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Asset Purchase Agreement - Centigram Communications Corp. and The Telephone Connection Inc.

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                            ASSET PURCHASE AGREEMENT


                                      AMONG


                      CENTIGRAM COMMUNICATIONS CORPORATION


                             TTCI ACQUISITION CORP.


                                       AND


                         THE TELEPHONE CONNECTION, INC.


                                  June 20, 1998



<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

ARTICLE I - DEFINITIONS........................................................1

ARTICLE II - PURCHASE AND SALE TRANSACTION.....................................4

    2.1   Purchase and Sale of Assets..........................................4
    2.2   Assumption of Liabilities............................................5
    2.3   Purchase Price.......................................................5
    2.4   The Closing..........................................................5
    2.5   Deliveries at the Closing............................................5
    2.6   Allocation; Transfer Taxes; Property Taxes...........................5
    2.7   Non-Assignment of Certain Agreements.................................6

ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................6

    3.1   Organization.........................................................6
    3.2   Capital Structure....................................................7
    3.3   Subsidiaries.........................................................7
    3.4   Authority............................................................7
    3.5   No Conflict..........................................................7
    3.6   Consents.............................................................8
    3.7   Company Financial Statements.........................................8
    3.8   No Undisclosed Liabilities...........................................8
    3.9   No Changes...........................................................8
    3.10  Tax Matters.........................................................10
    3.11  Restrictions on Business Activities.................................11
    3.12  Title of Properties; Absence of Liens and Encumbrances; Condition
          of Equipment .......................................................11
    3.13  Intellectual Property...............................................12
    3.14  Agreements, Contracts and Commitments...............................16
    3.15  Interested Party Transactions.......................................18
    3.16  Governmental Authorization..........................................18
    3.17  Litigation..........................................................19
    3.18  Accounts Receivable.................................................19
    3.19  Minute Books........................................................19
    3.20  Bulk Sales Creditors................................................20
    3.21  Brokers' and Finders' Fees..........................................20
    3.22  Employees; Employee Benefit Plans and Compensation..................20
    3.23  Insurance...........................................................22
    3.24  Environmental Matters...............................................22
    3.25  Compliance with Laws................................................23
    3.26  Complete Copies of Materials........................................23
    3.27  Warranties; Indemnities.............................................23
    3.28  Representations Complete............................................23

                                       -i-

<PAGE>


                                TABLE OF CONTENTS
                                   (continued)

                                                                            Page

ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.................23

    4.1   Organization........................................................24
    4.2   Authority...........................................................24
    4.3   No Conflict.........................................................24
    4.4   Brokers' Fees.......................................................24
    4.5   Consents............................................................24

ARTICLE V - CONDUCT PRIOR TO THE CLOSING......................................25

    5.1   Conduct of Business of the Company..................................25
    5.2   No Solicitation.....................................................27

 ARTICLE VI - ADDITIONAL AGREEMENTS ..........................................27

    6.1   Stockholder Consent.................................................27
    6.2   Access to Information...............................................27
    6.3   Confidentiality.....................................................28
    6.4   Audit Procedures....................................................28
    6.5   Public Disclosure...................................................28
    6.6   Consents............................................................28
    6.7   Reasonable Best Efforts; Further Assurances.........................28
    6.8   Notification of Certain Matters.....................................29
    6.9   Bulk Transfer Laws..................................................29
    6.10  Company 401(k) Plan.................................................29
    6.11  Transferred Employees...............................................29
    6.12  Satisfaction of Liabilities.........................................30
    6.13  Severance Agreements................................................30

ARTICLE VII - CONDITIONS TO OBLIGATION TO CLOSE ..............................30

    7.1   Conditions to Obligation of the Parent and Sub......................30
    7.2   Conditions to Obligation of the Company.............................31

ARTICLE VIII - SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW;
          INDEMNITY ..........................................................32

    8.1   Survival of Representations and Warranties..........................32
    8.2   Indemnification of Parent and Sub...................................32
    8.3   Indemnification of the Company......................................34

                                      -ii-

<PAGE>


                                TABLE OF CONTENTS
                                   (continued)

                                                                            Page

    8.4   Escrow Arrangements.................................................35
    8.5   ....................................................................41

ARTICLE IX - TERMINATION......................................................41

    9.1   Termination of Agreement............................................41
    9.2   Effect of Termination...............................................42

ARTICLE X - MISCELLANEOUS.....................................................42

    10.1  No Third-Party Beneficiaries........................................42
    10.2  Entire Agreement....................................................42
    10.3  Succession and Assignment...........................................42
    10.4  Counterparts........................................................42
    10.5  Headings............................................................43
    10.6  Notices.............................................................43
    10.7  Governing Law.......................................................44
    10.8  Amendments and Waivers..............................................44
    10.9  Severability........................................................44
    10.10 Expenses............................................................44
    10.11 Construction........................................................45
    10.12 Incorporation of Exhibits and Schedules.............................45
    10.13 Specific Performance................................................45
    10.14 Other Remedies......................................................45
    10.15 Submission to Jurisdiction..........................................45


Exhibit A    -   Form of Assignment and Assumption
Exhibit B    -   Form of Settlement Agreement and Mutual Release
Exhibit C    -   Form of Settlement Agreement and Mutual Release
Exhibit D    -   Form of Opinion of Intellectual Property Counsel to the Company
Exhibit E    -   Employee List

Schedule A   -   Acquired Assets
Schedule B   -   Assumed Liabilities

Disclosure Schedule

                                      -iii-

<PAGE>


                            ASSET PURCHASE AGREEMENT


         This Asset  Purchase  Agreement is entered into as of June 20, 1998, by
and  among  Centigram   Communications   Corporation,   a  Delaware  corporation
("Parent"),  TTCI Acquisition  Corp., a Delaware  corporation  ("Sub"),  and The
Telephone Connection, Inc., a Delaware corporation (the "Company").  Parent, Sub
and the Company are referred to collectively herein as the "Parties."

                                    RECITALS

         A. The  Boards of  Directors  of each of the  Company,  Parent  and Sub
believe  it is in the  best  interests  of each  company  and  their  respective
stockholders  that Sub  acquire  the assets of the  Company  and assume  certain
liabilities of the Company (the "Acquisition") and, in furtherance thereof, have
approved the Acquisition.

         B. The Company, Parent and Sub desire to make certain  representations,
warranties, covenants and other agreements in connection with the Acquisition.

         C. The  Company is engaged in the  business of  designing,  developing,
marketing,  selling and  supporting  communications  software and  equipment (as
currently conducted, the "Business").

         D.  A  portion  of the  funds  otherwise  payable  to  the  Company  in
connection  with the  Acquisition  shall be subject to set off in the event that
the  Company  breaches  any  of its  representations,  warranties  or  covenants
contained in this Agreement.

         NOW,  THEREFORE,  in  consideration  of  the  covenants,  promises  and
representations set forth herein, and for other good and valuable consideration,
the Parties agree as follows:


                                    ARTICLE I

                                   DEFINITIONS

         "Acquired Assets" means all right, title, and interest in and to all of
the assets of the Company,  including  but not limited to those assets listed on
Schedule A attached hereto and the following:

                  (1) all leases,  subleases,  licenses,  wills, trusts or other
contracts,  agreements or  instruments,  whether written or oral, and all rights
thereunder,  including without limitation (i) the MCI Agreement (as such term is
defined in Section 3.5 of the Disclosure  Schedule) and the  agreements  between
the Company and MCI related thereto,  (ii) the agreements  referenced in Section
1.1 of the  Disclosure  Schedule,  and (iii) the  Contracts set forth in Section
3.14(a) of the Disclosure Schedule that


<PAGE>

are marked with an asterisk  (but  excluding  the Contracts set forth in Section
3.14(a) of the Disclosure Schedule that are not marked with an asterisk);

                  (2) (i) all  claims,  deposits,  refunds,  causes  of  action,
choses  in  action,  rights  of  recovery,  rights  of set off,  and  rights  of
recoupment,   (ii)  all  franchises,   approvals,   permits,  licenses,  orders,
registrations,   certificates,  variances,  and  similar  rights  obtained  from
governments and governmental agencies, (iii) all books, records, ledgers, files,
documents,  correspondence,  lists, plats,  architectural plans,  drawings,  and
specifications,  creative  materials,  advertising  and  promotional  materials,
studies, reports, and other printed or written materials;

                  (3) all supplies owned by the Company;

                  (4) all tangible personal property,  including equipment owned
or leased by the Company;

                  (5) all  businesses  and financial  records,  books,  ledgers,
files, plans,  documents,  correspondence,  lists, plots,  architectural  plans,
drawings,  notebooks,   specifications,   creative  materials,  advertising  and
promotional materials,  marketing materials, studies, reports, equipment repair,
maintenance or service records of the Company, whether written or electronically
stored or otherwise recorded;

                  (6) all books,  records,  customer  lists,  supplier lists and
other  proprietary or confidential  information or data relating to the Acquired
Assets;

                  (7) all of the Company's goodwill;

                  (8) the  benefit,  to the extent the Company is able to assign
the same,  of all right,  title and interest of the Company to claims and causes
of action relating to the Business;

                  (9)  all of the  Company's  rights  in,  arising  out  of,  or
associated  with  Intellectual   Property,   including  without  limitation  all
Intellectual Property of the Company;

                  (10) all real  property,  improvements,  fixtures and fittings
thereon,  easements, rights of way and other appurtenant rights thereto (such as
appurtenant rights in and to public streets), if any; and

                  (11) all  rights  with  respect  to  leasehold  interests  and
subleases and rights thereunder relating to the real and personal property.

provided, however, that the Acquired Assets shall not include (i) the corporate
charter,  qualifications  and  franchises  to  conduct  business  as  a  foreign
corporation,   arrangements   with   registered   agents   relating  to  foreign
qualifications,  taxpayer and other identification numbers, seals, minute books,
stock plans,

                                       -2-

<PAGE>

stock transfer books, blank stock certificates,  and other documents relating to
the  organization,  maintenance,  and existence of the Company as a corporation,
(ii) any of the rights of the Company  under,  arising  out of or in  connection
with this  Agreement,  the  Acquisition  and/or  the  transactions  contemplated
thereby  (or under any side  agreement  between  the Company on the one hand and
Parent  and/or Sub on the other hand  entered  into on or after the date of this
Agreement),  (iii) all cash, cash  equivalents,  securities,  notes and accounts
receivable  of,  and other  evidences  of  indebtedness  owing to,  the  Company
existing as of the Closing Date (as defined below),  or (iv) any prepaid rentals
or other prepaid expenses or deposits of the Company.


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

         "Assumed Liabilities" has the meaning set forth in Section 2.2 below.

         "Audited Statements" has the meaning set forth in Section 6.4 below.

         "Cash" means cash and cash equivalents (including marketable securities
and short term  investments)  calculated  in  accordance  with GAAP applied on a
basis consistent with the preparation of the Financial Statements.

         "Closing" has the meaning set forth in Section 2.4 below.

         "Closing Date" has the meaning set forth in Section 2.4 below.

         "Company" has the meaning set forth in the preface above.

         "Company Agent" means Howard Bender.

         "Company Notes" means,  collectively (i) that certain  Promissory Note,
dated  _________,  by and between the Company and Merrill  Solomon and (ii) that
certain Promissory Note, dated _________,  by and between the Company and Howard
Bender.

         "Disclosure Schedule" has the meaning set forth in Article 3 below.

         "Escrow Agent" means U.S. Bank Trust National Association.

         "Escrow Amount" means $750,000.

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

         "Financial Statements" has the meaning set forth in Section 3.7 below.


                                       -3-

<PAGE>

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

         "Intellectual  Property  of the  Company"  has the meaning set forth in
Section 3.13(a).

         "Knowledge"  means actual knowledge after  reasonable  investigation of
Merrill Solomon, Steven Schwartz, Jay Kimball, Eric Burger and Tom Beres.

         "Liability"  means any liability,  indebtedness,  obligation,  expense,
claim,  deficiency,  guaranty or endorsement (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.

         "Liens"  means  any  mortgage,   pledge,   lien,   security   interest,
encumbrance, charge or claim.

         "Ordinary  Course of Business"  means the  ordinary  course of business
consistent with past custom and practice (including with respect to quantity and
frequency).

         "Party" has the meaning set forth in the preface above.

         "Person"  means  an  individual,  a  partnership,  a  corporation,   an
association,  a joint stock company, a trust, a joint venture, an unincorporated
organization,  or a governmental entity (or any department,  agency or political
subdivision thereof).

         "Purchase Price" has the meaning set forth in Section 2.3 below.

         "Securities Act" means the Securities Act of 1933, as amended.

         "Tax" has the meaning set forth in Section 3.10(a) below.

         "Tax Returns" has the meaning set forth in Section 3.10(b) below.


                                   ARTICLE II

                          PURCHASE AND SALE TRANSACTION

         2.1  Purchase  and Sale of  Assets.  On and  subject  to the  terms and
conditions of this Agreement,  the Sub agrees to purchase from the Company,  and
the Company agrees to sell, transfer, convey, and deliver to the Sub, all of the
Acquired  Assets at the Closing for the  consideration  specified  below in this
Article 2.


                                       -4-

<PAGE>

         2.2  Assumption  of  Liabilities.  On  and  subject  to the  terms  and
conditions of this Agreement and the Assignment and Assumption  Agreement in the
form attached  hereto as Exhibit A (the  "Assignment and  Assumption"),  the Sub
agrees to assume and become  responsible for only the Liabilities of the Company
which  are   specifically   set  forth  on  Schedule  B  hereto  (the   "Assumed
Liabilities")  at the  Closing.  Neither  Parent nor Sub will assume or have any
responsibility,  however,  with  respect to any  Liability  of the  Company  not
included within the definition of Assumed Liabilities.

         2.3 Purchase Price. The Sub agrees to pay to the Company at the Closing
$11,144,100 (the "Purchase  Price") by delivery of cash payable by wire transfer
or delivery of other immediately available United States funds.

         2.4 The Closing.  The closing of the transactions  contemplated by this
Agreement  (the  "Closing")  shall take place at the  offices of Wilson  Sonsini
Goodrich & Rosati,  Professional Corporation in Palo Alto, California commencing
at 9:00 a.m. local time on the second business day following the satisfaction or
waiver of all  conditions to the  obligations  of the Parties to consummate  the
transactions  contemplated hereby (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").

         2.5  Deliveries  at the Closing.  At the Closing,  (i) the Company will
deliver  to the  Parent  and  Sub the  various  certificates,  instruments,  and
documents referred to in Section 7.1 below; (ii) the Parent and Sub will deliver
to the Company the various certificates,  instruments, and documents referred to
in  Section  7.2  below;  (iii)  the  Company  will  execute,   acknowledge  (if
appropriate)  and deliver to the Sub (A) the  Assignment and Assumption and such
additional  assignments  (including  real  property  and  Intellectual  Property
transfer documents) as are necessary to consummate the transactions contemplated
by this Agreement and (B) such other instruments of sale,  transfer,  conveyance
and assignment as the Sub and its counsel may reasonably  request;  (iv) the Sub
will execute,  acknowledge (if  appropriate)  and deliver to the Company (A) the
Assignment and  Assumption  and (B) such other  instruments of assumption as the
Company and its counsel may reasonably request;  and (v) the Sub will deliver to
the Company the  Purchase  Price in the manner  specified  in Section 2.3 above;
provided that the Sub will, on behalf and at the direction of the Company hereby
irrevocably  given,  pay  directly to  creditors  under the  Company  Notes that
portion of the Purchase  Price as is equal to the amount  outstanding  as of the
Closing Date under the Company Notes,  whereupon the Company will deliver to Sub
evidence of the satisfaction and cancellation of the Company Notes.

         2.6 Allocation;  Transfer Taxes;  Property Taxes.  The Parties agree to
allocate the  consideration  paid for the Acquired Assets for tax purposes among
the Acquired Assets in accordance with Section 1060 of the Internal Revenue Code
of 1986, as amended (the "Code"). Parent or Sub shall pay and promptly discharge
when due any and all sales taxes, use taxes, transfer taxes,  recording fees and
similar taxes,  charges,  fees or expenses ("Sales Tax") that may become payable
by reason of or in connection with the Acquisition.  All personal property Taxes
shall be pro rated for the taxable  period  which  includes the Closing Date and
each party shall bear its allocable share of such Taxes. The Company, Parent and
Sub agree to cooperate in the  preparation  of forms to be filed with respect to
Sales

                                       -5-

<PAGE>

Tax and the filing of such forms with the  appropriate  agency or authority.  At
the Closing,  the Company,  Parent and Sub shall agree on a settlement statement
which reconciles the obligations of each party as stated herein and accounts for
prepaid expenses, deposits, rentals and the like.

         2.7 Non-Assignment of Certain Agreements. Notwithstanding the foregoing
provisions of this Article 2 (but without limiting the obligation of the Company
under  Section  6.6 of this  Agreement  or the  rights of  Parent  and Sub under
Section  7.1(d)  of this  Agreement),  no  agreement  which by its  terms is not
assignable  without the consent of the other party or parties  thereto  shall be
deemed to be assigned hereby (or by any other  instrument or agreement  executed
in connection  herewith) unless and until such consent shall have been obtained.
With  respect  to each such  agreement,  until  such time as such  agreement  is
assigned  to Sub,  the  Company,  at  Sub's  request  and  expense  and at Sub's
direction,  shall take all  reasonable  actions  (i) to preserve  the  Company's
rights and obligations  with respect to such  agreement,  (ii) to facilitate the
collection of any monies due or payable with respect thereto, (iii) to hold such
monies for Sub's  benefit and to pay such monies  promptly  over to Sub, (iv) to
confer on and  deliver to Sub all other  rights  and  benefits  accruing  to the
Company thereunder, and (v) to permit Sub, in the Company's name, to fulfill all
of the Company's duties and obligations thereunder.

                                   ARTICLE III

                        REPRESENTATIONS AND WARRANTIES OF
                                   THE COMPANY

         The  Company  represents  and  warrants  to the Parent and Sub that the
statements  contained  in this Article 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 Article 3), except as specifically  set forth in
the disclosure schedule accompanying this Agreement and initialed by the Parties
(the  "Disclosure  Schedule")  and except as provided in the final  paragraph of
Section  5.1 of this  Agreement.  The  Disclosure  Schedule  will be arranged in
paragraphs  corresponding to the lettered and numbered  paragraphs  contained in
this Article 3.

         3.1  Organization.  The Company is a corporation duly  incorporated and
organized,  and is validly  existing and in good standing  under the laws of the
State of Delaware.  The Company has the corporate power and authority to own its
properties and to carry on its business as now being  conducted.  The Company is
duly  qualified  to do business  and in good  standing as a foreign  corporation
under the laws of each  jurisdiction  in which the  failure  to be so  qualified
could  have a  material  adverse  effect  on  the  business,  assets,  financial
condition or results of operations  of the Company.  The Company has delivered a
true and correct  officially  certified copy of its Certificate of Incorporation
and Bylaws,  which have not been  amended  since the time the Company was formed
(together, the "Charter"), to Parent or its counsel.

                                      -6-

<PAGE>

         3.2  Capital Structure.

              (a) The authorized  capital of the Company  consists of (i) 10,000
shares  of  Common  Stock,  of which  that  number  of  shares  are  issued  and
outstanding as is set forth in Section 3.2 of the Disclosure Schedule,  and (ii)
no shares of  Preferred  Stock.  The  stockholders  listed in Section 3.2 of the
Disclosure  Schedule  hold of record  and  beneficially  all of the  outstanding
capital stock of the Company. All of the issued and outstanding capital stock of
the Company have been duly  authorized and validly issued and are fully paid and
nonassessable,  and were not issued in violation of or subject to any preemptive
right, or other rights to subscribe for or purchase shares.

              (b)  Except for the  options  described  in Section  3.2(b) of the
Disclosure Schedule, there are no options,  warrants, calls, rights, commitments
or agreements of any character, written or oral, to which the Company is a party
or by which  it is  bound  obligating  the  Company  to  issue,  deliver,  sell,
repurchase or redeem,  or cause to be issued,  delivered,  sold,  repurchased or
redeemed, any shares of the capital stock of the Company. Except for the options
described in this Section 3.2(b), there are no options, warrants, calls, rights,
commitments  or  agreements  of any  character,  written  or oral,  to which the
Company  is a party or by which it is bound  obligating  the  Company  to grant,
extend, accelerate the vesting of, change the price of, otherwise amend or enter
into any such option, warrant, call, right, commitment or agreement.

         3.3  Subsidiaries.  The  Company  does not have and has  never  had any
subsidiaries and does not otherwise own and has never otherwise owned any shares
of capital stock of, or any interest in, or control, directly or indirectly, any
other  corporation,  partnership,  association,  joint venture or other business
entity.

         3.4  Authority.  The  Company  has all  requisite  corporate  power and
authority  to enter into this  Agreement,  and to  consummate  the  transactions
contemplated  hereby.  The  execution  and delivery of this  Agreement,  and the
consummation of the transactions  contemplated hereby, have been duly authorized
by  all  necessary  corporate  action  on  the  part  of  the  Company  and  its
stockholders,  and no further  action is  required on the part of the Company or
its stockholders to authorize this Agreement and the  transactions  contemplated
hereby.  This Agreement has been duly executed and delivered by the Company and,
assuming the due  authorization,  execution  and  delivery by the other  parties
hereto, constitutes the valid and binding obligation of the Company, enforceable
in  accordance  with  its  terms,  subject  to the laws of  general  application
relating to bankruptcy, insolvency and the relief of debtors and to rules of law
governing specific performance, injunctive relief or other equitable remedies.

         3.5 No Conflict. The execution and delivery of this Agreement does not,
and, the consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default under (with or without notice or
lapse of time, or both), or give rise to a right of  termination,  cancellation,
modification or acceleration of any obligation or loss of any benefit under (any
such event, a "Conflict")  (i) any provision of the Charter,  (ii) any mortgage,
indenture, lease, contract or other agreement or instrument, permit, concession,
franchise or license to which the Company is

                                       -7-

<PAGE>

subject, or (iii) any judgment,  order, decree, statute, law, ordinance, rule or
regulation applicable to the Company or its properties or assets. The Company is
not  required  to give any  notice  to,  make any  filing  with,  or obtain  any
authorization,  consent, or approval of any government or governmental agency in
order for the  Parties  to  consummate  the  transactions  contemplated  by this
Agreement  (including the assignments  and assumptions  referred to in Article 2
above).

         3.6  Consents. No consent, waiver, approval, order or authorization of,
or registration, declaration or filing with, any court, administrative agency or
commission  or other  U.S.  federal,  state,  province,  county,  local or other
foreign   governmental   authority,   instrumentality,   agency  or   commission
("Governmental  Entity") or any third party,  including a party to any agreement
with the  Company (so as not to trigger  any  Conflict),  is required by or with
respect to the Company in  connection  with the  execution  and delivery of this
Agreement or the consummation of the transactions  contemplated  hereby,  except
for such consents, waivers, approvals,  orders,  authorizations,  registrations,
declarations and filings which if not obtained or made would not have a material
adverse  effect on the ability of the  Company to  consummate  the  transactions
contemplated hereby.

         3.7  Company  Financial  Statements.  Section  3.7  of  the  Disclosure
Schedule includes the Company's unaudited financial  statements (balance sheets,
income  statements  and statements of cash flows) as of and for the fiscal years
ending  December  31,  1997 and 1996,  and its  unaudited  financial  statements
(balance sheets,  income statement and statement of cash flow) as of and for the
five-month period ended May 31, 1998. Such financial  statements are referred to
collectively  as  the  "Financial  Statements."  The  Financial  Statements  are
complete and correct and have been prepared in accordance with GAAP,  applied on
a basis consistent  throughout the periods indicated.  The Financial  Statements
present fairly the financial  condition and operating results of the Business as
of the dates and during the periods indicated therein.  The balance sheet of the
Company as of May 31, 1998 is  hereinafter  referred to as the "Balance  Sheet."
May 31, 1998 is hereinafter referred to as the "Balance Sheet Date."

         3.8 No Undisclosed Liabilities. Except as reflected or reserved against
in the Balance Sheet and except for  Liabilities not required to be reflected in
financial  statements in accordance  with GAAP, as of the Balance Sheet Date the
Company  did not  have  (and,  in the case of  Liabilities  which  are  unknown,
unasserted,  contingent,  unaccrued,  unliquidated  or to  become  due,  to  the
Company's knowledge the Company did not have) any Liability, nor has the Company
incurred any such  Liability,  except for  Liabilities  incurred in the Ordinary
Course of Business and  Liabilities  set forth in Section 3.8 of the  Disclosure
Schedule.

         3.9  No Changes. Since the Balance  Sheet Date through the date hereof,
except as set forth in Section  3.9 of the  Disclosure  Schedule,  there has not
been, occurred or arisen any:

              (a)  transaction by the Company  except in the Ordinary  Course of
Business;

              (b) capital  expenditure or commitment for capital  expenditure by
the Company, either individually or in the aggregate, exceeding $5,000;

                                       -8-

<PAGE>

              (c)  destruction  of,  damage  to or loss of any  Acquired  Assets
(whether  or not covered by  insurance)  in an amount in excess of $1,000 in the
aggregate or loss of any business or customers of the Company;

              (d) labor  trouble  or claim of  wrongful  discharge  of which the
Company has  received  written  notice or of which the Company is aware or other
unlawful labor  practice or action  (Section  3.9(d) of the Disclosure  Schedule
includes a list of all employees  who have been  terminated by the Company since
January 1, 1997);

              (e) change in  accounting  methods  or  practices  (including  any
change in depreciation or amortization policies or rates) by the Company;

              (f)  revaluation  by the  Company of any of the  Acquired  Assets,
other than depreciation as required by GAAP and reflected on the Balance Sheet;

              (g)  declaration,  setting aside or payment of any dividends on or
any other  distribution  (whether in cash,  stock or property) in respect of any
the capital stock of the Company;

              (h)  increase  in the salary or other  compensation  payable or to
become  payable by the Company to any of its officers,  directors,  employees or
advisors,  or the  declaration,  payment or commitment or obligation of any kind
for the  payment,  by the  Company  of a bonus or  other  additional  salary  or
compensation to any such person;

              (i) sale, lease, license or other disposition of any of the assets
or properties of the Company,  except  dispositions of inventory in the Ordinary
Course of Business;

              (j)  amendment or  termination  or  violation of any  distribution
agreement or any material contract, agreement or license to which the Company is
a party or by which it is bound,  other than termination by the Company pursuant
to the terms thereof in the Ordinary Course of Business;

              (k) loan by the  Company  to any  person  or  entity,  other  than
advances to its  employees  for travel and  business  expenses  in the  Ordinary
Course of Business,  or incurrence by the Company of any indebtedness other than
trade  debt in  Ordinary  Course of  Business,  guaranty  of the  Company of any
indebtedness,  issuance  or  sale  of any  debt  securities  of the  Company  or
guaranteeing of any debt securities of others;

              (l)  waiver  or  release  of any  material  right  or claim of the
Company,  including any write-off or other compromise of any account  receivable
of the Company;

              (m) notice of  commencement,  or to the  knowledge  of the Company
commencement or threat of commencement,  of any lawsuit or proceeding against or
investigation of the Company or its affairs;

                                       -9-

<PAGE>

              (n) to the knowledge of the Company, claim of ownership by a third
party of any Intellectual Property of the Company or infringement by the Company
of any third party's intellectual property rights;

              (o) change in pricing or  royalties  set or charged by the Company
other than in the Ordinary Course of Business;

              (p) any event or  condition of any  character  that had a material
adverse  effect  on the  Acquired  Assets  or the  Business  ("Material  Adverse
Effect"); or

              (q)  negotiation  or  agreement  by the  Company or any officer or
employees  of the  Company to do any of the things  described  in the  preceding
clauses  (a) through  (p) (other  than by  negotiations  with Parent and Sub and
their representatives  regarding the transactions contemplated by this Agreement
and acts otherwise permitted by such clauses (a) through (p)).

         3.10 Tax Matters.

              (a) Definition of Taxes. For the purposes of this Agreement, "Tax"
or, collectively, "Taxes," means (i) any and all federal, state, province, local
and  foreign  taxes,   assessments  and  other  governmental  charges,   duties,
impositions  and  liabilities,  including  taxes based upon or measured by gross
receipts,  income,  profits,  sales,  use and  occupation,  and value added,  ad
valorem,  goods  and  services,  transfer,  franchise,   withholding,   payroll,
recapture,  employment,  excise and property taxes,  together with all interest,
penalties  and  additions  imposed  with respect to such  amounts;  and (ii) any
liability for the payment of any amounts of the type  described in clause (i) as
a result of being a member of an affiliated,  consolidated,  combined or unitary
group for any period;  and (iii) any liability for the payment of any amounts of
the type  described  in clause (i) or (ii) as a result of any express or implied
obligation to indemnify any other person or as a result of any obligations under
any  agreements  or  arrangements  with any other  person  with  respect to such
amounts and including any liability for taxes of a predecessor entity.

              (b) Tax Returns and Audits.

                  (i) The Company as of the Closing Date will have  prepared and
timely filed or made a timely  request for extension  for all required  federal,
state, province,  local and foreign returns,  estimates,  information statements
and  reports  ("Tax  Returns")  relating  to any and  all  Taxes  concerning  or
attributable  to the  Company or its  operations  which  shall  become due on or
before  Closing,  and  such Tax  Returns  are true  and  correct  and have  been
completed in accordance with applicable law.

                  (ii) The Company as of the Closing  Date (A) will have paid or
accrued all Taxes it is required to pay or accrue and (B) will have withheld and
timely  remitted  all income  taxes and other Taxes  required to be withheld and
remitted.

                                      -10-

<PAGE>

                  (iii) The  Company has not been  delinquent  in the payment of
any Tax nor is there any Tax deficiency or reassessment outstanding, assessed or
notified or, to the knowledge of the Company,  proposed against the Company, nor
has the  Company  executed  any  waiver  of any  statute  of  limitations  on or
extending the period for the assessment or collection of any Tax.

                  (iv) To the Company's knowledge, no audit or other examination
of any Tax Return of the Company is presently  in progress,  nor has the Company
been notified of any request for such an audit or other examination.

                  (v) Except for  Liabilities  arising  after the Balance  Sheet
Date,  the Company  does not have any  liabilities  for unpaid  federal,  state,
province,  local and  foreign  Taxes  which have not been  accrued  or  reserved
against in  accordance  with GAAP on the  Balance  Sheet,  whether  asserted  or
unasserted, contingent or otherwise.

                  (vi) The Company has provided to Parent or its legal  counsel,
copies of all foreign,  federal, state and province income and sales and use Tax
Returns filed for all years as to which any  applicable  statute of  limitations
has not expired.

                  (vii)  There  are no Liens of any  sort on the  assets  of the
Company  relating to or attributable to Taxes other than Liens for taxes not yet
due and payable.

                  (viii)  Except as set forth in  Section  3.10(b)(viii)  of the
Disclosure Schedule, the Company has no knowledge of any basis for the assertion
of any claim relating or attributable  to Taxes  attributable to periods through
the Closing Date which, if adversely determined, would result in any Lien on any
Acquired Assets.

              (c) Executive  Compensation  Tax. No payment or benefit which will
or may be  made  by  the  Company,  Parent  or  Sub or any of  their  respective
Affiliates with respect to any employee of the Company will be  characterized as
an "excess  parachute  payment" within the meaning of Section  280G(b)(1) of the
Code.

         3.11 Restrictions  on   Business  Activities.  There  is  no  agreement
(noncompete or otherwise),  commitment, judgment, injunction, order or decree to
which the Company or, to the knowledge of the Company, any of its officers, is a
party or otherwise binding upon the Company or, to the knowledge of the Company,
any of its officers that has or reasonably  could be expected to have the effect
of prohibiting or impairing any acquisition of the Acquired Assets by the Sub or
the conduct of the Business by the Sub or the Parent.

         3.12 Title of Properties; Absence of Liens and Encumbrances;  Condition
of Equipment.

              (a) The  Company  owns no real  property.  Section  3.12(a) of the
Disclosure  Schedule sets forth a list of all real property  currently leased by
the Company and the name of the lessor, the date

                                      -11-

<PAGE>

of the lease and each amendment  thereto and the aggregate  annual rental and/or
other fees payable  under any such lease.  All such leases are in full force and
effect,  are valid and effective in accordance with their respective  terms, and
there is not, under any of such leases, any existing default or event of default
(or event  which  with  notice or lapse of time,  or both,  would  constitute  a
default).

              (b) On the date of this Agreement,  the Company has good and valid
title to, or, in the case of leased or licensed properties and assets, valid and
enforceable  leasehold or license interests in, all of the Acquired Assets, free
and clear of any Liens,  other than Liens for Taxes not yet due and payable.  At
the time of the  Closing,  the Company will have good and valid title to, or, in
the case of leased or  licensed  properties  and assets,  valid and  enforceable
leasehold or license interests in, all of the Acquired Assets, free and clear of
any Liens,  other than Liens for personal  property taxes on tangible assets not
yet due and payable that will not exceed $10,000 in the aggregate.

              (c) The equipment and other  tangible  personal  property owned or
leased by the Company, including without limitation the Acquired Assets, (i) are
adequate  for the conduct of its business as  currently  conducted,  (ii) are in
good operating  condition,  subject to normal wear and tear, and (iii) have been
reasonably maintained.

              (d) The Company owns or has valid and continuing rights to use all
of the  properties  and assets  (including  all  Acquired  Assets)  necessary to
conduct the Business.

         3.13 Intellectual Property.

              (a) For the purposes of this  Agreement,  the following terms have
the following definitions:

              "Intellectual Property" shall mean any or all of the following and
all rights in,  arising out of, or associated  therewith:  (i) all United States
and foreign  patents and  applications  therefor  and all  reissues,  divisions,
renewals,  extensions,  provisionals,  continuations  and  continuations-in-part
thereof; (ii) all inventions (whether patentable or not), invention disclosures,
improvements,  trade secrets,  proprietary  information,  know how,  technology,
technical data and customer lists, and all documentation  relating to any of the
foregoing;  (iii) all  copyrights,  copyrights  registrations  and  applications
therefor,  and all other rights corresponding thereto throughout the world; (iv)
all mask works, mask work registrations and applications therefor, and all other
rights  corresponding  thereto  throughout the world; (v) all industrial designs
and any registrations and applications  therefor  throughout the world; (vi) all
trade names,  logos,  common law  trademarks  and service  marks;  trademark and
service mark registrations and applications therefor throughout the world; (vii)
all databases and data collections and all rights therein  throughout the world;
and  (viii) all  computer  software  including  all source  code,  object  code,
firmware,  development tools, files, records and data, all media on which any of
the foregoing is recorded, and all documentation related to any of the foregoing
throughout the world.

                                      -12-

<PAGE>

              "Intellectual   Property  of  the  Company"  shall  mean  (i)  any
Intellectual  Property that is owned by or exclusively  licensed to the Company,
or (ii) any  Intellectual  Property  which is necessary to the  operation of the
Company,  including  the design,  manufacture,  sale and use of the  products or
performance of the services of the Company as it currently is operated.

              "currently"  means, as used in this section,  the period beginning
six years prior to the Closing Date and ending on such date.

              (b) Section  3.13(b) of the  Disclosure  Schedule lists all of the
Company's United States and foreign: (i) patents, patent applications (including
provisional applications); (ii) registered trademarks,  applications to register
trademarks,  intent-to-use  applications,  or  other  registrations  related  to
trademarks;   (iii)   registered   copyrights  and  applications  for  copyright
registration;  (iv) mask work  registrations  and  applications to register mask
works;  and (v) any  other  Intellectual  Property  of the  Company  that is the
subject of an application,  certificate or registration issued by or recorded by
any state,  government  or other public legal  authority,  all of the  foregoing
(except any of the foregoing  that are abandoned or listed as  "abandoned,"  "in
preparation"  or "pending" in Section 3.13(b) of the Disclosure  Schedule),  the
"Registered Intellectual Property".

              (c)  Section   3.13(c)  of  the  Disclosure   Schedule  lists  any
proceedings or actions before any court,  tribunal  (including the United States
Patent Office or equivalent  authority  anywhere in the world) related to any of
the Registered Intellectual Property.

              (d) The  Company  has  complied  with  all  applicable  disclosure
requirements and has not committed any fraudulent act in the application for and
maintenance of any patent, trademark or copyright of the Company.

              (e)  Except  as set forth in  Section  3.13(e)  of the  Disclosure
Schedule, each item of Registered Intellectual Property is valid and subsisting,
all necessary registration, maintenance and renewal fees in connection with such
Registered  Intellectual Property have been made and all necessary documents and
certificates in connection with such Registered  Intellectual Property have been
filed with the relevant patent, copyright, trademark or other authorities in the
United States or foreign jurisdictions,  as the case may be, for the purposes of
maintaining such Registered Intellectual Property.

              (f) The  contracts,  licenses  and  agreements  listed on  Section
3.13(f)  of  the  Disclosure  Schedule  include  all  contracts,   licenses  and
agreements,  to which the  Company is a party with  respect to any  Intellectual
Property.

              (g)  Except  as set forth in  Section  3.13(f)  of the  Disclosure
Schedule,  the contracts,  licenses and agreements  listed on Section 3.13(f) of
the Disclosure  Schedule are in full force and effect.  The  consummation of the
transactions  contemplated  by this Agreement will neither violate nor result in
the  breach,  modification,  cancellation,  termination,  or  suspension  of the
contracts, licenses and

                                      -13-

<PAGE>

agreements listed on Section 3.13(f) of the Disclosure Schedule.  The Company is
in compliance  with, and has not breached any term of, the  contracts,  licenses
and agreements listed on Section 3.13(f) of the Disclosure Schedule, and, to the
best knowledge of the Company, all other parties to the contracts,  licenses and
agreements  listed  on  Section  3.13(f)  of the  Disclosure  Schedule  are,  in
compliance with, and have not breached any term of, such contracts, licenses and
agreements. Following the Closing Date, Sub will be permitted to exercise all of
the Company's  rights under the  contracts,  licenses and  agreements  listed in
Section 3.13(f) of the Disclosure Schedule without the payment of any additional
amounts or  consideration  other than ongoing fees,  royalties or payments which
the Company would otherwise be required to pay.

              (h)  Except  as set forth in  Section  3.13(h)  of the  Disclosure
Schedule:  (i) no person has any rights to use any of the Intellectual  Property
of the  Company;  and  (ii) the  Company  has not  granted  to any  Person,  nor
authorized any Person to retain, any rights in the Intellectual  Property of the
Company.

              (i)  Except  as set forth on  Section  3.13(i)  of the  Disclosure
Schedule:  (i) the Company owns and has good and exclusive title to each item of
the Intellectual Property of the Company,  including all Registered Intellectual
Property listed on Section 3.13(b) of the Disclosure Schedule, free and clear of
any Lien; (ii) the Company owns, or has the right,  pursuant to a valid Contract
to use or operate under,  all other  Intellectual  Property of the Company;  and
(iii) the Company is the exclusive  owner of all trademarks and trade names used
in connection with the operation or conduct of the Business,  including the sale
of any products or the provision of any services by the Company.

              (j)  The  operation  of  the  Business  as  currently   conducted,
including the Company's design, development,  manufacture, marketing and sale of
the  products or services of the  Company  (including  with  respect to products
currently under development) has not and does not infringe or misappropriate the
Intellectual  Property of any other Person or constitute  unfair  competition or
trade practices under the laws of any jurisdiction

              (k) The Company has not  received  notice from any person that the
operation  of the business of the Company,  including  its design,  development,
manufacture  and  sale of its  products  (including  with  respect  to  products
currently  under  development)  and  provision  of its  services,  infringes  or
misappropriates  the Intellectual  Property of any Person or constitutes  unfair
competition or trade practices under the laws of any jurisdiction.

              (l) To the Company's knowledge,  the Company owns or has the right
to all  Intellectual  Property  necessary  to the conduct of its  business as it
currently is conducted,  including, without limitation, the design, development,
manufacture  and  sale of all  products  currently  manufactured  or sold by the
Company or under  development by the Company and the performance of all services
provided by the Company.

                                      -14-

<PAGE>

              (m)  Section   3.13(m)  of  the  Disclosure   Schedule  lists  all
contracts,  licenses  and  agreements  between the Company and any other  Person
wherein or whereby the Company has agreed to, or assumed, any obligation or duty
to warrant, indemnify, hold harmless or otherwise assume or incur any obligation
or liability with respect to the infringement or misappropriation by the Company
or such other Person of the Intellectual Property of any other Person.

              (n)  Except  as  listed  on  Section  3.13(n)  of  the  Disclosure
Schedule,  there are no contracts,  licenses and agreements  between the Company
and any other  person with respect to the  Intellectual  Property of the Company
under  which there is any dispute  known to the Company  regarding  the scope of
such agreement,  or performance  under such agreement  including with respect to
any payments to be made or received by the Company thereunder.

              (o)  Except  as  listed  on  Section  3.13(o)  of  the  Disclosure
Schedule,  to the  knowledge of the Company,  no person has or is  infringing or
misappropriating any of Intellectual Property of the Company.

              (p)  Except  as  listed  on  Section  3.13(p)  of  the  Disclosure
Schedule,  to the knowledge of the Company,  there have been, and are, no claims
(other than service or support calls in the Ordinary Course of Business;  a list
of such  service  and  support  calls  from  January 1, 1997 to the date of this
Agreement is set forth in Section 3.13(p) of the Disclosure  Schedule)  asserted
against  the  Company or against  any  customer  of the  Company  related to any
product or service of the Company.

              (q)  Except  as  listed  on  Section  3.13(q)  of  the  Disclosure
Schedule,  no Intellectual Property of the Company, or product or service of the
Company is subject to any proceeding or outstanding decree, order,  judgment, or
stipulation  restricting in any manner the use, transfer or licensing thereof by
the Company,  or which may affect the validity,  use or  enforceability  of such
Intellectual Property of the Company.

              (r) The Company has taken all steps that are  reasonably  required
to protect the Company's  rights in the Company's  confidential  information and
trade secrets or any trade secrets or confidential  information of third parties
provided to the Company,  and, without  limiting the foregoing,  the Company has
and  enforces  a policy  requiring  each  employee  and  contractor  to  execute
proprietary information and confidentiality  agreements sufficient to vest title
in the  Company  of all  Intellectual  Property  created  by  such  employee  or
contractor  in the  scope of his or her  employment  with the  Company,  and all
current and former  employees and  contractors of the Company have executed such
an agreement.

              (s) The  Company  owns  exclusively  and  has  good  title  to all
copyrighted  works that are incorporated by the Company in its products,  except
for those copyrighted works licensed to the Company listed on Section 3.13(s) of
the Disclosure Schedule.

                                      -15-

<PAGE>

              (t) To the extent that any work,  invention,  or material has been
developed or created by a third party for the Company, the Company has a written
agreement with such third party with respect thereto and the Company thereby has
obtained ownership of, and is the exclusive owner of, all Intellectual  Property
in such work, material or invention by operation of law or by valid assignment.

              (u) Each of the Company's  products,  including but not limited to
the  Intellectual  Property  related to such products,  has been developed to be
capable  of  fully   performing  in  accordance  with  its   specifications   at
chronological  dates after the year 2000, without any material adverse change or
effect,  and  without  the need to  materially  modify or alter such  product or
Intellectual Property.

              (v) Section  3.13(v) of the  Disclosure  Schedule list all action,
including the payment of any fees, that must, or should reasonably, be performed
by, or on behalf of, the Company or Sub in the ninety-day  period  following the
Closing Date, with respect to any application for,  perfection of,  preservation
of, or  continuation  of any rights of the Company (prior to the Closing) or the
Sub  (after  the  Closing)  with  respect to any  Intellectual  Property  of the
Company,  including  the filing of any patent  applications,  response to Patent
Office actions or payment of fees, including renewal fees.

              (w) The Company has not claimed "Small  Business  Status" or other
particular  status in the application for any Registered  Intellectual  Property
which claim of status was inaccurate or false at the time made.

              (x)  Except  as set forth in  Section  3.13(x)  of the  Disclosure
Schedule,  the Company has no knowledge of any facts or circumstances that would
render any  Intellectual  Property  of the  Company  invalid  or  unenforceable.
Without  limiting the  foregoing,  Company knows of no  information,  materials,
facts or circumstances,  including any information or fact that would constitute
prior art, that would render any of the Registered Intellectual Property invalid
or  unenforceable,  or would  adversely  affect any pending  application for any
Registered  Intellectual  Property  and the Company has not  misrepresented,  or
failed to  disclose,  and is not aware of any  misrepresentation  or  failure to
disclose,  any  fact or  circumstances  in any  application  for any  Registered
Intellectual    Property   that   would   constitute   fraud   or   a   material
misrepresentation  with  respect to such  application  or that  would  otherwise
effect the validity or enforceability of any Registered Intellectual Property.

              (y) No software  changes have been  initiated  by MCImetro  Access
Transmission  Services,  Inc.  ("MCI")  pursuant to Article 11, Section 3 of the
Master  Agreement  Number  123197,  dated  January 1, 1995,  between MCI and the
Company, as amended.

         3.14 Agreements, Contracts and Commitments.

              (a)  Except  as set forth in  Section  3.14(a)  of the  Disclosure
Schedule,  the Company does not have any continuing  obligations under, is not a
party to or is not bound by:

                                      -16-

<PAGE>

                  (i) any collective bargaining agreements, or any contract with
or  commitment  to any trade  unions,  employee  bargaining  agent or affiliated
bargaining agent (collectively, "labor representatives") and the Company has not
conducted  any  negotiations  with  respect  to any  such  future  contracts  or
commitments,

                  (ii) any agreements or arrangements that contain any severance
pay or post- employment  liabilities or obligations or are otherwise required by
statute or case law to provide any of the foregoing,

                  (iii)  any  bonus,  deferred  compensation,   pension,  profit
sharing  or  retirement   plans,   or  any  other  employee   benefit  plans  or
arrangements,

                  (iv) any  employment  or  consulting  agreement,  contract  or
commitment  with  an  employee  or  individual   consultant  or  salesperson  or
consulting  or sales  agreement,  contract  or  commitment  with a firm or other
organization,

                  (v) any  agreement or plan,  including  any share option plan,
share  appreciation  rights plan or share  purchase plan, any of the benefits of
which  will  be  increased,  or  the  vesting  of  benefits  of  which  will  be
accelerated,  by the occurrence of any of the transactions  contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the  transactions  contemplated  by this  Agreement,  except  as
provided herein,

                  (vi) any fidelity or surety bond or completion bond,

                  (vii) any lease of personal property,

                  (viii) any agreement of indemnification or guaranty,

                  (ix) any  agreement,  contract or  commitment  containing  any
covenant  limiting  the freedom of the Company to engage in any line of business
or to compete with any person,

                  (x) any agreement,  contract or commitment relating to capital
expenditures and involving future payments in excess of $5,000,

                  (xi) any  agreement,  contract or  commitment  relating to the
disposition of any Acquired  Assets or the acquisition of material assets or any
interest in any business enterprise outside the Ordinary Course of Business,

                  (xii) any mortgages,  indentures,  loans or credit agreements,
security agreements or other agreements or instruments relating to the borrowing
of money or  extension  of credit,  including  guaranties  referred to in clause
(viii) hereof,

                                      -17-

<PAGE>

                  (xiii) any purchase  order or contract for the purchase of raw
materials, other than purchase orders made in the Ordinary Course of Business,

                  (xiv)  any   distribution,   joint  marketing  or  development
agreement,

                  (xv) any other agreement, contract or commitment that involves
$5,000 or more, or

                  (xvi)  any  agreement,  contract  or  commitment  that  is not
cancelable without penalty within thirty (30) days.

              (b) Except as noted in Section 3.14(b) of the Disclosure Schedule,
the  Company  has not  materially  breached,  violated or  defaulted  under,  or
received notice that it has materially  breached,  violated or defaulted  under,
any of the terms or conditions of any agreement, contract or commitment required
to be set forth in Section  3.14(a) of the  Disclosure  Schedule  (collectively,
"Contracts" and each, a "Contract"),  nor is the Company aware of any event that
would  constitute  such a breach,  violation  or default with the lapse of time,
giving of notice or both.  Each Contract is in full force and effect and, except
as otherwise  disclosed in Section  3.14(b) of the Disclosure  Schedule,  is not
subject to any  default  thereunder  of which the  Company is aware by any party
obligated to the Company  pursuant  thereto.  The Company has obtained,  or will
obtain prior to the Closing Date, all necessary consents,  waivers and approvals
of parties to any  Contract  designated  in  Section  3.14(a) of the  Disclosure
Schedule to be assigned to Sub as are required thereunder to validly effect such
assignment.

              (c) Except  for the  Contracts  listed in  Section  3.14(a) of the
Disclosure  Schedule,  the  Company  has not made any  binding  oral or  written
representations,  warranties,  promises,  agreements,  contracts or  commitments
(including  without  limitation  bid  commitments)  with or to its  existing  or
potential  customers  regarding the Company's  products and services,  including
without limitation matters related to pricing,  support services,  enhancements,
upgrades, specifications, concessions or performance.

         3.15 Interested Party Transactions. No officer, director or employee of
the  Company  (or any  spouse or member of the  immediate  family of any of such
persons,  or any trust,  partnership or corporation in which any of such persons
has or has had a material interest), has or had, directly or indirectly,  (i) an
interest in any entity which furnished or sold, or furnishes or sells,  services
or products that the Company furnishes or sells, or proposes to furnish or sell,
or (ii) any interest in any entity that purchases from or sells or furnishes to,
the  Company,  any  goods or  services  or (iii) a  beneficial  interest  in any
Contract;  provided, that passive ownership of no more than five percent (5%) of
the outstanding  stock of a corporation  shall not be deemed an "interest in any
entity" for purposes of this Section 3.15.

         3.16 Governmental  Authorization.   Section  3.16  of   the  Disclosure
Schedule accurately lists each material consent, license, permit, grant or other
authorization  issued to the Company by a  governmental  entity (a)  pursuant to
which  the  Company  currently  operates  or holds  any  interest  in any of its
properties  or (b) which is required  for the  operation  of the Business or the
holding of any such

                                      -18-

<PAGE>

interest (herein collectively called  "Authorizations").  All Authorizations are
in full force and effect and  constitute all  Authorizations  required to permit
the  Company to operate or conduct  the  Business  or hold any  interest  in its
properties or assets.

         3.17 Litigation.  Except as set forth in Section 3.17 of the Disclosure
Schedule,  there is no action,  suit,  claim,  proceeding or  arbitration of any
nature  pending or, to the  knowledge  of the  Company,  threatened  against the
Company  or  any of  its  properties  or  any  of  its  officers,  directors  or
stockholders in respect of the Company.  To the knowledge of the Company,  there
is no investigation pending or threatened against the Company, its properties or
any of its officers,  directors or  stockholders in respect of the Company by or
before any governmental  entity. No governmental entity has at any time notified
the  Company of a  challenge  or  question  relating  to the legal  right of the
Company to manufacture,  offer or sell any of its products in the present manner
or style  thereof,  and the Company has no  knowledge  of any such  challenge or
question.

         3.18 Accounts  Receivable.   Set  forth   in  Section  3.18(a)  of  the
Disclosure  Schedule  is a  list  of all  accounts  receivable  of  the  Company
reflected on the Balance  Sheet  ("Accounts  Receivable")  along with a range of
days elapsed  since  invoice as of the date of the Balance  Sheet.  All Accounts
Receivable  of the Company (i) arose in the ordinary  course of  business,  (ii)
represent bona fide indebtedness  incurred by the applicable  account debtors in
the amounts invoiced by the Company and stated on its books and records, subject
to collection,  (iii) are carried at values  determined in accordance with GAAP,
consistently  applied, and (iv) to the Company's  knowledge,  are not subject to
any  defenses,  counterclaims  or claims for set off. The  reserves  against the
Accounts  Receivable  have been  established in accordance  with GAAP, and based
upon a review of such Accounts  Receivable the Company believes such reserves to
be adequate.  No person has any Lien on any of such Accounts  Receivable  and no
request or agreement for deduction or discount has been made with respect to any
of such  Accounts  Receivable.  To the  knowledge of the  Company,  none of such
Accounts Receivable is owed by a person or entity that has sought the protection
of any  bankruptcy  or  insolvency  law or is the  subject of any  dispute as to
payment.

              All of the  inventories  of the Company  reflected  on the Balance
Sheet and the  Company's  books and records on the date  hereof were  purchased,
acquired  or  produced  in the  ordinary  course  of  business  and in a  manner
consistent with the Company's regular  inventory  practices and are set forth on
the Company's  books and records in accordance with the practices and principles
of the Company.  The reserves  against such inventory  have been  established in
accordance  with GAAP.  The  presentation  of  inventory  on the  Balance  Sheet
conforms to GAAP and such  inventory is stated at the lower of cost  (determined
using the specific identification method) or net realizable value.

         3.19 Minute Books.  The minutes of the Company  provided to counsel for
Parent  and Sub are the only  minutes of the  Company  and  contain an  accurate
summary of all meetings of directors (or committees thereof) and stockholders or
actions by written consent since December 31, 1995.

                                      -19-

<PAGE>

         3.20 Bulk Sales Creditors.  The Company has no "creditors" as that term
is used in  Section  6- 104(a) of  Article 6 (Bulk  Transfers)  of the  Maryland
Uniform Commercial Code.

         3.21 Brokers' and Finders' Fees. The Company has not incurred, nor will
it incur,  directly or indirectly,  any Liability for brokerage or finders' fees
or agents'  commissions or any similar charges in connection with this Agreement
or any transaction contemplated hereby.

         3.22 Employees; Employee Benefit Plans and Compensation.

              (a) For purposes of this Section 3.22,  the following  terms shall
have the meanings set forth below:

                  (i) "Employee Plan" shall refer to any plan, program,  policy,
practice,  contract,  agreement  or other  arrangement  providing  for  bonuses,
severance,  termination pay, performance awards, stock or stock-related  awards,
fringe  benefits  or other  employee  benefits  of any kind,  whether  formal or
informal,  funded or unfunded and whether or not legally binding,  including any
plan  which  is or has  been  maintained,  contributed  to,  or  required  to be
contributed  to, by the Company for the  benefit of any  "Employee"  (as defined
below),  and  pursuant  to  which  the  Company  has or may  have  any  material
liability, contingent or otherwise;

                  (ii)  "Employee"  shall mean any current,  former,  or retired
employee, consultant, independent contractor, sales representative,  officer, or
director of the Company;

                  (iii)  "Employee  Agreement"  shall refer to each  employment,
severance, consulting or similar agreement or contract, whether written or oral,
between the Company and any Employee;

              (b)  Section  3.22(b)  of  the  Disclosure  Schedule  contains  an
accurate and complete list of each  Employee  Plan and each Employee  Agreement.
The Company does not have any plan or  commitment,  whether  legally  binding or
not, to establish  any new Employee  Plan or Employee  Agreement,  to modify any
Employee Plan or Employee  Agreement (except to the extent required by law or to
conform any such Employee Plan or Employee  Agreement to the requirements of any
applicable law), or to enter into any Employee Plan or Employee  Agreement,  nor
does it have any intention or commitment to do any of the foregoing.

              (c) The  Company  has  provided  to Parent and Sub (i) correct and
complete copies of all documents  embodying each Employee Plan and each Employee
Agreement  including all amendments thereto and copies of all forms of agreement
and enrollment used therewith; (ii) the most recent annual actuarial valuations,
if any,  prepared for each Employee  Plan; and (iii) if Employee Plan is funded,
the most recent annual and periodic accounting of Employee Plan assets.

                                      -20-

<PAGE>

              (d) (i) The Company has performed all  obligations  required to be
performed  by it  under  each  Employee  Plan and  each  Employee  Plan has been
established  and  maintained  in  accordance  with  its  terms  and in  material
compliance with all applicable laws,  statutes,  orders,  rules and regulations;
(ii) there are no actions,  suits or claims pending, or, to the knowledge of the
Company,  threatened  against  any  Employee  Plan or against  the assets of any
Employee Plan (other than routine claims for benefits); and (iii) subject to the
requirements of applicable law, each Employee Plan can be amended, terminated or
otherwise  discontinued  after the Closing  Date in  accordance  with its terms,
without  liability  to the  Company  or  Parent  or  Sub  (other  than  ordinary
administration expenses typically incurred in a termination event).

              (e) No Employee  Plan  provides,  or has any liability to provide,
life insurance,  medical or other employee  benefits to any Employee upon his or
her retirement or  termination  of employment  for any reason,  except as may be
required by statute, and the Company has not represented, promised or contracted
(whether in oral or written  form) to any Employee  (either  individually  or to
Employees  as a group)  that  such  Employee(s)  would  be  provided  with  life
insurance,  medical or other employee  welfare benefits upon their retirement or
termination of employment, except to the extent required by statute.

              (f)  Except  as set forth in  Section  3.22(f)  of the  Disclosure
Schedule,   the  execution  of  this  Agreement  and  the  consummation  of  the
transactions  contemplated  hereby will not (either alone or upon the occurrence
of any additional or subsequent  events)  constitute an event under any Employee
Plan, Employee  Agreement,  trust or loan that will or may result in any payment
(whether  of  severance  pay  or   otherwise),   acceleration,   forgiveness  of
indebtedness,  vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any Employee.

              (g) The Company (i) is in compliance in all material respects with
all applicable laws,  rules and regulations  respecting  employment,  employment
practices, terms and conditions of employment and wages and hours, in each case,
with respect to Employees;  (ii) has withheld all amounts  required by law or by
agreement  to be  withheld  from the  wages,  salaries  and  other  payments  to
Employees;  (iii) is not  liable  for any  arrears  of wages or any taxes or any
penalty for failure to comply with any of the foregoing;  and (iv) is not liable
for  any  payment  to  any  trust  or  other  fund  or to  any  governmental  or
administrative  authority,  with respect to unemployment  compensation benefits,
social security or other benefits for Employees  (other than routine payments to
be made in the normal course of business and consistent with past practice).

              (h) No work  stoppage  or labor  strike  against  the  Company  is
pending or, to the  knowledge  of the  Company,  threatened.  The Company is not
involved in, or, to the knowledge of the Company,  has not been threatened with,
any  labor  dispute,  grievance  or  litigation  relating  to  labor,  safety or
discrimination matters involving any Employee, including charges of unfair labor
practices or discrimination complaints,  which, if adversely determined,  would,
individually  or in the  aggregate,  result in  liability  to the  Company.  The
Company has not engaged in any unfair labor practices which could,  individually
or in the  aggregate,  directly  or  indirectly  result  in a  liability  to the
Company. The Company

                                      -21-

<PAGE>

is not  presently,  nor has it been in the past,  a party  to, or bound by,  any
collective  bargaining  agreement,  contract  with or  commitment  to any  labor
representatives  (as  defined in Section  3.14(a)(i))  and the  Company  has not
conducted negotiations with respect to any such future contracts or commitments;
no labor representatives hold bargaining rights with respect to any employees of
the  Company;  and there are no current  or, to the  knowledge  of the  Company,
threatened  attempts  to  organize  or  establish  any trade  union or  employee
association with respect to the Company.

              (i) Section  3.22(i) of the  Disclosure  Schedule  sets forth each
Employee,  such Employee's date of hire and such Employee's compensation for the
past three fiscal years, to the extent applicable.

         3.23  Insurance.  Section  3.23 of the  Disclosure  Schedule  lists all
insurance  policies and fidelity  bonds covering the assets  (including  without
limitation the Acquired Assets), business,  equipment,  properties,  operations,
employees,  officers and directors of the Company.  Such insurance  policies are
customary for similarly situated companies and reasonably satisfactory to ensure
the Company against the risks associated with the Business. There is no claim by
the Company  pending under any of such  policies or bonds.  All premiums due and
payable  under all such  policies  and bonds  have been paid and the  Company is
otherwise in material  compliance  with the terms of such policies and bonds (or
other policies and bonds providing  substantially  similar insurance  coverage).
The Company  has no  knowledge  of any  threatened  termination  of, or material
premium increase with respect to, any of such policies.

         3.24 Environmental Matters.

              (a) Hazardous Material. To the Company's knowledge, no underground
storage tank  containing  any regulated  amount of any  substance  that has been
designated by any  Governmental  Entity or by applicable law to be  radioactive,
toxic,  hazardous or otherwise a danger to health or the environment,  including
PCBs,  asbestos,  petroleum,  urea-formaldehyde  and all  substances  listed  as
hazardous  substances  pursuant  to  applicable  law (a  "Hazardous  Material"),
excluding  office and janitorial  supplies  properly and safely  maintained,  is
present in, on or under any property,  including the land and the  improvements,
ground water and surface water thereof,  that the Company has at any time owned,
operated, occupied or leased.

              (b)   Hazardous   Materials   Activities.   The  Company  has  not
transported,  stored, used,  manufactured,  disposed of, released or exposed its
employees or others to Hazardous  Materials in violation of any law in effect on
or before the Closing Date, nor has the Company disposed of, transported,  sold,
or  manufactured  any  product  containing  a Hazardous  Material  (collectively
"Hazardous Materials Activities") in violation of any rule,  regulation,  treaty
or statute  promulgated by any  Governmental  Entity in effect prior to or as of
the date hereof to  prohibit,  regulate or control  Hazardous  Materials  or any
Hazardous Material Activity.

              (c) The  Company  currently  holds  all  environmental  approvals,
permits,  licenses,   clearances  and  consents  (the  "Environmental  Permits")
necessary for the conduct of its Hazardous

                                      -22-

<PAGE>

Material  Activities as such activities are currently being conducted.  All such
Environmental Permits are listed in Section 3.24 of the Disclosure Schedule.

              (d) Environmental Liabilities.  No action, proceeding,  revocation
proceeding, amendment procedure, writ, injunction or claim is pending, or to the
knowledge  of the  Company,  threatened  concerning  any  Environmental  Permit,
Hazardous  Material or any  Hazardous  Materials  Activity of the  Company.  The
Company is not aware of any fact or circumstance which could involve the Company
in any  environmental  litigation  or  impose  upon  the  Company  any  material
environmental liability.

         3.25 Compliance  with Laws.  The Company  has  complied in all material
respects  with,  is not in  violation  in any  material  respect of, and has not
received any notices of violation with respect to, any foreign,  federal, state,
province or local statute,  law or regulation with respect to the conduct of its
business, or the ownership or operation of its business, assets or properties.

         3.26 Complete Copies of Materials.  The Company has delivered to Parent
and Sub true and complete  copies of each  agreement,  contract,  commitment  or
other document that is referred to in the Disclosure Schedule.

         3.27 Warranties;  Indemnities.  Section 3.27 of the Disclosure Schedule
sets forth a summary of all warranties and indemnities relating to products sold
or services rendered by the Company, and no warranty or indemnity has been given
by the Company which differs therefrom.  Section 3.27 of the Disclosure Schedule
also indicates all warranty and indemnity  claims made against the Company since
inception.

         3.28 Representations   Complete.   None  of  the   representations   or
warranties  made in this Article III (as modified by the  Disclosure  Schedule),
nor any statement made in any schedule or  certificate  furnished by the Company
pursuant to this Agreement contains, as of the date hereof, any untrue statement
of a material fact, or omits, as of the date hereof,  to state any material fact
necessary in order to make the statements  contained  herein or therein,  in the
light of the circumstances under which made, not misleading.


                                   ARTICLE IV

                REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB

         The Parent  and Sub  represent  and  warrant  to the  Company  that the
statements  contained  in this Article 4 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 Article 4).

                                      -23-

<PAGE>

         4.1  Organization.  Each  of  Parent  and  Sub  is a  corporation  duly
incorporated and organized, validly existing and in good standing under the laws
of the State of Delaware.

         4.2 Authority. Each of Parent and Sub has all requisite corporate power
and  authority to enter into this  Agreement,  to  consummate  the  transactions
contemplated  hereby,  to own its properties and to carry on its business as now
being  conducted.  The  execution  and  delivery  of  this  Agreement,  and  the
consummation of the transactions  contemplated hereby, have been duly authorized
by all necessary  corporate action on the part of Parent and Sub, and no further
action is required on the part of Parent or Sub to authorize  this Agreement and
the transactions  contemplated hereby. This Agreement has been duly executed and
delivered by Parent and Sub and, assuming the due  authorization,  execution and
delivery  by the  other  parties  hereto,  constitutes  the  valid  and  binding
obligations of Parent and Sub, enforceable in accordance with its terms, subject
to the laws of general  application  relating to bankruptcy,  insolvency and the
relief of debtors and to rules of law governing specific performance, injunctive
relief or other equitable remedies.

         4.3 No Conflict. The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated hereby will not, result in
or give rise to any Conflict  with (i) any  provision of the charter,  bylaws or
other organizational  documents of Parent or Sub, (ii) any mortgage,  indenture,
lease, contract or other agreement or instrument, permit, concession,  franchise
or license to which  Parent or Sub is  subject,  or (iii) any  judgment,  order,
decree, statute, law, ordinance,  rule or regulation applicable to Parent or Sub
or their  properties or assets.  Neither  Parent nor Sub is required to give any
notice  to,  make any filing  with,  or obtain any  authorization,  consent,  or
approval of any  government or  governmental  agency in order for the Parties to
consummate  the  transactions  contemplated  by this  Agreement  (including  the
assignments and assumptions referred to in Article 2 above).

         4.4  Brokers'  Fees.  Parent and Sub have not  incurred,  nor will they
incur,  directly or indirectly,  any liability for brokerage or finders' fees or
agents'  commissions or any similar charges in connection with this Agreement or
any  transaction  contemplated  hereby,  except for fees and  expenses  of First
Analysis  Securities  Corporation,  which  fees  and  expenses  shall be paid by
Parent.

         4.5 Consents. No consent,  waiver, approval, order or authorization of,
or  registration,  declaration  or filing with, any  Governmental  Entity or any
third party,  including a party to any  agreement  with the Parent or Sub (so as
not to trigger any  Conflict),  is required by or with  respect to the Parent or
Sub in  connection  with the  execution  and  delivery of this  Agreement or the
consummation of the transactions  contemplated hereby, except for such consents,
waivers,  approvals,  orders,  authorizations,  registrations,  declarations and
filings which if not obtained or made would not have a material  adverse  effect
on the ability of the Parent or Sub to consummate the transactions  contemplated
hereby.

                                      -24-

<PAGE>

                                    ARTICLE V

                          CONDUCT PRIOR TO THE CLOSING

         5.1 Conduct of Business of the Company. During the period from the date
of this  Agreement and  continuing  until the earlier of (i) the  termination of
this  Agreement and (ii) the Closing,  the Company  agrees (except to the extent
that Parent  shall  otherwise  consent in writing,  which  consent  shall not be
unreasonably  withheld)  to carry on its  business  in the  usual,  regular  and
ordinary course in substantially the same manner as heretofore conducted, to pay
its debts and Taxes when due, to pay or perform other obligations when due, and,
to the extent  consistent  with such  business,  to use all  reasonable  efforts
consistent  with past  practice  and  policies  to  preserve  intact its present
business  organization,  keep available the services of its present officers and
employees  and  preserve  their   relationships   with   customers,   suppliers,
distributors, licensors, licensees, and others having business dealings with it,
all with the goal of preserving  unimpaired its goodwill and ongoing  businesses
at the  Closing.  The  Company  shall  promptly  notify  Parent  of any event or
occurrence  or emergency  not in the ordinary  course of its  business,  and any
material  event  involving  the  Company or its  business.  Except as  expressly
contemplated  by this  Agreement or  disclosed in Section 5.1 of the  Disclosure
Schedule,  the Company shall not,  without the prior  written  consent of Parent
(which consent shall not be unreasonably withheld):

              (a) Enter into any commitment or  transaction  not in the Ordinary
Course of Business.

              (b)   Transfer   to  any  person  or  entity  any  rights  to  the
Intellectual Property of the Company;

              (c) Enter into or amend any agreements pursuant to which any other
party is granted marketing,  distribution or similar rights of any type or scope
with respect to any products of the Company;

              (d) Amend or otherwise  modify (or agree to do so), or violate the
terms  of,  any of the  agreements  set  forth or  described  in the  Disclosure
Schedule;

              (e) Commence or settle any litigation;

              (f) Declare,  set aside or pay any  dividends on or make any other
distributions  (whether  in cash,  stock or  property)  in respect of any of its
capital stock, other than  distributions made to permit  stockholders to satisfy
tax  liabilities  arising by virtue of the Company's  status as an S Corporation
under  the Code,  or  repurchase,  redeem  or  otherwise  acquire,  directly  or
indirectly,  any shares of its  capital  stock (or  options,  warrants  or other
rights exercisable therefor,  other than options outstanding on the date of this
Agreement tendered to the Company in connection with their exercise);

                                      -25-

<PAGE>

              (g)  Cause  or  permit  any  amendments  to  its   Certificate  of
Incorporation or Bylaws;

              (h) Acquire or agree to acquire by merging or consolidating  with,
or by purchasing any assets or equity securities of, or by any other manner, any
business  or  any  corporation,   partnership,  association  or  other  business
organization or division  thereof,  or otherwise acquire or agree to acquire any
assets in an amount in excess of  $15,000  in the  aggregate,  other than in the
Ordinary Course of Business;

              (i) Sell, lease,  license,  grant any Lien on or otherwise dispose
of or encumber any of its properties or assets (including without limitation the
Acquired  Assets),  except  for  (i)  sale of  inventory  and use of Cash in the
Ordinary  Course of Business  and (ii) Liens and  encumbrances  in the  Ordinary
Course of Business that will be satisfied in full and  extinguished  immediately
prior to Closing;

              (j) Incur any  indebtedness  for borrowed  money or guarantee  any
such  indebtedness  or  issue  or sell any debt  securities  of the  Company  or
guarantee  any debt  securities  of  others,  except in the  Ordinary  Course of
Business;

              (k) Grant any severance or termination  pay (i) to any director or
officer or (ii) to any other employee, except payments made pursuant to standard
written agreements  outstanding on the date hereof or as otherwise  contemplated
by this Agreement;

              (l) Adopt or amend any employee  benefit  plan,  or enter into any
employment  contract,  extend employment offers, pay or agree to pay any special
bonus or special  remuneration  to any  director or  employee,  or increase  the
salaries or wage rates of its employees;

              (m) Revalue any of its assets  (including  without  limitation the
Acquired  Assets),  including  without  limitation  writing  down  the  value of
inventory or writing off notes or accounts receivable;

              (n) Pay,  discharge or satisfy,  in an amount in excess of $50,000
in  the  aggregate,  any  Liability,   other  than  the  payment,  discharge  or
satisfaction  in the  Ordinary  Course of Business of  Liabilities  reflected or
reserved against in the Company  Financial  Statements (or the notes thereto) or
as otherwise necessary to satisfy the covenant set forth in Section 6.12 of this
Agreement;

              (o) Make or change  any  material  election  in  respect of Taxes,
adopt or change  any  accounting  method in  respect  of Taxes,  enter  into any
closing  agreement,  settle any claim or  assessment  in  respect  of Taxes,  or
consent to any extension or waiver of the  limitation  period  applicable to any
claim or  assessment  in  respect of Taxes,  in each case to the extent  that it
would have an adverse  effect on Parent's or Sub's conduct of the Business after
the Closing;

              (p)  Enter  into  any  strategic  alliance,  development  or joint
marketing agreement; or

                                      -26-

<PAGE>

              (q) Take,  or agree in writing or  otherwise  to take,  any of the
actions described in Sections 5.1(a) through (p) above.

              In the event that Parent consents in writing to any of the actions
described in Sections 5.1(a) through (p) above, the Disclosure Schedule shall be
deemed  amended such that the action,  to the extent so  consented  to, does not
result  in a breach  of a  representation  or  warranty  of the  Company  at the
Closing.

         5.2  No Solicitation. Until the earlier of (i) the Closing and (ii) the
date of termination of this Agreement  pursuant to the provisions of Section 9.1
hereof,  the Company will not (nor will the Company  permit any of the Company's
officers,  directors,  agents,  representatives  or  affiliates  to) directly or
indirectly,  take any of the following actions with any party other than Parent,
Sub and their  designees:  (a) solicit,  conduct  discussions  with or engage in
negotiations  with any  person,  relating  to the  possible  acquisition  of the
Company (whether by way of merger, purchase of capital stock, purchase of assets
or  otherwise)  or any  material  portion of its  capital  stock or assets,  (b)
provide information with respect to it to any person,  other than Parent or Sub,
relating to the possible  acquisition of the Company  (whether by way of merger,
purchase of capital  stock,  purchase of assets or  otherwise)  or any  material
portion of its capital  stock or assets,  (c) enter into an  agreement  with any
person,  other than Parent and Sub, providing for the acquisition of the Company
(whether  by way of merger,  purchase  of capital  stock,  purchase of assets or
otherwise) or any material portion of its capital stock or assets or (d) make or
authorize  any  statement,  recommendation  or  solicitation  in  support of any
possible  acquisition  of the  Company  (whether  by way of merger,  purchase of
capital stock,  purchase of assets or otherwise) or any material  portion of its
capital stock or assets by any person, other than by Parent or Sub.


                                   ARTICLE VI

                              ADDITIONAL AGREEMENTS

         6.1  Stockholder  Consent.  The Company  shall use its best  efforts to
cause the holders of  outstanding  common stock having not less than the minimum
number of votes  required  to approve  the  Acquisition  and this  Agreement  to
execute and deliver irrevocable written consents approving the Agreement and the
Acquisition.  The Company shall comply with the  requirements  of Section 228 of
the General Corporation Law of the State of Delaware with respect to stockholder
notice of actions approved by written consent.

         6.2  Access  to  Information.  Subject  to any  applicable  contractual
confidentiality  obligations  (which the Company shall use reasonable efforts to
cause to be waived),  the Company  shall afford the Parent and its  accountants,
counsel and other  representatives,  reasonable  access during  normal  business
hours  during the  period  prior to the  Closing  to (a) all of its  properties,
books,  contracts,  agreements  and  records,  and  (b)  all  other  information
concerning the business, properties and personnel (subject to

                                      -27-

<PAGE>

restrictions  imposed by  applicable  law) of it as the  Parent  may  reasonably
request.  No information or knowledge obtained in any investigation  pursuant to
this  Section  6.2 shall  affect or be deemed to modify  any  representation  or
warranty contained herein or the conditions to the obligations of the parties to
consummate the Acquisition,  provided, however, that if any information obtained
after the date of this  Agreement  and prior to the  Closing by Parent or Sub in
the course of their  investigation  of the  Company,  or by Ernst & Young in the
course of its audit,  calls into  question the accuracy or  completeness  of the
Disclosure  Schedule in any  material  respect,  Parent or Sub shall  notify the
Company of such information prior to the Closing.

         6.3  Confidentiality.  Each of the parties  hereto hereby agrees to and
reaffirms the terms and provisions of the Nondisclosure Agreement between Parent
and the Company dated as of January 29, 1998.

         6.4 Audit Procedures. Promptly following execution and delivery of this
Agreement by the Parties, the Company shall provide to Ernst & Young full access
during normal  business hours to (a) all of its  properties,  books,  contracts,
agreements and records,  and (b) all other information  concerning the business,
properties and personnel as is reasonably necessary to perform an audit (and, as
to  quarterly  periods  after  January  1,  1998,  a  review)  of the  financial
statements  of the  Company  such that Ernst & Young shall be able to provide to
Parent audited (and, as to quarterly  periods after January 1, 1998,  unaudited)
financial  statements of the Company  prepared in accordance  with GAAP that, in
the view of  Ernst & Young,  meet the  requirements  of  Regulation  S-X and are
sufficient to satisfy the requirements of the Securities and Exchange Commission
and  Parent's  reporting  requirements  under  the  Exchange  Act (the  "Audited
Statements").

         6.5 Public Disclosure. Upon execution and delivery of this Agreement by
the parties, Parent and the Company shall release an announcement describing the
Acquisition,   provided  that,  the  contents  of  such  announcement  shall  be
reasonably  acceptable  to both  Parent  and the  Company.  Notwithstanding  the
foregoing,  except as aforesaid,  unless  otherwise  required by law (including,
without  limitation,  securities  laws)  or,  as to  Parent,  by the  rules  and
regulations of the National  Association of Securities  Dealers,  Inc., prior to
the  Closing,  no  disclosure  (whether or not in response to an inquiry) of the
subject  matter  of this  Agreement  shall be made by any  party  hereto  unless
approved by Parent and the Company prior to release, provided that such approval
shall not be unreasonably withheld.

         6.6  Consents.  The  Company  shall use its best  efforts to obtain the
consents, waivers and approvals under any of the Contracts designated in Section
3.14(a) of the  Disclosure  Schedule as may be required in  connection  with the
Acquisition  so as to assign to Sub all rights of, and  benefits to, the Company
thereunder. The Company agrees to pay all fees and costs necessary to obtain the
foregoing consents, waivers and approvals.

         6.7  Reasonable Best Efforts; Further Assurances.  Subject to the terms
and conditions provided in this Agreement,  each of the parties hereto shall use
its reasonable best efforts to take

                                      -28-

<PAGE>

promptly,  or cause to be taken, all actions, and to do promptly, or cause to be
done,  all things  necessary,  proper or  advisable  under  applicable  laws and
regulations  to  consummate  and make  effective the  transactions  contemplated
hereby to obtain all necessary waivers, consents and approvals and to effect all
necessary  registrations  and  filings  and to remove any  injunctions  or other
impediments  or delays,  legal or  otherwise,  in order to  consummate  and make
effective the  transactions  contemplated  by this  Agreement for the purpose of
securing to the parties  hereto the  benefits  contemplated  by this  Agreement;
provided that Parent shall not be required to agree to any divestiture by Parent
or the  Company  or any of  Parent's  subsidiaries  or  affiliates  of shares of
capital  stock  or of  any  business,  assets  or  property  of  Parent  or  its
subsidiaries or affiliates or the Company or its  affiliates,  or the imposition
of any  material  limitation  on the  ability  of any of them to  conduct  their
businesses or to own or exercise control of such assets,  properties and capital
stock.  Each party  hereto,  at the  request of the other  party  hereto,  shall
execute and deliver  such other  instruments  and do and perform such other acts
and things as may be reasonably  necessary or desirable for effecting completely
the consummation of this Agreement and the transactions contemplated hereby.

         6.8  Notification  of Certain  Matters.  The Company  shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company, of (i) the
occurrence or  non-occurrence  of any event, the occurrence or non-occurrence of
which is likely to cause any  representation  or  warranty  of the  Company  and
Parent  or Sub,  respectively,  contained  in this  Agreement  to be  untrue  or
inaccurate at or prior to the Closing except as  contemplated  by this Agreement
(including  the  Disclosure  Schedule)  and (ii) any  failure of the  Company or
Parent or Sub,  as the case may be, to comply  with or satisfy  in any  material
respect any covenant, condition or agreement to be complied with or satisfied by
it hereunder;  provided,  however,  that the delivery of any notice  pursuant to
this Section 6.8 shall not limit or otherwise  affect any remedies  available to
the party receiving such notice.

         6.9  Bulk Transfer  Laws.  The Company will comply with the  applicable
provisions  of  all  applicable  bulk  transfer  laws  in  connection  with  the
Acquisition.

         6.10 Company 401(k) Plan. Not later than 30 days following the Closing,
the Company will  terminate  its 401(k) plan and each other plan  referenced  in
Section 3.14(a)(iii) of this Agreement.

         6.11 Transferred Employees. Parent shall, within two (2) days after the
execution date of this Agreement,  extend offers of employment to all of the Key
Employees and the Additional  Employees (as defined in Section 7.1(k) hereof) on
terms which are  commercially  reasonable and consistent with this Section 6.11.
All of the Key  Employees and the  Additional  Employees  which accept  Parent's
offer  of  employment  (the  "Transferred   Employees")  shall  be  entitled  to
participate  in any  employee  benefit  plan,  program,  arrangement  or payroll
practice that is  established,  maintained or sponsored by Parent and/or Sub, on
the same terms as other  employees  of Parent  and/or  Sub,  except that (i) the
Transferred  Employees  shall not be  subject  to  exclusions  for  pre-existing
conditions; (ii) the Transferred Employees shall be credited with their years of
service with the Company for purposes of eligibility to participate  and vesting
in all such benefits  (except for (A) the enrollment date for Parent's  employee
stock purchase plan and (B)  sabbaticals,  which shall accrue at a rate of fifty
percent (50%) of a Transferred Employee's

                                      -29-

<PAGE>

years of service with the Company,  up to a maximum  accrual of two years);  and
(iii) amounts paid by the  Transferred  Employees  before the Closing Date under
any medical plans of the Company  shall be taken into account in applying  other
deductible and  out-of-pocket  limits  applicable to such Transferred  Employees
under the medical or health insurance plan of the Parent and/or Sub.

         6.12 Satisfaction of Liabilities.  All known Liabilities of the Company
which are or become due and payable  prior to, upon or  following  the  Closing,
including  without   limitation  all  trade  payables   (excluding  the  Assumed
Liabilities and the Company Notes),  shall be paid in full by the Company in the
Ordinary Course of Business so as to avoid disruption of the Business;  provided
that severance payments (including severance payments to be due to employees who
will not be employed by Sub after the  Closing)  and accrued  wages and vacation
shall have been paid in full by the  Company on or prior to the  Closing and all
Taxes  associated  therewith  shall be paid in full by the Company no later than
the due date thereof.

         6.13 Severance Agreements. The Company shall have used its best efforts
to cause James F. Harmon, Jean L. Kaminski, Steven Schwartz and Nell T. Tyson to
enter into  Settlement and Mutual Release  Agreements with in the form set forth
in Exhibit B attached hereto.


                                   ARTICLE VII

                        CONDITIONS TO OBLIGATION TO CLOSE

         7.1  Conditions to Obligation of the Parent and Sub. The  obligation of
Parent  and  Sub  to  consummate  the  transactions  to  be  performed  by it in
connection  with  the  Closing  is  subject  to  satisfaction  of the  following
conditions, any of which may be waived in writing exclusively by Parent and Sub:

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

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

              (c) this  Agreement and the  Acquisition  shall have been approved
and  adopted by the  stockholders  of the  Company by the  requisite  vote under
applicable law and the Company's Certificate of Incorporation;

              (d)  the  Company  shall  have  procured  all of the  third  party
consents  relating to the Office Lease and the MCI  Agreement (as such terms are
defined in Section 3.5 of the Disclosure Schedule);

                                      -30-

<PAGE>

              (e) no action,  suit, or proceeding shall be pending or threatened
before any court or  quasi-judicial  or  administrative  agency of any  federal,
state,  local,  or  foreign  jurisdiction  or before any  arbitrator  wherein an
unfavorable  injunction,  judgment,  order, decree,  ruling, or charge would (A)
prevent consummation of any of the transactions  contemplated by this Agreement,
(B) cause any of the transactions contemplated by this Agreement to be rescinded
following consummation,  or (C) affect adversely the right of the Sub to own the
Acquired Assets, and to operate the Business (and no such injunction,  judgment,
order, decree, ruling, or charge shall be in effect);

              (f) there shall not have occurred any Material Adverse Effect;

              (g) the  Company  shall  have  delivered  to the  Parent and Sub a
certificate  signed by the  President  and the Chief  Financial  Officer  of the
Company to the effect  that each of the  conditions  specified  above in Section
7.1(a)-(f) is satisfied in all respects;

              (h) The Company shall have entered into a Settlement Agreement and
Mutual Release with Merrill  Solomon in the form set forth in Exhibit C attached
hereto, and the same shall be in full force and effect;

              (i) the Parent and Sub shall have received from corporate  counsel
to the  Company an  opinion in a form  reasonably  satisfactory  to counsel  for
Parent and Sub,  addressed  to the Parent and Sub,  and dated as of the  Closing
Date;

              (j) the  Parent  and Sub shall  have  received  from  intellectual
property  counsel  to the  Company  an  opinion  in form set forth in  Exhibit D
attached  hereto,  addressed  to the Parent and Sub, and dated as of the Closing
Date; and

              (k)  all  of  the  "Key  Employees"  and  at  least  seven  of the
"Additional  Employees" listed in the Employee List attached hereto as Exhibit E
shall have  resigned  from the  Company and shall have  accepted  Sub's offer of
employment.

         7.2  Conditions  to Obligation  of the Company.  The  obligation of the
Company to consummate the  transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions, any of which
may be waived in writing exclusively by the Company:

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

              (b) the Parent and Sub shall have  performed and complied with all
of their  respective  covenants  hereunder in all material  respects through the
Closing;

                                      -31-

<PAGE>

              (c) no action,  suit,  or proceeding  shall be pending  before any
court or quasi-judicial or administrative  agency of any federal,  state, local,
or foreign  jurisdiction  wherein an unfavorable  injunction,  judgment,  order,
decree,  ruling,  or  charge  would  (A)  prevent  consummation  of  any  of the
transactions contemplated by this Agreement or (B) cause any of the transactions
contemplated by this Agreement to be rescinded  following  consummation  (and no
such injunction, judgment, order, decree, ruling, or charge shall be in effect);

              (d) the  Parent  and Sub shall  have  delivered  to the  Company a
certificate to the effect that each of the conditions specified above in Section
7.2(a)-(c) is satisfied in all respects; and

              (e) the Parent's  offer of employment to the Key Employees and the
Additional  Employees  referred  to in Section  7.1(k) of this  Agreement  shall
include provisions  sufficient to satisfy the Parent's obligations under Section
6.11 of this Agreement.

                                  ARTICLE VIII

         SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW; INDEMNITY

         8.1  Survival  of   Representations   and   Warranties.   All  of   the
representations and warranties made by the Company and by Parent and Sub in this
Agreement  or in any  instrument  delivered  pursuant  to this  Agreement  shall
survive the Acquisition and continue until the twelve (12) month  anniversary of
the Closing  (the  "Expiration  Date").  No claim may be made  against any party
hereto,  and no party hereto shall have any liability to any other party hereto,
after the applicable  survival period for a representation or warranty specified
above  shall have  expired,  except  that,  if a claim  shall be made by a party
hereto  against  another  party hereto prior to the  expiration of such survival
period,  then such survival period shall be extended as it relates to such claim
until such claim has been  satisfied or otherwise  resolved as set forth in this
Article VIII.

         8.2  Indemnification of Parent and Sub.

              (a) Subject to the limitations contained in this Article VIII, the
Company  agrees to  indemnify,  defend and hold harmless  Parent,  Sub and their
respective officers, directors, shareholders and Affiliates (each individually a
"Buyer Indemnified Party", and collectively,  the "Buyer Indemnified  Parties"),
for any claims, losses, liabilities,  damages, deficiencies, costs and expenses,
including reasonable attorneys' fees and expenses, and expenses of investigation
and  defense  (hereinafter  individually  a "Loss"  and  collectively  "Losses")
incurred  by the  foregoing  directly  or  indirectly  as a  result  of (i)  any
inaccuracy or breach of a representation or warranty of the Company contained in
Article 3 herein,  (ii) any failure by the Company to perform or comply with any
covenant  contained  herein,  (iii) any failure to comply with any bulk transfer
law which may be applicable to the transactions  contemplated by this Agreement,
(iv) the  failure  of any of the  persons  referenced  in  Section  6.13 of this
Agreement to execute and deliver a Settlement  Agreement  and Mutual  Release in
the form attached hereto as Exhibit B, (v) the failure of the Company to pay any
Liability of the Company or its

                                      -32-

<PAGE>

shareholders  other  than  an  Assumed   Liability,   (vi)  the  employment  and
termination  of Loren  Smith or the  cancellation  of his  options  to  purchase
capital  stock  of the  Company  or (vii)  utilizing  a name in the  conduct  of
business in Maryland other than "TTC, Inc."

              (b) No Buyer  Indemnified  Party shall be entitled to make a claim
against the Company for indemnification  pursuant to this Section 8.2 unless and
until  the  aggregate  sum of the  amounts  of all  Losses  for  which the Buyer
Indemnified Parties  (collectively as a group) shall be entitled to compensation
under this Section 8.2 exceeds Seventy-Five Thousand Dollars ($75,000). Once the
said  Seventy-Five  Thousand Dollar ($75,000)  threshold is exceeded,  the Buyer
Indemnified  Parties  shall be  entitled  to recover  the  aggregate  sum of the
amounts of all Losses  incurred up to the Escrow  Amount  (plus any  interest or
earnings on the Escrow Amount up to the disbursement date).  Notwithstanding the
foregoing  provisions of this Section 8.2(b), the foregoing  threshold shall not
apply to claims arising under subsection (v) or (vi) of Section 8.2(a),  and the
Buyer  Indemnified  Parties  shall be entitled to recover  such amounts from the
first dollar of such Loss.  For  purposes of this Section 8.2, in computing  the
amounts of  individual  or  aggregate  Losses,  the amount of each Loss shall be
deemed to be an amount (i) net of any tax benefit to the applicable  indemnified
party and (ii) net of any insurance proceeds and any indemnity,  contribution or
similar payment paid by any third party with respect thereto.

              (c) Each Buyer  Indemnified  Party shall give the  Company  prompt
written notice of any claim,  assertion,  event or proceeding  (collectively,  a
"Claim") by or in respect of a third party of which such Buyer Indemnified Party
has knowledge  concerning any Loss as to which such Buyer  Indemnified Party may
request  indemnification  hereunder,  provided that the failure to so notify the
Company shall not relieve the Company from any liability which it may have under
this  Article VIII except to the extent that the Company is  prejudiced  by such
failure.  Within five (5) business days after receipt of written  notice of such
Claim,  the Company shall have the right to direct,  through  counsel of its own
choosing,  the  defense  or  settlement  of any such  Claim at its own  expense;
provided,  however,  that if (x) the  amount of direct  damages  alleged in such
Claim plus (y) the amount of  additional  Losses  reasonably  anticipated  to be
incurred by the Buyer Indemnified  Parties in connection with such Claim exceeds
the then-current  balance of the Escrow Fund, the Buyer Indemnified Parties may,
notwithstanding  any other provision of this Section  8.2(c),  retain control of
the defense and  settlement of such Claim,  and the Company shall have the right
to participate in such defense and settlement at the Company's  expense.  If the
Company elects to assume the defense of any such Claim,  such Buyer  Indemnified
Party may  participate  in such  defense,  but in such case the expenses of such
Buyer  Indemnified  Party shall be paid by such Buyer  Indemnified  Party.  Such
Buyer  Indemnified Party shall provide the Company with reasonable access to its
records and personnel  relating to any such Claim during normal  business  hours
and shall  otherwise  reasonably  cooperate  with the  Company in the defense or
settlement thereof, and the Company shall reimburse such Buyer Indemnified Party
for all its reasonable out of pocket  expenses in connection  therewith.  If the
Company elects to direct the defense of such Claim, such Buyer Indemnified Party
shall  not pay,  or permit to be paid,  any part of the Loss  arising  from such
Claim,  unless (i) the  Company  consents in writing to such  payment,  (ii) the
Company, subject to the last sentence of this subsection (c), withdraws from the
defense of such Claim,  (iii) a final judgment from which no appeal may be taken
by or on behalf of the Company is entered against the

                                      -33-

<PAGE>

Buyer  Indemnified  Party for such Loss, or (iv) the Buyer  Indemnified Party is
otherwise required by law to pay such Loss or to permit such Loss to be paid. If
the  Company  shall fail to defend any Claim  (other than  Claims  which  Parent
elects to retain  pursuant to the proviso in the second sentence of this Section
8.2(c)),  or if, after  commencing or  undertaking  any such  defense,  fails to
prosecute or withdraws  from such defense,  such Buyer  Indemnified  Party shall
have the right to undertake the defense or settlement  thereof, at the Company's
expense.  If such Buyer  Indemnified  Party  assumes  the  defense of such Claim
pursuant to this  subsection  (c) and  proposes to settle such Claims prior to a
final judgment thereof, then such Buyer Indemnified Party shall give the Company
prompt  written  notice  thereof  and  the  Company  shall  have  the  right  to
participate in the settlement of such Claim.

              (d) In no event shall the  aggregate  liability  of the Company to
the Buyer Indemnified Parties for any reason (including, without limitation, for
any misrepresentation, breach of warranty or breach of any covenant or agreement
contained in this Agreement) exceed the Escrow Amount;  provided,  however, that
the foregoing  limitation shall not apply to (i) a breach of subsection (iii) of
Section 8.2(a) or (ii) liability for fraud.

         8.3  Indemnification of the Company.

              (a) Subject to the  limitations  contained in this  Article  VIII,
Parent agrees to indemnify,  defend and hold harmless  Company and its officers,
directors,  shareholders and Affiliates (each individually a "Seller Indemnified
Party",  and collectively,  the "Seller  Indemnified  Parties"),  for any Losses
incurred  by the  foregoing  as a result  of (i) any  inaccuracy  or breach of a
representation  or warranty of the Parent or Sub  contained in Article 3 herein,
(ii) any  failure by the Parent or Sub to  perform or comply  with any  covenant
contained herein,  (iii) any liability resulting from, or any failure of the Sub
to pay,  any Assumed  Liability  or (iv) acts or  omissions  of Parent or Sub or
their  Affiliates  occurring after the Closing in connection with the conduct of
the Business  after the  Closing,  except in the case of this clause (iv) to the
extent that such Losses arise directly from (A) acts or omissions of the Company
or its Affiliates  prior to or after the Closing or (B) any inaccuracy or breach
of a  representation  or warranty of the Company  contained  in Article 3 herein
(without  regard to  whether  the  survival  period for such  representation  or
warranty shall have expired as provided in Section 8.1 hereof).

              (b) No Seller  Indemnified Party shall be entitled to make a claim
against the Parent for  indemnification  pursuant to this Section 8.3 unless and
until the  aggregate  sum of the  amounts  of all  Losses  for which the  Seller
Indemnified Parties  (collectively as a group) shall be entitled to compensation
under  this  Section  8.3  exceeds  Seventy-Five   Thousand  Dollars  ($75,000).
Notwithstanding  the foregoing  provisions of this Section 8.3(b), the foregoing
threshold  shall not apply to claims arising under  subsection  (iii) of Section
8.3(a),  and the Seller  Indemnified  Parties  shall be entitled to recover such
amounts from the first dollar of such Loss. For purposes of this Section 8.3, in
computing the amounts of individual or aggregate Losses, the amount of each Loss
shall be deemed to be an amount  (i) net of any tax  benefit  to the  applicable
indemnified  party and (ii) net of any  insurance  proceeds  and any  indemnity,
contribution or similar payment paid by any third party with respect thereto.

                                      -34-

<PAGE>

              (c) Each Seller  Indemnified  Party  shall give the Parent  prompt
written  notice of any Claim by or in  respect  of a third  party of which  such
Seller  Indemnified  Party has  knowledge  concerning  any Loss as to which such
Seller Indemnified Party may request  indemnification  hereunder,  provided that
the  failure to so notify  the  Parent  shall not  relieve  the Parent  from any
liability  which it may have under this  Article  VIII except to the extent that
the Parent is prejudiced  by such  failure.  Within five (5) business days after
receipt  of written  notice of such  Claim,  the Parent  shall have the right to
direct,  through  counsel of its own choosing,  the defense or settlement of any
such Claim at its own expense. If the Parent elects to assume the defense of any
such Claim, such Seller  Indemnified Party may participate in such defense,  but
in such case the expenses of such Seller Indemnified Party shall be paid by such
Seller Indemnified Party. Such Seller Indemnified Party shall provide the Parent
with reasonable  access to its records and personnel  relating to any such Claim
during normal  business  hours and shall  otherwise  reasonably  cooperate  with
Parent in the defense or settlement  thereof,  and Parent shall  reimburse  such
Seller  Indemnified  Party  for all its  reasonable  out of pocket  expenses  in
connection therewith.  If the Parent elects to direct the defense of such Claim,
such Seller  Indemnified  Party shall not pay, or permit to be paid, any part of
the Loss arising from such Claim,  unless (i) the Parent  consents in writing to
such payment,  (ii) the Parent,  subject to the last sentence of this subsection
(c), withdraws from the defense of such Claim, (iii) a final judgment from which
no appeal  may be taken by or on behalf of the  Parent is  entered  against  the
Seller  Indemnified Party for such Loss, or (iv) the Seller Indemnified Party is
otherwise required by law to pay such Loss or to permit such Loss to be paid. If
the  Parent  shall  fail  to  defend  any  Claim,  or if,  after  commencing  or
undertaking any such defense, fails to prosecute or withdraws from such defense,
such Seller  Indemnified  Party shall have the right to undertake the defense or
settlement  thereof,  at the Parent's expense.  If such Seller Indemnified Party
assumes the defense of such Claim  pursuant to this  subsection (c) and proposes
to settle  such  Claims  prior to a final  judgment  thereof,  then such  Seller
Indemnified  Party shall give Parent prompt  written  notice  thereof and Parent
shall have the right to participate in the settlement of such Claim.

         8.4  Escrow Arrangements.

              (a) Escrow Fund. At the Closing, Sub shall deposit with the Escrow
Agent the Escrow Amount,  such deposit to constitute an escrow fund (the "Escrow
Fund") to be  governed by the terms set forth  herein and at  Parent's  cost and
expense.  The Escrow  Fund shall be the sole source of funds  available  for the
fulfillment  of any  indemnification  obligations  of the  Company  to the Buyer
Indemnified  Parties  as set forth in  Section  8.2  hereof.  Regardless  of the
existence of any Reserved  Amount or claim  against the Escrow Fund,  the Escrow
Agent  shall pay and  disburse to the  Company,  not later than thirty (30) days
after the end of each calendar year,  all interest  earned and other earnings on
the Escrow Fund during such year.  The parties  agree that the Company  shall be
liable for all Taxes  payable on the interest  earned and other  earnings on the
Escrow Fund.

              (b) Escrow Period: Distribution upon Termination of Escrow Period.
Subject to the  following  requirements,  the Escrow Fund shall be in  existence
immediately  following the Closing and shall terminate at 5:00 p.m.,  California
time, on the  Expiration  Date (the "Escrow  Period");  provided that the Escrow
Period  shall not  terminate  with respect to such amount as is necessary in the
reasonable

                                      -35-

<PAGE>

judgment  of  Parent,  subject to the  objection  of the  Company  Agent and the
subsequent  arbitration  of the matter in the manner  provided in Section 8.4(f)
hereof,  to satisfy any unsatisfied  claims  concerning facts and  circumstances
existing  prior  to the  termination  of such  Escrow  Period  specified  in any
Officer's Certificate (as hereafter defined) delivered to the Escrow Agent prior
to termination of such Escrow Period.  In no event shall the Escrow Agent accept
or pay any claim or claims  specified  in any  Officer's  Certificate  delivered
after the  termination  of the Escrow  Period,  regardless of when the facts and
circumstances giving rise to such claims occurred.  As soon as all such properly
made claims have been  resolved  and all  payments  due to the Escrow Agent have
been  satisfied  as provided in Section  8.4(k)  hereof,  the Escrow Agent shall
deliver to the Company the remaining  portion of the Escrow Fund not required to
satisfy  such  claims.  The Parties  acknowledge  and agree that  payment of any
interest  earned on the  Escrow  Fund  will be  subject  to  backup  withholding
penalties unless a properly  completed  Internal Revenue Service form W-8 or W-9
certification is submitted to the Escrow Agent.

              (c)  Protection  of Escrow  Fund.  The Escrow Agent shall hold and
safeguard the Escrow Fund during the Escrow  Period,  shall treat such fund as a
trust  fund in  accordance  with  the  terms  of this  Agreement  and not as the
property  of Parent or Sub and shall hold and dispose of the Escrow Fund only in
accordance  with the terms hereof.  The Escrow Agent shall invest Escrow Fund at
all times in such  investments  (with  maturities of no longer than one year) as
the Company Agent and Parent shall from time to time mutually  direct,  provided
that, in the absence of such direction, the Escrow Agent shall invest the Escrow
Fund in a U.S. Bank money market fund.

              (d) Claims Upon Escrow Fund.

                  (i) Upon  receipt by the Escrow Agent at any time on or before
the last day of the  Escrow  Period of a  certificate  signed  by any  executive
officer of Sub (an "Officer's Notice  Certificate"):  (A) stating that Parent or
Sub is properly entitled to  indemnification  with respect to, and reimbursement
for,  a Loss  anticipated  under  Section  8.2  hereof,  and (B)  specifying  in
reasonable  detail  the  individual  items of Losses  included  in the amount so
stated, the basis for such liability,  and the nature of the  misrepresentation,
breach of  warranty  or  covenant  to which such item is related  (or such other
basis for  indemnification  under  Section 8.2  hereof),  the Escrow Agent shall
register such claim for the purposes set forth in the second sentence of Section
8.1  hereof and shall  deliver to the  Company  Agent a  duplicate  copy of such
certificate. If the Company Agent shall, within thirty (30) days after delivery,
object  in a  written  statement  to the  claim  made  in the  Officer's  Notice
Certificate,  the  appropriate  amount  of the  Escrow  Fund to be  reserved  in
connection with such Officer's Notice  Certificate (the "Reserved Amount") shall
be determined in accordance  with the provisions of Section  8.4(f)  hereof.  If
such  objection  is not timely made,  the Reserved  Amount shall be equal to the
amount set forth in the Officer's Notice Certificate.  The Reserved Amount shall
be reserved and held in Escrow Fund until an  Officer's  Claim  Certificate  (as
hereinafter  defined) is received  and  processed  in  accordance  with  Section
8.4(d)(ii);  provided, however, that (a) upon a material change in the status of
a Claim to which an Officer's Notice  Certificate  relates,  Parent or Sub shall
send a revised  Officer's  Notice  Certificate  to the Escrow Agent,  the Escrow
Agent shall again comply with this Section 8.4(d), and the Reserved Amount shall
be adjusted as necessary and (b) if the Company believes that there has been a

                                      -36-

<PAGE>

material  change  in such a Claim  and  Parent  or Sub does not take the  action
described in clause (a) of this sentence,  the Company may propose in writing to
the Escrow Agent, Parent and Sub to revise or eliminate the Reserved Amount, and
if  agreement  among the  Company,  the Escrow  Agent,  Parent and Sub cannot be
reached,  such proposal shall be submitted to  arbitration  under Section 8.4(f)
hereof.


  If such  adjustment  takes  place after the  Expiration  Date and results in a
reduction  in the  Reserved  Amount,  the  Escrow  Agent  shall as  promptly  as
practicable  disburse  and deliver to the Company all amounts then in the Escrow
Fund in excess of the revised Reserved Amount.

                  (ii) If and when the Losses reserved for under a previously or
simultaneously  timely filed Officer's Notice Certificate are actually incurred,
Sub shall provide to Escrow Agent a certificate  signed by any executive officer
of Sub (an "Officer's  Claim  Certificate"):  (A) stating that Parent or Sub has
incurred and is properly  entitled to  reimbursement  for a Loss for which it is
entitled to  indemnification  under  Section 8.2 hereof,  and (B)  specifying in
reasonable  detail  the  individual  items of Losses  included  in the amount so
stated, and the date each such item was paid. The Escrow Agent shall then follow
the procedures set forth in Section 8.4(e) hereof and, upon the determination of
the appropriate amount to disburse in accordance with such Section 8.4(e), shall
disburse and deliver to Sub out of the Escrow Fund such amount.

              (e) Objections to Claims. At the time of delivery of any Officer's
Claim  Certificate  to the Escrow Agent,  Sub shall deliver a duplicate  copy of
such certificate to the Company Agent and for a period of thirty (30) days after
such  delivery,  the Escrow  Agent  shall make no  delivery to Sub of any Escrow
Amount pursuant to Section  8.4(d)(ii) hereof unless the Escrow Agent shall have
received written authorization from the Company Agent to make such delivery. The
Company Agent may deliver a written  objection (the  "Objection"),  if any, to a
claim or claims made in the  Officer's  Claim  Certificate  to the Escrow  Agent
within thirty (30) days after  delivery of such Officer's  Claim  Certificate to
the Company  Agent,  in which case the Escrow Agent shall only disburse  amounts
from the  Escrow  Fund in  accordance  with  Section  8.4(f)  hereof.  After the
expiration of such thirty (30) day period without the Escrow Agent receiving the
Objection, the Escrow Agent shall, as promptly as practicable, deliver cash from
the  Escrow  Fund in an amount  equal to the amount of Losses  specified  in the
Officer's  Claim  Certificate,  provided that no such payment or delivery may be
made if the Company Agent shall object in a written  statement to the claim made
in the Officer's Claim Certificate, and such statement shall have been delivered
to the Escrow Agent prior to the expiration of such thirty (30) day period.

              (f) Resolution of Conflicts; Arbitration.

                  (i) In case the  Company  Agent  shall so object in writing to
any claim or claims made in any Officer's Notice  Certificate or Officer's Claim
Certificate  (either,  an  "Officer's  Certificate"),  the Company Agent and Sub
shall attempt in good faith to agree upon the rights of the  respective  parties
with  respect to each of such  claims.  If the  Company  Agent and Sub should so
agree, a memorandum setting forth such agreement shall be prepared and signed by
both parties and an original,

                                      -37-

<PAGE>

executed copy thereof  shall be delivered to the Escrow Agent.  The Escrow Agent
shall be  entitled  to rely on any such  memorandum  and  shall  distribute  (if
applicable) cash from the Escrow Fund in accordance with the terms thereof.

                  (ii) If no such  agreement  can be  reached  after  good faith
negotiation,  either  Sub or the  Company  Agent may demand  arbitration  of the
matter unless (in the case of a disputed Officer's Claim Certificate) the amount
of the damage or loss is at issue in pending  litigation  with a third party, in
which event  arbitration shall not be commenced until such amount is ascertained
or both parties agree to arbitration;  and in either such event the matter shall
be settled by arbitration  conducted by three  arbitrators.  Sub and the Company
Agent  shall each select one  arbitrator,  and the two  arbitrators  so selected
shall select a third arbitrator, each of which arbitrators shall be independent.
The  arbitrators  shall set a  limited  time  period  and  establish  procedures
designed to reduce the cost and time for discovery while allowing the parties an
opportunity,  adequate  in the sole  judgment  of the  arbitrators,  to discover
relevant  information  from the opposing parties about the subject matter of the
dispute.  The  arbitrators  shall rule upon motions to compel or limit discovery
and shall have the authority to impose sanctions,  including  attorneys fees and
costs,  to the  extent  as a  court  of  competent  law or  equity,  should  the
arbitrators   determine   that   discovery   was  sought   without   substantial
justification  or that discovery was refused or objected to without  substantial
justification.  The  decision of a majority of the three  arbitrators  as to the
validity and amount of any claim in such Officer's  Certificate shall be binding
and conclusive upon the parties to this Agreement,  and notwithstanding anything
in  Section  8.4(e)  hereof,  the  Escrow  Agent  shall  be  entitled  to act in
accordance  with such  decision and make or withhold  payments out of the Escrow
Fund in  accordance  therewith.  Such  decision  shall be  written  and shall be
supported by written findings of fact and conclusions  which shall set forth the
award, judgment, decree or order awarded by the arbitrators.

                  (iii) Judgment upon any award rendered by the  arbitrators may
be entered in any court having jurisdiction.  Any such arbitration shall be held
in Santa Clara County, California under the rules then in effect of the Judicial
Arbitration and Mediation Services, Inc. For purposes of this Section 8.4(f), in
any arbitration  hereunder,  each party shall pay its own expenses, and the fees
of each arbitrator  shall be paid one-half by the Company and one-half by Parent
or Sub.

              (g) Company Agent; Power of Attorney.

                  (i) The Company hereby appoints the Company Agent as agent and
attorney-in-fact for the Company to give and receive notices and communications,
to  authorize  payment to Sub of cash from the Escrow  Fund in  satisfaction  of
claims by Parent or Sub, to object to such deliveries,  to agree to,  negotiate,
enter into  settlements and  compromises  of, and demand  arbitration and comply
with orders of courts and awards of arbitrators with respect to such claims, and
to take all actions  necessary or  appropriate  in the judgment of Company Agent
for the  accomplishment  of the  foregoing.  Such  agency  may be changed by the
Company  from time to time upon not less than  thirty  (30) days  prior  written
notice to Parent and Sub. The Company Agent may resign upon not less than thirty
(30) days prior written notice to Parent, Sub, the Escrow Agent and the Company.
Any vacancy in the position

                                      -38-

<PAGE>

of Company Agent may be filled by the Company.  No bond shall be required of the
Company Agent,  and the Company Agent shall not receive  compensation for his or
her  services.  Notices or  communications  to or from the  Company  Agent shall
constitute notice to or from the Company.

                  (ii) The Company Agent shall not be liable for any act done or
omitted  hereunder  as  Company  Agent  while  acting  in good  faith and in the
exercise of reasonable  judgment.  The Company shall indemnify the Company Agent
and hold the  Company  Agent  harmless  against any loss,  liability  or expense
incurred  without  negligence  or bad faith on the part of the Company Agent and
arising out of or in connection  with the  acceptance or  administration  of the
Company Agent's duties hereunder,  including the reasonable fees and expenses of
any legal counsel retained by the Company Agent.

              (h) Actions of the Company  Agent.  A  decision,  act,  consent or
instruction of the Company Agent shall  constitute a decision of the Company and
shall be final,  binding and conclusive upon the Company,  and the Escrow Agent,
Parent and Sub may rely upon any such decision,  act,  consent or instruction of
the Company  Agent as being the decision,  act,  consent or  instruction  of the
Company. The Escrow Agent, Parent and Sub are hereby relieved from any liability
to any person for any acts done by them in accordance  with such decision,  act,
consent or instruction of the Company Agent.

              (i) Escrow Agent's Duties.

                  (i)  The  Escrow  Agent  shall  be  obligated   only  for  the
performance  of such duties as are  specifically  set forth  herein,  and as set
forth in any additional  written escrow  instructions which the Escrow Agent may
receive after the date of this  Agreement  which are signed by an officer of Sub
and the  Company  Agent,  and may rely and  shall be  protected  in  relying  or
refraining from acting on any instrument  reasonably  believed to be genuine and
to have been signed or  presented  by the proper  party or  parties.  The Escrow
Agent shall not be liable to any party for any act done or omitted  hereunder as
Escrow  Agent  while  acting in good  faith and in the  exercise  of  reasonable
judgment.  The Escrow  Agent shall not incur any such  liability  for any action
taken  or  omitted  in  reliance  upon any  instrument,  including  any  written
statement of  affidavit  provided  for in this  Agreement  that the Escrow Agent
shall in good faith  believe to be genuine,  nor will the Escrow Agent be liable
or responsible for forgeries, fraud, impersonations, or determining the scope of
any representative authority. In addition, the Escrow Agent may consult with the
legal counsel in connection  with Escrow Agent's duties under this Agreement and
shall be fully protected in any act taken,  suffered, or permitted by him/her in
good faith in  accordance  with the advice of counsel.  The Escrow  Agent is not
responsible  for determining and verifying the authority of any person acting or
purporting to act on behalf of any party to this Agreement.

                  (ii)  The  Escrow  Agent is  hereby  expressly  authorized  to
disregard  any and all  warnings  given by any of the  parties  hereto or by any
other person,  excepting  only orders or process of courts of law, and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case the Escrow Agent obeys or complies with any such order,  judgment
or

                                      -39-

<PAGE>

decree of any court,  the Escrow Agent shall not be liable to any of the parties
hereto or to any other person by reason of such compliance,  notwithstanding any
such order, judgment or decree being subsequently reversed,  modified, annulled,
set aside, vacated or found to have been entered without jurisdiction.

                  (iii) The Escrow  Agent  shall not be liable in any respect on
account  of the  identity,  authority  or rights  of the  parties  executing  or
delivering or  purporting to execute or deliver this  Agreement or any documents
or papers deposited or called for hereunder.

                  (iv) The Escrow  Agent shall not be liable for the  expiration
of any rights under any statute of limitations with respect to this Agreement or
any documents deposited with the Escrow Agent.

                  (v) If any  controversy  arises  between  the  parties to this
Agreement,  or with any  other  party,  concerning  the  subject  matter of this
Agreement,  its terms or  conditions,  the Escrow  Agent will not be required to
determine the  controversy or to take any action  regarding it. The Escrow Agent
may hold all documents and the Escrow Amount and may wait for  settlement of any
such controversy by final  appropriate  legal  proceedings or other means as, in
the Escrow Agent's  discretion,  the Escrow Agent may be required,  despite what
may be set forth  elsewhere in this Agreement.  In such event,  the Escrow Agent
will not be liable for damage.

              Furthermore, the Escrow Agent may at its option, file an action of
interpleader  requiring the parties to answer and litigate any claims and rights
among  themselves.  The Escrow Agent is  authorized to deposit with the clerk of
the court all  documents  and the  Escrow  Amount,  except  all cost,  expenses,
charges and  reasonable  attorney  fees  incurred by the Escrow Agent due to the
interpleader  action and which the parties  jointly and severally  agree to pay.
Upon  initiating  such  action,  the Escrow  Agent shall be fully  released  and
discharged of and from all  obligations  and  liability  imposed by the terms of
this Agreement.

                  (vi) The parties and their  respective  successors and assigns
agree jointly and severally to indemnify and hold Escrow Agent harmless  against
any and all  losses,  claims,  damages,  liabilities,  and  expenses,  including
reasonable costs of investigation,  counsel fees, and disbursements  that may be
imposed on Escrow  Agent or  incurred  by Escrow  Agent in  connection  with the
performance  of  his/her/its  duties  under this  Agreement,  including  but not
limited to any  litigation  arising from this Agreement or involving its subject
matter,  except  for  acts  or  omissions  taken  by  the  Escrow  Agent  not in
conformance with the standard set forth in clause (i) of this Section 8.4(i).

                  (vii) The Escrow  Agent may resign at any time upon  giving at
least thirty (30) days written notice to the parties; provided, however, that no
such  resignation  shall become  effective  until the appointment of a successor
escrow agent which shall be accomplished as follows: the parties shall use their
best efforts to mutually  agree on a successor  escrow agent within  thirty (30)
days after receiving such notice.  If the parties fail to agree upon a successor
escrow agent within such time,

                                      -40-

<PAGE>

the  Escrow  Agent  shall  have the right to appoint a  successor  escrow  agent
authorized to do business in the State of California. The successor escrow agent
shall execute and deliver an instrument accepting such appointment and it shall,
without  further  acts,  be vested  with all the  estates,  properties,  rights,
powers,  and duties of the  predecessor  escrow agent as if originally  named as
escrow agent.  The Escrow Agent shall be discharged  from any further duties and
liability under this Agreement.

              (j) Fees.  All fees of the  Escrow  Agent for  performance  of its
duties  hereunder shall be paid by the Parent without  deduction from the Escrow
Fund. Without affecting the foregoing,  if Parent fails to pay such fees for any
reason,  the  Company  may  elect to pay such  fees and in such  event  shall be
entitled to reimbursement therefor by Parent. It is understood that the fees and
usual  charges  agreed upon for services of the Escrow Agent shall be considered
compensation  for ordinary  services as contemplated  by this Agreement.  In the
event that the  conditions of this Agreement are not promptly  fulfilled,  or if
the Escrow Agent renders any service not provided for in this  Agreement,  or if
the  parties  request  a  substantial  modification  of  its  terms,  or if  any
controversy arises, or if the Escrow Agent is made a party to, or intervenes in,
any litigation pertaining to this escrow or its subject matter, the Escrow Agent
shall be reasonably  compensated for such extraordinary  services and reimbursed
for all  reasonable  costs,  attorney's  fees,  and expenses  occasioned by such
default, delay, controversy or litigation.

         8.5 Exclusive  Remedy.  To the extent permitted by law, the indemnities
and  other  remedies  set  forth in this  Article  VIII  shall be the  exclusive
remedies of the parties for any misrepresentation,  breach of warranty or breach
of any covenant or  agreement  contained in this  Agreement,  provided  that the
foregoing shall not limit any party's right to recover for fraud.


                                   ARTICLE IX

                                   TERMINATION

         9.1  Termination of Agreement.  This Agreement may be terminated at any
time prior to the Closing as provided below:

              (a) the Parties may  terminate  this  Agreement by mutual  written
consent at any time prior to the Closing;

              (b) the Parent may  terminate  this  Agreement  by giving  written
notice to the  Company  at any time  prior to the  Closing  (A) in the event the
Company has breached any representation, warranty, or covenant contained in this
Agreement  in any material  respect,  the Parent has notified the Company of the
breach,  and the breach has continued without cure for a period of 30 days after
the notice of breach or (B) if the Closing  shall not have occurred on or before
July 15, 1998, by reason of the failure of any condition precedent under Section
7.1 hereof (unless the failure  results  primarily from the Parent or Sub itself
breaching any representation, warranty or covenant contained in this Agreement);
and

                                      -41-

<PAGE>

              (c) the Company may  terminate  this  Agreement by giving  written
notice to the Parent and Sub at any time prior to the  Closing  (A) in the event
the  Parent  or Sub  has  breached  any  representation,  warranty  or  covenant
contained in this  Agreement in any material  respect,  the Company has notified
the Parent and Sub of the breach,  and the breach has continued without cure for
a period of 30 days after the notice of breach or (B) if the  Closing  shall not
have  occurred  on or before  July 15,  1998,  by reason of the  failure  of any
condition  precedent  under  Section  7.2 hereof  (unless  the  failure  results
primarily  from the Company  itself  breaching any  representation,  warranty or
covenant contained in this Agreement).

         9.2  Effect  of  Termination.  In the  event  of  termination  of  this
Agreement as provided in Section 9.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of Parent,  Sub or the
Company, or their respective officers, directors or stockholders,  provided that
each party shall remain liable for any breaches of this  Agreement  prior to its
termination,  and provided  further that, the provisions of Sections 6.3 and 6.5
and  Article X of this  Agreement  shall  remain in full  force and  effect  and
survive any termination of this Agreement.


                                    ARTICLE X

                                  MISCELLANEOUS

         10.1 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.

         10.2 Entire Agreement. This Agreement (including the documents referred
to herein)  constitutes the entire agreement  between the Parties and supersedes
any prior  understandings,  agreements,  or  representations  by or between  the
Parties,  written or oral,  to the extent they related in any way to the subject
matter hereof.

         10.3 Succession  and  Assignment.  This Agreement shall be binding upon
and inure to the  benefit  of the  Parties  named  herein  and their  respective
successors and permitted  assigns.  No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of each other Party, provided, however, that Parent or Sub may, upon 30
days' prior written  notice to the Company  Agent,  (i) assign any or all of its
rights  and  interests  hereunder  to one or more  of its  Affiliates  and  (ii)
designate one or more of its Affiliates to perform its obligations hereunder (in
any  or  all of  which  cases  the  Parent  and  Sub  nonetheless  shall  remain
responsible for the performance of all of its obligations hereunder).

         10.4 Counterparts.  This   Agreement  may be  executed  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.

                                      -42-

<PAGE>

         10.5 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.

         10.6 Notices.  All   notices,  requests,  demands,  claims,  and  other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other  communication  hereunder  shall be deemed duly given (a) if personally
delivered,  upon delivery or refusal of delivery; (b) if mailed by registered or
certified United States mail, return receipt  requested,  postage prepaid,  upon
delivery  or  refusal of  delivery;  or (c) if sent by a  nationally  recognized
overnight  delivery service,  upon delivery or refusal of delivery.  All notices
hereunder shall be addressed to the intended recipient as set forth below:

If to the Company:      The Telephone Connection, Inc.
                        1120 Connecticut Avenue, N.W., Suite 1200
                        Washington, D.C. 20036
                        Attn:  Howard Bender
                        Telephone: (202) 828-9000

Copy to:                Tucker, Flyer & Lewis
                        1615 L Street, N.W., Suite 400
                        Washington, D.C. 20036
                        Attn:  Thomas J. Knox, Esq.
                        Telephone:  (202) 452-8600

If to the Company
           Agent:       Howard Bender
                        1120 Connecticut Avenue, N.W., Suite 1200
                        Washington, D.C. 20036
                        Telephone: (202) 828-9000

Copy to:                Tucker, Flyer & Lewis
                        1615 L Street, N.W., Suite 400
                        Washington, D.C. 20036
                        Attn:  Thomas J. Knox, Esq.
                        Telephone:  (202) 452-8600


If to the Parent
         or Sub:        Centigram Communications Corporation
                        91 East Tasman Drive
                        San Jose, California 95134
                        Attn:  President
                        Telephone:    (408) 944-0250


                                      -43-

<PAGE>

Copy to:                Wilson Sonsini Goodrich & Rosati
                        650 Page Mill Road
                        Palo Alto, California 94304
                        Attn:  Steven E. Bochner, Esq.
                        Telephone:    (650) 493-9300


If to the Escrow
          Agent:        U.S. Bank Trust National Association
                        One California Street, Fourth Floor
                        San Francisco, California 94111
                        Attn:  Barbara L. Wise
                        Telephone:  (415) 273-4530

         Any Party may change the address to which notices,  requests,  demands,
claims,  and other  communications  hereunder  are to be delivered by giving the
other Parties notice in the manner herein set forth.

         10.7 Governing  Law. This Agreement  shall be governed by and construed
in accordance  with the domestic laws of the State of California  without giving
effect to any choice or conflict of law  provision or rule (whether of the State
of California or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of California.

         10.8 Amendments  and  Waivers.  No  amendment of any  provision of this
Agreement  shall be valid  unless the same shall be in writing and signed by the
Parent,  Sub and the Company.  The Company may consent to any such  amendment at
any time  prior to the  Closing  with the  prior  authorization  of its board of
directors; provided, however, that any amendment effected after the stockholders
of the Company have approved this Agreement will be subject to the  restrictions
contained in the Delaware General Corporation Law. 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.

         10.9 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.

        10.10 Expenses. Whether  or not the Acquisition is consummated, all fees
and expenses  incurred in connection  with the  Acquisition  including,  without
limitation, all legal, accounting,  financial advisory, consulting and all other
fees and expenses of third parties  incurred by a party in  connection  with the
negotiation  and  effectuation of the terms and conditions of this Agreement and
the transactions

                                      -44-

<PAGE>

contemplated  hereby,  shall be the obligation of the respective party incurring
such fees and expenses,  provided that the accounting fees and expenses of Ernst
& Young in connection  with preparing the Audited  Statements  shall be borne by
Parent.

        10.11 Construction.  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 word "agreement
" when used herein shall be deemed in each case to mean any contract, commitment
or other  agreement,  whether  oral or  written,  that is legally  binding.  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) which 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.

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

        10.13 Specific  Performance. Each of the Parties acknowledges and agrees
that the  other  Party  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 Party 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  10.15
below),  in addition to any other remedy to which it may be entitled,  at law or
in equity.

        10.14 Other  Remedies.  Except as otherwise provided herein, any and all
remedies herein expressly  conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party,  and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.

        10.15 Submission  to  Jurisdiction.  Each  of  the  Parties  irrevocably
consents to the exclusive  jurisdiction  and venue of any state or federal court
sitting in Santa Clara County,  California,  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 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
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 in equity.

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                                      -45-

<PAGE>

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

                                 CENTIGRAM COMMUNICATIONS CORPORATION


                                 By:  /s/ Robert L. Puette
                                      ----------------------------------------
                                 Name:  Robert L. Puette
                                 Title: President and Chief Executive Officer


                                 TTCI ACQUISITION CORP.


                                 By: /s/ Robert L. Puette
                                     -----------------------------------------
                                 Name:  Robert L. Puette
                                 Title:  President and Chief Executive Officer


                                 THE TELEPHONE CONNECTION, INC.


                                 By: /s/ Steven J. Schwartz
                                     -----------------------------------------
                                 Name:  Steven J. Schwartz
                                 Title: Treasurer


                                 U.S. BANK TRUST NATIONAL ASSOCIATION


                                 By: /s/ Barbara L. Wise
                                     -----------------------------------------
                                 Name:  Barbara L. Wise
                                 Title:  Vice President


                    [ASSET PURCHASE AGREEMENT SIGNATURE PAGE]

                                      -46-