, that (a) the provisions in
Article I concerning issuance of the Merger Shares are intended for the benefit
of the Company Stockholders and (b) the provisions in Article VI concerning
indemnification are intended for the benefit of the individuals specified
therein and their respective legal representatives.

      9.3 Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, with respect to the subject matter hereof.

      9.4 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Parties; provided that the Transitory Subsidiary may assign its
rights, interests and obligations hereunder to an Affiliate of the Buyer.

      9.5 Counterparts; Facsimile Signature. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument. This Agreement may
be executed by facsimile signature.

      9.6 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.

      9.7 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly delivered two
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one business day after it is sent via a reputable
nationwide overnight courier service, in each case to the intended recipient as
set forth below:

      If to the Company:                        Copy to:
      ------------------                        --------

      SEVA Technologies, Inc.                   Wilson Sonsini Goodrich & Rosati

                                      -53-

      200 Brown Rd., Suite 103                  650 Page Mill Road
      Fremont, CA  94539                        Palo Alto, CA  94304
      Attention: Yatin Trivedi,                 Attention: Nevan C. Elam, Esq.
                 President

      If to the Buyer:                          Copy to:

      Intrinsix Corp.                           Hale and Dorr LLP
      33 Lyman Street                           60 State Street
      Westboro, MA  01581                       Boston, MA  02109
      Attention: James A. Gobes,                Attention: Peter B. Tarr, Esq.
                 President

      If to the Transitory Subsidiary:          Copy to:

      Intrinsix Merger Corp.                    Hale and Dorr LLP
      33 Lyman Street                           60 State Street
      Westboro, MA  01581                       Boston, MA  02109
      Attention: James A. Gobes,                Attention: Peter B. Tarr, Esq.
                 President

Any Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the party for
whom it is intended. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set forth.

      9.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of The Commonwealth of Massachusetts without
giving effect to any choice or conflict of law provision or rule (whether The
Commonwealth of Massachusetts or any other jurisdiction) that would cause the
application of laws of any jurisdictions other than those of The Commonwealth of
Massachusetts.

      9.9 Amendments and Waivers. The Parties may mutually amend any provision
of this Agreement at any time prior to the Effective Time; provided, however,
that any amendment

                                      -54-

effected subsequent to the Requisite Stockholder Approval shall be subject to
the restrictions contained in the Massachusetts Business Corporation Law. No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by all of the Parties. No waiver by any Party of
any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.

      9.10 Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.

      9.11 Expenses. Except as set forth in the Escrow Agreement, each of the
Parties shall bear its own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby.

      9.12 Specific Performance. Each of the Parties acknowledges and agrees
that one or more of the other Parties would be damaged irreparably in the event
any of the provisions of this Agreement are not performed in accordance with
their specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter in addition to any other remedy to
which it may be entitled, at law or in equity.

      9.13 Construction. The language used in this Agreement shall be deemed to
be the language chosen by the Parties hereto to express their mutual intent, and
no rule of strict construction shall be applied against any Party. Any reference
to any federal, state, local, or

                                      -55-

foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.

      9.14 Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.

             [The remainder of this page has been intentionally left blank.]

                                      -56-

      IN WITNESS WHEREOF, each of the Parties hereto have caused this Agreement
to be executed and its corporate seal to be affixed thereto as of the date first
above written by its respective duly authorized officers.

                                          BUYER

[SEAL]                                    INTRINSIX CORP.

                                          By: /s/ James A. Gobes
                                              ----------------------------------
                                                  James A. Gobes, President

                                          By: /s/ Brian Meeks
                                              ----------------------------------
                                                  Brian C. Meeks, Treasurer

                                          TRANSITORY SUBSIDIARY

[SEAL]                                    INTRINSIX MERGER CORP.

                                          By: /s/ James A. Gobes
                                              ----------------------------------
                                                  James A. Gobes, President

                                          By: Brian Meeks
                                              ----------------------------------
                                              Brian C. Meeks, Treasurer

                                          COMPANY

[SEAL]                                    SEVA TECHNOLOGIES, INC.

                                          By: /s/ Yatin Trivedi
                                              ----------------------------------
                                                  Yatin Trivedi, President

                                          By: /s/ Larry Saunders
                                              ----------------------------------
                                                  Larry F. Saunders, Treasurer

                                      -57-

      The following stockholders of the Company hereby execute this Agreement
for the limited purpose of agreeing to and becoming bound by the provisions of
Section 4.2(c), Section 4.10 and Article VI.

                                          /s/ Yatin Trivedi
                                          --------------------------------------
                                          Yatin Trivedi

                                          /s/ Larry Saunders
                                          --------------------------------------
                                          Larry F. Saunders

                                      -58- 

Basic Info X:

Name: (collectively, the "Securityholder Agents"), and State Street Bank and Trust
Type: trust
Date: April 3, 2000
Company: INTRINSIX CORP
State: Massachusetts

Other info:

Date:

  • June 11 , 1999
  • June 30 , 1999
  • December 31 , 1996
  • December 31 , 1998
  • January 1 , 1996
  • November 19 , 1980
  • March 31 , 1999
  • April 30 , 1999

Organization:

  • Sonsini , Goodrich & Rosati
  • the State of California the Articles of Merger
  • State Street Bank
  • Articles of Organization of the Transitory Subsidiary
  • Closing of Transfer Books
  • Board of Directors of the Company
  • Materials of Environmental Concern
  • Certain Business Relationships With Affiliates
  • 3.3 Authorization of Transaction
  • Massachusetts Business Corporation Law
  • Absence of Certain Changes
  • Buyer Most Recent Balance Sheet Date
  • Internal Revenue Service
  • Intellectual Property or Third Party Intellectual Property Rights
  • Buyer Common Stock
  • Termination Without Cause
  • Employment Termination Date
  • Securities Laws Matters
  • Method of Asserting Claims
  • Buyer Financial Statements 3.5 Buyer Material Adverse Effect
  • Company Introduction Company Affiliates 4.7 Company Common Stock 2.2 Company Material Adverse Effect 2.7 Company Stockholders
  • Ordinary Course of Business 2.4 Parties Introduction
  • Third Party Beneficiaries
  • SEVA Technologies , Inc. Wilson Sonsini Goodrich & Rosati
  • Intrinsix Corp. Hale
  • Intrinsix Merger Corp. Hale
  • The Commonwealth of Massachusetts

Location:

  • Wilson
  • United States of America
  • California
  • Brown Rd.
  • Fremont
  • Palo Alto
  • Westboro
  • Boston
  • Esq
  • Massachusetts

Money:

  • $ 5,000

Person:

  • Michael Carroll
  • Hale
  • Nevan C. Elam
  • Lyman
  • Peter B. Tarr
  • James A. Gobes
  • Brian Meeks
  • Brian C. Meeks
  • Yatin Trivedi
  • Larry Saunders
  • Larry F. Saunders

Time:

  • 10:00 a.m. local time

Percent:

  • 90 %
  • 10 %
  • 25 %
  • 98 %
  • 1 %