AGREEMENT AND PLAN OF MERGER

                                      AMONG

                                 TALK.COM, INC.,

                           ALADDIN ACQUISITION CORP.,

                                       AND

                         ACCESS ONE COMMUNICATIONS CORP.


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                                TABLE OF CONTENTS
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                                                                                                               PAGE
<S>     <C>                                                                                                    <C>


1.       Definitions...........................................................1
2.       The Transaction.......................................................7
         (a)      The Merger...................................................7
         (b)      The Closing..................................................7
         (c)      Actions at the Closing.......................................7
         (d)      Effect of Merger.............................................8
         (e)      Procedure for Exchange......................................10
         (f)      Escrow......................................................11
         (g)      Closing of Transfer Records.................................12
3.       Representations and Warranties of the Target.........................12
         (a)      Organization, Qualification, and Corporate Power............13
         (b)      Capitalization..............................................13
         (c)      Noncontravention............................................14
         (d)      Compliance with Laws; Licenses..............................14
         (e)      Customers...................................................15
         (f)      Suppliers...................................................15
         (g)      Brokers' Fees...............................................15
         (h)      Title to Assets.............................................15
         (i)      Subsidiaries................................................15
         (j)      Financial Statements........................................16
         (k)      Events Subsequent to Most Recent Fiscal Year End............16
         (l)      Undisclosed Liabilities.....................................18
         (m)      Legal Compliance............................................18
         (n)      Tax Matters.................................................19
         (o)      Real Property...............................................20
         (p)      Intellectual Property.......................................21
         (q)      Tangible Assets.............................................22
         (r)      Inventory...................................................22
         (s)      Contracts...................................................22
         (t)      Notes and Accounts Receivable...............................23
         (u)      Powers of Attorney..........................................23
         (v)      Insurance...................................................23
         (w)      Litigation..................................................24
         (x)      Employees...................................................24
         (y)      Employee Benefits...........................................25
         (z)      Guaranties..................................................27
         (aa)     Environmental, Health and Safety Matters....................27
         (bb)     Certain Business Relationships with the Target and its
                  Subsidiaries................................................28
         (cc)     Accounts; Lockboxes; Safe Deposit Boxes.....................28
         (dd)     Securities..................................................28
         (ee)     Accounting Matters..........................................28
         (ff)     Disclosure..................................................28
4.       Representations and Warranties of Parent and the Parent Subsidiary...28
         (a)      Organization................................................29
         (b)      Capitalization..............................................29

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                                                         TABLE OF CONTENTS

                                                            (CONTINUED)

<S>      <C>                                                                                             <C>
(c)      Authorization of Transaction.........................................29
         (d)      Noncontravention............................................29
         (e)      Brokers' Fees...............................................29
         (f)      Continuity of Business......................................30
         (g)      Securities Exchange Act Reports.............................30
         (h)      Disclosure..................................................30
         (i)      Authorization for Parent Shares.............................30
         (j)      NASDAQ Compliance...........................................30
         (k)      Litigation..................................................30
         (l)      No Material Adverse Changes.................................31
5.       Covenants............................................................31
         (a)      General.....................................................31
         (b)      Notices and Consents........................................31
         (c)      Regulatory Matters and Approvals............................31
         (d)      Operation of the Business...................................33
         (e)      Preservation of Business....................................33
         (f)      Full Access.................................................33
         (g)      Notice of Developments......................................34
         (h)      Exclusivity.................................................34
         (i)      Continuity of Business......................................35
         (j)      Employment Agreements.......................................36
         (k)      Listing.....................................................36
         (l)      Services Agreement..........................................36
         (m)      Voting Agreement............................................36
         (n)      MCG Finance Agreement.......................................36
         (o)      Lockup Agreement............................................36
6.       Conditions to Obligation to Close....................................37
         (a)      Conditions to Obligation of Parent and the Parent
                  Subsidiary..................................................37
         (b)      Conditions to Obligation of the Target and Stockholders.....38
7.       Remedies for Breaches of this Agreement..............................40
         (a)      Survival of Representations and Warranties..................40
         (b)      Indemnification Agreement...................................40
         (c)      Other Indemnification Provisions............................40
         (d)      Directors' and Officers' Indemnity..........................40
8.       Termination..........................................................41
         (a)      Termination of Agreement....................................41
         (b)      Effect of Termination.......................................42
9.       Miscellaneous........................................................42
         (a)      Press Releases and Public Announcements.....................42
         (b)      No Third-Party Beneficiaries................................42
         (c)      Entire Agreement............................................42
         (d)      Binding Effect; Assignment..................................42
         (e)      Counterparts................................................43
         (f)      Headings....................................................43
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                                                           TABLE OF CONTENTS

                                                               (CONTINUED)


<S>                                                                                                            <C>
         (g)      Notices.....................................................43
         (h)      GOVERNING LAW...............................................44
         (i)      Amendments and Waivers......................................44
         (j)      Severability................................................44
         (k)      Expenses....................................................45
         (l)      Incorporation of Exhibits...................................45
         (m)      Construction................................................45
         (n)      Incorporation of Exhibits and Schedules.....................45
         (o)      Specific Performance........................................45
         (p)      Submission to Jurisdiction..................................45
         (q)      WAIVER OF JURY TRIAL........................................46

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                                       9
<PAGE>

                          AGREEMENT AND PLAN OF MERGER

         THIS AGREEMENT AND PLAN OF MERGER (the  "Agreement") is dated effective
March 24, 2000, by and among TALK.COM,  INC., a Delaware corporation ("Parent"),
ALADDIN  ACQUISITION  CORP., a Delaware  corporation  and a direct  wholly-owned
Subsidiary of Parent (the "Parent  Subsidiary"),  and ACCESS ONE  COMMUNICATIONS
CORP., a New Jersey  corporation (the "Target").  Parent,  the Parent Subsidiary
and the Target are referred to collectively herein as the "Parties."

                                   WITNESSETH:

         WHEREAS, this Agreement  contemplates a transaction whereby Parent will
acquire all of the  outstanding  capital stock of the Target through a merger of
the Parent Subsidiary with and into the Target;

         WHEREAS,  the  Board  of  Directors  of  each  of  Parent,  the  Parent
Subsidiary and the Target has approved the  acquisition of the Target by Parent,
including  the merger of the  Parent  Subsidiary  with and into the Target  (the
"Merger"), upon the terms and subject to the conditions set forth herein;

         WHEREAS,  the Board of Directors of the Target has determined  that the
Merger is advisable  and is fair to and in the best  interests of the holders of
the Target's capital stock, par value $.001 per share (the "Target Shares"), and
has  resolved to  recommend  the approval of the Merger and the adoption of this
Agreement by the Stockholders;

         WHEREAS,  the Board of  Directors  of Parent  has  determined  that the
Merger is advisable  and is fair to and in the best  interests of the holders of
Parent's capital stock, par value $0.01 per share (the "Parent Shares");

         WHEREAS,  the  Stockholders  that are signatory to the Voting Agreement
have  agreed to vote for the Merger on the terms and  subject to the  conditions
set forth in this Agreement; and

         WHEREAS,  this Agreement  contemplates that for U.S. Federal income tax
purposes the Merger will qualify as a reorganization  within the meaning of Code
Section 368(a).

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
promises  set  forth  herein,  and  in  consideration  of  the  representations,
warranties and covenants set forth herein, the Parties agree as follows:

1.       Definitions.

                  "Acquisition Proposal" means any proposal or offer (including,
without limitation, any proposal or offer to the Stockholders) with respect to a
merger,   acquisition,    consolidation,    recapitalization,    reorganization,
liquidation, tender offer or exchange offer or similar transaction involving, or
any  purchase  of 25% or more  of the  consolidated  assets  of,  or any  equity
interest representing 25% or more of the outstanding shares of capital stock in,
the Target.

                                       10
<PAGE>

                  "Affiliate"  has the  meaning  set forth in Rule  12b-2 of the
regulations promulgated under the Securities Exchange Act.

                  "Affiliated  Group"  means any  affiliated  group  within  the
meaning of Code Section  1504(a) or any similar  group  defined  under a similar
provision of federal, state, local or foreign law.

                  "Agreement" has the meaning set forth in the preamble.

                  "Basis"   means   any  past  or   present   fact,   situation,
circumstance,  status, condition,  activity, practice, plan, occurrence,  event,
incident,  action,  failure to act or  transaction  that forms or could form the
basis for any specified consequence.

                  "Certificate  of Merger"  has the meaning set forth in Section
2(c) below.

                  "Closing" has the meaning set forth in Section 2(b) below.

                  "Closing  Date"  has the  meaning  set forth in  Section  2(b)
below.

                  "Closing Sales Price per Parent Share" means,  on any day, the
average of the last  reported  sale price of one Parent  Share on the Nasdaq for
each of the five trading days immediately preceding such day.

                  "COBRA"  means the  requirements  of Part 6 of  Subtitle  B of
Title I of ERISA and Code Section 4980B and of any similar state law.

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

                  "Confidentiality Agreements" means the letter agreements dated
February 9, 2000 and March 8, 2000,  between  Parent and the  Target,  providing
that,  among  other  things,  each Party  would  maintain  confidential  certain
information of the other Party.

                  "Deferred Intercompany  Transaction" has the meaning set forth
in Treas. Reg. Section 1.1502-13.

                  "Delaware General Corporation Law" means Title 8, Chapter 1 of
the Delaware Code, as amended.

                  "Disclosure  Schedule"  has the meaning set forth in Section 3
below

                  "Effective  Time" has the meaning set forth in Section 2(d)(i)
below.

                  "Employee  Benefit Plan" means any "employee benefit plan" (as
such term is defined in ERISA Section 3(3)) and any other employee benefit plan,
program or arrangement of any kind.

                  "Employee  Pension  Benefit Plan" has the meaning set forth in
ERISA Section 3(2).

                                       11
<PAGE>

                  "Employee  Welfare  Benefit Plan" has the meaning set forth in
ERISA Section 3(1).

                  "Employment  Agreement"  has the  meaning set forth in Section
5(j) below.

                  "Environmental,  Health,  and Safety  Requirements"  means all
federal,  state, local and foreign statutes,  regulations,  ordinances and other
provisions  having the force or effect of law, all  judicial and  administrative
orders  and  determinations,  all  contractual  obligations  and all  common law
concerning public health and safety,  worker health and safety, and pollution or
protection of the environment,  including without  limitation all those relating
to  the  presence,  use,  production,   generation,  handling,   transportation,
treatment,  storage,  disposal,  distribution,  labeling,  testing,  processing,
discharge,  release,  threatened  release,  control, or cleanup of any hazardous
materials,  substances or wastes,  chemical substances or mixtures,  pesticides,
pollutants,  contaminants,  toxic chemicals,  petroleum  products or byproducts,
asbestos,  polychlorinated  biphenyl, noise or radiation, each as amended and as
now or hereafter in effect.

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

                  "ERISA  Affiliate"  means  each  entity  that is  treated as a
single employer with the Target for purposes of Code Section 414.

                  "Escrow  Agent" has the meaning  set forth in Section  2(f)(i)
below.

                  "Escrow  Agreement"  has the  meaning  set  forth  in  Section
2(f)(i) below.

                  "Escrow  Amount" has the meaning set forth in Section  2(e)(i)
below.

                  "Excess Loss Account" has the meaning set forth in Treas. Reg.
Section 1.1502-19.


                  "Exchange  Agent" has the meaning set forth in Section 2(e)(i)
below.

                  "Exchange  Fund" has the meaning set forth in Section  2(e)(i)
below.

                  "FCC" means the Federal Communications Commission.

                  "Fiduciary" has the meaning set forth in ERISA Section 3(21).

                  "Financial  Statements"  has the  meaning set forth in Section
3(j) below.

                  "GAAP"  means  United  States  generally  accepted  accounting
principles as in effect from time to time.

                  "Governmental  Entity" means any United States federal,  state
or local or any foreign  government,  governmental  regulatory or administrative
authority, agency, commission (including any department or political subdivision
of any of the foregoing), court, tribunal or judicial or arbitral body.

                                       12
<PAGE>

                  "Governmental  Order" means any order, ruling, writ, judgment,
injunction,  decree, charge,  stipulation,  determination or award entered by or
with any Governmental Entity.

                  "Hart-Scott-Rodino Act" means the Hart-Scott-Rodino  Antitrust
Improvements Act of 1976, as amended.

                  "Indemnification  Agreement"  has the  meaning  set  forth  in
Section 7(b) below.

                  "Intellectual  Property"  means  (a) all  inventions  (whether
patentable  or  unpatentable  and  whether  or not  reduced  to  practice),  all
improvements   thereto,   and  all  patents,   patent  applications  and  patent
disclosures,      together     with     all     reissuances,      continuations,
continuations-in-part, revisions, extensions and reexaminations thereof, (b) all
trademarks,  service marks, trade dress, logos, trade names and corporate names,
together  with  all  translations,  adaptations,  derivations  and  combinations
thereof and including all goodwill associated  therewith,  and all applications,
registrations and renewals in connection therewith, (c) all copyrightable works,
all copyrights and all  applications,  registrations  and renewals in connection
therewith,  (d) all mask works and all applications,  registrations and renewals
in  connection  therewith,  (e) all  trade  secrets  and  confidential  business
information  (including  ideas,  research and development,  know-how,  formulae,
compositions,  manufacturing and production processes and techniques,  technical
data, designs,  drawings,  specifications,  customer and supplier lists, pricing
and cost information,  and business and marketing plans and proposals),  (f) all
computer  software  (including  data and related  documentation),  (g) all other
proprietary  rights and (h) all  copies and  tangible  embodiments  thereof  (in
whatever form or medium).

                  "Knowledge"    means   actual   knowledge   after   reasonable
investigation.

                  "Laws"   mean   any   laws,   statutes,   rules,   ordinances,
regulations,  codes, plans,  injunctions,  judgments,  orders,  writs,  decrees,
rulings and charges thereunder of any Governmental Entity.

                  "Liability"  means any  liability  (whether  known or unknown,
whether asserted or unasserted,  whether absolute or contingent, whether accrued
or unaccrued,  whether liquidated or unliquidated,  and whether due or to become
due), including any liability for Taxes.

                  "Licenses" has the meaning set forth in Section 3(d)(i) below.

                  "Material Adverse Effect" means, relative to any occurrence of
whatever  nature  (including  any  adverse   determination  in  any  litigation,
arbitration or governmental  investigation  or proceeding),  a material  adverse
change  to,  or,  as the case may be, a  materially  adverse  effect  on (x) the
business,  assets,  revenues,  financial  condition,  operations or prospects of
Target  or any of its  Subsidiaries  identified  at or prior to  Closing  in any
writing;  (y) the ability of Target or any of its Subsidiaries to perform any of
its or their  payment  obligations  when due or to  perform  any other  material
obligations; or (z) any right, remedy or benefit of Parent, Parent Subsidiary or
Surviving Corporation hereunder or under any related document.

                  "MCG" has the meaning set forth in Section 5(n) below.

                  "MCG  Agreement"  has the  meaning  set forth in Section  5(n)
below.

                                       13
<PAGE>

                  "Merger" has the meaning set forth in the preamble.

                  "Merger  Consideration"  has the  meaning set forth in Section
2(d)(v) below.

                  "Most Recent Balance Sheet" means the balance sheet  contained
within the Most Recent Financial Statements.

                  "Most Recent  Financial  Statements" has the meaning set forth
in Section 3(j) below.

                  "Most  Recent  Fiscal  Month End" has the meaning set forth in
Section 3(j) below.

                  "Most  Recent  Fiscal  Year End" has the  meaning set forth in
Section 3(j) below.

                  "Multiemployer  Plan"  has the  meaning  set  forth  in  ERISA
Section 3(37).

                  "NASD" means the National  Association of Securities  Dealers,
Inc.

                  "Nasdaq" means the Nasdaq National Market.

                  "Ordinary  Course of Business"  means the  ordinary  course of
business consistent with past practice.

                  "Parent" has the meaning set forth in the preamble.

                  "Parent Board" means the board of directors of Parent.

                  "Parent  Fairness  Opinion" means an opinion of Bear Stearns &
Co.  Inc.,  addressed to the Parent  Board,  as to the fairness of the Merger to
Parent from a financial point of view.

                  "Parent  SEC  Documents"  has the meaning set forth in Section
4(g) below.

                  "Parent Shares" has the meaning set forth in the preamble.

                  "Parent Special  Meeting" has the meaning set forth in Section
5(c)(ii) below.

                  "Parent  Stockholder"  means any Person who or which holds any
                  Parent Shares.  "Parent  Subsidiary" has the meaning set forth
                  in the preamble.

                  "Parties" has the meaning set forth in the preamble.

                  "PBGC" means the Pension Benefit Guaranty Corporation.

                  "Person" means an individual, a partnership,  a corporation, a
limited liability  company,  an association,  a joint stock company,  a trust, a
joint venture, an unincorporated organization or a Governmental Entity.

                                       14
<PAGE>

                  "Per Share Merger  Consideration" has the meaning set forth in
Section 2(d)(v) below.

                  "Pledgee"  has the  meaning  set forth in the  preamble of the
Escrow Agreement.

                  "Principal  Executive"  has the  meaning  set forth in Section
5(j) below.

                  "Process  Agent" has the  meaning  set forth in  Section  9(p)
below.

                  "Prohibited  Transaction"  has the  meaning set forth in ERISA
Section 406 and Code Section 4975.

                  "Registration  Statement" has the meaning set forth in Section
5(c)(v) below.

                  "Reportable  Event" has the meaning set forth in ERISA Section
4043.

                  "Representative"  has the meaning set forth in Section 5(h)(i)
below.

                  "Requisite Stockholder Approval" means the affirmative vote of
the holders of the  outstanding  Target  Shares in favor of the adoption of this
Agreement in  accordance  with the New Jersey  Business  Corporation  Act of the
State of New Jersey.

                  "SEC" means the Securities and Exchange Commission.

                  "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.

                  "Securities Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.

                  "Security   Interest"  means  any  mortgage,   pledge,   lien,
encumbrance,  charge or other  security  interest,  other  than (a)  mechanic's,
materialman's  and similar  liens;  (b) liens for taxes not yet due and payable;
(c) purchase money liens and liens securing  rental payments under capital lease
arrangements; and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.

                  "Services Agreement" has the meaning set forth in Section 5(l)
below.

                  "Stockholder" has the meaning set forth in Section 3(b) below.

                  "Stock  Rights" means each option,  warrant,  purchase  right,
subscription  right,   conversion  right,  exchange  right  or  other  contract,
commitment or security  providing for the issuance or sale of any capital stock,
or otherwise causing to become outstanding any capital stock.

                  "Subsidiary"  of a  specified  Person  means any  corporation,
limited liability company,  partnership,  joint venture or other legal entity of
which the specified  Person (either alone or together with any other  Subsidiary
of the specified  Person)  owns,  directly or  indirectly,  more than 50% of the
stock or other  equity,  partnership,  limited  liability  company or equivalent

                                       15
<PAGE>

interests,  the holders of which are generally entitled to vote for the election
of the board of directors or other  governing body of such  corporation or other
legal  entity,  or  otherwise  has the  power to vote or  direct  the  voting of
sufficient  securities  to elect a majority of such board of  directors or other
governing body.

                  "Superior  Proposal"  has the  meaning  set  forth in  Section
5(h)(ii) below.

                  "Surviving  Corporation"  has the meaning set forth in Section
2(a) below.

                  "SWDA" has the meaning set forth in Section 3(aa)(iii).

                  "Target" has the meaning set forth in the preamble.

                  "Target Board" means the board of directors of the Target.

                  "Target Shares" has the meaning set forth in the preamble.

                  "Target Special  Meeting" has the meaning set forth in Section
5(c)(i) below.

                  "Tax" means any  federal,  state,  local,  or foreign  income,
gross  receipts,  license,  payroll,   employment,   excise,  severance,  stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
Section 59A), customs duties, capital stock,  franchise,  profits,  withholding,
social security (or similar), unemployment,  disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.

                  "Tax Return" means any report,  return,  declaration  or other
information  required to be supplied to a taxing  authority in  connection  with
Taxes.

                  "Voting  Agreement"  has the meaning set forth in Section 5(m)
below.

2.       The Transaction

                  (a) The Merger.  On and subject to the terms and conditions of
this Agreement, the Parent Subsidiary will merge with and into the Target at the
Effective  Time. The Target shall be the  corporation  surviving the Merger (the
"Surviving Corporation").

                  (b) The Closing. The closing of the transactions  contemplated
by this Agreement (the "Closing") shall take place at the offices of Kelley Drye
& Warren LLP, 1200 19th Street, N.W., Washington, D.C. 20036, commencing at 9:00
a.m. local time on the third business day following the  satisfaction  or waiver
of  all  conditions  to  the  obligations  of  the  Parties  to  consummate  the
transactions  contemplated by this Agreement (other than conditions with respect
to actions the respective Parties will take at the Closing itself) or such other
date as the Parties may mutually determine (the "Closing Date").

                  (c) Actions at the  Closing.  At the  Closing,  (i) the Target
will  deliver to Parent  and the Parent  Subsidiary  the  various  certificates,
instruments and documents referred to in

                                       16
<PAGE>

Section 6(a) below;  (ii) Parent and the Parent  Subsidiary  will deliver to the
Target the  various  certificates,  instruments  and  documents  referred  to in
Section 6(b) below;  (iii) the Target and the Parent  Subsidiary  will file with
the  Secretary of State of the State of Delaware and with the Secretary of State
of the State of New  Jersey a  Certificate  of Merger  in the form  attached  as
Exhibit A (the  "Certificate of Merger");  and (iv) Parent will deliver or cause
to be delivered the Exchange Fund to the Exchange  Agent in the manner  provided
below in this Section 2.

        (d)      Effect of Merger.

                 (i) General. The Merger shall become effective at the time (the
        "Effective  Time")  the  Target  and  the  Parent  Subsidiary  file  the
        Certificate  of  Merger  with the  Secretary  of  State of the  State of
        Delaware  and with the  Secretary of State of the State of New Jersey or
        at  such  later  time  as the  Parties  may  agree  and  specify  in the
        Certificate  of Merger.  The Merger  shall have the effects set forth in
        the  Delaware  General  Corporation  Law  and the  New  Jersey  Business
        Corporation  Act. 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 Target or the Parent
        Subsidiary  in  order  to  carry  out and  effectuate  the  transactions
        contemplated by this Agreement.

                 (ii) Certificate of  Incorporation.  At the Effective Time, the
        certificate  of  incorporation  of the  Surviving  Corporation  shall be
        amended  to read in its  entirety  in the form of  Exhibit B and,  as so
        amended,  shall be the  certificate  of  incorporation  of the Surviving
        Corporation until thereafter amended in accordance with its terms and as
        provided by law.

                 (iii) By-laws.  The By-laws of the Surviving  Corporation shall
        be amended and restated at and as of the Effective Time to read in their
        entirety  as  did  the  By-laws  of  the  Parent  Subsidiary  in  effect
        immediately  prior to the Effective Time and shall be the By-laws of the
        Surviving  Corporation  until amended in accordance with their terms and
        as provided by law.

                 (iv) Directors and Officers.  The directors and officers of the
        Parent  Subsidiary  immediately prior to the Effective Time shall be the
        directors  and officers of the  Surviving  Corporation  at and as of the
        Effective  Time  (retaining  their  respective  positions  and  terms of
        office), until the earlier of their respective  resignation,  removal or
        otherwise  ceasing to be a director or officer,  respectively,  or until
        their respective successors are duly elected and qualified,  as the case
        may be.

                 (v)  Conversion  of Target  Shares.  At and as of the Effective
        Time,  (A) each issued and  outstanding  Target  Share will be converted
        into the right to receive  .571428  Parent Shares (the "Per Share Merger
        Consideration"),   and  all  such  Target   Shares  will  no  longer  be
        outstanding,  will be canceled and will cease to exist,  and each holder
        of a certificate  representing  any such Target  Shares will  thereafter
        cease to have any rights with respect to such Target Shares,  except the
        right to receive the Per Share Merger Consideration for each such Target
        Share to

                                       17
<PAGE>

        which the holder of such Target  Shares is entitled  pursuant to Section
        2(e) upon the surrender of such  certificate in accordance  with Section
        2(e)  (collectively,  the "Merger  Consideration");  except that the Per
        Share  Merger   Consideration   shall  be  subject  to   equitable   and
        proportionate adjustment in the event of any stock split, stock dividend
        or reverse stock split by Parent  between the date of this Agreement and
        the Closing Date, and (B) each Target Share owned by the Target shall be
        canceled without payment therefor. No Target Share shall be deemed to be
        outstanding  or to have any rights  other than those set forth  above in
        this Section 2(d)(v) after the Effective Time.  Notwithstanding anything
        to the contrary in this Section  2(d)(v),  no  fractional  Parent Shares
        shall be  issued  to then  former  holders  of  Target  Shares.  In lieu
        thereof,  each then former holder of a Target Share who would  otherwise
        have been entitled to receive a fraction of a Parent Share (after taking
        into account all  certificates  delivered by such then former  holder at
        any one time) shall  receive an amount in cash equal to such fraction of
        a Parent Share multiplied by $14.

                 (vi) Conversion of Stock Rights. The Target shall take all such
        action as may be necessary to cause,  at the Effective  Time, each Stock
        Right  granted  by  the  Target  to  purchase   Target  Shares  that  is
        outstanding and unexercised  immediately  prior thereto  (whether or not
        vested or exercisable), to be converted automatically into an equivalent
        Stock  Right to purchase  Parent  Shares in an amount and at an exercise
        price determined as follows:

                     (x) The  number of Parent  Shares to be  subject to the new
                     Stock  Right will be equal to the  product of the number of
                     Target   Shares   subject  to  the  original   Stock  Right
                     multiplied by the Per Share Merger Consideration,  provided
                     that any  fractional  Parent  Shares  resulting  from  this
                     multiplication   will  be  rounded  as   provided   in  the
                     instrument  governing  the  Stock  Right or, if there is no
                     such instrument, up to the next whole share; and

                     (y) The exercise price per Parent Share under the new Stock
                     Right will be equal to the quotient of the  exercise  price
                     per Target Share under the original  Stock Right divided by
                     the Per  Share  Merger  Consideration,  provided  that  the
                     exercise price resulting from this division will be rounded
                     as provided in the instrument governing the Stock Right or,
                     if there is no instrument, up to the next whole cent.

                  The adjustments provided in this Section 2(d)(vi) with respect
                  to  any  original  Stock  Rights  that  are  "incentive  stock
                  options"  (as  defined in Section 422 of the Code) must be and
                  are  intended to be  effected  in a manner that is  consistent
                  with Section 424(a) of the Code. The option plan of the Target
                  under  which the  original  Stock  Rights  were issued will be
                  assumed by Parent, and the duration and other terms of the new
                  Stock  Rights will be the same as the original  Stock  Rights,
                  except that all  references to the Target will be deemed to be
                  references to Parent.  Promptly  following the Effective Time,
                  Parent shall deliver to the former  holders

                                       18
<PAGE>


                  of original Stock Rights appropriate  agreements  representing
                  the right to acquire Parent Shares on the terms and conditions
                  set forth in this Section 2(d)(vi);  provided, however, that a
                  portion of any warrants issuable under such agreements,  equal
                  in an amount  that when  added to the  portion  of the  Merger
                  Consideration to be withheld and delivered to the Escrow Agent
                  in  accordance  with Section  2(e)(i)  constitutes  10% of the
                  total Merger Consideration, shall be withheld from each of the
                  Pledgees  (as  defined  in the  Escrow  Agreement)  under such
                  agreements under the Escrow Agreement  proportionately,  based
                  on the  Merger  Consideration  to which  each such  Pledgee is
                  entitled pursuant to this Agreement.

                  The  Parent  shall  take all  corporate  action  necessary  to
                  reserve for issuance a sufficient  number of Parent Shares for
                  delivery  on exercise  of the new Stock  Rights in  accordance
                  with this Section  2(d)(vi).  At the  Effective  Time,  Parent
                  shall  file a  registration  statement  on  Form  S-8  (or any
                  successor form) or another appropriate form, and seek to cause
                  this Form S-8 to become effective at or as soon as practicable
                  after the  Effective  Time,  with  respect  to  Parent  Shares
                  subject to new employee  stock  options  included in the Stock
                  Rights   and  shall  use  best   efforts   to   maintain   the
                  effectiveness of this  registration  statement or registration
                  statements  (and maintain the current status of the prospectus
                  or  prospectuses  contained  therein)  for so  long  as  these
                  options remain outstanding.  With respect to those individuals
                  who  subsequent to the Merger will be subject to the reporting
                  requirements  under Section 16(a) of the  Securities  Exchange
                  Act, Parent shall administer the option plans assumed pursuant
                  to this Section  2(d)(vi) in a manner that  complies with Rule
                  16b-3  promulgated  under the  Securities  Exchange Act to the
                  extent the Target option plan complied with this rule prior to
                  the Merger.

                         (vii)   Conversion  of  Capital  Stock  of  the  Parent
                  Subsidiary.  At and as of the  Effective  Time,  each share of
                  common  stock,  $.01  par  value  per  share,  of  the  Parent
                  Subsidiary  will be converted  into one share of common stock,
                  $.01 par value per share, of the Surviving Corporation.

                  (e)  Procedure for Exchange.

                         (i)  Immediately  after the Effective  Time, (A) Parent
                  shall  furnish to First City  Transfer  Company,  its transfer
                  agent,  or  such  other  bank  or  trust  company   reasonably
                  acceptable  to  the  Target,  to act as  exchange  agent  (the
                  "Exchange  Agent")  a    corpus  (the  "Exchange
                  Fund")  consisting  of Parent  Shares and cash  sufficient  to
                  permit the Exchange Agent to make   full payment
                  of  the  Merger  Consideration  to the  holders  of all of the
                  issued and  outstanding  Target  Shares (other than any Target
                  Shares owned by the  Target),  less such portion of the Parent
                  Shares  to be  delivered  to the  holders  of the  issued  and
                  outstanding Target Shares which when added to the other Merger
                  Consideration  to be delivered to the Escrow Agent pursuant to
                  the  Escrow  Agreement  pursuant  to  Section  2(d)(vi)  above
                  constitutes 10% of the total Merger Consideration (the "Escrow
                  Amount")  which  will be  withheld  from each of the  Pledgees
                  under the  Escrow    Agreement  proportionately,
                  based on the Merger  Consideration  to which each such Pledgee
                  is  entitled  pursuant to this  Agreement  and (B) Parent will
                  cause the Exchange Agent

                                       19
<PAGE>

                  to mail a letter of  transmittal  (with  instructions  for its
                  use) in a form to be  mutually  agreed  upon by the Target and
                  Parent   prior  to  Closing  to  each  holder  of  issued  and
                  outstanding  Target Shares (other than any Target Shares owned
                  by the  Target)  for the  holder  to use in  surrendering  the
                  certificates  that,  immediately  prior to the Effective Time,
                  represented  his or its Target Shares  against  payment of the
                  Merger  Consideration to which the holder is entitled pursuant
                  to  Section  2(e)(ii),  subject  to the  escrow of the  Escrow
                  Amount pursuant to the Escrow Agreement. Upon surrender to the
                  Exchange Agent of these certificates, together with the letter
                  of transmittal, duly executed and completed in accordance with
                  the letter of transmittal instructions,  subject to the escrow
                  of the Escrow Amount pursuant to the Escrow Agreement,  Parent
                  shall promptly  cause to be issued a certificate  representing
                  that number of whole  Parent  Shares and a check  representing
                  the amount of cash in lieu of any  fractional  shares to which
                  the Persons are entitled,  after giving effect to any required
                  tax  withholdings.  No interest will be paid or accrued on the
                  cash in lieu of  fractional  shares  payable to  recipients of
                  Parent Shares. If payment is to be made to a Person other than
                  the registered holder of the certificate surrendered, it shall
                  be a condition  of payment  that the  surrendered  certificate
                  must be  properly  endorsed  or  otherwise  in proper form for
                  transfer and that the Person requesting such payment shall pay
                  any transfer or other taxes  required by reason of the payment
                  to  a  Person  other  than  the   registered   holder  of  the
                  certificate   surrendered   or  establish  to  the  reasonable
                  satisfaction  of the  Surviving  Corporation  or the  Exchange
                  Agent that this tax has been paid or is not applicable. If any
                  certificate  representing  Target  Shares  is lost,  stolen or
                  destroyed, upon the making of an affidavit of that fact by the
                  Person claiming a certificate to be lost, stolen or destroyed,
                  the  Exchange  Agent  will  issue in  exchange  for this lost,
                  stolen  or  destroyed  certificate  the  Merger  Consideration
                  deliverable  in respect  thereof;  except that,  the Person to
                  whom this Merger  Consideration  is paid shall, as a condition
                  precedent  to the payment  thereof,  indemnify  the  Surviving
                  Corporation in a manner reasonably  satisfactory to it against
                  any claim that may be made against the  Surviving  Corporation
                  with  respect  to the  certificate  alleged to have been lost,
                  stolen  or  destroyed.  No  dividends  or other  distributions
                  declared  after  the  Effective  Time with  respect  to Parent
                  Shares and  payable to the holders of record  thereof  will be
                  paid to the holder of any unsurrendered  certificate until the
                  holder thereof shall surrender this  certificate in accordance
                  with this Section  2(e).  After the surrender of a certificate
                  in  accordance  with this  Section  2(e),  the  record  holder
                  thereof is  entitled to receive  any such  dividends  or other
                  distributions,  without any interest thereon, which previously
                  had  become   payable  with  respect  to  the  Parent   Shares
                  represented by such certificate. No holder of an unsurrendered
                  certificate   is  entitled,   until  the   surrender  of  such
                  certificate,  to vote the Parent  Shares into which his or its
                  Target Shares shall have been converted.

                         (ii) The Parent shall pay, or shall cause the Surviving
                  Corporation  to pay,  all charges and expenses of the Exchange
                  Agent.

                  (f)      Escrow.

                                       20
<PAGE>

                         (i)  At  the  Effective   Time,   Parent,   the  Parent
                  Subsidiary,  Target,  Kenneth G.  Baritz and the Escrow  Agent
                  shall execute and deliver an escrow agreement substantially in
                  the form of the attached  Exhibit C (the  "Escrow  Agreement")
                  under  which a person  mutually  satisfactory  to Parent,  the
                  Parent  Subsidiary  and Target  shall act as escrow agent (the
                  "Escrow  Agent") with  respect to the Parent  Shares and other
                  securities  convertible  into Parent Shares deposited with the
                  Escrow Agent.  Parent shall deposit the Escrow Amount with the
                  Escrow  Agent,   which  shall  be  withheld  from  the  Merger
                  Consideration  as provided in Section 2(e) in connection  with
                  the  indemnification  obligations set forth in Section 7 below
                  and the Indemnification Agreement.

                         (ii) Subject to the  provisions  of this Section  2(f),
                  the Escrow Agreement and the  Indemnification  Agreement,  the
                  Escrow  Amount  shall  be paid to the  Stockholders  one  year
                  following the Effective  Time, as reduced by the amount of any
                  Material  Adverse  Effect the  Parent,  Parent  Subsidiary  or
                  Surviving  Corporation may suffer based on, arising from or in
                  connection  with all claims for  indemnification  asserted  in
                  writing   within  such  one  year   period   pursuant  to  the
                  Indemnification Agreement that have not been fully resolved.

                         (iii) For all purposes of this Agreement and the Escrow
                  Agreement,  whenever  Parent  Shares  shall be  required to be
                  delivered to satisfy an indemnity or  contribution  obligation
                  of any Party hereto,  each Parent Share shall be valued at the
                  Closing Sales Price per Parent Share on the date when a notice
                  asserting a claim under the Indemnification Agreement is given
                  pursuant  thereto.  In the event of any stock  split,  reverse
                  stock split,  stock  combination  or  reclassification  of the
                  Parent Shares or any merger,  consolidation  or combination of
                  Parent with any other  entity or  entities,  the deemed  value
                  specified above for the Parent Shares shall be  proportionally
                  adjusted so that the deemed  value of the Parent  Shares after
                  such event shall be the same as the deemed value of the Parent
                  Shares prior to such event. All such adjustments shall be made
                  successively.

                         (iv) Kenneth G. Baritz and his representatives shall be
                  entitled  to inspect  all of the work  papers,  schedules  and
                  other supporting  documentation relating to the calculation of
                  any Material Adverse Effect pursuant to Section 2(f)(ii).

                  (g) Closing of Transfer Records.  After the Effective Time, no
transfer of Target Shares outstanding prior to the Effective Time may be made on
the stock transfer books of the Surviving  Corporation.  If, after the Effective
Time,  certificates  representing  such shares are presented for transfer to the
Exchange  Agent,   they  shall  be  canceled  and  exchanged  for   certificates
representing  Parent  Shares and cash in lieu of fractional  shares,  if any, as
provided in Section 2(e).

                  3.  Representations  and Warranties of the Target.  The Target
represents and warrants to the Parent and Parent  Subsidiary that the statements
contained  in this  Section 3 are  correct  and  complete as of the date of this
Agreement  and will be correct and  complete  as of the Closing  Date (as though
made then and as though the Closing Date were  substituted  for the date of this
Agreement  throughout this Section 3 unless  otherwise  specifically  provided),
except as set forth

                                       21
<PAGE>


in the  disclosure  schedule  delivered  by the Target to the Parent on the date
hereof and initialed by the Parties (the "Disclosure Schedule").  Nothing in the
Disclosure  Schedule  shall be deemed  adequate to disclose  an  exception  to a
representation or warranty made herein,  however, unless the Disclosure Schedule
identifies the exception with  particularity  and describes the relevant  facts.
Without limiting the generality of the foregoing, the mere listing (or inclusion
of a copy) of a document or other item shall not be deemed  adequate to disclose
an  exception  to  a   representation   or  warranty  made  herein  (unless  the
representation or warranty has to do with the existence of the document or other
item itself).  All information  that is necessary to make a given section of the
Disclosure  Schedule complete and accurate,  but is not fully disclosed therein,
shall  nevertheless  be deemed to be complete and accurate if it is contained in
any  other  paragraph  of the  Disclosure  Schedule  provided  that  appropriate
cross-references  are  included in all  applicable  sections  of the  Disclosure
Schedule.  The Disclosure Schedule will be arranged in paragraphs  corresponding
to the lettered and numbered paragraphs contained in this Section 3.

                  (a) Organization,  Qualification, and Corporate Power. Each of
the  Target  and its  Subsidiaries  is a  corporation  duly  organized,  validly
existing,  and in  good  standing  under  the  laws of the  jurisdiction  of its
incorporation.  Each of the Target and its  Subsidiaries  is duly  authorized to
conduct  business and is in good  standing  under the laws of each  jurisdiction
where such  qualification  is required  except if such failure  would not have a
Material  Adverse  Effect.  Each of the  Target  and its  Subsidiaries  has full
corporate  power and  authority and all licenses,  permits,  and  authorizations
necessary  to carry on the  businesses  in which it is  engaged  and in which it
presently proposes to engage and to own and use the properties owned and used by
it. Section 3(a) of the Disclosure Schedule lists for each of the Target and its
Subsidiaries  (i) the directors and officers;  (ii) the state of  incorporation;
and  (iii)  the  jurisdictions  in which  the  corporation  is  qualified  to do
business.  The Target has delivered to the Parent correct and complete copies of
the charter and bylaws of each of the Target and its Subsidiaries (as amended to
date). The minute books (containing the records of meetings of the stockholders,
the board of directors, and any committees of the board of directors), the stock
certificate  books,  and the stock  record  books of each of the  Target and its
Subsidiaries  are  correct and  complete,  and the Target has  delivered  to the
Parent copies of all such items.  None of the Target and its  Subsidiaries is in
default under or in violation of any provision of its charter or bylaws.

                  (b) Capitalization. The entire authorized capital stock of the
Target  consists of 57,500,000  Target Shares,  of which  50,000,000  shares are
designated  as common stock and  7,500,000  shares are  designated  as preferred
stock. Of the authorized  common stock,  19,236,833 Target Shares are issued and
outstanding and 30,000 Target Shares are held in treasury. All of the issued and
outstanding Target Shares have been duly authorized,  are validly issued,  fully
paid, and nonassessable,  and are held of record by the respective  stockholders
as set forth in Section 3(b) of the Disclosure  Schedule  (each a  "Stockholder"
and collectively,  "Stockholders"). Other than options that are exercisable into
2,180,278  Target Shares and warrants that are exercisable into 3,582,889 Target
Shares  (as  identified  in Section  3(b) of the  Disclosure  Schedule  with all
relevant  material  information  including  but not limited to  exercise  price,
exercise term, transferability  restrictions,  employment related conditions (if
any) and  vesting  rights),  there are no  outstanding  or  authorized  options,
warrants,  purchase rights,  subscription  rights,  conversion rights,  exchange
rights,  or other  contracts  or  commitments  that could  require the Target to
issue,  sell, or otherwise cause to become outstanding any of its capital stock.
There are no outstanding or authorized stock appreciation, phantom stock, profit
participation, or


                                       22
<PAGE>

similar rights with respect to the Target. There are no voting trusts,  proxies,
or other agreements or understandings  with respect to the voting of the capital
stock of the Target (other than the Voting Agreement). Each Stockholder holds of
record and, to Target's Knowledge, owns beneficially the number of Target Shares
set forth next to his or its name in Section  3(b) of the  Disclosure  Schedule,
free and clear of any  restrictions  on transfer  (other  than any  restrictions
under the Securities Act and state securities laws), Taxes,  Security Interests,
options, warrants, purchase rights, contracts, commitments, equities, claims and
demands.  To  Target's  Knowledge,  no  Stockholder  is a party  to any  option,
warrant,  purchase right or other contract or commitment  that could require the
Stockholder to sell,  transfer or otherwise  dispose of any capital stock of the
Target (other than this Agreement).

                  (c)  Noncontravention.  Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
will (i)  violate any Law or  Governmental  Order to which any of the Target and
its  Subsidiaries is subject or any provision of the charter or bylaws of any of
the Target and its  Subsidiaries  or (ii) conflict with,  result in a breach of,
constitute a default under,  result in the  acceleration of, create in any party
the right to  accelerate,  terminate,  modify or cancel,  or require  any notice
under any agreement,  contract, lease, license,  instrument or other arrangement
to which any of the  Target  and its  Subsidiaries  is a party or by which it is
bound or to which any of its assets is subject (or result in the  imposition  of
any  Security  Interest  upon any of its  assets).  None of the  Target  and its
Subsidiaries  needs to give any notice to, make any filing  with,  or obtain any
authorization,  consent or approval of any Governmental  Entity in order for the
Parties to consummate the transactions contemplated by this Agreement except for
(x)  the  filing  of  a  Notification  and  Report  Form  by  Target  under  the
Hart-Scott-Rodino  Act;  (y)  the  filings  pursuant  to  the  Delaware  General
Corporation Law and the New Jersey Business Corporation Act; and (z) the filings
with and the approvals of the FCC and state public utility  commissions or other
Governmental Entities identified in Section 3(c) of the Disclosure Schedule.

                  (d)  Compliance  with Laws;  Licenses.  Except as set forth in
Section  3(d) of the  Disclosure  Schedule,  Target  and its  Subsidiaries  have
conducted and continue to conduct their respective businesses in accordance with
all Laws,  Licenses and Governmental  Orders applicable to any of the businesses
in which any of the Target  and its  Subsidiaries  is engaged  and in which they
presently  propose  to  engage,  and  Target  and  its  Subsidiaries  are not in
violation of any such Law,  License or  Governmental  Order except to the extent
that noncompliance would not have a Material Adverse Effect.

                         (i)  Target  and its  Subsidiaries  hold  all  permits,
                  licenses,   certificates,   variances,   exemptions,   orders,
                  approvals,  tariffs, rate schedules and similar documents from
                  Governmental  Entities  (collectively,  "Licenses")  that  are
                  necessary  to  own,  lease and operate the assets and
                  properties  they  currently  own,  lease  and  operate  and to
                  conduct  their  respective  businesses  and  operations in the
                  manner  previously  conducted and as proposed to be conducted.
                  Section  3(d)(i)  of the  Disclosure  Schedule  sets forth all
                  Licenses  issued  by  the  FCC  or any  state  public  utility
                  commission  and  all  other  Licenses  held by  Target  or its
                  Subsidiaries,  together with any pending applications

                                       23
<PAGE>

                  filed by Target or its Subsidiaries for other Licenses. Target
                  has  delivered to Parent  correct and  complete  copies of all
                  Licenses (including the applications  related thereto) and all
                  pending   applications   listed  on  Section  3(d)(i)  of  the
                  Disclosure Schedule. No event has occurred with respect to any
                  such License or application  that would permit the revocation,
                  termination,  suspension or denial  thereof or would result in
                  any impairment of the rights of the holder thereof.  No notice
                  has been received and to Target's  Knowledge no  investigation
                  or review is pending or threatened by any Governmental  Entity
                  with regard to any alleged  violation  by Target or any of its
                  Subsidiaries  of any License or any alleged  failure by Target
                  or any of its Subsidiaries to have any Licenses.

                  (e)  Customers.  Listed  in  Section  3(e)  of the  Disclosure
Schedule are the names and addresses of the ten most  significant  customers (by
revenue)  of Target  and its  Subsidiaries  for the  twelve-month  period  ended
December  31,  1999 and the  amount for which each such  customer  was  invoiced
during such period. Target has not received any notice or has any Knowledge that
any significant  customer of Target or any of its  Subsidiaries  has ceased,  or
will cease, to use the products,  equipment,  goods or services of Target or any
of its Subsidiaries,  or has substantially reduced or will substantially reduce,
the use of such products, equipment, goods or services at any time.

                  (f)  Suppliers.  Listed  in  Section  3(f)  of the  Disclosure
Schedule are the names and addresses of all the  suppliers  from which Target or
any of its Subsidiaries ordered services, raw materials,  supplies,  merchandise
and other  goods from with an  aggregate  purchases  price of  $500,000  or more
during the twelve-month  period ended December 31, 1999.  Except as disclosed in
Section 3(f) of the Disclosure  Schedule,  Target has not received any notice or
has any Knowledge that any such supplier will not sell services,  raw materials,
supplies,  merchandise  and other goods to Target or any of its  Subsidiaries at
any time,  on terms and  conditions  substantially  similar to those used in its
current sales to Target or any of its Subsidiaries,  subject only to general and
customary price increases.

                  (g) Brokers' Fees. Neither the Target and its Subsidiaries nor
any  Stockholder  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.

                  (h) Title to Assets.  Except as  identified in Section 3(h) of
the  Disclosure  Schedule,  the  Target  and  its  Subsidiaries  have  good  and
marketable title to, or a valid leasehold interest in, the properties and assets
used by them,  located on their  premises,  or shown on the Most Recent  Balance
Sheet or  acquired  after  the date  thereof,  free  and  clear of all  Security
Interests,  except for properties and assets  disposed of in the Ordinary Course
of Business since the date of the Most Recent Balance Sheet.

                  (i) Subsidiaries. Section 3(i) of the Disclosure Schedule sets
forth  for each  Subsidiary  of the  Target  (i) its name  and  jurisdiction  of
incorporation,  (ii) the number of shares of  authorized  capital  stock of each
class of its capital stock, (iii) the number of issued and outstanding shares of
each class of its  capital  stock,  the names of the  holders  thereof,  and the
number of shares held by each such holder,  and (iv) the number of shares of its
capital  stock held in  treasury.  All of the issued and  outstanding  shares of
capital stock of each Subsidiary of the Target have been duly authorized and are
validly issued,  fully paid and nonassessable.  All of the outstanding shares of
each Subsidiary of the Target is free and clear of any  restrictions on

                                       24
<PAGE>



transfer (other than restrictions  under the Securities Act and state securities
laws), Taxes, Security Interests, options, warrants, purchase rights, contracts,
commitments,   equities,  claims  and  demands.  There  are  no  outstanding  or
authorized options, warrants,  purchase rights,  subscription rights, conversion
rights, exchange rights or other contracts or commitments that could require any
of the Target and its Subsidiaries to sell, transfer or otherwise dispose of any
capital stock of any of its Subsidiaries or that could require any Subsidiary of
the Target to issue,  sell or otherwise  cause to become  outstanding any of its
own capital stock. There are no outstanding stock  appreciation,  phantom stock,
profit  participation  or similar  rights with respect to any  Subsidiary of the
Target.   There  are  no  voting   trusts,   proxies  or  other   agreements  or
understandings with respect to the voting of any capital stock of any Subsidiary
of the  Target.  None of the Target and its  Subsidiaries  controls  directly or
indirectly  or  has  any  direct  or  indirect  equity   participation   in  any
corporation,  partnership,  trust or other business  association  which is not a
Subsidiary of the Target.

                  (j) Financial Statements. Attached hereto as Exhibit D are the
following financial statements  (collectively the "Financial  Statements"):  (i)
audited  consolidated  balance  sheets  and  statements  of  income,  changes in
stockholders' equity, and cash flow as of and for the fiscal years ended October
31, 1997,  October 31, 1998,  and October 31, 1999 (the "Most Recent Fiscal Year
End") for the  Target  and its  Subsidiaries;  and (ii)  unaudited  consolidated
balance sheets and statements of income,  changes in stockholders'  equity,  and
cash flow (the "Most Recent Financial Statements") as of and for the month ended
December  31, 1999 (the "Most  Recent  Fiscal Month End") for the Target and its
Subsidiaries.  The Financial Statements  (including the notes thereto) have been
prepared in accordance  with GAAP applied on a consistent  basis  throughout the
periods covered  thereby,  present fairly the financial  condition of the Target
and its  Subsidiaries  as of such  dates and the  results of  operations  of the
Target and its Subsidiaries for such periods, are correct and complete,  and are
consistent with the books and records of the Target and its Subsidiaries  (which
books and records are correct and complete).

                  (k) Events  Subsequent to Most Recent  Fiscal Year End.  Since
the Most Recent Fiscal Year End, there has not been any Material  Adverse Effect
involving  any  of  the  Target  and  its  Subsidiaries.  Without  limiting  the
generality of the foregoing, since that date:

                         (i) none of the Target and its  Subsidiaries  has sold,
                  leased,  transferred,  or assigned any of its assets, tangible
                  or intangible,  other than in the Ordinary Course of Business;


                         (ii)  none  of the  Target  and  its  Subsidiaries  has
                  entered  into any  agreement,  contract,  lease or license (or
                  series of related agreements,  contracts, leases and licenses)
                  either  involving  more  than  $250,000  or other  than in the
                  Ordinary Course of Business;

                         (iii) no party  (including  any of the  Target  and its
                  Subsidiaries)   has  accelerated,   terminated,   modified  or
                  cancelled any agreement, contract, lease or license (or series
                  of  related  agreements,   contracts,   leases  and  licenses)
                  involving  more than  $250,000  to which any of the Target and
                  its Subsidiaries is a party or by which any of them is bound;

                                       25
<PAGE>

                         (iv) none of the Target and its  Subsidiaries  has made
                  any  capital   expenditure   (or  series  of  related  capital
                  expenditures)  either  involving  more than  $250,000 or other
                  than in the Ordinary Course of Business;

                         (v) none of the  Target and its  Subsidiaries  has made
                  any capital  investment in, any loan to, or any acquisition of
                  the  securities  or assets of, any other  Person (or series of
                  related capital  investments,  loans or  acquisitions)  either
                  involving  more than  $50,000  or other  than in the  Ordinary
                  Course of Business;

                         (vi) none of the Target and its Subsidiaries has issued
                  any note,  bond or other debt  security or created,  incurred,
                  assumed or guaranteed any  indebtedness  for borrowed money or
                  capitalized   lease  obligation  either  involving  more  than
                  $50,000 singly or $250,000 in the aggregate;

                         (vii)  none  of the  Target  and its  Subsidiaries  has
                  delayed or postponed the payment of accounts payable and other
                  Liabilities other than in the Ordinary Course of Business;

                         (viii)  none of the  Target  and its  Subsidiaries  has
                  cancelled,  compromised, waived or released any right or claim
                  (or series of related rights and claims) either involving more
                  than $50,000 or other than in the Ordinary Course of Business;

                         (ix)  none  of the  Target  and  its  Subsidiaries  has
                  granted any license or  sublicense of any rights under or with
                  respect to any Intellectual Property;

                         (x) other than as contemplated by this Agreement, there
                  has been no change made or authorized in the charter or bylaws
                  of any of the Target and its Subsidiaries;

                         (xi)  none  of the  Target  and  its  Subsidiaries  has
                  issued,  sold  or  otherwise  disposed  of any of its  capital
                  stock,  or granted any  options,  warrants or other  rights to
                  purchase or obtain  (including  upon  conversion,  exchange or
                  exercise)  any of its capital stock other than as described in
                  Section 3(k)(xi) of the Disclosure Schedule;

                         (xii)  none  of the  Target  and its  Subsidiaries  has
                  declared,   set  aside  or  paid  any  dividend  or  made  any
                  distribution  with  respect to its capital  stock  (whether in
                  cash or in kind) or redeemed,  purchased or otherwise acquired
                  any of its capital stock;

                         (xiii)  none of the  Target  and its  Subsidiaries  has
                  experienced  any damage,  destruction  or loss (whether or not
                  covered  by  insurance)  to its  property  which  could have a
                  Material Adverse Effect;

                         (xiv) none of the Target and its  Subsidiaries has made
                  any loan to, or entered into any other  transaction  with, any
                  of its  directors,  officers  or  employees  other than in the
                  Ordinary Course of Business;

                                       26
<PAGE>

                         (xv)  none  of the  Target  and  its  Subsidiaries  has
                  entered into any employment contract or collective  bargaining
                  agreement,  written or oral, or modified the terms of any such
                  existing contract or agreement;

                         (xvi)  none  of the  Target  and its  Subsidiaries  has
                  granted any  increase in the base  compensation  of any of its
                  directors,  officers or  employees  other than in the Ordinary
                  Course of Business;

                         (xvii)  none of the  Target  and its  Subsidiaries  has
                  adopted,   amended,   modified   or   terminated   any  bonus,
                  profit-sharing,  incentive,  severance or other plan, contract
                  or  commitment  for  the  benefit  of any  of  its  directors,
                  officers or  employees  (or taken any such action with respect
                  to any other Employee Benefit Plan);

                         (xviii)  none of the  Target and its  Subsidiaries  has
                  made any  other  change  in  employment  terms  for any of its
                  directors,  officers or  employees  other than in the Ordinary
                  Course of Business;

                         (xix) none of the Target and its  Subsidiaries has made
                  or  pledged   to  make  any   charitable   or  other   capital
                  contribution other than in the Ordinary Course of Business;

                         (xx)  there has not been any other  occurrence,  event,
                  incident,  action, failure to act or transaction other than in
                  the Ordinary  Course of Business  involving  any of the Target
                  and  its  Subsidiaries  that  could  have a  Material  Adverse
                  Effect; and

                         (xxi)  none  of the  Target  and its  Subsidiaries  has
                  committed to any of the foregoing.

                  (l)  Undisclosed  Liabilities.  None  of the  Target  and  its
Subsidiaries  has any Liability (and to the Knowledge of the Target) there is no
Basis  for  any   present  or  future   action,   suit,   proceeding,   hearing,
investigation,  charge,  complaint,  claim or demand  against any of them giving
rise to any Liability),  except for (i) Liabilities set forth on the face of the
Most Recent Balance Sheet and (ii) Liabilities  which have arisen after the Most
Recent  Fiscal  Month  End in the  Ordinary  Course of  Business  (none of which
results  from,  arises out of,  relates to, is in the nature of or was caused by
any breach of contract,  breach of warranty,  tort, infringement or violation of
law).

                  (m) Legal  Compliance.  Each of the Target,  its Subsidiaries,
and their  respective  predecessors  and Affiliates has complied in all material
respects with all Laws, and no action, suit, proceeding, hearing, investigation,
charge,  complaint,  claim, demand, or notice has been filed or, to the Target's
Knowledge,  commenced  against any of them alleging any failure so to comply the
failure of which could have a Material Adverse Effect.

                                       27
<PAGE>

                 (n)      Tax Matters.

                         (i) Each of the Target and its  Subsidiaries  has filed
                  all Tax Returns  that it was  required  to file.  All such Tax
                  Returns were  correct and  complete in all material  respects.
                  All  Taxes  owed by any of the  Target  and  its  Subsidiaries
                  (whether or not shown on any Tax Return) have been paid.  None
                  of  the  Target  and  its   Subsidiaries   currently   is  the
                  beneficiary  of any extension of time within which to file any
                  Tax  Return.  No claim has ever  been  made by a  Governmental
                  Entity  in a  jurisdiction  where  any of the  Target  and its
                  Subsidiaries  does not file Tax  Returns  that it is or may be
                  subject  to  taxation  by  that  jurisdiction.  There  are  no
                  Security  Interests  on any of the assets of any of the Target
                  and its Subsidiaries that arose in connection with any failure
                  (or alleged failure) to pay any Tax.

                         (ii)  Each  of the  Target  and  its  Subsidiaries  has
                  withheld and paid all Taxes required to have been withheld and
                  paid in connection with amounts paid or owing to any employee,
                  independent contractor,  creditor,  stockholder or other third
                  party.

                         (iii)  There  is no  dispute  or claim  concerning  any
                  Liability   for  any  Tax  of  any  of  the   Target  and  its
                  Subsidiaries  either (A) claimed or raised by any Governmental
                  Entity  in  writing  received  by  the  Target  or  any of its
                  Subsidiaries  or (B) as to  which  any  of the  directors  and
                  officers (and  employees  responsible  for Tax matters) of the
                  Target and its  Subsidiaries  has Knowledge  based on personal
                  contact with any agent of such  Governmental  Entity.  Section
                  3(n) of the  Disclosure  Schedule  lists all  federal,  state,
                  local and foreign income Tax Returns filed with respect to any
                  of the Target and its  Subsidiaries  for taxable periods ended
                  on or after October 31, 1998, indicates those Tax Returns that
                  have  been  audited,  and  indicates  those Tax  Returns  that
                  currently  are the subject of audit.  The Target has delivered
                  to the  Parent  correct  and  complete  copies of all  federal
                  income Tax Returns,  examination  reports,  and  statements of
                  deficiencies  assessed  against  or  agreed  to by  any of the
                  Target and its Subsidiaries since October 31, 1998.

                         (iv) None of the Target and its Subsidiaries has waived
                  any  statute of  limitations  in respect of Taxes or agreed to
                  any  extension  of time with  respect to a Tax  assessment  or
                  deficiency.

                         (v) None of the Target and its Subsidiaries has filed a
                  consent  under  Code  Section  341(f)  concerning  collapsible
                  corporations. None of the Target and its Subsidiaries has made
                  any payments, is obligated to make any payments, or is a party
                  to  any  agreement  that  under  certain  circumstances  could
                  obligate it to make any payments  that will not be  deductible
                  under  Code  Section   280G.   None  of  the  Target  and  its
                  Subsidiaries  has been a United States real  property  holding
                  corporation  within  the  meaning  of Code  Section  897(c)(2)
                  during  the  applicable   period  specified  in  Code  Section
                  897(c)(1)(A)(ii).  Each of the Target and its Subsidiaries has
                  disclosed  on its federal  income Tax  Returns  all  positions
                  taken   therein   that  could  give  rise  to  a   substantial
                  understatement  of federal  income  Tax

                                       28
<PAGE>


                  within the meaning of Code  Section  6662.  None of the Target
                  and its  Subsidiaries  is a party  to any  Tax  allocation  or
                  sharing agreement. None of the Target and its Subsidiaries (A)
                  has been a member of an Affiliated Group filing a consolidated
                  federal  income  Tax  Return  (other  than a group the  common
                  parent of which was the Target) or (B) has any  Liability  for
                  the Taxes of any Person  (other than any of the Target and its
                  Subsidiaries)  under  Treas.  Reg.  Section  1.1502-6  (or any
                  similar  provision  of  state,  local or  foreign  law),  as a
                  transferee or successor, by contract or otherwise.

                         (vi) Section 3(n) of the Disclosure Schedule sets forth
                  the following  information  with respect to each of the Target
                  and its  Subsidiaries  (or,  in the case of clause  (B) below,
                  with  respect  to each  of the  Subsidiaries)  as of the  most
                  recent  practicable date (as well as on an estimated pro forma
                  basis as of the Closing giving effect to the  consummation  of
                  the transactions  contemplated  hereby): (A) the amount of any
                  net operating  loss,  net capital loss,  unused  investment or
                  other  credit,   unused  foreign  tax,  or  excess  charitable
                  contribution  allocable to the Target or  Subsidiary;  and (B)
                  the  amount  of any  deferred  gain or loss  allocable  to the
                  Target or Subsidiary arising out of any Deferred  Intercompany
                  Transaction.   Promptly   following   the  execution  of  this
                  Agreement,  Target shall update Section 3(n) of the Disclosure
                  Schedule to add (C) the basis of the Target or  Subsidiary  in
                  its  assets;  and (D) the basis of the  stockholder(s)  of the
                  Subsidiary  in its stock (or the  amount  of any  Excess  Loss
                  Account).

                         (vii)  The   unpaid   Taxes  of  the   Target  and  its
                  Subsidiaries  (A) did not, as of the Most Recent  Fiscal Month
                  End,  exceed the reserve for Taxes (other than any reserve for
                  deferred  Taxes  established  to  reflect  timing  differences
                  between book and Tax income) set forth on the face of the Most
                  Recent  Balance Sheet  (rather than in any notes  thereto) and
                  (B) do not exceed that  reserve as adjusted for the passage of
                  time  through the  Closing  Date in  accordance  with the past
                  custom and  practice  of the Target  and its  Subsidiaries  in
                  filing their Tax Returns.

                  (o)      Real Property.

                         (i) Neither the Target nor any of its Subsidiaries owns
                  any real property.

(ii)              Section   3(o)(ii)  of  the  Disclosure   Schedule  lists  and
                  describes briefly all real property leased or subleased to any
                  of the Target and its  Subsidiaries.  The Target has delivered
                  to the Parent  correct and  complete  copies of the leases and
                  subleases   listed  in  Section  3(o)(ii)  of  the  Disclosure
                  Schedule (as amended to date).  With respect to each lease and
                  sublease   listed  in  Section   3(o)(ii)  of  the  Disclosure
                  Schedule:

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

                                       29
<PAGE>

                  (2) the lease or sublease  will  continue to be legal,  valid,
binding,  enforceable, and in full force and effect on identical terms following
the consummation of the transactions contemplated hereby;

                  (3) 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;

                  (4) no  party to the  lease or  sublease  has  repudiated  any
provision thereof;

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

                  (6) with respect to each  sublease,  the  representations  and
warranties set forth in  subsections  (1) through (5) above are true and correct
with respect to the underlying lease;

                  (7) none of the  Target  and its  Subsidiaries  has  assigned,
transferred, conveyed, mortgaged, deeded in trust, or encumbered any interest in
the leasehold or subleasehold;

                  (8)  all  facilities  leased  or  subleased   thereunder  have
received all approvals of Governmental Entities (including Licenses) required in
connection  with the operation  thereof and have been operated and maintained in
accordance with all Laws;

                  (9) all facilities leased or subleased thereunder are supplied
with  utilities  and  other  services   necessary  for  the  operation  of  said
facilities; and

                  (10) to the Knowledge of the Target, there are no restrictions
that impair the current use or occupancy of the property  that is subject to the
lease.

                 (p)      Intellectual Property.

                         (i)  Set  forth  in  Section  3(p)  of  the  Disclosure
                  Schedule is a complete  and correct  list of all  Intellectual
                  Property  owned  or used by the  Target  or its  Subsidiaries.
                  Except as set forth in 3(p) of the  Disclosure  Schedule,  (A)
                  the Target  and/or its  subsidiaries  own or have the right to
                  use all of such  Intellectual  Property  free and clear of any
                  Security  Interest,  license  or  other  restriction;  (B)  no
                  proceedings  have  been  instituted,  are  pending  or, to the
                  Knowledge of the Target are  threatened,  which  challenge the
                  rights of the  Target  and/or its  Subsidiaries  in respect of
                  such Intellectual Property or the validity thereof and, to the
                  Knowledge  of the  Target,  there  is no  Basis  for any  such
                  proceedings;  (C) none of such Intellectual  Property violates
                  any Laws,  or has at any time  infringed  on or  violated  any
                  rights of others,  or is being  infringed  by others;  and (D)
                  none  of  such   Intellectual   Property  is  subject  to  any
                  outstanding Governmental Order.

                                       30
<PAGE>

                         (ii) The  Target and its  Subsidiaries  own or have the
                  right to use  pursuant to license,  sublicense,  agreement  or
                  permission all  Intellectual  Property  necessary or desirable
                  for the  operation  of the  businesses  of the  Target and its
                  Subsidiaries as presently  conducted and as presently proposed
                  to be conducted.  Each item of Intellectual  Property owned or
                  used by any of the  Target  and its  Subsidiaries  immediately
                  prior to the Closing  hereunder will be owned or available for
                  use by the Surviving Corporation or the Target's Subsidiary on
                  identical terms and conditions  immediately  subsequent to the
                  Closing hereunder. Each of the Target and its Subsidiaries has
                  taken all  necessary  and  desirable  action to  maintain  and
                  protect  each item of  Intellectual  Property  that it owns or
                  uses. None of the Target and its  Subsidiaries has ever agreed
                  to  indemnify  any  Person for or  against  any  interference,
                  infringement,  misappropriation or other conflict with respect
                  to any item included in such Intellectual Property.

                  (q) Tangible  Assets.  The Target and its  Subsidiaries own or
lease all buildings,  machinery,  equipment and other tangible assets  necessary
for the conduct of their  businesses  as  presently  conducted  and as presently
proposed to be conducted.  Each such tangible asset is free from defects (patent
and latent), 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 and  presently  is
proposed to be used.

                  (r) Inventory.  Neither the Target nor its Subsidiaries  holds
any  supplies,  manufactured  or purchased  parts,  goods in process or finished
goods for sale in the Ordinary Course of Business.

                  (s) Contracts.  Section 3(s) of the Disclosure  Schedule lists
the following  contracts and other agreements to which any of the Target and its
Subsidiaries is a party:

                         (i) any agreement (or group of related  agreements) for
                  the lease of personal property to or from any Person providing
                  for annual lease payments in excess of $50,000 per annum;

                         (ii) any agreement (or group of related agreements) for
                  the purchase or sale of raw materials, commodities,  supplies,
                  products or other personal property,  or for the furnishing or
                  receipt of services, the performance of which will extend over
                  a period of more than one year, result in a loss to any of the
                  Target and its Subsidiaries,  or involve annual  consideration
                  in excess of $250,000;

                         (iii) any agreement  concerning a partnership  or joint
                  venture;

                         (iv) any  agreement  (or group of  related  agreements)
                  under which it has created,  incurred,  assumed or  guaranteed
                  any indebtedness for borrowed money, or any capitalized  lease
                  obligation, in excess of $50,000 or under which it has imposed
                  a  Security  Interest  on  any  of  its  assets,  tangible  or
                  intangible;

                         (v)  any  agreement   concerning   confidentiality   or
                  noncompetition;


                                       31
<PAGE>


                         (vi) any  agreement  with any of the  Stockholders  and
                  their Affiliates (other than the Target and its Subsidiaries);

                         (vii) any profit sharing, stock option, stock purchase,
                  stock appreciation, deferred compensation,  severance or other
                  plan or  arrangement  for the benefit of its current or former
                  directors, officers or employees;

                         (viii) any collective bargaining agreement;

                         (ix) any agreement for the employment of any individual
                  on a full-time, part-time, consulting or other basis providing
                  annual   compensation   in  excess  of  $70,000  or  providing
                  severance benefits;

                         (x) any agreement under which it has advanced or loaned
                  any  amount to any of its  directors,  officers  or  employees
                  outside the Ordinary Course of Business;

                         (xi) any agreement  under which the  consequences  of a
                  default or termination  could have a Material  Adverse Effect;
                  or

                         (xii)  any  other   agreement   (or  group  of  related
                  agreements)   the   performance  of  which   involves   annual
                  consideration in excess of $50,000.

The  Target has  delivered  to the Parent a correct  and  complete  copy of each
written agreement listed in Section 3(s) of the Disclosure  Schedule (as amended
to date) and a written  summary  setting forth the terms and  conditions of each
oral  agreement  referred to in Section 3(s) of the  Disclosure  Schedule.  With
respect to each such  agreement:  (A) the  agreement is legal,  valid,  binding,
enforceable and in full force and effect;  (B) the agreement will continue to be
legal,  valid,  binding,  enforceable  and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby; (C) no
party is in material breach or material default, and no event has occurred which
with  notice or lapse of time would  constitute  a material  breach or  material
default,  or  permit   termination,   modification  or  acceleration  under  the
agreement;  and (D) no  party  has  repudiated  any  material  provision  of the
agreement.

                  (t)  Notes and  Accounts  Receivable.  All notes and  accounts
receivable of the Target and its  Subsidiaries  are reflected  properly on their
books  and  records,  are  valid  receivables  and  subject  to  no  setoffs  or
counterclaims,  are current and collectible (except as described in Section 3(t)
of the Disclosure Schedule), subject only to the reserve for bad debts set forth
on the face of the Most Recent  Balance Sheet (rather than in any notes thereto)
as adjusted for the passage of time through the Closing Date in accordance  with
the past  custom and  practice  of the Target  and its  Subsidiaries.  Listed in
Section 3(t) of the Disclosure  Schedule are notes or accounts receivable of the
Company or any of its Subsidiaries in excess of $50,000.

                  (u) Powers of  Attorney.  There are no  outstanding  powers of
attorney executed on behalf of any of the Target and its Subsidiaries.

                  (v) Insurance.  Section 3(v) of the  Disclosure  Schedule sets
forth the following  information  with respect to each current  insurance policy
(including  policies  providing  property,

                                       32
<PAGE>


casualty,  liability  and  workers'  compensation  coverage  and bond and surety
arrangements)  to which any of the Target and its  Subsidiaries  are a party,  a
named insured, or otherwise the beneficiary of coverage:

                         (i) the  name,  address  and  telephone  number  of the
                  agent;

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

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

                         (iv) 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

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

With  respect to each such  insurance  policy:  (A) the policy is legal,  valid,
binding, enforceable, and in full force and effect; (B) the policy will continue
to be legal,  valid,  binding,  enforceable,  and in full  force  and  effect on
identical terms  following the  consummation  of the  transactions  contemplated
hereby;  (C) neither any of the Target and its  Subsidiaries nor any other party
to the policy is in breach or default  (including with respect to the payment of
premiums or the giving of notices), and to the Knowledge of the Target, 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 the
policy;  and (D) no party to the policy has  repudiated  any provision  thereof.
Each of the Target and its Subsidiaries has been covered during the past 5 years
by insurance in scope and amount  customary and reasonable for the businesses in
which it has engaged during the aforementioned period. Neither Target nor any of
its Subsidiaries has maintained any self-insurance  arrangements during the past
5 years.

                  (w) Litigation.  Section 3(w) of the Disclosure  Schedule sets
forth  each  instance  in which any of the Target  and its  Subsidiaries  (i) is
subject  to any  outstanding  Governmental  Order  or (ii) is a party  or to the
Knowledge of the Target is  threatened  to be made a party to any action,  suit,
proceeding,  hearing or investigation of, in or before, any Governmental  Entity
or  quasi-judicial  or  administrative  agency of any federal,  state,  local or
foreign  jurisdiction or before any arbitrator or mediator.  Except as set forth
in  Section  3(w) of the  Disclosure  Schedule,  none of  such  actions,  suits,
proceedings,  hearings and  investigations  could result in any Material Adverse
Effect.

                  (x) Employees.  To the Knowledge of the Target,  no executive,
key employee,  or group of employees has any plans to terminate  employment with
any of the Target and its  Subsidiaries  and there is no  organizational  effort
presently  being  made or  threatened  by or on behalf of any labor  union  with
respect to  employees  of any of the Target  and its  Subsidiaries.  None of the
Target and its Subsidiaries is a party to or bound by any collective  bargaining
agreement,  nor has any of them experienced any strikes,  grievances,  claims of
unfair labor practices,  or other collective  bargaining  disputes.  None of the
Target and its Subsidiaries has committed any unfair labor practice.

                                       33
<PAGE>

                 (y)      Employee Benefits.

                         (i) Section 3(y) of the Disclosure  Schedule lists each
                  Employee   Benefit  Plan  that  any  of  the  Target  and  its
                  Subsidiaries  maintains,  to which any of the  Target  and its
                  Subsidiaries  contributes or has any obligation to contribute,
                  and describes any Liability or potential Liability that may be
                  incurred   by  or   imposed  on  the  Target  or  any  of  its
                  Subsidiaries with respect thereto.

                  (1) To the Knowledge of the Target, each such Employee Benefit
Plan (and each related trust,  insurance  contract or fund) has been maintained,
funded and  administered in accordance  with the terms of such Employee  Benefit
Plan and complies in form and in operation  in all  material  respects  with the
applicable requirements of ERISA, the Code, and other applicable laws.

                  (2) To the  Knowledge  of the Target,  all  material  required
reports and  descriptions  (including  annual  reports (IRS Form 5500),  summary
annual  reports,  and summary plan  descriptions)  have been timely filed and/or
distributed in accordance with the applicable requirements of ERISA and the Code
with respect to each such Employee Benefit Plan. To the Knowledge of the Target,
the requirements of COBRA have been met in all material respects with respect to
each such  Employee  Benefit  Plan which is an  Employee  Welfare  Benefit  Plan
subject to COBRA.

                  (3)  All  material   contributions   (including  all  employer
contributions  and employee salary reduction  contributions)  which are due have
been made  within  the time  period  prescribed  by ERISA to each such  Employee
Benefit  Plan  which  is an  Employee  Pension  Benefit  Plan  and all  material
contributions  for any period ending on or before the Closing Date which are not
yet due have been made to each such Employee  Pension Benefit Plan or accrued in
accordance with the past custom and practice of the Target and its Subsidiaries.
All premiums or other  payments for all periods  ending on or before the Closing
Date, that are due on or before the Closing Date, have been paid with respect to
each such Employee Benefit Plan which is an Employee Welfare Benefit Plan.

                  (4) Each such Employee  Benefit Plan which is intended to meet
the  requirements of a "qualified plan" under Code Section 401(a) has received a
determination  from the Internal Revenue Service that such Employee Benefit Plan
is so qualified,  and to the Knowledge of the Target  nothing has occurred since
the date of such  determination that could adversely affect the qualified status
of any such Employee Benefit Plan.

                  (5) The  market  value of  assets  under  each  such  Employee
Benefit  Plan  which  is an  Employee  Pension  Benefit  Plan  (other  than  any
Multiemployer  Plan)  equals or  exceeds  the  present  value of all  vested and
nonvested  Liabilities  thereunder as determined by the independent  actuary for
the Employee Pension Benefit Plan in accordance with PBGC methods,  factors, and
assumptions  applicable to an Employee  Pension Benefit Plan  terminating on the
Closing Date.

                  (6)  The  Target  has  delivered  to the  Parent  correct  and
complete  copies of the plan documents and summary plan  descriptions,  the most
recent determination

                                       34
<PAGE>

letter received from the Internal Revenue Service, the most recent annual report
(IRS  Form  5500,  with  all  applicable  attachments),  and all  related  trust
agreements,  insurance contracts, and other funding arrangements which implement
each such Employee Benefit Plan.

                         (ii) With  respect to each  Employee  Benefit Plan that
                  any of the Target,  its Subsidiaries,  and any ERISA Affiliate
                  maintains,  to  which  any of  them  contributes  or  has  any
                  obligation  to  contribute,  and  describes  any  Liability or
                  potential  Liability that may be incurred by or imposed on the
                  Target or any of its Subsidiaries with respect thereto:

                  (1) No such Employee Benefit Plan which is an Employee Pension
Benefit  Plan  (other  than  any  Multiemployer  Plan)  has been  completely  or
partially  terminated  or to the  Knowledge  of the Target been the subject of a
Reportable  Event.  No  proceeding  by the PBGC to terminate  any such  Employee
Pension Benefit Plan (other than any Multiemployer  Plan) has been instituted or
threatened.

                  (2) To the  Knowledge  of  the  Target,  there  have  been  no
Prohibited  Transactions  with respect to any such  Employee  Benefit  Plan.  No
Fiduciary has any material  Liability for breach of fiduciary  duty or any other
failure to act or comply in connection with the  administration or investment of
the assets of any such  Employee  Benefit  Plan.  No action,  suit,  proceeding,
hearing,  or investigation  with respect to the administration or the investment
of the assets of any such Employee  Benefit Plan (other than routine  claims for
benefits) is pending or to the  Knowledge of the Target is  threatened.  None of
the directors  and officers  (and  employees  with  responsibility  for employee
benefits  matters) of the Target and its  Subsidiaries  has any Knowledge of any
Basis for any such action, suit, proceeding, hearing or investigation.

                  (3) None of the Target and its  Subsidiaries  has incurred any
material Liability to the PBGC (other than with respect to PBGC premium payments
not yet due) or  otherwise  under Title IV of ERISA  (including  any  withdrawal
liability  as defined in ERISA  Section  4201) or under the Code with respect to
any such  Employee  Benefit Plan which is an Employee  Pension  Benefit Plan, or
under COBRA with respect to any such Employee  Benefit Plan which is an Employee
Welfare Benefit Plan.

                         (iii) None of the  Target,  its  Subsidiaries,  and any
                  ERISA   Affiliate   contributes  to,  has  any  obligation  to
                  contribute  to,  or has any  Liability  (including  withdrawal
                  liability  as defined  in ERISA  Section  4201)  under or with
                  respect to any Multiemployer Plan.

                         (iv) Section 3(y)(iv) of the Disclosure  Schedule lists
                  each Employee  Welfare Benefit Plan that any of the Target and
                  its Subsidiaries maintains, to which any of the Target and its
                  Subsidiaries  contributes or has any obligation to contribute,
                  and describes any Liability or potential Liability that may be
                  incurred   by  or   imposed  on  the  Target  or  any  of  its
                  Subsidiaries with respect to medical, health or life insurance
                  or other  welfare-type  benefits for current or future retired
                  or terminated  employees,  their spouses,  or their dependents
                  (other than in accordance with COBRA).

                                       35
<PAGE>

                  (z) Guaranties.  None of the Target and its  Subsidiaries is a
guarantor  or otherwise is liable for any  Liability  or  obligation  (including
indebtedness) of any other Person.

                  (aa) Environmental, Health and Safety Matters.

                         (i) The properties and facilities currently occupied by
                  the Target and its  Subsidiaries  are not being used by Target
                  or its Subsidiaries to make, store,  handle,  treat,  dispose,
                  generate,  or transport  hazardous  substances in violation of
                  any Environmental, Health, and Safety Requirement.

                         (ii) To the Knowledge of Target,  hazardous  substances
                  have never been made, stored, handled,  treated,  disposed of,
                  generated,  or  transported  on or  from  the  properties  and
                  facilities  occupied by the Target and its Subsidiaries during
                  the term of such occupancy, except in accordance with Law.

                         (iii) The properties,  facilities and operations of the
                  Target and its Subsidiaries and their respective  predecessors
                  and  Affiliates  have  complied and are in  compliance  in all
                  material respects with all applicable  Environmental,  Health,
                  and Safety  Requirements.  Without  limiting the generality of
                  the foregoing,  each of the Target, its Subsidiaries and their
                  respective  Affiliates  has obtained and complied with, and is
                  in   compliance   with,   all  permits,   licenses  and  other
                  authorizations  that are required  pursuant to  Environmental,
                  Health,  and Safety  Requirements  for the  occupation  of its
                  facilities  and the operation of its  business;  a list of all
                  such permits,  licenses and other  authorizations is set forth
                  in Section 3(aa)(iii) of the Disclosure Schedule.

                         (iv)  To  the   Knowledge   of  Target,   none  of  the
                  properties,  facilities  or  operations  of the Target and its
                  Subsidiaries  is subject  to any  judicial  or  administrative
                  proceedings   alleging  the   violation   of  any   applicable
                  Environmental, Health, and Safety Requirements.

                         (v) To the Knowledge of Target, none of the properties,
                  facilities or operations of the Target and its Subsidiaries is
                  the   subject  of  federal,   state  or  local   investigation
                  evaluating whether any remedial action is needed to respond to
                  a  release  of any  hazardous  or toxic  waste,  substance  or
                  constituent,  any petroleum or petroleum product, or any other
                  hazardous, illegal or unlawful substance into the environment.

                         (vi) Neither the Target nor its  Subsidiaries has filed
                  any notice under any Law indicating past or present  treatment
                  or disposal of a hazardous waste,  hazardous  substance or any
                  petroleum  or  petroleum  product,  or  reporting  a spill  or
                  release  of  a  hazardous   or  toxic   waste,   substance  or
                  constituent,  any petroleum or petroleum product, or any other
                  substance into the environment.

                         (vii)  None of the  Target  and its  Subsidiaries  have
                  within  the past year  received  written  notice  nor are they
                  aware  of any  contingent  liability  in  connection  with any
                  release  of  any  hazardous  or  toxic  waste,   substance  or

                                       36
<PAGE>


                  constituent,  any petroleum or petroleum product, or any other
                  substance into the environment.

                  (bb) Certain  Business  Relationships  with the Target and its
Subsidiaries.  Except as described in Section 3(bb) of the Disclosure  Schedule,
none of the  Stockholders and their Affiliates has been involved in any business
arrangement or relationship  with any of the Target and its Subsidiaries  within
the past 12 months,  and none of the  Stockholders and their Affiliates owns any
asset,  tangible  or  intangible,  which is used in the  business  of any of the
Target and its Subsidiaries.

                  (cc) Accounts; Lockboxes; Safe Deposit Boxes. Section 3(cc) of
the  Disclosure  Schedule  contains a true and complete list of (i) the names of
each bank,  savings and loan  association,  securities or commodities  broker or
other financial  institution in which any of the Target and its Subsidiaries has
an account,  including cash contribution  accounts, and the names of all persons
authorized  to draw thereon or have access  thereto and (ii) the location of all
lockboxes and safe deposit boxes of the Target or its Subsidiaries and the names
of all  persons  authorized  to draw  thereon  or have  access  thereto.  At the
Effective Time,  neither Target nor any of its Subsidiaries  shall have any such
account, lockbox or safe deposit box other than those listed in Section 3(cc) of
the Disclosure  Schedule,  nor shall any additional person have been authorized,
from the date of this  Agreement,  to draw thereon or have access  thereto.  The
Stockholders  and their  Affiliates  have not  commingled  monies or accounts of
Target or its Subsidiaries with other monies or accounts of the Stockholders and
their Affiliates or relating to their other businesses nor have the Stockholders
or their Affiliates transferred monies or accounts of Target or its Subsidiaries
other than to an account of Target or its  Subsidiaries.  At the Effective Time,
all monies and accounts of Target and its Subsidiaries  shall be held by, and be
accessible only to, Target or its Subsidiaries.

                  (dd)  Securities.   To  the  Knowledge  of  the  Target,   the
outstanding  shares of Target were issued in accordance with the registration or
qualification   provisions  of  the  Securities  Act,  and  any  relevant  state
securities laws or pursuant to valid exemptions therefrom.

                  (ee)  Accounting  Matters.  Listed  in  Section  3(ee)  of the
Disclosure  Schedule are all predecessor  companies of the Target,  the names of
any Persons from which,  since January 1, 1994, the Target  previously  acquired
material properties or assets, and the changes in the Target's capital structure
and capital stock ownership since October 1, 1998.

                  (ff)  Disclosure.  All written  information  contained  in any
schedule,  report,  certificate  or any other  document  furnished  to Parent by
Target  or any other  Person  (on  behalf of  Target)  in  connection  with this
Agreement is true, accurate and complete,  and no such Person (including Target)
has stated therein (or included in any such  document) any untrue  material fact
or omitted to state any material  fact  necessary to make such  information  not
misleading.  The representations  and warranties  contained in this Section 3 do
not  contain  any  untrue  statement  of a  material  fact or omit to state  any
material  fact  necessary  in  order  to make  the  statements  and  information
contained in this Section 3 not misleading.

         4.  Representations and Warranties of Parent and the Parent Subsidiary.
The Parent  represents and warrants to the Target that the statements  contained
in this Section 4 are correct

                                       37
<PAGE>

and complete as of the date of this  Agreement  and will be correct and complete
as of the Closing  Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 4).

                  (a) Organization. Each of the Parent and the Parent Subsidiary
is a corporation duly organized,  validly  existing,  and in good standing under
the laws of the jurisdiction of its incorporation.

                  (b) Capitalization. The entire authorized capital stock of the
Parent consists of 305,000,000  Parent Shares, of which  300,000,000  shares are
designated  as common stock and  5,000,000  shares are  designated  as preferred
stock.  Of the  authorized  common  stock,  66,972,960  shares  are  issued  and
outstanding  and 1,183,808  shares are held in treasury.  The entire  authorized
capital stock of the Parent Subsidiary  consists of 1,000 shares, $.01 par value
per share, all of one class designated as common, of which 100 shares are issued
and  outstanding.  Other than options that are  outstanding as of March 17, 2000
for 7,205,595  shares of Parent's common stock and  convertible  debentures that
are convertible  into 3,437,756  shares of Parent's  common stock,  there are no
outstanding options, warrants,  purchase rights, subscription rights, conversion
rights,  exchange rights, or other contracts or commitments as of such date that
could require the Parent to issue, sell or otherwise cause to become outstanding
any of its capital stock.

                  (c)  Authorization of Transaction.  Each of the Parent and the
Parent  Subsidiary has full power and authority  (including full corporate power
and  authority)  to execute  and  deliver  this  Agreement  and to  perform  its
obligations hereunder.  This Agreement constitutes the valid and legally binding
obligation  of each of the  Parent  and the Parent  Subsidiary,  enforceable  in
accordance with its terms and conditions.

                  (d)  Noncontravention.  Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any Law or Governmental Order to which either the Parent or the
Parent Subsidiary is subject or any provision of the charter or bylaws of either
the Parent or the Parent  Subsidiary or (ii) conflict  with,  result in a breach
of,  constitute a default under,  result in the  acceleration  of, create in any
party the right to  accelerate,  terminate,  modify or cancel,  or  require  any
notice under any  agreement,  contract,  lease,  license,  instrument,  or other
arrangement to which either the Parent or the Parent Subsidiary is a party or by
which it is bound  or to which  any of its  assets  is  subject.  Other  than in
connection  with the  provisions  of the  Hart-Scott-Rodino  Act,  the  Delaware
General Corporation Law, the New Jersey Business Corporation Act, the Securities
Exchange Act, the Securities Act, the Trust Indenture Act, the state  securities
laws and the FCC's and the state public  utility  commissions'  or similar state
regulatory bodies' rules,  regulations and policies,  neither the Parent nor the
Parent  Subsidiary  needs to give any notice to, make any filing with, or obtain
any authorization,  consent or approval of any Governmental  Entity in order for
the Parties to consummate the transactions contemplated by this Agreement.

                  (e)  Brokers'   Fees.   Neither  the  Parent  nor  the  Parent
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 for which any of the Target and its  Subsidiaries  could become liable
or obligated;  provided,  however,  that the parties acknowledge that the

                                       38
<PAGE>


Parent has retained  Bear Stearns & Co. Inc. in  connection  with the Merger for
which the Parent shall be obligated to pay any fees or commissions.

                  (f) Continuity of Business. It is the present intention of the
Parent  to  continue  at least one  significant  historic  business  line of the
Target,  or to use at  least a  significant  portion  of the  Target's  historic
business  assets in a business,  in each case within the meaning of Treas.  Reg.
Section 1.368-1(d).

                  (g)  Securities  Exchange  Act  Reports.  Parent has filed all
reports,  proxy statements,  forms and other documents required to be filed with
the SEC prior to the date of this  Agreement.  The Parent has  delivered  to the
Target and the  Stockholders  complete  and  accurate  copies of a (i)  Parent's
Annual Report on Form 10-K for the year ended  December 31, 1999, as filed under
the Securities Exchange Act with the SEC, (ii) all of Parent's Quarterly Reports
on Form 10-Q for the quarters ended March 31, 1999,  June 30, 1999 and September
30, 1999, as filed under the Securities  Exchange Act with the SEC and (iii) all
of  Parent's  proxy  statements  and  annual  reports  to  shareholders  used in
connection  with meetings of Parent  Stockholders  held since  December 31, 1998
(the  "Parent SEC  Documents").  As of their  respective  dates,  the Parent SEC
Documents (x) did not contain an untrue  statement of a material fact or omit to
state a material  fact  required to be stated  therein or  necessary to make the
statements  therein,  in light of the circumstances  under which they were made,
not  misleading  and  (y)  complied  as to form in all  material  respects  with
applicable laws and rules and regulations of the SEC.

                  (h)  Disclosure.  All  written  information  contained  in any
schedule,  report,  certificate  or any other  document  furnished  to Target by
Parent  or any other  Person  (on  behalf of  Parent)  in  connection  with this
Agreement is true, accurate and complete,  and no such Person (including Parent)
has stated therein (or included in any such  document) any untrue  material fact
or omitted to state any material  fact  necessary to make such  information  not
misleading.  The representations  and warranties  contained in this Section 4 do
not  contain  any  untrue  statement  of a  material  fact or omit to state  any
material  fact  necessary  in  order  to make  the  statements  and  information
contained in this Section 4 not misleading.

                  (i)  Authorization  for Parent  Shares.  Parent  will take all
necessary  action  prior to the Closing Date to permit it to issue the number of
Parent Shares and options and/or  warrants to purchase Parent Shares required to
be issued in the Merger pursuant to this Agreement.  All of the Parent Shares to
be issued in the Merger have been duly authorized and, upon  consummation of the
Merger, will be validly issued, fully paid and nonassessable, and no Person will
have any preemptive  right of subscription or purchase in respect  thereof.  All
Parent Shares issued pursuant to this Agreement will, when issued, be registered
or exempt from registration under the Securities Act and the Securities Exchange
Act and  registered  or exempt  from  registration  under any  applicable  state
securities laws.

                  (j)  NASDAQ  Compliance.  Parent  is in  compliance  with  all
applicable  maintenance  criteria  and other  requirements  necessary  to permit
continued  listing  of the  Parent  Shares on the  NASDAQ,  and  Parent  has not
received evidence to the contrary from the NASD.

                  (k)  Litigation.  Exhibit E sets forth each  instance in which
any of the  Parent  and  its  Subsidiaries  (i) is  subject  to any  outstanding
Governmental  Order or (ii) is a party or to the


                                       39
<PAGE>


Knowledge of the Parent and the Parent  Subsidiary  is  threatened  to be made a
party to any  action,  suit,  proceeding,  hearing  or  investigation  of, in or
before,  any Governmental  Entity or quasi-judicial or administrative  agency of
any federal,  state,  local or foreign  jurisdiction or before any arbitrator or
mediator.

                  (l) No Material Adverse  Changes.  Since the date of filing of
the most recent Parent SEC Document,  there has been no Material  Adverse Effect
involving the Parent or its Subsidiaries.

         5.  Covenants.  The Parties agree as follows with respect to the period
from and after the execution of this Agreement.


                  (a) General.  Each of the Parties will use its best efforts to
take all action and to do all things necessary, proper, or advisable in order to
consummate and make effective the  transactions  contemplated  by this Agreement
(including satisfaction,  but not waiver, of the closing conditions set forth in
Section 6 below).

                  (b) Notices and Consents. The Target will give (and will cause
each of its  Subsidiaries to give) any notices to third parties,  and the Target
will  use  commercially   reasonable   efforts  (and  will  cause  each  of  its
Subsidiaries to use its best efforts) to obtain any third party  consents,  that
the Parent may request in  connection  with the  matters  referred to in Section
3(c)  above.  Each of the  Parties  will (and the Target  will cause each of its
Subsidiaries   to)  give  any  notices  to,  make  any  filings  with,  and  use
commercially  reasonable  efforts to obtain  any  authorizations,  consents  and
approvals of Governmental Entities in connection with the matters referred to in
Sections 3(c) and 4(d) above.  Without limiting the generality of the foregoing,
each  of  the  Parties  will  file  (and  the  Target  will  cause  each  of its
Subsidiaries  to file) any  Notification  and Report Forms and related  material
that it may be  required  to file  with the  Federal  Trade  Commission  and the
Antitrust  Division  of the  United  States  Department  of  Justice  under  the
Hart-Scott-Rodino  Act, will use commercially  reasonable efforts to obtain (and
the  Target  will  cause  each of its  Subsidiaries  to use its best  efforts to
obtain) an early  termination of the applicable  waiting  period,  and will make
(and the Target will cause each of its Subsidiaries to make) any further filings
pursuant  thereto that may be  necessary,  proper,  or  advisable in  connection
therewith.

                  (c)  Regulatory  Matters and  Approvals.  Each of the Parties,
promptly  after the date hereof,  will (and the Target,  promptly after the date
hereof,  will cause each of its  Subsidiaries  to) give any notices to, make any
filings  with  and  use  all  commercially  reasonable  efforts  to  obtain  any
authorizations,  consents and approvals of  Governmental  Entities in connection
with the matters  referred to in Section 3(c) and 4(d) above.  Without  limiting
the generality of the foregoing:

                         (i) New Jersey  Business  Corporation  Act.  The Target
                  will take all action,  to the extent  necessary in  accordance
                  with  applicable  law, its  certificate of  incorporation  and
                  by-laws, to convene a special meeting of its Stockholders (the
                  "Target Special Meeting"),  as soon as reasonably  practicable
                  in order that the  Stockholders  may  consider and vote on the
                  adoption of this  Agreement  and the

                                       40
<PAGE>

                  approval  of the  Merger  in  accordance  with the New  Jersey
                  Business Corporation Act of the State of New Jersey.

                         (ii) Delaware General  Corporation Law. The Parent will
                  take all action,  to the extent  necessary in accordance  with
                  applicable law, its certificate of incorporation  and by-laws,
                  to convene a special meeting of the Parent  Stockholders  (the
                  "Parent Special Meeting"),  as soon as reasonably  practicable
                  in order that the Parent Stockholders may consider and vote on
                  the adoption of this  Agreement and the approval of the Merger
                  in accordance with Delaware General Corporation Law.

                         (iii)  Hart-Scott-Rodino Act. Each of the Parties shall
                  file (and the Target  will cause each of its  Subsidiaries  to
                  file) any  Notification  and Report Forms and related material
                  that  it may be  required  to  file  with  the  Federal  Trade
                  Commission  and the  Antitrust  Division of the United  States
                  Department  of Justice under the  Hart-Scott-Rodino  Act, will
                  use its best efforts to obtain (and the Target will cause each
                  of its  Subsidiaries  to use its best  efforts  to  obtain) an
                  early termination of the applicable  waiting period,  and will
                  make (and the Target  will cause each of its  Subsidiaries  to
                  make)  any  further  filings  pursuant  thereto  that  may  be
                  necessary, proper or advisable.

                         (iv)   Telecommunications   Laws.   Parent   shall   be
                  responsible   for   preparing   and  filing  the   appropriate
                  applications,  notifications and other documentation necessary
                  or  appropriate  to request from  Governmental  Entities  with
                  jurisdiction   over  the   telecommunications   industry   all
                  necessary authorizations, consents and approvals to the Merger
                  and the transactions  contemplated  hereby. The Target, at its
                  sole cost and  expense,  will  cooperate  with  Parent in this
                  regard,  providing such assistance as Parent shall  reasonably
                  request.

                         (v)  Securities  Act. With respect to the Parent Shares
                  to be issued in  connection  with the  Merger  and any  Parent
                  Shares  into  which  any  warrants  that are part of the Stock
                  Rights to be issued by Parent in  connection  with the Merger,
                  Parent  shall  promptly  prepare  and  file  with  the  SEC  a
                  registration   statement   on  Form  S-4  (the   "Registration
                  Statement")  under  the  Securities  Act and will use its best
                  efforts  to  cause  such  Registration   Statement  to  become
                  effective at the earliest  possible  time, and with respect to
                  the Parent Shares into which any warrants that are part of the
                  Stock  Rights to be issued  by Parent in  connection  with the
                  Merger to  maintain  the  effectiveness  of such  Registration
                  Statement  for  a  period  of  one  year,  which  Registration
                  Statement  shall  comply as to form in all  material  respects
                  with the  provisions of the  Securities  Act and the rules and
                  regulations promulgated  thereunder,  and will not contain any
                  untrue  statement  of a  material  fact or omit to  state  any
                  material  fact  required to be stated  therein or necessary to
                  make the  statements  therein,  in light of the  circumstances
                  under which they were made, not misleading; provided, however,
                  that  Parent  makes no and shall not make any  representation,
                  warranty or covenant with respect to any information furnished
                  to  it by  the  Target,  the  Stockholders  or  any  of  their
                  accountants,    counsel    or    authorized    representatives
                  specifically for inclusion in the

                                       41
<PAGE>

                  Registration  Statement.  The Target  represents and covenants
                  that it can  deliver  and it shall  cause to be  delivered  to
                  Parent at the earliest possible time any financial  statements
                  that  may  be  required  to be  filed  with  the  Registration
                  Statement  together  with a letter from  Target's  independent
                  certified  public  accountant  that such financial  statements
                  comply with the  requirements  of Regulation  S-X (17 CFR Part
                  210).  The Target hereby  indemnifies  and holds  harmless the
                  Parent  (and its  directors,  officers,  employees,  financial
                  advisors,  stockholders,  agents and representatives)  against
                  any losses,  claims,  damages or  liabilities  to which any of
                  such Persons may become subject based on any untrue  statement
                  of any material fact contained in the Registration  Statement,
                  or the  omission or alleged  omission  therefrom of a material
                  fact  required to be stated  therein or  necessary to make the
                  statements  therein, in light of the circumstances under which
                  they were made,  not  misleading,  but only to the extent that
                  such untrue  statement or alleged untrue statement or omission
                  or alleged omission was made in the Registration  Statement in
                  reliance on and in conformity  with  information  furnished to
                  the Parent by the  Target,  the  Stockholders  or any of their
                  accountants,    counsel    or    authorized    representatives
                  specifically  for use  therein.  The  Parent  and  the  Parent
                  Subsidiary  hereby indemnify and hold harmless the Target (and
                  its  directors,   officers,  employees,   financial  advisors,
                  stockholders,  agents and representatives) against any losses,
                  claims,  damages or  liabilities  to which any of such Persons
                  may  become  subject  based  on any  untrue  statement  of any
                  material fact contained in the Registration  Statement, or the
                  omission  or alleged  omission  therefrom  of a material  fact
                  required  to be  stated  therein  or  necessary  to  make  the
                  statements  therein, in light of the circumstances under which
                  they were made, not misleading, except to the extent that such
                  untrue  statement or alleged  untrue  statement or omission or
                  alleged  omission  was made in the  Registration  Statement in
                  reliance on and in conformity  with  information  furnished to
                  the Parent by the  Target,  the  Stockholders  or any of their
                  accountants,    counsel    or    authorized    representatives
                  specifically  for use therein.

                  (d) Operation of the Business. The Target shall not (and shall
not cause or permit any of its Subsidiaries to) engage in any practice, take any
action,  or enter  into any  transaction  other than in the  Ordinary  Course of
Business. Without limiting the generality of the foregoing, the Target shall not
(and  shall not cause or permit any of its  Subsidiaries  to) (i)  declare,  set
aside, or pay any dividend or make any distribution  with respect to its capital
stock or redeem,  purchase or otherwise acquire any of its capital stock or (ii)
otherwise engage in any practice, take any action, or enter into any transaction
of the sort described in Section 3(k) above.

                  (e) Preservation of Business.  The Target shall keep (and will
cause  each  of  its   Subsidiaries   to  keep)  its  business  and   properties
substantially  intact,  including its present operations,  physical  facilities,
working  conditions,  and  relationships  with  lessors,  licensors,  suppliers,
customers and employees.

                  (f) Full Access. Each Party shall permit (and shall cause each
of its Subsidiaries to permit) representatives of the other Parties to have full
access to all premises,  properties,  personnel,  books,  records (including Tax
records),  contracts  and  documents  of or  pertaining  to each Party and their
respective Subsidiaries.

                                       42
<PAGE>

                  (g)  Notice of  Developments.  Each Party  shall  give  prompt
written notice to the other Party of any material adverse  development causing a
breach  of any of its own  representations  and  warranties  in  Section  3, and
Section 4 above.  No  disclosure  by any Party  pursuant to this  Section  5(g),
however,  shall be deemed to amend or supplement the  Disclosure  Schedule or to
prevent or cure any misrepresentation, breach of warranty or breach of covenant.

                  (h)      Exclusivity.

                         (i) The Target shall,  and shall cause its Subsidiaries
                  and any of their respective  Affiliates to,  immediately cease
                  and   terminate   any   existing   solicitation,   initiation,
                  encouragement,  activity,  discussion or negotiation  with any
                  Persons conducted  heretofore by the Target,  its Subsidiaries
                  or any of their respective  Affiliates,  officers,  directors,
                  employees,   financial  advisors,   stockholders,   agents  or
                  representatives (each a "Representative")  with respect to any
                  proposed, potential or contemplated Acquisition Proposal.

                         (ii) From and after the date hereof,  without the prior
                  written  consent of Parent,  the Target will not  authorize or
                  permit any of its Subsidiaries to, and shall cause any and all
                  of its  Representatives  not to,  directly or indirectly,  (A)
                  solicit, initiate or encourage any inquiries or proposals that
                  constitute,  or could  reasonably  be  expected to lead to, an
                  Acquisition   Proposal,  or  (B)  engage  in  negotiations  or
                  discussions  with any Third Party  concerning,  or provide any
                  non-public information to any person or entity relating to, an
                  Acquisition  Proposal, or (C) enter into any letter of intent,
                  agreement in principle or any  acquisition  agreement or other
                  similar  agreement with respect to any  Acquisition  Proposal;
                  provided,  however,  that  nothing  contained  in this Section
                  5(h)(ii)  shall prevent the Target or the Target  Board,  from
                  furnishing   non-public   information  to,  or  entering  into
                  discussions   or   negotiations   with,  any  Third  Party  in
                  connection with an unsolicited, bona fide written proposal for
                  an  Acquisition  Proposal by such Third Party,  if and only to
                  the  extent  that  (1) such  Third  Party  has made a  written
                  proposal  to the Target  Board to  consummate  an  Acquisition
                  Proposal, (2) the Target Board determines in good faith, based
                  on the advice of a financial advisor of nationally  recognized
                  reputation,  that  such  Acquisition  Proposal  is  reasonably
                  capable  of  being  completed  on   substantially   the  terms
                  proposed,  and would, if consummated,  result in a transaction
                  that would provide  greater value to the holders of the Target
                  Shares than the transaction  contemplated by this Agreement (a
                  "Superior  Proposal"),  (3) the  failure  to take such  action
                  would,  in the  reasonable  good faith  judgment of the Target
                  Board,  based on a written  opinion of Target's  outside legal
                  counsel,  be a  violation  of  its  fiduciary  duties  to  the
                  Stockholders under applicable law, and (4) prior to furnishing
                  such non-public  information to, or entering into  discussions
                  or negotiations  with, such Person,  the Target Board receives
                  from such Person an executed  confidentiality  agreement  with
                  material  terms no less  favorable  to the  Target  than those
                  contained in the Confidentiality Agreements and provides prior
                  notice to the Parent of its decision to take such action.  The
                  Target  shall not release  any Third Party from,  or waive any
                  provision of, any standstill  agreement to which it is a party
                  or any confidentiality agreement between it and another Person
                  who has made, or who

                                       43
<PAGE>


                  may  reasonably be considered  likely to make, an  Acquisition
                  Proposal, unless the failure to take such action would, in the
                  reasonable good faith judgment of the Target Board, based on a
                  written  opinion  of  Target's  outside  legal  counsel,  be a
                  violation of its fiduciary  duties to the  Stockholders  under
                  applicable  law.  Without   limiting  the  foregoing,   it  is
                  understood that any violation of the restrictions set forth in
                  the preceding  sentence by any Representative of the Target or
                  any of its Subsidiaries shall be deemed to be a breach of this
                  Section 5(h) by the Target.

                         (iii) The Target shall  notify  Parent  promptly  after
                  receipt by the Target or the Target's Knowledge of the receipt
                  by any of its  Representatives of any Acquisition  Proposal or
                  any request for non-public  information in connection  with an
                  Acquisition Proposal or for access to the properties, books or
                  records of the Target by any Person  that  informs  such party
                  that it is  considering  making  or has  made  an  Acquisition
                  Proposal.  Such notice shall be made orally and in writing and
                  shall  indicate  the identity of the offeror and the terms and
                  conditions of such  proposal,  inquiry or contact.  The Target
                  shall keep Parent informed of the status (including any change
                  to the  material  terms) of any such  Acquisition  Proposal or
                  request for non-public information.

                         (iv) The Target  Board may not  withdraw or modify,  or
                  propose to withdraw or modify,  in a manner adverse to Parent,
                  the  approval or  recommendation  by the Target  Board of this
                  Agreement  or the Merger  unless,  following  the receipt of a
                  Superior  Proposal,  in the reasonable  good faith judgment of
                  the Target  Board,  based on the  written  opinion of Target's
                  outside  legal  counsel,  the  failure  to  do so  would  be a
                  violation  of  the  Target  Board's  fiduciary  duties  to the
                  Stockholders  under applicable law; provided,  however,  that,
                  the Target Board shall submit this Agreement and the Merger to
                  the Stockholders for adoption and approval, whether or not the
                  Target  Board  at  any  time  subsequent  to the  date  hereof
                  determines  that  this  Agreement  is no longer  advisable  or
                  recommends  that  the  Stockholders  reject  it  or  otherwise
                  modifies or withdraws  its  recommendation.  Unless the Target
                  Board has withdrawn its  recommendation  of this  Agreement in
                  compliance   herewith,   the  Target  shall  use  commercially
                  reasonable efforts to solicit from the Stockholders proxies in
                  favor of the adoption and approval of this  Agreement  and the
                  Merger and to secure  the vote or consent of the  Stockholders
                  required by the New Jersey  Business  Corporation  Act and its
                  certificate of incorporation  and by-laws to adopt and approve
                  this Agreement and the Merger.

                  (i) Continuity of Business . Parent,  Surviving Corporation or
any other  member of the  qualified  group (as  defined in Treas.  Reg.  Section
1.368-1(d)) shall, for the foreseeable future, continue at least one significant
historic  business line of the Target or use at least a  significant  portion of
the Target's  historic  business  assets in a business,  in each case within the
meaning of Treas. Reg. Section 1.368-1(d).

                  (j)   Employment   Agreements.   Contemporaneously   with  the
execution  of this  Agreement,  each of Kenneth G. Baritz and Kevin  Griffo (the
"Principal  Executives") shall enter

                                       44
<PAGE>

into an employment  agreement with Parent in the form attached as Exhibit F (the
"Employment Agreement").

                  (k) Listing.  Parent shall use commercially reasonable efforts
to cause the  Parent  Shares to be issued in  connection  with the  Merger to be
approved for listing on Nasdaq, subject to official notice of issuance, prior to
the Closing Date.

                  (l) Services Agreement.  Contemporaneously  with the execution
of this  Agreement,  Parent (or a  Subsidiary  of Parent) and Target shall enter
into the  Services  Agreement in the form  attached as Exhibit G (the  "Services
Agreement")  pursuant to which for a five (5) year term Target shall  furnish to
Parent (or to a  Subsidiary  of Parent) the services it delivers in the ordinary
course of business to its end user  customers or is capable of delivering to its
end user  customers,  at Target's cost, for resale by Parent (or by a Subsidiary
of Parent) to the end user customers of Parent and its Subsidiaries.

                  (m) Voting Agreement.  Contemporaneously with the execution of
this  Agreement,  Parent  and the other  signatories  identified  in the  Voting
Agreement in the form attached as Exhibit H (the "Voting Agreement") shall enter
into the Voting  Agreement  pursuant  to which such  signatories  shall grant to
Parent their proxy to vote their Target Shares in favor of the Merger.

                  (n) MCG Finance Agreement.  Within 30 days of the execution of
this  Agreement,  Target  shall  secure and furnish a copy thereof to Parent the
written  agreement of MCG Finance  Corporation  ("MCG"),  in form and  substance
acceptable to Parent in its  reasonable  discretion,  to accept at the Closing a
warrant exercisable for Parent Shares in full satisfaction of MCG's rights under
the Warrant  Agreement by and between MCG and Target  dated June 30, 1999,  such
warrant for Parent  Shares to be  consistent  with the  provisions  set forth in
Section 2(d)(vi) above (the "MCG Agreement").

                  (o) Lockup  Agreement.  The Parties  agree that for the period
ending on the  earlier of October 31, 2000 or 90 days  following  the  Effective
Time, the holders of Target securities that receive Merger Consideration as part
of the Merger shall not offer, sell, contract to sell, pledge,  grant any option
to purchase,  make any short sale or otherwise dispose of any part of the Merger
Consideration  consisting of Parent Shares, any options or warrants  convertible
or exercisable  into Parent Shares,  or any other securities  convertible  into,
exchangeable  for or that  represent  the right to  receive  the  Parent  Shares
(except pursuant to the Escrow Agreement and the Indemnification Agreement). The
foregoing restriction is expressly agreed to preclude the such holders of Target
securities from engaging in any hedging or other transaction that is designed to
or  which  reasonably  could  be  expected  to  lead to or  result  in a sale or
disposition of such securities received as part of the Merger Consideration even
if such Merger  Consideration  would be  disposed of by someone  other than such
holder of a Target security. Such prohibited hedging or other transactions would
include without limitation any short sale or any purchase,  sale or grant of any
right (including  without limitation any put or call option) with respect to any
of the Merger  Consideration  or with  respect to any  security  that  includes,
relates to, or derives any part of its value from such Merger Consideration.

                                       45
<PAGE>

6.       Conditions to Obligation to Close.

                  (a)   Conditions  to  Obligation  of  Parent  and  the  Parent
Subsidiary.  The  obligation  of each of Parent  and the  Parent  Subsidiary  to
consummate the Merger is subject to  satisfaction  or waiver by Parent or Parent
Subsidiary of the following conditions at or prior to the Closing Date:

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

                         (ii)  the  Target  and  its  Subsidiaries   shall  have
                  procured all of the third party consents  specified in Section
                  3(c) above;

                         (iii) the  representations  and warranties set forth in
                  Section 3 and Section 4 above shall be true and correct in all
                  material respects at and as of the Closing Date;

                         (iv) the Target shall have  performed and complied with
                  all of  its  covenants  hereunder  in  all  material  respects
                  through the Closing;

                         (v)  neither  any Law or  Governmental  Order  shall be
                  enacted,  promulgated,  entered, enforced or deemed applicable
                  to the  Merger nor any other  action  shall have been taken by
                  any Governmental Entity (A) that prohibits the consummation of
                  the  transactions  contemplated  by this  Agreement;  (B) that
                  prohibits  Parent's or the Parent  Subsidiary's  ownership  or
                  operation  of all or any  portion  of  their  or the  Target's
                  business  or  assets,  or which  compels  Parent or the Parent
                  Subsidiary  to dispose of or hold  separate all or any portion
                  of  Parent's  or  the  Parent  Subsidiary's  or  the  Target's
                  business   or  assets   as  a  result   of  the   transactions
                  contemplated  by this  Agreement;  (C) that makes the purchase
                  of, or payment for, some or all of the Target Shares  illegal;
                  (D) that imposes  limitations  on the ability of Parent or the
                  Parent   Subsidiary   to  acquire  or  hold  or  to   exercise
                  effectively   all  rights  of  ownership  of  Target   Shares,
                  including,  without  limitation,  the right to vote any Target
                  Shares purchased by Parent on all matters  properly  presented
                  to the  Stockholders;  or (E) that imposes any  limitations on
                  the  ability  of Parent or the  Parent  Subsidiary,  or any of
                  their respective  Subsidiaries,  effectively to control in any
                  respect the business or operations of the Target or any of its
                  Subsidiaries;

                         (vi) the Target shall have  delivered to Parent and the
                  Parent Subsidiary a certificate to the effect that each of the
                  conditions  specified  above in  Section  6(a)(i) - 6(a)(v) is
                  satisfied in all respects;

                         (vii)  all   applicable   waiting   periods   (and  any
                  extensions thereof) under the Hart-Scott-Rodino Act shall have
                  expired or otherwise been terminated;

                         (viii) the Parent and the Parent  Subsidiary shall have
                  received  from  counsel  to the  Target an opinion in form and
                  substance as set forth in Exhibit I attached hereto, addressed
                  to the Parent and the Parent  Subsidiary,  and dated as of the
                  Closing Date;

                                       46
<PAGE>

                         (ix) the Parent and the  Parent  Subsidiary  shall have
                  received  from  counsel  to  the  Target  that  is  reasonably
                  acceptable  to Parent and its  counsel  an opinion  concerning
                  regulatory matters in form and substance reasonably acceptable
                  to Parent  and its  counsel,  addressed  to the Parent and the
                  Parent Subsidiary, and dated as of the Closing Date;

                         (x) the  Parent and the  Parent  Subsidiary  shall have
                  received the  resignations,  effective  as of the Closing,  of
                  each  director and officer of the Target and its  Subsidiaries
                  other  than those whom the  Parent  shall  have  specified  in
                  writing at least five business days prior to the Closing;

                         (xi) Target and Kenneth G. Baritz shall have  delivered
                  to Parent and the Parent Subsidiary an executed counterpart of
                  the Escrow Agreement;

                         (xii)  each of the  Employment  Agreements  shall be in
                  full force and effect;

                         (xiii)  the  Parent  shall  have  received  the  Parent
                  Fairness Opinion;

                         (xiv) the Parent  shall have  procured all of the third
                  party consents specified in Section 55(c) above;

                         (xv)  the MCG  Agreement  shall  be in full  force  and
                  effect;

                         (xvi) the  Indemnification  Agreement  shall be in full
                  force and effect; and

                         (xvii)  all  actions  to be  taken  by  the  Target  in
                  connection with consummation of the transactions  contemplated
                  by this Agreement and all certificates,  opinions, instruments
                  and  other  documents  required  to  effect  the  transactions
                  contemplated  herein will be reasonably  satisfactory  in form
                  and substance to the Parent and the Parent Subsidiary.

                  Subject to the  provisions of  applicable law,  Parent and the
Parent  Subsidiary may waive,  in whole or in part,  any condition  specified in
this  Section  6(a) if they  execute a  writing  so  stating  at or prior to the
Closing.

                  (b)  Conditions to Obligation of the Target and  Stockholders.
The  obligation of the Target and the  Stockholders  to consummate the Merger is
subject to satisfaction  or waiver by the Target of the following  conditions at
or prior to the Closing Date:

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

                         (ii) the Parent  shall have  procured  all of the third
                  party consents specified in Section 55(c) above;

                         (iii) the  representations  and warranties set forth in
                  Section  4 above  shall be true and  correct  in all  material
                  respects at and as of the Closing Date;

                                       47
<PAGE>

                         (iv) each of Parent  and the  Parent  Subsidiary  shall
                  have   performed  and  complied  with  all  of  its  covenants
                  hereunder in all material respects through the Closing;

                         (v)  neither  any Law or  Governmental  Order  shall be
                  enacted,  promulgated,  entered, enforced or deemed applicable
                  to the  Merger nor any other  action  shall have been taken by
                  any Governmental Entity (A) that prohibits the consummation of
                  the  transactions  contemplated  by this  Agreement;  (B) that
                  prohibits  Parent's or the Parent  Subsidiary's  ownership  or
                  operation  of all or any  portion  of  their  or the  Target's
                  business  or  assets,  or which  compels  Parent or the Parent
                  Subsidiary  to dispose of or hold  separate all or any portion
                  of  Parent's  or  the  Parent  Subsidiary's  or  the  Target's
                  business   or  assets   as  a  result   of  the   transactions
                  contemplated  by this  Agreement;  (C) that makes the purchase
                  of, or payment for, some or all of the Target Shares illegal;

                         (vi) the Parent  shall have  delivered  to the Target a
                  certificate   to  the  effect  that  each  of  the  conditions
                  specified  above in Section  6(b)(i) - 6(b)(v) is satisfied in
                  all respects;

                         (vii)  all   applicable   waiting   periods   (and  any
                  extensions thereof) under the Hart-Scott-Rodino Act shall have
                  expired or otherwise been terminated;

                         (viii)  Parent  shall  have   delivered  to  Target  an
                  executed counterpart of the Escrow Agreement;

                         (ix) each of the Employment Agreements shall be in full
                  force and effect;

                         (x) Parent  shall have  satisfied  and paid in full the
                  liabilities  listed  on  Section  6(b)(x)  of  the  Disclosure
                  Schedule  (representing those liabilities and obligations that
                  are required by contractual  terms to be satisfied as a result
                  of the transactions  contemplated herein), which payment in no
                  circumstances shall exceed $17 million;

                         (xi)  The  Registration  Statement  shall  be  declared
                  effective  by the SEC and no stop  order  shall be  issued  in
                  connection therewith;

                         (xii) The Parent Shares to be issued in connection with
                  the Merger shall be approved for listing on Nasdaq, subject to
                  official notice of issuance;

                         (xiii) Kenneth G. Baritz shall be elected to the Parent
                  Board;

                         (xiv) the  Target  shall  have  received  from  general
                  counsel of the Parent an opinion in form and  substance as set
                  forth in Exhibit J attached  hereto,  addressed to the Target,
                  and dated as of the Closing Date;

                         (xv) the Target  shall have  received  an opinion  from
                  counsel  of  its  choice  that  the  Merger   qualifies  as  a
                  "reorganization"  within the meaning of Code  Section  368(a);
                  and

                                       48
<PAGE>

                         (xvi) all  actions  to be taken by the  Parent  and the
                  Parent  Subsidiary  in  connection  with  consummation  of the
                  transactions   contemplated   by   this   Agreement   and  all
                  certificates,   opinions,   instruments  and  other  documents
                  required to effect the transactions  contemplated  herein will
                  be  reasonably  satisfactory  in  form  and  substance  to the
                  Target.

                  Subject to the  provisions of  applicable  law, the Target may
waive,  in whole or in part, any condition  specified in this Section 6(b) if it
executes a writing so stating at or prior to the Closing.

7.       Remedies for Breaches of this Agreement.

                  (a) Survival of  Representations  and  Warranties.  All of the
representations  and warranties of the Parties contained in this Agreement shall
survive the Closing  hereunder  (even if the damaged Party knew or had reason to
know of any  misrepresentation  or breach of warranty or covenant at the time of
Closing) and continue in full force and effect for one year thereafter  (subject
to any applicable statutes of limitations).

                  (b)  Indemnification  Agreement.  Contemporaneously  with  the
execution  of this  Agreement,  Parent and Target  shall  execute and deliver an
indemnification  agreement  substantially  in the form of the attached Exhibit K
(the "Indemnification Agreement")

                  (c) Other  Indemnification  Provisions.  No Stockholder  shall
make any claim for indemnification against any of the Surviving Corporation, the
Target and its  Subsidiaries by reason of the fact that he or it was a director,
officer,  employee  or agent of any such entity or was serving at the request of
any such entity as a partner, trustee,  director,  officer, employee or agent of
another entity (whether such claim is for judgments,  damages, penalties, fines,
costs, amounts paid in settlement,  losses,  expenses,  or otherwise and whether
such claim is pursuant to any statute,  charter  document,  bylaw,  agreement or
otherwise) with respect to any action,  suit,  proceeding,  complaint,  claim or
demand brought by the Parent, Parent Subsidiary or Surviving Corporation against
such Stockholder (whether such action,  suit,  proceeding,  complaint,  claim or
demand is pursuant to this  Agreement,  applicable  law or  otherwise).  Nothing
contained in this  Agreement  shall void,  abrogate or otherwise  eliminate  the
rights of a former  director  or  officer  of Target or any of its  Subsidiaries
under any  directors  and officers  insurance  policy  previously  maintained by
Target  or  its  Subsidiaries   (including  any  "tail"  coverage  purchased  in
connection therewith).

                  (d)  Directors'  and  Officers'   Indemnity.   Notwithstanding
anything to the contrary  contained in this  Agreement,  following the Effective
Time,  Parent will take no action to abrogate  or  diminish  any right  accorded
under the  articles  of  incorporation  or  by-laws  of  Target as they  existed
immediately  prior to the  Effective  Time to any person who, on or prior to the
Effective Time, was a director or officer of Target to  indemnification  from or
against losses, expenses,  claims, demands,  damages,  liabilities,  judgements,
fines,  penalties,  costs,  expenses  (including without  limitation  reasonable
attorneys  fees) and amounts  paid in  settlement  pertaining  to or incurred in
connection  with any threatened or actual  action,  suit,  claim,  or proceeding
(whether civil, criminal, administrative, arbitration, or investigative) arising
out of events, matters, actions, or omissions that are specifically described in
the Disclosure  Schedule,  and Parent will honor

                                       49
<PAGE>


such obligations in accordance with their terms with respect to events,  acts or
omissions that are specifically described in the Disclosure Schedule.

        8.       Termination.

                  (a)  Termination of Agreement.  The Parties may terminate this
Agreement with the prior authorization of their respective board of directors as
provided below:

                         (i) the Parties may terminate this  Agreement,  and the
                  Merger may be abandoned, by mutual written consent at any time
                  prior to the  Effective  Time before or after the  approval by
                  the Stockholders, or the Parent Subsidiary stockholder;

                         (ii) the Parent may terminate  this Agreement by giving
                  written  notice to the Target at any time prior to the Closing
                  in the event  the  Target  has  breached  any  representation,
                  warranty  or  covenant  contained  in  this  Agreement  in any
                  material  respect,  the Parent has  notified the Target of the
                  breach, and the breach has continued without cure for a period
                  of 30 days after the notice of breach;

                         (iii) the Target may terminate this Agreement by giving
                  written  notice to the Parent at any time prior to the Closing
                  in the event the Parent or Parent  Subsidiary has breached any
                  representation,   warranty  or  covenant   contained  in  this
                  Agreement in any material respect, the Target has notified the
                  Parent of the  breach,  and the breach has  continued  without
                  cure for a period of 30 days after the notice of breach;

                         (iv) the Parent may terminate  this Agreement by giving
                  written  notice to the Target at any time prior to the Closing
                  (A) if the Target Board in the exercise of its fiduciary  duty
                  (x) enters into an agreement  or  agreement in principle  with
                  respect  to  an   Acquisition   Proposal,   (y)  withdraws  it
                  recommendation  to the  Stockholders  of this Agreement or the
                  Merger or (z) after the  receipt of an  Acquisition  Proposal,
                  fails to confirm  publicly,  within ten days after the request
                  of Parent,  its  recommendation  to the Stockholders  that the
                  Stockholders  adopt and approve this  Agreement and the Merger
                  or (B) if the Target or any of its  Representatives  takes any
                  of the actions that would be proscribed by Section 5(h) above,
                  notwithstanding   the  exceptions   therein  allowing  certain
                  actions  to be taken  pursuant  to the  proviso  in the  first
                  sentence of Section 5(h)(ii) above; or

                         (v) either the Target or the Parent may terminate  this
                  Agreement by giving written notice to the other Parties if the
                  Closing  shall not have  occurred on or before March 23, 2001,
                  by reason of the  failure  of any  condition  precedent  under
                  Section 6 hereof  (unless the failure  results  primarily from
                  the terminating Party's breach of any representation, warranty
                  or covenant  contained  in this  Agreement  or under any other
                  agreement contemplated hereunder).

                  (b)      Effect of Termination.

                                       50
<PAGE>

                         (i) Except as provided in clauses (ii) or (iii) of this
                  Section 8(b), if any Party terminates this Agreement  pursuant
                  to  Sections   8(a)(i)  -  8(a)(v)   above,   all  rights  and
                  obligations of the Parties  hereunder shall terminate  without
                  any liability of any Party to any other Party; except that the
                  provisions of the Confidentiality Agreements shall survive any
                  such termination.

                         (ii) If this  Agreement  is  terminated  by the  Parent
                  pursuant to Section 8(a)(ii) or Section 8(a)(iv),  then within
                  five (5) days after such termination, the Target shall pay the
                  Parent the sum of  $6,000,000  plus all  expenses  incurred by
                  Parent to third  parties in connection  with the  transactions
                  contemplated  hereunder in immediately available funds and the
                  Services Agreement shall remain in full force and effect.

                         (iii) If this  Agreement  is  terminated  by the Target
                  pursuant to Section 8(a)(iii), then within five (5) days after
                  such  termination,  the Parent shall pay the Target the sum of
                  $6,000,000  plus all  expenses  incurred  by  Target  to third
                  parties  in  connection  with  the  transactions  contemplated
                  hereunder  in  immediately  available  funds and the  Services
                  Agreement shall terminate in accordance with its terms.

        9.  Miscellaneous.

             (a) Press Releases and Public  Announcements.  No Party shall issue
any press release or make any public announcement relating to the subject matter
of this  Agreement  without the prior  written  approval  of the other  Parties;
except that any Party may make any public  disclosure  it believes in good faith
is required by applicable law or any listing or trading agreement concerning its
publicly-traded  securities  (in which  case the  disclosing  Party will use all
reasonable efforts to advise the other Parties prior to making the disclosure).

             (b) 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.

             (c) Entire Agreement. This Agreement (including the Confidentiality
Agreements and the other  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, to the extent they
related in any way to the subject matter hereof.

             (d) Binding  Effect;  Assignment.  This Agreement  shall be binding
upon and inure to the benefit of the Parties and their respective successors and
permitted assigns.  No Party may assign or delegate either this Agreement or any
of its rights,  interests  or  obligations  hereunder,  by  operation  of law or
otherwise,  without  the  prior  written  approval  of the  other  Parties.  Any
purported assignment or delegation without such approval shall be void and of no
effect.

             (e)  Counterparts.  This  Agreement  may be executed  (including by
facsimile)  in one or more  counterparts,  each of  which  shall  be  deemed  an
original but all of which together will constitute one and the same instrument.

                                       51
<PAGE>

             (f) 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.

             (g)  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 given if (and then two
business days after) it is sent by registered or certified mail,  return receipt
requested,  postage prepaid and addressed to the intended recipient as set forth
below:

    If to the Target:

                                   Access One Communications Corp.
                                   3427 NW 55th Street
                                   Fort Lauderdale, FL  33309
                                   Attention: Kenneth G. Baritz
                                   Facsimile:  (954) 739-2476

    with a Copy to:                Blank Rome Tenzer Greenblatt LLP
                                   405 Lexington Avenue
                                   New York, NY  10174
                                   Attention:  Michael S. Mullman, Esq.
                                   Facsimile:  (212) 885-5001

    If to Parent:                  Talk.com, Inc.
                                   6805 Route 202
                                   New Hope, PA  18938
                                   Attention:  Aloysius T. Lawn, IV, Esq.
                                               Executive Vice President -
                                                 General Counsel and Secretary
                                   Facsimile: (215) 862-1960

    with a Copy to:                Kelley Drye & Warren LLP
                                   1200 19th Street, N.W., Suite 500
                                   Washington, DC  20036
                                   Attention:  Joseph B. Hoffman, Esq.
                                   Facsimile:  (202) 955-9792

     If to the Parent Subsidiary:  Aladdin Acquisition Corp.
                                   6805 Route 202
                                   New Hope, PA  18938
                                   Attention: Aloysius T. Lawn, IV, Esq.
                                              Executive Vice President -
                                                 General Counsel and Secretary
                                   Facsimile:  (215) 862-1960


                                       52
<PAGE>

    with a Copy to:                 Kelley Drye & Warren LLP
                                    1200 19th Street, N.W., Suite 500
                                    Washington, DC  20036
                                    Attention:  Joseph B. Hoffman, Esq.
                                    Facsimile:  (202) 955-9792

Any Party may send any notice,  request,  demand,  claim or other  communication
hereunder  to the  intended  recipient  at the  address  set forth  above  using
personal delivery,  expedited courier,  messenger service,  telecopy or ordinary
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
intended recipient. 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 set forth in this Section 9(g),  provided
that no such change of address shall be effective  until it actually is received
by the intended recipient.

                  (h)  GOVERNING  LAW. THIS  AGREEMENT  SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF DELAWARE  WITHOUT
GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE
STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.

                  (i) Amendments and Waivers. The Parties may mutually amend any
provision  of this  Agreement at any time prior to the  Effective  Time with the
prior  authorization  of their respective  boards of directors;  except that any
amendment effected subsequent to Requisite  Stockholder Approval will be subject
to the restrictions  contained in the Delaware  General  Corporation Law, to the
extent  applicable.  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.

                  (j) 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.

                  (k) Expenses.  Except as expressly set forth elsewhere in this
Agreement,  each of Target  and  Parent  shall  bear its own costs and  expenses
(including  legal fees and expenses)  incurred in connection with this Agreement
and the transactions contemplated hereby.

                  (l) Incorporation of Exhibits. The Exhibits identified in this
Agreement are incorporated herein by reference and made a part hereof.

                  (m) Construction. The Parties have participated jointly in the
negotiation  and  drafting  of this  Agreement.  In the  event an  ambiguity  or
question of intent or interpretation

                                       53
<PAGE>


arises,  this Agreement  shall be construed as if drafted jointly by the Parties
and no presumption  or burden of proof shall arise  favoring or disfavoring  any
Party by virtue of the  authorship of any of the  provisions of this  Agreement.
Any reference to any federal,  state,  local or foreign  statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the  context  requires  otherwise.  The word  "including"  shall mean  including
without  limitation.  The phrase  "business day" shall mean any day other than a
day on which  banks in the State of New York are  required or  authorized  to be
closed.  The Parties  intend that each  representation,  warranty  and  covenant
contained herein shall have independent significance.  If any Party has breached
any  representation,  warranty or covenant contained herein in any respect,  the
fact that there exists another representation,  warranty or covenant relating to
the same subject matter  (regardless of the relative levels of specificity) that
the Party has not breached  shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty or covenant.

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

                  (o) Specific Performance. Each of the Parties acknowledges and
agrees that 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  (subject  to the  provisions  set
forth in Section 9(p) below),  in addition to any other remedy to which they may
be entitled, at law or in equity.

                  (p) Submission to Jurisdiction. Each of the Parties submits to
the  jurisdiction  of any state or federal court sitting in the  Commonwealth of
Virginia  in any  action  or  proceeding  arising  out of or  relating  to  this
Agreement and agrees that all claims in respect of the action or proceeding  may
be heard and  determined in any such court.  Each Party also agrees not to bring
any action or  proceeding  arising out of or relating to this  Agreement  in any
other court. Each of the Parties waives any defense of inconvenient forum to the
maintenance  of any action or proceeding so brought and waives any bond,  surety
or other  security  that  might be  required  of any other  Party  with  respect
thereto. Each Party appoints C-T Corporation (the "Process Agent") as his or its
agent to  receive  on his or its behalf  service  of copies of the  summons  and
complaint  and  any  other  process  that  might  be  served  in the  action  or
proceeding.  Any  Party  may make  service  on any  other  Party by  sending  or
delivering  a copy of the  process  (A) to the Party to be served at the address
and in the manner  provided  for the giving of notices in Section  9(g) above or
(B) to the Party to be served in care of the Process Agent at the address and in
the manner provided for the giving of notices in Section 9(g) above.  Nothing in
this Section 9(p),  however,  shall affect the right of any Party to serve legal
process in any other  manner  permitted  by law or at equity.  Each Party agrees
that a final judgment in any action or proceeding so brought shall be conclusive
and may be enforced by suit on the judgment or in any other  manner  provided by
law or at equity.

                                       54
<PAGE>

                  (q)  WAIVER  OF  JURY  TRIAL.  EACH  OF  PARENT,   THE  PARENT
SUBSIDIARY AND TARGET, AND EACH INDEMNIFIED PARTY, HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT  PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR  COUNTERCLAIM  (WHETHER  BASED UPON  CONTRACT,  TORT OR OTHERWISE)
ARISING  OUT OF OR  RELATING  TO  THIS  AGREEMENT  OR  ANY  OF THE  TRANSACTIONS
CONTEMPLATED HEREBY.


                                       55
<PAGE>


         IN WITNESS  WHEREOF,  the Parties  hereto have executed this  Agreement
effective the date first above written.

                                            ACCESS ONE COMMUNICATIONS CORP.



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


                                            ALADDIN ACQUISITION CORP.



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


                                            TALK.COM, INC.



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

Source: OneCLE Business Contracts.